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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549





FORM 10-Q





(MARK ONE)

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

FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2008

OR



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

FOR THE TRANSITION PERIOD FROM            .

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 of Incorporation or Organization) |  | (I.R.S. Employer Identification No.)



|                                             |  |           
|-------------------------------------------- |  | ----------
|Two Bala Plaza, Suite #300, Philadelphia, PA |  | 19004     
|(Address of Principal Executive Offices)     |  | (Zip code)

(610) 660-7817

(REGISTRANTS TELEPHONE NUMBER, INCLUDING AREA CODE)





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

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of
accelerated filer and large accelerated filer in Rule 12b-2 of the Exchange Act (check one):

Large Accelerated
Filer  x    Accelerated Filer   ̈    Non-Accelerated Filer   ̈

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

The number of shares outstanding of each class of the issuers common stock as of May 6, 2008:

Common Stock ($.01 par value) 42,826,451











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INDEX



|           |  |                                                                                                                                 |  |     
|---------- |  | ------------------------------------------------------------------------------------------------------------------------------- |  | ----
|           |  |                                                                                                                                 |  | PAGE
|PART I     |  | FINANCIAL INFORMATION                                                                                                           |  |     
|           |  |                                                                                                                                
|Item 1     |  | Financial Statements                                                                                                            |  |     
|           |  |                                                                                                                                
|           |  | Consolidated Condensed Balance Sheets, March 31, 2008 (unaudited) and December 31, 2007                                         |  | 3   
|           |  |                                                                                                                                
|           |  | Consolidated Condensed Statements of Income (unaudited) for the three month periods ended March 31, 2008 and March 31, 2007     |  | 4   
|           |  |                                                                                                                                
|           |  | Consolidated Condensed Statement of Changes in Stockholders Equity (unaudited) as of March 31, 2008                            |  | 5   
|           |  |                                                                                                                                
|           |  | Consolidated Condensed Statements of Cash Flows (unaudited) for the three month periods ended March 31, 2008 and March 31, 2007 |  | 6   
|           |  |                                                                                                                                
|           |  | Notes to Consolidated Condensed Financial Statements (unaudited)                                                                |  | 7-18
|           |  |                                                                                                                                
|Item 2     |  | Managements Discussion and Analysis of Financial Condition and Results of Operations                                           |  | 19  
|           |  |                                                                                                                                
|Item 3     |  | Quantitative and Qualitative Disclosures about Market Risk                                                                      |  | 28  
|           |  |                                                                                                                                
|Item 4     |  | Controls and Procedures                                                                                                         |  | 28  
|           |  |                                                                                                                                
|PART II    |  | OTHER INFORMATION                                                                                                               |  |     
|           |  |                                                                                                                                
|Item 6     |  | Exhibits                                                                                                                        |  | 30  
|           |  |                                                                                                                                
|Signatures |  |                                                                                                                                 |  | 31  



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED BALANCE SHEET (UNAUDITED)

Amounts in columns expressed in thousands

(except share information)



|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------- | --------- | - | ---------------- | - | --------- | -
|                                                                                                                                                            |  | March 31,2008 |           |   | December 31,2007 |  
|ASSETS                                                                                                                                                      |  |               |           |   |                  |   |           |  
|Current Assets                                                                                                                                              |  |               |           |   |                  |   |           |  
|Cash and cash equivalents                                                                                                                                   |  | $             | 260,826   |   |                  | $ | 87,867    |  
|Accounts receivable, net of allowance for doubtful accounts of $31,419 and $29,277 respectively                                                             |  |               | 273,878   |   |                  |   | 316,277   |  
|Inventories                                                                                                                                                 |  |               | 150,163   |   |                  |   | 141,272   |  
|Prepaid expenses and other current assets                                                                                                                   |  |               | 17,779    |   |                  |   | 16,536    |  
|Deferred income taxes                                                                                                                                       |  |               | 8,812     |   |                  |   | 5,141     |  
|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|Total Current Assets                                                                                                                                        |  |               | 711,458   |   |                  |   | 567,093   |  
|                                                                                                                                                            |  |              
|Intangible assets, net                                                                                                                                      |  |               | 757,526   |   |                  |   | 545,697   |  
|Goodwill, net                                                                                                                                               |  |               | 745,931   |   |                  |   | 577,282   |  
|Property, plant and equipment, net                                                                                                                          |  |               | 115,348   |   |                  |   | 79,979    |  
|Deferred income taxes                                                                                                                                       |  |               | 10,051    |   |                  |   | 11,407    |  
|Other assets                                                                                                                                                |  |               | 629       |   |                  |   | 710       |  
|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|Total Assets                                                                                                                                                |  | $             | 2,340,943 |   |                  | $ | 1,782,168 |  
|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|                                                                                                                                                            |  |              
|LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                        |  |               |           |   |                  |   |           |  
|Current Liabilities                                                                                                                                         |  |               |           |   |                  |   |           |  
|Trade accounts payable                                                                                                                                      |  | $             | 154,940   |   |                  | $ | 172,340   |  
|Bank loans and overdraft facilities                                                                                                                         |  |               | 183,219   |   |                  |   | 42,785    |  
|Income taxes payable                                                                                                                                        |  |               | 6,933     |   |                  |   | 5,408     |  
|Taxes other than income taxes                                                                                                                               |  |               | 97,846    |   |                  |   | 101,929   |  
|Other accrued liabilities                                                                                                                                   |  |               | 69,150    |   |                  |   | 71,959    |  
|Current portions of obligations under capital leases                                                                                                        |  |               | 1,384     |   |                  |   | 1,759     |  
|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|Total Current Liabilities                                                                                                                                   |  |               | 513,472   |   |                  |   | 396,180   |  
|                                                                                                                                                            |  |              
|Long-term debt, less current maturities                                                                                                                     |  |               |          |   |                  |   | 122,952   |  
|Long-term obligations under capital leases                                                                                                                  |  |               | 3,027     |   |                  |   | 2,708     |  
|Long-term obligations under Senior Notes                                                                                                                    |  |               | 669,627   |   |                  |   | 344,298   |  
|Other long-term accrued liabilities                                                                                                                         |  |               | 15,000    |   |                  |   |          |  
|Deferred income taxes                                                                                                                                       |  |               | 145,783   |   |                  |   | 100,113   |  
|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|Total Long Term Liabilities                                                                                                                                 |  |               | 833,437   |   |                  |   | 570,071   |  
|                                                                                                                                                            |  |              
|Minority interests                                                                                                                                          |  |               | 7,040     |   |                  |   | 481       |  
|                                                                                                                                                            |  |              
|Stockholders Equity                                                                                                                                        |  |               |           |   |                  |   |           |  
|Common Stock ($0.01 par value, 80,000,000 shares authorized, 42,566,664 and 40,566,096 shares issued at March 31, 2008 and
December 31, 2007, respectively) |  |               | 426       |   |                  |   | 406       |  
|Additional paid-in-capital                                                                                                                                  |  |               | 507,360   |   |                  |   | 429,554   |  
|Retained earnings                                                                                                                                           |  |               | 223,718   |   |                  |   | 205,186   |  
|Accumulated other comprehensive income                                                                                                                      |  |               | 255,640   |   |                  |   | 180,440   |  
|Less Treasury Stock at cost (246,037 shares at March 31, 2008 and December 31, 2007)                                                                        |  |               | (150      | ) |                  |   | (150      | )
|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|Total Stockholders Equity                                                                                                                                  |  |               | 986,994   |   |                  |   | 815,436   |  
|                                                                                                                                                            |  |               |           |   |                  |   |           |  
|Total Liabilities and Stockholders Equity                                                                                                                  |  | $             | 2,340,943 |   |                  | $ | 1,782,168 |  
|                                                                                                                                                            |  |               |           |   |                  |   |           |  

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



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)

Amounts in columns expressed in thousands

(except per share information)

PROFIT AND LOSS



|                                              |  |                    |         |   |               |   |         |  
|--------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                              |  | Three months ended |        
|                                              |  | March 31,2008      |         |   | March 31,2007 |  
|Sales                                         |  | $                  | 408,080 |   |               | $ | 288,996 |  
|Excise taxes                                  |  |                    | (94,460 | ) |               |   | (60,782 | )
|Net Sales                                     |  |                    | 313,620 |   |               |   | 228,214 |  
|Cost of goods sold                            |  |                    | 247,404 |   |               |   | 181,897 |  
|                                              |  |                    |         |   |               |   |         |  
|Gross Profit                                  |  |                    | 66,216  |   |               |   | 46,317  |  
|                                              |  |                    |         |   |               |   |         |  
|Operating expenses                            |  |                    | 40,748  |   |               |   | 27,402  |  
|                                              |  |                    |         |   |               |   |         |  
|Operating Income                              |  |                    | 25,468  |   |               |   | 18,915  |  
|                                              |  |                    |         |   |               |   |         |  
|Non operating income / (expense), net         |  |                    |         |   |               |   |         |  
|Interest (expense), net                       |  |                    | (11,528 | ) |               |   | (8,649  | )
|Other financial income / (expense), net       |  |                    | 9,103   |   |               |   | (15,400 | )
|Other non operating income / (expense), net   |  |                    | 140     |   |               |   | (343    | )
|                                              |  |                    |         |   |               |   |         |  
|Income before taxes                           |  |                    | 23,183  |   |               |   | (5,477  | )
|                                              |  |                    |         |   |               |   |         |  
|Income tax expense                            |  |                    | 4,398   |   |               |   | (1,030  | )
|                                              |  |                   
|Minority interests                            |  |                    | 253     |   |               |   | 729     |  
|                                              |  |                    |         |   |               |   |         |  
|Net income                                    |  | $                  | 18,532  |   |               | $ | (5,176  | )
|                                              |  |                    |         |   |               |   |         |  
|Net income per share of common stock, basic   |  | $                  | 0.46    |   |               | $ | (0.13   | )
|                                              |  |                    |         |   |               |   |         |  
|Net income per share of common stock, diluted |  | $                  | 0.45    |   |               | $ | (0.13   | )
|                                              |  |                    |         |   |               |   |         |  

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



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENT OF CHANGES IN

STOCKHOLDERS EQUITY (UNAUDITED)

