CENTRAL EUROPEAN DISTRIBUTION CORP 
By MT. LAUREL, N.J., Feb. 29, 2012 /PRNewswire/ -- Central European Distribution Corporation (NASDAQ: CEDC) today announced its results for the fiscal year 2011. Net Sales for the twelve months ended December 31, 2011 were $877.6 million as compared to $711.5 million reported for the same period in 2010 and net sales for the fourth quarter of 2011 was $280.1 million as compared to $228.4 million for the same period in 2010.
CEDC announced a net loss from continuing operations on a U.S. GAAP basis (as hereinafter defined) for the year of $1,291.8 million or $17.90 per fully diluted share, as compared to net loss of $92.9 million or $1.32 per fully diluted share, for the same period in 2010. Comparable net income for the year ending December 31, 2011, excludes the impact of a non-cash, impairment charge on goodwill and brands of $1,057 million, described in more detail below as well as other non-operational cost, including costs associated with restructuring and relicensing in Russia. On a comparable basis, CEDC announced a net loss from continuing operations of $11.8 million, or $0.16 per fully diluted share, for the full year 2011, as compared to a net profit of $38.7 million, or $0.55 per fully diluted share, for the same period in 2010. In addition to the impairment charge noted above, the comparable net income excludes the unrealized non-cash foreign exchange loss of $139.9 million from the revaluation of liabilities recognized during the period. The number of fully diluted shares used in computing the full year earnings per share was 72.2 million for 2011 and 70.3 million for 2010.
The net loss from continuing operations on a U.S. GAAP basis for the 4th quarter of 2011 was $456.1 million or $6.29 per fully diluted share, as compared to net loss of $103.2 million or $1.46 per fully diluted share, for the same period in 2010. Comparable net income for the fourth quarter ending December 31, 2011, excludes the impact of a non-cash, impairment charge on goodwill of $383 million, described in more detail below as well as other cost associated with restructuring and relicensing in Russia. On a comparable basis, CEDC announced net income of $8.0 million, or $0.11 per fully diluted share, for the 4th quarter 2011, as compared to $12.2 million, or $0.17 per fully diluted share, for the same period in 2010.
For a complete 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."
Operating loss on a U.S. GAAP basis for the fourth quarter 2011 was $362.3 million and $1,250 million for the year as compared to an operating loss of $119.1 million and $23.5 million for the same period in 2010. As noted above, the operating loss for the fourth quarter of 2011 was driven by an impairment charge for goodwill of $383 million in addition to the $674.5 of goodwill and trademark impairment charges that were already taken during the third quarter of 2011. During the fourth quarter the Company experienced continued underperformance of its Russia domestic vodka business as compared to expectations, and as such the Company determined that an additional impairment charge was necessary as part of the Company's annual goodwill impairment testing for the fourth quarter of 2011. Also as noted in the third quarter earnings release the Company experienced the underperformance of certain brands in Poland, primarily Bols Vodka and as such the company also took an impairment charge for certain Polish trademarks during the third quarter of 2011 of $128 million.
William Carey, President and CEO commented, "Although the fourth quarter of 2011 showed marked improvement as compared to the prior year in many of our business units, primarily Poland, RTD and the Ukraine, our largest market and business in Russia under-performed the market and our expectations. We also experienced a large foreign exchange loss as local currencies experienced declines against the euro and U.S. dollar for the quarter. The operating environment in Russia continues to be difficult especially with continued spirit price increases and heavy discounting going on in the market."
William Carey, President and CEO continued, "In Poland, we achieved our sales volume target of plus 10% and value target of plus 12% in local currency and are making substantial progress on our goals of growing profitable market share with pricing, sales and mix as well as improvements in distribution coverage. We believe we are well positioned from a management and product stand point to continue to grow off of our 2011 base in terms of top line and bottom line growth into 2012."
