UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                              Washington D.C. 20549

                                    Form 10-K

            [X] ANNUAL REPORT PURSUANT TO SECTION 13 or 15 (d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 1999

            [ ] 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 0-24341

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION
             ------------------------------------------------------
             (Exact name of registrant as specified in its charter)


                  DELAWARE                                       54-1865271
      ---------------------------------                      -------------------
        (State or other jurisdiction                           (I.R.S. employer
      Of incorporation or organization)                      identification no.)

1343 MAIN STREET, SUITE 301, SARASOTA FLORIDA                      34236
----------------------------------------------                  ----------
   (Address of principal executive offices)                     (Zip code)


       Registrant's telephone number, including area code: (941) 330-1558

           Securities registered pursuant to Section 12(b) of the Act:
                                 Not Applicable
           Securities registered pursuant to Section 12(g) of the Act.
                     COMMON STOCK, PAR VALUE $0.01 PER SHARE
                     ---------------------------------------
                                 Title of Class

         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 if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein, and will not be contained,
to the best of registrant's knowledge in definitive proxy or information
statements incorporated by reference in Part III of the Form 10-K or any
amendment to this Form 10-K. [ ]

         The aggregate market value of the voting stock held by non-affiliates
of the registrant (based on the closing price of the registrant's common stock
on the Nasdaq National Stock Market) on March 5, 2000 was $10,975,050.*

         As of March 5, 2000, the registrant had 4,134,230 shares of common
stock outstanding.

                       Documents Incorporated by Reference

Portions of the proxy statement for the annual meeting of stockholders to be
held on May 23, 2000 are incorporated by reference into Part III.

-----------
*   Solely for purposes of this calculation, all directors and executive
    officials of the registrant and all stockholders beneficially owning more
    than 5% of the registrant's common stock are considered to be affiliates.
<PAGE>

                                TABLE OF CONTENTS

                                                                            PAGE
                                                                            ----

PART I

    Item 1.     Business                                                      4

    Item 2.     Properties                                                   20

    Item 3.     Legal Proceedings                                            20

    Item 4.     Submission of Matters to a Vote of Security-Holders          21

PART II

    Item 5.     Market for Registrant's Common Equity and Related
                    Stockholder Matters                                      21

    Item 6.     Selected Financial Data                                      22

    Item 7.     Management's Discussion and Analysis of Financial
                    Condition and Results of Operations                      23

    Item 7A.    Quantitative and Qualitative Disclosure About Market Risk    26

    Item 8.     Financial Statements and Supplementary Data                  27

    Item 9.     Changes in and Disagreements with Accountants on
                    Accounting and Financial Disclosure                      47

PART III

    Item 10.    Directors and Executive Officers of the Registrant           47

    Item 11.    Executive Compensation                                       47

    Item 12.    Security Ownership of Certain Beneficial
                      Owners and Management                                  47

    Item 13.    Certain Relationships and Related Transactions               47

PART IV

    Item 14.    Exhibits, Financial Statement Schedules and Reports
                     on Form 8K                                              47

    Signatures                                                               50



                                                                               3
<PAGE>


         THIS ANNUAL REPORT ON FORM 10-K CONTAINS CERTAIN STATEMENTS THAT ARE
NOT HISTORICAL FACTS AND MAY BE FORWARD-LOOKING. SUCH STATEMENTS INVOLVE
ESTIMATES, ASSUMPTIONS, RISKS AND UNCERTAINTIES. THERE IS NO ASSURANCE THAT
FUTURE RESULTS WILL NOT DIFFER MATERIALLY FROM THOSE EXPRESSED IN THE
FORWARD-LOOKING STATEMENTS. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO
BE MATERIALLY DIFFERENT FROM THE FORWARD-LOOKING STATEMENTS ARE DISCLOSED UNDER
THE HEADING "BUSINESS - RISK FACTORS" AND THROUGHOUT THIS FORM 10-K.

PART I

ITEM 1.   BUSINESS

GENERAL

Central European Distribution Corporation, a Delaware corporation ("CEDC") has
three wholly owned subsidiaries: Carey Agri International Poland Sp z.o.o.
("Carey Agri"), Multi Trade Company Sp. z.o.o. ("MTC") and The Cellars of Fine
Wines Sp. z.o.o. ("PWW"). Each such subsidiary is a Polish limited liability
company operating in the Republic of Poland. MTC and PWW were acquired during
1999. CEDC and its three subsidiaries are referred to herein as the "Company".

The Company, formed in 1990, is a leading importer and distributor of alcoholic
beverages in Poland. The Company operates the largest nationwide next-day
alcoholic beverage delivery service in Poland through its eleven regional
offices located in Poland's principal cities, including Warsaw, Krakow, Gdynia
and Katowice. The Company currently distributes approximately 330 brands in
three categories: beer, spirits and wine. The Company imports and distributes
seven international beers, including GUINNESS, CORONA, MILLER, BUDWEISER BUDVAR
and FOSTER'S. The Company currently distributes approximately 226 spirit
products, including leading international brands of scotch, single malt and
other whiskeys, rums, bourbons, vodkas, tequilas, gins, brandys, cognacs,
vermouths and specialty spirits, such as JOHNNIE WALKER, SMIRNOFF, ABSOLUT,
FINLANDIA, BACARDI, GORDON'S LONDON DRY and TANQUERAY.

In addition, the Company imports and distributes 555 wine products, including
BPH ROTHSCHILD, TORRES, BOLLA, CONCHA Y TORRO, PENFOLDS, SUTTER HOME, GEORGES
DUBOUEF and MONDAVI. In addition to its distribution agreements with various
alcoholic beverage suppliers, the Company is the exclusive importer for Dunhill
Cigars and San Pelligrino and Evian Mineral Waters.

The Company distributes its products throughout Poland to approximately 4,400
outlets, including off-trade establishments, such as small businesses and
multi-store retail outlets where alcoholic beverages are not consumed on
premises, and on-trade locations, such as bars, nightclubs, hotels and
restaurants, where such products are consumed.

INDUSTRY OVERVIEW

CONSUMPTION. In 1999, Poland was the fourth largest consumer of vodka in the
world. The total market for alcoholic beverage products in Poland was
approximately $4.0 billion in 1998 at the retail level. Traditionally, the
population of Poland has primarily consumed domestic vodka, but in recent years
there has been a general shift in the population's consumption habits from vodka
to other types of alcohol that are primarily imported, such as beers, wines and
spirits. The shift in consumption habits in Poland is a result of: (i)
stabilization of the Polish economy, including increased wages as well as a
decrease in the rate of inflation from 250% in 1990 to 8.5% in 1998 and 9.8% in
1999; (ii) an increase in tourism, which has created a demand for imported
products; (iii) an increase in multinational firms doing business in Poland,
which has brought both capital into the country and new potential customers for
the Company's products; and (iv) increased availability and decreased prices for
imported products.

DISTRIBUTION. Currently, the market for the distribution of alcoholic beverages
in Poland is highly fragmented. There are numerous distributors spread
throughout the country, all delivering primarily one type of product (I.E.,
domestic


                                                                               4
<PAGE>


vodka). Furthermore, distributors have been located regionally, rather than
nationally, due to the difficulties in establishing a nationwide distribution
system, including the capital required to set up such a system. Distributed
alcohol is delivered to both off-trade sites and on-trade sites. Off-trade sites
include Polish-owned and managed businesses such as small grocery stores as well
as major chain stores. On-trade sites include bars, nightclubs, hotels and
restaurants. There has been a trend to consolidate many off-trade sites, which
would be classified as "mom and pop" stores as well as a trend toward expanding
major chain stores. The Company believes that it is well positioned to take
advantage of both the trends in consumption and distribution.

BUSINESS STRATEGY

The principal components of the Company's business strategy are as follows:

EXPAND DISTRIBUTION CAPACITY. The Company plans to continue increasing its
distribution capacity by expanding the number of its regional offices in Poland
through the acquisition of existing wholesalers, particularly in areas where the
Company does not distribute directly. During the first quarter of 1999, the
Company acquired substantially all the assets of MTC in northeastern Poland. MTC
was a major regional competitor of the Company with approximately $43.0 million
in sales and approximately $0.4 million in operating profits in 1998.

The Company will seek to acquire additional successful wholesalers, which are
primarily involved in the vodka distribution business and are among the leading
wholesalers in their region. The Company would then add its higher margin
imported brands to complement and enhance the existing product portfolio. While
the Company has identified additional potential wholesalers and has conducted
exploratory talks about such acquisitions, it has not reached any definitive
agreements regarding the terms and conditions of any such acquisition, including
the purchase price to be paid to the sellers, and such additional acquisitions
may not be available to the Company on acceptable terms, if at all. In such
case, the Company would seek to enter these markets with its own regional
offices.

INCREASE PRODUCT OFFERINGS. The Company acquired one of Poland's leading premium
wine importers in May of 1999. PWW is a high quality wine importer, which offers
a wide selection of specialty wines such as Penfolds, Concha y Toro, Mondavi .
The Company also added Stock Brandy, one of Poland's leading brandies and other
Stock alcohol products during the second quarter of 1999. Also added in 1999 was
Sierra Tequila, De Kuyper Liquers, Camus Cognac, Cona Rio and Monterina wines as
well as Finsbury Gin. The Company is also in exploratory talks to import
additional alcoholic and non-alcoholic products.

EXPAND RETAIL MARKET. The Company has implemented its retail business strategy
in Warsaw, where one location has been leased, remodeled and opened for business
in February 1998. The second specialty store was opened in Krakow in December
1999. The Company believes that specialty retail sales of alcoholic beverages in
Poland have yet to be developed. Currently, alcoholic beverages are sold through
grocery stores, supermarkets, small shops and gas stations. These retail outlets
sell, in general, fast moving items, primarily domestic beer and vodka, as well
as a small number of the more popular selling imported products, which are
brands often imported by the Company.

HISTORY

CEDC's subsidiary Carey Agri was incorporated as a limited liability company in
July 1990 in Poland. It was founded by William O. Carey, who died in early 1997,
and Jeffrey Peterson, the Company's Vice Chairman and Executive Vice President.
Mr. Carey's son, William V. Carey, is the managing director of Carey Agri and
the President and Chief Executive Officer of CEDC. In February 1991, Carey Agri
was granted its first import license for FOSTER'S LAGER, which it sold to
wholesalers. With this beverage, Carey Agri sought to offer a desirable product
for which it had an exclusive import license to the market segment of the Polish
population who were benefiting from the country's market transformation. Because
of Carey Agri's initial success with FOSTER'S LAGER, for which it still holds
the exclusive import license for Poland, it quickly diversified in 1992 by
importing other quality brand beers from Europe and the United States. Sales
during this period were typically in high volume consignments to other
wholesalers.


                                                                               5
<PAGE>

In 1993, with the acceleration of the privatization of retail outlets in Poland,
Carey Agri began to implement a systematic delivery system in Warsaw which could
deliver alcoholic beverages to retail outlets on a reliable basis. Carey Agri
leased a warehouse, purchased trucks and hired and trained operational personnel
and began to sell directly to convenience shops, small grocery stores and newly
opened pubs. Because of this business experience, Carey Agri was prepared to
take advantage of the opportunity to expand its import and delivery capacity in
Warsaw when a large, foreign-owned supermarket chain began operations in 1993,
creating a significant increase in the demand for the Company's product line.
The Warsaw model of desirable product lines and dependable prompt delivery of
product was duplicated by the Company in Krakow (1993), Wroclaw (1994), Szczecin
(1994), Gdynia (1994), Katowice (1995), Torun (1995) Poznan (1996) and
Bialystock (1999) with the acquisition of MTC . In 1999, CEDC acquired MTC and
PWW, increasing its distribution capacity and products offerings in Poland.

CEDC was incorporated in Delaware in 1997. In July 1998, the Company issued
2,000,000 shares of Common Stock in an Initial Public Offering on the Nasdaq
Smallcap Market raising net proceeds of approximately $10.6 million. During
August of 1999, the Company was accepted onto the Nasdaq National Market where
it trades under the symbol CEDC.

PRODUCT LINE

The Company currently offers over 330 brands of beverages in three categories:
(a) beers; (b) spirits; and (c) wines. Its brands of imported beer accounted for
17.0%, 15.9% and 6% of net sales revenues during the twelve-month period ended
December 31, 1997, 1998 and 1999, respectively. Spirits accounted for 32.0%,
79.1% and 85.9% of net sales revenues for the same periods. Sales of Polish
vodka in the twelve-months ended December 31, 1999 accounted for 80% of net
sales revenues in the spirits category and imported spirits accounted for 5.9%.
Wine accounted for 7.0%, 7.2%, and 8.1% of net revenues for the same periods.
Sales of other products, which were 1.4% in 1998, were insignificant during the
year ended December 31, 1999.

The Company has agreements with many of the companies from which it acquires
products for sale. Certain products, however, have never been covered by a
written agreement. The Company does not believe that the absence of such written
agreements is likely to result in an adverse financial effect on the Company
because the Company has long-standing relationships with such suppliers.

BEER

The Company distributes imported beer through each of its regional offices.
BUDWEISER BUDVAR, GUINNESS, CORONA, FOSTER'S LAGER, KILKENNY, HARPS,and MILLER
GENUINE DRAFT are distributed throughout Poland on an exclusive basis.

Most of the Company's distribution contracts for beer contain a minimum purchase
requirement and typically permit termination if the Company breaches its
agreements, such as failure to pay within a certain time period or to properly
store and transport the product. Trade credit is extended to the Company for a
period of time after delivery of products. The duration of these agreements
differ.

SPIRITS

The Company distributes all its imported spirit products through each of its
offices, mostly on a nonexclusive basis. The spirit products sold by the Company
include the following:

<TABLE>
<S>                    <C>                                      <C>
Scotch Whisky:         Johnnie Walker, Black, Blue,             Black & White
                       Gold and Red Labels                      The Dimple
                       Haig                                     White Horse
                       Chivas Regal                             VAT 69
                       Ballantines Finest                       Teacher's Highland Cream
                       Ballantines Gold Seal                    Old Smuggler
                       J&B Rare                                 Whyte and McKay
</TABLE>


                                                                               6
<PAGE>

<TABLE>
<S>                    <C>                                      <C>
Single Malt Whisky:    Dalmore                                  Bruichladdich
                       Cragganmore                              Glenkinche
                       Dalwhinne                                Oban
                       Lagavulan                                Talisker
                       Isle of Jura                             Cardhu

Rum:                   Bacardi Light, Gold and Black            Ron Rico, White and Gold
                       Captain Morgan                           Malibu

Other Whiskey:         Blenders Pride                           Crown Royal
                       Seven Crown                              Black Velvet
                       Canadian Mist

Bourbon:               Jack Daniel's Tennessee Whiskey          Forester
                       Early Times                              Jim Beam

Vodkas:                Smirnoff                                 Absolut Blue
                       Citron and Kurant                        Finlandia
                       Tanqueray                                Polish Vodkas

Tequila:               Jose Cuervo                              Sierra *

Gins:                  Gordon's London Dry                      Beefeater
                       Tanqueray

Brandy:                Metaxa                                   Sandeman Capa Negra
                       Raynal                                   Stock *

Cognacs:               Hennessy                                 Courvoisier
                       Martell                                  Camus Cognac *

Vermouths:             Stock Blanco*, Rosa and                  Cinzano Blanco, Rosso,Rose,
                       Extra Dry Martini Bianco,                Extra Dry, Americano, Orancio
                       Rosso, Rose, Extra Dry

Specialty Spirits:     Bailey's Irish Cream                     Carolan's Irish Cream
                       Kahlua Coffee Liqueur                    Grand Marnier
                       Creme de Grand Marnier                   Pimm's Cup
                       Jagermeister                             Archer's
                       Dekuyper *                               Mandarine Napoleon *
</TABLE>
* Denotes exclusive importation.

