10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(MARK ONE)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2012

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM              TO             

COMMISSION FILE NUMBER 001-35293

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

Delaware	54-1865271
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
3000 Atrium Way, Suite 265 Mt. Laurel, New Jersey	08054
(Address of Principal Executive Offices)	(Zip code)

(856) 273-6980

(REGISTRANT’S TELEPHONE NUMBER, INCLUDING AREA CODE)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (check one):

Large Accelerated Filer	x	Accelerated Filer	¨
Non-Accelerated Filer	¨  (Do not check if a smaller reporting company)	Smaller Reporting Company	¨

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.):    Yes  ¨    No  x

The number of shares outstanding of each class of the issuer’s common stock as of November 14, 2012: Common Stock ($.01 par value) 78,761,652

INDEX

		PAGE
PART I FINANCIAL INFORMATION
Item 1	Condensed Consolidated Financial Statements (unaudited)
	Condensed Consolidated Balance Sheets as of September 30, 2012 (unaudited) and as of December  31, 2011		3
	Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three and nine month periods ended September 30, 2012 and September 30, 2011		4
	Condensed Consolidated Statements of Cash Flow (unaudited) for the nine month periods ended September 30, 2012 and September 30, 2011		5
	Notes to Condensed Consolidated Financial Statements (unaudited)		6
Item 2	Management’s Discussion and Analysis of Financial Condition and Results of Operations		21
Item 3	Quantitative and Qualitative Disclosures about Market Risk		33
Item 4	Controls and Procedures		33
PART II OTHER INFORMATION			34
Item 1	Legal Proceedings		34
Item 1A	Risk Factors		34
Item 6	Exhibits		34

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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONDENSED CONSOLIDATED BALANCE SHEETS

All amounts are expressed in thousands

(except share information)

	September 30, 2012 (unaudited)			December 31, 2011
ASSETS
Current Assets
Cash and cash equivalents	$	102,713		$	94,410
Accounts receivable, net of allowance for doubtful accounts at September 30, 2012 of $26,512 and at December 31, 2011 of $24,510		220,802			410,866
Inventories		160,061			117,690
Prepaid expenses		27,472			16,538
Other current assets		48,780			23,020
Deferred income taxes		5,173			4,717
Debt issuance costs		7,389			2,962
Total Current Assets		572,390			670,203
Intangible assets, net		486,787			463,848
Goodwill		706,924			670,294
Property, plant and equipment, net		178,871			176,660
Deferred income taxes, net		23,195			21,488
Debt issuance costs		11,324			13,550
Non-current assets held for sale		675			675
Total Non-Current Assets		1,407,776			1,346,515
Total Assets	$	1,980,166		$	2,016,718
LIABILITIES AND EQUITY
Current Liabilities
Trade accounts payable	$	78,735		$	144,797
Bank loans and overdraft facilities		115,196			85,762
Obligations under Convertible Senior Notes		257,122			0
Obligations under Debt Security		70,000			0
Income taxes payable		9,421			9,607
Taxes other than income taxes		101,820			189,515
Other accrued liabilities		75,357			48,208
Current portions of obligations under capital leases		832			1,109
Total Current Liabilities		708,483			478,998
Long-term obligations under capital leases		674			532
Long-term obligations under Convertible Senior Notes		0			304,645
Long-term obligations under Senior Secured Notes		933,871			932,089
Long-term accruals		2,093			2,000
Deferred income taxes		94,815			91,128
Commitments and contingent liabilities (Note 15)
Total Long-Term Liabilities		1,031,453			1,330,394
Temporary equity		29,443			0
Stockholders’ Equity
Common Stock ($0.01 par value, 120,000,000 shares authorized, 73,045,992 and 72,740,302 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively)		730			727
Preferred Stock ($0.01 par value, 1,000,000 shares authorized, none issued and outstanding)		0			0
Additional paid-in-capital		1,371,389			1,369,471
Accumulated deficit		(1,189,620	)		(1,197,884	)
Accumulated other comprehensive income		28,438			35,162
Less Treasury Stock at cost (246,037 shares at September 30, 2012 and December 31, 2011)		(150	)		(150	)
Total Stockholders’ Equity		210,787			207,326
Total Liabilities and Equity	$	1,980,166		$	2,016,718

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (UNAUDITED)

All amounts are expressed in thousands

(except per share information)

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Sales	$	401,113		$	432,942		$	1,125,619		$	1,176,861
Excise taxes		(209,782	)		(223,304	)		(601,098	)		(630,513	)
Net sales		191,331			209,638			524,521			546,348
Cost of goods sold		109,317			131,427			312,055			340,820
Gross profit		82,014			78,211			212,466			205,528
Selling, general and administrative expenses		66,835			61,710			187,909			180,836
Gain on remeasurement of previously held equity interests		0			0			0			(7,898	)
Impairment charge		0			674,515			0			674,515
Operating income		15,179			(658,014	)		24,557			(641,925	)
Non operating income / (expense), net
Interest income / (expense), net		(26,231	)		(28,123	)		(78,139	)		(83,336	)
Other financial income / (expense), net		58,490			(170,337	)		80,648			(120,807	)
Other non operating income / (expense), net		(5,883	)		(10,683	)		(10,982	)		(14,320	)
Income / (loss) before income taxes and equity in net losses from unconsolidated investments		41,555			(867,157	)		16,084			(860,388	)
Income tax benefit / (expense)		(5,786	)		18,422			(7,820	)		14,232
Equity in net losses of affiliates		0			0			0			(7,946	)
Net income / (loss) attributable to the company		35,769			(848,735	)		8,264			(854,102	)
Net income / (loss) from operations per share of common stock, basic	$	0.46		($	11.71	)	$	0.11		($	11.85	)
Net income / (loss) from operations per share of common stock, diluted	$	0.44		($	11.71	)	$	0.10		($	11.85	)
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments		10,945			(215,010	)		(6,724	)		(50,410	)
Comprehensive income / (loss) attributable to the company	$	46,714		($	1,063,745	)	$	1,540		($	904,512	)

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOW (UNAUDITED)

All amounts are expressed in thousands

	Nine months ended September 30,
	2012			2011
Cash flows from operating activities
Net income / (loss)	$	8,264		$	(854,102	)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization		15,075			15,328
Deferred income taxes		(1,948	)		(5,138	)
Unrealized foreign exchange gains		(77,591	)		118,366
Stock options fair value expense		1,919			1,998
Equity loss in affiliates		0			7,946
Gain on fair value remeasurement of previously held equity interest		0			(6,397	)
Impairment charge		0			674,515
Impairments related to assets held for sale		0			7,355
Other non cash items		849			6,170
Changes in operating assets and liabilities:
Accounts receivable		211,483			246,153
Inventories		(33,969	)		(9,183	)
Prepayments and other current assets		(42,447	)		(7,701	)
Trade accounts payable		(78,804	)		(42,518	)
Other accrued liabilities and payables (including taxes)		(71,829	)		(106,396	)
Net cash provided by / (used in) operating activities		(68,998	)		46,396
Cash flows from investing activities
Purchase of fixed assets		(8,017	)		(5,422	)
Proceeds from the disposal of fixed assets		381			0
Purchase of intangibles		0			(693	)
Purchase of trademarks		0			(17,473	)
Acquisitions of subsidiaries, net of cash acquired		0			(24,125	)
Net cash used in investing activities		(7,636	)		(47,713	)
Cash flows from financing activities
Borrowings on bank loans and overdraft facility		78,177			36,027
Payment of bank loans, overdraft facility and other borrowings		(45,439	)		(37,892	)
Issuance of Debt Security, net of debt issuance cost of $838		69,162			0
Repayment of Convertible Senior Notes		(50,392	)		0
Issuance of shares in private placement		29,885			0
Decrease in short term capital leases payable		(252	)		(34	)
Proceeds from options exercised		0			72
Net cash provided by / (used in) financing activities		81,141			(1,827	)
Currency effect on brought forward cash balances		3,796			(7,781	)
Net increase / (decrease) in cash		8,303			(10,925	)
Cash and cash equivalents at beginning of period		94,410			122,116
Cash and cash equivalents at end of period	$	102,713		$	111,191
Supplemental Schedule of Non-cash Investing Activities
Common stock issued in connection with investment in subsidiaries	$	0		$	23,175

The accompanying notes are an integral part of the condensed consolidated financial statements.

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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables expressed in thousands, except share and per share information

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and description of business

We operate primarily in the alcohol beverage industry. We are one of the largest producers of vodka in the world and are Central and Eastern Europe’s largest integrated spirit beverages business, measured by total volume, with approximately 33.2 million nine-liter cases produced and distributed in 2011. Our business primarily involves the production and sale of our own spirit brands (principally vodka), and the importation on an exclusive basis of a wide variety of spirits, wines and beers. Our primary operations are conducted in Poland, Russia, Ukraine and Hungary. We have six operational manufacturing facilities located in Poland and Russia.

In Poland, we are one of the largest vodka producers with a brand portfolio that includes Absolwent, Żubrówka, Żubrówka Biała, Bols, Palace and Soplica brands, each of which we produce at our Polish distilleries. We produce and sell vodkas primarily in three of four vodka sectors: premium, mainstream and economy. In Poland, we also own and produce Royal, the top-selling vodka in Hungary.

We are also the largest vodka producer in Russia, the world’s largest vodka market. Our Green Mark brand is the top-selling mainstream vodka in Russia and the second-largest vodka brand by volume in the world, and our Parliament and Zhuravli brands are two top-selling sub-premium vodkas in Russia.

As well as sales and distribution of its own branded spirits, the Company is a leading exclusive importer of wines and spirits in Poland, Russia and Hungary.

Liquidity

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As described in Note 6, certain credit and factoring facilities are coming due in fourth quarter of 2012, which the Company expects to renew. Furthermore, our Convertible Senior Notes (the “Convertible Notes”) are due on March 15, 2013. Our current cash on hand, estimated cash from operations and available credit facilities will not be sufficient to make the repayment of principal on the Convertible Notes and, unless the transaction with Russian Standard Corporation, described in Note 3, is completed the Company may default on them. The Company’s cash flow forecasts include the assumption that certain credit and factoring facilities that are coming due in fourth quarter of 2012 will be renewed to manage working capital needs. Moreover, the Company had a net loss and significant impairment charges in 2011 and current liabilities exceed current assets at September 30, 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The transaction with Russian Standard Corporation is subject to certain risks, including shareholder approval which may not be obtained. The Company’s 2012 Annual Meeting of Stockholders (the “AGM”), which was postponed due to the need to restate the Company’s financial statements, is expected to be held as soon as practicable. We believe that if the transaction is completed as scheduled, the Convertible Notes will be repaid by their maturity date, which would substantially reduce doubts about the Company’s ability to continue as a going concern.

Basis of presentation

These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

CEDC’s subsidiaries maintain their books of account and prepare their statutory financial statements in their respective local currencies. The subsidiaries’ financial statements have been adjusted to reflect U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present our financial condition, results of operations and comprehensive income and cash flows for the interim periods presented have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ended December 31, 2012.

The balance sheet at December 31, 2011 has been derived from the restated audited consolidated financial statements at that date, filed with the SEC on October 5, 2012 as Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the fiscal year ended December 31, 2011, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

6

These unaudited condensed consolidated financial statements should be read in conjunction with the restated consolidated financial statements and related notes included in Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the fiscal year ended December 31, 2011, filed with the SEC on October 5, 2012.

The significant interim accounting policies include the recognition of a pro-rata share of certain estimated annual sales incentives, marketing, promotion and advertising costs, generally in proportion to sales, and the recognition of income taxes using an estimated annual effective tax rate adjusted for tax amendments related to prior years and changes in estimates.

On February 7, 2011, the Company acquired full voting and economic control over Whitehall Group and changed the accounting treatment for its interest in Whitehall from the equity method of accounting to consolidation beginning on February 7, 2011.

2. SALE OF ACCOUNTS RECEIVABLE

On February 24, 2011, two subsidiaries of the Company, namely CEDC International Sp. z o.o. (“CEDC International”) and Polmos Białystok S.A. (“Polmos Bialystok”), entered into factoring arrangements (“Factoring Agreements”) with ING Commercial Finance Polska (“ING Polska”) for the sale up to 290.0 million Polish zlotys (approximately $91.3 million) of receivables. On January 1, 2012, the total limit under the Factoring Agreements was reduced from 290.0 million Polish zlotys ($91.3 million) to 250.0 million Polish zlotys ($78.7 million) and from March 1, 2012 it was further reduced to 220.0 million Polish zlotys ($69.2 million). The Factoring Agreements were to mature on April 30, 2012, however on April 25, 2012 the Company extended these agreements until September 30, 2012 with further decrease of the total limit to 200.0 million Polish zlotys (approximately $62.9 million). On September 28, 2012 the Company further extended these agreements until December 31, 2012 with decrease of the total limit to 170.0 million Polish zlotys (approximately $53.5 million).

As of September 30, 2012, the total balance of receivables under factoring amounted to 95.9 million Polish zlotys (approximately $30.2 million) of the 170.0 million Polish zlotys limit available.

For the three and nine months ended September 30, 2012, the Company sold receivables in the amount of 282.3 million Polish zlotys ($88.8 million) and 979.7 million Polish zlotys ($308.3 million), respectively and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 2.8 million Polish zlotys ($0.8 million) and 9.1 million Polish zlotys ($2.7 million), respectively in respect of the non-recourse factoring.

Furthermore, the Company signed in June 2011 and in January 2012 factoring agreements with ING Polska and with Bank Handlowy w Warszawie Spółka Akcyjna (“Bank Handlowy”), respectively. These agreements allow the Company to sale to the banks receivable of three Company’s distributors named in these agreements. There is no financing limit in any of the two agreements. As a result of the agreement with ING Polska, in three and nine month periods ended September 30, 2012 the Company sold receivables in the amount of 20.9 million Polish zlotys ($6.6 million) and 76.6 million Polish zlotys ($24.1 million), respectively and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 0.14 million Polish zlotys ($0.04 million) and 0.50 million Polish zlotys ($0.15 million). As a result of the agreement with Bank Handlowy, in three and nine month periods ended September 30, 2012 the Company sold receivables in the amount of 21.1 million Polish zlotys ($6.6 million) and 65.3 million Polish zlotys ($20.5 million), respectively and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 0.10 million Polish zlotys ($0.03 million) and 0.3 million Polish zlotys ($0.09 million).

Additionally, in August 2012, the Company signed agreements with its distributor and Bank Zachodni WBK S.A. for non-recourse factoring of the receivables from the distributor and its related parties. There is no financing limit fixed in these agreements. As a result of these agreement, in the three and nine month period ended September 30, 2012 the Company sold receivables in the amount of 129.9 million Polish zlotys ($40.9 million) and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 1.3 million Polish zlotys ($0.4 million). The Company has no continuing involvement with the sold non-recourse receivables.

As of September 30, 2012, the liabilities from factoring with recourse amounted to $1.7 million and are included in the short term bank loans in the balance sheet. Corresponding receivables from factoring with recourse are presented under accounts receivable in the balance sheet.

3. AGREEMENT WITH ROUST TRADING

On April 23, 2012, the Company entered into a Securities Purchase Agreement (“SPA”) with Roust Trading Limited (“Roust Trading”), for a strategic transaction. Pursuant to this SPA, Roust Trading agreed to make an investment in the Company in three stages, subject to typical closing conditions. In the first stage, on May 7, 2012, Roust Trading acquired 5,714,286 newly issued shares of the Company’s common stock for an aggregate purchase price of $30 million, or $5.25 per share (the “Initial Shares”). The Initial Shares were accounted for as temporary equity in the balance sheet. Also on May 7, 2012, JSC Russian Standard Bank (“Russian Standard Bank”), a subsidiary of Roust Trading, purchased $70 million aggregate principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% (the “Debt Security”) issued by the Company. The SPA also contemplated the following transactions:

• upon approval of CEDC’s shareholders, and after the satisfaction of certain other conditions, the Company would be able to cause Roust Trading to or Roust Trading would be able to

• purchase such number of shares of common stock at a purchase price of $5.25 per share sufficient to repay the then-outstanding principal amount of the Debt Security, plus the accrued and unpaid interest thereon, totaling approximately 13.3 million shares of common stock (the “Exchange Shares”) plus additional shares representing accrued and unpaid interest thereon, and

• sell to CEDC the entire principal amount of the Debt Security;

• the purchase by Roust Trading of a new debt security with a principal aggregate amount of approximately $102.6 million maturing on July 31, 2016 (the “Rollover Notes”), with the Rollover Notes to bear a blended interest rate of 6.00% over the term of the Rollover Notes and interest accrued on the Rollover Notes to be effectively paid in shares of common stock before January 1, 2014, and in cash thereafter; and

• the receipt by CEDC of the right to put to Roust Trading a debt security maturing on July 31, 2016 (the “Backstop Notes”) of an aggregate principal amount of up to $107.5 million, with the Backstop Notes to bear a blended interest rate of 6.00% over the term of the Backstop Notes and interest to be accrued on the Backstop Notes to be effectively paid in shares of common stock before January 1, 2014, and in cash thereafter.

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On July 9, 2012, the Company entered into an amended and restated securities purchase agreement (the “Amended SPA”) with Roust Trading, which amended and restated the entirety of the SPA described above. The material amendments to the terms of the SPA as set forth in the Amended SPA include:

• the Company will, within five business days of a request by Roust Trading, issue to Roust Trading, as an adjustment to the issue price of the Initial Shares and Exchange Shares, up to the following amount of shares of common stock at any time after the following dates: (i) 3 million shares of common stock after the execution of the Amended SPA; (ii) 5 million shares of common stock after receipt of Company Stockholder Approval (as defined in the Amended SPA); and (iii) 2 million shares following the Backstop Escrow Release Date (as defined in the Amended SPA) (the shares of common stock in clauses (i), (ii) and (iii) above collectively the “Additional Shares”);

• interest payable (i) on the Debt Security prior to the Second Closing (as defined in the Amended SPA) may, at the option of Roust Trading and after the Second Closing, be effectively paid in shares of common stock at a price of $3.44 per share of common stock, (ii) on the Rollover Notes through June 30, 2014, will be effectively paid in a number of shares of common stock, determined by dividing the amount of interest payable over such period by the 5-day volume weighted average price (the “VWAP”) of the common stock (as traded on NASDAQ), provided that the VWAP may never exceed $4.13 or be lower than $2.75 (the “VWAP Amount”), and (iii) on the Backstop Notes through December 31, 2013, will be effectively paid in a number of shares of common stock, determined by dividing the amount of interest payable over such period by the VWAP Amount;

• the final maturity date for the Debt Security will be extended to July 31, 2016; and

• the Company’s board of directors authorized (subject to applicable blackout periods and regulatory limitations) Roust Trading to purchase an amount of shares of common stock in the market that, when added to the shares currently owned by Roust Trading, the Exchange Shares, the Additional Shares and the shares that Roust Trading would receive in connection with interest payments under notes issued and to be issued to Roust Trading, would not exceed an amount of outstanding share capital of the Company that would require Roust Trading to make a tender offer for the Company’s common stock under Polish law. Upon receipt of certain Polish regulatory waivers if and to the extent received, the Company’s board of directors has agreed that the threshold will be raised to 42.9%.

In consideration of the above terms, and subject to the fulfillment of certain conditions, Roust Trading agreed to waive certain contractual claims it may have under the Original SPA and under certain other agreements arising from the accounting errors announced on the Company’s Form 8-K filed with the SEC on June 4, 2012.

The cash proceeds from the Rollover Notes will be used by the Company to repurchase the Convertible Notes held by Roust Trading or its affiliates with a face value of approximately $102.6 million, at par. The remaining proceeds (net of transaction fees and expenses) received by the Company from the issuance of the Initial Shares, Debt Security and Backstop Notes will be used to repurchase or repay the outstanding amount of Convertible Notes.

As described in Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the year ended December 31, 2011, filed with SEC on October 5, 2012, the Company restated its consolidated financial statements as of and for the years ended December 31, 2011 and 2010, primarily due to the fact that certain retroactive trade rebates and trade marketing refunds were not properly recorded by CEDC’s principle operating subsidiary in Russia, the Russian Alcohol Group. The cumulative impact of restatements for the years ended December 31, 2011 and 2010, exceeded certain thresholds as set out in the Amended SPA. As a result, Roust Trading may no longer be obliged to consummate the associated funding transaction and may have other claims against the Company, including potential event of default under the New Debt. Roust Trading has reserved its rights and therefore it is uncertain at this stage whether Roust Trading will consummate the funding transaction agreed with the Company or if Roust Trading will propose new terms to an amended transaction or propose an alternative transaction. Discussions have commenced between the Company and Roust Trading regarding of the impact of the restatement on our strategic alliance.

4. COMPREHENSIVE INCOME

Comprehensive income is defined as all changes in equity during a period except those resulting from investments by owners and distributions to owners. Comprehensive income includes net income adjusted by foreign currency translation adjustments. The foreign translation losses/gains on the re-measurements from foreign currencies to U.S. dollars are classified separately as foreign currency translation adjustment within accumulated other comprehensive income included in stockholders’ equity.

As of September 30, 2012, our functional currencies exchange rates used to translate the balance sheet strengthened against the U.S. dollar as compared to the exchange rates as of December 31, 2011, and as a result $6.7 million of foreign currency translation adjustment was recognized as part of total comprehensive income.

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5. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated.

	Three months ended September 30,					Nine months ended September 30,
	2012		2011			2012		2011
Net income / (loss)	$	35,769	$	(848,735	)	$	8,264	$	(854,102	)
Weighted average shares of common stock outstanding (used to calculate basic EPS)		78,582		72,490			75,902		72,063
Shares issuable according to Amended SPA (See Note 3)		3,000		0			3,000		0
Net effect of dilutive employee stock options based on the treasury stock method		209		104			202		115
Weighted average shares of common stock outstanding (used to calculate diluted EPS)		81,791		72,594			79,104		72,178
Net income / (loss) per common share - basic	$	0.46	$	(11.71	)	$	0.11	$	(11.85	)
Net income / (loss) per common share - diluted	$	0.44	$	(11.71	)	$	0.10	$	(11.85	)

Employee stock options granted have not been included in the above calculations of diluted earnings per share where the exercise price is less than the average market price of the common stock during the three and nine months ended September 30, 2012 and 2011. In addition there is no adjustment to fully diluted shares related to the Convertible Senior Notes as the average market price was below the conversion price for the periods.

6. BORROWINGS

Bank Facilities

As of September 30, 2012, the Company has outstanding liability of €22.5 million ($29.1 million) from the term loans from Alfa Bank and Zenith Bank drawn by Whitehall:

• The loan agreement with Alfa Bank, dated July 22, 2008, matures on October 18, 2014. The credit limit under this agreement is €20.0 million ($25.9 million). The loan as of September 30, 2012 consists of seven open tranches released between March 30, 2012 and September 26, 2012, and is repayable between September 30, 2012 and December 28, 2012. As of September 30, 2012, the Company had outstanding liability of €17.0 million ($22.0 million) from this term loan;

• The loan agreement with Zenith Bank, dated March 29, 2011, matured on June 6, 2012. The original loan was repaid at maturity date. A new loan agreement was signed on August 16, 2012 with maturity date of April 25, 2014. The credit limit under this agreement is €10.0 million ($12.9 million). The loan was released in two tranches on August 16, 2012 and September 10, 2012. As of September 30, 2012, the Company had outstanding liability of €5.5 million ($7.1 million) from this term loan.

The aforementioned loans drawn by Whitehall are guaranteed by Whitehall companies. The both loans are secured by the Company’s inventory.

As of September 30, 2012, the Company has outstanding term loans of 2,371.4 million Russian rubles ($76.6 million) from MKB Bank, Unicredit, Alfabank and JSC Grand Invest Bank, all drawn by Russian Alcohol, as well as, an overdraft facility from Nomos-Bank drawn by Russian Alcohol and an overdraft facility from Sberbank drawn by Bravo Premium:

• The loan agreement with MKB Bank, dated July 19, 2012, matures on February 25, 2013. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 1,000.0 million Russian rubles ($32.3 million) from this term loan;

• The loan agreement with Alfabank, dated July 25, 2012, matures on December 31, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 560.0 million Russian rubles ($18.1 million) from this term loan;

• The loan agreement with Unicredit, dated May 24, 2011, matures on November 25, 2012. This loan has no financial covenants and is secured by inventory of up to 720 million Russian rubles ($23.3 million) and guarantees given by companies of Russian Alcohol. As of September 30, 2012, the Company has outstanding liability of 600.0 million Russian rubles ($19.4 million) from this term loan;

9

• The loan agreement with JSC Grand Invest Bank, dated November 25, 2011, matures on November 23, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 211.4 million Russian rubles ($6.8 million) from this term loan;

• The overdraft agreement with Nomos-Bank, dated July 6, 2012, matures on December 29, 2012. The credit limit under this agreement is 500.0 million Russian rubles ($16.2 million). This loan has no collateral. As of September 30, 2012, the loan was utilized in the amount of 173.4 million Russian rubles ($5.6 million).

• The overdraft agreement with Sberbank, dated February 6, 2012, matures on February 5, 2013. The credit limit under this agreement is 60.0 million Russian rubles ($1.9 million). This loan is secured by fixed assets. As of September 30, 2012, the loan was fully utilized.

Convertible Senior Notes due 2013

On March 7, 2008, the Company completed the issuance of $310 million aggregate principal amount of 3% Convertible Senior Notes due 2013 (the “Convertible Senior Notes”). Interest is due semi-annually on the 15^th of March and September, beginning on September 15, 2008. The Convertible Senior Notes are convertible in certain circumstances into cash and, if applicable, shares of our common stock, based on an initial conversion rate of 14.7113 shares per $1,000 principal amount, subject to certain adjustments. Upon conversion of the notes, the Company will deliver cash up to the aggregate principal amount of the notes to be converted and, at the election of the Company, cash and/or shares of common stock in respect to the remainder, if any, of the conversion obligation. The proceeds from the Convertible Senior Notes were used to fund the cash portions of the acquisition of Copecresto Enterprises Limited and Whitehall.

In the period from May to September of 2012, the Company repurchased $52.1 million principal amount of Convertible Notes in six tranches for $50.2 million.

As of September 30, 2012 and December 31, 2011, the Company had accrued interest of $0.5 million and $2.7 million, respectively, related to the Convertible Senior Notes, with the next coupon due for payment on March 15, 2013. Total obligations under the Convertible Senior Notes are shown net of deferred finance costs, amortized over the life of the borrowings using the effective interest rate method as shown in the table below:

	September 30, 2012			December 31, 2011
Convertible Senior Notes	$	257,858		$	310,000
Unamortized debt discount		(320	)		(1,070	)
Debt discount related to ASC 470-20		(416	)		(4,285	)
Total	$	257,122		$	304,645

For the three and nine months ended September 30, 2012, the additional pre-tax non-cash interest expense recognized in the condensed consolidated statement of operations was $1.5 million and $4.1 million, respectively and for three and nine months ended September 30, 2011 $1.1 million and $3.2 million, respectively. Pre-tax increase in non-cash interest expense on our condensed consolidated statements of operations and comprehensive income to be recognized until 2013, the maturity date of the Convertible Senior Notes, amounts to $0.4 million.

Senior Secured Notes due 2016

On December 2, 2009, the Company issued $380 million 9.125% Senior Secured Notes due 2016 and €380 million ($491.9 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used a portion of the net proceeds from the 2016 Notes to redeem the Company’s outstanding 2012 Notes, having an aggregate principal amount of €245.4 million ($317.7 million) on January 4, 2010. The remainder of the net proceeds from the 2016 Notes was used to (i) purchase Lion Capital’s remaining equity interest in Russian Alcohol by exercising the Lion Option and the Co-Investor Option, pursuant to the terms and conditions of the Lion Option Agreement and the Co-Investor Option Agreement, respectively (ii) repay all amounts outstanding under Russian Alcohol credit facilities; and (iii) repay certain other indebtedness.

On December 9, 2010, the Company issued an additional €50.0 million ($64.7 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used the net proceeds from the additional 2016 Notes to repay its term loans and overdraft facilities with Bank Handlowy w Warszawie S.A and Bank Zachodni WBK S.A.

As of September 30, 2012 and December 31, 2011 the Company had accrued interest of $28.0 million and $7.0 million, respectively related to the Senior Secured Notes due 2016, with the next coupon due for payment on December 1, 2012.

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	September 30, 2012			December 31, 2011
Senior Secured Notes due 2016	$	936,635		$	935,296
Unamortized debt discount		(2,764	)		(3,207	)
Total	$	933,871		$	932,089

Senior notes due March 18, 2013 (“the Debt Security”)

As described in Note 3 above, on May 7, 2012, the Company issued $70 million principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% to Russian Standard Bank. Pursuant to the Amended SPA, upon approval of the Company’s shareholders, and after the satisfaction of certain other conditions including the receipt of certain Polish regulatory waivers, Roust Trading will purchase such number of shares of common stock at a purchase price of $5.25 per share sufficient to repay the then-outstanding principal amount of the Debt Security, totaling approximately 13.3 million shares of common stock and sell to CEDC the entire principal amount of the Debt Security. In addition, interest payable on the Debt Security prior to the Second Closing may, at the option of Roust Trading and after the Second Closing, be effectively paid in shares of common stock at a price $3.44 per share of common stock. Pursuant to the Amended SPA, the final maturity date for the Debt Security will be extended to July 31, 2016.

	September 30, 2012		December 31, 2011
Senior Notes due 2013	$	70,000	$	0
Total	$	70,000	$	0

As of September 30, 2012, the Company had accrued interest of $0.7 million, related to the Debt Security, with the next coupon due for payment on March 18, 2013.

Total accumulated unamortized debt discount related to the Company’s debt was $18.7 million and $16.5 million as of September 30, 2012 and December 31, 2011, respectively.

The following is a schedule by years of the future principal repayments for borrowings as of September 30, 2012:

	September 30, 2012		December 31, 2011
Principal repayments for the following years
2012	$	53,203	$	78,504
2013		389,114		304,645
2014		0		0
2015		0		0
2016 and beyond		933,871		932,089
Total	$	1,376,188	$	1,315,238

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7. INVENTORIES

The following table summarizes our inventories:

	September 30, 2012		December 31, 2011
Raw materials and supplies	$	34,510	$	22,237
In-process inventories		4,714		2,655
Finished goods and goods for resale		120,837		92,798
Total	$	160,061	$	117,690

Because of the nature of the products supplied by the Company, great attention is paid to inventory rotation. The number of days in inventory increased from approximately 81 days as of December 31, 2011 to approximately 135 days as of September 30, 2012. As a comparison, the number of days in inventory as of September 30, 2011 amounted to 85 days with total balance of $121.4 million.

8. INCOME TAXES

Our tax charge for the nine months ended September 30, 2012 was $7.8 million which represents an effective tax rate for this period of 48.6%. The underlying tax rates in our key jurisdictions are 19% in Poland, 20% in Russia, 21% in Ukraine, 16% in Hungary and 35% in the United States. Changes in the Company’s uncertain income tax positions, excluding the related accrual for interest and penalties, for the nine-month period ended September 30, 2012 result from additions to accruals for current and prior year tax positions. There were no reductions for prior year tax positions, settlements or lapses in statutes of limitations. As of September 30, 2012 and December 31, 2011, the uncertain income tax position balance was $8.0 million and $7.1 million, respectively.

9. OPERATING SEGMENTS

The Company operates and manages its business based upon three primary geographic segments: Poland, Russia and Hungary. Selected financial data split based upon this segmentation assuming elimination of intercompany revenues and profits is shown below: Segment information represents only continuing operations.

	Segment Net Sales
	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Segment
Poland	$	56,471	$	58,234	$	159,778	$	163,463
Russia		128,895		143,623	$	347,675	$	362,393
Hungary		5,965		7,781	$	17,068	$	20,492
Total Net Sales	$	191,331	$	209,638	$	524,521	$	546,348

	Operating income / (loss)
	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Segment
Poland before fair value adjustments	$	11,905		$	8,120		$	27,497		$	21,155
Gain on remeasurement of previously held equity interests		0		$	0			0			7,898
Impairment charge		0		$	(213,687	)		0		$	(213,687	)
Poland after fair value adjustments		11,905			(205,567	)		27,497			(184,634	)
Russia before fair value adjustments		19,634		$	9,167			20,221			6,011
Impairment charge		0		$	(460,828	)		0			(460,828	)
Russia after fair value adjustments		19,634			(451,661	)		20,221			(454,817	)
Hungary		987		$	1,446			2,469			3,387
Corporate Overhead
General corporate overhead		(17,017	)	$	(1,570	)		(23,711	)		(3,862	)
Option Expense		(330	)	$	(662	)		(1,919	)		(1,999	)
Total Operating income / (loss)	$	15,179		$	(658,014	)	$	24,557		$	(641,925	)

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	Identifiable Operating Assets
	September 30, 2012		December 31, 2011
Segment
Poland	$	560,792	$	600,940
Russia		1,316,088		1,369,744
Hungary		20,349		20,265
Corporate		82,937		25,769
Total Identifiable Assets	$	1,980,166	$	2,016,718

	Goodwill
	September 30, 2012		December 31, 2011
Segment
Poland	$	271,069	$	252,080
Russia		429,286		412,105
Hungary		6,569		6,109
Total Goodwill	$	706,924	$	670,294

10. INTEREST EXPENSE, NET

The following items are included in Interest expense, net:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Interest income	$	578		$	127		$	1,398		$	1,008
Interest expense		(26,809	)		(28,250	)		(79,537	)		(84,344	)
Total interest expense, net	$	(26,231	)	$	(28,123	)	$	(78,139	)	$	(83,336	)

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11. OTHER FINANCIAL INCOME / (EXPENSE), NET

The following items are included in Other financial income / (expense), net:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Foreign exchange impact related to foreign currency financing	$	62,145		$	(173,664	)	$	82,682		$	(123,196	)
Gain on debt extinguishment		640			0			1,949			0
Other gains / (losses)		(4,295	)		3,327			(3,983	)		2,389
Total other financial income / (expense), net	$	58,490		$	(170,337	)	$	80,648		$	(120,807	)

12. OTHER NON-OPERATING EXPENSE

The following items are included in Other non-operating income / (expense):

	Three months ended September 30						Nine months ended September 30,
	2012			2011			2012			2011
Write-off of assets held for sale		0			(7,355	)		0			(7,355	)
Factoring costs and bank fees	$	(2,781	)	$	(1,651	)	$	(6,501	)	$	(3,662	)
Bank waiver costs		(1,867	)		0			(1,867	)		0
Other gains / (losses)		(1,235	)		(1,677	)		(2,614	)		(3,303	)
Total other non operating income / (expense), net	$	(5,883	)	$	(10,683	)	$	(10,982	)	$	(14,320	)

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13. STOCK BASED COMPENSATION PLANS AND WARRANTS

During the nine months ended September 30, 2012, the range of exercise prices for outstanding options was $2.00 to $60.92. During the nine months ended September 30, 2012, the weighted average remaining contractual life of options outstanding is 4.5 years. Exercise prices for options exercisable as of September 30, 2012 ranged from $2.00 to $60.92.

The Company has issued stock options to employees under stock based compensation plans. Stock options are issued at the current market price, subject to a vesting period, which varies from one to three years. As of September 30, 2012, the Company has not changed the terms of any outstanding awards.

During the nine months ended September 30, 2012, the Company recognized compensation cost of $1.92 million.

As of September 30, 2012, there was $1.2 million of total unrecognized compensation cost related to non-vested stock options, restricted stock units and restricted stock granted under the Company’s Stock Incentive Plan. The costs are expected to be recognized over the 2012 to 2014 period.

The following weighted-average assumptions were used in the calculation of fair value for options granted during 2011. For the nine months ended September 30, 2012 the Company did not grant any options to its employees.

	December 31, 2011
Fair Value	$	7.60
Dividend Yield		0	%
Expected Volatility		66.1	%
Weighted Average Volatility		66.1	%
Risk Free Interest Rate		3	%
Expected Life of Options from Grant		3.2

14. RELATED PARTY TRANSACTIONS

Pursuant to the SPA and the Amended SPA as described in Note 3, on May 7, 2012, Roust Trading acquired 5,714,286 shares of the Company’s common stock. Roust Trading directly controls Russian Standard Corporation and indirectly controls other Russian Standard entities. Mr. Roustam Tariko who indirectly controls Roust Trading has been appointed to CEDC’s Board of Directors as a non-Executive Chairman of the Board. Effectively all entities controlled by Mr. Tariko are as of now related parties of CEDC, including Russian Standard Bank, Russian Standard Corporation and Roust Inc. (“Roust”).

As disclosed in Note 3 and Note 6 above, on May 7, 2012, the Company issued $70 million principal amount of senior notes due March 18, 2013, bearing on interest rate of 3% to Russian Standard Bank. The details of this transaction are described in Note 6 above.

In the ordinary course of business, the Company is involved in transactions with entities controlled by Mr. Tariko that resulted in recognition of revenues, expenses, assets and liabilities by the Company. There were no significant transactions with the entities controlled by Mr. Tariko in prior periods.

The following table summarizes the transactions with Roust as included in the Company’s Consolidated Financial Statements:

Related Party Transactions with Roust (in thousands)
Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three and nine month periods ended September 30, 2012 and September 30, 2011	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Sales	$	1,473	$	0	$	1,473	$	0
Selling, general and administrative expenses		83		0		83		0

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Condensed Consolidated Balance Sheets as of September 30, 2012 (unaudited) and as of December 31, 2011 (in thousands)	September 30, 2012 (unaudited)		December 31, 2011
Current Assets
Accounts receivable		1,798		0
Other current assets		1,034		0
Total due from Roust		2,832		0
Current Liabilities
Other accrued liabilities		95		0
Total due to Roust		95		0

15. FINANCING COMMITMENTS AND CONTINGENT LIABILITIES

Supply contracts

The Company has various agreements covering its sources of supply, which, in some cases, may be terminated by either party on relatively short notice. Thus, there is a risk that a portion of the Company’s supply of products could be curtailed at any time.

