##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 10-Q
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
 For the quarterly period ended July 1, 2007
 Commission File Number 0-9286
 COCA-COLA
BOTTLING CO. CONSOLIDATED
  Delaware
    
    56-0950585(State or other jurisdiction of incorporation ororganization)
    
    (I.R.S. Employer Identification No.)
 4100 Coca-Cola Plaza, Charlotte, North Carolina 28211
 
 704) 557-4400
 
 þ o
 
 Large accelerated filer o
    
    Accelerated filer þ
    
    Non-accelerated filer o
 o þ
  Class
    
    Outstanding at July 31, 2007Common Stock, $1.00 Par Value
    
    6,643,677Class B Common Stock, $1.00 Par Value
    
    2,479,652




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##### 



COCA-COLA BOTTLING CO. CONSOLIDATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED JULY 1, 2007
 INDEX
 PagePART I  FINANCIAL INFORMATIONItem 1.
    
    Financial Statements (Unaudited)Consolidated Statements of Operations
    
    
    3Consolidated Balance Sheets
    
    
    4Consolidated Statements of Changes in Stockholders Equity
    
    
    6Consolidated Statements of Cash Flows
    
    
    7Notes to Consolidated Financial Statements
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    32Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    
    55Item 4.
    
    Controls and Procedures
    
    
    55PART II  OTHER INFORMATIONItem 1A.
    
    Risk Factors
    
    
    56Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    57Item 6.
    
    Exhibits
    
    
    58Signature
    
    
    59Exhibit 12Exhibit 31.1Exhibit 31.2Exhibit 32
  2




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##### Table of Contents



Item l. Financial Statements.
 
 
 Second Quarter
    
    
    First Half2007
    
    
    2006
    
    
    2007
    
    
    2006Net sales
    
    $
    390,443
    
    
    $
    386,624
    
    
    $
    727,999
    
    
    $
    719,803Cost of sales
    
    
    221,153
    
    
    
    218,935
    
    
    
    407,218
    
    
    
    406,088Gross margin
    
    
    169,290
    
    
    
    167,689
    
    
    
    320,781
    
    
    
    313,715Selling, delivery and administrative expenses
    
    
    136,684
    
    
    
    138,310
    
    
    
    267,515
    
    
    
    270,038Amortization of intangibles
    
    
    112
    
    
    
    142
    
    
    
    223
    
    
    
    290Income from operations
    
    
    32,494
    
    
    
    29,237
    
    
    
    53,043
    
    
    
    43,387Interest expense
    
    
    12,294
    
    
    
    12,843
    
    
    
    24,512
    
    
    
    25,063Minority interest
    
    
    1,169
    
    
    
    1,149
    
    
    
    1,850
    
    
    
    1,705Income before income taxes
    
    
    19,031
    
    
    
    15,245
    
    
    
    26,681
    
    
    
    16,619Income taxes
    
    
    7,340
    
    
    
    6,358
    
    
    
    10,339
    
    
    
    6,917Net income
    
    $
    11,691
    
    
    $
    8,887
    
    
    $
    16,342
    
    
    $
    9,702Basic net income per share:Common Stock
    
    $
    1.28
    
    
    $
    .98
    
    
    $
    1.79
    
    
    $
    1.07Weighted average number of Common Stock
shares outstanding
    
    
    6,644
    
    
    
    6,643
    
    
    
    6,643
    
    
    
    6,643Class B Common Stock
    
    $
    1.28
    
    
    $
    .98
    
    
    $
    1.79
    
    
    $
    1.07Weighted average number of Class B Common
Stock shares outstanding
    
    
    2,480
    
    
    
    2,460
    
    
    
    2,480
    
    
    
    2,460Diluted net income per share:Common Stock
    
    $
    1.28
    
    
    $
    .97
    
    
    $
    1.79
    
    
    $
    1.06Weighted average number of Common Stock
shares outstanding  assuming dilution
    
    
    9,143
    
    
    
    9,123
    
    
    
    9,137
    
    
    
    9,118Class B Common Stock
    
    $
    1.28
    
    
    $
    .97
    
    
    $
    1.79
    
    
    $
    1.06Weighted average number of Class B Common
Stock shares outstanding  assuming dilution
    
    
    2,500
    
    
    
    2,480
    
    
    
    2,494
    
    
    
    2,475Cash dividends per share:Common Stock
    
    $
    .25
    
    
    $
    .25
    
    
    $
    .50
    
    
    $
    .50Class B Common Stock
    
    $
    .25
    
    
    $
    .25
    
    
    $
    .50
    
    
    $
    .50
  3




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##### Table of Contents



Unaudited
    
    
    
    
    
    
    UnauditedJuly 1,
    
    
    Dec. 31,
    
    
    July 2,2007
    
    
    2006
    
    
    2006ASSETSCurrent Assets:Cash and cash equivalents
    
    $
    71,149
    
    
    $
    61,823
    
    
    $
    30,971Accounts receivable, trade, less allowance for
doubtful accounts 
of $1,024, $1,334 and $1,490,
respectively
    
    
    109,977
    
    
    
    91,299
    
    
    
    106,740Accounts receivable from The Coca-Cola Company
    
    
    22,660
    
    
    
    4,915
    
    
    
    10,709Accounts receivable, other
    
    
    10,296
    
    
    
    8,565
    
    
    
    10,485Inventories
    
    
    66,347
    
    
    
    67,055
    
    
    
    63,932Prepaid expenses and other current assets
    
    
    17,444
    
    
    
    13,485
    
    
    
    15,848Total current assets
    
    
    297,873
    
    
    
    247,142
    
    
    
    238,685Property, plant and equipment, net
    
    
    365,167
    
    
    
    384,464
    
    
    
    385,813Leased property under capital leases, net
    
    
    72,929
    
    
    
    69,851
    
    
    
    71,511Other assets
    
    
    36,767
    
    
    
    35,542
    
    
    
    38,892Franchise rights
    
    
    520,672
    
    
    
    520,672
    
    
    
    520,672Goodwill
    
    
    102,049
    
    
    
    102,049
    
    
    
    102,049Other identifiable intangible assets, net
    
    
    4,524
    
    
    
    4,747
    
    
    
    4,986Total
    
    $
    1,399,981
    
    
    $
    1,364,467
    
    
    $
    1,362,608
  4




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##### Table of Contents



Unaudited
    
    
    
    
    
    
    UnauditedJuly 1,
    
    
    Dec. 31,
    
    
    July 2,2007
    
    
    2006
    
    
    2006LIABILITIES AND STOCKHOLDERS EQUITYCurrent Liabilities:Current portion of debt
    
    $
    100,000
    
    
    $
    100,000Current portion of obligations under capital leases
    
    
    2,517
    
    
    
    2,435
    
    
    $
    1,594Accounts payable, trade
    
    
    41,379
    
    
    
    44,050
    
    
    
    40,890Accounts payable to The Coca-Cola Company
    
    
    35,990
    
    
    
    21,748
    
    
    
    34,695Other accrued liabilities
    
    
    57,864
    
    
    
    51,030
    
    
    
    51,973Accrued compensation
    
    
    15,598
    
    
    
    19,671
    
    
    
    13,073Accrued interest payable
    
    
    10,021
    
    
    
    10,008
    
    
    
    9,747Total current liabilities
    
    
    263,369
    
    
    
    248,942
    
    
    
    151,972Deferred income taxes
    
    
    157,440
    
    
    
    162,694
    
    
    
    163,650Pension and postretirement benefit obligations
    
    
    57,489
    
    
    
    57,757
    
    
    
    65,227Other liabilities
    
    
    96,539
    
    
    
    88,598
    
    
    
    89,458Obligations under capital leases
    
    
    78,936
    
    
    
    75,071
    
    
    
    76,728Long-term debt
    
    
    591,450
    
    
    
    591,450
    
    
    
    691,450Total liabilities
    
    
    1,245,223
    
    
    
