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		(I.R.S. Employer Identification No.)
organization)

     4100 Coca-Cola Plaza, Charlotte, North Carolina 28211     
(Address of principal executive offices) (Zip Code)

(704) 557-4400

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.

Large accelerated filer o		Accelerated filer þ		Non-accelerated filer o		Smaller reporting company o
				(Do not check if a smaller reporting company)

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 29, 2011
Common Stock, $1.00 Par Value			7,141,447
Class B Common Stock, $1.00 Par Value			2,066,522

 

 

COCA-COLA BOTTLING CO. CONSOLIDATED
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTERLY PERIOD ENDED APRIL 3, 2011

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			52
Item 4.		Controls and Procedures			53
PART II — OTHER INFORMATION
Item 1A.		Risk Factors			54
Item 6.		Exhibits			55
		Signatures			56
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
		2011				2010
Net sales		$	359,629			$	347,498
Cost of sales			210,468				200,795
Gross margin			149,161				146,703
Selling, delivery and administrative expenses			129,982				129,044
Income from operations			19,179				17,659
Interest expense, net			8,769				8,810
Income before income taxes			10,410				8,849
Income tax expense			3,941				3,714
Net income			6,469				5,135
Less: Net income attributable to the noncontrolling interest			556				475
Net income attributable to Coca-Cola Bottling Co. Consolidated		$	5,913			$	4,660
Basic net income per share based on net income attributable to Coca-Cola Bottling Co. Consolidated:
Common Stock		$	.64			$	.51
Weighted average number of Common Stock shares outstanding			7,141				7,141
Class B Common Stock		$	.64			$	.51
Weighted average number of Class B Common Stock shares outstanding			2,051				2,029
Diluted net income per share based on net income attributable to Coca-Cola Bottling Co. Consolidated:
Common Stock		$	.64			$	.51
Weighted average number of Common Stock shares outstanding — assuming dilution			9,232				9,210
Class B Common Stock		$	.64			$	.50
Weighted average number of Class B Common Stock shares outstanding — assuming dilution			2,091				2,069
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 (UNAUDITED)
In Thousands (Except Share Data)

		April 3,				Jan. 2,				April 4,
		2011				2011				2010
ASSETS
Current Assets:
Cash and cash equivalents		$	30,382			$	45,872			$	48,325
Restricted cash			3,500				3,500				4,500
Accounts receivable, trade, less allowance for doubtful accounts of $1,442, $1,300 and $2,056, respectively			110,809				96,787				111,397
Accounts receivable from The Coca-Cola Company			15,256				12,081				17,008
Accounts receivable, other			8,450				15,829				11,026
Inventories			72,606				64,870				64,734
Prepaid expenses and other current assets			27,306				25,760				32,590
Total current assets			268,309				264,699				289,580
Property, plant and equipment, net			319,682				322,143				321,488
Leased property under capital leases, net			64,188				46,856				50,375
Other assets			51,457				46,332				46,796
Franchise rights			520,672				520,672				520,672
Goodwill			102,049				102,049				102,049
Other identifiable intangible assets, net			4,748				4,871				5,227
Total		$	1,331,105			$	1,307,622			$	1,336,187

See Accompanying Notes to Consolidated Financial Statements.

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

		April 3,				Jan. 2,				April 4,
		2011				2011				2010
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of debt		$	—			$	—			$	20,000
Current portion of obligations under capital leases			3,946				3,866				3,851
Accounts payable, trade			41,997				41,878				36,869
Accounts payable to The Coca-Cola Company			34,744				25,058				43,542
Other accrued liabilities			69,809				69,471				65,279
Accrued compensation			13,730				30,944				12,813
Accrued interest payable			10,061				5,523				10,062
Total current liabilities			174,287				176,740				192,416
Deferred income taxes			144,972				143,962				159,591
Pension and postretirement benefit obligations			113,291				114,163				89,356
Other liabilities			112,242				109,882				108,980
Obligations under capital leases			72,925				55,395				58,319
Long-term debt			523,101				523,063				552,952
Total liabilities			1,140,818				1,123,205				1,161,614
Commitments and Contingencies (Note 14)
Equity:
Common Stock, $1.00 par value:
Authorized — 30,000,000 shares;
Issued — 10,203,821 shares			10,204				10,204				10,204
Class B Common Stock, $1.00 par value:
Authorized — 10,000,000 shares;
Issued — 2,694,636, 2,672,316 and 2,672,316 shares, respectively			2,693				2,671				2,671
Capital in excess of par value			106,140				104,835				104,758
Retained earnings			138,489				134,872				110,364
Accumulated other comprehensive loss			(63,063	)			(63,433	)			(45,449	)
			194,463				189,149				182,548
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			133,209				127,895				121,294
Noncontrolling interest			57,078				56,522				53,279
Total equity			190,287				184,417				174,573
Total		$	1,331,105			$	1,307,622			$	1,336,187

