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

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 þ     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

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

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

Class		Outstanding at April 30, 2010
Common Stock, $1.00 Par Value		7,141,447
Class B Common Stock, $1.00 Par Value		2,044,202

 

 

COCA-COLA BOTTLING CO. CONSOLIDATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED APRIL 4, 2010

INDEX

				Page
PART I — FINANCIAL INFORMATION
Item 1.		Financial Statements (Unaudited)
		Consolidated Statements of Operations			3
		Consolidated Balance Sheets			4
		Consolidated Statements of Changes in 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			33
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			53
Item 4.		Controls and Procedures			54
PART II — OTHER INFORMATION
Item 1A.		Risk Factors			55
Item 2.		Unregistered Sales of Equity Securities and Use of Proceeds			55
Item 6.		Exhibits			56
		Signatures			57
EX-12
EX-31.1
EX-31.2
EX-32

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

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

		First Quarter
		2010				2009
Net sales		$	347,498			$	336,261
Cost of sales			200,795				189,132
Gross margin			146,703				147,129
Selling, delivery and administrative expenses			129,044				125,988
Income from operations			17,659				21,141
Interest expense, net			8,810				9,258
Income before income taxes			8,849				11,883
Income tax expense			3,714				3,060
Net income			5,135				8,823
Less: Net income attributable to the noncontrolling interest			475				292
Net income attributable to Coca-Cola Bottling Co. Consolidated		$	4,660			$	8,531
Basic net income per share based on net income attributable to Coca-Cola Bottling Co. Consolidated:
Common Stock		$	.51			$	.93
Weighted average number of Common Stock shares outstanding			7,141				6,857
Class B Common Stock		$	.51			$	.93
Weighted average number of Class B Common Stock shares outstanding			2,029				2,306
Diluted net income per share based on net income attributable to Coca-Cola Bottling Co. Consolidated:
Common Stock		$	.51			$	.93
Weighted average number of Common Stock shares outstanding — assuming dilution			9,210				9,174
Class B Common Stock		$	.50			$	.93
Weighted average number of Class B Common Stock shares outstanding — assuming dilution			2,069				2,317
Cash dividends per share:
Common Stock		$	.25			$	.25
Class B Common Stock		$	.25			$	.25

See Accompanying Notes to Consolidated Financial Statements

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

		Unaudited								Unaudited
		April 4,				Jan. 3,				March 29,
		2010				2010				2009
ASSETS
Current Assets:
Cash and cash equivalents		$	48,325			$	17,770			$	37,996
Restricted cash			4,500				4,500				—
Accounts receivable, trade, less allowance for doubtful accounts of $2,056, $2,187 and $1,820, respectively			111,397				92,727				97,647
Accounts receivable from The Coca-Cola Company			17,008				4,109				20,857
Accounts receivable, other			11,026				17,005				11,969
Inventories			64,734				59,122				72,924
Prepaid expenses and other current assets			32,590				35,016				23,261
Total current assets			289,580				230,249				264,654
Property, plant and equipment, net			321,488				326,701				329,896
Leased property under capital leases, net			50,375				51,548				55,051
Other assets			46,796				46,508				40,260
Franchise rights			520,672				520,672				520,672
Goodwill			102,049				102,049				102,049
Other identifiable intangible assets, net			5,227				5,350				5,770
Total		$	1,336,187			$	1,283,077			$	1,318,352

See Accompanying Notes to Consolidated Financial Statements

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

		Unaudited								Unaudited
		April 4,				Jan. 3,				March 29,
		2010				2010				2009
LIABIILITIES AND EQUITY
Current Liabilities:
Current portion of debt		$	20,000			$	—			$	66,693
Current portion of obligations under capital leases			3,851				3,846				3,557
Accounts payable, trade			36,869				36,794				41,569
Accounts payable to The Coca-Cola Company			43,542				27,880				33,384
Other accrued liabilities			65,279				61,978				71,830
Accrued compensation			12,813				25,963				13,629
Accrued interest payable			10,062				5,521				13,606
Total current liabilities			192,416				161,982				244,268
Deferred income taxes			159,591				158,548				140,932
Pension and postretirement benefit obligations			89,356				89,306				104,898
Other liabilities			108,980				106,968				106,863
Obligations under capital leases			58,319				59,261				62,124
Long-term debt			552,952				537,917				524,757
Total liabilities			1,161,614				1,113,982				1,183,842
Commitments and Contingencies (Note 14)
Equity:
Common Stock, $1.00 par value:
Authorized — 30,000,000 shares;
Issued — 10,203,821, 10,203,821 and 10,203,821 shares, respectively			10,204				10,204				10,204
Class B Common Stock, $1.00 par value:
Authorized — 10,000,000 shares;
Issued — 2,672,316, 2,649,996 and 2,649,996 shares, respectively			2,671				2,649				2,649
Capital in excess of par value			104,758				103,464				103,562
Retained earnings			110,364				107,995				85,261
Accumulated other comprehensive loss			(45,449	)			(46,767	)			(56,601	)
			182,548				177,545				145,075
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 equity of Coca-Cola Bottling Co. Consolidated			121,294				116,291				83,821
Noncontrolling interest			53,279				52,804				50,689
Total equity			174,573				169,095				134,510
Total		$	1,336,187			$	1,283,077			$	1,318,352

