##### Table of Contents



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 June 29, 2008
 Commission
File Number 0-9286
 COCA-COLA BOTTLING CO. CONSOLIDATED
  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
 704) 557-4400
 þ o
  Large accelerated filer oAccelerated filer þNon-accelerated filer o(Do not check if a smaller reporting company)Smaller reporting company o o þ
  Class
    
    
    
    Outstanding at July 31, 2008Common Stock, $1.00 Par Value
    
    
    
    
    6,643,677Class B Common Stock, $1.00 Par Value
    
    
    
    
    2,499,652




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##### 



COCA-COLA BOTTLING CO. CONSOLIDATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JUNE 29, 2008
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated Statements of Operations
    
    
    3Consolidated Balance Sheets
    
    
    4Consolidated Statements of Changes in Stockholders Equity
    
    
    6Consolidated Statements of Cash Flows
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    34Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    57Item 4.
    
    Controls and Procedures
    
    
    58PART II  OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    59Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    59Item 6.
    
    Exhibits
    
    
    60Signatures
    
    
    61Exhibit 12Exhibit 31.1Exhibit 31.2Exhibit 32
  2




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##### Table of Contents



Item l. Financial Statements.
 
 
 Second Quarter
    
    
    First Half2008
    
    
    2007
    
    
    2008
    
    
    2007Net sales
    
    $
    396,003
    
    
    $
    390,443
    
    
    $
    733,677
    
    
    $
    727,999Cost of sales
    
    
    224,123
    
    
    
    221,153
    
    
    
    421,879
    
    
    
    407,218Gross margin
    
    
    171,880
    
    
    
    169,290
    
    
    
    311,798
    
    
    
    320,781Selling, delivery and administrative expenses
    
    
    135,673
    
    
    
    136,796
    
    
    
    271,916
    
    
    
    267,738Income from operations
    
    
    36,207
    
    
    
    32,494
    
    
    
    39,882
    
    
    
    53,043Interest expense
    
    
    9,949
    
    
    
    12,294
    
    
    
    20,383
    
    
    
    24,512Minority interest
    
    
    1,360
    
    
    
    1,169
    
    
    
    1,021
    
    
    
    1,850Income before income taxes
    
    
    24,898
    
    
    
    19,031
    
    
    
    18,478
    
    
    
    26,681Income tax provision
    
    
    9,743
    
    
    
    7,340
    
    
    
    7,658
    
    
    
    10,339Net income
    
    $
    15,155
    
    
    $
    11,691
    
    
    $
    10,820
    
    
    $
    16,342Basic net income per share:Common Stock
    
    $
    1.66
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79Weighted average number of Common Stock
shares outstanding
    
    
    6,644
    
    
    
    6,644
    
    
    
    6,644
    
    
    
    6,643Class B Common Stock
    
    $
    1.66
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79Weighted average number of Class B Common
Stock shares outstanding
    
    
    2,500
    
    
    
    2,480
    
    
    
    2,500
    
    
    
    2,480Diluted net income per share:Common Stock
    
    $
    1.65
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79Weighted average number of Common Stock
shares outstanding  assuming dilution
    
    
    9,164
    
    
    
    9,143
    
    
    
    9,157
    
    
    
    9,137Class B Common Stock
    
    $
    1.65
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79Weighted average number of Class B Common
Stock shares outstanding  assuming dilution
    
    
    2,520
    
    
    
    2,500
    
    
    
    2,513
    
    
    
    2,494Cash dividends per share:Common Stock
    
    $
    .25
    
    
    $
    .25
    
    
    $
    .50
    
    
    $
    .50Class B Common Stock
    
    $
    .25
    
    
    $
    .25
    
    
    $
    .50
    
    
    $
    .50
  3




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##### Table of Contents



Unaudited
    
    
    
    
    
    
    UnauditedJune 29,
    
    
    Dec. 30,
    
    
    July 1,2008
    
    
    2007
    
    
    2007ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    9,323
    
    
    $
    9,871
    
    
    $
    71,149Accounts receivable, trade, less allowance for
doubtful accounts
 of $916, $1,137 and $1,024,
respectively
    
    
    118,292
    
    
    
    92,499
    
    
    
    109,977Accounts receivable from The Coca-Cola Company
    
    
    17,243
    
    
    
    3,800
    
    
    
    22,660Accounts receivable, other
    
    
    11,381
    
    
    
    7,867
    
    
    
    10,296Inventories
    
    
    69,467
    
    
    
    63,534
    
    
    
    66,347Prepaid expenses and other current assets
    
    
    22,645
    
    
    
    20,758
    
    
    
    17,444Total current assets
    
    
    248,351
    
    
    
    198,329
    
    
    
    297,873Property, plant and equipment, net
    
    
    358,799
    
    
    
    359,930
    
    
    
    365,167Leased property under capital leases, net
    
    
    68,797
    
    
    
    70,862
    
    
    
    72,929Other assets
    
    
    38,058
    
    
    
    35,655
    
    
    
    36,767Franchise rights, net
    
    
    520,672
    
    
    
    520,672
    
    
    
    520,672Goodwill, net
    
    
    102,049
    
    
    
    102,049
    
    
    
    102,049Other identifiable intangible assets, net
    
    
    4,082
    
    
    
    4,302
    
    
    
    4,524Total
    
    $
    1,340,808
    
    
    $
    1,291,799
    
    
    $
    1,399,981
  4




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##### Table of Contents



Unaudited
    
    
    
    
    
    
    UnauditedJune 29,
    
    
    Dec. 30,
    
    
    July 1,2008
    
    
    2007
    
    
    2007LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current portion of debt
    
    $
    119,253
    
    
    $
    7,400
    
    
    $
    100,000Current portion of obligations under capital leases
    
    
    2,690
    
    
    
    2,602
    
    
    
    2,517Accounts payable, trade
    
    
    45,457
    
    
    
    51,323
    
    
    
    41,379Accounts payable to The Coca-Cola Company
    
    
    40,882
    
    
    
    11,597
    
    
    
    35,990Other accrued liabilities
    
    
    56,321
    
    
    
    54,511
    
    
    
    57,864Accrued compensation
    
    
    14,446
    
    
    
    23,447
    
    
    
    15,598Accrued interest payable
    
    
    7,504
    
    
    
    8,417
    
    
    
    10,021Total current liabilities
    
    
    286,553
    
    
    
    159,297
    
    
    
    263,369Deferred income taxes
    
    
    169,664
    
    
    
    168,540
    
    
    
    157,440Pension and postretirement benefit obligations
    
    
    34,452
    
    
    
    32,758
    
    
    
    57,489Other liabilities
    
    
    96,311
    
    
    
    93,632
    
    
    
    96,539Obligations under capital leases
    
    
    76,246
    
    
    
    77,613
    
    
    
    78,936Long-term debt
    
    
    502,197
    
    
    
    591,450
    
    
    
    591,450Total liabilities
    
    
    1,165,423
    
    
    
    1,123,290
    
    
    
    1,245,223Commitments and Contingencies(Note 14)Minority interest
    
    
    49,026
    
    
    
    48,005
    
    
    
    47,853Stockholders 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
    
    
    
    9,706Class 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
    
    
    
    3,107Capital in excess of par value
    
    
    102,449
    
    
    
    102,469
    
    
    
    101,711Retained earnings
    
    
    85,322
    
    
    
    79,227
    
    
    
    80,275Accumulated other comprehensive loss
    
    
    (12,991
    )
    
    
    (12,751
    )
    
    
    (26,640
    )187,613
    
    
    
    181,758
    
    
    
    168,159Less-Treasury stock, at cost:Common  3,062,374 shares
    
    
    60,845
    
    
    
    60,845
    
    
    
    60,845Class B Common  628,114 shares
    
    
    409
    
    
    
    409
    
    
    
    409Total stockholders equity
    
    
    126,359
    
    
    
    120,504
    
    
    
    106,905Total
    
    $
    1,340,808
    
    
    $
    1,291,799
    
    
    $
    1,399,981
  5




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##### Table of Contents



Capital
    
    
    
    
    
    
    AccumulatedClass B
    
    
    in
    
    
    
    
    
