EX-99 4 dex99.txt PRO FORMA FINANCIAL STATEMENTS Exhibit 99 Pro Forma Financial Statements Central European Distribution Corporation Pro Forma Combined Condensed Financial Information The un-audited pro forma condensed combined balance sheet information set forth below for Central European Distribution (CEDC), AGIS S.A. (purchased on April 24, 2002) and Damianex S.A. (purchased on April 22, 2002) is presented as if these acquisitions had been completed on March 31, 2002. The un-audited condensed combined income statement for 2001 assumes the acquisitions were completed on January 1, 2001. The un-audited condensed combined income statement for the three-month period ended March 31, 2002 assumes the acquisitions were completed on January 1, 2002. The data is subject to the assumptions and adjustments in the accompanying notes to the pro forma balance sheets and income statements. CEDC has accounted for the acquisitions of Damianex S.A. and AGIS S.A. as purchases in accordance with SFAS 141. Pro forma financial information for CEDC and Damianex S.A. as of December 31, 2001 has been included in an 8K report filed with the Securities and Exchange Commission. The pro forma information does not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and therefore should be read in conjunction with the historical financial statements of CEDC included in its Annual 2001 Report on Form 10K, and its first quarter 2002 Report on Form 10Q and the historical financial statements of Damaniex S.A. included in the Form 8-K which are on file with the Securities and Exchange Commission and the historical financial statements of AGIS S.A. for 2000 and 2001, included herein. The pro forma adjustments do not reflect operating efficiencies and cost savings that may be achievable with respect to the newly acquired companies. The pro forma adjustments do not include any adjustments to the historical operating data for future changes in selling prices, or operating efficiencies, which may arise. A final determination of required purchase accounting adjustments, including the allocation of the purchase price to the assets acquired and liabilities assumed based on their respective estimated fair values, will be made after completion of the escrow period on August 31, 2002 (applicable to the Damianex acquisition), upon final adjustments of the AGIS S.A. purchase price related to old AGIS accounts receivable and upon receipt of independent valuations for both acquisitions. Accordingly, the purchase accounting adjustment(s) and the following pro forma condensed combined balance sheet and income statement information may be revised. CEDC currently knows of no events that would require a substantial change to the preliminary purchase price allocation. The pro forma financial information is presented for illustrative purposes only and is not intended to be indicative of the financial position and operating results that would have occurred if the acquisitions had been consummated in accordance with the assumptions set forth below nor is it intended to be a forecast of future operating results or financial position. Central European Distribution Corporation Unaudited Pro Forma Condensed Combined Balance Sheet Information March 31, 2002 Amounts in columns expressed in thousands of USD
Total Damianex AGIS S.A, Pro Forma Historical CEDC Historical Historical S.A. Pro Forma CEDC with (A1) Damianex S.A. AGIS S.A. (A3) Pro Forma Adjust- AGIS S.A. and (A5) Adjustments ments DAMIANEX S.A. ---------------- ------------------------------------------------------------ --------------- ASSETS Current Assets Cash and cash equivalents $ 9,707 $ 451 $ 219 D 2,500 D 1,800 $ 2,392 B2 (7,455) B1 (4,830) Accounts receivable, net 28,888 6,497 6,755 42,140 Inventories 12,083 4,550 3,495 20,128 Deferred income taxes and other current assets 2,777 230 134 C2 190 C1 160 3,491 ----------- ---------------------------------------------------------- ------------- 53,455 11,728 10,603 (4,765) (2,870) 68,151 Property, plant and equipment, net 3,309 1,497 572 C2 368 5,746 Intangible assets, net 2,872 - - 2,872 Goodwill, net 9,687 - - C2 6,258 C1 6,427 22,372 Deferred income taxes and other assets 1,437 180 - 1,617 ----------- ---------------------------------------------------------- ------------- Total Assets $70,760 $13,405 $11,175 $ 1,861 $ 3,557 $ 100,758 =========== ========================================================== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Trade accounts payable $25,844 $ 4,385 $ 6,207 C2 740 C1 1,412 $ 38,588 Bank loans and overdraft