##### 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 September 30, 2007
 Commission
File Number 0-9286
 COCA-COLA BOTTLING CO. CONSOLIDATED
  Delaware
    
    56-0950585(State or other jurisdiction of incorporation or
    
    (I.R.S. Employer Identification No.)organization)
 4100 Coca-Cola Plaza, Charlotte, North Carolina 28211
 (704) 557-4400  (Registrants telephone number, including area code)
 þ o
  Large accelerated filer o
    Accelerated filer þ
    Non-accelerated filer o
 o þ
  Class
    
    Outstanding at October 31, 2007Common Stock, $1.00 Par Value
    
    6,643,677Class B Common Stock, $1.00 Par Value
    
    2,479,652




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##### 



COCA-COLA BOTTLING CO. CONSOLIDATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2007
 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
    
    
    32Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    55Item 4.
    
    Controls and Procedures
    
    
    55PART II  OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    56Item 6.
    
    Exhibits
    
    
    57Signature
    
    
    58Exhibit 12Exhibit 31.1Exhibit 31.2Exhibit 32
  2




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##### Table of Contents



Item l. Financial Statements.
  
 
 Third Quarter
    
    
    First Nine Months2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    367,360
    
    
    $
    370,626
    
    
    $
    1,095,359
    
    
    $
    1,090,429Cost of sales
    
    
    212,148
    
    
    
    213,237
    
    
    
    619,366
    
    
    
    619,325Gross margin
    
    
    155,212
    
    
    
    157,389
    
    
    
    475,993
    
    
    
    471,104Selling, delivery and administrative expenses
    
    
    134,861
    
    
    
    135,421
    
    
    
    402,376
    
    
    
    405,459Amortization of intangibles
    
    
    111
    
    
    
    136
    
    
    
    334
    
    
    
    426Income from operations
    
    
    20,240
    
    
    
    21,832
    
    
    
    73,283
    
    
    
    65,219Interest expense
    
    
    12,135
    
    
    
    12,745
    
    
    
    36,647
    
    
    
    37,808Minority interest
    
    
    110
    
    
    
    841
    
    
    
    1,960
    
    
    
    2,546Income before income taxes
    
    
    7,995
    
    
    
    8,246
    
    
    
    34,676
    
    
    
    24,865Income taxes
    
    
    2,722
    
    
    
    3,305
    
    
    
    13,061
    
    
    
    10,222Net income
    
    $
    5,273
    
    
    $
    4,941
    
    
    $
    21,615
    
    
    $
    14,643Basic net income per share:Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.37
    
    
    $
    1.61Weighted average number of Common Stock
shares outstanding
    
    
    6,644
    
    
    
    6,643
    
    
    
    6,644
    
    
    
    6,643Class B Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.37
    
    
    $
    1.61Weighted average number of Class B Common
Stock shares outstanding
    
    
    2,480
    
    
    
    2,460
    
    
    
    2,480
    
    
    
    2,460Diluted net income per share:Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.36
    
    
    $
    1.61Weighted average number of Common Stock
shares outstanding  assuming dilution
    
    
    9,144
    
    
    
    9,123
    
    
    
    9,140
    
    
    
    9,120Class B Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.36
    
    
    $
    1.60Weighted average number of Class B Common
Stock shares outstanding  assuming dilution
    
    
    2,500
    
    
    
    2,480
    
    
    
    2,496
    
    
    
    2,476Cash dividends per share:Common Stock
    
    $
    .25
    
    
    $
    .25
    
    
    $
    .75
    
    
    $
    .75Class B Common Stock
    
    $
    .25
    
    
    $
    .25
    
    
    $
    .75
    
    
    $
    .75
  3




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##### Table of Contents



Unaudited
    
    
    
    
    
    
    UnauditedSept. 30,
    
    
    Dec. 31,
    
    
    Oct. 1,2007
    
    
    2006
    
    
    2006ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    88,400
    
    
    $
    61,823
    
    
    $
    57,420Accounts receivable, trade, less allowance for
doubtful accounts of $1,056, $1,334 and $1,373,
respectively
    
    
    96,914
    
    
    
    91,299
    
    
    
    90,749Accounts receivable from The Coca-Cola Company
    
    
    19,768
    
    
    
    4,915
    
    
    
    8,322Accounts receivable, other
    
    
    10,128
    
    
    
    8,565
    
    
    
    8,731Inventories
    
    
    62,822
    
    
    
    67,055
    
    
    
    56,799Prepaid expenses and other current assets
    
    
    16,000
    
    
    
    13,485
    
    
    
    14,627Total current assets
    
    
    294,032
    
    
    
    247,142
    
    
    
    236,648Property, plant and equipment, net
    
    
    359,391
    
    
    
    384,464
    
    
    
    389,856Leased property under capital leases, net
    
    
    71,896
    
    
    
    69,851
    
    
    
    70,681Other assets
    
    
    34,670
    
    
    
    35,542
    
    
    
    36,791Franchise rights
    
    
    520,672
    
    
    
    520,672
    
    
    
    520,672Goodwill
    
    
    102,049
    
    
    
    102,049
    
    
    
    102,049Other identifiable intangible assets, net
    
    
    4,413
    
    
    
    4,747
    
    
    
    4,871Total
    
    $
    1,387,123
    
    
    $
    1,364,467
    
    
    $
    1,361,568
  4




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##### Table of Contents



Unaudited
    
    
    
    
    
    
    UnauditedSept. 30,
    
    
    Dec. 31,
    
    
    Oct. 1,2007
    
    
    2006
    
    
    2006LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current portion of debt
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    Current portion of obligations under capital leases
    
    
    2,559
    
    
    
    2,435
    
    
    
    1,583Accounts payable, trade
    
    
    38,445
    
    
    
    44,050
    
    
    
    34,994Accounts payable to The Coca-Cola Company
    
    
    21,896
    
    
    
    21,748
    
    
    
    22,863Other accrued liabilities
    
    
    53,993
    
    
    
    51,030
    
    
    
    59,087Accrued compensation
    
    
    16,652
    
    
    
    19,671
    
    
    
    14,781Accrued interest payable
    
    
    18,760
    
    
    
    10,008
    
    
    
    18,537Total current liabilities
    
    
    252,305
    
    
    
    248,942
    
    
    
    151,845Deferred income taxes
    
    
    152,392
    
    
    
    162,694
    
    
    
    158,529Pension and postretirement benefit obligations
    
    
    57,064
    
    
    
    57,757
    
    
    
    65,161Other liabilities
    
    
    97,175
    
    
    
    88,598
    
    
    