Amounts
in columns expressed in thousands

(except per share information)



|                                                    |  |              |  |                |                          |              |                  |        |                                     |      |       |  |   |         |  |   |         |  |   |         |  |   |        
|--------------------------------------------------- |  | ------------ |  | -------------- | ------------------------ | ------------ | ---------------- | ------ | ----------------------------------- | ---- | ----- |  | - | ------- |  | - | ------- |  | - | ------- |  | - | -------
|                                                    |  | Common Stock |  |                | AdditionalPaid-inCapital |              | RetainedEarnings |        | Accumulatedothercomprehensiveincome |      | Total
|                                                    |  | Common Stock |  | Treasury Stock |                          |              |                  |        |                                     |      |       |  |  
|                                                    |  | No. ofShares |  | Amount         |                          | No. ofShares |                  | Amount |                                     |      |       |  |   |         |  |   |        
|Balance at December 31, 2007                        |  | 40,566       |  | $              | 406                      |              | 246              |        | $                                   | (150 | )     |  | $ | 429,554 |  | $ | 205,186 |  | $ | 180,440 |  | $ | 815,436
|                                                    |  |              |  |                |                          |              |                  |        |                                     |      |       |  |   |         |  |   |         |  |   |         |  |   |        
|Net income for 2008                                 |  |             |  |                |                         |              |                 |        |                                     |     |       |  |   |        |  |   | 18,532  |  |   |        |  |   | 18,532 
|Foreign currency translation adjustment             |  |             |  |                |                         |              |                 |        |                                     |     |       |  |   |        |  |   |        |  |   | 75,200  |  |   | 75,200 
|                                                    |  |              |  |                |                          |              |                  |        |                                     |      |       |  |   |         |  |   |         |  |   |         |  |   |        
|Comprehensive income for 2008                       |  |             |  |                |                         |              |                 |        |                                     |     |       |  |   |        |  |   | 18,532  |  |   | 75,200  |  |   | 93,732 
|Contractual compensation                            |  |             |  |                |                         |              |                  |        |                                     |      |       |  |   |        |  |   |        |  |   |        |  |   |       
|Common stock issued in public placement             |  |             |  |                |                         |              |                 |        |                                     |     |       |  |   |        |  |   |        |  |   |        |  |   |       
|Common stock issued in connection with options      |  | 12           |  |                | 0                        |              |                 |        |                                     |     |       |  |   | 958     |  |   |        |  |   |        |  |   | 958    
|Common stock issued in connection with acquisitions |  | 1,989        |  |                | 20                       |              |                 |        |                                     |     |       |  |   | 76,848  |  |   |        |  |   |        |  |   | 76,868 
|Balance at March 31, 2008                           |  | 42,567       |  | $              | 426                      |              | 246              |        | $                                   | (150 | )     |  | $ | 507,360 |  | $ | 223,718 |  | $ | 255,640 |  | $ | 986,994
|                                                    |  |              |  |                |                          |              |                  |        |                                     |      |       |  |   |         |  |   |         |  |   |         |  |   |        

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



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOW (UNAUDITED)

Amounts in columns expressed in thousands

CASH FLOW



|                                                                                              |  |                             |          |   |      |   |         |  
|--------------------------------------------------------------------------------------------- |  | --------------------------- | -------- | - | ---- | - | ------- | -
|                                                                                              |  | Three months endedMarch 31, |         
|                                                                                              |  | 2008                        |          |   | 2007 |  
|Operating Activities                                                                          |  |                             |          |   |      |   |         |  
|Net income                                                                                    |  | $                           | 18,532   |   |      | $ | (5,176  | )
|Adjustments to reconcile net income to net cash provided by / (used in) operating activities: |  |                             |          |   |      |   |         |  
|Depreciation and amortization                                                                 |  |                             | 3,198    |   |      |   | 2,434   |  
|Deferred income taxes                                                                         |  |                             | (1,131   | ) |      |   | (7,148  | )
|Bad debt provision                                                                            |  |                             | (174     | ) |      |   | 188     |  
|Minority interests                                                                            |  |                             | 253      |   |      |   | 729     |  
|Unrealized foreign exchange (gains) / losses                                                  |  |                             | (8,915   | ) |      |   | 3,364   |  
|Cost of debt extinguishment                                                                   |  |                             | 1,156    |   |      |   | 11,869  |  
|Stock options expense                                                                         |  |                             | 766      |   |      |   | 463     |  
|Other non cash items                                                                          |  |                             | (1,344   | ) |      |   |        |  
|Changes in operating assets and liabilities:                                                  |  |                             |          |   |      |   |         |  
|Accounts receivable                                                                           |  |                             | 71,550   |   |      |   | 44,461  |  
|Inventories                                                                                   |  |                             | 3,886    |   |      |   | 11,431  |  
|Prepayments and other current assets                                                          |  |                             | 6,344    |   |      |   | 6,807   |  
|Trade accounts payable                                                                        |  |                             | (33,920  | ) |      |   | (46,825 | )
|Other accrued liabilities and payables                                                        |  |                             | (10,823  | ) |      |   | (20,192 | )
|                                                                                              |  |                             |          |   |      |   |         |  
|Net Cash provided by Operating Activities                                                     |  |                             | 49,378   |   |      |   | 2,405   |  
|                                                                                              |  |                            
|Investing Activities                                                                          |  |                             |          |   |      |   |         |  
|Investment in fixed assets                                                                    |  |                             | (9,284   | ) |      |   | (5,410  | )
|Proceeds from the disposal of fixed assets                                                    |  |                             | 1,337    |   |      |   | 2,647   |  
|Refundable purchase price related to Botapol acquisition                                      |  |                             |         |   |      |   | 5,000   |  
|Acquisitions of subsidiaries, net of cash acquired                                            |  |                             | (170,959 | ) |      |   | (90,917 | )
|                                                                                              |  |                             |          |   |      |   |         |  
|Net Cash used in Investing Activities                                                         |  |                             | (178,906 | ) |      |   | (88,680 | )
|                                                                                              |  |                            
|Financing Activities                                                                          |  |                             |          |   |      |   |         |  
|Borrowings on bank loans and overdraft facility                                               |  |                             | 16,763   |   |      |   | 94,311  |  
|Payment of bank loans and overdraft facility                                                  |  |                             | (14,869  | ) |      |   | (5,733  | )
|Payment of Senior Secured Notes                                                               |  |                             | (14,445  | ) |      |   | (95,440 | )
|Movements in capital leases payable                                                           |  |                             | (466     | ) |      |   | (160    | )
|Issuance of shares in public placement                                                        |  |                             |         |   |      |   | 42,354  |  
|Net Borrowings on Convertible Senior Notes                                                    |  |                             | 304,403  |   |      |   |        |  
|Options exercised                                                                             |  |                             | 192      |   |      |   | 311     |  
|                                                                                              |  |                             |          |   |      |   |         |  
|Net Cash provided by Financing Activities                                                     |  |                             | 291,578  |   |      |   | 35,643  |  
|                                                                                              |  |                             |          |   |      |   |         |  
|Currency effect on brought forward cash balances                                              |  |                             | 10,909   |   |      |   | (56     | )
|Net Increase / (Decrease) in Cash                                                             |  |                             | 172,959  |   |      |   | (50,632 | )
|Cash and cash equivalents at beginning of period                                              |  |                             | 87,867   |   |      |   | 159,362 |  
|                                                                                              |  |                             |          |   |      |   |         |  
|Cash and cash equivalents at end of period                                                    |  | $                           | 260,826  |   |      | $ | 108,674 |  
|                                                                                              |  |                             |          |   |      |   |         |  
|Supplemental Schedule of Non-cash Investing Activities                                        |  |                             |          |   |      |   |         |  
|Common stock issued in connection with investment in subsidiaries                             |  |                             | 76,848   |   |      | $ |        |  
|                                                                                              |  |                             |          |   |      |   |         |  
|Supplemental disclosures of cash flow information                                             |  |                             |          |   |      |   |         |  
|Interest paid                                                                                 |  | $                           | 19,361   |   |      | $ | 18,124  |  
|Income tax paid                                                                               |  | $                           | 4,698    |   |      | $ | 6,600   |  
|                                                                                              |  |                             |          |   |      |   |         |  

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



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables expressed in thousands, except per share information



|1. | ORGANIZATION AND DESCRIPTION OF BUSINESS
|-- | ----------------------------------------

Central
European Distribution Corporation (CEDC), a Delaware corporation, and its subsidiaries (collectively referred to as we, us, our, or the Company) operate primarily in the alcohol beverage
industry. The Company is Central Europes largest integrated spirit beverages business. The Company is the largest vodka producer by value and volume in Poland and produces the Absolwent, Zubrowka, Bols and Soplica brands, among others. The
Company currently exports its products to many markets around the world. In addition, it produces and distributes Royal Vodka, the number one selling vodka in Hungary. The Company is the leading distributor and the leading importer of spirits, wine
and beer in Poland and Hungary. In March 2008, the Company continued its expansion plans in the region by purchasing an 85% stake in Copecresto Enterprises Limited, which owns the leading premium vodka brand in Russia, Parliament Vodka.



|2. | BASIS OF PRESENTATION
|-- | ---------------------

Our consolidated financial
statements are prepared in accordance with accounting principles generally accepted in the United States. Our Company consolidates all entities that we control by ownership of a majority voting interest. All inter-company accounts and transactions
have been eliminated in the consolidated financial statements.

CEDCs subsidiaries maintain their books of account and prepare their
statutory financial statements in their respective local currencies. The subsidiaries financial statements have been adjusted to reflect accounting principles generally accepted in the United States of America (U.S. GAAP) for interim financial
information and in accordance with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and disclosures required by generally accepted accounting principles in the United States of
America for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring adjustments) considered necessary to fairly present our financial condition, results of operations and cash flows for the
interim periods presented have been included. Operating results for the three-month periods ended March 31, 2008 are not necessarily indicative of the results that may be expected for the year ending December 31, 2008.

The balance sheet at December 31, 2007 has been derived from the audited financial statements at that date but does not include all of the
information and footnotes required by generally accepted accounting principles for complete financial statements.

The unaudited interim
financial statements should be read with reference to the consolidated financial statements and footnotes thereto included in our annual report on Form 10-K for the year ended December 31, 2007.



|3. | ACQUISITIONS
|-- | ------------

On March 11, 2008, the Company
and certain of its affiliates entered into a Share Sale and Purchase Agreement and certain other agreements with White Horse Intervest Limited, a British Virgin Islands Company, and certain of White Horses affiliates, relating to the
Companys acquisition from White Horse of 85% of the share capital of Copecresto Enterprises Limited, a Cypriot company. In connection with this acquisition, the Company paid a consideration of approximately $180 million in cash and
2.2 million shares of common stock. The delivery of 250,000 shares of the Share Consideration and $15 million of the Cash Consideration was deferred pending the consummation of certain of the Reorganization Transactions, but ultimately the
shares were issued on May 2, 2008.

On February 27, 2008, the Company announced that it has signed Heads of Terms outlining the
main terms on which the Company would invest in the Whitehall Group in Russia. The Whitehall Group is one of the leading importers and distributors of premium wines and spirits in Russia.

The fair value of the net assets acquired in connection with the 2008 Parliament group acquisition as of the acquisition date is:



|                          |  |   |        
|------------------------- |  | - | -------
|ASSETS                    |  |   |        
|                          | 
|Cash and cash equivalents |  |   | 1,347  
|Inventory                 |  |   | 2      
|Prepayments               |  |   | 6,159  
|Deferred tax  current    |  |   | 10     
|Equipment                 |  |   | 34,046 
|Trademarks                |  |   | 151,611
|Other non-current assets  |  |   | 43     
|                          |  |   |        
|Total Assets              |  | $ | 193,218
|                          |  |   |        



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##### Table of Contents

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



|                                        |  |   |        
|--------------------------------------- |  | - | -------
|LIABILITIES                             |  |   |        
|                                        | 
|Trade payables                          |  |   | 435    
|Other Accrued liabilities               |  |   | 12     
|Long term debt                          |  |   | 44     
|Deferred tax                            |  |   | 36,163 
|                                        |  |   |        
|Total Liabilities                       |  | $ | 36,654 
|                                        |  |   |        
|Minority interests                      |  |   |       
|Net identifiable assets and liabilities |  |   | 156,565
|                                        | 
|Goodwill on acquisition                 |  |   | 113,916
|                                        | 
|Consideration paid, satisfied in cash   |  |   | 172,306
|Consideration paid, satisfied in shares |  |   | 76,867 
|                                        |  |   |        
|Cash (acquired)                         |  | $ | 1,347  
|                                        |  |   |        
|Net Cash Outflow                        |  | $ | 170,959

The Company is in the process of completing its valuations and refining its purchase price
adjustments for Parliament, which are expected to be finalized by September 30, 2008. As such, the allocation of the purchase price is subject to further adjustments.

