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

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.)

(Address of principal executive offices) (Zip Code)

(704) 557-4400

(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 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 April 30, 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 MARCH 30, 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			32
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			51
Item 4.		Controls and Procedures			52
PART II — OTHER INFORMATION
Item 1A.		Risk Factors			53
Item 6.		Exhibits			54
		Signature			55
Exhibit 10.1
Exhibit 12
Exhibit 31.1
Exhibit 31.2
Exhibit 32

PART I — FINANCIAL INFORMATION

Item l. Financial Statements.

Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
In Thousands (Except Per Share Data)

		First Quarter
		2008				2007
Net sales		$	337,674			$	337,556
Cost of sales			197,756				186,065
Gross margin			139,918				151,491
Selling, delivery and administrative expenses			136,243				130,942
Income from operations			3,675				20,549
Interest expense			10,434				12,218
Minority interest			(339	)			681
Income (loss) before income taxes			(6,420	)			7,650
Income tax provision (benefit)			(2,085	)			2,999
Net income (loss)		$	(4,335	)		$	4,651
Basic net income (loss) per share:
Common Stock		$	(.47	)		$	.51
Weighted average number of Common Stock shares outstanding			6,644				6,643
Class B Common Stock		$	(.47	)		$	.51
Weighted average number of Class B Common Stock shares outstanding			2,500				2,480
Diluted net income (loss) per share:
Common Stock		$	(.47	)		$	.51
Weighted average number of Common Stock shares outstanding — assuming dilution			9,144				9,131
Class B Common Stock		$	(.47	)		$	.51
Weighted average number of Class B Common Stock shares outstanding — assuming dilution			2,500				2,488
Cash dividends per share:
Common Stock		$	.25			$	.25
Class B Common Stock		$	.25			$	.25

See Accompanying Notes to Consolidated Financial Statements

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

		Unaudited								Unaudited
		March 30,				Dec. 30,				April 1,
		2008				2007				2007
ASSETS
Current Assets:
Cash and cash equivalents		$	9,930			$	9,871			$	55,039
Accounts receivable, trade, less allowance for doubtful accounts of $858, $1,137 and $1,328, respectively			107,412				92,499				102,356
Accounts receivable from The Coca-Cola Company			14,158				3,800				16,724
Accounts receivable, other			6,655				7,867				8,801
Inventories			65,556				63,534				63,746
Prepaid expenses and other current assets			24,881				20,758				17,543
Total current assets			228,592				198,329				264,209
Property, plant and equipment, net			358,626				359,930				376,185
Leased property under capital leases, net			69,829				70,862				73,962
Other assets			35,662				35,655				36,108
Franchise rights, net			520,672				520,672				520,672
Goodwill, net			102,049				102,049				102,049
Other identifiable intangible assets, net			4,192				4,302				4,636
Total		$	1,319,622			$	1,291,799			$	1,377,821

See Accompanying Notes to Consolidated Financial Statements

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

		Unaudited								Unaudited
		March 30,				Dec. 30,				April 1,
		2008				2007				2007
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Current portion of debt		$	42,100			$	7,400			$	103,000
Current portion of obligations under capital leases			2,645				2,602				2,476
Accounts payable, trade			44,887				51,323				42,615
Accounts payable to The Coca-Cola Company			22,610				11,597				23,111
Other accrued liabilities			55,540				54,511				51,827
Accrued compensation			12,935				23,447				10,416
Accrued interest payable			14,337				8,417				18,562
Total current liabilities			195,054				159,297				252,007
Deferred income taxes			165,988				168,540				158,192
Pension and postretirement benefit obligations			33,645				32,758				57,276
Other liabilities			95,045				93,632				95,722
Obligations under capital leases			76,935				77,613				79,581
Long-term debt			591,450				591,450				591,450
Total liabilities			1,158,117				1,123,290				1,234,228
Commitments and Contingencies (Note 14)
Minority interest			47,666				48,005				46,683
Stockholders’ Equity:
Common Stock, $1.00 par value:
Authorized — 30,000,000 shares; Issued — 9,706,051, 9,706,051 and 9,705,551 shares, respectively			9,706				9,706				9,705
Class B Common Stock, $1.00 par value:
Authorized — 10,000,000 shares; Issued — 3,127,766, 3,107,766 and 3,108,266 shares, respectively			3,127				3,107				3,108
Capital in excess of par value			102,732				102,469				101,418
Retained earnings			72,453				79,227				70,865
Accumulated other comprehensive loss			(12,925	)			(12,751	)			(26,932	)
			175,093				181,758				158,164
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			113,839				120,504				96,910
Total		$	1,319,622			$	1,291,799			$	1,377,821