    90,393Obligations under capital leases
    
    
    78,280
    
    
    
    75,071
    
    
    
    76,328Long-term debt
    
    
    591,450
    
    
    
    591,450
    
    
    
    691,450Total liabilities
    
    
    1,228,666
    
    
    
    1,224,512
    
    
    
    1,233,706Commitments and Contingencies (Note 14)Minority interest
    
    
    47,963
    
    
    
    46,002
    
    
    
    45,330Stockholders Equity:Common Stock, $1.00 par value:Authorized  30,000,000 shares; 
Issued  9,706,051, 9,705,551 and 9,705,551 shares,
respectively
    
    
    9,706
    
    
    
    9,705
    
    
    
    9,705Class B Common Stock, $1.00 par value:Authorized  10,000,000 shares; 
Issued  3,107,766, 3,088,266 and 3,088,266 shares,
respectively
    
    
    3,107
    
    
    
    3,088
    
    
    
    3,088Capital in excess of par value
    
    
    102,003
    
    
    
    101,145
    
    
    
    100,913Retained earnings
    
    
    83,267
    
    
    
    68,495
    
    
    
    62,171Accumulated other comprehensive loss
    
    
    (26,335
    )
    
    
    (27,226
    )
    
    
    (32,091
    )171,748
    
    
    
    155,207
    
    
    
    143,786Less: Treasury stock, at costCommon  3,062,374 shares
    
    
    60,845
    
    
    
    60,845
    
    
    
    60,845Class B Common  628,114 shares
    
    
    409
    
    
    
    409
    
    
    
    409Total stockholders equity
    
    
    110,494
    
    
    
    93,953
    
    
    
    82,532Total
    
    $
    1,387,123
    
    
    $
    1,364,467
    
    
    $
    1,361,568
  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
January 1, 2006
    
    $
    9,705
    
    
    $
    3,068
    
    
    $
    99,376
    
    
    $
    54,355
    
    
    $
    (30,116
    )
    
    $
    (61,254
    )
    
    $
    75,134Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,643
    
    
    
    
    
    
    
    
    
    
    
    14,643Net change in
minimum pension
liability adjustment,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,975
    )
    
    
    
    
    
    
    (1,975
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    12,668Cash dividends paidCommon
($.75 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,982
    )
    
    
    
    
    
    
    
    
    
    
    (4,982
    )Class B Common
($.75 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,845
    )
    
    
    
    
    
    
    
    
    
    
    (1,845
    )Issuance of 20,000
shares of Class B
Common Stock
    
    
    
    
    
    
    20
    
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    860Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    697
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    697Balance on
October 1, 2006
    
    $
    9,705
    
    
    $
    3,088
    
    
    $
    100,913
    
    
    $
    62,171
    
    
    $
    (32,091
    )
    
    $
    (61,254
    )
    
    $
    82,532Balance on
December 31, 2006
    
    $
    9,705
    
    
    $
    3,088
    
    
    $
    101,145
    
    
    $
    68,495
    
    
    $
    (27,226
    )
    
    $
    (61,254
    )
    
    $
    93,953Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    21,615
    
    
    
    
    
    
    
    
    
    
    
    21,615Foreign currency
translation
adjustments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    15
    
    
    
    
    
    
    
    15Pension and
postretirement benefit
adjustments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    876
    
    
    
    
    
    
    
    876Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    22,506Cash dividends paidCommon
($.75 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (4,983
    )
    
    
    
    
    
    
    
    
    
    
    (4,983
    )Class B Common
($.75 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,860
    )
    
    
    
    
    
    
    
    
    
    
    (1,860
    )Issuance of 20,000
shares of Class B
Common Stock
    
    
    
    
    
    
    20
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    878
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    878Conversion of Class B
Common Stock into
Common Stock
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance on
September 30, 2007
    
    $
    9,706
    
    
    $
    3,107
    
    
    $
    102,003
    
    
    $
    83,267
    
    
    $
    (26,335
    )
    
    $
    (61,254
    )
    
    $
    110,494
  6




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##### Table of Contents



First Nine Months2007
    
    
    2006Cash
Flows from Operating ActivitiesNet income
    
    $
    21,615
    
    
    $
    14,643Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation expense
    
    
    50,793
    
    
    
    50,371Amortization of intangibles
    
    
    334
    
    
    
    426Deferred income taxes
    
    
    5,092
    
    
    
    2,061Losses on disposal of property, plant and equipment
    
    
    298
    
    
    
    1,327Amortization of debt costs
    
    
    2,051
    
    
    
    1,986Amortization of deferred gain related to terminated
interest rate agreements
    
    
    (1,273
    )
    
    
    (1,266
    )Stock compensation expense
    
    
    878
    
    
    
    697Minority interest
    
    
    1,960
    
    
    
    2,546(Increase) decrease in current assets less current liabilities
    
    
    (9,154
    )
    
    
    13,168Decrease in other noncurrent assets
    
    
    1,499
    
    
    
    2,102Decrease in other noncurrent liabilities
    
    
    (13,330
    )
    
    
    (4,011
    )Other
    
    
    15
    
    
    
    Total adjustments
    
    
    39,163
    
    
    
    69,407Net cash provided by operating activities
    
    
    60,778
    
    
    
    84,050Cash
Flows from Investing ActivitiesAdditions to property, plant and equipment
    
    
    (30,603
    )
    
    
    (50,742
    )Proceeds from the sale of property, plant and equipment
    
    
    7,684
    
    
    
    950Investment in plastic bottle manufacturing cooperative
    
    
    (2,256
    )
    
    
    (1,515
    )Other
    
    
    
    
    
    
    (243
    )Net cash used in investing activities
    
    
    (25,175
    )
    
    
    (51,550
    )Cash
Flows from Financing ActivitiesPayment of current portion of long-term debt
    
    
    
    
    
    
    (39
    )Payment of lines of credit, net
    
    
    
    
    
    
    (6,500
    )Cash dividends paid
    
    
    (6,843
    )
    
    
    (6,827
    )Principal payments on capital lease obligations
    
    
    (1,811
    )
    
    
    (1,291
    )Other
    
    
    (372
    )
    
    
    (31
    )Net cash used in financing activities
    
    
    (9,026
    )
    
    
    (14,688
    )Net
increase in cash
    
    
    26,577
    
    
    
    17,812Cash at
beginning of period
    
    
    61,823
    
    
    
    39,608Cash at
end of period
    
    $
    88,400
    
    
    $
    57,420Significant
non-cash investing and financing activities:Issuance of Class B Common Stock in connection with stock award
    
    $
    929
    
    
    $
    860Capital lease obligations incurred
    
    
    5,144
    
    
    
