Central European Distribution Corporation Announces Second Quarter 2010 Results
BALA CYNWYD, Pa., Aug. 5 /PRNewswire-FirstCall/ -- Central European Distribution Corporation (Nasdaq: CEDC) today announced its results for the second quarter of 2010. Net sales for the three months ended June 30, 2010 were $175.6 million as compared to $175.9 million reported for the same period in 2009. Operating profit on a comparable basis for the second quarter 2010 was $44.7 million as compared to $36.3 million for 2009. On a comparable basis, CEDC announced net income, excluding discontinued operations of $17.6 million, or $0.25 per fully diluted share, for the second quarter of 2010, as compared to $16.2 million, or $0.34 per fully diluted share, for the same period in 2009. CEDC also announced net loss on a U.S. GAAP basis (as hereinafter defined), excluding discontinued operations, for the quarter was $70.1 million or $1.00 per fully diluted share, as compared to net profit of $211.4 million or $4.28 per fully diluted share, for the same period in 2009. The net profit in 2009 included a one-time gain in the three month period ended June 30, 2009, amounting to $225.6 million in operating income based on the remeasurement of previously held equity interests in RAG to fair value, which was partially offset by an impairment charge of $20.3 million.
Operating profit on a U.S. GAAP basis for the second quarter 2010 was $41.2 million as compared to $242.6 million for 2009. This resulted primarily from the consolidation of the results of the Russian Alcohol Group, from which the Company recognized a one-time gain in the three month period ended June 30, 2009, amounting to $225.6 million in operating income based on the remeasurement of previously held equity interests in RAG to fair value, which was partially offset by an impairment charge of $20.3 million. The number of fully diluted shares used in computing the earnings per share was 70.4 million for 2010 and 49.4 million for 2009. For a complete reconciliation of comparable net income to net income reported under United States Generally Accepted Accounting Principles ("U.S. GAAP") and comparable operating profit to operating profit reported under U.S. GAAP, please see the section "Unaudited Reconciliation of Non-GAAP Measures".
William Carey, President and CEO commented, "We have started to see more robust demand from the consumer in our largest market, Russia (which represents approximately 75% of our net income), our volumes were up 7.5% from vodka and imports from the Whitehall Group were up 14% in volume terms during the second quarter of 2010. The bulk of the growth in demand for our vodka portfolio is still coming from a lower price point as compared to the second quarter 2009, but pricing seems to have stabilized and gross margins remain above 50% . We have also seen strong Parliament Vodka distribution gains, post integration, in the second quarter with Parliament vodka up 14% in volume. There has been continued strong interest from the vodka consumer in Russia for our new mainstream/economy brands that we launched last fall, and we are still realizing strong distribution gains for these brands over the last nine months. Our core economy brand, Yamskaya, is ranked as one of the fastest growing brands in Russia today and is expected to achieve over three million nine liter cases in 2010 (a 25% increase over 2009). Although the product mix has had a slight negative impact on our gross margin percentages this has been more than offset by a declining SG&A base resulting in our core operating profit as a percent of sales in Russia expanding by over 400 basis points over 2009 second quarter results."
William Carey, President and CEO continued, "In Russia the overall vodka market has been positively impacted by strong government controls that have been put in to reduce the grey market. The controls that are taking place affect the producers of raw spirit, vodka manufacturers, retailers and wholesalers. We are still estimating that from the shift from grey market to legal market that the overall legal vodka market will grow this year with overall consumption including the grey market down approximately one to three percent. Based upon Gosstat data, the legal vodka market is up one percent for the six months ending June 30, 2010. We expect that the growth of the legal vodka market to come primarily from the value sector where people are shifting from the grey market, but as real wage inflation continues its positive trends we expect mainstream/sub-premium sectors to benefit medium term."
William Carey, President and CEO continued, "The Polish consumer was hit with a number of external events that we believe had a significant impact on the Polish vodka market generally and our results. The quarter began with the tragic accident involving the death of the Polish President and other high ranking officials followed by a few weeks of mourning, massive flooding took place in the southern part of Poland and record high temperatures that began in June. Our vodka volumes for the quarter were down approximately 12% and were partially offset by increases in our import and export businesses. We were able to continue to reduce SG&A as a percent of sales on a comparable basis by over 100 basis points, translating into operating profit margins of over 50 basis points higher as compared to the prior year period. Management is extremely focused on improving the volume numbers in Poland and with a major launch of a new mainstream/subpremium vodka brand planned for the fourth quarter of this year and improved execution; we believe we are on track to deliver increased top line growth and a continued improvement in our operating profit margins."