    
    OtherCommon
    
    
    Common
    
    
    Excess of
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Stock
    
    
    Par Value
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    TotalBalance on
December 31, 2006
    
    $
    9,705
    
    
    $
    3,088
    
    
    $
    101,145
    
    
    $
    68,495
    
    
    $
    (27,226
    )
    
    $
    (61,254
    )
    
    $
    93,953Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,342
    
    
    
    
    
    
    
    
    
    
    
    16,342Foreign currency
translation
adjustments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Pension and postretirement
benefit adjustments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    584
    
    
    
    
    
    
    
    584Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,928Cash dividends paid

Common ($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,322
    )
    
    
    
    
    
    
    
    
    
    
    (3,322
    )Class B Common
($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,240
    )
    
    
    
    
    
    
    
    
    
    
    (1,240
    )Issuance of 20,000
shares of Class B
Common Stock
    
    
    
    
    
    
    20
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    586
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    586Conversion of Class B Common
Stock into Common Stock
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance on
July 1, 2007
    
    $
    9,706
    
    
    $
    3,107
    
    
    $
    101,711
    
    
    $
    80,275
    
    
    $
    (26,640
    )
    
    $
    (61,254
    )
    
    $
    106,905Balance on
December 30, 2007
    
    $
    9,706
    
    
    $
    3,107
    
    
    $
    102,469
    
    
    $
    79,227
    
    
    $
    (12,751
    )
    
    $
    (61,254
    )
    
    $
    120,504Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,820
    
    
    
    
    
    
    
    
    
    
    
    10,820Foreign currency
translation
adjustments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    7Pension and postretirement
benefit adjustments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (133
    )
    
    
    
    
    
    
    (133
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    10,694Adjustment to change
measurement date for
SFAS No. 158, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (153
    )
    
    
    (114
    )
    
    
    
    
    
    
    (267
    )Cash dividends paid

Common ($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,322
    )
    
    
    
    
    
    
    
    
    
    
    (3,322
    )Class B Common
($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,250
    )
    
    
    
    
    
    
    
    
    
    
    (1,250
    )Issuance of 20,000
shares of Class B
Common Stock
    
    
    
    
    
    
    20
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance on
June 29, 2008
    
    $
    9,706
    
    
    $
    3,127
    
    
    $
    102,449
    
    
    $
    85,322
    
    
    $
    (12,991
    )
    
    $
    (61,254
    )
    
    $
    126,359
  6




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##### Table of Contents



First Half2008
    
    
    2007Cash Flows from Operating ActivitiesNet income
    
    $
    10,820
    
    
    $
    16,342Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation expense
    
    
    33,649
    
    
    
    33,572Amortization of intangibles
    
    
    220
    
    
    
    223Deferred income taxes
    
    
    7,658
    
    
    
    2,023(Gain) loss on sale of property, plant and equipment
    
    
    851
    
    
    
    (113
    )Amortization of debt costs
    
    
    1,225
    
    
    
    1,412Amortization of deferred gain related to terminated
interest rate agreements
    
    
    (853
    )
    
    
    (848
    )Stock compensation expense
    
    
    
    
    
    
    586Minority interest
    
    
    1,021
    
    
    
    1,850Increase in current assets less current liabilities
    
    
    (34,324
    )
    
    
    (18,734
    )Increase in other noncurrent assets
    
    
    (2,490
    )
    
    
    (645
    )Decrease in other noncurrent liabilities
    
    
    (2,580
    )
    
    
    (6,486
    )Other
    
    
    (152
    )
    
    
    Total adjustments
    
    
    4,225
    
    
    
    12,840Net cash provided by operating activities
    
    
    15,045
    
    
    
    29,182Cash Flows from Investing ActivitiesAdditions to property, plant and equipment
    
    
    (31,570
    )
    
    
    (19,014
    )Proceeds from the sale of property, plant and equipment
    
    
    266
    
    
    
    6,918Investment in plastic bottle manufacturing cooperative
    
    
    (968
    )
    
    
    (1,629
    )Net cash used in investing activities
    
    
    (32,272
    )
    
    
    (13,725
    )Cash Flows from Financing ActivitiesBorrowing under revolving credit facility
    
    
    30,000
    
    
    
    Repayments of lines of credit
    
    
    (7,400
    )
    
    
    Cash dividends paid
    
    
    (4,572
    )
    
    
    (4,562
    )Principal payments on capital lease obligations
    
    
    (1,279
    )
    
    
    (1,197
    )Other
    
    
    (70
    )
    
    
    (372
    )Net cash provided by (used in) financing activities
    
    
    16,679
    
    
    
    (6,131
    )Net increase (decrease) in cash
    
    
    (548
    )
    
    
    9,326Cash at beginning of period
    
    
    9,871
    
    
    
    61,823Cash at end of period
    
    $
    9,323
    
    
    $
    71,149Significant non-cash investing and financing activities:Issuance of Class B Common Stock in connection with stock award
    
    $
    1,171
    
    
    $
    929Capital lease obligations incurred
    
    
    
    
    
    
    5,144
  7




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8




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##### Table of Contents



June 29,
    
    
    Dec. 30,
    
    
    July 1,In Thousands
    
    2008
    
    
    2007
    
    
    2007Finished products
    
    $
    43,652
    
    
    $
    37,649
    
    
    $
    40,459Manufacturing materials
    
    
    8,431
    
    
    
    9,198
    
    
    
    8,685Plastic shells, plastic pallets and other inventories
    
    
    17,384
    
    
    
    16,687
    
    
    
    17,203Total inventories
    
    $
    69,467
    
    
    $
    63,534
    
    
    $
    66,347
   June 29,
    
    
    Dec. 30,
    
    
    July 1,
    
    
    EstimatedIn Thousands
    
    2008
    
    
    2007
    
    
    2007
    
    
    Useful LivesLand
    
    $
    12,278
    
    
    $
    12,280
    
    
    $
    12,380Buildings
    
    
    111,104
    
    
    
    110,721
    
    
    
    110,771
    
    
    10-50 yearsMachinery and equipment
    
    
    117,176
    
    
    
    106,180
    
    
    
    101,347
    
    
    5-20 yearsTransportation equipment
    
    
    178,142
    
    
    
    174,882
    
    
    
    175,837
    
    
    4-13 yearsFurniture and fixtures
    
    
    38,691
    
    
    
    38,350
    
    
    
    41,125
    
    
    4-10 yearsCold drink dispensing equipment
    
    
    328,683
    
    
    
    323,629
    
    
    
    327,180
    
    
    6-13 yearsLeasehold and land improvements
    
    
    60,877
    
    
    
    60,023
    
    
    
    58,134
    
    
    5-20 yearsSoftware for internal use
    
    
    54,156
    
    
    
    51,681
    
    
    
    48,682
    
    
    3-10 yearsConstruction in progress
    
    
    5,101
    
    
    
    6,635
    
    
    
    2,808Total property, plant and equipment, at cost
    
    
    906,208
    
    
    
    884,381
    
    
    
    878,264Less: Accumulated depreciation
and amortization
    
    
    547,409
    
    
    
    524,451
    
    
    
    513,097Property, plant and equipment, net
    
    $
    358,799
    
    
    $
    359,930
    
    
    $
    365,167
  9




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##### Table of Contents



June 29,
    
    
    Dec. 30,
    
    
    July 1,
    
    
    EstimatedIn Thousands
    
    2008
    
    
    2007
    
    
    2007
    
    
    Useful LivesLeased property under capital leases
    
    $
    88,619
    
    
    $
    88,619
    
    
    $
    88,619
    
    
    3-29 yearsLess: Accumulated amortization
    
    
    19,822
    
    
    
    17,757
    
    
    
    15,690Leased property under capital leases, net
    
    $
    68,797
    
    
    $
    70,862
    
    
    $
    72,929
      June 29,
    
    
    Dec. 30,
    
    
    July 1,
    
    
    EstimatedIn Thousands
    
    2008
    
    
    2007
    
    
    2007
    
    
    Useful LivesOther identifiable intangible assets
    
    $
    6,599
    
    
    $
    6,599
    
    
    $
    6,599
    
    
    1-16 yearsLess: Accumulated amortization
    
    
    2,517
    
    
    