The following table sets forth the unaudited pro forma results of operations of the Company for the three month periods ending March 31, 2008 and 2007. The unaudited pro forma results of operations give effect to
the Companys acquisitions as if they occurred on January 1, 2008 and 2007. The unaudited pro forma results of operations are presented after giving effect to certain adjustments for depreciation, amortization of deferred financing costs,
interest expense on the acquisition financing, and related income tax effects. The unaudited pro forma results of operations are based upon currently available information and certain assumptions that the Company believes are reasonable under the
circumstances. The unaudited pro forma results of operations do not purport to present what the Companys results of operations would actually have been if the aforementioned transactions had in fact occurred on such date or at the beginning of
the period indicated, nor do they project the Companys financial position or results of operations at any future date or for any future period.



|                                           |  |                             |         |      |   |         |  
|------------------------------------------ |  | --------------------------- | ------- | ---- | - | ------- | -
|                                           |  | Three months endedMarch 31, |        
|                                           |  | 2008                        |         | 2007 |  
|Net sales                                  |  | $                           | 351,798 |      | $ | 276,762 |  
|Net income                                 |  |                             | 23,156  |      |   | (5,939  | )
|                                           |  |                            
|Net income per share data:                 |  |                             |         |      |   |         |  
|Basic earnings per share of common stock   |  | $                           | 0.54    |      | $ | (0.14   | )
|Diluted earnings per share of common stock |  | $                           | 0.53    |      | $ | (0.14   | )



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



|4. | INTANGIBLE ASSETS OTHER THAN GOODWILL
|-- | -------------------------------------

The major
components of intangible assets are:



|                                   |  |               |         |   |                  |   |         |  
|---------------------------------- |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                   |  | March 31,2008 |         |   | December 31,2007 |  
|Non-amortizable intangible assets: |  |               |         |   |                  |   |         |  
|Trademarks                         |  | $             | 754,992 |   |                  | $ | 543,123 |  
|Total                              |  |               | 754,992 |   |                  |   | 543,123 |  
|Amortizable intangible assets:     |  |               |         |   |                  |   |         |  
|Trademarks                         |  | $             | 7,391   |   |                  | $ | 6,754   |  
|Customer relationships             |  |               | 2,056   |   |                  |   | 1,913   |  
|Less accumulated amortization      |  |               | (6,913  | ) |                  |   | (6,093  | )
|Total                              |  |               | 2,534   |   |                  |   | 2,574   |  
|                                   |  |               |         |   |                  |   |         |  
|Total intangible assets            |  | $             | 757,526 |   |                  | $ | 545,697 |  
|                                   |  |               |         |   |                  |   |         |  

Management considers trademarks that are indefinite-lived assets to have high or market-leader
brand recognition within their market segments based on the length of time they have existed, the comparatively high volumes sold and their general market positions relative to other products in their respective market segments. These trademarks
include Soplica, Zubrówka, Absolwent, Royal and the rights for Bols Vodka in Poland, Hungary and Russia. Taking the above into consideration, as well as the evidence provided by analyses of vodka products life cycles, market studies,
competitive and environmental trends, management believes that these brands will generate cash flows for an indefinite period of time, and that the useful lives of these brands are indefinite. In accordance with SFAS 142, intangible assets with an
indefinite life are not amortized but are reviewed at least annually for impairment.

The Company has included in non-amortizable intangible
assets the preliminary valuation of the Parliament trademark. A full purchase price allocation according to SFAS 141 is currently in progress and is expected to be completed by September 30, 2008.



|5. | COMPREHENSIVE INCOME/(LOSS)
|-- | ---------------------------

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

As of March 31, 2008, the Polish Zloty exchange rate used to translate the balance sheet strengthened by approximately 8.6% as
compared to the exchange rate as of December 31, 2007, and as a result a comprehensive income was recognized. Additionally, translation gains and losses with respect to long-term subordinated inter-company loans with the parent company are
charged to other comprehensive income. No deferred tax benefit has been recorded on the comprehensive income/(loss) in regard to the long-term inter-company transactions with the parent company, as the repayment of any equity investment is not
anticipated in the foreseeable future.



|6. | EARNINGS PER SHARE
|-- | ------------------

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



|                                                    |  |                             |        |      |   |        |  
|--------------------------------------------------- |  | --------------------------- | ------ | ---- | - | ------ | -
|                                                    |  | Three months endedMarch 31, |       
|                                                    |  | 2008                        |        | 2007 |  
|Basic:                                              |  |                             |        |      |   |        |  
|Net income                                          |  | $                           | 18,532 |      | $ | (5,176 | )
|                                                    |  |                             |        |      |   |        |  
|Weighted average shares of common stock outstanding |  |                             | 40,720 |      |   | 39,055 |  
|Basic earnings per share                            |  | $                           | 0.46   |      | $ | (0.13  | )
|                                                    |  |                             |        |      |   |        |  



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



|                                                                                 |  |   |        |  |   |        |  
|-------------------------------------------------------------------------------- |  | - | ------ |  | - | ------ | -
|Diluted:                                                                         |  |   |        |  |   |        |  
|Net income                                                                       |  | $ | 18,532 |  | $ | (5,176 | )
|                                                                                 |  |   |        |  |   |        |  
|Weighted average shares of common stock outstanding                              |  |   | 40,720 |  |   | 39,055 |  
|Net effect of dilutive employee stock options based on the treasury stock method |  |   | 760    |  |   | 387    |  
|Totals                                                                           |  |   | 41,480 |  |   | 39,442 |  
|Diluted earnings per share                                                       |  | $ | 0.45   |  | $ | (0.13  | )
|                                                                                 |  |   |        |  |   |        |  

Employee stock options granted have been included in the above calculations of diluted earnings
per share since the exercise price is less than the average market price of the common stock during the three months periods ended March 31, 2008 and 2007. The above calculation does not include the impact of contingent shares issued in
relation to the Parliament acquisition as they were not material. In addition there is no adjustment to fully diluted shares related to the Convertible Senior Notes as the average market price was below the conversion price for the period.



|7. | BORROWINGS
|-- | ----------

Bank Facilities

In June 2006, the Company consolidated all working capital facilities to three banks. These facilities are used primarily to support the Companys
working capital requirements. These credit lines are only denominated in Polish Zloty.

As of March 31, 2008, $77.5 million remained
available under the Companys overdraft facilities. These overdraft facilities are renewed on an annual basis.

As of March 31,
2008, the company had utilized approximately $134.5 million of a multipurpose credit line agreement in connection with the 2007 tender offer in Poland to purchase the remaining outstanding shares of Polmos Bialystok S.A. The Companys
obligations under the credit line agreement are guaranteed through promissory notes by certain subsidiaries of the Company. The indebtedness under the credit line agreement bears interest at a rate equal to the one month Warsaw Interbank Rate plus a
margin of 1.2% and matures on March 31, 2009.

Senior Secured Notes

In connection with the Bols and Polmos Bialystok acquisitions, on July 25, 2005 the Company completed the issuance of 325 million 8%
Senior Secured Notes due 2012 (the Notes). Interest is due semi-annually on the 25th of January and July, and the Notes are guaranteed on a senior basis by certain of the Companys subsidiaries. The Indenture governing our Notes
contains certain restrictive covenants, including covenants limiting the Companys ability to: make certain payments, including dividends or other distributions, with respect to the share capital of the parent or its subsidiaries; incur or
guarantee additional indebtedness or issue preferred stock; make certain investments; prepay or redeem subordinated debt or equity; create certain liens or enter into sale and leaseback transactions; engage in certain transactions with affiliates;
sell assets or consolidate or merge with or into other companies; issue or sell share capital of certain subsidiaries; and enter into other lines of business.

During the three months ending March 31, 2008, the Company purchased 9.8 million of it outstanding Senior Secured Notes back on the open market and retired this debt as of March 31, 2008.

As of March 31, 2008 and December 31, 2007, the Company had accrued interest included in other accrued liabilities of $7.0
million and $15.8 million respectively related to the Senior Secured Notes, with the next coupon due for payment on July 25, 2008. Total obligations under the Senior Secured Notes are shown net of deferred finance costs, amortized over the life
of the borrowings using the effective interest rate method and fair value adjustments from the application of hedge accounting as shown in the table below:



|                                     |  |               |         |   |                  |   |         |  
|------------------------------------ |  | ------------- | ------- | - | ---------------- | - | ------- | -
|                                     |  | March 31,2008 |         |   | December 31,2007 |  
|Senior Secured Notes                 |  | $             | 395,649 |   |                  | $ | 381,689 |  
|Fair value bond mark to market       |  |               | (20,624 | ) |                  |   | (28,204 | )
|Unamortized portion of closed hedges |  |               | (888    | ) |                  |   | (858    | )
|Unamortized issuance costs           |  |               | (8,913  | ) |                  |   | (8,329  | )
|                                     |  |               |         |   |                  |   |         |  
|Total                                |  | $             | 365,224 |   |                  | $ | 344,298 |  
|                                     |  |               |         |   |                  |   |         |  



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



Convertible Senior Notes

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

The proceeds from the
Convertible Notes were used to fund the cash portion of the acquisition of Copecresto Enterprises Limited, with the remaining proceeds to be used for future potential acquisitions, including the potential Whitehall acquisition.

As of March 31, 2008 the Company had accrued interest included in other accrued liabilities of $0.6 million related to the Convertible Senior Notes,
with the next coupon due for payment on September 15, 2008. Total obligations under the Convertible Senior Notes are shown net of deferred finance costs, amortized over the life of the borrowings using the effective interest rate method as
shown in the table below:



|                           |  |               |         |   |                  |   |  
|-------------------------- |  | ------------- | ------- | - | ---------------- | - | -
|                           |  | March 31,2008 |         |   | December 31,2007
|Convertible Senior Notes   |  | $             | 310,000 |   |                  | $ | 
|Unamortized issuance costs |  |               | (5,597  | ) |                  |   | 
|                           |  |               |         |   |                  |   |  
|Total                      |  | $             | 304,403 |   |                  | $ | 
|                           |  |               |         |   |                  |   |  

Total borrowings as disclosed in the financial statements are:



|                                                                   |  |               |         |                  |   |        
|------------------------------------------------------------------ |  | ------------- | ------- | ---------------- | - | -------
|                                                                   |  | March 31,2008 |         | December 31,2007
|Short term bank loans and overdraft facilities for working capital |  | $             | 48,689  |                  | $ | 42,785 
|Short term bank loans for share tender                             |  |               | 134,530 |                  |   |       
|                                                                   |  |              
|Total short term bank loans and overdraft facilities               |  |               | 183,219 |                  |   | 42,785 
|                                                                   |  |              
|Long term bank loans for share tender                              |  |               |        |                  |   | 122,952
|Long term obligations under Senior Secured Notes                   |  |               | 365,224 |                  |   | 344,298
|Long term obligations under Convertible Senior Notes               |  |               | 304,403 |                  |   |        
|Other total long term debt, less current maturities                |  |               |        |                  |   |       
|                                                                   |  |               |         |                  |   |        
|Total debt                                                         |  | $             | 852,846 |                  | $ | 510,035
|                                                                   |  |               |         |                  |   |        



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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



|                                             |  |               |        
|-------------------------------------------- |  | ------------- | -------
|                                             |  | March 31,2008
|Principal repayments for the following years |  |               |        
|2008                                         |  | $             | 48,689 
|2009                                         |  |               | 134,530
|2010                                         |  |               |       
|2011                                         |  |               |       
|2012 and beyond                              |  |               | 669,627
|                                             |  |               |        
|Total                                        |  | $             | 852,846
|                                             |  |               |        

The amounts due in 2008 relate to normal working capital facilities which are typically renewed on
an annual basis.



|8. | INVENTORIES
|-- | -----------

Inventories are stated at the lower of
cost (first-in, first-out method) or market value. Elements of cost include materials, labor and overhead and are classified as follows:



|                                    |  |               |         |                  |   |        
|----------------------------------- |  | ------------- | ------- | ---------------- | - | -------
|                                    |  | March 31,2008 |         | December 31,2007
|Raw materials and supplies          |  | $             | 21,887  |                  | $ | 19,051 
|In-process inventories              |  |               | 6,204   |                  |   | 2,479  
|Finished goods and goods for resale |  |               | 122,072 |                  |   | 119,742
|                                    |  |               |         |                  |   |        
|Total                               |  | $             | 150,163 |                  | $ | 141,272
|                                    |  |               |         |                  |   |        

Because of the nature of the products supplied by the Company, great attention is paid to
inventory rotation. Where goods are estimated to be obsolete or unmarketable they are written down to a value reflecting the net realizable value in their relevant condition.