William Carey, President and CEO continued, "Some other key highlights for the quarter are shown below:
- SG&A in Russia reduced by 20% as compared to 2009
- Exports for the Group are up 12% in volume terms
- Imports in Poland up 3% in volume terms
- Imports in Russia up 14% in volume terms
- Successfully completed disposal of our Polish wholesale business
- Started distribution to the US market for Zubrowka with Remy Cointreau"
Chris Biedermann, Vice-President and CFO, commented, "We have continued to move forward in our objective of de-levering our balance sheet with continued improvement of our net debt to EBITDA ratio. Going forward, we expect to be further de-levering with the proceeds from the sale of our Polish Wholesale business applied primarily to debt reduction. One of our key objectives is to de-lever our balance sheet to approximately 2.5 times and with continued strong cash flow generation and EBITDA growth, we expect to be in a position to deliver this objective by the first quarter of 2012."
Chris Biedermann, Vice-President and CFO, continued, "As announced earlier this week, we completed the final disposal of our Polish Wholesale business to Eurocash. As part of this sale process and the separation of this business we have completed our final split of the 2010 Poland sales forecast of clients that will be sold directly through CEDC or the disposed Polish wholesale business. The result of this final sales split provides for an increased shift of the wholesale revenue of approximately $136 million (grossing up excise for the wholesale business) and revised reduction of $711 million (previous $575 million) from our initial full year 2010 net sales guidance. The operating profit impact of this change will be less than $1 million annually. As a result of this change we are updating our full year net sales guidance from $900 - $1,050 million to $764 million to $914 million and keeping full year fully diluted earnings per share guidance unchanged at $2.10 -$2.20. We are also maintaining our full year guidance for operating profit excluding depreciation of $262 million."
CEDC has reported net income, fully diluted net income per share and operating profit in accordance with GAAP and on a non-GAAP basis, referred to in this release as comparable net income and comparable operating profit. 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 producer 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, 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, operating profit and earnings guidance, expected gross margins and operating margins, reduced leverage, expectations of increased consumer demand for our products, integration of our acquired companies, 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 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, 2009, 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 |
|
610-660-7817 |
|
In Europe: |
|
Anna Zaluska |
|
Corporate PR Manager |
|
Central European Distribution Corporation |
|
48-22-456-6000 |
|
CENTRAL EUROPEAN DISTRIBUTION CORPORATION CONSOLIDATED CONDENSED BALANCE SHEET Amounts in columns expressed in thousands (Except share information) |
|||
June 30, |
December 31, |
||
ASSETS |
|||
Current Assets |
|||
Cash and cash equivalents |
$ 125,560 |
$ 126,439 |
|
Restricted cash |
0 |
481,419 |
|
Accounts receivable, net of allowance for doubtful accounts of $38,283 and $37,630 respectively |
294,485 |
475,126 |
|
Inventories |
79,188 |
92,216 |
|
Prepaid expenses and other current assets |
26,808 |
33,302 |
|
Loans granted |
0 |
1,608 |
|
Loans granted to affiliates |
0 |
7,635 |
|
Deferred income taxes |
70,723 |
82,609 |
|
Current assets of discontinued operations |
156,381 |
267,561 |
|
Total Current Assets |
753,145 |
1,567,915 |
|
Intangible assets, net |
696,974 |
773,222 |
|
Goodwill, net |
1,376,968 |
1,484,072 |
|
Property, plant and equipment, net |
215,431 |
215,916 |
|
Deferred income taxes |
49,304 |
27,123 |
|
Equity method investment in affiliates |
230,067 |
244,504 |
|
Non-current assets of discontinued operations |
63,733 |
101,778 |
|
Total Non-Current Assets |
2,632,477 |
2,846,615 |
|
Total Assets |
$ 3,385,622 |
$ 4,414,530 |
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|||
Current Liabilities |
|||
Trade accounts payable |
$ 60,790 |
$ 113,006 |
|
Bank loans and overdraft facilities |
122,795 |
81,053 |
|
Income taxes payable |
3,027 |
3,827 |
|
Taxes other than income taxes |
88,730 |
208,784 |
|
