Central European Distribution Corporation Announces Full Year and Fourth Quarter...

Central European Distribution Corporation Announces Full Year and Fourth
Quarter 2007 Results; Operating Income Increases 47% over Fourth Quarter 2006

BALA CYNWYD, Pa., Feb. 27 /PRNewswire-FirstCall/ -- Central European
Distribution Corporation (Nasdaq: CEDC) today announced its results for fiscal
year 2007. Net sales for the full year ended December 31, 2007 increased by
26% to $1,189.8 million from the $944.1 million reported for the same period
in 2006 and net sales for the fourth quarter increased by 32% to $393.4
million from the $298.1 million reported for the same quarter in 2006.
Operating income for the full year ended December 31, 2007 increased by 29% to
$118.1 million from $91.6 million for the same period in 2006 and operating
income for the fourth quarter increased by 47% to $45.6 million from the $30.9
million reported for the same quarter in 2006.
On a comparable basis, CEDC announced net income of $69.8 million, or
$1.73 per fully diluted share for the full year 2007, as compared to $46.1
million, or $1.28 per fully diluted share for the same period in 2006. Net
Income, on a U.S. GAAP basis (as hereinafter defined) for the full year was
$77.1 million or $1.91 per fully diluted share in 2007 as compared to $55.5
million or $1.53 per fully diluted share in 2006. 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 Secured Notes,
partially offset by among other items costs associated with early retirement
of debt. 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
2007 was 40.4 million compared to 36.1 million for 2006.
Some of the Company's key financial highlights for full Year 2007 compared
to full Year 2006 include the following:
-- Sales up 26%
-- Gross profit up 25%
-- Operating income up 29%
-- Operating margins up from 9.7% to 9.9%
-- Exclusive import portfolio sales growth of 46%
-- Comparable net income up 52%

Some of the Company's key financial highlights for the 4th quarter 2007
compared to 4th quarter 2006 include the following:
-- Sales up 32%
-- Gross profit up 32%
-- Operating income up 47%
-- Operating margins up from 10.4% to 11.6%
-- Exclusive import portfolio sales growth of 46%
-- Comparable net income up 52%

Mr. William Carey, CEO and President, said, "The substantial amount of
integration work that we accomplished in 2006 has positioned our company to
take full advantage of the growing opportunities in the market place. The
execution in 2007 of our overall business model, including accelerating growth
of our core brands, gaining profitable distribution market share and reducing
key overheads is clearly visible in the numbers described above. We continue
to see strong growth in the underlying economy which is propelling growth of
premium brands, both domestic and imported as evidenced in the 46% growth of
our exclusive import portfolio sales, 19% growth of sales of our premium
vodka, Bols Vodka, and strong organic growth (excluding the impact of foreign
exchange) of approximately 8% for the fourth quarter. Investment in our
rectification facilities were completed in the fourth quarter of 2007,
providing us with a lower cost base of spirit going into 2008, which we expect
be accretive to our overall gross margins. We believe we are well positioned
to take advantage of the continued strong economic trends in Poland with our
premium portfolio."
Mr. Carey continued, "In addition to the strong growth in Poland, we are
laying the foundation for further growth in the region with the recent
announcement of our strategic investment in the Whitehall Group. We are
continuing to move forward with preparations for closing our Parliament
acquisition, as all regulatory approvals have been received, and are targeting
March for closing. We strongly believe in the consumer premiumization that is
taking place in Russia and the portfolios of Whitehall and Parliament that are
not only very complimentary, but are also strategically placed in the fastest
growing segments of the wine and spirit market. We believe the Russian spirit
market is going through a rapid consolidation and our aim is to be at the
forefront of this market evolution. "
Mr. Carey added, "We confirm our previously announced full year 2008 net
sales guidance of $1.30-$1.40 billion and full year 2008 comparable fully
diluted earnings per share guidance of $2.08-$2.18, which does not include the
impact of any future acquisitions including Parliament and Whitehall."
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 on a comparable basis in order to give
investors better insight into underlying business trends from continuing
operations. CEDC's calculation of this measure may not be the same as
similarly named measures presented by other companies. This measure is 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 this
measure. 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 by value and produces the
Absolwent, Zubrowka, Bols and Soplica brands, among others. CEDC currently
exports Zubrowka to European and Asian markets.
CEDC also is the leading distributor by volume and a leading importer by
value of alcoholic beverages in Poland. CEDC operates 17 distribution centers
and 87 satellite branches throughout Poland. CEDC imports many of the world's
leading brands to Poland, including brands such as Remy Martin, Metaxa, Jim
Beam, Sauza Tequila, Grant's, E&J Gallo, Sutter Home, Torres, Penfolds and
Concha y Toro wines, Corona, Foster's, and Guinness Stout beers and Evian.
This press release contains forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 including, without
limitation, statements relating to our proposed Parliament acquisition and our
proposed strategic investment in the Whitehall Group. 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, 2006, 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
(Amount in columns expressed in thousands)

