UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended September 28, 2008

COCA-COLA BOTTLING CO. CONSOLIDATED

(Exact name of registrant as specified in its charter)

Delaware		56-0950585
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4100 Coca-Cola Plaza, Charlotte, North Carolina 28211
(Address of principal executive offices) (Zip Code)

(704) 557-4400

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 þ No o

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

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

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

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

Class		Outstanding at October 31, 2008
Common Stock, $1.00 Par Value		6,643,677
Class B Common Stock, $1.00 Par Value		2,499,652

 

 

COCA-COLA BOTTLING CO. CONSOLIDATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 28, 2008

INDEX

				Page
PART I — FINANCIAL INFORMATION
Item 1.		Financial Statements (Unaudited)
		Consolidated Statements of Operations			3
		Consolidated Balance Sheets			4
		Consolidated Statements of Changes in Stockholders’ Equity			6
		Consolidated Statements of Cash Flows			7
		Notes to Consolidated Financial Statements			8
Item 2.		Management’s Discussion and Analysis of Financial Condition and Results of Operations			36
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			60
Item 4.		Controls and Procedures			61
PART II — OTHER INFORMATION
Item 1A.		Risk Factors			62
Item 6.		Exhibits			62
		Signatures			63

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

In Thousands (Except Per Share Data)

		Third Quarter								First Nine Months
		2008				2007				2008				2007
Net sales		$	381,563			$	367,360			$	1,115,240			$	1,095,359
Cost of sales			225,736				212,148				647,615				619,366
Gross margin			155,827				155,212				467,625				475,993
Selling, delivery and administrative expenses			149,384				134,972				421,300				402,710
Income from operations			6,443				20,240				46,325				73,283
Interest expense			9,406				12,135				29,789				36,647
Minority interest			705				110				1,726				1,960
Income (loss) before income taxes			(3,668	)			7,995				14,810				34,676
Income tax provision (benefit)			(523	)			2,722				7,135				13,061
Net income (loss)		$	(3,145	)		$	5,273			$	7,675			$	21,615
Basic net income (loss) per share:
Common Stock		$	(.34	)		$	.58			$	.84			$	2.37
Weighted average number of Common Stock shares outstanding			6,644				6,644				6,644				6,644
Class B Common Stock		$	(.34	)		$	.58			$	.84			$	2.37
Weighted average number of Class B Common Stock shares outstanding			2,500				2,480				2,500				2,480
Diluted net income (loss) per share:
Common Stock		$	(.34	)		$	.58			$	.84			$	2.36
Weighted average number of Common Stock shares outstanding — assuming dilution			9,144				9,144				9,159				9,140
Class B Common Stock		$	(.34	)		$	.58			$	.83			$	2.36
Weighted average number of Class B Common Stock shares outstanding — assuming dilution			2,500				2,500				2,515				2,496
Cash dividends per share:
Common Stock		$	.25			$	.25			$	.75			$	.75
Class B Common Stock		$	.25			$	.25			$	.75			$	.75

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED BALANCE SHEETS

In Thousands (Except Share Data)

		Unaudited								Unaudited
		Sept. 28,				Dec. 30,				Sept. 30,
		2008				2007				2007
ASSETS
Current Assets:
Cash and cash equivalents		$	20,583			$	9,871			$	88,400
Accounts receivable, trade, less allowance for doubtful accounts of $1,043, $1,137 and $1,056, respectively			105,580				92,499				96,914
Accounts receivable from The Coca-Cola Company			12,661				3,800				19,768
Accounts receivable, other			11,539				7,867				10,128
Inventories			65,595				63,534				62,822
Prepaid expenses and other current assets			19,334				20,758				16,000
Total current assets			235,292				198,329				294,032
Property, plant and equipment, net			351,575				359,930				359,391
Leased property under capital leases, net			67,763				70,862				71,896
Other assets			36,365				35,655				34,670
Franchise rights, net			520,672				520,672				520,672
Goodwill, net			102,049				102,049				102,049
Other identifiable intangible assets, net			3,973				4,302				4,413
Total		$	1,317,689			$	1,291,799			$	1,387,123

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated
CONSOLIDATED BALANCE SHEETS
In Thousands (Except Share Data)

		Unaudited								Unaudited
		Sept. 28,				Dec. 30,				Sept. 30,
		2008				2007				2007
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt		$	176,693			$	7,400			$	100,000
Current portion of obligations under capital leases			2,735				2,602				2,559
Accounts payable, trade			37,071				51,323				38,445
Accounts payable to The Coca-Cola Company			38,346				11,597				21,896
Other accrued liabilities			61,654				54,511				53,993
Accrued compensation			17,563				23,447				16,652
Accrued interest payable			15,060				8,417				18,760
Total current liabilities			349,122				159,297				252,305
Deferred income taxes			163,403				168,540				152,392
Pension and postretirement benefit obligations			34,560				32,758				57,064
Other liabilities			109,720				93,632				97,175
Obligations under capital leases			75,545				77,613				78,280
Long-term debt			414,757				591,450				591,450
Total liabilities			1,147,107				1,123,290				1,228,666
Commitments and Contingencies (Note 14)
Minority interest			49,731				48,005				47,963
Stockholders’ Equity:
Common Stock, $1.00 par value:
Authorized - 30,000,000 shares; Issued - 9,706,051, 9,706,051 and 9,706,051 shares, respectively			9,706				9,706				9,706
Class B Common Stock, $1.00 par value:
Authorized - 10,000,000 shares; Issued -3,127,766, 3,107,766 and 3,107,766 shares, respectively			3,127				3,107				3,107
Capital in excess of par value			102,449				102,469				102,003
Retained earnings			79,891				79,227				83,267
Accumulated other comprehensive loss			(13,068	)			(12,751	)			(26,335	)
			182,105				181,758				171,748
Less-Treasury stock, at cost:
Common - 3,062,374 shares			60,845				60,845				60,845
Class B Common - 628,114 shares			409				409				409
Total stockholders’ equity			120,851				120,504				110,494
Total		$	1,317,689			$	1,291,799			$	1,387,123

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (UNAUDITED)