Only the Company's sales of Polish vodka and alcoholic beverages distributed for
companies now a part of Diageo plc exceeded five percent of the Company's net
sales for the years ended December 31, 1997 1998 and 1999. The Company's
non-exclusive contract with one such entity covers the products which Diageo plc
itself imports into Poland, including Bailey's Irish Cream and JOHNNIE WALKER.
This contract became effective on January 1, 1995 for an unspecified period.
Each party, however, has a right to terminate it with 90 days' prior written
notice. The contract imposes on the Company certain obligations, which if it
fails to satisfy could lead to the contract's immediate termination, unless the
Company cures the breach within a specified period. There are also sales goals
to be met by the Company.


                                                                               7
<PAGE>

The Company's agreements with various state-owned Polish vodka producers may be
terminated by either party without cause with one-month prior written notice.
Products are delivered based on the Company's standard order forms.

WINE

The Company offers 54 brands of wine encompassing 555 products on an exclusive
basis. During 1998 the Company offered two brands encompassing 34 products. The
additional exclusive wines were a result of the acquisition of PWW. These wines,
which include standard red and white varieties, are offered through all of the
Company's regional offices. The Company also offers on a non-exclusive basis the
following sparkling wines and champagnes: CINZANO ASTI, GRAN CINZANO, GRAN
FESTA, MARTINI ASTI, MARTINI BRUT, MOET & CHANDON DOM PERIGNON, BRUT IMPERIAL.

LIST OF EXCLUSIVE BRANDS FOR PWW BY SUPPLIER

FRENCH WINES                        SPANISH WINES             ITALIAN WINES

B.P.H Rothschild                    Torres                    Castello Banfi
Kressmann                           Jean Leon                 Frescobaldi
Borie Manoux                        Vega Sicilia              Cecchi
Andre Lurton                        Bodegas Age               Gaja
Jean-Jeann                          Martinez Bujanda          Marchesi di Barolo
De Ladoucette                       Faustino                  Villadoria
J. Moreau & Fils                    Rioja                     Santa Margherita
Domaine Laroche                     Ramos Pint                Calinto
Louis Latour                                                  Bolla
Domaine la Chevaliere
Georges Dubouef
Faiveley
Leon Beyer
M. Chapoutier
Ogier


CALIFORNIAN                         CHILEAN                   AUSTRALIAN

Mondavi                             Concha y Torro            Penfolds
M. Torres                           M. Torres
Trinchero Estates                   San Pedro
Robert Mondavi
Sutter Home
Savona
Fetzer


OTHER                               CHAMPAGNES

Lenz Mozer - Austrian               Veuve Clicquot
Morhena - German                    Krug
Boutari - Greek


                                                                               8
<PAGE>

NON-ALCOHOLIC PRODUCTS

During the second quarter 1999 the Company received the exclusive distribution
rights for San Pelligrino water, a non-alcoholic brand-name product to add to
its nationwide distribution system. Both Evian Mineral Water products and
Dunhill Cigars were added in 1998.

SALES AND MARKETING

As an early entrant in the post-Communist market in Poland, the Company has over
eight years of experience in introducing, developing and refining marketing,
sales and customer service practices in the diverse and rapidly developing
Polish economy, which it believes is a competitive advantage in the alcoholic
beverage distribution business.

The Company employs approximately 120 salespeople who are assigned to one of its
eleven regional offices. Each regional office has a sales manager, who may also
be the office manager, who meets with the salespeople of that office on a daily
basis to review products and payments before the salespeople begin calling on
customers. The sales force at each office is typically divided into three
categories: (a) vodka accounts; (b) import accounts; and (c) key accounts.
Salespeople, who are paid on commission, return to the office later in the day
to process orders so that products can be dispatched the next morning.

DISTRIBUTION SYSTEM

The Company's headquarters are located in Warsaw, the capital of Poland, in and
around which, as of December 31, 1999, the Company estimates that 2.4 million
people, or 6% of the country's population, lived. Sales and service offices are
presently located in eleven major regional centers in central, north, south and
western Poland where, as of the same date, another 8.8 million, or 22% of the
population, lived. The Company estimates that the regional sales and service
centers deliver to surrounding cities covering an additional 6 million people or
an additional 15% of the population. Thus, the Company estimates that it
currently reaches 43% of Poland's population through direct sales and
distribution based on census data as of June 30, 1998. Other areas in Poland are
served through arrangements with wholesalers. See "Business Strategy."

The Company has developed its own centrally controlled, national next-day
distribution system for its alcoholic beverage products, and has the ability to
leverage its distribution to include non-alcoholic beverage products in its
system. The Company believes that it is the only independent distribution
business which currently has this capability in Poland. For imported products,
the distribution network begins with a central bonded warehouse in Warsaw.
Products can remain in this warehouse without customs and other duties being
paid until the product is actually needed for sale. At such point, the product
is transferred to the Company's consolidation warehouse at the same location or
shipped directly to one of the regional office warehouses connected to each of
the Company's sales locations outside of Warsaw. Based on current sales and
projections, the regional offices are provided with deliveries on a weekly or
bi-weekly basis so that they are able to respond to their customers' needs on a
next-day basis.

For products which the Company delivers for others who themselves import the
products into Poland, the distribution chain begins at the Company's
consolidation warehouse in Warsaw. From there, the product is delivered to
customers using the same procedures as described above.

Except at peak periods during the summer holidays and other similar times such
as Christmas, all deliveries are made by Company-trained employees using
Company-owned or leased vehicles. During such busy periods, the Company relies
on independent contractors, which are usually small family-run businesses with
which the Company has had relationships for several years.


                                                                               9
<PAGE>

MARKET FOR PRODUCT LINE

In the year ended December 31, 1999, approximately 65% of the Company's total
sales were through off-trade locations where the alcoholic beverages are not
consumed, another 25% through on-trade locations where the alcoholic beverages
are consumed, and the other 10% through other wholesalers.

OFF-TRADE MARKET

There are two components of the Company's sales to locations where alcoholic
beverages are not consumed on premises. The most significant are small, usually
Polish-owned and managed businesses, including small grocery stores. At December
31, 1999, the Company sold products to approximately 2900 such business outlets,
which typically stock and sell relatively few alcoholic beverage products and
wish to have access to the most popular selling brands. The other components of
the off-trade business are large supermarket chains, which are typically
non-Polish-owned, as well as smaller multi-store retail outlets operated by
major Western energy companies in connection with the sale of gasoline products.
The large supermarket chains typically offer a wide selection of alcohol
products, while the smaller retail outlets offer a more limited selection.

ON-TRADE MARKET

There are three components to the Company's sales to locations where alcoholic
beverages are consumed: sales to (i) bars and nightclubs; (ii) hotels; and (iii)
restaurants. Bars and nightclubs are usually locally managed businesses,
although they may be owned and operated in major cities by a non-Polish
national. Hotels include worldwide chains such as Marriott, Sheraton and Holiday
Inn, as well as the major Polish chain, Orbis. Restaurants are typically
up-scale and located in major urban areas. This latter category also includes
two major United States-based restaurant chains which operate in Poland.

WHOLESALE TRADE

The Company also sells products throughout Poland through other wholesalers.
There are no written agreements with these wholesalers.

CONTROL OF BAD DEBTS

The Company believes that its close monitoring of customer accounts both at the
relevant regional office and from Warsaw has contributed to its success in
maintaining a low ratio of bad debts to net sales. During the years ended
December 31, 1997, 1998 and 1999, bad debt expense as a percentage of net sales
was 0.12%, 0.17% and 0.28% of net sales, respectively. Management believes the
ongoing acquisition of computer upgrades for interoffice financial and
administrative controls will assist in maintaining a low ratio of bad debts to
net sales as the Company continues to expand.

COMPETITION

The Company, as an early entrant in the post-Communist market in Poland, has
over eight years of experience in introducing, developing and refining
marketing, sales and customer service practices in the diverse and rapidly
developing Polish economy, which it believes is a competitive advantage in the
alcoholic beverage distribution business. The Company believes that it is
currently the only independent national distributor of an extensive and
diversified alcoholic beverage line in Poland. Some of the international drink
companies doing business in Poland, which import their own products but use the
Company on a nonexclusive basis to distribute their products, could develop
nationwide distribution systems, but have not and the Company believes these
companies will concentrate on expanding their sales organizations. These
entities include, Seagrams, Diageo plc, Allied Domecq and Bacardi. The Company
was the largest single distributor in 1997, 1998 and 1999 for Diageo plc
products in Poland.


                                                                              10
<PAGE>

The Company competes with various regional distributors in all of its offices.
This competition is particularly vigorous with respect to domestic vodka brands.
One of the larger, foreign-owed chain stores also sells directly to smaller
retailers. The Company addresses this regional competition, in part, through
offering to customers in the region a single source supply of more products than
its regional competitors typically offer.

The brands of beers, wines and spirits distributed by the Company compete with
other brands in each category, including some the Company itself distributes.
The Company expects this competition to increase as it adds more brands and as
the Polish produced products are distributed more efficiently. In addition, the
international drinks companies with which the Company competes in the import
sector of its business have greater financial and other resources than does the
Company.

DIRECTORS AND EXECUTIVE OFFICERS

The directors and executive officers and their ages of CEDC as of March 15,
2000, are set forth below:

<TABLE>
<CAPTION>
         NAME                               AGE      POSITION(S)
         -----                              ---      -----------
<S>                                         <C>      <C>
         William V. Carey ................  35       Chairman, President and Chief Executive Officer
         Jeffrey Peterson ................  49       Vice Chairman and Executive Vice President
         Joseph S. Conti .................  63       Director
         James T. Grossmann ..............  59       Director
         James B. Kelly ..................  57       Director
         Jan W. Laskowski ................  43       Director
         Joe M. Richardson ...............  47       Director
         Neil Crook ......................  37       Vice President and Chief Financial Officer
         Evangelos Evangelou .............  32       Chief Operating Officer
</TABLE>

Directors and executive officers of CEDC are elected to serve until they resign
or are removed, or are otherwise disqualified to serve, or until their
successors are elected. All directors of CEDC are elected annually at the annual
meeting of stockholders. Executive officers of CEDC generally are appointed at
the board's first meeting after each annual meeting of stockholders.

WILLIAM V. CAREY has served as Chairman, President and Chief Executive Officer
of CEDC since its inception. Mr. Carey began working for Carey Agri in 1990 and
in 1993, Mr. Carey instituted and supervised the direct delivery system for
Carey Agri's nationwide expansion. Mr. Carey, a 1987 graduate of the University
of Florida, played briefly on the professional golf circuit before joining the
Company. Mr. Carey is a member of the American Chamber of Commerce in Poland.

JEFFREY PETERSON has served as Vice Chairman, Executive Vice President and
director of CEDC since its inception. Mr. Peterson was a co-founder of Carey
Agri in 1990, and is a member of the management board of that entity. Prior
thereto, Mr. Peterson contracted with African, Middle Eastern, South American
and Asian governments and companies for the supply of American agricultural
exports and selected agribusiness products, such as livestock, feed supplements
and veterinary supplies. Mr. Peterson has worked with international banks and
United States government entities to facilitate support for exports from the
United States.

JOSEPH S. CONTI has served as a Consultant and Senior Advisor to the Polish
American Enterprise Fund ("PAEF") since May 1992. In this capacity, he currently
serves as Chairman of the Board of Directors of the First Polish American Bank,
a majority owned investment of the PAEF. Mr. Conti also serves as Chairman of
the Board of Directors of the Enterprise Credit Corporation, a wholly owned
subsidiary of the PAEF. He previously served as Vice Chairman of the Board of
Directors on Bank Rolno-Przemyslowy, a minority-owned investment of the PAEF,
until its sale to Rabobank in 1997. Prior to consulting to the PAEF, Mr. Conti
spent 23 years with Bankers Trust Company, retiring in April 1992 as a Senior
Vice President.


                                                                              11
<PAGE>

JAMES T. GROSSMANN, a retired United States Foreign Service officer, has served
as a director of CEDC since its inception. With the United States Agency for
International Development ("U.S.A.I.D."), during the years 1977 to 1996, Mr.
Grossmann served in emerging markets in Central Europe, Central America, Africa
and Asia with a concentration on developing private sector trading and
investment through United States government-sponsored aid programs. Immediately
prior to his retirement in 1996, he managed a $300 million mass privatization
and capital markets development program that assisted 14 former state-controlled
countries in Central Europe transition to market economies.

JAMES B. KELLY, a former Deputy Assistant Secretary of Commerce of the United
States specializing in international economic policy, has served as a director
of CEDC since its inception. Mr. Kelly is currently the President of SynXis
Corporation, a software development company, a position he has held since August
1996. From July 1992 to August 1996, Mr. Kelly was the International
Vice-President of BDM International, an international information technology
company with sales in 1996 of over $1.0 billion, where he was in charge of
penetrating foreign technology markets by acquisition, alliance and direct
sales.

JAN W. LASKOWSKI has served as a director of CEDC since its inception. Mr.
Laskowski has lived and worked in Poland since 1991. He was the Vice President
and member of the management board of American Bank in Poland ("Amerbank") until
February 1999, a position he had held since 1996, where he was responsible for
business development. Before joining Amerbank in 1991, Mr. Laskowski worked in
London for Bank Liechtenstein (UK) Ltd from 1989 to 1991. He began his career
with Credit Suisse, also in London, where he worked for 11 years.

JOE M. RICHARDSON has served as a director of CEDC since its inception. Since
October 1994, Mr. Richardson has served as the Director of Sales and Marketing
Europe of Sutter Home Winery Inc., where he is responsible for developing and
managing the importation, distribution and sales of Sutter Home Wines within
Europe. From October 1993 until October 1994, Mr. Richardson assisted Carey Agri
in marketing development. Prior thereto, Mr. Richardson had 19 years experience
in the wine industry.

NEIL CROOK joined the Company in February 2000 as Vice President and Chief
Financial Officer. From April 1996 to January 2000, he held the position of
Financial Controller in Xerox Polska Ltd, the autonomous subsidiary of Xerox
(Europe) Ltd in Poland. Prior thereto, he worked with Continental Can Polska
where he oversaw the financial operation of the construction of an aluminum can
manufacturing plant. Mr. Crook has six years experience in Poland and is a
United Kingdom registered F.C.M.A.

EVANGELOS EVANGELOU joined the Company in September 1998. From October 1993
until July 1998, Mr. Evangelou was both Assistant Manager and General Manager of
Louis Poland where he was responsible for the day to day operations of all food
and beverage outlets within Warsaw International Airport. Prior to coming to
Poland for Louis, Mr. Evangelou was in food and beverage management in the
United Kingdom.

EMPLOYEES

The Company had approximately 400 full-time employees as of December 31, 1999.
Substantially all employees were employed in Poland and, as required by Polish
law, have labor agreements with the Company. The Polish Labor Code, which
applies to each of these agreements, requires that certain benefits be provided
to employees, such as the length of vacation time, maternity leave and a bonus
of a month's salary paid upon retirement. This law also restricts the discretion
of the Company's management to terminate employees without cause and requires in
most instances a severance payment of one to three months salary. The Company
made required monthly payments of 25% of an employee's salary to the
governmental health and pension system and has established a Social Benefit Fund
as required by Polish law, but does not provide other additional benefit
programs. The Social Benefits system was changed under Polish law effective
January 1, 1999, and the employee is now required to make monthly payments of
23% of their salary, but the Company believes that it will not have a material
effect on the Company's earnings. None of the Company's employees are unionized.
The Company believes that its relations with its employees are good.


                                                                              12
<PAGE>

REGULATION

The Company's business of importing and distributing alcoholic beverages is
subject to extensive regulation. The Company believes it is operating with all
licenses and permits material to its business. The Company is not subject to any
proceedings calling into question its operations in compliance with any
licensing and permit requirements.