William Carey, President and CEO continued, "In Russia, as stated above, we continued to experience a difficult trading environment in the 4th quarter with high shelf prices reducing consumption, substantially higher spirit pricing negatively impacting our cost of goods sold, route to market challenges following the overhaul of the 2011 re-licensing issues and management execution challenges that we are addressing. All of these factors have made it extremely difficult to forecast on a quarter by quarter basis in Russia as the underlying factors are changing on a month to month basis. We believe we have the ability to put through price increases but at the expense to volumes and as such we continue to look to streamline the company in terms of cost reductions. Our export trends from Poland and Russia remain robust and in the year 2011, we became the largest exporter out of Russia with a 35.5% share of all export volume in the vodka sector from Russia, with all of our export brands doing extremely well."
William Carey, President and CEO continued, "In terms of other markets, we are seeing substantial increases in our volumes in the Ukraine and have reached a 7.4% market share as of today with an improvement in the bottom-line profitability as well. Our RTD business in Russia is also seeing robust value growth as we continue to change the volume mix to a more profitable mix over the last two years."
William Carey, President and CEO continued, "As we look to the year 2012, we will be making changes starting with a new General Manager in Russia starting from April 1st, 2012, Grant Winterton. Grant comes from a strong Russian FMCG background including senior management positions at Coca-Cola, Wimm-Bill-Dann and most recently General Manager of Red Bull Russia. We expect to see visible improvements in our overall businesses, mainly led by increased volumes, pricing, robust export growth, growth of new products and cost reductions off setting negative volumes of core brands in Russia. We will also seek to benefit from product, client and channel mix in Poland. In addition to the General Manager change, we will be putting more Senior Management in place to improve our sales execution and better control the costs that are associated with sales."
Over the past several months, the management of the Company, in consultation with the Board and with assistance of financial and legal advisors, has been reviewing the Company's strategic alternatives in light of its upcoming financial obligations, in particular the Company's 3.00% Convertible Senior Notes due 2013 (2013 Notes). The management of the Company has concluded that cash generated from operations, cash on hand and amounts expected to be available under existing credit facilities will not be sufficient to pay principal on the 2013 Notes, which is due and payable on March 15, 2013. This review has taken on added importance given the challenging market conditions and a difficult operating environment.
The Board and the management of the Company believe that all strategic alternatives should be evaluated, and is not ruling out any transaction that is in the best interests of stockholders. The Company and its advisors are working to develop various alternatives to address the 2013 obligation, including a strategic alliance with several potential investors, including Mr. Roustam Tariko and Russian Standard Corporation, other strategic investments, sale of certain assets, an exchange of the Convertible Notes and issuing equity. In the context of its evaluation of strategic alternatives, the Board continues to consider the letter from Mr. Tariko of Russian Standard Corporation (Russian Standard), dated February 1, 2012 proposing a "strategic alliance" whereby, among other things, Russian Standard would seek to convert a portion of its 3.00% Convertible Senior Notes due 2013 in exchange for common stock of the Company, obtain certain minority rights and board seats, possibly extend a backstop credit facility to the Company and possibly sell certain distribution and other rights to the Company. Although discussions are ongoing, no agreement has been reached. Moreover, there can be no assurance that any transaction or series of transactions will be completed with Russian Standard or any other third party. A failure to pay amounts owed on our 2013 notes would constitute a default under those notes and the Company's 9.125% Senior Secured Notes and 8.875% Senior Secured Notes, each due 2016, and other indebtedness. The Company's cash flow forecasts include the assumption that certain credit and factoring facilities that are coming due in 2012 will be renewed to manage the working capital needs. The Company's auditors' report for the year ended December 31, 2011, which will be included with the Company's financial statements in its annual report on form 10-K filed with the U.S. SEC, will be unqualified and will include an explanatory paragraph that certain matters raise a substantial doubt about the Company's ability to continue as a going concern, primarily relating to the Company's present ability to repay the 2013 Notes.
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 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 one of the largest producers of vodka in the world and Central and Eastern Europe's largest integrated spirit beverage business. CEDC produces the Green Mark, Absolwent, Zubrowka, Bols, Parliament, Zhuravli, Royal and Soplica brands, among others. CEDC currently exports its products to many markets around the world, including the United States, England, France and Japan.
CEDC also is a leading importer of alcoholic beverages in Poland, Russia 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 Liqueur, Remy Martin Cognac, Sutter Home wines, Grant's Whisky, Jagermeister, E&J Gallo, Jim Beam Bourbon, Sierra Tequila, Teacher's Whisky, Campari, Cinzano, and Old Smuggler. CEDC is also a leading importer of premium spirits and wines in Russia with such brands as 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 expectations of increased consumer demand for our products. 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 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 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, 2010, 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.