In Thousands

										Capital								Accumulated
						Class B				in								Other
		Common				Common				Excess of				Retained				Comprehensive				Treasury
		Stock				Stock				Par Value				Earnings				Loss				Stock				Total
Balance on December 31, 2006		$	9,705			$	3,088			$	101,145			$	68,495			$	(27,226	)		$	(61,254	)		$	93,953
Comprehensive income:
Net income															21,615												21,615
Foreign currency translation adjustments, net of tax																			15								15
Pension and postretirement benefit adjustments, net of tax																			876								876
Total comprehensive income																											22,506
Cash dividends paid
Common ($.75 per share)															(4,983	)											(4,983	)
Class B Common ($.75 per share)															(1,860	)											(1,860	)
Issuance of 20,000 shares of Class B Common Stock							20				(20	)															—
Stock compensation expense											878																878
Conversion of Class B Common Stock into Common Stock			1				(1	)																			—
Balance on September 30, 2007		$	9,706			$	3,107			$	102,003			$	83,267			$	(26,335	)		$	(61,254	)		$	110,494
Balance on December 30, 2007		$	9,706			$	3,107			$	102,469			$	79,227			$	(12,751	)		$	(61,254	)		$	120,504
Comprehensive income:
Net income															7,675												7,675
Foreign currency translation adjustments, net of tax																			(3	)							(3	)
Pension and postretirement benefit adjustments, net of tax																			(200	)							(200	)
Total comprehensive income																											7,472
Adjustment to change measurement date for SFAS No. 158, net of tax															(153	)			(114	)							(267	)
Cash dividends paid
Common ($.75 per share)															(4,983	)											(4,983	)
Class B Common ($.75 per share)															(1,875	)											(1,875	)
Issuance of 20,000 shares of Class B Common Stock							20				(20	)															—
Balance on September 28, 2008		$	9,706			$	3,127			$	102,449			$	79,891			$	(13,068	)		$	(61,254	)		$	120,851

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

In Thousands

		First Nine Months
		2008				2007
Cash Flows from Operating Activities
Net income		$	7,675			$	21,615
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense			50,386				50,793
Amortization of intangibles			329				334
Deferred income taxes			1,044				5,092
Loss on sale of property, plant and equipment			1,117				298
Amortization of debt costs			1,834				2,051
Amortization of deferred gain related to terminated interest rate agreements			(1,311	)			(1,273	)
Provision for liabilities to exit from multi-employer pension plan			13,812				—
Stock compensation expense			—				878
Minority interest			1,726				1,960
Increase in current assets less current liabilities			(2,828	)			(9,154	)
(Increase) decrease in other noncurrent assets			(1,341	)			1,499
Decrease in other noncurrent liabilities			(9,423	)			(13,330	)
Other			(170	)			15
Total adjustments			55,175				39,163
Net cash provided by operating activities			62,850				60,778
Cash Flows from Investing Activities
Additions to property, plant and equipment			(41,175	)			(30,603	)
Proceeds from the sale of property, plant and equipment			1,126				7,684
Investment in plastic bottle manufacturing cooperative			(968	)			(2,256	)
Net cash used in investing activities			(41,017	)			(25,175	)
Cash Flows from Financing Activities
Repayments of lines of credit			(7,400	)			—
Cash dividends paid			(6,858	)			(6,843	)
Principal payments on capital lease obligations			(1,935	)			(1,811	)
Proceeds from termination of interest rate swap agreements			5,142				—
Other			(70	)			(372	)
Net cash used in financing activities			(11,121	)			(9,026	)
Net increase in cash			10,712				26,577
Cash at beginning of period			9,871				61,823
Cash at end of period		$	20,583			$	88,400
Significant non-cash investing and financing activities:
Issuance of Class B Common Stock in connection with stock award		$	1,171			$	929
Capital lease obligations incurred			—				5,144

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)

1. Significant Accounting Policies

The consolidated financial statements include the accounts of Coca-Cola Bottling Co. Consolidated and its majority owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated.

The consolidated financial statements reflect all adjustments which, in the opinion of management, are necessary for a fair statement of the results for the interim periods presented. All such adjustments are of a normal, recurring nature.

The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. These policies are presented in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 30, 2007 filed with the United States Securities and Exchange Commission.

Certain prior year amounts have been reclassified to conform to current classifications.

2. Seasonality of Business

Historically, operating results for the third quarter and first nine months of the fiscal year have not been representative of results for the entire fiscal year. Business seasonality results primarily from higher unit sales of the Company’s products in the second and third quarters versus the first and fourth quarters of the fiscal year. Fixed costs, such as depreciation expense, are not significantly impacted by business seasonality.

3. Piedmont Coca-Cola Bottling Partnership

On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont Coca-Cola Bottling Partnership (“Piedmont”) to distribute and market nonalcoholic beverages primarily in portions of North Carolina and South Carolina. The Company provides a portion of the soft drink products to Piedmont at cost and receives a fee for managing the business of Piedmont pursuant to a management agreement. These intercompany transactions are eliminated in the consolidated financial statements.

Minority interest as of September 28, 2008, December 30, 2007 and September 30, 2007 represents the portion of Piedmont owned by The Coca-Cola Company, which was 22.7% for all periods presented.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

4. Inventories

Inventories were summarized as follows:

		Sept. 28,				Dec. 30,				Sept. 30,
In Thousands		2008				2007				2007
Finished products		$	40,250			$	37,649			$	37,340
Manufacturing materials			7,261				9,198				8,150
Plastic shells, plastic pallets and other inventories			18,084				16,687				17,332
Total inventories		$	65,595			$	63,534			$	62,822

5. Property, Plant and Equipment

The principal categories and estimated useful lives of property, plant and equipment were as follows:

		Sept. 28,				Dec. 30,				Sept. 30,				Estimated
In Thousands		2008				2007				2007				Useful Lives
Land		$	12,212			$	12,280			$	12,280
Buildings			110,708				110,721				110,454			10-50 years
Machinery and equipment			118,154				106,180				103,400			5-20 years
Transportation equipment			179,787				174,882				176,966			4-13 years
Furniture and fixtures			38,877				38,350				40,363			4-10 years
Cold drink dispensing equipment			327,054				323,629				325,685			6-13 years
Leasehold and land improvements			60,979				60,023				59,047			5-20 years
Software for internal use			58,611				51,681				49,608			3-10 years
Construction in progress			4,082				6,635				3,524
Total property, plant and equipment, at cost			910,464				884,381				881,327
Less: Accumulated depreciation and amortization			558,889				524,451				521,936
Property, plant and equipment, net		$	351,575			$	359,930			$	359,391

