##### Table of Contents

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SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549



FORM 10-Q



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



For the quarterly period ended October 2, 2005



Commission File Number 0-9286



COCA-COLA BOTTLING CO. CONSOLIDATED

(Exact name of registrant as specified in its charter)



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



4100 Coca-Cola
Plaza, Charlotte, North Carolina 28211

(Address of principal executive offices) (Zip Code)



(704) 557-4400

(Registrants telephone number, including area code)



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



Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes  x    No ̈



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



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



|                                      |  |                                
|------------------------------------- |  | -------------------------------
|Class                                 |  | Outstanding at October 31, 2005
|Common Stock, $1.00 Par Value         |  | 6,643,077                      
|Class B Common Stock, $1.00 Par Value |  | 2,440,252                      



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##### Table of Contents

COCA-COLA BOTTLING CO. CONSOLIDATED

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED OCTOBER 2, 2005



INDEX



|                               |  |                                                                                       |  |     
|------------------------------ |  | ------------------------------------------------------------------------------------- |  | ----
|                               |  |                                                                                       |  | Page
|PART I  FINANCIAL INFORMATION
|                               |  |                                                                                      
|Item 1.                        |  | Financial Statements (Unaudited)                                                      |  |     
|                               |  |                                                                                      
|                               |  | Consolidated Balance Sheets                                                           |  | 3   
|                               |  |                                                                                      
|                               |  | Consolidated Statements of Operations                                                 |  | 5   
|                               |  |                                                                                      
|                               |  | Consolidated Statements of Changes in Stockholders Equity                            |  | 6   
|                               |  |                                                                                      
|                               |  | Consolidated Statements of Cash Flows                                                 |  | 7   
|                               |  |                                                                                      
|                               |  | Notes to Consolidated Financial Statements                                            |  | 8   
|                               |  |                                                                                      
|Item 2.                        |  | Managements Discussion and Analysis of Financial Condition and Results of Operations |  | 26  
|                               |  |                                                                                      
|Item 3.                        |  | Quantitative and Qualitative Disclosures About Market Risk                            |  | 47  
|                               |  |                                                                                      
|Item 4.                        |  | Controls and Procedures                                                               |  | 47  
|                              
|PART II  OTHER INFORMATION   
|                               |  |                                                                                      
|Item 6.                        |  | Exhibits                                                                              |  | 48  



2



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##### Table of Contents

PART I - FINANCIAL INFORMATION



|Item 1. | Financial Statements
|------- | --------------------



Coca-Cola Bottling Co. Consolidated

CONSOLIDATED BALANCE SHEETS

In Thousands (Except Share Data)



|                                                                                             |  |                        |           |              |   |                          |  |   |          
|-------------------------------------------------------------------------------------------- |  | ---------------------- | --------- | ------------ | - | ------------------------ |  | - | ---------
|                                                                                             |  | Unaudited Oct. 2, 2005 |           | Jan. 2, 2005 |   | Unaudited Sept. 26, 2004
|ASSETS                                                                                       |  |                        |           |              |   |                          |  |   |          
|Current Assets:                                                                              |  |                        |           |              |   |                          |  |   |          
|Cash                                                                                         |  | $                      | 35,838    |              | $ | 8,885                    |  | $ | 7,895    
|Accounts receivable, trade, less allowance for doubtful accountsof $1,364, $1,678 and $1,964 |  |                        | 99,759    |              |   | 82,036                   |  |   | 87,876   
|Accounts receivable from The Coca-Cola Company                                               |  |                        | 9,823     |              |   | 7,049                    |  |   | 7,412    
|Accounts receivable, other                                                                   |  |                        | 9,344     |              |   | 9,637                    |  |   | 7,989    
|Inventories                                                                                  |  |                        | 56,878    |              |   | 48,886                   |  |   | 51,725   
|Prepaid expenses and other current assets                                                    |  |                        | 10,350    |              |   | 7,935                    |  |   | 7,948    
|                                                                                             |  |                        |           |              |   |                          |  |   |          
|Total current assets                                                                         |  |                        | 221,992   |              |   | 164,428                  |  |   | 170,845  
|                                                                                             |  |                        |           |              |   |                          |  |   |          
|Property, plant and equipment, net                                                           |  |                        | 392,266   |              |   | 418,853                  |  |   | 421,883  
|Leased property under capital leases, net                                                    |  |                        | 74,148    |              |   | 76,857                   |  |   | 77,760   
|Other assets                                                                                 |  |                        | 39,590    |              |   | 25,270                   |  |   | 26,703   
|Franchise rights, net                                                                        |  |                        | 520,672   |              |   | 520,672                  |  |   | 520,672  
|Goodwill, net                                                                                |  |                        | 102,049   |              |   | 102,049                  |  |   | 102,049  
|Other identifiable intangible assets, net                                                    |  |                        | 5,211     |              |   | 5,934                    |  |   | 6,695    
|                                                                                             |  |                        |           |              |   |                          |  |   |          
|Total                                                                                        |  | $                      | 1,355,928 |              | $ | 1,314,063                |  | $ | 1,326,607
|                                                                                             |  |                        |           |              |   |                          |  |   |          



See Accompanying Notes
to Consolidated Financial Statements



3



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED BALANCE SHEETS

In Thousands (Except Share Data)



|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  
|--------------------------------------------------- |  | -------------------- | --------- | - | ----------- | - | --------- | ---------------------- |  | - | --------- | -
|                                                    |  | UnauditedOct. 2,2005 |           |   | Jan. 2,2005 |   |           | UnauditedSept. 26,2004 | 
|LIABILITIES AND STOCKHOLDERS EQUITY                |  |                      |           |   |             |   |           |                        |  |   |           |  
|Current Liabilities:                                |  |                      |           |   |             |   |           |                        |  |   |           |  
|Portion of long-term debt payable within one year   |  | $                    | 39        |   |             | $ | 8,000     |                        |  | $ | 39        |  
|Current portion of obligations under capital leases |  |                      | 1,759     |   |             |   | 1,826     |                        |  |   | 1,797     |  
|Accounts payable, trade                             |  |                      | 43,176    |   |             |   | 30,989    |                        |  |   | 39,920    |  
|Accounts payable to The Coca-Cola Company           |  |                      | 22,121    |   |             |   | 18,223    |                        |  |   | 21,972    |  
|Accrued compensation                                |  |                      | 15,324    |   |             |   | 17,186    |                        |  |   | 17,239    |  
|Other accrued liabilities                           |  |                      | 59,618    |   |             |   | 50,409    |                        |  |   | 61,837    |  
|Accrued interest payable                            |  |                      | 16,839    |   |             |   | 11,864    |                        |  |   | 16,739    |  
|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  
|Total current liabilities                           |  |                      | 158,876   |   |             |   | 138,497   |                        |  |   | 159,543   |  
|Deferred income taxes                               |  |                      | 174,577   |   |             |   | 165,578   |                        |  |   | 161,029   |  
|Pension and postretirement benefit obligations      |  |                      | 42,985    |   |             |   | 42,361    |                        |  |   | 39,037    |  
|Other liabilities                                   |  |                      | 79,933    |   |             |   | 85,260    |                        |  |   | 79,684    |  
|Obligations under capital leases                    |  |                      | 77,911    |   |             |   | 79,202    |                        |  |   | 79,643    |  
|Long-term debt                                      |  |                      | 700,000   |   |             |   | 700,039   |                        |  |   | 703,039   |  
|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  
|Total liabilities                                   |  |                      | 1,234,282 |   |             |   | 1,210,937 |                        |  |   | 1,221,975 |  
|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  
|Commitments and Contingencies (Note 14)             |  |                      |           |   |             |   |           |                        |  |   |           |  
|Minority interest                                   |  |                      | 41,849    |   |             |   | 38,687    |                        |  |   | 38,315    |  
|Stockholders Equity:                               |  |                      |           |   |             |   |           |                        |  |   |           |  
|Common Stock, $1.00 par value:                      |  |                      |           |   |             |   |           |                        |  |   |           |  
|Authorized - 30,000,000 shares;                     |  |                      |           |   |             |   |           |                        |  |   |           |  
|Issued - 9,705,451, 9,704,951 and 9,704,951 shares  |  |                      | 9,705     |   |             |   | 9,704     |                        |  |   | 9,704     |  
|Class B Common Stock, $1.00 par value:              |  |                      |           |   |             |   |           |                        |  |   |           |  
|Authorized - 10,000,000 shares;                     |  |                      |           |   |             |   |           |                        |  |   |           |  
|Issued - 3,068,366, 3,048,866 and 3,048,866 shares  |  |                      | 3,068     |   |             |   | 3,049     |                        |  |   | 3,049     |  
|Capital in excess of par value                      |  |                      | 99,376    |   |             |   | 98,255    |                        |  |   | 98,255    |  
|Retained earnings                                   |  |                      | 54,705    |   |             |   | 40,488    |                        |  |   | 40,431    |  
|Accumulated other comprehensive loss                |  |                      | (25,803   | ) |             |   | (25,803   | )                      |  |   | (23,868   | )
|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  
|                                                    |  |                      | 141,051   |   |             |   | 125,693   |                        |  |   | 127,571   |  
|Less-Treasury stock, at cost:                       |  |                      |           |   |             |   |           |                        |  |   |           |  
|Common - 3,062,374 shares                           |  |                      | 60,845    |   |             |   | 60,845    |                        |  |   | 60,845    |  
|Class B Common - 628,114 shares                     |  |                      | 409       |   |             |   | 409       |                        |  |   | 409       |  
|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  
|Total stockholders equity                          |  |                      | 79,797    |   |             |   | 64,439    |                        |  |   | 66,317    |  
|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  
|Total                                               |  | $                    | 1,355,928 |   |             | $ | 1,314,063 |                        |  | $ | 1,326,607 |  
|                                                    |  |                      |           |   |             |   |           |                        |  |   |           |  



See Accompanying Notes
to Consolidated Financial Statements



4



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)

In Thousands (Except Per Share Data)



|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|--------------------------------------------------------------------------------- |  | ------------- | ------- | ----------------- | - | ------- |  | ---- | --------- |  | - | -------
|                                                                                  |  | Third Quarter |         | First Nine Months
|                                                                                  |  | 2005          |         | 2004              |   | 2005    |  | 2004
|Net sales                                                                         |  | $             | 358,414 |                   | $ | 321,336 |  | $    | 1,022,451 |  | $ | 937,774
|Cost of sales, excluding depreciation expense shown below                         |  |               | 197,229 |                   |   | 169,938 |  |      | 554,772   |  |   | 485,174
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|Gross margin                                                                      |  |               | 161,185 |                   |   | 151,398 |  |      | 467,679   |  |   | 452,600
|Selling, delivery and administrative expenses, excluding depreciation shown below |  |               | 115,927 |                   |   | 109,646 |  |      | 340,280   |  |   | 328,140
|Depreciation expense                                                              |  |               | 17,010  |                   |   | 17,795  |  |      | 51,176    |  |   | 53,108 
|Amortization of intangibles                                                       |  |               | 157     |                   |   | 766     |  |      | 723       |  |   | 2,356  
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|Income from operations                                                            |  |               | 28,091  |                   |   | 23,191  |  |      | 75,500    |  |   | 68,996 
|Interest expense                                                                  |  |               | 12,005  |                   |   | 10,838  |  |      | 36,396    |  |   | 31,822 
|Minority interest                                                                 |  |               | 1,201   |                   |   | 1,346   |  |      | 3,162     |  |   | 3,444  
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|Income before income taxes                                                        |  |               | 14,885  |                   |   | 11,007  |  |      | 35,942    |  |   | 33,730 
|Income taxes                                                                      |  |               | 6,093   |                   |   | 4,899   |  |      | 14,912    |  |   | 14,204 
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|Net income                                                                        |  | $             | 8,792   |                   | $ | 6,108   |  | $    | 21,030    |  | $ | 19,526 
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|Basic net income per share                                                        |  | $             | .97     |                   | $ | .67     |  | $    | 2.32      |  | $ | 2.15   
|Diluted net income per share                                                      |  | $             | .97     |                   | $ | .67     |  | $    | 2.32      |  | $ | 2.15   
|                                                                                  |  |               |         |                  
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|Weighted average number of common shares outstanding                              |  |               | 9,083   |                   |   | 9,063   |  |      | 9,083     |  |   | 9,063  
|Weighted average number of common shares outstanding-assuming dilution            |  |               | 9,083   |                   |   | 9,063   |  |      | 9,083     |  |   | 9,063  
|                                                                                  |  |               |         |                  
|                                                                                  |  |               |         |                   |   |         |  |      |           |  |   |        
|                                                                                  |  |               |         |                  
|Cash dividends per share                                                          |  |               |         |                   |   |         |  |      |           |  |   |        
|Common Stock                                                                      |  | $             | .25     |                   | $ | .25     |  | $    | .75       |  | $ | .75    
|Class B Common Stock                                                              |  | $             | .25     |                   | $ | .25     |  | $    | .75       |  | $ | .75    



See Accompanying Notes
to Consolidated Financial Statements



5



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS EQUITY (UNAUDITED)

In Thousands



|                                                     |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|---------------------------------------------------- |  | ----------- | ----- | ------------------ | - | ----- | ---------------------------- |  | ---------------- | ------ |  | --------------------------------- | ------ | - | ------------- | - | ------- | ----- |  | - | ------- | - |  | - | ------ | -
|                                                     |  | CommonStock |       | Class BCommonStock |   |       | Capital inExcess ofPar Value |  | RetainedEarnings |        |  | AccumulatedOtherComprehensiveLoss |        |   | TreasuryStock |   |         | Total | 
|Balance on Dec. 28, 2003                             |  | $           | 9,704 |                    | $ | 3,029 |                              |  | $                | 97,220 |  | $                                 | 27,703 |   |               | $ | (23,930 | )     |  | $ | (61,254 | ) |  | $ | 52,472 |  
|Comprehensive income:                                |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Net income                                           |  |             |       |                    |   |       |                              |  |                  |        |  |                                   | 19,526 |   |               |   |         |       |  |   |         |   |  |   | 19,526 |  
|Net gain on derivatives, net of tax                  |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   | 62      |       |  |   |         |   |  |   | 62     |  
|                                                     |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Total comprehensive income                           |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   | 19,588 |  
|Cash dividends paid                                  |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Common ($.75 per share)                              |  |             |       |                    |   |       |                              |  |                  |        |  |                                   | (4,982 | ) |               |   |         |       |  |   |         |   |  |   | (4,982 | )
|Class B Common ($.75 per share)                      |  |             |       |                    |   |       |                              |  |                  |        |  |                                   | (1,816 | ) |               |   |         |       |  |   |         |   |  |   | (1,816 | )
|Issuance of 20,000 shares ofClass B Common Stock     |  |             |       |                    |   | 20    |                              |  |                  | 1,035  |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   | 1,055  |  
|                                                     |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Balance on Sept. 26, 2004                            |  | $           | 9,704 |                    | $ | 3,049 |                              |  | $                | 98,255 |  | $                                 | 40,431 |   |               | $ | (23,868 | )     |  | $ | (61,254 | ) |  | $ | 66,317 |  
|                                                     |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Balance on Jan. 2, 2005                              |  | $           | 9,704 |                    | $ | 3,049 |                              |  | $                | 98,255 |  | $                                 | 40,488 |   |               | $ | (25,803 | )     |  | $ | (61,254 | ) |  | $ | 64,439 |  
|Comprehensive income:                                |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Net income                                           |  |             |       |                    |   |       |                              |  |                  |        |  |                                   | 21,030 |   |               |   |         |       |  |   |         |   |  |   | 21,030 |  
|                                                     |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Total comprehensive income                           |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   | 21,030 |  
|Cash dividends paid                                  |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Common ($.75 per share)                              |  |             |       |                    |   |       |                              |  |                  |        |  |                                   | (4,982 | ) |               |   |         |       |  |   |         |   |  |   | (4,982 | )
|Class B Common ($.75 per share)                      |  |             |       |                    |   |       |                              |  |                  |        |  |                                   | (1,831 | ) |               |   |         |       |  |   |         |   |  |   | (1,831 | )
|Issuance of 20,000 shares ofClass B Common Stock     |  |             |       |                    |   | 20    |                              |  |                  | 1,121  |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   | 1,141  |  
|Conversion of Class B Common Stock into Common Stock |  |             | 1     |                    |   | (1    | )                            |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |       |  
|                                                     |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  
|Balance on Oct. 2, 2005                              |  | $           | 9,705 |                    | $ | 3,068 |                              |  | $                | 99,376 |  | $                                 | 54,705 |   |               | $ | (25,803 | )     |  | $ | (61,254 | ) |  | $ | 79,797 |  
|                                                     |  |             |       |                    |   |       |                              |  |                  |        |  |                                   |        |   |               |   |         |       |  |   |         |   |  |   |        |  