Other accrued liabilities |
87,017 |
91,435 |
|
Short-term obligations under Senior Notes |
0 |
358,943 |
|
Current portions of obligations under capital leases |
374 |
481 |
|
Deferred consideration |
5,000 |
160,880 |
|
Current liabilities of discontinued operations |
119,176 |
194,761 |
|
Total Current Liabilities |
486,909 |
1,213,170 |
|
Long-term debt, less current maturities |
29,969 |
106,043 |
|
Long-term obligations under capital leases |
676 |
480 |
|
Long-term obligations under Senior Notes |
1,118,711 |
1,205,467 |
|
Long-term accruals |
2,200 |
3,214 |
|
Deferred income taxes |
174,304 |
198,174 |
|
Non-current liabilities of discontinued operations |
696 |
2,820 |
|
Total Long Term Liabilities |
1,326,556 |
1,516,198 |
|
Stockholders' Equity |
|||
Common Stock ($0.01 par value, 120,000,000 shares authorized, 70,666,770 and 69,411,845 shares issued at June 30, 2010 and December 31, 2009, respectively) |
707 |
694 |
|
Additional paid-in-capital |
1,340,445 |
1,296,391 |
|
Retained earnings |
163,557 |
264,917 |
|
Accumulated other comprehensive income of continuing operations |
68,683 |
120,389 |
|
Accumulated other comprehensive income / (loss) of discontinued operations |
(1,085) |
2,921 |
|
Less Treasury Stock at cost (246,037 shares at June 30, 2010 and December 31, 2009, respectively) |
(150) |
(150) |
|
Total CEDC Stockholders' Equity |
1,572,157 |
1,685,162 |
|
Total Equity |
1,572,157 |
1,685,162 |
|
Total Liabilities and Stockholders' Equity |
$ 3,385,622 |
$ 4,414,530 |
|
CENTRAL EUROPEAN DISTRIBUTION CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF INCOME Amounts in columns expressed in thousands (Except per share information) |
|||||||
Three months ended |
Six months ended |
||||||
June 30, |
June 30, |
June 30, |
June 30, |
||||
Sales |
$ 379,874 |
$ 375,450 |
$ 710,768 |
$ 559,622 |
|||
Excise taxes |
(204,277) |
(199,559) |
(385,365) |
(312,959) |
|||
Net Sales |
175,597 |
175,891 |
325,403 |
246,663 |
|||
Cost of goods sold |
87,119 |
84,546 |
162,793 |
122,426 |
|||
Gross Profit |
88,478 |
91,345 |
162,610 |
124,237 |
|||
Operating expenses |
47,252 |
54,011 |
96,130 |
74,527 |
|||
Gain on remeasurement of previously held equity interests |
0 |
(225,605) |
0 |
(225,605) |
|||
Impairment charge |
0 |
20,309 |
0 |
20,309 |
|||
Operating Income |
41,226 |
242,630 |
66,480 |
255,006 |
|||
Non operating income / (expense), net |
|||||||
Interest (expense), net |
(26,423) |
(20,789) |
(52,099) |
(30,661) |
|||
Other financial income / (expense), net |
(111,698) |
61,532 |
(76,786) |
(28,810) |
|||
Amortization of deferred charges |
0 |
(11,231) |
0 |
(11,231) |
|||
Other non operating income / (expense), net |
6,638 |
(8,838) |
(11,352) |
(8,257) |
|||
Income / (loss) before taxes, equity in net income from unconsolidated investments and noncontrolling interests in subsidiaries |
(90,257 ) |
263,304 |
(73,757 ) |
176,047 |
|||
Income tax benefit / (expense) |
17,918 |
(51,663) |
14,748 |
(34,588) |
|||
Less: Net income attributable to noncontrolling interests in subsidiaries |
0 |
2,249 |
0 |
2,138 |
|||
Equity in net earnings / (losses) of affiliates |
2,265 |
2,013 |
444 |
(18,852) |
|||
Net income /(loss) from continuing operations attributable to CEDC |
($ 70,074 ) |
$ 211,405 |
($ 58,565 ) |
$ 120,469 |
|||
Discontinued operations |
|||||||
Income / (loss) from operations of distribution business (including impairment charge of $28.2 million in 6 months ended June 30, 2010) |
(7,963) |
2,664 |
(42,685) |
6,492 |
|||
Income tax (expense) / benefit |
41 |
(342) |
(110 ) |
(895) |
|||
Income / (loss) on discontinued operations |
(7,922) |
2,322 |
(42,795) |
5,597 |
|||
Net income / (loss) |
($ 77,996) |
$ 213,727 |
($ 101,360) |
$ 126,066 |
|||
Net income / (loss) from continuing operations per share of common stock, basic |
($ 1.00) |
$ 4.30 |
($ 0.84) |
$ 2.48 |
|||
Net income / (loss) from discontinued operations per share of common stock, basic |
($ 0.11) |
$ 0.05 |
($ 0.61) |
$ 0.12 |
|||
Net income / (loss) from operations per share of common stock, basic |
($ 1.11) |
$ 4.35 |
($ 1.45) |
$ 2.60 |
|||
Net income / (loss) from continuing operations per share of common stock, diluted |
($ 1.00) |
$ 4.28 |
($ 0.84) |
$ 2.47 |
|||
Net income / (loss) from discontinued operations per share of common stock, diluted |
($ 0.11) |
$ 0.05 |
($ 0.61) |
$ 0.11 |
|||
Net income / (loss) from operations per share of common stock, diluted |
($ 1.11) |
$ 4.33 |
($ 1.45) |
$ 2.58 |
|||