IMPORT OF PRODUCTS

IMPORT LICENSE

The Company must receive a license from the Minister of Economy to be able to
import all of its alcoholic beverages except for the beer and wine brands. The
current license was issued for the period from July 1, 1998 until December 31,
2000. While in certain circumstances prescribed by Polish law, the Minister of
Economy has discretion to withdraw the import license or limit its scope, the
Company believes that such license will remain effective as long as the Company
abides by the conditions set forth therein, including, in particular, regular
reporting to the Minister of Economy on the volume of imports. The Company must
also apply each year for a license to import cigars. The Company has obtained a
license which expires on December 31, 2000.

IMPORT PERMITS

Additionally, import permits must be obtained for specific consignments of
alcoholic beverages to be imported under the import license as well as under
customs quotas. See "--Customs Duties and Quotas." The Company must obtain such
permits for all its imported alcoholic beverages except for the beer and wine
brands. The application for a permit is usually made when products are ordered
and must specify the product, amount of product and source country. Permits are
issued for three months, and the Company must demonstrate to appropriate
officials that each consignment it imports is covered by a permit. Similar
permits must be obtained for the import of cigars.

APPROVAL OF HEALTH AUTHORITIES

Local health authorities at the place of import must also be notified of what
alcoholic beverages and cigars are being imported into Poland. This notification
is typically given when a particular shipment of products arrives in Poland. In
general, this notice permits the applicable health authorities to determine that
no product is entering the Polish market without having been previously approved
for sale in Poland. See "--Wholesale Activities--General Norms."

WHOLESALE ACTIVITIES

The Company must have additional permits from the Minister of Economy and
appropriate health authorities to operate its wholesale distribution business.
Furthermore, it must comply with rules of general applicability with regard to
packaging, labeling and transporting products.

GENERAL PERMITS

The Company is required to have permits for the wholesale trade of each of its
three product lines. The permit with regard to beer is issued for two years and
the current permit expires on March 28, 2001. The permit with regard to spirits
is issued for one year and the current permit expires on December 31, 2000. The
permit for wine is issued for two years and the current permit expires on March
28, 2001. One of the conditions of these permits is that the Company sells its
products only to those who have appropriate permits to resell the products. A
permit can be revoked or not renewed if the Company fails to observe laws
applicable to its business as an alcohol wholesaler, fails to follow the
requirements of a permit or if it introduces into the Polish market alcohol
products that have not been approved for trade. The Company must also obtain
separate permits for each of its warehouses.


                                                                              13
<PAGE>

HEALTH REQUIREMENTS

The Company must obtain the approval of the local health authorities to open and
operate its warehouses. This approval is the basis for obtaining the permit for
wholesale activities. The health authorities are primarily concerned with
sanitation and proper storage of alcoholic beverages, especially those which
must be refrigerated, as well as cigars. These authorities can monitor the
Company's compliance with health regulations. Similar regulations apply to the
transport of alcoholic beverages and cigars, and the drivers of such transports
must themselves submit health records to appropriate authorities.

GENERAL NORMS

The Company must comply with a set of rules, usually referred to generally as
"Polish Norms," which constitute legal regulations concerning, as applicable to
the Company, standards according to which alcoholic beverages and cigars are
packaged, stored, labeled and transported. These norms are established by the
Polish Normalization Committee, composed of specialists. In case of alcoholic
beverages, the committee is composed of academics working with relevant
government ministries and agencies as well as experienced businessmen working in
the alcoholic beverage industry. The Company received a certificate after an
inspection by the Central Standardization Institute, which is part of the
Ministry of Agriculture, indicating its compliance with applicable norms as of
the date thereof. Such certification also is needed to import alcoholic
beverages. Compliance with these norms also is confirmed by health authorities
when particular shipments of alcoholic beverages arrive in Poland. See "--Import
of Products--Approval of Health Authorities."

CUSTOMS WAREHOUSE

Since the Company operates a customs warehouse, further regulations apply, and a
permit of the President of the Main Customs Office and the approval of health
authorities are required to open and operate such a warehouse. The applicable
health concerns are the same as those discussed under "--Wholesale Activities"
with regard to non-custom warehouses. The Company received its most current
permit on December 14, 1999 from the President of the Main Customs Office, which
is for an unspecified period of time. The continued effectiveness of the permit
is conditioned on the Company's complying with the requirements of the permit
which are, in general, the proper payment of customs duties and maintenance of
an insurance policy.

CUSTOMS DUTIES AND QUOTAS

As a general rule, the import of alcoholic beverages and cigars into Poland is
subject to customs duties and the rates of the duties are set by the Polish
government acting through the Council of Ministers for particular types of
products. In the Company's case, the duties vary by its products lines.

The Counsel of Ministers is authorized, however, to establish a schedule of
quotas for alcoholic beverages and cigars for which the customs duties are
substantially reduced. For example, the basic customs duty on Stock Brandy
currently imported by the Company is $12.13 per .75 liter bottle, or 212% higher
than the $5.72 duty under the quota in 2000. The difference between the basic
custom duties and the duty under the quota on other spirit products imported by
the Company were similar to the difference on Stock Brandy. The difference
between the basic custom duties and the duty under the quota was considerably
smaller for beer and wine products subject to customs duties and imported by the
Company. The customs duty on beer imported from the European Union (e.g. Guiness
Stout) decreased from 17.5% in 1998 to 6.0% in 1999 and 2000. In the case of
beer imported from the Czech Republic (e.g. Budweiser Budvar), the average basic
duty of $2.10 per case of beer was approximately 43% higher than the duty under
the quota, and the basic customs duty of $0.15 per .75 liter bottle of wine was
100% higher than the duty under the quota.

Customs quotas for alcoholic beverages as well as for cigars are fixed annually,
with the current quotas being applicable through December 31, 2000. There are no
public guidelines on how the Minister of Economy has determined the current
quotas or may determine future quotas. If such quotas were substantially reduced
or eliminated,


                                                                              14
<PAGE>

it would likely have an adverse impact on the Company's business since the
retail price of some of its imported alcohol products would increase.

To import alcoholic beverages and cigars under the quotas, the Company must
receive a permit which is generally valid for three months and specifies what
products and what quality thereof may be imported from what country or group of
companies. It is the Company's practice to apply for this import permit after
concluding a contract for the import of a particular group of products. The
Company has always received the import permits for which it has applied,
although there can be no assurance that it will continue to do so in the future.

PRICE AND MARGIN CONTROLS

In general, Polish law does not affect either the prices charged or the margins
earned by the Company on its imported liquor products. Provisions of the tax law
provide for a general ban on importing products at "dumping prices," generally
defined as being at prices lower than for similar products in the country of
origin. Fines could be imposed for such activity. Also, the Treasury Office,
which is part of the Ministry of Finance, may order a reduction in the price of
a product it determines to be "blatantly high." This standard is deemed met if
(a) the price of a product exceeds the price of the same alcoholic beverage in
another local jurisdiction by more than 25% or of a similar alcoholic beverage
by 40% or (b) the price quoted by the seller is higher than 10% of the price
quoted to the same purchaser by another seller and the former seller cannot
justify the higher price.

ADVERTISING BAN

Pursuant to the Alcohol Awareness Law of October 26, 1982, as amended, there is
an absolute ban on direct and indirect advertising of alcoholic beverages in
Poland. The definition of "alcoholic beverage" under such law encompasses all
the Company's products. Promotions at the point of sale and game contests are
often used to limit the law's impact. The agency charged with enforcing this law
has successfully brought numerous cases in the past few years alleging indirect
advertising in the media. The Company has not been involved in any such
proceedings and seeks to comply fully with this law.

REGULATION OF RETAIL SALES

As part of the Company's business strategy, it operates retail outlets for
alcoholic beverages. Polish law will require each such outlet to have a retail
permit to sell the brands expected to be offered to the public. Typically, such
permits are valid for two years and are renewable. The local health authorities
must also approve the sale of alcoholic beverages for each location. The retail
permit for the Company's initial retail outlet in Warsaw is valid from February
25, 1998 through February 24, 2000. The Company has applied for renewal of the
retail permit. Relevant proceedings are pending. The retail permit for the
Company's outlet in Krakow is valid for 1 year and expires on December 31, 2000.

RISK FACTORS

LIMITED MANAGEMENT RESOURCES; DEPENDENCE ON KEY PERSONS

The Company is relying on a small number of key individuals to implement its
business and operations and, in particular, the services of William V. Carey,
its Chairman, President and Chief Executive Officer, Jeffrey Peterson, its Vice
Chairman and Executive Vice President, Neil Crook, its Chief Financial Officer,
and Evangelos Evangelou, its Chief Operations Officer. Accordingly, the Company
may not have sufficient managerial resources to successfully manage the
increased business activity envisioned by its business strategy, although it
continues to employ an experienced manager at its Polish subsidiary. In
addition, the Company's future success depends in large part on the continued
service of Messrs. Carey and Peterson. Mr. Carey has entered into a three-year
employment agreement with the Company which commenced on July 31, 1998 and which
may be terminated by Mr. Carey only for "good reason," which includes CEDC's
failure to perform its obligations under the agreement, or by CEDC for "cause,"
as defined, which includes Mr. Carey's willful refusal to follow written orders
or willful engagement in conduct materially injurious to the Company or
continued failure to perform his required duties. The Company has purchased a
$2.5 million key man life insurance policy on the life of Mr. Carey. Mr.
Peterson has entered into a two-year employment


                                                                              15
<PAGE>

agreement with the Company which commenced on July 31, 1998 and which may be
terminated by CEDC, with or without cause, on three months' prior written
notice. Mr. Peterson may terminate his employment agreement only for good
reason.

The management of future growth will require, among other things, continued
development of the Company's financial and management controls and management
information systems, stringent control of costs, increased marketing activities,
ability to attract and retain qualified management personnel and the training of
new personnel. The Company continues to seek additional personnel in order to
manage its growth and expansion. Failure to successfully hire needed personnel
and to manage its growth and development would have a material adverse effect on
the Company's business, results of operations and financial condition.

NON-EXCLUSIVE, SHORT-TERM SUPPLY CONTRACTS

The Company has exclusive rights to distribute in Poland certain alcoholic
beverages which during 1997, 1998 and 1999 constituted approximately $8.3
million, $10.4 million and $13.5 million, respectively, or 21%, 19%, and 15%
respectively, of its net sales. The Company distributes the remainder of the
alcoholic beverages in its portfolio on a nonexclusive basis, and, therefore,
the Company enjoys little competitive advantage with regard to the distribution
of these beverages which are already available to the Company's competitors at
prices similar to those which the Company pays. Furthermore, most of the
Company's distribution agreements have a term of approximately one year,
although many are automatically renewed unless one party gives notice of
termination. Several of such agreements, however, can be terminated by one party
without cause on relatively short notice. For example, the distribution
agreements with respect to domestic vodka (which accounted for approximately
39%, 54% and 80% of the Company's net sales in 1997, 1998 and 1999,
respectively) can be terminated on one month's notice. The agreements with units
of Diageo plc, which was formed in part in 1998 from the combination of
affiliates of the Company's suppliers United Distiller and International Drinks
and Vintners, can be terminated on 90 days' prior written notice and
constituted, on a combined basis, 25%, 15% and 10% of the Company's net sales in
1997, 1998 and 1999, respectively. The termination of such agreements could have
a material adverse effect on the business and operations of the Company.

RISKS RELATED TO GROWTH THROUGH ACQUISITIONS

The Company's growth will depend in large part on its ability to acquire
additional distributors, increase product offerings, manage expansion, control
costs in its operations and consolidate effectively any acquisition into its
existing operations and systems of management and financial controls. Unforeseen
capital and operating expenses, or other difficulties, complications and delays
frequently encountered in connection with the expansion and integration of
acquired operations could inhibit the Company's growth. The full benefits of a
significant acquisition will require the integration of operational,
administrative, finance, sales and marketing organizations, as well as the
coordination of common sales and marketing efforts and the implementation of
appropriate operational, financial and management systems and controls. This
effort will require substantial attention from the Company's senior management
team. The diversion of management attention required by an acquisition could
have an adverse effect on the net sales and operating results of the Company.
There can be no assurance that the Company will identify suitable acquisition
candidates, that acquisitions will be consummated on acceptable terms or that
the Company will be able to successfully integrate the operations of any
acquisition. In addition, there can be no assurance that any acquired businesses
will be profitable at the time of their acquisition or will achieve or maintain
profitability levels that justify the investment therein, or that the Company
will be able to realize operating and economic efficiencies following such
acquisitions.

The Company's ability to grow through the acquisition of additional companies
will also be dependent upon the availability of capital to complete such
acquisitions. The Company intends to finance acquisitions through a combination
of its available cash resources, bank borrowings and, in appropriate
circumstances, the further issuance of equity and/or debt securities. Acquiring
additional companies will have a significant effect on the Company's financial
position, and could cause substantial fluctuations in the Company's quarterly
and yearly operating results. Also, acquisitions could result in the recording
of significant goodwill and intangible assets on the Company's financial
statements, the amortization of which would reduce reported earnings in
subsequent years.



                                                                              16
<PAGE>

Under the Polish Anti-Monopoly Act, acquisitions may be blocked or have
conditions imposed upon them by the Polish Office for Protection of Competition
and Consumers (the "Anti-Monopoly Office") if the Anti-Monopoly Office
determines that the acquisition has a negative impact on the competitiveness of
the Polish market.

LIMITED RETAIL EXPERIENCE

One component of the Company's growth strategy is to expand its limited retail
market for sales of alcoholic beverages. The Company has significant retail
experience only at two locations, in Warsaw and Krakow, accordingly, is subject
to the numerous risks of expanding a new business. Such risks include, among
others, unanticipated operating problems, lack of experience and significant
competition from existing and new retailers. There can be no assurance that the
Company will be able to conduct retail operations profitably.

DEPENDENCE ON PRINCIPAL SUPPLIERS

Various companies from which the Company purchases alcoholic beverages were
combined in 1998 into a new holding company structure under the name of Diageo
plc. Purchases from such companies, on a combined basis, accounted for 29% of
the Company's net sales in 1997, 17% in 1998 and 10% in 1999. The termination of
the Company's relationship with any of these entities could have a material
adverse effect on the business and operations of the Company.

FLUCTUATIONS IN QUARTERLY OPERATING RESULTS

The Company has experienced, and expects to continue to experience, significant
fluctuations in its quarterly operating results. The Company's future operating
results are dependent upon a number of factors including, but not limited to,
the demand for its products, the timing of its sales, the length of its sales
cycle and the timing and development of any competing businesses or products and
legislation.

REGULATION OF THE COMPANY'S BUSINESS

The importation and distribution of alcoholic beverages in Poland are subject to
extensive regulation, requiring the Company to receive and renew various permits
and licenses to import, warehouse, transport and sell alcoholic beverages. These
permits and licenses often contain conditions with which the Company must comply
in order to maintain the validity of such permits and licenses. The Company
believes it is operating with all the licenses and permits material to its
business, and the Company is not subject to any proceeding calling into question
its operations in compliance with any licensing and permit requirements. The
import and sale of cigars by the Company is also subject to regulation.

There can be no assurance that the various governmental regulations applicable
to the alcoholic beverage industry will not be changed so as to impose more
stringent requirements on the Company. If the Company were to fail to be in
compliance with applicable governmental regulations or the conditions of the
licenses and permits it receives, such failure could cause the Company's
licenses and permits to be revoked and have a material adverse effect of the
Company's business, results of operations and financial condition. Further, the
applicable Polish governmental authorities, in particular the Minister of
Economy, have articulated only general standards for issuance, renewal and
termination of the licenses and permits which the Company needs to operate and,
therefore, such governmental authorities retain considerable discretionary
authority in making such decisions.

POSSIBILITY OF INCREASED GOVERNMENTAL REGULATION

The alcoholic beverage industry has become the subject of considerable societal
and political attention generally in recent years due to increasing public
concern over alcohol-related societal problems, including driving while
intoxicated, underage drinking and health consequences from the abuse of
alcohol. As an outgrowth of these concerns,


                                                                              17
<PAGE>

the possibility exists for further regulation of the alcoholic beverage industry
in Poland. If alcohol consumption in general were to come into disfavor among
consumers in Poland, the Company's business operations could be materially
adversely affected. Since the Company expects to sell cigars at its retail
stores, it will also be subject to public concern and governmental regulation
over the sale and use of tobacco products.