See Accompanying Notes
to Consolidated Financial Statements



6



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

In Thousands



|                                                                                  |  |                   |         |   |      |   |          |  
|--------------------------------------------------------------------------------- |  | ----------------- | ------- | - | ---- | - | -------- | -
|                                                                                  |  | First Nine Months |        
|                                                                                  |  | 2005              |         |   | 2004 |  
|Cash Flows from Operating Activities                                              |  |                   |         |   |      |   |          |  
|Net income                                                                        |  | $                 | 21,030  |   |      | $ | 19,526   |  
|Adjustments to reconcile net income to net cash provided by operating activities: |  |                   |         |   |      |   |          |  
|Depreciation expense                                                              |  |                   | 51,176  |   |      |   | 53,108   |  
|Amortization of intangibles                                                       |  |                   | 723     |   |      |   | 2,356    |  
|Deferred income taxes                                                             |  |                   | 10,214  |   |      |   | 13,833   |  
|Losses on sale of property, plant and equipment                                   |  |                   | 807     |   |      |   | 736      |  
|Amortization of debt costs                                                        |  |                   | 1,296   |   |      |   | 836      |  
|Amortization of deferred gain related to terminated interest rate agreements      |  |                   | (1,259  | ) |      |   | (1,526   | )
|Minority interest                                                                 |  |                   | 3,162   |   |      |   | 3,444    |  
|Decrease in current assets less current liabilities                               |  |                   | 2,000   |   |      |   | 6,637    |  
|(Increase) decrease in other noncurrent assets                                    |  |                   | (1,180  | ) |      |   | 100      |  
|Increase (decrease) in other noncurrent liabilities                               |  |                   | (6,982  | ) |      |   | 7,209    |  
|Other                                                                             |  |                   | (466    | ) |      |   | 29       |  
|                                                                                  |  |                   |         |   |      |   |          |  
|Total adjustments                                                                 |  |                   | 59,491  |   |      |   | 86,762   |  
|                                                                                  |  |                   |         |   |      |   |          |  
|Net cash provided by operating activities                                         |  |                   | 80,521  |   |      |   | 106,288  |  
|                                                                                  |  |                   |         |   |      |   |          |  
|Cash Flows from Financing Activities                                              |  |                   |         |   |      |   |          |  
|Payment of long-term debt                                                         |  |                   |         |   |      |   | (85,000  | )
|Payment of current portion of long-term debt                                      |  |                   |         |   |      |   | (39      | )
|Repayment of lines of credit, net                                                 |  |                   | (8,000  | ) |      |   | (14,600  | )
|Cash dividends paid                                                               |  |                   | (6,813  | ) |      |   | (6,798   | )
|Principal payments on capital lease obligations                                   |  |                   | (1,358  | ) |      |   | (1,430   | )
|Premium on exchange of long-term debt                                             |  |                   | (15,554 | ) |      |   |          |  
|Other                                                                             |  |                   | 375     |   |      |   | (829     | )
|                                                                                  |  |                   |         |   |      |   |          |  
|Net cash used in financing activities                                             |  |                   | (31,350 | ) |      |   | (108,696 | )
|                                                                                  |  |                   |         |   |      |   |          |  
|Cash Flows from Investing Activities                                              |  |                   |         |   |      |   |          |  
|Additions to property, plant and equipment                                        |  |                   | (25,532 | ) |      |   | (38,630  | )
|Proceeds from the sale of property, plant and equipment                           |  |                   | 3,314   |   |      |   | 1,840    |  
|Proceeds from the redemption of life insurance policies                           |  |                   |         |   |      |   | 29,049   |  
|                                                                                  |  |                   |         |   |      |   |          |  
|Net cash used in investing activities                                             |  |                   | (22,218 | ) |      |   | (7,741   | )
|                                                                                  |  |                   |         |   |      |   |          |  
|Net increase (decrease) in cash                                                   |  |                   | 26,953  |   |      |   | (10,149  | )
|Cash at beginning of period                                                       |  |                   | 8,885   |   |      |   | 18,044   |  
|                                                                                  |  |                   |         |   |      |   |          |  
|Cash at end of period                                                             |  | $                 | 35,838  |   |      | $ | 7,895    |  
|                                                                                  |  |                   |         |   |      |   |          |  
|Significant non-cash investing and financing activities:                          |  |                   |         |   |      |   |          |  
|Issuance of Class B Common Stock related to stock award                           |  | $                 | 1,141   |   |      | $ | 1,055    |  
|Capital lease obligations incurred                                                |  |                   |         |   |      |   | 37,307   |  
|Exchange of long-term debt                                                        |  |                   | 164,757 |   |      |   |          |  



See Accompanying Notes
to Consolidated Financial Statements



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



1. Accounting Policies



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



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



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



The accounting policies followed in the presentation of interim financial results are
consistent with those followed on an annual basis. These policies are presented in Note 1 to the consolidated financial statements included in the Companys Annual Report on Form

10-K for the year ended January 2, 2005 filed with the Securities and Exchange Commission.



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



2. Seasonality of Operations



Operating results for the third quarter and the first nine months of 2005 are not indicative of results that may be expected for the fiscal
year ending January 1, 2006 because of business seasonality. Business seasonality results primarily from higher unit sales of the Companys products in the second and third quarters versus the first and fourth quarters of the fiscal year.
Fixed costs, such as depreciation, amortization and interest expense, are not significantly impacted by business seasonality.



3. Piedmont Coca-Cola Bottling Partnership



On July 2, 1993, the Company and The Coca-Cola Company formed Piedmont Coca-Cola Bottling Partnership (Piedmont) to distribute and market nonalcoholic
beverages primarily in portions of North Carolina and South Carolina. The Company provides a portion of the finished products to Piedmont at cost and receives a fee for managing the business of Piedmont pursuant to a management agreement.



Minority interest as of October 2, 2005, January 2, 2005 and
September 26, 2004 represents the portion of Piedmont owned by The Coca-Cola Company, which was 22.7% for all periods presented.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



4. Inventories



Inventories were summarized as follows:



|                                          |  |              |        |              |   |                |  |   |       
|----------------------------------------- |  | ------------ | ------ | ------------ | - | -------------- |  | - | ------
|In Thousands                              |  | Oct. 2, 2005 |        | Jan. 2, 2005 |   | Sept. 26, 2004
|Finished products                         |  | $            | 32,693 |              | $ | 25,026         |  | $ | 30,014
|Manufacturing materials                   |  |              | 8,935  |              |   | 10,148         |  |   | 7,360 
|Plastic shells, plastic pallets and other |  |              | 15,250 |              |   | 13,712         |  |   | 14,351
|                                          |  |              |        |              |   |                |  |   |       
|Total inventories                         |  | $            | 56,878 |              | $ | 48,886         |  | $ | 51,725
|                                          |  |              |        |              |   |                |  |   |       



5.
Property, Plant and Equipment



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



|                                                |  |              |         |              |   |                |  |                        |         |  |            
|----------------------------------------------- |  | ------------ | ------- | ------------ | - | -------------- |  | ---------------------- | ------- |  | -----------
|In Thousands                                    |  | Oct. 2, 2005 |         | Jan. 2, 2005 |   | Sept. 26, 2004 |  | Estimated Useful Lives
|Land                                            |  | $            | 12,737  |              | $ | 12,822         |  | $                      | 12,702  |  |            
|Buildings                                       |  |              | 111,517 |              |   | 114,176        |  |                        | 113,639 |  | 10-50 years
|Machinery and equipment                         |  |              | 96,115  |              |   | 92,307         |  |                        | 91,764  |  | 5-20 years 
|Transportation equipment                        |  |              | 167,105 |              |   | 163,707        |  |                        | 164,261 |  | 4-13 years 
|Furniture and fixtures                          |  |              | 44,197  |              |   | 39,228         |  |                        | 41,816  |  | 4-10 years 
|Cold drink dispensing equipment                 |  |              | 348,174 |              |   | 347,971        |  |                        | 349,289 |  | 6-13 years 
|Leasehold and land improvements                 |  |              | 55,671  |              |   | 55,210         |  |                        | 54,453  |  | 5-20 years 
|Software for internal use                       |  |              | 31,491  |              |   | 28,607         |  |                        | 35,212  |  | 3-10 years 
|Construction in progress                        |  |              | 4,362   |              |   | 5,667          |  |                        | 5,949   |  |            
|                                                |  |              |         |              |   |                |  |                        |         |  |            
|Total property, plant and equipment, at cost    |  |              | 871,369 |              |   | 859,695        |  |                        | 869,085 |  |            
|Less: Accumulated depreciation and amortization |  |              | 479,103 |              |   | 440,842        |  |                        | 447,202 |  |            
|                                                |  |              |         |              |   |                |  |                        |         |  |            
|Property, plant and equipment, net              |  | $            | 392,266 |              | $ | 418,853        |  | $                      | 421,883 |  |            
|                                                |  |              |         |              |   |                |  |                        |         |  |            



6.
Leased Property Under Capital Leases



Leased property under capital leases was
summarized as follows:



|                                          |  |             |        |             |   |               |  |                       |        |  |           
|----------------------------------------- |  | ----------- | ------ | ----------- | - | ------------- |  | --------------------- | ------ |  | ----------
|In Thousands                              |  | Oct. 2,2005 |        | Jan. 2,2005 |   | Sept. 26,2004 |  | EstimatedUseful Lives
|Leased property under capital leases      |  | $           | 84,035 |             | $ | 84,035        |  | $                     | 84,035 |  | 3-29 years
|Less: Accumulated amortization            |  |             | 9,887  |             |   | 7,178         |  |                       | 6,275  |  |           
|                                          |  |             |        |             |   |               |  |                       |        |  |           
|Leased property under capital leases, net |  | $           | 74,148 |             | $ | 76,857        |  | $                     | 77,760 |  |           
|                                          |  |             |        |             |   |               |  |                       |        |  |           



The majority of the leased property
under capital leases is real estate and is provided by related parties as described in Note 19 to the consolidated financial statements.



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



7. Franchise Rights and Goodwill



Franchise rights and goodwill were summarized as follows:



|                                   |  |              |         |              |   |                |  |   |        
|---------------------------------- |  | ------------ | ------- | ------------ | - | -------------- |  | - | -------
|In Thousands                       |  | Oct. 2, 2005 |         | Jan. 2, 2005 |   | Sept. 26, 2004
|Franchise rights                   |  | $            | 677,769 |              | $ | 677,769        |  | $ | 677,769
|Goodwill                           |  |              | 155,487 |              |   | 155,487        |  |   | 155,487
|                                   |  |              |         |              |   |                |  |   |        
|Franchise rights and goodwill      |  |              | 833,256 |              |   | 833,256        |  |   | 833,256
|Less: Accumulated amortization     |  |              | 210,535 |              |   | 210,535        |  |   | 210,535
|                                   |  |              |         |              |   |                |  |   |        
|Franchise rights and goodwill, net |  | $            | 622,721 |              | $ | 622,721        |  | $ | 622,721
|                                   |  |              |         |              |   |                |  |   |        



The Company performed its annual
impairment test of franchise rights and goodwill during the third quarter of 2005. As of October 2, 2005, there was no impairment of the carrying values of franchise rights and goodwill.



8. Other Identifiable Intangible Assets



Other identifiable intangible assets were summarized as follows:



|                                          |  |              |        |              |   |                |  |                        |        |  |           
|----------------------------------------- |  | ------------ | ------ | ------------ | - | -------------- |  | ---------------------- | ------ |  | ----------
|In Thousands                              |  | Oct. 2, 2005 |        | Jan. 2, 2005 |   | Sept. 26, 2004 |  | Estimated Useful Lives
|Customer relationships                    |  | $            | 61,102 |              | $ | 61,102         |  | $                      | 61,102 |  | 3-20 years
|Less: Accumulated amortization            |  |              | 55,891 |              |   | 55,168         |  |                        | 54,407 |  |           
|                                          |  |              |        |              |   |                |  |                        |        |  |           
|Other identifiable intangible assets, net |  | $            | 5,211  |              | $ | 5,934          |  | $                      | 6,695  |  |           
|                                          |  |              |        |              |   |                |  |                        |        |  |           



9.
Other Accrued Liabilities



Other accrued liabilities were summarized as
follows:



|                                        |  |              |        |              |   |                |  |   |       
|--------------------------------------- |  | ------------ | ------ | ------------ | - | -------------- |  | - | ------
|In Thousands                            |  | Oct. 2, 2005 |        | Jan. 2, 2005 |   | Sept. 26, 2004
|Accrued marketing costs                 |  | $            | 6,655  |              | $ | 9,289          |  | $ | 9,345 
|Accrued insurance costs                 |  |              | 10,311 |              |   | 11,129         |  |   | 12,066
|Accrued taxes (other than income taxes) |  |              | 3,336  |              |   | 1,670          |  |   | 3,308 
|Employee benefit plan accruals          |  |              | 11,432 |              |   | 9,009          |  |   | 10,901
|All other accrued expenses              |  |              | 27,884 |              |   | 19,312         |  |   | 26,217
|                                        |  |              |        |              |   |                |  |   |       
|Total other accrued liabilities         |  | $            | 59,618 |              | $ | 50,409         |  | $ | 61,837
|                                        |  |              |        |              |   |                |  |   |       



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



10. Long-Term Debt



Long-term debt was summarized as follows:



|                                                        |  |          |  |              |   |    |               |  |             |         |             |    |               |  |   |        
|------------------------------------------------------- |  | -------- |  | ------------ | - | -- | ------------- |  | ----------- | ------- | ----------- | -- | ------------- |  | - | -------
|In Thousands                                            |  | Maturity |  | InterestRate |   |    | Interest Paid |  | Oct. 2,2005 |         | Jan. 2,2005 |    | Sept. 26,2004
|Lines of Credit                                         |  |          |  |              |   |    | Varies        |  |             |         |             | $  | 8,000         |  | $ | 3,000  
|Debentures                                              |  | 2007     |  | 6.85         | % |    | Semi-annually |  | $           | 100,000 |             |    | 100,000       |  |   | 100,000
|Debentures                                              |  | 2009     |  | 7.20         | % |    | Semi-annually |  |             | 57,440  |             |    | 100,000       |  |   | 100,000
|Debentures                                              |  | 2009     |  | 6.375        | % |    | Semi-annually |  |             | 127,803 |             |    | 250,000       |  |   | 250,000
|Senior Notes                                            |  | 2012     |  | 5.00         | % |    | Semi-annually |  |             | 150,000 |             |    | 150,000       |  |   | 150,000
|Senior Notes                                            |  | 2015     |  | 5.30         | % |    | Semi-annually |  |             | 100,000 |             |    | 100,000       |  |   | 100,000
|Senior Notes                                            |  | 2016     |  | 5.00         | % |    | Semi-annually |  |             | 164,757 |             |    |               |  |   |        
|Other Notes Payable                                     |  | 2006     |  | 5.75         | % |    | Quarterly     |  |             | 39      |             |    | 39            |  |   | 78     
|                                                        |  |          |  |              |   |    |               |  |             |         |             |    |               |  |   |        
|                                                        |  |          |  |              |   |    |               |  |             | 700,039 |             |    | 708,039       |  |   | 703,078
|Less: Portion of long-term debt payable within one year |  |          |  |              |   | 39 |               |  | 8,000       |         |             | 39
|                                                        |  |          |  |              |   |    |               |  |             |         |             |    |               |  |   |        
|Long-term debt                                          |  |          |  |              |   |    |               |  | $           | 700,000 |             | $  | 700,039       |  | $ | 703,039
|                                                        |  |          |  |              |   |    |               |  |             |         |             |    |               |  |   |        



In June 2005, the Company issued
$164.8 million of new 5.00% senior notes due 2016 in exchange for $122.2 million of its outstanding 6.375% debentures due 2009 and $42.6 million of its outstanding 7.20% debentures due 2009. The exchange was conducted as a private placement to
holders of the existing debentures that were qualified institutional buyers within the meaning of Rule 144A of the Securities Act of 1933. As part of the exchange, the Company paid a premium of $15.6 million to holders participating in
the exchange. The transaction was accounted for as an exchange of debt, and the $15.6 million premium will be amortized over the life of the new notes. The Company incurred financing transaction costs of $1.3 million related to the exchange of debt
which were included in interest expense during the second quarter of 2005. In August 2005, the Company successfully completed a registered exchange offer in which all of the previously issued private notes were exchanged for substantially identical
registered notes.