See Accompanying Notes to Consolidated Financial Statements

COCA-COLA BOTTLING CO. CONSOLIDATED

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (UNAUDITED)
In Thousands

										Capital								Accumulated
						Class B				in								Other								Total
		Common				Common				Excess of				Retained				Comprehensive				Treasury				Equity				Noncontrolling				Total
		Stock				Stock				Par Value				Earnings				Loss				Stock				of CCBCC				Interest				Equity
Balance on Dec. 28, 2008		$	9,706			$	3,127			$	103,582			$	79,021			$	(57,873	)		$	(61,254	)		$	76,309			$	50,397			$	126,706
Comprehensive income:
Net income															8,531												8,531				292				8,823
Foreign currency translation adjustments, net of tax																			(6	)							(6	)							(6	)
Pension and postretirement benefit adjustments, net of tax																			1,278								1,278								1,278
Total comprehensive income																											9,803				292				10,095
Cash dividends paid
Common ($.25 per share)															(1,661	)											(1,661	)							(1,661	)
Class B Common ($.25 per share)															(630	)											(630	)							(630	)
Issuance of 20,000 shares of Class B Common Stock							20				(20	)															—								—
Conversion of Class B Common Stock into Common Stock			498				(498	)																			—								—
Balance on Mar. 29, 2009		$	10,204			$	2,649			$	103,562			$	85,261			$	(56,601	)		$	(61,254	)		$	83,821			$	50,689			$	134,510
Balance on Jan. 3, 2010		$	10,204			$	2,649			$	103,464			$	107,995			$	(46,767	)		$	(61,254	)		$	116,291			$	52,804			$	169,095
Comprehensive income:
Net income															4,660												4,660				475				5,135
Ownership share of Southeastern OCI																			15								15								15
Foreign currency translation adjustments, net of tax																			(4	)							(4	)							(4	)
Pension and postretirement benefit adjustments, net of tax																			1,307								1,307								1,307
Total comprehensive income																											5,978				475				6,453
Cash dividends paid
Common ($.25 per share)															(1,785	)											(1,785	)							(1,785	)
Class B Common ($.25 per share)															(506	)											(506	)							(506	)
Issuance of 22,320 shares of Class B Common Stock							22				1,294																1,316								1,316
Balance on April 4, 2010		$	10,204			$	2,671			$	104,758			$	110,364			$	(45,449	)		$	(61,254	)		$	121,294			$	53,279			$	174,573

See Accompanying Notes to Consolidated Financial Statements

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

		First Quarter
		2010				2009
Cash Flows from Operating Activities
Net income		$	5,135			$	8,823
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense			14,537				15,060
Amortization of intangibles			123				140
Deferred income taxes			1,146				(747	)
(Gain) loss on sale of property, plant and equipment			444				(250	)
Amortization of debt costs			582				603
Amortization of deferred gain related to terminated interest rate agreements			(302	)			(850	)
Stock compensation expense			585				517
Increase in current assets less current liabilities			(16,753	)			(13,087	)
Increase in other noncurrent assets			(766	)			(6,814	)
Increase (decrease) in other noncurrent liabilities			993				(1,616	)
Other			(6	)			(56	)
Total adjustments			583				(7,100	)
Net cash provided by operating activities			5,718				1,723
Cash Flows from Investing Activities
Additions to property, plant and equipment			(7,977	)			(6,249	)
Proceeds from the sale of property, plant and equipment			1,062				135
Net cash used in investing activities			(6,915	)			(6,114	)
Cash Flows from Financing Activities
Borrowings under revolving credit facility			15,000				—
Proceeds from lines of credit, net			20,000				—
Cash dividends paid			(2,291	)			(2,291	)
Principal payments on capital lease obligations			(937	)			(643	)
Other			(20	)			(86	)
Net cash provided by (used in) financing activities			31,752				(3,020	)
Net increase (decrease) in cash			30,555				(7,411	)
Cash at beginning of period			17,770				45,407
Cash at end of period		$	48,325			$	37,996
Significant non-cash investing and financing activities:
Issuance of Class B Common Stock in connection with stock award		$	1,316			$	1,130
Capital lease obligations incurred			—				660

See Accompanying Notes to Consolidated Financial Statements

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

1. Significant Accounting Policies

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

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

The consolidated financial statements have been prepared in accordance with United States generally accepted accounting principles (GAAP) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all information and footnotes required by GAAP. The preparation of consolidated financial statements 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 3, 2010 filed with the United States Securities and Exchange Commission.

2. Seasonality of Business

Historically, operating results for the first quarter of the fiscal year have not been representative of results for the entire fiscal year. Business seasonality results primarily from higher unit sales of the Company’s products in the second and third quarters versus the first and fourth quarters of the fiscal year. Fixed costs, such as depreciation 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 nonalcoholic beverage products to Piedmont at cost and receives a fee for managing the operations of Piedmont pursuant to a management agreement. These intercompany transactions are eliminated in the consolidated financial statements.

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

3. Piedmont Coca-Cola Bottling Partnership

Noncontrolling interest as of April 4, 2010, January 3, 2010 and March 29, 2009 represents the portion of Piedmont owned by The Coca-Cola Company. The Coca-Cola Company’s interest in Piedmont was 22.7% for all periods presented.

4. Inventories

Inventories were summarized as follows:

		April 4,				Jan. 3,				March 29,
In Thousands		2010				2010				2009
Finished products		$	38,336			$	33,686			$	45,781
Manufacturing materials			8,528				8,275				9,091
Plastic shells, plastic pallets and other inventories			17,870				17,161				18,052
Total inventories		$	64,734			$	59,122			$	72,924

5. Property, Plant and Equipment

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

		April 4,				Jan. 3,				March 29,				Estimated
In Thousands		2010				2010				2009				Useful Lives
Land		$	12,671			$	12,671			$	12,167
Buildings			111,387				111,314				109,403			10-50 years
Machinery and equipment			130,097				127,068				119,277			5-20 years
Transportation equipment			152,012				156,692				175,984			4-17 years
Furniture and fixtures			34,484				36,573				37,629			4-10 years
Cold drink dispensing equipment			313,333				312,079				316,487			6-15 years
Leasehold and land improvements			65,350				64,390				60,154			5-20 years
Software for internal use			67,366				65,290				63,479			3-10 years
Construction in progress			6,388				7,907				3,672
Total property, plant and equipment, at cost			893,088				893,984				898,252
Less: Accumulated depreciation and amortization			571,600				567,283				568,356
Property, plant and equipment, net		$	321,488			$	326,701			$	329,896

Depreciation and amortization expense was $14.5 million and $15.1 million in the first quarter of 2010 (“Q1 2010”) and the first quarter of 2009 (“Q1 2009”), respectively. These amounts included amortization expense for leased property under capital leases.

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

6. Leased Property Under Capital Leases

Leased property under capital leases was summarized as follows:

		April 4				Jan. 3,				March 29,				Estimated
In Thousands		2010				2010				2009				Useful Lives
Leased property under capital leases		$	76,877			$	76,877			$	76,877			3-20 years
Less: Accumulated amortization			26,502				25,329				21,826
Leased property under capital leases, net		$	50,375			$	51,548			$	55,051

As of April 4, 2010, real estate represented $49.9 million of the leased property under capital leases and $48.4 million of this real estate is leased from related parties as described in Note 19 to the consolidated financial statements.

