8-K

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)

OF THE SECURITIES EXCHANGE ACT OF 1934

Date of Report (Date of Earliest Event Reported) – March 1, 2006

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

(Exact Name of Registrant as Specified in Charter)

DELAWARE	0-24341	54-1865271
(State or Other Jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification No.)

Two Bala Plaza, Suite 300 Bala Cynwyd, Pennsylvania	19004
(Address of Principal Executive Offices)	(Zip Code)

(610) 660-7817

(Registrant’s telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On March 1, 2006, Central European Distribution Corporation issued a press release announcing its financial results for the three months and full year ended December 31, 2005. A copy of the press release is furnished herewith as Exhibit 99.1 and incorporated herein by reference. Such information shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits.

99.1     Press Release issued by Central European Distribution Corporation on March 1, 2006.

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, Central European Distribution Corporation has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

CENTRAL EUROPEAN DISTRIBUTION CORPORATION
By:	/s/ Chris Biedermann
	Chris Biedermann
	Vice President and Chief Financial Officer

Date: March 1, 2006

EXHIBIT INDEX

Exhibit No.	Description
99.1	Press Release issued by Central European Distribution Corporation on March 1, 2006

EX-99.1

Exhibit 99.1

Central European Distribution Corporation Announces Record Net Sales (an Increase of 29% over 2004)

and Operating Income for 2005 (an Increase of 82% over 2004)

Bala Cynwyd, Pennsylvania March 1, 2006: Central European Distribution Corporation (NASDAQ: CEDC) today announced its results for fiscal year 2005. Net sales for the full year ended December 31, 2005 increased 29% to $749.4 million from the $580.7 million reported for the same period in 2004. Operating income increased by 81.9% to $51.6 million from $28.4 million for the same period in 2004.

On a comparable basis, CEDC announced earnings of $31.3 million, or $1.63 per fully diluted share (which is in line with previously issued guidance of $1.57 to $1.67 per fully diluted share), as compared to $21.8 million, or $1.31 per fully diluted share, for the same period in 2004. The comparable results exclude the impact of acquisition related costs (which were fully accounted for in 2005) and foreign exchange movements related to CEDC’s Senior Secured Notes financing. For a complete reconciliation of comparable earnings to earnings reported under United States Generally Accepted Accounting Principles (“GAAP”), please see the section “Unaudited Reconciliation of Non-GAAP Measures”. CEDC reported a net profit under GAAP of $20.3 million or $1.05 per share on a fully diluted basis.

Mr. William Carey, CEO and President, said, “We delivered record cash flow from operations of $34.1 million for the year, as well as a significant increase in gross margins in the fourth quarter to 22% from 13% in the fourth quarter of 2004. The key vodka brands that we acquired with the Polmos Bialystok and Bols acquisitions continued to show solid growth resulting in our vodka market share increasing to over 32% in the fourth quarter.”

Some of the key financial highlights to date include the following:

• Full year net sales up 29%

• Full year gross profit up 64%

• Full year gross margins up from 12.8% to 16.3% (fourth quarter gross margins up from 13.4% to 21.9%)

• Full year operating income up 82%

• Full year EBITDA (adjusted for minority interest) up 75% to $56 million

• Full year cash flow from operations up from $8.9 million to $34.1 million

• Exclusive import portfolio growth of 21%

Mr. Carey continued, “Since the closing of the Polmos Bialystok acquisition in October of 2005, we have been focused on executing our key objectives and are seeing positive results from the reduction of costs of raw materials, the accelerated sales of our own brands, the solidifying partnerships for increased exports of Zubrowka and the successful implementation of new trade terms we put in place on December 1, 2005. As we move into 2006, we are continuing to reduce costs at our newly acquired companies, finalizing development for construction of our new rectified spirits plant and are working on purchasing additional local brands to fill our existing production capacity. We believe that with our strong portfolio of imported and recently acquired brands our sales force will have a tremendous advantage in the marketplace in developing sales to same store customers. These efforts all will be supported by our experienced marketing team to take advantage of the strong brand position we already have.”

“We have acquired two distributors since November 2005 and we are targeting additional distributor acquisitions of approximately $64 million to $84 million in annualized net sales over the next 10 months. We are confirming our 2006 guidance for net sales of $931 million to $956 million and full year fully diluted earnings per share guidance of $1.90 to $2.10, which includes the impact of expensing options, which is estimated to be approximately $0.06 per fully diluted share.”

The 2006 guidance noted above does not take into account additional acquisitions that may be completed or any potential impact of foreign exchange movements on CEDC’s Senior Secured Notes financing. All acquisition related costs were fully accounted for in 2005.

