UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended July 4, 2010

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.

Large accelerated filer o

Accelerated filer þ

Non-accelerated filer o (Do not check if a smaller reporting company)

Smaller reporting company o

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

 

 

				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			35
Item 3.		Quantitative and Qualitative Disclosures About Market Risk			57
Item 4.		Controls and Procedures			58
PART II — OTHER INFORMATION
Item 1A.		Risk Factors			59
Item 6.		Exhibits			60
		Signatures			61
EX-4.1
EX-4.2
EX-4.3
EX-10.1
EX-10.2
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)

		Second Quarter								First Half
		2010				2009				2010				2009
Net sales		$	417,361			$	377,749			$	764,859			$	714,010
Cost of sales			249,353				217,622				450,148				406,754
Gross margin			168,008				160,127				314,711				307,256
Selling, delivery and administrative expenses			138,190				129,449				267,234				255,437
Income from operations			29,818				30,678				47,477				51,819
Interest expense, net			8,802				9,935				17,612				19,193
Income before income taxes			21,016				20,743				29,865				32,626
Income tax expense			7,612				7,825				11,326				10,885
Net income			13,404				12,918				18,539				21,741
Less: Net income attributable to the noncontrolling interest			1,361				731				1,836				1,023
Net income attributable to Coca-Cola Bottling Co. Consolidated		$	12,043			$	12,187			$	16,703			$	20,718
Basic net income per share based on net income attributable to Coca-Cola Bottling Co. Consolidated:
Common Stock		$	1.31			$	1.33			$	1.82			$	2.26
Weighted average number of Common Stock shares outstanding			7,141				7,141				7,141				6,999
Class B Common Stock		$	1.31			$	1.33			$	1.82			$	2.26
Weighted average number of Class B Common Stock shares outstanding			2,044				2,022				2,036				2,164
Diluted net income per share based on net income attributable to Coca-Cola Bottling Co. Consolidated:
Common Stock		$	1.31			$	1.32			$	1.81			$	2.25
Weighted average number of Common Stock shares outstanding — assuming dilution			9,225				9,203				9,217				9,189
Class B Common Stock		$	1.30			$	1.32			$	1.80			$	2.25
Weighted average number of Class B Common Stock shares outstanding — assuming dilution			2,084				2,062				2,076				2,190
Cash dividends per share:
Common Stock		$	.25			$	.25			$	.50			$	.50
Class B Common Stock		$	.25			$	.25			$	.50			$	.50

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED BALANCE SHEETS
In Thousands (Except Share Data)

		Unaudited								Unaudited
		July 4,				Jan. 3,				June 28,
		2010				2010				2009
ASSETS
Current Assets:
Cash and cash equivalents		$	14,301			$	17,770			$	33,453
Restricted cash			3,500				4,500				4,500
Accounts receivable, trade, less allowance for doubtful accounts of $2,051, $2,187 and $2,101, respectively			133,034				92,727				103,971
Accounts receivable from The Coca-Cola Company			20,897				4,109				22,721
Accounts receivable, other			18,855				17,005				15,576
Inventories			72,105				59,122				77,385
Prepaid expenses and other current assets			30,583				35,016				32,753
Total current assets			293,275				230,249				290,359
Property, plant and equipment, net			317,140				326,701				325,820
Leased property under capital leases, net			49,202				51,548				53,906
Other assets			41,034				46,508				41,454
Franchise rights			520,672				520,672				520,672
Goodwill			102,049				102,049				102,049
Other identifiable intangible assets, net			5,105				5,350				5,630
Total		$	1,328,477			$	1,283,077			$	1,339,890

See Accompanying Notes to Consolidated Financial Statements

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

		Unaudited								Unaudited
		July 4,				Jan. 3,				June 28,
		2010				2010				2009
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of debt		$	5,000			$	—			$	2,440
Current portion of obligations under capital leases			3,856				3,846				3,674
Accounts payable, trade			46,944				36,794				42,843
Accounts payable to The Coca-Cola Company			52,573				27,880				50,054
Other accrued liabilities			66,606				61,978				77,762
Accrued compensation			18,001				25,963				19,965
Accrued interest payable			5,522				5,521				7,451
Total current liabilities			198,502				161,982				204,189
Deferred income taxes			149,622				158,548				139,328
Pension and postretirement benefit obligations			88,465				89,306				102,790
Other liabilities			110,004				106,968				108,098
Obligations under capital leases			57,361				59,261				61,217
Long-term debt			537,988				537,917				577,848
Total liabilities			1,141,942				1,113,982				1,193,470
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 — 2,672,316, 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			120,111				107,995				95,158
Accumulated other comprehensive loss			(44,595	)			(46,767	)			(55,319	)
			193,149				177,545				156,254
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			131,895				116,291				95,000
Noncontrolling interest			54,640				52,804				51,420
Total equity			186,535				169,095				146,420
Total		$	1,328,477			$	1,283,077			$	1,339,890