The Company modified a related party lease and terminated a second lease in Q1 2009. See Note 19 to the consolidated financial statements for additional information on the lease modification.

The Company’s outstanding lease obligations for these capital leases were $62.2 million, $63.1 million and $65.7 million as of April 4, 2010, January 3, 2010 and March 29, 2009, respectively.

7. Franchise Rights and Goodwill

There was no change in the carrying amounts of franchise rights and goodwill in the periods presented. The Company performs its annual impairment test of franchise rights and goodwill as of the first day of the fourth quarter. During Q1 2010, the Company believes it did not experience any triggering events or changes in circumstances that indicated the carrying amounts of the Company’s franchise rights or goodwill exceeded fair values. As such, the Company has not recognized any impairments of franchise rights or goodwill.

8. Other Identifiable Intangible Assets

Other identifiable intangible assets were summarized as follows:

		April 4,				Jan. 3,				March 29,				Estimated
In Thousands		2010				2010				2009				Useful Lives
Other identifiable intangible assets		$	8,665			$	8,665			$	8,665			1-20 years
Less: Accumulated amortization			3,438				3,315				2,895
Other identifiable intangible assets, net		$	5,227			$	5,350			$	5,770

Other identifiable intangible assets primarily represent customer relationships and distribution rights.

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

9. Other Accrued Liabilities

Other accrued liabilities were summarized as follows:

		April 4,				Jan. 3,				March 29,
In Thousands		2010				2010				2009
Accrued marketing costs		$	9,047			$	9,738			$	7,591
Accrued insurance costs			18,561				18,086				17,540
Accrued taxes (other than income taxes)			1,793				408				1,880
Employee benefit plan accruals			9,827				12,015				11,184
Checks and transfers yet to be presented for payment from zero balance cash accounts			18,640				11,862				20,339
All other accrued liabilities			7,411				9,869				13,296
Total other accrued liabilities		$	65,279			$	61,978			$	71,830

10. Debt

Debt was summarized as follows:

						Interest				Interest				April 4,				Jan. 3,				March 29,
In Thousands		Maturity				Rate				Paid				2010				2010				2009
Revolving Credit Facility			2012				0.60	%		Varies				$	30,000			$	15,000			$	—
Line of Credit			2010				1.11	%		Varies					20,000				—				—
Debentures			2009				7.20	%		Semi-annually					—				—				57,440
Debentures			2009				6.375	%		Semi-annually					—				—				119,253
Senior Notes			2012				5.00	%		Semi-annually					150,000				150,000				150,000
Senior Notes			2015				5.30	%		Semi-annually					100,000				100,000				100,000
Senior Notes			2016				5.00	%		Semi-annually					164,757				164,757				164,757
Senior Notes			2019				7.00	%		Semi-annually					110,000				110,000				—
Unamortized discount on Senior Notes			2019												(1,805	)			(1,840	)			—
															572,952				537,917				591,450
Less: Current portion of debt															20,000				—				66,693
Long-term debt														$	552,952			$	537,917			$	524,757

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

10. Debt

On March 8, 2007, the Company entered into a $200 million revolving credit facility (“$200 million facility”), replacing its $100 million facility. The $200 million facility matures in March 2012 and includes an option to extend the term for an additional year at the discretion of the participating banks. The $200 million facility bears interest at a floating base rate or a floating rate of LIBOR plus an interest rate spread of .35%, dependent on the length of the term of the interest period. In addition, the Company must pay an annual facility fee of .10% of the lenders’ aggregate commitments under the facility. Both the interest rate spread and the facility fee are determined from a commonly-used pricing grid based on the Company’s long-term senior unsecured debt rating. The $200 million facility contains two financial covenants: a fixed charges coverage ratio and a debt to operating cash flow ratio, each as defined in the credit agreement. The fixed charges coverage ratio requires the Company to maintain a consolidated cash flow to fixed charges ratio of 1.5 to 1 or higher. The operating cash flow ratio requires the Company to maintain a debt to cash flow ratio of 6.0 to 1 or lower. The Company is currently in compliance with these covenants. These covenants do not currently, and the Company does not anticipate they will, restrict its liquidity or capital resources. On July 1, 2009, the Company borrowed $55.0 million under the $200 million facility and used the proceeds, along with $2.4 million of cash on hand, to repay at maturity the Company’s $57.4 million outstanding 7.20% Debentures due in July 2009. On April 4, 2010 and January 3, 2010, the Company had $30 million and $15 million of outstanding borrowings, respectively, on the $200 million facility. On March 29, 2009, the Company had no outstanding borrowings on the $200 million facility.

On February 10, 2010, the Company entered into an agreement for an uncommitted line of credit. Under this agreement, the Company may borrow up to a total of $20 million for periods of 7 days, 30 days, 60 days or 90 days. On April 4, 2010, the Company had $20 million outstanding on the uncommitted line of credit.

After taking into account all of its interest rate hedging activities, the Company had a weighted average interest rate of 5.4%, 5.6% and 5.6% for its debt and capital lease obligations as of April 4, 2010, January 3, 2010 and March 29, 2009, respectively. The Company’s overall weighted average interest rate on its debt and capital lease obligations was 5.7% for Q1 2010 compared to 5.6% for Q1 2009. As of April 4, 2010, approximately 12.4% of the Company’s debt and capital lease obligations of $635.1 million was subject to changes in short-term interest rates.

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

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

In April 2009, the Company issued $110 million of unsecured 7% Senior Notes due in 2019. The proceeds plus cash on hand were used to repay the $119.3 million debt maturity on May 1, 2009. The current portion of debt at March 29, 2009 reflected the $176.7 million of debt maturing in May and July of 2009 less the $110 million of debt which was repaid from the proceeds of the 7% Senior Notes.

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

11. Derivative Financial Instruments

Interest

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.

On September 18, 2008, the Company terminated six outstanding interest rate swap agreements with a notional amount of $225 million receiving $6.2 million in cash proceeds including $1.1 million for previously accrued interest receivable. After accounting for previously accrued interest receivable, the Company is amortizing the gain of $5.1 million over the remaining term of the underlying debt. During Q1 2010 and Q1 2009, $.2 million and $.4 million of the gain, respectively, was amortized. The remaining amount to be amortized is $3.2 million. All of the Company’s interest rate swap agreements were LIBOR-based.