CENTRAL EUROPEAN DISTRIBUTION CORPORATION CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW Amounts in columns expressed in thousands |
|||
Six months ended June 30, |
|||
2010 |
2009 |
||
(as adjusted) |
|||
Cash flows from operating activities of continuing operations |
|||
Net income / (loss) |
($ 101,360) |
$ 126,066 |
|
Adjustments to reconcile net income / (loss) to net cash provided by operating activities: |
|||
Net income / (loss) from discontinued operations |
42,795 |
(5,597) |
|
Depreciation and amortization |
8,389 |
5,626 |
|
Deferred income taxes |
(20,305) |
(39,396) |
|
Unrealized foreign exchange / losses |
82,679 |
29,265 |
|
Cost of debt extinguishment |
14,114 |
0 |
|
Stock options expense |
1,672 |
1,924 |
|
Dividends received |
11,399 |
0 |
|
Hedge fair value revaluation |
0 |
4,259 |
|
Equity income in affiliates |
(444) |
18,852 |
|
Gain on fair value remeasurement of previously held equity interest, net of impairment |
0 |
(151,893) |
|
Other non cash items |
11,919 |
1,707 |
|
Changes in operating assets and liabilities: |
|||
Accounts receivable |
149,610 |
107,976 |
|
Inventories |
3,890 |
(6,666) |
|
Prepayments and other current assets |
(4,750) |
3,215 |
|
Trade accounts payable |
(42,918) |
(54,083) |
|
Other accrued liabilities and payables |
(114,152) |
(4,764) |
|
Net cash provided by operating activities from continuing operations |
42,538 |
36,491 |
|
Cash flows from investing activities of continuing operations |
|||
Investment in fixed assets |
(1,306) |
(8,534) |
|
Proceeds from the disposal of fixed assets |
0 |
2,124 |
|
Changes in restricted cash |
481,419 |
0 |
|
Investment in trademarks |
(6,000) |
0 |
|
Acquisitions of subsidiaries, net of cash acquired |
(135,964) |
140,776 |
|
Net cash provided by investing activities from continuing operations |
338,149 |
134,366 |
|
Cash flows from financing activities of continuing operations |
|||
Borrowings on bank loans and overdraft facility |
18,568 |
5,505 |
|
Payment of bank loans, overdraft facility and other borrowings |
(21,664) |
(58,676) |
|
Payment of Senior Secured Notes |
(367,954) |
0 |
|
Hedge closure |
0 |
(1,940) |
|
Repayment of short term capital leases |
0 |
(1,159) |
|
Proceeds from short term capital leases |
244 |
0 |
|
Transactions with equity holders |
7,500 |
(7,876) |
|
Options exercised |
1,976 |
276 |
|
Net cash (used in) financing activities from continuing operations |
(361,330) |
(63,870) |
|
Cash flows from discontinued operations |
|||
Net cash provided by / (used in) operating activities of discontinued operations |
1,625 |
5,638 |
|
Net cash provided by / (used in) investing activities of discontinued operations |
(330) |
(85) |
|
Net cash provided by / (used in) financing activities of discontinued operations |
(1,841) |
(3,296) |
|
Net cash provided by / (used in) discontinued operations |
(546) |
2,257 |
|
Adjustment to reconcile the change in cash balances of discontinued operations |
546 |
(2,257) |
|
Currency effect on brought forward cash balances |
(20,236) |
6,984 |
|
Net Increase / (Decrease) in Cash |
(879) |
113,971 |
|
Cash and cash equivalents at beginning of period |
126,439 |
107,601 |
|
Cash and cash equivalents at end of period |
$ 125,560 |
$ 221,572 |
|
Supplemental Schedule of Non-cash Investing Activities |
|||
Common stock issued in connection with investment in subsidiaries |
$ 41,344 |
$ 19,047 |
|
Supplemental disclosures of cash flow information |
|||
Interest paid |
$ 75,051 |
$ 19,939 |
|
Income tax paid |
$ 18,053 |
$ 2,568 |
|
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 |
F |
Comparable |
|||
Q2-10 |
FX |
APB 14 |
Acquisition |
RAG Adjustments |
Restructuring Costs |
Other Adjustments |
Q2-10 |
|||
Sales |
$379,874 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$379,874 |
||
Excise taxes |
(204,277) |
(204,277) |
||||||||
Net Sales |
175,597 |
0 |
0 |
0 |
0 |
0 |
0 |
175,597 |
||
Cost of goods sold |
87,119 |
87,119 |
||||||||
Gross Profit |
88,478 |
0 |
0 |
0 |
0 |
0 |
0 |
88,478 |
||
50.39% |
50.39% |
|||||||||
Operating expenses |
47,252 |
(500) |
(3,019) |
43,733 |
||||||
Gain on remeasurement of previously held equity interest |
0 |
0 |
||||||||
Impairment charge |
0 |
0 |
||||||||
Operating Income |
41,226 |
0 |
0 |
500 |
0 |
3,019 |
0 |
44,745 |
||
23.48% |
25.48% |
|||||||||
Non operating income / (expense), net |
||||||||||
Interest income / (expense), net |
(26,423) |
1,018 |
(25,405) |
|||||||
Other financial income / (expense), net |
(111,698) |
111,698 |