Bank Guarantees

In accordance with current legislation in Russia each producer of spirit beverages must acquire excise stamps and must pay excise tax in full before buying spirit for production purposes. For each lot of stamps purchased, the alcohol producer must provide the relevant body with a bank guarantee in the full amount of payment for the excise tax to secure the legality of usage of the excise stamps. This bank guarantee serves as insurance against the illegal usage of excise stamps by an alcohol producer.

In addition, under new legislation effective since August 1, 2011 the producer purchasing spirit alcohol must a) prepay the excise tax in full or b) provide the relevant tax body with a bank guarantee in the full amount of the excise tax before purchasing to secure payment of the excise tax. This bank guarantee serves as insurance that the excise tax is paid in time.

Russian Alcohol has in place a guarantee line agreement with multiple banks pursuant to which it was provided with a guarantee limit of 22.7 billion Russian rubles (approximately $735.5 million) for a period from 1 to 4 years, Bravo Premium signed a guarantee line agreement with multiple banks pursuant to which it was provided with a guarantee limit of 820.0 million Russian rubles (approximately $26.5 million) for a period from 1 to 2 years and Whitehall has in place a guarantee line agreement with multiple banks pursuant to which it was provided with a guarantee limit of 1.2 billion Russian rubles (approximately $37.5 million) as insurance against the illegal usage of excise stamps.

According to the agreements, companies have the right to obtain bank guarantees during the agreement term for each purchase of excise stamps and for the purchase of spirit. The guarantees for excise stamps are held by Rosalkoregulirovanie (the Federal Service for Alcohol Market Regulation), during the whole production period for which the excise stamps were purchased. The guarantee for excise tax is held by the beneficiary (the tax body) for 6 months after the end of month the spirit was purchased.

As of September 30, 2012, the Company has bank guarantees related to customs duties on imported goods in Poland of 4.4 million Polish zlotys (approximately $1.4 million).

Operating Leases and Rent Commitments

The Company makes rental payments for real estate, vehicles, office, computer, and manufacturing equipment under operating leases. The following is a schedule by years of the future rental payments under the non-cancelable operating lease as of September 30, 2012:

2012	$	2,918
2013		9,130
2014		8,722
2015		8,148
2016		5,536
Thereafter		2,976
Total	$	37,430

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During 2012, the Company continued its policy of renewing its transportation fleet by way of capital leases. The future minimum lease payments for the assets under capital lease as of September 30, 2012 are as follows:

2012	$	594
2013		593
2014		236
Gross payments due	$	1,423
Less interest		(100	)
Net payments due	$	1,323

Legal proceedings

From time to time we are involved in legal proceedings arising in the normal course of our business, including opposition and cancellation proceedings with respect to trademarks similar to some of our brands, and other proceedings, both in the United States and elsewhere. Except as set forth below, we are not currently involved in or aware of any pending or threatened proceedings that we reasonably expect, either individually or in the aggregate, will result in a material adverse effect on our consolidated financial statements.

On October 24, 2011, a class action complaint titled Steamfitters Local 449 Pension Fund vs. Central European Distribution Corporation, et al., was filed in the United States District Court, District of New Jersey on behalf of a putative class of all purchasers of our common stock from August 5, 2010 through February 28, 2011 against us and certain of our officers. The complaint seeks unspecified money damages and alleges violations of federal securities law in connection with alleged materially false and misleading statements and/or omissions regarding our business, financial results and prospects in our public statements and public filings with the U.S. Securities & Exchange Commission for the second and third quarters of 2010, relating to declines in our vodka portfolio, our need to take an impairment charge relating to the deterioration in fair value of certain of our brands in Poland and negative financial results from the launch of Żubrówka Biała. Subsequent to the above complaint, a second, substantially similar class action complaint titled Tim Schuler v. Central European Distribution Corporation, et al., was filed in the same court. By court orders dated August 22, 2012, the Steamfitters action and the Schuler action were consolidated and are now proceeding in the District of New Jersey under the caption In re Central European Distribution Corp. Securities Litigation.

On June 8, 2012, a purported securities fraud class action titled Grodko v. Central European Distribution Corporation, et al., was filed against the Company in the United States District Court for the Southern District of New York. The plaintiff in the lawsuit, who is suing purportedly on behalf of a class of all purchasers of the Company’s common stock between March 1, 2010 and June 4, 2012, alleges that the Company made false and/or misleading statements related to and/or failed to disclose that (1) the Company’s reported net sales in the years ended December 31, 2010 and 2011 were materially inflated; (2) as a result of a failure to account for retroactive trade rebates provided to the customers of Russian Alcohol, the Company anticipates restating its reported consolidated net sales, operating profit and related accounts for these periods; and (3) as a result of the foregoing, the Company’s statements were materially false and misleading at all relevant times. On August 7, 2012 a second, substantially similar class action complaint titled Puerto Rico System of Annuities and Pension for Teachers v. Central European Distribution Corporation, et al., was filed in the same court. By court orders dated September 4, 2012, the Grodko action and the Puerto Rico System of Annuities and Pension for Teachers action were transferred to the United States District Court for the District of New Jersey, where the actions have been consolidated with the prior-pending cases in New Jersey, described above, and are proceeding under the caption In re Central European Distribution Corp. Securities Litigation. Objections by certain plaintiffs to the consolidation of these actions are pending.

The Company intends to mount a vigorous defense to the claims asserted. Although we believe the allegations in the class action complaints are without merit, these types of lawsuits can be protracted, time-consuming, distracting to management and expensive and, whether or not the claims are ultimately successful, could ultimately have an adverse effect on our business, operating results and cash flows.

As noted in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the SEC on October 5, 2012, the Audit Committee, through its counsel, voluntarily notified the SEC of its internal investigation regarding the Company’s retroactive trade rebates, trade marketing refunds and related accounting issues. The Company has subsequently been contacted by the Fraud Division of the Criminal Division of the US Department of Justice (“DOJ”) regarding the disclosure in the Form 10-K/A for the year ended December 31, 2011, filed with the SEC on October 5, 2012 that there has been a breach of the books and records provisions of the Foreign Corrupt Practices Act (“FCPA”) of the United States and potentially other breaches of the FCPA. The Company has been asked to provide information about these matters on a voluntary basis to the SEC and DOJ. The Company is fully cooperating with the SEC and DOJ. Any action by the SEC or DOJ could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees.

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16. FAIR VALUE MEASUREMENTS

The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of inputs used to measure fair value are as follows:

Level 1 —	Quoted prices in active markets for identical assets or liabilities.
Level 2 —	Observable inputs other than quoted prices included in Level 1. We value assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
Level 3 —	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of September 30, 2012, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents. The monetary assets represented by these financial instruments are primarily located in Poland, Hungary and Russia. Consequently, they are subject to currency translation risk when reporting in U.S. dollars. The fair values of the cash and cash equivalents, Convertible Senior Notes and Secured Senior Notes is determined based on quoted market prices in public markets and is categorized as Level 1. Fair value of Debt Security is determined based on the principal face value and accrued interest and is categorized as Level 3. Apart from assets held for sale, the Company does not have any financial assets measured at fair value on a recurring basis as Level 3 and there were no transfers in or out of Level 1, Level 2 or Level 3 during the nine months ended September 30, 2012.

Non-financial assets and liabilities, such as goodwill and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment on the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual depletion of the asset. If an impairment exists, the resulting write-down would be the difference between the fair market value of the long-lived asset and the related net book value. As of the balance sheet date, the carrying value of its long-lived assets are recoverable and no impairment existed.

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The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring and nonrecurring basis (cash and cash equivalents as well as assets held for sale ) and fair values of financial assets accounted for at their carrying values (Convertible Senior Notes, Secured Senior Notes and Debt Security) as of September 30, 2012, and December 31, 2011.

			Assets at Fair Value Using
			Quoted Prices in Activated Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
September 30, 2012
Recurring items
Cash and cash equivalents	$	102,713	$	102,713	$	0	$	0
Convertible Senior Notes	$	240,450	$	240,450	$	0	$	0
Secured Senior Notes	$	649,199	$	649,199	$	0	$	0
Debt Security	$	70,722	$	0	$	0	$	70,722
Nonrecurring items
Assets held for sale	$	675	$	0	$	0	$	675
December 31, 2011
Recurring items
Cash and cash equivalents	$	94,410	$	94,410	$	0	$	0
Convertible Senior Notes	$	248,000	$	248,000	$	0	$	0
Secured Senior Notes	$	702,700	$	702,700	$	0	$	0
Nonrecurring items
Assets held for sale	$	675	$	0	$	0	$	675

The Company has other financial instruments, such as receivables, accounts payable, overdrafts, short term bank loans and other liabilities which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value approximate their fair values. The Company did not have any other financial instruments with the scope of the fair value disclosure requirements as of September 30, 2012.

17. EFFECTS OF FOREIGN CURRENCY MOVEMENTS

Substantially all of the Company’s operating cash flows and assets are denominated in Polish zloty, Russian ruble and Hungarian forint. This means that the Company is exposed to translation movements both on its balance sheet and statement of operations and comprehensive income. The impact on working capital items is demonstrated on the cash flow statement as the movement in exchange on cash and cash equivalents. The impact on the statement of operations is by the movement of the average exchange rate used to restate the statement of operations from Polish zloty, Russian ruble and Hungarian forint to U.S. dollars. The amounts shown as exchange rate gains or losses on the face of the statements of operations relate only to realized gains or losses on transactions that are not denominated in Polish zloty, Russian ruble or Hungarian forint. Table below presents the exchange rates used for translation of our balance sheet and statement of operations and comprehensive income balances as of and for the three months ended September 30, 2012:

	Balance sheet rate as of September 30, 2012		Balance sheet rate as of December 31, 2011		Average rate for the three  months ended September 30, 2012		Average rate for the three  months ended September 30, 2011
PLN / US$		3.1780		3.4174		3.3107		2.9400
RUR / US$		30.9144		32.2092		31.9874		29.1667
HUF / US$		219.1724		240.6620		226.7603		194.7020

Because the Company’s reporting currency is the U.S. dollar, the translation effects of fluctuations in the exchange rate of our functional currencies have impacted the Company’s financial condition and results of operations and have affected the comparability of our results between financial periods.

19

The Company has borrowings including its Convertible Notes due 2013 and Senior Secured Notes due 2016 that are denominated in U.S. dollars and euros, which have been lent to its operations where the functional currency is the Polish zloty and Russian ruble. The effect of having debt denominated in currencies other than the Company’s functional currencies is to increase or decrease the value of the Company’s liabilities on that debt in terms of the Company’s functional currencies when those functional currencies depreciate or appreciate in value respectively. As a result of this, the Company is exposed to gains and losses on the re-measurement of these liabilities. The table below summarizes the pre-tax impact of a one percent movement in each of the exchange rate which could result in a significant impact in the results of the Company’s operations.

Exchange Rate	Value of notional amount		Pre-tax impact of a 1% movement in exchange rate
USD-Polish zloty	$	444 million	$	4.4 million gain/loss
USD-Russian ruble	$	264 million	$	2.6 million gain/loss
EUR-Polish zloty	€	430 million or approximately $557 million	$	5.6 million gain/loss

18. SUBSEQUENT EVENTS

In October 2012 Russian Alcohol signed new agreements with multiple banks, related to its bank guarantees. As a result of new agreements signed, guaranteed limit decreased by 1.2 billion Russian rubles ($39.9 million) to 21.5 billion Russian rubles ($695.6 million).

19. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. The Company adopted ASU 2011-04 during the first quarter of the current fiscal year. The adoption of ASU 2011-04 did not have a material impact on the Company’s consolidated financial statements other than disclosures related to fair value measurements.

In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”), which was issued to enhance comparability between entities that report under U.S. GAAP and IFRS, and to provide a more consistent method of presenting non-owner transactions that affect an entity’s equity. ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. However, in December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011-12”), which deferred the guidance on whether to require entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement where net income is presented and the statement where other comprehensive income is presented for both interim and annual financial statements. ASU 2011-12 reinstated the requirements for the presentation of reclassifications that were in place prior to the issuance of ASU 2011-05 and did not change the effective date for ASU 2011-05. For public entities, the amendments in ASU 2011-05 and ASU2011-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and should be applied retrospectively. The Company adopted both ASU 2011-05 and ASU 2011-12 during the first quarter of the current fiscal year. The adoption of ASU 2011-05 and ASU 2011-12 did not have a material impact on the Company’s consolidated financial statements, other than presentation of comprehensive income.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”), which simplifies testing for impairment by allowing an entity to first assess qualitative factors and determine if it is more likely than not (defined as 50% or more) that the fair value of the reporting unit is less than its carrying amount. That determination can then be used to decide if it is necessary to perform the two-step goodwill impairment test. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, which corresponds to the Company’s first quarter of current fiscal year. The Company will adopt ASU 2011-08 during the current fiscal year and this adoption is not expected to have a material impact on the Company’s consolidated financial statements.

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following analysis should be read in conjunction with the Condensed Consolidated Financial Statements and the notes thereto appearing elsewhere in this report.

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Regarding Forward-Looking Information.

This report (and other oral and written statements we have made or make, including press releases containing information about our business, results of operations, financial condition, guidance and other business developments), contains forward-looking statements, which provide our current expectations or forecasts of future events. These forward-looking statements may be identified by the use of forward-looking terminology, including the terms “believes,” “estimates,” “anticipates,” “expects,” “intends,” “may,” “will” or “should” or, in each case, their negative, or other variations or comparable terminology, but the absence of these words does not necessarily mean that a statement is not forward-looking. These forward-looking statements include all matters that are not historical facts. They appear in a number of places throughout this report and include, without limitation:

• information concerning possible or assumed future results of operations, trends in financial results and business plans, including those relating to earnings growth and revenue growth, liquidity, prospects, strategies and the industry in which the Company and its affiliates operate, as well as the integration of recent acquisitions and other investments and the effect of such acquisitions and other investments on the Company;

• statements about the expected level of our costs and operating expenses, and about the expected composition of the Company’s revenues;

• information about the impact of governmental regulations on the Company’s businesses;

• statements about local and global credit markets, currency exchange rates and economic conditions;

• other statements about the Company’s plans, objectives, expectations and intentions including with respect to its credit facility and other outstanding indebtedness;

• statements relating to shareholder approval of the transaction with Roust Trading and Roust Trading’s ability or intention to fund some or all of its investment in the Company; and

• other statements that are not historical facts.

By their nature, forward-looking statements involve known and unknown risks and uncertainties because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and that our actual results of operations, financial condition and liquidity, the development of the industries in which we operate, and the effects of acquisitions and other investments on us may differ materially from those anticipated in or suggested by the forward-looking statements contained in this report. In addition, even if our results of operations, financial condition and liquidity, and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this report, those results or developments may not be indicative of results or developments in subsequent periods.

We urge you to read and carefully consider the items of this and other reports and documents that we have filed with or furnished to the SEC for a more complete discussion of the factors and risks that could affect our future performance and the industry in which we operate, including the risk factors described in this report and in the Company’s Annual Report on Form 10-K/A filed with the SEC on October 5, 2012. In light of these risks, uncertainties and assumptions, the forward-looking events described in this report may not occur as described, or at all.

You should not unduly rely on these forward-looking statements, because they reflect our views only as of the date of this report. The Company undertakes no obligation to publicly update or revise any forward-looking statement to reflect circumstances or events after the date of this report, or to reflect on the occurrence of unanticipated events. All subsequent written and oral forward-looking statements attributable to us or to persons acting on our behalf are expressly qualified in their entirety by the cautionary statements referred to above and contained elsewhere in this report.

The following discussion and analysis should be read in conjunction with the Consolidated Financial Statements and the notes thereto found elsewhere in this report.

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Overview

The Company is one of the world’s largest vodka producers and Central and Eastern Europe’s largest integrated spirit beverages business with its primary operations in Poland, Russia and Hungary. In Poland, the Company was able to see year on year domestic sales volume and value growth for the quarter ending September 30, 2012 primarily due to the continued success of Żubrówka Biała and the higher margin flavored segment including Soplica. In Russia, although our sales volumes for the nine months were down by 8.4%, sales were flat in the third quarter, following the change of the management team in Russia. Nonetheless, Russia continues to be a challenging environment with excise taxes increasing by 18% in July 2012 (the second increase of the year) and overall difficult consumer market.

Significant factors affecting our consolidated results of operations

Effect of Exchange Rate and Interest Rate Fluctuations

Substantially all of Company’s operating cash flows and assets are denominated in Polish zloty, Russian ruble and Hungarian forint. This means that the Company is exposed to translation movements both on its balance sheet and statement of operations. The impact on working capital items is demonstrated on the cash flow statement as the movement in exchange on cash and cash equivalents. The impact on the statement of operations is due to the movement of the average exchange rate used to restate the statements of operations from Polish zloty, Russian ruble and Hungarian forint to U.S. dollars. The amounts shown as exchange rate gains or losses on the face of the statements of operations relate only to realized gains or losses on transactions that are not denominated in Polish zloty, Russian ruble or Hungarian forint. The table below presents the exchange rates used for translation of our balance sheet and statement of operations balances as of and for the quarter ended September 30, 2012:

	Balance sheet rate as of September 30, 2012		Average rate for the three months ended September 30, 2012
PLN / US$		3.1780		3.3107
RUR / US$		30.9144		31.9874
HUF / US$		219.1724		226.7603

Because the Company’s reporting currency is the U.S. dollar, the translation effects of fluctuations in the exchange rate of our functional currencies have impacted the Company’s financial condition and results of operations and have affected the comparability of our results between financial periods.

The Company also has borrowings including its Convertible Notes due 2013 and Senior Secured Notes due 2016 that are denominated in U.S. dollars and euros, which have been lent to its operations where the functional currency is the Polish zloty and Russian ruble. The effect of having debt denominated in currencies other than the Company’s functional currencies is to increase or decrease the value of the Company’s liabilities on that debt in terms of the Company’s functional currencies when those functional currencies depreciate or appreciate in value, respectively. As a result of this, the Company is exposed to gains and losses on the re-measurement of these liabilities. The table below summarizes the pre-tax impact of a one percent movement in each of the exchange rate which could result in a significant impact in the results of the Company’s operations.

Exchange Rate	Value of notional amount		Pre-tax impact of a 1% movement in exchange rate
USD-Polish zloty	$	444 million	$	4.4 million gain/loss
USD-Russian ruble	$	264 million	$	2.6 million gain/loss
EUR-Polish zloty	€	430 million or approximately $557 million	$	5.6 million gain/loss

22

Results of Operations:

Three months ended September 30, 2012 compared to three months ended September 30, 2011

A summary of the Company’s operating performance (expressed in thousands except per share amounts) is presented below.

	Three months ended September 30,
	2012			2011
Sales	$	401,113		$	432,942
Excise taxes		(209,782	)		(223,304	)
Net sales		191,331			209,638
Cost of goods sold		109,317			131,427
Gross profit		82,014			78,211
Selling, general and administrative expenses		66,835			61,710
Impairment charge		0			674,515
Operating income / (loss)		15,179			(658,014	)
Non operating income / (expense), net
Interest income / (expense), net		(26,231	)		(28,123	)
Other financial income / (expense), net		58,490			(170,337	)
Other non operating income / (expense), net		(5,883	)		(10,683	)
Income / (loss) before taxes and equity in net income from unconsolidated investments		41,555			(867,157	)
Income tax expense		(5,786	)		18,422
Net income / (loss) attributable to the company		35,769			(848,735	)
Net income / (loss) from operations per share of common stock, basic	$	0.46		$	(11.71	)
Net income / (loss) from operations per share of common stock, diluted	$	0.44		$	(11.71	)
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments		10,945			(215,010	)
Comprehensive income / (loss) attributable to the company	$	46,714		$	(1,063,745	)

Net Sales

Net sales represent total sales net of all customer rebates, excise tax on production and imports, and value added tax. Total net sales decreased by approximately 8.7%, or $18.3 million, from $209.6 million for the three months ended September 30, 2011 to $191.3 million for the three months ended September 30, 2012. This decrease was driven by the impact of foreign exchange translation of $20.3 million partially offset by higher local currency sales revenue of $2.0 million.

	Segment Net Sales Three months ended September 30,
	2012		2011
Segment
Poland	$	56,471	$	58,234
Russia		128,895		143,623
Hungary		5,965		7,781
Total Net Sales	$	191,331	$	209,638

Sales for Poland decreased by $1.7 million from $58.2 million for the three months ended September 30, 2011 to $56.5 million for the three months ended September 30, 2012. This decrease was mainly a combination of a volume decrease of domestic vodkas of 2.5%, resulting in a net sales value increase of $4.8 million, offset by weaker Polish zloty against the U.S. dollar which accounted for approximately $6.5 million of sales in U.S. dollar terms. The Company continued to see strong demand for its Żubrówka Biała as well as higher margin flavored vodkas including Soplica.

Sales for Russia decreased by $14.7 million from $143.6 million for the three months ended September 30, 2011 to $128.9 million for the three months ended September 30, 2012. The sales decline in Russia resulted from the impact of foreign exchange translation of $12.7 million, higher value of export sales of $4.9 million due to the increased lower value sales to the Ukraine partially offset by domestic sales value decrease of $6.9 million. Domestic vodka sales volumes were flat for the quarter however improved pricing and lower trade spend resulted in sales value growth.

23

Sales for Hungary decreased by $1.8 million from $7.8 million for the three months ended September 30, 2011 to $6.0 million for the three months ended September 30, 2012, which resulted in a $0.7 million decrease in volumes on local currency terms, as well as a weaker Hungarian forint against the U.S. dollar which accounted for approximately $1.1 million of sales in U.S. dollar terms.

Gross Profit

Total gross profit increased by approximately 4.9%, or $3.8 million, to $82.0 million for the three months ended September 30, 2012, from $78.2 million for the three months ended September 30, 2011. Absolute gross margin increased, gross profit margins as a percentage of net sales increased by 5.6 percentage points from 37.3% to 42.9% for the three months ended September 30, 2012 as compared to the three months ended September 30, 2011. The improvement in gross margin percentage was driven by a number of factors including improved product and channel mix in Poland and price increases taken in Russia. Part of the improvement in pricing coming from the Russian market was offset by the year on year growth of spirit pricing which resulted in approximately $3.5 million of additional cost in the third quarter of 2012.

Operating Expenses

Operating expenses consist of selling, general and administrative, or “SG&A” expenses, advertising expenses, non-production depreciation and amortization, and provision for bad debts. Total operating expenses decreased by $669.4 million, from $736.2 million for the three months ended September 30, 2011 to $66.8 million for the three months ended September 30, 2012. This decrease was primarily driven by the impairment charges for Poland and Russia recorded as of September 30, 2011 of $674.5 million and $5.6 million decrease resulting from weaker local currencies against U.S. dollar, offset by additional costs related to the restatement of financial statements of $8.9 million and redundancy payments of $4.4 million.

The table below sets forth the items of operating expenses.

	Operating Expenses Three Months Ended September 30,
	2012		2011
SG&A	$	59,800	$	52,596
Marketing		4,756		6,472
Depreciation and amortization		2,279		2,642
Sub-total		66,835		61,710
Impairment charge	$	0	$	674,515
Total operating expense	$	66,835	$	736,225

SG&A consists of salaries, warehousing and transportation costs, administrative expenses and bad debt expense. SG&A expenses increased by $7.2 million, from $52.6 million for the three months ended September 30, 2011 to $59.8 million for the three months ended September 30, 2012. The increase in SG&A expenses results primarily from additional legal costs incurred in the three months ended September 30, 2012 related to the restatement of financial statements of $8.9 million, $4.4 million of redundancy costs, offset by cost savings achieved on integration of businesses in Russia and Poland and effect of weaker local currencies against U.S. dollar.

Marketing expenses decreased by $1.7 million, from $6.5 million for the three months ended September 30, 2011 to $4.8 million for the three months ended September 30, 2012. Decrease mainly was as a result of postponed marketing activities to fourth quarter, 2012 in Russia.

Depreciation and amortization decreased by $0.3 million, from $2.6 million for the three months ended September 30, 2011 to $2.3 million for the three months ended September 30, 2012.

24

Operating Income

Total operating income increased by $673.2 million, from $658.0 million loss for the three months ended September 30, 2011 to $15.2 million profit for the three months ended September 30, 2012, primarily driven by impairment charge for the three months ended September 30, 2011 in Russia and Poland and offset by higher spirit costs in the Russian market. The table below summarizes the segmental split of operating profit.

	Operating Income/(Loss) Three months ended September 30,
	2012			2011
Segment
Poland before fair value adjustments	$	11,905		$	8,120
Impairment charge		0			(213,687	)
Poland after fair value adjustments		11,905			(205,567	)
Russia before fair value adjustments		19,634			9,167
Impairment charge		0			(460,828	)
Russia after fair value adjustments		19,634			(451,661	)
Hungary		987			1,446
Corporate Overhead
General corporate overhead		(17,017	)		(1,570	)
Option Expense		(330	)		(662	)
Total Operating Profit/(Loss)	$	15,179		$	(658,014	)

Underlying operating income in Poland excluding fair value adjustments increased by approximately 46.9%, or $3.8 million, from $8.1 million for the three months ended September 30, 2011 to $11.9 million for the three months ended September 30, 2012. The operating income in Russia before fair value adjustment increased by $10.4 million from $9.2 million the three months ended September 30, 2011 to $19.6 million for the three months ended September 30, 2012. The changes in operating income in both of these segments were driven by all of the factors described above.

General corporate overheads increased by $15.4 million from $1.6 million for the three months ended September 30, 2011 to $17.0 million for the three months ended September 30, 2012. The increase mainly was driven by $9.8 million of additional costs related to restatement and $4.4 million of redundancy costs.

Non Operating Income and Expenses

Total interest expense decreased by approximately 6.8%, or $1.9 million, from $28.1 million for the three months ended September 30, 2011 to $26.2 million for the three months ended September 30, 2012. This decrease was primarily driven by the euro exchange rate as compared to the Polish zloty.

The Company recognized $58.5 million of non-cash unrealized foreign exchange rate gain in the three months ended September 30, 2012, primarily related to the impact of movements in exchange rates on our U.S. dollar and euro denominated liabilities by $62.1 million, as compared to $170.3 million of loss in the three months ended September 30, 2011. During three months ended September 30, 2012, the Company recognized $0.6 million gain on debt extinguishment related to repurchased part of Convertible Senior Notes due 2013.

Total other non-operating expenses decreased by $4.8 million, from a loss of $10.7 million for the three months ended September 30, 2011 to a loss of $5.9 million for the three months ended September 30, 2012.

	Three months ended September 30,
	2012			2011
Write-off assets held for sale		0			(7,355	)
Factoring costs and bank fees		(2,781	)		(1,651	)
Bank waiver costs		(1,867	)		0
Other gains / (losses)		(1,235	)		(1,677	)
Total other non operating income / (expense), net	$	(5,883	)	$	(10,683	)

Income Tax

Our effective tax rate for the three months ended September 30, 2012 was 13.9% as compared to an average blended statutory rate of 21%. The difference between the statutory and effective tax rates was due primarily to permanent tax differences related to valuation allowances recorded against tax loss carry forwards that the Company believes will not be utilized in the future.

25

Nine months ended September 30, 2012 compared to nine months ended September 30, 2011

A summary of the Company’s operating performance (expressed in thousands except per share amounts) is presented below.

	Nine months ended September 30,
	2012			2011
Sales	$	1,125,619		$	1,176,861
Excise taxes		(601,098	)		(630,513	)
Net sales		524,521			546,348
Cost of goods sold		312,055			340,820
Gross profit		212,466			205,528
Selling, general and administrative expenses		187,909			180,836
Gain on re-measurement of previously held equity interests		0			(7,898	)
Impairment charge		0			674,515
Operating income / (loss)		24,557			(641,925	)
Non operating income / (expense), net
Interest income / (expense), net		(78,139	)		(83,336	)
Other financial income / (expense), net		80,648			(120,807	)
Other non operating income / (expense), net		(10,982	)		(14,320	)
Income / (loss) before income taxes and equity in net losses from unconsolidated investments		16,084			(860,388	)
Income tax benefit / (expense)		(7,820	)		14,232
Equity in net losses of affiliates		0			(7,946	)
Net income / (loss) attributable to the company	$	8,264		$	(854,102	)
Net income / (loss) from operations per share of common stock, basic	$	0.11		$	(11.85	)
Net income / (loss) from operations per share of common stock, diluted	$	0.10		$	(11.85	)
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments		(6,724	)		(50,410	)
Comprehensive income / (loss) attributable to the company	$	1,540		$	(904,512	)

Net Sales

Net sales represent total sales net of all customer rebates, excise tax on production and imports and value added tax. Total net sales decreased by approximately 4.0%, or $21.8 million, from $546.3 million for the nine months ended September 30, 2011 to $524.5 million for the nine months ended September 30, 2012.

The decrease was driven by the impact of foreign exchange translation of $53.4 million and lower local currency sales value of $26.1 million. Decrease was partially offset by the consolidation of Whitehall only for eight months in 2011 comparing to full three quarters in 2012 of $6.5 million, increase in export sales of $6.3 million and increase of $44.8 due to price mix. In Russia although sales volumes were lower, this was offset by improved pricing and lower trade marketing spend in the quarter.

Our business split by segment, which represents our primary geographic locations of operations, Poland, Russia and Hungary, is shown below:

	Segment Net Sales
	Nine months ended September 30,
	2012		2011
Segment
Poland	$	159,778	$	163,463
Russia		347,675		362,393
Hungary		17,068		20,492
Total Net Sales	$	524,521	$	546,348

26

Sales for Poland decreased by $3.7 million from $163.5 million for the nine months ended September 30, 2011 to $159.8 million for the nine months ended September 30, 2012. This decrease was driven mainly by a weaker Polish zloty against the U.S. dollar which accounted for approximately $21.6 million of sales in U.S. dollar terms offset by higher volume sales of $18.0 million. In 2012, the Company continued to see strong demand for its Żubrówka Biała, as well as higher margin flavored vodkas including Soplica.

Sales for Russia decreased by $14.7 million from $362.4 for the nine months ended September 30, 2011 to $347.7 for the nine months ended September 30, 2012. For the first half of the year sales for Russia remained stable and in the third quarter sales for Russia decreased by $14.7 million. This decline resulted from the impact of foreign exchange translation of $12.7 million, higher value of export sales of $4.9 million due to the increased lower value sales to the Ukraine partially offset by domestic sales value decrease of $6.9 million.

Sales for Hungary decreased by $3.4 million from $20.5 million for the nine months ended September 30, 2011 to $17.1 million for the nine months ended September 30, 2012 resulting primarily from weakening of the Hungarian forint against the U.S. dollar.

Gross Profit

Total gross profit increased by approximately 3.4%, or $7.0 million, to $212.5 million for the nine months ended September 30, 2012, from 205.5 million for the nine months ended September 30, 2011. Gross profit margins as a percentage of net sales increased by 2.9 percentage points from 37.6% to 40.5% for the nine months ended September 30, 2012 as compared to the nine months ended September 30, 2011. The improvement in gross margin percentage was driven by a number of factors including improved product and channel mix in Poland and price increases taken in Russia. Part of the improvement in pricing coming from the Russian market was offset by the year on year growth of spirit pricing which resulted in approximately $11.3 million of additional cost in the nine months period of 2012.

Operating Expenses

Operating expenses consist of selling, general and administrative, or “S,G&A” expenses, advertising expenses, non-production depreciation and amortization, and provision for bad debts. Total operating expenses decreased by approximately 77.8%, or $659.6 million, from $847.5 million for the nine months ended September 30, 2011 to $187.9 million for the nine months ended September 30, 2012. This change includes a one-time gain in the nine month period ended September 30, 2011, amounting to $7.9 million in operating income based on the remeasurement of previously held equity interests in Whitehall to fair value and $674.5 of impairment charge. For comparability of costs between periods, items of operating expenses excluding this fair value adjustment and impairment charge are shown separately in the table below. Operating expenses, excluding fair value adjustments and impairment charge as a percent of net sales increased from 33.1% for the nine months ended September 30, 2011 to 35.8% for the nine months ended September 30, 2012. Operating expenses, net of fair value adjustments and impairment charge increased by $7.1 million, from $180.8 million for the nine months ended September 30, 2011 to $187.9 million for the nine months ended September 30, 2012.

The table below sets forth the items of operating expenses.

	Operating Expenses Nine Months Ended September 30,
	2012		2011
S,G&A	$	162,925	$	156,025
Marketing		18,063		16,360
Depreciation and amortization		6,921		8,451
Sub-Total		187,909		180,836
Impairment charge		0		674,515
Fair value adjustments		0		(7,898	)
Total operating expense	$	187,909	$	847,453

S,G&A consists of salaries, warehousing and transportation costs, administrative expenses and bad debt expense. S,G&A expenses increased by $6.9 million, from $156.0 million for the nine months ended September 30, 2011 to $162.9 million for the nine months ended September 30, 2012. The increase in SG&A is primarily due to the inclusion of full three quarters of the Whitehall Group in 2012 of $4.0 million, redundancy costs of $7.5 million, $13.5 million of additional legal costs incurred in the third quarter 2012 related to restatement of financial statements for 2010 and 2011 and additional bad debt provision in Russia of $3.2 million offset by impact of weaker local currencies against U.S. dollar.

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Marketing expenses increased by $1.7 million, from $16.4 million for the nine months ended September 30, 2011 to $18.1 million for the nine months ended September 30, 2012 mainly due to higher marketing spending in Russia and Ukraine.

Depreciation and amortization decreased by $1.6 million, from $8.5 million for the nine months ended September 30, 2011 to $6.9 million for the nine months ended September 30, 2012.

Operating Income

Total operating income increased by approximately 103.8%, or $666.5 million, from $641.9 million loss for the nine months ended September 30, 2011 to $24.6 million income for the nine months ended September 30, 2012, which is primarily driven by impairment charge of $674.5 million charged in 2011. The table below summarizes the segmental split of operating profit.

	Operating Income Nine months ended September 30,
	2012			2011
Segment
Poland before fair value adjustments	$	27,497		$	21,155
Gain on remeasurement of previously held equity interests		0			7,898
Impairment charge		0			(213,687	)
Poland after fair value adjustments		27,497			(184,634	)
Russia before fair value adjustments		20,221			6,011
Impairment charge		0			(460,828	)
Russia after fair value adjustments		20,221			(454,817	)
Hungary		2,469			3,387
Corporate Overhead
General corporate overhead		(23,711	)		(3,862	)
Option Expense		(1,919	)		(1,999	)
Total Operating Income / (Loss)	$	24,557		$	(641,925	)

Underlying operating income in Poland excluding fair value adjustments increased by approximately 29.7%, or $6.3 million, from $21.2 million for the nine months ended September 30, 2011 to $27.5 million for the nine months ended September 30, 2012. The operating income in Russia excluding fair value adjustments increased by $14.2 million from $6.0 million for the nine months ended September 30, 2011 to $20.2 million for the nine months ended September 30, 2012. The changes in operating income in both of these segments were driven by all of the factors described above.

General corporate overheads increased by $19.8 million, from $3.9 million for the nine months ended September 30, 2011 to $23.7 million for the nine months ended September 30, 2012. This increase mainly was driven by $12.6 million of additional costs related to restatement and $4.4 million of redundancy costs.

Non Operating Income and Expenses

Total interest expense decreased by approximately 6.2%, or $5.2 million, from $83.3 million for the nine months ended September 30, 2011 to $78.1 million for the nine months ended September 30, 2012. This decrease is mainly a result of the weaker euro as compared to the U.S. dollar, as a significant portion of the long-term borrowings are denominated in euro’s.

The Company recognized $80.6 million of unrealized foreign exchange rate gains in the nine months ended September 30, 2012, primarily related to the impact of movements in exchange rates on our U.S. dollar and euro denominated liabilities, as compared to $120.8 million of expense in the nine months ended September 30, 2011. These gains resulted mainly from the appreciation of the Polish zloty and Russian ruble against the U.S. dollar and euro. During the nine months ended September 30, 2012, the Company recognized $1.9 million gain on debt extinguishment related to repurchased part of Convertible Senior Notes due 2013.

Total other non operating expenses decreased by $3.3 million, from $14.3 million for the nine months ended September 30, 2011 to $11.0 million for the nine months ended September 30, 2012. This decrease is mainly a result of write-off of assets held for sale in 2011, which represent $7.4 million of the decrease. The decrease was offset by higher costs related to factoring of receivables in 2012, which represent $6.5 million of expense for the nine months ended September 30, 2012 comparing to $3.7 million for the nine months ended September 30, 2011

	Nine months ended September 30,
	2012			2011
Write-off assets held for sale		0			(7,355	)
Factoring costs and bank fees		(6,501	)		(3,662	)
Bank waiver costs		(1,867	)		0
Other gains / (losses)		(2,614	)		(3,303	)
Total other non operating income / (expense), net	$	(10,982	)	$	(14,320	)

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Income Tax

Our effective tax rate for the nine months ended September 30, 2012 was 48.6% as compared to an average blended statutory rate of 21%. The difference between the statutory and effective tax rates was due primarily to permanent tax differences related to valuation allowances recorded against tax loss carry forwards that the Company believes will not be utilized in the future.

Equity in Net Earnings

Equity in net losses for the nine months ended September 30, 2011 include the Company’s proportional share of net income from its investment in the Moet Hennessey Russia Joint Venture for the period from January 1, 2011 to March 30, 2011 and Whitehall for the period from January 1, 2011 to February 7, 2011.