The Company had no interest rate swap agreements outstanding at April 4, 2010, January 3, 2010 and March 29, 2009.

Commodities

The Company is subject to the risk of loss arising from adverse changes in commodity prices. In the normal course of business, the Company manages these risks through a variety of strategies, including the use of derivative instruments. The Company does not use derivative instruments for trading or speculative purposes. All derivative instruments are recorded at fair value as either assets or liabilities in the Company’s consolidated balance sheets. These derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage commodity risk. Currently the Company has derivative instruments to hedge some or all of its projected diesel fuel and aluminum purchase requirements. These derivative instruments are marked to market on a monthly basis and recognized in earnings consistent with the expense classification of the underlying hedged item. Settlements of derivative agreements are included in cash flows from operating activities on the Company’s consolidated statements of cash flows.

The Company uses several different financial institutions for commodity derivative instruments 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 derivative transactions.

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

11. Derivative Financial Instruments

The Company used derivative instruments to hedge essentially all of its diesel fuel purchases for 2009 and is using derivative instruments to hedge essentially all of its diesel fuel purchases for 2010. These derivative instruments relate to diesel fuel used by the Company’s delivery fleet. At the end of Q1 2009, the Company began using derivative instruments to hedge approximately 75% of the projected 2010 aluminum purchase requirements. During the second quarter of 2009, the Company entered into derivative agreements to hedge approximately 75% of the projected 2011 aluminum purchase requirements.

The following summarizes Q1 2010 and Q1 2009 net gains and losses on the Company’s fuel and aluminum derivative financial instruments and the classification of such net gains in the consolidated statements of operations:

				First Quarter
In Thousands		Classification of Gain (Loss)		2010				2009
Fuel hedges		Selling, delivery and administrative expenses		$	(401	)		$	1,451
Aluminum hedges		Cost of sales			513				663
Total Net Gain				$	112			$	2,114

The following summarizes the fair values and classification in the consolidated balance sheets of derivative instruments held by the Company as of April 4, 2010:

				April 4,			Jan. 3,			March 29,
In Thousands		Balance Sheet Classification		2010			2010			2009
Assets
Aluminum hedges at fair market value		Prepaid expenses and other current assets		$	5,017		$	3,303		$	663
Unamortized cost of fuel hedging agreements		Prepaid expenses and other current assets			674			863			1,441
Unamortized cost of aluminum hedging agreements		Prepaid expenses and other current assets			1,369			967			1,197
Fuel hedges at fair market value		Prepaid expenses and other current assets			1,325			1,617			—
Total				$	8,385		$	6,750		$	3,301
Aluminum hedges at fair market value		Other assets		$	5,971		$	7,149			—
Unamortized cost of aluminum hedging agreements		Other assets			2,029			2,453			—
Total				$	8,000		$	9,602			—
Liabilities
Fuel hedges at fair market value		Other accrued liabilities			—			—		$	215
Total					—			—		$	215

The following table summarizes the Company’s outstanding derivative agreements as of April 4, 2010:

		Notional				Latest
In Millions		Amount				Maturity
Fuel hedging agreements		$	7.6			December 2010
Aluminum hedging agreements			46.0			December 2011

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

12. Fair Value of Financial Instruments

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

Cash and Cash Equivalents, Restricted Cash, Accounts Receivable and Accounts Payable

The fair values of cash and cash equivalents, restricted cash, accounts receivable and accounts payable approximate carrying values due to the short maturity of these items.

Public Debt Securities

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

Non-Public Variable Rate Debt

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

Deferred Compensation Plan Assets/Liabilities

The fair values of deferred compensation plan assets and liabilities, which are held in mutual funds, are based upon the quoted market value of the securities held within the mutual funds.

Derivative Financial Instruments

The fair values for the Company’s fuel hedging and aluminum hedging agreements are based on current settlement values. The fair values of the fuel and aluminum hedging agreements at each balance sheet date represent the estimated amounts the Company would have received or paid upon termination of these agreements. Credit risk related to the derivative financial instruments is managed by requiring high standards for its counterparties and periodic settlements. The Company considers nonperformance risk in determining the fair value of derivative financial instruments.

Letters of Credit

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

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

12. Fair Value of Financial Instruments

The carrying amounts and fair values of the Company’s debt, deferred compensation plan assets and liabilities, and derivative financial instruments were as follows:

		April 4, 2010								January 3, 2010								March 29, 2009
		Carrying				Fair				Carrying				Fair				Carrying				Fair
In Thousands		Amount				Value				Amount				Value				Amount				Value
Public debt securities		$	522,952			$	556,459			$	522,917			$	557,758			$	591,450			$	569,606
Non-public variable rate debt			50,000				50,000				15,000				15,000				—				—
Deferred compensation plan assets/liabilities			9,098				9,098				8,471				8,471				5,841				5,841
Fuel hedging agreements			(1,325	)			(1,325	)			(1,617	)			(1,617	)			215				215
Aluminum hedging agreements			(10,988	)			(10,988	)			(10,452	)			(10,452	)			(663	)			(663	)

The fair values of the fuel hedging agreements at April 4, 2010 and January 3, 2010 represented the estimated amount the Company would have received upon termination of these agreements. The fair value of the fuel hedging agreements at March 29, 2009 represented the estimated amount the Company would have paid upon termination of these agreements.

The fair values of the aluminum hedging agreements at April 4, 2010, January 3, 2010 and March 29, 2009 represented the estimated amount the Company would have received upon termination of these agreements.

GAAP requires that assets and liabilities carried at fair value be classified and disclosed in one of the following categories:

Level 1: Quoted market prices in active markets for identical assets or liabilities.

Level 2: Observable market based inputs or unobservable inputs that are corroborated by market data.

Level 3: Unobservable inputs that are not corroborated by market data.

