EX-99.1 2 dex991.htm POWERPOINT SLIDES PowerPoint slides
1
CEDC
Central European Distribution Corporation
CEDC Investor Presentation
November 2007
Exhibit 99.1

2
Forward Looking Statements
This presentation 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,
including,
without
limitation,
economic
and
vodka
consumption
trends
in
Poland
or
other
markets
CEDC
serves,
risks
arising
from
exchange
rate
and
interest
rate
movements,
CEDC’s
ability
to
make and integrate acquisitions and CEDC’s
ability to implement its business plan, 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. Forward looking
statements are based on Management’s current expectations and assessments of market and other
conditions. 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 and prospectus for the fiscal year ended December 31, 2006, and in other periodic and
current reports filed by CEDC with the Securities and Exchange Commission.

3
Current Business Overview
Ongoing, strong economic trends in Poland continue to drive the premiumization
of the wine and spirits market
•
Imported spirit market has grown year to date over 20% in 2007
•
Polish vodka market is up 7% in value year to date
2007 CEDC business objectives continue to be executed leading to
a strong base
for 2008
•
Strong organic growth of core business (22% organic sales growth in Q3 2007–12 % excluding    
currency)
•
Successful
launch
of
new
flavored
vodka
brand
–
Zlota
Gorzka
•
Numerous packaging changes driving positive volume development
•
Zubrowka
new export packaging starting to roll out
•
Rectification
project
completed
–
significant
savings
on
spirit
pricing
•
Expanding business operations to Russia

4
CEDC Core Brands in Poland
•
Our four core brands (Bols, Zubrowka, Soplica and Absolwent) delivering double
digit growth year to date 2007
•
Bols Vodka up 18% after price adjustment in February 2007
•
New labeling of Zubrowka package in Poland has sparked
strong sales growth, with an increase in
value
over 15% since redesign in April 2007
•
Imports continue to see strong growth,
with Carlo Rossi up 47% in volume year to date
(Carlo Rossi is
now
the #1 wine brand in Poland)

5
Launch of Zlota Gorzka
•
August 1st 2007 launched new flavored vodka
•
Competitor for Zolakowa Gorzka from Lublin
•
Price at similar point as ZG from Lublin
•
Mint flavor to be launched this month
•
Our objective is to take 30% of the Gorzka
segment by 2009 (600,000 9L cases)

6
Export Forging Ahead
•
In Q3 2007 first shipments of Zubrowka in the new export
packaging began to U.S., U.K. as well as other export markets
•
Launch in the US supported by new marketing campaign
•
Creative focuses on the uniqueness of the product, with special
emphasis on the bison grass. Campaign “Play on Words”
uses
double entendre to bring together grass and seduction….
-
“SEDUCTIVE BY NATURE”

7
Zubrowka U.S. Marketing Campaign

8
Rectification Completed
•
Both rectification plants in Bols and Polmos
Bialystok completed and operational
•
Final investments for both facilities are
approximately $15 million with projected annual
cost savings of approximately $4.0
million (based
upon 36
million liters of 100% spirit)
•
Financial impact of rectification to begin Q4 2007

9
Other Polish Acquisition Opportunities
V&S process provides an acquisition opportunity for CEDC in Poland to
acquire Polmos
Zielona
Gora, a leading local producer
•
CEDC will be taking an active role in the process to bid for this business.  The
process is expected to close Q1-Q2 2008
•
Polmos
Zielona
Gora, owned by V&S, has a market share of approximately
7% in Poland through the Polska
and Luksusowa
brands
•
Luksusowa
brand is a potato vodka which will provide a complimentary
product to our grain based vodka portfolio
•
Combined portfolio would leave CEDC with an approximate 37% market
share,
which
is
below
the
typical
Polish
anti
trust
limits
of
40%
Still looking at other wholesalers that would fill distribution gaps
Evaluating niche brands that are still State owned in Poland that would
provide a good fit with our portfolio

10
Russian Expansion Strategy
•
We are looking to expand our business model into new growth markets –
with a
focus on Russia
•
CEDC has recently entered into a binding Letter of Intent to acquire the Parliament
business in Russia (#1 premium vodka in Russia)