    1,224,512
    
    
    
    1,238,485Commitments and Contingencies (Note 14)Minority interest
    
    
    47,853
    
    
    
    46,002
    
    
    
    44,489Stockholders Equity:Common Stock, $1.00 par value:Authorized  30,000,000 shares;Issued  9,706,051, 9,705,551 and 9,705,451 shares,
respectively
    
    
    9,706
    
    
    
    9,705
    
    
    
    9,705Class B Common Stock, $1.00 par value:Authorized  10,000,000 shares;Issued  3,107,766, 3,088,266 and 3,088,366 shares,
respectively
    
    
    3,107
    
    
    
    3,088
    
    
    
    3,088Capital in excess of par value
    
    
    101,711
    
    
    
    101,145
    
    
    
    100,681Retained earnings
    
    
    80,275
    
    
    
    68,495
    
    
    
    59,505Accumulated other comprehensive loss
    
    
    (26,640
    )
    
    
    (27,226
    )
    
    
    (32,091
    )168,159
    
    
    
    155,207
    
    
    
    140,888Less: Treasury stock, at costCommon  3,062,374 shares
    
    
    60,845
    
    
    
    60,845
    
    
    
    60,845Class B Common  628,114 shares
    
    
    409
    
    
    
    409
    
    
    
    409Total stockholders equity
    
    
    106,905
    
    
    
    93,953
    
    
    
    79,634Total
    
    $
    1,399,981
    
    
    $
    1,364,467
    
    
    $
    1,362,608
  5




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##### Table of Contents



Capital
    
    
    
    
    
    
    AccumulatedClass B
    
    
    in
    
    
    
    
    
    
    OtherCommon
    
    
    Common
    
    
    Excess of
    
    
    Retained
    
    
    Comprehensive
    
    
    TreasuryStock
    
    
    Stock
    
    
    Par Value
    
    
    Earnings
    
    
    Loss
    
    
    Stock
    
    
    TotalBalance on
January 1, 2006
    
    $
    9,705
    
    
    $
    3,068
    
    
    $
    99,376
    
    
    $
    54,355
    
    
    $
    (30,116
    )
    
    $
    (61,254
    )
    
    $
    75,134Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    9,702
    
    
    
    
    
    
    
    
    
    
    
    9,702Net change in
minimum pension
liability adjustment,
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,975
    )
    
    
    
    
    
    
    (1,975
    )Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    7,727Cash dividends paid

Common
($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,322
    )
    
    
    
    
    
    
    
    
    
    
    (3,322
    )Class B Common

($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,230
    )
    
    
    
    
    
    
    
    
    
    
    (1,230
    )Issuance of 20,000
shares of Class B
Common Stock
    
    
    
    
    
    
    20
    
    
    
    840
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    860Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    465
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    465Balance on
July 2, 2006
    
    $
    9,705
    
    
    $
    3,088
    
    
    $
    100,681
    
    
    $
    59,505
    
    
    $
    (32,091
    )
    
    $
    (61,254
    )
    
    $
    79,634Balance on
December 31, 2006
    
    $
    9,705
    
    
    $
    3,088
    
    
    $
    101,145
    
    
    $
    68,495
    
    
    $
    (27,226
    )
    
    $
    (61,254
    )
    
    $
    93,953Comprehensive
income:Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,342
    
    
    
    
    
    
    
    
    
    
    
    16,342Foreign currency
translation
adjustments, net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    2Pension and
postretirement benefit
adjustments, 
net of tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    584
    
    
    
    
    
    
    
    584Total comprehensive
income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    16,928Cash dividends paid

Common
($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,322
    )
    
    
    
    
    
    
    
    
    
    
    (3,322
    )Class B Common

($.50 per share)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,240
    )
    
    
    
    
    
    
    
    
    
    
    (1,240
    )Issuance of 20,000
shares of Class B
Common Stock
    
    
    
    
    
    
    20
    
    
    
    (20
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Stock compensation expense
    
    
    
    
    
    
    
    
    
    
    586
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    586Conversion of Class B
Common Stock into
Common Stock
    
    
    1
    
    
    
    (1
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Balance on
July 1, 2007
    
    $
    9,706
    
    
    $
    3,107
    
    
    $
    101,711
    
    
    $
    80,275
    
    
    $
    (26,640
    )
    
    $
    (61,254
    )
    
    $
    106,905
  6




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##### Table of Contents



First Half2007
    
    
    2006Cash Flows from Operating ActivitiesNet income
    
    $
    16,342
    
    
    $
    9,702Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation expense
    
    
    33,572
    
    
    
    33,572Amortization of intangibles
    
    
    223
    
    
    
    290Deferred income taxes
    
    
    2,023
    
    
    
    1,040(Gains)/losses on disposal of property, plant and equipment
    
    
    (113
    )
    
    
    543Amortization of debt costs
    
    
    1,412
    
    
    
    1,328Amortization of deferred gain related to terminated
interest rate agreements
    
    
    (848
    )
    
    
    (843
    )Stock compensation expense
    
    
    586
    
    
    
    465Minority interest
    
    
    1,850
    
    
    
    1,705Increase in current assets less current liabilities
    
    
    (18,734
    )
    
    
    (17,440
    )Increase in other noncurrent assets
    
    
    (645
    )
    
    
    (284
    )Increase (decrease) in other noncurrent liabilities
    
    
    (6,486
    )
    
    
    3,123Total adjustments
    
    
    12,840
    
    
    
    23,499Net cash provided by operating activities
    
    
    29,182
    
    
    
    33,201Cash Flows from Investing ActivitiesAdditions to property, plant and equipment
    
    
    (19,014
    )
    
    
    (29,833
    )Proceeds from the sale of property, plant and equipment
    
    
    6,918
    
    
    
    837Investment in plastic bottle manufacturing cooperative
    
    
    (1,629
    )
    
    
    (618
    )Other
    
    
    
    
    
    
    (222
    )Net cash used in investing activities
    
    
    (13,725
    )
    
    
    (29,836
    )Cash Flows from Financing ActivitiesPayment of current portion of long-term debt
    
    
    
    
    
    
    (39
    )Payment of lines of credit, net
    
    
    
    
    
    
    (6,500
    )Cash dividends paid
    
    
    (4,562
    )
    
    
    (4,552
    )Principal payments on capital lease obligations
    
    
    (1,197
    )
    
    
    (880
    )Other
    
    
    (372
    )
    
    
    (31
    )Net cash used in financing activities
    
    
    (6,131
    )
    
    
    (12,002
    )Net increase (decrease) in cash
    
    
    9,326
    
    
    
    (8,637
    )Cash at beginning of period
    
    
    61,823
    
    
    
    39,608Cash at end of period
    
    $
    71,149
    
    
    $
    30,971Significant non-cash investing and financing activities:Issuance of Class B Common Stock in connection with stock award
    
    $
    929
    
    
    $
    860Capital lease obligations incurred
    
    
    5,144
    
    
    
    
  7




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8




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##### Table of Contents



July 1,
    
    Dec. 31,
    
    July 2,In Thousands
    
    2007
    
    2006
    
    2006Finished products
    
    $
    40,459
    
    
    $
    32,934
    
    
    $
    38,216Manufacturing materials
    
    
    8,685
    
    
    
    19,333
    
    
    
    9,073Plastic shells, pallets and other inventories
    
    
    17,203
    
    
    
    14,788
    
    
    
    16,643Total inventories
    
    $
    66,347
    
    
    $
    67,055
    
    
    $
    63,932
   July 1,
    
    Dec. 31,
    
    July 2,
    
    EstimatedIn Thousands
    
    2007
    
    2006
    
    2006
    
    Useful LivesLand
    
    $
    12,380
    
    
    $
    12,455
    
    
    $
    12,605Buildings
    
    
    110,771
    
    
    
    110,444
    
    
    