0 |
|||||||
Amortization of deferred charges |
0 |
0 |
||||||||
Other non operating income / (expense), net |
6,638 |
825 |
(7,642) |
(179) |
||||||
Income / (loss) before taxes, equity in net income from unconsolidated investments and noncontrolling interests in subsidiaries |
(90,257) |
111,698 |
1,018 |
500 |
0 |
3,844 |
(7,642) |
19,161 |
||
Income tax benefit / (expense) |
17,918 |
(22,005) |
(356) |
(100) |
0 |
(730) |
1,452 |
(3,821) |
||
Less: Net income attributable to noncontrolling interests in subsidiaries |
0 |
0 |
||||||||
Equity in net earnings of affiliates |
2,265 |
2,265 |
||||||||
Net income / (loss) from continuing operations attributable to CEDC |
($70,074) |
$89,693 |
$662 |
$400 |
$0 |
$3,114 |
($6,190) |
$17,605 |
||
Discontinued operations |
||||||||||
Loss from operations of distribution business (including impairment charge of $28.4 million) |
(7,963) |
(7,963) |
||||||||
Income tax (expense) |
41 |
41 |
||||||||
Loss on discontinued operations |
($7,922) |
($7,922) |
||||||||
Net income /(loss) |
($77,996) |
$89,693 |
$662 |
$400 |
$0 |
$3,114 |
($6,190) |
$9,683 |
||
Net income / (loss) from continuing operations per share of common stock, basic |
($1.00) |
$0.25 |
||||||||
Net income / (loss) from discontinued operations per share of common stock, basic |
($0.11) |
($0.11) |
||||||||
Net income / (loss) from continuing operations per share of common stock, diluted |
($1.00) |
$0.25 |
||||||||
Net income / (loss) from discontinued operations per share of common stock, diluted |
($0.11) |
($0.11) |
||||||||
GAAP |
A |
B |
C |
D |
E |
F |
Comparable |
|||
Q2-09 |
FX |
APB 14 |
Acquisition |
RAG Adjustments |
Restructuring Costs |
Other Adjustments |
Q2-09 |
|||
Sales |
$375,450 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$375,450 |
||
Excise taxes |
(199,559) |
0 |
0 |
0 |
0 |
0 |
0 |
(199,559) |
||
Net Sales |
175,891 |
0 |
0 |
0 |
0 |
0 |
0 |
175,891 |
||
Cost of goods sold |
84,546 |
0 |
0 |
0 |
0 |
0 |
0 |
84,546 |
||
Gross Profit |
91,345 |
0 |
0 |
0 |
0 |
0 |
0 |
91,345 |
||
51.93% |
51.93% |
|||||||||
Operating expenses |
54,011 |
1,040 |
55,051 |
|||||||
Gain on remeasurement of previously held equity interest |
(225,605) |
225,605 |
0 |
|||||||
Impairment charge |
20,309 |
(20,309) |
0 |
|||||||
Operating Income |
242,630 |
0 |
0 |
(206,336) |
0 |
0 |
0 |
36,294 |
||
137.94% |
20.63% |
|||||||||
Non operating income / (expense), net |
||||||||||
Interest income / (expense), net |
(20,789) |
984 |
(19,805) |
|||||||
Other financial income / (expense), net |
61,532 |
(61,532) |
0 |
|||||||
Amortization of deferred charges |
(11,231) |
11,231 |
0 |
|||||||
Other non operating income, net |
(8,838) |
8,733 |
603 |
498 |
||||||
Income / (loss) before taxes, equity in net income from unconsolidated investments and noncontrolling interests in subsidiaries |
263,304 |
(61,532) |
984 |
(206,336) |
11,231 |
8,733 |
603 |
16,987 |
||
Income tax benefit / (expense) |
(51,663) |
7,571 |
(344) |
43,552 |
(2,134) |
(1,703) |
(121) |
(4,842) |
||
Less: Net income attributable to noncontrolling interests in subsidiaries |
2,249 |
(12,022) |
7,689 |
(2,084) |
||||||
Equity in net earnings of affiliates |
2,013 |
2,013 |
||||||||
Net income / (loss) from continuing operations attributable to CEDC |
$211,405 |
($41,939) |
$640 |
($162,784) |
$1,408 |
$7,030 |
$482 |
$16,242 |
||
Discontinued operations |
||||||||||
Income from operations of distribution business |
2,664 |
2,664 |
||||||||
Income tax (expense) |
(342) |
(342) |
||||||||
Income on discontinued operations |
$2,322 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$2,322 |
||
Net income /(loss) |
$213,727 |
($41,939) |
$640 |
($162,784) |
$1,408 |
$7,030 |
$482 |
$18,564 |
||
Net income / (loss) from continuing operations per share of common stock, basic |
$4.30 |
$0.34 |
||||||||
Net income / (loss) from discontinued operations per share of common stock, basic |
$0.05 |
$0.05 |
||||||||
Net income / (loss) from continuing operations per share of common stock, diluted |
$4.28 |
$0.34 |
||||||||
Net income / (loss) from discontinued operations per share of common stock, diluted |
$0.05 |
$0.05 |
||||||||
A. Represents the net after tax 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 Also includes the proportional net after tax impact of the foreign currency revaluation related to the foreign currency liabilities included in the earnings of the Russian Alcohol Group as it has the Russian Ruble as its functional currency.