The following table summarizes, by assets and liabilities, the valuation of the Company’s deferred compensation plan, aluminum hedging agreements and fuel hedging agreements:

		April 4, 2010								January 3, 2010								March 29, 2009
In Thousands		Level 1				Level 2				Level 1				Level 2				Level 1				Level 2
Assets
Deferred compensation plan assets		$	9,098							$	8,471							$	5,841
Fuel hedging agreements						$	1,325							$	1,617
Aluminum hedging agreements							10,988								10,452							$	663
Liabilities
Deferred compensation plan liabilities			9,098								8,471								5,841
Fuel hedging agreements																							215

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

12. Fair Value of Financial Instruments

The Company maintains a non-qualified deferred compensation plan for certain executives and other highly compensated employees. The investment assets are held in mutual funds. The fair value of the mutual funds is based on the quoted market value of the securities held within the funds (Level 1). The related deferred compensation liability represents the fair value of the investment assets.

The Company’s fuel hedging agreements are based upon NYMEX rates that are observable and quoted periodically over the full term of the agreement and are considered Level 2 items.

The Company’s aluminum hedging agreements are based upon LME rates that are observable and quoted periodically over the full term of the agreement and are considered Level 2 items.

The Company does not have Level 3 assets or liabilities. Also, there were no transfers of assets or liabilities between Level 1 and Level 2 for any of the periods presented.

13. Other Liabilities

Other liabilities were summarized as follows:

		April 4,				Jan. 3,				March 29,
In Thousands		2010				2010				2009
Accruals for executive benefit plans		$	87,787			$	85,382			$	79,177
Other			21,193				21,586				27,686
Total other liabilities		$	108,980			$	106,968			$	106,863

14. Commitments and Contingencies

The Company is a member of South Atlantic Canners, Inc. (“SAC”), a manufacturing cooperative from which it is obligated to purchase 17.5 million cases of finished product on an annual basis through May 2014. The Company is also a member of Southeastern Container (“Southeastern”), a plastic bottle manufacturing cooperative from which it is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories. See Note 19 to the consolidated financial statements for additional information concerning SAC and Southeastern.

The Company guarantees a portion of SAC’s and Southeastern’s debt and lease obligations. The amounts guaranteed were $39.0 million, $30.5 million and $40.3 million as of April 4, 2010, January 3, 2010 and March 29, 2009, respectively. The Company has not recorded any liability associated with these guarantees and holds no assets as collateral against these guarantees. The guarantees relate to the debt and lease obligations of SAC and Southeastern, which resulted primarily from the purchase of production equipment and facilities. These guarantees expire at various dates through 2021. The members of both cooperatives consist solely of Coca-Cola bottlers. The Company does not anticipate either of these cooperatives will fail to fulfill their commitments. The Company further believes each of these cooperatives has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust selling prices of their products which adequately mitigate the risk of material loss from the Company’s guarantees. In the event either of these cooperatives fails to fulfill its commitments under the related debt and lease obligations, the Company would be responsible for payments to the lenders up to the level of the guarantees. If these cooperatives had borrowed up to their borrowing capacity, the Company’s maximum exposure under these guarantees on April 4, 2010 would have been $25.2 million for SAC and $25.3 million for Southeastern and the Company’s maximum total exposure, including its equity investment, would have been $30.8 million for SAC and $41.0 million for Southeastern.

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

14. Commitments and Contingencies

The Company has been purchasing plastic bottles from Southeastern and finished products from SAC for more than ten years and has never had to pay against these guarantees.

The Company has an equity ownership in each of the entities in addition to the guarantees of certain indebtedness and records its investment in each under the equity method. As of April 4, 2010, SAC had total assets of approximately $42 million and total debt of approximately $21 million. SAC had total revenues for Q1 2010 of approximately $40 million. As of April 4, 2010, Southeastern had total assets of approximately $377 million and total debt of approximately $218 million. Southeastern had total revenue for Q1 2010 of approximately $136 million.

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. On April 4, 2010, these letters of credit totaled $30.7 million. The Company has been required to maintain $4.5 million of restricted cash for letters of credit since the second quarter of 2009.

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations. The future payments related to these contractual arrangements as of April 4, 2010 amounted to $20.2 million and expire at various dates through 2018.

The Company is involved in various claims and legal proceedings which have arisen in the ordinary course of its business. Although it is difficult to predict the ultimate outcome of these claims and legal proceedings, management believes the ultimate disposition of these matters will not have a material adverse effect on the financial condition, cash flows or results of operations of the Company. No material amount of loss in excess of recorded amounts is believed to be reasonably possible as a result of these claims and legal proceedings.

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

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

15. Income Taxes

The Company’s effective income tax rate for Q1 2010 and Q1 2009 was 44.4% and 26.4%, respectively. The increase in the effective tax rate for Q1 2010 resulted primarily from the elimination of the tax deduction associated with Medicare Part D subsidy as required by the Patient Protection and Affordable Care Act enacted on March 23, 2010 and the Health Care and Education Reconciliation Act enacted on March 30, 2010.

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

		First Quarter
In Thousands		2010				2009
Statutory expense		$	2,931			$	4,057
State income taxes, net of federal effect			354				505
Manufacturing deduction benefit			(394	)			(315	)
Meals and entertainment			116				247
Adjustment for uncertain tax positions			161				(1,686	)
Tax law change related to Medicare Part D subsidy			464				—
Other, net			82				252
Income tax expense		$	3,714			$	3,060

The Company had $5.7 million of uncertain tax positions, including accrued interest, of which $3.6 million would affect the Company’s effective tax rate if recognized as of April 4, 2010. The Company had $5.6 million of uncertain tax positions, including accrued interest, of which $3.5 million would affect the Company’s effective tax rate if recognized as of January 3, 2010. It is expected that the amount of uncertain tax positions may change in the next 12 months; however, the Company does not expect the change to have a significant impact on the consolidated financial statements.

The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. As of April 4, 2010, the Company had approximately $1.0 million of accrued interest related to uncertain tax positions. As of January 3, 2010, the Company had approximately $.9 million of accrued interest related to uncertain tax positions. Income tax expense included interest expense of approximately $.1 million in Q1 2010 and an interest credit of approximately $.7 million in Q1 2009.