    
  7




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8




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##### Table of Contents



Sept. 30,
    
    Dec. 31,
    
    Oct. 1,In Thousands
    
    2007
    
    2006
    
    2006Finished products
    
    $
    37,340
    
    
    $
    32,934
    
    
    $
    32,884Manufacturing materials
    
    
    8,150
    
    
    
    19,333
    
    
    
    7,397Plastic shells, pallets and other inventories
    
    
    17,332
    
    
    
    14,788
    
    
    
    16,518Total inventories
    
    $
    62,822
    
    
    $
    67,055
    
    
    $
    56,799
   Sept. 30,
    
    Dec. 31,
    
    Oct. 1,
    
    EstimatedIn Thousands
    
    2007
    
    2006
    
    2006
    
    Useful LivesLand
    
    $
    12,280
    
    
    $
    12,455
    
    
    $
    12,495Buildings
    
    
    110,454
    
    
    
    110,444
    
    
    
    110,586
    
    
    10-50 yearsMachinery and equipment
    
    
    103,400
    
    
    
    100,519
    
    
    
    99,980
    
    
    5-20 yearsTransportation equipment
    
    
    176,966
    
    
    
    184,861
    
    
    
    185,324
    
    
    4-13 yearsFurniture and fixtures
    
    
    40,363
    
    
    
    39,184
    
    
    
    40,135
    
    
    4-10 yearsCold drink dispensing equipment
    
    
    325,685
    
    
    
    331,174
    
    
    
    340,617
    
    
    6-13 yearsLeasehold and land improvements
    
    
    59,047
    
    
    
    57,837
    
    
    
    57,871
    
    
    5-20 yearsSoftware for internal use
    
    
    49,608
    
    
    
    36,665
    
    
    
    34,778
    
    
    3-10 yearsConstruction in progress
    
    
    3,524
    
    
    
    13,464
    
    
    
    12,076Total property, plant and equipment, at cost
    
    
    881,327
    
    
    
    886,603
    
    
    
    893,862Less: Accumulated depreciation
and amortization
    
    
    521,936
    
    
    
    502,139
    
    
    
    504,006Property, plant and equipment, net
    
    $
    359,391
    
    
    $
    384,464
    
    
    $
    389,856
  9




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##### Table of Contents



Sept. 30,
    
    Dec. 31,
    
    Oct. 1,
    
    EstimatedIn Thousands
    
    2007
    
    2006
    
    2006
    
    Useful LivesLeased property under capital leases
    
    $
    88,619
    
    
    $
    83,475
    
    
    $
    84,035
    
    
    3-29 yearsLess: Accumulated amortization
    
    
    16,723
    
    
    
    13,624
    
    
    
    13,354Leased property under capital leases, net
    
    $
    71,896
    
    
    $
    69,851
    
    
    $
    70,681
      Sept. 30,
    
    Dec. 31,
    
    Oct. 1,
    
    EstimatedIn Thousands
    
    2007
    
    2006
    
    2006
    
    Useful LivesOther identifiable intangible assets
    
    $
    6,599
    
    
    $
    6,599
    
    
    $
    8,374
    
    
    1-18 yearsLess: Accumulated amortization
    
    
    2,186
    
    
    
    1,852
    
    
    
    3,503Other identifiable intangible assets, net
    
    $
    4,413
    
    
    $
    4,747
    
    
    $
    4,871
  10




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##### Table of Contents



Sept. 30,
    
    Dec. 31,
    
    Oct. 1,In Thousands
    
    2007
    
    2006
    
    2006Accrued marketing costs
    
    $
    6,798
    
    
    $
    6,659
    
    
    $
    7,745Accrued insurance costs
    
    
    13,392
    
    
    
    12,495
    
    
    
    12,596Accrued taxes (other than income taxes)
    
    
    2,822
    
    
    
    2,068
    
    
    
    3,029Accrued income taxes
    
    
    3,086
    
    
    
    1,558
    
    
    
    3,132Employee benefit plan accruals
    
    
    8,429
    
    
    
    8,427
    
    
    
    8,872Checks and transfers yet to be presented for payment from
zero balance cash account
    
    
    9,958
    
    
    
    10,199
    
    
    
    15,312All other accrued liabilities
    
    
    9,508
    
    
    
    9,624
    
    
    
    8,401Total other accrued liabilities
    
    $
    53,993
    
    
    $
    51,030
    
    
    $
    59,087
   Interest
    
    Interest
    
    Sept. 30,
    
    Dec. 31,
    
    Oct. 1,In Thousands
    
    Maturity
    
    Rate
    
    Paid
    
    2007
    
    2006
    
    2006Debentures
    
    
    2007
    
    
    
    6.85
    %
    
    Semi-annually
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    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
    
    
    
    164,757691,450
    
    
    
    691,450
    
    
    
    691,450Less: Current portion of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    591,450
    
    
    $
    591,450
    
    
    $
    691,450
 11




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##### Table of Contents



September 30, 2007
    
    December 31, 2006
    
    October 1, 2006Notional
    
    Remaining
    
    Notional
    
    Remaining
    
    Notional
    
    RemainingIn Thousands
    
    Amount
    
    Term
    
    Amount
    
    Term
    
    Amount
    
    TermInterest rate swap agreement - floating
    
    $
    25,000
    
    
    0.17 years
    
    $
    25,000
    
    
    0.92 years
    
    $
    25,000
    
    
    1.17 yearsInterest rate swap agreement - floating
    
    
    25,000
    
    
    0.17 years
    
    
    25,000
    
    
    0.92 years
    
    
    25,000
    
    
    1.17 yearsInterest rate swap agreement - floating
    
    
    50,000
    
    
    1.67 years
    
    
    50,000
    
    
    2.42 years
    
    
    50,000
    
    
    2.67 yearsInterest rate swap agreement - floating
    
    
    50,000
    
    
    0.17 years
    
    
    50,000
    
    
    0.92 years
    
    
    50,000
    
    
    1.17 yearsInterest rate swap agreement - floating
    
    
    50,000
    
    
    1.83 years
    
    
    50,000
    
    
    2.58 years
    
    
    50,000
    
    
    2.83 yearsInterest rate swap agreement - floating
    
    
    50,000
    
    
    5.17 years
    
    
    50,000
    
    
    5.92 years
    
    
    50,000
    
    
    6.17 yearsInterest rate swap agreement - floating
    
    
    25,000
    
    
    1.58 yearsInterest rate swap agreement - floating
    
    
    25,000
    
    
    7.50 yearsInterest rate swap agreement - floating
    
    
    25,000
    
    
    5.17 years
    13




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Cash and Cash Equivalents, Accounts Receivable and Accounts Payable
  Public Debt Securities
  Derivative Financial Instruments
  Letters of Credit
   Sept. 30, 2007
    