11
Russia and Ukraine –
The Time is Right
Take leading role in the consolidation of a fragmented spirit market
Acquire leading brands with a national sales platform
Target import brands to add to local portfolio
Premiumization trends taking place in the region
Cost and sales synergies through expansion
Strong economic growth in the region
Leverage our regional know how to execute acquisitions

12
Russian Market
•
Russia
is
the
largest
vodka
market
in
the
world
and
the
2
nd
largest
alcohol
market in the world
•
Rapidly growing economy (GDP growth of 6.5% YTD 2007) which in turn
is driving consumer spending for premium branded products (both
imported and domestic)
•
Russian
market
is
very
fragmented
with
no
producer
having
over
a
7%
market share
•
The Russian Government is focused on reducing “grey zone”
vodka with
tighter
controls
over
spirit
production
and
distribution
->
expected
that
legalized spirits will grow from 50%-60% of current market share to 75%-
80% by 2011
Source: Renaissance Capital Report, August 2007

13
Russian Market
Global vodka market, by volume (2006)
Russian spirits market, by value (2006)
•
Russia is by far the world’s largest vodka market in volume
terms
•
The vodka market in Russia in volume terms is nearly four
times bigger than in the United States
Source: Euromonitor
Vodka
80%
Whiskey
3%
Other spirits
5%
Cognac and
Brandy
12%
.
4
5
7
8
8
11
22
34
44
176
Germany
Brazil
Belarus
Uzbekistan
United Kingdom
Kazakhstan
Poland
Ukraine
USA
Russia
mln.
decalitres

14
Russian Market
Russian vodka market by production
•
Although in volume terms the market has been in decline, the value branded segment of the
market
is
growing
rapidly
–
premium
segment
of
Parliament
is
fastest
growing
segment
•
Economic sector vodka is being replaced by more expensive branded vodka
•
Currently mainstream and premium segments make up approximately 40% of the market, and this is
expected to increase to 60% by 2011
276.4
275
272.2
253.1
246.8
239.4
237.5
231
224.1
217.1
210.1
9.3
9.6
10.8
12.9
14.2
15.1
16.5
17.6
18.6
19.6
20.5
0
50
100
150
200
250
300
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
-
5
10
15
20
25
30
Vodka market volume (mn dl)
Vodka market value ($bn)
Source: Renaissance Capital Estimates

15
Russian Market
Market Share of the Top-5 leaders (2006)
Number of players on the market
344
324
286
209
175
2003
2004
2005
2006
2007E
26%
58%
61%
78%
Russia
USA
Ukraine
Poland
•
The Russian vodka market is undergoing consolidation and the
number of players has halved in the last five years
•
However, compared to other developed consumer markets, the level
of consolidation is still comparatively low
Source: Management, Business Analytica Data as of January 2007

16
Parliament, #1 Market Share in the Premium
Sector
•
Forecasted 2007 sales of approximately
25 million liters –
5 year CAGR of 37%
•
Distributed in over 60,000 outlets across
Russia
•
53% brand awareness –
second only to
Russian Standard
•
115-240 RUR price segment (Parliament 170 RUR)
is the fastest growing vodka segment
•
Over 200 sales staff serving Russia
•
Currently
not
distributing
any
3
rd
party
agency
brands (represents a big potential)
•
Nearly 60% lower excise tax in Russia as compared to Poland, with similar retail
price, translating into higher margins for producers
Source: CEDC Management Estimates, Renaissance Capital Estimates

17
Parliament
The Group’s market share in the sub-premium segment (total market)
0
2
5
11
13
17
53
55
59
69
82
95
1%
4%
8%
15%
16%
18%
0
10
20
30
40
50
60
70
80
90
100
2001
2002
2003
2004
2005
2006E
0%
5%
10%
15%
20%
25%
30%
Parliament
Sub-premium segment
Market share of sub-premium segment
Source: Management, Business Analytica data as of January 2006
Strong brand growth driven primarily
by core brand Parliament Classic split
almost 50/50 in 0.5 liter and 0.7 liter
Also sold is a range of flavored vodka’s
•
Black current
•
Mandarin
•
Pepper