Contact:
In the U.S.:
Jim Archbold
Investor Relations Officer
Central European Distribution Corporation
856-273-6980
In Europe:
Anna Za?uska
Corporate PR Manager
Central European Distribution Corporation
48-22-456-6061
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED BALANCE SHEET
Amounts in columns expressed in thousands
(Except share information)
December December
31, 31,
2011 2010
---- ----
ASSETS
Current Assets
Cash and cash equivalents $94,410 $122,324
Accounts receivable, net of allowance for
doubtful accounts at December 31, 2011 of
$23,112 and at December 31, 2010 of
$20,357 466,317 478,379
Inventories 116,897 93,678
Prepaid expenses 16,982 10,092
Other current assets 20,007 25,110
Deferred income taxes 8,455 80,956
Debt issuance costs 2,962 2,739
----- -----
Total Current Assets 726,030 813,278
Intangible assets 463,848 627,342
Goodwill 666,653 1,450,273
Property, plant and equipment, net 179,478 192,863
Deferred income taxes, net 22,295 44,028
Equity method investment in affiliates 0 243,128
Debt issuance costs 13,550 16,656
Non-current assets held for sale 675 8,614
--- -----
Total Non-Current Assets 1,346,499 2,582,904
--------- ---------
Total Assets $2,072,529 $3,396,182
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $144,801 $114,958
Bank loans and overdraft facilities 85,762 45,359
Income taxes payable 8,766 5,102
Taxes other than income taxes 188,307 182,232
Other accrued liabilities 44,501 55,070
Current portions of obligations under
capital leases 1,109 758
Deferred consideration 0 5,000
--- -----
Total Current Liabilities 473,246 408,479
Long-term obligations under capital leases 532 1,175
Long-term obligations under Convertible
Senior Notes 304,645 299,122
Long-term obligations under Senior Secured
Notes 932,764 951,636
Long-term accruals 2,027 2,572
Deferred income taxes 92,945 168,527
Commitments and contingencies (Note 17)
Total Long-Term Liabilities 1,332,913 1,423,032
Stockholders' Equity
Common Stock ($0.01 par value, 120,000,000
shares authorized, 72,740,302 and
70,752,670 shares issued and outstanding
at December 31, 2011 and December 31,
2010, respectively) 727 708
Preferred Stock ($0.01 par value, 1,000,000
shares authorized, none issued and
outstanding) 0 0
Additional paid-in-capital 1,369,471 1,343,639
(Accumulated deficit) / Retained earnings (1,131,566) 160,250
Accumulated other comprehensive income 27,888 60,224
Less Treasury Stock at cost (246,037 shares
at December 31, 2011 and December 31,
2010, respectively) (150) (150)
---- ----
Total Stockholders' Equity 266,370 1,564,671
------- ---------
Total Liabilities and Stockholders' Equity $2,072,529 $3,396,182
========== ==========
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
Amounts in columns expressed in thousands
(Except per share information)
Year ended December 31,
2011 2010 2009
---- ---- ----
Sales $1,782,602 $1,573,702 $1,532,352
Excise taxes (905,015) (862,165) (842,938)
Net sales 877,587 711,537 689,414
Cost of goods sold 538,218 383,671 340,482
------- ------- -------
Gross profit 339,369 327,866 348,932
======= ======= =======
Selling, general and
administrative expenses 270,731 219,609 192,763
Consideration true-up 0 0 15,000
Gain on remeasurement of
previously held equity
interests (7,898) 0 (63,605)
Impairment charge 1,057,819 131,849 20,309
--------- ------- ------
Operating income / (loss) (981,283) (23,592) 184,465
======== ======= =======
Non operating income / (expense), net
Interest income /(expense),
net (111,649) (104,866) (73,468)
Other financial income /
(expense), net (139,952) 6,773 25,193
Amortization of deferred
charges 0 0 (38,501)
Other non operating income /
(expense), net (17,913) (13,572) (934)
------- ------- ----
Income /(loss) before taxes
and equity in net income from
unconsolidated investments (1,250,797) (135,257) 96,755
========== ======== ======
Income tax benefit / (expense) (32,205) 28,114 (18,495)
Equity in net income /