Cost includes customs duty (where applicable), and all costs associated with bringing the inventory to a condition for sale. These costs include
importation, handling, storage and transportation costs, and exclude rebates received from suppliers, which are reflected as reductions to closing inventory. Inventories are comprised primarily of beer, wine, spirits, packaging materials and
non-alcoholic beverages.



|9. | INCOME TAXES
|-- | ------------

The Company operates in seven tax
jurisdictions: the United States of America, Poland, The Netherlands, Hungary, Russia, Germany and Cyprus. All Polish subsidiaries file their own corporate tax returns as well as account for their own deferred tax assets and liabilities. The Company
does not file a tax return in Delaware based upon its consolidated income, but does file a return in Delaware based on the income statement for transactions occurring in the United States of America.

The company is currently generating tax loss carry forwards in the United States at a 35% tax rate, which has the effect of reducing the overall effective
tax rate below the 19% Polish statutory rate.



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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



The Company adopted the provisions of FASB Interpretation No. 48, Accounting for
Uncertainty in Income Taxes, an interpretation of FASB Statement 109, effective January 1, 2007. Interpretation 48 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement
of a tax position taken or expected to be taken in a tax return. Benefits from tax positions should be recognized in the financial statements only when it is more likely than not that the tax position will be sustained upon examination by the
appropriate taxing authority that would have full knowledge of all relevant information. A tax position that meets the more-likely-than-not recognition threshold is measured at the largest amount of benefit that is greater than fifty percent likely
of being realized upon ultimate settlement. Tax positions that previously failed to meet the more-likely-than-not recognition threshold should be recognized in the first subsequent financial reporting period in which that threshold is met.
Previously recognized tax positions that no longer meet the more-likely-than-not recognition threshold should be derecognized in the first subsequent financial reporting period in which that threshold is no longer met. Interpretation 48 also
provides guidance on the accounting for and disclosure of unrecognized tax benefits, interest and penalties. Adoption of Interpretation 48 did not have a significant impact on the Corporations financial statements.

The Company files income tax returns in the U.S., Poland, Hungary, Russia, as well as in various other countries throughout the world in which we conduct
our business. The major tax jurisdictions and their earliest fiscal years that are currently open for tax examinations are 2003 in the U.S., 2002 in Poland and Hungary.



|10. | INTEREST INCOME / (EXPENSE)
|--- | ---------------------------

For the three months
ended March 31, 2008 and 2007 respectively, the following items are included in Interest income / (expense):



|                              |  |                             |         |   |      |   |        |  
|----------------------------- |  | --------------------------- | ------- | - | ---- | - | ------ | -
|                              |  | Three months endedMarch 31, |        
|                              |  | 2008                        |         |   | 2007 |  
|Interest income               |  | $                           | 1,374   |   |      | $ | 1,316  |  
|Interest expense              |  |                             | (12,902 | ) |      |   | (9,965 | )
|                              |  |                             |         |   |      |   |        |  
|Total interest (expense), net |  | $                           | (11,528 | ) |      | $ | (8,649 | )



|11. | OTHER FINANCIAL INCOME / (EXPENSE)
|--- | ----------------------------------

For the three
months ended March 31, 2008 and 2007, the following items are included in Other Financial Income / (Expense):



|                                                                  |  |                             |       |   |      |   |         |  
|----------------------------------------------------------------- |  | --------------------------- | ----- | - | ---- | - | ------- | -
|                                                                  |  | Three months endedMarch 31, |      
|                                                                  |  | 2008                        |       |   | 2007 |  
|Foreign exchange impact related to Senior Secured Notes financing |  | $                           | 5,959 |   |      | $ | (3,364  | )
|Foreign exchange impact related to Convertible Notes              |  | $                           | 2,956 |   |      |   |        |  
|Premium for early debt retirement                                 |  |                             |      |   |      |   | (6,940  | )
|Write-off of hedge associated with retired debt                   |  |                             | (305  | ) |      |   | (2,757  | )
|Write-off of financing costs associated with retired debt         |  |                             | (851  | ) |      |   | (2,167  | )
|Other gains / (losses)                                            |  |                             | 1,344 |   |      |   | (172    | )
|                                                                  |  |                             |       |   |      |   |         |  
|Total other financial income / (expense), net                     |  | $                           | 9,103 |   |      | $ | (15,400 | )



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



|12. | FINANCIAL INSTRUMENTS
|--- | ---------------------

Financial Instruments and
Their Fair Values

Financial instruments consist mainly of cash and cash equivalents, accounts receivable, accounts payable, bank loans,
overdraft facilities and long-term debt. All of the monetary assets represented by these financial instruments are located in Poland. Consequently, they are subject to currency translation risk when reporting in U.S. Dollars.

Derivative financial instruments

The
Company is exposed to market movements in foreign currency exchange rates that could affect the Companys results of operations and financial condition. In accordance with SFAS 133, Accounting for Derivative Instruments and Hedging
Activities, the Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value.

The fair values of the Companys derivative instruments can change with fluctuations in interest rates and/or currency rates and are expected to offset changes in the values of the underlying exposures. The
Companys derivative instruments are held to hedge economic exposures. The Company follows internal policies to manage interest rate and foreign currency risks, including limitations on derivative market-making or other speculative activities.

To qualify for hedge accounting under SFAS No. 133, the details of the hedging relationship must be formally documented at the
inception of the arrangement, including the risk management objective, hedging strategy, hedged item, specific risk that is being hedged, the derivative instrument, how effectiveness is being assessed and how ineffectiveness will be measured. The
derivative must be highly effective in offsetting either changes in the fair value or cash flows, as appropriate, of the risk being hedged.

Effectiveness is evaluated on a retrospective and prospective basis based on quantitative measures. When it is determined that a derivative is not, or has ceased to be, highly effective as a hedge, the Company discontinues hedge accounting
prospectively. The Company discontinues hedge accounting prospectively when (1) the derivative is no longer highly effective in offsetting changes in the cash flows of a hedged item; (2) the derivative expires or is sold, terminated, or
exercised; (3) it is no longer probable that the forecasted transaction will occur; or (4) management determines that designating the derivative as a hedging instrument is no longer appropriate.

Fair value hedges are hedges that offset the risk of changes in the fair values of recorded assets, liabilities and firm commitments. The Company records
changes in the fair value of derivative instruments which are designated and deemed effective as fair value hedges, in earnings offset by the corresponding changes in the fair value of the hedged items.

In September 2005, the Company entered into a coupon swap arrangement which exchanges a fixed Euro based coupon of 8%, with a variable Euro based coupon
(IRS) based upon the 6 month Euribor rate plus a margin. The hedge is accounted for as a fair value hedge according to SFAS 133 and is tested for effectiveness on a quarterly basis using the long haul method. Under this method, as long as the hedge
is deemed highly effective both the fair value of the hedge and the hedge item are marked to market with the net impact recorded as gain or loss in the income statement. For the three months ended March 31, 2008, the company recorded a net gain
of $414,500. In September 2005, the Company entered into a second hedge that exchanged the variable Euro coupon with a variable Polish Zloty coupon (CIRS). However, due to the continued strength of the Polish economy and currency the Company closed
this swap contract. The hedge did not qualify for hedge accounting and therefore the changes in fair value were reflected in the results of operations.

In March 2008, a portion of the IRS hedge related to the repurchased Senior Secured Notes was closed and written off, and a new hedging relationship was created with the hedge match one for one the remaining
outstanding Senior Secured Notes.

In February 2007 and December 2006, a portion of the IRS hedge was closed and a new hedging relationship
was created. The mark to market valuation of the closed hedges at the time was frozen and is being amortized over the remaining useful life of the hedged item. The hedge closure in December 2006 was related to the part of the Senior Secured Notes
repurchased in January 2007. Consequently, the amount was written off in January 2007 following the repurchase. As of March 31, 2008, there is an unamortized asset of $0.9 million recorded as an adjustment to the valuation of the Senior Secured
Notes.



|13. | FAIR VALUE MEASUREMENTS
|--- | -----------------------

Effective January 1,
2008, the Company adopted SFAS No. 157, which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability
in an orderly transaction between market participants at the measurement date. SFAS No. 157 establishes a three-level fair value hierarchy that prioritizes the inputs used to measure fair value. This hierarchy requires entities to maximize the
use of observable inputs and minimize the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1  Quoted prices in active markets for identical assets or liabilities.



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NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



Level 2  Observable inputs other than quoted prices included in Level 1, such as
quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3  Unobservable inputs that are supported by little or no market activity and that are significant to the fair value
of the assets or liabilities. This includes certain pricing models, discounted cash flow methodologies and similar techniques that use significant unobservable inputs.

The Companys adoption of SFAS No. 157 did not have a material impact on our consolidated financial statements.

We evaluate the position of each financial instrument measured at fair value in the hierarchy individually based on the valuation methodology we apply. At March 31, 2008, we have no material financial assets or
liabilities carried at fair value using significant level 1 or level 2 inputs and the only instruments we value using level 3 inputs are currency swap agreements as follows:

Coupon Swap

In September 2005, the
Company entered into a coupon swap arrangement which exchanges a fixed Euro based coupon of 8%, with a variable Euro based coupon (IRS) based upon the 6 month Euribor rate plus a margin. The hedge is accounted for as a fair value hedge according to
SFAS 133 and is tested for effectiveness on a quarterly basis using the long haul method. Under this method, as long as the hedge is deemed highly effective both the fair value of the hedge and the hedged item are marked to market with the net
impact recorded as gain or loss in the income statement. In September 2005, the Company entered into a second hedge that exchanged the variable Euro coupon with a variable Polish Zloty coupon (CIRS). However, due to the continued strength of the
Polish economy and currency the Company closed this swap contract. The hedge did not qualify for hedge accounting and therefore the changes in fair value were reflected in the results of operations.

The fair value of these instruments as at March 31, 2008, was a $20.6 million liability, which represented a $7.6 million decrease from the $28.2
million liability as at December 31, 2007 and was recognized as a gain in the consolidated statement of operations.



|14. | STOCK OPTION PLANS AND RESTRICTED STOCK AWARDS
|--- | ----------------------------------------------

As
of January 1, 2006, the Company adopted SFAS No. 123(R) Share-Based Payment requiring the recognition of compensation expense in the Condensed Consolidated Statements of Income related to the fair value of its employee
share-based options. SFAS No. 123(R) revises SFAS No. 123 Accounting for Stock-Based Compensation and supersedes APB Opinion No. 25 Accounting for Stock Issued to Employees. SFAS No. 123(R) is supplemented
by SEC Staff Accounting Bulletin (SAB) No. 107 Share-Based Payment. SAB No. 107 expresses the SEC staffs views regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations
including the valuation of share-based payments arrangements.

The Company recognizes the cost of all employee stock options on a
straight-line attribution basis over their respective vesting periods, net of estimated forfeitures. The Company has selected the modified prospective method of transition; accordingly, prior periods have not been restated.