B. In May 2008, the FASB issued FSP APB 14-1, which impacts the accounting treatment for convertible debt instruments that allow for either mandatory or optional cash settlements. FSP APB 14-1 will impact the accounting associated with our $310.0 million senior convertible notes. This FSP 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. FSP APB 14-1 has become effective beginning in our first quarter of 2009 and is required to be applied retrospectively to all presented periods, as applicable.
C. For 2010 this represents the legal and professional service costs related to the potential acquisition of Nemiroff, which was ultimately not pursued by the Company. For 2009 as a result of the change in accounting treatment of the investment in the Russian Alcohol Group during the second quarter of 2009 from equity accounting to consolidation, CEDC was required to revalue the equity investment to market value at the time of conversion. This amount was then netted with an impairment charge for RAG goodwill.
D. In 2009 the Company has recorded deferred payments to Lion in connection with the RAG acquisition on the balance sheet at fair value and amortizes this discount as a non cash amortization expense over the payment period and records its investment in RAG as if it owned Lions shares. This adjustment on the 2009 results eliminates the non-cash amortization and increases the minority interest for the net profit attributable to the shares held by Lion Capital to reflect CEDC results as if it owned 52% of RAG without amortization of the deferred payments to Lion.
E. Represents one-off restructuring costs associated with the integration of Parliament and the Russian Alcohol Group.
F. For 2010, this adjustment eliminates the dividend income received from its Polish Wholesale business which is accounted for as a discontinued operation and was fully disposed of on August 2, 2010. For 2009 the amount represents one off tax charges related to a tax inspection for the period prior to the investment in 2008.
GAAP |
A |
B |
C |
D |
E |
F |
G |
Comparable |
|||
PTD Q2-10 |
FX |
APB 14 |
Acquisition related |
RAG Adjustments |
Restructuring Costs |
Cost associated |
Other Adjustments |
PTD Q2-10 |
|||
Sales |
$710,768 |
$710,768 |
|||||||||
Excise taxes |
(385,365) |
(385,365) |
|||||||||
Net Sales |
325,403 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
325,403 |
||
Cost of goods sold |
162,793 |
162,793 |
|||||||||
Gross Profit |
162,610 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
162,610 |
||
49.97% |
49.97% |
||||||||||
Operating expenses |
96,130 |
0 |
0 |
(500) |
0 |
(4,359) |
0 |
0 |
91,271 |
||
Gain on remeasurement of previously held equity interest |
0 |
0 |
|||||||||
Impairment charge |
0 |
0 |
|||||||||
Operating Income |
66,480 |
0 |
0 |
500 |
0 |
4,359 |
0 |
0 |
71,339 |
||
21.92% |
|||||||||||
Non operating income / (expense), net |
|||||||||||
Interest (expense), net |
(52,099) |
0 |
2,026 |
0 |
0 |
0 |
0 |
0 |
(50,073) |
||
Other financial (expense), net |
(76,786) |
77,688 |
0 |
0 |
0 |
0 |
0 |
0 |
902 |
||
Amortization of deferred charges |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Other non operating income / (expense), net |
(11,352) |
0 |
0 |
0 |
0 |
825 |
17,990 |
(7,642) |
(179) |
||
Income / (loss) before taxes, equity in net income from unconsolidated investments and noncontrolling interests in subsidiaries |
(73,757) |
77,688 |
2,026 |
500 |
0 |
5,184 |
17,990 |
(7,642) |
21,989 |
||
Income tax expense |
14,748 |
(15,339) |
(709) |
(100) |
0 |
(998) |
(3,418) |
1,452 |
(4,364) |
||
Less: Net income attributable to noncontrolling interests in subsidiaries |
0 |
0 |
|||||||||
Equity in net earnings of affiliates |
444 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
444 |
||
Net income / (loss) from continuing operations attributable to CEDC |
($58,565) |
$62,349 |
$1,317 |
$400 |
$0 |
$4,186 |
$14,572 |
($6,190) |
$18,069 |
||
Discontinued operations |
|||||||||||
Income / (loss) from operations of distribution business (including impairment charge of $28.2 million in 6 months ended June 30, 2010) |