    110,854
    
    
    10-50 yearsMachinery and equipment
    
    
    101,347
    
    
    
    100,519
    
    
    
    99,519
    
    
    5-20 yearsTransportation equipment
    
    
    175,837
    
    
    
    184,861
    
    
    
    174,903
    
    
    4-13 yearsFurniture and fixtures
    
    
    41,125
    
    
    
    39,184
    
    
    
    39,291
    
    
    4-10 yearsCold drink dispensing equipment
    
    
    327,180
    
    
    
    331,174
    
    
    
    340,836
    
    
    6-13 yearsLeasehold and land improvements
    
    
    58,134
    
    
    
    57,837
    
    
    
    57,726
    
    
    5-20 yearsSoftware for internal use
    
    
    48,682
    
    
    
    36,665
    
    
    
    33,876
    
    
    3-10 yearsConstruction in progress
    
    
    2,808
    
    
    
    13,464
    
    
    
    8,660Total property, plant and equipment, at cost
    
    
    878,264
    
    
    
    886,603
    
    
    
    878,270Less: Accumulated depreciation
and amortization
    
    
    513,097
    
    
    
    502,139
    
    
    
    492,457Property, plant and equipment, net
    
    $
    365,167
    
    
    $
    384,464
    
    
    $
    385,813
  9




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##### Table of Contents



July 1,
    
    Dec. 31,
    
    July 2,
    
    EstimatedIn Thousands
    
    2007
    
    2006
    
    2006
    
    Useful LivesLeased property under capital leases
    
    $
    88,619
    
    
    $
    83,475
    
    
    $
    84,035
    
    
    3-29 yearsLess: Accumulated amortization
    
    
    15,690
    
    
    
    13,624
    
    
    
    12,524Leased property under capital leases, net
    
    $
    72,929
    
    
    $
    69,851
    
    
    $
    71,511
      July 1,
    
    Dec. 31,
    
    July 2,
    
    EstimatedIn Thousands
    
    2007
    
    2006
    
    2006
    
    Useful LivesOther identifiable intangible assets
    
    $
    6,599
    
    
    $
    6,599
    
    
    $
    8,703
    
    
    1-18 yearsLess: Accumulated amortization
    
    
    2,075
    
    
    
    1,852
    
    
    
    3,717Other identifiable intangible assets, net
    
    $
    4,524
    
    
    $
    4,747
    
    
    $
    4,986
  10




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##### Table of Contents



July 1,
    
    Dec. 31,
    
    July 2,In Thousands
    
    2007
    
    2006
    
    2006Accrued marketing costs
    
    $
    6,524
    
    
    $
    6,659
    
    
    $
    7,263Accrued insurance costs
    
    
    11,907
    
    
    
    12,495
    
    
    
    11,886Accrued taxes (other than income taxes)
    
    
    3,244
    
    
    
    2,068
    
    
    
    3,357Accrued income taxes
    
    
    4,159
    
    
    
    1,558
    
    
    
    3,338Employee benefit plan accruals
    
    
    8,123
    
    
    
    8,427
    
    
    
    7,999Checks and transfers yet to be presented for payment from
zero balance cash account
    
    
    13,766
    
    
    
    10,199
    
    
    
    9,117All other accrued liabilities
    
    
    10,141
    
    
    
    9,624
    
    
    
    9,013Total other accrued liabilities
    
    $
    57,864
    
    
    $
    51,030
    
    
    $
    51,973
   Interest
    
    Interest
    
    July 1,
    
    Dec. 31,
    
    July 2,In Thousands
    
    Maturity
    
    Rate
    
    Paid
    
    2007
    
    2006
    
    2006Debentures
    
    
    2007
    
    
    
    6.85
    %
    
    Semi-annually
    
    $
    100,000
    
    
    $
    100,000
    
    
    $
    100,000Debentures
    
    
    2009
    
    
    
    7.20
    %
    
    Semi-annually
    
    
    57,440
    
    
    
    57,440
    
    
    
    57,440Debentures
    
    
    2009
    
    
    
    6.375
    %
    
    Semi-annually
    
    
    119,253
    
    
    
    119,253
    
    
    
    119,253Senior Notes
    
    
    2012
    
    
    
    5.00
    %
    
    Semi-annually
    
    
    150,000
    
    
    
    150,000
    
    
    
    150,000Senior Notes
    
    
    2015
    
    
    
    5.30
    %
    
    Semi-annually
    
    
    100,000
    
    
    
    100,000
    
    
    
    100,000Senior Notes
    
    
    2016
    
    
    
    5.00
    %
    
    Semi-annually
    
    
    164,757
    
    
    
    164,757
    
    
    
    164,757691,450
    
    
    
    691,450
    
    
    
    691,450Less: Current portion of debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    100,000
    
    
    
    100,000
    
    
    
    Long-term debt
    
    
    
    
    
    
    
    
    
    
    
    
    
    $
    591,450
    
    
    $
    591,450
    
    
    $
    691,450
 11




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July 1, 2007
    
    December 31, 2006
    
    July 2, 2006Notional
    
    Remaining
    
    Notional
    
    Remaining
    
    Notional
    
    RemainingIn Thousands
    
    Amount
    
    Term
    
    Amount
    
    Term
    
    Amount
    
    TermInterest rate swap agreement  floating
    
    $
    25,000
    
    
    0.42 years
    
    $
    25,000
    
    
    0.92 years
    
    $
    25,000
    
    
    1.42 yearsInterest rate swap agreement  floating
    
    
    25,000
    
    
    0.42 years
    
    
    25,000
    
    
    0.92 years
    
    
    25,000
    
    
    1.42 yearsInterest rate swap agreement  floating
    
    
    50,000
    
    
    1.92 years
    
    
    50,000
    
    
    2.42 years
    
    
    50,000
    
    
    2.92 yearsInterest rate swap agreement  floating
    
    
    50,000
    
    
    0.42 years
    
    
    50,000
    
    
    0.92 years
    
    
    50,000
    
    
    1.42 yearsInterest rate swap agreement  floating
    
    
    50,000
    
    
    2.08 years
    
    
    50,000
    
    
    2.58 years
    
    
    50,000
    
    
    3.08 yearsInterest rate swap agreement  floating
    
    
    50,000
    
    
    5.42 years
    
    
    50,000
    
    
    5.92 years
    
    
    50,000
    
    
    6.42 yearsInterest rate swap agreement  floating
    
    
    25,000
    
    
    1.83 yearsInterest rate swap agreement  floating
    
    
    25,000
    
    
    7.75 yearsInterest rate swap agreement  floating
    
    
    25,000
    
    
    5.42 years
    13




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Cash and Cash Equivalents, Accounts Receivable and Accounts Payable
  Public Debt Securities
  Derivative Financial Instruments
  Letters of Credit
   July 1, 2007
    
    December 31, 2006
    
    July 2, 2006Carrying
    
    Fair
    
    Carrying
    
    Fair
    
    Carrying
    
    FairIn Thousands
    
    Amount
    
    Value
    
    Amount
    
    Value
    
    Amount
    
    ValuePublic debt securities
    
    $
    691,450
    
    
    $
    670,475
    
    
    $
    691,450
    
    
    $
    679,991
    
    
    $
    691,450
    
    
    $
    664,867Interest rate swap agreements
    
    
    7,658
    
    
    
    7,658
    
    
    
    6,950
    
    
    
    6,950
    
    
    
    11,693
    
    
    
    11,693Fuel hedging agreements
    
    
    
    
    
    
    (496
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Letters of credit
    
    
    
    
    
    
    21,271
    
    
    
    
    
    
    
    22,068
    
    
    
    
    
    
    
    19,786
  14




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July 1,
    
    Dec. 31,
    
    July 2,In Thousands
    
    2007
    
    2006
    
    2006Accruals for executive benefit plans
    
    $
    73,161
    
    
    $
    69,547
    
    
    $
    67,049Other
    
    
    23,378
    
    
    