SFAS No. 123(R) Share-Based Payment requires the recognition of compensation expense in the Consolidated Statements of Income related to
the fair value of employee share-based options. Determining the fair value of share-based awards at the grant date requires judgment, including estimating the expected term that stock options will be outstanding prior to exercise, the associated
volatility and the expected dividends. Judgment is also required in estimating the amount of share-based awards expected to be forfeited prior to vesting. If actual forfeitures differ significantly from these estimates, share-based compensation
expense could be materially impacted. Prior to adopting SFAS No. 123(R), the Company applied Accounting Principles Board (APB) Opinion No. 25, and related Interpretations, in accounting for its stock-based compensation plans.
All employee stock options were granted at or above the grant date market price. Accordingly, no compensation cost was recognized for fixed stock option grants in prior periods.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



The Companys 2007 Stock Incentive Plan (Incentive Plan) provides for the grant of
stock options, stock appreciation rights, restricted stock and restricted stock units to directors, executives, and other employees (employees) of the Company and to non-employee service providers of the Company. Following a shareholder
resolution in April 2003 and the stock splits of May 2003, May 2004 and June 2006, the Incentive Plan authorizes, and the Company has reserved for future issuance, up to 1,397,333 shares of Common Stock (subject to an anti-dilution adjustment
in the event of a stock split, re-capitalization, or similar transaction). The Compensation Committee of the Board of Directors of the Company administers the Incentive Plan.

The option exercise price for stock options granted under the Incentive Plan may not be less than fair market value but in some cases may be in excess of
the closing price of the Common Stock on the date of grant. The Company uses the stock option price based on the closing price of the Common Stock on the day before the date of grant if such price is not materially different than the opening price
of the Common Stock on the day of the grant. Stock options may be exercised up to 10 years after the date of grant except as otherwise provided in the particular stock option agreement. Payment for the shares must be in cash, which must be received
by the Company prior to any shares being issued. Stock options granted to directors and officers as part of an employee employment contract vest after 2 years. Stock options granted to general employees as part of a loyalty program vest after three
years. The Incentive Plan was approved by CEDC shareholders during the annual shareholders meeting on April 30, 2007 to replace the Companys 1997 Stock Incentive Plan (the Old Stock Incentive Plan), which expired in November
2007. The Stock Incentive Plan will expire in November 2017. The terms and conditions of the Stock Incentive Plan are substantially similar to those of the Old Stock Incentive Plan.

Before January 1, 2006 CEDC, the holding company, realized net operating losses and therefore an excess tax benefit (windfall) resulting from the
exercise of the awards and a related credit to Additional Paid-in Capital (APIC) of $2.2 million was not recorded in the Companys books. The excess tax benefits and the credit to APIC for the windfall should not be recorded until the deduction
reduces income taxes payable on the basis that cash tax savings have not occurred. The Company will recognize the windfall upon realization.

A summary of the Companys stock option and restricted stock units activity, and related information for the three months ended March 31, 2008 is as follows:



|                               |  |                  |   |  |                                |      
|------------------------------ |  | ---------------- | - |  | ------------------------------ | -----
|Total Options                  |  | Number ofOptions |   |  | Weighted-AverageExercise Price
|Outstanding at January 1, 2008 |  | 1,253,037        |   |  | $                              | 22.02
|Granted                        |  | 165,875          |   |  | $                              | 55.21
|Exercised                      |  | (11,763          | ) |  | $                              | 16.33
|Forfeited                      |  | (8,362           | ) |  | $                              | 25.87
|                               |  |                  |   |  |                                |      
|Outstanding at March 31, 2008  |  | 1,398,787        |   |  | $                              | 35.12
|Exercisable at March 31, 2008  |  | 966,512          |   |  | $                              | 19.69



|                                 |  |                                |   |  |                                      |      
|-------------------------------- |  | ------------------------------ | - |  | ------------------------------------ | -----
|Nonvested restricted stock units |  | Number ofRestrictedStock Units |   |  | Weighted-Average GrantDate FairValue
|Nonvested at January 1, 2008     |  | 35,830                         |   |  | $                                    | 34.73
|Granted                          |  | 3,000                          |   |  | $                                    | 58.08
|Vested                           |  |                               |   |  | $                                    |     
|Forfeited                        |  | (490                           | ) |  | $                                    | 34.51
|                                 |  |                                |   |  |                                      |      
|Nonvested at March 31, 2008      |  | 38,340                         |   |  | $                                    | 36.56

During 2008, the range of exercise prices for outstanding options was $1.13 to $58.08. During
2008, the weighted average remaining contractual life of options outstanding was 5.8 years. Exercise prices for options exercisable as of March 31, 2008 ranged from $1.13 to $29.14. The Company has also granted 3,000 restricted stock units to
its employees at an average price of $58.08.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



The Company has issued stock options to employees under stock based compensation plans. Stock options
are issued at the current market price, subject to a vesting period, which varies from one to three years. As of March 31, 2008, the Company has not changed the terms of any outstanding awards.

During the three months ended March 31, 2008, the Company recognized compensation cost of $0.77 million and a related deferred tax asset of $0.26
million.

As of March 31, 2008, there was $4.6 million of total unrecognized compensation cost related to non-vested stock options and
restricted stock units granted under the Plan. The costs are expected to be recognized over a weighted average period of 45 months through 2008-2010.

Total cash received from exercise of options during the three months ended March 31, 2008 amounted to $0.19 million.

For the three month period ended March 31, 2008, the compensation expense related to all options was calculated based on the fair value of each option grant using the binomial distribution model. The Company has
never paid cash dividends and does not currently have plans to pay cash dividends, and thus has assumed a 0% dividend yield. Expected volatilities are based on average of implied and historical volatility projected over the remaining term of the
options. The expected life of stock options is estimated based on historical data on exercise of stock options, post-vesting forfeitures and other factors to estimate the expected term of the stock options granted. The risk-free interest rates are
derived from the U.S. Treasury yield curve in effect on the date of grant for instruments with a remaining term similar to the expected life of the options. In addition, the Company applies an expected forfeiture rate when amortizing stock-based
compensation expenses. The estimate of the forfeiture rates is based primarily upon historical experience of employee turnover. As individual grant awards become fully vested, stock-based compensation expense is adjusted to recognize actual
forfeitures. The following weighted-average assumptions were used in the calculation of fair value:



|                                    |  |      |               |      |   |             
|----------------------------------- |  | ---- | ------------- | ---- | - | ------------
|                                    |  | 2008 |               | 2007
|Fair Value                          |  | $    | 17.89         |      | $ | 10.03       
|Dividend Yield                      |  |      | 0%            |      |   | 0%          
|Expected Volatility                 |  |      | 37.8% - 38.5% |      |   | 30.5 - 38.4%
|Weighted Average Volatility         |  |      | 37.9%         |      |   | 37.1%       
|Risk Free Interest Rate             |  |      | 1.5% - 3.2%   |      |   | 4.7 - 5.1%  
|Expected Life of Options from Grant |  |      | 3.2           |      |   | 3.2         



|15. | COMMITMENTS AND CONTINGENT LIABILITIES
|--- | --------------------------------------

The Company
is involved in litigation from time to time and has claims against it in connection with matters arising in the ordinary course of business. In the opinion of management, the outcome of these proceedings will not have a material adverse effect on
the Companys operations.

As part of the Share Purchase Agreement related to the October 2005 Polmos Bialystok Acquisition, the
Company is required to ensure that Polmos Bialystok will make investments of at least 77.5 million Polish Zloty during the five years after the acquisition was consummated. As of March 31, 2008, the Company has invested 51.2 million
Polish Zloty (approximately $23.0 million) in Polmos Bialystok.

As of March 31, 2008, the Company has secured letters for credit for
the construction of rectification lines with a cash deposit of $5.7 million. Moreover, custom liabilities with the local tax office for imported products have been secured by cash held by the bank for $2.7 million.



|16. | RELATED PARTY TRANSACTION
|--- | -------------------------

In January of 2005, the
Company entered into a rental agreement for a facility located in northern Poland, which is 33% owned by the Companys Chief Operating Officer. The monthly rent to be paid by the Company for this location is approximately $16,300 per month and
relates to facilities to be shared by two subsidiaries of the Company.

During the three months of 2008, the Company made sales to a
restaurant which is partially owned by the Chief Executive Officer of the Company. All sales were made on normal commercial terms, and total sales for the three months ended March 31, 2008 and 2007 were approximately $28,500 and $26,000.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)

Amounts in tables
expressed in thousands, except per share information



|17. | SUBSEQUENT EVENTS
|--- | -----------------

On April 24, 2008, CEDC
signed a credit agreement with Bank Zachodni WBK SA in Poland to provide up to $50 million of financing to be used to finance a portion of the Parliament and potential Whitehall acquisition. The agreement provides for a $30 million five year
amortizing term facility and a one year $20 million short term facility with annual renewal. The facilities are to bear interest at 6 month LIBOR plus 1.65% for the five year facility and 1.45% for the short term facility. None of these facilities
has yet been drawn.



|18. | RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
|--- | -----------------------------------------

In
September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 Fair Value Measurements (SFAS 157). SFAS 157 clarifies the principle that fair value should be based on the assumptions market
participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those assumptions. Under the standard, fair value measurements would be separately disclosed by level
within the fair value hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and interim periods within those fiscal years, with early adoption permitted. The Company has implemented
certain provisions of this pronouncement and is not expecting any material impact that the full implementation of SFAS 157 would have on the consolidated financial statements when adopted.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial Liabilitiesincluding an
amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which the fair value option has been
elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for our Company January 1, 2008. The implementation of SFAS 159, did not have any material impact on the consolidated financial statements.

In December 2007, the FASB issued SFAS No. 141-R, Business Combinations. This Statement applies prospectively to business
combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, which is business combinations in the year ending November 30, 2010 for the Company. The
objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business combination and its effects.

In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial Statements  an amendment of ARB
No. 51. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, which for the Company is the year ending November 30, 2010 and the interim periods
within the fiscal year. The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated financial statements. This standard currently does
not impact us as we have full controlling interest of all of our subsidiaries, however this standard may impact the treatment of future acquisitions.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities  An Amendment of SFAS No. 133. SFAS 161 seeks to improve financial reporting for
derivative instruments and hedging activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and cash flows. To achieve this increased transparency, SFAS 161 requires (1) the disclosure of
the fair value of derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative features that are credit risk-related; and (3) cross-referencing within the footnotes. SFAS 161 is effective for us on
January 1, 2009. We are in the process of evaluating the new disclosure requirements under SFAS 161.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF

OPERATIONS

Amounts
in tables expressed in thousands, except per share information



|ITEM 2. | MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
|------- | -------------------------------------------------------------------------------------

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

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

This report contains forward-looking statements, which provide our current expectations or forecasts of future events. These forward-looking statements
may be identified by the use of forward-looking terminology, including the terms believes, estimates, anticipates, expects, intends, may, will or should
or, in each case, their negative, or other variations or comparable terminology, but the absence of these words does not necessarily mean that a statement is not forward-looking. Those forward looking statements include all matters that are not
historical facts. They appear in a number of places throughout this report and include, without limitation:



| |  |  | information concerning possible or assumed future results of operations, trends in financial results and business plans, including those relating to earnings growth
and revenue growth, liquidity, prospects, strategies and the industry in which the Company and its subsidiaries operate;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | statements about the level of our costs and operating expenses relative to the Company revenues, and about the expected composition of the Companys revenues;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | statements about consummation and integration of the Companys acquisitions, including future acquisitions the Company may make;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | information about the impact of Polish regulations on the Company business;
| | - |  | ---------------------------------------------------------------------------



| |  |  | other statements about the Companys plans, objectives, expectations and intentions; and
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | other statements that are not historical facts.
| | - |  | -----------------------------------------------

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

We urge you to read and carefully consider the items of the other reports that we have filed with or furnished to the SEC for a more complete discussion
of the factors and risks that could affect us and our future performance and the industry in which we operate, including the risk factors described in the Companys Annual Report on Form 10-K for the year ended, December 31, 2007 filed
with the SEC on February 29, 2008. In light of these risks, uncertainties and assumptions, the forward-looking events described in this report may not occur as described, or at all.