Statement of Liquidity and Capital Resources

During the nine months ended September 30, 2011, the Company’s primary sources of liquidity were cash flows generated from operations. The Company’s primary uses of cash were to fund its working capital requirements, service indebtedness and finance capital expenditures. The following table sets forth selected information concerning the Company’s consolidated cash flow during the periods indicated.

	Nine months ended September 30, 2012			Nine months ended September 30, 2011
Cash flow from operating activities	$	(68,998	)	$	46,396
Cash flow from investing activities	$	(7,636	)	$	(47,713	)
Cash flow from financing activities	$	81,141		$	(1,827	)

Management views and performs analysis of financial and non financial performance indicators of the business by segments that are split by countries. The extensive analysis of indicators such as sales value in local currencies, gross margin and operating expenses by segment is included in the MD&A section of this Form 10-Q.

Net cash flow from operating activities

Net cash flow from operating activities represents net cash from operations and interest. Overall cash flow from operating activities decreased from cash generation of $46.4 million for the nine months ended September 30, 2011 to cash utilization of $69.0 million for the nine months ended September 30, 2012. The primary factors contributing to this lower cash generation in 2012 are due to the fact that in the first quarter of 2011, the Company entered into factoring arrangements in Poland for the first time which resulted in higher cash collection during this quarter. In 2011, the Polish operations received the cash inflow from the peak Q4 2010 sales as well as the cash from the factored receivables of the quarter, resulting in a one-off benefit in cash flow for the period. During the same period in 2012, the Polish operations only received the normal factored cash flow from the first quarter of 2012.

Overall working capital movements of accounts receivable, inventory and accounts payable resulted in cash outflow approximately $15.6 million of cash during the nine months ended September 30, 2012. Days sales outstanding (“DSO”) as of September 30, 2012 amounted to 39 days as compared to 44 days as of September 30, 2011. The number of days in inventory as of September 30, 2012 amounted to 135 days as compared to 85 days as of September 30, 2011. In addition, the ratio of our current assets to current liabilities, net of inventories, was 0.58 as of September 30, 2012 as compared to 1.54 as of September 30, 2011.

Net cash flow used in investing activities

Net cash flows used in investing activities represent net cash used to acquire subsidiaries and fixed assets. Net cash outflow for the nine months ended September 30, 2012 was $7.6 million as compared to $47.7 million for the nine months ended September 30, 2011.

Net cash flow from financing activities

Net cash flow from financing activities represents cash used for servicing indebtedness, borrowings under credit facilities. Net cash inflow in financing activities was $81.1 million for the nine months ended September 30, 2012 as compared to an outflow of $1.8 million for the nine months ended September 30, 2011. The primary inflow in the nine months ended September 30, 2012 was $100 million of cash invested by Roust Trading Limited and its affiliates offset by cash used for repayment of part of Convertible Senior Notes and loans by the Company.

Changes in working capital as recorded in Condensed Consolidated Balance Sheet

Inventories increased by $ 42.4 million, from $117.7 million as of December 31, 2011 to $160.1 million as of September 30, 2012. This results from the normal course of the business as inventory is always build up in the third quarter of the year in order to prepare for coming season of the highest sale.

Trade accounts payable decreased by $66.1 million, from $144.8 million as of December 31, 2011 to $78.7 million as of September 30, 2012. The change results from the seasonality in the Company’s business. The Company has the highest turnover in the fourth quarter of the year. Inventory is build up during the third quarter and sold in the fourth and resulting accounts payable are paid during following months. Additionally in December, 2011 one of the Russian subsidiaries of the Company realized a one-off distribution contract. Trade accounts payable resulting from this contract of 768.8 million Russian rubles (approx. $23.4 million) were settled after year end.

Accounts receivable, net of allowance for doubtful debts, decreased by $190.1 million from $410.9 million as of December 31, 2011 to $220.8 million as of September 30, 2012. A decrease results from the fact that in the fourth quarter of the year the Company generates the highest turnover and significant part of payments is collected in the following year.

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The Company’s Future Liquidity and Capital Resources

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As discussed further in Note 6, certain credit and factoring facilities are coming due in fourth quarter of 2012, which the Company expects to renew. Furthermore, our Convertible Senior Notes (the “Convertible Notes”) are due on March 15, 2013. Our current cash on hand, estimated cash from operations and available credit facilities will not be sufficient to make the repayment of principal on the Convertible Notes and, unless the transaction with Russian Standard Corporation, described in Note 3, is completed the Company may default on them. The Company’s cash flow forecasts include the assumption that certain credit and factoring facilities that are coming due in fourth quarter of 2012 will be renewed to manage working capital needs. Moreover, the Company had a net loss and significant impairment charges in 2011 and current liabilities exceed current assets at September 30, 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The Russian Standard transaction is subject to certain risks, including shareholder approval which may not be obtained. The Company’s board of directors, along with senior management, continue to review the timing of the Company’s 2012 Annual Meeting of Stockholders (the “AGM”) and expects to hold the AGM as soon as practicable. We believe that if the transaction is completed as scheduled, the Convertible Notes will be repaid by their maturity date which would substantially reduce doubts about the Company’s ability to continue as a going concern. Under the terms of the Indenture for our Senior Secured Notes due 2016, we expect that any indebtedness we incur in exchange for, or to redeem or refinance, all or a portion of the Convertible Notes will be required to be incurred as permitted refinancing indebtedness (a term defined in the Indenture); as a result, the terms of the indenture may limit our ability to enter into agreements that contain limitations on dividends (and certain payments having similar effects) payable to the Company (or its subsidiaries) by its subsidiaries. Any failure to pay the Convertible Notes would also be an event of default under our Senior Secured Notes due 2016 and the terms of our other indebtedness. Such events would jeopardize our ability to continue as a going concern. Notwithstanding the foregoing, we believe that cash on hand, cash from operations and available credit facilities will be sufficient to fund our anticipated cash requirements for working capital purposes and normal capital expenditures, and that we will remain in compliance with the financial covenants contained in our debt agreements, for at least the next twelve months. The Company’s cash flow forecasts used in making this determination include the assumption that certain credit and factoring facilities that are coming due in forth quarter of 2012 will be renewed to manage the Company’s working capital needs.

For additional information, see also “Risk Factors—Risks Relating to Our Indebtedness”—included in Item 8 of our Annual Report on Form 10-K/A filed with the SEC on October 5, 2012.

Financing Arrangements

Bank Facilities

As of September 30, 2012, the Company has outstanding liability of €22.5 million ($29.1 million) from the term loans from Alfa Bank and Zenith Bank drawn by Whitehall:

• The loan agreement with Alfa Bank, dated July 22, 2008, matures on October 18, 2014. The credit limit under this agreement is €20.0 million ($25.9 million). The loan as of September 30, 2012 consists of seven open tranches released between March 30, 2012 and September 26, 2012, and is repayable between September 30, 2012 and December 28, 2012. As of September 30, 2012, the Company had outstanding liability of €17 million ($22.0 million) from this term loan;

• The loan agreement with Zenith Bank, dated March 29, 2011, matured on June 6, 2012. The original loan was repaid at maturity date. A new loan agreement was signed on August 16, 2012 with maturity April 25, 2014. The credit limit under this agreement is €10.0 million ($12.9 million). The loan was released in two tranches on August 16, 2012 and September 10, 2012. As of September 30, 2012, the Company had outstanding liability of €5.5 million ($7.1 million) from this term loan.

The aforementioned loans drawn by Whitehall are guaranteed by Whitehall companies. The both loans are secured by the Company’s inventory.

As of September 30, 2012, the Company has outstanding term loans of 2,371.4 million Russian rubles ($76.7 million) from MKB Bank, Unicredit, Alfabank and JSC Grand Invest Bank, all drawn by Russian Alcohol, as well as, an overdraft facility from Nomos-Bank and an overdraft facility from Sberbank drawn by Bravo Premium:

• The loan agreement with MKB Bank, dated July 19, 2012, matures on February 25, 2013. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 1,000.0 million Russian rubles ($32.3 million) from this term loan;

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• The loan agreement with Alfabank, dated July 25, 2012, matures on December 31, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 560.0 million Russian rubles ($18.1 million) from this term loan;

• The loan agreement with Unicredit, dated May 24, 2011, matures on November 25, 2012. This loan has no financial covenants and is secured by inventory of up to 720 million Russian rubles ($23.3 million) and guarantees given by companies of Russian Alcohol. As of September 30, 2012, the Company has outstanding liability of 600.0 million Russian rubles ($19.4 million) from this term loan;

• The loan agreement with JSC Grand Invest Bank, dated November 25, 2011, matures on November 23, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 211.4 million Russian rubles ($6.8 million) from this term loan;

• The overdraft agreement with Nomos-Bank, dated July 6, 2012, matures on December 29, 2012. The credit limit under this agreement is 500.0 million Russian rubles ($16.2 million). This loan has no collateral. As of September 30, 2012, the loan was utilized in the amount of 173.4 million Russian rubles ($5.6 million).

• The overdraft agreement with Sberbank, dated February 6, 2012, matures on February 5, 2013. The credit limit under this agreement is 60.0 million Russian rubles ($1.9 million). This loan is secured by fixed assets. As of September 30, 2012, the loan was fully utilized.

Convertible Senior Notes due 2013

On March 7, 2008, the Company completed the issuance of $310 million aggregate principal amount of 3% Convertible Senior Notes due 2013 (the “Convertible Notes”). Interest is due semi-annually on the 15th of March and September, beginning on September 15, 2008. The Convertible Notes are convertible in certain circumstances into cash and, if applicable, shares of our common stock, based on an initial conversion rate of 14.7113 shares per $1,000 principal amount, subject to certain adjustments. Upon conversion of the notes, the Company will deliver cash up to the aggregate principal amount of the notes to be converted and, at the election of the Company, cash and/or shares of common stock in respect to the remainder, if any, of the conversion obligation. The proceeds from the Convertible Notes were used to fund the cash portions of the acquisitions of Copecresto Enterprises Limited and Whitehall. The indenture governing the Convertible Notes also contains a cross-acceleration covenant, which would apply in the event that we do not repay when due any indebtedness which equals or exceeds $30 million. In addition, in the event of a fundamental change (as that term is used in our indenture), we would be required to offer to repay the outstanding indebtedness under the Convertible Notes in cash at a price equal to 100% of the aggregate principal amount thereof.

In May 2012, the Company repurchased $36.6 million principal amount of Convertible Notes in four tranches for $35.3 million. Additionally, in July and September 2012, the Company repurchased $15.0 million and $0.5 million principal amount of Convertible Notes for $14.4 million and $0.46 million, respectively.

Senior Secured Notes due 2016

On December 2, 2009, the Company issued $380 million 9.125% Senior Secured Notes due 2016 and €380 million ($491.9 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used a portion of the net proceeds from the 2016 Notes to redeem the Company’s outstanding 2012 Notes, having an aggregate principal amount of €245.4 million ($317.7 million) on January 4, 2010. The remainder of the net proceeds from the 2016 Notes was used to (i) purchase Lion Capital’s remaining equity interest in Russian Alcohol by exercising the Lion Option and the Co-Investor Option, pursuant to the terms and conditions of the Lion Option Agreement and the Co-Investor Option Agreement, respectively (ii) repay all amounts outstanding under Russian Alcohol credit facilities; and (iii) repay certain other indebtedness.

On December 9, 2010, the Company issued an additional €50.0 million ($64.7 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used the net proceeds from the additional 2016 Notes to repay its term loans and overdraft facilities with Bank Handlowy w Warszawie S.A and Bank Zachodni WBK S.A.

The 2016 Notes are guaranteed on a senior basis by certain of the Company’s subsidiaries. We are required to ensure that subsidiaries representing at least 85% of our consolidated EBITDA, as defined in the indenture, guarantee the notes. The notes are secured, directly or indirectly, by a variety of our and our subsidiary’s assets, including shares of the issuer of the notes and subsidiaries in Poland, Cyprus, Russia and Luxembourg, certain intercompany loans made by the issuer of the notes and our Russian finance company in connection with the issuance of the notes, trademarks related to the Soplica brand registered in Poland, European Union trademarks for the Parliament brand registered in Germany, and bank accounts over $5.0 million. We have also provided mortgages over our Polmos and Bols production plants and the Russian Alcohol Siberian and Topaz Distilleries. The indenture governing the 2016 Notes contains certain restrictive covenants, including covenants limiting the Company’s ability to: incur or guarantee additional debt; make certain restricted payments; transfer or sell assets; enter into transactions with affiliates; create certain liens; create restrictions on the ability of restricted subsidiaries to pay dividends or other payments; issue guarantees of indebtedness

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by restricted subsidiaries; enter into sale and leaseback transactions; merge, consolidate, amalgamate or combine with other entities; designate restricted subsidiaries as unrestricted subsidiaries; and engage in any business other than a permitted business. The indenture governing the 2016 Notes also contains a cross-acceleration covenant, which would apply in the event that we do not repay when due our Convertible Notes or any other indebtedness which equals or exceeds $30 million. In addition, in the event of a change of control (as that term is used in our indenture), we would be required to offer to repay the outstanding indebtedness under the 2016 Notes at a price equal to 101% of the aggregate principal amount thereof.

Senior notes due March 18, 2013 (“Debt Security”)

As described in Note 3 to the accompanying condensed consolidated financial statements, on May 7, 2012, the Company issued $70 million principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% to JSC Russian Standard Bank, an affiliate of Russian Standard Corporation. Pursuant to the Amended SPA, as described in Note 3 to the accompanying condensed consolidated financial statements, upon approval of the Company’s shareholders, and after the satisfaction of certain other conditions including the receipt of certain Polish regulatory waivers, Roust Trading will purchase such number of shares of common stock at a purchase price of $5.25 per share sufficient to repay the then-outstanding principal amount of the Debt Security, totaling approximately 13.3 million shares of common stock and sell to the Company the entire principal amount of the Debt Security. In addition, interest payable on the Debt Security prior to the Second Closing may, at the option of Roust Trading and after the Second Closing, be effectively paid in shares of common stock at a price $3.44 per share of common stock. Pursuant to the Amended SPA, the final maturity date for the Debt Security will be extended to July 31, 2016.

Effects of Inflation and Foreign Currency Movements

Inflation in Poland is projected at 3.8% for 2012, compared to actual inflation of 4.6% in 2011. In Russia, Hungary and Ukraine, inflation for 2012 is projected at 5.2%, 5.7% and 2.1% respectively, compared to actual inflation of 6.1%, 4.1% and 8.0% in 2011.

Substantially all of the Company’s operating cash flows and assets are denominated in Polish zloty, Russian ruble and Hungarian forint. This means that the Company is exposed to translation movements both on its balance sheet and statement of operations. The impact on working capital items is demonstrated on the cash flow statement as the movement in exchange on cash and cash equivalents. The impact on the statement of operations is by the movement of the average exchange rate used to restate the statement of operations from Polish zloty, Russian ruble and Hungarian forint to U.S. dollars. The amounts shown as exchange rate gains or losses on the face of the statements of operations relate only to realized gains or losses on transactions that are not denominated in Polish zloty, Russian ruble or Hungarian forint. Table below presents the exchange rates used for translation of our balance sheet and statement of operations balances as of and for the quarter ended September 30, 2012:

	Balance sheet rate as of September 30, 2012		Average rate for the three months ended September 30, 2012
PLN / US$		3.1780		3.3107
RUR / US$		30.9144		31.9874
HUF / US$		219.1724		226.7603

Because the Company’s reporting currency is the U.S. dollar, the translation effects of fluctuations in the exchange rate of our functional currencies have impacted the Company’s financial condition and results of operations and have affected the comparability of our results between financial periods.

The Company has borrowings including its Convertible Notes due 2013 and Senior Secured Notes due 2016 that are denominated in U.S. dollars and euros, which have been lent to its operations where the functional currency is the Polish zloty and Russian ruble. The effect of having debt denominated in currencies other than the Company’s functional currencies is to increase or decrease the value of the Company’s liabilities on that debt in terms of the Company’s functional currencies when those functional currencies depreciate or appreciate in value respectively. As a result of this, the Company is exposed to gains and losses on the re-measurement of these liabilities. The table below summarizes the pre-tax impact of a one percent movement in each of the exchange rate which could result in a significant impact in the results of the Company’s operations.

Exchange Rate	Value of notional amount		Pre-tax impact of a 1% movement in exchange rate
USD-Polish zloty	$	444 million	$	4.4 million gain/loss
USD-Russian ruble	$	264 million	$	2.6 million gain/loss
EUR-Polish zloty	€	430 million or approximately $557 million	$	5.6 million gain/loss

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Significant Accounting Policies and Estimates

For a discussion of our critical accounting policies, see “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our restated 2011 Annual Report on Form 10-K/A.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Our operations are conducted primarily in Poland and Russia, and our functional currencies are primarily the Polish zloty, Hungarian forint and Russian ruble, and our reporting currency is the U.S. dollar. Our financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, bank loans, overdraft facilities and long-term debt. All of the monetary assets represented by these financial instruments are located in Poland, Russia and Hungary. Consequently, they are subject to currency translation movements when reporting in U.S. dollars.

If the U.S. dollar increases in value against the Polish zloty, Russian ruble or Hungarian forint, the value in U.S. dollars of assets, liabilities, revenues and expenses originally recorded in Polish zloty, Russian ruble or Hungarian forint will decrease. Conversely, if the U.S. dollar decreases in value against the Polish zloty, Russian ruble or Hungarian forint, the value in U.S. dollars of assets, liabilities, revenues and expenses originally recorded in Polish zloty, Russian ruble or Hungarian forint will increase. Thus, increases and decreases in the value of the U.S. dollar can have a material impact on the value in U.S. dollars of our non-U.S. dollar assets, liabilities, revenues and expenses, even if the value of these items has not changed in their original currency.

The Company has borrowings including its Convertible Notes due 2013 and Senior Secured Notes 2016 that are denominated in U.S. dollars and euros, which have been lent to its operations where the functional currency is the Polish zloty and Russian ruble. The effect of having debt denominated in currencies other than the Company’s functional currencies is to increase or decrease the value of the Company’s liabilities on that debt in terms of the Company’s functional currencies when those functional currencies depreciate or appreciate in value respectively. As a result of this, the Company is exposed to gains and losses on the re-measurement of these liabilities. The table below summarizes the pre-tax impact of a one percent movement in each of the exchange rate which could result in a significant impact in the results of the Company’s operations.

Exchange Rate	Value of notional amount		Pre-tax impact of a 1% movement in exchange rate
USD-Polish zloty	$	444 million	$	4.4 million gain/loss
USD-Russian ruble	$	264 million	$	2.6 million gain/loss
EUR-Polish zloty	€	430 million or approximately $557 million	$	5.6 million gain/loss

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures.

We have carried out an evaluation under the supervision of, and with the participation of, our management, including the Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of September 30, 2012. Since December 31, 2011, we have begun the restructuring of our corporate finance and reporting department in Poland and Russia to implement more effective internal controls over financial reporting. However, our evaluation has disclosed material weaknesses still exist in our internal control over financial reporting as noted in Management’s Assessment on Internal Control over Financial Reporting located in Item 9A, Financial Statements and Supplementary Data, of our restated 2011 Annual Report on Form 10-K/A filed with the SEC on October 5, 2012.

Due to our material weaknesses, our Chief Executive Officer and Chief Financial Officer have concluded that our disclosure controls and procedures are not effective to provide reasonable assurance that information required to be disclosed by us in the reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the applicable rules and forms, and that information required to be disclosed by us in reports filed or submitted under the Exchange Act is accumulated and communicated to our management, including our Chief Executive Officer and our Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure.

There are inherent limitations to the effectiveness of any system of disclosure controls and procedures, including the possibility of human error and the circumvention or overriding of the controls and procedures. Accordingly, even effective disclosure controls and procedures can only provide reasonable assurance of achieving their control objectives.

Changes in internal control over financial reporting.

There has been no material change in internal control over financial reporting in the quarter ended September 30, 2012, that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

In response to the identified material weaknesses in our internal control over financial reporting, we are in the process of implementing the remediation steps listed in Item 9A of our Form 10-K/A for the year ended December 31, 2011, filed with the SEC on October 5, 2012.

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PART II. OTHER INFORMATION

Item 1. Legal Proceedings.

Please refer to Note 15 of the accompanying Condensed Consolidated Financial Statements attached herein for a discussion of certain legal proceedings.

Item 1A. Risk Factors.

For a discussion of the Company’s risk factors, see the information under the heading “Risk Factors” in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the SEC on October 5, 2012.

Item 6. Exhibits.

(a) Exhibits

Exhibit Number	Exhibit Description
3.1	Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q filed with the SEC on May 5, 2010 and incorporated herein by reference).
3.2*	Amended and Restated Bylaws.
10.65*	Employment Agreement dated July 9, 2012 between Central European Distribution Corporation and David Bailey.
10.66*	Separation Agreement dated September 14, 2012 between Central European Distribution Corporation and Christopher Biedermann.
31.1*	Certificate of the CEO pursuant to Rule 13a-15(e) or Rule 15d-15(e).
31.2*	Certificate of the CFO pursuant to Rule 13a-15(e) or Rule 15d-15(e).
32.1*	Certification of the CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2*	Certification of the CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101*	The following financial statements from Central European Distribution Corporation’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012, formatted in XBRL (eXtensible Business Reporting Language): (i) Consolidated Statements of Income, (ii) Consolidated Balance Sheets, (iii) Consolidated Statements of Cash Flows, (iv) Notes to Consolidated Financial Statements, tagged as blocks of text.

* Filed herewith.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	CENTRAL EUROPEAN DISTRIBUTION CORPORATION (registrant)
Date: November 19, 2012	By:	/s/    David Bailey
		David Bailey
		Interim Chief Executive Officer
Date: November 19, 2012	By:	/s/    Bartosz Kołaciński
		Bartosz Kołaciński
		Interim Chief Financial Officer

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EX-3.2

Exhibit 3.2

AMENDED AND RESTATED BYLAWS

OF

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

(Effective October 23, 2012)

1. OFFICE

1.1. Registered Office

The initial registered office of the Corporation shall be in Wilmington, Delaware, and the initial registered agent in charge thereof shall be Corporation Service Company, 1013 Centre Road, Wilmington, Delaware 19805.

1.2. Other Offices

The Corporation may also have offices at such other places, both within and without the State of Delaware, as the Board of Directors may from time to time determine or as may be necessary or useful in connection with the business of the Corporation.

2. MEETINGS OF STOCKHOLDERS

2.1. Place of Meetings

All meetings of the stockholders shall be held at such place as may be fixed from time to time by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President.

2.2. Annual Meetings

The Corporation shall hold annual meetings of stockholders, commencing with the year 1998, on such date and at such time as shall be designated from time to time by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President, at which stockholders shall elect a Board of Directors and transact such other business as may properly be brought before the meeting.

2.3. Special Meetings

Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute, may be called by the Board of Directors, the Chairman of the Board, the Chief Executive Officer or the President of the Corporation, and shall be called by the President or the Secretary of the Corporation at the request in writing of stockholders possessing at least 10 percent of the voting power of the issued and outstanding voting stock of the Corporation entitled to vote generally for the election of directors.

2.4. Notice of Meetings

Notice of any meeting of stockholders, stating the place, date and hour of the meeting, and (if it is a special meeting) the purpose or purposes for which the meeting is called, shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting (except to the extent that such notice is waived or is not required as provided in the General Corporation Law of the State of Delaware (the “Delaware General Corporation Law”) or these Bylaws). Such notice shall be given in accordance with, and shall be deemed effective as set forth in, Section 222 (or any successor section) of the Delaware General Corporation Law.

2.5. Waivers of Notice

Whenever the giving of any notice is required by statute, the Certificate of Incorporation of the Corporation (which shall include any amendments thereto and shall be hereinafter referred to as so amended as the “Certificate of Incorporation”) or these Bylaws, a waiver thereof, in writing and delivered to the Corporation, signed by the person or persons entitled to said notice, whether before or after the event as to which such notice is required, shall be deemed equivalent to notice. Attendance of a stockholder at a meeting shall constitute a waiver of notice (a) of such meeting, except when the stockholder at the beginning of the meeting objects to holding the meeting or transacting business at the meeting, and (b) (if it is a special meeting) of consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice, unless the stockholder objects to considering the matter at the beginning of the meeting.

2.6. Business at Special Meetings

Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the Corporation’s notice of meeting (except to the extent that such notice is waived or is not required as provided in the Delaware General Corporation Law or these Bylaws). Nominations of persons for election to the Board of Directors at any special meeting shall be made only in accordance with the procedures and requirements set forth in Section 3.8. Proposals made by a stockholder or stockholders of other business to be conducted at a special meeting shall be made only in accordance with the procedures set forth in Section 2.12.

2.7. List of Stockholders

After the record date for a meeting of stockholders has been fixed, at least ten days before such meeting, the officer who has charge of the stock ledger of the Corporation shall make a list of all stockholders entitled to vote at the meeting, arranged in alphabetical order and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder for any purpose germane to the meeting, on a reasonably accessible electronic network, provided that the information required to gain access to such list is provided with the notice of meeting, or during ordinary business hours, at the principal place of business of the Corporation. Such list shall also, for the duration of the meeting, be produced and kept open to the examination of any stockholder who is present at the time and place of the meeting.

2.8. Quorum at Meetings

Stockholders may take action on a matter at a meeting only if a quorum exists with respect to that matter. Except as otherwise provided by statute or by the Certificate of Incorporation, the holders of a majority of the shares entitled to vote at the meeting, and who are present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. Where a separate vote by a class or classes is required, the holders of a majority of the outstanding shares of such class or classes, who are present in person or represented by proxy, shall constitute a quorum entitled to take action on that matter. Once a share is represented for any purpose at a meeting (other than solely to object (a) to holding the meeting or transacting business at the meeting, or (b) (if it is a special meeting) to consideration of a particular matter at the meeting that is not within the purpose or purposes described in the meeting notice), it is deemed present for quorum purposes for the remainder of the meeting and for any adjournment of that meeting unless a new record date is or must be set for the adjourned meeting. The holders of a majority of the voting shares represented at a meeting, whether or not a quorum is present, may adjourn such meeting from time to time.

2.9. Voting and Proxies

Unless otherwise provided in the Delaware General Corporation Law or in the Corporation’s Certificate of Incorporation, and subject to the other provisions of these Bylaws, each stockholder shall be entitled to one vote on each matter, in person or by proxy, for each share of the Corporation’s capital stock that has voting power and that is held by such stockholder. No proxy shall be voted or acted upon after three years from its date, unless the proxy provides for a longer period. A duly executed appointment of proxy shall be irrevocable if the appointment form states that it is irrevocable and if, and only as long as, it is coupled with an interest sufficient in law to support an irrevocable power.

2.10. Required Vote

When a quorum is present at any meeting of stockholders, all matters shall be determined, adopted and approved by the affirmative vote (which need not be by ballot) of the holders of a majority of the shares present in person or represented by proxy at the meeting and entitled to vote with respect to the matter, unless the proposed action is one upon which, by express provision of statutes or of the Certificate of Incorporation, a different vote is specified and required, in which case such express provision shall govern and control the decision of such question. Where a separate vote by a class or classes is required, the affirmative vote of the holders of a majority of the shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class, unless the proposed action is one upon which, by express provision of statutes or of the Certificate of Incorporation, a different vote is specified and required, in which case such express provision shall govern and control the decision of such question. Notwithstanding the foregoing, directors shall be elected by a plurality of the votes of the shares present in person or represented by proxy at the meeting and entitled to vote on the election of directors.

2.11. Action Without a Meeting

Any action required or permitted to be taken by the stockholders of the Corporation must be effected at a duly called annual or special meeting of such stockholders and may not be effected by any consent in writing by such stockholders, unless such consent is unanimous.

2.12. Business at Annual Meeting

At any meeting of stockholders, only such business shall be transacted as shall have been properly brought before the meeting. To be properly brought before a meeting of stockholders, business must be (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors or (c) otherwise properly brought before the meeting by a stockholder who is entitled to vote and who has complied with the procedures established by this Section 2.12. For business to be properly brought before a meeting by a stockholder (other than the nomination of a person for election as a director, which is governed by Section 3.8 of these Bylaws), the stockholder intending to propose such business (the “Proponent”) must have given timely and proper notice thereof in writing to the Secretary of the Corporation, in accordance with, and containing all information provided for, in this Section 2.12, such business must be a proper matter for stockholder action under the General Corporation Law of Delaware and, in the case of a special meeting, the Proponent must have given a valid and unrevoked request to the Corporation pursuant to Section 2.4 in respect of such meeting.

To be timely, a Proponent’s notice must be delivered to or mailed to the Secretary of the Corporation and received at the principal executive offices of the Corporation (as reflected in the Corporation’s most recent filing with the U.S. Securities and Exchange Commission containing such information), (i) in the case of an annual meeting, not later than the close of business 90 days prior to the first anniversary of the preceding year’s annual meeting of stockholders; provided, however, in the event the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date, then to be timely such notice must be received by the Corporation at such offices not later than the close of business on the later of the 90th day prior to the date of the meeting or the 10th day following the date of Public Disclosure (defined below) of the date of the annual meeting or (ii) in the case of a special meeting, a Proponent’s notice shall accompany or precede the request made pursuant to Section 2.4. In no event shall any adjournment or postponement of a meeting of stockholders or announcement thereof commence a new time period or extend any time period for the giving of a Proponent’s notice as required by this Section 2.12.

A Proponent’s notice to the Secretary shall set forth: (a) as to each matter the Proponent proposes to bring before the annual meeting, a description of the business desired to be brought before the meeting, the reasons for transacting such business at the meeting and the text of any resolutions to be proposed, and whether the Proponent has communicated with any other stockholder or beneficial owner of shares of stock of the Corporation regarding such business and (b) as to the Proponent and any Stockholder Associated Person (defined below) on whose behalf the proposal is being made, (i) the name and address of the Proponent, and any holder of record of the Proponent’s shares of stock, as they appear on the Corporation’s books, and of any Stockholder Associated Person and a detailed description of the relationship between the Proponent and each Stockholder Associated Person and every agreement, arrangement and understanding between the Proponent and the Stockholder Associated Persons in connection with the proposal and such business by the Proponent, (ii) the class and number of shares of stock of the Corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person, as of the date of the Proponent’s notice, the date such shares were acquired and the investment intent with respect thereto, (iii) a representation and agreement that the Proponent will notify the Corporation in writing of the class and number of shares of stock of the Corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person, as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (iv) a description of all purchases and sales of, or other transactions involving in any way, shares of stock of the Corporation by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person during the twenty-four month period prior to the date of the Proponent’s notice, including the date of the transactions, the class and number of shares and the consideration (without regard to whether such shares involved were or were not owned by the Proponent or any such person), (v) a description of any agreement, arrangement or understanding, including all Derivative Instruments (defined below), that has been entered into or is in effect as of the date of the Proponent’s notice, by or on behalf of the Proponent or any Stockholder Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of stock price changes for, or increase or decrease the voting power of, the Proponent or any Stockholder Associated Person with respect to the Corporation’s securities, (vi) a representation and agreement that the Proponent will notify the Corporation in writing of any such agreement, arrangement or understanding, including all Derivative Instruments, that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (vii) a description of any material interest of the Proponent or any Stockholder Associated Person in such business, (viii) a description of any other agreement, arrangement or understanding that has been entered into or is in effect as of

the date of the Proponent’s notice, between or among the Proponent, any Stockholder Associated Person or any other person, and that relates to such business, (ix) to the extent actually known by the Proponent, the name and address of any other person who owns, of record or beneficially, any securities of the Corporation and who supports the proposal of such business that the Proponent proposes to bring before the meeting on the date of the Proponent’s notice, (x) a detailed description of each proxy, contract, arrangement, understanding, or relationship pursuant to which the Proponent and/or the Stockholder Associated Persons has a right to vote, or cause or direct the vote of, any securities of the Corporation, (xi) a representation and agreement that the Proponent will notify the Corporation in writing of any such agreement, arrangement or understanding that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (xii) a representation that the Proponent is the holder of record or beneficial owner of shares of stock of the Corporation entitled to vote at the meeting and intends to appear in person or by proxy at the meeting to propose such business and (xiii) a representation as to whether the Proponent intends to deliver a proxy statement and/or form of proxy to stockholders and/or otherwise to solicit proxies from stockholders in support of such proposal.

No business proposed by a stockholder shall be transacted at a meeting of stockholders except in accordance with the procedures set forth in this Section 2.12. If the Proponent intending to propose business at a meeting pursuant to this Section 2.12 does not give timely and proper notice thereof in writing to the Secretary of the Corporation, in accordance with, and containing all information provided for in, this Section 2.12, or if the Proponent (or a qualified representative of the Proponent) does not appear at the meeting to present the proposed business, then, in any such case, such business shall not be transacted, notwithstanding the fact that proxies in respect of such business may have been solicited or obtained. The chairman of the meeting shall, if the facts warrant, determine that the business was not properly brought before the meeting in accordance with the provisions of this Section 2.12, and, if the chairman should so determine, he or she shall declare to the meeting that such business was not properly brought before the meeting and shall not be transacted.

The requirements of this Section 2.12 shall apply to any business to be brought before a meeting of stockholders by a stockholder (other than the nomination by a stockholder of a person for election as a director, which is governed by Section 3.8 of these Bylaws) without regard to whether such business also is intended to be included in the Corporation’s proxy statement pursuant to Rule 14a-8 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) or whether such business is presented to stockholders by means of a proxy solicitation by any person other than by or on behalf of the Board of Directors.

For purposes of the Bylaws:

“Derivative Instrument” means any option, warrant, convertible or exchangeable security, stock appreciation right, swap or right similar to any of the foregoing, hedging transactions or borrowed or loaned shares, with an exercise, conversion or exchange privilege or a settlement payment or mechanism related to any security of the Corporation or similar instrument with a value derived in whole or in part from the value of a security of the Corporation, whether or not such instrument or right shall be subject to settlement in the underlying class or series of shares of stock of the Corporation or otherwise directly or indirectly owned and any other direct or indirect opportunity to profit or share in any profit derived from any increase or decrease in the value of shares of stock of the Corporation.

“Public Disclosure” means disclosure made in a press release reported by Dow Jones News Service, Associated Press, Reuters or a comparable national news service or in a document publicly filed by the Corporation pursuant to Section 13, 14 or 15(d) of the Exchange Act.

“Stockholder Associated Person” means, with respect to the applicable stockholder, (i) any beneficial owner of shares of the Corporation owned of record or beneficially by such stockholder, (ii) any associate of such stockholder or beneficial owner, (iii) any affiliate of such stockholder or beneficial owner and (iv) any other person acting in concert, directly or indirectly pursuant to any agreement, arrangement, relationship, understanding, or otherwise, whether written or oral, with such stockholder or beneficial owner (or any of their respective affiliates or associates).

2.13. Inspectors of Votes

The presiding officer of the meeting may appoint an inspector of votes to act at each meeting of the stockholders, unless the Board of Directors shall have theretofore made such appointment. The inspector of votes shall first subscribe an oath or affirmation faithfully to execute the duties of an inspector of votes at the meeting with strict impartiality and according to the best of such inspector’s ability. Such inspector of votes, if any, shall take charge of the ballots, if any, at the meeting, and after the balloting on any question, shall count the ballots cast and shall make a report in writing to the secretary of the meeting of the results of the balloting. An inspector of votes need not be a stockholder of the Corporation, and any officer of the Corporation may be an inspector of votes on any question other than a vote for or against such officer’s election to any position with the Corporation or on any other question in which such officer may be directly interested.

3. DIRECTORS

3.1. Powers

The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, which may exercise all such powers of the Corporation and do all such lawful acts and things, subject to any limitation set forth in the Certificate of Incorporation or as otherwise may be provided in the Delaware General Corporation Law. The Board of Directors shall annually elect a Chairman of the Board from among its members . The Board of Directors shall also annually elect a Lead Director from among its members upon the nomination of a director to serve as Lead Director by a committee of the Board of Directors consisting of directors that (a) have not been appointed or designated by, or are affiliated with, Roust Trading Ltd. or its affiliates and (b) are not employed by the Corporation. The Board of Directors shall designate, when present, either the Chairman of the Board or the President to preside at its meetings, except when the Chairman of the Board is also serving as President, Chief Executive Officer or in another similar executive capacity at the Corporation, in which case the Board of Directors shall, when present, designate the Lead Director to preside at its meetings. If none of the Chairman of the Board, the President or the Lead Director is present, the Board of Directors may designate another officer or director to preside at such meeting. The Chairman of the Board and the President may be the same person. The Board of Directors may also annually elect one or more Vice Chairmen from among its members, with such duties as the Board of Directors shall from time to time prescribe. The Chairman of the Board shall retain his or her right to chair any meeting of the Board he or she may choose to call during any period during which the Chairman of the Board of Directors is also serving as Chief Executive Officer, President or in another similar executive capacity at the Corporation.

3.2. Number and Election

The term “entire Board of Directors” as used herein shall mean the total number of directors constituting the entire Board of Directors irrespective of the number of directors then in office or vacancies. The total number of directors constituting the entire Board of Directors shall be determined by resolution of the Board of Directors passed by the affirmative vote of at least two-thirds of the directors then in office, provided, that such number shall be consistent with the minimum and maximum number of directors set forth in the Certificate of Incorporation. Directors shall be elected at annual meetings of the stockholders, except as provided in Section 3.3 hereof, and each director elected shall hold office until his successor is elected and qualified or until his earlier death, resignation or removal. Directors need not be stockholders. Unless and until Roust Trading Ltd. acquires a majority of the outstanding class or classes of stock of the Corporation entitled to elect directors, a majority of the then-serving directors shall consist of directors that have not been appointed or designated by, or are affiliated with, Roust Trading Ltd. or its affiliates, provided, that so long as the number of directors appointed or designated by Roust Trading Ltd does not exceed the number of directors that Roust Trading Ltd is entitled to appoint pursuant to Section 2.1 of the Governance Agreement, no director appointed or designated by, or are affiliated with, Roust Trading Ltd. or its affiliate shall be required to resign or vacate his or her position as a director to preserve such a majority.