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															4,651												4,651
Foreign currency translation adjustments, net of tax																			2								2
Pension and postretirement benefit adjustments, net of tax																			292								292
Total comprehensive income																											4,945
Cash dividends paid Common ($.25 per share)															(1,661	)											(1,661	)
Class B Common ($.25 per share)															(620	)											(620	)
Issuance of 20,000 shares of Class B Common Stock							20				(20	)															—
Stock compensation expense											293																293
Balance on April 1, 2007		$	9,705			$	3,108			$	101,418			$	70,865			$	(26,932	)		$	(61,254	)		$	96,910
Balance on December 30, 2007		$	9,706			$	3,107			$	102,469			$	79,227			$	(12,751	)		$	(61,254	)		$	120,504
Comprehensive income (loss):
Net loss															(4,335	)											(4,335	)
Foreign currency translation adjustments, net of tax																			7								7
Pension and postretirement benefit adjustments, net of tax																			(67	)							(67	)
Total comprehensive income (loss)																											(4,395	)
Adjustment to change measurement date for SFAS No. 158, net of tax															(153	)			(114	)							(267	)
Cash dividends paid Common ($.25 per share)															(1,661	)											(1,661	)
Class B Common ($.25 per share)															(625	)											(625	)
Issuance of 20,000 shares of Class B Common Stock							20				(20	)															—
Stock compensation expense											283																283
Balance on March 30, 2008		$	9,706			$	3,127			$	102,732			$	72,453			$	(12,925	)		$	(61,254	)		$	113,839

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands

		First Quarter
		2008				2007
Cash Flows from Operating Activities
Net income (loss)		$	(4,335	)		$	4,651
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation expense			16,629				16,944
Amortization of intangibles			110				111
Deferred income taxes			(2,085	)			754
Losses on sale of property, plant and equipment			369				679
Amortization of debt costs			615				768
Amortization of deferred gain related to terminated interest rate agreements			(426	)			(424	)
Stock compensation expense			283				293
Minority interest			(339	)			681
Increase in current assets less current liabilities			(28,879	)			(21,518	)
(Increase) decrease in other noncurrent assets			147				(285	)
Increase (decrease) in other noncurrent liabilities			1,753				(142	)
Other			(152	)			(92	)
Total adjustments			(11,975	)			(2,231	)
Net cash provided by (used in) operating activities			(16,310	)			2,420
Cash Flows from Investing Activities
Additions to property, plant and equipment			(14,835	)			(8,415	)
Proceeds from the sale of property, plant and equipment			174				197
Investment in plastic bottle manufacturing cooperative			(729	)			(758	)
Net cash used in investing activities			(15,390	)			(8,976	)
Cash Flows from Financing Activities
Proceeds from lines of credit, net			34,700				3,000
Cash dividends paid			(2,286	)			(2,281	)
Principal payments on capital lease obligations			(635	)			(593	)
Other			(20	)			(354	)
Net cash provided by (used in) financing activities			31,759				(228	)
Net increase (decrease) in cash			59				(6,784	)
Cash at beginning of period			9,871				61,823
Cash at end of period		$	9,930			$	55,039
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 first quarter 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 and interest 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.

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

3. Piedmont Coca-Cola Bottling Partnership

Minority interest as of March 30, 2008, December 30, 2007 and April 1, 2007 represents the portion of Piedmont owned by The Coca-Cola Company, which was 22.7% for all periods presented.