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

The following discussion and analysis provides information which management believes is relevant to the readers assessment and understanding of the
Companys results of operations and financial condition and should be read in conjunction with the Consolidated Financial Statements and the notes thereto found elsewhere in this report.

Overview

We are the largest vodka producer by value
and volume in Poland, and one of the largest producers of vodka in the world. We produced and sold over 9.3 million nine-liter cases of vodka in 2007 in the four main vodka segments in Poland: top premium, premium, mainstream and economy. In
addition, in our Bols plant, we produce the top selling vodka in Hungary, Royal Vodka, which we distribute through our Hungarian subsidiary, Bols Hungary.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



In March 2008, we closed our acquisition of 85% of the capital stock of the Parliament Group in
Russia which owns various alcoholic beverage production and distribution assets, including the Parliament vodka brand. Parliament vodka is a top selling premium vodka brand in Russia. Parliament is expected to reach sales of
over 3 million 9 liter cases in 2008. Parliament provides us our first platform in Russia where we can not only grow the Parliament brand domestically, but also add import brands into the mix, thereby leveraging the existing
structure to take advantage of the premiumization of alcohol consumption taking place in the Russian market. For the three months ended March 31, 2008, the results from operations include approximately two weeks of activity related to the
Parliament Group.

Results of Operations:

Three
months ended March 31, 2008 compared to three months ended March 31, 2007

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

PROFIT AND LOSS



|                                              |  |                    |         |   |               |   |         |  
|--------------------------------------------- |  | ------------------ | ------- | - | ------------- | - | ------- | -
|                                              |  | Three months ended |        
|                                              |  | March 31,2008      |         |   | March 31,2007 |  
|Sales                                         |  | $                  | 408,080 |   |               | $ | 288,996 |  
|Excise taxes                                  |  |                    | (94,460 | ) |               |   | (60,782 | )
|Net Sales                                     |  |                    | 313,620 |   |               |   | 228,214 |  
|Cost of goods sold                            |  |                    | 247,404 |   |               |   | 181,897 |  
|                                              |  |                    |         |   |               |   |         |  
|Gross Profit                                  |  |                    | 66,216  |   |               |   | 46,317  |  
|                                              |  |                    |         |   |               |   |         |  
|Operating expenses                            |  |                    | 40,748  |   |               |   | 27,402  |  
|                                              |  |                    |         |   |               |   |         |  
|Operating Income                              |  |                    | 25,468  |   |               |   | 18,915  |  
|                                              |  |                    |         |   |               |   |         |  
|Non operating income / (expense), net         |  |                    |         |   |               |   |         |  
|Interest (expense), net                       |  |                    | (11,528 | ) |               |   | (8,649  | )
|Other financial income / (expense), net       |  |                    | 9,103   |   |               |   | (15,400 | )
|Other non operating income / (expense), net   |  |                    | 140     |   |               |   | (343    | )
|                                              |  |                    |         |   |               |   |         |  
|Income before taxes                           |  |                    | 23,183  |   |               |   | (5,477  | )
|                                              |  |                    |         |   |               |   |         |  
|Income tax expense                            |  |                    | 4,398   |   |               |   | (1,030  | )
|                                              |  |                   
|Minority interests                            |  |                    | 253     |   |               |   | 729     |  
|                                              |  |                    |         |   |               |   |         |  
|Net income                                    |  | $                  | 18,532  |   |               | $ | (5,176  | )
|                                              |  |                    |         |   |               |   |         |  
|Net income per share of common stock, basic   |  | $                  | 0.46    |   |               | $ | (0.13   | )
|                                              |  |                    |         |   |               |   |         |  
|Net income per share of common stock, diluted |  | $                  | 0.45    |   |               | $ | (0.13   | )
|                                              |  |                    |         |   |               |   |         |  



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



Net Sales

Net
sales represent total sales net of all customer rebates, excise tax on production and exclusive imports and value added tax. Total net sales increased by approximately 37.4%, or $85.4 million, from $228.2 million for the three months ended
March 31, 2007 to $313.6 million for the three months ended March 31, 2008. This increase in sales is due to the following factors:



|                                                |  |   |         |  
|----------------------------------------------- |  | - | ------- | -
|Net Sales for three months ended March 31, 2007 |  | $ | 228,214 |  
|Increase from acquisitions                      |  |   | 26,343  |  
|Existing business sales growth                  |  |   | 16,070  |  
|Excise tax reduction                            |  |   | (15,028 | )
|Impact of foreign exchange rates                |  |   | 58,021  |  
|                                                |  |   |         |  
|Net sales for three months ended March 31, 2008 |  | $ | 313,620 |  

Factors impacting our existing business sales for the three months ending March 31, 2008
include the growth of our key vodka brands, with Bols Vodka, our flagship premium vodka, growing by 17% in volume terms and Zubrowka by 13% in volume terms as compared to the three months ending March 31, 2007. Sales of our
exclusive import brands in U.S. dollars grew by 44% in value terms for the three months ending March 31, 2008 as compared to the same period in 2007.

As of January 2008, sales of products which we produce at Polmos Bialystok and Bols to certain key accounts were moved from our distribution companies to the producer, Polmos Bialystok and Bols. When a sale is
reported directly from a producer, excise tax is eliminated from net sales and when a sale is made from a distribution company the sales are recorded gross with excise tax. Therefore the movement of the sales contracts from a distributor to the
producer reduces the amount of net sales reported through the elimination of excise tax and also increases gross profit as a percent of sales. The impact of this sales reduction for the three months ended March 31, 2008 was $15.0 million.

Based upon average exchange rates for the three months ended March 31, 2008 and 2007, the Polish Zloty appreciated by approximately
20%. This resulted in an increase of $58.0 million of sales in U.S. Dollar terms.

Gross Profit

Total gross profit increased by approximately 43.0%, or $19.9 million, to $66.2 million for the three months ended March 31, 2008, from $46.3 million
for the three months ended March 31, 2007, reflecting sales growth for the factors noted above in the three months ended March 31, 2008. Gross margin increased from 20.3% of net sales for the three months ended March 31, 2007 to 21.1%
of net sales for the three months ended March 31, 2008. Factors impacting our margins include improved sales mix, lower spirit costs, the impact of excise tax as described above as well as the consolidation of Parliament from the first quarter
of 2008, which operates as a producer with higher margins.

Operating Expenses

Operating expenses consist of selling, general and administrative, or S,G&A expenses, advertising expenses, non-production depreciation
and amortization, and provision for bad debts. Total operating expenses increased by approximately 48.5%, or $13.3 million, from $27.4 million for the three months ended March 31, 2007 to $40.7 million for the three months ended March 31,
2008. Approximately $2.0 million of this increase resulted primarily from the effects of the acquisition of PHS in July 2007, approximately $1.5 million of this increase resulted primarily from the effects of the acquisition of Parliament in March
2008 and the remainder of the increase resulted primarily from the growth of the business and the impact of foreign exchange expenses as detailed below.



|                                                         |  |   |       
|-------------------------------------------------------- |  | - | ------
|Operating expenses for three months ended March 31, 2007 |  | $ | 27,402
|Increase from acquisitions                               |  |   | 4,377 
|Increase from existing business growth                   |  |   | 2,003 
|Impact of foreign exchange rates                         |  |   | 6,966 
|                                                         |  |   |       
|Operating expenses for three months ended March 31, 2008 |  | $ | 40,748

The table below sets forth the items of operating expenses.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



|                              |  |                             |        |      |   |       
|----------------------------- |  | --------------------------- | ------ | ---- | - | ------
|                              |  | Three Months EndedMarch 31,
|                              |  | 2008                        |        | 2007
|                              |  | ($ in thousands)           
|S,G&A                         |  | $                           | 32,808 |      | $ | 23,025
|Marketing                     |  |                             | 5,822  |      |   | 2,547 
|Depreciation and amortization |  |                             | 2,118  |      |   | 1,830 
|                              |  |                             |        |      |   |       
|Total operating expense       |  | $                           | 40,748 |      | $ | 27,402

S,G&A consists of salaries, warehousing and transportation costs, administrative expenses and
bad debt expense. S,G&A increased by approximately 42.6%, or $9.8 million, from $23.0 million for the three months ended March 31, 2007 to $32.8 million for the three months ended March 31, 2008. Approximately $3.5 million of this
increase resulted primarily from the effects of the acquisitions discussed above and the remainder of the increase resulted primarily from the growth of the business and the appreciation of the Polish Zloty against the U.S. Dollar. As a percent of
sales, S,G&A has increased from 10.0% of net sales for the three months ended March 31, 2007 to 10.5% of net sales for the three months ended March 31, 2008.

Depreciation and amortization increased by approximately 15.7%, or $ 0.3 million, from $1.8 million for the three months ended March 31, 2007
to $2.1 million for the three months ended March 31, 2008. This increase resulted primarily from our existing business growth.

Operating Income

Total operating income increased by approximately 34.9%, or $6.6 million, from $18.9 million for the three months ended March 31,
2007 to $25.5 million for the three months ended March 31, 2008. This increase resulted primarily from the factors described under Net Sales above.

Income Tax

Our effective tax rate for the three months ending March 31, 2008 was 18.97%, which
was driven primarily by the tax rate in Poland of 19%, where most of our income is generated and the tax loss carry forward generated in the U.S.

Non
Operating Income and Expenses

Total interest expense increased by approximately 33.7%, or $2.9 million, from $8.6 million for the three
months ended March 31, 2007 to $11.5 million for the three months ended March 31, 2008. This increase resulted from a combination of additional borrowings for the purchase of Polmos Bialystok shares completed in June 2007, the issuance of
our Convertible Senior Notes to finance the Parliament acquisition and increased interest rates in 2008 as compared to 2007.

The Company
recognized $8.9 million of unrealized foreign exchange rate gain related to the impact of movements in exchange rates on our Senior Notes.

Liquidity
and Capital Resources

The Companys primary uses of cash in the future will be to fund its working capital requirements, service
indebtedness, finance capital expenditures and fund acquisitions. The Company expects to fund these requirements in the future with cash flows from its operating activities, cash on hand, the financing arrangements described below, and other
arrangements we may enter into from time to time.

Financing Arrangements

Existing Credit Facilities

As of March 31, 2008, the Company had total short-term debt
outstanding under existing credit facilities in the Polish Zloty equivalent of approximately $183.2 million. In order to fund working capital and other liquidity requirements, the Company also has available non-committed credit lines with various
banks and credit institutions. As of March 31, 2008, the amount of available, unutilized and uncommitted credit facilities was the Polish Zloty equivalent of approximately $77.5 million. These existing credit facilities are subject to renewal
on an annual basis.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



As of March 31, 2008, the company had utilized approximately $134.5 million of a multipurpose
credit line agreement in connection with the 2007 tender offer in Poland to purchase the remaining outstanding shares of Polmos Bialystok S.A. The Companys obligations under the credit line agreement are guaranteed through promissory notes by
certain subsidiaries of the Company. The indebtedness under the credit line agreement bears interest at a rate equal to the one month Warsaw Interbank Rate plus a margin of 1.2% and matures on March 31, 2009.