POSSIBLE INCREASE IN GOVERNMENTAL TAXATION

The import and sale of alcoholic beverages is a business that is highly
regulated and subject to taxation in Poland. The Company's operations may be
subject to increased taxation as compared with those of non-alcohol related
businesses. In such case, the Company may have to raise prices on its products
to maintain its profit margins. The effect on the Company's business operations
of such an increase will depend on the amount of any such increase, general
economic conditions and other factors, but could negatively impact sales of the
products the Company distributes. The anticipated import and sale of cigars by
the Company will also be subject to regulation and taxation.

CUSTOMS DUTIES AND QUOTAS

As a general rule, the import of alcoholic beverages into Poland is subject to
customs duties and the rates of the duties are set for particular types of
products. The Minister of Economy is authorized to establish a schedule of
quotas for alcoholic beverages for which the customs duties are substantially
reduced. Customs quotas for alcoholic beverages are fixed annually, with the
current quotas being applicable through December 31, 2000. There are no public
guidelines on how the Minister of Economy has determined the current quotas or
may determine future quotas. If such quotas were substantially reduced or
eliminated, it would likely have an adverse impact on the Company's business
operations since the retail price of its imported alcoholic beverages would
likely increase.

COMPETITION LAW

Competition in Poland is governed by the Anti-Monopoly Act, which established
the Anti-Monopoly Office to regulate monopolistic and other anti-competitive
practices. The current body of Polish anti-monopoly law is not well-established.
As a general rule, companies that obtain control of 40% or more of their market
may face greater scrutiny from the Anti-Monopoly Office than those that control
a lesser share. Additionally, several types of reorganizations, mergers and
acquisitions and undertakings between business entities, including acquisitions
of stock, under circumstances specified in the Anti-Monopoly Act, require prior
notification to the Anti-Monopoly Office. Sanctions for failure to notify
include fines imposed on parties to the transaction and members of their
governing bodies. Pursuant to the current interpretation of the Anti-Monopoly
Office, transactions between non-Polish parties affecting market conditions in
Poland may also require a notification to the Anti-Monopoly Office. The Law on
Public Trading in Securities, which came into force on January 4, 1998, provides
for an amendment to the Anti-Monopoly Act to repeal the exemption from
notification of transactions made on a stock exchange, but such law does not
stipulate whether this is applicable to stock exchanges outside Poland or only
those within Poland. There can be no assurance that the Anti-Monopoly Office
will approve any future acquisition by the Company.

POLITICAL AND ECONOMIC ENVIRONMENT; ENFORCEMENT OF FOREIGN JUDGMENTS

Poland has undergone significant political and economic change since 1989.
Political, economic, social and other developments in Poland could in the future
have a material adverse effect on the Company's business and operations. In
particular, changes in laws or regulations (or in the interpretations of
existing laws or regulations), whether caused by changes in the government of
Poland or otherwise, could materially adversely affect the Company's business
and operations. Currently there are no limitations on the repatriation of
profits from Poland, but there can be no assurance that foreign exchange control
restrictions, taxes or limitations will not be imposed or increased in the
future with regard to repatriation of earnings and investments from Poland. If
such exchange control restrictions, taxes or limitations are imposed, the
ability of CEDC to receive dividends or other payments from Carey Agri, MTC and
PWW could be reduced, which may have a material adverse effect on the Company.

Poland is generally considered by international investors to be an emerging
market. There can be no assurance that political, economic, social and other
developments in other emerging markets will not have an adverse effect on the
market value and liquidity of the Common Stock. In general, investing in the
securities of issuers with substantial


                                                                              18
<PAGE>

operations in markets such as Poland involves a higher degree of risk than
investing in the securities of issuers with substantial operations in the United
States and other similar jurisdictions.

CEDC is organized under the laws of the State of Delaware. Company stockholders
are able to effect service of process in the United States upon CEDC and may be
able to effect service of process upon its directors, due to the fact that CEDC
is primarily a holding company which holds all of the outstanding securities of
Carey Agri, MTC and PWW substantially all of the assets of the Company are
located outside the United States. As a result, it may not be possible for
investors to enforce against the Company's assets judgments of United States
courts predicated upon the civil liability provisions of United States laws.
CEDC has been advised by its counsel that there is doubt as to the
enforceability in Poland, in original actions or in actions for enforcement of
judgments of U.S. courts, of civil liabilities predicated solely upon the laws
of the United States. In addition, awards of punitive damages in actions brought
in the United States or elsewhere may not be enforceable in Poland.

INFLATION; CURRENCY RISK

Since the fall of Communist rule in 1989, Poland has experienced high levels of
inflation and significant fluctuations in the exchange rate for the zloty. The
Polish government has adopted policies that slowed the annual rate of inflation
from approximately 250% in 1990 to approximately 15% in 1997 and to
approximately 9.8% in 1999. In addition, while the exchange rate for the zloty
per U.S. Dollar stabilized prior to 1999, it fluctuated significantly in 1999.
Inflation and currency exchange fluctuations have had, and may continue to have,
an adverse effect on the financial condition and results of operations of the
Company.

Certain of the Company's operating expenses and capital expenditures are, and
are expected to continue to be, denominated in or indexed to U.S. Dollars or
other hard currencies. By contrast, substantially all of the Company's revenue
is denominated in zloty. Any devaluation of the zloty against the U.S. Dollar
that the Company is unable to offset through price adjustments will require the
Company to use a larger portion of its revenue to service its U.S.
Dollar-denominated obligations. While the Company may consider entering into
transactions to hedge the risk of exchange rate fluctuations, it is unlikely
that the Company will be able to obtain hedging arrangements on commercially
satisfactory terms. Accordingly, shifts in currency exchange rates may have an
adverse effect on the ability of the Company to service its U.S. Dollar
denominated obligations and, thus, on the Company's financial condition and
results of operations.


                                                                              19
<PAGE>

EXCHANGE RATE

The following table sets forth, for the periods indicated, the noon exchange
rate (expressed in current zloty) quoted by the National Bank of Poland. Such
rates are set forth as zloty per U.S. Dollar. At March 24, 2000, such rate was
PLN 4.05= $1.00.

                                                         YEAR ENDED DECEMBER 31,
                                                         -----------------------
                                                          1997     1998    1999
                                                          ----     ----    ----
     Exchange rate at end of period .................     3.53     3.50     4.15
     Average exchange rate during period (1) ........     3.28     3.50     3.97
     Highest exchange rate during period ............     3.56     3.81     4.35
     Lowest exchange rate during period .............     2.86     3.41     3.41
     ----------
     (1) The average of the exchange rates on the last day of each month during
         the applicable period.

ITEM 2.  PROPERTIES

CUSTOMS AND CONSOLIDATION WAREHOUSE

The Customs and Consolidation Warehouse is a 2,815 square meter leased facility
located near Warsaw. The lease is long term and the monthly rental, denominated
in Polish currency, was approximately $10,670 per month as of December 31, 1999.

SALES OFFICES AND WAREHOUSES

The Company also has entered into leases for its Warsaw headquarters and each of
its regional sales offices and warehouses. The amount of office and warehouse
space leased varies between 536 square meters in Gdynia up to 1,090 square
meters in Krakow. The monthly lease payments, which are denominated in Polish
currency, vary between approximately $2,000 and $4,000 at the regional offices
and is $11,670 per month in Warsaw. The Warsaw lease can be terminated on six
months prior notice; five of the other leases can be terminated by either party
on three months prior notice; one can be terminated by either party on two
months prior notice.

Office and warehouse areas are leased in Bialystok for MTC operations. Monthly
rent is approximately $17,000. The rental increase is indexed every year using
inflation ratio calculated by the Polish Government. The lease expiration date
is March 12, 2002, at which time the lease may be renegotiated.

RETAIL OUTLETS

The Company has entered into a lease dated August 21, 1997 for its Warsaw retail
outlet. The lease is for an indefinite term and can be terminated by either
party on three months prior notice. The lessor, however, has waived its right to
terminate the agreement for three years as long as the lessee is performing its
obligations thereunder. Lease payments are currently $2,000 per month. The
Company leased its Krakow outlet in November 1999 and pays approximately $1,500
on monthly basis.

ITEM 3. LEGAL PROCEEDINGS

The Company is involved in litigation from time to time in the ordinary course
of business. In management's opinion, such litigation, individually and in the
aggregate, is not material to the Company's financial condition or results of
operations.



                                                                              20
<PAGE>

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

No matters were submitted to a vote of security holders during the fourth
quarter of the fiscal year ended December 31, 1999.

PART II

ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS

MARKET INFORMATION

The Company's common stock, $0.01 per share ("Common Stock") has been traded on
the Nasdaq National Market (the "National Market") under the symbol "CEDC" since
August 1999. Prior thereto it traded on the Nasdaq SmallCap Market since its
initial public offering in July 1998. Before such time, there was no established
public trading market for the Common Stock. The following table sets forth the
high and low sales prices for the Common Stock, as reported on the Smallcap and
National Markets for each of the Company's fiscal quarters since trading
commenced through December 31, 1999.

                                     HIGH               LOW
                                     ----               ---
Quarter Ended 9/30/98                7.000             4.375

Quarter Ended 12/31/98               6.125             3.375

Quarter Ended 3/30/99                8.250             5.500

Quarter Ended 6/30/99                8.875             5.875

Quarter Ended 9/30/99                9.063             5.500

Quarter Ended 12/31/99               6.500             3.625


On March 20, 2000, the last reported sales price of the Common Stock was $5.00
per share.

HOLDERS

As of March 5, 2000 there were 478 record holders of the Common Stock.

DIVIDENDS

Neither CEDC nor any of its subsidiaries has ever declared or paid any dividends
on its capital stock. These companies do not anticipate paying dividends in the
forseeable future. Future dividends, if any, will be subject to CEDC's board of
directors and will depend upon, among other things, the results of CEDC's
operations, CEDC's capital requirements, surplus, general financial condition
and contractual restrictions and such other factors as the board of directors
may deem relevant.

In addition, CEDC is a holding company with no business operations of its own.
Therefore, the ability of CEDC to pay dividends will be dependent upon either
cash flows and earnings of Carey Agri, MTC and PWW or the payment of funds by
its subsidiaries to CEDC. As Polish limited liability companies, Carey Agri, MTC
and PWW are permitted to declare dividends only once a year from its retained
earnings, computed under Polish Accounting Regulations after the audited
financial statements for that year have been provided to and approved by
shareholders and filed with a court.


                                                                              21
<PAGE>

At December 31, 1999, the combined retained earnings of Carey Agri, MTC and PWW
were approximately $4.0 million. The Company presently intends that such funds
will be permanently reinvested in Poland and will, accordingly, not be available
to pay dividends to CEDC. Consequently at such date, no earnings were available
to pay dividends to CEDC.

ITEM 6. SELECTED FINANCIAL DATA

The following table sets forth selected consolidated financial data for the
periods indicated and should be read in conjunction with and is qualified by
reference to "Management's Discussion and Analysis of Financial Condition and
Results of Operations," the consolidated financial statements, the notes thereto
and the other financial data contained in Items 7 and 8 of this report on Form
10-K.

<TABLE>
<CAPTION>
                                                                             YEAR ENDED DECEMBER 31,
                                                       --------------------------------------------------------------------
                                                         1995           1996           1997           1998           1999
                                                       --------       --------       --------       --------       --------
                                                                   (in thousands, except for per share amounts)
<S>                                                    <C>            <C>            <C>            <C>            <C>
INCOME STATEMENT DATA:

Net sales .......................................      $ 16,017       $ 23,942       $ 40,189       $ 54,011       $ 90,240
Cost of goods sold ..............................        13,113         19,850         34,859         45,864         77,471
                                                       --------       --------       --------       --------       --------

Gross profit ....................................         2,904          4,092          5,330          8,147         12,769
Sales, general and administrative
     expenses ...................................         2,603          3,569          4,198          5,790          9,537
                                                       --------       --------       --------       --------       --------

Operating income ................................           301            523          1,132          2,357          3,232
Non-Operating income (expense)
    Interest expense ............................          (106)          (124)          (200)          (192)          (374)
    Interest income .............................            --             --             28            170            378
    Realized and unrealized foreign currency
     transaction  losses, net ...................           (84)          (232)          (326)            (5)          (215)
    Other income (expense), net .................            84              6             15             (1)           (13)
                                                       --------       --------       --------       --------       --------

Income before income taxes ......................           195            173            649          2,329          3,008
Income (taxes) credit ...........................          (120)          (111)          (341)          (861)        (1,106)
                                                       --------       --------       --------       --------       --------

Net income ......................................      $     75       $     62       $    308       $  1,468       $  1,902
                                                       ========       ========       ========       ========       ========

Net income per common share,
     basic and dilutive (1) .....................      $   0.04       $   0.03       $   0.17       $   0.56       $   0.47
                        ==                             ========       ========       ========       ========       ========

Average number of outstanding shares of
     common stock (1) ...........................         1,780          1,780          1,780          2,635          4,050


                                                                                   DECEMBER 31,
                                                       --------------------------------------------------------------------
                                                         1995           1996           1997           1998           1999
                                                       --------       --------       --------       --------       --------
                                                                                  (in thousands)
BALANCE SHEET DATA:

Cash and cash equivalents .......................      $    595       $    740       $  1,053       $  3,628       $  3,115
Working capital (deficit) .......................            27           (117)          (508)        10,922          9,608
Total assets ....................................         3,264          7,335         12,530         21,926         38,966
Long-term debt and capital lease obligations,
    less current portion ........................           180            303             47             --          3,622
Stockholders' equity (deficit) ..................           (36)            26            334         12,327         14,613
</TABLE>

(1)   Gives effect to the 1,780,000 shares of Common Stock issued in the
      reorganization and 2,000,000 shares issued in the July 1998 initial public
      offering.



                                                                              22
<PAGE>

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATION

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

OVERVIEW

The Company's operating results are generally determined by the volume of
alcoholic beverages that can be sold by the Company through its national
distribution system, the gross profits on such sales and control of costs. The
Company purchases the alcoholic beverages it distributes from producers as well
as other importers and wholesalers. Normally purchases are made with the sellers
providing a period of time, generally between 25 and 90 days, before the
purchase price is to be paid by the Company. Since the Company's initial public
offering in July 1998, however, the Company pays for a significant portion of
its domestic vodka purchases using cash on delivery terms in order to receive
additional discounts. The Company sells the alcoholic beverages with a mark-up
over its purchase price, which mark up reflects the market price for such
individual product brands in the Polish market. Additional margins are avaialble
for premium imported brands. The Company's bad debt provision as a percentage of
net sales was 0.12% in 1997, 0.17% in 1998 and 0.28% in 1999.

The following comments regarding variations in operating results should be read
considering the rates of inflation in Poland during the period -- 1997, 14.9%
1998, 8.5% and 1999, 9.8%-- as well as the fluctuations of the Polish zloty
compared to the U.S. Dollar. The zloty in comparison to the U.S. Dollar
apprciated 0.3% in 1998 and depreciated 18.6% in 1999.

RESULTS OF OPERATIONS

YEAR ENDED DECEMBER 31, 1999 COMPARED TO YEAR ENDED DECEMBER 31, 1998

Net sales increased $36.2 million, or 67% from $54.01 million in 1998 to $90.2
million in 1999. This increase is mainly due to increased sales of domestic
vodka due to acquistion of MTC and increased market penetration by the existing
distribution system and the acquisition of PWW.

Cost of goods sold increased $31.7 million, or 69%, from $45.9 million in 1998
to $77.5 million in 1999. As a percentage of net sales, cost of goods sold
increased from 84.9% to 85.8%. This increase is mainly due to increases in the
sales of domestic vodka in the second half of the year, which sells at a lower
gross margin than imported alcohol products.