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



10. Long-Term Debt



On April 7, 2005, the Company entered into a new five-year $100 million revolving credit facility replacing the
existing $125 million facility that was scheduled to expire in December 2005. On October 2, 2005, there were no amounts outstanding under this facility. The $100 million facility matures in April 2010. The new facility includes an option to
extend the term for an additional year at the discretion of the participating banks. The new revolving credit facility bears interest at a floating base rate or a floating rate of LIBOR plus an interest rate spread of .375%. In addition, there is a
facility fee of .125% required for this revolving credit facility. Both the interest rate spread and the facility fee are determined from a commonly used pricing grid based on the Companys long-term senior unsecured noncredit-enhanced debt
rating. The Companys new revolving credit facility contains two financial covenants related to ratio requirements for interest coverage, and long-term debt to cash flow, each as defined in the credit agreement. These covenants do not
currently, and the Company does not anticipate that they will, restrict its liquidity or capital resources.



The Company borrows periodically under its available lines of credit. These lines of credit, in the aggregate amount of $60 million at October 2, 2005, are made available at the discretion of two participating
banks and may be withdrawn at any time by such banks. The Company intends to renew the lines of credit as they mature. To the extent that borrowings under the lines of credit and borrowings under the revolving credit facility do not exceed the
amount available under the Companys revolving credit facility and the term of the revolving credit facility matures in more than 12 months, such borrowings are classified as noncurrent liabilities. On October 2, 2005, there were no
amounts outstanding under the lines of credit. On January 2, 2005 and September 26, 2004, $8.0 million and $3.0 million, respectively, were outstanding under the lines of credit.



After taking into account all of the interest rate hedging activities, the Company had a
weighted average interest rate of 5.9%, 5.6% and 5.3% for its debt and capital lease obligations as of October 2, 2005, January 2, 2005 and September 26, 2004, respectively. The Companys overall weighted average interest
rate on its debt and capital lease obligations, excluding the financing transaction costs related to the debt exchange, would have been 6.0% for first nine months of 2005 compared to 5.1% for the first nine months of 2004. Including the $1.3 million
of financing transaction costs related to the Companys debt exchange, the overall weighted average interest rate for the first nine months of 2005 was 6.2%. As of October 2, 2005, approximately 42% of the Companys debt and capital
lease obligations of $779.7 million was subject to changes in short-term interest rates. The Company considers all floating rate debt and fixed rate debt with a maturity of less than one year to be subject to changes in short-term interest rates.



If average interest rates for the floating rate component of the
Companys debt and capital lease obligations increased by 1%, interest expense for the first nine months of 2005 would have increased by approximately $2.5 million and net income would have been reduced by approximately $1.4 million.



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



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



11. Derivative Financial Instruments



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



Derivative financial instruments were summarized as follows:



|                                      |  |                |        |               |            |                |   |               |  |                |  |               |        |  |           
|------------------------------------- |  | -------------- | ------ | ------------- | ---------- | -------------- | - | ------------- |  | -------------- |  | ------------- | ------ |  | ----------
|                                      |  | Oct. 2, 2005   |        | Jan. 2, 2005  |            | Sept. 26, 2004
|In Thousands                          |  | NotionalAmount |        | RemainingTerm |            | NotionalAmount |   | RemainingTerm |  | NotionalAmount |  | RemainingTerm
|Interest rate swap agreement-floating |  | $              | 25,000 |               | 2.17 years |                | $ | 25,000        |  | 2.92 years     |  | $             | 25,000 |  | 3.17 years
|Interest rate swap agreement-floating |  |                | 25,000 |               | 2.17 years |                |   | 25,000        |  | 2.92 years     |  |               | 25,000 |  | 3.17 years
|Interest rate swap agreement-floating |  |                | 50,000 |               | 3.67 years |                |   | 50,000        |  | 4.42 years     |  |               | 50,000 |  | 4.67 years
|Interest rate swap agreement-floating |  |                | 50,000 |               | 2.17 years |                |   | 50,000        |  | 2.92 years     |  |               | 50,000 |  | 3.17 years
|Interest rate swap agreement-floating |  |                | 50,000 |               | 3.83 years |                |   | 50,000        |  | 4.58 years     |  |               | 50,000 |  | 4.83 years
|Interest rate swap agreement-floating |  |                | 50,000 |               | 7.17 years |                |   | 50,000        |  | 7.92 years     |  |               | 50,000 |  | 8.17 years



The Company had six interest rate swap
agreements as of October 2, 2005 with varying terms that effectively converted $250 million of the Companys fixed rate debt to a floating rate. All of the interest rate swap agreements have been accounted for as fair value hedges.



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



12. Fair Values of Financial Instruments



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



Cash, Accounts Receivable and Accounts Payable



The fair values of cash, accounts receivable and accounts payable approximate carrying values due to the short maturity of these financial instruments.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



12. Fair Values of Financial Instruments



Public Debt Securities



The fair values of the Companys public debt securities are based on estimated market prices.



Non-Public Variable Rate Long-Term Debt



The carrying amounts of the Companys variable rate borrowings approximate their fair
values.



Non-Public Fixed Rate Long-Term Debt



The fair values of the Companys other notes payable are estimated using discounted
cash flow analyses based on the Companys current borrowing rates for similar types of borrowing arrangements.



Derivative Financial Instruments



Fair values for the Companys interest rate swap agreements are based on current settlement values.



Letters of Credit



The fair values of the Companys letters of credit are based on the notional amounts of the instruments. These letters of credit primarily relate to the
Companys property and casualty insurance programs.



The carrying amounts
and fair values of the Companys long-term debt, derivative financial instruments and letters of credit were as follows:



|                                        |  |                |         |              |   |                |  |            |         |                |   |         |            |   |         |   |  |   |         |  
|--------------------------------------- |  | -------------- | ------- | ------------ | - | -------------- |  | ---------- | ------- | -------------- | - | ------- | ---------- | - | ------- | - |  | - | ------- | -
|                                        |  | Oct. 2, 2005   |         | Jan. 2, 2005 |   | Sept. 26, 2004 | 
|In Thousands                            |  | CarryingAmount |         | Fair Value   |   | CarryingAmount |  | Fair Value |         | CarryingAmount |   |         | Fair Value |  
|Public debt securities                  |  | $              | 700,000 |              | $ | 708,017        |  | $          | 700,000 |                | $ | 738,666 |            | $ | 700,000 |   |  | $ | 748,860 |  
|Non-public variable rate long-term debt |  |                |        |              |   |               |  |            | 8,000   |                |   | 8,000   |            |   | 3,000   |   |  |   | 3,000   |  
|Non-public fixed rate long-term debt    |  |                | 39      |              |   | 39             |  |            | 39      |                |   | 39      |            |   | 78      |   |  |   | 80      |  
|Interest rate swap agreements           |  |                | 6,673   |              |   | 6,673          |  |            | 1,594   |                |   | 1,594   |            |   | (1,194  | ) |  |   | (1,194  | )
|Letters of credit                       |  |                |        |              |   | 19,679         |  |            |        |                |   | 15,826  |            |   |        |   |  |   | 14,513  |  



The fair values of the interest rate
swap agreements at October 2, 2005 and January 2, 2005 represent the estimated amounts the Company would have paid upon termination of these agreements. The fair value of the interest rate swap agreements on September 26, 2004
represents the estimated amounts the Company would have received upon termination of these agreements.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



13. Other Liabilities



Other liabilities were summarized as follows:



|                                     |  |             |        |             |   |               |  |   |       
|------------------------------------ |  | ----------- | ------ | ----------- | - | ------------- |  | - | ------
|In Thousands                         |  | Oct. 2,2005 |        | Jan. 2,2005 |   | Sept. 26,2004
|Accruals for executive benefit plans |  | $           | 59,779 |             | $ | 59,824        |  | $ | 59,155
|Other                                |  |             | 20,154 |             |   | 25,436        |  |   | 20,529
|                                     |  |             |        |             |   |               |  |   |       
|Total other liabilities              |  | $           | 79,933 |             | $ | 85,260        |  | $ | 79,684
|                                     |  |             |        |             |   |               |  |   |       



Accruals for executive benefit plans
as of October 2, 2005 reflected the reduction of an accrual for deferred compensation of $1.1 million due to the resignation of an executive during the second quarter of 2005.



14. Commitments and Contingencies



The Company is a member of three cooperatives in which it has ongoing business relationships and has guaranteed a portion of the debt for
two of these cooperatives. The amounts guaranteed were $42.5 million, $41.4 million and $44.7 million as of October 2, 2005, January 2, 2005 and September 26, 2004, respectively. The Company has not recorded any liability
associated with these guarantees. The Company holds no assets as collateral against these guarantees and no contractual recourse provision exists that would enable the Company to recover amounts guaranteed. The guarantees relate to debt and lease
obligations, which resulted primarily from the purchase of production equipment and facilities. These guarantees expire at various times through 2021. The members of both cooperatives consist solely of Coca-Cola bottlers. The Company does not
anticipate that either of these cooperatives will fail to fulfill their commitments under these agreements. The Company further believes that each of these cooperatives has sufficient assets, including production equipment, facilities and working
capital, and the ability to adjust selling prices of their products to adequately mitigate the risk of material loss.



The Company has identified the two cooperatives for which it has guaranteed debt as variable interest entities and has determined that it is not the primary beneficiary
of either of the cooperatives. The Companys variable interest in these cooperatives includes an equity ownership in each of the entities and the guarantee of certain indebtedness. As of October 2, 2005, these entities had total assets of
approximately $399.9 million, total debt of approximately $282.9 million and total revenues for the first nine months of 2005 of approximately $533.1 million. In the event either of these cooperatives fail to fulfill their commitments under the
related debt and lease obligations, the Company would be responsible for payments to the lenders up to the level of the guarantees. If these cooperatives had borrowed up to their borrowing capacity, the Companys potential amount of payments
under these guarantees on October 2, 2005 would have been $57.4 million and the Companys maximum total exposure, including its equity investment, would have been $64.3 million. The Company has been purchasing plastic bottles and finished
can products from these cooperatives for more than ten years.



The Company is
involved in various claims and legal proceedings which have arisen in the ordinary course of business. Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes that the ultimate disposition
of these matters will not have a material adverse effect on the



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



14. Commitments and Contingencies



financial condition, cash flows or results of operations of the Company. No material amount of loss in excess of recorded amounts is believed to be
reasonably possible.



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



15. Income Taxes



The provision for income taxes consisted of the following:



|                         |  |                   |        |   |      |   |       
|------------------------ |  | ----------------- | ------ | - | ---- | - | ------
|                         |  | First Nine Months
|In Thousands             |  | 2005              |        |   | 2004
|Current:                 |  |                   |        |   |      |   |       
|Federal                  |  | $                 | (1,909 | ) |      | $ |      
|State                    |  |                   | 6,607  |   |      |   | 371   
|                         |  |                   |        |   |      |   |       
|Total current provision  |  |                   | 4,698  |   |      |   | 371   
|                         |  |                   |        |   |      |   |       
|Deferred:                |  |                   |        |   |      |   |       
|Federal                  |  |                   | 14,054 |   |      |   | 11,966
|State                    |  |                   | (3,840 | ) |      |   | 1,867 
|                         |  |                   |        |   |      |   |       
|Total deferred provision |  |                   | 10,214 |   |      |   | 13,833
|                         |  |                   |        |   |      |   |       
|Income tax expense       |  | $                 | 14,912 |   |      | $ | 14,204
|                         |  |                   |        |   |      |   |       



Reported income tax expense is
reconciled to the amount computed on the basis of income before income taxes at the statutory rate as follows:



|                                                                               |  |                   |        |   |      |   |       
|------------------------------------------------------------------------------ |  | ----------------- | ------ | - | ---- | - | ------
|                                                                               |  | First Nine Months
|In Thousands                                                                   |  | 2005              |        |   | 2004
|Statutory expense                                                              |  | $                 | 12,580 |   |      | $ | 11,805
|State income taxes, net of federal benefit                                     |  |                   | 1,512  |   |      |   | 1,455 
|Impact of state tax audit and updated assessment of state income tax liability |  |                   | 287    |   |      |   |      
|Meals and entertainment                                                        |  |                   | 689    |   |      |   | 568   
|Other                                                                          |  |                   | (156   | ) |      |   | 376   
|                                                                               |  |                   |        |   |      |   |       
|Income tax expense                                                             |  | $                 | 14,912 |   |      | $ | 14,204
|                                                                               |  |                   |        |   |      |   |       



During the second quarter of 2005, the
Company entered into a settlement agreement with a state whereby the Company agreed to reduce certain net operating loss carryforwards and to pay certain additional taxes and interest relating to prior years. The loss of state net operating loss
carryforwards, net of federal tax benefit, of $4.4 million did not have an effect on the provision for income taxes due to a valuation allowance



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##### Table of Contents

Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



15. Income Taxes



previously recorded for such deferred tax assets. Under this settlement, the Company was required to pay $5.7 million in the second quarter of 2005 and is
required to pay an additional $5.0 million by April 15, 2006. The amounts paid and the liability remaining in excess of reserves previously recorded had the effect of increasing income tax expense by approximately $4.1 million in the second
quarter of 2005. Based on an analysis of current facts, the Company also made adjustments to reserves for income tax exposure in other states in the second quarter which had the effect of decreasing income tax expense by $3.8 million. The
Companys income tax reserves are subject to adjustment in future periods based on the Companys ongoing evaluations of its income tax liabilities and new information that becomes available to the Company.



The Companys effective income tax rates for the first nine months of 2005 and the first
nine months of 2004 were 41.5% and 42.1%, respectively.