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 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
Balance on Jan. 2, 2011		$	10,204			$	2,671			$	104,835			$	134,872			$	(63,433	)		$	(61,254	)		$	127,895			$	56,522			$	184,417
Comprehensive income:
Net income															5,913												5,913				556				6,469
Foreign currency translation adjustments, net of tax																			(4	)							(4	)							(4	)
Pension and postretirement benefit adjustments, net of tax																			374								374								374
Total comprehensive income																											6,283				556				6,839
Cash dividends paid Common ($.25 per share)															(1,785	)											(1,785	)							(1,785	)
Class B Common
($.25 per share)															(511	)											(511	)							(511	)
Issuance of 22,320 shares of Class B Common Stock							22				1,305																1,327								1,327
Balance on April 3, 2011		$	10,204			$	2,693			$	106,140			$	138,489			$	(63,063	)		$	(61,254	)		$	133,209			$	57,078			$	190,287

See Accompanying Notes to Consolidated Financial Statements.

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands

		First Quarter
		2011				2010
Cash Flows from Operating Activities
Net income		$	6,469			$	5,135
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense			14,826				14,537
Amortization of intangibles			123				123
Deferred income taxes			839				1,146
Loss on sale of property, plant and equipment			353				444
Amortization of debt costs			569				582
Amortization of deferred gain related to terminated interest rate agreements			(304	)			(302	)
Stock compensation expense			668				585
Increase in current assets less current liabilities			(23,356	)			(19,321	)
Increase in other noncurrent assets			(5,601	)			(766	)
Increase in other noncurrent liabilities			2,340				3,561
Other			(6	)			(6	)
Total adjustments			(9,549	)			583
Net cash provided by (used in) operating activities			(3,080	)			5,718
Cash Flows from Investing Activities
Additions to property, plant and equipment			(9,069	)			(7,977	)
Proceeds from the sale of property, plant and equipment			22				1,062
Net cash used in investing activities			(9,047	)			(6,915	)
Cash Flows from Financing Activities
Proceeds from lines of credit, net			—				20,000
Borrowings (payments) under revolving credit facility			—				15,000
Cash dividends paid			(2,296	)			(2,291	)
Principal payments on capital lease obligations			(941	)			(937	)
Other			(126	)			(20	)
Net cash provided by (used in) financing activities			(3,363	)			31,752
Net increase (decrease) in cash			(15,490	)			30,555
Cash at beginning of period			45,872				17,770
Cash at end of period		$	30,382			$	48,325
Significant non-cash investing and financing activities:
Issuance of Class B Common Stock in connection with stock award		$	1,327			$	1,316
Capital lease obligations incurred			18,552				—

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.

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

The accounting policies followed in the presentation of interim financial results are consistent with those followed on an annual basis. These policies are presented in Note 1 to the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended January 2, 2011 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.

Noncontrolling interest as of April 3, 2011, January 2, 2011 and April 4, 2010 primarily 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.