Depreciation and amortization expense was $50.4 million in the first nine months of 2008 (“YTD 2008”) and $50.8 million in the first nine months of 2007 (“YTD 2007”). This amount included amortization expense for leased property under capital leases.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

6. Leased Property Under Capital Leases

Leased property under capital leases was summarized as follows:

		Sept. 28,				Dec. 30,				Sept. 30,				Estimated
In Thousands		2008				2007				2007				Useful Lives
Leased property under capital leases		$	88,619			$	88,619			$	88,619			3-29 years
Less: Accumulated amortization			20,856				17,757				16,723
Leased property under capital leases, net		$	67,763			$	70,862			$	71,896

As of September 28, 2008, real estate represented all of the leased property under capital leases and $62.1 million of this real estate is leased from related parties as described in Note 19 to the consolidated financial statements.

7. Franchise Rights and Goodwill

There was no change in the carrying amounts of franchise rights and goodwill in the periods presented. The Company performs its annual impairment test of franchise rights and goodwill as of the first day of the fourth quarter. During the third quarter of 2008 (“Q3 2008”), the Company believes it did not experience any events or changes in circumstances that indicated the carrying amounts of the Company’s franchise rights or goodwill exceeded fair values. As such, the Company did not perform an interim impairment test during Q3 2008 and did not record any impairments of franchise rights or goodwill.

8. Other Identifiable Intangible Assets

Other identifiable intangible assets were summarized as follows:

		Sept. 28,				Dec. 30,				Sept. 30,				Estimated
In Thousands		2008				2007				2007				Useful Lives
Other identifiable intangible assets		$	6,599			$	6,599			$	6,599			1-16 years
Less: Accumulated amortization			2,626				2,297				2,186
Other identifiable intangible assets, net		$	3,973			$	4,302			$	4,413

Other identifiable intangible assets primarily represent customer relationships.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

9. Other Accrued Liabilities

Other accrued liabilities were summarized as follows:

		Sept. 28,				Dec. 30,				Sept. 30,
In Thousands		2008				2007				2007
Accrued marketing costs		$	9,121			$	6,787			$	6,798
Accrued insurance costs			16,558				14,228				13,392
Accrued taxes (other than income taxes)			2,517				502				2,822
Accrued income taxes			3,840				—				3,086
Employee benefit plan accruals			11,010				9,933				8,429
Checks and transfers yet to be presented for payment from zero balance cash account			10,235				13,279				9,958
All other accrued liabilities			8,373				9,782				9,508
Total other accrued liabilities		$	61,654			$	54,511			$	53,993

10. Debt

Debt was summarized as follows:

						Interest				Interest				Sept. 28,				Dec. 30,				Sept. 30,
In Thousands		Maturity				Rate				Paid				2008				2007				2007
Lines of Credit			2008				—			Varies				$	—			$	7,400			$	—
Debentures			2007				—			Semi-annually					—				—				100,000
Debentures			2009				7.20	%		Semi-annually					57,440				57,440				57,440
Debentures			2009				6.375	%		Semi-annually					119,253				119,253				119,253
Senior Notes			2012				5.00	%		Semi-annually					150,000				150,000				150,000
Senior Notes			2015				5.30	%		Semi-annually					100,000				100,000				100,000
Senior Notes			2016				5.00	%		Semi-annually					164,757				164,757				164,757
															591,450				598,850				691,450
Less: Current portion of debt															176,693				7,400				100,000
Long-term debt														$	414,757			$	591,450			$	591,450

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

10. Debt

On March 8, 2007, the Company entered into a $200 million revolving credit facility (the “$200 million facility”), replacing its $100 million facility. The $200 million facility matures in March 2012 and includes an option to extend the term for an additional year at the discretion of the participating banks. The $200 million facility bears interest at a floating base rate or a floating rate of LIBOR plus an interest rate spread of .35%, dependent on the length of the term of the borrowing. In addition, the Company must pay an annual facility fee of .10% of the lenders’ aggregate commitments under the facility. Both the interest rate spread and the facility fee are determined from a commonly-used pricing grid based on the Company’s long-term senior unsecured debt rating. The $200 million facility contains two financial covenants: a fixed charge coverage ratio and a debt to operating cash flow ratio, each as defined in the credit agreement. On August 25, 2008, the Company entered into an amendment to the $200 million facility. The amendment clarified that charges incurred by the Company resulting from the Company’s withdrawal from the Central States, Southeast and Southwest Areas Pension Fund (“Central States”) would be excluded from the calculations of the financial covenants to the extent they are recognized before March 29, 2009 and do not exceed $15 million. See Note 18 of the consolidated financial statements for additional details on the withdrawal. The Company is currently in compliance with these covenants. On September 28, 2008, December 30, 2007 and September 30, 2007, the Company had no amounts outstanding under the $200 million facility.

Prior to October 3, 2008, the Company borrowed periodically under uncommitted lines of credit from certain banks participating in the $200 million facility. These uncommitted lines of credit were made available at the discretion of participating banks and have since been terminated. On September 28, 2008 and September 30, 2007, there were no amounts outstanding under the uncommitted lines of credit and there was $35 million and $60 million available, respectively. On December 30, 2007, $7.4 million was outstanding under uncommitted lines of credit of $60 million available.

After taking into account all of its interest rate hedging activities, the Company had a weighted average interest rate of 5.9%, 6.2% and 6.7% for its debt and capital lease obligations as of September 28, 2008, December 30, 2007 and September 30, 2007, respectively. The Company’s overall weighted average interest rate on its debt and capital lease obligations was 5.7% for YTD 2008 compared to 6.7% for YTD 2007. As of September 28, 2008, approximately 6% of the Company’s debt and capital lease obligations of $669.7 million was subject to changes in short-term interest rates.

The Company’s public debt is not subject to financial covenants but does limit the incurrence of certain liens and encumbrances as well as the incurrence of indebtedness by the Company’s subsidiaries in excess of certain amounts.