    2,297
    
    
    
    2,075Other identifiable intangible assets, net
    
    $
    4,082
    
    
    $
    4,302
    
    
    $
    4,524
  10




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##### Table of Contents



June 29,
    
    
    Dec. 30,
    
    
    July 1,In Thousands
    
    2008
    
    
    2007
    
    
    2007Accrued marketing costs
    
    $
    9,173
    
    
    $
    6,787
    
    
    $
    6,524Accrued insurance costs
    
    
    15,068
    
    
    
    14,228
    
    
    
    11,907Accrued taxes (other than income taxes)
    
    
    3,048
    
    
    
    502
    
    
    
    3,244Accrued income taxes
    
    
    2,503
    
    
    
    
    
    
    
    4,159Employee benefit plan accruals
    
    
    7,221
    
    
    
    9,933
    
    
    
    8,123Checks and transfers yet to be presented for payment from
zero balance cash account
    
    
    10,840
    
    
    
    13,279
    
    
    
    13,766All other accrued liabilities
    
    
    8,468
    
    
    
    9,782
    
    
    
    10,141Total other accrued liabilities
    
    $
    56,321
    
    
    $
    54,511
    
    
    $
    57,864
   Interest
    
    
    Interest
    
    
    June 29,
    
    
    Dec. 30,
    
    
    July 1,In Thousands
    
    Maturity
    
    
    Rate
    
    
    Paid
    
    
    2008
    
    
    2007
    
    
    2007Lines of Credit
    
    
    2008
    
    
    
    
    
    
    Varies
    
    $
    
    
    
    $
    7,400
    
    
    $
    Revolving Credit Facility
    
    
    2012
    
    
    
    2.91%
    
    
    Varies
    
    
    30,000
    
    
    
    
    
    
    
    Debentures
    
    
    2007
    
    
    
    
    
    
    Semi-annually
    
    
    
    
    
    
    
    
    
    
    100,000Debentures
    
    
    2009
    
    
    
    7.20%
    
    
    Semi-annually
    
    
    57,440
    
    
    
    57,440
    
    
    
    57,440Debentures
    
    
    2009
    
    
    
    6.375%
    
    
    Semi-annually
    
    
    119,253
    
    
    
    119,253
    
    
    
    119,253Senior Notes
    
    
    2012
    
    
    
    5.00%
    
    
    Semi-annually
    
    
    150,000
    
    
    
    150,000
    
    
    
    150,000Senior Notes
    
    
    2015
    
    
    
    5.30%
    
    
    Semi-annually
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Senior Notes
    
    
    2016
    
    
    
    5.00%
    
    
    Semi-annually
    
    
    164,757
    
    
    
    164,757
    
    
    
    164,757621,450
    
    
    
    598,850
    
    
    
    691,450Less: Current portion of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    119,253
    
    
    
    7,400
    
    
    
    100,000Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    502,197
    
    
    $
    591,450
    
    
    $
    591,450
 11




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12




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##### Table of Contents



June 29, 2008
    
    December 30, 2007
    
    July 1, 2007Notional
    
    Remaining
    
    Notional
    
    Remaining
    
    Notional
    
    RemainingIn Thousands
    
    Amount
    
    Term
    
    Amount
    
    Term
    
    Amount
    
    TermInterest rate swap agreement  floating
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    25,000
    
    
    0.4 yearsInterest rate swap agreement  floating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    25,000
    
    
    0.4 yearsInterest rate swap agreement  floating
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    50,000
    
    
    0.4 yearsInterest rate swap agreement  floating
    
    
    50,000
    
    
    0.9 years
    
    
    50,000
    
    
    1.4 years
    
    
    50,000
    
    
    1.9 yearsInterest rate swap agreement  floating
    
    
    50,000
    
    
    1.0 years
    
    
    50,000
    
    
    1.5 years
    
    
    50,000
    
    
    2.0 yearsInterest rate swap agreement  floating
    
    
    50,000
    
    
    4.4 years
    
    
    50,000
    
    
    4.9 years
    
    
    50,000
    
    
    5.4 yearsInterest rate swap agreement  floating
    
    
    25,000
    
    
    0.8 years
    
    
    25,000
    
    
    1.3 years
    
    
    25,000
    
    
    1.8 yearsInterest rate swap agreement  floating
    
    
    25,000
    
    
    6.8 years
    
    
    25,000
    
    
    7.2 years
    
    
    25,000
    
    
    7.8 yearsInterest rate swap agreement  floating
    
    
    25,000
    
    
    4.4 years
    
    
    25,000
    
    
    4.9 years
    
    
    25,000
    
    
    5.4 years
    13




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Cash and Cash Equivalents, Accounts Receivable and Accounts Payable
  Public Debt Securities
  Non-Public Variable Rate Debt
  Deferred Compensation Plan Assets
  Derivative Financial Instruments
  Letters of Credit
   June 29, 2008
    
    December 30, 2007
    
    July 1, 2007Carrying
    
    Fair
    
    Carrying
    
    Fair
    
    Carrying
    
    FairIn Thousands
    
    Amount
    
    Value
    
    Amount
    
    Value
    
    Amount
    
    ValuePublic debt securities
    
    $
    591,450
    
    
    $
    563,915
    
    
    $
    591,450
    
    
    $
    575,833
    
    
    $
    691,450
    
    
    $
    670,475Non-public variable rate debt
    
    
    30,000
    
    
    
    30,000
    
    
    
    7,400
    
    
    
    7,400Deferred compensation plan assets
    
    
    7,120
    
    
    
    7,120
    
    
    
    6,386
    
    
    
    6,386
    
    
    
    5,904
    
    
    
    5,904Interest rate swap agreements
    
    
    (3,242
    )
    
    
    (3,242
    )
    
    
    (2,337
    )
    
    
    (2,337
    )
    
    
    7,658
    
    
    
    7,658Fuel hedging agreements
    
    
    (1,143
    )
    
    
    (1,143
    )
    
    
    (340
    )
    
    
    (340
    )
    
    
    (496
    )
    
    
    (496
    )Letters of credit
    
    
    
    
    
    
    19,450
    
    
    
    
    
    
    
    21,389
    
    
    
    
    
    
    
    21,271
 14




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##### Table of Contents



In Thousands
    
    Level 1
    
    Level 2AssetsDeferred compensation plan assets
    
    $
    7,120Interest rate swap agreements
    
    
    
    
    
    $
    3,242Fuel hedging agreements
    
    
    
    
    
    
    1,143LiabilitiesDeferred compensation plan liabilities
    
    
    7,120
  15




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June 29,
    
    Dec. 30,
    
    July 1,In Thousands
    
    2008
    
    2007
    
    2007Accruals for executive benefit plans
    
    $
    78,084
    
    
    $
    75,438
    
    
    $
    73,161Other
    
    
    18,227
    
    
    
    18,194
    
    
    
    23,378Total other liabilities
    
    $
    96,311
    
    
    $
    93,632
    
    
    $
    96,539
    16




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17




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First HalfIn Thousands
    
    2008
    
    2007Statutory expense
    
    $
    6,467
    
    
    $
    9,338State income taxes, net of federal effect
    
    
    805
    
    
    
    1,162Manufacturing deduction benefit
    
    
    (333
    )
    
    
    (755
    )Meals and entertainment
    
    
    339
    
    
    
    288State income tax adjustment
    
    
    (83
    )
    
    
    Other, net
    
    
    463
    
    
    
    306Income tax expense
    
    $
    7,658
    
    
    $
    10,339
   18




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Application ofDec. 30,
    
    SFAS No. 158
    
    Pre-tax
    
    Tax
    
    June 29,In Thousands
    
    2007
    
    After tax(1)
    
    Activity
    
    Effect
    
    2008Net pension activity:Actuarial loss
    
    $
    (12,684
    )
    
    $
    23
    
    
    $
    222
    
    
    $
    (86
    )
    
    $
    (12,525
    )Prior service costs
    
    
    (55
    )
    
    
    1
    
    
    
    8
    
    
    
    (3
    )
    
    
    (49
    )Net postretirement benefits activity:Actuarial loss
    
    
    (9,928
    )
    