Sales, general and administrative expenses increased $3.7 million or 65% from
$5.79 million in 1998 to $9.5 million in 1999. This increase is mainly due to
the expansion of sales noted above and additional expenses in connection with
running a public company. As a percentage of net sales, sales, general and
administrative expenses decreased slightly from 10.7% to 10.6%.

Interest expense increased $.18 million or 94% from $0.19 million in 1998 to
$0.37 million in 1999. This increase is mainly due to additional borrowing
required for financing the acquisitions neccessary to support the increase in
demand. As a percentage of net sales, interest expense was 0.4% in 1998 and in
1999.

In 1999, interest income was   $378,000 compared to $170,000 in 1998.

Net realized and unrealized foreign currency transactions resulted in losses of
$5,000 in 1998 and $0.2 million in 1999. This was due to a 18.6% devaluation of
the Polish zloty in 1999 compared to an increase of 0.3% in 1998. In addition,


                                                                              23
<PAGE>

the Company no longer considered Poland to be a hyperinflationary country since
January 1, 1998 and made the Polish zloty the functional currency for Carey
Agri's operations. Therefore, translation losses are now accounted for in
equity, in the determination of comprehensive income, rather than in the income
statement. Such translation losses were $110,000 in 1998 and $1.9 million in
1999.

Income tax expense increased $0.24 million from $0.86 million in 1998 to $1.11
million in 1999. This increase is mainly due to the increase in income before
income taxes from $2.33 million to $3.0 million.

The effective tax rate was 37.0% in 1998 and in 1999. An increase in the
deferred tax asset valuation allowance and the effect on the deferred tax asset
of the reduced Polish income tax rates in years after 1999 caused the effective
tax rate for 1999 to be the same as 1998 despite the decrease in the statutory
tax rate in Poland from 36% in 1998 to 34% in 1999. The Company believes its US
deferred tax asset of $123,000 will be recovered by virtue of interest and other
income received from loans and other services provided to its subsidiaries. The
aggregate deferred tax asset of the Polish subsidiaries of $178,000 should be
recovered from future operating profits. See notes to the consolidated financial
statements for further information on income taxes.

Net income increased $434,000 from $1.468 million in 1998 to $1.902 million in
1999. This increase is due to the factors noted above.

YEAR ENDED DECEMBER 31, 1998 COMPARED TO YEAR ENDED DECEMBER 31, 1997

Net sales increased $13.82 million, or 34.4% from $40.19 million in 1997 to
$54.01 million in 1998. This increase is mainly due to increased sales of
domestic vodka and increased market penetration by the existing distribution
system.

Cost of goods sold increased $11.01 million, or 31.6%, from $34.86 million in
1997 to $45.86 million in 1998. As a percentage of net sales, cost of goods sold
decreased from 86.7% to 84.9%. This decrease is mainly due to increases in the
selling price for domestic vodka in the first half of the year, increased
discounts on domestic vodka due to higher purchases and, in the second half of
1998, paying for the purchases more quickly. These items offset the higher
portion of vodka sales which sells at a lower gross margin than imported alcohol
products.

Sales, general and administrative expenses increased $1.59 million or 37.9% from
$4.20 million in 1997 to $5.79 million in 1998. This increase is mainly due to
the expansion of sales noted above and additional expenses in connection with
running a public company. As a percentage of net sales, sales, general and
administrative expenses increased slightly from 10.4% to 10.7%.

Interest expense decreased $8,000 or 4% from $200,000 in 1997 to $192,000 in
1998. In the second half of the year all outstanding debt was retired using the
proceeds from the initial public offering. As a percentage of net sales,
interest expense was 0.4% in 1997 and 1998.

In 1998, interest income was $170,000 which resulted from earnings on the funds
raised from the public offering.

Net realized and unrealized foreign currency transactions resulted in losses of
$326,000 in 1997 and $5,000 in 1998. Lower foreign currency losses in 1998 are
due to paying foreign suppliers more quickly and to the relative stability of
the zloty in 1998, versus the U.S. dollar. In addition, the Company no longer
considered Poland to be a hyperinflationary country since January 1, 1998 and
made the Polish zloty the functional currency for the operations of all its
subsidiaries. Therefore, translation losses are now accounted for in equity, in
the determination of comprehensive income, rather than in the income statement.
Such translation losses were $110,000 in 1998.

Income tax expense increased $520,000, from $341,000 in 1997 to $861,000 in
1998. This increase is mainly due to the increase in income before income taxes
from $649,000 to $2,329,000.

The effective tax rate decreased from 52.5% in 1997 to 37.0% in 1998. Permanent
differences (for items such as non-deductible interest, taxes, and depreciation)
between financial and taxable income normally make up a considerably lower
percentage of income before income taxes when income before income taxes is
higher, as it was in 1998. For


                                                                              24
<PAGE>

this reason, as well as the decrease in the statutory tax rate in Poland from
38% in 1997 to 36% in 1998, the effective tax rate was significantly lower in
1998. The Company believes its US deferred tax asset of $62,000 will be
recovered by virtue of interest and other income received from loans and other
services provided to its subsidiaries. Carey Agri's Polish deferred tax asset of
$77,000 should be recovered from future operating profits. See notes to the
consolidated financial statements for further information on income taxes.

Net income increased $1,160,000 from $308,000 in 1997 to $1,468,000 in 1998.
This increase is due to the factors noted above.

STATEMENT OF LIQUIDITY AND CAPITAL RESOURCES

The Company's net cash balance decreased by $0.5 million in 1999 compared to an
increase of $2.6 million in 1998. The decrease was a result of cash used for
acquisitions and increased working capital in excess of cash provided from
borrowings.

Net cash used in operating activities decreased by $2.6 million to a negative
$3.3 million in 1999 compared to a negative $5.9 million in 1998. The movement
is due to higher working capital required to finance the strong sales growth,
the acquisitions in 1999 and to make increased COD payments for domestic vodka.

Investing activities amounted to $5.7 million in 1999 and are in most part
related to the acquisitions as well as a substantial increase in vehicle
purchases as leases expired. During the 1998 period the investing activities
amounted to $1.0 million of which the largest part was the purchase of delivery
vehicles.

Financing activities in 1999 resulted in an increase of $8.6 million due to EURO
and U.S. dollar denominated loans. The net change of the overdraft facility and
short term borrowings was an increase of borrowings of $2.2 million.

The Company began 1999 debt free and in the year incurred short term debt of
$2.2 million and long term debt of $6.4 million to facilitate the acquisitions
of MTC, PWW and increased working capital.

The amount of the Company's stockholders' equity is directly affected by foreign
currency translation adjustments. For the year 1999 such adjustments resulted in
a comprehensive loss of $1.9 million and a decrease in stockholders' equity of a
like amount.

STATEMENT ON INFLATION AND CURRENCY FLUCTUATIONS

Inflation in Poland was 9.8% for the whole of 1999, slightly higher than the
8.5% in 1998 but substancially lower than previous years.

The percentage of aggregated purchases denominated in foreign currencies has
decreased, lowering foreign exchange exposure. However, the level of borrowing
denominated in U.S. Dollar's and Euro's has increased due to the funding of the
acquisitions. In 1999, the zloty depreciated 18.6% versus the U.S.Dollar and
depreciated 18.7% versus the Euro.


                                                                              25
<PAGE>

SEASONALITY

The Company's sales have been historically seasonable with over 35% of the sales
in 1998 occurring in the fourth quarter. During 1999 sales in the fourth quarter
decreased to 30%. This decrease was a result of the increases of sales of
domestic vodka which has a flatter sales pattern than the imported products
which typically increase substantially during the holiday periods in the fourth
quarter.

The Company's working capital requirements are also seasonal, and are normally
highest in the months of December and January. Liquidity then normally improves
as collections are made on the higher sales during the months of November and
December.

OTHER MATTERS

The Company continues to be involved in litigation from time to time in the
ordinary course of business. In management's opinion, the litigation in which
the Company is currently involved, individually and in the aggregate, is not
material to the Company's financial condition or results of operations.

During March of 1999 the Company finalized its acquisition of Multi Trade
Company paying approximately $2.9 million in cash and 254,230 shares of
restricted stock. The acquisition did not have a material effect for the first
quarter of 1999 although it has effected the rest of the year.

In May the Company finalized the acquisition of The Cellars of Fine Wines paying
approximately $1.8 million and 100,000 shares of restricted stock. This
acquisition had a minor effect on the second quarter though it added marginally
to the third and fourth quarters.

In December 1999 the Company signed a letter of intent to acquire 100% of Jama
Sp. z.o.o. a distributor in south-west Poland with a 1999 turnover of
approximately $40 million (unaudited). The purchase price is approximately $5.0
million and is a combination of cash and CEDC stock. Closing is expected to
occur in the first half of 2000.

In March 2000 the Company contracted to purchase 14,750 meters (147,500 square
feet) of modern high volume warehouse facility along with 1,800 meters (18,000
square feet) of class 'A' office accommodation. This is to enable CEDC to
increase performance both from improved productivity of inventory handling and
by attracting / retaining exclusive distribution rights on more premium brands.

IMPACT OF YEAR 2000

In prior years, the Company discussed the nature and progress of its plans to
become Year 2000 ready. In late 1999, the Company completed its remediation and
testing of systems. As a result of those planning and implementation efforts,
the Company experienced no significant disruptions in mission critical
information technology and non-information technology systems and believe those
systems successfully responded to the Year 2000 date change. The Company did not
incur any significant costs during 1999 with remediating its systems. The
Company is not aware of any material problems resulting from Year 2000 issues,
either with its products, its internal systems, or the products and services of
third parties The Company will continue to monitor its mission critical computer
applications and those of its suppliers and vendors throughout the year 2000 to
ensure that any latent Year 2000 matters that may arise are addressed promptly.

ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

The Company's operations are conducted primarily in Poland and the functional
currency of Carey Agri, MTC and PWW is the Polish zloty and the reporting
currency is the U.S. dollar. The Company's financial instrument consist mainly
of cash and cash equivalents, accounts receivable, accounts payable, bank loans,
overdraft facilities and long-term debt. Substantially all of the monetary
assets represented by these financial instruments are located in Poland;
consequently, they are subject to currency translation risk when reporting in
U.S. dollars. Accounts payable for imported beverages are billed in various
currencies and the Company is subject to short-term swings in the currency
markets for product purchases. However, trade payables are settled relatively
quickly so as to minimize this risk. Bank borrowings are sensitive to interest
and foreign currency market risks as they usually bear interest at variable
rates and are in more than one currency. The Company has not attempted any
serious hedging programs prior to the end of 1999. However, in year 2000 it
plans to increase management of its currency risk through the use of forward
contracts. There were no such contracts outstanding at either December 31, 1998
or 1999.

The Company's sensitivity to interest rates and foreign currency movements at
December 31, 1999 is shown below for its bank financial instruments:

                                                 YEAR OF MATURITY
                                        2000           2001             TOTAL
                                                (THOUSANDS OF USD)

Short-term borrowings

Bank overdrafts payable in Polish        171            --                171
zloty (interest varies with WIBOR,
14.5% at year end)

Bank loans payble in EURO,              1994            --               1994
interest varies with EURLIBOR
(average rate at year end 5.2%)

Long-terms loans                        1765           1735              3500
Expected to be payable in Swiss
Francs, interest varies with LIBOR
(4.10% at year end)

USD loan, interest varies with          1000            500              1500
USD LIBOR (7.47% at year end)

EURO loan interest varies with           --            1387              1387
EURLIBOR (4.48% at year end)

Currency rates per USD at year end
   Polish Zloty                         4.15
   Swiss Franc                           .62
   EURO                                 1.01


                                                                              26
<PAGE>

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS:

     Report of Independent Auditors

     Consolidated Balance Sheets at December 31, 1998 and 1999

     Consolidated Statements of Income for the years ended December 31, 1997,
       1998 and 1999

     Consolidated Statements of Changes in Stockholders' Equity for the years
       ended December 31, 1997, 1998 and 1999

     Consolidated Statements of Cash Flows for the years ended December 31,
       1997, 1998 and 1999



                                                                              27
<PAGE>

                         REPORT OF INDEPENDENT AUDITORS


The Board of Directors and Stockholders
Central European Distribution Corporation

We have audited the accompanying consolidated balance sheets of Central European
Distribution Corporation as of December 31, 1999 and 1998 and the related
consolidated statements of income, changes in stockholders' equity, and cash
flows for each of the three years in the period ended December 31, 1999. These
financial statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.

We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in
all material respects, the consolidated financial position of Central European
Distribution Corporation at December 31, 1999 and 1998, and the consolidated
results of its operations and its cash flows for each of the three years in the
period ended December 31, 1999 in conformity with accounting principles
generally accepted in the United States of America.


ERNST & YOUNG
AUDIT Sp. zo.o.


Warsaw, Poland
March 13, 2000



                                                                              28
<PAGE>


                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                           CONSOLIDATED BALANCE SHEETS
                    AMOUNTS IN COLUMNS EXPRESSED IN THOUSANDS

<TABLE>
<CAPTION>
                                                                            DECEMBER 31,
                                                                       -----------------------
                                                                         1998           1999
                                                                       --------       --------
<S>                                                                    <C>            <C>
                              ASSETS
CURRENT ASSETS
Cash and cash equivalents                                              $  3,628       $  3,115
Accounts receivable, net of allowance for doubtful accounts of
  $181,000 and $343,000, respectively                                    11,514         17,299
Inventories                                                               4,837          7,610
Prepaid expenses and other current assets                                   423          2,208
Deferred income taxes                                                       119            107
                                                                       --------       --------
TOTAL CURRENT ASSETS                                                     20,521         30,339

Intangible assets, net                                                       --          6,676
Equipment, net                                                            1,345          1,618
Deferred income taxes                                                        20            194
Other assets                                                                 40            139
                                                                       --------       --------
TOTAL ASSETS                                                             21,926         38,966
                                                                       ========       ========

LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Trade accounts payable                                                 $  8,149       $ 14,629
Bank loans and overdraft facilities                                          --          2,165
Income taxes payable                                                        217            134
Taxes other than income taxes                                             1,035            481
Other accrued liabilities                                                   198            557
Current portion of long-term debt                                            --          2,765
                                                                       --------       --------
TOTAL CURRENT LIABILITIES                                                 9,599         20,731

Long-term debt, less current maturities                                      --          3,622

STOCKHOLDERS' EQUITY
Preferred Stock ($0.01 par value, 1,000,000 shares authorized;
  no shares issued and outstanding)                                          --             --
Common Stock ($0.01 par value, 20,000,000 shares authorized,
  3,780,000 and 4,134,230 shares issued and outstanding at
  December 31, 1998 and 1999, respectively)                                  38             42
Additional paid-in-capital                                               10,651         12,900
Retained earnings                                                         1,748          3,650
Accumulated other comprehensive loss                                       (110)        (1,979)
                                                                       --------       --------
TOTAL STOCKHOLDERS' EQUITY                                               12,327         14,613
                                                                       --------       --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                             $ 21,926       $ 38,966
                                                                       ========       ========
</TABLE>


See accompanying notes.


                                                                              29
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                        CONSOLIDATED STATEMENTS OF INCOME
                    Amounts in columns expressed in thousands
                             (except per share data)


<TABLE>
<CAPTION>
                                                            YEAR ENDED DECEMBER 31,
                                                     --------------------------------------
                                                       1997           1998           1999
                                                     --------       --------       --------
<S>                                                  <C>            <C>            <C>
Net sales                                            $ 40,189       $ 54,011       $ 90,240
Cost of goods sold                                     34,859         45,864         77,471
                                                     --------       --------       --------

Gross profit                                            5,330          8,147         12,769
Sales, general and administrative expenses              4,150          5,696          9,283
Bad debt expense                                           48             94            254
                                                     --------       --------       --------

Operating income                                        1,132          2,357          3,232
Non-operating income (expense)
       Interest expense                                  (200)          (192)          (374)
       Interest income                                     28            170            378
       Realized and unrealized foreign currency
       transaction losses, net                           (326)            (5)          (215)
       Other income (expense), net                         15             (1)           (13)
                                                     --------       --------       --------

Income before income taxes                                649          2,329          3,008
Income tax expense                                        341            861          1,106
                                                     --------       --------       --------

Net income                                           $    308       $  1,468       $  1,902
                                                     ========       ========       ========

Net income per common share, basic and dilutive      $   0.17       $   0.56       $   0.47
                                                     ========       ========       ========
</TABLE>


See accompanying notes.