All of the outstanding long-term debt has been issued by the Company with none being issued by any of the Company’s subsidiaries. There are no guarantees of the Company’s debt.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

11. Derivative Financial Instruments

The Company periodically uses interest rate hedging products to modify risk from interest rate fluctuations. The Company has historically altered its fixed/floating rate mix based upon anticipated cash flows from operations relative to the Company’s debt level and the potential impact of changes in interest rates on the Company’s overall financial condition. Sensitivity analyses are performed to review the impact on the Company’s financial position and coverage of various interest rate movements. The Company does not use derivative financial instruments for trading purposes nor does it use leveraged financial instruments.

On September 18, 2008, the Company terminated six outstanding interest rate swap agreements with a notional amount of $225 million receiving $6.2 million in cash proceeds including $1.1 million for previously accrued interest receivable. After accounting for previously accrued interest receivable, the Company will amortize a gain of $5.1 million over the remaining term of the underlying debt. All of the Company’s interest rate swap agreements were LIBOR-based.

Derivative financial instruments were summarized as follows:

		September 28, 2008								December 30, 2007								September 30, 2007
		Notional				Remaining				Notional				Remaining				Notional				Remaining
In Thousands		Amount				Term				Amount				Term				Amount				Term
Interest rate swap agreement — floating		$	—				—			$	—				—			$	25,000			0.2 years
Interest rate swap agreement — floating			—				—				—				—				25,000			0.2 years
Interest rate swap agreement — floating			—				—				—				—				50,000			0.2 years
Interest rate swap agreement — floating			—				—				50,000			1.4 years					50,000			1.7 years
Interest rate swap agreement — floating			—				—				50,000			1.5 years					50,000			1.8 years
Interest rate swap agreement — floating			—				—				50,000			4.9 years					50,000			5.2 years
Interest rate swap agreement — floating			—				—				25,000			1.3 years					25,000			1.6 years
Interest rate swap agreement — floating			—				—				25,000			7.2 years					25,000			7.5 years
Interest rate swap agreement — floating			—				—				25,000			4.9 years					25,000			5.2 years

The counterparties to these contractual arrangements were major financial institutions with which the Company also has other financial relationships. The Company used several different financial institutions for interest rate derivative contracts to minimize the concentration of credit risk. While the Company was exposed to credit loss in the event of nonperformance by these counterparties, the Company did not anticipate nonperformance by these parties. The Company had master agreements with the counterparties to its derivative financial agreements that provided for net settlement of the derivative transactions.

During the first quarter of 2007, the Company began using derivative instruments to hedge the majority of its vehicle fuel purchases. These derivative instruments relate to diesel fuel and unleaded gasoline used in the Company’s operations. Derivative instruments used include puts, calls and caps which effectively establish an upper and lower limit on the Company’s price of fuel within periods covered by the instruments. The Company currently accounts for its fuel hedges on a mark-to-market basis with any expense or income being reflected as an adjustment of fuel costs. The fuel hedging agreements expired at the end of Q3 2008.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

11. Derivative Financial Instruments

The net impact of the fuel hedges was to increase fuel costs by $0.6 million and $0.1 million in Q3 2008 and Q3 2007, respectively. The net impact of the fuel hedges was to decrease fuel costs by $1.2 million and $0.7 million in YTD 2008 and YTD 2007, respectively.

12. Fair Values of Financial Instruments

The following methods and assumptions were used by the Company in estimating the fair values of its financial instruments:

Cash and Cash Equivalents, Accounts Receivable and Accounts Payable
The fair values of cash and cash equivalents, accounts receivable and accounts payable approximate carrying values due to the short maturity of these items.

Public Debt Securities
The fair values of the Company’s public debt securities are based on estimated market prices.

Non-Public Variable Rate Debt
The carrying amounts of the Company’s variable rate borrowings approximate their fair values.

Deferred Compensation Plan Assets
The fair values of deferred compensation plan assets, which are held in mutual funds, are based upon the quoted market value of the securities held within the mutual funds.

Derivative Financial Instruments
The fair values for the Company’s interest rate swap and fuel hedging agreements are based on current settlement values.

Letters of Credit
The fair values of the Company’s letters of credit, obtained from financial institutions, are based on the notional amounts of the instruments. These letters of credit primarily relate to the Company’s property and casualty insurance programs.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

12. Fair Values of Financial Instruments

The carrying amounts and fair values of the Company’s debt, deferred compensation plan assets, derivative financial instruments and letters of credit were as follows:

		September 28, 2008								December 30, 2007								September 30, 2007
		Carrying				Fair				Carrying				Fair				Carrying				Fair
In Thousands		Amount				Value				Amount				Value				Amount				Value
Public debt securities		$	591,450			$	550,420			$	591,450			$	575,833			$	691,450			$	676,324
Non-public variable rate debt			—				—				7,400				7,400				—				—
Deferred compensation plan assets			6,444				6,444				6,386				6,386				6,252				6,252
Interest rate swap agreements			—				—				(2,337	)			(2,337	)			2,353				2,353
Fuel hedging agreements			—				—				(340	)			(340	)			—				(154	)
Letters of credit			—				19,332				—				21,389				—				21,271

On September 18, 2008, the Company terminated all of its outstanding interest rate swap agreements. The fair value of interest rate swap agreements at December 30, 2007 represented the estimated amount the Company would have received upon termination of these agreements. The fair value increased to $6.2 million at the date the interest rate swap agreements were terminated. The fair value on September 30, 2007 represented the estimated amount the Company would have paid upon the termination of these agreements.

The fair values of the fuel hedging agreements at December 30, 2007 and September 30, 2007 represented the estimated amount the Company would have received upon termination of these agreements.