    Dec. 31, 2006
    
    Oct. 1, 2006Carrying
    
    Fair
    
    Carrying
    
    Fair
    
    Carrying
    
    FairIn Thousands
    
    Amount
    
    Value
    
    Amount
    
    Value
    
    Amount
    
    ValuePublic debt securities
    
    $
    691,450
    
    
    $
    676,324
    
    
    $
    691,450
    
    
    $
    679,991
    
    
    $
    691,450
    
    
    $
    682,132Interest rate swap agreements
    
    
    2,353
    
    
    
    2,353
    
    
    
    6,950
    
    
    
    6,950
    
    
    
    7,608
    
    
    
    7,608Fuel hedging agreements
    
    
    
    
    
    
    (154
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    21,271
    
    
    
    
    
    
    
    22,068
    
    
    
    
    
    
    
    20,927
  14




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Sept. 30,
    
    Dec. 31,
    
    Oct. 1,In Thousands
    
    2007
    
    2006
    
    2006Accruals for executive benefit plans
    
    $
    74,462
    
    
    $
    69,547
    
    
    $
    68,134Other
    
    
    22,713
    
    
    
    19,051
    
    
    
    22,259Total other liabilities
    
    $
    97,175
    
    
    $
    88,598
    
    
    $
    90,393
      15




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16




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First Nine MonthsIn Thousands
    
    2007
    
    2006Statutory expense
    
    $
    12,137
    
    
    $
    8,703State income taxes, net of federal benefit
    
    
    1,510
    
    
    
    1,139Manufacturing deduction benefit
    
    
    (1,141
    )
    
    
    (448
    )Meals and entertainment
    
    
    440
    
    
    
    534Other, net
    
    
    115
    
    
    
    294Income tax expense
    
    $
    13,061
    
    
    $
    10,222
    17




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##### Table of Contents



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




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19




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##### Table of Contents



Annual
    
    Nine MonthShares
    
    Grant-Date
    
    Compensation
    
    CompensationYear
    
    Awarded
    
    Price
    
    Expense
    
    Expense2006
    
    
    20,000
    
    
    $
    46.45
    
    
    $
    929,000
    
    
    $
    696,7502007
    
    
    20,000
    
    
    
    58.53
    
    
    
    1,170,600
    
    
    
    877,950
    Pension Plans
   20




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Third Quarter
    
    First Nine MonthsIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Service cost
    
    $
    20
    
    
    $
    19
    
    
    $
    59
    
    
    $
    5,367Interest cost
    
    
    2,634
    
    
    
    2,512
    
    
    
    7,902
    
    
    
    7,866Expected return on plan assets
    
    
    (3,224
    )
    
    
    (3,047
    )
    
    
    (9,674
    )
    
    
    (9,056
    )Amortization of prior service cost
    
    
    6
    
    
    
    6
    
    
    
    18
    
    
    
    18Recognized net actuarial loss
    
    
    623
    
    
    
    962
    
    
    
    1,868
    
    
    
    3,482Net periodic pension cost
    
    $
    59
    
    
    $
    452
    
    
    $
    173
    
    
    $
    7,677
  Postretirement Benefits
   Third Quarter
    
    First Nine MonthsIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Service cost
    
    $
    107
    
    
    $
    83
    
    
    $
    319
    
    
    $
    249Interest cost
    
    
    552
    
    
    
    557
    
    
    
    1,657
    
    
    
    1,671Amortization of unrecognized transitional assets
    
    
    (7
    )
    
    
    (6
    )
    
    
    (19
    )
    
    
    (18
    )Recognized net actuarial loss
    
    
    306
    
    
    
    339
    
    
    
    916
    
    
    
    1,017Amortization of prior service cost
    
    
    (447
    )
    
    
    (446
    )
    
    
    (1,339
    )
    
    
    (1,338
    )Net periodic postretirement benefit cost
    
    $
    511
    
    
    $
    527
    
    
    $
    1,534
    
    
    $
    1,581
 401(k) Savings Plan
  21




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First Nine MonthsIn Millions
    
    2007
    
    
    2006Payments by the Company for concentrate, syrup,
sweetener and other purchases
    
    $
    254.4
    
    
    $
    262.2Marketing funding support payments to the Company
    
    
    28.4
    
    
    
    17.9Payments net of marketing funding support
    
    $
    226.0
    
    
    $
    244.3Payments by the Company for customer marketing programs
    
    $
    35.0
    
    
    $
    35.6Payments by the Company for cold drink equipment parts
    
    
    4.2
    
    
    
    4.8Fountain delivery and equipment repair fees paid to the Company
    
    
    4.7
    
    
    
    6.8Presence marketing funding support provided by
The Coca-Cola Company on the Companys behalf
    
    
    3.2
    
    
    
    4.8Sales of finished products to The Coca-Cola Company
    
    
    24.8
    
    
    
    31.9
  22




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23




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Third Quarter
    
    First Nine MonthsIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Bottle/can sales:Sparkling beverages (including energy products)
    
    $
    255,804
    
    
    $
    252,482
    
    
    $
    760,359
    
    
    $
    762,575Still beverages
    
    
    58,897
    
    
    
    54,617
    
    
    
    158,280
    
    
    
    143,380Total bottle/can sales
    
    
    314,701
    
    
    
    307,099
    
    
    
    918,639
    
    
    
    905,955Other sales:Sales to other Coca-Cola bottlers
    
    
    27,804
    
    
    
    39,463
    
    
    
    101,774
    
    
    
    118,546Postmix and other
    
    
    24,855
    
    
    
    24,064
    
    
    
    74,946
    
    
    
    65,928Total other sales
    
    
    52,659
    
    
    
    63,527
    
    
    
    176,720
    
    
    
    184,474Total net sales
    
    $
    367,360
    
    
    $
    370,626
    
    
    $
    1,095,359
    
    
    $
    1,090,429
  24




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Third Quarter
    
    
    First Nine MonthsIn Thousands (Except Per Share Data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator for basic and diluted net income per
Common Stock and                     Class B Common Stock share:Net income
    
    $
    5,273
    
    
    $
    4,941
    
    
    $
    21,615
    
    
    $
    14,643Less dividends:Common Stock
    
    
    1,661
    
    
    
    1,661
    
    
    
    4,983
    
    
    
    4,982Class B Common Stock
    
    
    620
    
    
    