16. Accumulated Other Comprehensive Income (Loss)



The reconciliation of the components of accumulated other comprehensive income (loss) was as follows:



|                                                            |  |                        |     |   |                                     |   |         |       |  |   |         |  
|----------------------------------------------------------- |  | ---------------------- | --- | - | ----------------------------------- | - | ------- | ----- |  | - | ------- | -
|In Thousands                                                |  | DerivativesGain/(Loss) |     |   | Minimum PensionLiability Adjustment |   |         | Total | 
|Balance as of December 28, 2003                             |  | $                      | (62 | ) |                                     | $ | (23,868 | )     |  | $ | (23,930 | )
|Change in fair market value of cash flow hedges, net of tax |  |                        | 62  |   |                                     |   |        |       |  |   | 62      |  
|                                                            |  |                        |     |   |                                     |   |         |       |  |   |         |  
|Balance as of September 26, 2004                            |  | $                      |    |   |                                     | $ | (23,868 | )     |  | $ | (23,868 | )
|                                                            |  |                        |     |   |                                     |   |         |       |  |   |         |  
|Balance as of January 2, 2005 and October 2, 2005           |  | $                      |    |   |                                     | $ | (25,803 | )     |  | $ | (25,803 | )
|                                                            |  |                        |     |   |                                     |   |         |       |  |   |         |  



A summary of the components of
accumulated other comprehensive income (loss) was as follows:



|                                  |  |                  |     |                  |   |     |                 |  |   |   
|--------------------------------- |  | ---------------- | --- | ---------------- | - | --- | --------------- |  | - | --
|In Thousands                      |  | Before-TaxAmount |     | Income TaxEffect |   |     | After-TaxAmount
|First nine months 2004            |  |                  |     |                  |   |     |                 |  |   |   
|Net gain (loss) on derivatives    |  | $                | 101 |                  | $ | (39 | )               |  | $ | 62
|                                  |  |                  |     |                  |   |     |                 |  |   |   
|Other comprehensive income (loss) |  | $                | 101 |                  | $ | (39 | )               |  | $ | 62
|                                  |  |                  |     |                  |   |     |                 |  |   |   
|First nine months 2005            |  |                  |     |                  |   |     |                 |  |   |   
|Other comprehensive income (loss) |  | $                |    |                  | $ |    |                 |  | $ |  
|                                  |  |                  |     |                  |   |     |                 |  |   |   



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



17. Capital Transactions



On May 12, 1999, the stockholders of the Company approved a restricted stock award for
J. Frank Harrison, III, the Companys Chairman of the Board of Directors and Chief Executive Officer, consisting of 200,000 shares of the Companys Class B Common Stock. The fair value of the restricted stock award, when approved, was
approximately $11.7 million based on the market price of the Common Stock on the effective date of the award. The award provides that the shares of restricted stock vest at the rate of 20,000 shares per year over a ten-year period. The vesting of
each annual installment is contingent upon the Company achieving at least 80% of the overall goal achievement factor in the Companys Annual Bonus Plan. As of October 2, 2005, the fair market value of the potentially issuable shares
(80,000 shares over the next four years) under this award approximated $3.9 million. Compensation expense related to the restricted stock award was $1.3 million and $1.4 million for the first nine months of 2005 and for the first nine months of
2004, respectively.



On March 3, 2004, the Compensation Committee of the
Board of Directors determined that 20,000 shares of restricted Class B Common Stock vested and should be issued pursuant to the performance-based award discussed above to J. Frank Harrison, III, in connection with his services as Chairman of the
Board of Directors and Chief Executive Officer of the Company. On February 23, 2005, the Compensation Committee determined that an additional 20,000 shares of restricted Class B Common Stock vested.



The increase in the number of shares outstanding in the first quarter of 2005 and the first
quarter of 2004 was due to the issuance in each quarter of 20,000 shares of Class B Common Stock related to the restricted stock award. During the third quarter of 2005, 500 shares of Class B Common Stock were converted to 500 shares of Common
Stock.



18. Benefit Plans



Retirement benefits under the two Company-sponsored pension plans are based on the
employees length of service, average compensation over the five consecutive years which gives the highest average compensation and the average of the Social Security taxable wage base during the 35-year period before a participant reaches
Social Security retirement age. Contributions to the plans are based on the projected unit credit actuarial funding method and are limited to the amounts that are currently deductible for income tax purposes.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



18. Benefit Plans



Net periodic pension cost for the indicated periods was as follows:



|                                   |  |               |        |   |                   |   |        |      |  |   |        |   |  |   |        |  
|---------------------------------- |  | ------------- | ------ | - | ----------------- | - | ------ | ---- |  | - | ------ | - |  | - | ------ | -
|                                   |  | Third Quarter |        |   | First Nine Months |  
|In Thousands                       |  | 2005          |        |   | 2004              |   |        | 2005 |  |   | 2004   |  
|Service cost                       |  | $             | 1,747  |   |                   | $ | 1,477  |      |  | $ | 5,241  |   |  | $ | 4,431  |  
|Interest cost                      |  |               | 2,529  |   |                   |   | 2,266  |      |  |   | 7,587  |   |  |   | 6,798  |  
|Expected return on plan assets     |  |               | (2,672 | ) |                   |   | (2,327 | )    |  |   | (8,016 | ) |  |   | (6,981 | )
|Amortization of prior service cost |  |               | 6      |   |                   |   | 5      |      |  |   | 18     |   |  |   | 15     |  
|Recognized net actuarial loss      |  |               | 1,335  |   |                   |   | 1,210  |      |  |   | 4,005  |   |  |   | 3,630  |  
|                                   |  |               |        |   |                   |   |        |      |  |   |        |   |  |   |        |  
|Net periodic pension cost          |  | $             | 2,945  |   |                   | $ | 2,631  |      |  | $ | 8,835  |   |  | $ | 7,893  |  
|                                   |  |               |        |   |                   |   |        |      |  |   |        |   |  |   |        |  



The Company contributed $8.0 million
to its pension plans during the first nine months of 2005.



The Company
provides postretirement benefits for a portion of its current employees. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees periods of active service. Qualifying active
employees are eligible for coverage upon retirement until they become eligible for Medicare (normally age 65), at which time coverage under the plan will cease. The Company does not pre-fund these benefits.



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



|                                                 |  |               |       |   |                   |   |     |      |  |   |       |   |  |   |       |  
|------------------------------------------------ |  | ------------- | ----- | - | ----------------- | - | --- | ---- |  | - | ----- | - |  | - | ----- | -
|                                                 |  | Third Quarter |       |   | First Nine Months |  
|In Thousands                                     |  | 2005          |       |   | 2004              |   |     | 2005 |  |   | 2004  |  
|Service cost                                     |  | $             | 172   |   |                   | $ | 137 |      |  | $ | 516   |   |  | $ | 411   |  
|Interest cost                                    |  |               | 781   |   |                   |   | 705 |      |  |   | 2,343 |   |  |   | 2,115 |  
|Amortization of unrecognized transitional assets |  |               | (6    | ) |                   |   | (6  | )    |  |   | (18   | ) |  |   | (18   | )
|Recognized net actuarial loss                    |  |               | 252   |   |                   |   | 207 |      |  |   | 756   |   |  |   | 621   |  
|Amortization of prior service cost               |  |               | (68   | ) |                   |   | (68 | )    |  |   | (204  | ) |  |   | (204  | )
|                                                 |  |               |       |   |                   |   |     |      |  |   |       |   |  |   |       |  
|Net periodic postretirement benefit cost         |  | $             | 1,131 |   |                   | $ | 975 |      |  | $ | 3,393 |   |  | $ | 2,925 |  
|                                                 |  |               |       |   |                   |   |     |      |  |   |       |   |  |   |       |  



19.
Related Party Transactions



The Companys business consists primarily of
the production, marketing and distribution of nonalcoholic beverages of The Coca-Cola Company, which is the sole owner of the secret formulas under which the primary components (either concentrate or syrup) of its soft drink products are
manufactured. As of October 2, 2005, The Coca-Cola Company had a 27.3% interest in the Companys total outstanding Common Stock and Class B Common Stock on a combined basis.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



19. Related Party Transactions



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



|                                                                                            |  |                   |       |      |   |      
|------------------------------------------------------------------------------------------- |  | ----------------- | ----- | ---- | - | -----
|                                                                                            |  | First Nine Months
|In Millions                                                                                 |  | 2005              |       | 2004
|Payments by the Company for concentrate, syrup, sweetener and other purchases               |  | $                 | 252.2 |      | $ | 214.2
|Marketing funding support payments to the Company                                           |  |                   | 15.2  |      |   | 27.5 
|                                                                                            |  |                   |       |      |   |      
|Payments net of marketing funding support                                                   |  | $                 | 237.0 |      | $ | 186.7
|                                                                                            |  |                   |       |      |   |      
|Payments by the Company for customer marketing programs                                     |  | $                 | 34.8  |      | $ | 30.6 
|Payments by the Company for cold drink equipment parts                                      |  |                   | 3.2   |      |   | 2.9  
|Fountain delivery and equipment repair fees paid to the Company                             |  |                   | 6.0   |      |   | 5.6  
|Presence marketing funding support provided by The Coca-Cola Companyon the Companys behalf |  |                   | 4.7   |      |   | 3.6  
|Sale of energy products to The Coca-Cola Company                                            |  |                   | 18.7  |      |   |     



The Company received proceeds in the
second quarter of 2005 as a result of a settlement of a class action lawsuit known as In re: High Fructose Corn Syrup Antitrust Litigation Master File No. 95-1477 in the United States District Court for the Central District of Illinois. The
lawsuit related to purchases of high fructose corn syrup by several companies, including The Coca-Cola Company and its subsidiaries, The Coca-Cola Bottlers Association and various Coca-Cola bottlers, during the period from July 1, 1991 to
June 30, 1995. The Company recognized the proceeds received of $6.4 million as a reduction of cost of sales during the second quarter. The proceeds received represent approximately 90% of the expected recovery with the estimated remaining
balance to be received in late 2005 or early 2006. Any additional recovery, however, is subject to Court approval. Accordingly, the Company has not recognized any amounts for possible collection of these remaining reimbursements since the ultimate
outcome is not determinable.



Marketing funding support in the first quarter of
2004 included a favorable nonrecurring item of approximately $2 million for certain customer-related marketing programs between the Company and The Coca-Cola Company.



The Company has a production arrangement with Coca-Cola Enterprises Inc. (CCE) to buy and sell finished products at cost. Sales
to CCE under this agreement were $32.8 million and $18.9 million in the first nine months of 2005 and the first nine months of 2004, respectively. Purchases from CCE under this arrangement were $13.7 million and $14.5 million in the first nine
months of 2005 and the first nine months of 2004, respectively. The Coca-Cola Company has significant equity interests in the Company and CCE. As of October 2, 2005, CCE held 10.5% of the Companys outstanding Common Stock but held no
shares of the Companys Class B Common Stock, giving CCE a 7.7% equity interest in the Companys total outstanding Common Stock and Class B Common Stock on a combined basis.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



19. Related Party Transactions



Along with all the other Coca-Cola bottlers in the United States, the Company has become a member in Coca-Cola
Bottlers Sales and Services Company, LLC (CCBSS), which was formed in 2003 for the purposes of facilitating various procurement functions and distributing certain specified beverage products of The Coca-Cola Company with the
intention of enhancing the efficiency and competitiveness of the Coca-Cola bottling system in the United States. CCBSS negotiated the procurement for the majority of the Companys raw materials (excluding concentrate) in 2004 and the first nine
months of 2005. The Company paid approximately $250,000 to CCBSS for its share of the administrative costs of CCBSS for both the first nine months of 2005 and the first nine months of 2004. CCE is also a member of CCBSS.



The Company provides a portion of the finished products for Piedmont at cost and receives a
fee for managing the operations of Piedmont pursuant to a management agreement. The Company sold product at cost to Piedmont during the first nine months of 2005 and the first nine months of 2004 totaling $51.3 million and $57.9 million,
respectively. The Company received $16.0 million and $13.3 million for management services pursuant to its management agreement with Piedmont for the first nine months of 2005 and the first nine months of 2004, respectively. The Company provides
financing for Piedmont at the Companys average cost of funds plus 0.50%. As of October 2, 2005, the Company had loaned $109.2 million to Piedmont. The loan was amended on August 25, 2005 to extend the maturity date from
December 31, 2005 to December 31, 2010 on terms comparable to the previous loan. The Company also subleases various fleet and vending equipment to Piedmont at cost. These sublease rentals amounted to $6.5 million and $6.2 million in the
first nine months of 2005 and the first nine months of 2004, respectively. In addition, Piedmont subleases various fleet and vending equipment to the Company at cost. These sublease rentals amounted to approximately $120,000 and $130,000 during the
first nine months of 2005 and the first nine months of 2004, respectively. All significant intercompany accounts and transactions between the Company and Piedmont have been eliminated.



The Company is a shareholder in two cooperatives from which it purchases substantially all its requirements for plastic bottles. Net
purchases from these entities were $52.4 million and $44.7 million in the first nine months of 2005 and the first nine months of 2004, respectively. In connection with its participation in one of these cooperatives, the Company has guaranteed a
portion of the cooperatives debt. Such guarantee amounted to $22.5 million as of October 2, 2005.



The Company is also a member of South Atlantic Canners, Inc. (SAC), a manufacturing cooperative. SAC sells finished products to the Company and Piedmont at cost. Purchases from SAC by the Company and
Piedmont for finished products were $94.7 million and $81.0 million in the first nine months of 2005 and the first nine months of 2004, respectively. The Company also manages the operations of SAC pursuant to a management agreement. Management fees
earned from SAC were $1.1 million and $1.3 million in the first nine months of 2005 and the first nine months of 2004, respectively. The Company has also guaranteed the debt and lease obligations for SAC. Such guarantee was $20.0 million as of
October 2, 2005.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



19. Related Party Transactions



The Company leases from Harrison Limited Partnership One (HLP) the Snyder Production Center and an
adjacent sales facility, which are located in Charlotte, North Carolina. HLPs sole limited partner is a trust of which J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, is a trustee. The
principal balance outstanding under this capital lease as of October 2, 2005 was $39.8 million. Rental payments related to this lease were $2.5 million and $2.0 million in the first nine months of 2005 and the first nine months of 2004,
respectively.



On June 1, 1993, the Company entered into a lease agreement
with Beacon Investment Corporation (Beacon) related to the Companys headquarters office facility. Beacons sole shareholder is J. Frank Harrison, III. On January 5, 1999, the Company entered into a ten-year agreement with
Beacon which included the Companys headquarters office facility and an adjacent office facility. On March 1, 2004, the Company recorded a capital lease of $32.4 million related to these facilities when the Company received a renewal
option to extend the term of the lease, which it expects to exercise. The principal balance outstanding under this capital lease as of October 2, 2005 was $31.5 million. Rental payments related to this lease were $2.4 million and $2.1 million
in the first nine months of 2005 and the first nine months of 2004, respectively.



In March 2005, the Company entered into a two-year consulting agreement with Robert D. Pettus, Jr. Mr. Pettus served as an officer of the Company in various capacities from 1984 and is currently the Vice Chairman of the Board of
Directors of the Company. Mr. Pettus will receive $350,000 per year plus additional benefits as described in the consulting agreement during the term of this consulting agreement.