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

4. Inventories

Inventories were summarized as follows:

		April 3,				Jan. 2,				April 4,
In Thousands		2011				2011				2010
Finished products		$	43,163			$	36,484			$	38,336
Manufacturing materials			10,967				10,619				8,528
Plastic shells, plastic pallets and other inventories			18,476				17,767				17,870
Total inventories		$	72,606			$	64,870			$	64,734

5. Property, Plant and Equipment

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

		April 3,				Jan. 2,				April 4,				Estimated
In Thousands		2011				2011				2010				Useful Lives
Land		$	12,751			$	12,965			$	12,671
Buildings			119,339				119,471				111,387			10-50 years
Machinery and equipment			140,347				136,821				130,097			5-20 years
Transportation equipment			150,624				147,960				152,012			4-17 years
Furniture and fixtures			37,902				37,120				34,484			4-10 years
Cold drink dispensing equipment			313,522				312,176				313,333			6-15 years
Leasehold and land improvements			71,380				69,996				65,350			5-20 years
Software for internal use			71,419				70,891				67,366			3-10 years
Construction in progress			4,580				8,733				6,388
Total property, plant and equipment, at cost			921,864				916,133				893,088
Less: Accumulated depreciation and amortization			602,182				593,990				571,600
Property, plant and equipment, net		$	319,682			$	322,143			$	321,488

Depreciation and amortization expense was $14.8 million and $14.5 million in the first quarter of 2011 (“Q1 2011”) and the first quarter of 2010 (“Q1 2010”), 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 3,				Jan. 2,				April 4,				Estimated
In Thousands		2011				2011				2010				Useful Lives
Leased property under capital leases		$	95,428			$	76,877			$	76,877			3-20 years
Less: Accumulated amortization			31,240				30,021				26,502
Leased property under capital leases, net		$	64,188			$	46,856			$	50,375

As of April 3, 2011, real estate represented $63.9 million of the leased property under capital leases and $44.1 million of this real estate is leased from related parties as described in Note 19 to the consolidated financial statements.

In Q1 2011, the Company entered into leases for two sales distribution centers. Each lease has a term of fifteen years with various monthly rental payments. The two leases added $18.6 million, at inception, to the leased property under capital leases balance.

The Company’s outstanding obligations for capital leases were $76.9 million, $59.2 million and $62.2 million as of April 3, 2011, January 2, 2011 and April 4, 2010, 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 2011, the Company 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 3,				Jan. 2,				April 4,				Estimated
In Thousands		2011				2011				2010				Useful Lives
Other identifiable intangible assets		$	8,675			$	8,675			$	8,665			1-20 years
Less: Accumulated amortization			3,927				3,804				3,438
Other identifiable intangible assets, net		$	4,748			$	4,871			$	5,227

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 3,				Jan. 2,				April 4,
In Thousands		2011				2011				2010
Accrued marketing costs		$	9,598			$	15,894			$	9,047
Accrued insurance costs			17,133				18,005				18,561
Accrued taxes (other than income taxes)			1,731				2,023				1,793
Accrued income taxes			6,925				4,839				—
Employee benefit plan accruals			10,475				9,790				9,827
Checks and transfers yet to be presented for payment from zero balance cash accounts			14,847				8,532				18,640
All other accrued liabilities			9,100				10,388				7,411
Total other accrued liabilities		$	69,809			$	69,471			$	65,279

10. Debt

Debt was summarized as follows:

						Interest				Interest		April 3,				Jan. 2,				April 4,
In Thousands		Maturity				Rate				Paid		2011				2011				2010
Revolving Credit Facility			2012				—			Varies		$	—			$	—			$	30,000
Line of Credit										Varies			—				—				20,000
Senior Notes			2012				5.00	%		Semi-annually			150,000				150,000				150,000
Senior Notes			2015				5.30	%		Semi-annually			100,000				100,000				100,000
Senior Notes			2016				5.00	%		Semi-annually			164,757				164,757				164,757
Senior Notes			2019				7.00	%		Semi-annually			110,000				110,000				110,000
Unamortized discount on Senior Notes			2019										(1,656	)			(1,694	)			(1,805	)
													523,101				523,063				572,952
Less: Current portion of debt													—				—				20,000
Long-term debt												$	523,101			$	523,063			$	552,952

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”). 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. 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 April 3, 2011 and January 2, 2011, the Company had no outstanding borrowings on the $200 million facility. On April 4, 2010, the Company had $30 million of 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 at the discretion of the participating banks. On April 3, 2011 and January 2, 2011, the Company had no outstanding borrowings under the uncommitted line of credit. On April 4, 2010, the Company had $20 million of outstanding borrowings on the uncommitted line of credit.