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															20,718												20,718				1,023				21,741
Foreign currency translation adjustments, net of tax																			(2	)							(2	)							(2	)
Pension and postretirement benefit adjustments, net of tax																			2,556								2,556								2,556
Total comprehensive income																											23,272				1,023				24,295
Cash dividends paid Common ($.50 per share)															(3,446	)											(3,446	)							(3,446	)
Class B Common ($.50 per share)															(1,135	)											(1,135	)							(1,135	)
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 June 28, 2009		$	10,204			$	2,649			$	103,562			$	95,158			$	(55,319	)		$	(61,254	)		$	95,000			$	51,420			$	146,420
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															16,703												16,703				1,836				18,539
Ownership share of Southeastern OCI																			30								30								30
Foreign currency translation adjustments, net of tax																			(8	)							(8	)							(8	)
Pension and postretirement benefit adjustments, net of tax																			2,150								2,150								2,150
Total comprehensive income																											18,875				1,836				20,711
Cash dividends paid Common ($.50 per share)															(3,571	)											(3,571	)							(3,571	)
Class B Common ($.50 per share)															(1,016	)											(1,016	)							(1,016	)
Issuance of 22,320 shares of Class B Common Stock							22				1,294																1,316								1,316
Balance on July 4, 2010		$	10,204			$	2,671			$	104,758			$	120,111			$	(44,595	)		$	(61,254	)		$	131,895			$	54,640			$	186,535

See Accompanying Notes to Consolidated Financial Statements

Coca-Cola Bottling Co. Consolidated

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
In Thousands

		First Half
		2010				2009
Cash Flows from Operating Activities
Net income		$	18,539			$	21,741
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense			29,286				30,415
Amortization of intangibles			245				280
Deferred income taxes			2,303				640
Loss on sale of property, plant and equipment			992				355
Net gain on property, plant and equipment damaged in flood			(612	)			—
Amortization of debt costs			1,170				1,218
Amortization of deferred gain related to terminated interest rate agreements			(604	)			(1,468	)
Stock compensation expense			925				1,164
Insurance proceeds received for flood damage			1,450				—
Increase in current assets less current liabilities			(30,623	)			(8,987	)
(Increase) decrease in other noncurrent assets			4,538				(7,552	)
Decrease in other noncurrent liabilities			(15,316	)			(9,684	)
Other			(13	)			(3	)
Total adjustments			(6,259	)			6,378
Net cash provided by operating activities			12,280				28,119
Cash Flows from Investing Activities
Additions to property, plant and equipment			(16,496	)			(17,224	)
Proceeds from the sale of property, plant and equipment			1,312				371
(Increase) decrease in restricted cash			1,000				(4,500	)
Net cash used in investing activities			(14,184	)			(21,353	)
Cash Flows from Financing Activities
Proceeds from the issuance of long-term debt, net			—				108,062
Proceeds from lines of credit, net			5,000				—
Repayment — current portion of long-term debt			—				(119,253	)
Cash dividends paid			(4,587	)			(4,581	)
Payments for the termination of interest rate lock agreements			—				(340	)
Principal payments on capital lease obligations			(1,890	)			(1,480	)
Debt issuance costs paid			—				(1,042	)
Other			(88	)			(86	)
Net cash used in financing activities			(1,565	)			(18,720	)
Net decrease in cash			(3,469	)			(11,954	)
Cash at beginning of period			17,770				45,407
Cash at end of period		$	14,301			$	33,453
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 second quarter and the first half 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 July 4, 2010, January 3, 2010 and June 28, 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:

		July 4,				Jan. 3,				June 28,
In Thousands		2010				2010				2009
Finished products		$	41,384			$	33,686			$	48,608
Manufacturing materials			10,898				8,275				8,863
Plastic shells, plastic pallets and other inventories			19,823				17,161				19,914
Total inventories		$	72,105			$	59,122			$	77,385