In June 2005, the Company entered into a two-year consulting agreement with David V. Singer. Mr. Singer served the Company as Executive
Vice President and Chief Financial Officer until his resignation on May 11, 2005. The Company agreed to waive the 50% reduction in Mr. Singers accrued benefits under the Companys Officer Retention Plan due to the termination of
his employment before age 55. Under the consulting agreement, Mr. Singer agreed to certain non-compete restrictions for a five-year period following his resignation. The net adjustment to the Companys executive benefit accruals as a
result of Mr. Singers resignation was a $1.1 million reduction in S,D&A expenses in the second quarter of 2005.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



20. Earnings Per Share



The following table sets forth the computation of basic net income per share and diluted net
income per share:



|                                                                                                             |  |               |       |                   |   |       |  |      |        |  |   |       
|------------------------------------------------------------------------------------------------------------ |  | ------------- | ----- | ----------------- | - | ----- |  | ---- | ------ |  | - | ------
|                                                                                                             |  | Third Quarter |       | First Nine Months
|In Thousands (Except Per Share Data)                                                                         |  | 2005          |       | 2004              |   | 2005  |  | 2004
|Numerator:                                                                                                   |  |               |       |                   |   |       |  |      |        |  |   |       
|Numerator for basic net income per share and diluted net income per share                                    |  | $             | 8,792 |                   | $ | 6,108 |  | $    | 21,030 |  | $ | 19,526
|                                                                                                             |  |               |       |                   |   |       |  |      |        |  |   |       
|Denominator:                                                                                                 |  |               |       |                   |   |       |  |      |        |  |   |       
|Denominator for basic net income per share and diluted net income per share  weighted average common shares |  |               | 9,083 |                   |   | 9,063 |  |      | 9,083  |  |   | 9,063 
|                                                                                                             |  |               |       |                   |   |       |  |      |        |  |   |       
|Basic net income per share                                                                                   |  | $             | .97   |                   | $ | .67   |  | $    | 2.32   |  | $ | 2.15  
|                                                                                                             |  |               |       |                   |   |       |  |      |        |  |   |       
|Diluted net income per share                                                                                 |  | $             | .97   |                   | $ | .67   |  | $    | 2.32   |  | $ | 2.15  
|                                                                                                             |  |               |       |                   |   |       |  |      |        |  |   |       



No potentially dilutive shares were
outstanding in the periods presented.



21.
Risks and Uncertainties



The Companys products are sold and distributed
directly by its employees to retail stores and other outlets. During the first nine months of 2005, approximately 66% of the Companys bottle/can volume to retail customers was sold for future consumption. The remaining bottle/can volume to
retail customers of approximately 34% was sold for immediate consumption. The Companys largest customers, Wal-Mart Stores, Inc. and Food Lion, LLC, accounted for approximately 14% and 10%, respectively, of the Companys total bottle/can
volume to retail customers during the first nine months of 2005. Wal-Mart Stores, Inc. accounted for approximately 11% of the Companys total net sales during the first nine months of 2005.



The Company makes significant expenditures each year for aluminum cans and plastic bottles,
on fuel for product delivery and for health care costs. Material increases in the costs of aluminum cans, plastic bottles or fuel or in health care costs may result in a reduction in earnings to the extent the Company is not able to increase its
selling prices to offset increases in the costs of aluminum cans, plastic bottles or fuel or in health care costs.



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



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



21. Risks and Uncertainties



Less than 7% of the Companys labor force is currently covered by collective bargaining agreements. There are no
collective bargaining agreements that will expire during the remainder of 2005.



22. Supplemental Disclosures of Cash Flow Information



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



|                                                    |  |                   |         |   |      |   |         |  
|--------------------------------------------------- |  | ----------------- | ------- | - | ---- | - | ------- | -
|                                                    |  | First Nine Months |        
|In Thousands                                        |  | 2005              |         |   | 2004 |  
|Accounts receivable, trade, net                     |  | $                 | (17,723 | ) |      | $ | (5,654  | )
|Accounts receivable from The Coca-Cola Company      |  |                   | (2,774  | ) |      |   | 10,700  |  
|Accounts receivable, other                          |  |                   | (2,707  | ) |      |   | 2,674   |  
|Inventories                                         |  |                   | (7,992  | ) |      |   | (4,436  | )
|Prepaid expenses and other current assets           |  |                   | (867    | ) |      |   | (2,251  | )
|Accounts payable, trade                             |  |                   | 12,187  |   |      |   | 427     |  
|Accounts payable to The Coca-Cola Company           |  |                   | 3,898   |   |      |   | 10,976  |  
|Other accrued liabilities                           |  |                   | 14,530  |   |      |   | (11,398 | )
|Accrued compensation                                |  |                   | (721    | ) |      |   | (793    | )
|Accrued interest payable                            |  |                   | 4,169   |   |      |   | 6,392   |  
|                                                    |  |                   |         |   |      |   |         |  
|Decrease in current assets less current liabilities |  | $                 | 2,000   |   |      | $ | 6,637   |  
|                                                    |  |                   |         |   |      |   |         |  



23.
New Accounting Pronouncements



In November 2004, the Financial Accounting
Standards Board (FASB) issued Statement No. 151, Inventory Costs  an amendment of ARB No. 43, Chapter 4. This Statement clarifies the accounting for abnormal amounts of idle facility expense, freight, handling
costs and wasted material (spoilage) and is effective for fiscal years beginning after June 15, 2005. The Company anticipates that the adoption of this Statement will not have a material impact on its consolidated financial statements.



In December 2004, the FASB issued Statement No. 153, Exchanges of
Nonmonetary Assets  an amendment of APB Opinion No. 29. This Statement eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general exception for exchanges on nonmonetary assets that
do not have commercial substance and is effective for fiscal periods beginning after June 15, 2005. The adoption of this Statement did not have a material impact on the Companys consolidated financial statements.



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Coca-Cola Bottling Co. Consolidated

Notes to Consolidated Financial Statements (Unaudited)



23. New Accounting Pronouncements



In December 2004, the FASB issued Statement No. 123 (revised 2004), Share-Based Payment. This
Statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation, and is effective for the Company as of the beginning of the first quarter of fiscal year 2006. This Statement requires public companies to
measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. The Company will adopt this Statement beginning January 2, 2006, and will adopt using one of the two
transition methods. The Company anticipates that the adoption of this Statement will not have a material impact on its consolidated financial statements.



In October 2004, the American Jobs Creation Act of 2004 (the Jobs Act) was signed into law. The Jobs Act provided for a tax deduction for qualified production
activities. In December 2004, the FASB issued FASB Staff Position No. FAS 109-1, Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax Deduction on Qualified Production Activities Provided by the American Jobs
Creation Act of 2004 (FAS 109-1), which was effective immediately. FAS 109-1 provides guidance on the accounting for the provision within the Jobs Act that provides a tax deduction on qualified production activities. The Company
estimates that the deduction for qualified production activities provided within the Jobs Act and the Companys related adoption of FAS 109-1 will reduce the Companys effective income tax rate by approximately 1% in 2005.



In March 2005, the FASB issued FASB Interpretation No. 47, Accounting for
Conditional Asset Retirement Obligations (FIN 47). FIN 47 clarifies that a conditional asset retirement obligation, as used in FASB Statement 143, Accounting for Asset Retirement Obligations, refers to a legal
obligation to perform an asset retirement activity in which the timing and/or method of the settlement are conditional on a future event that may or may not be within the control of the entity. Accordingly, an entity is required to recognize a
liability for the fair value of a conditional asset retirement obligation if the fair value can be reasonably estimated. FIN 47 is effective as of the end of fiscal years ending after December 15, 2005. The Company anticipates that the adoption
of this Interpretation will not have a material impact on its consolidated financial statements.



In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections  a replacement of APB Opinion No. 20 and FASB Statement No. 3. This Statement requires
retrospective application to prior period financial statements of a voluntary change in accounting principle unless it is impracticable and is effective for fiscal years beginning after December 15, 2005. Previously, most voluntary changes in
accounting principle were recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle.



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|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------



Introduction



The following Managements Discussion and Analysis of Financial Condition and Results of Operations (M,D&A) should be read in conjunction with the
Companys consolidated financial statements and the accompanying notes to consolidated financial statements. M,D&A includes the following sections:



| |  |  | Our Business  a general description of the Companys business and the nonalcoholic beverage industry.
| | - |  | ------------------------------------------------------------------------------------------------------



| |  |  | Areas of Emphasis  a summary of the Companys key priorities for 2005 and the next several years.
| | - |  | --------------------------------------------------------------------------------------------------



| |  |  | Overview of Operations and Financial Condition  a summary of key information concerning the financial results for the third quarter and first nine months of fiscal year 2005
and changes from the third quarter and first nine months of fiscal year 2004.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Discussion of Critical Accounting Policies 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 the third quarter and first nine months of 2005 compared to the third quarter and first nine
months of 2004.
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Financial Condition  an analysis of the Companys financial condition as of the end of the third quarter of 2005 compared to fiscal year-end 2004 and the end of the third
quarter of 2004.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 interest rate hedging.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Cautionary Information Regarding Forward-Looking Statements  cautionary information about forward-looking statements and a description of certain risks and uncertainties that
could cause the Companys actual results to differ materially from the Companys historical results or the Companys current expectations about future periods.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The consolidated statements of operations for the three months and the nine months ended
October 2, 2005 and September 26, 2004, the consolidated statements of cash flows for the nine months ended October 2, 2005 and September 26, 2004 and the consolidated balance sheets at October 2, 2005, January 2,
2005 and September 26, 2004 include the consolidated operations of the Company and its majority owned subsidiaries including Piedmont Coca-Cola Bottling Partnership (Piedmont). Minority interest consists of The Coca-Cola
Companys interest in Piedmont, which was 22.7% for all periods presented.



Our Business



Coca-Cola Bottling Co.
Consolidated (the Company) produces, markets and distributes nonalcoholic beverages, primarily products of The Coca-Cola Company, which include some of the most recognized and popular beverage brands in the world. The Company is the
second largest bottler of products of The Coca-Cola Company in the United States, operating in eleven states, primarily in the Southeast. The Company also distributes several other beverage brands. The Companys product offerings include
carbonated soft drinks,



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bottled water, teas, juices, isotonics and energy drinks. The Company had net sales of approximately $1.3 billion in 2004.



The carbonated soft drink market and the noncarbonated beverage market are highly
competitive. The Companys competitors in these markets include bottlers and distributors of nationally advertised and marketed products, regionally advertised and marketed products and private label soft drinks. In each region in which the
Company operates, between 75% and 90% of carbonated soft drink sales in bottles, cans and other containers are accounted for by the Company and its principal competitors, which in each region includes the local bottler of Pepsi-Cola and, in some
regions, the local bottler of Royal Crown and/or 7-Up products. During the last two years, volume of total carbonated soft drinks in the soft drink industry has been soft. The decline in sugar carbonated beverages is partially offset by volume
growth from diet carbonated beverages, isotonics, bottled water and energy products. Volume in the soft drink industry has also been negatively impacted by less aggressive price promotion by some retailers in the future consumption channels.



The principal methods of competition in the soft drink industry are
point-of-sale merchandising, new product introductions, new vending and dispensing equipment, packaging changes, pricing, price promotions, product quality, retail space management, customer service, frequency of distribution and advertising. The
Company believes that it is competitive in its territories with respect to each of these methods of competition.



Operating results for the third quarter and first nine months of 2005 are not indicative of results that may be expected for the fiscal year ending January 1, 2006
because of business seasonality. Historically, business seasonality results primarily from higher unit sales of the Companys products in the second and third quarters versus the first and fourth quarters of the fiscal year. Fixed costs, such
as depreciation, amortization and interest expense, are not significantly impacted by business seasonality.



The Companys bottle/can volume by product category as a percentage of total bottle/can volume was as follows:



|                              |  |               |   |  |                   |   |  |      |   |  |      |  
|----------------------------- |  | ------------- | - |  | ----------------- | - |  | ---- | - |  | ---- | -
|                              |  | Third Quarter |   |  | First Nine Months |  
|Product Category              |  | 2005          |   |  | 2004              |   |  | 2005 |   |  | 2004 |  
|Sugar carbonated soft drinks  |  | 58            | % |  | 60                | % |  | 59   | % |  | 61   | %
|Diet carbonated soft drinks   |  | 27            | % |  | 27                | % |  | 28   | % |  | 28   | %
|                              |  |               |   |  |                   |   |  |      |   |  |      |  
|Total carbonated soft drinks  |  | 85            | % |  | 87                | % |  | 87   | % |  | 89   | %
|                              |  |               |   | 
|Bottled water                 |  | 8             | % |  | 6                 | % |  | 7    | % |  | 6    | %
|Isotonics                     |  | 4             | % |  | 3                 | % |  | 3    | % |  | 2    | %
|Other noncarbonated beverages |  | 3             | % |  | 4                 | % |  | 3    | % |  | 3    | %
|                              |  |               |   |  |                   |   |  |      |   |  |      |  
|Total noncarbonated beverages |  | 15            | % |  | 13                | % |  | 13   | % |  | 11   | %
|                              |  |               |   |  |                   |   |  |      |   |  |      |  
|Total bottle/can volume       |  | 100           | % |  | 100               | % |  | 100  | % |  | 100  | %
|                              |  |               |   |  |                   |   |  |      |   |  |      |  



Areas of Emphasis



Key priorities for the Company during 2005 and over the next
several years include revenue management, product innovation, distribution cost management and productivity.



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Revenue Management



Revenue management includes striking the appropriate balance between generating growth in volume, gross margin and market share. It requires
a strategy which reflects consideration for pricing of brands and packages within channels, as well as highly effective working relationships with customers and disciplined fact-based decision-making. Revenue management has been and continues to be
a key performance driver which has significant impact on the Companys operating income.



Product Innovation



Volume
growth of sugar carbonated soft drinks has slowed over the past several years and innovation of both brands and packages has been and will continue to be critical to the Companys overall volume. During the first quarter of 2005, the Company
introduced Coca-Cola with Lime and Full Throttle, an energy product from The Coca-Cola Company. During June 2005, the Company introduced Coca-Cola Zero, Dasani flavors, and Vault in certain markets. The Company will introduce Vault in the
Companys remaining markets in the fourth quarter of 2005. The Company introduced diet Coke with Lime, Coca-Cola C2 and Rockstar in 2004. In addition, the Company has also developed specialty packaging for customers in certain channels over the
past several years.



Distribution Cost Management



Distribution cost, which represents the cost of transporting finished goods from Company
locations to customer outlets, is the second largest expense category for the Company. Total distribution costs amounted to $136.3 million and $130.7 million in the first nine months of 2005 and the first nine months of 2004, respectively. Over the
past several years, the Company has focused on converting its distribution system from a conventional routing system to a predictive or pre-sell system. This conversion to a pre-sell system has allowed the Company to more efficiently handle an
increasing number of brands and packages. In addition, the Company has closed a number of smaller sales distribution centers reducing its fixed warehouse-related costs. Distribution cost management will continue to be a key area of emphasis for the
Company for the next several years.



Productivity



To achieve improvements in operating performance over the long-term, the Companys
gross margin must grow faster than the increase in selling, delivery and administrative (S,D&A) expenses. A key driver in the Companys S,D&A expense management relates to ongoing improvements in labor productivity and asset
productivity. The Company continues to focus on its supply chain and distribution functions for opportunities to improve productivity.