4. Inventories

Inventories were summarized as follows:

		March 30,				Dec. 30,				April 1,
In Thousands		2008				2007				2007
Finished products		$	41,822			$	37,649			$	38,279
Manufacturing materials			6,923				9,198				9,700
Plastic shells, plastic pallets and other inventories			16,811				16,687				15,767
Total inventories		$	65,556			$	63,534			$	63,746

5. Property, Plant and Equipment

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

		March 30,				Dec. 30,				April 1,				Estimated
In Thousands		2008				2007				2007				Useful Lives
Land		$	12,280			$	12,280			$	12,455
Buildings			110,721				110,721				111,533			10-50 years
Machinery and equipment			106,575				106,180				101,118			5-20 years
Transportation equipment			174,785				174,882				185,475			4-13 years
Furniture and fixtures			38,587				38,350				39,841			4-10 years
Cold drink dispensing equipment			325,586				323,629				328,404			6-13 years
Leasehold and land improvements			60,047				60,023				58,119			5-20 years
Software for internal use			52,155				51,681				36,677			3-10 years
Construction in progress			13,336				6,635				16,603
Total property, plant and equipment, at cost			894,072				884,381				890,225
Less: Accumulated depreciation and amortization			535,446				524,451				514,040
Property, plant and equipment, net		$	358,626			$	359,930			$	376,185

Depreciation and amortization expense was $16.6 million and $16.9 million in the first quarter of 2008 (“Q1 2008”) and the first quarter of 2007 (“Q1 2007”), respectively. These amounts 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:

		March 30,				Dec. 30,				April 1,				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			18,790				17,757				14,657
Leased property under capital leases, net		$	69,829			$	70,862			$	73,962

As of March 30, 2008, real estate represented all of the leased property under capital leases and $64.0 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 franchise rights and goodwill in the periods presented.

8. Other Identifiable Intangible Assets

Other identifiable intangible assets were summarized as follows:

		March 30,				Dec. 30,				April 1,				Estimated
In Thousands		2008				2007				2007				Useful Lives
Other identifiable intangible assets		$	6,599			$	6,599			$	6,599			1-16 years
Less: Accumulated amortization			2,407				2,297				1,963
Other identifiable intangible assets, net		$	4,192			$	4,302			$	4,636

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:

		March 30,				Dec. 30,				April 1,
In Thousands		2008				2007				2007
Accrued marketing costs		$	6,406			$	6,787			$	4,656
Accrued insurance costs			15,281				14,228				11,562
Accrued taxes (other than income taxes)			2,080				502				2,208
Employee benefit plan accruals			8,936				9,933				8,752
Checks and transfers yet to be presented for payment from zero balance cash account			13,550				13,279				9,681
All other accrued liabilities			9,287				9,782				14,968
Total other accrued liabilities		$	55,540			$	54,511			$	51,827

10. Debt

Debt was summarized as follows:

						Interest				Interest				March 30,				Dec. 30,				April 1,
In Thousands		Maturity				Rate				Paid				2008				2007				2007
Lines of Credit			2008				2.87	%		Varies				$	42,100			$	7,400			$	3,000
Debentures			2007				—								—				—				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
															633,550				598,850				694,450
Less: Current portion of debt															42,100				7,400				103,000
Long-term debt														$	591,450			$	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%. 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 related to ratio requirements for interest coverage and long-term debt to cash flow, each as defined in the credit agreement. The Company is currently in compliance with these covenants. On March 30, 2008, the Company had no outstanding borrowing on the $200 million facility.

The Company borrows periodically under its uncommitted lines of credit. These uncommitted lines of credit, in the aggregate amount of $60 million at March 30, 2008, are made available at the discretion of two participating banks and may be withdrawn at any time by such banks. The Company uses the $200 million facility to provide appropriate liquidity when the uncommitted lines of credit are unavailable. On March 30, 2008, amounts outstanding under the lines of credit were $42.1 million with a weighted average interest rate of 2.87%. On December 30, 2007 and April 1, 2007, $7.4 million and $3.0 million, respectively, were outstanding under the uncommitted lines of credit.

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 6.8% for its debt and capital lease obligations as of March 30, 2008, December 30, 2007 and April 1, 2007, respectively. The Company’s overall weighted average interest rate on its debt and capital lease obligations was 5.9% for Q1 2008 compared to 6.6% for Q1 2007. As of March 30, 2008, approximately 43% of the Company’s debt and capital lease obligations of $713.1 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.

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

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

11. Derivative Financial Instruments

derivative financial instruments for trading purposes nor does it use leveraged financial instruments. All of the Company’s interest rate swap agreements are LIBOR-based.