3.3. Vacancies

Vacancies and newly created directorships resulting from any increase in the authorized number of directors shall be filled by a majority of the directors then in office, whether or not a quorum, or by a sole remaining director. Whenever the holders of any class or classes of stock or series thereof are entitled to elect one or more directors by the provisions of the Certificate of Incorporation, vacancies and newly created directorships of such class or classes or series may be filled by a majority of the directors elected by such class or classes or series thereof then in office, or by the sole remaining director so elected. Each director so chosen shall hold office until the next election, and until such director’s successor is elected and qualified, or until the director’s earlier resignation or removal. In the event that one or more directors resigns from the Board, effective at a future date, a majority of the directors then in office, including those who have so resigned, shall have power to fill such vacancy or vacancies, the vote thereon to take effect when such resignation or resignations shall become effective, and each director so chosen shall hold office until the next election, and until such director’s successor is elected and qualified, or until the director’s earlier resignation or removal, provided, that when the majority of then-serving directors includes directors that have been appointed or designated by, or are affiliated with, Roust Trading Ltd, such vacancy or vacancies shall be filled by a vote of the majority of then-serving directors that have not been appointed or designated by, or are affiliated with, Roust Trading Ltd.

3.4. Meetings

3.4.1. Regular Meetings

Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board of Directors.

3.4.2. Special Meetings

Special meetings of the Board may be called by the Chairman of the Board, the President or the Lead Director on one day’s notice to each director, either personally or by telephone, express delivery service (so that the scheduled delivery date of the notice is at least one day in advance of the meeting), telegram or facsimile transmission. The notice need not describe the purpose of a special meeting.

3.4.3. Telephone Meetings

Members of the Board of Directors may participate in a meeting of the Board by any communication by means of which all participating directors can simultaneously hear each other during the meeting. A director participating in a meeting by this means is deemed to be present in person at the meeting.

3.4.4. Action Without Meeting

Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting if all members of the Board consent thereto in writing or by electronic transmission and the writing or writings and transmission or transmissions are filed with the minutes of proceedings of the Board of Directors.

3.4.5. Waiver of Notice of Meeting

A director may waive any notice required by statute, the Certificate of Incorporation or these Bylaws before or after the date and time stated in the notice. Except as set forth below, the waiver must be in writing, signed by the director entitled to the notice, and delivered to the Corporation for inclusion in the minute book. Notwithstanding the foregoing, a director’s attendance at or participation in a meeting waives any required notice to the director of the meeting unless the director at the beginning of the meeting objects to holding the meeting or transacting business at the meeting and does not thereafter vote for or assent to action taken at the meeting.

3.5. Quorum and Vote at Meetings

At all meetings of the Board, a quorum of the Board of Directors consists of the presence of a majority of the total number of directors constituting the entire Board of Directors. The affirmative vote of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors, except as may be otherwise specifically provided by statute, the Certificate of Incorporation or these Bylaws.

3.6. Committees of Directors

3.6.1. General

The Board of Directors may by resolution designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The qualifications for any director to serve on any committee of the Board shall be subject to the provisions of the Sarbanes-Oxley Act of 2002, the Rules and Regulations adopted by the Securities and Exchange Commission implementing the Sarbanes-Oxley Act of 2002, and all applicable rules of Nasdaq or any national securities exchange on which any securities of the Corporation are listed. The Board may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. If a member of a committee shall be absent from any meeting, or disqualified from voting thereat, the remaining member or members present and not disqualified from voting, whether or not such member or members constitute a quorum, may, by unanimous vote, appoint another member of the Board of Directors to act at the meeting in the place of such absent or disqualified member. Any such committee, to the extent provided in the resolution of the Board of Directors, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or authority in reference to amending the Certificate of Incorporation (except that a committee may, to the extent authorized in the resolution or resolutions providing for the issuance of shares of stock adopted by the Board of Directors pursuant to Section 151(a) of the Delaware General Corporation Law, fix the designations and any of the preferences or rights of such shares relating to dividends, redemption, dissolution, any distribution of assets of the Corporation or the conversion into, or the exchange of such shares for, shares of any other class or classes or any other series of the same or any other class or classes of stock of the Corporation or fix the number of shares of any series of stock or authorize the increase or decrease of any shares of any series), adopting an agreement of merger or consolidation pursuant to Sections 251, 252, 257, 258, 263 or 264 of the Delaware General Corporation Law, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution,

or amending the Bylaws; and unless the resolutions, these Bylaws or the Certificate of Incorporation expressly so provide, no such committee shall have the power or authority to declare a dividend, to authorize the issuance of stock, or to adopt a certificate of ownership and merger pursuant to Section 253 of the Delaware General Corporation Law. Such committee or committees shall have such name or names as may be determined from time to time by resolution adopted by the Board of Directors. Unless otherwise specified in the resolution of the Board of Directors designating the committee, at all meetings of each such committee of directors, a majority of the members of the committee shall constitute a quorum for the transaction of business, and the affirmative vote of a majority of the members of the committee present at any meeting at which there is a quorum shall be the act of the committee. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors, when required.

3.6.2. Compliance with Listing Requirements.

So long as any of the Corporation’s securities are listed on a national securities exchange or quoted on the Nasdaq National Market, the Corporation shall create, constitute and keep in effect any committees that may be required pursuant to the listing requirements of such national securities exchange or the Nasdaq National Market including but limited to an Audit Committee, a Compensation Committee and a Nominating Committee. Each member of each such committee shall be “independent” as defined under both the Sarbanes-Oxley Act of 2002, and the rules promulgated thereunder, and the applicable rules of the national securities exchange or the Nasdaq National Market.

3.6.3. Nominating Committee.

The Board of Directors shall establish a Nominating Committee authorized to (i) select nominees for director positions to be recommended by the Board of Directors for election as directors and (ii) fill any newly created director positions or any vacancies in director positions. The Nominating Committee shall consist of at least three members. The approval of a majority of the members on the Nominating Committee shall be required in order for the Board of Directors to select any nominee for a director position.

3.6.4. Compensation Committee

The Board of Directors shall establish a Compensation Committee whose principal duties shall be (i) to review key employee compensation policies, plans and programs, (ii) to review and approve the compensation of the chief executive officer and the other executive officers of the Corporation, (iii) to review and approve any employment contracts, severance arrangements, change of control arrangements or similar arrangements between the Corporation and any executive officer of the Corporation, (iv) to review and consult with the chief executive officer concerning selection of officers, management succession planning, performance of individual executives and related matters, and (v) to administer the Corporation’s stock option plans, incentive compensation plan programs and any such plans that the Board of Directors may from time to time adopt and to exercise all the powers, duties and responsibilities of the Board of Directors with respect to such plans, in addition to any other duties set forth in such committee’s charter. The Compensation Committee shall consist of at least three members.

3.6.5. Audit Committee.

The Board of Directors shall establish an Audit Committee for the purpose of fulfilling the Board of Director’s oversight responsibilities regarding the Corporation’s and its subsidiaries’ accounting and systems of internal controls, the quality and integrity of the Corporation’s financial reports and the independence and performance of the Corporation’s outside auditor as set forth in the Audit Committee charter. The Audit Committee shall consist of at least three members. The approval of a majority of the entire Audit Committee shall be required to approve the appointment of the independent auditors of the Corporation and its consolidated subsidiaries and any change in such appointment. At least one member of the Audit Committee shall be an “Audit Committee Financial Expert” as such term is defined in the rules promulgated pursuant to the Sarbanes-Oxley Act of 2002.

3.7. Compensation of Directors.

As expressly provided by resolution adopted by the Board of Directors, and subject to the provisions of the Sarbanes-Oxley Act of 2002, the Rules and Regulations adopted by the Securities and Exchange Commission implementing the Sarbanes-Oxley Act of 2002, and all applicable rules of Nasdaq or any national securities exchange on which any securities of the Corporation are listed, the directors may, as such, receive remuneration for their services; and the Board of Directors may at any time and from time to time by resolution provide that a specified sum shall be paid to any director of the Corporation, either as such director’s annual remuneration as such director or member of any committee of the Board of Directors or as remuneration for such director’s attendance at each meeting of the Board of Directors or any such committee. The Board of Directors may also likewise provide that the Corporation shall reimburse each director for any expenses paid by such director on account of such director’s attendance at any meeting. Nothing in this Section 3.7 shall be construed to preclude any director from serving the Corporation in any other capacity and receiving remuneration therefore.

3.8. Nomination of Directors

Nominations of persons for election to the Board of Directors of the Corporation may be made only (i) by the Board of Directors at any meeting of stockholders and (ii) at an annual meeting of stockholders, by any stockholder of the Corporation who is entitled to vote for the election of directors and who has complied with the procedures established by this Section 3.8. For a nomination to be properly brought before an annual meeting by a stockholder, the Proponent (as defined in Section 2.12) must have given timely and proper notice thereof in writing to the Secretary of the Corporation, in accordance with, and containing all information and the completed questionnaire provided for in, this Section 3.8.

To be timely, a Proponent’s notice must be delivered to or mailed to the Secretary of the Corporation and received at the principal executive offices of the Corporation (as reflected in the Corporation’s most recent filing with the U.S. Securities and Exchange Commission containing such information) not later than the close of business 90 days prior to the first anniversary of the preceding year’s annual meeting of stockholders; provided, however, in the event the date of the annual meeting is advanced more than 30 days prior to such anniversary date or delayed more than 60 days after such anniversary date then to be timely such notice must be received by the Corporation at such offices not later than the close of business on the later of the 90th day prior to the date of the meeting or the 10th day following the date of Public Disclosure (as defined in Section 2.12) of the date of the annual meeting. In no event shall any adjournment or postponement of an annual meeting of stockholders or announcement thereof commence a new time period or extend any time period for the giving of a Proponent’s notice as required by this Section 3.8.

A Proponent’s notice to the Secretary shall set forth: (a) as to each person the Proponent proposes to nominate for election as a director at the annual meeting, (i) the name, age, business address, residence address and telephone number of such nominee and the name, business address and residence address of any Nominee Associated Persons (defined below), (ii) the principal occupation or employment of such nominee, (iii) the class and number of shares of stock of the Corporation that are owned (beneficially and of record) by or on behalf of such nominee and by or on behalf of any Nominee Associated Person, as of the date of the Proponent’s notice, (iv) a description of such nominee’s qualifications to be a director and (v) a statement as to whether such nominee would be an independent director, and the basis therefor, under the listing standards of the Nasdaq National Market and the Corporate Governance Requirements of its Listing Rules and (b) as to the Proponent and any Stockholder Associated Person (as defined in Section 2.12) on whose behalf the nomination is being made, (i) the name and address of the Proponent, and any holder of record of the Proponent’s shares of stock, as they appear on the Corporation’s books, and of any Stockholder Associated Person and a detailed description of the relationship between the Proponent and each Stockholder Associated Person and every agreement, arrangement and understanding between the Proponent and the Stockholder Associated Persons in connection with the proposal and such nomination by the Proponent, (ii) the class and number of shares of stock of the Corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person, as of the date of the Proponent’s notice, the date such shares were acquired and the investment intent with respect thereto, (iii) a representation and agreement that the Proponent will notify the Corporation in writing of the class and number of shares of stock of the Corporation that are owned (beneficially and of record) by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person, as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (iv) a description of all purchases and sales of, or other transactions involving in any way, shares of stock of the Corporation by or on behalf of the Proponent and by or on behalf of any Stockholder Associated Person during the twenty-four month period prior to the date of the Proponent’s notice, including the date of the transactions, the class and number of shares and the consideration (without regard to whether such shares were or were not owned by the Proponent or any such person), (v) a description of any agreement, arrangement or understanding, including all Derivative Instruments (as defined in Section 2.12), that has been entered into or is in effect as of the date of the Proponent’s notice, by or on behalf of the Proponent, any Stockholder Associated Person, any nominee or any Nominee Associated Person, the effect or intent of which is to mitigate loss to, manage risk or benefit of stock price changes for, or increase or decrease the voting power of, the Proponent, any Stockholder Associated Person, any nominee or any Nominee Associated Person with respect to the Corporation’s securities, (vi) a representation and agreement that the Proponent will notify the Corporation in writing of any such agreement, arrangement or understanding, including all Derivative Instruments, that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or the date of Public Disclosure of the record date, (vii) a description of any other agreement, arrangement or understanding that has been entered into or is in effect as of the date of the Proponent’s notice, between or among the Proponent, any Stockholder Associated Person, any nominee, any Nominee Associated Person or any other person, and that relates to such nomination or such nominee’s service as a director of the Corporation, (viii) a representation and agreement that the Proponent will notify the Corporation in writing of any such agreement, arrangement or understanding that has been entered into or is in effect as of the record date for the meeting, not later than the close of business on the third business day following the later of the record date or

the date of Public Disclosure of the record date, (ix) to the extent actually known by the Proponent, the name and address of any other person who owns, of record or beneficially, any securities of the Corporation and who supports the nomination or nominations that the Proponent proposes to bring before the meeting on the date of the Proponent’s notice, (x) a detailed description of each proxy, contract, arrangement, understanding, or relationship pursuant to which the Proponent and/or the Stockholder Associated Persons has a right to vote, or cause or direct the vote of, any securities of the Corporation, (xi) a representation that the Proponent is the holder of record or beneficial owner of shares of stock of the Corporation entitled to vote for the election of directors at the annual meeting and intends to appear in person or by proxy at the meeting to nominate any such nominee and (xii) a representation as to whether the Proponent intends to deliver a proxy statement and/or form of proxy to stockholders and/or otherwise to solicit proxies from stockholders in support of such nomination.

The Proponent’s notice shall also include a completed questionnaire (in the form provided by the Secretary of the Corporation upon request by the Proponent) signed by each such nominee with respect to information of the type required by the Corporation’s Questionnaires for Directors and Officers of the Corporation in connection with the Annual Meeting of Stockholders and Various Reports to the Securities and Exchange Commission. The questionnaire shall also include a representation and agreement that such nominee (i) is not and will not become a party to (A) any agreement, arrangement or understanding with, and has not given any commitment or assurance to, any person or entity as to how such nominee, if elected as a director of the Corporation, will act or vote on any issue or question (a “Voting Commitment”) that has not been, or will not be within three business days thereafter, disclosed to the Corporation or (B) any Voting Commitment that could limit or interfere with the nominee’s ability to comply, if elected as a director of the Corporation, with such nominee’s fiduciary duties under applicable law, (ii) is not and will not become a party to any agreement, arrangement or understanding with any person or entity other than the Corporation with respect to any direct or indirect compensation, reimbursement or indemnification in connection with service or action as a director of the Corporation that has not been, or will not be within three business days thereafter, disclosed to the Corporation and (iii) in such nominee’s individual capacity and on behalf of any person or entity on whose behalf the nomination is being made, would be in compliance, if elected as a director of the Corporation, and will comply, with applicable law and all applicable corporate governance, code of conduct and ethics, conflict of interest, corporate opportunities, confidentiality and stock ownership and trading policies and guidelines of the Corporation.

No person proposed to be nominated by a stockholder shall be eligible for election as a director of the Corporation unless such person is nominated in accordance with the procedures set forth in this Section 3.8. If the Proponent intending to nominate a person for election as a director of the Corporation at an annual meeting pursuant to this Section 3.8 does not give timely and proper notice thereof in writing to the Secretary of the Corporation, in accordance with, and containing all information and the completed questionnaire provided for in, this Section 3.8, or if the Proponent (or a qualified representative of the Proponent) does not appear at the meeting to nominate such person for election as a director of the Corporation, then, in any such case, such proposed nomination shall not be made, notwithstanding the fact that proxies in respect of such nomination may have been solicited or obtained. The chairman of the meeting shall, if the facts warrant, determine that the nomination was not properly made in accordance with the provisions of this Section 3.8, and, if the chairman should so determine, he or she shall declare to the meeting that such nomination was not properly made and shall be disregarded.

The requirements of this Section 3.8 shall apply to the nomination by a stockholder of a person for election as a director without regard to whether such nomination also is intended to be included in the Corporation’s proxy statement pursuant to Rule 14a-8 of the Exchange Act, or whether such nomination is presented to stockholders by means of a proxy solicitation by any person other than by or on behalf of the Board of Directors.

“Nominee Associated Person” of any nominee for election as a director means (i) any affiliate or associate (as such terms are defined for purposes of the Exchange Act) of the nominee and any other person acting in concert with any of the foregoing, (ii) any beneficial owner of shares of stock of the Corporation owned of record or beneficially by such nominee and (iii) any person controlling, controlled by or under common control with such Nominee Associated Person.

3.9. Lead Director

The Lead Director serves to coordinate the activities of the non–employee directors and to perform such other duties and have such other powers as the Board of Directors shall designate from time to time. The Lead Director shall have the authority of the Chairman in the event the position of Chairman is vacant. If the Chairman is also serving as President, Chief Executive Officer or in another similar executive capacity for the Corporation, the Lead Director shall be required to consult with the Chairman of the Board in connection with setting the agenda for any meeting and shall have no ability to limit the authority of the Chairman of the Board, including the authority of the Chairman of the Board to call a meeting of the Board and set the agenda. The Chairman of the Board shall retain his or her right to set the agenda for and chair any meeting of the Board he or she may choose to call during any period.

4. OFFICERS

4.1. Positions

The officers of the Corporation shall be a Chairman of the Board, a President, a Chief Executive Officer, a Chief Financial Officer and a Secretary, and such other officers as the Board of Directors from time to time may appoint, including one or more Vice Chairpersons, a Chief Operating Officer, a Treasurer, Executive Vice Presidents, a General Counsel, Senior Vice Presidents, Vice Presidents, Assistant Secretaries and Assistant Treasurers. Each such officer shall exercise such powers and perform such duties as shall be set forth below and/or such other powers and duties as from time to time may be specified by the Board of Directors or by any officer(s) authorized by the Board of Directors to prescribe the duties of such other officers. Any number of offices may be held by the same person, except that in no event shall the President and the Secretary be the same person. Each of the Chairman of the Board, the President and Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, and/or any Executive Vice President or Senior Vice President may execute bonds, mortgages and other documents under the seal of the Corporation, except where required or permitted by law to be otherwise executed and except where the authorization therefor shall be expressly delegated by the Board of Directors to some other officer or agent of the Corporation.

4.2. Chairman of the Board

Subject to Section 3.1 of these bylaws, the Chairman of the Board shall (when present) preside at all meetings of the Board of Directors and stockholders and shall ensure that all orders and resolutions of the Board of Directors are carried into effect.

4.3. Chief Executive Officer

Subject to the authority of the Board of Directors, the Chief Executive Officer shall have such executive responsibility and authority for management of the business, affairs and operations of the Corporation as may be assigned to him or her by the Board of Directors, and shall perform such other duties as, from time to time, may be assigned to him or her by the Board of Directors.

4.4. President

Subject to the authority of the Board of Directors, the President shall have such executive responsibility and authority for management of the business, affairs and operations of the Corporation as may be assigned to him or her by the Board of Directors, and shall perform such other duties as, from time to time, may be assigned to him or her by the Board of Directors.

4.5. Chief Financial Officer

The Chief Financial Officer of the Corporation shall have general charge and supervision of the financial affairs of the Corporation, including budgetary, accounting and statistical methods, and shall approve payment, or designate others serving under him to approve for payment, all vouchers and warrants for disbursements of funds, and, in general, shall perform such other duties as are incident to the office of a chief financial officer of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned to him or her by the Board of Directors, the President or Chief Executive Officer.

4.6. Chief Operating Officer

The Chief Operating Officer of the Corporation shall have general charge and supervision of the day to day operations of the Corporation (subject to the direction of the President and/or Chief Executive Officer and the authority of the Board of Directors), and, in general, shall perform such other duties as are incident to the office of a chief operating officer of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned to him or her by the Board of Directors, or the President or Chief Executive Officer.

4.7. General Counsel

The General Counsel of the Corporation shall be responsible for supervising the legal affairs of the Corporation, and, in general, shall perform such other duties as are incident to the office of a general counsel of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned to him or her by the Board of Directors, the President or Chief Executive Officer.

4.8. Vice President

In the absence of the President or in the event of the President’s failure or refusal to act, the Vice President (or in the event there be more than one Vice President, the Vice Presidents in the order designated, or in the absence of any designation, then in the order of their election) shall perform the duties of the President, and when so acting shall have all the powers of, and be subject to all the restrictions upon, the President and Chief Executive Officer. The Vice President or Vice Presidents, in general, shall perform such other duties as are incident to the office of a vice president of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned to him or her or them by the Board of Directors, the President or Chief Executive Officer. The Board of Directors may designate one or more Vice Presidents as Executive Vice Presidents or Senior Vice Presidents.

4.9. Secretary

The Secretary, or an Assistant Secretary, shall attend all meetings of the Board of Directors and all meetings of the stockholders, and shall record all the proceedings of the meetings of the stockholders and of the Board of Directors in a book to be kept for that purpose, and shall perform like duties for the standing committees, when required. The Secretary shall have custody of the corporate seal of the Corporation, and the Secretary, or an Assistant Secretary, shall have authority to affix the same to any instrument requiring it, and when so affixed it may be attested by the signature of the Secretary or by the signature of such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by such officer’s signature. The Secretary or an Assistant Secretary may also attest all instruments signed by the President and Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer or any Vice President. The Secretary, or an Assistant Secretary, shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and, in general, shall perform all duties as are incident to the office of a secretary of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned to him or her by the Board of Directors, the President, Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer or any Executive Vice President.

4.10. Assistant Secretary

The Assistant Secretary, or if there be more than one, the Assistant Secretaries in the order determined by the Board of Directors (or if there shall have been no such determination, then in the order of their election), shall, in the absence of the Secretary or in the event of the Secretary’s inability or refusal to act or when requested by the Chairman of the Board, the President and Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer or any Executive Vice President, perform the duties and exercise the powers of the Secretary, and, in general, shall perform all duties as are incident to the office of an assistant secretary of a corporation, including those duties customarily performed by persons holding such office, and shall perform such other duties as, from time to time, may be assigned to him or her or them by the Board of Directors, the President, Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, any Executive Vice President or the Secretary. An Assistant Secretary may or may not be an officer, as determined by the Board of Directors.

4.11. Treasurer

The Treasurer shall have responsibility for the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation, and shall deposit all moneys and other valuable effects in the name and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall also render to the President and Chief Executive Officer and the Chief Operating Officer, upon request, and to the Board of Directors at its regular meetings, or when the Board of Directors so requires, an account of all financial transactions and of the financial condition of the Corporation and, in general, shall perform such duties as are incident to the office of a treasurer of a corporation, including those customarily performed by persons occupying such office, and shall perform all other duties as, from time to time, may be assigned to him or her by the Board of Directors, the President, Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer or any Executive Vice President.

4.12. Assistant Treasurer

The Assistant Treasurer, or if there shall be more than one, the Assistant Treasurers in the order determined by the Board of Directors (or if there shall have been no such determination, then in the order of their election), shall, in the absence of the Treasurer or in the event of the Treasurer’s inability or refusal to act, perform the duties and exercise the powers of the Treasurer, and, in general, shall perform all duties as are incident to the office of an assistant treasurer of a corporation, including those duties customarily performed by persons occupying such office, and shall perform such other duties as, from time to time, may be assigned

to him or them by the Board of Directors, the President, Chief Executive Officer, the Chief Operating Officer, the Chief Financial Officer, any Executive Vice President or by the Treasurer. An Assistant Treasurer may or may not be an officer, as determined by the Board of Directors.

4.13. Term of Office

The officers of the Corporation shall hold office until their successors are chosen and qualify or until their earlier resignation or removal. Any officer may resign at any time upon written notice to the Corporation. Any officer elected or appointed by the Board of Directors may be removed at any time, with or without cause, by the affirmative vote of a majority of the directors constituting the entire Board of Directors.

4.14. Compensation

The compensation of officers of the Corporation shall be fixed by the Compensation Committee of the Board of Directors.

4.15. Fidelity Bonds

The Corporation may secure the fidelity of any or all of its officers or agents by bond or otherwise.

5. CAPITAL STOCK

5.1. Certificates of Stock; Uncertificated Shares

The shares of the Corporation shall be represented by certificates, provided that the Board of Directors may provide by resolution that some or all of any or all classes or series of the Corporation’s stock shall be uncertificated shares. Any such resolution shall not apply to shares represented by a certificate until such certificate is surrendered to the Corporation. Notwithstanding the adoption of such a resolution by the Board of Directors, every holder of stock represented by certificates, and upon request every holder of uncertificated shares, shall be entitled to have a certificate (representing the number of shares registered in certificate form) signed in the name of the Corporation by the Chairman of the Board, President or any Vice President, and by the Treasurer, Secretary or any Assistant Treasurer or Assistant Secretary of the Corporation. Any or all the signatures on the certificate may be facsimile. In case any officer, transfer agent or registrar whose signature or facsimile signature appears on a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if such person were such officer, transfer agent or registrar at the date of issue.

5.2. Lost Certificates

The Board of Directors, Chairman of the Board, President, Chief Executive Officer, Chief Financial Officer or Secretary may direct a new certificate of stock to be issued in place of any certificate theretofore issued by the Corporation and alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming that the certificate of stock has been lost, stolen or destroyed. When authorizing such issuance of a new certificate, the Board or any such officer may, as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate or certificates, or such owner’s legal representative, to advertise the same in such manner as the Board or such officer shall require and/or to give the Corporation a bond or indemnity, in such sum or on such terms and conditions as the Board or such officer may direct, as indemnity against any claim that may be made against the Corporation on account of the certificate alleged to have been lost, stolen or destroyed or on account of the issuance of such new certificate or uncertificated shares.

5.3. Record Date

5.3.1. Actions by Stockholders

In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than sixty days nor less than ten days before the date of such meeting. If no record date is fixed by the Board of Directors, the record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting, unless the Board of Directors fixes a new record date for the adjourned meeting.

In order that the Corporation may determine the stockholders entitled to consent to corporate action in writing without a meeting, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted by the Board of Directors, and which record date shall not be more than ten days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. If no record date has been fixed by the Board of Directors, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is required by the Delaware General Corporation Law, shall be the first date on which a signed written consent setting forth the action taken or proposed to be taken is delivered to the Corporation in the manner prescribed by Section 213(b) of the Delaware General Corporation Law. If no record date has been fixed by the Board of Directors and prior action by the Board of Directors is required by the Delaware General Corporation Law, the record date for determining stockholders entitled to consent to corporate action in writing without a meeting shall be at the close of business on the day on which the Board of Directors adopts the resolution taking such prior action.

5.3.2. Payments

In order that the Corporation may determine the stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record date is adopted, and which record date shall be not more than sixty days prior to such action. If no record date is fixed, the record date for determining stockholders for any such purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.

5.3.3. Stockholders of Record

The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, to receive notifications, to vote as such owner, and to exercise all the rights and powers of an owner. The Corporation shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise may be provided by the Delaware General Corporation Law.

6. INDEMNIFICATION

6.1. Authorization of Indemnification

Each person who was or is a party or is threatened to be made a party to or is involved in any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative and whether by or in the right of the Corporation or otherwise (a “proceeding”), by reason of the fact that he or she, or a person of whom he or she is the legal representative, is or was a director or officer of the Corporation or is or was serving at the request of the Corporation as a director, officer, employee, partner (limited or general) or agent of another corporation or of a partnership, joint venture, limited liability company, trust or other enterprise, including service with respect to an employee benefit plan, shall be (and shall be deemed to have a contractual right to be) indemnified and held harmless by the Corporation (and any successor to the Corporation by merger or otherwise) to the fullest extent authorized by, and subject to the conditions and (except as provided herein) procedures set forth in the Delaware General Corporation Law, as the same exists or may hereafter be amended (but any such amendment shall not be deemed to limit or prohibit the rights of indemnification hereunder for past acts or omissions of any such person insofar as such amendment limits or prohibits the indemnification rights that said law permitted the Corporation to provide prior to such amendment), against all expenses, liabilities and losses (including attorneys’ fees, judgments, fines, ERISA taxes or penalties and amounts paid or to be paid in settlement) reasonably incurred or suffered by such person in connection therewith; provided, however, that the Corporation shall indemnify any such person seeking indemnification in connection with a proceeding (or part thereof) initiated by such person (except for a suit or action pursuant to Section 6.2 hereof) only if such proceeding (or part thereof) was authorized by the Board of Directors of the Corporation. Persons who are not directors or officers of the Corporation may be similarly indemnified in respect of such service to the extent authorized at any time by the Board of Directors of the Corporation. The indemnification conferred in this Section 6.1 also shall include the right to be paid by the Corporation (and such successor) the expenses (including attorneys’ fees) incurred in the defense of or other involvement in any such proceeding in advance of its final disposition; provided, however, that, if and to the extent the Delaware General Corporation Law requires, the payment of such expenses (including attorneys’ fees) incurred by a director or officer in advance of the final disposition of a proceeding shall be made only upon delivery to the Corporation of an undertaking by or on behalf of such director or officer to repay all amounts so paid in advance if it shall ultimately be determined that such director or officer is not entitled to be indemnified under this Section 6 or otherwise; and provided further, that, such expenses incurred by other employees and agents may be so paid in advance upon such terms and conditions, if any, as the Board of Directors deems appropriate.

6.2. Right of Claimant to Bring Action Against the Corporation

If a claim under Section 6.1 is not paid in full by the Corporation within sixty days after a written claim has been received by the Corporation, the claimant may at any time thereafter bring an action against the Corporation to recover the unpaid amount of the claim and, if successful in whole or in part, the claimant shall be entitled to be paid also the expense of prosecuting such action. It shall be a defense to any such action (other than an action brought to enforce a claim for expenses incurred in connection with any proceeding in advance of its final disposition where the required undertaking, if any is required, has been tendered to the Corporation) that the claimant has not met the standards of conduct which make it permissible under the Delaware General Corporation Law for the Corporation to indemnify the claimant for the amount claimed or is otherwise not entitled to indemnification under Section 6.1 but the burden of proving such defense shall be on the Corporation. The failure of the Corporation (in the manner provided under the Delaware General Corporation Law) to have made a determination prior to or after the commencement of such action that indemnification of the claimant is proper in the circumstances because he or she has met the applicable standard of conduct set forth in the Delaware General Corporation Law shall not be a defense to the action or create a presumption that the claimant has not met the applicable standard of conduct. Unless otherwise specified in an agreement with the claimant, an actual determination by the Corporation (in the manner provided under the Delaware General Corporation Law) after the commencement of such action that the claimant has not met such applicable standard of conduct shall not be a defense to the action, but shall create a presumption that the claimant has not met the applicable standard of conduct.

6.3. Non-exclusivity

The rights to indemnification and advance payment of expenses provided by Section 6.1 hereof shall not be deemed exclusive of any other rights to which those seeking indemnification and advance payment of expenses may be entitled under any by-law, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in his or her official capacity and as to action in another capacity while holding such office.

6.4. Survival of Indemnification

The indemnification and advance payment of expenses and rights thereto provided by, or granted pursuant to, Section 6.1 hereof shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee, partner or agent and shall inure to the benefit of the personal representatives, heirs, executors and administrators of such person.

6.5. Insurance

The Corporation shall have power to purchase and maintain insurance on behalf of any person who is or was a director, officer, employee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, partner (limited or general )or agent of another corporation or of a partnership, joint venture, limited liability company, trust or other enterprise, against any liability asserted against such person or incurred by such person in any such capacity, or arising out of such person’s status as such, and related expenses, whether or not the Corporation would have the power to indemnify such person against such liability under the provisions of the Delaware General Corporation Law.

7. GENERAL PROVISIONS

7.1. Inspection of Books and Records

Any stockholder, in person or by attorney or other agent, shall, upon written demand under oath stating the purpose thereof, have the right during the usual hours for business to inspect for any proper purpose the Corporation’s stock ledger, a list of its stockholders, and its other books and records, and to make copies or extracts therefrom. A proper purpose shall mean a purpose reasonably related to such person’s interest as a stockholder. In every instance where an attorney or other agent shall be the person who seeks the right to inspection, the demand under oath shall be accompanied by a power of attorney or such other writing which authorizes the attorney or other agent to so act on behalf of the stockholder. The demand under oath shall be directed to the Corporation at its registered office or at its principal place of business.

7.2. Dividends

The Board of Directors may declare dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation and the laws of the State of Delaware.

7.3. Reserves

The directors of the Corporation may set apart, out of the funds of the Corporation available for dividends, a reserve or reserves for any proper purpose and may abolish any such reserve.

7.4. Execution of Instruments

All checks, drafts or other orders for the payment of money, and promissory notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate.

7.5. Fiscal Year

The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors.

7.6. Seal

The corporate seal shall be in such form as the Board of Directors shall approve. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or otherwise reproduced.

7.7. Pronouns

All pronouns and any variations thereof shall be deemed to refer to the masculine, feminine, neuter, singular or plural, as the identity of the person or entity may require.

7.8. Amendments

The Board of Directors or the stockholders may from time to time adopt, amend or repeal the Bylaws of the Corporation. Such action by the Board of Directors shall require the affirmative vote of at least a majority of the directors then in office at a duly constituted meeting of the Board of Directors called for such purpose. Such action by the stockholders shall require the affirmative vote of the holders of at least a majority of the outstanding shares of stock of the Corporation entitled to vote thereon at a duly constituted meeting of stockholders called for such purpose.

EX-10.65

Exhibit 10.65

PRIVILEGED AND CONFIDENTIAL

EMPLOYMENT AGREEMENT

THIS EMPLOYMENT AGREEMENT (“Agreement”) is entered into as of July 9, 2012 (the “Effective Date”), by and between Central European Distribution Corporation, a Delaware corporation (the “Company”), and David Bailey (the “Officer”).

WHEREAS, the Company desires to employ the Officer, and the Officer desires to be employed by the Company, on the terms and conditions set forth herein.

NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and other good and valuable consideration, the receipt and sufficiency of which hereby are acknowledged, the parties hereto agree as follows:

1. Employment.

On the terms and conditions set forth in this Agreement, the Company agrees to employ the Officer and the Officer agrees to be employed by the Company for the term set forth in Section 2 hereof and in the position and with the duties set forth in Section 3 hereof.

2. Term.

The term of employment of the Officer by the Company as provided in Section 1 hereof (the “Term”) shall commence as of the Effective Date and continue for a period of up to six months, expiring on January 9, 2013, unless sooner terminated pursuant to Section 8. The Term may be extended by mutual agreement of the parties for a period of not more than an additional six months.

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3. Position and Duties.

During the Term, the Officer shall serve as Interim Chief Executive Officer of the Company, and as Interim Chief Executive Officer of CEDC International Sp. zo.o.(“Subsidiary”), with such duties and responsibilities as the board of directors of the Company and/or the Subsidiary may from time to time determine and assign to the Officer. Additionally, during the Term the Officer shall serve as a member of the Board of Directors of the Company and as the Chairman of the management board and the managing director of the Subsidiary. The Officer shall devote the Officer’s reasonable best efforts and substantially full business time to the performance of the Officer’s duties and the advancement of the business and affairs of the Company and the Subsidiary.

4. Place of Performance.

In connection with the Officer’s employment by the Company, the Officer shall be based at the principal executive office of the Subsidiary, or such other place as the Company and the Officer mutually agree, except for required travel on Company business.

5. Compensation.

5(a) Base Salary. During the Term, the Officer shall be paid base salary at the rate of Sixty-Two thousand Five Hundred USD ($62,500) gross per month by the Company and Subsidiary (the base salary in effect from time to time, the “Base Salary”). Any portion of the Base Salary may be paid by the Subsidiary as determined by the Company in the Company’s sole discretion.

5(b) Bonus. With respect to the second half of the 2012 fiscal year of the Company, the Officer shall be eligible to receive a cash bonus under the Company’s Executive Bonus Plan (the “Second Half Bonus”), the target amount of which shall be $300,000. The terms and conditions relating to the earning and payment of the Second Half Bonus are set forth in Exhibit A attached hereto, it being understood that there shall be no requirement that the Officer remain employed beyond January 9, 2013. Such bonus shall be paid no later than March 15, 2013.

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5(c) Equity Awards. Subject to shareholder approval (at the Company’s 2012 annual meeting or any special meeting of shareholders) of amendments to the Company’s 2007 Stock Incentive Plan authorizing additional shares to be reserved for the granting of equity-based awards, the Company shall grant to the Officer, as of the date of such approval, a number of restricted stock units (“RSUs”) having an aggregate value of Two-Hundred Fifty Thousand USD ($250,000) as of such date. Such RSUs shall become fully vested and payable as of January 9, 2013, so long as the Officer has remained employed to such date; provided, that vesting and payment in respect of the RSUs shall be accelerated in full in the event that, prior to such date, the Officer’s employment is terminated by the Company (other than for Cause, as hereinafter defined), the Officer terminates his employment for Good Reason (as hereinafter defined), or the Officer’s employment terminates by reason of death; provided, further, however, that notwithstanding the previous proviso, in the event the Officer’s employment is terminated by the Company (other than for Cause) or the Officer terminates his employment for Good Reason and, in either case, such termination results from the appointment of a permanent Chief Executive Officer for the Company (such termination being hereinafter referred to as a “New CEO Termination”), vesting in respect of the RSUs shall only be accelerated on a pro rata basis, based on the quotient determined by dividing (A) the number of full and partial months from the Effective Date to the Date of Termination by (B) the number six (6), and the remainder of such RSUs shall be forfeited.