facilities 7,426 4,704 2,726 14,856 Income and other taxes payable 974 413 198 F1 (42) 1,543 Other accrued liabilities 1,422 204 110 F1 150 1,886 Current portion of debt and capital leases 2,356 - - 2,356 ----------- ---------------------------------------------------------- ------------- 38,022 9,706 9,241 740 1,520 59,229 Non-current deferred taxes C2 92 92 Long-term portion of debt and capital leases 3,451 - D 2,500 D 1,800 7,751 Temporary equity B2 2,228 2,228 Stockholders' Equity Common stock 55 1,739 229 E (1,739) E (229) 57 B1 2 Additional paid-in-capital 23,356 - - B1 2,169 25,525 Retained earnings 7,943 1,992 1,807 E (1,992) E (1,807) 7,943 Accumulated other comprehensive income (loss) (1,917) (32) (102) E 32 E 102 (1,917) Less Treasury shares (150) - - - (150) ----------- ---------------------------------------------------------- ------------- 29,287 3,699 1,934 (3,699) 237 31,458 ----------- ---------------------------------------------------------- ------------- Total Liabilities and Stockholders' Equity $70,760 $13,405 $11,175 $ 1,861 $ 3,557 $ 100,758 =========== ========================================================== =============
Central European Distribution Corporation Unaudited Pro Forma Condensed Combined Income Statement Information For the three month period ended March 31, 2002 Amounts in columns expressed in thousands of USD (except per share data)
Total Pro Forma Historical Historical Historical DAMIANEX AGIS S.A. CEDC with CEDC Damianex AGIS S.A S.A. Pro Forma AGIS S.A. (A1) (A5) (A3) Pro Forma Adjustments and Damianex Adjustments S.A. ----------- ------------- ------------ ----------------- ---------------- -------------- Net sales $42,650 $17,554 $ 16,374 $ 76,578 Cost of goods sold, excluding depreciation and amortization 36,771 15,565 15,614 67,950 ---------- ----------- ---------- ---------------- ------------- ----------- 5,879 1,989 760 8,628 Selling, general and administrative expenses, F1 (15) excluding depreciation 3,920 1,451 555 5,965 F1 54 Bad debt expense 384 14 137 535 Depreciation of tangible fixed assets 234 68 52 F2 2 F1 (6) 350 Amortization of intangible assets 43 - - 43 ---------- ----------- ---------- ----------------- ------------ ----------- Operating income 1,298 456 16 (2) (33) 1,735 Non-operating income (expense) Interest expense (237) (147) (132) D (30) D (19) (565) Other income (expense), net 20 44 200 F1 (150) 114 ---------- ----------- ---------- ----------------- ----------- ----------- Income before income taxes 1,081 353 84 (32) (202) 1,284 Income tax (expense) benefit (299) (88) (57) G 9 G 57 (378) ---------- ----------- ---------- ----------------- ----------- ----------- Net income $ 782 $ 265 $ 27 $ (23) $(145) $ 906 ========== =========== ========== ================= =========== =========== Net income per share of common stock, basic $ 0.17 $ 0.17 ========== =========== Net income per share of common stock, diluted $ 0.16 $ 0.16 ========== ===========
Central European Distribution Corporation Unaudited Pro Forma Condensed Combined Income Statement Information For the year ended December 31, 2001 Amounts in columns expressed in thousands of USD (except per share data)
Total Pro Forma Historical Historical Historical DAMIANEX AGIS S.A. CEDC with CEDC Damianex AGIS S.A (A4) S.A. Pro Forma AGIS S.A. (A2) S.A (A6) Pro Forma Adjustments and DAMIANEX Adjustments S.A. -------------- ----------- ------------- -------------- ------------- ------------- Net sales $ 178,236 $78,977 $75,449 $332,662 Cost of goods sold, excluding depreciation and amortization 154,622 70,262 69,649 294,533 ------------ ----------- ------------ ------------ 23,614 8,715 5,800 38,129 Selling, general and administrative expenses, 16,445 6,008 2,703 F (41) 25,331 excluding depreciation F1 216 Bad debt expense 711 218 106 1,035 Depreciation of tangible fixed assets 841 258 165 F2 10 F1 (16) 1,258 Amortization of intangible assets 762 - - 762 ------------ ----------- ------------ ------------ ------------- ------------ Operating income 4,855 2,231 2,826 (10) (159) 9,743 Non-operating income (expense) Interest expense (1,345) (555) (665) D (106) D (77) (2,748) Other income (expense), net 148 55 (14) - 189 ------------ ----------- ------------ ------------ ------------- ------------ Income before income taxes 3,658 1,731 2,147 (116) (236) 7,184 Income tax (expense) benefit (1,132) (520) (650) G 33 G 66 (2,203) ------------ ----------- ------------ ------------ ------------- ------------ Net income $ 2,526 $1,211 $1,497 $(83) $(170) $4,981 ============ =========== ============ ============ ============= ============ Net income per share of common stock , basic $ 0.58 $0.93 ============ ============ Net income per share of common stock, diluted $ 0.57 $0.89 ============ ============