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##### Table of Contents

Overview of Operations and Financial Condition



The following overview provides a summary of key information concerning the Companys
financial results for the third quarter and first nine months of 2005 compared to the third quarter and first nine months of 2004.



|                                             |  |                   |           |        |   |          |  |   |        |  |    |  
|-------------------------------------------- |  | ----------------- | --------- | ------ | - | -------- |  | - | ------ |  | -- | -
|                                             |  | Third Quarter     |           | Change |   | % Change | 
|In Thousands (Except Per Share Data)         |  | 2005              |           | 2004   |   |         
|Net sales                                    |  | $                 | 358,414   |        | $ | 321,336  |  | $ | 37,078 |  | 12 | %
|Gross margin                                 |  |                   | 161,185   |        |   | 151,398  |  |   | 9,787  |  | 6  | %
|Income from operations                       |  |                   | 28,091    |        |   | 23,191   |  |   | 4,900  |  | 21 | %
|Interest expense                             |  |                   | 12,005    |        |   | 10,838   |  |   | 1,167  |  | 11 | %
|Income before taxes                          |  |                   | 14,885    |        |   | 11,007   |  |   | 3,878  |  | 35 | %
|Net income                                   |  |                   | 8,792     |        |   | 6,108    |  |   | 2,684  |  | 44 | %
|                                             |  |                   |           |       
|Basic net income per share(6)                |  | $                 | .97       |        | $ | .67      |  | $ | .30    |  | 45 | %
|                                             |  |                   |          
|                                             |  | First Nine Months |           | Change |   | % Change | 
|In Thousands (Except Per Share Data)         |  | 2005              |           | 2004   |   |         
|Net sales                                    |  | $                 | 1,022,451 |        | $ | 937,774  |  | $ | 84,677 |  | 9  | %
|Gross margin(1)(2)(5)                        |  |                   | 467,679   |        |   | 452,600  |  |   | 15,079 |  | 3  | %
|Income from operations(1)(2)(3)(5)           |  |                   | 75,500    |        |   | 68,996   |  |   | 6,504  |  | 9  | %
|Interest expense(4)                          |  |                   | 36,396    |        |   | 31,822   |  |   | 4,574  |  | 14 | %
|Income before taxes(1)(2)(3)(4)(5)           |  |                   | 35,942    |        |   | 33,730   |  |   | 2,212  |  | 7  | %
|Net income(1)(2)(3)(4)(5)                    |  |                   | 21,030    |        |   | 19,526   |  |   | 1,504  |  | 8  | %
|                                             |  |                   |           |       
|Basic net income per share(1)(2)(3)(4)(5)(6) |  | $                 | 2.32      |        | $ | 2.15     |  | $ | .17    |  | 8  | %



|(1) | Results for the first nine months of 2005 included a favorable adjustment of $6.4 million (pre-tax) related to the settlement of high fructose corn syrup litigation,
which was reflected as a reduction in cost of sales.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Results for the first nine months of 2004 included a one-time unfavorable non-cash adjustment of $1.7 million (pre-tax) related to a change in the pricing of
concentrate purchased from The Coca-Cola Company, which was reflected as an increase to cost of sales.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Results for the first nine months of 2005 included a favorable adjustment of $1.1 million (pre-tax) related to an adjustment of amounts accrued for certain executive
benefit plans upon the resignation of an executive.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Interest expense for the first nine months of 2005 included financing transaction costs of $1.3 million (pre-tax) related to the exchange of $164.8 million of the
Companys long-term debt.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Results in the first nine months of 2004 included a favorable adjustment of approximately $2 million (pre-tax) for certain customer-related marketing programs
between the Company and The Coca-Cola Company, which was reflected as a reduction in cost of sales.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | The Company does not currently have any stock options or other common stock equivalents that
would result in dilution of earnings per share. Accordingly, for the periods presented, basic and fully diluted earnings per share are equivalent.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Companys net sales grew approximately 12% and approximately 9% during the third quarter and first nine months of 2005 compared to the corresponding periods
of 2004. The net sales increase in the third quarter was primarily due to an increase in average revenue per case of approximately 3%, an increase in bottle/can volume of approximately 4% and an increase in contract sales to other bottlers of $15.6
million. Average revenue per case increased by approximately 2%, bottle/can volume increased by approximately 3% and contract sales to other



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bottlers increased by $41.6 million for the first nine months of 2005 compared to the first nine months of 2004. The Company anticipates that growth in
overall bottle/can volume will be primarily dependent upon continued growth in diet products, isotonics, bottled water and energy drinks as well as the introduction of new products.



Gross margin improved in the first nine months of 2005 compared to the first nine months of 2004 due, in part, to the receipt of $6.4
million from the settlement of a class action lawsuit known as In re: High Fructose Corn Syrup Antitrust Litigation Master File No. 95-1477 in the United States District Court for the Central District of Illinois. The lawsuit related to
purchases of high fructose corn syrup by several companies, including The Coca-Cola Company and its subsidiaries, The Coca-Cola Bottlers Association and various Coca-Cola bottlers, during the period from July 1, 1991 to June 30,
1995. The Company recognized the proceeds received as a reduction of cost of sales during the second quarter of 2005. The proceeds received represent approximately 90% of the expected recovery with the estimated remaining balance to be received in
late 2005 or early 2006. Any additional recovery, however, is subject to Court approval. Accordingly, the Company has not recognized any amounts for possible collection of these remaining reimbursements since the ultimate outcome is not
determinable. Despite the proceeds received from the high fructose corn syrup litigation, the Companys gross margin as a percentage of net sales declined in the first nine months of 2005 compared to the same period in 2004 due to higher cost
of sales related primarily to increased packaging material costs and the impact of higher contract sales which have lower margins.



Interest expense increased $1.2 million and $4.6 million during the third quarter and first nine months of 2005 compared to the third quarter and first nine months of
2004, respectively. The increase is attributable to financing transaction costs of $1.3 million in the second quarter of 2005 related to the exchange of $164.8 million of the Companys long-term debentures and higher interest rates on the
Companys floating rate debt, partially offset by the impact of lower debt balances and short-term cash investments.



Debt and capital lease obligations were summarized as follows:



|                                         |  |              |         |              |   |               |  |   |        
|---------------------------------------- |  | ------------ | ------- | ------------ | - | ------------- |  | - | -------
|In Thousands                             |  | Oct. 2, 2005 |         | Jan. 2, 2005 |   | Sept. 26,2004
|Debt                                     |  | $            | 700,039 |              | $ | 708,039       |  | $ | 703,078
|Capital lease obligations                |  |              | 79,670  |              |   | 81,028        |  |   | 81,440 
|                                         |  |              |         |              |   |               |  |   |        
|Total debt and capital lease obligations |  | $            | 779,709 |              | $ | 789,067       |  | $ | 784,518
|                                         |  |              |         |              |   |               |  |   |        



Discussion of Critical
Accounting Policies and New Accounting Pronouncements



Critical Accounting Policies



In the ordinary course of
business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of its consolidated financial statements in conformity with accounting principles
generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company included in its Annual Report on Form 10-K for the year ended January 2,
2005 a discussion of the Companys most critical accounting policies, which are those that are most important to the portrayal of the Companys financial condition and results of operations and require managements most difficult,
subjective



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and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.



The Company performed its annual impairment test of franchise rights and goodwill during the
third quarter of 2005. As of October 2, 2005, there was no impairment of the carrying values of franchise rights and goodwill.



The Company has not made changes in any critical accounting policies during the third quarter of 2005. Any changes in critical accounting policies are discussed with the
Audit Committee of the Board of Directors of the Company during the quarter in which a change is made.



New Accounting Pronouncements



In November 2004, the Financial Accounting Standards Board (FASB) issued Statement No. 151, Inventory Costs  an amendment of ARB No. 43, Chapter 4. This Statement clarifies the accounting for abnormal
amounts of idle facility expense, freight, handling costs and wasted material (spoilage) and is effective for fiscal years beginning after June 15, 2005. The Company anticipates that the adoption of this Statement will not have a material
impact on its consolidated financial statements.



In December 2004, the FASB
issued Statement No. 153, Exchanges of Nonmonetary Assets  an amendment of APB Opinion No. 29. This Statement eliminates the exception for nonmonetary exchanges of similar productive assets and replaces it with a general
exception for exchanges on nonmonetary assets that do not have commercial substance and is effective for fiscal periods beginning after June 15, 2005. The adoption of this Statement did not have a material impact on the Companys
consolidated financial statements.



In December 2004, the FASB issued Statement
No. 123 (revised 2004), Share-Based Payment. This Statement is a revision of FASB Statement No. 123, Accounting for Stock-Based Compensation, and is effective for the Company as of the beginning of the first quarter
of fiscal year 2006. This Statement requires public companies to measure the cost of employee services received in exchange for an award of an equity instrument based on the grant-date fair value of the award. The Company will adopt this Statement
beginning January 2, 2006, and will adopt using one of the two transition methods. The Company anticipates that the adoption of this Statement will not have a material impact on its consolidated financial statements.



In October 2004, the American Jobs Creation Act of 2004 (the Jobs Act) was signed
into law. The Jobs Act provided for a tax deduction for qualified production activities. In December 2004, the FASB issued FASB Staff Position No. FAS 109-1, Application of FASB Statement No. 109, Accounting for Income Taxes, to the Tax
Deduction on Qualified Production Activities Provided by the American Jobs Creation Act of 2004 (FAS 109-1), which was effective immediately. FAS 109-1 provides guidance on the accounting for the provision within the Jobs Act that
provides a tax deduction on qualified production activities. The Company estimates that the deduction for qualified production activities provided within the Jobs Act and the Companys related adoption of FAS 109-1 will reduce the
Companys effective income tax rate by approximately 1% in 2005.



In March
2005, the FASB issued FASB Interpretation No. 47, Accounting for Conditional Asset Retirement Obligations (FIN 47). FIN 47 clarifies that a conditional asset retirement obligation, as used in FASB Statement 143,
Accounting for Asset Retirement Obligations, refers to a legal obligation to perform an



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asset retirement activity in which the timing and/or method of the settlement are conditional on a future event that may or may not be within the control of
the entity. Accordingly, an entity is required to recognize a liability for the fair value of a conditional asset retirement obligation if the fair value can be reasonably estimated. FIN 47 is effective as of the end of fiscal years ending after
December 15, 2005. The Company anticipates that the adoption of this Interpretation will not have a material impact on its consolidated financial statements.



In May 2005, the FASB issued Statement No. 154, Accounting Changes and Error Corrections  a replacement of APB Opinion
No. 20 and FASB Statement No. 3. This Statement requires retrospective application to prior period financial statements of a voluntary change in accounting principle unless it is impracticable and is effective for fiscal years
beginning after December 15, 2005. Previously, most voluntary changes in accounting principle were recognized by including in net income of the period of the change the cumulative effect of changing to the new accounting principle.



Results of Operations



Third Quarter 2005 Compared to Third Quarter 2004 and First Nine Months 2005 Compared
to First Nine Months 2004



Net Income



The Company reported net income of $8.8 million or $.97 per basic share for the third
quarter of 2005 compared with net income of $6.1 million or $.67 per basic share for the third quarter of 2004. Net income for the first nine months of 2005 was $21.0 million or $2.32 per basic share compared to $19.5 million or $2.15 per basic
share for the first nine months of 2004. Results in all periods presented include infrequent or nonrecurring items on a pre-tax basis as follows:



| |  |  | The first nine months of 2005 results included a favorable adjustment of $6.4 million related to the settlement of litigation regarding purchases of high fructose corn syrup, which
was reflected as a reduction in cost of sales.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The first nine months of 2005 included a favorable adjustment of $1.1 million related to an adjustment of amounts accrued for executive benefit plans due to the resignation of an
executive, which was reflected as a reduction to S,D&A expenses.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The first nine months of 2005 included financing transaction costs of $1.3 million related to the exchange of $164.8 million of the Companys long-term debt, which was
reflected as an increase to interest expense.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Results in the first nine months of 2004 included a favorable adjustment of approximately $2 million for certain customer-related marketing programs between the Company and The
Coca-Cola Company, which was reflected as a reduction in cost of sales.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Results for the first nine months of 2004 included an unfavorable non-cash adjustment of $1.7 million related to a change in the pricing of concentrate purchased from The Coca-Cola
Company, which was reflected as an increase to cost of sales.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Net Sales



Net sales in the third quarter and first nine months of 2005 increased by approximately 12% and approximately 9%, respectively. The net sales increases were primarily due
to increases in average revenue per case of approximately 3% and approximately 2% for the third quarter and first nine months of 2005, respectively, increases in bottle/can volume of approximately 4% and approximately 3% for the third quarter and
first nine months of 2005, respectively, and increased contract sales to other Coca-Cola bottlers.



The Companys contract net sales increased to $33.7 million in the third quarter of 2005 compared to $18.1 million for the comparable period in 2004, an increase of $15.6 million or approximately 86%. Contract
sales for the first nine months of 2005 were approximately $95.7 million compared to $54.1 million in the first nine months of 2004, an increase of $41.6 million or approximately 77%. The significant increase in contract sales resulted from volume
related to new customers and shipments of Full Throttle, the new energy product of The Coca-Cola Company. The Company produces this product for Coca-Cola bottlers in the eastern half of the United States.



The percentage increases (decreases) in bottle/can volume by product category in the third
quarter and first nine months of 2005 compared to the third quarter and first nine months of 2004 were as follows:



|                                                        |  |                                        |  |                  
|------------------------------------------------------- |  | -------------------------------------- |  | -----------------
|                                                        |  | Bottle/Can Volume% Increase (Decrease)
|Product Category                                        |  | Third Quarter                          |  | First Nine Months
|Sugar carbonated soft drinks                            |  | 0%                                     |  | (1%)             
|Diet carbonated soft drinks                             |  | 2%                                     |  | 4%               
|Total carbonated soft drinks                            |  | 1%                                     |  | 1%               
|Bottled water                                           |  | 41%                                    |  | 22%              
|Isotonics                                               |  | 37%                                    |  | 30%              
|Other noncarbonated beverages (including energy drinks) |  | 3%                                     |  | 7%               
|Total noncarbonated beverages                           |  | 29%                                    |  | 19%              
|Total bottle/can volume                                 |  | 4%                                     |  | 3%               



The Companys noncarbonated
beverage portfolio continues to provide strong volume growth with Dasani growing at 22% and PowerAde growing at 30% and with the newly introduced energy drinks Full Throttle and Rockstar accounting for .5% of total volume in the first nine months of
2005. The Company has encountered significant pricing pressure in the supermarket channel for bottled water with average revenue per case declining by approximately 13% from the first nine months of 2005 compared to the first nine months of 2004.



The Company has introduced several new products during 2005. During the second
quarter of 2005, the Company introduced Coca-Cola Zero, Dasani flavors, and Vault in certain markets. During the first quarter of 2005, the Company introduced Coca-Cola with Lime and Full Throttle, an energy product. Product innovation will continue
to be an important factor impacting the Companys overall bottle/can volume in the future.



The Companys products are sold and distributed through various channels. These channels include selling directly to retail stores and other outlets such as food markets, institutional accounts and vending
machine outlets. During the first nine months of 2005, approximately 66% of the Companys bottle/can volume was



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sold for future consumption. The remaining bottle/can volume of approximately 34% was sold for immediate consumption. The Companys largest customer,
Wal-Mart Stores, Inc., accounted for approximately 14% of the Companys total bottle/can volume during the first nine months of 2005. The Companys second largest customer, Food Lion, LLC, accounted for approximately 10% of the
Companys total bottle/can volume during the first nine months of 2005. Wal-Mart Stores, Inc. accounted for approximately 11% of the Companys total net sales during the first nine months of 2005. All of the Companys sales are to
customers in the United States.



Gross Margin



Gross margins for the first nine months of 2005 and the first nine months of 2004 were
impacted by adjustments for items that are not necessarily indicative of the Companys ongoing results. Excluding these adjustments, the Companys gross margins and gross margins as a percentage of net sales would have been as follows:



|                                             |  |                   |       |    |      |   |       |   
|-------------------------------------------- |  | ----------------- | ----- | -- | ---- | - | ----- | --
|                                             |  | First Nine Months |      
|In Millions                                  |  | 2005              |       |    | 2004 |  
|Gross margin as reported                     |  | $                 | 467.7 |    |      | $ | 452.6 |   
|Adjustments:                                 |  |                   |       |    |      |   |       |   
|High fructose corn syrup litigation proceeds |  |                   | (6.4  | )  |      |   |       |   
|Change in concentrate pricing                |  |                   |       |    |      |   | 1.7   |   
|Customer marketing programs adjustment       |  |                   |       |    |      |   | (2.0  | ) 
|                                             |  |                   |       |    |      |   |       |   
|Gross margin as adjusted                     |  | $                 | 461.3 |    |      | $ | 452.3 |   
|                                             |  |                   |       |    |      |   |       |   
|                                             | 
|                                             |  | First Nine Months |      
|Percentage of Net Sales                      |  | 2005              |       |    | 2004 |  
|Gross margin percentage as reported          |  |                   | 45.7  | %  |      |   | 48.3  | % 
|Adjustments:                                 |  |                   |       |    |      |   |       |   
|High fructose corn syrup litigation proceeds |  |                   | (.6   | %) |      |   |       |   
|Change in concentrate pricing                |  |                   |       |    |      |   | .2    | % 
|Customer marketing programs adjustment       |  |                   |       |    |      |   | (.3   | %)
|                                             |  |                   |       |    |      |   |       |   
|Gross margin percentage as adjusted          |  |                   | 45.1  | %  |      |   | 48.2  | % 
|                                             |  |                   |       |    |      |   |       |   



The non-GAAP financial measures
Gross margin as adjusted and Gross margin percentage as adjusted are provided to allow investors to more clearly evaluate gross margin trends. These measures exclude the impact of high fructose corn syrup litigation proceeds
in 2005, and a change in concentrate pricing and an adjustment of customer marketing programs reimbursements in 2004. The 3.1% decrease in gross margin as a percentage of net sales as adjusted in the first nine months of 2005 resulted primarily from
the impact of higher contract sales, which have lower margins (1.8% of the 3.1% decrease). The remainder of the decrease resulted primarily from increases in the Companys packaging costs.