5. Property, Plant and Equipment

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

		July 4,				Jan. 3,				June 28,				Estimated
In Thousands		2010				2010				2009				Useful Lives
Land		$	12,671			$	12,671			$	12,167
Buildings			113,740				111,314				109,886			10-50 years
Machinery and equipment			132,525				127,068				121,862			5-20 years
Transportation equipment			151,175				156,692				176,603			4-17 years
Furniture and fixtures			35,749				36,573				37,615			4-10 years
Cold drink dispensing equipment			314,282				312,079				309,564			6-15 years
Leasehold and land improvements			67,007				64,390				60,818			5-20 years
Software for internal use			68,057				65,290				63,693			3-10 years
Construction in progress			3,541				7,907				4,411
Total property, plant and equipment, at cost			898,747				893,984				896,619
Less: Accumulated depreciation and amortization			581,607				567,283				570,799
Property, plant and equipment, net		$	317,140			$	326,701			$	325,820

Depreciation and amortization expense was $14.8 million and $15.3 million in the second quarter of 2010 (“Q2 2010”) and the second quarter of 2009 (“Q2 2009”), respectively. Depreciation and amortization expense was $29.3 million and $30.4 million in the first half of 2010 (“YTD 2010”) and the first half of 2009 (“YTD 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:

		July 4,				Jan. 3,				June 28,				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			27,675				25,329				22,971
Leased property under capital leases, net		$	49,202			$	51,548			$	53,906

As of July 4, 2010, real estate represented $48.8 million of the leased property under capital leases and $47.3 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 the first quarter of 2009 (“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 $61.2 million, $63.1 million and $64.9 million as of July 4, 2010, January 3, 2010 and June 28, 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 YTD 2010, 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:

		July 4,				Jan. 3,				June 28,				Estimated
In Thousands		2010				2010				2009				Useful Lives
Other identifiable intangible assets		$	8,665			$	8,665			$	8,665			1-20 years
Less: Accumulated amortization			3,560				3,315				3,035
Other identifiable intangible assets, net		$	5,105			$	5,350			$	5,630

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:

		July 4,				Jan. 3,				June 28,
In Thousands		2010				2010				2009
Accrued marketing costs		$	13,152			$	9,738			$	10,222
Accrued insurance costs			19,052				18,086				18,898
Accrued taxes (other than income taxes)			2,927				408				2,762
Accrued income taxes			5,766				—				4,610
Employee benefit plan accruals			9,842				12,015				13,652
Checks and transfers yet to be presented for payment from zero balance cash accounts			9,364				11,862				16,214
All other accrued liabilities			6,503				9,869				11,404
Total other accrued liabilities		$	66,606			$	61,978			$	77,762

10. Debt

Debt was summarized as follows:

						Interest				Interest		July 4,				Jan. 3,				June 28,
In Thousands		Maturity				Rate				Paid		2010				2010				2009
Revolving Credit Facility			2012				.73	%		Varies		$	15,000			$	15,000			$	—
Line of Credit			2010				1.06	%		Varies			5,000				—				—
Debentures			2009				7.20	%		Semi-annually			—				—				57,440
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										(1,769	)			(1,840	)			(1,909	)
													542,988				537,917				580,288
Less: Current portion of debt													5,000				—				2,440
Long-term debt												$	537,988			$	537,917			$	577,848

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 revolving credit 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 July 2009. As of June 28, 2009, $2.4 million of the 7.20% Debentures due July 2009 was classified as current. This amount was paid with cash on hand. On both July 4, 2010 and January 3, 2010, the Company had $15 million of outstanding borrowings on the $200 million facility. On June 28, 2009, the Company had no outstanding borrowings on the $200 million facility.

In April 2009, the Company issued $110 million of unsecured 7% Senior Notes due 2019. The proceeds plus cash on hand were used to repay the $119.3 million debt maturity on May 1, 2009.

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 July 4, 2010, the Company had $5.0 million outstanding on the uncommitted line of credit, which was classified as current in the consolidated balance sheets.

The Company had a weighted average interest rate of 5.7%, 5.6% and 5.7% for its debt and capital lease obligations as of July 4, 2010, January 3, 2010 and June 28, 2009, respectively. The Company’s overall weighted average interest rate on its debt and capital lease obligations was 5.8% for YTD 2010 compared to 5.7% for YTD 2009. As of July 4, 2010, approximately 8.0% of the Company’s debt and capital lease obligations of $604.2 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.