CEDC has reported net income and diluted net income per share in accordance with GAAP and on a non-GAAP basis, referred to in this release as comparable earnings, as well as the non-GAAP measure EBITDA. CEDC’s management believes that pro forma 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. EBITDA represents GAAP earnings excluding interest, taxes, depreciation and amortization and other financial income and expenses. EBITDA is presented because management believes it provides additional information with respect to the cash flow of CEDC. A complete 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. The preliminary financial results reported in this press release have been prepared in accordance with GAAP. In addition to the GAAP results, CEDC also has provided additional information concerning its results, which includes certain financial measures not prepared in accordance with GAAP. These non-GAAP financial measures should not be considered a substitute for any measure derived in accordance with GAAP. These non-GAAP financial measures also may be inconsistent with the manner in which similar measures are derived or used by other companies. Management believes that the presentation of such non-GAAP financial measures, when considered in conjunction with the most directly comparable GAAP financial measures, provides additional useful information concerning CEDC’s operations without certain non-recurring charges. CEDC has provided reconciling information in the text 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 is also the leading distributor by volume and a leading importer by value of alcoholic beverages in Poland. CEDC operates 15 distribution centers and 78 satellite branches throughout Poland. CEDC imports many of the world’s leading brands to Poland, including brands such as Rémy 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. 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, 2004, and in other periodic reports 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

UNAUDITED RECONCILIATION OF NON-GAAP MEASURES

(in thousands, except share and per share information)

	Three Months Ended December 31,		Twelve Months Ended December 31,
	2005	2004	2005	2004
GAAP net income/(loss)	12,071	9,108	20,268	21,830
Pre-acquisition financing cost	464	—	3,907	—	(A)
Acquisition related hedges	—	—	3,384	—	(B)
Foreign exchange impact of Bols acquisition	—	—	1,335	—	(C)
Foreign exchange impact of escrowed cash, Senior Secured Notes and hedge revaluation	1,905	—	2,111	—	(D)
Other acquisition related costs	114	—	317	—	(E)
Comparable non-GAAP net income	14,554	9,108	31,322	21,830
Comparable non-GAAP net income per share of common stock, basic	0.62	0.55	1.66	1.34
Comparable non-GAAP net income per share of common stock, diluted	0.61	0.55	1.63	1.31

	Twelve Months Ended December 31,
	2005		2004
GAAP net income/(loss)	20,268		21,830
Income Tax	5,346		4,614
Net Interest Expense	15,828		2,115
Net Other Financial Expense/(Income)	7,678		19
Depreciation and Amortization	4,529		3,414
Minority Interest	2,261		—
EBITDA, adjusted for minority interest	55,910		31,992
Change in working capital	(18,232	)	(19,503	)
Non cash expenses	984		758
Taxes paid	(4,580	)	(4,386	)
Net cash provided by Operating Activities	34,082		8,861

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 year over year financial performance. Descriptions of these items are presented below:

(A) CEDC closed a €325 million Senior Secured Notes offering on July 25, 2005 in order to fund the acquisitions of Polmos Bialystok and Bols. Due to various delays in receiving final approval from the Polish Anti-Monopoly office, the acquisitions were not completed until August 17, 2005, in the case of Bols, and October 12, 2005, in the case of Polmos Bialystok. These amounts represent the proportional share of interest accrued (net of interest earned in escrow) prior to completion of the acquisitions. In addition, CEDC incurred additional debt to support the deposit payment made to the State Treasury as part of the Polmos Bialystok acquisition. The costs relating to this additional financing are also represented in this calculation.

(B) In anticipation of volatility in exchange rates in Poland due to elections that were held in late September, CEDC purchased additional hedges to protect the value of the cash obtained from the Senior Secured Notes, held in escrow. All derivates other than coupon hedge had closed as of September 30, 2005.

(C) The closing of the Bols acquisition required the exchange of funds through various currencies during a volatile period of exchange rate movements. CEDC incurred spot losses in exchanging these funds. The spot loss above represents less than 1% of the cash value of the transaction.

(D) Represents the net impact of interest and foreign currency movements related to escrowed cash and Senior Secured Notes and coupon hedge revaluation for the period. As these are non-cash adjustments related to acquisition financing and were not part of prior year results, the net impact has been excluded from comparable non-GAAP net income.

(E) Represents other miscellaneous costs directly related to the acquisitions of Bols and Polmos Bialystok of $203 and a one time tax write-off related to a tax control in one of the operating subsidiaries of $114.