    19,051
    
    
    
    22,409Total other liabilities
    
    $
    96,539
    
    
    $
    88,598
    
    
    $
    89,458
      15




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First HalfIn Thousands
    
    2007
    
    2006Statutory expense
    
    $
    9,338
    
    
    $
    5,816State income taxes, net of federal benefit
    
    
    1,162
    
    
    
    761Manufacturing deduction benefit
    
    
    (755
    )
    
    
    (158
    )Meals and entertainment
    
    
    288
    
    
    
    321Other, net
    
    
    306
    
    
    
    177Income tax expense
    
    $
    10,339
    
    
    $
    6,917
   
 17




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Dec. 31,
    
    Pre-tax
    
    Tax
    
    July 1,In Thousands
    
    2006
    
    Activity
    
    Effect
    
    2007Net pension activity:Actuarial loss
    
    $
    (24,673
    )
    
    $
    1,245
    
    
    $
    (490
    )
    
    $
    (23,918
    )Prior service costs
    
    
    (31
    )
    
    
    12
    
    
    
    (5
    )
    
    
    (24
    )Net postretirement benefits activity:Actuarial loss
    
    
    (13,512
    )
    
    
    610
    
    
    
    (240
    )
    
    
    (13,142
    )Prior service costs
    
    
    10,915
    
    
    
    (892
    )
    
    
    351
    
    
    
    10,374Transition asset
    
    
    75
    
    
    
    (12
    )
    
    
    5
    
    
    
    68Foreign currency translation adjustment
    
    
    
    
    
    
    3
    
    
    
    (1
    )
    
    
    2Total
    
    $
    (27,226
    )
    
    $
    966
    
    
    $
    (380
    )
    
    $
    (26,640
    )
   sm ®
  18




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19




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##### Table of Contents



Annual
    
    First HalfShares
    
    Grant-Date
    
    Compensation
    
    CompensationYear
    
    Awarded
    
    Price
    
    Expense
    
    Expense2006
    
    
    20,000
    
    
    $
    46.45
    
    
    $
    929,000
    
    
    $
    464,5002007
    
    
    20,000
    
    
    
    58.53
    
    
    
    1,170,600
    
    
    
    585,300
    Recently Adopted Pronouncement
  Pension Plans
   20




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Second Quarter
    
    First HalfIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Service cost
    
    $
    19
    
    
    $
    3,304
    
    
    $
    39
    
    
    $
    5,348Interest cost
    
    
    2,634
    
    
    
    2,512
    
    
    
    5,268
    
    
    
    5,354Expected return on plan assets
    
    
    (3,225
    )
    
    
    (3,048
    )
    
    
    (6,450
    )
    
    
    (6,009
    )Amortization of prior service cost
    
    
    6
    
    
    
    6
    
    
    
    12
    
    
    
    12Recognized net actuarial loss
    
    
    622
    
    
    
    961
    
    
    
    1,245
    
    
    
    2,520Net periodic pension cost
    
    $
    56
    
    
    $
    3,735
    
    
    $
    114
    
    
    $
    7,225
  Postretirement Benefits
   Second Quarter
    
    First HalfIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Service cost
    
    $
    106
    
    
    $
    83
    
    
    $
    212
    
    
    $
    166Interest cost
    
    
    553
    
    
    
    557
    
    
    
    1,105
    
    
    
    1,114Amortization of unrecognized transitional assets
    
    
    (6
    )
    
    
    (6
    )
    
    
    (12
    )
    
    
    (12
    )Recognized net actuarial loss
    
    
    305
    
    
    
    339
    
    
    
    610
    
    
    
    678Amortization of prior service cost
    
    
    (446
    )
    
    
    (446
    )
    
    
    (892
    )
    
    
    (892
    )Net periodic postretirement benefit cost
    
    $
    512
    
    
    $
    527
    
    
    $
    1,023
    
    
    $
    1,054
 401(k) Savings Plan
  21




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First HalfIn Millions
    
    2007
    
    2006Payments by the Company for concentrate, syrup,
sweetener and other purchases
    
    $
    179.2
    
    
    $
    173.5Marketing funding support payments to the Company
    
    
    19.1
    
    
    
    12.0Payments net of marketing funding support
    
    $
    160.1
    
    
    $
    161.5Payments by the Company for customer marketing programs
    
    $
    23.0
    
    
    $
    24.5Payments by the Company for cold drink equipment parts
    
    
    2.7
    
    
    
    3.3Fountain delivery and equipment repair fees paid to the Company
    
    
    3.8
    
    
    
    4.5Presence marketing funding support provided by
The Coca-Cola Company on the Companys behalf
    
    
    2.1
    
    
    
    3.2Sales of finished products to The Coca-Cola Company
    
    
    21.1
    
    
    
    19.2
   22




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23




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Second Quarter
    
    First HalfIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Bottle/can sales:Sparkling beverages (including energy products)
    
    $
    271,657
    
    
    $
    274,283
    
    
    $
    505,315
    
    
    $
    510,092Still beverages
    
    
    53,982
    
    
    
    50,543
    
    
    
    99,556
    
    
    
    88,763Total bottle/can sales
    
    
    325,639
    
    
    
    324,826
    
    
    
    604,871
    
    
    
    598,855Other sales:Sales to other bottlers
    
    
    39,088
    
    
    
    41,719
    
    
    
    73,971
    
    
    
    79,083Post mix and other
    
    
    25,716
    
    
    
    20,079
    
    
    
    49,157
    
    
    
    41,865Total other sales
    
    
    64,804
    
    
    
    61,798
    
    
    
    123,128
    
    
    
    120,948Total net sales
    
    $
    390,443
    
    
    $
    386,624
    
    
    $
    727,999
    
    
    $
    719,803
  24




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Second Quarter
    
    
    First HalfIn Thousands (Except Per Share Data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator for basic and diluted net income per
Common Stock and Class B Common Stock share:Net income
    
    $
    11,691
    
    
    $
    8,887
    
    
    $
    16,342
    
    
    $
    9,702Less dividends:Common Stock
    
    
    1,661
    
    
    
    1,662
    
    
    
    3,322
    
    
    
    3,322Class B Common Stock
    
    
    620
    
    
    
    615
    
    
    
    1,240
    
    
    
    1,230Total undistributed earnings
    
    $
    9,410
    
    
    $
    6,610
    
    
    $
    11,780
    
    
    $
    5,150Common Stock undistributed earnings  basic
    
    $
    6,852
    
    
    $
    4,824
    
    
    $
    8,578
    
    
    $
    3,758Class B Common Stock undistributed earnings  basic
    
    
    2,558
    
    
    
    1,786
    
    
    
    3,202
    
    
    
    1,392Total undistributed earnings  basic
    
    $
    9,410
    
    
    $
    6,610
    
    
    $
    11,780
    
    
    $
    5,150Common Stock undistributed earnings  diluted
    
    $
    6,837
    
    
    $
    4,813
    
    
    $
    8,565
    
    
    $
    3,752Class B Common Stock undistributed earnings  diluted
    
    
    2,573
    
    
    
    1,797
    
    
    
    3,215
    
    
    
    1,398Total undistributed earnings  diluted
    
    $
    9,410
    
    
    $
    6,610
    
    
    $
    11,780
    
    
    $
    5,150Numerator for basic net income per Common
Stock share:Dividends on Common Stock
    
    $
    1,661
    
    
    $
    1,662
    
    
    $
    3,322
    
    
    $
    3,322Common Stock undistributed earnings  basic
    
    
    6,852
    
    
    
    4,824
    
    
    
    8,578
    
    
    
    3,758Numerator for basic net income per Common
Stock share
    
    $
    8,513
    
    
    $
    6,486
    
    
    $
    11,900
    
    
    $
    7,080Numerator for basic net income per Class B
Common Stock share:Dividends in Class B Common Stock
    