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 is amortizing the gain of $5.1 million over the remaining term of the underlying debt. During YTD 2010 and YTD 2009, $.5 million and $.8 million of the gain, respectively, was amortized. The remaining amount to be amortized is $3.0 million. All of the Company’s interest rate swap agreements were LIBOR-based.

The Company had no interest rate swap agreements outstanding at July 4, 2010, January 3, 2010 and June 28, 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 price 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 substantially all of its diesel fuel purchases for 2009 and is using derivative instruments to hedge substantially all of its diesel fuel purchases for 2010. These derivative instruments relate to diesel fuel used by the Company’s delivery fleet. During Q1 2009, the Company began using derivative instruments to hedge approximately 75% of the projected 2010 aluminum purchase requirements. During Q2 2009, the Company entered into derivative agreements to hedge approximately 75% of the projected 2011 aluminum purchase requirements.

The following summarizes Q2 2010 and Q2 2009 net gains and losses on the Company’s fuel and aluminum derivative financial instruments and the classification, either cost of sales or selling, delivery and administrative (“S,D&A) expenses, of such net gains and losses in the consolidated statements of operations:

				Second Quarter
In Thousands		Classification of Gain (Loss)		2010				2009
Fuel hedges — contract premium and contract settlement		S,D&A expenses		$	79			$	(491	)
Fuel hedges — mark-to-market adjustment		S,D&A expenses			(1,064	)			1,649
Aluminum hedges — contract premium and contract settlement		Cost of sales			534				—
Aluminum hedges — mark-to-market adjustment		Cost of sales			(6,749	)			3,223
Total Net Gain (Loss)				$	(7,200	)		$	4,381

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

				First Half
In Thousands		Classification of Gain (Loss)		2010				2009
Fuel hedges — contract premium and contract settlement		S,D&A expenses		$	(30	)		$	(809	)
Fuel hedges — mark-to-market adjustment		S,D&A expenses			(1,356	)			3,418
Aluminum hedges — contract premium and contract settlement		Cost of sales			511				—
Aluminum hedges — mark-to-market adjustment		Cost of sales			(6,213	)			3,886
Total Net Gain (Loss)				$	(7,088	)		$	6,495

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

11. Derivative Financial Instruments

The following summarizes the fair values and classification in the consolidated balance sheets of derivative instruments held by the Company as of July 4, 2010, January 3, 2010 and June 28, 2009:

		Balance Sheet		July 4,				Jan. 3,				June 28,
In Thousands		Classification		2010				2010				2009
Assets
Aluminum hedges at fair market value		Prepaid expenses and other current assets		$	2,936			$	3,303			$	3,886
Unamortized cost of fuel hedging agreements		Prepaid expenses and other current assets			473				863				1,241
Unamortized cost of aluminum hedging agreements		Prepaid expenses and other current assets			1,842				967				3,651
Fuel hedges at fair market value		Prepaid expenses and other current assets			261				1,617				1,434
Total				$	5,512			$	6,750			$	10,212
Aluminum hedges at fair market value		Other assets		$	1,303			$	7,149			$	—
Unamortized cost of aluminum hedging agreements		Other assets			1,316				2,453				—
Total				$	2,619			$	9,602			$	—

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

		Notional				Latest
In Thousands		Amount				Maturity
Fuel hedging agreements		$	5,166			December 2010
Aluminum hedging agreements			43,302			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.

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

12. Fair Value of Financial Instruments

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

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

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.

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:

		July 4, 2010								January 3, 2010								June 28, 2009
		Carrying				Fair				Carrying				Fair				Carrying				Fair
In Thousands		Amount				Value				Amount				Value				Amount				Value
Public debt securities		$	(522,988	)		$	(576,897	)		$	(522,917	)		$	(557,758	)		$	(580,288	)		$	(590,931	)
Non-public variable rate debt			(20,000	)			(20,000	)			(15,000	)			(15,000	)			—				—
Deferred compensation plan assets			8,335				8,335				8,471				8,471				6,810				6,810
Deferred compensation plan liabilities			(8,335	)			(8,335	)			(8,471	)			(8,471	)			(6,810	)			(6,810	)
Fuel hedging agreements			261				261				1,617				1,617				1,434				1,434
Aluminum hedging agreements			4,239				4,239				10,452				10,452				3,886				3,886

The fair values of the fuel hedging and aluminum hedging agreements at July 4, 2010, January 3, 2010 and June 28, 2009 represented the estimated amount the Company would have received upon termination of these agreements.