(42,685) |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
(42,685) |
||
Income tax (expense) |
(110) |
(110) |
|||||||||
Income / (loss) on discontinued operations |
($42,795) |
($42,795) |
|||||||||
Net income /(loss) |
($101,360) |
$62,349 |
$1,317 |
$400 |
$0 |
$4,186 |
$14,572 |
($6,190) |
($24,726) |
||
Net income / (loss) from continuing operations per share of common stock, basic |
($0.84) |
$0.26 |
|||||||||
Net income / (loss) from discontinued operations per share of common stock, basic |
($0.61) |
($0.61) |
|||||||||
Net income / (loss) from continuing operations per share of common stock, diluted |
($0.84) |
$0.26 |
|||||||||
Net income / (loss) from discontinued operations per share of common stock, diluted |
($0.61) |
($0.61) |
|||||||||
GAAP |
A |
B |
C |
D |
E |
F |
G |
Comparable |
|||
PTD Q2-09 |
FX |
APB 14 |
Acquisition related costs and FV adjustments |
RAG Adjustments |
Restructuring Costs |
Cost associated with debt refinancing |
Other Adjustments |
PTD Q2-09 |
|||
Sales |
$559,622 |
$559,622 |
|||||||||
Excise taxes |
(312,959) |
(312,959) |
|||||||||
Net Sales |
246,663 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
246,663 |
||
Cost of goods sold |
122,426 |
122,426 |
|||||||||
Gross Profit |
124,237 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
124,237 |
||
38.18% |
38.18% |
||||||||||
Operating expenses |
74,527 |
0 |
0 |
1,040 |
0 |
0 |
0 |
0 |
75,567 |
||
Gain on remeasurement of previously held equity interest |
(225,605) |
225,605 |
0 |
||||||||
Impairment charge |
20,309 |
(20,309) |
0 |
||||||||
Operating Income |
255,006 |
0 |
0 |
(206,336) |
0 |
0 |
0 |
0 |
48,670 |
||
78.37% |
14.96% |
||||||||||
Non operating income / (expense), net |
|||||||||||
Interest (expense), net |
(30,661) |
0 |
1,948 |
0 |
0 |
0 |
0 |
0 |
(28,713) |
||
Other financial (expense), net |
(28,810) |
28,810 |
0 |
0 |
0 |
0 |
0 |
0 |
0 |
||
Amortization of deferred charges |
(11,231) |
0 |
0 |
0 |
11,231 |
0 |
0 |
0 |
0 |
||
Other non operating income / (expense), net |
(8,257) |
0 |
0 |
0 |
0 |
8,733 |
0 |
603 |
1,079 |
||
Income / (loss) before taxes, equity in net income from unconsolidated investments and noncontrolling interests in subsidiaries |
176,047 |
28,810 |
1,948 |
(206,336) |
11,231 |
8,733 |
0 |
603 |
21,036 |
||
Income tax expense |
(34,588) |
(9,594) |
(682) |
43,552 |
(2,134) |
(1,703) |
0 |
(121) |
(5,270) |
||
Less: Net income attributable to noncontrolling interests in subsidiaries |
2,138 |
(12,022) |
0 |
0 |
7,689 |
0 |
0 |
0 |
(2,195) |
||
Equity in net earnings of affiliates |
(18,852) |
23,709 |
0 |
0 |
0 |
0 |
0 |
0 |
4,857 |
||
Net income / (loss) from continuing operations attributable to CEDC |
$120,469 |
$54,947 |
$1,266 |
($162,784) |
$1,408 |
$7,030 |
$0 |
$482 |
$22,818 |
||
Discontinued operations |
|||||||||||
Income / (loss) from operations of distribution business |
6,492 |
6,492 |
|||||||||
Income tax (expense) |
(895) |
(895) |
|||||||||
Income / (loss) on discontinued operations |
$5,597 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$0 |
$5,597 |
||
Net income /(loss) |
$126,066 |
$54,947 |
$1,266 |
($162,784) |
$1,408 |
$7,030 |
$0 |
$482 |
$28,415 |
||
Net income / (loss) from continuing operations per share of common stock, basic |
$2.48 |
$0.47 |
|||||||||
Net income / (loss) from discontinued operations per share of common stock, basic |
$0.12 |
$0.12 |
|||||||||
Net income / (loss) from continuing operations per share of common stock, diluted |
$2.47 |
$0.47 |
|||||||||
Net income / (loss) from discontinued operations per share of common stock, diluted |
$0.11 |
$0.11 |
|||||||||
A. Represents the net after tax 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. Also includes the proportional net after tax impact of the foreign currency revaluation related to the foreign currency liabilities included in the earnings of the Russian Alcohol Group as it has the Russian Ruble as its functional currency. The amount has been adjusted to reflect only the CEDC portion of foreign exchange gains or losses of the Russian Alcohol Group and does not include the portion attributable to the minority shareholders.