(losses) of affiliates (8,814) 14,254 (5,583)
------ ------ ------
Income /(loss) from
continuing operations (1,291,816) (92,889) 72,677
========== ======= ======
Discontinued operations
Income /(loss) from
operations 0 (11,815) 9,410
Income tax benefit /(expense) 0 37 (1,050)
--- --- ------
Income /(loss) on
discontinued operations 0 (11,778) 8,360
--- ------- -----
Net income / (loss) (1,291,816) (104,667) 81,037
========== ======== ======
Less: Net income attributable
to noncontrolling interests
in subsidiaries 0 0 2,708
--- --- -----
Net income /(loss)
attributable to CEDC (1,291,816) (104,667) 78,329
========== ======== ======
Income /(loss) from
continuing operations per
share of common stock, ($17.90) ($1.32) $1.35
basic
Income /(loss) from
discontinued operations per
share of common stock, $0.00 ($0.17) $0.16
basic
Net income /(loss) from
operations per share of
common stock, basic ($17.90) ($1.49) $1.51
Income /(loss) from
continuing operations per
share of common stock, ($17.90) ($1.32) $1.35
diluted
Income /(loss) from
discontinued operations per
share of common stock,
diluted $0.00 ($0.17) $0.15
Net income /(loss) from
operations per share of
common stock, diluted ($17.90) ($1.49) $1.50
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
Amounts in columns expressed in thousands
Year ended December 31,
2011 2010 2009
---- ---- ----
Cash flows from operating activities of
continuing operations
Net income / (loss) ($1,291,816) ($104,667) $81,037
Adjustments to reconcile net income /
(loss) to net cash provided by operating
activities:
Net loss from discontinued operations 0 11,778 (8,360)
Depreciation and amortization 19,718 16,947 11,274
Deferred income taxes 35,533 (41,591) (34,941)
Unrealized foreign exchange (gains) /
losses 139,728 (2,911) (38,760)
Cost of debt extinguishment 0 14,114 0
Stock options fair value expense 2,605 3,206 3,782
Dividends received 0 10,859 10,868
Hedge fair value revaluation 0 0 9,160
Equity (income)/loss in affiliates 8,814 (14,254) 5,583
Gain on fair value remeasurement of
previously held equity interest (7,898) 0 (32,727)
Impairment charge 1,057,819 131,849 20,309
Amortization of deferred charges 0 0 38,501
Impairments related to assets held for
sale 7,355 0 0
Other non cash items 4,074 21,970 (1,175)
Changes in operating assets and
liabilities:
Accounts receivable 60,604 (19,812) (21,433)
Inventories (2,857) (5,828) 35,590
Prepayments and other current assets (115) 518 27,906
Trade accounts payable (6,773) 5,243 (92,552)
Other accrued liabilities and payables
(including taxes) 2,968 (56,807) 75,690
----- ------- ------
Net cash provided by operating activities
from continuing operations 29,759 (29,386) 89,752
Cash flows from investing activities of
continuing operations
Purchase of fixed assets (15,075) (6,194) (16,080)
Proceeds from the disposal of fixed
assets 511 0 3,874
Purchase of intangibles (licenses) (693) 0 0
Changes in restricted cash 0 481,419 (481,419)
Purchase of trademarks (17,473) (6,000) 0
Disposal of subsidiaries 0 124,160 0
Acquisitions of subsidiaries, net of cash
acquired (24,124) (135,964) (573,504)
------- -------- --------
Net cash provided by /(used in)
investing activities from continuing
operations (56,854) 457,421 (1,067,129)
Cash flows from financing activities of
continuing operations
Borrowings on bank loans and overdraft
facility 57,512 63,853 5,810
Payment of bank loans, overdraft facility
and other borrowings (47,417) (174,251) (112,084)
Payment of long-term borrowings 0 (19,098) (265,517)
Net borrowings of Senior Secured notes 0 67,561 929,569
Payment of Senior Secured Notes 0 (367,954) 0
Repayment of obligation to former
shareholders 0 0 (28,814)
Hedge closure 0 0 (14,417)
Decrease in short term capital leases
payable (76) 0 (535)
Increase in short term capital leases
payable 0 976 0
Issuance of shares in public placement 0 0 490,974
Transactions with equity holders 0 7,500 (7,876)
Options exercised 72 3,550 854
--- ----- ---