    $
    620
    
    
    $
    615
    
    
    $
    1,240
    
    
    $
    1,230Class B Common Stock undistributed earnings  basic
    
    
    2,558
    
    
    
    1,786
    
    
    
    3,202
    
    
    
    1,392Numerator for basic net income per Class B
Common Stock share
    
    $
    3,178
    
    
    $
    2,401
    
    
    $
    4,442
    
    
    $
    2,622
 25




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Second Quarter
    
    
    First HalfIn Thousands (Except Per Share Data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Numerator for diluted net income per
Common Stock share:Dividends on Common Stock
    
    $
    1,661
    
    
    $
    1,662
    
    
    $
    3,322
    
    
    $
    3,322Dividends on Class B Common Stock
assumed converted to Common Stock
    
    
    620
    
    
    
    615
    
    
    
    1,240
    
    
    
    1,230Common Stock undistributed earnings  diluted
    
    
    9,410
    
    
    
    6,610
    
    
    
    11,780
    
    
    
    5,150Numerator for diluted net income per
Common Stock share
    
    $
    11,691
    
    
    $
    8,887
    
    
    $
    16,342
    
    
    $
    9,702Numerator for diluted net income per Class B
Common Stock share:Dividends on Class B Common Stock
    
    $
    620
    
    
    $
    615
    
    
    $
    1,240
    
    
    $
    1,230Class B Common Stock undistributed earnings  diluted
    
    
    2,573
    
    
    
    1,797
    
    
    
    3,215
    
    
    
    1,398Numerator for diluted net income per Class B
Common Stock share
    
    $
    3,193
    
    
    $
    2,412
    
    
    $
    4,455
    
    
    $
    2,628
 26




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Second Quarter
    
    
    First HalfIn Thousands (Except Per Share Data)
    
    2007
    
    
    2006
    
    
    2007
    
    
    2006Denominator for basic net income per Common
Stock and Class B Common Stock share:Common Stock weighted average shares
outstanding  basic
    
    
    6,644
    
    
    
    6,643
    
    
    
    6,643
    
    
    
    6,643Class B Common Stock weighted average shares
outstanding  basic
    
    
    2,480
    
    
    
    2,460
    
    
    
    2,480
    
    
    
    2,460Denominator for diluted net income per Common
Stock and Class B Common Stock share:Common Stock weighted average shares
outstanding  diluted (assumes conversion of
Class B Common Stock to Common Stock)
    
    
    9,143
    
    
    
    9,123
    
    
    
    9,137
    
    
    
    9,118Class B Common Stock weighted average shares
outstanding  diluted
    
    
    2,500
    
    
    
    2,480
    
    
    
    2,494
    
    
    
    2,475Basic net income per share:Common Stock
    
    $
    1.28
    
    
    $
    .98
    
    
    $
    1.79
    
    
    $
    1.07Class B Common Stock
    
    $
    1.28
    
    
    $
    .98
    
    
    $
    1.79
    
    
    $
    1.07Diluted net income per share:Common Stock
    
    $
    1.28
    
    
    $
    .97
    
    
    $
    1.79
    
    
    $
    1.06Class B Common Stock
    
    $
    1.28
    
    
    $
    .97
    
    
    $
    1.79
    
    
    $
    1.06
 
 NOTES TO TABLE(1)
    
    For purposes of the diluted net income per share computation for Common Stock, shares of
Class B Common Stock are assumed to be converted; therefore, 100% of undistributed earnings is
allocated to Common Stock.(2)
    
    For purposes of the diluted net income per share computation for Class B Common Stock,
weighted average shares of Class B Common Stock are assumed to be outstanding for the entire
period and not converted.(3)
    
    The denominator for diluted net income per share for Common Stock and Class B Common Stock
includes the diluted effect of shares relative to the restricted stock award. 27




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First HalfIn Thousands
    
    2007
    
    2006Accounts receivable, trade, net
    
    $
    (18,678
    )
    
    $
    (12,164
    )Accounts receivable from The Coca-Cola Company
    
    
    (17,745
    )
    
    
    (7,990
    )Accounts receivable, other
    
    
    (1,731
    )
    
    
    (2,097
    )Inventories
    
    
    708
    
    
    
    (5,699
    )Prepaid expenses and other current assets
    
    
    (3,950
    )
    
    
    (7,038
    )Accounts payable, trade
    
    
    (2,671
    )
    
    
    5,557Accounts payable to The Coca-Cola Company
    
    
    14,242
    
    
    
    19,179Other accrued liabilities
    
    
    15,151
    
    
    
    (2,229
    )Accrued compensation
    
    
    (4,073
    )
    
    
    (5,036
    )Accrued interest payable
    
    
    13
    
    
    
    77Increase in current assets less current liabilities
    
    $
    (18,734
    )
    
    $
    (17,440
    )
  Recently Adopted Pronouncements
    29




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Recently Issued Pronouncements
   30




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##### Table of Contents



Severance Pay
    
    RelocationIn Thousands
    
    and Benefits
    
    and Other
    
    TotalBalance at December 31, 2006
    
    $
    
    
    
    $
    
    
    
    $
    Provision
    
    
    1,607
    
    
    
    835
    
    
    
    2,442Cash payments
    
    
    1,607
    
    
    
    835
    
    
    
    2,442Balance at July 1, 2007
    
    $
    
    
    
    $
    
    
    
    $
    
 31




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Item 2. Managements Discussion and Analysis of Financial Condition and Results of Operations.
  
    
    Our Business and the Nonalcoholic Beverage Industry  a general description of the
Companys business and the nonalcoholic beverage industry.
    
    Areas of Emphasis  a summary of
the Companys key priorities.
    
    Overview of Operations and Financial Condition  a summary of key information and
trends concerning the financial results for the second quarter of 2007 (Q2 2007) and the
first half of 2007 (YTD 2007) and changes from the second quarter of 2006 (Q2 2006) and
the first half of 2006 (YTD 2006).
    
    Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements
  a discussion of accounting policies that are most important to the portrayal of the
Companys financial condition and results of operations and that require critical judgments
and estimates and the expected impact of new accounting pronouncements.
    
    Results of Operations  an analysis of the Companys results of operations for Q2 2007
and YTD 2007 compared to Q2 2006 and YTD 2006.
    
    Two-Class Method for Net Income Per Share.
    
    Financial Condition  an analysis of the Companys financial condition as of the end of
Q2 2007 compared to year-end 2006 and the end of Q2 2006 as presented in the consolidated
financial statements.
    
    Liquidity and Capital Resources  an analysis of capital resources, cash sources and
uses, investing activities, financing activities, off-balance sheet arrangements, aggregate
contractual obligations and hedging activities.
    
    Cautionary Information Regarding Forward-Looking Statements.
  Our Business and the Nonalcoholic Beverage Industry
  32




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Second Quarter
    
    First HalfIn Thousands
    
    2007
    
    2006
    
    2007
    
    2006Bottle/can sales:Sparkling beverages (including energy products)
    
    $
    271,657
    
    
    $
    274,283
    
    
    $
    505,315
    
    
    $
    510,092Still beverages
    
    
    53,982
    
    
    
    50,543
    
    
    
    99,556
    
    
    
    88,763Total bottle/can sales
    
    
    325,639
    
    
    
    324,826
    
    
    
    604,871
    
    
    
    598,855Other sales:Sales to other Coca-Cola bottlers
    
    
    39,088
    
    
    
    41,719
    
    
    
    73,971
    
    
    
    79,083Post mix and other
    
    
    25,716
    
    
    
    20,079
    
    
    
    49,157
    
    
    
    41,865Total other sales
    
    
    64,804
    
    
    
    61,798
    
    
    
    123,128
    
    
    