5(d) Specific Benefits. The Officer shall receive the following fringe benefits, subject to the Company’s policies in effect from time to time:

(d)(i) Company Car

(d)(ii) Health plan — Medicover card

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5(e) Other Benefits.

The Officer also shall be entitled to participate in such other benefit plans and to receive such bonuses, incentive compensation and fringe benefits as may be granted or established by the Company and/or Subsidiary from time to time. The Company and Subsidiary each reserve the right to amend, modify or terminate any compensation or benefit plans, policies or agreements at any time and from time to time in the Company’s or Subsidiary’s discretion, including, without limitation, changing carriers or effecting modifications in insurance coverage for the Officer.

5(f) Vacation: Holidays. The Officer shall be entitled to all public holidays observed by the Subsidiary, and shall be entitled to fifteen (15) vacation days during the Term, in accordance with the applicable vacation policies for senior executives of the Company and applicable law, which shall be taken at a reasonable time or times.

5(g) Cost-of-Living Adjustments. If the spot foreign exchange of PLN to USD will drop for over a period of sixty (60) days below 2.50 then the Compensation Committee shall determine, in its discretion, if an adjustment to all payments made to the Officer under this Agreement in cash or a cash equivalent (including, without limitation, any base salary, bonus or reimbursement, and any corresponding payment, if any, due hereunder following the Officer’s termination of employment with the Company and the Subsidiary) shall be subject to increase or decrease pursuant to a cost-of-living adjustment.

5(h) Withholding Taxes and Other Deductions. The Company and the Subsidiary shall withhold from any payments to the Officer, or with respect to any benefits provided under this Agreement, any applicable taxes or other deductions as the Company or Subsidiary determine must be withheld pursuant to applicable law or payroll policies.

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6. Expenses.

6(a) The Company or the Subsidiary shall reimburse the Officer for all reasonable expenses incurred by the Officer (in accordance with the policies and procedures in effect for senior executives of the Company and the Subsidiary) in connection with the Officer’s services under this Agreement. The Officer shall account to the Company or the Subsidiary, as the case may be, for such expenses in accordance with policies and procedures established by the Company or the Subsidiary.

6(b) All reimbursements and in-kind benefits provided under the Agreement which are subject to Section 409A of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), shall be made or provided in accordance with the requirements of Section 409A of the Code, including, where applicable, the requirement that (i) any reimbursement shall be for expenses incurred during the Officer’s lifetime (or during a shorter period of time specified in this agreement), (ii) the amount of expenses eligible for reimbursement, or in-kind benefits provided, during a calendar year may not affect the expenses eligible for reimbursement, or in-kind benefits to be provided, in any other calendar year, (iii) the reimbursement of an eligible expense will be made on or before the last day of the calendar year following the year in which the expense is incurred, and (iv) the right to reimbursement or in-kind benefits is not subject to liquidation or exchange for another benefit.

7. Confidential Information.

7(a) The Officer covenants and agrees that the Officer will not ever, without the prior written consent of the Board or a person authorized by the Board, publish or disclose to any unaffiliated third party or use for the Officer’s personal benefit or advantage any confidential information with respect to any of the Company’s or Subsidiary’s products, services, subscribers, suppliers, marketing techniques, methods or future plans disclosed to the Officer as a result of the Officer’s employment with the Company, to the extent such information has heretofore or shall hereafter remain confidential (except for unauthorized disclosures) and except as otherwise ordered by a court of competent jurisdiction.

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7(b) The Officer acknowledges that the restrictions contained in Section 7 (a) hereof are reasonable and necessary, in view of the nature of the Company’s business, in order to protect the legitimate interests of the Company, and that any violation thereof would result in irreparable injury to the Company. Therefore, the Officer agrees that in the event of a breach or threatened breach by the Officer of the provisions of Section 7(a) hereof, the Company shall be entitled to obtain from any court of competent jurisdiction, preliminary or permanent injunctive relief restraining the Officer from disclosing or using any such confidential information. Nothing herein shall be construed as prohibiting the Company from pursuing any other remedies available to it for such breach or threatened breach, including, without limitation, recovery of damages from the Officer.

7(c) The Officer shall deliver promptly to the Company on termination of employment, or at any other time the Company may so request, ail confidential memoranda, notes, records, reports and other documents (and ail copies thereof) relating to the Company’s and its affiliates’ businesses which the Officer obtained white employed by, or otherwise serving or acting on behalf of, the Company or which the Officer may then possess or have under his or her control.

8. Termination of Employment.

8(a) Death. The Officer’s employment hereunder shall terminate upon the Officer’s death.

8(b) By the Company. The Company may terminate the Officer’s employment hereunder for “Cause.” For purposes of this Agreement, “Cause” shall mean any of the following:

(i)(A) the willful refusal by the Officer to follow a written order of the Board of Directors of the Company , in so far as the request does not breach any federal, state or local law;

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(i)(B) the Officer’s willful engagement in conduct materially injurious to the Company;

(i)(C) dishonesty of a material nature that relates to the performance of the Officer’s duties under this Agreement;

(i)(D) the Officer’s conviction of any felony involving moral turpitude; or,

(i)(E) the Officer’s continued failure to perform his duties under this Agreement (except due to the Officer’s incapacity as a result of physical or mental illness) to the satisfaction of the Board of Directors of the Company for a period of at least forty-five (45) consecutive days after written notice from the Board of Directors is delivered to the Officer specifically identifying the manner in which the Officer has failed to perform his duties.

8(c) By the Officer for Good Reason. The Officer may terminate the Officer’s employment hereunder for “Good Reason.” For purposes of this Agreement, “Good Reason” shall mean (i) the Company’s failure to perform or observe any of the material terms or provisions of this Agreement, and the continued failure of the Company to cure such default within thirty (30) days after written demand for performance has been given to the Company by the Officer, which demand shall describe specifically the nature of such alleged failure to perform or observe such material terms or provisions; or (ii) a material reduction in the scope of the Officer’s responsibilities and duties for the Company or the Subsidiary (including the appointment of a permanent Chief Executive Officer of the Company). For the sake of clarity, the appointment of a permanent Chief Executive Officer of the Subsidiary shall not constitute “Good Reason.”

8(d) The Company may terminate the Officer’s employment for any reason, other than the reasons specified in Sections 8(b), upon written notice to the Officer as specified in Section 8(e)(ii). The Officer may terminate his employment for any reason, other than the reasons specified in Section 8(c), upon ten days’ written notice to the Company.

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8(e) Notice of Termination.

(e)(i) Any termination of the Officer’s employment by the Company or the Officer (other than pursuant to Section 8(a) hereof) shall be communicated by written “Notice of Termination” to the other party hereto in accordance with Section 10 hereof. For purposes of this Agreement, a “Notice of Termination” shall mean a notice which shall indicate the Date of Termination, the specific termination provision in this Agreement relied upon, if any, and shall set forth in reasonable detail the facts and circumstances claimed to provide a basis for termination of the Officer’s employment under the provision so indicated.

(e)(ii) For any termination of the Officer’s employment by the Company pursuant to Section 8(d) (other than a New CEO Termination), one (1) month’s notice must be provided in a Notice of Termination.

(e)(iii) Notwithstanding any other provision of this Agreement to the contrary, if the Officer’s employment is terminated under Section 8(c) or Section 8(d), the Company, in its sole discretion, may accelerate the Date of Termination that is specified in the Notice of Termination. If the Company determines to accelerate the Date of Termination, then if the Officer terminated his employment with the Company pursuant to Section 8(c) or the Company terminated the Officer’s employment pursuant to Section 8(d), the Officer shall receive compensation and benefits pursuant to Section 9(d) without further payment with respect to the shortened notice period.

(e)(iv) It is understood by both the Company and the Officer that termination of this agreement terminates by association any employment agreement with any and all of the Company’s subsidiaries.

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8(f) Date of Termination. For purposes of this Agreement, the “Date of Termination” shall mean (i) if the Officer’s employment is terminated by the Officer’s death, the date of the Officer’s death; or (ii)) if the Officer’s employment is terminated for any other reason, the date specified as the Date of Termination in the Notice of Termination. Notwithstanding the previous sentence, in the case of a termination pursuant to Section 8(b), Section 8(c) or Section 8(d), if payments to the Officer may be subject to Section 409A of the Code, the Date of Termination shall be no later than the date the Officer experiences a “separation from service” as such term is defined under Section 409A of the Code.

9. Compensation Upon Termination.

9(a) If the Officer’s employment is terminated by the Officer’s death, (1) the Company shall pay all Accrued Obligations to the Officer’s estate, or as may be directed by the legal representatives of such estate, (2) the accelerated vesting provisions of Section 5(c) shall apply, (3) in the case of Officer’s death prior to the close of the Company’s 2012 fiscal year, the Company shall pay to the executive’s estate, or as may be directed by the legal representatives of such estate, a lump sum bonus amount equal to the Remaining Bonus, as defined and determined under Section 9(d) below, such amount to be paid at the same time bonuses for 2012 are paid to the Company’s other senior executives, and (4) the Company shall have no further obligations to the Officer under this Agreement. “Accrued Obligations” shall mean the following: (1) the lump sum amount of any Base Salary accrued but unpaid through the Date of Termination, (2) the lump sum amount of any earned but unpaid annual bonus for periods with respect to which the performance period to earn such bonus has closed under the Executive Bonus Plan, (3) the lump sum amount of any accrued but unused paid time off or sick pay in accordance with Company policy and applicable law, (4) the lump sum of any business expenses incurred which have been properly submitted for reimbursement in accordance with Company and/or Subsidiary policy, but not reimbursed prior to the Date of Termination, (5) any other compensation or benefits which may be owed or provided to or in respect of the Officer, paid or provided in accordance with the

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terms and provisions of the applicable benefit plans or programs of the Company and/or Subsidiary, and (6) less any advances made to the Officer. For all purposes of this Agreement, the cash payments payable to, or with respect to, the Officer under clauses (1), (2) and (3) of the definition of Accrued Obligations shall be paid within ten (10) days of the Date of Termination or, if earlier, in accordance with applicable law.

9(b) If the Company terminates the Officer’s employment for Cause as provided in Section 8(b) hereof, the Company shall pay the Officer all Accrued Obligations and the Company shall have no further obligations to the Officer under this Agreement.

9(c) If the Officer terminates the Officer’s employment other than for Good Reason, the Company shall pay to the Officer all Accrued Obligations and the Company shall have no further obligations to the Officer under this Agreement.

9(d) If the Company terminates the Officer’s employment other than for Cause, disability or death, or if the Officer terminates the Officer’s employment for Good Reason as provided in Section 8(c) hereof, then (1) the Company shall: (i) pay or provide to the Officer all Accrued Obligations; (ii) except as hereinafter provided, pay the Officer in a single lump sum payment an amount equal to the Base Salary that would have been payable to the Officer under Sections 5(a) through January 9, 2013 (the “Remaining Base Salary”); (iii) pay the Officer in a single lump sum the bonus to which the Officer would have been entitled under Section 5(b) had he remained employed to January 9, 2013 (the “Remaining Bonus”); and (iv) pay the Officer any other amounts and provide to the Officer benefits that would have been received by him under Section 5(d) hereof during the remainder of the Term, at the time such amounts or benefits would otherwise have been due in accordance with the Company’s normal payroll practices; (2) the full or partial accelerated vesting provisions of Section 5(c) shall apply; and (3) the Company shall have no further obligations to the Officer under this Agreement. For purposes of determining the amount of the Remaining Bonus, the parties

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acknowledge that the portion of the Second Half Bonus which is dependant upon financial results will be calculated based on such financial results and that the portion of the Second Half Bonus which is dependant upon operational or organizational results will be determined in good faith by the Compensation Committee in consultation with the Officer, if living, but subject to approval by the Board of Directors of the Company. If certain operational or organizational targets have been achieved until the date of termination then the full associated bonus for such operational or organizational actions should be paid. Notwithstanding the initial sentence of this Section 9(d), in the event of a New CEO Termination, the Officer shall not be entitled to payment of any Remaining Base Salary and the amount of the Remaining Bonus shall be pro rated based on the quotient determined by dividing (A) the number of full and partial months from the Effective Date to the Date of Termination by (B) the number six (6).

9(e) Mitigation. The Officer shall not be required to mitigate amounts payable pursuant to Section 9(a) through Section 9(d) hereof by seeking other employment, provided, however, that the Company’s obligation to continue to provide the Officer with benefits pursuant to Section 9(d) hereof shall cease if the Officer becomes eligible to participate in benefit plans or otherwise receive employer-provided benefits substantially similar to those provided for in this Agreement as a result of the Officer’s employment during the period that the Officer is entitled to such benefits. The Officer must provide prompt notice to the Company upon acceptance of any subsequent employment that may impose an offset under this Section 9(e).

9(f) Release. Notwithstanding any provision of this Agreement to the contrary, the Company’s obligations to the Officer pursuant to Section 9(d) upon the Officer’s termination of employment shall be conditioned upon the Officer’s execution and the irrevocability of a release in substantially the form attached hereto as Exhibit B hereto (the “Release”). All cash payments (other than any Accrued Obligations) pursuant to Section 9(d) will be paid on the sixtieth (60th) day following the Date of Termination, provided that the Release becomes irrevocable by such sixtieth

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(60th) day, except that the bonus amount referred to in Section 8(d)(1)(ii) shall be paid at the same time bonuses are paid to Company employees with respect to the Company’s 2012 fiscal year. The Company shall provide the Release to the Officer within five days of the Officer’s Date of Termination.

10. Notices.

All notices, demands, requests or other communications required or permitted to be given or made hereunder shall be in writing and shall be delivered, telecopied or mailed by first class registered or certified mail, postage prepaid, addressed as follows:

10(a) If to the Company:

Central European Distribution Corporation
ul. Bobrowiecka 6
00-728 Warsaw, Poland
Telecopier:	48 22 488 34 10
Attention:	James Archbold
	Vice President and Director of Investor Relations or

10(b) If to the Officer:

David Bailey

At the address on file with the Company

Or to such other address as may be designated by either party in a notice to the other. Each notice, demand, request or other communication that shall be given or made in the manner described above shall be deemed sufficiently given or made for all purposes at such time as it is delivered to the addressee (with the return receipt, the delivery receipt, the answer back or the affidavit of messenger being deemed conclusive evidence of such delivery) or at such time as delivery is refused by the addressee upon presentation.

11. Severability.

The invalidity or unenforceability of any one or more provisions of this Agreement shall not affect the validity or enforceability of the other provisions of this Agreement, which shall remain in full force and effect.

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12. Survival.

It is the express intention and agreement of the parties hereto that the provisions of Section 7 hereof shall survive the termination of employment of the Officer. In addition, all obligations of the Company to make payments hereunder shall survive any termination of this Agreement on the terms and conditions set forth herein.

13. Assignment.

The rights and obligations of the parties to this Agreement shall not be assignable, except that the rights and obligations of the Company hereunder shall be assignable in connection with any subsequent merger, consolidation, sale of all substantially all of the assets of the Company or similar reorganization of a successor corporation.

14. Binding Effect.

Subject to any provisions hereof restricting assignment, this Agreement shall be binding upon the parties hereto and shall inure to the benefit of the parties and their respective heirs, devisees, executors, administrators, legal representatives, successors and assigns.

15. Amendment Waiver.

This Agreement shall not be amended, altered or modified except by an instrument in writing duly executed by the parties hereto. Neither the waiver by either of the parties hereto of a breach of or a default under any of the provisions of this Agreement, nor the failure of either of the parties, on one or more occasions, to enforce any of the provisions of this Agreement or to exercise any right or privilege hereunder, shall thereafter be construed as a waiver of any subsequent breach or default of a similar nature, or as a waiver of any such provisions, rights or privileges hereunder.

16. Headings.

Section and subsection headings contained in this Agreement are inserted for convenience of reference only, shall not be deemed to be a part of this Agreement for any purpose, and shall not in any way define or affect the meaning, construction or scope of any of the provisions hereof. Any reference herein to a “Reserved” provision shall not have any meaning for purposes of interpreting the terms or provisions of this Agreement.

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17. Governing Law.

This Agreement, the rights and obligations of the parties hereto, and any claims or disputes relating thereto, shall be governed by and construed in accordance with the laws of the State of Delaware (but not including the choice of law rules thereof).

18. Action of Behalf of the Subsidiary.

The Company is executing this Agreement also on behalf of its Subsidiary and agrees to cause the Subsidiary to fulfill its obligations hereunder, through the appointment and removal, if necessary, of members of the management board of the Subsidiary.

19. Entire Agreement.

This Agreement constitutes the entire agreement between the parties hereto with respect to the subject matter hereof, and it supersedes all prior oral or written agreements, commitments or understandings with respect to the matters provided for herein.

20. Counterparts.

This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which shall be deemed to constitute one and the same instrument.

21. Parachute Tax.

Anything in this Agreement to the contrary notwithstanding, if it shall be determined that any payment, award, benefit or distribution by the Company (or any of its affiliated entities) or by any entity which effectuates a change of control of the Company (or any of its affiliated entities) to or for the benefit of the Officer (whether pursuant to the terms of this Agreement or otherwise) (each a “Payment”) would be subject to the excise tax imposed by Section 4999 of the Code or any corresponding provisions of state or local tax laws, or any interest or penalties with respect to such excise tax (such excise tax, together with any such interest and penalties, are

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hereinafter collectively referred to as the “Excise Tax”), and if it shall also be determined that, by reducing the Payments to a present value (as calculated in accordance with Section 280G of the Code) that is one dollar less than the Safe Harbor Amount (as hereinafter defined), the Officer would receive a larger after-tax benefit from the Payments than if such reduction had not occurred, the Payments shall be reduced so as to have a present value that is one dollar less than the Safe Harbor Amount. The reduction of the amounts payable hereunder, if applicable, shall be made by first reducing the payments or benefits provided under Section 9(d)(1) before reducing the other payments under this Agreement or otherwise; thereafter any such reduction shall be made to other cash payments to which the Officer is entitled. For purposes of this Section 21, “Safe Harbor Amount” shall mean the greatest amount that could be paid to the Officer such that the receipt of Payments would not give rise to any Excise Tax. All determinations required to be made under this Section 21 shall be made by the public accounting firm that is retained by the Company as of the date immediately prior to any change in control of the Company (the “Accounting Firm”), which shall provide detailed supporting calculations both to the Company and the Officer within fifteen (15) business days of the receipt of notice from the Officer that there has been a Payment, or such earlier time as is requested by the Company. All fees and expenses of the Accounting Firm shall be borne solely by the Company.

22. Section 409A.

It is intended that this Agreement will comply with Section 409A of the Code, to the extent the Agreement is subject thereto, and the Agreement shall be interpreted on a basis consistent with such intent. If an amendment of the Agreement is necessary in order for it to comply with Section 409A of the Code, the parties hereto will negotiate in good faith to amend the Agreement in a manner that preserves the original intent of the parties to the extent reasonably possible. Notwithstanding any provision to the contrary in this Agreement, and except as otherwise provided in this Agreement, if a payment or benefit is to be paid upon the Officer’s Date of Termination or termination, then such payment shall be delayed until the Officer has experienced a “separation from service” (as such term is defined under Section 409A of the Code); provided, however, that if a payment or benefit is considered to be a deferral of compensation subject to Section 409A of the Code and the Officer is deemed to be a “specified employee” within the meaning of that term under Section 409A(a)(2)(B) of the Code, then with

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regard to any payment or the provisions of any benefit that is required to be delayed pursuant to Section 409A(a)(2)(B) of the Code, such payment or benefit shall not be made or provided prior to the earlier of (i) the expiration of the six (6)-month period measured from the date of the Officer’s “separation from service” (as such term is defined in U.S. Treasury Regulations issued under Section 409A of the Code), or (ii) the date of the Officer’s death (the “Delay Period”). As soon as practicable following the expiration of the Delay Period, all payments and benefits delayed pursuant to this Section 22 (whether they would have otherwise been payable in a single sum or in installments in the absence of such delay) shall be paid or reimbursed to the Officer in a lump sum, and any remaining payments and benefits due under this Agreement shall be paid or provided in accordance with the normal payment dates specified for them herein. Notwithstanding the foregoing, to the extent that the foregoing applies to the provision of any ongoing welfare benefits to the Officer that would not be required to be delayed if the premiums therefore were paid by the Officer, the Officer shall pay the full costs of premiums for such welfare benefits during the Delay Period and the Company shall pay the Officer an amount equal to the amount of such premiums paid by the Officer during the Delay Period within thirty (30) days after the conclusion of such Delay Period.

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IN WITNESS WHEREOF, the undersigned have duly executed this Agreement, or have caused this Agreement to be duly executed on their behalf, as of the day and year fast hereinabove written.

CENTRAL EUROPEAN DISTRIBUTION CORPORATION
By:	/s/ Markus Sieger
Name:	Markus Sieger
Title:	Chairman of the Compensation Committee
/s/ David Bailey
Name:	David Bailey
Title:	The Officer

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EXHIBIT A

Terms and Conditions

Of Second Half Bonus

Each of the three targets (a, b, c) count each for 1/3 of the total bonus amount of US$ 300’000 — each assessed independently.

a. EBITDA target for 2H2012, adjusted for extraordinary, this being unbudgeted

• legal fees

• impact of financial restatement

• fees for investigation

• Whitehall restructuring fees (if any)

• termination payments for executives

• waiver fees

• FX impact (as defined in the bonus system)

• fees for executive search.

b. Successfully manage and direct the financial restatement process that results in reissued 2010, 2011 audited financial by October 31st, 2012, Q1 & Q2 2012 and the Company meeting all financial reporting covenants in 2012, excluding the August 14th reporting covenant, which is in process of being waived and excluding any resulting delays from the investigation.

c. Organizational Matters, specifically

• Assessment and selection of new GM for Poland latest by December 31st, 2012

• Actively Operate and direct the establishment of the Russia Advisory Committee with activity summary reported to the Board monthly beginning August, 2012

• Coordination internal control activities specifically related to recent deficiencies and provide a Report on Internal Control activities to the Audit Committee monthly beginning in August.

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EXHIBIT B

TO THE

EMPLOYMENT AGREEMENT

BETWEEN

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

AND

DAVID BAILEY

GENERAL RELEASE AND WAIVER AGREEMENT¹

This General Release and Waiver Agreement (the “Agreement”) is made as of             ,          by and between David Bailey (the “Officer”) and Central European Distribution Corporation, a Delaware corporation (together with all of its subsidiaries and affiliated entities, collectively hereinafter referred to as “Company”).

I. TERMINATION OF EMPLOYMENT

The parties acknowledge that the Officer terminated his employment with the Company effective [list date].

II. CONSIDERATION

As consideration for Officer’s entering into and abiding by this Agreement, (i) the Company will pay and provide to the Officer the amounts and benefits specified in Section 9(d) of the Employment Agreement (the “Employment Agreement”) between Central European Distribution Corporation and the Officer, dated as of July 9, 2012 (all such amounts and benefits the “Aggregate Severance Payments”). The parties agree that the Aggregate Severance Payments are in excess of any payments or benefits to which Officer may otherwise be entitled from the Company and its subsidiaries and affiliated entities.

III. COMPLETE RELEASE

Officer, for Officer and Officer’s predecessors, successors, assigns, and heirs, hereby discharges and releases Company and, as applicable, each of the Company’s predecessors, representatives, the Company’s present or former officers, directors, employees, stockholders, affiliates, insurers, successors and assigns, from all claims or demands Officer may have based on Officer’s employment with Company or the termination of that employment. This includes a release of any rights or claims Officer may have based on any facts or events, whether known or unknown by the Officer that occurred on or before the effective date of this Agreement or events that are contemplated by this Agreement, including, without limitation, a release of any rights or claims Officer may have based on (i) the following United States laws: the Civil Rights Acts of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Americans with Disabilities Act of 1990; the Rehabilitation Act of 1973; the Equal Pay Act of

¹  Provisions of Agreement should be modified to comply with legal requirements and customs under non-U.S. law.

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1963; or the Employee Retirement Income Security Act of 1974, as amended; (ii) applicable laws of the states of the United States concerning wages, employment and discharge; (iii) applicable laws of Poland and the European Union concerning wages, discrimination, employment and discharge; (iv) claims arising out of any legal restrictions of the right to terminate Officer such as wrongful or unlawful discharge or related causes of action; (v) defamation, invasion of privacy, intentional or negligent infliction of emotional distress or any other tortious conduct; and/or (vi) violations of any contract or promise express or implied, specifically including, but not limited to the Employment Agreement. No reference to the aforementioned causes of action or claims is intended to limit the scope of this Agreement. Notwithstanding the foregoing, the Officer does not hereby release any rights or claims with respect to enforcement of this Agreement or the period following the effective date of this Agreement.

IV. PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT

Officer confirms that Officer is over the age of 40 and has been given twenty-one (21) days [or forty-five (45) days if applicable under ADEA] to review and consider this Agreement before signing it.

[If forty-five (45) day period applies, additional information will be attached as required by ADEA.]

V. ENCOURAGEMENT TO CONSULT WITH AN ATTORNEY

Officer is encouraged, at Officer’s own expense, to consult with an attorney before signing this Agreement.

VI. OFFICER’S RIGHT TO REVOKE AGREEMENT

If this Agreement is signed by Officer and returned to Company within the time specified in Section IV, Officer may revoke this Agreement within seven (7) calendar days of the date of the Officer’s signature. Revocation can be made by delivering a written notice of revocation to the Company. For this revocation to be effective, written notice must be received no later than the close of business on the seventh (7th) calendar day (or next business day thereafter) after the Officer signs this Agreement. If the Officer revokes this Agreement, it shall not be effective or enforceable and Officer will not receive the payments described in Section II. Notices for the purposes of this paragraph shall be effective if delivered personally, or by certified mail to the following address (or such other address as Officer shall notify Company, or Company shall notify Officer (as the case may be), in each case in writing):

Officer:	David Bailey	Company:	Central European Distribution Corporation
[Officer’s Address]		[Company’s Address]
		Attention:	[Company Representative]

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VII. SEVERABILITY AND JUDICIAL RESTATEMENT

Officer and Company agree that the provisions of this Agreement are severable and divisible. In the event any portion of this Agreement is determined to be illegal or unenforceable, the remaining provisions of this Agreement shall remain in full force and effect.

VIII. MISCELLANEOUS

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws thereunder.

The captions of this Agreement are not part of the provisions hereof and shall not have any force or effect.

This Agreement may not be amended or modified otherwise than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

Nothing contained in this Agreement is intended to be, or shall be construed to be, an admission of any liability by any party or an admission of the existence of any facts upon which liability could be based.

Officer acknowledges and represents that Officer has voluntarily executed this Agreement.

This Agreement shall not be assignable, except that in the event of the death of Officer white amounts or benefits are still due hereunder, any remaining payments due as described in Section II hereof shall be paid to Officer’s estate.

IX. EFFECTIVE DATE OF AGREEMENT

The effective date of this Agreement shall be eight (8) calendar days after the date this Agreement is signed and dated by Officer. If the Agreement is not dated by Officer then, in that event, the effective date of this Agreement shall be eight (8)) calendar days after receipt of the signed Agreement by Company.

PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS PRIOR TO THE DATE THE OFFICER SIGNS THIS AGREEMENT INCLUDING THOSE PURSUANT TO THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED, AND OTHER LAWS PROHIBITING DISCRIMINATION IN EMPLOYMENT.

21

OFFICER ACKNOWLEDGES THAT OFFICER HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT.

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

By:

Date:

David Bailey

Date:

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EX-10.66

Exhibit 10.66

EXECUTION VERSION

SEPARATION AGREEMENT

This SEPARATION AGREEMENT (this “Agreement”) is made and entered into by and between Central European Distribution Corporation, a Delaware corporation. (the “Company”), and Christopher Biedermann (the “Executive”), dated as of September 14, 2012.

WHEREAS, the Executive is currently employed as Chief Financial Officer of the Company (“CFO”) pursuant to the Second Amended and Restated Employment Agreement dated as of October 13, 2011 (as amended, the “Employment Agreement”); and

WHEREAS, the Executive and the Company have mutually determined that it is in the best interest of the Company for the Executive to cease to serve as CFO and to continue to serve as a Consultant pursuant to the terms hereof; and

WHEREAS, the parties wish to set forth their mutual understanding as to their respective rights and obligations in connection with the foregoing;

NOW, THEREFORE, in consideration of the foregoing premises and the mutual promises, terms, provisions and conditions set forth in this Agreement, the parties hereby agree as follows:

1. Separation Date. For purposes of this Agreement, the “Separation Date” shall be September 14, 2012.

2. Resignation. Effective as of the Separation Date, the Executive hereby irrevocably resigns his position as CFO and from all positions he currently holds with any subsidiary of the Company, and the Company hereby accepts such resignations. The Executive agrees to cooperate with the Company and to execute such documents and take reasonable actions as may be necessary or desirable to effectuate the foregoing.

3. Consulting Period. Subject to the succeeding sentence hereof, the period from the Separation Date through December 14, 2012 shall be referred to as the “Consulting Period” during which the Executive shall serve the Company as an independent consultant in accordance with the terms set forth below. Upon ten (10) days’ prior notice to the Executive, the Company may cause the Consulting Period to end prior to December 14, 2012.

1

(a) During the Consulting Period:

(i) the Executive shall consult with and report to the Interim Chief Executive Officer of the Company (the “Interim CEO”) and/or the Interim Chief Financial Officer of the Company (the “Interim CFO”), or their respective designee, as needed, and shall have such duties and responsibilities as may be reasonably assigned to him from time to time by the Interim CEO, the Interim CFO or their respective designee, including but not limited to, the duties and responsibilities set forth on Appendix B annexed hereto;

(ii) the Executive shall not have any executive responsibilities and, except as may be expressly granted to the Executive in writing, the Executive shall have no authority to obligate the Company in any manner, shall not enter into any contract on behalf of the Company, shall not, directly or indirectly, solicit for employment, or employ, any employee of the Company, or solicit or induce any such persons to leave the employ of or otherwise terminate their employment relationship with the Company, and shall not make any representation, warranty or other statement or take any action that may be construed by any third party to indicate that the Executive has any authority to obligate in any manner, or to enter into any contract on behalf of the Company;

(iii) the Executive shall not, directly or indirectly, solicit any of the Company’s distributors, customers or suppliers with whom he was involved as part of his job responsibilities during his employment with the Company or regarding which or from whom he learned confidential information during his employment with the Company, without the prior express written consent of the Interim CEO or his designee;

(iv) so long as the Executive has performed his consulting services hereunder (as determined in good faith by the Interim CEO), the Company shall pay to the Executive a consulting fee of twenty-seven thousand dollars ($27,000) per month, the first payment of which shall be made on October 14, 2012, and thereafter on November 14, 2012 and December 14, 2012 (except as hereinafter provided), it being understood that such amount shall be payable if the Company does not avail itself of the Executive’s consulting services; provided, however, that in the event the Consulting Period is terminated by the Company as described above, a final consulting payment, pro rated as necessary to reflect a period of less than one month, shall be made within two days following the end of the shortened Consulting Period; and provided further, that in no event shall the Executive be entitled to less than a minimum of twenty-seven thousand dollars ($27,000) for the Consulting Period; and

(v) the Company shall pay or reimburse the Executive for all reasonable and necessary business expenses incurred or paid by the Executive in

2

the performance of his duties and responsibilities as a consultant, in accordance with the reimbursement policies of the Company that were in effect and applicable to the Executive during his period of employment by the Company.

(b) The Executive shall be solely responsible for the taxes due to any applicable taxing authority in respect of the payments and benefits provided by the Company to the Executive under this Section 3. The Executive hereby agrees to indemnify and hold harmless the Company for and taxes, interest, of penalty that may be assessed against the Company in respect of the payments and benefits provided by the Company to the Executive under this Section 3 that are subsequently determined to have been subject to deduction and remittance to any taxing authority.

4. Severance Benefits.

(a) In connection with the Executive’s “separation from service” as of the Separation Date, but subject to the provisions of paragraph (b) below and to the conditions set forth in Section 9(h) of the Employment Agreement, (1) the Company shall pay or provide to the Executive, in a lump sum, the sum of one million seventy-three thousand twenty-two dollars ($1,073,022) (the “Severance Amount”), payable ten (10) days after this Agreement and the General Release and Waiver Agreement attached hereto as Appendix A are executed and delivered by the Executive to the Company, provided however, that such agreements and release are executed and delivered to the Company within 21 days following the Separation Date, and (2) the Executive shall continue to receive the benefits provided under Section 5(d) of the Employment Agreement for a period of eighteen (18) months following the Separation Date. For the sake of clarity, the Executive hereby acknowledges and agrees that, except as provided herein, he shall not be entitled to any other compensation or benefits pursuant to the Employment Agreement in connection with his separation from service (including but not limited to any compensation or benefits pursuant to Section 9(g) of the Employment Agreement and any compensation in consideration for not having been granted additional equity awards in January 2012) and that all unvested equity and other awards held by Executive as of the Separation Date shall be immediately forfeited in full.

(b) Payment of the Severance Amount, less any required tax withholdings (such net amount, the “Net Severance Amount”), shall be made via deposit to a separate bank account in the Executive’s name, which account shall be reasonably acceptable to the Company. The Executive acknowledges and agrees that, until the earlier of December 31, 2012 or completion of the current investigation being conducted by the Audit Committee of the Company’s Board of Directors (the “Board”) relating to the restated financial statements of the Company (the “Investigation”), he shall not withdraw (or cause to be withdrawn) from such account any portion of the Net Severance Amount. The Executive acknowledges that the Company hereby reserves its rights and remedies against the Executive solely based on the facts made known to it as a result of the Investigation. Should the Board conclude in good faith, based upon the results of the Investigation, that it has adequate grounds to have terminated Executive’s employment for “Cause” (within the meaning of Section 8(b)(ii) of the Employment Agreement) (the “Board Finding”), Executive’s employment shall be deemed to have terminated for “Cause” as of the Separation Date and the Company shall have the right to seek repayment of any or all amounts paid, or the value of other compensation or benefits provided to the Executive pursuant to paragraph (a) above. Without limiting the generality of the preceding sentence, if all or any portion of the Net Severance Amount is held in the aforementioned bank account at the time of the Board Finding, Executive shall cause all

3

amounts then so held to be returned promptly to the Company. Nothing herein shall be deemed as a waiver of Executive’s right to contest the Board’s determination that it had adequate grounds to terminate Executive’s employment for “Cause”.

5. Final Salary and Paid Time Off. On the first regular Company payday immediately following the Separation Date, the Executive shall receive payment with respect to any earned but unpaid base salary through the Separation Date and accrued paid time off rights, including but not limited to, pay for the vacation the Executive had earned and not used as of the Separation Date. Such unpaid base salary through the Separation Date and accrued paid time off rights are equivalent to $45,730.

6. Confidentiality. The Executive affirms that the provisions of Section 7 of the Employment Agreement shall remain in full force and effect and continue to apply in accordance with their terms. The Executive represents that he has not taken any action or failed to take any action in breach of the provisions of Section 7 of the Employment Agreement on or before the date upon which he signs this Agreement.

7. Indemnification and Advancement. At all times prior to, during and after this Separation Agreement, the Executive shall continue to receive the rights of advancement and indemnification from the Company to the fullest extent permitted under the Company’s Amended and Restated Bylaws (effective September 28, 2011) and under Delaware Law, including indemnification for “fees on fees” litigation.

8. Withholding. All payments made by the Company to the Executive under Sections 4 and 5 of this Agreement shall be subject to applicable tax withholding.

9. Consultation with Attorney; Voluntary Agreement. The Executive understands and agrees that the Executive has the right and has been given the opportunity to review this Agreement and, specifically, the General Release and Waiver attached as Appendix A to this Agreement, with an attorney. Executive represents that he has read this Agreement, including the aforementioned Release, and understands its terms and that the Executive enters into this Agreement freely, voluntarily, and without coercion.

10. Miscellaneous.

(a) This Agreement may not be modified or amended, and no breach shall be deemed to be waived, unless agreed to in writing by the Executive and the authorized designee of the Board. The captions and headings in this Agreement are for convenience only, and in no way define or describe the scope or content of any provision of this Agreement.

(b) The Company and the Executive each hereby affirm that it is their intention that the provision of payments and benefits described or referenced herein be exempt from or in compliance with the requirements of Section 409A of the Code and that each party’s tax reporting shall be completed in a manner consistent with such view. The Executive and the Company hereby further agree that in the event that any payment or benefit made or provided to the Executive in connection with his service to the Company would result in the imposition of an excise tax pursuant to Section 4999 of the Code, the provisions of Section 21 of the Employment Agreement shall apply.

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(c) Subject to his other personal and profession commitments existing at the time, the Executive agrees from and after the Consulting Period, will make himself reasonably available to the Company to provide cooperation and assistance to the Company with respect to areas and matters in which he was involved during his employment, including any threatened or actual litigation concerning the Company, and make himself reasonably available to provide to the Company, if requested, information and counsel relating to ongoing matters of interest to the Company. The Company agrees to reimburse the Executive for the actual out-of-pocket expenses incurred by him as a result of complying with this provision, subject to submission to the Company of documentation substantiating such expenses as the Company may require.

(d) The Company shall pay or reimburse the Executive for all reasonable and necessary legal expenses incurred in connection with his negotiation and entry into of this Agreement, and the General Release and Waiver Agreement, subject to a maximum payment/reimbursement of $15,000.

(e) This Agreement may be executed in counterparts, each of which shall be deemed an original, and which together shall be deemed to be one and the same instrument.

(f) In the event that any one or more of the provisions of this Agreement shall be held to be invalid, illegal or unenforceable, the validity, legality and enforceability of the remainder of the Agreement shall not in any way be affected or impaired thereby.