The Company adopted Statement of Financial Accounting Standards No. 157, “Fair Value Measurement” (“SFAS No. 157”) as of the beginning of the first quarter of 2008 (“Q1 2008”), and there was no material impact to the consolidated financial statements. SFAS No. 157 currently applies to all financial assets and liabilities and for nonfinancial assets and liabilities recognized or disclosed at fair value on a recurring basis. In February 2008, the Financial Accounting Standards Board (“FASB”) issued FASB Staff Position SFAS No. 157-2, “Effective Date of FASB Statement No. 157,” which defers the application date of the provisions of SFAS No. 157 for all nonfinancial assets and liabilities until the first quarter of 2009 except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. SFAS No. 157 requires disclosure that establishes a framework for measuring fair value in GAAP, and expands disclosures about fair value measurements. SFAS No. 157 is intended to enable the readers of financial statements to assess the inputs used to develop those measurements by establishing a hierarchy for ranking the quality and reliability of the information used to determine fair values. SFAS No. 157 requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.
Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.
Level 3: Unobservable inputs that are not corroborated by market data.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

12. Fair Values of Financial Instruments

The following table summarizes the valuation of deferred compensation plan assets and liabilities by the above categories as of September 28, 2008:

In Thousands					Level 1
Assets
Deferred compensation plan assets					$	6,444
Liabilities
Deferred compensation plan liabilities						6,444

The Company maintains a non-qualified deferred compensation plan for certain executives and other highly compensated employees. The investment assets are held in mutual funds. The fair value of the mutual funds is based on the quoted market value of the securities held within the funds (Level 1). The related deferred compensation liability represents the fair value of the investment assets.

13. Other Liabilities

Other liabilities were summarized as follows:

		Sept. 28,				Dec. 30,				Sept. 30,
In Thousands		2008				2007				2007
Accruals for executive benefit plans		$	77,601			$	75,438			$	74,462
Other			32,119				18,194				22,713
Total other liabilities		$	109,720			$	93,632			$	97,175

14. Commitments and Contingencies

The Company is a member of South Atlantic Canners, Inc. (“SAC”), a manufacturing cooperative from which it is obligated to purchase 17.5 million cases of finished product on an annual basis through May 2014. The Company is also a member of Southeastern Container (“Southeastern”), a plastic bottle manufacturing cooperative from which it is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories. See Note 19 to the consolidated financial statements for additional information concerning SAC and Southeastern.

The Company guarantees a portion of SAC’s and Southeastern’s debt and lease obligations. The amounts guaranteed were $42.1 million, $45.4 million and $43.0 million as of September 28, 2008, December 30, 2007 and September 30, 2007, respectively. The Company has not recorded any liability associated with these guarantees. The Company holds no assets as collateral against these guarantees. The guarantees relate to the debt and lease obligations of SAC and Southeastern, which resulted primarily from the purchase of production equipment and facilities. These guarantees expire at various times through 2021. The members of both cooperatives consist solely of Coca-Cola bottlers. The Company does not anticipate either of these cooperatives

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

14. Commitments and Contingencies

will fail to fulfill their commitments. The Company further believes each of these cooperatives has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust selling prices of their products which adequately mitigate the risk of material loss from the Company’s guarantees.

In the event either of these cooperatives fails to fulfill its commitments under the related debt and lease obligations, the Company would be responsible for payments to the lenders up to the level of the guarantees. If these cooperatives had borrowed up to their borrowing capacity, the Company’s maximum exposure under these guarantees on September 28, 2008 would have been $25.2 million each for SAC and Southeastern and the Company’s maximum total exposure, including its equity investment, would have been $29.2 million for SAC and $36.3 million for Southeastern.

The Company has been purchasing plastic bottles from Southeastern and finished products from SAC for more than ten years.

The Company has an equity ownership in each of the entities in addition to the guarantees of certain indebtedness. As of September 28, 2008, SAC had total assets of approximately $41 million and total debt of approximately $21 million. SAC had total revenues for YTD 2008 of approximately $144 million. As of September 28, 2008, Southeastern had total assets of approximately $395 million and total debt of approximately $248 million. Southeastern had total revenue for YTD 2008 of approximately $446 million.

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. On September 28, 2008, these letters of credit totaled $19.3 million.

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations. The future payments related to these contractual arrangements as of September 28, 2008 amounted to $25.7 million and expire at various dates through 2018.

The Company is involved in various claims and legal proceedings which have arisen in the ordinary course of its business. Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, cash flows or results of operations of the Company. No material amount of loss in excess of recorded amounts is believed to be reasonably possible as a result of these claims and legal proceedings.

The Company is subject to audit by tax authorities in jurisdictions where it conducts business. These audits may result in assessments that are subsequently resolved with the tax authorities or potentially through the courts. Management believes the Company has adequately provided for any assessments that are likely to result from these audits; however, final assessments, if any, could be different than the amounts recorded in the consolidated financial statements.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

15. Income Taxes

The Company’s effective income tax rate for YTD 2008 and YTD 2007 was 48.2% and 37.7%, respectively.

The following table provides a reconciliation of the income tax expense (benefit) at the statutory federal rate to actual income tax expense.

		First Nine Months
In Thousands		2008				2007
Statutory expense		$	5,184			$	12,137
State income taxes, net of federal effect			645				1,510
Manufacturing deduction benefit			(487	)			(1,141	)
Meals and entertainment			507				440
Adjustment for uncertain tax positions			1,277				(75	)
Other, net			9				190
Income tax expense		$	7,135			$	13,061

In June 2006, FASB issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of FASB Statement No. 109, “Accounting for Income Taxes.” FIN 48 clarifies the accounting for uncertainty in income taxes recognized by prescribing a recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken on a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods and disclosure. In May 2007, FASB issued FASB Staff Position FIN 48-1, “Definition of Settlement in FASB Interpretation No. 48” (“FSP FIN 48-1”). FSP FIN 48-1 provides guidance on whether a tax position is effectively settled for the purpose of recognizing previously unrecognized tax benefits. The Company adopted the provisions of FIN 48 and FSP FIN 48-1 effective as of January 1, 2007. As a result of the implementation of FIN 48 and FSP FIN 48-1, the Company recognized no material adjustment in the liability for unrecognized income tax benefits. As of December 30, 2007, the Company had $9.2 million of unrecognized tax benefits, including accrued interest, of which $8.0 million would affect the Company’s effective tax rate if recognized. As of September 28, 2008, the Company had $10.4 million of unrecognized tax benefits, including accrued interest, of which $9.3 million would affect the Company’s effective rate if recognized. It is expected that the amount of unrecognized tax benefits may change in the next 12 months. During this period, it is reasonably possible that tax audits could reduce unrecognized tax benefits. The Company cannot reasonably estimate the change in the amount of unrecognized tax benefits until further information is made available during the progress of the audits.