    615
    
    
    
    1,860
    
    
    
    1,845Total undistributed earnings
    
    $
    2,992
    
    
    $
    2,665
    
    
    $
    14,772
    
    
    $
    7,816Common Stock undistributed earnings  basic
    
    $
    2,179
    
    
    $
    1,945
    
    
    $
    10,757
    
    
    $
    5,704Class B Common Stock undistributed earnings  basic
    
    
    813
    
    
    
    720
    
    
    
    4,015
    
    
    
    2,112Total undistributed earnings  basic
    
    $
    2,992
    
    
    $
    2,665
    
    
    $
    14,772
    
    
    $
    7,816Common Stock undistributed earnings  diluted
    
    $
    2,174
    
    
    $
    1,941
    
    
    $
    10,738
    
    
    $
    5,694Class B Common Stock undistributed earnings  diluted
    
    
    818
    
    
    
    724
    
    
    
    4,034
    
    
    
    2,122Total undistributed earnings  diluted
    
    $
    2,992
    
    
    $
    2,665
    
    
    $
    14,772
    
    
    $
    7,816Numerator for basic net income per Common
Stock share:Dividends on Common Stock
    
    $
    1,661
    
    
    $
    1,661
    
    
    $
    4,983
    
    
    $
    4,982Common Stock undistributed earnings  basic
    
    
    2,179
    
    
    
    1,945
    
    
    
    10,757
    
    
    
    5,704Numerator for basic net income per Common
Stock share
    
    $
    3,840
    
    
    $
    3,606
    
    
    $
    15,740
    
    
    $
    10,686Numerator for basic net income per Class B
Common Stock share:Dividends on Class B Common Stock
    
    $
    620
    
    
    $
    615
    
    
    $
    1,860
    
    
    $
    1,845Class B Common Stock undistributed earnings  basic
    
    
    813
    
    
    
    720
    
    
    
    4,015
    
    
    
    2,112Numerator for basic net income per Class B
Common Stock share
    
    $
    1,433
    
    
    $
    1,335
    
    
    $
    5,875
    
    
    $
    3,957
 25




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Third Quarter
    
    
    First Nine MonthsIn Thousands (Except Per Share Data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator for diluted net income per
Common Stock share:Dividends on Common Stock
    
    $
    1,661
    
    
    $
    1,661
    
    
    $
    4,983
    
    
    $
    4,982Dividends on Class B Common Stock
assumed converted to Common Stock
    
    
    620
    
    
    
    615
    
    
    
    1,860
    
    
    
    1,845Common Stock undistributed earnings  diluted
    
    
    2,992
    
    
    
    2,665
    
    
    
    14,772
    
    
    
    7,816Numerator for diluted net income per
Common Stock share
    
    $
    5,273
    
    
    $
    4,941
    
    
    $
    21,615
    
    
    $
    14,643Numerator for diluted net income per Class B
Common Stock share:Dividends on Class B Common Stock
    
    $
    620
    
    
    $
    615
    
    
    $
    1,860
    
    
    $
    1,845Class B Common Stock undistributed earnings  diluted
    
    
    818
    
    
    
    724
    
    
    
    4,034
    
    
    
    2,122Numerator for diluted net income per Class B
Common Stock share
    
    $
    1,438
    
    
    $
    1,339
    
    
    $
    5,894
    
    
    $
    3,967
 26




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Third Quarter
    
    
    First Nine MonthsIn Thousands (Except Per Share Data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Denominator for basic net income per Common
Stock and                     Class B Common Stock share:Common Stock weighted average shares
outstanding  basic
    
    
    6,644
    
    
    
    6,643
    
    
    
    6,644
    
    
    
    6,643Class B Common Stock weighted average shares
outstanding  basic
    
    
    2,480
    
    
    
    2,460
    
    
    
    2,480
    
    
    
    2,460Denominator 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)
    
    
    9,144
    
    
    
    9,123
    
    
    
    9,140
    
    
    
    9,120Class B Common Stock weighted average shares
outstanding  diluted
    
    
    2,500
    
    
    
    2,480
    
    
    
    2,496
    
    
    
    2,476Basic net income per share:Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.37
    
    
    $
    1.61Class B Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.37
    
    
    $
    1.61Diluted net income per share:Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.36
    
    
    $
    1.61Class B Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    2.36
    
    
    $
    1.60
 
 NOTES TO TABLE(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)
    
    The denominator for diluted net income per share for Common Stock and Class B Common Stock
includes the diluted effect of shares relative to the restricted stock award. 27




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First Nine MonthsIn Thousands
    
    2007
    
    2006Accounts receivable, trade, net
    
    $
    (5,615
    )
    
    $
    3,827Accounts receivable from The Coca-Cola Company
    
    
    (14,853
    )
    
    
    (5,603
    )Accounts receivable, other
    
    
    (1,563
    )
    
    
    (343
    )Inventories
    
    
    4,233
    
    
    
    1,434Prepaid expenses and other current assets
    
    
    (2,564
    )
    
    
    (5,863
    )Accounts payable, trade
    
    
    (5,605
    )
    
    
    (339
    )Accounts payable to The Coca-Cola Company
    
    
    148
    
    
    
    7,347Other accrued liabilities
    
    
    10,932
    
    
    
    7,168Accrued compensation
    
    
    (3,019
    )
    
    
    (3,328
    )Accrued interest payable
    
    
    8,752
    
    
    
    8,868(Increase) decrease in current assets less current liabilities
    
    $
    (9,154
    )
    
    $
    13,168
  Recently Adopted Pronouncements
    29




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Recently Issued Pronouncements
   30




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Severance Pay
    
    RelocationIn Thousands
    
    and Benefits
    
    and Other
    
    TotalBalance at December 31, 2006
    
    $
    
    
    
    $
    
    
    
    $
    Provision
    
    
    1,607
    
    
    
    988
    
    
    
    2,595Cash payments
    
    
    1,607
    
    
    
    988
    
    
    
    2,595Balance at September 30, 2007
    
    $
    
    
    
    $
    
    
    
    $
    
 31




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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 third quarter of 2007 (Q3 2007) and the first
nine months of 2007 (YTD 2007) and changes from the third quarter of 2006 (Q3 2006) and
the first nine months of 2006 (YTD 2006).
    
    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 Q3 2007
and YTD 2007 compared to Q3 2006 and YTD 2006.
    