(g) This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware, without reference to its choice of law rules. Any suit involving any dispute, controversy or claim arising under or relating to this Agreement, or the General Release and Waiver Agreement may only be brought in a court of competent jurisdiction within the United States of America. The Company and the Executive hereby irrevocably consent to the exercise of personal jurisdiction by any such court with respect to any such proceeding and waive any objection to venue or inconvenient forum.

(h) This Agreement, along with the General Release and Waiver Agreement and the surviving provisions of the Employment Agreement as expressly provided herein, contain the entire agreement and understanding of the parties relating to the subject matter hereof and merges and supersedes any and all prior discussions, agreements, negotiations and understandings of every kind and nature between the parties pertaining to the subject matter hereof.

5

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first set forth above.

Central European Distribution Corporation
By:	/s/ David Bailey
	David Bailey, Interim Chief Executive Officer
	/s/ Christopher Biedermann
	Christopher Biedermann

6

Appendix A

GENERAL RELEASE AND WAIVER AGREEMENT

This General Release and Waiver Agreement (the “Agreement”) is made and entered into by and between Christopher Biedermann (the “Officer”) and Central European Distribution Corporation, a Delaware corporation (“CEDC”) (together, with all of its subsidiaries and affiliated entities, collectively hereinafter referred to as “Company).

I. TERMINATION OF EMPLOYMENT

The parties acknowledge that the Officer resigned as Chief Financial Officer of the Company, effective as of September 14, 2012.

II. CONSIDERATION

As mutual consideration for Officer’s as well as the Company’s entering into and abiding by this Agreement, and as contemplated by the Separation Agreement entered into by the Officer and CEDC dated as of September 14, 2012 (the “Separation Agreement”), the Officer will take such actions contemplated by the Separation Agreement and the Company will pay and provide to the Officer the amounts and benefits set forth in the Separation Agreement, subject to its terms and conditions (all such amounts and benefits the “Separation Payments”). The parties agree that the Separation Payments are in excess of any payments or benefits to which Officer may otherwise be entitled from the Company.

III. MUTUAL RELEASES

A. Officer, for Officer and Officer’s predecessors, successors, assigns, and heirs, hereby knowingly and voluntarily forever discharges and releases the Company and each of its predecessors and representatives, along with each of its present or former officers, directors, employees, employee benefit plans, stockholders, affiliates, insurers, successors and assigns from all rights, claims and demands Officer may have based on or related to Officer’s employment or termination of employment with the Company or that the Officer had, now has, or may hereafter claim to have based on any facts or events, whether known or unknown by Officer that occurred on or before the date Officer signs this Agreement or events that are contemplated by this Agreement, including, without limitation, a release of any rights or claims the Officer may have based on (i) the following United States laws: the Civil Rights Acts of 1964, as amended; the Age Discrimination in Employment Act of 1967, as amended; the Americans with Disabilities Act of 1990; the Rehabilitation Act of 1973; the Equal Pay Act of 1963; and the Employee Retirement Income Security Act of 1974, as amended; (ii) applicable laws of the states of the United States concerning wages, employment and discharge; (iii) applicable laws of Poland and the European Union concerning wages, discrimination, employment and discharge; (iv) claims arising out of any legal restrictions of the right to terminate Officer, such as wrongful or unlawful discharge or related causes of action; (v) defamation, invasion of privacy, intentional or negligent infliction of emotional distress or any other tortious conduct; and/or (vi) violations of any contract or promise, express or implied, specifically including, but not limited to, the Employment Agreement (as defined in the Separation Agreement). No reference to the

Appendix A - 1

aforementioned causes of action or claims is intended to limit the scope of this Agreement. Notwithstanding the foregoing, the Officer does not hereby release any rights, claims or demands with respect to the enforcement of this Agreement, the Separation Agreement, or the period following the effective date of this Agreement.

B. The Company hereby knowingly and voluntarily forever discharges and release Officer, Officer’s predecessors, successors, assigns, and heirs, from all rights, claims or demands the Company had, now has, or may hereafter claim to have against Officer based on Officer’s employment with Company (or the termination thereof), or on any facts or events, whether known or unknown by the Company that occurred on or before the date the Comp signs this Agreement; provided, however, that this release shall not include a release of the Company’s rights under Section 4(b) of the Separation Agreement. Notwithstanding the foregoing, the Company does not hereby release any rights, claims or demands with respect to the enforcement of this Agreement, any other provision of the Separation Agreement, or the period following the effective date of this Agreement.

IV. PERIOD FOR REVIEW AND CONSIDERATION OF AGREEMENT

Officer confirms that Officer is over the age of 40 and has been given twenty-one (21) days to review and consider this Agreement before signing it.

V. ENCOURAGEMENT TO CONSULT WITH AN ATTORNEY

Officer is encouraged to consult with an attorney before signing this Agreement.

VI. OFFICER’S RIGHT TO REVOKE AGREEMENT

If this Agreement is signed by Officer and returned to the Company within the time specified in Section IV, Officer may revoke this Agreement within seven (7) calendar days of the date of the Officer’s signature. Revocation can be made by delivering a written notice of revocation to the Company. For this revocation to be effective, written notice must be received no later than the close of business on the seventh (7th) calendar day (or next business day thereafter) after the Officer signs this Agreement. If the Officer revokes this Agreement, it shall not be effective or enforceable and Officer will not receive the payments or benefits described in Section II hereof or the release set forth in Section III (B) above. Notices for the purposes of this paragraph shall be effective if delivered personally, or by certified mail, to the following address (or such other address as the Officer shall notify Company, or Company shall notify the Officer (as the case may be), in each case in writing):

Officer: Christopher Biedermann	Company: Central European Distribution Corporation
at the most recent address in the payroll records of the Company	Bobrowiecka 6 00-728 Warsaw, Poland Attention: David Bailey Facsimile: +48 22 456 60 01

Appendix A - 2

VII. SEVERABILITY AND JUDICIAL RESTATEMENT

Officer and Company agree that the provisions of this Agreement are severable and divisible. In the event any portion of this Agreement is determined to be illegal or unenforceable, the remaining provisions of this Agreement shall remain in full force and effect.

VIII. MISCELLANEOUS

This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware, without reference to principles of conflict of laws thereunder.

The captions of this Agreement are not part of the provisions hereof and shall not have any force or effect.

This Agreement may not be amended or modified other than by a written agreement executed by the parties hereto or their respective successors and legal representatives.

Nothing contained in this Agreement is intended to be, or shall be construed to be, an admission of any liability by any party or an admission of the existence of any facts upon which liability could be based.

Officer acknowledges and represents that Officer has voluntarily executed this Agreement.

This Agreement shall not be assignable, except that in the event of the death of Officer while amounts or benefits are still due hereunder, any remaining payments due as described in Section II hereof shall be paid to Officer’s estate.

IX. EFFECTIVE DATE OF AGREEMENT

The effective date of this Agreement shall be eight (8) calendar days after the date this Agreement is signed and dated by Officer. If the Agreement is not dated by Officer then, in that event, the effective date of this Agreement shall be eight (8) calendar days after receipt of the signed Agreement by Company.

PLEASE READ CAREFULLY. THIS AGREEMENT INCLUDES A RELEASE OF ALL KNOWN AND UNKNOWN CLAIMS PRIOR TO THE DATE OFFICER SIGNS THIS AGREEMENT INCLUDING THOSE PURSUANT TO THE AGE DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED, AND OTHER LAWS PROHIBITING DISCRIMINATION IN EMPLOYMENT. OFFICER ACKNOWLEDGES THAT OFFICER HAS READ THIS AGREEMENT, UNDERSTANDS IT AND IS VOLUNTARILY ENTERING INTO IT.

Appendix A - 3

IN WITNESS WHEREOF, the parties have executed this Agreement as of the date set forth.

CENTRAL EUROPEAN DISTRIBUTION CORPORATION
By:
Name:	David Bailey
Title:	Interim Chief Executive Officer
Date:
Christopher Biedermann
Date:

Appendix A - 4

Appendix B

The Executive will support the Interim CEO and Interim CFO in the overall transition of the financial function from the Executive to the Interim CFO. This will include but is not limited to the following areas:

1. Financial Reporting Function

(a) Support in preparing the final restated 2010, 2011 and Q1 2012 SEC reports (10Q/A’s and 10K/A) as well as the 2nd quarter 2012 10Q.

(b) Support the Interim CFO in organizing and executing the Q3 2012 close process for the Company’s group.

(c) Advising on any accounting or reporting issues as part of the close process as necessary.

(d) Review of current monthly reporting packs and support in development of new reporting packs to better support the goals of new Company management.

(e) Transfer over of knowledge from Executive to Interim CFO on all issues around restatement and normal month-end closing.

(f) Consultation on earnings press releases and investor presentations.

2. 2013 Budget Process – Support in developing the structure for the 2013 budget process including:

(a) Timeline and overall organization;

(b) Develop reporting packs to be completed by business units;

(c) Development of overall consolidation model for budgeting;

(d) Support Interim CFO with communications to Business Unit CFO’s with regards to the budget process;

(e) Provide views to Company management with regards to assumptions and output coming from the business units 2013 budget; and

(f) Work with Company group Treasurer and Interim CFO to develop improved cash flow budgeting as part of 2013 budgeting process.

3. Reorganization and Structure

(a) Work closely with the Russian finance team to provide restructuring of the legal entities in order to maximize tax benefits and avoid any potential technical bankruptcy issues, all within the confines of the Company’s current Senior Secured 2016 bond indenture.

Appendix B - 1

(b) Clean sheet of paper look at current head office finance function to develop proposed new structure for immediate term and transition to a more effective long term structure, including:

(i) Identification of current skill gaps in the organization and support in filling these gaps; and

(ii) Assist in the recruitment of new employees to ensure proper structure of head office finance team.

(c) Advise on implementation of a new head office SAP BPC Financial Consolidation system.

4. Treasury

(a) Support in transition of cooperation with Company Treasurer from the Executive to the Interim CFO and CEO.

(b) Support in assessing the structure of Company Treasury and proposal for any required changes.

(c) Review of cash flow forecasts together with Interim CEO.

(d) Support in ensuring compliance with loan agreements and outstanding bond indentures.

(e) Preparing Interim CFO for meetings and discussions with rating agencies.

(f) Consultation on current working capital financing in Poland and analysis of new proposals (e.g. working capital loans and/or new factoring arrangements).

5. Management reporting

(a) Support in preparing new monthly management reporting package and KPI system.

6. Other

(a) Advice when needed on SOX compliance and internal controls.

(b) Provide Interim CEO with view on potential investor or analysts meetings. Preparing the Interim CFO for any meetings with investors or analysts if necessary.

Appendix B - 2

EX-31.1

Exhibit 31.1

CERTIFICATIONS

I, David Bailey, certify that:

1. I have reviewed this report on Form 10-Q of Central European Distribution Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2012

By:	/s/    David Bailey
	David Bailey
	Interim Chief Executive Officer (principal executive officer)

EX-31.2

Exhibit 31.2

CERTIFICATIONS

I, Bartosz Kołaciński, certify that:

1. I have reviewed this report on Form 10-Q of Central European Distribution Corporation;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: November 19, 2012

By:	/s/    Bartosz Kołaciński
	Bartosz Kołaciński
	Interim Chief Financial Officer (principal financial officer)

EX-32.1

Exhibit 32.1

Written Statement of Chief Executive Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Executive Officer of Central European Distribution Corporation (the “Company”), hereby certifies that, to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the quarterly period ended September 30, 2012, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 19, 2012

/s/    David Bailey        

David Bailey

Interim Chief Executive Officer

EX-32.2

Exhibit 32.2

Written Statement of Chief Financial Officer

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

The undersigned, the Chief Financial Officer of Central European Distribution Corporation (the “Company”), hereby certifies that, to his knowledge on the date hereof:

(a) the Form 10-Q of the Company for the quarterly period ended September 30, 2012, filed on the date hereof with the Securities and Exchange Commission (the “Report”) fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(b) information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: November 19, 2012

/s/    Bartosz Kołaciński        

Bartosz Kołaciński

Interim Chief Financial Officer

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Organization And Significant Accounting Policies - Additional Information (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2012 Facility	Dec. 31, 2011 Cases l
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Number of cases produced and distributed		33,200,000
Number of liters per case		9
Number of operational manufacturing facilities	6
Credit and factoring facilities maturity, year	2012
Convertible Senior Notes Due 2013 [Member]
Organization Consolidation And Presentation Of Financial Statements [Line Items]
Maturity of convertible senior notes	Mar. 15, 2013

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Operating Segments - Segment Information On Goodwill (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Total Goodwill	$ 706,924	$ 670,294
Poland [Member]
Segment Reporting Information [Line Items]
Total Goodwill	271,069	252,080
Russia [Member]
Segment Reporting Information [Line Items]
Total Goodwill	429,286	412,105
Hungary [Member]
Segment Reporting Information [Line Items]
Total Goodwill	$ 6,569	$ 6,109

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Inventories - Components Of Inventories (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011	Sep. 30, 2011
Inventory [Line Items]
Raw materials and supplies	$ 34,510	$ 22,237
In-process inventories	4,714	2,655
Finished goods and goods for resale	120,837	92,798
Total	$ 160,061	$ 117,690	$ 121,400

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Interest Expense, Net - Components Of Interest Expense, Net (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Interest income	$ 578	$ 127	$ 1,398	$ 1,008
Interest expense	(26,809)	(28,250)	(79,537)	(84,344)
Total interest expense, net	$ (26,231)	$ (28,123)	$ (78,139)	$ (83,336)

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Borrowings - Total Obligations Under Senior Secured Notes (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Debt Instrument [Line Items]
Senior Secured Notes	$ 70,000	$ 0
Secured Debt [Member]
Debt Instrument [Line Items]
Senior Secured Notes	933,871	932,089
Secured Debt [Member] | Senior Secured Notes Due 2016 [Member]
Debt Instrument [Line Items]
Senior Secured Notes	936,635	935,296
Unamortized debt discount	(2,764)	(3,207)
Senior Notes due March 18, 2013 (New Debt) [Member]
Debt Instrument [Line Items]
Unamortized debt discount	(18,700)	(16,500)
Senior Notes due March 18, 2013 (New Debt) [Member] | Secured Debt [Member]
Debt Instrument [Line Items]
Senior Secured Notes	$ 70,000	$ 0

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OTHER NON-OPERATING EXPENSE (Tables)

9 Months Ended

Sep. 30, 2012

Components Of Other Non-Operating Expense

The following items are included in Other non-operating income / (expense):

	Three months ended September 30						Nine months ended September 30,
	2012			2011			2012			2011
Write-off of assets held for sale		0			(7,355	)		0			(7,355	)
Factoring costs and bank fees	$	(2,781	)	$	(1,651	)	$	(6,501	)	$	(3,662	)
Bank waiver costs		(1,867	)		0			(1,867	)		0
Other gains / (losses)		(1,235	)		(1,677	)		(2,614	)		(3,303	)
Total other non operating income / (expense), net	$	(5,883	)	$	(10,683	)	$	(10,982	)	$	(14,320	)

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Other Non-Operating Expense - Components Of Other Non-Operating Expense (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Write-off of assets held for sale	$ 0	$ (7,355)	$ 0	$ (7,355)
Factoring costs and bank fees	(2,781)	(1,651)	(6,501)	(3,662)
Bank waiver costs	(1,867)	0	(1,867)	0
Other gains / (losses)	(1,235)	(1,677)	(2,614)	(3,303)
Total other non operating income / (expense), net	$ (5,883)	$ (10,683)	$ (10,982)	$ (14,320)

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Recently Issued Accounting Pronouncements

9 Months Ended

Sep. 30, 2012

Recently Issued Accounting Pronouncements

19. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS

In May 2011, the FASB issued ASU 2011-04, “Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRSs” (“ASU 2011-04”), which is effective for annual reporting periods beginning after December 15, 2011. This guidance amends certain accounting and disclosure requirements related to fair value measurements. Additional disclosure requirements in the update include: (1) for Level 3 fair value measurements, quantitative information about unobservable inputs used, a description of the valuation processes used by the entity, and a qualitative discussion about the sensitivity of the measurements to changes in the unobservable inputs; (2) for an entity’s use of a nonfinancial asset that is different from the asset’s highest and best use, the reason for the difference; (3) for financial instruments not measured at fair value but for which disclosure of fair value is required, the fair value hierarchy level in which the fair value measurements were determined; and (4) the disclosure of all transfers between Level 1 and Level 2 of the fair value hierarchy. The Company adopted ASU 2011-04 during the first quarter of the current fiscal year. The adoption of ASU 2011-04 did not have a material impact on the Company’s consolidated financial statements other than disclosures related to fair value measurements.

In June 2011, the FASB issued ASU 2011-05, “Presentation of Comprehensive Income” (“ASU 2011-05”), which was issued to enhance comparability between entities that report under U.S. GAAP and IFRS, and to provide a more consistent method of presenting non-owner transactions that affect an entity’s equity. ASU 2011-05 eliminates the option to report other comprehensive income and its components in the statement of changes in stockholders’ equity and requires an entity to present the total of comprehensive income, the components of net income and the components of other comprehensive income either in a single continuous statement or in two separate but consecutive statements. This pronouncement is effective for fiscal years, and interim periods within those years, beginning after December 15, 2011. However, in December 2011, the FASB issued ASU 2011-12, “Deferral of the Effective Date for Amendments to the Presentation of Reclassifications of Items Out of Accumulated Other Comprehensive Income in Accounting Standards Update No. 2011-05” (“ASU 2011-12”), which deferred the guidance on whether to require entities to present reclassification adjustments out of accumulated other comprehensive income by component in both the statement where net income is presented and the statement where other comprehensive income is presented for both interim and annual financial statements. ASU 2011-12 reinstated the requirements for the presentation of reclassifications that were in place prior to the issuance of ASU 2011-05 and did not change the effective date for ASU 2011-05. For public entities, the amendments in ASU 2011-05 and ASU2011-12 are effective for fiscal years, and interim periods within those years, beginning after December 15, 2011, and should be applied retrospectively. The Company adopted both ASU 2011-05 and ASU 2011-12 during the first quarter of the current fiscal year. The adoption of ASU 2011-05 and ASU 2011-12 did not have a material impact on the Company’s consolidated financial statements, other than presentation of comprehensive income.

In September 2011, the FASB issued ASU 2011-08, “Testing Goodwill for Impairment” (“ASU 2011-08”), which simplifies testing for impairment by allowing an entity to first assess qualitative factors and determine if it is more likely than not (defined as 50% or more) that the fair value of the reporting unit is less than its carrying amount. That determination can then be used to decide if it is necessary to perform the two-step goodwill impairment test. ASU 2011-08 is effective for annual and interim goodwill impairment tests performed for fiscal years beginning after December 15, 2011, which corresponds to the Company’s first quarter of current fiscal year. The Company will adopt ASU 2011-08 during the current fiscal year and this adoption is not expected to have a material impact on the Company’s consolidated financial statements.

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Income Taxes - Additional Information (Detail) (USD $)	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Income tax expense	$ 5,786,000	$ (18,422,000)	$ 7,820,000	$ (14,232,000)
Effective income tax rate			48.60%
Uncertain income tax position balance	$ 8,000,000		$ 8,000,000		$ 7,100,000
Poland [Member]
Underlying tax rate			19.00%
Russia [Member]
Underlying tax rate			20.00%
Ukraine [Member]
Underlying tax rate			21.00%
Hungary [Member]
Underlying tax rate			16.00%
United States [Member]
Underlying tax rate			35.00%

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Comprehensive Income - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended		12 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011	Dec. 31, 2011
Foreign currency translation adjustment	$ 10,945	$ (215,010)	$ (6,724)	$ (50,410)	$ 6,700

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Fair Value Measurements (Tables)

9 Months Ended

Sep. 30, 2012

Fair Value Of Assets Measured On Recurring And Nonrecurring Basis

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring and nonrecurring basis (cash and cash equivalents as well as assets held for sale ) and fair values of financial assets accounted for at their carrying values (Convertible Senior Notes, Secured Senior Notes and Debt Security) as of September 30, 2012, and December 31, 2011.

			Assets at Fair Value Using
			Quoted Prices in Activated Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
September 30, 2012
Recurring items
Cash and cash equivalents	$	102,713	$	102,713	$	0	$	0
Convertible Senior Notes	$	240,450	$	240,450	$	0	$	0
Secured Senior Notes	$	649,199	$	649,199	$	0	$	0
Debt Security	$	70,722	$	0	$	0	$	70,722
Nonrecurring items
Assets held for sale	$	675	$	0	$	0	$	675
December 31, 2011
Recurring items
Cash and cash equivalents	$	94,410	$	94,410	$	0	$	0
Convertible Senior Notes	$	248,000	$	248,000	$	0	$	0
Secured Senior Notes	$	702,700	$	702,700	$	0	$	0
Nonrecurring items
Assets held for sale	$	675	$	0	$	0	$	675

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Operating Segments - Segment Information On Operating Income / (Loss) (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Gain on remeasurement of previously held equity interests	$ 0	$ 0	$ 0	$ 7,898
Impairment charge	0	(674,515)	0	(674,515)
Operating income	15,179	(658,014)	24,557	(641,925)
Russia after fair value adjustments	35,769	(848,735)	8,264	(854,102)
Option Expense			(1,919)	(1,998)
Poland [Member]
Segment Reporting Information [Line Items]
Poland before fair value adjustments	11,905	8,120	27,497	21,155
Gain on remeasurement of previously held equity interests	0	0	0	7,898
Impairment charge	0	(213,687)	0	(213,687)
Operating income	11,905	(205,567)	27,497	(184,634)
Russia [Member]
Segment Reporting Information [Line Items]
Impairment charge	0	(460,828)	0	(460,828)
Operating income	19,634	9,167	20,221	6,011
Russia after fair value adjustments	19,634	(451,661)	20,221	(454,817)
Hungary [Member]
Segment Reporting Information [Line Items]
Operating income	987	1,446	2,469	3,387
Corporate [Member]
Segment Reporting Information [Line Items]
General corporate overhead	(17,017)	(1,570)	(23,711)	(3,862)
Option Expense	$ (330)	$ (662)	$ (1,919)	$ (1,999)

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Effects Of Foreign Currency Movements - Exchange Rates Used For Translation Of Balance Sheet And Statement Of Operations (Detail)	9 Months Ended	12 Months Ended
	Sep. 30, 2012	Dec. 31, 2011
PLN / US$ [Member]
Effects Of Foreign Currency Movements [Line Items]
Balance sheet rate	3.1780	3.4174
Average rate	3.3107	2.9400
RUR / US$ [Member]
Effects Of Foreign Currency Movements [Line Items]
Balance sheet rate	30.9144	32.2092
Average rate	31.9874	29.1667
HUF / US$ [Member]
Effects Of Foreign Currency Movements [Line Items]
Balance sheet rate	219.1724	240.6620
Average rate	226.7603	194.7020

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RELATED PARTY TRANSACTIONS - Condensed Consolidated Statements of Operations and Comprehensive Income (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Related Party Transaction [Line Items]
Sales	$ 1,473	$ 0	$ 1,473	$ 0
Selling, general and administrative expenses	$ 83	$ 0	$ 83	$ 0

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Borrowings - Principal Repayments (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Extinguishment of Debt [Line Items]
2012	$ 53,203	$ 78,504
2013	389,114	304,645
2014	0	0
2015	0	0
2016 and beyond	933,871	932,089
Total	$ 1,376,188	$ 1,315,238

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Agreement With Roust Trading

9 Months Ended

Sep. 30, 2012

Agreement With Roust Trading

3. AGREEMENT WITH ROUST TRADING

On April 23, 2012, the Company entered into a Securities Purchase Agreement (“SPA”) with Roust Trading Limited (“Roust Trading”), for a strategic transaction. Pursuant to this SPA, Roust Trading agreed to make an investment in the Company in three stages, subject to typical closing conditions. In the first stage, on May 7, 2012, Roust Trading acquired 5,714,286 newly issued shares of the Company’s common stock for an aggregate purchase price of $30 million, or $5.25 per share (the “Initial Shares”). The Initial Shares were accounted for as temporary equity in the balance sheet. Also on May 7, 2012, JSC Russian Standard Bank (“Russian Standard Bank”), a subsidiary of Roust Trading, purchased $70 million aggregate principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% (the “Debt Security”) issued by the Company. The SPA also contemplated the following transactions:

• upon approval of CEDC’s shareholders, and after the satisfaction of certain other conditions, the Company would be able to cause Roust Trading to or Roust Trading would be able to

• purchase such number of shares of common stock at a purchase price of $5.25 per share sufficient to repay the then-outstanding principal amount of the Debt Security, plus the accrued and unpaid interest thereon, totaling approximately 13.3 million shares of common stock (the “Exchange Shares”) plus additional shares representing accrued and unpaid interest thereon, and

• sell to CEDC the entire principal amount of the Debt Security;

• the purchase by Roust Trading of a new debt security with a principal aggregate amount of approximately $102.6 million maturing on July 31, 2016 (the “Rollover Notes”), with the Rollover Notes to bear a blended interest rate of 6.00% over the term of the Rollover Notes and interest accrued on the Rollover Notes to be effectively paid in shares of common stock before January 1, 2014, and in cash thereafter; and

• the receipt by CEDC of the right to put to Roust Trading a debt security maturing on July 31, 2016 (the “Backstop Notes”) of an aggregate principal amount of up to $107.5 million, with the Backstop Notes to bear a blended interest rate of 6.00% over the term of the Backstop Notes and interest to be accrued on the Backstop Notes to be effectively paid in shares of common stock before January 1, 2014, and in cash thereafter.

On July 9, 2012, the Company entered into an amended and restated securities purchase agreement (the “Amended SPA”) with Roust Trading, which amended and restated the entirety of the SPA described above. The material amendments to the terms of the SPA as set forth in the Amended SPA include:

• the Company will, within five business days of a request by Roust Trading, issue to Roust Trading, as an adjustment to the issue price of the Initial Shares and Exchange Shares, up to the following amount of shares of common stock at any time after the following dates: (i) 3 million shares of common stock after the execution of the Amended SPA; (ii) 5 million shares of common stock after receipt of Company Stockholder Approval (as defined in the Amended SPA); and (iii) 2 million shares following the Backstop Escrow Release Date (as defined in the Amended SPA) (the shares of common stock in clauses (i), (ii) and (iii) above collectively the “Additional Shares”);

• interest payable (i) on the Debt Security prior to the Second Closing (as defined in the Amended SPA) may, at the option of Roust Trading and after the Second Closing, be effectively paid in shares of common stock at a price of $3.44 per share of common stock, (ii) on the Rollover Notes through June 30, 2014, will be effectively paid in a number of shares of common stock, determined by dividing the amount of interest payable over such period by the 5-day volume weighted average price (the “VWAP”) of the common stock (as traded on NASDAQ), provided that the VWAP may never exceed $4.13 or be lower than $2.75 (the “VWAP Amount”), and (iii) on the Backstop Notes through December 31, 2013, will be effectively paid in a number of shares of common stock, determined by dividing the amount of interest payable over such period by the VWAP Amount;

• the final maturity date for the Debt Security will be extended to July 31, 2016; and

• the Company’s board of directors authorized (subject to applicable blackout periods and regulatory limitations) Roust Trading to purchase an amount of shares of common stock in the market that, when added to the shares currently owned by Roust Trading, the Exchange Shares, the Additional Shares and the shares that Roust Trading would receive in connection with interest payments under notes issued and to be issued to Roust Trading, would not exceed an amount of outstanding share capital of the Company that would require Roust Trading to make a tender offer for the Company’s common stock under Polish law. Upon receipt of certain Polish regulatory waivers if and to the extent received, the Company’s board of directors has agreed that the threshold will be raised to 42.9%.

In consideration of the above terms, and subject to the fulfillment of certain conditions, Roust Trading agreed to waive certain contractual claims it may have under the Original SPA and under certain other agreements arising from the accounting errors announced on the Company’s Form 8-K filed with the SEC on June 4, 2012.

The cash proceeds from the Rollover Notes will be used by the Company to repurchase the Convertible Notes held by Roust Trading or its affiliates with a face value of approximately $102.6 million, at par. The remaining proceeds (net of transaction fees and expenses) received by the Company from the issuance of the Initial Shares, Debt Security and Backstop Notes will be used to repurchase or repay the outstanding amount of Convertible Notes.

As described in Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the year ended December 31, 2011, filed with SEC on October 5, 2012, the Company restated its consolidated financial statements as of and for the years ended December 31, 2011 and 2010, primarily due to the fact that certain retroactive trade rebates and trade marketing refunds were not properly recorded by CEDC’s principle operating subsidiary in Russia, the Russian Alcohol Group. The cumulative impact of restatements for the years ended December 31, 2011 and 2010, exceeded certain thresholds as set out in the Amended SPA. As a result, Roust Trading may no longer be obliged to consummate the associated funding transaction and may have other claims against the Company, including potential event of default under the New Debt. Roust Trading has reserved its rights and therefore it is uncertain at this stage whether Roust Trading will consummate the funding transaction agreed with the Company or if Roust Trading will propose new terms to an amended transaction or propose an alternative transaction. Discussions have commenced between the Company and Roust Trading regarding of the impact of the restatement on our strategic alliance.

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RELATED PARTY TRANSACTIONS - Condensed Consolidated Balance Sheets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Current Assets
Accounts receivable	$ 1,798	$ 0
Other current assets	1,034	0
Total due from Roust	2,832	0
Current Liabilities
Other accrued liabilities	95	0
Total due to Roust	$ 95	$ 0

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Earnings Per Share - Computation Of Basic And Diluted Earnings Per Share (Detail) (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Schedule Of Computation Of Basic And Diluted Earnings Per Common Share [Line Items]
Net income/ (loss)	$ 35,769	$ (848,735)	$ 8,264	$ (854,102)
Weighted average shares of common stock outstanding (used to calculate basic EPS)	78,582	72,490	75,902	72,063
Shares issuable according to Amended SPA (See Note 3)	3,000	0	3,000	0
Net effect of dilutive employee stock options based on the treasury stock method	209	104	202	115
Weighted average shares of common stock outstanding (used to calculate diluted EPS)	81,791	72,594	79,104	72,178
Net income / (loss) per common share - basic	$ 0.46	$ (11.71)	$ 0.11	$ (11.85)
Net income / (loss) per common share - diluted	$ 0.44	$ (11.71)	$ 0.10	$ (11.85)

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Inventories (Tables)

9 Months Ended

Sep. 30, 2012

Components Of Inventories

The following table summarizes our inventories:

	September 30, 2012		December 31, 2011
Raw materials and supplies	$	34,510	$	22,237
In-process inventories		4,714		2,655
Finished goods and goods for resale		120,837		92,798
Total	$	160,061	$	117,690

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BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2012

Principal Repayments

The following is a schedule by years of the future principal repayments for borrowings as of September 30, 2012:

	September 30, 2012		December 31, 2011
Principal repayments for the following years
2012	$	53,203	$	78,504
2013		389,114		304,645
2014		0		0
2015		0		0
2016 and beyond		933,871		932,089
Total	$	1,376,188	$	1,315,238

Convertible Senior Notes Due 2013 [Member]

Total Obligations Under Senior Notes

Senior Notes, with the next coupon due for payment on March 15, 2013. Total obligations under the Convertible Senior Notes are shown net of deferred finance costs, amortized over the life of the borrowings using the effective interest rate method as shown in the table below:

	September 30, 2012			December 31, 2011
Convertible Senior Notes	$	257,858		$	310,000
Unamortized debt discount		(320	)		(1,070	)
Debt discount related to ASC 470-20		(416	)		(4,285	)
Total	$	257,122		$	304,645

Senior Notes due March 18, 2013 (New Debt) [Member]

Total Obligations Under Senior Notes

shares of common stock at a price $3.44 per share of common stock. Pursuant to the Amended SPA, the final maturity date for the Debt Security will be extended to July 31, 2016.

	September 30, 2012		December 31, 2011
Senior Notes due 2013	$	70,000	$	0
Total	$	70,000	$	0

Convertible Senior Notes due 2016 [Member]

Total Obligations Under Senior Notes

As of September 30, 2012 and December 31, 2011 the Company had accrued interest of $28.0 million and $7.0 million, respectively related to the Senior Secured Notes due 2016, with the next coupon due for payment on December 1, 2012.

	September 30, 2012			December 31, 2011
Senior Secured Notes due 2016	$	936,635		$	935,296
Unamortized debt discount		(2,764	)		(3,207	)
Total	$	933,871		$	932,089

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Other Financial Income/ (Expense), Net - Components Of Other Financial Income Net (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Foreign exchange impact related to foreign currency financing	$ 62,145	$ (173,664)	$ 82,682	$ (123,196)
Gain on debt extinguishment	640	0	1,949	0
Other gains / (losses)	(4,295)	3,327	(3,983)	2,389
Total other financial income / (expense), net	$ 58,490	$ (170,337)	$ 80,648	$ (120,807)

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Borrowings - Additional Information (Detail)	9 Months Ended		0 Months Ended									9 Months Ended			0 Months Ended	3 Months Ended		9 Months Ended					9 Months Ended				9 Months Ended		0 Months Ended		9 Months Ended	1 Months Ended		9 Months Ended											9 Months Ended	0 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 RUB	Dec. 02, 2009 9.125% Senior Secured Notes Due 2016 [Member] USD ($)	Dec. 02, 2009 8.875% Senior Secured Notes Due 2016 [Member] USD ($)	Dec. 02, 2009 8.875% Senior Secured Notes Due 2016 [Member] EUR (€)	Dec. 09, 2010 8.875% Senior Secured Notes Due 2016 [Member] Additional Debt [Member] USD ($)	Dec. 09, 2010 8.875% Senior Secured Notes Due 2016 [Member] Additional Debt [Member] EUR (€)	Sep. 30, 2012 Raiffeisen Bank [Member] USD ($)	Sep. 30, 2012 Raiffeisen Bank [Member] EUR (€)	Sep. 30, 2012 Zenit Bank, Alfa Bank And Raiffeisen Bank [Member] USD ($)	Jun. 30, 2012 Zenit Bank, Alfa Bank And Raiffeisen Bank [Member] EUR (€)	Sep. 30, 2012 Alfa Bank [Member] Tranches	Sep. 30, 2012 Senior Notes due March 18, 2013 (New Debt) [Member] USD ($)	Dec. 31, 2011 Senior Notes due March 18, 2013 (New Debt) [Member] USD ($)	Mar. 07, 2008 Convertible Senior Notes Due 2013 [Member] USD ($)	Sep. 30, 2012 Convertible Senior Notes Due 2013 [Member] USD ($)	Sep. 30, 2011 Convertible Senior Notes Due 2013 [Member] USD ($)	Sep. 30, 2012 Convertible Senior Notes Due 2013 [Member] USD ($)	Sep. 30, 2011 Convertible Senior Notes Due 2013 [Member] USD ($)	Dec. 31, 2011 Convertible Senior Notes Due 2013 [Member] USD ($)	Sep. 30, 2012 Loan Agreement [Member] Unicredit And JSC Grand Invest Bank [Member] USD ($)	Sep. 30, 2012 Loan Agreement [Member] Unicredit And JSC Grand Invest Bank [Member] RUB	Sep. 30, 2012 Loan Agreement [Member] Unicredit [Member] USD ($)	Sep. 30, 2012 Loan Agreement [Member] Unicredit [Member] RUB	Sep. 30, 2011 Loan Agreement [Member] Unicredit [Member] USD ($)	Sep. 30, 2011 Loan Agreement [Member] Unicredit [Member] RUB	Sep. 30, 2012 Loan Agreement [Member] JSC Grand Invest Bank [Member] USD ($)	Sep. 30, 2012 Loan Agreement [Member] JSC Grand Invest Bank [Member] RUB	Jul. 06, 2010 Loan Agreement [Member] Raiffeisen Bank [Member] USD ($) Tranches	Jul. 06, 2010 Loan Agreement [Member] Raiffeisen Bank [Member] EUR (€) Tranches	Sep. 30, 2012 Loan Agreement [Member] Raiffeisen Bank [Member]	Jul. 22, 2008 Loan Agreement [Member] Alfa Bank [Member] USD ($)	Jul. 22, 2008 Loan Agreement [Member] Alfa Bank [Member] EUR (€)	Sep. 30, 2012 Loan Agreement [Member] Alfa Bank [Member] USD ($)	Sep. 30, 2012 Loan Agreement [Member] Alfa Bank [Member] EUR (€)	Sep. 30, 2012 Loan Agreement [Member] Alfa Bank [Member] Minimum [Member]	Sep. 30, 2012 Loan Agreement [Member] Alfa Bank [Member] Maximum [Member]	Sep. 30, 2012 Loan Agreement [Member] MKB Bank [Member] USD ($)	Sep. 30, 2012 Loan Agreement [Member] MKB Bank [Member] RUB	Sep. 30, 2012 Loan Agreement [Member] Outstanding Loan Balance [Member] USD ($)	Sep. 30, 2012 Loan Agreement [Member] Outstanding Loan Balance [Member] RUB	Sep. 30, 2012 Overdraft Agreement [Member] Sberbank [Member]	Feb. 06, 2012 Overdraft Agreement [Member] Sberbank [Member] USD ($)	Feb. 06, 2012 Overdraft Agreement [Member] Sberbank [Member] RUB	Sep. 30, 2012 Convertible Note [Member] USD ($) Tranches	Jan. 04, 2010 Senior Secured Notes Due 2016 [Member] USD ($)	Jan. 04, 2010 Senior Secured Notes Due 2016 [Member] EUR (€)	Sep. 30, 2012 Senior Secured Notes Due 2016 [Member] USD ($)	Dec. 31, 2011 Senior Secured Notes Due 2016 [Member] USD ($)
Line of Credit Facility [Line Items]
Outstanding liability								$ 7,100,000	€ 5,500,000	$ 29,100,000	€ 22,500,000										$ 76,600,000	2,371,400,000	$ 19,400,000	600,000,000			$ 6,800,000	211,400,000						$ 22,000,000	€ 17,000,000			$ 32,300,000	1,000,000,000	$ 18,100,000	560,000,000
Initiation date	July 6, 2012	July 6, 2012																					May 24, 2011	May 24, 2011			November 25, 2011	November 25, 2011			March 29, 2011			July 22, 2008	July 22, 2008			July 19, 2012	July 19, 2012	July 25, 2012	July 25, 2012	February 6, 2012
Maturity date	December 29, 2012	December 29, 2012																					November 25, 2012	November 25, 2012			November 23, 2012	November 23, 2012			June 6, 2012	October 18, 2014	October 18, 2014					February 25, 2013	February 25, 2013	December 31, 2012	December 31, 2012	February 5, 2013
Maximum borrowing capacity	16,200,000	500,000,000																											12,900,000	10,000,000		25,900,000	20,000,000										1,900,000	60,000,000
Loan agreement, number of tranches												7																	2	2															6
Date of tranches release, start date																															August 16, 2012			March 30, 2012	March 30, 2012
Date of tranches release, end date																															September 10, 2012			September 26, 2012	September 26, 2012
Repayable date																																				September 30, 2012	December 28, 2012
Amount of collateral on term loan																									23,300,000	720,000,000
Term loan facility utilized portion	5,600,000	173,400,000
Debt instrument issuance amount	70,000,000		380,000,000	491,900,000	380,000,000	64,700,000	50,000,000						70,000,000		310,000,000
Interest rate percentage on issued debt	3.00%	3.00%	9.125%	8.875%	8.875%	8.875%	8.875%						3.00%		3.00%
Year of maturity of debt															2013
Initial conversion rate shares															14.7113
Principal amount of initial conversion rate															1,000
Repurchased amount of convertible notes																																													52,100,000
Principal amount of convertible notes																																													50,200,000
Accrued interest																500,000		500,000		2,700,000																												28,000,000	7,000,000
Pre tax non-cash interest expense recognized in consolidated statement of operations																1,500,000	1,100,000	4,100,000	3,200,000
Annual pre-tax increase in non-cash interest expense																		400,000
Debt instrument maturity year			2016	2016	2016	2016	2016
Redemption of senior secured notes																																														317,700,000	245,400,000
Debt instrument maturity date													Mar. 18, 2013
Common stock to be purchased, shares													13,300,000
Common stock to be purchased, price per share													$ 5.25
Common stock price per share for interest payable on debt security													$ 3.44
Accrued interest													700,000
Unamortized debt discount													$ 18,700,000	$ 16,500,000

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OPERATING SEGMENTS (Tables)

9 Months Ended

Sep. 30, 2012

Segment Information On Net Sales

profits is shown below: Segment information represents only continuing operations.