Net cash provided by /(used in)
financing activities from continuing
operations 10,091 (417,863) 997,964
------ -------- -------
Cash flows from discontinued operations
Net cash used in operating activities of
discontinued operations 0 2,806 19,527
Net cash provided by investing activities
of discontinued operations 0 (330) (2,596)
Net cash provided by financing activities
of discontinued operations 0 100 (11,656)
--- --- -------
Net cash used in discontinued operations 0 2,576 5,275
Adjustment to reconcile the change in
cash balances of discontinued operations 0 (2,576) (5,275)
Currency effect on brought forward cash
balances (10,910) (14,287) 21,213
Net increase / (decrease) in cash (27,914) (4,115) 41,800
Cash and cash equivalents at beginning of
period 122,324 126,439 84,639
------- ------- ------
Cash and cash equivalents at end of
period $94,410 $122,324 $126,439
======= ======== ========
Supplemental Schedule of Non-cash
Investing Activities
Common stock issued in connection with
investment in subsidiaries $23,174 $41,344 $81,197
======= ======= =======
Supplemental disclosures of cash flow
information
Interest paid $103,836 $111,535 $68,865
Income tax paid $5,139 $29,544 $16,270
====== ======= =======
CENTRAL EUROPEAN DISTRIBUTION CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES
Amounts in columns expressed in thousands
(Except per share information)
GAAP A B C D E Comparable
Change in
bad debt
Q4-11 FX APB 14 policy Restructuring / FV Adj Q4-11
Re-
licensing
----- --- ------ ---------- Costs ------ -----
----------
Sales $554,870 $0 $0 $0 $0 $0 $554,870
Excise taxes (274,801) 0 0 0 0 0 (274,801)
Net sales 280,069 0 0 0 0 0 280,069
Cost of goods sold 178,387 0 0 0 0 0 178,387
Gross profit 101,682 0 0 0 0 0 101,682
======= === === === === === =======
36.31% 36.31%
Operating expenses 80,679 0 0 (4,890) (13,378) 0 62,411
Impairment charge 383,304 0 0 0 (383,304) 0
Operating income / (loss) (362,301) 0 0 4,890 13,378 383,304 39,271
======== === === ===== ====== ======= ======
-129.36% 14.02%
Non operating income /
(expense), net
Interest income /(expense),
net (27,403) 0 1,052 0 0 0 (26,351)
Other financial income /
(expense), net (18,937) 18,937 0 0 0 0 0
Other non operating income /
(expense), net (2,643) 0 0 0 0 0 (2,643)
Income /(loss) before taxes
and equity in net income from
unconsolidated investments (411,284) 18,937 1,052 4,890 13,378 383,304 10,277
======== ====== ===== ===== ====== ======= ======
Income tax benefit / (expense) (44,817) 0 0 0 0 42,556 (2,261)
Equity in net income /(losses)
of affiliates 0 0 0 0 0 0 0
--- --- --- --- --- --- ---
Net income /(loss) ($456,101) $18,937 $1,052 $4,890 $13,378 $425,860 $8,016
========= ======= ====== ====== ======= ======== ======
Net income /(loss) from
continuing operations per
share of common stock, basic ($6.29) $0.11
------ -----
Net income /(loss) from
continuing operations per
share of common stock, diluted ($6.29) $0.11
------ -----
[A] - Represents the impact of the foreign currency revaluation
related to our USD and EUR liabilities as a majority of these have
been lent down to entities that have the Polish Zloty or Russian
Ruble as their functional currency.
[B] - In May 2008, the FASB issued FSP APB 14-1 ("ASC 470-20"),
which impacts the accounting treatment for convertible debt
instruments that allow for either mandatory or optional cash
settlements. ASC 470-20 will impact the accounting associated with
our $310.0 million senior convertible notes. This ASC 470-20
requires us to recognize additional non-cash interest expense on a
retrospective basis, based on the market rate for similar debt
instruments without the conversion feature. Furthermore, it requires
recognizing interest expense in prior periods pursuant to the
retrospective accounting treatment. ASC 470-20 has become effective
beginning in our first quarter of 2009 and is required to be applied
retrospectively to all presented periods, as applicable.