                                                                              30
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                    Amounts in columns expressed in thousands

<TABLE>
<CAPTION>
                                                                            RETAINED     ACCUMULATED
                                      COMMON STOCK           ADDITIONAL     EARNINGS        OTHER
                               -------------------------       PAID-IN-  (ACCUMULATED   COMPREHENSIVE
                                NO. OF SHARES    AMOUNT        CAPITAL      DEFICIT)         LOSS           TOTAL
                                -------------   --------      --------      --------       --------       --------
<S>                                  <C>        <C>           <C>           <C>            <C>            <C>
Balance at December 31, 1996         1,780      $     18      $     36      $    (28)      $     --       $     26
Net income and
  comprehensive income
  for 1997                              --            --            --           308             --            308
                                  --------      --------      --------      --------       --------       --------
Balance at December 31, 1997         1,780            18            36           280             --            334
Net income for 1998                     --            --            --         1,468             --          1,468
Foreign currency
  translation adjustment                --            --            --            --           (110)          (110)
                                  --------      --------      --------      --------       --------       --------
Comprehensive income
  for 1998                              --            --            --         1,468           (110)         1,358
Common stock issued in
  connection with initial
  public offering                    2,000            20        10,615            --             --         10,635
                                  --------      --------      --------      --------       --------       --------
Balance at December 31, 1998         3,780      $     38      $ 10,651      $  1,748       $   (110)      $ 12,327
Net income for 1999                     --            --            --         1,902             --          1,902
Foreign currency
  translation adjustment                --            --            --            --         (1,869)        (1,869)
                                  --------      --------      --------      --------       --------       --------
Comprehensive income
  for 1999                              --            --            --         1,902         (1,869)            33
Common stock issued in
  connection with
  acqusitions                          354             4         2,249            --             --          2,253
                                  --------      --------      --------      --------       --------       --------
Balance at December 31, 1999         4,134      $     42      $ 12,900      $  3,650       $ (1,979)      $ 14,613
                                  ========      ========      ========      ========       ========       ========

------------------------------------------------------------------------------------------------------------------
</TABLE>

See accompanying notes.


                                                                              31
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                    Amounts in columns expressed in thousands

<TABLE>
<CAPTION>
                                                                   YEAR ENDED DECEMBER 31,
                                                           --------------------------------------
                                                             1997           1998           1999
                                                           --------       --------       --------
<S>                                                        <C>            <C>            <C>
OPERATING ACTIVITIES
Net income                                                 $    308       $  1,468       $  1,902
Adjustments to reconcile net income to net cash
  provided by (used in) operating activities:
      Depreciation and amortization                             168            199            446
      Deferred income tax benefit                                (1)           (28)          (162)
      Gain on the disposal of equipment                          (3)           (42)            --
      Bad debt provision                                         48             94            254
      Changes in operating assets and liabilities:
           Accounts receivable                               (2,807)        (4,638)        (1,517)
           Inventories                                       (1,620)        (1,557)          (354)
           Prepayments and other current assets                 (63)          (188)        (1,737)
           Trade accounts payable                             4,650         (1,641)           893
           Income and other taxes                                73            453           (799)
           Other accrued liabilities and other                   --            (44)        (2,228)
                                                           --------       --------       --------

Net Cash Provided By (Used In) Operating Activities             753         (5,924)        (3,331)

INVESTING ACTIVITIES
Purchases of equipment                                         (240)        (1,052)        (1,113)
Proceeds from the disposal of equipment                          60             53            137
Purchases of marketable securities                               --         (7,842)            --
Proceeds from sale of marketable securities                      --          7,842             --
Acquisitions of subsidiaries (net)                               --            (40)        (4,758)
                                                           --------       --------       --------

Net Cash (Used In) Investing Activities                        (180)        (1,039)        (5,734)

FINANCING ACTIVITIES
Borrowings on overdraft facility                             12,892         24,575          8,120
Payment of overdraft facility                               (12,608)       (24,875)        (7,949)
Payment of capital lease obligations                           (183)          (113)            --
Short-term borrowings                                           600            725          1,994
Payment of short-term borrowings                               (815)        (1,350)            --
Long-term borrowings                                             87            139          6,387
Payment of long-term borrowings                                  (9)          (422)            --
Costs paid in 1997 in connection with public offering          (224)            --             --
Net proceeds form initial public offering                        --         10,859             --
                                                           --------       --------       --------
Net Cash Provided By (Used In) Financing Activities            (260)         9,538          8,552
                                                           --------       --------       --------
Net Increase (Decrease) in Cash                                 313          2,575           (513)
Cash and cash equivalents at beginning of period                740          1,053          3,628

                                                           ========       ========       ========
Cash and cash equivalents at end of period                 $  1,053       $  3,628          3,115
                                                           ========       ========       ========

SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES
Common stock issued in connection with
  investment in subsidiaries                               $     --       $     --       $  2,253
                                                           ========       ========       ========
</TABLE>

See accompanying notes.


                                                                              32
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Central European Distribution Corporation (CEDC) was organized as a Delaware
Corporation in September 1997 to operate as a holding company through its then
sole subsidiary, Carey Agri International Poland Sp. z o.o. (Carey Agri). CEDC,
Carey Agri and the other subsidaries referred to later in this note are referred
to herein as the Company.

CEDC's authorized capital stock consists of 20.0 million shares of common stock,
$0.01 par value, and 1.0 million shares of preferred stock, $0.01 par value. No
shares of preferred stock have been issued and its terms and conditions will be
established by the Board of Directors at a later date.

In November 1997, CEDC issued 1,780,000 shares of its common stock to the former
stockholders of Carey Agri in exchange for all the issued and outstanding shares
of Carey Agri. This reorganization resulted in no changes in relative equity
interests among the stockholders and no adjustments of the underlying net assets
of Carey Agri. The new capital structure has been reported in a manner
comparable to a pooling of interests in the accompanying consolidated financial
statements. All share and per share data have been presented in accordance with
the new capital structure.

In July 1998, CEDC had an initial public offering of 2,000,000 shares (at $6.50
per share) receiving net proceeds of approximately $10.6 million. The shares are
currently quoted on the Nasdaq National Market.

Carey Agri is a Polish limited liability company with headquarters in Warsaw,
Poland. Carey Agri distributes alcoholic beverages throughout Poland and all
activities are conducted within that country. It currently has branches in the
following Polish cities: Warsaw, Krakow, Szczecin, Gdynia, Wroclaw, Torun,
Katowice, Poznan and Biaylstok.

In March 1999, the Company purchased a significant portion of the assets, of
Multi Trade Company S.C. (MTC). MTC is a distributor of alcoholic beverages
located in Biaylstok, Poland.

In May 1999, the Company purchased a significant portion of the assets, of the
Cellar of Fine Wines Sp.zo.o. (PWW). PWW is an importer and a distributor of
wines located in Sulejowek near Warsaw, Poland.

Pursuant to Polish statutory requirements, Carey Agri, MTC and PWW may pay
annual dividends, based on their audited Polish financial statements, to the
extent of their retained earnings as defined. At December 31, 1999,
approximately $4,000,000 was available for payment of dividends.

2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The significant accounting policies and practices followed by the Company are as
follows:

BASIS OF PRESENTATION

Since CEDC had no operations prior to September 1997, the accompanying
consolidated financial statements related to the period to this date reflect the
activities of its subsidary Carey Agri only.

CEDC's subsidiaries maintain their books of account and prepare their Statutory
financial statements in Polish zloties (PLN) in accordance with Polish statutory
requirements and the Accounting Act of 29 September 1994. The accompanying
consolidated financial statements have been prepared from the Polish accounting
records for presentation in accordance with accounting principles generally
accepted in the United States of America ("US GAAP)". The accompanying
consolidated financial statements differ from the financial statements issued
for statutory purposes in Poland, in that they reflect certain adjustments, not
recorded in CEDC's books which are appropriate to present the financial
position, results of operations and cash flows in accordance with US GAAP.


                                                                              33
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


FOREIGN CURRENCY TRANSLATION AND TRANSACTIONS

Carey Agri, MTC and PWW report to the Polish Tax authorities in Polish zloties
and the accounting records are maintained in that currency. The accompanying
consolidated financial statements have been prepared in US Dollars. For all
periods prior to January 1, 1998, transactions and balances not already measured
in US Dollars (primarily Polish zloties) have been restated into US Dollars in
accordance with the relevant provisions of US Financial Accounting Standard
(SFAS) No. 52 "Foreign Currency Translation" as applied to entities in highly
inflationary economies.

Under SFAS No. 52 (hyper-inflationary accounting), revenues, costs, capital and
non-monetary assets and liabilities are translated at historical exchange rates
prevailing on the transaction dates. Monetary assets and liabilities are
translated at exchange rates prevailing on the balance sheet date. Exchange
gains and losses arising from remeasurements of monetary assets and liabilities
that are not denominated in US Dollars are credited or charged to operations.

Effective January 1, 1998, the Company no longer considered Poland to be a
hyper-inflationary economy and it ceased accounting for its Polish activities
using provisions applicable to hyper-inflationary economies and has treated the
Polish zloty as the functional currency for its subsidaries. Since January 1,
1998 the subsidaries transactions and financial statements have been translated
to US Dollars using the current rate method as per SFAS No. 52. Consequently all
assets and liabilities have been translated to US dollars using the rate in
effect at the end of the period; income and expenses are translated using the
average rate during the period; capital accounts are translated using historical
rates. See the discussion below regarding the effect of this change on
comprehensive income.

The exchange rate used on zloty denominated transactions and balances for
translation purposes as of December 31, 1998 and 1999 for one US dollar was 3.50
PLN and 4.15PLN respectively. As of March 13, 2000 the rate had changed to 4.09
PLN.

EQUIPMENT

Equipment is stated at cost, less accumulated depreciation. Depreciation is
computed by the straight-line method over the following useful lives:

                   TYPE                            DEPRECIATION LIFE IN YEARS
-------------------------------------------     --------------------------------
Transportation Equipment                                       6
Beer Dispensing and Other Equipment                          2-10

Equipment held under capital lease agreements are depreciated over the shorter
of the useful life or the lease term.

The Company periodically reviews equipment, when indicators of impairment exist
and if the value of the asset is impaired, an impairment loss is recognized.


                                                                              34
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


INTANGIBLE ASSETS

Intangibles consist of acquired goodwill and trademarks. Goodwill and trademarks
are amortized on a straight-line basis over the periods that expected economic
benefits will be provided (25 years for goodwill and 10 years for trademarks).
The realizability of goodwill and trademarks is evaluated periodically when
events or circumstances indicate a possible inability to recover the carrying
amount.

REVENUE RECOGNITION

Revenue is recognized when goods are shipped to customers.

ADVERTISING AND PROMOTION COSTS

Advertising and promotion costs are expensed as incurred. Advertising and
promotion costs not reimbursed by suppliers were approximately $85,000,
$660,000, and $359,000 in 1997, 1998 and 1999, respectively.

INVENTORIES

Inventories are stated at the lower of cost (first-in, first-out method) or
market. Cost includes customs duty and transportation costs. Inventories are
comprised primarily of beer, wine and spirits.

CASH AND CASH EQUIVALENTS

Short-term investments that have a maturity of three months or less from the
date of purchase are classified as cash equivalents. Virtually all of this
amount was located in bank accounts in Poland at December 31, 1999.

ESTIMATES

The preparation of consolidated financial statements in conformity with US GAAP
requires management to make estimates and assumptions that affect the amounts
reported in the consolidated financial statements and accompanying notes. Actual
results may differ from those estimates and such differences may be material to
the consoidated financial statements.

INCOME TAXES

The Company computes and records income taxes in accordance with the liability
method.

COMPREHENSIVE INCOME

In June 1997, the Financial Accounting Standards Board (FASB) issued its
Statement No. 130, "Reporting Comprehensive Income." This standard requires the
disclosure of comprehensive income which 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,
among other items, foreign currency translation adjustments.


                                                                              35
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


As disclosed in this Note 2, until January 1, 1998, the Company remeasured
transactions and results of its Polish subsidiary in accordance with SFAS No. 52
as applied to entities in highly inflationary economies. Therefore, exchange
gains and losses arising from remeasurements of these monetary assets and
liabilities were credited or charged to net income. However, in 1998 and
subsequently since Poland was no longer considered a highly inflationary
economy, the foreign translation losses on the translation from Polish zloties
to US dollars are classified as a separate component of the shareholders' equity
as "accumulated other comprehensive loss".

During the period ended December 31, 1999, the Company incurred foreign currency
translation losses of $1,870,000 and reported this amount as part of the
accumulated comprehensive loss in shareholders' equity of $1,980,000. The
translation losses were a result of the strength of the US dollar in 1999 as the
Polish zloty depreciated against the US dollar approximately 20% during 1999.
Additionally translation losses with respect to long term inter-company
transactions with the parent company are charged to other comprehensive loss .
No deferred tax benefit is recorded on the comprehensive loss as it is CEDC's
intention to permanently reinvest subsidiary earnings.

NET INCOME PER COMMON SHARE

Net income per common share is calculated under the provisions of SFAS No. 128,
"Earnings per Share". Basic earnings per share (EPS) is computed by dividing
income available to common shareholders by the weighted-average number of common
shares outstanding for the year. The stock options and warrants discussed in
Note 14 were not included in the computation of diluted earnings per common
share as the effect would be anti dilutive.

SEGMENT REPORTING

The Company operates in one industry segment, the distribution of alcoholic and
non-alcoholic beverages. These activities are conducted by Carey Agri, MTC and
PWW in Poland. Substantially all revenues, operating profits and assets relate
to this business. CEDC assets (excluding intercompany loans and investments)
located in the United States of America represent approximately 2% of
consolidated assets.

RECLASSIFICATIONS

Certain amounts in the financial statements have been reclassified from prior
years to conform to the current year presentation.

3. INTANGIBLE ASSETS

Intangibles, presented net of accumulated amortization in the consolidated
balance sheets, consist of:

                                                               DECEMBER 31,
                                                           --------------------
                                                             1998         1999
                                                           -------      -------
Goodwill                                                        --      $ 2,913
Trademark                                                       --        4,077
Other                                                           --           71
                                                           -------      -------
                                                                --        7,061

Less accumulated amortization                                   --         (385)
                                                           -------      -------
Intangibles, net                                                --      $ 6,676
                                                           =======      =======


                                                                              36
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


4. EQUIPMENT

Equipment, presented net of accumulated depreciation in the consolidated balance
sheets, consists of:

                                                             DECEMBER 31,
                                                        ---------------------
                                                          1998          1999
                                                        -------       -------
Transportation equipment                                $ 1,035       $ 1,541
Beer dispensing and other equipment                         788           701
                                                        -------       -------
                                                          1,823         2,242

Less accumulated depreciation                              (478)         (624)

                                                        -------       -------
Equipment, net                                          $ 1,345       $ 1,618
                                                        =======       =======



5. ALLOWANCE FOR DOUBTFUL ACCOUNTS

Changes in the allowance for doubtful accounts during each of the three years in
the period ended December 31, 1999 were as follows:

                                                YEAR ENDED DECEMBER 31,
                                          ----------------------------------
                                            1997          1998          1999
                                          -------       -------       -------
Balance, beginning of year                $    49       $    94       $   181
Provision for bad debts                        48            94           254
Charge-offs, net of recoveries                 (3)           (7)          (92)
                                          -------       -------       -------
Balance, end of year                      $    94       $   181       $   343
                                          =======       =======       =======


6. LONG-TERM DEBT

Long-term debt consists of the following:

                                                             DECEMBER 31,
                                                        ---------------------
                                                          1998          1999
                                                        -------       -------
Loans denominated in US Dollars                         $    --       $ 5,000
Loans denominated in EUR                                     --         1,387
Current portion of these loans                               --        (2,765)
                                                        -------       -------
Long-term portion                                       $    --       $ 3,622
                                                        =======       =======

The Company has a long-term US Dollar loan from BRE Bank amounting to $
3,500,000 at December 31, 1999 of which $1,765,000 is payable in 2000 with the
balance payable in February 2001. The loan may be repaid in USD with annual
interest of LIBOR plus 1.85%, or in DEM with annual interest of EURLIBOR plus
1.95% or in Swiss Francs with annual interest rate of LIBOR plus 2.25%
(approximately 7.9%, 5.29%, 4.10% respectively at December 31, 1999). The
Company presently anticipates paying the loan in CHF. The loan was
collateralized by a bill of exchange issued by the Company.