	Segment Net Sales
	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Segment
Poland	$	56,471	$	58,234	$	159,778	$	163,463
Russia		128,895		143,623	$	347,675	$	362,393
Hungary		5,965		7,781	$	17,068	$	20,492
Total Net Sales	$	191,331	$	209,638	$	524,521	$	546,348

Segment Information On Operating Income / (Loss)

Operating income / (loss)
	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Segment
Poland before fair value adjustments	$	11,905		$	8,120		$	27,497		$	21,155
Gain on remeasurement of previously held equity interests		0		$	0			0			7,898
Impairment charge		0		$	(213,687	)		0		$	(213,687	)
Poland after fair value adjustments		11,905			(205,567	)		27,497			(184,634	)
Russia before fair value adjustments		19,634		$	9,167			20,221			6,011
Impairment charge		0		$	(460,828	)		0			(460,828	)
Russia after fair value adjustments		19,634			(451,661	)		20,221			(454,817	)
Hungary		987		$	1,446			2,469			3,387
Corporate Overhead
General corporate overhead		(17,017	)	$	(1,570	)		(23,711	)		(3,862	)
Option Expense		(330	)	$	(662	)		(1,919	)		(1,999	)
Total Operating income / (loss)	$	15,179		$	(658,014	)	$	24,557		$	(641,925	)

Segment Information On Identifiable Assets

Identifiable Operating Assets
	September 30, 2012		December 31, 2011
Segment
Poland	$	560,792	$	600,940
Russia		1,316,088		1,369,744
Hungary		20,349		20,265
Corporate		82,937		25,769
Total Identifiable Assets	$	1,980,166	$	2,016,718

Segment Information On Goodwill

	Goodwill
	September 30, 2012		December 31, 2011
Segment
Poland	$	271,069	$	252,080
Russia		429,286		412,105
Hungary		6,569		6,109
Total Goodwill	$	706,924	$	670,294

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Interest Expense, Net (Tables)

9 Months Ended

Sep. 30, 2012

Components Of Interest Expense, Net

The following items are included in Interest expense, net:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Interest income	$	578		$	127		$	1,398		$	1,008
Interest expense		(26,809	)		(28,250	)		(79,537	)		(84,344	)
Total interest expense, net	$	(26,231	)	$	(28,123	)	$	(78,139	)	$	(83,336	)

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Sale Of Accounts Receivable

9 Months Ended

Sep. 30, 2012

Sale Of Accounts Receivable

2. SALE OF ACCOUNTS RECEIVABLE

On February 24, 2011, two subsidiaries of the Company, namely CEDC International Sp. z o.o. (“CEDC International”) and Polmos Białystok S.A. (“Polmos Bialystok”), entered into factoring arrangements (“Factoring Agreements”) with ING Commercial Finance Polska (“ING Polska”) for the sale up to 290.0 million Polish zlotys (approximately $91.3 million) of receivables. On January 1, 2012, the total limit under the Factoring Agreements was reduced from 290.0 million Polish zlotys ($91.3 million) to 250.0 million Polish zlotys ($78.7 million) and from March 1, 2012 it was further reduced to 220.0 million Polish zlotys ($69.2 million). The Factoring Agreements were to mature on April 30, 2012, however on April 25, 2012 the Company extended these agreements until September 30, 2012 with further decrease of the total limit to 200.0 million Polish zlotys (approximately $62.9 million). On September 28, 2012 the Company further extended these agreements until December 31, 2012 with decrease of the total limit to 170.0 million Polish zlotys (approximately $53.5 million).

As of September 30, 2012, the total balance of receivables under factoring amounted to 95.9 million Polish zlotys (approximately $30.2 million) of the 170.0 million Polish zlotys limit available.

For the three and nine months ended September 30, 2012, the Company sold receivables in the amount of 282.3 million Polish zlotys ($88.8 million) and 979.7 million Polish zlotys ($308.3 million), respectively and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 2.8 million Polish zlotys ($0.8 million) and 9.1 million Polish zlotys ($2.7 million), respectively in respect of the non-recourse factoring.

Furthermore, the Company signed in June 2011 and in January 2012 factoring agreements with ING Polska and with Bank Handlowy w Warszawie Spółka Akcyjna (“Bank Handlowy”), respectively. These agreements allow the Company to sale to the banks receivable of three Company’s distributors named in these agreements. There is no financing limit in any of the two agreements. As a result of the agreement with ING Polska, in three and nine month periods ended September 30, 2012 the Company sold receivables in the amount of 20.9 million Polish zlotys ($6.6 million) and 76.6 million Polish zlotys ($24.1 million), respectively and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 0.14 million Polish zlotys ($0.04 million) and 0.50 million Polish zlotys ($0.15 million). As a result of the agreement with Bank Handlowy, in three and nine month periods ended September 30, 2012 the Company sold receivables in the amount of 21.1 million Polish zlotys ($6.6 million) and 65.3 million Polish zlotys ($20.5 million), respectively and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 0.10 million Polish zlotys ($0.03 million) and 0.3 million Polish zlotys ($0.09 million).

Additionally, in August 2012, the Company signed agreements with its distributor and Bank Zachodni WBK S.A. for non-recourse factoring of the receivables from the distributor and its related parties. There is no financing limit fixed in these agreements. As a result of these agreement, in the three and nine month period ended September 30, 2012 the Company sold receivables in the amount of 129.9 million Polish zlotys ($40.9 million) and recognized a loss on the sale in the statement of operations and comprehensive income in the amount of 1.3 million Polish zlotys ($0.4 million). The Company has no continuing involvement with the sold non-recourse receivables.

As of September 30, 2012, the liabilities from factoring with recourse amounted to $1.7 million and are included in the short term bank loans in the balance sheet. Corresponding receivables from factoring with recourse are presented under accounts receivable in the balance sheet.

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OTHER FINANCIAL INCOME / (EXPENSE), NET (Tables)

9 Months Ended

Sep. 30, 2012

Components Of Other Financial Income, Net

The following items are included in Other financial income / (expense), net:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Foreign exchange impact related to foreign currency financing	$	62,145		$	(173,664	)	$	82,682		$	(123,196	)
Gain on debt extinguishment		640			0			1,949			0
Other gains / (losses)		(4,295	)		3,327			(3,983	)		2,389
Total other financial income / (expense), net	$	58,490		$	(170,337	)	$	80,648		$	(120,807	)

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Sale Of Accounts Receivable - Additional Information (Detail)	3 Months Ended		9 Months Ended									3 Months Ended		9 Months Ended				3 Months Ended		9 Months Ended		3 Months Ended		9 Months Ended
	Sep. 30, 2012 USD ($)	Sep. 30, 2012 PLN	Sep. 30, 2012 USD ($)	Sep. 30, 2012 PLN	Mar. 31, 2012 PLN	Mar. 01, 2012 USD ($)	Mar. 01, 2012 PLN	Jan. 02, 2012 USD ($)	Jan. 02, 2012 PLN	Sep. 28, 2012 Subsequent Event [Member] USD ($)	Sep. 28, 2012 Subsequent Event [Member] PLN	Sep. 30, 2012 ING Polska [Member] USD ($)	Sep. 30, 2012 ING Polska [Member] PLN	Sep. 30, 2012 ING Polska [Member] USD ($)	Sep. 30, 2012 ING Polska [Member] PLN	Feb. 24, 2011 ING Polska [Member] USD ($)	Feb. 24, 2011 ING Polska [Member] PLN	Sep. 30, 2012 Bank Handlowy And WBK [Member] USD ($)	Sep. 30, 2012 Bank Handlowy And WBK [Member] PLN	Sep. 30, 2012 Bank Handlowy And WBK [Member] USD ($)	Sep. 30, 2012 Bank Handlowy And WBK [Member] PLN	Sep. 30, 2012 Related Party [Member] USD ($)	Sep. 30, 2012 Related Party [Member] PLN	Sep. 30, 2012 Related Party [Member] USD ($)	Sep. 30, 2012 Related Party [Member] PLN
Accounts, Notes, Loans and Financing Receivable [Line Items]
Maximum sale under factoring agreement													220,000,000		220,000,000	$ 91,300,000	290,000,000
Factoring agreements, limit	62,900,000	200,000,000	62,900,000	200,000,000	220,000,000	69,200,000	170,000,000	78,700,000	250,000,000	53,500,000	170,000,000
Factoring agreements maturity date			Apr. 30, 2012	Apr. 30, 2012
Factoring agreements extended maturity date			Dec. 31, 2012	Dec. 31, 2012
Total balance of accounts receivable under factoring												30,200,000	95,900,000	30,200,000	95,900,000
Accounts receivable sold during the period	88,800,000	282,300,000	308,300,000	979,700,000								6,600,000	20,900,000	24,100,000	76,600,000			6,600,000	21,100,000	20,500,000	65,300,000	40,900,000	129,900,000	40,900,000	129,900,000
Non-recourse factoring loss	800,000	2,800,000	2,700,000	9,100,000								40,000	140,000	150,000	500,000			30,000	100,000	90,000	300,000	400,000	1,300,000	400,000	1,300,000
Liability for recourse from factored receivables	$ 1,700,000		$ 1,700,000

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Operating Segments - Segment Information On Identifiable Assets (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Segment Reporting Information [Line Items]
Total Identifiable Assets	$ 1,980,166	$ 2,016,718
Poland [Member]
Segment Reporting Information [Line Items]
Total Identifiable Assets	560,792	600,940
Russia [Member]
Segment Reporting Information [Line Items]
Total Identifiable Assets	1,316,088	1,369,744
Hungary [Member]
Segment Reporting Information [Line Items]
Total Identifiable Assets	20,349	20,265
Corporate [Member]
Segment Reporting Information [Line Items]
Total Identifiable Assets	$ 82,937	$ 25,769

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Condensed Consolidated Balance Sheets (USD $)	Sep. 30, 2012	Dec. 31, 2011
Current Assets
Cash and cash equivalents	$ 102,713,000	$ 94,410,000
Accounts receivable, net of allowance for doubtful accounts at September 30, 2012 of $26,512 and at December 31, 2011 of $24,510	220,802,000	410,866,000
Inventories	160,061,000	117,690,000
Prepaid expenses	27,472,000	16,538,000
Other current assets	48,780,000	23,020,000
Deferred income taxes	5,173,000	4,717,000
Debt issuance costs	7,389,000	2,962,000
Total Current Assets	572,390,000	670,203,000
Intangible assets, net	486,787,000	463,848,000
Goodwill	706,924,000	670,294,000
Property, plant and equipment, net	178,871,000	176,660,000
Deferred income taxes, net	23,195,000	21,488,000
Debt issuance costs	11,324,000	13,550,000
Non-current assets held for sale	675,000	675,000
Total Non-Current Assets	1,407,776,000	1,346,515,000
Total Assets	1,980,166,000	2,016,718,000
Current Liabilities
Trade accounts payable	78,735,000	144,797,000
Bank loans and overdraft facilities	115,196,000	85,762,000
Obligations under Convertible Senior Notes	257,122,000	0
Obligations under Debt Security	70,000,000	0
Income taxes payable	9,421,000	9,607,000
Taxes other than income taxes	101,820,000	189,515,000
Other accrued liabilities	75,357,000	48,208,000
Current portions of obligations under capital leases	832,000	1,109,000
Total Current Liabilities	708,483,000	478,998,000
Long-term obligations under capital leases	674,000	532,000
Long-term obligations under Convertible Senior Notes	0	304,645,000
Long-term obligations under Senior Secured Notes	933,871,000	932,089,000
Long-term accruals	2,093,000	2,000,000
Deferred income taxes	94,815,000	91,128,000
Commitments and contingent liabilities (Note 15)
Total Long-Term Liabilities	1,031,453,000	1,330,394,000
Temporary equity	29,443,000	0
Stockholders' Equity
Common Stock ($0.01 par value, 120,000,000 shares authorized, 73,045,992 and 72,740,302 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively)	730,000	727,000
Preferred Stock ($0.01 par value, 1,000,000 shares authorized, none issued and outstanding)	0	0
Additional paid-in-capital	1,371,389,000	1,369,471,000
Accumulated deficit	(1,189,620,000)	(1,197,884,000)
Accumulated other comprehensive income	28,438,000	35,162,000
Less Treasury Stock at cost (246,037 shares at September 30, 2012 and December 31, 2011)	(150,000)	(150,000)
Total Stockholders' Equity	210,787,000	207,326,000
Total Liabilities and Equity	$ 1,980,166,000	$ 2,016,718,000

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Borrowings - Total Obligations Under Convertible Senior Notes (Detail) (Convertible Senior Notes Due 2013 [Member], USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Short-Term Debt [Line Items]
Debt discount	$ (416)	$ (4,285)
Convertible Senior Notes	257,122	304,645
Secured Debt [Member]
Short-Term Debt [Line Items]
Convertible Senior Notes	257,858	310,000
Unamortized debt discount	$ (320)	$ (1,070)

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Condensed Consolidated Statements of Cash Flow (Parenthetical) (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Debt issuance cost	$ 838

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Stock Based Compensation Plans And Warrants - Schedule Of Weighted-Average Assumptions (Detail) (USD $)	12 Months Ended
	Dec. 31, 2011
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair Value	$ 7.60
Dividend Yield	0.00%
Expected Volatility	66.10%
Weighted Average Volatility	66.10%
Risk Free Interest Rate	3.00%
Expected Life of Options from Grant	3 years 2 months 12 days

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RELATED PARTY TRANSACTIONS (Tables)

9 Months Ended

Sep. 30, 2012

Condensed Consolidated Statements of Operations and Comprehensive Income

The following table summarizes the transactions with Roust as included in the Company’s Consolidated Financial Statements:

Related Party Transactions with Roust (in thousands)
Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three and nine month periods ended September 30, 2012 and September 30, 2011	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Sales	$	1,473	$	0	$	1,473	$	0
Selling, general and administrative expenses		83		0		83		0

Condensed Consolidated Balance Sheets

Condensed Consolidated Balance Sheets as of September 30, 2012 (unaudited) and as of December 31, 2011 (in thousands)	September 30, 2012 (unaudited)		December 31, 2011
Current Assets
Accounts receivable		1,798		0
Other current assets		1,034		0
Total due from Roust		2,832		0
Current Liabilities
Other accrued liabilities		95		0
Total due to Roust		95		0

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Financing Commitments And Contingent Liabilities - Future Minimum Lease Payments For Assets Under Capital Lease (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
2012	$ 594
2013	593
2014	236
Gross payments due	1,423
Less interest	(100)
Net payments due	$ 1,323

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Fair Value Measurements

9 Months Ended

Sep. 30, 2012

Fair Value Measurements

16. FAIR VALUE MEASUREMENTS

The Company utilizes the accounting guidance for fair value measurements and disclosures for all financial assets and liabilities and nonfinancial assets and liabilities that are recognized or disclosed at fair value in the condensed financial statements on a recurring basis or on a nonrecurring basis during the reporting period. The fair value is an exit price, representing the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants based upon the best use of the asset or liability at the measurement date. The Company utilizes market data or assumptions that market participants would use in pricing the asset or liability. The accounting guidance establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The three levels of inputs used to measure fair value are as follows:

Level 1 —	Quoted prices in active markets for identical assets or liabilities.
Level 2 —	Observable inputs other than quoted prices included in Level 1. We value assets and liabilities included in this level using dealer and broker quotations, certain pricing models, bid prices, quoted prices for similar assets and liabilities in active markets, or other inputs that are observable or can be corroborated by observable market data.
Level 3 —	Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

As of September 30, 2012, the Company held certain financial assets that are measured at fair value on a recurring basis. These consisted of cash and cash equivalents. The monetary assets represented by these financial instruments are primarily located in Poland, Hungary and Russia. Consequently, they are subject to currency translation risk when reporting in U.S. dollars. The fair values of the cash and cash equivalents, Convertible Senior Notes and Secured Senior Notes is determined based on quoted market prices in public markets and is categorized as Level 1. Fair value of Debt Security is determined based on the principal face value and accrued interest and is categorized as Level 3. Apart from assets held for sale, the Company does not have any financial assets measured at fair value on a recurring basis as Level 3 and there were no transfers in or out of Level 1, Level 2 or Level 3 during the nine months ended September 30, 2012.

Non-financial assets and liabilities, such as goodwill and long-lived assets, are accounted for at fair value on a nonrecurring basis. These items are tested for impairment on the occurrence of a triggering event or in the case of goodwill, on at least an annual basis. Management reviews long-lived assets for potential impairment whenever significant events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. An impairment exists when the carrying amount of the long-lived asset is not recoverable and exceeds its fair value. The carrying amount of a long-lived asset is not recoverable if it exceeds the sum of the estimated undiscounted cash flows expected to result from the use and eventual depletion of the asset. If an impairment exists, the resulting write-down would be the difference between the fair market value of the long-lived asset and the related net book value. As of the balance sheet date, the carrying value of its long-lived assets are recoverable and no impairment existed.

The following table sets forth by level, within the fair value hierarchy, the Company’s financial assets accounted for at fair value on a recurring and nonrecurring basis (cash and cash equivalents as well as assets held for sale ) and fair values of financial assets accounted for at their carrying values (Convertible Senior Notes, Secured Senior Notes and Debt Security) as of September 30, 2012, and December 31, 2011.

			Assets at Fair Value Using
			Quoted Prices in Activated Markets for Identical Assets		Significant Other Observable Inputs		Unobservable Inputs
	Total		(Level 1)		(Level 2)		(Level 3)
September 30, 2012
Recurring items
Cash and cash equivalents	$	102,713	$	102,713	$	0	$	0
Convertible Senior Notes	$	240,450	$	240,450	$	0	$	0
Secured Senior Notes	$	649,199	$	649,199	$	0	$	0
Debt Security	$	70,722	$	0	$	0	$	70,722
Nonrecurring items
Assets held for sale	$	675	$	0	$	0	$	675
December 31, 2011
Recurring items
Cash and cash equivalents	$	94,410	$	94,410	$	0	$	0
Convertible Senior Notes	$	248,000	$	248,000	$	0	$	0
Secured Senior Notes	$	702,700	$	702,700	$	0	$	0
Nonrecurring items
Assets held for sale	$	675	$	0	$	0	$	675

The Company has other financial instruments, such as receivables, accounts payable, overdrafts, short term bank loans and other liabilities which have been excluded from the tables above. Due to the short-term nature of these instruments, the carrying value approximate their fair values. The Company did not have any other financial instruments with the scope of the fair value disclosure requirements as of September 30, 2012.

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Financing Commitments And Contingent Liabilities (Tables)

9 Months Ended

Sep. 30, 2012

Future Rental Payments Under Non-Cancelable Operating Lease

The following is a schedule by years of the future rental payments under the non-cancelable operating lease as of September 30, 2012:

2012	$	2,918
2013		9,130
2014		8,722
2015		8,148
2016		5,536
Thereafter		2,976
Total	$	37,430

Future Minimum Lease Payments For Assets Under Capital Lease

The future minimum lease payments for the assets under capital lease as of September 30, 2012 are as follows:

2012	$	594
2013		593
2014		236
Gross payments due	$	1,423
Less interest		(100	)
Net payments due	$	1,323

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Subsequent Events

9 Months Ended

Sep. 30, 2012

Subsequent Events

18. SUBSEQUENT EVENTS

In October 2012 Russian Alcohol signed new agreements with multiple banks, related to its bank guarantees. As a result of new agreements signed, guaranteed limit decreased by 1.2 billion Russian rubles ($39.9 million) to 21.5 billion Russian rubles ($695.6 million).

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Effects Of Foreign Currency Movements - Schedule Of Foreign Currency Exchange Rate Effect Before Tax (Detail) In Millions, unless otherwise specified	9 Months Ended
	Sep. 30, 2012 PLN / US$ [Member] USD ($)	Sep. 30, 2012 RUR / US$ [Member] USD ($)	Sep. 30, 2012 EUR-Polish Zloty [Member] USD ($)	Sep. 30, 2012 EUR-Polish Zloty [Member] EUR (€)
Effects Of Foreign Currency Movements [Line Items]
Value of notional amount	$ 444	$ 264	$ 557	€ 430
Pre-tax movement	$ 4.4	$ 2.6	$ 5.6

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Organization And Significant Accounting Policies

9 Months Ended

Sep. 30, 2012

Organization And Significant Accounting Policies

1. ORGANIZATION AND SIGNIFICANT ACCOUNTING POLICIES

Organization and description of business

We operate primarily in the alcohol beverage industry. We are one of the largest producers of vodka in the world and are Central and Eastern Europe’s largest integrated spirit beverages business, measured by total volume, with approximately 33.2 million nine-liter cases produced and distributed in 2011. Our business primarily involves the production and sale of our own spirit brands (principally vodka), and the importation on an exclusive basis of a wide variety of spirits, wines and beers. Our primary operations are conducted in Poland, Russia, Ukraine and Hungary. We have six operational manufacturing facilities located in Poland and Russia.

In Poland, we are one of the largest vodka producers with a brand portfolio that includes Absolwent, Żubrówka, Żubrówka Biała, Bols, Palace and Soplica brands, each of which we produce at our Polish distilleries. We produce and sell vodkas primarily in three of four vodka sectors: premium, mainstream and economy. In Poland, we also own and produce Royal, the top-selling vodka in Hungary.

We are also the largest vodka producer in Russia, the world’s largest vodka market. Our Green Mark brand is the top-selling mainstream vodka in Russia and the second-largest vodka brand by volume in the world, and our Parliament and Zhuravli brands are two top-selling sub-premium vodkas in Russia.

As well as sales and distribution of its own branded spirits, the Company is a leading exclusive importer of wines and spirits in Poland, Russia and Hungary.

Liquidity

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As described in Note 6, certain credit and factoring facilities are coming due in fourth quarter of 2012, which the Company expects to renew. Furthermore, our Convertible Senior Notes (the “Convertible Notes”) are due on March 15, 2013. Our current cash on hand, estimated cash from operations and available credit facilities will not be sufficient to make the repayment of principal on the Convertible Notes and, unless the transaction with Russian Standard Corporation, described in Note 3, is completed the Company may default on them. The Company’s cash flow forecasts include the assumption that certain credit and factoring facilities that are coming due in fourth quarter of 2012 will be renewed to manage working capital needs. Moreover, the Company had a net loss and significant impairment charges in 2011 and current liabilities exceed current assets at September 30, 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The transaction with Russian Standard Corporation is subject to certain risks, including shareholder approval which may not be obtained. The Company’s 2012 Annual Meeting of Stockholders (the “AGM”), which was postponed due to the need to restate the Company’s financial statements, is expected to be held as soon as practicable. We believe that if the transaction is completed as scheduled, the Convertible Notes will be repaid by their maturity date, which would substantially reduce doubts about the Company’s ability to continue as a going concern.

Basis of presentation

These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

CEDC’s subsidiaries maintain their books of account and prepare their statutory financial statements in their respective local currencies. The subsidiaries’ financial statements have been adjusted to reflect U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present our financial condition, results of operations and comprehensive income and cash flows for the interim periods presented have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ended December 31, 2012.

The balance sheet at December 31, 2011 has been derived from the restated audited consolidated financial statements at that date, filed with the SEC on October 5, 2012 as Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the fiscal year ended December 31, 2011, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the restated consolidated financial statements and related notes included in Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the fiscal year ended December 31, 2011, filed with the SEC on October 5, 2012.

The significant interim accounting policies include the recognition of a pro-rata share of certain estimated annual sales incentives, marketing, promotion and advertising costs, generally in proportion to sales, and the recognition of income taxes using an estimated annual effective tax rate adjusted for tax amendments related to prior years and changes in estimates.

On February 7, 2011, the Company acquired full voting and economic control over Whitehall Group and changed the accounting treatment for its interest in Whitehall from the equity method of accounting to consolidation beginning on February 7, 2011.

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Condensed Consolidated Balance Sheets (Parenthetical) (USD $) In Thousands, except Share data, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Accounts receivable, allowance for doubtful accounts	$ 26,512	$ 24,510
Common Stock, par value	$ 0.01	$ 0.01
Common Stock, shares authorized	120,000,000	120,000,000
Common Stock, shares issued	73,045,992	72,740,302
Common Stock, shares outstanding	73,045,992	72,740,302
Preferred Stock, par value	$ 0.01	$ 0.01
Preferred Stock, shares authorized	1,000,000	1,000,000
Preferred Stock, shares issued	0	0
Preferred Stock, shares outstanding	0	0
Treasury Stock at cost, shares	246,037	246,037

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OTHER FINANCIAL INCOME / (EXPENSE), NET

9 Months Ended

Sep. 30, 2012

OTHER FINANCIAL INCOME / (EXPENSE), NET

11. OTHER FINANCIAL INCOME / (EXPENSE), NET

The following items are included in Other financial income / (expense), net:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Foreign exchange impact related to foreign currency financing	$	62,145		$	(173,664	)	$	82,682		$	(123,196	)
Gain on debt extinguishment		640			0			1,949			0
Other gains / (losses)		(4,295	)		3,327			(3,983	)		2,389
Total other financial income / (expense), net	$	58,490		$	(170,337	)	$	80,648		$	(120,807	)

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Document and Entity Information	9 Months Ended
	Sep. 30, 2012	Nov. 14, 2012
Entity Information [Line Items]
Document Type	10-Q
Amendment Flag	false
Document Period End Date	Sep. 30, 2012
Document Fiscal Year Focus	2012
Document Fiscal Period Focus	Q3
Trading Symbol	CEDC
Entity Registrant Name	CENTRAL EUROPEAN DISTRIBUTION CORP
Entity Central Index Key	0001046880
Current Fiscal Year End Date	--12-31
Entity Filer Category	Large Accelerated Filer
Entity Common Stock, Shares Outstanding		78,761,652

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OTHER NON-OPERATING EXPENSE

9 Months Ended

Sep. 30, 2012

OTHER NON-OPERATING EXPENSE

12. OTHER NON-OPERATING EXPENSE

The following items are included in Other non-operating income / (expense):

	Three months ended September 30						Nine months ended September 30,
	2012			2011			2012			2011
Write-off of assets held for sale		0			(7,355	)		0			(7,355	)
Factoring costs and bank fees	$	(2,781	)	$	(1,651	)	$	(6,501	)	$	(3,662	)
Bank waiver costs		(1,867	)		0			(1,867	)		0
Other gains / (losses)		(1,235	)		(1,677	)		(2,614	)		(3,303	)
Total other non operating income / (expense), net	$	(5,883	)	$	(10,683	)	$	(10,982	)	$	(14,320	)

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Condensed Consolidated Statements Of Operations And Comprehensive Income (USD $) In Thousands, except Per Share data, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Sales	$ 401,113	$ 432,942	$ 1,125,619	$ 1,176,861
Excise taxes	(209,782)	(223,304)	(601,098)	(630,513)
Net sales	191,331	209,638	524,521	546,348
Cost of goods sold	109,317	131,427	312,055	340,820
Gross profit	82,014	78,211	212,466	205,528
Selling, general and administrative expenses	66,835	61,710	187,909	180,836
Gain on remeasurement of previously held equity interests	0	0	0	(7,898)
Impairment charge	0	674,515	0	674,515
Operating income	15,179	(658,014)	24,557	(641,925)
Non operating income / (expense), net
Interest income / (expense), net	(26,231)	(28,123)	(78,139)	(83,336)
Other financial income / (expense), net	58,490	(170,337)	80,648	(120,807)
Other non operating income / (expense), net	(5,883)	(10,683)	(10,982)	(14,320)
Income / (loss) before income taxes and equity in net losses from unconsolidated investments	41,555	(867,157)	16,084	(860,388)
Income tax benefit / (expense)	(5,786)	18,422	(7,820)	14,232
Equity in net losses of affiliates	0	0	0	(7,946)
Net income / (loss) attributable to the company	35,769	(848,735)	8,264	(854,102)
Net income / (loss) from operations per share of common stock, basic	$ 0.46	$ (11.71)	$ 0.11	$ (11.85)
Net income / (loss) from operations per share of common stock, diluted	$ 0.44	$ (11.71)	$ 0.10	$ (11.85)
Other comprehensive income / (loss), net of tax:
Foreign currency translation adjustments	10,945	(215,010)	(6,724)	(50,410)
Comprehensive income / (loss) attributable to the company	$ 46,714	$ (1,063,745)	$ 1,540	$ (904,512)

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BORROWINGS

9 Months Ended

Sep. 30, 2012

BORROWINGS

6. BORROWINGS

Bank Facilities

As of September 30, 2012, the Company has outstanding liability of €22.5 million ($29.1 million) from the term loans from Alfa Bank and Zenith Bank drawn by Whitehall:

• The loan agreement with Alfa Bank, dated July 22, 2008, matures on October 18, 2014. The credit limit under this agreement is €20.0 million ($25.9 million). The loan as of September 30, 2012 consists of seven open tranches released between March 30, 2012 and September 26, 2012, and is repayable between September 30, 2012 and December 28, 2012. As of September 30, 2012, the Company had outstanding liability of €17.0 million ($22.0 million) from this term loan;

• The loan agreement with Zenith Bank, dated March 29, 2011, matured on June 6, 2012. The original loan was repaid at maturity date. A new loan agreement was signed on August 16, 2012 with maturity date of April 25, 2014. The credit limit under this agreement is €10.0 million ($12.9 million). The loan was released in two tranches on August 16, 2012 and September 10, 2012. As of September 30, 2012, the Company had outstanding liability of €5.5 million ($7.1 million) from this term loan.

The aforementioned loans drawn by Whitehall are guaranteed by Whitehall companies. The both loans are secured by the Company’s inventory.

As of September 30, 2012, the Company has outstanding term loans of 2,371.4 million Russian rubles ($76.6 million) from MKB Bank, Unicredit, Alfabank and JSC Grand Invest Bank, all drawn by Russian Alcohol, as well as, an overdraft facility from Nomos-Bank drawn by Russian Alcohol and an overdraft facility from Sberbank drawn by Bravo Premium:

• The loan agreement with MKB Bank, dated July 19, 2012, matures on February 25, 2013. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 1,000.0 million Russian rubles ($32.3 million) from this term loan;

• The loan agreement with Alfabank, dated July 25, 2012, matures on December 31, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 560.0 million Russian rubles ($18.1 million) from this term loan;

• The loan agreement with Unicredit, dated May 24, 2011, matures on November 25, 2012. This loan has no financial covenants and is secured by inventory of up to 720 million Russian rubles ($23.3 million) and guarantees given by companies of Russian Alcohol. As of September 30, 2012, the Company has outstanding liability of 600.0 million Russian rubles ($19.4 million) from this term loan;

• The loan agreement with JSC Grand Invest Bank, dated November 25, 2011, matures on November 23, 2012. This loan has no financial covenants that need to be met. As of September 30, 2012, the Company has outstanding liability of 211.4 million Russian rubles ($6.8 million) from this term loan;

• The overdraft agreement with Nomos-Bank, dated July 6, 2012, matures on December 29, 2012. The credit limit under this agreement is 500.0 million Russian rubles ($16.2 million). This loan has no collateral. As of September 30, 2012, the loan was utilized in the amount of 173.4 million Russian rubles ($5.6 million).

• The overdraft agreement with Sberbank, dated February 6, 2012, matures on February 5, 2013. The credit limit under this agreement is 60.0 million Russian rubles ($1.9 million). This loan is secured by fixed assets. As of September 30, 2012, the loan was fully utilized.

Convertible Senior Notes due 2013

On March 7, 2008, the Company completed the issuance of $310 million aggregate principal amount of 3% Convertible Senior Notes due 2013 (the “Convertible Senior Notes”). Interest is due semi-annually on the 15^th of March and September, beginning on September 15, 2008. The Convertible Senior Notes are convertible in certain circumstances into cash and, if applicable, shares of our common stock, based on an initial conversion rate of 14.7113 shares per $1,000 principal amount, subject to certain adjustments. Upon conversion of the notes, the Company will deliver cash up to the aggregate principal amount of the notes to be converted and, at the election of the Company, cash and/or shares of common stock in respect to the remainder, if any, of the conversion obligation. The proceeds from the Convertible Senior Notes were used to fund the cash portions of the acquisition of Copecresto Enterprises Limited and Whitehall.

In the period from May to September of 2012, the Company repurchased $52.1 million principal amount of Convertible Notes in six tranches for $50.2 million.

As of September 30, 2012 and December 31, 2011, the Company had accrued interest of $0.5 million and $2.7 million, respectively, related to the Convertible Senior Notes, with the next coupon due for payment on March 15, 2013. Total obligations under the Convertible Senior Notes are shown net of deferred finance costs, amortized over the life of the borrowings using the effective interest rate method as shown in the table below:

	September 30, 2012			December 31, 2011
Convertible Senior Notes	$	257,858		$	310,000
Unamortized debt discount		(320	)		(1,070	)
Debt discount related to ASC 470-20		(416	)		(4,285	)
Total	$	257,122		$	304,645

For the three and nine months ended September 30, 2012, the additional pre-tax non-cash interest expense recognized in the condensed consolidated statement of operations was $1.5 million and $4.1 million, respectively and for three and nine months ended September 30, 2011 $1.1 million and $3.2 million, respectively. Pre-tax increase in non-cash interest expense on our condensed consolidated statements of operations and comprehensive income to be recognized until 2013, the maturity date of the Convertible Senior Notes, amounts to $0.4 million.

Senior Secured Notes due 2016

On December 2, 2009, the Company issued $380 million 9.125% Senior Secured Notes due 2016 and €380 million ($491.9 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used a portion of the net proceeds from the 2016 Notes to redeem the Company’s outstanding 2012 Notes, having an aggregate principal amount of €245.4 million ($317.7 million) on January 4, 2010. The remainder of the net proceeds from the 2016 Notes was used to (i) purchase Lion Capital’s remaining equity interest in Russian Alcohol by exercising the Lion Option and the Co-Investor Option, pursuant to the terms and conditions of the Lion Option Agreement and the Co-Investor Option Agreement, respectively (ii) repay all amounts outstanding under Russian Alcohol credit facilities; and (iii) repay certain other indebtedness.

On December 9, 2010, the Company issued an additional €50.0 million ($64.7 million) 8.875% Senior Secured Notes due 2016 (the “2016 Notes”) in an unregistered offering to institutional investors. The Company used the net proceeds from the additional 2016 Notes to repay its term loans and overdraft facilities with Bank Handlowy w Warszawie S.A and Bank Zachodni WBK S.A.

As of September 30, 2012 and December 31, 2011 the Company had accrued interest of $28.0 million and $7.0 million, respectively related to the Senior Secured Notes due 2016, with the next coupon due for payment on December 1, 2012.