Additional Credit Agreements

On April 24, 2008,
CEDC signed a credit agreement with Bank Zachodni WBK SA in Poland to provide up to $50 million of financing to be used to finance a portion of the Parliament acquisition. The agreement provides for a $30 million five year amortizing term facility
and a one year $20 million short term facility with annual renewal. The facilities are to bear interest at the six month LIBOR plus 1.65% for the five year facility and 1.45% for the short term facility (subject to reduction in the event CEDC
maintains certain financial ratios). None of these facilities has yet been drawn.

Senior Secured Notes

In connection with the Bols and Polmos Bialystok acquisitions, on July 25, 2005 the Company completed the issuance of 325 million 8%
Senior Secured Notes due 2012 (the Notes). Interest is due semi-annually on the 25th of January and July, and the Notes are guaranteed on a senior basis by certain of the Companys subsidiaries. The Indenture governing our Notes
contains certain restrictive covenants, including covenants limiting the Companys ability to: make certain payments, including dividends or other distributions, with respect to the share capital of the parent or its subsidiaries; incur or
guarantee additional indebtedness or issue preferred stock; make certain investments; prepay or redeem subordinated debt or equity; create certain liens or enter into sale and leaseback transactions; engage in certain transactions with affiliates;
sell assets or consolidate or merge with or into other companies; issue or sell share capital of certain subsidiaries; and enter into other lines of business.

During the three months ending March 31, 2008, the Company purchased 9.8 million of it outstanding Senior Secured Notes back on the open market and retired this debt as of March 31, 2008.

Convertible Senior Notes

On
March 7, 2008, the Company completed the issuance of $310 million of 3% Convertible Senior Notes due 2013 (the Convertible Notes). Interest is due semi-annually on the 15th of March and September, beginning on September 15,
2008. The Convertible Senior Notes are convertible in certain circumstances into cash and, if applicable, shares of our common stock, based on an initial conversion rate of 14.7113 shares per $1,000 principle amount, subject to certain adjustments.
Upon conversion of the Convertible Notes, the Company will deliver cash up to the aggregate principle amount of the Convertible Notes to be converted and, at the election of the Company, cash or shares of common stock in respect to the remainder, if
any, of the conversion obligation.

The proceeds from the Convertible Notes were used to fund the cash portion of the acquisition of 85% of
the capital stock of Copecresto Enterprises Limited, with the remaining proceeds to be used for future potential acquisitions, including the potential Whitehall acquisition.

Equity Issuance

On March 11, 2008, the Company and certain of its affiliates entered into a
Share Sale and Purchase Agreement and certain other agreements with White Horse Intervest Limited, a British Virgin Islands Company, and certain of White Horses affiliates, relating to the Companys acquisition from White Horse of 85% of
the share capital of Copecresto Enterprises Limited, a Cypriot company, owner of the Parliament group. In connection with this acquisition, the Company paid a consideration of approximately $180 million in cash and 2.2 million shares of common
stock. According to the agreement the shares are to remain locked up and can not be sold for a period of one year from closing, subject to certain limited exceptions.

Statement of Liquidity and Capital Resources

During the periods under review, the Companys
primary sources of liquidity were cash flows generated from operations, credit facilities, the equity offerings, the Convertible Senior Notes offering and proceeds from options exercised. The Companys primary uses of cash were to fund its
working capital requirements, service indebtedness, finance capital expenditures and fund acquisitions. The following table sets forth selected information concerning the Companys consolidated cash flow during the periods indicated.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



|                                    |  |                                 |          |   |                                 |   |         |  
|----------------------------------- |  | ------------------------------- | -------- | - | ------------------------------- | - | ------- | -
|                                    |  | Three monthsendedMarch 31, 2008 |          |   | Three monthsendedMarch 31, 2007 |  
|                                    |  | ($ in thousands)                |         
|Cash flow from operating activities |  | $                               | 49,378   |   |                                 | $ | 2,405   |  
|Cash flow from investing activities |  | $                               | (178,906 | ) |                                 | $ | (88,680 | )
|Cash flow from financing activities |  | $                               | 291,578  |   |                                 | $ | 35,643  |  

Net cash flow from operating activities

Net cash flow from operating activities represents net cash from operations and interest. Net cash provided by operating activities for the three months ended March 31, 2008 was $49.4 million as compared to $2.4
million for the three months ended March 31, 2007. The primary driver for this change was working capital movements. Working capital movements utilized $37.0 million of cash inflows for the three months ended March 31, 2008 as compared to
$4.3 million of cash outflows for the three months ended March 31, 2007. The primary drivers for the change in working capital movements include improved receivable collections after the peak holiday selling period in December 2007 and reduced
excise tax payments in 2008 as compared to 2007. In 2007 the Company shipped product earlier into the market than in prior years, thus increasing excise payments in 2007, which provided a cash flow benefit during the first quarter of 2008.

Net cash flow used in investing activities

Net cash flows used in investing activities represents net cash used to acquire subsidiaries and fixed assets as well as proceeds from sales of fixed assets. Net cash used in investing activities for the three months ended March 31,
2008 was $178.9 million as compared to $88.7 million for the three months ended March 31, 2007. The primary cash outflows from investing activities for the three months ended March 31, 2008 were the cash consideration and expenses related
to the Parliament acquisition, which was closed on March 11, 2008.

Net cash flow from financing activities

Net cash flow from financing activities represents cash used for servicing indebtedness, borrowings under credit facilities and cash inflows from private
placements and exercise of options. Net cash provided by financing activities was $291.6 million for the three months ended March 31, 2008 as compared to $35.6 million for the three months ended March 31, 2007. The primary source of cash
from financing activities was the Companys offering of $310 million of Convertible Secured Notes to fund the Parliament acquisition and other planned acquisitions, which resulted in net proceeds of $304.4 million.

The Companys Future Liquidity and Capital Resources

The Companys primary uses of cash in the future will be to fund its working capital requirements, service indebtedness, finance capital expenditures and fund acquisitions. The Company expects to fund these
requirements in the future with cash flows from its operating activities, cash on hand, the financing arrangements described above and other financing arrangements it may enter into from time to time.

Effects of Inflation and Foreign Currency Movements

Inflation in Poland is projected at 3.8% for 2008, compared to actual inflation of 2.5% in 2007.

Substantially all of
Companys operating cash flows and assets are denominated in Polish Zloty and Hungarian Forint. This means that the Company is exposed to translation movements both on its balance sheet and income statement. The impact on working capital items
is demonstrated on the cash flow statement as the movement in exchange on cash and cash equivalents. The impact on the income statement is by the movement of the average exchange rate used to restate the income statement from Polish Zloty and
Hungarian Forint to U.S. Dollars. The amounts shown as exchange rate gains or losses on the face of the income statement relate only to realized gains or losses on transactions that are not denominated in Polish Zloty or Hungarian Forint.

As a result of the issuance of the Companys Senior Secured Notes due 2012, of which 250 million are currently
outstanding, we are exposed to foreign exchange movements. Movements in the EUR-Polish Zloty exchange rate will require us to revalue our liability on the Senior Secured Notes accordingly, the impact of which will be reflected in the results of the
Companys operations. Every one percent movement in the EUR-Polish Zloty exchange rate will have an approximate $2.2 million change in the valuation of the liability with the offsetting pre-tax gain or losses recorded in the profit and loss of
the Company.



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CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



In order to manage the cash flow impact of foreign exchange changes, the Company has entered into
certain hedge agreements. As of March 31, 2008, the Company had outstanding a hedge contract for a seven year interest rate swap agreement. The swap agreement exchanges a fixed Euro based coupon of 8%, with a variable Euro based coupon (IRS)
based upon the six month Euribor rate plus a margin.

The average Zloty/Dollar exchange rate used to create our income statement
appreciated by approximately 20% as compared to the same period in 2007. The actual period end Zloty/Dollar exchange rate used to create our balance sheet appreciated by approximately 9% as compared to the same period in 2007.

The proceeds of our $310 million Senior Convertible Notes have been on-lent to subsidiares that have the Polish Zloty as the functional currency.
Movements in the USD-Polish Zloty exchange rate will require us to revalue our liability on the Senior Convertible Notes accordingly, the impact of which will be reflected in the results of the Companys operations. Every one percent movement
in the USD-Polish Zloty exchange rate will have an approximate $2.7 million change in the valuation of the liability with the offsetting pre-tax gain or losses recorded in the profit and loss of the Company.

Critical Accounting Policies and Estimates

General

The Companys discussion and analysis of its financial condition and results of operations are based upon the Companys
consolidated financial statements which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the Company to make estimates and
judgments that affect the reported amounts of net sales, expenses, assets and liabilities. The Company bases its estimates on historical experience and on various other assumptions that are believed to be reasonable under the circumstances. Actual
results may differ from these estimates under different assumptions and conditions.

Goodwill and Intangibles

Following the introduction of SFAS 142, acquired goodwill is no longer amortized. Instead the Company assesses the recoverability of its goodwill at least
once a year or whenever adverse events or changes in circumstances or business climate indicate that expected future cash flows (undiscounted and without interest charges) for individual business units may not be sufficient to support the recorded
goodwill. If undiscounted cash flows are not sufficient to support the goodwill, an impairment charge would be recognized to reduce the carrying value of the goodwill based on the expected discounted cash flows of the business unit. No such charge
has been considered necessary through the date of the accompanying financial statements. Intangibles are amortized over their effective useful life. In estimating fair value, management must make assumptions and projections regarding such items as
future cash flows, future revenues, future earnings, and other factors. The assumptions used in the estimate of fair value are generally consistent with the past performance of each reporting unit and are also consistent with the projections and
assumptions that are used in current operating plans. Such assumptions are subject to change as a result of changing economic and competitive conditions. If these estimates or their related assumptions change in the future, the Company may be
required to record an impairment loss for the assets. The fair values calculated have been adjusted where applicable to reflect the tax impact upon disposal of the asset.

In connection with the Bols and Bialystok acquisitions, the Company has acquired trademark rights to various brands, which were capitalized as part of the purchase price allocation process. As these brands are well
established they have been assessed to have an indefinite life. These trademarks rights will not be amortized; however, management assesses them at least once a year for impairment.

In connection with White Horse acquisition the Company has included in non-amortizable intangible assets the preliminary valuation of the Parliament
trademark, which capitalized as part of the purchase price allocation process. As this brand is well established it has been assessed to have an indefinite life. This trademark right will not be amortized; however, management assesses it at least
once a year for impairment.

The calculation of the impairment charge for goodwill and indefinite lived intangible assets, requires the use
of estimates. The discount rate used for the calculation was 7.42%. Factoring in a deviation of 10% for the discount rate as compared to managements estimate, there would still be no need for an impairment charge against goodwill.



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##### Table of Contents

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



Accounting for Business Combinations

The acquisition of businesses is an important element of the Companys strategy. We account for our acquisitions under the purchase method of
accounting in accordance with SFAS 141, Business Combinations, and allocate the assets acquired and liabilities assumed based on their estimated fair values at the acquisition date. The determination of the values of the assets acquired and
liabilities assumed, as well as associated asset useful lives, requires management to make estimates. The Companys acquisitions typically result in goodwill and other intangible assets; the value and estimated life of those assets may affect
the amount of future period amortization expense for intangible assets with finite lives as well as possible impairment charges that may be incurred.

The calculation of purchase price allocation requires judgment on the part of management in determining the valuation of the assets acquired and liabilities assumed.