Derivative financial instruments were summarized as follows:

		March 30, 2008								December 30, 2007								April 1, 2007
		Notional				Remaining				Notional				Remaining				Notional				Remaining
In Thousands		Amount				Term				Amount				Term				Amount				Term
Interest rate swap agreement — floating		$	—				—			$	—				—			$	25,000			0.7 years
Interest rate swap agreement — floating			—				—				—				—				25,000			0.7 years
Interest rate swap agreement — floating			—				—				—				—				50,000			0.7 years
Interest rate swap agreement — floating			50,000			1.2 years					50,000			1.4 years					50,000			2.2 years
Interest rate swap agreement — floating			50,000			1.3 years					50,000			1.5 years					50,000			2.3 years
Interest rate swap agreement — floating			50,000			4.7 years					50,000			4.9 years					50,000			5.7 years
Interest rate swap agreement — floating			25,000			1.1 years					25,000			1.3 years					25,000			2.1 years
Interest rate swap agreement — floating			25,000			7.0 years					25,000			7.2 years					25,000			8.0 years
Interest rate swap agreement — floating			25,000			4.7 years					25,000			4.9 years					25,000			5.7 years

The Company had six interest rate swap agreements as of March 30, 2008 with varying terms that effectively converted $225 million of the Company’s fixed rate debt to floating rate debt. All of the interest rate swap agreements have been accounted for as fair value hedges.

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

During Q1 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 delivery fleet. 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.

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

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.

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:

		March 30, 2008								December 30, 2007								April 1, 2007
		Carrying				Fair				Carrying				Fair				Carrying				Fair
In Thousands		Amount				Value				Amount				Value				Amount				Value
Public debt securities		$	591,450			$	588,616			$	591,450			$	575,833			$	691,450			$	681,014
Non-public variable rate debt			42,100				42,100				7,400				7,400				3,000				3,000
Deferred compensation plan assets			6,810				6,810				6,386				6,386				4,956				4,956
Interest rate swap agreements			(8,405	)			(8,405	)			(2,337	)			(2,337	)			8,883				8,883
Fuel hedging agreements			(654	)			(654	)			(340	)			(340	)			(667	)			(667	)
Letters of credit			—				21,496				—				21,389				—				21,252

The fair values of the interest rate swap agreements at March 30, 2008 and December 30, 2007 represent the estimated amounts the Company would have received upon termination of these agreements, which are the current settlement values. The fair value on April 1, 2007 represents the estimated amount the Company would have paid upon the termination of these agreements. The fair value of the fuel hedging agreements at March 30, 2008, December 30, 2007 and April 1, 2007 represents the estimated amount the Company would have received upon termination of these agreements.

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

12. Fair Values of Financial Instruments

The Company adopted Statement of Financial Accounting Standards No. 157, “Fair Value Measurement” (“SFAS No. 157”) as of the beginning of 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. For all other nonfinancial assets and liabilities, SFAS No. 157 is effective for the first quarter of 2009. In February 2008, 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 except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. Due to the deferral, the Company has delayed the implementation of SFAS No. 157 provisions on the fair value of goodwill, intangible assets with indefinite lives and nonfinancial long-lived assets. SFAS No. 157 requires new 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.

The following table summarizes the valuation of derivative instruments and deferred compensation plan assets and liabilities by the above categories as of March 30, 2008:

In Thousands		Level 1				Level 2
Assets
Deferred compensation plan assets		$	6,810
Interest rate swap agreements						$	8,405
Fuel hedging agreements							654
Liabilities
Deferred compensation plan liabilities			6,810

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 available under the Company’s 401(k) Savings Plan. 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. The Company’s interest rate swap agreements are fair value hedges, meaning the Company receives fixed and pays variable rates based on LIBOR swap rates. LIBOR swap rates are observable and quoted periodically over the full term of the agreements and are considered Level 2 items. The Company’s fuel hedging agreements are based on NYMEX and Weekly US DOE Daily Average rates that are observable and quoted periodically over the full term of the agreement and are considered Level 2 items.

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

13. Other Liabilities

Other liabilities were summarized as follows:

		March 30,				Dec. 30,				April 1,
In Thousands		2008				2007				2007
Accruals for executive benefit plans		$	77,222			$	75,438			$	71,945
Other			17,823				18,194				23,777
Total other liabilities		$	95,045			$	93,632			$	95,722

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 $45.4 million, $45.4 million and $45.3 million as of March 30, 2008, December 30, 2007 and April 1, 2007, respectively. The Company has not recorded any liability associated with these guarantees. The Company holds no assets as collateral against these guarantees and no contractual recourse exists that would enable the Company to recover amounts paid, if any, under such 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 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 to adequately mitigate the risk of material loss.