[C] - During the 4th quarter of 2011 the Company changed the
methodology for calculation bad debt provision across the Group to a
more conservative approach. This expense represents the impact of the
change in accounting policy.
[D] - Includes elimination costs associated with the re-licensing in
Russia, cost of restructuring and other miscellaneous one off
charges.
[E] - Net impact of impairment charge for goodwill and brands as well
as tax true up of NOL provision in income taxes and provision for
uncertain tax positions.
GAAP A B C D E Comparable
Change in
bad debt Restructuring Other
Full Year FX APB 14 policy Costs Adjustments Full Year
2011 --- ------ --------- ------------- ----------- 2011
---- ----
Sales $1,782,602 $0 $0 $0 $0 $0 $1,782,602
Excise taxes (905,015) 0 0 0 0 0 (905,015)
Net Sales 877,587 0 0 0 0 0 877,587
Cost of goods sold 538,218 0 0 0 (446) 0 537,772
Gross profit 339,369 0 0 0 446 0 339,815
======= === === === === === =======
38.67% 38.72%
Operating expenses 270,731 0 0 (4,890) (21,196) (5,804) 238,841
Gain on remeasurement of
previously held equity
interests (7,898) 0 0 0 0 7,898 0
Impairment charge 1,057,819 0 0 0 0 (1,057,819) 0
Operating income /
(loss) (981,283) 0 0 4,890 21,641 1,055,725 100,973
======== === === ===== ====== ========= =======
-111.82% 11.51%
Non operating income /
(expense), net
Interest income /
(expense), net (111,649) 0 4,193 0 0 0 (107,456)
Other financial income /
(expense), net (139,952) 139,952 0 0 0 0 0
Other non operating
income (expense), net (17,913) 0 0 0 9,279 0 (8,634)
Income /(loss) before
taxes and equity in net
income from
unconsolidated
investments (1,250,797) 139,952 4,193 4,890 30,920 1,055,725 (15,117)
========== ======= ===== ===== ====== ========= =======
Income tax benefit /
(expense) (32,205) 0 0 0 0 35,531 3,326
Equity in net income /
(losses) of affiliates (8,814) 0 0 0 0 8,814 0
------ --- --- --- --- ----- ---
Net income /(loss) ($1,291,816) $139,952 $4,193 $4,890 $30,920 $1,100,070 ($11,791)
=========== ======== ====== ====== ======= ========== ========
Net loss from continuing
operations per share of
common stock, basic ($17.90) ($0.16)
------- ------
Net loss from continuing
operations per share of
common stock, diluted ($17.90) ($0.16)
------- ------
[A] - Represents the impact of the foreign currency revaluation
related to our USD and EUR liabilities as a majority of these have
been lent down to entities that have the Polish Zloty or Russian
Ruble as their functional currency.
[B] - In May 2008, the FASB issued FSP APB 14-1 ("ASC 470-20"),
which impacts the accounting treatment for convertible debt
instruments that allow for either mandatory or optional cash
settlements. ASC 470-20 will impact the accounting associated with
our $310.0 million senior convertible notes. This ASC 470-20
requires us to recognize additional non-cash interest expense on a
retrospective basis, based on the market rate for similar debt
instruments without the conversion feature. Furthermore, it requires
recognizing interest expense in prior periods pursuant to the
retrospective accounting treatment. ASC 470-20 has become effective
beginning in our first quarter of 2009 and is required to be applied
retrospectively to all presented periods, as applicable.
[C] - During the 4th quarter of 2011 the Company changed the
methodology for calculation bad debt provision across the Group to a
more conservative approach. This expense represents the impact of the
change in accounting policy.
[D] - Includes elimination costs associated with the re-licensing in
Russia, cost of restructuring and other miscellaneous one off
charges.
[E] - Net impact of impairment charge for goodwill and brands as well
as tax true up of NOL provision in income taxes and provision for
uncertain tax positions.