Derivative Instruments

The Company is exposed to
market movements from changes in foreign currency exchange rates that could affect the Companys results of operations and financial condition. In accordance with SFAS 133, Accounting for Derivative Instruments and Hedging Activities, the
Company recognizes all derivatives as either assets or liabilities on the balance sheet and measures those instruments at fair value.

The
fair values of the Companys derivative instruments can change with fluctuations in interest rates and/or currency rates and are expected to offset changes in the values of the underlying exposures. The Companys derivative instruments are
held to hedge economic exposures. The Company follows internal policies to manage interest rate and foreign currency risks, including limitations on derivative market-making or other speculative activities.

At the inception of a transaction the Company documents the relationship between the hedging instruments and hedged items, as well as its risk management
objective. This process includes linking all derivatives designated to specific firm commitments or forecasted transitions. The Company also documents its assessment, both at the hedge inception and on an ongoing basis, of whether the derivative
financial instruments that are used in hedging transactions are highly effective in offsetting changes in fair value or cash flows of hedged items.

Share Based Payments

As of January 1, 2006, the Company adopted SFAS No. 123(R) Share-Based Payment
requiring the recognition of compensation expense in the Condensed Consolidated Statements of Income related to the fair value of its employee share-based options. SFAS No. 123(R) revises SFAS No. 123 Accounting for Stock-Based
Compensation and supersedes APB Opinion No. 25 Accounting for Stock Issued to Employees. SFAS No. 123(R) is supplemented by SEC Staff Accounting Bulletin (SAB) No. 107 Share-Based Payment. SAB
No. 107 expresses the SEC staffs views regarding the interaction between SFAS No. 123(R) and certain SEC rules and regulations including the valuation of share-based payments arrangements.

Grant-date fair value of stock options is estimated using a lattice-binomial option-pricing model. We recognize compensation cost for awards over the
vesting period. The majority of our stock options have a vesting period between one to three years.

See Note 14 to our Consolidated
Financial Statements for more information regarding stock-based compensation.

Recently Issued Accounting Pronouncements

In September 2006, the FASB issued Statement of Financial Accounting Standards No. 157 Fair Value Measurements (SFAS 157).
SFAS 157 clarifies the principle that fair value should be based on the assumptions market participants would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop those
assumptions. Under the standard, fair value measurements would be separately disclosed by level within the fair value hierarchy. SFAS 157 is effective for financial statements issued for fiscal years beginning after November 15, 2007 and
interim periods within those fiscal years, with early adoption permitted. The Company has implemented certain provisions of this pronouncement and does not expect any material impact on the consolidated financial statements when SFAS 157 is fully
implemented.

In February 2007, the FASB issued SFAS No. 159, The Fair Value Option for Financial Assets and Financial
Liabilitiesincluding an amendment of FASB Statement No. 115. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. Unrealized gains and losses on items for which
the fair value option has been elected will be recognized in earnings at each subsequent reporting date. SFAS No. 159 is effective for the Company January 1, 2008. The implementation of SFAS 159, did not have any material impact on the
consolidated financial statements.



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##### Table of Contents

CENTRAL EUROPEAN DISTRIBUTION CORPORATION

MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

OPERATIONS

Amounts in tables expressed in thousands, except per share information



In December 2007, the FASB issued SFAS No. 141-R, Business Combinations. This
Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008, meaning business combinations in the year ending
November 30, 2010 for the Company. The objective of this Statement is to improve the relevance, representational faithfulness, and comparability of the information that a reporting entity provides in its financial reports about a business
combination and its effects.

In December 2007, the FASB issued SFAS 160, Noncontrolling Interests in Consolidated Financial
Statements  an amendment of ARB No. 51. This Statement is effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2008, which for the Company is the year ending
November 30, 2010 and the interim periods within the fiscal year. The objective of this Statement is to improve the relevance, comparability, and transparency of the financial information that a reporting entity provides in its consolidated
financial statements. This standard currently does not impact us as we have full controlling interest of all of our subsidiaries, however this standard may impact the treatment of future acquisitions.

In March 2008, the FASB issued SFAS No. 161, Disclosures about Derivative Instruments and Hedging Activities  An Amendment of SFAS
No. 133. SFAS 161 seeks to improve financial reporting for derivative instruments and hedging activities by requiring enhanced disclosures regarding the impact on financial position, financial performance, and cash flows. To achieve this
increased transparency, SFAS 161 requires (1) the disclosure of the fair value of derivative instruments and gains and losses in a tabular format; (2) the disclosure of derivative features that are credit risk-related; and
(3) cross-referencing within the footnotes. SFAS 161 is effective for us on January 1, 2009. We are in the process of evaluating the new disclosure requirements under SFAS 161.



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##### Table of Contents

|ITEM 3: | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
|------- | ----------------------------------------------------------

Our operations are conducted primarily in Poland and our functional currency is the Polish Zloty and the reporting currency is the U.S. Dollar. Our financial instruments consist mainly of cash and cash equivalents, accounts receivable,
accounts payable, inventories, bank loans, overdraft facilities and long-term debt. 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.

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

Our commercial foreign exchange exposure mainly arises from the fact
that substantially all of our revenues are denominated in Polish Zloty, our Senior Secured Notes are denominated in Euros and our Senior Convertible Notes are denominated in US Dollars. This debt has been on-lent to the operating subsidiary level in
Poland, thus exposing the Company to movements in the EUR/Polish Zloty and USD/Polish Zloty exchange rate. Every one percent movement in the EUR-Polish Zloty exchange rate will have an approximate $2.2 million change in the valuation of the
liability with the offsetting pre-tax gain or losses recorded in the profit and loss of the Company. Every one percent movement in the USD-Polish Zloty exchange rate will have an approximate $2.7 million change in the valuation of the liability with
the offsetting pre-tax gain or losses recorded in the profit and loss of the Company.

As a result of the remaining outstanding
250 million Senior Secured Notes and our $310 million of Senior Convertible Notes which have been on-lent to Polish Zloty operating companies, we are exposed to foreign exchange movements. Movements in the EUR/Polish Zloty and USD/Polish
Zloty exchange rate will require us to revalue our liability accordingly, the impact of which will be reflected in the results of the Companys operations.

In order to manage the cash flow impact of foreign exchange changes, the Company has entered into certain hedge agreements. As of March 31, 2008, the Company had outstanding a hedge contract for a seven year
interest rate swap agreement hedging 250.2 million EUR of the Senior Secured Notes. The swap agreement exchanges a fixed Euro based coupon of 8%, with a variable Euro based coupon (IRS) based upon the 6 month Euribor rate plus a margin. Any
changes in Euribor will result in a change in the interest expense. Each basis point move in Euribor will result in an increase or a decrease in annual interest expense of 25,020.



|ITEM 4. | CONTROLS AND PROCEDURES
|------- | -----------------------

Disclosure Controls and
Procedures. Disclosure controls and procedures (as defined in Rules 13a-15(e) and 15(d)-15(e) of the Securities Exchange Act of 1934) refer to the controls and other procedures of a company that are designed to ensure that information
required to be disclosed by the Company in the reports that it files or submits under the Securities Exchange Act of 1934, is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms. A
companys internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the
assets of the company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures
of the company are being made only in accordance with authorizations of management and directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of
the companys assets that could have a material effect on the financial statements.

Based upon the evaluation of the Companys disclosure
controls and procedures as of the end of the period covered by this report, the Chief Executive Officer and Chief Financial Officer have concluded that the Companys disclosure controls and procedures were effective at the reasonable assurance
level.

Inherent Limitations in Internal Control over Financial Reporting. The Companys management, including the Chief
Executive Officer and Chief Financial Officer, does not expect that the Companys disclosure controls and procedures or internal control over financial reporting will prevent all errors and all fraud. A control system, no matter how well
conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Because of the limitations in all control systems, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, within the Company have been detected. Further, the design of any control system is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any
design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected. Accordingly, the
Companys disclosure controls and procedures are designed to provide reasonable assurance that the controls and procedures will meet their objectives.



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Changes to Internal Control over Financial Reporting. The Chief Executive Officer and the
Chief Financial Officer conclude that, during the most recent fiscal quarter, there have been no changes in the Companys internal control over financial reporting that have materially affected, or are reasonably likely to materially affect,
the Companys internal controls over financial reporting.



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##### Table of Contents

PART II. OTHER INFORMATION



|ITEM 2. | UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|------- | -----------------------------------------------------------

On March 11, 2008, the Company and certain of its affiliates entered into a Share Sale and Purchase Agreement and certain other agreements with White Horse Intervest Limited, a British Virgin Islands Company, and certain of White
Horses affiliates, relating to the Companys acquisition from White Horse of 85% of the share capital of Copecresto Enterprises Limited, a Cypriot company. In connection with this acquisition, the Company paid a consideration of
$180,335,257 in cash and 2,238,806 shares of the Companys common stock. The delivery of 250,000 shares of the Share Consideration and $15,000,000 of the Cash Consideration was deferred pending the consummation of certain of the Reorganization
Transactions but ultimately the shares were issued on May 2, 2008.

The cash and share consideration described above was negotiated
between the Company and White Horse in connection with the negotiation of the Share Sale and Purchase Agreement. The offering of the share consideration was made only to persons who are not U.S. Persons as defined in Rule 902 under
Regulation S under the Securities Act of 1933, as amended. The share consideration has not been registered under the Securities Act or any state securities laws and may not be offered or sold in the United States in the absence of an effective
registration statement or an exemption from the registration requirements of the Securities Act. The Company relied on the exemption from the registration requirements of the Securities Act set forth under Regulation S and the rules and regulations
promulgated thereunder.



|ITEM 6. | EXHIBITS
|------- | --------

(a) Exhibits



|               |  |                                                                                                                                                                                                                              
|-------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit Number |  | Exhibit Description                                                                                                                                                                                                          
|3.1            |  | Amended and Restated Certificate of Incorporation (Filed as Exhibit 3.1 to the Quarterly Report on Form 10-Q filed with the SEC on August 8, 2006 and incorporated herein by
reference).                                     
|               | 
|3.2            |  | Amended and Restated Bylaws (filed as Exhibit 99.3 to the Periodic Report on Form 8-K filed with the SEC on May 3, 2006 and incorporated herein by reference).                                                               
|               | 
|10.1*          |  | Facilities Agreement dated April 24, 2008 among Central European Distribution Corporation, Bols Sp. z o.o. and certain other subsidiaries of Central European Distribution Corporation, and Bank
Zachodni WBK S.A. as lender.
|               | 
|31.1*          |  | Certificate of the CEO pursuant to Rule 13a-15(e) or Rule 15d-15(e).                                                                                                                                                         
|               | 
|31.2*          |  | Certificate of the CFO pursuant to Rule 13a-15(e) or Rule 15d-15(e).                                                                                                                                                         
|               | 
|32.1*          |  | Certification of the CEO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                          
|               | 
|32.2*          |  | Certification of the CFO pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                          



|* | Filed herewith
|- | --------------



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SIGNATURES

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



|                  |  |  |  |                                           |  |                                           
|----------------- |  |  |  | ----------------------------------------- |  | ------------------------------------------
|                  |  |  |  | CENTRAL EUROPEAN DISTRIBUTION CORPORATION
|                  |  |  |  | (registrant)                             
|                  |  |  | 
|Date: May 9, 2008 |  |  |  | By:                                       |  | /s/ William V. Carey                      
|                  |  |  |  |                                           |  | William V. Carey                          
|                  |  |  |  |                                           |  | President and Chief Executive Officer     
|                  |  |  | 
|Date: May 9, 2008 |  |  |  | By:                                       |  | /s/ Chris Biedermann                      
|                  |  |  |  |                                           |  | Chris Biedermann                          
|                  |  |  |  |                                           |  | Vice President and Chief Financial Officer



31