December 31, December 31,
2007 2006
ASSETS
Current Assets
Cash and cash equivalents $87,867 $159,362
Accounts receivable, net of allowance
for doubtful accounts of $29,277 and
$24,354 respectively 316,277 224,575
Inventories 141,272 89,522
Prepaid expenses and other current assets 16,536 24,299
Deferred income taxes 5,141 5,336
Total Current Assets 567,093 503,094

Intangible assets, net 545,697 371,624
Goodwill, net 577,282 398,005
Property, plant and equipment, net 79,979 49,801
Deferred income taxes 11,407 3,305
Other assets 710 204
Total Assets $1,782,168 $1,326,033

LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities
Trade accounts payable $172,340 $138,585
Bank loans and overdraft facilities 42,785 24,656
Income taxes payable 5,408 2,975
Taxes other than income taxes 101,929 94,985
Other accrued liabilities 71,959 57,620
Current portions of obligations under
capital leases 1,759 2,005
Total Current Liabilities 396,180 320,826

Long-term debt, less current maturities 122,952 8
Long-term obligations under capital leases 2,708 1,122
Long-term obligations under Senior Secured Notes 344,298 393,434
Deferred income taxes 100,113 68,275
Total Long Term Liabilities 570,071 462,839

Minority interests 481 21,395

Stockholders' Equity
Common Stock ($0.01 par value, 80,000,000 shares
authorized, 40,566,096 and 38,691,635 shares issued
at December 31, 2007 and 2006, respectively) 406 387
Additional paid-in-capital 429,554 374,985
Retained earnings 205,186 128,084
Accumulated other comprehensive income 180,440 17,667
Less Treasury Stock at cost (246,037 shares at
December 31, 2007 and 2006, respectively) (150) (150)
Total Stockholders' Equity 815,436 520,973

Total Liabilities and Stockholders' Equity $1,782,168 $1,326,033

CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Amount in columns expressed in thousands, except share and per share
information)

Year ended December 31,
2007 2006 2005

Sales $1,483,344 $1,193,248 $828,918
Excise taxes (293,522) (249,140) (79,503)
Net Sales 1,189,822 944,108 749,415
Cost of goods sold 941,060 745,721 627,368

Gross Profit 248,762 198,387 122,047

Operating expenses 130,677 106,805 70,404

Operating Income 118,085 91,582 51,643

Non operating income / (expense),
net
Interest (expense), net (35,829) (31,750) (15,828)
Other financial (expense), net 13,594 17,212 (7,678)
Other non operating income /
(expense), net (1,770) 1,119 (262)

Income before taxes 94,080 78,163 27,875
Income tax expense 15,910 13,986 5,346

Minority interests 1,068 8,727 2,261

Net income $77,102 $55,450 $20,268

Net income per share of common
stock, basic $1.93 $1.55 $0.72

Net income per share of common
stock, diluted $1.91 $1.53 $0.70

CENTRAL EUROPEAN DISTRIBUTION CORPORATION
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW
(Amount in columns expressed in thousands)