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 March 30, 2008 would have been $50.4 million and the Company’s maximum total exposure including its equity investment, would have been $29.3 million for SAC and $33.4 million for Southeastern. The Company has been purchasing plastic bottles and finished products from these cooperatives 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 March 30, 2008, SAC had total assets of approximately $44 million and total debt of approximately $24 million. SAC had total revenues for Q1 2008 of approximately $47 million. As of March

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

14. Commitments and Contingencies

30, 2008, Southeastern had total assets of approximately $380.9 million and total debt of approximately $253.4 million. Southeastern had total revenue for Q1 2008 of approximately $135.7 million.

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. On March 30, 2008, these letters of credit totaled $21.5 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 March 30, 2008 amounted to $21.4 million and expire at various dates through 2017.

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.

15. Income Taxes

The Company’s effective income tax rate for Q1 2008 and Q1 2007 was 32.5% and 39.2%, respectively.

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

		First Quarter
In Thousands		2008				2007
Statutory expense (benefit)		$	(2,247	)		$	2,677
State income taxes (benefits), net of federal effect			(279	)			333
Manufacturing deduction benefit			128				(224	)
Meals and entertainment			(103	)			83
State income tax adjustment			159				—
Other, net			257				130
Income tax expense (benefit)		$	(2,085	)		$	2,999

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

15. Income Taxes

In June 2006, the Financial Accounting Standards Board (“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 March 30, 2008, the Company had $9.4 million of unrecognized tax benefits, including accrued interest, of which $8.3 million would affect the Company’s effective rate if recognized. It is expected that the amount of unrecognized tax benefits will change in the next 12 months; however, the Company does not expect the change to have a significant impact on the consolidated financial statements.

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 March 30, 2008, the Company had approximately $2.1 million of accrued interest related to uncertain tax positions. Income tax expense in both Q1 2008 and Q1 2007 included approximately $.1 million of interest.

In Q1 2008, the Company reached an agreement with a state tax authority to resolve certain prior year tax positions. The net effect of the adjustments was an increase to income tax expense of approximately $.2 million.

Various tax years from 1989 remain open due to loss carryforwards in certain state jurisdictions. The tax years 2004 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.

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.

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

16. Accumulated Other Comprehensive Loss

A summary of accumulated other comprehensive loss is as follows:

						Application
		Dec. 30,				SFAS No. 158				Pre-tax				Tax				March 30,
In Thousands		2007				After tax(1)				Activity				Effect				2008
Net pension activity:
Actuarial loss		$	(12,684	)		$	23			$	111			$	(43	)		$	(12,593	)
Prior service costs			(55	)			1				4				(2	)			(52	)
Net postretirement benefits activity:
Actuarial loss			(9,928	)			141				229				(88	)			(9,646	)
Prior service costs			9,833				(275	)			(446	)			171				9,283
Transition asset			60				(4	)			(6	)			3				53
Foreign currency translation adjustment			23				—				12				(5	)			30
Total		$	(12,751	)		$	(114	)		$	(96	)		$	36			$	(12,925	)

		Dec. 31,				Pre-tax				Tax				April 1,
In Thousands		2006				Activity				Effect				2007
Net pension activity:
Actuarial loss		$	(24,673	)		$	623			$	(246	)		$	(24,296	)
Prior service costs			(31	)			6				(2	)			(27	)
Net postretirement benefits activity:
Actuarial loss			(13,512	)			305				(119	)			(13,326	)
Prior service costs			10,915				(446	)			175				10,644
Transition asset			75				(6	)			2				71
Foreign currency translation adjustment			—				3				(1	)			2
Total		$	(27,226	)		$	485			$	(191	)		$	(26,932	)

(1)		See Note 18 of the consolidated financial statements for additional information.

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 tier of The NASDAQ Stock Market LLC^® 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.