The Company had a weighted average interest rate of 5.9%, 5.8% and 5.4% for its debt and capital lease obligations as of April 3, 2011, January 2, 2011 and April 4, 2010, respectively. The Company’s overall weighted average interest rate on its debt and capital lease obligations was 6.0% for Q1 2011 compared to 5.7% for Q1 2010. As of April 3, 2011, none of the Company’s debt and capital lease obligations of $600 million were 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.

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 the previously accrued interest receivable, the Company began amortizing a gain of $5.1 million over the remaining term of the underlying debt. As of April 3, 2011, the remaining amount to be amortized was $2.2 million. All of the Company’s interest rate swap agreements were LIBOR-based.

During both Q1 2011 and Q1 2010, the Company amortized deferred gains related to terminated interest rate swap agreements and forward interest rate agreements by $.3 million, which was recorded as a reduction to interest expense.

The Company had no interest rate swap agreements outstanding at April 3, 2011, January 2, 2011 and April 4, 2010.

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 price risk. Currently the Company has derivative instruments to hedge some or all of its projected diesel fuel, unleaded gasoline 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 substantially all of the diesel fuel purchases for 2010 and is using derivative instruments to hedge all of the Company’s projected diesel fuel and unleaded gasoline purchases for the second, third and fourth quarters of 2011. These derivative instruments relate to diesel fuel and unleaded gasoline used by the Company’s delivery fleet and other vehicles. The Company used derivative instruments to hedge approximately 75% of its aluminum purchase requirements in 2010 and is using derivative instruments to hedge approximately 75% of the Company’s projected aluminum purchase requirements for 2011.

The following table summarizes Q1 2011 and Q1 2010 net gains and losses on the Company’s fuel and aluminum derivative financial instruments and the classification, either as cost of sales or selling, delivery and administrative (“S,D&A”) expenses, of such net gains and losses in the consolidated statements of operations:

				First Quarter
In Thousands		Classification of Gain (Loss)		2011				2010
Fuel hedges — contract premium and contract settlement		S,D&A expenses		$	171			$	(110	)
Fuel hedges — mark-to-market adjustment		S,D&A expenses			(146	)			(291	)
Aluminum hedges — contract premium and contract settlement		Cost of sales			521				(23	)
Aluminum hedges — mark-to-market adjustment		Cost of sales			(508	)			536
Total Net Gain				$	38			$	112

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

11. Derivative Financial Instruments

The following table summarizes the fair values and classification in the consolidated balance sheets of derivative instruments held by the Company as of April 3, 2011, January 2, 2011 and April 4, 2010:

		Balance Sheet		Apr. 3,				Jan. 2,				Apr. 4,
In Thousands		Classification		2011				2011				2010
Fuel hedges at fair market value		Prepaid expenses and other current assets		$	25			$	171			$	1,325
Unamortized cost of fuel hedging agreements		Prepaid expenses and other current assets			631				—				674
Aluminum hedges at fair market value		Prepaid expenses and other current assets			6,158				6,666				5,017
Unamortized cost of aluminum hedging agreements		Prepaid expenses and other current assets			2,029				2,453				1,369
Total				$	8,843			$	9,290			$	8,385
Aluminum hedges at fair market value		Other assets		$	—			$	—			$	5,971
Unamortized cost of aluminum hedging agreements		Other assets			—				—				2,029
Total				$	—			$	—			$	8,000

The following table summarizes the Company’s outstanding derivative agreements as of April 3, 2011:

		Notional				Latest
In Millions		Amount				Maturity
Fuel hedging agreements		$	20.9			December 2011
Aluminum hedging agreements			23.0			December 2011

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.

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

12. Fair Value of Financial Instruments

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 hedging 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.