The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. As of December 30, 2007, the Company had approximately $2.0 million of accrued interest related to uncertain tax positions. As of September 28, 2008, the Company had approximately $2.4 million of accrued interest related to uncertain tax positions. Income tax expense included interest of approximately $.4 million in both YTD 2008 and YTD 2007.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

15. Income Taxes

Various tax years from 1990 remain open due to loss carryforwards in certain state jurisdictions. The tax years 2005 through 2007 remain open to examination by taxing jurisdictions to which the Company is subject.

The Company’s income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such assets and liabilities and new information that becomes available to the Company.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

16. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is comprised of adjustments relative to the Company’s pension and postretirement medical benefit plans and foreign currency translation adjustments required for a subsidiary of the Company that performs data analysis and provides consulting services in Europe.

A summary of accumulated other comprehensive loss is as follows:

						Application of
		Dec. 30,				SFAS No. 158				Pre-tax				Tax				Sept. 28,
In Thousands		2007				After tax(1)				Activity				Effect				2008
Net pension activity:
Actuarial loss		$	(12,684	)		$	23			$	333			$	(128	)		$	(12,456	)
Prior service costs			(55	)			1				12				(5	)			(47	)
Net postretirement benefits activity:
Actuarial loss			(9,928	)			141				687				(264	)			(9,364	)
Prior service costs			9,833				(275	)			(1,338	)			514				8,734
Transition asset			60				(4	)			(18	)			7				45
Foreign currency translation adjustment			23				—				(5	)			2				20
Total		$	(12,751	)		$	(114	)		$	(329	)		$	126			$	(13,068	)

		Dec. 31,				Pre-tax				Tax				Sept. 30,
In Thousands		2006				Activity				Effect				2007
Net pension activity:
Actuarial loss		$	(24,673	)		$	1,868			$	(735	)		$	(23,540	)
Prior service costs			(31	)			18				(7	)			(20	)
Net postretirement benefits activity:
Actuarial loss			(13,512	)			916				(360	)			(12,956	)
Prior service costs			10,915				(1,339	)			527				10,103
Transition asset			75				(19	)			7				63
Foreign currency translation adjustment			—				22				(7	)			15
Total		$	(27,226	)		$	1,466			$	(575	)		$	(26,335	)

17. Capital Transactions

The Company has two classes of common stock outstanding, Common Stock and Class B Common Stock. The Common Stock is traded on the NASDAQ Global Select Market^sm under the symbol COKE. There is no established public trading market for the Class B Common Stock. Shares of the Class B Common Stock are convertible on a share-for-share basis into shares of Common Stock at any time at the option of the holders of Class B Common Stock.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

17. Capital Transactions

No cash dividend or dividend of property or stock other than stock of the Company, as specifically described in the Company’s certificate of incorporation, may be declared and paid on the Class B Common Stock unless an equal or greater dividend is declared and paid on the Common Stock. During YTD 2008 and YTD 2007, dividends of $.75 per share were declared and paid on both Common Stock and Class B Common Stock.

Each share of Common Stock is entitled to one vote per share and each share of Class B Common Stock is entitled to 20 votes per share at all meetings of stockholders. Except as otherwise required by law, holders of the Common Stock and Class B Common Stock vote together as a single class on all matters brought before the Company’s stockholders. In the event of liquidation, there is no preference between the two classes of common stock.

On May 12, 1999, the stockholders of the Company approved a restricted stock award for J. Frank Harrison, III, the Company’s Chairman of the Board of Directors and Chief Executive Officer, consisting of 200,000 shares of the Company’s Class B Common Stock. Under the award, shares of restricted stock are granted at a rate of 20,000 shares per year over a ten-year period. The vesting of each annual installment is contingent upon the Company achieving at least 80% of the overall goal achievement factor in the Company’s Annual Bonus Plan. The restricted stock award does not entitle Mr. Harrison, III to participate in dividend or voting rights until each installment has vested and the shares are issued. On February 28, 2007, the Compensation Committee of the Board of Directors determined 20,000 shares of restricted Class B Common Stock vested and should be issued to Mr. Harrison, III for the fiscal year ended December 31, 2006. On February 27, 2008, the Compensation Committee determined an additional 20,000 shares of restricted Class B Common Stock vested and should be issued to Mr. Harrison, III for the fiscal year ended December 30, 2007.

The Company’s only active share-based compensation is the restricted stock award to Mr. Harrison, III, as previously described. Each annual 20,000 share tranche has an independent performance requirement as it is not established until the Company’s Annual Bonus Plan targets are approved each year by the Compensation Committee of the Company’s Board of Directors. As a result, each 20,000 share tranche is considered to have its own service inception date, grant-date fair value and requisite service period. The Company’s Annual Bonus Plan targets, which establish the performance requirement for the restricted stock awards, are approved by the Compensation Committee in the first quarter of each year.

A summary of restricted stock awards is as follows:

										Potential				Recorded
										Annual				Nine Month
		Shares				Grant-Date				Compensation				Compensation
Year		Awarded				Price				Expense				Expense
2007			20,000			$	58.53			$	1,170,600			$	877,950
2008			20,000				56.50				1,130,000				—

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

17. Capital Transactions

The Company currently estimates it will not achieve at least 80% of the overall goal achievement factor in the Company’s 2008 Annual Bonus Plan required for the restricted stock award to vest. Accordingly, no compensation expense has been recorded in Q3 2008 or YTD 2008, based upon the Company’s estimate. The Company reimburses Mr. Harrison, III for income taxes to be paid on the shares if the performance requirement is met and the shares are issued. The Company accrues the estimated cost of the income tax reimbursement, if necessary, over the one-year service period.

On April 29, 2008, the stockholders of the Company approved a Performance Unit Award Agreement for Mr. Harrison, III consisting of 400,000 performance units (“Units”). Each Unit represents the right to receive one share of the Company’s Class B Common Stock, subject to certain terms and conditions. The Units will vest in annual increments over a ten-year period starting in fiscal year 2009. The number of Units that vest each year will equal the product of 40,000 multiplied by the overall goal achievement factor (not to exceed 100%) under the Company’s Annual Bonus Plan. The Performance Unit Award Agreement will replace the restricted stock award discussed above which expires at the end of 2008 and will not affect the Company’s results of operations or financial position for the fiscal year ending December 28, 2008.