Pursuant to the Company’s Restated Certificate of Incorporation, no cash dividend or dividend of property or stock other than stock of the Company, as specifically described in the Restated Certificate of Incorporation, may be declared and paid on the Class B Common Stock unless an equal or greater dividend is declared and

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

17. Capital Transactions

paid on the Common Stock. During Q1 2008 and Q1 2007, dividends of $.25 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 at all meetings of stockholders and each share of Class B Common Stock is entitled to 20 votes per share at such meetings. Except to the extent 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 program, the shares of restricted stock are granted at a rate of 20,000 shares per year over the 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, pursuant to the performance-based award discussed above, to Mr. Harrison, III in connection with his services as Chairman of the Board of Directors and Chief Executive Officer of the Company 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 in connection with his services 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:

										Annual				First Quarter
		Shares				Grant-Date				Compensation				Compensation
Year		Awarded				Price				Expense				Expense
2007			20,000			$	58.53			$	1,170,600			$	292,650
2008			20,000				56.50				1,130,000				282,500

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

17. Capital Transactions

In addition, 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 over the one-year service period.

On April 29, 2008, the stockholders approved a Performance Unit Award Agreement for Mr. Harrison, III consisting of 400,000 performance units (“Units”) that each represents the right to receive one share of the Company’s Class B Common Stock. The Units will vest in annual increments over a ten-year period starting in fiscal year 2009. The Units vested each year will equal the product of 40,000 multiplied by the overall goal achievement factor (not to exceed 100%) as determined under the Company’s existing Annual Bonus Plan based upon annual targets defined by the Compensation Committee. 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 during 2008.

The increase in the number of shares outstanding in Q1 2008 and Q1 2007 was due to the issuance of 20,000 shares of Class B Common Stock related to the restricted stock award in each quarter.

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:

		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

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

18. Benefit Plans

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 which gives the highest average compensation and the average of the Social Security taxable wage base during the 35-year period before a participant reaches 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:

		First Quarter
In Thousands		2008				2007
Service cost		$	21			$	20
Interest cost			2,701				2,634
Expected return on plan assets			(3,410	)			(3,225	)
Amortization of prior service cost			4				6
Recognized net actuarial loss			111				623
Net periodic pension cost (income)		$	(573	)		$	58

The Company did not contribute to its pension plans during Q1 2008 and expects to make contributions of approximately $0.3 million to its principal Company-sponsored pension plan 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.

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

		First Quarter
In Thousands		2008				2007
Service cost		$	128			$	106
Interest cost			536				552
Amortization of unrecognized transitional assets			(6	)			(6	)
Recognized net actuarial loss			229				305
Amortization of prior service cost			(446	)			(446	)
Net periodic postretirement benefit cost		$	441			$	511

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

18. Benefit Plans

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 Q1 2008 and Q1 2007 was $2.5 million and $2.1 million, respectively.

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 soft drink products are manufactured. As of March 30, 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.

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

		First Quarter
In Millions		2008				2007
Payments by the Company for concentrate, syrup, sweetener and other purchases		$	87.3			$	75.4
Marketing funding support payments to the Company			8.5				6.8
Payments by the Company net of marketing funding support		$	78.8			$	68.6
Payments by the Company for customer marketing programs		$	11.0			$	10.0
Payments by the Company for cold drink equipment parts			1.6				1.3
Fountain delivery and equipment repair fees paid to the Company			2.3				2.3
Presence marketing funding support provided by The Coca-Cola Company on the Company’s behalf			1.1				1.1
Sales of finished products to The Coca-Cola Company			3.7				10.9

On March 10, 2008, the Company entered into a letter agreement with The Coca-Cola Company regarding brand innovation and distribution collaboration. Under the letter agreement, the Company granted to The Coca-Cola Company the option to purchase any nonalcoholic beverage brands then or thereafter owned by the Company. The option is exercisable as to each brand at a formula-based price during the two-year period that begins after that brand has achieved a specified level of net operating revenue or, if earlier, beginning five years after the introduction of that brand in the market with a minimum level of net operating revenue (except that, with respect to brands owned at the date of the letter agreement, the five-year period does not begin earlier than the date of the letter agreement).

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

19. Related Party Transactions

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 $8.5 million and $10.7 million in Q1 2008 and Q1 2007, respectively. Purchases from CCE under this arrangement were $5.3 million and $3.1 million in Q1 2008 and Q1 2007, respectively. The Coca-Cola Company has significant equity interests in the Company and CCE. As of March 30, 2008, CCE held less than 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 shareholder in two entities from which it purchases substantially all its requirements for plastic bottles. Net purchases from these entities were $16.6 million and $16.8 million in Q1 2008 and Q1 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 $21.2 million as of March 30, 2008. Additionally, the Company has recorded an equity investment of $8.2 million in one of these entities as of March 30, 2008.