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

		Apr. 3, 2011								Jan. 2, 2011								Apr. 4, 2010
		Carrying				Fair				Carrying				Fair				Carrying				Fair
In Thousands		Amount				Value				Amount				Value				Amount				Value
Public debt securities		$	(523,101	)		$	(564,527	)		$	(523,063	)		$	(564,671	)		$	(522,952	)		$	(556,459	)
Non-public variable rate debt			—				—				—				—				(50,000	)			(50,000	)
Deferred compensation plan assets			9,934				9,934				9,780				9,780				9,098				9,098
Deferred compensation plan liabilities			(9,934	)			(9,934	)			(9,780	)			(9,780	)			(9,098	)			(9,098	)
Fuel hedging agreements			25				25				171				171				1,325				1,325
Aluminum hedging agreements			6,158				6,158				6,666				6,666				10,988				10,988

The fair values of the fuel hedging and aluminum hedging agreements at April 3, 2011, January 2, 2011 and April 4, 2010 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.

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

12. Fair Value of Financial Instruments

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

		Apr. 3, 2011								Jan. 2, 2011								Apr. 4, 2010
In Thousands		Level 1				Level 2				Level 1				Level 2				Level 1				Level 2
Assets
Deferred compensation plan assets		$	9,934							$	9,780							$	9,098
Fuel hedging agreements						$	25							$	171							$	1,325
Aluminum hedging agreements							6,158								6,666								10,988
Liabilities
Deferred compensation plan liabilities			9,934								9,780								9,098

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:

		Apr. 3,				Jan. 2,				Apr. 4,
In Thousands		2011				2011				2010
Accruals for executive benefit plans		$	93,142			$	90,906			$	87,787
Other			19,100				18,976				21,193
Total other liabilities		$	112,242			$	109,882			$	108,980

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

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 $34.5 million, $29.0 million and $39.0 million as of April 3, 2011, January 2, 2011 and April 4, 2010, 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 its 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 3, 2011 would have been $25.2 million for SAC and $25.2 million for Southeastern and the Company’s maximum total exposure, including its equity investment, would have been $31.9 million for SAC and $43.2 million for Southeastern.

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 3, 2011, SAC had total assets of approximately $44 million and total debt of approximately $18 million. SAC had total revenues for Q1 2011 of approximately $42 million. As of April 3, 2011, Southeastern had total assets of approximately $376 million and total debt of approximately $194 million. Southeastern had total revenue for Q1 2011 of approximately $159 million.

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. On April 3, 2011, these letters of credit totaled $23.2 million. The Company was required to maintain $4.5 million of restricted cash for letters of credit beginning in the second quarter of 2009 which was reduced to $3.5 million in the second quarter of 2010. As of April 3, 2011, the Company maintained $3.5 million of restricted cash for these letters of credit.

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 3, 2011 amounted to $19.3 million and expire at various dates through 2020.

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

14. Commitments and Contingencies

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.

15. Income Taxes

The Company’s effective tax rate, as calculated by dividing income tax expense by income before income taxes, for Q1 2011 and Q1 2010 was 37.9% and 42.0%, respectively. The Company’s effective tax rate, as calculated by dividing income tax expense by the difference of income before income taxes minus net income attributable to the noncontrolling interest, for Q1 2011 and Q1 2010 was 40.0% and 44.4%, respectively. The higher effective tax rate for Q1 2010 was primarily due to the impact of the elimination of the tax deduction associated with Medicare Part D subsidy as required by the Patient Protection and Affordable Care Act (“PPACA”) enacted on March 23, 2010 and the Health Care and Education Reconciliation Act of 2010 (“Reconciliation Act”) enacted on March 30, 2010.