The Companys gross margins as a percentage of net sales may not be comparable to other
companies, since some entities include all costs related to their distribution network in cost of sales and the Company excludes a portion of these costs from gross margin, including them instead in S,D&A expenses.



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Cost of Sales



Cost of sales on a per unit basis for bottle/can volume increased approximately 3% in the third quarter and the first nine months of 2005 compared to the comparable
periods of 2004. The increase in cost of sales for the first nine months was mitigated by the $6.4 million settlement of litigation regarding purchases of high fructose corn syrup in the second quarter of 2005 which partially offset higher raw
material costs. During the second quarter of 2004, The Coca-Cola Company changed its method of concentrate pricing, resulting in a change in the Companys investment in inventories, resulting in a one-time increase in cost of sales of $1.7
million. Packaging costs per unit increased by approximately 7% during the third quarter of 2005 as compared to the third quarter of 2004. Packaging costs per unit increased more than 10% during the first nine months of 2005 compared to the same
period in 2004. The increase in packaging costs in 2005 relates to significantly higher plastic bottle costs and increased aluminum can costs.



The Company relies extensively on advertising and sales promotion in the marketing of its products. The Coca-Cola Company and other beverage companies that supply
concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures to promote sales in the local territories served by the Company. The Company also benefits from national advertising programs conducted
by The Coca-Cola Company and other beverage companies. Certain of the marketing expenditures by The Coca-Cola Company and other beverage companies are made pursuant to annual arrangements. Although The Coca-Cola Company has advised the Company that
it intends to continue to provide marketing funding support for the remainder of 2005, it is not obligated to do so under the Companys Bottle Contracts. Significant decreases in marketing funding support from The Coca-Cola Company or other
beverage companies could adversely impact operating results of the Company in the future.



Total marketing funding support from The Coca-Cola Company and other beverage companies, which includes direct payments to the Company and payments to customers for marketing programs, was $22.2 million for the first
nine months of 2005 versus $33.7 million for the first nine months of 2004 and was recorded as a reduction in cost of sales. Since May 28, 2004, The Coca-Cola Company has provided the majority of the Companys marketing funding support for
bottle/can products as a reduction in the price of concentrate. The change in concentrate price represents a significant portion of the marketing funding support that previously would have been paid to the Company in cash related to the sale of
bottle/can products of The Coca-Cola Company. Accordingly, the amounts received in cash from The Coca-Cola Company for marketing funding support decreased significantly in the first nine months of 2005 as compared to the first nine months of 2004.
However, this change in marketing funding support, after taking into account the related reduction in concentrate price, did not have a significant impact on overall results of operations in the first nine months of 2005.



Cost of sales includes the following: raw material costs, manufacturing labor, manufacturing
overhead, inbound freight charges related to raw materials, receiving costs, inspection costs, manufacturing warehousing costs and freight charges related to the movement of finished goods from manufacturing locations to sales distribution centers.



S,D&A Expenses



S,D&A expenses increased by 5.7% in the third quarter and 3.7% in the first nine months
of 2005 compared to the same periods in 2004. The increase in S,D&A expenses was primarily due to wage increases for the Companys employees, higher employee benefits costs including pension and health care costs and higher fuel



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costs. The increase in S,D&A expenses in 2005 was mitigated by the reduction of an accrual for executive benefit plans of $1.1 million due to the
resignation of an executive of the Company in the second quarter of 2005. The Company continues to incur increased fuel costs. Fuel costs for the third quarter of 2005 related to the movement of finished goods from sales distribution centers to
customer locations increased by approximately 40% or $1.2 million compared to the third quarter of 2004. Fuel costs for the first nine months of 2005 increased by approximately 32% or $2.7 million compared to the first nine months of 2004.



Over the last three years, the Company has converted the majority of its
distribution system from a conventional sales method to a pre-sell method in which sales personnel either visit or call a customer to determine the customers requirements for their order. This pre-sell method has enabled the Company to add a
significant number of new product and package combinations and provides the capacity to add additional product offerings in the future. The Company will continue to evaluate its distribution system in an effort to improve the process of distributing
products to customers. Shipping and handling costs related to the movement of finished goods from manufacturing locations to sales distribution centers are included in cost of sales. Shipping and handling costs related to the movement of finished
goods from sales distribution centers to customer locations are included in S,D&A expenses and totaled $136.3 million and $130.7 million in the first nine months of 2005 and the first nine months of 2004, respectively. Customers do not pay the
Company separately for shipping and handling costs.



In October 2005, the
Company announced changes to its postretirement health care plan. These changes will be effective beginning in 2006. Due to the changes announced, the Company anticipates that its expense and liability related to its postretirement health care plan
will be reduced. Both the expense and liability for postretirement health care benefits are subject to determination by the Companys actuaries and include numerous variables that will affect the impact of the announced changes. The Company
anticipates that the annual expense for the postretirement health care plan will decrease by approximately $2 million in 2006.



The S,D&A expense line item includes the following: sales management labor costs, distribution costs from sales distribution centers to customer locations, sales
distribution center warehouse costs, point-of-sale expenses, advertising expenses, vending equipment repair costs and administrative support labor and operating costs such as treasury, legal, information services, accounting, internal audit and
executive management costs.



Depreciation Expense



Depreciation expense for the third quarter and first nine months of 2005 declined by $.8
million and $1.9 million compared to the same periods in the prior year. The decline in depreciation expense was primarily due to lower levels of capital spending.



Amortization of Intangibles



Amortization of intangibles expense for the third quarter and first nine months of 2005 declined by $.6 million and $1.6 million compared to the same periods in 2004. The
decline in amortization expense was due to the impact of certain customer relationships which are now fully amortized.



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##### Table of Contents

Interest Expense



Interest expense increased $1.2 million and $4.6 million during the third quarter and first nine months of 2005 compared to the third quarter and first nine months of
2004, respectively. The increase is attributable to financing transaction costs of $1.3 million in the second quarter of 2005 related to the exchange of $164.8 million of the Companys long-term debentures and higher interest rates on the
Companys floating rate debt, partially offset by the impact of lower debt balances and short-term cash investments.



Minority Interest



The Company recorded minority interest expense of $1.2 million during the third quarter of 2005 compared to $1.3 million during the third quarter of 2004 related to the portion of Piedmont owned by The Coca-Cola
Company. The Company recorded minority interest expense of $3.2 million during the first nine months of 2005 compared to $3.4 million during the first nine months of 2004 related to the portion of Piedmont owned by The Coca-Cola Company.



Income Taxes



The Companys effective income tax rate for the first nine months of 2005 was 41.5% compared to 42.1% for the first nine months of
2004. The Company estimates that the adoption of FAS 109-1 will reduce the Companys effective income tax rate by approximately 1% in 2005.



During the second quarter of 2005, the Company entered into a settlement agreement with a state whereby the Company agreed to reduce certain net operating loss
carryforwards and to pay certain additional taxes and interest relating to prior years. The loss of state net operating loss carryforwards, net of federal tax benefit, of $4.4 million did not have an effect on the provision for income taxes due to a
valuation allowance previously recorded for such deferred tax assets. Under this settlement, the Company was required to pay $5.7 million in the second quarter of 2005 and is required to pay an additional $5.0 million by April 15, 2006. The
amounts paid and the liability remaining in excess of reserves previously recorded had the effect of increasing income tax expense by approximately $4.1 million in the second quarter of 2005. Based on analysis of current facts, the Company also made
adjustments to reserves for income tax exposure in other states in the second quarter which had the effect of decreasing income tax expense by $3.8 million. The Companys income tax reserves are subject to adjustment in future periods based on
the Companys ongoing evaluations of its income tax liabilities and new information that becomes available to the Company.



The Companys effective tax rate for the first nine months of 2005 reflects expected full year 2005 earnings. The Companys effective income tax rate for the
remainder of 2005 is dependent upon operating results and may change if the results for the year are different from current expectations.



Financial Condition



Total assets increased slightly from $1.31 billion at January 2, 2005 to $1.36 billion at October 2, 2005 primarily due to increases in cash, accounts
receivable, inventories and other assets partially offset by a decrease in property, plant and equipment, net. Other assets increased by $14.3 million from January 2, 2005 to



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October 2, 2005 primarily as a result of the premium paid in conjunction with the debt exchange. Property, plant and equipment, net decreased primarily due
to lower levels of capital spending.



Net working capital, defined as current
assets less current liabilities, increased by $37.2 million from January 2, 2005 to October 2, 2005 and increased by $51.8 million from September 26, 2004 to October 2, 2005.



Significant changes in net working capital from January 2, 2005 to October 2, 2005
were as follows:



| |  |  | An increase in cash of $27.0 million due to cash flow from operating activities.
| | - |  | --------------------------------------------------------------------------------



| |  |  | An increase in accounts receivable, trade of $17.7 million due to seasonality, growth in bottle/can volume and a significant increase in contract sales to other Coca-Cola bottlers.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in inventories of $8.0 million due to seasonality and the introduction of new products.
| | - |  | ---------------------------------------------------------------------------------------------------



| |  |  | An increase in accounts payable, trade of $12.2 million primarily due to seasonality and growth in bottle/can volume.
| | - |  | ---------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in other accrued liabilities of $9.2 million, due primarily to a $5 million accrual for a payment due in 2006 as a result of an income tax settlement.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



Significant changes in net working capital from
September 26, 2004 to October 2, 2005 were as follows:



| |  |  | An increase in cash of $27.9 million due to cash flow from operating activities.
| | - |  | --------------------------------------------------------------------------------



| |  |  | An increase in accounts receivable, trade of $11.9 million due to a significant increase in contract sales to other Coca-Cola bottlers and growth in bottle/can volume.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | An increase in inventories of $5.2 million due to growth in bottle/can volume and the introduction of new products.
| | - |  | -------------------------------------------------------------------------------------------------------------------



Debt and capital lease obligations were $779.7 million as of October 2, 2005 compared to
$789.1 million as of January 2, 2005 and $784.5 million as of September 26, 2004. Debt and capital lease obligations as of October 2, 2005 included $79.7 million of capital lease obligations related primarily to Company facilities.



Liquidity and Capital Resources



Capital Resources



Sources of capital for the Company include cash flows from operating activities, bank borrowings and the issuance of debt and equity
securities. Management believes that the Company, through these sources, has sufficient financial resources available to maintain its 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 amount and frequency of future dividends will be determined by the Companys Board of Directors in light of the earnings and financial condition of the Company at
such time, and no assurance can be given that dividends will be declared in the future.



The Company primarily uses cash flows from operations and available credit facilities to meet its cash requirements. On April 7, 2005, the Company entered into a new $100 million revolving credit facility replacing its existing $125
million revolving credit facility. The $100 million facility matures in April 2010.



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The Company anticipates that cash provided by operating activities and its credit facilities will be sufficient to meet all of its anticipated cash
requirements, including debt and capital lease maturities, through 2008.



In
June 2005, the Company issued $164.8 million of new 5.00% senior notes due 2016 in exchange for $122.2 million of its outstanding 6.375% debentures due 2009 and $42.6 million of its outstanding 7.20% debentures due 2009. The exchange was conducted
as a private placement to holders of the existing debentures that were qualified institutional buyers within the meaning of Rule 144A of the Securities Act of 1933. As part of the exchange, the Company paid a premium of $15.6 million to
holders participating in the exchange. The transaction was accounted for as an exchange of debt, and the $15.6 million premium will be amortized over the life of the new notes. The Company incurred financing transaction costs of $1.3 million related
to the exchange of debt which were included in interest expense during the second quarter of 2005. In August 2005, the Company successfully completed a registered exchange offer in which all of the previously issued private notes were exchanged for
substantially identical registered notes. The exchange of debt will reduce the Companys interest costs prospectively and lengthens maturities on portions of the Companys debt, reducing refinancing requirements in the near-term.



Cash Sources and Uses



The primary source of cash for the Company has been cash provided by operating activities.
The primary uses of cash have been for capital expenditures, the repayment of debt maturities and capital lease obligations, the premium on the debt exchange, income tax payments and dividends.



A summary of activity for the first nine months of 2005 and the first nine months of 2004
follows:



|                                                    |  |                   |      |      |   |       |  
|--------------------------------------------------- |  | ----------------- | ---- | ---- | - | ----- | -
|                                                    |  | First Nine Months |     
|In Millions                                         |  | 2005              |      | 2004 |  
|Cash Sources                                        |  |                   |      |      |   |       |  
|Cash provided by operating activities               |  | $                 | 80.5 |      | $ | 106.3 |  
|Proceeds from redemption of life insurance policies |  |                   |      |      |   | 29.0  |  
|Other                                               |  |                   | 3.7  |      |   | 1.9   |  
|                                                    |  |                   |      |      |   |       |  
|Total cash sources                                  |  | $                 | 84.2 |      | $ | 137.2 |  
|                                                    |  |                   |      |      |   |       |  
|Cash Uses                                           |  |                   |      |      |   |       |  
|Capital expenditures                                |  | $                 | 25.5 |      | $ | 38.6  |  
|Repayment of debt and capital lease obligations     |  |                   | 9.3  |      |   | 101.1 |  
|Premium on exchange of long-term debt               |  |                   | 15.6 |      |   |       |  
|Dividends                                           |  |                   | 6.8  |      |   | 6.8   |  
|Other                                               |  |                   |      |      |   | .8    |  
|                                                    |  |                   |      |      |   |       |  
|Total cash uses                                     |  | $                 | 57.2 |      | $ | 147.3 |  
|                                                    |  |                   |      |      |   |       |  
|Increase (decrease) in cash                         |  | $                 | 27.0 |      | $ | (10.1 | )
|                                                    |  |                   |      |      |   |       |  



The Company made contributions to its
pension plans of $8.0 million during the first nine months of 2005. The Company anticipates making total contributions to its pension plans of approximately $8 million to $10 million in 2005.



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Based on current projections, which include a number of assumptions such as the Companys pre-tax earnings, the
Company anticipates its cash payments for income taxes will increase from approximately $6 million to $9 million in 2005 to an estimated $13 million to $17 million in 2006.



Investing Activities



Additions to property, plant and equipment during the first nine months of 2005 were $25.5 million compared to $38.6 million during the first nine months of 2004. Capital
expenditures during the first nine months of 2005 were funded with cash flows from operations and from borrowings under the Companys available lines of credit. Leasing is used for certain capital additions when considered cost effective
relative to other sources of capital. The Company currently leases its corporate headquarters, two production facilities and several sales distribution facilities and administrative facilities.