    Financial Condition  an analysis of the Companys financial condition as of the end of
Q3 2007 compared to year-end 2006 and the end of Q3 2006 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
  32




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Third Quarter
    
    First Nine MonthsIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Bottle/can sales:Sparkling beverages (including energy products)
    
    $
    255,804
    
    
    $
    252,482
    
    
    $
    760,359
    
    
    $
    762,575Still beverages
    
    
    58,897
    
    
    
    54,617
    
    
    
    158,280
    
    
    
    143,380Total bottle/can sales
    
    
    314,701
    
    
    
    307,099
    
    
    
    918,639
    
    
    
    905,955Other sales:Sales to other Coca-Cola bottlers
    
    
    27,804
    
    
    
    39,463
    
    
    
    101,774
    
    
    
    118,546Postmix and other
    
    
    24,855
    
    
    
    24,064
    
    
    
    74,946
    
    
    
    65,928Total other sales
    
    
    52,659
    
    
    
    63,527
    
    
    
    176,720
    
    
    
    184,474Total net sales
    
    $
    367,360
    
    
    $
    370,626
    
    
    $
    1,095,359
    
    
    $
    1,090,429
 Areas of Emphasis
  Revenue Management
  33




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Innovation and Beverage Portfolio Expansion
 ©
   ®
 Distribution Cost Management
   
    
    bulk delivery for large supermarkets, mass merchandisers and club stores;
    
    advance sale delivery for convenience stores, drug stores, small supermarkets and
certain on-premise accounts; and
    
    full service delivery for its full service vending customers.
 ® ®
 34




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Productivity
  35




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##### Table of Contents



Overview of Operations and Financial Condition
  Third Quarter
    
    
    
    
    
    %In Thousands (Except Per Share Data)
    
    2007
    
    2006
    
    Change
    
    ChangeNet sales
    
    $
    367,360
    
    
    $
    370,626
    
    
    $
    (3,266
    )
    
    
    (0.9
    )Gross margin
    
    
    155,212
    
    
    
    157,389
    
    
    
    (2,177
    )
    
    
    (1.4
    )S,D&A expenses
    
    
    134,861
    
    
    
    135,421
    
    
    
    (560
    )
    
    
    (0.4
    )Income from operations
    
    
    20,240
    
    
    
    21,832
    
    
    
    (1,592
    )
    
    
    (7.3
    )Interest expense
    
    
    12,135
    
    
    
    12,745
    
    
    
    (610
    )
    
    
    (4.8
    )Income before income taxes
    
    
    7,995
    
    
    
    8,246
    
    
    
    (251
    )
    
    
    (3.0
    )Net income
    
    
    5,273
    
    
    
    4,941
    
    
    
    332
    
    
    
    6.7Basic net income per share:Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    .04
    
    
    
    7.4Class B Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    .04
    
    
    
    7.4Diluted net income per share:Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    .04
    
    
    
    7.4Class B Common Stock
    
    $
    .58
    
    
    $
    .54
    
    
    $
    .04
    
    
    
    7.4
 First Nine Months
    
    
    
    
    
    %In Thousands (Except Per Share Data)
    
    2007
    
    2006
    
    Change
    
    ChangeNet sales
    
    $
    1,095,359
    
    
    $
    1,090,429
    
    
    $
    4,930
    
    
    
    0.5Gross margin
    
    
    475,993
    
    
    
    471,104
    
    
    
    4,889
    
    
    
    1.0S,D&A expenses
    
    
    402,376
    
    
    
    405,459
    
    
    
    (3,083
    )
    
    
    (0.8
    )Income from operations
    
    
    73,283
    
    
    
    65,219
    
    
    
    8,064
    
    
    
    12.4Interest expense
    
    
    36,647
    
    
    
    37,808
    
    
    
    (1,161
    )
    
    
    (3.1
    )Income before income taxes
    
    
    34,676
    
    
    
    24,865
    
    
    
    9,811
    
    
    
    39.5Net income
    
    
    21,615
    
    
    
    14,643
    
    
    
    6,972
    
    
    
    47.6Basic net income per share:Common Stock
    
    $
    2.37
    
    
    $
    1.61
    
    
    $
    .76
    
    
    
    47.2Class B Common Stock
    
    $
    2.37
    
    
    $
    1.61
    
    
    $
    .76
    
    
    
    47.2Diluted net income per share:Common Stock
    
    $
    2.36
    
    
    $
    1.61
    
    
    $
    .75
    
    
    
    46.6Class B Common Stock
    
    $
    2.36
    
    
    $
    1.60
    
    
    $
    .76
    
    
    
    47.5
  36




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Sept. 30,
    
    Dec. 31,
    
    Oct. 1,In Thousands
    
    2007
    
    2006
    
    2006Debt
    
    $
    691,450
    
    
    $
    691,450
    
    
    $
    691,450Capital lease obligations
    
    
    80,839
    
    
    
    77,506
    
    
    
    77,911Total debt and capital lease obligations
    
    
    772,289
    
    
    
    768,956
    
    
    
    769,361Less: Cash and cash equivalents
    
    
    88,400
    
    
    
    61,823
    
    
    
    57,420Total net debt and capital lease obligations (1)
    
    $
    683,889
    
    
    $
    707,133
    
    
    $
    711,941
 
 (1)
    
    The non-GAAP measure Total net debt and capital lease obligations is used to
provide investors with additional information to more clearly evaluate the Companys capital
structure and financial leverage.  37




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##### Table of Contents



Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements
 Critical Accounting Policies and Estimates
   New Accounting Pronouncements
 Recently Adopted Pronouncements
    38




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Recently Issued Pronouncements
   39




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##### Table of Contents



Results of Operations
 Q3 2007 Compared to Q3 2006 and YTD 2007 Compared to YTD 2006
 Net Sales
   Q3 2007
    
    

Attributable to:(In Millions)$
    7.2
    
    
    2.4% increase in bottle/can sales price per unit primarily
due to higher net pricing for sparkling beverages(6.1
    )
    
    15.4%
decrease in other bottler sales volume primarily due to a decrease in sales of
sparkling beverages (primarily energy drinks)(5.6
    )
    
    16.7% decrease in other bottler sales price per unit primarily due to change in
product mix (energy drinks have higher sales price per unit)1.2
    
    
    6.1% increase in sales price per unit of postmix primarily due to higher sales price
for sparkling beverages1.1
    
    
    Increase in delivery fees to certain customers(1.1
    )
    
    Other$
    (3.3
    )
    
    Total decrease in net sales
 YTD 2007
    
    
    Attributable to:(In Millions)$
    13.4
    
    
    2.4% increase in bottle/can sales price per unit primarily
due to higher net pricing for sparkling beverages offset by
lower net pricing for water(12.6
    )
    