    
    141
    
    
    
    458
    
    
    
    (176
    )
    
    
    (9,505
    )Prior service costs
    
    
    9,833
    
    
    
    (275
    )
    
    
    (892
    )
    
    
    343
    
    
    
    9,009Transition asset
    
    
    60
    
    
    
    (4
    )
    
    
    (12
    )
    
    
    5
    
    
    
    49Foreign currency translation adjustment
    
    
    23
    
    
    
    
    
    
    
    12
    
    
    
    (5
    )
    
    
    30Total
    
    $
    (12,751
    )
    
    $
    (114
    )
    
    $
    (204
    )
    
    $
    78
    
    
    $
    (12,991
    )
 Dec. 31,
    
    Pre-tax
    
    Tax
    
    July 1,In Thousands
    
    2006
    
    Activity
    
    Effect
    
    2007Net pension activity:Actuarial loss
    
    $
    (24,673
    )
    
    $
    1,245
    
    
    $
    (490
    )
    
    $
    (23,918
    )Prior service costs
    
    
    (31
    )
    
    
    12
    
    
    
    (5
    )
    
    
    (24
    )Net postretirement benefits activity:Actuarial loss
    
    
    (13,512
    )
    
    
    610
    
    
    
    (240
    )
    
    
    (13,142
    )Prior service costs
    
    
    10,915
    
    
    
    (892
    )
    
    
    351
    
    
    
    10,374Transition asset
    
    
    75
    
    
    
    (12
    )
    
    
    5
    
    
    
    68Foreign currency translation adjustment
    
    
    
    
    
    
    3
    
    
    
    (1
    )
    
    
    2Total
    
    $
    (27,226
    )
    
    $
    966
    
    
    $
    (380
    )
    
    $
    (26,640
    )
 (1)
    
    See Note 18 of the consolidated financial statements for additional information.
  sm ®
 20




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21




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Annual
    
    First HalfShares
    
    Grant-Date
    
    Compensation
    
    CompensationYear
    
    Awarded
    
    Price
    
    Expense
    
    Expense2007
    
    
    20,000
    
    
    $
    58.53
    
    
    $
    1,170,600
    
    
    $
    585,3002008
    
    
    20,000
    
    
    
    56.50
    
    
    
    1,130,000
    
    
    
    
     Recently Adopted Pronouncement
 
 22




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##### Table of Contents



Before
    
    
    
    
    
    AfterApplication of
    
    
    
    
    
    Application ofIn Thousands
    
    SFAS No. 158
    
    Adjustment
    
    SFAS No. 158Pension and postretirement benefit obligations
    
    $
    32,758
    
    
    $
    434
    
    
    $
    33,192Deferred income taxes
    
    
    168,540
    
    
    
    (167
    )
    
    
    168,373Total liabilities
    
    
    1,123,290
    
    
    
    267
    
    
    
    1,123,557Retained earnings
    
    
    79,227
    
    
    
    (153
    )
    
    
    79,074Accumulated other comprehensive loss
    
    
    (12,751
    )
    
    
    (114
    )
    
    
    (12,865
    )Total stockholders equity
    
    
    120,504
    
    
    
    (267
    )
    
    
    120,237
 Pension Plans
   Second Quarter
    
    First HalfIn Thousands
    
    2008
    
    2007
    
    2008
    
    2007Service cost
    
    $
    20
    
    
    $
    19
    
    
    $
    41
    
    
    $
    39Interest cost
    
    
    2,702
    
    
    
    2,634
    
    
    
    5,403
    
    
    
    5,268Expected return on plan assets
    
    
    (3,411
    )
    
    
    (3,225
    )
    
    
    (6,821
    )
    
    
    (6,450
    )Amortization of prior service cost
    
    
    4
    
    
    
    6
    
    
    
    8
    
    
    
    12Recognized net actuarial loss
    
    
    111
    
    
    
    622
    
    
    
    222
    
    
    
    1,245Net periodic pension cost (income)
    
    $
    (574
    )
    
    $
    56
    
    
    $
    (1,147
    )
    
    $
    114
  Postretirement Benefits
  23




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Second Quarter
    
    First HalfIn Thousands
    
    2008
    
    2007
    
    2008
    
    2007Service cost
    
    $
    128
    
    
    $
    106
    
    
    $
    256
    
    
    $
    212Interest cost
    
    
    536
    
    
    
    553
    
    
    
    1,072
    
    
    
    1,105Amortization of unrecognized transitional assets
    
    
    (6
    )
    
    
    (6
    )
    
    
    (12
    )
    
    
    (12
    )Recognized net actuarial loss
    
    
    229
    
    
    
    305
    
    
    
    458
    
    
    
    610Amortization of prior service cost
    
    
    (446
    )
    
    
    (446
    )
    
    
    (892
    )
    
    
    (892
    )Net periodic post retirement benefit cost
    
    $
    441
    
    
    $
    512
    
    
    $
    882
    
    
    $
    1,023
 401(k) Savings Plan
     First HalfIn Millions
    
    2008
    
    
    2007Payments by the Company for concentrate, syrup,
sweetener and other purchases
    
    $
    188.4
    
    
    $
    179.2Marketing funding support payments to the Company
    
    
    26.9
    
    
    
    19.1Payments by the Company net of marketing funding support
    
    $
    161.5
    
    
    $
    160.1Payments by the Company for customer marketing programs
    
    $
    24.4
    
    
    $
    23.0Payments by the Company for cold drink equipment parts
    
    
    3.5
    
    
    
    2.7Fountain delivery and equipment repair fees paid to the Company
    
    
    4.8
    
    
    
    3.8Presence marketing funding support provided by
The Coca-Cola Company on the Companys behalf
    
    
    2.0
    
    
    
    2.1Sales of finished products to The Coca-Cola Company
    
    
    5.3
    
    
    
    21.1
 24




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25




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Second Quarter
    
    First HalfIn Thousands
    
    2008
    
    2007
    
    2008
    
    2007Bottle/can sales:Sparkling beverages (including energy products)
    
    $
    269,989
    
    
    $
    271,657
    
    
    $
    504,541
    
    
    $
    505,315Still beverages
    
    
    66,404
    
    
    
    53,982
    
    
    
    119,860
    
    
    
    99,556Total bottle/can sales
    
    
    336,393
    
    
    
    325,639
    
    
    
    624,401
    
    
    
    604,871Other sales:Sales to other Coca-Cola bottlers
    
    
    35,097
    
    
    
    39,088
    
    
    
    63,125
    
    
    
    73,971Post-mix and other
    
    
    24,513
    
    
    
    25,716
    
    
    
    46,151
    
    
    
    49,157Total other sales
    
    
    59,610
    
    
    
    64,804
    
    
    
    109,276
    
    
    
    123,128Total net sales
    
    $
    396,003
    
    
    $
    390,443
    
    
    $
    733,677
    
    
    $
    727,999
  26




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##### Table of Contents



Second Quarter
    
    
    First HalfIn Thousands (Except Per Share Data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator for basic and diluted net income per
Common Stock and Class B Common Stock share:Net income
    
    $
    15,155
    
    
    $
    11,691
    
    
    $
    10,820
    
    
    $
    16,342Less dividends:Common Stock
    
    
    1,661
    
    
    
    1,661
    
    
    
    3,322
    
    
    
    3,322Class B Common Stock
    
    
    625
    
    
    
    620
    
    
    
    1,250
    
    
    
    1,240Total undistributed earnings
    
    $
    12,869
    
    
    $
    9,410
    
    
    $
    6,248
    
    
    $
    11,780Common Stock undistributed earnings  basic
    
    $
    9,351
    
    
    $
    6,852
    
    
    $
    4,540
    
    
    $
    8,578Class B Common Stock undistributed earnings  basic
    
    
    3,518
    
    
    
    2,558
    
    
    
    1,708
    
    
    
    3,202Total undistributed earnings  basic
    
    $
    12,869
    
    
    $
    9,410
    
    
    $
    6,248
    
    
    $
    11,780Common Stock undistributed earnings  diluted
    
    $
    9,330
    
    
    $
    6,837
    
    
    $
    4,533
    
    
    $
    8,565Class B Common Stock undistributed earnings  diluted
    
    
    3,539
    
    
    