                                                                              37
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


During April 1999, the Company obtained a $1,500,000 USD denominated long-term
loan. The interest on this loan is at the three month USD LIBOR rate plus 1.4%
(7.47% at December 31, 1999); $1,000,000 is payable in November 2000, and
$500,000 in May 2001. This loan is collaterized by inventory up to a value of
3,500,000 PLN.

In April 1999, the Company obtained from the same bank an EUR denominated
long-term loan. The interest on this loan is at the three-month EUROLIBOR rate
plus 1.4% (4.48% at December 31,1999) The amount payable under the loan was
1,380,000 EUR (1,387,000USD) at December 31, 1999 and the loan is due in May
2001. This loan is collaterized by inventory up to a value of 3,500,000 PLN.

7. LEASE OBLIGATIONS

During 1999, all equipment related operating lease agreements expired. Two
agreements were terminated prematurely due to the theft of the leased assets.
There were no operating nor financial leases as at December 31,1999 except for
the rental agreements as discussed below:

The rental expense incurred under operating leases during 1997, 1998 and 1999
was as follows:

                                       1997              1998              1999
                                      ------            ------            ------
Rent expense                          $  583            $  519            $  754
                                      ======            ======            ======


All rental agreements are operating leases and relate mainly to the leasing of
the space i.e. (customs and the consolidation warehouse in Warsaw, Warsaw head
office space, the regional offices and warehouses, and the retail shop in
Warsaw). Monthly rentals range from approximately $2,000 to $11,670. The customs
and consolidation warehouse lease expires in September 2001. The Warsaw
headquarters lease can be terminated with six months prior notice. All of the
regional office and warehouse leases can be terminated by either party with two
or three months prior notice. The retail shop lease has no stated expiration
date, but can be terminated by either party with three months prior notice.
Rental payments to related parties charged to expense amount to approximately
$27,000 in 1999; there were no rental agreements with related parties in 1997 or
1998.

Prior to 1999, the Company had certain capital leases for transportation and
other equipment. These leases either expired or were settled early using
proceeds from the 1998 public offering.

8. SHORT-TERM BANK LOANS AND OVERDRAFT FACILITIES

On March 23, 1999 the Company secured an agreement with a bank for an overdraft
limit of $445,000 (PLN 1,850,000). The facility was used to finance the daily
operations of MTC. The annual interest rate equaled WIBOR (daily) plus 1% (14.5%
at December 31, 1999). This loan is collaterized by inventory up to a value of
1,900,000 PLN. At the year end the Company has used $171,000 of the allocated
overdraft.

On March 23, 1999 the Company signed an agreement with a bank for a short-term
loan of $502,000 (EUR 500,000). The proceeds of the loan were used to finance
operating activities. The annual interest rate equaled EURLIBOR (1 month) plus
2% (5.34% at December 31, 1999). This loan is collaterized by inventory up to a
value of 2,000,000 PLN.

On May 17, 1999 the Company signed an agreement with a bank for a short-term
revolving loan of $1,507,000 (EUR 1,500,000). The proceeds of the loan were used
to finance operating activities. The annual interest rate equaled EURLIBOR (6
month) plus 0.8% (4.14% at December 31, 1999). This loan is collaterized by a
blank bill of exchange.


                                                                              38
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


The Company's borrowing arrangements (including long-term debt described in Note
6) contain various financial and non-financial covenants and restrictions which
the Company complied with or which were waived by the lenders.

The weighted average interest rates on short-term borrowings at December 31,
1999 was approximately 5.3%. Total interest paid in 1997, 1998 and 1999 is
substantially equal to the interest expense disclosed in the consolidated
statements of income.

9. EARNINGS PER SHARE

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

                                           1997        1998        1999
                                          ------      ------      ------
Basic:
Net income                                $  308      $1,468      $1,902
                                          ======      ======      ======
Average shares outstanding                 1,780       2,635       4,050
                                          ======      ======      ======
Basic EPS                                 $ 0.17      $ 0.56      $ 0.47
                                          ======      ======      ======

Diluted:
Net income                                $  308      $1,468      $1,902
                                          ======      ======      ======

Average shares outstanding                 1,780       2,635       4,050
Net effect of dilutive stock options
  based on the treasury stock method          --          --          --
                                          ------      ------      ------
Totals                                     1,780       2,635       4,050
                                          ======      ======      ======
Diluted EPS                               $ 0.17      $ 0.56      $ 0.47
                                          ======      ======      ======

No stock options have been exercised during the period. Warrants granted in
connection with the 1998 IPO and stock options granted in 1998 and 1999 have
been excluded from the above calculations of diluted shares since the exercise
price is equal to or greater than the average market price of the common shares
during 1998 and 1999.

10. ACQUISITIONS

On March 12,1999, the Company purchased certain business assets (excluding those
related to the production of distilled products) and the trademark of Multi
Trade Company ("MTC" - a Partnership distributing alcoholic beverages in Poland)
for $2.9 million cash and 254,230 shares of Common Stock. This stock cannot be
sold for three years without the consent from the Company. On May 10, 1999, the
Company purchased certain business assets, and trademark of The Cellar of Fine
Wines Sp. z o.o. (PWW - a limited liability company distributing wine in
Poland) for $ 1.8 million cash and 100,000 shares of Common Stock. This stock
cannot be sold until July 1, 2000 without the consent of the Company. The values
assigned to the Common Stock issued in these transactions were based on market
value at the time of the transactions and reduced by 10% for the effect of the
restrictions on sale. The acquired companies have been included in the 1999
consolidated financial statements from their respective dates of acquisition.


                                                                              39
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


The Company obtained independent valuations for both of these investments. The
cost of the acquisitions was allocated to the tangible and identifiable
intangible assets acquired based on the fair values at dates of acquisition and
estimated values per the valuation reports. The excess ($2,913,000) of the cost
over the amounts allocated as described above represents goodwill. Management
finalized the purchase price allocations during the last quarter of 1999 upon
the completion of the valuations of the companies. No significant adjustments
resulted from the finalisation of the purchase price allocations.

Assuming consummation of these two purchases and the issuance of common shares
as of January 1, 1998, the unaudited proforma consolidated operating results for
1998 and 1999 are as follows:

                                                          1998          1999
                                                        --------      --------
Net sales                                               $101,126      $ 97,709
Net income                                                 1,373         1,696
Net income per share data:
Basic and diluted                                       $   0.46      $   0.41

11. FINANCIAL INSTRUMENTS, COMMITMENTS AND CONTINGENT LIABILITIES

FINANCIAL INSTRUMENTS WITH ON-BALANCE SHEET RISK AND THEIR FAIR VALUES

Financial instruments with on-balance sheet risk include cash and cash
equivalents, accounts receivable, certain other current assets, trade accounts
payable, bank loans, overdraft facilities, long-term debt and other payables.
These financial instruments are disclosed separately in the consolidated balance
sheets and their carrying values approximate their fair market values. The
Companies on-balance sheet risk is minimum as the financial instruments are
denominated in stable currencies and they are of a short-term nature whose
interest rates approximate current market rates.

CONCENTRATIONS OF CREDIT RISK

Financial instruments that potentially subject the Company to concentration of
credit risk consist primarily of accounts receivable from Polish companies. The
Company restricts temporary cash investments to financial institutions with high
credit standing. Credit is given to customers only after a thorough review of
their credit worthiness. The Company does not normally require collateral with
respect to credit sales. The Company routinely assesses the financial strength
of its customers. As of December 31, 1999 and 1998, the Company had no
significant concentrations of credit risk. The Company has not experienced large
credit losses in the past.

INFLATION AND CURRENCY RISK

Since the fall of Communist rule in 1989, Poland has experienced high levels of
inflation and significant fluctuations in the exchange rate for the zloty. The
Polish government has adopted policies that slowed the annual rate of inflation
from approximately 250% in 1990 to approximately 14% in 1997, 8.5% in 1998 and
9.8% in 1999. The exchange rate for the zloty had stabilized in 1997 and 1998
and the rate of devaluation of the zloty had decreased for the last several
years prior to 1999. During 1999 this trend was reversed and the rate of
devaluation of the zloty increased. Inflation and currency exchange fluctuations
have had, and may continue to have, an adverse effect on the financial condition
and results of operations of the Company.


                                                                              40
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


A portion of Carey Agri's, MTC's and PWW's accounts payable and operating
expenses are expected to continue to be, denominated in or indexed to the U.S.
Dollar or other non-Polish denominated currency. By contrast, substantially all
of the Company's revenue is denominated in Polish zloty. Any devaluation of the
zloty against the U.S. Dollar or other currencies that the Company is unable to
offset through price adjustments will require the Company to use a larger
portion of its revenue to service its non-zloty denominated obligations. While
the Company may consider entering into transactions to hedge the risk of
exchange rate fluctuations, it is unlikely that the Company will be able to
obtain hedging arrangements on commercially satisfactory terms. Accordingly,
shifts in the currency exchange rates may have an adverse effect on the ability
of the Company to service its non-zloty denominated obligations and, therefore
may have an effect on the Company's financial condition and results of
operations.

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 significant portion of the Company's supply of products could
be curtailed at any time. The Company has made payments to suppliers to secure
longer term sources of supply. Management is confident that in the case of a
curtailment of supplies, a new supplier could be obtained quickly without any
material effect on the operations.

CONTINGENT LIABILITIES

The Company is involved in some litigation and has claims against it for matters
arising in the ordinary course of business. In the opinion of management, the
outcome will not have a material adverse effect on the Company's operations.

12. INCOME TAXES

Income tax expense consists of the following:

<TABLE>
<CAPTION>
                                                             YEAR ENDED DECEMBER 31,
                                                       -----------------------------------
                                                         1997          1998          1999
                                                       -------       -------       -------
<S>                                                    <C>           <C>           <C>
Current Polish income tax expense                      $   342       $   889       $ 1,268
Deferred Polish income tax (benefit) expense, net           (1)           34          (101)
Deferred US income tax benefit                              --           (62)          (61)
                                                       -------       -------       -------
Total income tax expense                               $   341       $   861       $ 1,106
                                                       =======       =======       =======
</TABLE>


Total Polish income tax payments (or amounts used as settlements against other
statutory liabilities) during 1997, 1998 and 1999 were $295,000, $725,000 and
$1,313,000, respectively. CEDC has paid no U.S. income taxes and has net
operating loss carry forwards of approximately $360,000 which expire in 2013 and
2014.


                                                                              41
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


Total income tax expense varies from expected income tax expense computed at
Polish statutory rates ( 38% in 1997, 36% in 1998 and 34% in 1999) as follows:

<TABLE>
<CAPTION>
                                                                           YEAR ENDED DECEMBER 31,
                                                                     ----------------------------------
                                                                       1997         1998          1999
                                                                     -------      -------       -------
<S>                                                                  <C>          <C>           <C>
Tax at Polish statutory rate                                         $   247      $   838       $ 1,023
Increase/(Reduction), in deferred tax asset valuation allowance
relating primarily to bad debt expense                                    --          (30)           46
Tax rate differential resulting from US activities                        --            6            --
Effect of foreign currency exchange rate change on net deferred
tax assets and reduction of deferred tax asset due to changes
in tax rates                                                              23            1            14
Permanent differences:
       Non-taxable interest                                               --           (9)          (15)
       Non-deductible taxes                                               19            6            16
       Non-deductible transportation taxes                                --           23             7
       Other non-deductible expenses                                      37           26            15
                                                                     -------      -------       -------
Income tax expense                                                   $   341      $   861       $ 1,106
                                                                     =======      =======       =======
</TABLE>

Significant components of the Company's deferred tax liabilities and assets are
as follows:

<TABLE>
<CAPTION>
                                                                                       DECEMBER 31,
                                                                                  ---------------------
                                                                                    1998          1999
                                                                                  -------       -------
<S>                                                                               <C>           <C>
Deferred tax assets:
       Allowance for doubtful accounts receivable                                 $    59       $    98
       Depreciation and other fixed asset basis differences                            20            --
       Unrealized foreign exchange losses, net                                          1           112
       Accrued expenses and deferred income                                            --            17
       CEDC operating loss carryforward benefit                                        62           123
                                                                                  -------       -------
Total deferred tax assets                                                         $   142       $   350
Less valuation allowance                                                               (3)          (49)
                                                                                  -------       -------
Net deferred tax asset                                                            $   139       $   301
                                                                                  =======       =======

Shown as:
Current deferred tax asset                                                        $   119       $   107
Long-term deferred tax asset                                                           20           194
                                                                                  -------       -------
                                                                                  $   139       $   301
                                                                                  =======       =======
</TABLE>

Valuation allowances are provided when it is more likely than not that some or
all of the deferred tax assets will not be realized in the future. These
evaluations are based on expected future taxable income and expected reversals
of the various net deductible temporary differences. The valuation allowance
relates primarily to the future tax deductibility of the allowance for bad
debts.


                                                                              42
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


Management intends that the undistributed earnings from the Polish subsidiaries
of $4,000,000 will be permanently reinvested. Therefore, no deferred taxes have
been created for these earnings. If the earnings were distributed in the form of
a dividend or otherwise, a portion would be subject to both U.S. income taxes
and Polish withholding taxes, less an adjustment for foreign tax credits. The
Company estimates the deferred tax liability to be approximately $123,000 based
on the undistributed earnings of Carey Agri, MTC and PWW at December 31, 1999.
This amount would, in part, be available to reduce some portion of U.S. tax
liability from foreign source income. Determination of the actual amount of U.S.
income tax liability that would be incurred is complex and subject to various
factors existing at the time of any distribution of foreign earnings to CEDC.

In November 1999, legislation was enacted which reduced the corporate income tax
rates in Poland effective January 1, 2000. The expected tax rate of 32% was
reduced from 32% to 30% in 2000, 28% in 2001 and 2002, 24% in 2003 and 22%
thereafter.

Carey Agri, MTC and PWW tax liabilities (including corporate income tax, Value
Added Tax (VAT), social security and other taxes) may be subject to examinations
by Polish tax authorities for up to five years from the end of the year the tax
is payable. A prior year's examination of Carey Agri's VAT returns resulted in
deductions for certain items being challenged by the tax authorities. This
matter was resolved in 1999. CEDC's US federal income tax returns are also
subject to examination by the US tax authorities. As the application of tax laws
and regulations, and transactions are susceptible to varying interpretations,
amounts reported in the consolidated financial statements could be changed at a
later date upon final detemination by the tax authorities.

13. RELATED PARTY TRANSACTIONS

A director of CEDC is also the director of one of the Company's suppliers of
wine. Purchases from this company amounted to approximately $570,000, $750,000
and $471,600 in 1997, 1998 and 1999, respectively.This company is owed $104,000
as at December 31, 1999 for purchases made during 1999.

A non-interest bearing advance receivable from the Company's president of
$17,000 at December 31, 1998, was paid in full in February 1999. The Company
wrote-off a receivable of approximately $4,000 from an affiliate during 1997.