At the end of the third quarter of 2005, the Company had no material commitments for the
purchase of capital assets other than those related to normal replacement of equipment. The Company considers the acquisition of bottling territories on an ongoing basis. The Company anticipates that additions to property, plant and equipment in
2005 will be in the range of $40 million to $45 million and plans to fund such additions through cash flows from operations and its available lines of credit. The Company anticipates that additions to property, plant and equipment will be in the
range of $60 million to $70 million in 2006.



Financing Activities



In June 2005, the Company issued $164.8 million of new 5.00% senior notes
due 2016 in exchange for $122.2 million of its outstanding 6.375% debentures due 2009 and $42.6 million of its outstanding 7.20% debentures due 2009. As a result of the debt exchange, the Company reduced its near-term refinancing requirements by
extending the maturity dates on a portion of its total debt.



On April 7,
2005, the Company entered into a new five-year $100 million revolving credit facility replacing the existing $125 million revolving credit facility that was scheduled to expire in December 2005. On October 2, 2005, there were no amounts
outstanding under the new facility. The $100 million facility matures in April 2010. The new facility includes an option to extend the term for an additional year at the discretion of the participating banks. The new revolving credit facility bears
interest at a floating base rate or a floating rate of LIBOR plus an interest rate spread of .375%. In addition, there is a facility fee of .125% required for this revolving credit facility. Both the interest rate spread and the facility fee are
determined from a commonly used pricing grid based on the Companys long-term senior unsecured noncredit-enhanced debt rating. The Companys new revolving credit facility contains two financial covenants related to ratio requirements for
interest coverage, and long-term debt to cash flow, each as defined in the credit agreement. These covenants do not currently, and the Company does not anticipate that they will, restrict its liquidity or capital resources.



The Company borrows periodically under its available lines of credit. These lines of credit,
in the aggregate amount of $60 million at October 2, 2005, are made available at the discretion of the two participating banks at rates negotiated at the time of borrowing and may be withdrawn at any time by such banks. The Company can utilize
its revolving credit facility in the event the lines of credit are not available. The Company had no amounts outstanding under its lines of credit as of October 2, 2005. To the extent that borrowings under the



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##### Table of Contents

lines of credit and borrowings under the revolving credit facility do not exceed the amount available under the Companys revolving credit facility and
the term of the revolving credit facility matures in more than 12 months, such borrowings are classified as noncurrent liabilities.



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



At October 2, 2005, the Companys credit
ratings were as follows:



|                  |  |               
|----------------- |  | --------------
|                  |  | Long-Term Debt
|Standard & Poors |  | BBB           
|Moodys           |  | Baa2          



The Companys credit ratings are
reviewed periodically by the respective rating agencies. Changes in the Companys operating results or financial position could result in changes in the Companys credit ratings. Lower credit ratings could result in higher borrowing costs
for the Company. There were no changes in these credit ratings from the prior year. It is the Companys intent to continue to reduce its financial leverage over time.



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



The Company issued 20,000 shares of Class B Common Stock to J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer, with respect to 2004, effective January 3, 2005, under a
restricted stock award plan that provides for annual awards of such shares subject to the Company meeting certain performance criteria.



Off-Balance Sheet Arrangements



There has been no significant change in the Companys off-balance sheet arrangements since January 2, 2005.



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Aggregate Contractual Obligations



The following table summarizes the Companys contractual obligations as of October 2, 2005:



|                                           |  |                        |           |                      |   |                     |  |                      |         |                  |   |         |  |   |        
|------------------------------------------ |  | ---------------------- | --------- | -------------------- | - | ------------------- |  | -------------------- | ------- | ---------------- | - | ------- |  | - | -------
|                                           |  | Payments Due by Period
|In Thousands                               |  | Total                  |           | Oct. 2005-Sept. 2006 |   | Oct. 2006-Sept 2008 |  | Oct. 2008-Sept. 2010 |         | After Sept. 2010
|Contractual obligations:                   |  |                        |           |                      |   |                     |  |                      |         |                  |   |         |  |   |        
|Long-term debt                             |  | $                      | 700,039   |                      | $ | 39                  |  | $                    | 100,000 |                  | $ | 185,243 |  | $ | 414,757
|Capital lease obligations, net of interest |  |                        | 79,670    |                      |   | 1,759               |  |                      | 3,256   |                  |   | 3,728   |  |   | 70,927 
|Purchase obligations(1)                    |  |                        | 646,923   |                      |   | 74,645              |  |                      | 149,290 |                  |   | 149,290 |  |   | 273,698
|Other long-term liabilities(2)             |  |                        | 72,729    |                      |   | 4,923               |  |                      | 10,133  |                  |   | 9,743   |  |   | 47,930 
|Operating leases                           |  |                        | 19,061    |                      |   | 2,489               |  |                      | 3,534   |                  |   | 2,979   |  |   | 10,059 
|Long-term contractual arrangements(3)      |  |                        | 31,291    |                      |   | 7,519               |  |                      | 11,904  |                  |   | 7,608   |  |   | 4,260  
|Purchase orders(4)                         |  |                        | 9,039     |                      |   | 9,039               |  |                      |         |                  |   |         |  |   |        
|                                           |  |                        |           |                      |   |                     |  |                      |         |                  |   |         |  |   |        
|Total contractual obligations              |  | $                      | 1,558,752 |                      | $ | 100,413             |  | $                    | 278,117 |                  | $ | 358,591 |  | $ | 821,631
|                                           |  |                        |           |                      |   |                     |  |                      |         |                  |   |         |  |   |        



|(1) | Represents the obligation by the Company to purchase finished products from South Atlantic
Canners, a manufacturing cooperative.
|--- | --------------------------------------------------------------------------------------------------------------------------------



|(2) | Includes obligations under executive benefit plans, non-compete liabilities and other
long-term liabilities.
|--- | ------------------------------------------------------------------------------------------------------------



|(3) | Includes contractual arrangements with certain prestige properties, athletic venues and other
locations, and other long-term marketing commitments.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Includes 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.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company is a member of Southeastern Container, a plastic bottle manufacturing cooperative, from which the Company is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories. Such
obligation is not included in the Companys table of aggregate contractual obligations since there are no minimum purchase requirements.



Interest Rate Hedging



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



The Company currently has six interest rate swap agreements. These interest rate swap agreements effectively converted $250 million of the
Companys debt from a fixed rate to a floating rate and are accounted for as fair value hedges.



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Interest expense was reduced due to amortization of deferred gains on previously terminated interest rate swap agreements
and forward interest rate agreements by $1.3 million and $1.5 million during the first nine months of 2005 and the first nine months of 2004, respectively.



The weighted average interest rate of the Companys debt and capital lease obligations after taking into account all of the interest rate hedging activities was 5.9%
as of October 2, 2005 compared to 5.6% as of January 2, 2005 and 5.3% as of September 26, 2004. Approximately 42% of the Companys debt and capital lease obligations of $779.7 million as of October 2, 2005 was maintained on
a floating rate basis and was subject to changes in short-term interest rates.



If interest rates increased by 1%, the Companys interest expense would increase by approximately $3.3 million over the next twelve months. This amount is determined by calculating the effect of a hypothetical interest rate increase of
1% on outstanding floating rate debt and capital lease obligations as of October 2, 2005, including the effects of our derivative financial instruments. This calculated, hypothetical increase in interest expense for the following twelve months
may be different from the actual increase in interest expense from a 1% increase in interest rates due to varying interest rate reset dates on the Companys floating rate debt and derivative financial instruments.



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CAUTIONARY INFORMATION REGARDING FORWARD-LOOKING STATEMENTS



This Quarterly Report on Form 10-Q, as well as information included in future filings by the
Company with the Securities and Exchange Commission and information contained in written material, press releases and oral statements issued by or on behalf of the Company, contains, or may contain, forward-looking management comments and other
statements that reflect managements current outlook for future periods. These statements include, among others, statements relating to:



| |  |  | increases in pension expense;
| | - |  | -----------------------------



| |  |  | anticipated return on pension plan investments;
| | - |  | -----------------------------------------------



| |  |  | the Companys ability to utilize net operating loss carryforwards;
| | - |  | ------------------------------------------------------------------



| |  |  | 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 the risk of loss with respect to funds deposited with banks is minimal;
| | - |  | -------------------------------------------------------------------------------------------------



| |  |  | 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;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | managements belief that the Company has adequately provided for any ultimate amounts that are likely to result from tax audits;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys expectation of exercising its option to extend certain lease obligations;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | the effects of the closings of sales distribution centers;
| | - |  | ----------------------------------------------------------



| |  |  | the Companys intention to continue to evaluate its distribution system in an effort to optimize the process of distributing products;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the upgrade of its ERP software system;
| | - |  | ---------------------------------------



| |  |  | 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 ability to issue $300 million of securities under acceptable terms under its shelf registration statement;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys belief that certain franchise rights are perpetual or will be renewed upon expiration;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | the Companys intention to provide for Piedmonts future financing requirements;
| | - |  | --------------------------------------------------------------------------------



| |  |  | the Companys key priorities for 2005 and the next several years;
| | - |  | -----------------------------------------------------------------



| |  |  | 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 for the first nine months of 2005;
| | - |  | --------------------------------------------------------------------------------------------------------------------------



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| |  |  | the Companys belief that cash provided by operating activities and its credit facilities will be sufficient to meet all of its anticipated cash requirements, including debt
and capital lease maturities, through 2008;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | 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 October 2, 2005;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | anticipated contributions to Company-sponsored pension plans of approximately $8 million to $10 million in 2005;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | anticipated cash payments for income taxes of approximately $6 to $9 million in 2005 and approximately $13 million to $17 million in 2006;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | anticipated additions to property, plant and equipment in 2005 will be in the range of $40 million to $45 million and additions to property, plant and equipment in 2006 will be in
the range of $60 million to $70 million;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys belief that compliance with environmental laws will not have a material adverse effect on its capital expenditures, earnings or competitive position;
| | - |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys belief that soft demand for sugar carbonated soft drinks will continue;
| | - |  | -------------------------------------------------------------------------------------



| |  |  | the Companys belief that the impact of the American Jobs Creation Act of 2004 and the related adoption of FAS 109-1 will reduce the Companys effective income tax rate in
2005 by approximately 1%;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys belief that its postretirement benefit expense will decrease by approximately $2 million in 2006;
| | - |  | ---------------------------------------------------------------------------------------------------------------



| |  |  | the Companys beliefs and estimates regarding the impact of the adoption of certain new accounting pronouncements;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the Companys belief that CCBSS will increase purchasing efficiency and reduce future increases in cost of sales and other operating expenses;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | anticipated product innovation; and
| | - |  | -----------------------------------



| |  |  | the Companys expectation that growth in overall bottle/can volume will be primarily dependent upon continued growth in diet products, isotonics, bottled water and energy
drinks as well as the introduction of new products.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



These
statements and expectations are based on the currently available competitive, financial and economic data along with the Companys operating plans, and are subject to future events and uncertainties that could cause anticipated events not to
occur or actual results to differ materially from historical or anticipated results. Among the events or uncertainties which could adversely affect future periods are:



| |  |  | lower than expected selling prices resulting from increased marketplace competition;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | an inability to meet performance requirements for expected levels of marketing funding support payments from The Coca-Cola Company or other beverage companies;
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | changes in how significant customers market or promote our products;
| | - |  | --------------------------------------------------------------------



| |  |  | reduced advertising and marketing spending by The Coca-Cola Company or other beverage companies;
| | - |  | ------------------------------------------------------------------------------------------------



| |  |  | an inability to meet requirements under bottling contracts with The Coca-Cola Company or other beverage companies;
| | - |  | ------------------------------------------------------------------------------------------------------------------



| |  |  | the inability of our aluminum can or PET bottle suppliers to meet our purchase requirements;
| | - |  | --------------------------------------------------------------------------------------------



| |  |  | significant changes from expectations in the cost of raw materials;
| | - |  | -------------------------------------------------------------------



| |  |  | higher than expected insurance premiums and fuel costs;
| | - |  | -------------------------------------------------------



| |  |  | lower than anticipated returns on pension plan assets;
| | - |  | ------------------------------------------------------



| |  |  | higher than anticipated health care costs;
| | - |  | ------------------------------------------



| |  |  | unfavorable interest rate fluctuations;
| | - |  | ---------------------------------------



| |  |  | higher than anticipated cash payments for income taxes;
| | - |  | -------------------------------------------------------



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##### Table of Contents

| |  |  | unfavorable weather conditions;
| | - |  | -------------------------------



| |  |  | significant changes in consumer preferences related to nonalcoholic beverages;
| | - |  | ------------------------------------------------------------------------------



| |  |  | inability to increase selling prices, increase bottle/can volume or reduce expenses to offset higher raw material costs;
| | - |  | ------------------------------------------------------------------------------------------------------------------------



| |  |  | reduced brand and packaging innovation;
| | - |  | ---------------------------------------



| |  |  | significant changes in credit ratings impacting the Companys ability to borrow;
| | - |  | --------------------------------------------------------------------------------



| |  |  | adverse or unanticipated outcomes arising from the disposition of certain claims and legal proceedings occurring in the ordinary course of business;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | assessments of additional taxes resulting from audits of our filings for various periods;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | terrorist attacks, war, other civil disturbances or national emergencies; and
| | - |  | -----------------------------------------------------------------------------



| |  |  | changes in financial markets.
| | - |  | -----------------------------



The Company undertakes no obligation to publicly update or revise any forward-looking statements.



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##### Table of Contents

|Item 3. | Quantitative and Qualitative Disclosures About Market Risk
|------- | ----------------------------------------------------------



There has been no significant change in market risks since January 2, 2005.



|Item 4. | Controls and Procedures
|------- | -----------------------



As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Companys
management, including the Companys Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Companys disclosure controls and procedures (as defined in Rule 13a-15(e) of the
Securities Exchange Act of 1934 (the Exchange Act)), pursuant to Rule 13a-15 of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and Chief Financial Officer concluded, as of the end of the period covered by this
report, that the Companys disclosure controls and procedures were effective for the purpose of providing reasonable assurance that the information required to be disclosed in the reports the Company files or submits under the Exchange Act
(1) is recorded, processed, summarized and reported within the time periods specified in the SECs rules and forms and (2) is accumulated and communicated to the Companys management, including its principal executive and
principal financial officers, as appropriate to allow timely decisions regarding required disclosures.



There has been no change in the Companys internal control over financial reporting during the quarter ended October 2, 2005 that has materially affected, or is reasonably likely to materially affect, the
Companys internal control over financial reporting.



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##### Table of Contents

PART II - OTHER INFORMATION



|Item 6. | Exhibits
|------- | --------



|(a) | Exhibits
|--- | --------



|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|              | 
|4.1           |  | 5.00% Senior Note due 2016 (filed herewith).                                                                                                                                                                                                                                                                                                                                                                                                                                 
|              | 
|4.2           |  | Second Amended and Restated Promissory Note, dated as of August 25, 2005, by and between the Company and Piedmont Coca-Cola Bottling Partnership (filed herewith).                                                                                                                                                                                                                                                                                                           
|              | 
|4.3           |  | 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 subsidiaries for which consolidated financial statements are required to be filed, and which authorizes a total amount of securities not in excess of 10 percent of total assets of the registrant and its subsidiaries on
a consolidated basis.
|              | 
|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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SIGNATURE



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



|                        |  |  |  |                                                  |  |                           |  |                                                                                                                     
|----------------------- |  |  |  | ------------------------------------------------ |  | ------------------------- |  | --------------------------------------------------------------------------------------------------------------------
|                        |  |  |  | COCA-COLA BOTTLING CO. CONSOLIDATED (REGISTRANT)
|                        |  |  | 
|Date: November 10, 2005 |  |  |  | By:                                              |  | /s/    STEVEN D.
WESTPHAL
|                        |  |  |  |                                                  |  |                           |  | Steven D. Westphal Principal Financial Officer of the RegistrantandSenior Vice President and Chief Financial Officer



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