Central European Distribution Corporation Notes to the Unaudited Pro Forma Condensed Combined Financial Information (Amounts in columns expressed in thousands of USD) A. THESE COLUMNS REPRESENT THE HISTORICAL BALANCE SHEETS AND RESULTS OF OPERATIONS AS FOLLOWS: (1)-CEDC - consolidated financial position and operating results as of and for the three month period end March 31, 2002 (2)-CEDC - consolidated operating results for the year ended December 31, 2001 (3)-AGIS S.A. - historical financial position and operating results as of and for the three month period ended March 31, 2002 (4)-AGIS S.A. - historical operating results for the year ended December 31, 2001 (5)-Damianex S.A. - historical financial position and operating results as of and for the three month period ended March 31, 2002 (6)-Damianex S.A. - historical operating results for the year ended December 31, 2001 B. ACQUISTIONS (1). AGIS S.A. On April 24, 2002, the CEDC group purchased the outstanding shares of AGIS S.A. Total consideration for the acquisition consisted of the following: Cash consideration to stockholders $ 4,568 *172,676 shares of CEDC common stock 2,171 Acquisition costs (estimated) 262 ------------ $ 7,001 ============ * CEDC's common stock was valued at the average stock price a few days before and after the purchase price was agreed and announced. The shares issued are not registered and may not be sold without the consent of CEDC for six months subsequent to the acquisition date. Central European Distribution Corporation Notes to the Unaudited Pro Forma Condensed Combined Financial Information (Amounts in columns expressed in thousands of USD) (2). DAMIANEX S.A. On April 22, 2002, the CEDC group purchased the outstanding shares of Damianex S.A. Total consideration for the acquisition consisted of the following: Cash consideration to stockholders $7,138 *152,996 shares of CEDC common stock 1,781 Value of put option on 152,996 shares 447 Acquisition costs (estimated) 317 ----------- $ 9,683 =========== * CEDC's common stock was valued at the average stock price a few days before and after the purchase price was agreed The shares issued are not registered and may not be sold without the consent of CEDC for one year subsequent to the acquisition date. The sellers were granted an option to sell the acquired CEDC stock ("Put Option") back to the Company at a price of $12.00 per share during the period from April 23, 2003 to April 29, 2003. If the put lapses, the shares will be transferred to equity. If the shares are purchased by the Company they will be treated as treasury shares. These shares have been disclosed in the pro forma condensed combined balance sheet as temporary equity above stockholders' equity. Prior to the exercise option period (April 23, 2003 to April 29, 2003) these shares will be considered in the calculation of diluted earnings per share (unless they are anti-dilutive). The put options have been valued at approximately $447,000 by an independent appraiser. As part of the Agreement, approximately $3,200,000 was transferred to an escrow account. The funds in the escrow account will be paid to the sellers when CEDC receives approval from the Polish Government in regards to the ownership of the real estate element of the transaction (estimated to be approximately 3 months). If approval is not received, the real estate will be separated from the Company and sold to a mutually agreed upon third party for a mutually agreed price. As part of the sale of the real estate, a lease agreement would be established for a period of three to five years with the buyers which shall not exceed the market price applicable in the region. If the real estate is not sold within six months from the day the Polish Government informs the parties of its refusal, the funds in the escrow account will be transferred back to CEDC with 50% of the interest earned on the escrowed amount. Central European Distribution Corporation Notes to the Unaudited Pro Forma Condensed Combined Financial Information (Amounts in columns expressed in thousands of USD) C. DETERMINATION OF GOODWILL (1) AGIS S.A. In connection with the preparation of the pro forma condensed combined balance sheet information at March 31, 2002, the book values of certain assets were adjusted to estimated fair values as follows: Cost of acquisition $ 7,001 Historical net book value at March 