    2,573
    
    
    
    1,715
    
    
    
    3,215Total undistributed earnings  diluted
    
    $
    12,869
    
    
    $
    9,410
    
    
    $
    6,248
    
    
    $
    11,780Numerator for basic net income per Common
Stock share:Dividends on Common Stock
    
    $
    1,661
    
    
    $
    1,661
    
    
    $
    3,322
    
    
    $
    3,322Common Stock undistributed earnings  basic
    
    
    9,351
    
    
    
    6,852
    
    
    
    4,540
    
    
    
    8,578Numerator for basic net income per Common
Stock share
    
    $
    11,012
    
    
    $
    8,513
    
    
    $
    7,862
    
    
    $
    11,900Numerator for basic net income per Class B
Common Stock share:Dividends in Class B Common Stock
    
    $
    625
    
    
    $
    620
    
    
    $
    1,250
    
    
    $
    1,240Class B Common Stock undistributed earnings  basic
    
    
    3,518
    
    
    
    2,558
    
    
    
    1,708
    
    
    
    3,202Numerator for basic net income per Class B
Common Stock share
    
    $
    4,143
    
    
    $
    3,178
    
    
    $
    2,958
    
    
    $
    4,442
 27




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Second Quarter
    
    
    First HalfIn Thousands (Except Per Share Data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Numerator for diluted net income per Common
Stock share:Dividends on Common Stock
    
    $
    1,661
    
    
    $
    1,661
    
    
    $
    3,322
    
    
    $
    3,322Dividends on Class B Common Stock
assumed converted to Common Stock
    
    
    625
    
    
    
    620
    
    
    
    1,250
    
    
    
    1,240Common Stock undistributed earnings  diluted
    
    
    12,869
    
    
    
    9,410
    
    
    
    6,248
    
    
    
    11,780Numerator
for diluted net income per Common Stock share
    
    $
    15,155
    
    
    $
    11,691
    
    
    $
    10,820
    
    
    $
    16,342Numerator for diluted net income per Class B
Common Stock share:Dividends on Class B Common Stock
    
    $
    625
    
    
    $
    620
    
    
    $
    1,250
    
    
    $
    1,240Class B Common Stock undistributed earnings  diluted
    
    
    3,539
    
    
    
    2,573
    
    
    
    1,715
    
    
    
    3,215Numerator for diluted net income per Class B
Common Stock share
    
    $
    4,164
    
    
    $
    3,193
    
    
    $
    2,965
    
    
    $
    4,455
 28




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Second Quarter
    
    
    First HalfIn Thousands (Except Per Share Data)
    
    2008
    
    
    2007
    
    
    2008
    
    
    2007Denominator for basic net income per Common
Stock and Class B Common Stock share:Common Stock weighted average shares
outstanding  basic
    
    
    6,644
    
    
    
    6,644
    
    
    
    6,644
    
    
    
    6,643Class B Common Stock weighted average shares
outstanding  basic
    
    
    2,500
    
    
    
    2,480
    
    
    
    2,500
    
    
    
    2,480Denominator for diluted net income 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)
    
    
    9,164
    
    
    
    9,143
    
    
    
    9,157
    
    
    
    9,137Class B Common Stock weighted average shares
outstanding  diluted
    
    
    2,520
    
    
    
    2,500
    
    
    
    2,513
    
    
    
    2,494Basic net income per share:Common Stock
    
    $
    1.66
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79Class B Common Stock
    
    $
    1.66
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79Diluted net income per share:Common Stock
    
    $
    1.65
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79Class B Common Stock
    
    $
    1.65
    
    
    $
    1.28
    
    
    $
    1.18
    
    
    $
    1.79
 
  (1)
    
    For purposes of the diluted net income 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 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 per share for Common Stock and Class B Common Stock
includes the dilutive effect of shares relative to the restricted stock award. 29




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30




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##### Table of Contents



First HalfIn Thousands
    
    2008
    
    
    2007Accounts receivable, trade, net
    
    $
    (25,793
    )
    
    $
    (18,678
    )Accounts receivable from The Coca-Cola Company
    
    
    (13,443
    )
    
    
    (17,745
    )Accounts receivable, other
    
    
    (3,514
    )
    
    
    (1,731
    )Inventories
    
    
    (5,933
    )
    
    
    708Prepaid expenses and other current assets
    
    
    (1,987
    )
    
    
    (3,950
    )Accounts payable, trade
    
    
    (5,866
    )
    
    
    (2,671
    )Accounts payable to The Coca-Cola Company
    
    
    29,285
    
    
    
    14,242Other accrued liabilities
    
    
    2,841
    
    
    
    15,151Accrued compensation
    
    
    (9,001
    )
    
    
    (4,073
    )Accrued interest payable
    
    
    (913
    )
    
    
    13Increase in current assets less current liabilities
    
    $
    (34,324
    )
    
    $
    (18,734
    )
  Recently Adopted Pronouncements
   31




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Recently Issued Pronouncements
     32




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33




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations.
  
    
    Our Business and the Nonalcoholic Beverage Industry  a general description of the
Companys business and the nonalcoholic beverage industry.
    
    Areas of Emphasis  a summary of the Companys key priorities.
    
    Overview of Operations and Financial Condition  a summary of key information and
trends concerning the financial results for the second quarter of 2008 (Q2 2008) and the
first half of 2008 (YTD 2008) and changes from the second quarter of 2007 (Q2 2007) and
the first half of 2007 (YTD 2007).
    
    Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements
  a discussion of accounting policies that are most important to the portrayal of the
Companys financial condition and results of operations and that require critical judgments
and estimates and the expected impact of new accounting pronouncements.
    
    Results of Operations  an analysis of the Companys results of operations for Q2 2008
and YTD 2008 compared to Q2 2007 and YTD 2007.
    
    Financial Condition  an analysis of the Companys financial condition as of the end of
Q2 2008 compared to year-end 2007 and the end of Q2 2007 as presented in the consolidated
financial statements.
    
    Liquidity and Capital Resources  an analysis of capital resources, cash sources and
uses, investing activities, financing activities, off-balance sheet arrangements, aggregate
contractual obligations and hedging activities.
    
    Cautionary Information Regarding Forward-Looking Statements.
  Our Business and the Nonalcoholic Beverage Industry
   34




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##### Table of Contents



Second Quarter
    
    First HalfIn Thousands
    
    2008
    
    2007
    
    2008
    
    2007Bottle/can sales:Sparkling beverages (including energy products)
    
    $
    269,989
    
    
    $
    271,657
    
    
    $
    504,541
    
    
    $
    505,315Still beverages
    
    
    66,404
    
    
    
    53,982
    
    
    
    119,860
    
    
    
    99,556Total bottle/can sales
    
    
    336,393
    
    
    
    325,639
    
    
    
    624,401
    
    
    
    604,871Other sales:Sales to other Coca-Cola bottlers
    
    
    35,097
    
    
    
    39,088
    
    
    
    63,125
    
    
    
    73,971Post-mix and other
    
    
    24,513
    
    
    
    25,716
    
    
    
    46,151
    
    
    
    49,157Total other sales
    
    
    59,610
    
    
    
    64,804
    
    
    
    109,276
    
    
    
    123,128Total net sales
    
    $
    396,003
    
    
    $
    390,443
    
    
    $
    733,677
    
    
    $
    727,999
 Areas of Emphasis
  Revenue Management
  35




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Product Innovation and Beverage Portfolio Expansion
 ©
    Distribution Cost Management
  36




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##### Table of Contents




    
    bulk delivery for large supermarkets, mass merchandisers and club stores;
    
    advanced sales delivery for convenience stores, drug stores, small supermarkets and
certain on-premise accounts; and
    
    full service delivery for its full service vending customers.
  Productivity
  Overview of Operations and Financial Condition
  Second Quarter
    
    
    
    
    
    %In Thousands (Except Per Share Data)
    
    2008
    
    2007
    
    Change
    
    ChangeNet sales
    
    $
    396,003
    
    
    $
    390,443
    
    
    $
    5,560
    
    
    