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)

(Amount in columns expressed in thousands)

	December 31,
	2005			2004
ASSETS
Current Assets
Cash and cash equivalents	$	60,745		$	10,491
Short term financial assets		4,269			—
Accounts receivable, net of allowance for doubtful accounts of $22,851 and $10,038, respectively		188,029			131,799
Inventories		73,411			64,372
Prepaid expenses and other current assets		19,198			10,801
Deferred income taxes		5,868			822
Total Current Assets		351,520			218,285
Trademark, net		316,821			2,543
Goodwill, net		312,860			51,370
Equipment, net		39,784			17,387
Deferred income taxes		2,340			1,684
Other assets		1,342			435
Total Assets	$	1,024,667		$	291,704
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities
Trade accounts payable	$	112,838		$	115,678
Bank loans and overdraft facilities		26,747			37,396
Income taxes payable		672			651
Taxes other than income taxes		59,387			3,108
Other accrued liabilities		62,577			7,338
Current portions of obligations under capital leases		3,328			2,970
Current portion of long-term debt		—			234
Total Current Liabilities		265,549			167,375
Long-term debt, less current maturities		9			1,873
Long-term obligations under capital leases		1,455			2,140
Long-term obligations under Senior Secured Notes		367,575			—
Total Long Term Liabilities		369,039			4,013
Minority interests		15,137			—
Stockholders’ Equity
Common Stock ($0.01 par value, 40,000,000 shares authorized, 23,885,245 and 16,677,045 shares issued at December 31, 2005 and December 31, 2004, respectively)		239			166
Additional paid-in-capital		296,574			55,663
Retained earnings		72,634			52,366
Accumulated other comprehensive income		5,645			12,271
Less Treasury Stock at cost (164,025 shares at December 31, 2005 and 2004)		(150	)		(150	)
Total Stockholders’ Equity		374,942			120,316
Total Liabilities and Stockholders’ Equity	$	1,024,667		$	291,704

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)

(Amount in columns expressed in thousands, except share and per share information)

	Year ended December 31,
	2005			2004			2003
Gross sales	$	828,918		$	580,744		$	429,118
Excise		(79,503	)		—			—
Net sales		749,415			580,744			429,118
Cost of goods sold		627,368			506,413			372,638
Gross profit		122,047			74,331			56,480
Selling, general and administrative expenses		69,420			45,188			33,721
Bad debt provision		984			758			592
Operating income		51,643			28,385			22,167
Non-operating income / (expense)
Interest income / (expense), net		(15,828	)		(2,115	)		(1,500	)
Other financial income / (expense), net		(7,678	)		(19	)		(92	)
Other income / (expense), net		(262	)		193			(59	)
Income before income taxes		27,875			26,444			20,516
Income tax expense		5,346			4,614			5,441
Minority interests		2,261			—			—
Net income	$	20,268		$	21,830		$	15,075
Net income per share of common stock, basic	$	1.07		$	1.34		$	0.98
Net income per share of common stock, diluted	$	1.05		$	1.31		$	0.96

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)

(Amount in columns expressed in thousands)

	Year ended December 31,
	2005			2004			2003
Operating Activities
Net income	$	20,268		$	21,830		$	15,075
Adjustments to reconcile net income to net cash provided by / (used in) operating activities:
Depreciation and amortization		4,529			3,414			2,127
Deferred income taxes		(316	)		228			698
Bad debt provision		984			758			592
Minority interests		2,261			—			—
Changes in operating assets and liabilities:
Accounts receivable		(23,730	)		(23,495	)		(6,862	)
Inventories		(238	)		(21,245	)		(4,143	)
Prepayments and other current assets		(6,614	)		(2,090	)		(1,183	)
Trade accounts payable		(7,149	)		29,424			(14,156	)
Income and other taxes		9,015			993			766
Other accrued liabilities and other		35,072			(956	)		(1,166	)
Net Cash provided by Operating Activities		34,082			8,861			(8,252	)
Investing Activities
Investment in distribution assets		(8,091	)		(5,449	)		(2,292	)
Proceeds from the disposal of equipment		2,454			1,490			647
Purchase of financial assets		(79,412	)		(5,378	)		(3,874	)
Proceeds from the disposal of financial assets		115,028			—			—
Acquisitions of subsidiaries, net of cash acquired		(490,092	)		—			—
Net Cash Used In Investing Activities		(460,113	)		(9,337	)		(5,519	)
Financing Activities
Borrowings on bank loans and overdraft facility		4,804			7,604			7,019
Payment of bank loans and overdraft facility		(13,565	)		(4,029	)		—
Long-term borrowings		—			1,518			—
Payment of long-term borrowings		(6,438	)		(4,400	)		(9,935	)
Payment of capital leases		(1,676	)		(1,838	)		(1,297	)
Net borrowings of Senior Secured Notes		378,447			—			—
Net proceed from private placement issuance of shares		111,594			—			19,308
Options exercised		3,205			1,780			2,035
Net cash provided by Financing Activities		476,371			635			17,130
Currency effect on brought forward cash balances		(86	)		4,103			633
Net Increase in Cash		50,254			4,262			3,992
Cash and cash equivalents at beginning of period		10,491			6,229			2,237
Cash and cash equivalents at end of period	$	60,745		$	10,491		$	6,229