18
2007 and 2008 Guidance
•
2007 Comparable EPS of $1.65 to $1.79
per fully diluted share
•
2008 Comparable EPS of $2.03 to $2.13
per fully diluted share
•
2007 revenue projection of $1.17 billion to
$1.20 billion, an increase of approximately
25% as compared to 2006
•
2008 revenue projection of $1.26 billion to
$1.36 billion
•
Above guidance does not factor in the
impact of any future acquisitions, including
Parliament
EPS on a comparable basis (US$)
Net sales (US$000’s)
GAAP information for the relevant periods, and reconciling information, is set forth on page 21 and 22

19
Increased Distribution and Liquidity
•
Average trading volume increased from
approximately 350,000 to over 450,000
shares a day over the last 3 months
•
Shares dually traded on Nasdaq and WSE
•Diversified investor base with 74% of our
shares held by institutions (60% a year ago)
•
54% U.S. Investors
•
7% Polish Investors
•
13% Other non U.S. Investors
•
Market capitalization approximately        
$2 billion
CEDC closing price on Nasdaq
0
10
20
30
40
50
60

20
Summary
GROWTH in emerging markets will
continue to fuel increasing consumer
demand for BRANDS
CEDC is well positioned to EXPAND and
GROW with these trends

21
UNAUDITED RECONCILIATION OF NON-GAAP
MEASURES
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
docment
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
such
measures.
Our
full
year
guidance
is
forward-looking
information.
See
“Forward
Looking
Statements”
at
the
beginning
of
this
presentation.
Note: for periods prior to 2005 there is no difference between GAAP and comparable
non-GAAP net income in this presentation
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. CEDC closed a EURO 325 million Senior Secured Notes offering on July 25, 2005 in order to fund the acquisitions of Polmos
Bialystok and
Bols.
B)
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) on our senior secured
noted
prior
to
completion
of
the
acquisitions.
In
addition,
the
CEDC
incurred
additional
debt
to
support
the
deposit
payment
made
to
the
State
Treasury
as
pa
rt
of
the
Polmos
Bialystok acquisition.  The costs relating to this additional financing are also represented in this calculation.
C)
Represents other miscellaneous costs incurred in 2005, directly
related to the acquisitions of Bols
and Polmos
Bialystok and 2006 costs related to the tender
for additional shares of Polmos
Bialystok.
D)
Represents
cost
incurred
with
the
potential
acquisition
of
Polmos
Lublin
which
was
not
completed
and
has
since
been
acquired
by
another
company.
E)
On January 1, 2006, the Company adopted SFAS 123(R) and began to expense stock options. This amount represents the net after tax impact of the
expensing of stock options.
12 Months Ended December 31,
2005
2006
GAAP net income/(loss)
20,268
      
55,450
      
A. Foreign exchange impact and hedge revaluation
6,832
        
(11,810)
     
B. Pre-acquisition financing costs
3,907
        
-
            
C. Other acquisition costs
317
           
423
           
D. Impact of Polmos Lublin acquistion costs write-off
469
           
E. Impact of expensing stock options
1,548
        
Range for Comparable non-GAAP Fully Diluted Earnings per
31,324
      
46,080
      
Comparable net income per share of common stock, basic
1.11
1.29
Comparable net income per share of common stock, diluted
1.09
1.28
GAAP net income per share of common stock, basic
0.72
          
1.55
          
GAAP net income per share of common stock, diluted
0.70
          
1.53
          
Share base for fully diluted earnings per share calculation
28,820
      
36,137
      

22
UNAUDITED RECONCILIATION OF NON-GAAP
MEASURES
Note:
Although
changes
in
foreign
exchange
have
had
a
significant
impact
on
EPS
in
prior
periods,
it
is
not
possible
to
estimate
this
for
2008;
therefore,
no
adjustment
is
provided.
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 September 30, 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 and cost incurred with the potential acquisition of Polmos
Lublin, which was not completed in
2006.
Full Year Guidance, 12 Months Ending December 31,
2007
2008
1.44
$        
1.99
          
1.58
$        
2.09
          
A. Foreign exchange impact and hedge revaluation
(0.10)
         
-
            
B. Other acquisition related costs
0.03
          
-
            
C. Cost associated with early retirement of debt
0.23
          
-
            
D. Impact of expensing stock options
0.04
          
0.04
          
E. Other non recurring costs
0.01
          
-
            
1.65
$        
2.03
1.79
$        
2.13
Range for Comparable non-GAAP Fully Diluted Earnings per
Share
Range for GAAP  Fully Diluted Earnings per Share