    120,948Total net sales
    
    $
    390,443
    
    
    $
    386,624
    
    
    $
    727,999
    
    
    $
    719,803
 Areas of Emphasis
  Revenue Management
  33




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##### Table of Contents



Innovation
   ®
 Distribution Cost Management
   
    
    bulk delivery for large supermarkets, mass merchandisers and club stores;
    
    pre-sell delivery for convenience stores, drug stores, small supermarkets and on-premise
accounts; and
    
    full service delivery for its full service vending customers.
 ® ®
 34




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##### Table of Contents



Productivity
  35




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##### Table of Contents



Overview of Operations and Financial Condition
  Second Quarter
    
    
    
    
    
    %In Thousands (Except Per Share Data)
    
    2007
    
    2006
    
    Change
    
    ChangeNet sales
    
    $
    390,443
    
    
    $
    386,624
    
    
    $
    3,819
    
    
    
    1.0Gross margin
    
    
    169,290
    
    
    
    167,689
    
    
    
    1,601
    
    
    
    1.0S,D&A expenses
    
    
    136,684
    
    
    
    138,310
    
    
    
    (1,626
    )
    
    
    (1.2
    )Income from operations
    
    
    32,494
    
    
    
    29,237
    
    
    
    3,257
    
    
    
    11.1Interest expense
    
    
    12,294
    
    
    
    12,843
    
    
    
    (549
    )
    
    
    (4.3
    )Income before income taxes
    
    
    19,031
    
    
    
    15,245
    
    
    
    3,786
    
    
    
    24.8Net income
    
    
    11,691
    
    
    
    8,887
    
    
    
    2,804
    
    
    
    31.6Basic net income per share:Common Stock
    
    $
    1.28
    
    
    $
    .98
    
    
    $
    .30
    
    
    
    30.6Class B Common Stock
    
    $
    1.28
    
    
    $
    .98
    
    
    $
    .30
    
    
    
    30.6Diluted net income per share:Common Stock
    
    $
    1.28
    
    
    $
    .97
    
    
    $
    .31
    
    
    
    32.0Class B Common Stock
    
    $
    1.28
    
    
    $
    .97
    
    
    $
    .31
    
    
    
    32.0
 First Half
    
    
    
    
    
    %In Thousands (Except Per Share Data)
    
    2007
    
    2006
    
    Change
    
    ChangeNet sales
    
    $
    727,999
    
    
    $
    719,803
    
    
    $
    8,196
    
    
    
    1.1Gross margin
    
    
    320,781
    
    
    
    313,715
    
    
    
    7,066
    
    
    
    2.3S,D&A expenses
    
    
    267,515
    
    
    
    270,038
    
    
    
    (2,523
    )
    
    
    (0.9
    )Income from operations
    
    
    53,043
    
    
    
    43,387
    
    
    
    9,656
    
    
    
    22.3Interest expense
    
    
    24,512
    
    
    
    25,063
    
    
    
    (551
    )
    
    
    (2.2
    )Income before income taxes
    
    
    26,681
    
    
    
    16,619
    
    
    
    10,062
    
    
    
    60.5Net income
    
    
    16,342
    
    
    
    9,702
    
    
    
    6,640
    
    
    
    68.4Basic net income per share:Common Stock
    
    $
    1.79
    
    
    $
    1.07
    
    
    $
    .72
    
    
    
    67.3Class B Common Stock
    
    $
    1.79
    
    
    $
    1.07
    
    
    $
    .72
    
    
    
    67.3Diluted net income per share:Common Stock
    
    $
    1.79
    
    
    $
    1.06
    
    
    $
    .73
    
    
    
    68.9Class B Common Stock
    
    $
    1.79
    
    
    $
    1.06
    
    
    $
    .73
    
    
    
    68.9
  36




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##### Table of Contents



July 1,
    
    December 31,
    
    July 2,In Thousands
    
    2007
    
    2006
    
    2006Debt
    
    $
    691,450
    
    
    $
    691,450
    
    
    $
    691,450Capital lease obligations
    
    
    81,453
    
    
    
    77,506
    
    
    
    78,322Total debt and capital lease obligations
    
    
    772,903
    
    
    
    768,956
    
    
    
    769,772Less: Cash and cash equivalents
    
    
    71,149
    
    
    
    61,823
    
    
    
    30,971Total net debt and capital lease obligations (1)
    
    $
    701,754
    
    
    $
    707,133
    
    
    $
    738,801
 (1)
  37




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##### Table of Contents



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




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##### Table of Contents



Recently Issued Pronouncements
   39




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##### Table of Contents



Results of Operations
 Q2 2007 Compared to Q2 2006 and YTD 2007 Compared to YTD 2006
 Net Sales
   Q2 2007
    
    
    Attributable to:(In Millions)$
    7.0
    
    
    4.1% increase in bottle/can sales price per unit
primarily due to higher net pricing for sparkling
beverages offset by lower net pricing for water(6.2
    )
    
    2.5% decrease in bottle/can volume primarily due to a decrease in sales of sugar
sparkling beverages partially offset by an increase in sales of water and tea products(2.8
    )
    
    6.8% decrease in bottler sales volume primarily due to a decrease in sales of
sparkling beverages offset partially by an increase in sales of tea products1.0
    
    
    Increase in delivery fees from certain customers1.0
    
    
    5.3% increase in sales price per unit of postmix primarily due to higher sales prices
for sparkling beverages3.8
    
    
    Other$
    3.8
    
    
    Total increase in net sales
 YTD 2007
    
    
    Attributable to:(In Millions)$
    6.9
    
    
    2.4% increase in bottle/can sales price per unit
primarily due to higher net pricing for sparkling
beverages offset by lower net pricing for water(6.7
    )
    
    8.5% decrease in bottler sales volume primarily due to a decrease in sales of
sparkling beverages offset partially by an increase in sales of tea products2.1
    
    
    Increase in delivery fees from certain customers2.0
    
    
    5.5% increase in sales price per unit of postmix primarily due to higher sales price
for sparkling beverages1.6
    
    
    2.2% increase in sales price per unit of bottler sales primarily due to higher
overall sales prices2.3
    
    
    Other$
    8.2
    
    
    Total increase in net sales
  40




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##### Table of Contents



Bottle/Can Sales Volume
    
    Bottle/Can Sales VolumeProduct Category
    
    Q2 2007
    
    Q2 2006
    
    % Increase (Decrease)Sparkling beverages (including
energy products)
    
    
    84.9
    %
    
    
    86.4
    %
    
    
    (4.2
    )Still beverages
    
    
    15.1
    %
    
    
    13.6
    %
    
    
    8.6Total bottle/can sales volume
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    (2.5
    )
 Bottle/Can Sales Volume
    
    Bottle/Can Sales VolumeProduct Category
    
    YTD 2007
    
    YTD 2006
    
    % Increase (Decrease)Sparkling beverages (including
energy products)
    
    
    85.2
    %
    
    
    87.1
    %
    
    
    (3.0
    )Still beverages
    
    
    14.8
    %
    
    
    12.9
    %
    
    
    13.9Total bottle/can sales volume
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    (.8
    )
    Cost of Sales
  41




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##### Table of Contents



Q2 2007
    
    
    Attributable to:(In Millions)$
    12.6
    
    
    Increase in raw material costs (primarily aluminum packaging, sweetener and
concentrate costs)(3.7
    )
    
    Increase in marketing funding received primarily from The Coca-Cola Company(2.8
    )
    
    Decrease in bottle/can volume primarily due to a decrease in sales of sugar sparkling
beverages partially offset by an increase in sales of water and tea products(2.8
    )
    
    Decrease in bottler sales volume primarily due to a decrease in sales of sparkling
beverages offset partially by an increase in sales of tea products(1.6
    )
    
    Decrease in manufacturing overhead costs.5
    
    
    Other$
    2.2
    
    
    Total increase in cost of sales
 YTD 2007
    
    
    Attributable to:(In Millions)$
    20.0
    
    
    Increase in raw material costs (primarily aluminum packaging, sweetener and
concentrate costs)(6.5
    )
    