B. In May 2008, the FASB issued FSP APB 14-1, which impacts the accounting treatment for convertible debt instruments that allow for either mandatory or optional cash settlements. FSP APB 14-1 will impact the accounting associated with our $310.0 million senior convertible notes. This FSP 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. FSP APB 14-1 has become effective beginning in our first quarter of 2009 and is required to be applied retrospectively to all presented periods, as applicable.
C. For 2010 this represents the legal and professional service costs related to the potential acquisition of Nemiroff, which was ultimately not pursued by the Company. For 2009 as a result of the change in accounting treatment of the investment in the Russian Alcohol Group during the second quarter of 2009 from equity accounting to consolidation, CEDC was required to revalue the equity investment to market value at the time of conversion. This amount was then netted with an impairment charge for RAG goodwill.
D. In 2009 the Company has recorded deferred payments to Lion in connection with the RAG acquisition on the balance sheet at fair value and amortizes this discount as a non cash amortization expense over the payment period and records its investment in RAG as if it owned Lions shares. This adjustment on the 2009 results eliminates the non-cash amortization and increases the minority interest for the net profit attributable to the shares held by Lion Capital to reflect CEDC results as if it owned 52% of RAG without amortization of the deferred payments to Lion.
E. For 2010 this represents one-off restructuring costs associated with the integration of Parliament and the Russian Alcohol Group. For 2009, represents other miscellaneous costs, directly related to acquisition costs related of the Parliament acquisition in 2008 and RAG in 2009.
F. 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.
G. For 2010, this adjustment eliminates the dividend income receive from the Polish Wholesale business which is accounted for as a discontinued operation and was fully disposed of on August 2, 2010. For 2009 the amount represents one off tax charges related to a tax inspection for the period prior to the investment in 2008.
FULL YEAR 2010 COMPARABLE EPS RECONCILIATION |
||
Full Year Guidance, 12 Months Ending December 31, |
2010 |
|
----------------------------------------------------------------------- |
------- |
|
Range for GAAP Fully Diluted Earnings per Share |
$0.99 |
|
$1.09 |
||
-------- |
||
A. Foreign exchange impact related to USD and EUR |
||
denominated financing |
$0.89 |
|
B. Impact of adoption of ABP14 |
$0.04 |
|
C. Acquisition Costs |
$0.01 |
|
D. Integration Costs |
$0.06 |
|
E. Cost associated with debt refinancing |
$0.20 |
|
F. Dividend from discontinued operation |
($0.09) |
|
------------------------------------------------------- |
--------- |
|
Range for Comparable non-GAAP Fully Diluted |
||
Earnings per Share |
$2.10 |
|
$2.20 |
||
------- |
||
A. Represents the net after tax impact of the foreign currency revaluation related to our USD and EUR financing as a majority of these borrowings have been lent down to entities that have the Polish Zloty or Russian Ruble as their functional currency. The impact of foreign exchange revaluation is inherently unpredictable and we have not forecasted the impact thereof; changes in foreign exchange revaluation may have a material effect on our financial results.
B. In May 2008, the FASB issued FSP APB 14-1, which impacts the accounting treatment for convertible debt instruments that allow for either mandatory or optional cash settlements. FSP APB 14-1 will impact the accounting associated with our $310.0 million senior convertible notes. This FSP 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. FSP APB 14-1 has become effective beginning in our first quarter of 2009 and is required to be applied retrospectively to all presented periods, as applicable.
C. Represents the legal and professional service costs related to the potential acquisition of Nemiroff, which was ultimately not pursued by the Company.
D. For 2010 this represents one-off restructuring costs associated with the integration of Parliament and the Russian Alcohol Group.
E. 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.
F. Elimination of the dividend income received from the 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
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article