On March 23, 2010, the Patient Protection and Affordable Care Act (“PPACA”) was signed into law. On March 30, 2010, a companion bill, the Health Care and Education Reconciliation Act of 2010 (“Reconciliation Act”), was also signed into law. The PPACA and the Reconciliation Act included provisions that will reduce the tax benefits available to employers that receive Medicare Part D subsidies. As a result, during Q1 2010, the Company recorded tax expense totaling $.5 million related to changes made to the tax deductibility of Medicare Part D subsidies. In Q1 2009, the Company reached an agreement with a state taxing authority to settle prior tax positions for which the Company had previously provided reserves due to uncertainty of resolution. As a result, the Company reduced the liability for uncertain tax positions by $1.7 million. The net effect of the adjustment was a decrease to income tax expense in Q1 2009 of approximately $1.7 million.

Various tax years from 1991 remain open to examination by taxing jurisdictions to which the Company is subject due to loss carryforwards.

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

16. Accumulated Other Comprehensive Loss

Accumulated other comprehensive loss is comprised of adjustments relative to the Company’s pension and postretirement medical benefit plans, foreign currency translation adjustments required for a subsidiary of the Company that performs data analysis and provides consulting services outside the United States and the Company’s share of Southeastern’s other comprehensive loss.

A summary of accumulated other comprehensive loss is as follows:

		Jan. 3,				Pre-tax				Tax				April 4,
In Thousands		2010				Activity				Effect				2010
Net pension activity:
Actuarial loss		$	(40,626	)		$	1,495			$	(587	)		$	(39,718	)
Prior service costs			(37	)			4				(1	)			(34	)
Net postretirement benefits activity:
Actuarial loss			(13,470	)			341				330				(12,799	)
Prior service costs			7,376				(446	)			175				7,105
Transition asset			26				(6	)			2				22
Ownership share of Southeastern OCI			(49	)			24				(9	)			(34	)
Foreign currency translation adjustment			13				(7	)			3				9
Total		$	(46,767	)		$	1,405			$	(87	)		$	(45,449	)

		Dec. 28,				Pre-tax				Tax				March 29,
In Thousands		2008				Activity				Effect				2009
Net pension activity:
Actuarial loss		$	(56,717	)		$	2,339			$	(921	)		$	(55,299	)
Prior service costs			(45	)			4				(1	)			(42	)
Net postretirement benefits activity:
Actuarial loss			(9,625	)			217				(86	)			(9,494	)
Prior service costs			8,459				(446	)			176				8,189
Transition asset			41				(6	)			2				37
Foreign currency translation adjustment			14				(10	)			4				8
Total		$	(57,873	)		$	2,098			$	(826	)		$	(56,601	)

17. Capital Transactions

The Company has two classes of common stock outstanding, Common Stock and Class B Common Stock. The Common Stock is traded on the NASDAQ Global Select Market^sm under the symbol COKE. There is no established public trading market for the Class B Common Stock. Shares of the Class B Common Stock are convertible on a share-for-share basis into shares of Common Stock at any time at the option of the holders of Class B Common Stock.

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

17. Capital Transactions

No cash dividend or dividend of property or stock other than stock of the Company, as specifically described in the Company’s certificate of incorporation, may be declared and paid on the Class B Common Stock unless an equal or greater dividend is declared and paid on the Common Stock. During Q1 2010 and Q1 2009, dividends of $.25 per share were declared and paid on both Common Stock and Class B Common Stock.

Each share of Common Stock is entitled to one vote per share and each share of Class B Common Stock is entitled to 20 votes per share at all meetings of stockholders. Except as otherwise required by law, holders of the Common Stock and Class B Common Stock vote together as a single class on all matters brought before the Company’s stockholders. In the event of liquidation, there is no preference between the two classes of common stock.

On May 12, 1999, the stockholders of the Company approved a restricted stock award program for J. Frank Harrison, III, the Company’s Chairman of the Board of Directors and Chief Executive Officer, consisting of 200,000 shares of the Company’s Class B Common Stock. Under the award, shares of restricted stock were granted at a rate of 20,000 shares per year over a ten-year period. The vesting of each annual installment was contingent upon the Company achieving at least 80% of the overall goal achievement factor in the Company’s Annual Bonus Plan. The restricted stock award did not entitle Mr. Harrison, III to participate in dividend or voting rights until each installment had vested and the shares were issued. The restricted stock award expired at the end of fiscal year 2008. On March 4, 2009, the Compensation Committee determined an additional 20,000 shares of restricted Class B Common Stock vested and such shares were issued to Mr. Harrison, III for the fiscal year ended December 28, 2008.

On April 29, 2008, the stockholders of the Company approved a Performance Unit Award Agreement for Mr. Harrison, III consisting of 400,000 performance units (“Units”). Each Unit represents the right to receive one share of the Company’s Class B Common Stock, subject to certain terms and conditions. The Units vest in annual increments over a ten-year period starting in fiscal year 2009. The number of Units that vest each year will equal the product of 40,000 multiplied by the overall goal achievement factor (not to exceed 100%) under the Company’s Annual Bonus Plan. The Performance Unit Award Agreement replaced the restricted stock award program.

Each annual 40,000 Unit tranche has an independent performance requirement as it is not established until the Company’s Annual Bonus Plan targets are approved each year by the Company’s Board of Directors. As a result, each 40,000 Unit tranche is considered to have its own service inception date, grant-date and requisite service period. The Company’s Annual Bonus Plan targets, which establish the performance requirements for the Performance Unit Award Agreement, are approved by the Compensation Committee of the Board of Directors in the first quarter of each year. The Performance Unit Award Agreement does not entitle Mr. Harrison, III to participate in dividends or voting rights until each installment has vested and the shares are issued. Mr. Harrison, III may satisfy tax withholding requirements in whole or in part by requiring the Company to settle in cash such number of Units otherwise payable in Class B Common Stock to meet the maximum statutory tax withholding requirements.

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

17. Capital Transactions

On March 9, 2010, the Compensation Committee determined that 40,000 Units vested for the fiscal year ended January 3, 2010. Of such Units, 22,320 were settled for 22,320 shares of Class B Common Stock and 17,680 were settled in cash to satisfy tax withholding obligations in connection with the vesting of the Units.

Compensation expense for the Performance Unit Award Agreement recognized in Q1 2010 was $.6 million, which was based upon a share price of $58.45 on April 1, 2010. Compensation expense recognized in Q1 2009 was $.5 million, which was based upon a share price of $51.68 on March 27, 2009.

On February 19, 2009, The Coca-Cola Company converted 497,670 shares of the Company’s Class B Common Stock into an equivalent number of shares of the Company’s Common Stock.