    10.7%
decrease in other bottler sales volume primarily due to a decrease in sales of
sparkling beverages offset partially by an increase in sales of tea products(4.2
    )
    
    3.9% decrease in other bottler sales price per unit primarily due to change in product
mix (energy drinks have higher sales price per unit)3.2
    
    
    5.7% increase in sales price per unit of postmix primarily due to higher sales prices
for sparkling beverages3.1
    
    
    Increase in delivery fees to certain customers2.0
    
    
    Other$
    4.9
    
    
    Total increase in net sales
  40




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##### Table of Contents



Bottle/Can Sales Volume
    
    Bottle/Can Sales VolumeProduct Category
    
    
    Q3 2007
    
    Q3 2006
    
    % Increase (Decrease)Sparkling beverages (including
energy products)
    
    
    83.2
    %
    
    
    84.1
    %
    
    
    (1.4
    )Still beverages
    
    
    16.8
    %
    
    
    15.9
    %
    
    
    5.6Total bottle/can sales volume
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    (0.3
    )
 Bottle/Can Sales Volume
    
    Bottle/Can Sales VolumeProduct Category
    
    
    YTD 2007
    
    YTD 2006
    
    % Increase (Decrease)Sparkling beverages (including
energy products)
    
    
    84.5
    %
    
    
    86.1
    %
    
    
    (2.5
    )Still beverages
    
    
    15.5
    %
    
    
    13.9
    %
    
    
    10.7Total bottle/can sales volume
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    (0.6
    )
 ©
   41




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##### Table of Contents



Cost of Sales
    Q3 2007
    
    

Attributable to:(In Millions)$
    14.0
    
    
    Increase in raw material costs (primarily aluminum
packaging, sweetener and concentrate costs)(5.9
    )
    

15.4%
decrease in other bottler sales volume primarily due to a decrease in sales of
sparkling beverages (primarily energy drinks)(5.1
    )
    

Decrease
in other bottler sales cost per unit primarily due to the change in product mix
(energy drinks have higher cost per unit)(3.5
    )
    
    Increase in marketing funding received primarily from The Coca-Cola Company(2.3
    )
    
    Decrease in manufacturing overhead costs1.7
    
    
    Other$
    (1.1
    )
    
    Total decrease in cost of sales
 YTD 2007
    
    

Attributable to:(In Millions)$
    33.7
    
    
    Increase in raw material costs (primarily aluminum
packaging, sweetener and concentrate costs)(12.2
    )
    

10.7%
decrease in other bottler sales volume primarily due to a decrease in sales of
sparkling beverages offset partially by an increase in sales of tea products(9.9
    )
    
    Increase in marketing funding received primarily from The Coca-Cola Company(8.1
    )
    
    Decrease in manufacturing overhead costs(4.9
    )
    

Decrease
in other bottler sales cost per unit primarily due to the change in product mix
(energy drinks have higher cost per unit)1.4
    
    
    Other$
    
    
    
    Total change in cost of sales
   42




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##### Table of Contents



Gross Margin
   Q3 2007
    
    

Attributable to:(In Millions)$
    (14.0
    )
    
    Increase in raw material costs (primarily aluminum
packaging, sweetener and concentrate costs)7.2
    
    
    2.4% increase in bottle/can sales price per unit primarily due to higher net pricing
for sparkling beverages3.5
    
    
    Increase in marketing funding received primarily from The Coca-Cola Company2.3
    
    
    Decrease in manufacturing overhead costs1.2
    
    
    6.1% increase in sales price per unit of postmix primarily due to higher sales price
for sparkling beverages1.1
    
    
    Increase in delivery fees to certain customers(3.5
    )
    
    Other$
    (2.2
    )
    
    Total decrease in gross margin
 YTD 2007
    
    

Attributable to:(In Millions)$
    (33.7
    )
    
    Increase in raw material costs (primarily aluminum
packaging, sweetener and concentrate costs)13.4
    
    
    2.4% increase in bottle/can sales price per unit primarily due to higher net pricing for
sparkling beverages offset by lower net pricing for water9.9
    
    
    Increase in marketing funding received primarily from The Coca-Cola Company8.1
    
    
    Decrease in manufacturing overhead costs3.2
    
    
    5.7% increase in sales price per unit of postmix primarily due to higher sales price
for sparkling beverages3.1
    
    
    Increase in delivery fees to certain customers0.9
    
    
    Other$
    4.9
    
    
    Total increase in gross margin
  43




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S,D&A Expenses
    Q3 2007
    
    

Attributable to:(In Millions)$
    0.7
    
    
    Increase in employee related expenses primarily related to wage increases0.5
    
    
    Increase in employee benefit costs primarily due to increases in the Companys 401(k) Savings Plan contributions(0.5
    )
    
    Decrease in property and casualty claims and insurance costs0.2
    
    
    Restructuring costs related to the simplification of the Companys operating management
structure and reduction in work force in order to improve operating efficiencies(1.5
    )
    
    Other$
    (0.6
    )
    
    Total decrease in S,D&A expenses
 YTD 2007
    
    

Attributable to:(In Millions)$
    3.6
    
    
    Increase in employee related expenses primarily related to wage increases(2.5
    )
    
    Decrease in employee benefit costs primarily due to the amendment of the principal Company-sponsored pension
plan, net of increases in the Companys 401(k) Savings Plan contributions and health insurance expenses2.6
    
    
    Restructuring costs related to the simplification of the Companys operating management
structure and reduction in work force in order to improve operating efficiencies(2.3
    )
    
    Decrease in property and casualty claims and insurance costs(1.6
    )
    
    Gain on sale of aviation equipment(1.0
    )
    
    Decrease in fuel and other energy costs related to the movement of finished goods from
sales distribution centers to customer locations(1.9
    )
    
    Other$
    (3.1
    )
    
    Total decrease in S,D&A expenses
  44




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Amortization of Intangibles
  Interest Expense
  Minority Interest
  Income Taxes
  45




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##### Table of Contents



Financial Condition
    
    
    An increase in cash and cash equivalents of $26.6 million primarily due to cash flows from
operating activities.
    
    An increase in accounts receivable, trade of $5.6 million primarily due to higher sales in
September 2007 compared to December 2006.
    
    An increase in accounts receivable from The Coca-Cola Company of $14.9 million primarily
due to higher marketing funding support and the timing of payments.
    
    A decrease in accounts payable, trade of $5.6 million primarily due to the timing of
payments.
    
    An increase in other accrued interest payable of $8.8 million primarily due to the timing
of payments.
  
    
    An increase in cash and cash equivalents of $31.0 million primarily due to cash flows from
operating activities.
    