The increase in the number of shares outstanding in YTD 2008 was due to the issuance of 20,000 shares of Class B Common Stock related to the restricted stock award. The increase in the number of shares in YTD 2007 was due to the issuance of 20,000 shares of Class B Common Stock related to the restricted stock award and the conversion of 500 shares from Class B Common Stock to Common Stock.

18. Benefit Plans

Recently Adopted Pronouncement

In September 2006, FASB issued Statement of Financial Accounting Standards No. 158, “Employers’ Accounting for Defined Pension and Other Postretirement Plans” (“SFAS No. 158”), which was effective for the year ending December 31, 2006 except for the requirement that the benefit plan assets and obligations be measured as of the date of the employer’s statement of financial position, which is effective for the year ending December 28, 2008. The Company adopted the measurement date provisions of SFAS No. 158 on the first day of Q1 2008 and used the “one measurement” approach. The incremental effect of applying the measurement date provisions on the balance sheet in Q1 2008 was as follows:

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

18. Benefit Plans

		Before								After
		Application of								Application of
In Thousands		SFAS No. 158				Adjustment				SFAS No. 158
Pension and postretirement benefit obligations		$	32,758			$	434			$	33,192
Deferred income taxes			168,540				(167	)			168,373
Total liabilities			1,123,290				267				1,123,557
Retained earnings			79,227				(153	)			79,074
Accumulated other comprehensive loss			(12,751	)			(114	)			(12,865	)
Total stockholders’ equity			120,504				(267	)			120,237

Pension Plans

Retirement benefits under the two Company-sponsored pension plans are based on the employee’s length of service, average compensation over the five consecutive years that give the highest average compensation and average Social Security taxable wage base during the 35-year period before reaching Social Security retirement age. Contributions to the plans are based on the projected unit credit actuarial funding method and are limited to the amounts currently deductible for income tax purposes. On February 22, 2006, the Board of Directors of the Company approved an amendment to the principal Company-sponsored pension plan to cease further benefit accruals under the plan effective June 30, 2006.

The components of net periodic pension cost (income) were as follows:

		Third Quarter								First Nine Months
In Thousands		2008				2007				2008				2007
Service cost		$	20			$	20			$	61			$	59
Interest cost			2,701				2,634				8,104				7,902
Expected return on plan assets			(3,410	)			(3,224	)			(10,231	)			(9,674	)
Amortization of prior service cost			4				6				12				18
Recognized net actuarial loss			111				623				333				1,868
Net periodic pension cost (income)		$	(574	)		$	59			$	(1,721	)		$	173

The Company contributed $0.2 million to one of its Company-sponsored pension plans during Q3 2008. The Company does not expect to contribute to either of its two Company-sponsored pension plans during the remainder of 2008.

Postretirement Benefits

The Company provides postretirement benefits for a portion of its current employees. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Company does not pre-fund these benefits and has the right to modify or terminate certain of these benefits in the future.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

18. Benefit Plans

The components of net periodic postretirement benefit cost were as follows:

		Third Quarter								First Nine Months
In Thousands		2008				2007				2008				2007
Service cost		$	128			$	107			$	384			$	319
Interest cost			536				552				1,608				1,657
Amortization of unrecognized transitional assets			(6	)			(7	)			(18	)			(19	)
Recognized net actuarial loss			229				306				687				916
Amortization of prior service cost			(446	)			(447	)			(1,338	)			(1,339	)
Net periodic postretirement benefit cost		$	441			$	511			$	1,323			$	1,534

401(k) Savings Plan

The Company provides a 401(k) Savings Plan for substantially all of its employees who are not part of collective bargaining agreements. The total cost for this benefit in YTD 2008 and YTD 2007 was $7.7 million and $6.3 million, respectively.

Multi-Employer Benefits

The Company entered into a new agreement in Q3 2008 when one of its collective bargaining contracts expired in July 2008. The new agreement allows the Company to freeze its liability to the Central States, a multi-employer defined benefit pension fund, while preserving the pension benefits previously earned by the employees. As a result of freezing the Company’s liability to the Central States, the Company recorded a charge of $13.8 million in Q3 2008. The Company has paid $3.0 million in the fourth quarter of 2008 to the Southern States Savings and Retirement Plan (“Southern States”) under the agreement to freeze the Central States liability. The remaining $10.8 million is the present value amount, using a discount rate of 7%, that will be paid to the Central States and has been recorded in other liabilities. The Company will pay approximately $1 million annually over the next 20 years. In addition, the Company will make future contributions on behalf of these employees to the Southern States.

19. Related Party Transactions

The Company’s business consists primarily of the production, marketing and distribution of nonalcoholic beverages of The Coca-Cola Company, which is the sole owner of the secret formulas under which the primary components (either concentrate or syrup) of its beverage products are manufactured. As of September 28, 2008, The Coca-Cola Company had a 27.1% interest in the Company’s total outstanding Common Stock and Class B Common Stock on a combined basis.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

19. Related Party Transactions

The following table summarizes the significant transactions between the Company and The Coca-Cola Company:

		First Nine Months
In Millions		2008				2007
Payments by the Company for concentrate, syrup, sweetener and other purchases		$	285.7			$	254.4
Marketing funding support payments to the Company			35.2				28.4
Payments by the Company net of marketing funding support		$	250.5			$	226.0
Payments by the Company for customer marketing programs		$	37.1			$	35.0
Payments by the Company for cold drink equipment parts			5.3				4.2
Fountain delivery and equipment repair fees paid to the Company			7.6				7.1
Presence marketing funding support provided by The Coca-Cola Company on the Company’s behalf			3.0				3.2
Sales of finished products to The Coca-Cola Company			7.8				24.8

The Company has a production arrangement with Coca-Cola Enterprises Inc. (“CCE”) to buy and sell finished products at cost. Sales to CCE under this arrangement were $28.3 million and $31.9 million in YTD 2008 and YTD 2007, respectively. Purchases from CCE under this arrangement were $15.2 million and $10.4 million in YTD 2008 and YTD 2007, respectively. The Coca-Cola Company has significant equity interests in the Company and CCE. As of September 28, 2008, CCE held 9% of the Company’s outstanding Common Stock and held no shares of the Company’s Class B Common Stock.