The increase in the total number of shares outstanding in Q1 2010 was due to the issuance of the 22,320 shares of Class B Common Stock related to the Performance Unit Award Agreement. The increase in the total number of shares outstanding in Q1 2009 was due to the issuance of 20,000 shares of Class B Common Stock related to the restricted stock award.

18. Benefit Plans

Pension Plans

Retirement benefits under the two Company-sponsored pension plans are based on the employee’s length of service, average compensation over the five consecutive years that give the highest average compensation and average Social Security taxable wage base during the 35-year period before reaching Social Security retirement age. Contributions to the plans are based on the projected unit credit actuarial funding method and are limited to the amounts currently deductible for income tax purposes. On February 22, 2006, the Board of Directors of the Company approved an amendment to the principal Company-sponsored pension plan to cease further benefit accruals under the plan effective June 30, 2006.

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

18. Benefit Plans

The components of net periodic pension cost were as follows:

		First Quarter
In Thousands		2010				2009
Service cost		$	19			$	23
Interest cost			2,857				2,788
Expected return on plan assets			(2,868	)			(2,270	)
Amortization of prior service cost			4				4
Recognized net actuarial loss			1,495				2,339
Net periodic pension cost		$	1,507			$	2,884

The Company contributed $.1 million to one of its Company-sponsored pension plans during Q1 2010.

Postretirement Benefits

The Company provides postretirement benefits for a portion of its current employees. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Company does not pre-fund these benefits and has the right to modify or terminate certain of these benefits in the future.

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

		First Quarter
In Thousands		2010				2009
Service cost		$	195			$	158
Interest cost			626				557
Amortization of unrecognized transitional assets			(6	)			(6	)
Recognized net actuarial loss			341				217
Amortization of prior service cost			(446	)			(446	)
Net periodic postretirement benefit cost		$	710			$	480

401(k) Savings Plan

The Company provides a 401(k) Savings Plan for substantially all of its employees who are not part of collective bargaining agreements. The Company suspended matching contributions to its 401(k) Savings Plan effective April 1, 2009. The Company maintained the option to match its employees’ 401(k) Savings Plan contributions based on the financial results for 2009. The Company subsequently decided to match the first 5% of its employees’ contributions (consistent with Q1 2009 matching contribution percentage) for the entire year of 2009. The Company will match the first 3% of its employees’ contributions for 2010. The Company maintains the option to increase the matching contributions an additional 2%, for a total of 5%, for the Company’s employees based on the financial results for 2010. The total cost for this benefit in Q1 2010 and Q1 2009 was $2.2 million and $2.3 million, respectively.

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

18. Benefit Plans

Multi-Employer Benefits

The Company entered into a new agreement in the third quarter of 2008 when one of its collective bargaining contracts expired in July 2008. The new agreement allowed the Company to freeze its liability to Central States Southeast and Southwest Areas Pension Plan (“Central States”), a multi-employer defined benefit pension fund, while preserving the pension benefits previously earned by the employees. As a result of freezing the Company’s liability to Central States, the Company recorded a charge of $13.6 million in the second half of 2008. The Company paid $3.0 million in the fourth quarter of 2008 to the Southern States Savings and Retirement Plan under the agreement to freeze the Central States liability. The remaining $10.6 million was the present value amount, using a discount rate of 7% that will be paid to Central States over the next 20 years and was recorded in other liabilities. The Company paid approximately $1 million in 2009 and will pay approximately $1 million annually over the next 19 years.

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 beverage products are manufactured. As of April 4, 2010, The Coca-Cola Company had a 27.0% interest in the Company’s total outstanding Common Stock and Class B Common Stock on a combined basis, representing 5.2% of the total votes of the Company’s Common Stock and Class B Common Stock voting together as a single class.

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

		First Quarter
In Millions		2010				2009
Payments by the Company for concentrate, syrup, sweetener and other purchases		$	92.0			$	83.8
Marketing funding support payments to the Company			10.2				9.6
Payments by the Company net of marketing funding support		$	81.8			$	74.2
Payments by the Company for customer marketing programs		$	12.7			$	11.0
Payments by the Company for cold drink equipment parts			1.7				1.5
Fountain delivery and equipment repair fees paid to the Company			2.2				2.9
Presence marketing funding support provided by The Coca-Cola Company on the Company’s behalf			1.1				1.0
Payments to the Company to facilitate the distribution of certain brands and packages to other Coca-Cola bottlers			.9				—
Sales of finished products to The Coca-Cola Company			—				.6

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

19. Related Party Transactions

The Company has a production arrangement with Coca-Cola Enterprises Inc. (“CCE”) to buy and sell finished products at cost. Sales to CCE under this arrangement were $11.9 million and $11.1 million in Q1 2010 and Q1 2009, respectively. Purchases from CCE under this arrangement were $4.5 million and $2.6 million in Q1 2010 and Q1 2009, respectively. In addition, CCE began distributing one of the Company’s own brands (Tum-E Yummies) in Q1 2010. Total sales to CCE for this brand were $3.3 million in Q1 2010.

The Coca-Cola Company has significant equity interests in the Company and CCE.

Along with all other Coca-Cola bottlers in the United States, the Company is a member in Coca-Cola Bottlers’ Sales and Services Company, LLC (“CCBSS”), which was formed in 2003 for the purposes of facilitating various procurement functions and distributing certain specified beverage products of The Coca-Cola Company with the intention of enhancing the efficiency and competitiveness of the Coca-Cola bottling system in the United States. CCBSS negotiates the procurement for the majority of the Company’s raw materials (excluding concentrate). The Company pays an administrative fee to CCBSS for its services. Administrative fees to CCBSS for its services were $.2 million and $.1 million in Q1 2010 and Q1 2009, respectively.

The Company is a member of SAC, a manufacturing cooperative. SAC sells finished products to the Company and Piedmont at cost. Purchases from SAC by the Company and Piedmont for finished products were $29.8 million and $30.4 million in Q1 2010 and Q1 2009, respectively. The Company also manages the operations of SAC pursuant to a management agreement. Management fees earned from SAC were $.3 million in Q1 2010 and $.4 million in Q1 2009. The Company has also guaranteed a portion of debt for SAC. Such guarantee amounted to $20.8 million as of April 4, 2010. The Company has not recorded any liability associated with this guarantee and holds no assets as collateral against this guarantee. The Company’s equity investment in SAC was $5.6 million as of April 4, 2010, January 3, 2010 and March 29, 2009.

