MT. LAUREL, N.J., Nov. 13, 2012 /PRNewswire/ -- Central
European Distribution Corporation (NASDAQ: CEDC) announced today
that it expects to restate its financial results for the three and
six months ended June 30,
2012. CEDC will restate these financial statements to
correct an excess provision previously recorded to account for
promotional compensation granted to one customer in a division of
its main operating subsidiary in Russia, the Russian Alcohol Group
("RAG"). The excess provision resulted in an inadvertent
understatement of the Company's accounts receivable.
CEDC estimates that the aggregate effect of the adjustments
identified to date will result in an increase in accounts
receivable as at June 30, 2012, and a
decrease in selling, general and administrative expenses for the
three and six months ended June 30,
2012, of approximately $6
million, resulting in an increase in net income for the
three and six months ended June 30,
2012, of approximately $6
million, which amounts are subject to change as CEDC
continues its review of the accounting matters discussed herein.
These amounts reflect the fact that certain accounts receivable
related to promotional compensation granted to customers of RAG
that had been provisioned as doubtful accounts were ultimately
recovered in the period and therefore the associated provisions are
to be reversed. The adjustments are not expected to have any impact
on previously reported net cash provided by operating activities
reported in the cash flow statements during the period.
As previously disclosed, following an internal investigation led
by the Audit Committee of CEDC's board of directors regarding
CEDC's retroactive trade rebates, trade marketing expenses and
related accounting issues, including the promotional compensation
granted to customers of RAG, CEDC filed an amended annual report on
Form 10-K/A for the year ended December 31,
2011, and amended quarterly reports on Form 10-Q/A for the
three and nine months ending September 30,
2011 and the three months ending March 31, 2012, with the United States Securities
and Exchange Commission (the "SEC"). In addition, CEDC filed a Form
10-Q for the three and six months ending June 30, 2012, that included restated financial
statements as of and for the three and six months ending
June 30, 2011. The adjustments to
CEDC's unaudited condensed consolidated financial statements for
the three and six months ended June 30,
2012, disclosed above represent a partial reversal of the
selling, general and administrative expenses, and associated
adjustments to the accounts receivable, reported in these restated
financial statements.
Certain members of the board of directors and senior management
of CEDC have discussed the matters described above with Ernst &
Young Audit Sp. z.o.o., CEDC's current auditor. CEDC is currently
targeting a date of November 19,
2012, for filing an amended quarterly report on Form 10-Q
for the three and six months ended June 30,
2012 with the SEC to reflect the restated financial
statements. There can be no assurance, however, that this filing
will be made within the anticipated period.
While CEDC has begun restructuring its corporate finance and
reporting department in Poland and
Russia to implement more effective
internal controls over financial reporting, management's evaluation
of its internal control over financial reporting has disclosed
material weaknesses still exist as noted in Management's Annual
Report on and Changes in Internal Control over Financial Reporting
located in Item 9A, Controls and Procedures, of CEDC's Form 10-K/A
for the year ended December 31, 2011,
filed with the SEC on October 5,
2012. CEDC is in the process of implementing the remediation
steps listed in that Item 9A.
The expected effects of the restatement described above are
based on currently available information. Because CEDC's accounting
review is ongoing, the estimates included herein are subject to
change until the final restated financial statements are filed with
the SEC.
About Central European Distribution Company
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.
Cautionary Statement about Forward-Looking
Information
This press release contains forward looking statements within
the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995 including, without limitation, statements
regarding the expected materiality or significance of the estimated
adjustments to CEDC's financial statements, the expected timing for
filing CEDC's amended quarterly report and the quantitative effects
of the restatement. 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. Such risks include,
among others, the risk that additional information may arise from
the evaluation of CEDC's disclosure controls and procedures and
that the preparation of CEDC's restated financial statements or
other subsequent events would require CEDC to make other
revisions.
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/A for the
fiscal year ended December 31, 2011, 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 Załuska
Corporate PR Manager
Central European Distribution Corporation
48-22-456-6061
SOURCE Central European Distribution Corporation