31, 2002 *(522) **Other current assets (160) ---------- *** Other current liabilities 108 ---------- Preliminary goodwill $ 6,427 ========== * Assuming the AGIS acquisition was finalized on March 31, 2002, the historical net book of $1,934,000 has been reduced to reflect a dividend declared in April 2002 in regards to prior year earnings for the amount of approximately $1,412,000. ** Assuming the acquisition was finalized on March 31, 2002, the goodwill was adjusted to reflect the estimated acquired goodwill determined as of April 24, 2002. *** This amount relates to the elimination of deferred income (net of taxes) in regards to the sale of real estate. The $108,000 deferred gain will never be recognized in the consolidated financial statements of CEDC as it is pre-acquisition. Prior to the finalization of the business combination agreement all the real estate (land and buildings) and certain vehicles were sold to the former shareholders. CEDC believes fair market value of the remaining assets is equal to their carrying values, this will be confirmed upon finalization of the appraisal of business combination assets. (2) DAMIANEX S.A. The book values of certain assets of the Damianex S.A. acquisition were adjusted to estimated fair values as follows (assuming the Polish Government approves the real estate element of the transaction): Cost of acquisition $ 9,683 Historical net book value at March 31, 2002 *2,959 To increase land to estimated fair value ***165 To increase buildings to estimated fair value ***203 To record deferred taxes on increase of book values of land and buildings ***(92) Other current assets **190 --------- ----------- Preliminary goodwill $ 6,258 =========== * Assuming the Damianex acquisition was finalized on March 31, 2002, the historical net book has been reduced to reflect a dividend declared in April 2002 in the amount of $740,000. ** Assuming the acquisition was finalized on March 31, 2002, the goodwill was adjusted to reflect the estimated acquired goodwill determined as of April 22, 2002. *** Assuming the Polish Government approves the real estate element of the transaction. Central European Distribution Corporation Notes to the Unaudited Pro Forma Condensed Combined Financial Information Amounts in columns expressed in thousands of USD DETERMINATION OF GOODWILL (cont'd) In accordance with SFAS 142, goodwill is no longer amortized. The allocation of the excess purchase price to goodwill may be revised when the Company receives the independent valuations in regards to the acquisitions (Damianex S.A. and AGIS S.A.) of the tangible and intangible business assets acquired and upon completion of the escrow period for the Damianex S.A. acquisition and final determination of the purchase price for AGIS for the effects of old accounts receivable. CEDC does not expect material adjustments from the completion of this process. D. FINANCING OF ACQUISITIONS The Company secured additional long-term borrowings of approximately $4,300,000 to finance the acquisitions. The interest rate on the additional borrowings is LIBOR plus 2%. The average LIBOR plus 2% rate for 2001 and for the three month period ended March 31, 2002 was approximately 4.25%. The Company allocated $1,800,000 and $2,500,000 of additional borrowing for the purchases of AGIS S.A. and Damianex S.A., respectively. The additional interest expense for AGIS S.A. in regards to the pro forma condensed combined income statement information is approximately $77,000 and $19,000 for the year end December 31, 2001 and for the three month period ended March 31, 2002. The additional interest expense for Damianex S.A. in regards to the pro forma condensed combined income statement information is approximately $106,000 and $30,000 for the year ended December 31, 2001 and for the three month period ended March 31, 2002. The loan is repayable in quarterly installments commencing during the second quarter of 2003. On March 28, 2002, CEDC finalized the private placement of 800,000 shares of the Company's common stock. The Company received approximate net proceeds of $7,543,000 from this private placement, of which $7,543,000 was used as follows: Acquisition of Damaniex S.A. $4,638 Acquisition of AGIS S.A. 2,768 Other 137 --------------- $7,543 =============== Because the private placement was completed on March 28, 2002, it has been included in the "historical CEDC" column. The effect is in cash ($7,543,000), Stockholders Equity Common Stock ($8,000) and additional paid in capital ($7,535,000). E. ELIMINATION OF ACQUIRED COMPANIES SHAREHOLDERS' EQUITY ACCOUNTS