    1.4Gross margin
    
    
    171,880
    
    
    
    169,290
    
    
    
    2,590
    
    
    
    1.5S,D&A expenses
    
    
    135,673
    
    
    
    136,796
    
    
    
    (1,123
    )
    
    
    (0.8
    )Income from operations
    
    
    36,207
    
    
    
    32,494
    
    
    
    3,713
    
    
    
    11.4Interest expense
    
    
    9,949
    
    
    
    12,294
    
    
    
    (2,345
    )
    
    
    (19.1
    )Income before income taxes
    
    
    24,898
    
    
    
    19,031
    
    
    
    5,867
    
    
    
    30.8Income tax provision
    
    
    9,743
    
    
    
    7,340
    
    
    
    2,403
    
    
    
    32.7Net income
    
    
    15,155
    
    
    
    11,691
    
    
    
    3,464
    
    
    
    29.6Basic net income per share:Common Stock
    
    $
    1.66
    
    
    $
    1.28
    
    
    $
    0.38
    
    
    
    29.7Class B Common Stock
    
    $
    1.66
    
    
    $
    1.28
    
    
    $
    0.38
    
    
    
    29.7Diluted net income per share:Common Stock
    
    $
    1.65
    
    
    $
    1.28
    
    
    $
    0.37
    
    
    
    28.9Class B Common Stock
    
    $
    1.65
    
    
    $
    1.28
    
    
    $
    0.37
    
    
    
    28.9
 37




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##### Table of Contents



First Half
    
    
    
    
    
    %In Thousands (Except Per Share Data)
    
    2008
    
    2007
    
    Change
    
    ChangeNet sales
    
    $
    733,677
    
    
    $
    727,999
    
    
    $
    5,678
    
    
    
    0.8Gross margin
    
    
    311,798
    
    
    
    320,781
    
    
    
    (8,983
    )
    
    
    (2.8
    )S,D&A expenses
    
    
    271,916
    
    
    
    267,738
    
    
    
    4,178
    
    
    
    1.6Income from operations
    
    
    39,882
    
    
    
    53,043
    
    
    
    (13,161
    )
    
    
    (24.8
    )Interest expense
    
    
    20,383
    
    
    
    24,512
    
    
    
    (4,129
    )
    
    
    (16.8
    )Income before income taxes
    
    
    18,478
    
    
    
    26,681
    
    
    
    (8,203
    )
    
    
    (30.7
    )Income tax provision
    
    
    7,658
    
    
    
    10,339
    
    
    
    (2,681
    )
    
    
    (25.9
    )Net income
    
    
    10,820
    
    
    
    16,342
    
    
    
    (5,522
    )
    
    
    (33.8
    )Basic net income per share:Common Stock
    
    $
    1.18
    
    
    $
    1.79
    
    
    $
    (0.61
    )
    
    
    (34.1
    )Class B Common Stock
    
    $
    1.18
    
    
    $
    1.79
    
    
    $
    (0.61
    )
    
    
    (34.1
    )Diluted net income per share:Common Stock
    
    $
    1.18
    
    
    $
    1.79
    
    
    $
    (0.61
    )
    
    
    (34.1
    )Class B Common Stock
    
    $
    1.18
    
    
    $
    1.79
    
    
    $
    (0.61
    )
    
    
    (34.1
    )
   ©
  38




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##### Table of Contents



June 29,
    
    December 30,
    
    July 1,In Thousands
    
    2008
    
    2007
    
    2007Debt
    
    $
    621,450
    
    
    $
    598,850
    
    
    $
    691,450Capital lease obligations
    
    
    78,936
    
    
    
    80,215
    
    
    
    81,453Total debt and capital lease obligations
    
    
    700,386
    
    
    
    679,065
    
    
    
    772,903Less: Cash and cash equivalents
    
    
    9,323
    
    
    
    9,871
    
    
    
    71,149Total net debt and capital lease obligations (1)
    
    $
    691,063
    
    
    $
    669,194
    
    
    $
    701,754
 (1)
    
    The non-GAAP measure Total net debt and capital lease obligations is used to
provide readers with additional information to more clearly evaluate the Companys capital
structure and financial leverage.
 Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements
 Critical Accounting Policies
  39




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New Accounting Pronouncements
 Recently Adopted Pronouncements
    40




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##### Table of Contents



Recently Issued Pronouncements
      Results of Operations
 Q2 2008 Compared to Q2 2007 and YTD 2008 Compared to YTD 2007
 Net Sales
  41




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##### Table of Contents



Q2 2008
    
    
    Attributable to:(In Millions)$
    7.1
    
    
    1.1% increase in bottle/can volume primarily due to
increases in enhanced water volume offset by a decrease in
bottled water volume3.7
    
    
    2.2% increase in bottle/can sales price per unit primarily due to increased sales of
enhanced water which has a higher per unit sales price offset by increases in sales of
lower price packages in higher margin channels (primarily convenience stores)(3.3
    )
    
    8.6% decrease in other bottler sales price per unit primarily due to a decrease in
energy drink volume as a percentage of total volume (energy drinks have a higher sales
price per unit)(2.0
    )
    
    9.6% decrease in post-mix volume0.1
    
    
    Other$
    5.6
    
    
    Total increase in net sales
 YTD 2008
    
    
    Attributable to:(In Millions)$
    16.5
    
    
    1.7% increase in bottle/can volume primarily due to
increases in enhanced water volume offset by a decrease in
bottled water volume(5.9
    )
    
    8.6% decrease in other bottler sales price per unit primarily due to a decrease in
energy drink volume as a percentage of total volume (energy drinks have a higher sales
price per unit)(4.9
    )
    
    6.6% decrease in bottler sales volume primarily due to decreases in energy and tea
product volume(3.7
    )
    
    9.5% decrease in post-mix volume3.0
    
    
    1.3% increase in bottle/can sales price per unit primarily due to increased sales of
enhanced water which has a higher per unit sales price offset by increases in sales of
lower price packages in higher margin channels (primarily convenience stores) and a lower
sales price per unit for bottled water0.7
    
    
    Other$
    5.7
    
    
    Total increase in net sales
   42




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##### Table of Contents



Bottle/Can Sales Volume
    
    Bottle/Can Sales VolumeProduct Category
    
    Q2 2008
    
    Q2 2007
    
    % Increase (Decrease)Sparkling beverages (including
energy products)
    
    
    83.6
    %
    
    
    84.9
    %
    
    
    (0.5
    )Still beverages
    
    
    16.4
    %
    
    
    15.1
    %
    
    
    9.7Total bottle/can sales volume
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    1.1
 Bottle/Can Sales Volume
    
    Bottle/Can Sales VolumeProduct Category
    
    YTD 2008
    
    YTD 2007
    
    % Increase (Decrease)Sparkling beverages (including
energy products)
    
    
    84.0
    %
    
    
    85.2
    %
    
    
    0.3Still beverages
    
    
    16.0
    %
    
    
    14.8
    %
    
    
    9.6Total bottle/can sales volume
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    1.7
   Cost of Sales
   43




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##### Table of Contents



Q2 2008
    
    
    Attributable to:(In Millions)$
    11.0
    
    
    Increase in costs primarily due to an increase in purchased products and an increase in raw
material costs such as aluminum cans, high fructose corn syrup and plastic bottles(6.1
    )
    
    Increase in marketing funding support received primarily from The Coca-Cola Company5.5
    
    
    1.1% increase in bottle/can volume primarily due to increases in enhanced water volume
offset by a decrease in bottled water volume(2.9
    )
    
    Decrease in other bottler cost per unit primarily due to a decrease in energy drink
volume as a percentage of total volume (energy drinks have a higher cost per unit)(1.4
    )
    
    9.6% decrease in post-mix volume(2.6
    )
    
    Increase in equity investment in plastic bottle cooperative(0.5
    )
    
    Other$
    3.0
    
    
    Total increase in cost of sales
 YTD 2008
    
    
    Attributable to:(In Millions)$
    24.9
    
    
    Increase in costs primarily due to an increase in purchased products and an increase in raw
material costs such as aluminum cans, high fructose corn syrup and plastic bottles11.5
    