14. STOCK OPTION PLANS AND WARRANTS

In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation." This standard defines a fair value based method of accounting for
an employee stock option or similar equity instrument plan. This statement gives
entities a choice of recognizing related compensation expense by adopting the
fair value method or to measure compensation using the intrinsic value approach
as recommended under Accounting Principles Board (APB) Opinion No. 25, the
former standard. If APB No. 25 is elected, then SFAS No. 123 requires
supplemental disclosure to show the effects of using the SFAS No. 123
measurement criteria. The Company has elected to follow APB No. 25. No expense
has been recognized for any of the employee/director options granted in 1998 and
1999 pursuant to APB No. 25 as the exercise price and market price at the date
of grant were the same.



                                                                              43
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


INCENTIVE PLAN

In November 1997, the CEDC 1997 Stock Incentive Plan ("Incentive Plan") was
created. This Incentive Plan provides for the grant of stock options, stock
appreciation rights, restricted stock and restricted stock units to directors,
executives, and other employees of CEDC and any of its subsidiaries or of any
service provider. The Incentive Plan authorizes the issuance of up to 750,000
shares of Common Stock (subject to anti-dilution adjustments in the event of a
stock split, recapitalization, or similar transaction). The compensation
committee of the board of directors will administer the Incentive Plan. The
Company has reserved 750,000 shares for future issuance in relation to the
Incentive Plan.

The option exercise price for incentive stock options granted under the
Incentive Plan may not be less than 100% of the fair market value of the Common
Stock on the date of grant of the option. Options may be exercised up to 10
years after grant, except as otherwise provided in the particular option
agreement. Payment for shares purchased under the Incentive Plan shall be made
in cash or cash equivalents. With respect to any participant who owns stock
possessing more than 10% of the voting power of all classes of stock of CEDC,
however, the exercise price of any incentive stock option granted must equal at
least 110% of the fair market value on the grant date and the maximum term of an
incentive stock option must not exceed five years.

A summary of the Company's stock option activity, and related information for
the year ended December 31, 1998 and December 31, 1999 as follows:

<TABLE>
<CAPTION>
                                                                        WEIGHTED-      WEIGHTED-
                                                                         AVERAGE        AVERAGE
                                       OPTIONS (000)   OPTIONS (000)     EXERCISE       EXERCISE
                                           1998            1999         PRICE-1998     PRICE-1999
                                       -------------   -------------    ----------     ----------
<S>                                              <C>           <C>      <C>            <C>
Outstanding at January 1,                         --             211            --             --
Granted                                          211              40    $     6.45     $     6.65
Exercised                                         --              --            --             --
Forfeited                                         --             (20)           --           6.50
                                       ----------------------------------------------------------
Outstanding at December 31,                      211             231    $     6.45     $     7.32

Exercisable at December 31,                       27             106    $     6.05     $     7.15

Weighted-average fair value of options
  granted                                         --              --    $      .32     $     2.50
</TABLE>

Exercise prices for options outstanding as of December 31, 1999 ranged from
$5.70 to $8.00. The weighted-average remaining contractual life of those options
is approximately 5 years as of December 31, 1999. The table above does not
include options mentioned below where the exercise price is unknown or for the
warrants discussed below.

STOCK OPTIONS GRANTED

CEDC has granted stock options in early 1998 to its executive officers and
members of the Board of Directors for 82,500 shares of Common Stock in
connection with its initial public offering. The exercise price for 57,500 of
these options is the initial public offering price of $ 6.50 per share. The
exercise price of 10,000 options was the average trading price of Common Stock
for the last five trading days of 1998 of $5.70. The exercise price of 15,000
options is the average trading price of Common Stock for the last five
trading days of 1999 ($4.84). Certain of these options were forfeited in 1999.


                                                                              44
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


The Company has granted stock options under the Incentive Plan for 134,250
shares of Common Stock in September 1998 to certain of its employees. Options
for 34,000 shares have an exercise price of $6.50 and may be exercised from
September 1999 to September 2001. Options for 43,000 shares have an exercise
price of $6.75 based on the market value of common shares at the end of August
1999 and are exercisable from September 2000 to September 2001. Options for
51,250 shares will have an exercise price based on the market value of common
shares as of August 2000 and are exercisable from August 2001 to September 2002.

Pro forma information regarding net income and earnings per share is required by
SFAS No. 123, and has been determined as if the Company had accounted for its
incentive stock options under the fair value method of that Statement.

In regards to the options granted in connection with the initial public
offering, the Company has estimated the fair market value of the stock
underlying these options to be approximately 50% of the planned public offering
price due to various uncertainties as of the time of grant. This is less than
the present value of the expected exercise price. Therefore, the fair value of
the options granted in connection with the initial public offering has been
estimated to be minimal under the provisions of SFAS No. 123.

As for the other stock options granted to employees, the fair value was
estimated at the date of grant using a Black-Scholes option pricing model with
the following weighted-average assumptions for 1998 and 1999 risk-free interest
rate of 5.5% dividend yield of 0%, volatility factors of the expected market
price of the Company's Common Stock of 0.68 for 1998 and 0.62 for 1999, and a
weighted-average expected life of the option of 2 years.

The Black-Scholes option valuation model was developed for use in estimating the
fair value of traded options which have no vesting restrictions and are fully
transferable. In addition, option valuation models require the input of highly
subjective assumptions including the expected stock price volatility. Because
the Company's employee stock options have characteristics significantly
different from those of traded options, and because changes in the subjective
input assumptions can materially affect the fair value estimate, in management's
opinion, the existing models do not necessarily provide a reliable single
measure of the fair value of its employee stock options.

For purposes of pro forma disclosures, the estimated fair value of the options
is amortized to expense over the options' vesting period. The effect of any
forfeitures is recognized when they occur. The Company's pro forma information
for 1998 and 1999 follows (1997 not included as no stock options were granted
before 1998):

                                                             1998         1999
                                                            ------       ------
             Net income as recorded                         $1,468       $1,902
             Pro forma net income                           $1,450       $1,770

             Pro forma earnings per share:
             Basic and fully diluted                        $  .55       $  .44



                                                                              45
<PAGE>

                    CENTRAL EUROPEAN DISTRIBUTION CORPORATION

                 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
    Amounts in columns expressed in thousands (except per share information)


OPTIONS GIVEN TO VENDORS

In late 1998, the Company gave options to a vendor for 50,000 shares of common
stock in exchange for a three-year service contract. These options are
exercisable from March 1999 until September 2001 at the following prices: $6.50
until September 1999, $8.00 until September 2000, and $9.00 until September
2001. Under APB 25 and FASB 123, the fair value of options given to vendors must
be expensed over the service period. Using the Black Scholes method described
above, with similar assumptions, the fair value of these options was $75,000.
This amount is being expensed over three years.

During 1999, the Company gave options to a consulting firm for 75,000 shares of
common stock in exchange for a one-year service contract involving various
acquisition consultations. The exercise price of the options is $8.00. These
options shall be exercisable at any time during a period of nine years
commencing March 5, 2000. Using the Black-Scholes method, 75 periods were used
to determine the volatility of the price. The value of the options is
approximately $135,000. Based upon the 10 months of the service contract ended
December 31, 1999, costs of $112,500 were capitalized to the purchase of MTC and
PWW or deferred with respect to the other pending acquistions as at the year
end.

The above warrants were excluded from the calculation of earnings per share as
the effect would not be dilutive.

WARRANTS

In connection with the planned public offering, the Company agreed to sell to
the Representatives or their designees (for nominal consideration) warrants to
purchase 200,000 shares of Common Stock from the Company. The warrants are
exercisable at any time during a period of four years commencing one year from
the date of the final prospectus used in the Company's initial public offering.
The exercise price of the warrants is 130% of the initial public offering price
($8.45 per share).

The above warrants were excluded from the calculation of earnings per share as
the effect would not be dilutive.

15. SUBSEQUENT EVENTS

In December 1999, the Company signed a letter of intent to acquire 100% of Jama
Sp. zo.o. a distributor in south west Poland with a 1999 turnover of
approximately $40 million (unaudited). The acquisition may result in the
purchase price of approximately $5.0 million payable in a combination of cash
and CEDC stock. Closing is expected to occur in the first half of 2000.

On March 7 2000, the Company signed an agreement to purchase a modern high
volume warehouse facility along with office accommodations. The cost of the
complex is approximately $15,000,000 is scheduled for completion during the
month of October 2000. Financing discussions was not completed at March 13,
2000.


                                                                              46
<PAGE>

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
        FINANCIAL DISCLOSURE

        Not Applicable.

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         The information with respect to directors and executive officers of the
Company is incorporated herein by reference to the proxy statement for the
annual meeting of stockholders to be held on May 23, 2000.

ITEM 11. EXECUTIVE COMPENSATION

         The information with respect to executive compensation and transactions
is incorporated here by reference to the proxy statement for the annual meeting
of stockholders to be held on May 23, 2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         The information with respect to security ownership of certain
beneficial owners and management is incorporated herein by reference to the
proxy statement for the annual meeting of stockholders to be held on May 23,
2000.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

         The information with respect to certain relationships and related
transactions is incorporated herein by reference to the proxy statement for the
annual meeting of stockholders to be held on May 23, 2000.

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8K


         (a)(1) The following consolidated financial statements of the Company
and report of independent auditors are included in Item 8 of the Form 10-K.

         Report of Independent Auditors

         Consolidated Balance Sheets at December 31, 1998 and 1999

         Consolidated Statements of Income for the years ended December 31,
                  1997, 1998 and 1999

         Consolidated Statements of Changes in Stockholders' Equity for the
                  years ended December 31, 1997, 1998, and 1999

         Consolidated Statements of Cash Flows for the years ended December 31,
                  1997, 1998 and 1999

         Notes to Consolidated Financial Statements


                                                                              47
<PAGE>

         (a)(2)  Schedules

         All schedules for which provision is made in the applicable accounting
         regulations of the Securities and Exchange Commission either have been
         included in the Company's consolidated financial statements or the
         notes thereto, are not required under the related instructions or are
         inapplicable, and therefore have been omitted.

         (a)(3) The following exhibits are either provided with this Form 10-K
or are incorporated herein by reference.

EXHIBIT
NUMBER                           EXHIBIT DESCRIPTION
------                           -------------------

2.1      Contribution Agreement among Central European Distribution Corporation
         and William V. Carey, William V. Carey Stock Trust, Estate of William
         O. Carey and Jeffrey Peterson dated November 28, 1997 (Filed as Exhibit
         2.1 to the Registration Statement on Form SB-2, File No. 333-42387,
         with the Commission on December 17, 1997
         [the "1997 Registration Statement"] and incorporated herein by
         reference.)

3.1      Certificate of Incorporation (Filed as Exhibit 3.1 to the 1997
         Registration Statement and incorporated herein by reference.)

3.2      Bylaws (Filed as Exhibit 3.2 to the 1997 Registration Statement and
         incorporated herein by reference.)

4.1      Form of Common Stock Certificate (Filed as Exhibit 4.1 to the 1997
         Registration Statement and incorporated herein by reference.)

4.2      Form of Warrant Agreement and attached form of Representatives' Warrant
         (Filed as Exhibit 4.2 to Amendment No. 1 on Form S-1 to Form SB-2
         Registration Statement, File No. 333-42387, with the Commission on
         April 17, 1998 [the "First 1998 Registration Statement"] and
         incorporated herein by reference.)

10.1     1997 Stock Incentive Plan (Filed as Exhibit 10.1 to the 1997
         Registration Statement and incorporated herein by reference.)

10.1(a)  Amendment to 1997 Stock Incentive Plan (Filed as 10.1(a) to Amendment
         No. 2 to Form S-1 Registration Statement, File No. 333-42387, with the
         Commission on May 19, 1998 [the "Second 1998 Registration Statement"]
         and incorporated herein by reference.)

10.2     Employment agreement with William V. Carey (Filed as Exhibit 10.8 to
         the 1997 Registration Statement and incorporated herein by reference.)

10.2(a)  Amendment to employment agreement with William V. Carey (Filed as
         Exhibit 10.9(a) to the Second 1998 Registration Statement and
         incorporated herein by reference.)

10.3     Employment agreement with Jeffrey Peterson (Filed as Exhibit 10.9 to
         the 1997 Registration Statement and incorporated herein by reference.)

10.4     Employment agreement with Neil Crook and the Company


                                                                              48
<PAGE>

10.5     Employment agreement with Neil Crook and Carey Agri International
         Poland Sp. z o.o.

10.6     Employment agreement with Evangelos Evangelou and CEDC (Filed as
         Exhibit 10.6 to the 1998 10K)

10.7     Employment agreement with Evangelos Evangelou and Carey Agri (Filed as
         Exhibit 10.7 to the 1998 10K)

10.8     Form of distribution contract with Polmos vodka producers (Filed as
         Exhibit 10.5 to the 1997 Registration Statement and incorporated herein
         by reference.)

10.9     Distribtuion contract between Carey Agri and United Distillers
         Finalandia Group Sp z.o.o. dated January 1, 1995 (Filed as Exhibit 10.4
         to the 1997 Registration Statement and incorporated herein by
         reference.)

10.10    Distribution contract with UDV Poland Sp. z.o.o. dated July 3, 1997
         (Filed as Exhibit 10.6 to the 1997 Registration Statement and
         incorporated herein by reference)

10.11    (a) Amendment, updated, to the distribution contract with UDV Poland
         Sp. Z.o.o. dated July 3, 1997 (Filed as Exhibit 10.6 (a) to the first
         first 1998 Registration Statement and incorporated herein by
         reference.)

21       Subsidiaries of the Company

27       Financial Data Schedule

         (b) Reports on form 8-K in the fourth quarter of 1999

         No reports were filed on Form 8-K by the Company during the last
         quarter of 1999.

         (c)  Exhibits

         The response to this portion of Item 14 is submitted in response to
         Item 14 (a) (3).

         (d) Financial Statement Schedules


                                                                              49
<PAGE>

                                   SIGNATURES

Pursuant to the requirements of the Section 13 or 15(d) 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

                               By:         /s/ WILLIAM V. CAREY
                                  ---------------------------------------
                                                William V.Carey
                               Chairman, President, and Chief Executive Officer

                               Date: March 28, 2000


Pursuant to the requirements of the Securities Exchange Act of 1933, this report
has been signed by the following persons on behalf of the registrant and in the
capacities and on the dates indicated below.

<TABLE>
<CAPTION>
         SIGNATURE                              TITLE                                    DATE
         ---------                              -----                                    ----
<S>                            <C>                                                  <C>
   /s/ WILLIAM V. CAREY        Chairman, President and Chief Executive              MARCH 28, 2000
---------------------------      Officer (Principal executive officer)              --------------
       William V. Carey


    /s/ JEFFREY PETERSON       Vice Chairman and Executive Vice President           MARCH 28, 2000
---------------------------                                                         --------------
        Jeffrey Peterson

      /s/ NEIL CROOK           Vice President and Chief Financial Officer           MARCH 28, 2000
----------------------------     (Principal financial and accounting officer)       --------------
          Neil Crook

    /s/ JOSEPH S. CONTI        Director                                             MARCH 28, 2000
----------------------------                                                        --------------
        Joseph S. Conti

   /s/ JAMES T. GROSSMANN      Director                                             MARCH 28, 2000
----------------------------                                                        --------------
       James T. Grossmann

     /s/ JAMES B. KELLY        Director                                             MARCH 28, 2000
----------------------------                                                        --------------
         James B. Kelly

    /s/ JAN W. LASKOWSKI       Director                                             MARCH 28, 2000
-----------------------------                                                       --------------
        Jan W. Laskowski

   /s/ JOE M. RICHARDSON       Director                                             MARCH 28, 2000
-----------------------------                                                       --------------
       Joe M. Richardson
</TABLE>


                                                                              50
<PAGE>

                               INDEX OF EXHIBITS



EXHIBIT                             DESCRIPTION
--------                            -----------

  27                      Financial Data Schedule