    Decrease in bottler sales volume primarily due to a decrease in sales of sparkling
beverages offset partially by an increase in sales of tea products(6.4
    )
    
    Increase in marketing funding received primarily from The Coca-Cola Company(5.8
    )
    
    Decrease in manufacturing overhead costs(.2
    )
    
    Other$
    1.1
    
    
    Total increase in cost of sales
   42




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##### Table of Contents



Gross Margin
   Q2 2007
    
    
    Attributable to:(In Millions)$
    (12.6
    )
    
    Increase in raw material costs (primarily aluminum packaging, sweetener and
concentrate costs)7.0
    
    
    4.1% increase in bottle/can sales price per unit primarily due to higher net pricing
for sparkling beverages offset by lower net pricing for water3.7
    
    
    Increase in marketing funding received primarily from The Coca-Cola Company(3.4
    )
    
    2.5% decrease in bottle/can volume primarily due to a decrease in sales of sugar
sparkling beverages partially offset by an increase in sales of water and tea products1.6
    
    
    Decrease in manufacturing overhead costs1.0
    
    
    Increase in delivery fees from certain customers1.0
    
    
    5.3% increase in sales price per unit of postmix primarily due to higher sales prices
for sparkling beverages3.3
    
    
    Other$
    1.6
    
    
    Total increase in gross margin
 YTD 2007
    
    
    Attributable to:(In Millions)$
    (20.0
    )
    
    Increase in raw material costs (primarily aluminum packaging, sweetener and
concentrate costs)6.9
    
    
    2.4% increase in bottle/can sales price per unit primarily due to higher net pricing
for sparkling beverages offset by lower net pricing for water6.4
    
    
    Increase in marketing funding received primarily from The Coca-Cola Company5.8
    
    
    Decrease in manufacturing overhead costs2.1
    
    
    Increase in delivery fees from certain customers2.0
    
    
    5.5% increase in sales per unit of postmix primarily due to higher sales prices for
sparkling beverages1.6
    
    
    2.2% increase in sales price per unit of bottler sales primarily due to higher overall
sales prices2.3
    
    
    Other$
    7.1
    
    
    Total increase in gross margin
  43




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S,D&A Expenses
    Q2 2007
    
    
    Attributable to:(In Millions)$
    (1.7
    )
    
    Decrease in employee benefit costs primarily due to the amendment of the principal Company-sponsored
pension plan, net of increases in the Companys 401(k) Savings Plan contributions1.8
    
    
    Increase in employee related expenses primarily related to wage increases(1.6
    )
    
    Gain on sale of aviation equipment(0.9
    )
    
    Decrease in property and casualty claims and insurance costs0.9
    
    
    Loss on disposal of property, plant and equipment0.3
    
    
    Restructuring costs related to the simplification of the Companys operating management
structure and reduction in work force in order to improve operating efficiencies(0.4
    )
    
    Other$
    (1.6
    )
    
    Total decrease in S,D&A expenses
 YTD 2007
    
    
    Attributable to:(In Millions)$
    (3.1
    )
    
    Decrease in employee benefit costs primarily due to the amendment of the principal Company-sponsored
pension plan, net of increases in the Companys 401(k) Savings Plan contributions2.9
    
    
    Increase in employee related expenses primarily related to wage increases2.4
    
    
    Restructuring costs related to the simplification of the Companys operating management
structure and reduction in work force in order to improve operating efficiencies(1.8
    )
    
    Decrease in property and casualty claims and insurance costs(1.6
    )
    
    Gain on sale of aviation equipment1.1
    
    
    Loss on disposal of property, plant and equipment(1.0
    )
    
    Decrease in fuel and other energy costs related to the movement of finished goods from
sales distribution centers to customer locations(1.4
    )
    
    Other$
    (2.5
    )
    
    Total decrease in S,D&A expenses
  44




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##### Table of Contents



401(k) Savings
 Amortization of Intangibles
  Interest Expense
  Minority Interest
  Income Taxes
  45




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##### Table of Contents



Net Income and Net Income per Share
  Two-Class Method for Net Income Per Share
  Financial Condition
   46




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##### Table of Contents




    
    An increase in cash and cash equivalents of $9.3 million primarily due to cash flows from
operating activities.
 
    
    An increase in accounts receivable, trade of $18.7 million primarily due to higher sales in
June 2007 compared to December 2006.
 
    
    An increase in accounts receivable from The Coca-Cola Company of $17.7 million primarily due
to higher marketing funding support and the timing of payments.
 
    
    An increase in accounts payable to The Coca-Cola Company of $14.2 million primarily due to the
timing of payments.
 
    
    A decrease in accrued compensation of $4.1 million due to the payment of bonuses in March 2007.
 
    
    An increase in other accrued liabilities of $6.8 million primarily due to an increase in
income taxes payable and the timing of payments.
  
    
    An increase in cash and cash equivalents of $40.2 million primarily due to cash flows from
operating activities.
 
    
    An increase in accounts receivable, trade of $3.2 million primarily due to higher sales in
June 2007 compared to June 2006.
 
    
    An increase in accounts receivable from The Coca-Cola Company of $12.0 million primarily due
to higher marketing funding support and the timing of payments.
 
    
    An increase in the current portion of debt of $100 million primarily due to the
reclassification from long-term to current of $100 million in debentures which matures in
November 2007.
 
    
    An increase in other accrued liabilities of $5.9 million primarily due to an increase in
income taxes payable.
  Liquidity and Capital Resources
 Capital Resources
    47




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##### Table of Contents



Cash Sources and Uses
   First HalfIn Millions
    
    2007
    
    2006Cash SourcesCash provided by operating activities
(excluding income tax payments)
    
    $
    37.2
    
    
    $
    41.5Other
    
    
    6.9
    
    
    
    .8Total cash sources
    
    $
    44.1
    
    
    $
    42.3Cash UsesCapital expenditures
    
    $
    19.0
    
    
    $
    29.8Investment in plastic bottle manufacturing cooperative
    
    
    1.6
    
    
    
    .6Payment of debt and capital lease obligations
    
    
    1.2
    
    
    
    7.4Dividends
    
    
    4.6
    
    
    
    4.6Income tax payments
    
    
    8.0
    
    
    
    8.3Other
    
    
    .4
    
    
    
    .2Total cash uses
    
    $
    34.8
    
    
    $
    50.9Increase (decrease) in cash
    
    $
    9.3
    
    
    $
    (8.6
    )
  Investing Activities
  48




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##### Table of Contents



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




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##### Table of Contents



Off-Balance Sheet Arrangements
  Aggregate Contractual Obligations
  Payments Due by PeriodJuly 2007-
    
    July 2008-
    
    July 2010-
    
    AfterIn Thousands
    
    Total
    
    June 2008
    
    June 2010
    
    June 2012
    
    June 2012Contractual obligations:Total debt, net of interest
    
    $
    691,450
    
    
    $
    100,000
    
    
    $
    176,693
    
    
    $
    
    
    
    $
    414,757Capital lease obligations,
net of interest
    
    
    81,453
    
    
    
    2,517
    
    
    
    5,565
    
    
    
    6,363
    
    
    
    67,008Estimated interest on
long-term debt and capital
lease obligations (1)
    
    
    312,108
    
    
    
    39,725
    
    
    
    66,207
    
    
    
    55,427
    
    
    
    150,749Purchase obligations (2)
    
    
    630,335
    
    
    
    91,093
    
    
    
    185,568
    
    
    
    187,978
    
    
    
    165,696Other long-term liabilities (3)
    
    
    92,692
    
    
    
    5,551
    
    
    
    10,723
    
    
    
    10,063
    
    
    
    66,355Operating leases
    
    
    18,061
    
    
    
    3,385
    
    
    
    4,768
    
    
    
    2,575
    
    
    
    7,333Long-term contractual
arrangements (4)
    
    
    25,485
    
    
    
    7,158
    
    
    
    10,751
    
    
    