    
    1.7% increase in bottle/can volume primarily due to increases in enhanced water volume
offset by a decrease in bottled water volume(7.8
    )
    
    Increase in marketing funding support received primarily from The Coca-Cola Company(5.1
    )
    
    Decrease in other bottler cost per unit primarily due to a decrease in energy drink
volume as a percentage of total volume (energy drinks have a higher cost per unit)(4.6
    )
    
    6.6% decrease in bottler sales volume primarily due to decreases in energy drinks and
tea volume(2.5
    )
    
    9.5% decrease in post-mix volume(2.6
    )
    
    Increase in equity investment in plastic bottle cooperative0.9
    
    
    Other$
    14.7
    
    
    Total increase in cost of sales
    44




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##### Table of Contents



Gross Margin
   Q2 2008
    
    Attributable to:(In Millions)$
    (11.0
    )
    
    Increase in costs primarily
due to an increase in purchased products and an increase in raw material costs such
as aluminum cans, high fructose corn syrup and plastic bottles6.1
    
    
    Increase in marketing funding
support received primarily from The Coca-Cola Company3.7
    
    
    2.2% increase in bottle/can sales price per unit primarily due to increased sales of
enhanced water which has a higher per unit sales price offset by increases in sales of
lower price packages in higher margin channels (primarily convenience stores)2.6
    
    
    Increase in equity investment in plastic bottle cooperative1.6
    
    
    1.1% increase in bottle/can volume primarily due to increases in enhanced water volume
offset by a decrease in bottled water volume(0.4
    )
    
    Other$
    2.6
    
    
    Total increase in gross margin
 YTD 2008
    
    Attributable to:(In Millions)$
    (24.9
    )
    
    Increase in costs primarily due to an increase in purchased products and an increase in raw material costs such
as aluminum cans, high fructose corn syrup and plastic bottles7.8
    
    
    Increase in marketing funding support received primarily from The Coca-Cola Company5.0
    
    
    1.7% increase in bottle/can volume primarily due to increases in enhanced water volume
offset by a decrease in bottled water volume3.0
    
    
    1.3% increase in bottle/can sales price per unit primarily due to increased sales of
enhanced water which has a higher per unit sales price offset by increases in sales of
lower price packages in higher margin channels (primarily convenience stores) and lower
sales price per unit for bottled water2.6
    
    
    Increase in equity investment in plastic bottle cooperative(2.5
    )
    
    Other$
    (9.0
    )
    
    Total decrease in gross margin
   45




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##### Table of Contents



S,D&A Expenses
    Q2 2008
    
    Attributable to:(In Millions)$
    (2.0
    )
    
    Decrease in estimated bonus expense based on projected 2008 financial performance1.6
    
    
    Gain on sale of aviation equipment in Q2 20071.5
    
    
    Increase in fuel and other energy costs related to the movement of finished goods from
sales distribution centers to customer locations1.4
    
    
    Increase in employee related expenses primarily related to wage increases(1.0
    )
    
    Decrease in estimated compensation expense related to  restricted stock award based on projected 2008 financial performance(0.7
    )
    
    Decrease in employee benefit costs primarily due to lower pension plan costs, offset
by increases in the Companys 401(k) Savings Plan contributions(1.9
    )
    
    Other$
    (1.1
    )
    
    Total decrease in S,D&A expenses
 46




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##### Table of Contents



YTD 2008
    
    Attributable to:(In Millions)$
    6.0
    
    
    Increase in employee related expenses primarily related to wage increases3.4
    
    
    Increase in fuel and other energy costs related to the movement of finished goods from
sales distribution centers to customer locations(2.7
    )
    
    Decrease in estimated bonus expense based on projected 2008 financial performance(2.4
    )
    
    Restructuring costs in YTD 2007(1.4
    )
    
    Decrease in employee benefit costs primarily due to lower pension plan costs, offset
by increases in the Companys 401(k) Savings Plan contributions1.6
    
    
    Gain on sales of aviation equipment in YTD 2007(1.0
    )
    
    Decrease in estimated compensation expense related to restricted stock award based on projected 2008 financial performance0.9
    
    

Increase
in property and casualty insurance costs(0.2
    )
    
    Other$
    4.2
    
    
    Total increase in S,D&A expenses
   Interest Expense
  47




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##### Table of Contents



Minority Interest
  Income Taxes
    Subsequent Events
   Financial Condition
    
    
    An increase in accounts receivable, trade of $25.8 million primarily due to higher sales in
the quarter ended June 2008 compared to the quarter ended
December 2007.
    
    An increase in accounts receivable from and an increase in accounts payable to The
Coca-Cola Company of $13.4 million and $29.3 million, respectively, primarily due to the
timing of payments.
    
    An increase in inventories of $5.9 million due primarily to increased purchases of finished
products.
    
    A decrease in accrued compensation of $9.0 million due primarily to the payment of bonuses
in March 2008 and a lower accrual for 2008 bonuses.
    
    An increase in current portion of long-term debt of $111.9 million primarily due to the
reclassification from long-term to current of $119.3 million of debentures which mature in May
2009.
    
    A decrease in accounts payable, trade of $5.9 million primarily due to the timing of
payments.
 48




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##### Table of Contents




    
    A decrease in cash and cash equivalents of $61.8 million primarily due to the payment of
$100 million of debentures in November 2007.
    
    An increase in accounts receivable, trade of $8.3 million primarily due to higher sales in
Q2 2008 compared to Q2 2007 and the collection of payments from customers on the last day of
June 2008 which was in the third quarter of 2008, while the last day of June 2007 was in the
second quarter of 2007.
    
    A decrease in accounts receivable and an increase in accounts payable to The Coca-Cola
Company of $5.4 million and $4.9 million, respectively, primarily due to the timing of
payments.
    
    An increase in prepaid expenses and other current assets of $5.2 million primarily due to
an increase in current deferred tax assets.
    
    An increase in the current portion of long-term debt of $19.3 million primarily due to the
reclassification from long-term to current of $119.3 million of debentures which mature in May
2009, partially offset by the payment of $100 million in
debentures in November 2007.
  Liquidity and Capital Resources
 Capital Resources
     49




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##### Table of Contents



Cash Sources and Uses
   First HalfIn Millions
    
    2008
    
    2007Cash SourcesCash
provided by operating activities (excluding income tax payments)
    
    $
    15.3
    
    
    $
    37.2Borrowings under revolving credit facility
    
    
    30.0
    
    
    
    Other
    
    
    .3
    
    
    
    6.9Total cash sources
    
    $
    45.6
    
    
    $
    44.1Cash UsesCapital expenditures
    
    $
    31.6
    
    
    $
    19.0Investment in plastic bottle manufacturing cooperative
    
    
    .9
    
    
    
    1.6Payment of lines of credit, net
    
    
    7.4
    
    
    
    Payment of debt and capital lease obligations
    
    
    1.3
    
    
    
    1.2Dividends
    
    
    4.6
    
    
    
    4.6Income tax payments
    
    
    .2
    
    
    
    8.0Other
    
    
    .1
    
    
    
    .4Total cash uses
    
    $
    46.1
    
    
    $
    34.8Increase (decrease) in cash
    
    $
    (0.5
    )
    
    $
    9.3
 Investing Activities
  Financing Activities
  50




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##### Table of Contents



Long-Term DebtStandard & Poors
    
    BBBMoodys
    
    Baa2
     51




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Off-Balance Sheet Arrangements
  52




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Aggregate Contractual Obligations
  Payments Due by PeriodJuly 2008-
    
    July 2009-
    
    July 2011-
    
    AfterIn Thousands
    
    Total
    
    June 2009
    
    June 2011
    
    June 2013
    
    June 2013Contractual obligations:Total debt, net of interest
    
    $
    621,450
    
    
    $
    119,253
    
    
    $
    57,440
    
    
    $
    180,000
    
    
    $
    264,757Capital lease obligations,
net of interest
    
    
    78,936
    
    
    
    2,690
    
    
    
    5,949
    
    
    
    6,808
    
    
    
    63,489Estimated interest on
long-term debt and capital
lease obligations (1)
    
    
    256,947
    
    
    
    31,258
    
    
    
    51,597
    
    
    
    47,407
    
    
    