Year ended December 31,
2007 2006 2005
Operating Activities
Net income $77,102 $55,450 $20,268
Adjustments to reconcile net income to
net cash provided by / (used in)
operating activities:
Depreciation and amortization 9,968 8,739 4,529
Deferred income taxes 9,957 2,205 (317)
Bad debt provision 249 999 984
Minority interests 1,044 8,727 2,261
Hedge valuation - (13,118) 16,957
Unrealized foreign exchange (gains)
/ losses (23,940) (3,274) (14,351)
Cost of debt extinguishment 11,864 - -
Stock options expense 1,866 1,908 -
Other non cash items 7,059 80 -
Changes in operating assets and
liabilities:
Accounts receivable (38,812) (7,554) (23,730)
Inventories (21,986) (3,165) (238)
Prepayments and other current assets 5,865 (2,026) (6,575)
Trade accounts payable (880) 8,123 (7,149)
Other accrued liabilities and payables (16,272) 14,597 41,442
Net Cash provided by Operating Activities 23,084 71,691 34,081

Investing Activities
Investment in fixed assets (25,787) (11,713) (8,091)
Proceeds from the disposal of fixed assets 2,670 2,045 2,454
Investment in trademarks - (1,210) -
Purchase of financial assets - - (79,412)
Proceeds from the disposal of financial
assets - 4,784 115,028
Refundable purchase price related to
Botapol acquisition 5,000 - -
Acquisitions of subsidiaries, net of
cash acquired (141,005) (35,828) (490,092)
Net Cash used in Investing Activities (159,122) (41,922) (460,113)

Financing Activities
Borrowings on bank loans and overdraft
facility 13,225 15,379 4,804
Borrowings on long-term bank loans 122,508 - -
Payment of bank loans and overdraft
facility (30,153) (21,526) (13,565)
Payment of long-term borrowings 8 (3) (6,438)
Net Borrowings of Senior Secured Notes - - 378,447
Payment of Senior Secured Notes (95,440) - -
Hedge closure - (7,323) -
Movements in capital leases payable 445 (2,232) (1,676)
Issuance of shares in public placement 42,354 71,719 -
Issuance of shares in private
placement - - 111,594
Options exercised 3,976 4,772 3,205
Net Cash provided by Financing
Activities 56,923 60,786 476,371
Currency effect on brought forward cash
balances 7,620 8,062 (86)
Net Increase / (Decrease) in Cash (71,495) 98,617 50,254
Cash and cash equivalents at beginning
of period 159,362 60,745 10,491
Cash and cash equivalents at end
of period $87,867 $159,362 $60,745

Supplemental Schedule of Non-cash
Investing Activities
Common stock issued in connection with
investment in subsidiaries $1,693 $161 $126,156

Supplemental disclosures of cash flow
information
Interest paid $40,136 $37,256 $2,669
Income tax paid $21,362 $11,980 $4,580

CENTRAL EUROPEAN DISTRIBUTION CORPORATION
UNAUDITED RECONCILIATION OF NON-GAAP MEASURES
(in thousands, except share and per share information)

Three Months Twelve Months
Ended Ended
Dec 31, Dec 31,
2007 2006 2007 2006

GAAP net income/(loss) $45,287 $32,088 $77,102 $55,450

Foreign exchange impact
and hedge revaluation (15,933) (13,590) (A) (20,084) (11,810) (A)
Other acquisition related
costs 369 - (B) 1,414 - (B)
Cost associated with early
retirement of debt - 423 (C) 9,609 423 (C)
Impact of expensing stock
options 358 770 (D) 1,498 1,548 (D)
Other non recurring costs - 95 (E) 307 469 (E)

Comparable non-GAAP net
income $30,081 $19,786 $69,846 $46,080

Comparable net income per
share of common stock,
basic $0.75 $0.54 $1.75 $1.29
Comparable net income per
share of common stock,
diluted $0.74 $0.54 $1.73 $1.28

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 mark to market revaluation of
financing related hedges as of December 31, 2007. The impact of
foreign exchange revaluation will change, which may have a material
effect on our financial results.
B. Represents other miscellaneous costs incurred in 2007, directly related
to the tender for additional shares of Polmos Bialystok and other
acquisitions.
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.
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. Represents one time charge for early retirement incentive program in
2007 and cost incurred with the potential acquisition of Polmos Lublin
which was not completed in 2006

SOURCE Central European Distribution Corporation

Jim Archbold, Investor Relations Officer of Central European Distribution
Corporation, +1-610-660-7817