GAAP A B C D E Comparable
Change in
bad debt Restructuring Other
Q4-10 FX APB 14 policy Costs Adjustments Q4-10
----- --- ------ --------- ------------- ----------- -----
Sales $515,442 $0 $0 $0 $0 $0 $515,442
Excise taxes (287,068) 0 0 0 0 0 (287,068)
Net sales 228,374 0 0 0 0 0 228,374
Cost of goods sold 140,430 0 0 0 0 0 140,430
Gross profit 87,944 0 0 0 0 0 87,944
====== === === === === === ======
38.51% 38.51%
Operating expenses 75,240 0 0 (7,111) (4,260) 0 63,869
Impairment charge 131,849 (131,849) 0
------- -------- ---
Operating income (119,145) 0 0 7,111 4,260 131,849 24,075
======== === === ===== ===== ======= ======
-52.17% 10.54%
Non operating income /
(expense), net
Interest income /
(expense), net (27,018) 0 1,041 0 0 0 (25,977)
Other financial income /
(expense), net 1,786 (1,786) 0 0 0 0 0
Other non operating
income /(expense), net (1,306) 0 0 0 0 2,000 694
Income /(loss) before
taxes and equity in net
income from
unconsolidated
investments (145,684) (1,786) 1,041 7,111 4,260 133,849 (1,209)
======== ====== ===== ===== ===== ======= ======
Income tax benefit /
(expense) 30,389 352 (364) (1,351) (820) (26,750) 1,456
Equity in net income /
(losses) of affiliates 12,091 (1,140) 0 0 985 0 11,936
------ ------ --- --- --- --- ------
Net income /(loss) ($103,204) ($2,574) $677 $5,760 $4,425 $107,099 $12,183
========= ======= ==== ====== ====== ======== =======
Net income from
continuing operations
per share of common
stock, basic ($1.47) $0.17
------ -----
Net income from
continuing operations
per share of common
stock, diluted ($1.47) $0.17
------ -----
[A] - Represents the impact of the foreign currency revaluation
related to our USD and EUR liabilities as a majority of these have
been lent down to entities that have the Polish Zloty or Russian
Ruble as their functional currency.
[B] - In May 2008, the FASB issued FSP APB 14-1 ("ASC 470-20"),
which impacts the accounting treatment for convertible debt
instruments that allow for either mandatory or optional cash
settlements. ASC 470-20 will impact the accounting associated with
our $310.0 million senior convertible notes. This ASC 470-20
requires us to recognize additional non-cash interest expense on a
retrospective basis, based on the market rate for similar debt
instruments without the conversion feature. Furthermore, it requires
recognizing interest expense in prior periods pursuant to the
retrospective accounting treatment. ASC 470-20 has become effective
beginning in our first quarter of 2009 and is required to be applied
retrospectively to all presented periods, as applicable.
[C] - During the fourth quarter of 2010, the Company elected to modify
its existing bad debt provisioning policy, primarily in Russia, to
take a more conservative view of certain receivables and as such took
a non-cash charge of $7.1 million to reflect the changes.
[D] - Represents restructuring costs associated with the integration
of Parliament and the Russian Alcohol Group as well as legal costs
associated with the negotiations of the buyout and of the remaining
stake in the Whitehall Group and associated change in control, which
was completed in February 2011 as well as certain cost of prior
Whitehall Group management that will be eliminated upon the change of
control.
[E] - Represents the non-cash impairment charge taken on certain
trademarks in Poland, primarily Absolwent and Bols of $131.8 million.
The column also includes $500,000 of legal and professional service
costs related to the potential acquisition of Nemiroff, which was
ultimately not pursued by the Company.