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

15. Income Taxes

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		2011				2010
Statutory expense		$	3,449			$	2,931
State income taxes, net of federal effect			430				354
Manufacturing deduction benefit			(318	)			(394	)
Meals and entertainment			135				116
Adjustment for uncertain tax positions			153				161
Tax law change related to Medicare Part D subsidy			—				464
Other, net			92				82
Income tax expense		$	3,941			$	3,714

As of April 3, 2011, the Company had $5.0 million of uncertain tax positions, including accrued interest, of which $2.6 million would affect the Company’s effective tax rate if recognized. The Company had $4.8 million of uncertain tax positions as of January 2, 2011, including accrued interest, of which $2.5 million would affect the Company’s effective tax rate if recognized. The Company had $5.7 million of uncertain tax positions as of April 4, 2010, including accrued interest, of which $3.6 million would affect the Company’s effective tax rate if recognized. While it is expected that the amount of uncertain tax positions may change in the next 12 months, the Company does not expect any 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 3, 2011, the Company had approximately $.5 million of accrued interest related to uncertain tax positions. As of January 2, 2011, the Company had approximately $.4 million of accrued interest related to uncertain tax positions. As of April 4, 2010, the Company had approximately $1.0 million of accrued interest related to uncertain tax positions. Income tax expense included interest expense of approximately $.1 million in both Q1 2011 and Q1 2010.

The PPACA and the Reconciliation Act include provisions that will reduce the tax benefits available to employers that receive Medicare Part D subsidies. As a result, during the first quarter of 2010, the Company recorded tax expense totaling $.5 million related to changes made to the tax deductibility of Medicare Part D subsidies.

Various tax years from 1992 remain open to examination by taxing jurisdictions to which the Company is subject due to loss carryforwards.

The Company’s income tax assets and liabilities are subject to adjustment in future periods based on the Company’s ongoing evaluations of such assets and liabilities and new information that becomes available to the Company.

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. 2,				Pre-tax				Tax				Apr. 3,
In Thousands		2011				Activity				Effect				2011
Net pension activity:
Actuarial loss		$	(51,822	)		$	518			$	(204	)		$	(51,508	)
Prior service costs			(43	)			4				(2	)			(41	)
Net postretirement benefits activity:
Actuarial loss			(17,875	)			530				(209	)			(17,554	)
Prior service costs			6,292				(429	)			169				6,032
Transition asset			11				(5	)			2				8
Foreign currency translation adjustment			4				(6	)			2				—
Total		$	(63,433	)		$	612			$	(242	)		$	(63,063	)

		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	)

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

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.

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 2011 and Q1 2010, dividends of $.25 per share were declared and paid on both the 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 April 29, 2008, the stockholders of the Company approved a Performance Unit Award Agreement for J. Frank Harrison, III, the Company’s Chairman of the Board of Directors and Chief Executive Officer, 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 equals the product of 40,000 multiplied by the overall goal achievement factor (not to exceed 100%) under the Company’s Annual Bonus Plan.

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.

On March 9, 2010, the Compensation Committee determined that 40,000 shares of the Company’s Class B Common Stock, should be issued pursuant to a Performance Unit Award Agreement to J. Frank Harrison, III, in connection with his services in 2009 as Chairman of the Board of Directors and Chief Executive Officer of the Company. As permitted under the terms of the Performance Unit Award Agreement, 17,680 of such shares were settled in cash to satisfy tax withholding obligations in connection with the vesting of the performance units.

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

17. Capital Transactions

On March 8, 2011, the Compensation Committee determined that 40,000 shares of the Company’s Class B Common Stock, should be issued pursuant to a Performance Unit Award Agreement to J. Frank Harrison, III, in connection with his services in 2010 as Chairman of the Board of Directors and Chief Executive Officer of the Company. As permitted under the terms of the Performance Unit Award Agreement, 17,680 of such shares were settled in cash to satisfy tax withholding obligations in connection with the vesting of the performance units.

Compensation expense for the Performance Unit Award Agreement recognized in Q1 2011 was $.7 million, which was based upon a share price of $66.79 on April 1, 2011. Compensation expense recognized in Q1 2010 was $.6 million, which was based upon a share price of $58.45 on April 1, 2010.

The increase in the total number of shares outstanding in Q1 2011 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 2010 was due to the issuance of 22,320 shares of Class B Common Stock related to the Performance Unit Award Agreement.

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.