	September 30, 2012			December 31, 2011
Senior Secured Notes due 2016	$	936,635		$	935,296
Unamortized debt discount		(2,764	)		(3,207	)
Total	$	933,871		$	932,089

Senior notes due March 18, 2013 (“the Debt Security”)

As described in Note 3 above, on May 7, 2012, the Company issued $70 million principal amount of senior notes due March 18, 2013, bearing an interest rate of 3.00% to Russian Standard Bank. Pursuant to the Amended SPA, upon approval of the Company’s shareholders, and after the satisfaction of certain other conditions including the receipt of certain Polish regulatory waivers, Roust Trading will purchase such number of shares of common stock at a purchase price of $5.25 per share sufficient to repay the then-outstanding principal amount of the Debt Security, totaling approximately 13.3 million shares of common stock and sell to CEDC the entire principal amount of the Debt Security. In addition, interest payable on the Debt Security prior to the Second Closing may, at the option of Roust Trading and after the Second Closing, be effectively paid in shares of common stock at a price $3.44 per share of common stock. Pursuant to the Amended SPA, the final maturity date for the Debt Security will be extended to July 31, 2016.

	September 30, 2012		December 31, 2011
Senior Notes due 2013	$	70,000	$	0
Total	$	70,000	$	0

As of September 30, 2012, the Company had accrued interest of $0.7 million, related to the Debt Security, with the next coupon due for payment on March 18, 2013.

Total accumulated unamortized debt discount related to the Company’s debt was $18.7 million and $16.5 million as of September 30, 2012 and December 31, 2011, respectively.

The following is a schedule by years of the future principal repayments for borrowings as of September 30, 2012:

	September 30, 2012		December 31, 2011
Principal repayments for the following years
2012	$	53,203	$	78,504
2013		389,114		304,645
2014		0		0
2015		0		0
2016 and beyond		933,871		932,089
Total	$	1,376,188	$	1,315,238

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Earnings Per Share

9 Months Ended

Sep. 30, 2012

Earnings Per Share

5. EARNINGS PER SHARE

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated.

	Three months ended September 30,					Nine months ended September 30,
	2012		2011			2012		2011
Net income / (loss)	$	35,769	$	(848,735	)	$	8,264	$	(854,102	)
Weighted average shares of common stock outstanding (used to calculate basic EPS)		78,582		72,490			75,902		72,063
Shares issuable according to Amended SPA (See Note 3)		3,000		0			3,000		0
Net effect of dilutive employee stock options based on the treasury stock method		209		104			202		115
Weighted average shares of common stock outstanding (used to calculate diluted EPS)		81,791		72,594			79,104		72,178
Net income / (loss) per common share - basic	$	0.46	$	(11.71	)	$	0.11	$	(11.85	)
Net income / (loss) per common share - diluted	$	0.44	$	(11.71	)	$	0.10	$	(11.85	)

Employee stock options granted have not been included in the above calculations of diluted earnings per share where the exercise price is less than the average market price of the common stock during the three and nine months ended September 30, 2012 and 2011. In addition there is no adjustment to fully diluted shares related to the Convertible Senior Notes as the average market price was below the conversion price for the periods.

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Effects Of Foreign Currency Movements

9 Months Ended

Sep. 30, 2012

Effects Of Foreign Currency Movements

17. EFFECTS OF FOREIGN CURRENCY MOVEMENTS

Substantially all of the Company’s operating cash flows and assets are denominated in Polish zloty, Russian ruble and Hungarian forint. This means that the Company is exposed to translation movements both on its balance sheet and statement of operations and comprehensive income. The impact on working capital items is demonstrated on the cash flow statement as the movement in exchange on cash and cash equivalents. The impact on the statement of operations is by the movement of the average exchange rate used to restate the statement of operations from Polish zloty, Russian ruble and Hungarian forint to U.S. dollars. The amounts shown as exchange rate gains or losses on the face of the statements of operations relate only to realized gains or losses on transactions that are not denominated in Polish zloty, Russian ruble or Hungarian forint. Table below presents the exchange rates used for translation of our balance sheet and statement of operations and comprehensive income balances as of and for the three months ended September 30, 2012:

	Balance sheet rate as of September 30, 2012		Balance sheet rate as of December 31, 2011		Average rate for the three  months ended September 30, 2012		Average rate for the three  months ended September 30, 2011
PLN / US$		3.1780		3.4174		3.3107		2.9400
RUR / US$		30.9144		32.2092		31.9874		29.1667
HUF / US$		219.1724		240.6620		226.7603		194.7020

Because the Company’s reporting currency is the U.S. dollar, the translation effects of fluctuations in the exchange rate of our functional currencies have impacted the Company’s financial condition and results of operations and have affected the comparability of our results between financial periods.

The Company has borrowings including its Convertible Notes due 2013 and Senior Secured Notes due 2016 that are denominated in U.S. dollars and euros, which have been lent to its operations where the functional currency is the Polish zloty and Russian ruble. The effect of having debt denominated in currencies other than the Company’s functional currencies is to increase or decrease the value of the Company’s liabilities on that debt in terms of the Company’s functional currencies when those functional currencies depreciate or appreciate in value respectively. As a result of this, the Company is exposed to gains and losses on the re-measurement of these liabilities. The table below summarizes the pre-tax impact of a one percent movement in each of the exchange rate which could result in a significant impact in the results of the Company’s operations.

Exchange Rate	Value of notional amount		Pre-tax impact of a 1% movement in exchange rate
USD-Polish zloty	$	444 million	$	4.4 million gain/loss
USD-Russian ruble	$	264 million	$	2.6 million gain/loss
EUR-Polish zloty	€	430 million or approximately $557 million	$	5.6 million gain/loss

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Stock Based Compensation Plans And Warrants

9 Months Ended

Sep. 30, 2012

Stock Based Compensation Plans And Warrants

13. STOCK BASED COMPENSATION PLANS AND WARRANTS

During the nine months ended September 30, 2012, the range of exercise prices for outstanding options was $2.00 to $60.92. During the nine months ended September 30, 2012, the weighted average remaining contractual life of options outstanding is 4.5 years. Exercise prices for options exercisable as of September 30, 2012 ranged from $2.00 to $60.92.

The Company has issued stock options to employees under stock based compensation plans. Stock options are issued at the current market price, subject to a vesting period, which varies from one to three years. As of September 30, 2012, the Company has not changed the terms of any outstanding awards.

During the nine months ended September 30, 2012, the Company recognized compensation cost of $1.92 million.

As of September 30, 2012, there was $1.2 million of total unrecognized compensation cost related to non-vested stock options, restricted stock units and restricted stock granted under the Company’s Stock Incentive Plan. The costs are expected to be recognized over the 2012 to 2014 period.

The following weighted-average assumptions were used in the calculation of fair value for options granted during 2011. For the nine months ended September 30, 2012 the Company did not grant any options to its employees.

	December 31, 2011
Fair Value	$	7.60
Dividend Yield		0	%
Expected Volatility		66.1	%
Weighted Average Volatility		66.1	%
Risk Free Interest Rate		3	%
Expected Life of Options from Grant		3.2

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OPERATING SEGMENTS

9 Months Ended

Sep. 30, 2012

OPERATING SEGMENTS

9. OPERATING SEGMENTS

The Company operates and manages its business based upon three primary geographic segments: Poland, Russia and Hungary. Selected financial data split based upon this segmentation assuming elimination of intercompany revenues and profits is shown below: Segment information represents only continuing operations.

	Segment Net Sales
	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Segment
Poland	$	56,471	$	58,234	$	159,778	$	163,463
Russia		128,895		143,623	$	347,675	$	362,393
Hungary		5,965		7,781	$	17,068	$	20,492
Total Net Sales	$	191,331	$	209,638	$	524,521	$	546,348

	Operating income / (loss)
	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Segment
Poland before fair value adjustments	$	11,905		$	8,120		$	27,497		$	21,155
Gain on remeasurement of previously held equity interests		0		$	0			0			7,898
Impairment charge		0		$	(213,687	)		0		$	(213,687	)
Poland after fair value adjustments		11,905			(205,567	)		27,497			(184,634	)
Russia before fair value adjustments		19,634		$	9,167			20,221			6,011
Impairment charge		0		$	(460,828	)		0			(460,828	)
Russia after fair value adjustments		19,634			(451,661	)		20,221			(454,817	)
Hungary		987		$	1,446			2,469			3,387
Corporate Overhead
General corporate overhead		(17,017	)	$	(1,570	)		(23,711	)		(3,862	)
Option Expense		(330	)	$	(662	)		(1,919	)		(1,999	)
Total Operating income / (loss)	$	15,179		$	(658,014	)	$	24,557		$	(641,925	)

	Identifiable Operating Assets
	September 30, 2012		December 31, 2011
Segment
Poland	$	560,792	$	600,940
Russia		1,316,088		1,369,744
Hungary		20,349		20,265
Corporate		82,937		25,769
Total Identifiable Assets	$	1,980,166	$	2,016,718

	Goodwill
	September 30, 2012		December 31, 2011
Segment
Poland	$	271,069	$	252,080
Russia		429,286		412,105
Hungary		6,569		6,109
Total Goodwill	$	706,924	$	670,294

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RELATED PARTY TRANSACTIONS - Additional Information (Detail) (USD $) In Millions, unless otherwise specified	Sep. 30, 2012
Related Party Transaction [Line Items]
Face value of debt issued	$ 70
Interest rate percentage on issued debt	3.00%

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Inventories

9 Months Ended

Sep. 30, 2012

Inventories

7. INVENTORIES

The following table summarizes our inventories:

	September 30, 2012		December 31, 2011
Raw materials and supplies	$	34,510	$	22,237
In-process inventories		4,714		2,655
Finished goods and goods for resale		120,837		92,798
Total	$	160,061	$	117,690

Because of the nature of the products supplied by the Company, great attention is paid to inventory rotation. The number of days in inventory increased from approximately 81 days as of December 31, 2011 to approximately 135 days as of September 30, 2012. As a comparison, the number of days in inventory as of September 30, 2011 amounted to 85 days with total balance of $121.4 million.

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Income Taxes

9 Months Ended

Sep. 30, 2012

Income Taxes

8. INCOME TAXES

Our tax charge for the nine months ended September 30, 2012 was $7.8 million which represents an effective tax rate for this period of 48.6%. The underlying tax rates in our key jurisdictions are 19% in Poland, 20% in Russia, 21% in Ukraine, 16% in Hungary and 35% in the United States. Changes in the Company’s uncertain income tax positions, excluding the related accrual for interest and penalties, for the nine-month period ended September 30, 2012 result from additions to accruals for current and prior year tax positions. There were no reductions for prior year tax positions, settlements or lapses in statutes of limitations. As of September 30, 2012 and December 31, 2011, the uncertain income tax position balance was $8.0 million and $7.1 million, respectively.

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Interest Expense, Net

9 Months Ended

Sep. 30, 2012

Interest Expense, Net

10. INTEREST EXPENSE, NET

The following items are included in Interest expense, net:

	Three months ended September 30,						Nine months ended September 30,
	2012			2011			2012			2011
Interest income	$	578		$	127		$	1,398		$	1,008
Interest expense		(26,809	)		(28,250	)		(79,537	)		(84,344	)
Total interest expense, net	$	(26,231	)	$	(28,123	)	$	(78,139	)	$	(83,336	)

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Financing Commitments And Contingent Liabilities - Future Rental Payments Under Non-Cancelable Operating Lease (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012
2012	$ 2,918
2013	9,130
2014	8,722
2015	8,148
2016	5,536
Thereafter	2,976
Total	$ 37,430

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Fair Value Measurements - Fair Value Of Assets Measured On Recurring And Nonrecurring Basis (Detail) (USD $) In Thousands, unless otherwise specified	Sep. 30, 2012	Dec. 31, 2011
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Secured Senior Notes	$ 933,871	$ 932,089
Recurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Cash and cash equivalents	102,713	94,410
Debt Security	70,722
Recurring Items [Member] | Convertible Senior Notes Due 2013 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Convertible Senior Notes	240,450	248,000
Recurring Items [Member] | Secured Senior Notes [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Secured Senior Notes	649,199	702,700
Nonrecurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets held for sale	675	675
Quoted Prices in Activated Markets for Identical Assets (Level 1) [Member] | Recurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Cash and cash equivalents	102,713	94,410
Debt Security	0
Quoted Prices in Activated Markets for Identical Assets (Level 1) [Member] | Recurring Items [Member] | Convertible Senior Notes Due 2013 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Convertible Senior Notes	240,450	248,000
Quoted Prices in Activated Markets for Identical Assets (Level 1) [Member] | Recurring Items [Member] | Secured Senior Notes [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Secured Senior Notes	649,199	702,700
Quoted Prices in Activated Markets for Identical Assets (Level 1) [Member] | Nonrecurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets held for sale	0	0
Significant Other Observable Inputs (Level 2) [Member] | Recurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Cash and cash equivalents	0	0
Debt Security	0
Significant Other Observable Inputs (Level 2) [Member] | Recurring Items [Member] | Convertible Senior Notes Due 2013 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Convertible Senior Notes	0	0
Significant Other Observable Inputs (Level 2) [Member] | Recurring Items [Member] | Secured Senior Notes [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Secured Senior Notes	0	0
Significant Other Observable Inputs (Level 2) [Member] | Nonrecurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets held for sale	0	0
Unobservable Inputs (Level 3) [Member] | Recurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Cash and cash equivalents	0	0
Debt Security	70,722
Unobservable Inputs (Level 3) [Member] | Recurring Items [Member] | Convertible Senior Notes Due 2013 [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Convertible Senior Notes	0	0
Unobservable Inputs (Level 3) [Member] | Recurring Items [Member] | Secured Senior Notes [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Secured Senior Notes	0	0
Unobservable Inputs (Level 3) [Member] | Nonrecurring Items [Member]
Fair Value Measurements, Recurring and Nonrecurring, Valuation Techniques [Line Items]
Assets held for sale	$ 675	$ 675

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Financing Commitments And Contingent Liabilities - Additional Information (Detail) In Millions, unless otherwise specified			9 Months Ended				9 Months Ended
	Sep. 30, 2012 Russian Alcohol [Member] USD ($)	Sep. 30, 2012 Russian Alcohol [Member] RUB	Sep. 30, 2012 Russian Alcohol [Member] Minimum [Member]	Sep. 30, 2012 Russian Alcohol [Member] Maximum [Member]	Sep. 30, 2012 Bravo Premium [Member] USD ($)	Sep. 30, 2012 Bravo Premium [Member] RUB	Sep. 30, 2012 Bravo Premium [Member] Minimum [Member]	Sep. 30, 2012 Bravo Premium [Member] Maximum [Member]	Sep. 30, 2012 Whitehall [Member] USD ($)	Sep. 30, 2012 Whitehall [Member] RUB	Sep. 30, 2012 Poland [Member] USD ($)	Sep. 30, 2012 Poland [Member] PLN
Commitments And Contingent Liabilities [Line Items]
Amount under bank guarantee	$ 735.5	22,700.0			$ 26.5	820.0			$ 37.5	1,200.0	$ 1.4	4.4
Term of bank guarantee, years			1 Year	4 Years			1 Year	2 Years

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Stock Based Compensation Plans And Warrants (Tables)

9 Months Ended

Sep. 30, 2012

Schedule Of Weighted-Average Assumptions

The following weighted-average assumptions were used in the calculation of fair value for options granted during 2011. For the nine months ended September 30, 2012 the Company did not grant any options to its employees.

	December 31, 2011
Fair Value	$	7.60
Dividend Yield		0	%
Expected Volatility		66.1	%
Weighted Average Volatility		66.1	%
Risk Free Interest Rate		3	%
Expected Life of Options from Grant		3.2

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Operating Segments - Segment Information On Net Sales (Detail) (USD $) In Thousands, unless otherwise specified	3 Months Ended		9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011	Sep. 30, 2012	Sep. 30, 2011
Segment Reporting Information [Line Items]
Total Net Sales	$ 191,331	$ 209,638	$ 524,521	$ 546,348
Poland [Member]
Segment Reporting Information [Line Items]
Total Net Sales	56,471	58,234	159,778	163,463
Russia [Member]
Segment Reporting Information [Line Items]
Total Net Sales	128,895	143,623	347,675	362,393
Hungary [Member]
Segment Reporting Information [Line Items]
Total Net Sales	$ 5,965	$ 7,781	$ 17,068	$ 20,492

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Financing Commitments And Contingent Liabilities

9 Months Ended

Sep. 30, 2012

Financing Commitments And Contingent Liabilities

15. FINANCING COMMITMENTS AND CONTINGENT LIABILITIES

Supply contracts

The Company has various agreements covering its sources of supply, which, in some cases, may be terminated by either party on relatively short notice. Thus, there is a risk that a portion of the Company’s supply of products could be curtailed at any time.

Bank Guarantees

In accordance with current legislation in Russia each producer of spirit beverages must acquire excise stamps and must pay excise tax in full before buying spirit for production purposes. For each lot of stamps purchased, the alcohol producer must provide the relevant body with a bank guarantee in the full amount of payment for the excise tax to secure the legality of usage of the excise stamps. This bank guarantee serves as insurance against the illegal usage of excise stamps by an alcohol producer.

In addition, under new legislation effective since August 1, 2011 the producer purchasing spirit alcohol must a) prepay the excise tax in full or b) provide the relevant tax body with a bank guarantee in the full amount of the excise tax before purchasing to secure payment of the excise tax. This bank guarantee serves as insurance that the excise tax is paid in time.

Russian Alcohol has in place a guarantee line agreement with multiple banks pursuant to which it was provided with a guarantee limit of 22.7 billion Russian rubles (approximately $735.5 million) for a period from 1 to 4 years, Bravo Premium signed a guarantee line agreement with multiple banks pursuant to which it was provided with a guarantee limit of 820.0 million Russian rubles (approximately $26.5 million) for a period from 1 to 2 years and Whitehall has in place a guarantee line agreement with multiple banks pursuant to which it was provided with a guarantee limit of 1.2 billion Russian rubles (approximately $37.5 million) as insurance against the illegal usage of excise stamps.

According to the agreements, companies have the right to obtain bank guarantees during the agreement term for each purchase of excise stamps and for the purchase of spirit. The guarantees for excise stamps are held by Rosalkoregulirovanie (the Federal Service for Alcohol Market Regulation), during the whole production period for which the excise stamps were purchased. The guarantee for excise tax is held by the beneficiary (the tax body) for 6 months after the end of month the spirit was purchased.

As of September 30, 2012, the Company has bank guarantees related to customs duties on imported goods in Poland of 4.4 million Polish zlotys (approximately $1.4 million).

Operating Leases and Rent Commitments

The Company makes rental payments for real estate, vehicles, office, computer, and manufacturing equipment under operating leases. The following is a schedule by years of the future rental payments under the non-cancelable operating lease as of September 30, 2012:

2012	$	2,918
2013		9,130
2014		8,722
2015		8,148
2016		5,536
Thereafter		2,976
Total	$	37,430

During 2012, the Company continued its policy of renewing its transportation fleet by way of capital leases. The future minimum lease payments for the assets under capital lease as of September 30, 2012 are as follows:

2012	$	594
2013		593
2014		236
Gross payments due	$	1,423
Less interest		(100	)
Net payments due	$	1,323

Legal proceedings

From time to time we are involved in legal proceedings arising in the normal course of our business, including opposition and cancellation proceedings with respect to trademarks similar to some of our brands, and other proceedings, both in the United States and elsewhere. Except as set forth below, we are not currently involved in or aware of any pending or threatened proceedings that we reasonably expect, either individually or in the aggregate, will result in a material adverse effect on our consolidated financial statements.

On October 24, 2011, a class action complaint titled Steamfitters Local 449 Pension Fund vs. Central European Distribution Corporation, et al., was filed in the United States District Court, District of New Jersey on behalf of a putative class of all purchasers of our common stock from August 5, 2010 through February 28, 2011 against us and certain of our officers. The complaint seeks unspecified money damages and alleges violations of federal securities law in connection with alleged materially false and misleading statements and/or omissions regarding our business, financial results and prospects in our public statements and public filings with the U.S. Securities & Exchange Commission for the second and third quarters of 2010, relating to declines in our vodka portfolio, our need to take an impairment charge relating to the deterioration in fair value of certain of our brands in Poland and negative financial results from the launch of Żubrówka Biała. Subsequent to the above complaint, a second, substantially similar class action complaint titled Tim Schuler v. Central European Distribution Corporation, et al., was filed in the same court. By court orders dated August 22, 2012, the Steamfitters action and the Schuler action were consolidated and are now proceeding in the District of New Jersey under the caption In re Central European Distribution Corp. Securities Litigation.

On June 8, 2012, a purported securities fraud class action titled Grodko v. Central European Distribution Corporation, et al., was filed against the Company in the United States District Court for the Southern District of New York. The plaintiff in the lawsuit, who is suing purportedly on behalf of a class of all purchasers of the Company’s common stock between March 1, 2010 and June 4, 2012, alleges that the Company made false and/or misleading statements related to and/or failed to disclose that (1) the Company’s reported net sales in the years ended December 31, 2010 and 2011 were materially inflated; (2) as a result of a failure to account for retroactive trade rebates provided to the customers of Russian Alcohol, the Company anticipates restating its reported consolidated net sales, operating profit and related accounts for these periods; and (3) as a result of the foregoing, the Company’s statements were materially false and misleading at all relevant times. On August 7, 2012 a second, substantially similar class action complaint titled Puerto Rico System of Annuities and Pension for Teachers v. Central European Distribution Corporation, et al., was filed in the same court. By court orders dated September 4, 2012, the Grodko action and the Puerto Rico System of Annuities and Pension for Teachers action were transferred to the United States District Court for the District of New Jersey, where the actions have been consolidated with the prior-pending cases in New Jersey, described above, and are proceeding under the caption In re Central European Distribution Corp. Securities Litigation. Objections by certain plaintiffs to the consolidation of these actions are pending.

The Company intends to mount a vigorous defense to the claims asserted. Although we believe the allegations in the class action complaints are without merit, these types of lawsuits can be protracted, time-consuming, distracting to management and expensive and, whether or not the claims are ultimately successful, could ultimately have an adverse effect on our business, operating results and cash flows.

As noted in the Company’s Annual Report on Form 10-K/A for the year ended December 31, 2011, filed with the SEC on October 5, 2012, the Audit Committee, through its counsel, voluntarily notified the SEC of its internal investigation regarding the Company’s retroactive trade rebates, trade marketing refunds and related accounting issues. The Company has subsequently been contacted by the Fraud Division of the Criminal Division of the US Department of Justice (“DOJ”) regarding the disclosure in the Form 10-K/A for the year ended December 31, 2011, filed with the SEC on October 5, 2012 that there has been a breach of the books and records provisions of the Foreign Corrupt Practices Act (“FCPA”) of the United States and potentially other breaches of the FCPA. The Company has been asked to provide information about these matters on a voluntary basis to the SEC and DOJ. The Company is fully cooperating with the SEC and DOJ. Any action by the SEC or DOJ could result in criminal or civil sanctions against the Company and/or certain of its current or former officers, directors or employees.

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Organization And Significant Accounting Policies (Policies)

9 Months Ended

Sep. 30, 2012

Organization And Description Of Business

Organization and description of business

We operate primarily in the alcohol beverage industry. We are one of the largest producers of vodka in the world and are Central and Eastern Europe’s largest integrated spirit beverages business, measured by total volume, with approximately 33.2 million nine-liter cases produced and distributed in 2011. Our business primarily involves the production and sale of our own spirit brands (principally vodka), and the importation on an exclusive basis of a wide variety of spirits, wines and beers. Our primary operations are conducted in Poland, Russia, Ukraine and Hungary. We have six operational manufacturing facilities located in Poland and Russia.

In Poland, we are one of the largest vodka producers with a brand portfolio that includes Absolwent, Żubrówka, Żubrówka Biała, Bols, Palace and Soplica brands, each of which we produce at our Polish distilleries. We produce and sell vodkas primarily in three of four vodka sectors: premium, mainstream and economy. In Poland, we also own and produce Royal, the top-selling vodka in Hungary.

We are also the largest vodka producer in Russia, the world’s largest vodka market. Our Green Mark brand is the top-selling mainstream vodka in Russia and the second-largest vodka brand by volume in the world, and our Parliament and Zhuravli brands are two top-selling sub-premium vodkas in Russia.

As well as sales and distribution of its own branded spirits, the Company is a leading exclusive importer of wines and spirits in Poland, Russia and Hungary.

Liquidity

Liquidity

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the realization of assets and the liquidation of liabilities in the normal course of business. As described in Note 6, certain credit and factoring facilities are coming due in fourth quarter of 2012, which the Company expects to renew. Furthermore, our Convertible Senior Notes (the “Convertible Notes”) are due on March 15, 2013. Our current cash on hand, estimated cash from operations and available credit facilities will not be sufficient to make the repayment of principal on the Convertible Notes and, unless the transaction with Russian Standard Corporation, described in Note 3, is completed the Company may default on them. The Company’s cash flow forecasts include the assumption that certain credit and factoring facilities that are coming due in fourth quarter of 2012 will be renewed to manage working capital needs. Moreover, the Company had a net loss and significant impairment charges in 2011 and current liabilities exceed current assets at September 30, 2012. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

The transaction with Russian Standard Corporation is subject to certain risks, including shareholder approval which may not be obtained. The Company’s 2012 Annual Meeting of Stockholders (the “AGM”), which was postponed due to the need to restate the Company’s financial statements, is expected to be held as soon as practicable. We believe that if the transaction is completed as scheduled, the Convertible Notes will be repaid by their maturity date, which would substantially reduce doubts about the Company’s ability to continue as a going concern.

Basis Of Presentation

Basis of presentation

These unaudited condensed consolidated financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).

CEDC’s subsidiaries maintain their books of account and prepare their statutory financial statements in their respective local currencies. The subsidiaries’ financial statements have been adjusted to reflect U.S. GAAP for interim financial information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by U.S. GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present our financial condition, results of operations and comprehensive income and cash flows for the interim periods presented have been included. Operating results for the three and nine months ended September 30, 2012 are not necessarily indicative of the results that may be expected for the year ended December 31, 2012.

The balance sheet at December 31, 2011 has been derived from the restated audited consolidated financial statements at that date, filed with the SEC on October 5, 2012 as Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the fiscal year ended December 31, 2011, but does not include all of the information and footnotes required by U.S. GAAP for complete financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the restated consolidated financial statements and related notes included in Amendment No. 2 on Form 10-K/A to the Company’s Annual Report for the fiscal year ended December 31, 2011, filed with the SEC on October 5, 2012.

The significant interim accounting policies include the recognition of a pro-rata share of certain estimated annual sales incentives, marketing, promotion and advertising costs, generally in proportion to sales, and the recognition of income taxes using an estimated annual effective tax rate adjusted for tax amendments related to prior years and changes in estimates.

On February 7, 2011, the Company acquired full voting and economic control over Whitehall Group and changed the accounting treatment for its interest in Whitehall from the equity method of accounting to consolidation beginning on February 7, 2011.

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Inventories - Additional Information (Detail) (USD $) In Thousands, unless otherwise specified	9 Months Ended		12 Months Ended
	Sep. 30, 2012 D	Sep. 30, 2011 D	Dec. 31, 2011 D
Inventory [Line Items]
Inventory rotation days	135	85	81
Total balance of inventory	$ 160,061	$ 121,400	$ 117,690

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Agreement With Roust Trading - Additional Information (Detail) (USD $) In Millions, except Share data, unless otherwise specified	1 Months Ended		9 Months Ended
	May 04, 2012	May 07, 2012	Sep. 30, 2012
Long-term Purchase Commitment [Line Items]
Interest rate percentage on issued debt			3.00%
Debt instrument issuance amount			70.0
Additional common stock issued to adjust issue price			3,000,000
Common stock issued on stockholders approval to adjust issue price			5,000,000
Common stock issued from escrow to adjust issue price			2,000,000
Repurchase Agreements [Member]
Long-term Purchase Commitment [Line Items]
Shares of common stock price			3.44
Repurchase Agreements [Member] | Maximum [Member]
Long-term Purchase Commitment [Line Items]
Common stock volume weighted average price			4.13
Repurchase Agreements [Member] | Minimum [Member]
Long-term Purchase Commitment [Line Items]
Common stock volume weighted average price			2.75
New Debt [Member]
Long-term Purchase Commitment [Line Items]
Debt instrument maturity date			Jul. 31, 2016
Senior Notes Due 2013 [Member]
Long-term Purchase Commitment [Line Items]
Common stock purchase price per share	$ 5.25
Roust Trading Limited [Member]
Long-term Purchase Commitment [Line Items]
Common stock issued under purchase agreement, shares	5,714,286
Common stock purchase value under purchase agreement		30
Common stock purchase price under purchase agreement	$ 5.25
Percentage of common stock in threshold			42.90%
Roust Trading Limited [Member] | Senior Notes Due 2013 [Member]
Long-term Purchase Commitment [Line Items]
Common stock issued under purchase agreement, shares	13,300,000
Senior notes purchased by affiliates		70
Senior notes purchased by affiliates due date		March 18, 2013
Interest rate percentage on issued debt	3.00%
Roust Trading Limited [Member] | Senior Rollover Notes Due 2013 [Member]
Long-term Purchase Commitment [Line Items]
Interest rate percentage on issued debt	6.00%
Debt instrument issuance amount	102.6
Debt instrument maturity date	Jul. 31, 2016
Roust Trading Limited [Member] | Senior Backstop Notes [Member]
Long-term Purchase Commitment [Line Items]
Interest rate percentage on issued debt	6.00%
Debt instrument issuance amount	107.5
Debt instrument maturity date	Jul. 31, 2016
Roust Trading Limited [Member] | Convertible Senior Notes Due 2013 [Member]
Long-term Purchase Commitment [Line Items]
Debt instrument issuance amount			102.6

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Condensed Consolidated Statements of Cash Flow (USD $) In Thousands, unless otherwise specified	9 Months Ended
	Sep. 30, 2012	Sep. 30, 2011
Cash flows from operating activities
Net income / (loss)	$ 8,264	$ (854,102)
Adjustments to reconcile net loss to net cash provided by operating activities:
Depreciation and amortization	15,075	15,328
Deferred income taxes	(1,948)	(5,138)
Unrealized foreign exchange gains	(77,591)	118,366
Stock options fair value expense	1,919	1,998
Equity loss in affiliates	0	7,946
Gain on fair value remeasurement of previously held equity interest	0	(6,397)
Impairment charge	0	674,515
Impairments related to assets held for sale	0	7,355
Other non cash items	849	6,170
Changes in operating assets and liabilities:
Accounts receivable	211,483	246,153
Inventories	(33,969)	(9,183)
Prepayments and other current assets	(42,447)	(7,701)
Trade accounts payable	(78,804)	(42,518)
Other accrued liabilities and payables (including taxes)	(71,829)	(106,396)
Net cash provided by / (used in) operating activities	(68,998)	46,396
Cash flows from investing activities
Purchase of fixed assets	(8,017)	(5,422)
Proceeds from the disposal of fixed assets	381	0
Purchase of intangibles	0	(693)
Purchase of trademarks	0	(17,473)
Acquisitions of subsidiaries, net of cash acquired	0	(24,125)
Net cash used in investing activities	(7,636)	(47,713)
Cash flows from financing activities
Borrowings on bank loans and overdraft facility	78,177	36,027
Payment of bank loans, overdraft facility and other borrowings	(45,439)	(37,892)
Issuance of Debt Security, net of debt issuance cost of $838	69,162	0
Repayment of Convertible Senior Notes	(50,392)	0
Issuance of shares in private placement	29,885	0
Decrease in short term capital leases payable	(252)	(34)
Proceeds from options exercised	0	72
Net cash provided by / (used in) financing activities	81,141	(1,827)
Currency effect on brought forward cash balances	3,796	(7,781)
Net increase / (decrease) in cash	8,303	(10,925)
Cash and cash equivalents at beginning of period	94,410	122,116
Cash and cash equivalents at end of period	102,713	111,191
Supplemental Schedule of Non-cash Investing Activities
Common stock issued in connection with investment in subsidiaries	$ 0	$ 23,175

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Comprehensive Income

9 Months Ended

Sep. 30, 2012

Comprehensive Income

4. COMPREHENSIVE INCOME

Comprehensive income is defined as all changes in equity during a period except those resulting from investments by owners and distributions to owners. Comprehensive income includes net income adjusted by foreign currency translation adjustments. The foreign translation losses/gains on the re-measurements from foreign currencies to U.S. dollars are classified separately as foreign currency translation adjustment within accumulated other comprehensive income included in stockholders’ equity.

As of September 30, 2012, our functional currencies exchange rates used to translate the balance sheet strengthened against the U.S. dollar as compared to the exchange rates as of December 31, 2011, and as a result $6.7 million of foreign currency translation adjustment was recognized as part of total comprehensive income.

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Stock Based Compensation Plans And Warrants - Additional Information (Detail) (USD $) In Millions, except Per Share data, unless otherwise specified	9 Months Ended
	Sep. 30, 2012
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Minimum range of exercise prices for outstanding options	$ 2.00
Maximum range of exercise prices for outstanding options	$ 60.92
Minimum range of exercise prices for options exercisable	$ 2.00
Maximum range of exercise prices for options exercisable	$ 60.92
Weighted average remaining contractual life of options outstanding (years)	4 years 6 months
Recognized compensation cost	$ 1.92
Total unrecognized compensation cost related to non-vested stock options	$ 1.2
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	1 year
Costs are expected to be recognized over period	2012
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period	3 years
Costs are expected to be recognized over period	2014

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SUBSEQUENT EVENTS - Additional Information (Detail) (Subsequent Event [Member]) In Millions, unless otherwise specified	1 Months Ended
	Oct. 31, 2012 USD ($)	Oct. 31, 2012 RUB
Subsequent Event [Line Items]
Decreased guarantees limit	$ 39.9	1,200.0
Guarantee limit	$ 695.6	21,500.0

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Earnings Per Share (Tables)

9 Months Ended

Sep. 30, 2012

Computation Of Basic And Diluted Earnings Per Share

The following table sets forth the computation of basic and diluted earnings per share for the periods indicated.

	Three months ended September 30,					Nine months ended September 30,
	2012		2011			2012		2011
Net income / (loss)	$	35,769	$	(848,735	)	$	8,264	$	(854,102	)
Weighted average shares of common stock outstanding (used to calculate basic EPS)		78,582		72,490			75,902		72,063
Shares issuable according to Amended SPA (See Note 3)		3,000		0			3,000		0
Net effect of dilutive employee stock options based on the treasury stock method		209		104			202		115
Weighted average shares of common stock outstanding (used to calculate diluted EPS)		81,791		72,594			79,104		72,178
Net income / (loss) per common share - basic	$	0.46	$	(11.71	)	$	0.11	$	(11.85	)
Net income / (loss) per common share - diluted	$	0.44	$	(11.71	)	$	0.10	$	(11.85	)

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Effects Of Foreign Currency Movements (Tables)

9 Months Ended

Sep. 30, 2012

Exchange Rates Used For Translation Of Balance Sheet And Statement Of Operations

Table below presents the exchange rates used for translation of our balance sheet and statement of operations and comprehensive income balances as of and for the three months ended September 30, 2012:

	Balance sheet rate as of September 30, 2012		Balance sheet rate as of December 31, 2011		Average rate for the three  months ended September 30, 2012		Average rate for the three  months ended September 30, 2011
PLN / US$		3.1780		3.4174		3.3107		2.9400
RUR / US$		30.9144		32.2092		31.9874		29.1667
HUF / US$		219.1724		240.6620		226.7603		194.7020

Schedule Of Foreign Currency Exchange Rate Effect Before Tax

losses on the re-measurement of these liabilities. The table below summarizes the pre-tax impact of a one percent movement in each of the exchange rate which could result in a significant impact in the results of the Company’s operations.

Exchange Rate	Value of notional amount		Pre-tax impact of a 1% movement in exchange rate
USD-Polish zloty	$	444 million	$	4.4 million gain/loss
USD-Russian ruble	$	264 million	$	2.6 million gain/loss
EUR-Polish zloty	€	430 million or approximately $557 million	$	5.6 million gain/loss

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RELATED PARTY TRANSACTIONS

9 Months Ended

Sep. 30, 2012

RELATED PARTY TRANSACTIONS

14. RELATED PARTY TRANSACTIONS

Pursuant to the SPA and the Amended SPA as described in Note 3, on May 7, 2012, Roust Trading acquired 5,714,286 shares of the Company’s common stock. Roust Trading directly controls Russian Standard Corporation and indirectly controls other Russian Standard entities. Mr. Roustam Tariko who indirectly controls Roust Trading has been appointed to CEDC’s Board of Directors as a non-Executive Chairman of the Board. Effectively all entities controlled by Mr. Tariko are as of now related parties of CEDC, including Russian Standard Bank, Russian Standard Corporation and Roust Inc. (“Roust”).

As disclosed in Note 3 and Note 6 above, on May 7, 2012, the Company issued $70 million principal amount of senior notes due March 18, 2013, bearing on interest rate of 3% to Russian Standard Bank. The details of this transaction are described in Note 6 above.

In the ordinary course of business, the Company is involved in transactions with entities controlled by Mr. Tariko that resulted in recognition of revenues, expenses, assets and liabilities by the Company. There were no significant transactions with the entities controlled by Mr. Tariko in prior periods.

The following table summarizes the transactions with Roust as included in the Company’s Consolidated Financial Statements:

Related Party Transactions with Roust (in thousands)
Condensed Consolidated Statements of Operations and Comprehensive Income (unaudited) for the three and nine month periods ended September 30, 2012 and September 30, 2011	Three months ended September 30,				Nine months ended September 30,
	2012		2011		2012		2011
Sales	$	1,473	$	0	$	1,473	$	0
Selling, general and administrative expenses		83		0		83		0

Condensed Consolidated Balance Sheets as of September 30, 2012 (unaudited) and as of December 31, 2011 (in thousands)	September 30, 2012 (unaudited)		December 31, 2011
Current Assets
Accounts receivable		1,798		0
Other current assets		1,034		0
Total due from Roust		2,832		0
Current Liabilities
Other accrued liabilities		95		0
Total due to Roust		95		0