    An increase in accounts receivable, trade of $6.2 million primarily due to higher sales in
September 2007 compared to September 2006.
    
    An increase in accounts receivable from The Coca-Cola Company of $11.4 million primarily
due to higher marketing funding support and the timing of payments.
    
    An increase in inventory of $6.0 million primarily due to the introduction of new products.
    
    An increase in the current portion of debt of $100 million primarily due to the
reclassification from long-term to current of $100 million in debentures which mature in
November 2007.
    
    A decrease in other accrued liabilities of $5.1 million primarily due to the timing of
payments.
  46




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Liquidity and Capital Resources
 Capital Resources
     Cash Sources and Uses
  47




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##### Table of Contents



First Nine MonthsIn Millions
    
    2007
    
    2006Cash SourcesCash provided by operating activities
(excluding income tax payments)
    
    $
    77.8
    
    
    $
    100.6Other
    
    
    7.7
    
    
    
    1.0Total cash sources
    
    $
    85.5
    
    
    $
    101.6Cash UsesCapital expenditures
    
    $
    30.6
    
    
    $
    50.7Investment in plastic bottle manufacturing cooperative
    
    
    2.3
    
    
    
    1.5Payment of debt and capital lease obligations
    
    
    1.8
    
    
    
    7.8Dividends
    
    
    6.8
    
    
    
    6.8Income tax payments
    
    
    17.0
    
    
    
    16.5Other
    
    
    .4
    
    
    
    .5Total cash uses
    
    $
    58.9
    
    
    $
    83.8Increase in cash
    
    $
    26.6
    
    
    $
    17.8
  Investing Activities
   Financing Activities
  48




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##### Table of Contents



Long-Term DebtStandard & Poors
    
    BBBMoodys
    
    Baa2
     49




---



##### Table of Contents



Off-Balance Sheet Arrangements
  Aggregate Contractual Obligations
  Payments Due by PeriodOct. 2007-
    
    Oct. 2008-
    
    Oct. 2010-
    
    AfterIn Thousands
    
    Total
    
    Sept. 2008
    
    Sept. 2010
    
    Sept. 2012
    
    Sept. 2012Contractual obligations:Total debt, net of interest
    
    $
    691,450
    
    
    $
    100,000
    
    
    $
    176,693
    
    
    $
    
    
    
    $
    414,757Capital lease obligations,
net of interest
    
    
    80,839
    
    
    
    2,559
    
    
    
    5,658
    
    
    
    6,471
    
    
    
    66,151Estimated interest on
long-term debt and capital
lease obligations (1)
    
    
    300,897
    
    
    
    39,322
    
    
    
    63,239
    
    
    
    55,382
    
    
    
    142,954Purchase obligations (2)
    
    
    607,615
    
    
    
    91,424
    
    
    
    186,031
    
    
    
    186,077
    
    
    
    144,083Other long-term liabilities (3)
    
    
    93,820
    
    
    
    5,716
    
    
    
    11,027
    
    
    
    10,379
    
    
    
    66,698Operating leases
    
    
    17,061
    
    
    
    3,268
    
    
    
    4,241
    
    
    
    2,442
    
    
    
    7,110Long-term contractual
arrangements (4)
    
    
    23,407
    
    
    
    6,830
    
    
    
    9,983
    
    
    
    4,423
    
    
    
    2,171Interest rate swap agreements (1)
    
    
    6,280
    
    
    
    2,556
    
    
    
    2,410
    
    
    
    1,144
    
    
    
    170Purchase orders (5)
    
    
    27,515
    
    
    
    27,515Total contractual obligations
    
    $
    1,848,884
    
    
    $
    279,190
    
    
    $
    459,282
    
    
    $
    266,318
    
    
    $
    844,094
 (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.
   50




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Hedging Activities
 Interest Rate Hedging
      51




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Fuel Hedging
  52




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Cautionary Information Regarding Forward-Looking Statements
   
    
    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 financial resources to maintain
current operations and provide for its current capital expenditure and working capital
requirements, scheduled debt payments, interest and income tax payments and dividends for
stockholders;
    
    the Companys intention to reduce its financial leverage over time;
    
    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 belief that its liquidity or capital resources will not be restricted by
certain financial covenants in the Companys credit agreements;
    
    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 September 30, 2007;
    
    the Companys belief that there will be no contribution to the principal
Company-sponsored pension plan in 2007;
    
    anticipated cash payments for income taxes will be in the range of $18
million to $21 million in 2007;
    
    anticipated additions to
property, plant and equipment in fiscal 2007 will be in the range of
$45 million to $52 million;
    
    the Companys belief that demand for sugar sparkling beverages will continue to decline;
    
    the Companys beliefs and estimates regarding the impact of the adoption of certain new
accounting pronouncements;
    
    the Companys belief that other parties to certain contractual arrangements will perform
their obligations;
    
    the Companys key priorities which are revenue management, innovation and beverage
portfolio expansion, distribution cost management and productivity;
    
    the Companys belief that postretirement benefit payments are expected to be
approximately $2.7 million in 2007;
    
    the Companys expectation that its overall bottle/can revenue will be primarily
dependent upon continued growth in diet sparkling products, sports drinks, bottled water,
tea and energy products, the introduction of new products and the pricing of brands and
packages within channels;
    
    the Companys belief that total restructuring expense will be in the range of $2.6
million to $2.8 million and that all of the cash expenditures will occur prior to 2007
fiscal year end;
 53




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##### Table of Contents




    
    the Companys beliefs that the growth of Company-owned or exclusive licensed brands
appear very promising and the cost of developing, marketing and distributing these brands
may be significant;
    
    the Companys belief
that the implementation of its new route delivery system will
continue over the next several years and should generate significant savings and more
effective delivery of a greater number of products;
    
    the Companys belief there will not be any material impact on its liquidity and capital
resources due to the resolution of income tax positions reserved for as uncertain;
    
    the Companys belief that the impact of increasing costs for aluminum cans and high
fructose corn syrup is anticipated to increase cost of sales during
the remainder of
2007; and
    
    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.
   54




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Item 3. Quantitative and Qualitative Disclosures About Market Risk.
     
 Item 4. Controls and Procedures.
   55




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##### Table of Contents



Item 1A. Risk Factors.
  56




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##### Table of Contents



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.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).
 57




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##### Table of Contents



COCA-COLA BOTTLING CO. CONSOLIDATED(REGISTRANT)Date: November 8, 2007
    
    
    
    By:
    
    /s/ Steven D. Westphal     

Steven D. WestphalPrincipal Financial Officer of the RegistrantandSenior Vice President and Chief Financial Officer
 58