The components of net periodic pension cost were as follows:

		First Quarter
In Thousands		2011				2010
Service cost		$	25			$	19
Interest cost			3,085				2,857
Expected return on plan assets			(2,922	)			(2,868	)
Amortization of prior service cost			4				4
Recognized net actuarial loss			518				1,495
Net periodic pension cost		$	710			$	1,507

The Company contributed $.9 million to its Company-sponsored pension plans during Q1 2011. The Company has made additional payments of $1.7 million subsequent to the end of Q1 2011.

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

18. Benefit Plans

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		2011				2010
Service cost		$	242			$	195
Interest cost			708				626
Amortization of unrecognized transitional assets			(5	)			(6	)
Recognized net actuarial loss			530				341
Amortization of prior service cost			(429	)			(446	)
Net periodic postretirement benefit cost		$	1,046			$	710

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 matched the first 3% of its employees’ contributions for 2010 and 2011. 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. Based on the financial results of the first quarter of 2010, the Company decided to increase the matching contributions an additional 2% for that quarter, which was approved and paid in the second quarter of 2010. The total cost, including the estimate for the additional 2% matching contributions, for this benefit in Q1 2011 and Q1 2010 was $2.1 million and $2.2 million, respectively.

Multi-Employer Benefits

The Company entered into a new agreement in the third quarter of 2008 after 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 (“Southern States”) 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. Including the $3.0 million to Southern States, the Company has paid approximately $5 million from the fourth quarter of 2008 through Q1 2011 and will pay approximately $1 million annually over the next 17½ years.

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

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 3, 2011, The Coca-Cola Company had a 34.8% interest in the Company’s total outstanding Common Stock, representing 5.1% of the total voting power of the Company’s Common Stock and Class B Common Stock voting together as a single class. The Coca-Cola Company does not own any shares of Class B Common Stock of the Company.

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

		First Quarter
In Millions		2011				2010
Payments by the Company for concentrate, syrup, sweetener and other purchases		$	90.9			$	92.0
Marketing funding support payments to the Company			(10.6	)			(10.2	)
Payments by the Company net of marketing funding support		$	80.3			$	81.8
Payments by the Company for customer marketing programs		$	11.6			$	12.7
Payments by the Company for cold drink equipment parts			2.0				1.7
Fountain delivery and equipment repair fees paid to the Company			2.8				2.2
Presence marketing funding support provided by The Coca-Cola Company on the Company’s behalf			1.0				1.1
Payments to the Company to facilitate the distribution of certain brands and packages to other Coca-Cola bottlers			.6				.9

The Company has a production arrangement with Coca-Cola Refreshments USA Inc. to buy and sell finished products at cost. The Coca-Cola Company acquired Coca-Cola Enterprises Inc. (“CCE”) on October 2, 2010. In connection with the transaction, CCE changed its name to Coca-Cola Refreshments USA Inc. (“CCR”), and transferred its beverage operations outside of North America to an independent third party. As a result of the transaction, the North American operations of CCE are now included in CCR. References to “CCR,” refer to CCR and CCE as it existed prior to the acquisition by The Coca-Cola Company. Sales to CCR under this arrangement were $13.0 million and $11.9 million in Q1 2011 and Q1 2010, respectively. Purchases from CCR under this arrangement were $5.3 million and $5.8 million in Q1 2011 and Q1 2010, respectively. In addition, CCR began distributing one of the Company’s own brands (Tum-E Yummies) in Q1 2010. Total sales to CCR for this brand were $3.0 million and $3.3 million in Q1 2011 and Q1 2010, respectively.

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

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

19. Related Party Transactions

raw materials (excluding concentrate). The Company pays an administrative fee to CCBSS for its services. Administrative fees to CCBSS for its services were $.1 million and $.2 million in Q1 2011 and Q1 2010, respectively. Amounts due from CCBSS for rebates on raw materials were $2.5 million, $3.6 million and $3.2 million as of April 3, 2011, January 2, 2011 and April 4, 2010, respectively. CCR is also a member of CCBSS.