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 $36.7 million and $32.6 million in Q1 2008 and Q1 2007, respectively. The Company also manages the operations of SAC pursuant to a management agreement. Management fees earned from SAC were $.3 million and $.4 million in Q1 2008 and Q1 2007, respectively. The Company has also guaranteed a portion of debt for SAC. Such guarantee amounted to $24.2 million as of March 30, 2008. Additionally, the Company has recorded an equity investment of $4.1 million in SAC as of March 30, 2008.

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. 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 March 30, 2008 was $38.3 million. Rental payments related to this lease were $1.0 million and $1.1 million in Q1 2008 and Q1 2007, respectively.

The Company leases from Beacon Investment Corporation (“Beacon”) the Company’s headquarters office facility and an adjacent office facility. Beacon’s sole shareholder is J. Frank Harrison, III. The principal balance outstanding under this capital lease as of March 30, 2008 was $33.9 million. Rental payments related to the lease were $.9 million in both Q1 2008 and Q1 2007.

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:

		First Quarter
In Thousands		2008				2007
Bottle/can sales:
Sparkling beverages (including energy products)		$	234,552			$	233,963
Still beverages			53,456				46,186
Total bottle/can sales			288,008				280,149
Other sales:
Sales to other Coca-Cola bottlers			28,028				34,883
Post-mix and other			21,638				22,524
Total other sales			49,666				57,407
Total net sales		$	337,674			$	337,556

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:

		First Quarter
In Thousands (Except Per Share Data)		2008				2007
Numerator for basic and diluted net income (loss) per Common Stock and Class B Common Stock share:
Net income (loss)		$	(4,335	)		$	4,651
Less dividends:
Common Stock			1,661				1,661
Class B Common Stock			625				620
Total undistributed earnings (losses)		$	(6,621	)		$	2,370
Common Stock undistributed earnings (losses) — basic		$	(4,811	)		$	1,726
Class B Common Stock undistributed earnings (losses) — basic			(1,810	)			644
Total undistributed earnings (losses) — basic		$	(6,621	)		$	2,370
Common Stock undistributed earnings (losses) — diluted		$	(4,811	)		$	1,724
Class B Common Stock undistributed earnings (losses) — diluted			(1,810	)			646
Total undistributed earnings (losses) — diluted		$	(6,621	)		$	2,370
Numerator for basic net income (loss) per Common Stock share:
Dividends on Common Stock		$	1,661			$	1,661
Common Stock undistributed earnings (losses) — basic			(4,811	)			1,726
Numerator for basic net income (loss) per Common Stock share		$	(3,150	)		$	3,387
Numerator for basic net income (loss) per Class B Common Stock share:
Dividends in Class B Common Stock		$	625			$	620
Class B Common Stock undistributed earnings (losses) — basic			(1,810	)			644
Numerator for basic net income (loss) per Class B Common Stock share		$	(1,185	)		$	1,264

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

21. Net Income (Loss) Per Share

		First Quarter
In Thousands (Except Per Share Data)		2008				2007
Numerator for diluted net income (loss) per Common Stock share:
Dividends on Common Stock		$	1,661			$	1,661
Dividends on Class B Common Stock assumed converted to Common Stock			625				620
Common Stock undistributed earnings (losses) — diluted			(6,621	)			2,370
Numerator for diluted net income (loss) per Common Stock share		$	(4,335	)		$	4,651
Numerator for diluted net income (loss) per Class B Common Stock share:
Dividends on Class B Common Stock			625				620
Class B Common Stock undistributed earnings (losses) — diluted			(1,810	)			646
Numerator for diluted net income (loss) per Class B Common Stock share		$	(1,185	)		$	1,266

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

21. Net Income (Loss) Per Share

		First Quarter
In Thousands (Except Per Share Data)		2008				2007
Denominator for basic net income (loss) per Common Stock and Class B Common Stock share:
Common Stock weighted average shares outstanding — basic			6,644				6,643
Class B Common Stock weighted average shares outstanding — basic			2,500				2,480
Denominator for diluted net income (loss) per Common Stock and Class B Common Stock share:
Common Stock weighted average shares outstanding — diluted (assumes conversion of Class B Common Stock to Common Stock)			9,144				9,131
Class B Common Stock weighted average shares outstanding — diluted			2,500				2,488
Basic net income (loss) per share:
Common Stock		$	(.47	)		$	.51
Class B Common Stock		$	(.47	)		$	.51
Diluted net income (loss) per share:
Common Stock		$	(.47	)		$	.51
Class B Common Stock		$	(.47	)		$	.51