GAAP A B C D Comparable
E
Change in
Full Bad Debt Restructuring Other
Year FX APB 14 Policy Costs Adjustments Full Year
2010 --- ------ ---------- -------------- ------------ 2010
---- ----
Sales $1,573,702 $0 $0 $0 $0 $0 $1,573,702
Excise taxes ($862,165) 0 0 0 0 0 (862,165)
Net Sales $711,537 0 0 0 0 0 711,537
Cost of goods sold $383,671 0 0 0 0 0 383,671
Gross profit 327,866 0 0 0 0 0 327,866
======= === === === === === =======
46.08% 46.08%
Operating expenses 219,609 0 0 (7,111) (12,019) (500) 199,979
Impairment charge 131,849 0 0 0 0 (131,849) 0
Operating income (23,592) 0 0 7,111 12,019 132,349 127,887
======= === === ===== ====== ======= =======
-3.32% 17.97%
Non operating income /
(expense), net
Interest income /
(expense), net (104,866) 0 4,097 0 0 0 (100,769)
Other financial income /
(expense), net 6,773 (5,871) 0 0 0 0 902
Other non operating
income /(expense), net (13,572) 0 0 0 825 12,348 (399)
Income /(loss) before
taxes and equity in net
income from
unconsolidated
investments (135,257) (5,871) 4,097 7,111 12,844 144,697 27,621
======== ====== ===== ===== ====== ======= ======
Income tax benefit /
(expense) 28,114 1,122 (1,434) (1,351) (2,464) (28,816) (4,829)
Equity in net income /
(losses) of affiliates 14,254 692 0 0 985 0 15,931
------ --- --- --- --- --- ------
Net income /(loss) from
continuing operations ($92,889) ($4,057) $2,663 $5,760 $11,365 $115,881 $38,723
======== ======= ====== ====== ======= ======== =======
Discontinued operations
Loss from operations (11,815) 0 0 0 0 0 (11,815)
Income tax benefit 37 0 0 0 0 0 37
---
Loss on discontinued
operations ($11,778) 0 0 0 0 0 ($11,778)
Net income /(loss) ($104,667) ($4,057) $2,663 $5,760 $11,365 $115,881 $26,945
========= ======= ====== ====== ======= ======== =======
Net income from
continuing operations
per share of common
stock, basic ($1.32) $0.55
------ -----
Net loss from
discontinued operations
per share of common
stock, basic ($0.17) ($0.17)
------ ------
Net income from
continuing operations
per share of common
stock, diluted ($1.32) $0.55
------ -----
Net loss from
discontinued operations
per share of common
stock, diluted ($0.17) ($0.17)
------ ------
[A] - Represents the impact of the foreign currency revaluation
related to our USD and EUR liabilities as a majority of these have
been lent down to entities that have the Polish Zloty or Russian
Ruble as their functional currency.
[B] - In May 2008, the FASB issued FSP APB 14-1 ("ASC 470-20"),
which impacts the accounting treatment for convertible debt
instruments that allow for either mandatory or optional cash
settlements. ASC 470-20 will impact the accounting associated with
our $310.0 million senior convertible notes. This ASC 470-20
requires us to recognize additional non-cash interest expense on a
retrospective basis, based on the market rate for similar debt
instruments without the conversion feature. Furthermore, it requires
recognizing interest expense in prior periods pursuant to the
retrospective accounting treatment. ASC 470-20 has become effective
beginning in our first quarter of 2009 and is required to be applied
retrospectively to all presented periods, as applicable.
[C] - During the fourth quarter of 2010, the Company elected to modify
its existing bad debt provisioning policy, primarily in Russia, to
take a more conservative view of certain receivables and as such took
a non-cash charge of $7.1 million to reflect the changes.
[D] - Represents restructuring costs associated with the integration
of Parliament and the Russian Alcohol Group as well as legal costs
associated with the negotiations of the buyout and of the remaining
stake in the Whitehall Group and associated change in control, which
was completed in February 2011 as well as certain cost of prior
Whitehall Group management that will be eliminated upon the change of
control.
[E] - Represents the non-cash impairment charge taken on certain
trademarks in Poland, primarily Absolwent and Bols of $131.8 million.
The column also includes $500,000 of legal and professional service
costs related to the potential acquisition of Nemiroff, which was
ultimately not pursued by the Company. Moreover it represents the net
after tax impact associated with the early retirement of CEDC's
outstanding Senior Secured Notes due 2012, including a 4% one-time
redemption premium payment to the Noteholders and write-off of
prepaid financing costs net off elimination of dividend income
receive from its Polish Wholesale business which is accounted for as
a discontinued operation and was fully disposed of on August 2, 2010.
SOURCE Central European Distribution Corporation