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 $31.1 million and $29.8 million in Q1 2011 and Q1 2010, respectively. The Company performs management services for SAC pursuant to a management agreement. Management fees earned from SAC were $.4 million in Q1 2011 and $.3 million in Q1 2010. The Company has also guaranteed a portion of debt for SAC. Such guarantee amounted to $18.3 million as of April 3, 2011. 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 $6.8 million, $5.6 million and $5.6 million as of April 3, 2011, January 2, 2011 and April 4, 2010, respectively.

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 $18.7 million in Q1 2011 and $17.0 million in Q1 2010. In connection with its participation in Southeastern, the Company has guaranteed a portion of the entity’s debt. Such guarantee amounted to $16.2 million as of April 3, 2011. 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 $17.9 million, $15.7 million and $15.7 million as of April 3, 2011, January 2, 2011 and April 4, 2010, 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 3, 2011 nor was there any impairment in 2010.

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 original lease was to expire on December 31, 2010. On March 23, 2009, the Company modified the lease agreement (new terms began on 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

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

19. Related Party Transactions

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 3, 2011 was $26.9 million. Rental payments related to this lease were $0.9 million and $0.8 million in Q1 2011 and Q1 2010, 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 3, 2011 was $28.6 million. Rental payments related to the lease were $1.0 million and $.9 million in Q1 2011 and Q1 2010, respectively.

20. Net Sales by Product Category

Net sales by product category were as follows:

		First Quarter
In Thousands		2011				2010
Bottle/can sales:
Sparkling beverages (including energy products)		$	243,028			$	242,706
Still beverages			48,273				41,872
Total bottle/can sales			291,301				284,578
Other sales:
Sales to other Coca-Cola bottlers			36,100				33,661
Post-mix and other			32,228				29,259
Total other sales			68,328				62,920
Total net sales		$	359,629			$	347,498

Sparkling beverages are carbonated beverages and energy products 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)		2011				2010
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		$	5,913			$	4,660
Less dividends:
Common Stock			1,785				1,785
Class B Common Stock			511				506
Total undistributed earnings		$	3,617			$	2,369
Common Stock undistributed earnings — basic		$	2,810			$	1,845
Class B Common Stock undistributed earnings — basic			807				524
Total undistributed earnings — basic		$	3,617			$	2,369
Common Stock undistributed earnings — diluted		$	2,798			$	1,837
Class B Common Stock undistributed earnings — diluted			819				532
Total undistributed earnings — diluted		$	3,617			$	2,369
Numerator for basic net income per Common Stock share:
Dividends on Common Stock		$	1,785			$	1,785
Common Stock undistributed earnings — basic			2,810				1,845
Numerator for basic net income per Common Stock share		$	4,595			$	3,630
Numerator for basic net income per Class B Common Stock share:
Dividends on Class B Common Stock		$	511			$	506
Class B Common Stock undistributed earnings — basic			807				524
Numerator for basic net income per Class B Common Stock share		$	1,318			$	1,030

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

21. Net Income Per Share

		First Quarter
In Thousands (Except Per Share Data)		2011				2010
Numerator for diluted net income per Common Stock share:
Dividends on Common Stock		$	1,785			$	1,785
Dividends on Class B Common Stock assumed converted to Common Stock			511				506
Common Stock undistributed earnings — diluted			3,617				2,369
Numerator for diluted net income per Common Stock share		$	5,913			$	4,660
Numerator for diluted net income per Class B Common Stock share:
Dividends on Class B Common Stock		$	511			$	506
Class B Common Stock undistributed earnings — diluted			819				532
Numerator for diluted net income per Class B Common Stock share		$	1,330			$	1,038

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

21. Net Income Per Share

		First Quarter
In Thousands (Except Per Share Data)		2011				2010
Denominator for basic net income per Common Stock and Class B Common Stock share:
Common Stock weighted average shares outstanding — basic			7,141				7,141
Class B Common Stock weighted average shares outstanding — basic			2,051				2,029
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)			9,232				9,210
Class B Common Stock weighted average shares outstanding — diluted			2,091				2,069
Basic net income per share:
Common Stock		$	.64			$	.51
Class B Common Stock		$	.64			$	.51
Diluted net income per share:
Common Stock		$	.64			$	.51
Class B Common Stock		$	.64			$	.50