NOTES TO TABLE

(1)		For purposes of the diluted net income (loss) per share computation for Common Stock, shares of Class B Common Stock are assumed to be converted; therefore, 100% of undistributed earnings is allocated to Common Stock.
(2)		For purposes of the diluted net income (loss) per share computation for Class B Common Stock, weighted average shares of Class B Common Stock are assumed to be outstanding for the entire period and not converted.
(3)		Denominator for diluted net income (loss) per share for Common Stock and Class B Common Stock includes the dilutive effect of shares relative to the restricted stock award.

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

22. Risks and Uncertainties

Approximately 89% of the Company’s Q1 2008 bottle/can volume to retail customers were products of The Coca-Cola Company, which is the sole supplier of the concentrates or syrups required to manufacture these products. The remaining 11% of the Company’s Q1 2008 bottle/can volume to retail customers were products of other beverage companies and the Company. The Company has bottling contracts under which it has various requirements to meet. Failure to meet the requirements of these bottling contracts could result in the loss of distribution rights for the respective product.

The Company’s products are sold and distributed directly by its employees to retail stores and other outlets. During Q1 2008, approximately 68% of the Company’s bottle/can volume to retail customers was sold for future consumption. The remaining bottle/can volume to retail customers of approximately 32% was sold for immediate consumption. The Company’s largest customers, Wal-Mart Stores, Inc. and Food Lion, LLC, accounted for approximately 18% and 12% of the Company’s total bottle/can volume to retail customers during Q1 2008, respectively. Wal-Mart Stores, Inc. accounted for approximately 14% of the Company’s total net sales during Q1 2008.

The Company obtains all of its aluminum cans from one domestic supplier. The Company currently obtains all of its plastic bottles from two domestic entities. See Note 19 of the consolidated financial statements for additional information.

The Company is exposed to price risk on such commodities as aluminum, corn and resin which affects the cost of raw materials used in the production of finished products. The Company both produces and procures these finished products. Examples of the raw materials affected are aluminum used for can packaging, high fructose corn syrup used as an ingredient and plastic bottles used for packaging. Further, the Company is exposed to commodity price risk on oil which impacts the Company’s cost of fuel used in the movement and delivery of the Company’s products.

Beginning in 2007, the majority of the Company’s aluminum packaging requirements did not have any ceiling price protection. The cost of aluminum cans further increased during Q1 2008. High fructose corn syrup costs also increased significantly during Q1 2008 as a result of increasing demand for corn products around the world such as for ethanol production. The combined impact of increasing costs for aluminum cans and high fructose corn syrup increased cost of sales during Q1 2008. In additional, there is no limit on the price The Coca-Cola Company and other beverage companies can charge for concentrate.

Certain liabilities of the Company are subject to risk due to changes in both long-term and short-term interest rates. These liabilities include floating rate debt, leases with payments determined on floating interest rates, postretirement benefit obligations and the Company’s pension liability.

Approximately 7% of the Company’s labor force is currently covered by collective bargaining agreements. Two collective bargaining contracts covering approximately 5% of the Company’s employees will expire during the remainder of 2008.

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

23. Supplemental Disclosures of Cash Flow Information

Changes in current assets and current liabilities affecting cash were as follows:

		First Quarter
In Thousands		2008				2007
Accounts receivable, trade, net		$	(14,913	)		$	(11,057	)
Accounts receivable from The Coca-Cola Company			(10,358	)			(11,809	)
Accounts receivable, other			1,212				(236	)
Inventories			(2,022	)			3,309
Prepaid expenses and other current assets			(4,143	)			(3,994	)
Accounts payable, trade			(6,436	)			(1,435	)
Accounts payable to The Coca-Cola Company			11,013				1,363
Other accrued liabilities			1,360				3,042
Accrued compensation			(10,512	)			(9,255	)
Accrued interest payable			5,920				8,554
Increase in current assets less current liabilities		$	(28,879	)		$	(21,518	)