    126,685Purchase obligations (2)
    
    
    556,578
    
    
    
    95,272
    
    
    
    193,328
    
    
    
    186,046
    
    
    
    81,932Other long-term liabilities (3)
    
    
    92,682
    
    
    
    6,360
    
    
    
    12,082
    
    
    
    11,517
    
    
    
    62,723Operating leases
    
    
    17,101
    
    
    
    3,616
    
    
    
    4,500
    
    
    
    2,413
    
    
    
    6,572Long-term contractual
arrangements (4)
    
    
    27,328
    
    
    
    6,602
    
    
    
    10,933
    
    
    
    7,257
    
    
    
    2,536Postretirement obligations
    
    
    36,031
    
    
    
    2,163
    
    
    
    4,868
    
    
    
    5,212
    
    
    
    23,788Purchase orders (5)
    
    
    37,935
    
    
    
    37,935Total contractual obligations
    
    $
    1,724,988
    
    
    $
    305,149
    
    
    $
    340,697
    
    
    $
    446,660
    
    
    $
    632,482
 (1)
    
    Includes interest payments based on contractual terms and current interest rates for variable
rate debt.(2)
    
    Represents an estimate of the Companys obligation to purchase 17.5 million cases of
finished product on an annual basis through May 2014 from South Atlantic Canners, a
manufacturing cooperative, and other purchase commitments.(3)
    
    Includes obligations under executive benefit plans, unrecognized income tax benefits and
other long-term liabilities.(4)
    
    Includes contractual arrangements with certain prestige properties, athletics venues and
other locations, and other long-term marketing commitments.(5)
    
    Purchase orders include commitments in which a written purchase order has been issued to a
vendor, but the goods have not been received or the services have not been performed.     53




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Hedging Activities
 Interest Rate Hedging
      Fuel Hedging
  54




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Cautionary Information Regarding Forward-Looking Statements
  
    
    the Companys belief that other parties to certain contractual arrangements will perform
their obligations;
    
    potential marketing funding support from The Coca-Cola Company and other beverage
companies;
    
    the Companys belief that disposition of certain claims and legal proceedings will not
have a material adverse effect on its financial condition, cash flows or results of
operations and that no material amount of loss in excess of recorded amounts is reasonably
possible;
    
    managements belief that the Company has adequately provided for any ultimate amounts
that are likely to result from tax audits;
    
    managements belief that the Company has sufficient resources available to finance its
business plan, meet its working capital requirements and maintain an appropriate level of
capital spending;
    
    the Companys belief that the cooperatives whose debt and lease obligations the Company
guarantees have sufficient assets and the ability to adjust selling prices of their
products to adequately mitigate the risk of material loss and that the cooperatives will
perform their obligations under their debt and lease agreements;
    
    the Companys key priorities which are revenue management, product innovation and
beverage portfolio expansion, distribution cost management and productivity;
    
    the Companys hypothetical calculation of the impact of a 1% increase in interest rates
on outstanding floating rate debt and capital lease obligations for the next twelve months
as of June 29, 2008;
    
    the Companys belief that contributions to one of the Company-sponsored pension plans in 2008
will be approximately $0.2 million;
    
    the Companys belief that postretirement benefit payments are expected to be
approximately $2.3 million in 2008;
    
    anticipated additions to property, plant and equipment in 2008 will be in the range of $45 million to $55 million;
    
    the Companys beliefs and estimates regarding the impact of the adoption of certain new
accounting pronouncements;
    
    the Companys expectation that its overall bottle/can sales growth will be primarily
dependent upon continued growth in diet sparkling products, sports drinks, bottled water,
enhanced water, tea and energy products, the introduction of new products and the pricing
of brands and packages within channels;
    
    the Companys belief that innovation of new brands and packages will continue to be
critical to the Companys overall revenue;
    
    the Companys beliefs that the growth prospects of Company-owned or exclusive licensed
brands appear promising and the cost of developing, marketing and distributing these brands
may be significant;
    
    the Companys belief there will not be any significant impact on its liquidity and
capital resources due to the resolution of income tax positions reserved for as uncertain;
    
    the Companys belief that changes in unrecognized tax benefits over the next 12 months
will not have a significant impact on the consolidated financial statements;
    
    the Companys expectation that it will use cash flow generated from operations, its
revolving credit facility and potentially other sources, including bank borrowings or
issuance of debentures or equity
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securities, to repay or refinance debentures maturing in May
2009 and July 2009;
    
    the Companys current estimate that it will not achieve at least 80% of the overall goal
achievement factor under its Annual Bonus Plan for 2008;
    
    the Companys estimate that it will incur total pre-tax charges of $4.0 million to $5.0
million related to the reorganization of its operating units and support services and its
workforce reduction plan, and the Companys expectations that the plan will be completed by
the end of the third quarter of 2008, that the majority of cash expenditures will be
incurred in the third quarter of 2008 and the annual savings
will be $25 million to $30 million from the plan;
    
    the Companys belief
that it will record a charge in the range of $13 million to
$15 million in the third quarter of 2008 in connection with its
withdrawal from a multi-employer pension fund;
    
    the Companys belief that it is competitive in its territories with respect to the
principal methods of competition in the nonalcoholic beverage industry; and
    
    the Companys estimate that a 10% increase in the cost of certain commodities as
compared to fiscal 2007, assuming flat volume, would be approximately $23 million.
   56




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
  Debt and Derivative Financial Instruments
   Raw Material and Commodity Price Risk
  
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Effects of Changing Prices
  
 Item 4. Controls and Procedures.
   58




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Item 1A. Risk Factors.
  
 Item 4. Submission of Matters to a Vote of Security Holders.
  (a)
    
    The election of eleven directors, each for a term of one year or until their successors
have been elected and qualified.
 Director Name
    
    For
    
    WithheldJ. Frank Harrison, III
    
    
    54,941,898
    
    
    
    1,352,911H. W. McKay Belk
    
    
    56,091,581
    
    
    
    203,228Sharon A. Decker
    
    
    56,112,364
    
    
    
    182,444William B. Elmore
    
    
    54,665,999
    
    
    
    1,628,810Henry W. Flint
    
    
    56,105,376
    
    
    
    189,433Deborah S. Harrison
    
    
    56,091,644
    
    
    
    203,164Ned R. McWherter
    
    
    56,091,201
    
    
    
    203,608James H. Morgan
    
    
    56,126,278
    
    
    
    168,531John W. Murrey, III
    
    
    56,109,527
    
    
    
    185,282Carl Ware
    
    
    56,116,216
    
    
    
    178,593Dennis A. Wicker
    
    
    56,096,506
    
    
    
    198,303
 (b)
    
    The approval of an award of performance units to the Companys Chairman and Chief Executive
Officer.
 For
    
    Against
    
    Abstentions54,718,381
    
    586,749
    
    9,329
 (c)
    
    The ratification of PricewaterhouseCoopers LLP as the independent registered public
accounting firm for 2008.
 For
    
    Against
    
    Abstentions54,034,403
    
    117,002
    
    29,194
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Item 6. Exhibits.
 ExhibitNumber
    
    Description4.1
    
    The registrant, by signing this report, agrees to furnish the Securities and
Exchange Commission, upon its request, a copy of any instrument which defines the
rights of holders of long-term debt of the registrant and its consolidated
subsidiaries which authorizes a total amount of securities not in excess of 10 percent
of the total assets of the registrant and its subsidiaries on a consolidated basis.10.1
    
    Performance Unit Award Agreement, incorporated herein by reference to Appendix
A to the Companys Proxy Statement for the 2008 Annual Meeting
of Stockholders.12
    

Ratio
of earnings to fixed charges (filed herewith).31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002 (filed
herewith).
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COCA-COLA BOTTLING CO. CONSOLIDATED
(REGISTRANT)Date: August 8, 2008
    By:
    /s/  James E. HarrisJames E. HarrisPrincipal Financial Officer of the Registrant
and
Senior Vice President and Chief Financial OfficerDate: August 8, 2008
    By:
    /s/  William J. BilliardWilliam J. BilliardPrincipal Accounting Officer of the Registrant
and
Vice President, Controller and Chief Accounting Officer 61