AGIS S.A. Damianex S.A. March 31, 2002 March 31, 2002 Common Stock $ 229 $1,739 Retained earnings 1,807 1,992 Accumulated other comprehensive loss, (net of tax) (102) (32) -------------------- ------------------ $1,934 $3,699 ==================== ==================
F. PROFORMA EXPENSE ADJUSTMENTS (1). CEDC did not acquire any of the AGIS buildings. As a result CEDC entered into lease agreements with the former shareholders of AGIS to lease the buildings for an unspecified period. This pro forma entry reflects the elimination with respect to the depreciation of the buildings and the addition of rent expense on the lease referred to above. Depreciation in the amount of $16,000 and $6,000 has been reduced for the year ended December 31, 2001 and the three month period ended March 31, 2002 respectively. Rent expense of $216,000 and $54,000 has been recognized for the year ended December 31, 2001 and for the three month period ended March 31, 2002, respectively. Additionally, the $150,000 profit made on the sale of the real estate prior to acquisition has been eliminated as it is a direct consequence of the acquisition. An adjustment of $42,000 regarding the associated tax charge has also been made. Additionally, real estate taxes and maintenance costs applicable to the buildings were eliminated, the expenses eliminated were $41,000 and $15,000 for the year ended December 31, 2001 and three month period ended March 31, 2002, respectively. (2). Damianex S.A. - The increase in the fair market values of the acquired buildings subsequently increased the depreciation expense for the year ended 2001 and for the three month period ended March 31, 2002. The depreciation expense was calculated based on the estimated average remaining life of buildings (approximately 20 years) which is approximately 5%. The additional depreciation expense for the year ended December 31, 2001 and for the three month period ended March 31, 2002 is approximately $10,000 and $2,000. G. PRO FORMA INCOME TAX ADJUSTMENTS
AGIS S.A. Damianex S.A. Three month period Three month period ended March 31, 2002 ended March 31, 2002 Interest expense $ 19 $ 30 Rent expense 54 - Real estate tax and repairs and maintenance (15) - Deferred profit on sale of real estate 150 Depreciation (6) 2 -------------------- -------------------- Additional tax deductible expenditures 202 32 Tax rate for period 28% 28% -------------------- -------------------- Total pro forma tax expense $ 57 $ 9 ==================== ====================
9 Central European Distribution Corporation Notes to the Unaudited Pro Forma Condensed Combined Financial Information Amounts in columns expressed in thousands of USD (except per share data)
AGIS S.A. Damianex S.A. Year ended December 31, Year ended December 2001 31, 2001 Interest expense $ 77 $ 106 Rent expense 216 - Real estate tax and repairs and maintenance (41) - Depreciation (16) 10 ---------------------- ------------------- Additional tax deductible expenditures 236 116 Tax rate for period 28% 28% ---------------------- ------------------- Total pro forma tax expense $ 66 $ 33 ====================== ===================
Goodwill is not tax deductible. H. PERSONNEL REDUCTIONS CEDC's management does not presently anticipate any significant personnel reductions as a result of the acquisitions. I. PRO FORMA NET INCOME PER SHARE INFORMATION Pro forma net income per share information considers the effects of shares issued in connection with the transaction as though they were outstanding during the periods presented. The shares used for these calculations were as follows:
Periods ended Year end Three month period ended December 31, 2001 March 31, 2002 -------------------------- ------------------------------ Historical Pro forma Historical Pro forma Basic 4,359 *5,332 4,508 *5,481 Dilutive 4,447 **5,583 4,845 ***5,818
* Includes the following: ** The pro forma diluted earnings per share are calculated using the pro forma shares indicated above. The pro forma diluted earnings per share calculation includes the 163,000 incremental shares as a result of applying the reverse treasury stock method to the 152,996 common shares with attached put options issued in connection with the Damianex acquisition. The result of this is anti-dilutive. 10 Central European Distribution Corporation Notes to the Unaudited Pro Forma Condensed Combined Financial Information Amounts in columns expressed in thousands of USD (except per share data) ***The 152,996 common shares classified as temporary equity for the three-month period ended March 31, 2002. 11