The Company is a shareholder in two entities from which it purchases substantially all its requirements for plastic bottles. Net purchases from these entities were $17.0 million in Q1 2010 and $16.6 million in Q1 2009. In connection with its participation in one of these entities, the Company has guaranteed a portion of the entity’s debt. Such guarantee amounted to $18.2 million as of April 4, 2010. The Company has not recorded any liability associated with this guarantee and holds no assets as collateral against this guarantee. The Company’s equity investment in one of these entities, Southeastern, was $15.7 million, $13.2 million and $13.2 million as of April 4, 2010, January 3, 2010 and March 29, 2009, respectively.

The Company monitors its investments in cooperatives and would be required to write down its investment if an impairment is identified and the Company determined it to be other-than temporary. No impairment of the Company’s investments in cooperatives has been identified as of April 4, 2010 nor was there any impairment in 2009.

The Company leases from Harrison Limited Partnership One (“HLP”) the Snyder Production Center (“SPC”) and an adjacent sales facility, which are located in Charlotte, North Carolina. HLP is directly and indirectly owned by trusts of which J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, and Deborah H. Everhart, a director of the Company, are trustees and beneficiaries. The current lease

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

19. Related Party Transactions

was to expire on December 31, 2010. On March 23, 2009, the Company modified the lease agreement (new terms to begin January 1, 2011) with HLP related to the SPC lease. The modified lease would not have changed the classification of the existing lease had it been in effect in the first quarter of 2002, when the capital lease was recorded, as the Company received a renewal option to extend the term of the lease, which it expected to exercise. The modified lease did not extend the term of the existing lease (remaining lease term was reduced from approximately 22 years to approximately 12 years). Accordingly, the present value of the leased property under capital leases and capital lease obligations was adjusted by an amount equal to the difference between the future minimum lease payments under the modified lease agreement and the present value of the existing obligation on the modification date. The capital lease obligations and leased property under capital leases were both decreased by $7.5 million in March 2009. The annual base rent the Company is obligated to pay under the modified lease is subject to an adjustment for an inflation factor. The prior lease annual base rent was subject to adjustment for an inflation factor and for increases or decreases in interest rates, using LIBOR as the measurement device. The principal balance outstanding under this capital lease as of April 4, 2010 was $28.5 million. Rental payments related to this lease were $.8 million and $.9 million in Q1 2010 and Q1 2009, respectively.

The Company leases from Beacon Investment Corporation (“Beacon”) the Company’s headquarters office facility and an adjacent office facility. The lease expires on December 31, 2021. Beacon’s sole shareholder is J. Frank Harrison, III. The principal balance outstanding under this capital lease as of April 4, 2010 was $30.5 million. Rental payments related to the lease were $.9 million in both Q1 2010 and Q1 2009.

20. Net Sales by Product Category

Net sales by product category were as follows:

		First Quarter
In Thousands		2010				2009
Bottle/can sales:
Sparkling beverages (including energy products)		$	242,706			$	235,455
Still beverages			41,872				45,917
Total bottle/can sales			284,578				281,372
Other sales:
Sales to other Coca-Cola bottlers			33,661				31,133
Post-mix and other			29,259				23,756
Total other sales			62,920				54,889
Total net sales		$	347,498			$	336,261

Sparkling beverages are carbonated beverages while still beverages are noncarbonated beverages.

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

21. Net Income Per Share

The following table sets forth the computation of basic net income per share and diluted net income per share under the two-class method:

		First Quarter
In Thousands (Except Per Share Data)		2010				2009
Numerator for basic and diluted net income per Common Stock and Class B Common Stock share:
Net income attributable to Coca-Cola Bottling Co. Consolidated		$	4,660			$	8,531
Less dividends:
Common Stock			1,785				1,714
Class B Common Stock			506				577
Total undistributed earnings		$	2,369			$	6,240
Common Stock undistributed earnings — basic		$	1,845			$	4,670
Class B Common Stock undistributed earnings — basic			524				1,570
Total undistributed earnings — basic		$	2,369			$	6,240
Common Stock undistributed earnings — diluted		$	1,837			$	4,664
Class B Common Stock undistributed earnings — diluted			532				1,576
Total undistributed earnings — diluted		$	2,369			$	6,240
Numerator for basic net income per Common Stock share:
Dividends on Common Stock		$	1,785			$	1,714
Common Stock undistributed earnings — basic			1,845				4,670
Numerator for basic net income per Common Stock share		$	3,630			$	6,384
Numerator for basic net income per Class B Common Stock share:
Dividends on Class B Common Stock		$	506			$	577
Class B Common Stock undistributed earnings — basic			524				1,570
Numerator for basic net income per Class B Common Stock share		$	1,030			$	2,147

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

21. Net Income Per Share

		First Quarter
In Thousands (Except Per Share Data)		2010				2009
Numerator for diluted net income per Common Stock share:
Dividends on Common Stock		$	1,785			$	1,714
Dividends on Class B Common Stock assumed converted to Common Stock			506				577
Common Stock undistributed earnings — diluted			2,369				6,240
Numerator for diluted net income per Common Stock share		$	4,660			$	8,531
Numerator for diluted net income per Class B Common Stock share:
Dividends on Class B Common Stock		$	506			$	577
Class B Common Stock undistributed earnings — diluted			532				1,576
Numerator for diluted net income per Class B Common Stock share		$	1,038			$	2,153

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

21. Net Income Per Share

		First Quarter
In Thousands (Except Per Share Data)		2010				2009
Denominator for basic net income per Common Stock and Class B Common Stock share:
Common Stock weighted average shares outstanding — basic			7,141				6,857
Class B Common Stock weighted average shares outstanding — basic			2,029				2,306
Denominator 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)			9,210				9,174
Class B Common Stock weighted average shares outstanding — diluted			2,069				2,317
Basic net income per share:
Common Stock		$	.51			$	.93
Class B Common Stock		$	.51			$	.93
Diluted net income per share:
Common Stock		$	.51			$	.93
Class B Common Stock		$	.50			$	.93