Along with all other Coca-Cola bottlers in the United States, the Company is a member in Coca-Cola Bottlers’ Sales and Services Company, LLC (“CCBSS”), which was formed in 2003 for the purposes of facilitating various procurement functions and distributing certain specified beverage products of The Coca-Cola Company with the intention of enhancing the efficiency and competitiveness of the Coca-Cola bottling system in the United States. CCBSS negotiates the procurement for the majority of the Company’s raw materials (excluding concentrate). The Company pays an administrative fee to CCBSS for its services.

The Company is a member of SAC, a manufacturing cooperative. SAC sells finished products to the Company and Piedmont at cost. Purchases from SAC by the Company and Piedmont for finished products were $111.5 million and $112.8 million in YTD 2008 and YTD 2007, respectively. The Company also manages the

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

19. Related Party Transactions

operations of SAC pursuant to a management agreement. Management fees earned from SAC were $1.1 million in YTD 2008 and $1.0 million in YTD 2007. The Company has also guaranteed a portion of debt for SAC. Such guarantee amounted to $21.4 million as of September 28, 2008. The Company’s equity investment in SAC was $4.1 million, $4.0 million and $4.0 million as of September 28, 2008, December 30, 2007 and September 30, 2007, respectively.

The Company is a shareholder in two entities from which it purchases substantially all its requirements for plastic bottles. Net purchases from these entities were $54.3 million and $51.9 million in YTD 2008 and YTD 2007, respectively. In connection with its participation in one of these entities, the Company has guaranteed a portion of the entity’s debt. Such guarantee amounted to $20.7 million as of September 28, 2008. The Company’s equity investment in one of these entities, Southeastern, was $11.0 million, $7.4 million and $6.3 million as of September 28, 2008, December 30, 2007 and September 30, 2007, respectively

The Company monitors its investments in cooperatives and would be required to write down its investment if an impairment is identified and determined to be other than temporary. No impairment of the Company’s investments in cooperatives has been identified as of September 28, 2008.

The Company recorded an adjustment to its equity investment in Southeastern in the second quarter of 2008 which resulted in a nonrecurring pre-tax credit of $2.6 million. This adjustment was based on information received from Southeastern during the quarter and reflected a higher share of Southeastern’s retained earnings compared to the amount previously recorded. The Company classifies its equity in earnings of Southeastern in cost of sales consistent with the classification of purchases from Southeastern.

The Company leases from Harrison Limited Partnership One (“HLP”) the Snyder Production Center and an adjacent sales facility, which are located in Charlotte, North Carolina. The lease expires on December 31, 2010. HLP is directly and indirectly owned by trusts of which J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, and Deborah S. Harrison, a director of the Company, are trustees and beneficiaries. The principal balance outstanding under this capital lease as of September 28, 2008 was $37.9 million. Rental payments related to this lease were $2.8 million and $3.2 million in YTD 2008 and YTD 2007, respectively.

The Company leases from Beacon Investment Corporation (“Beacon”) the Company’s headquarters office facility and an adjacent office facility. The lease expires on December 31, 2021. Beacon’s sole shareholder is J. Frank Harrison, III. The principal balance outstanding under this capital lease as of September 28, 2008 was $33.1 million. Rental payments related to the lease were $2.8 million and $2.7 million in YTD 2008 and YTD 2007, respectively.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

20. Net Sales by Product Category

Net sales by product category were as follows:

		Third Quarter								First Nine Months
In Thousands		2008				2007				2008				2007
Bottle/can sales:
Sparkling beverages (including energy products)		$	258,200			$	255,804			$	762,741			$	760,359
Still beverages			66,160				58,897				186,020				158,280
Total bottle/can sales			324,360				314,701				948,761				918,639
Other sales:
Sales to other Coca-Cola bottlers			31,231				27,804				94,356				101,774
Post-mix and other			25,972				24,855				72,123				74,946
Total other sales			57,203				52,659				166,479				176,720
Total net sales		$	381,563			$	367,360			$	1,115,240			$	1,095,359

Sparkling beverages are primarily carbonated beverages while still beverages are primarily noncarbonated beverages.

Coca-Cola Bottling Co. Consolidated
Notes to Consolidated Financial Statements (Unaudited)

21. Net Income (Loss) Per Share

The following table sets forth the computation of basic net income (loss) per share and diluted net income (loss) per share under the two-class method:

		Third Quarter								First Nine Months
In Thousands (Except Per Share Data)		2008				2007				2008				2007
Numerator for basic and diluted net income (loss) per Common Stock and Class B Common Stock share:
Net income (loss)		$	(3,145	)		$	5,273			$	7,675			$	21,615
Less dividends:
Common Stock			1,661				1,661				4,983				4,983
Class B Common Stock			625				620				1,875				1,860
Total undistributed earnings (losses)		$	(5,431	)		$	2,992			$	817			$	14,772
Common Stock undistributed earnings (losses) — basic		$	(3,946	)		$	2,179			$	594			$	10,757
Class B Common Stock undistributed earnings (losses) — basic			(1,485	)			813				223				4,015
Total undistributed earnings (losses) — basic		$	(5,431	)		$	2,992			$	817			$	14,772
Common Stock undistributed earnings (losses) — diluted		$	(3,946	)		$	2,174			$	593			$	10,738
Class B Common Stock undistributed earnings (losses) — diluted			(1,485	)			818				224				4,034
Total undistributed earnings (losses) — diluted		$	(5,431	)		$	2,992			$	817			$	14,772
Numerator for basic net income (loss) per Common Stock share:
Dividends on Common Stock		$	1,661			$	1,661			$	4,983			$	4,983
Common Stock undistributed earnings (losses) — basic			(3,946	)			2,179				594				10,757
Numerator for basic net income (loss) per Common Stock share		$	(2,285	)		$	3,840			$	5,577			$	15,740
Numerator for basic net income (loss) per Class B Common Stock share:
Dividends on Class B Common Stock		$	625			$	620			$	1,875			$	1,860
Class B Common Stock undistributed earnings (losses) — basic			(1,485	)			813				223				4,015
Numerator for basic net income (loss) per Class B Common Stock share		$	(860	)		$	1,433			$	2,098			$	5,875