    5,066
    
    
    
    2,510Interest rate swap agreements (1)
    
    
    7,323
    
    
    
    3,099
    
    
    
    2,768
    
    
    
    1,144
    
    
    
    312Purchase orders (5)
    
    
    34,853
    
    
    
    34,853Total contractual obligations
    
    $
    1,893,760
    
    
    $
    287,381
    
    
    $
    463,043
    
    
    $
    268,616
    
    
    $
    874,720
 (1)
    
    Includes interest payments based on contractual terms and current interest
rates for variable rate debt.(2)
    
    Represents an estimate of the Companys obligation to purchase 17.5 million cases
of finished product on an annual basis through May 2014 from South Atlantic Canners, a
manufacturing cooperative, and other purchase commitments.(3)
    
    Includes obligations under executive benefit plans, unrecognized income tax benefits
and other long-term liabilities.(4)
    
    Includes contractual arrangements with certain prestige properties, athletics
venues and other locations, and other long-term marketing commitments. 50




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##### Table of Contents



(5)
    
    Purchase orders include commitments in which a written purchase order has been
issued to a vendor, but the goods have not been received or the services have not been
performed.     Hedging Activities
 Interest Rate Hedging
    51




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Fuel Hedging
  52




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##### Table of Contents



Cautionary Information Regarding Forward-Looking Statements
  
    
    potential marketing funding support from The Coca-Cola Company and other beverage
companies;
    
    the Companys belief that disposition of certain claims and legal proceedings will not
have a material adverse effect on its financial condition, cash flows or results of
operations and that no material amount of loss in excess of recorded amounts is reasonably
possible;
    
    managements belief that the Company has adequately provided for any ultimate amounts
that are likely to result from tax audits;
    
    managements belief that the Company has sufficient financial resources to maintain
current operations and provide for its current capital expenditure and working capital
requirements, scheduled debt payments, interest and income tax payments and dividends for
stockholders;
    
    the Companys intention to reduce its financial leverage over time;
    
    the Companys belief that the cooperatives whose debt and lease obligations the Company
guarantees have sufficient assets and the ability to adjust selling prices of their
products to adequately mitigate the risk of material loss and that the cooperatives will
perform their obligations under their debt and lease agreements;
    
    the Companys belief that its liquidity or capital resources will not be restricted by
certain financial covenants in the Companys credit agreements;
    
    the Companys hypothetical calculation of the impact of a 1% increase in interest rates
on outstanding floating rate debt and capital lease obligations for the next twelve months
as of July 1, 2007;
    
    the Companys belief that there will be no contribution to the principal
Company-sponsored pension plan in 2007;
    
    anticipated cash payments for income taxes will be in the range of approximately $15
million to $20 million in 2007;
    
    anticipated additions to property, plant and equipment in 2007 will be in the range of
$45 million to $52 million;
    
    the Companys belief that demand for sugar sparkling beverages will continue to decline;
    
    the Companys beliefs and estimates regarding the impact of the adoption of certain new
accounting pronouncements;
    
    the Companys belief that other parties to certain contractual arrangements will perform
their obligations;
    
    the Companys key priorities which are revenue management, innovation, distribution cost
management and productivity;
    
    the Companys belief that postretirement benefit payments are expected to be
approximately $2.7 million in 2007;
    
    the Companys expectation that its overall bottle/can revenue will be primarily
dependent upon continued growth in diet products, sports drinks, bottled water, tea and
energy products, the introduction of new products and the pricing of brands and packages
within channels;
    
    the Companys belief that total restructuring expense will be in the range of $2.5
million to $3.5 million and that all of the cash expenditures will occur prior to 2007
fiscal year end;
 53




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##### Table of Contents




    
    the Companys beliefs that the growth prospects of Company-owned or licensed brands appear very
promising and the cost of developing, marketing and distributing
these brands will be significant;
    
    the Companys belief that the implementation of its new pre-sell delivery system will
continue over the next several years and should generate significant savings and more
efficient delivery of a greater number of products;
    
    the Companys belief there will not be any material impact on its liquidity and capital
resources due to the resolution of income tax positions reserved for as uncertain;
    
    the Companys anticipated use of cash and the availability under its revolving credit
facility to satisfy the $100 million maturity of debentures in November 2007;
    
    the Companys belief that the cost of aluminum cans will increase by 17% to 20% during
2007;
    
    the Companys belief that the cost of high fructose corn syrup will increase by 25% to
35% during 2007; and
    
    the Companys belief
that the impact of increasing costs for aluminum cans and high fructose corn
syrup is anticipated to continue increasing cost of sales
during 2007.
   54




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##### Table of Contents



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




---



##### Table of Contents



Item 1A. Risk Factors.
  56




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders.
  (a)
    
    The election of eleven directors, each for a term of one year or until their successors have
been elected and qualified.
 Director Name
    
    For
    
    WithheldJ. Frank Harrison, III
    
    
    53,916,671
    
    
    
    1,271,088H. W. McKay Belk
    
    
    55,009,386
    
    
    
    178,373Sharon A. Decker
    
    
    55,042,003
    
    
    
    145,756William B. Elmore
    
    
    53,896,894
    
    
    
    1,290,865Henry W. Flint
    
    
    55,041,648
    
    
    
    146,110James E. Harris
    
    
    55,041,942
    
    
    
    145,817Deborah S. Harrison
    
    
    55,041,218
    
    
    
    146,451Ned R. McWherter
    
    
    55,039,880
    
    
    
    147,879John W. Murrey, III
    
    
    55,041,726
    
    
    
    146,033Carl Ware
    
    
    55,041,875
    
    
    
    145,884Dennis A. Wicker
    
    
    55,009,309
    
    
    
    178,450
 (b)
    
    The approval of the Coca-Cola Bottling Co. Consolidated Amended and Restated Annual Bonus
Plan:
 For
    
    Against
    
    Abstentions53,915,138
    
    234,793
    
    30,667
 (c)
    
    The approval of the Coca-Cola Bottling Co. Consolidated Long-Term Performance Plan:
 For
    
    Against
    
    Abstentions54,034,403
    
    117,002
    
    29,194
 (d)
    
    The approval of an amendment to the Chief Executive Officers Restricted Stock Award:
 For
    
    Against
    
    Abstentions53,913,295
    
    257,183
    
    10,118
 57




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##### Table of Contents



Item 6. Exhibits.
 ExhibitNumber
    
    Description4.1
    
    The registrant, by signing this report, agrees to furnish the Securities and
Exchange Commission, upon its request, a copy of any instrument which defines the rights
of holders of long-term debt of the registrant and its consolidated subsidiaries which
authorizes a total amount of securities not in excess of 10 percent of the total assets
of the registrant and its subsidiaries on a consolidated basis.10.1
    
    Coca-Cola Bottling Co. Consolidated Amended and Restated Annual Bonus Plan,
incorporated herein by reference to Appendix B to the Companys Proxy Statement for the
2007 Annual Meeting of Stockholders.10.2
    
    Coca-Cola Bottling Co. Consolidated Long-Term Performance Plan, incorporated
herein by reference to Appendix C to the Companys Proxy Statement for the 2007 Annual
Meeting of Stockholders.10.3
    
    Amendment to Restricted Stock Award Agreement, incorporated herein by reference
to Appendix D to the Companys Proxy Statement for the 2007 Annual Meeting of
Stockholders.12
    
    Ratio of earnings to fixed charges (filed herewith).31.1
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).31.2
    
    Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed
herewith).32
    
    Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section
906 of the Sarbanes-Oxley Act of 2002 (filed herewith).
 58




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##### Table of Contents



COCA-COLA BOTTLING CO. CONSOLIDATED
            
            
      (REGISTRANT)Date:  August 9, 2007
    By:

/s/
Steven D. WestphalSteven D. WestphalPrincipal Financial Officer of the
Registrantand
Senior Vice President and Chief Financial Officer 59