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

12. Fair Value of Financial Instruments

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:

		July 4, 2010								January 3, 2010								June 28, 2009
In Thousands		Level 1				Level 2				Level 1				Level 2				Level 1				Level 2
Assets
Deferred compensation plan assets		$	8,335							$	8,471							$	6,810
Fuel hedging agreements						$	261							$	1,617							$	1,434
Aluminum hedging agreements							4,239								10,452								3,886
Liabilities
Deferred compensation plan liabilities			8,335								8,471								6,810

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:

		July 4,				Jan. 3,				June 28,
In Thousands		2010				2010				2009
Accruals for executive benefit plans		$	89,042			$	85,382			$	81,236
Other			20,962				21,586				26,862
Total other liabilities		$	110,004			$	106,968			$	108,098

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 $40.5 million, $30.5 million and $39.2 million as of July 4, 2010, January 3, 2010 and June 28, 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 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 July 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.

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 July 4, 2010, SAC had total assets of approximately $47 million and total debt of approximately $22 million. SAC had total revenues for YTD 2010 of approximately $89 million. As of July 4, 2010, Southeastern had total assets of approximately $392 million and total debt of approximately $218 million. Southeastern had total revenue for YTD 2010 of approximately $287 million.

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. On July 4, 2010, these letters of credit totaled $24.2 million. The Company was required to maintain $4.5 million of restricted cash for letters of credit beginning in Q2 2009 which was reduced to $3.5 million in Q2 2010.

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 July 4, 2010 amounted to $19.6 million and expire at various dates through 2018.

During May 2010, Nashville, Tennessee experienced a severe rain storm which caused extensive flood damage in the area. The Company has a production/sales distribution facility located in the flooded area. Due to damage incurred during this flood, the Company recorded a loss of approximately $.2 million on uninsured cold drink equipment. This loss was offset by gains of approximately $.8 million for the excess of insurance proceeds received as compared to the net book value of production equipment damaged as a result of the flood. In Q2 2010, the Company recorded a receivable of $6.2 million for insured losses of which $1.5 million has already been paid as of Q2 2010. The Company does not expect to incur any significant expenses related to the Nashville area flood for the remainder of 2010.

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 YTD 2010 and YTD 2009 was 37.9% and 33.4%, 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 YTD 2010 and YTD 2009 was 40.4% and 34.4%, respectively. The increase in the effective tax rate for YTD 2010 resulted primarily from an adjustment to the reserve for uncertain tax positions and 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.

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

		First Half
In Thousands		2010				2009
Statutory expense		$	9,810			$	11,061
State income taxes, net of federal effect			1,186				1,376
Manufacturing deduction benefit			(1,200	)			(845	)
Meals and entertainment			435				624
Adjustment for uncertain tax positions			365				(1,686	)
Tax law change related to Medicare Part D subsidy			464				—
Other, net			266				355
Income tax expense		$	11,326			$	10,885

The Company had $5.9 million of uncertain tax positions, including accrued interest, of which $3.8 million would affect the Company’s effective tax rate if recognized as of July 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. The Company had $9.3 million of uncertain tax positions, including accrued interest, of which $8.3 million would affect the Company’s effective tax rate if recognized as of June 28, 2009. While it is expected that the amount of uncertain tax positions may change in the next 12 months, the Company does not expect the change to have a significant impact on the consolidated financial statements.

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

15. Income Taxes

The Company recognizes potential interest and penalties related to uncertain tax positions in income tax expense. As of July 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. As of June 28, 2009, the Company had approximately $1.9 million of accrued interest related to uncertain tax positions. Income tax expense included interest expense of approximately $.1 million in YTD 2010 and an interest credit of approximately $.6 million in YTD 2009.

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 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 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 YTD 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.

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.

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

16. Accumulated Other Comprehensive Loss

A summary of accumulated other comprehensive loss for Q2 2010 and Q2 2009 is as follows:

		April 4,				Pre-tax				Tax				July 4,
In Thousands		2010				Activity				Effect				2010
Net pension activity:
Actuarial loss		$	(39,718	)		$	1,495			$	(586	)		$	(38,809	)
Prior service costs			(34	)			4				(2	)			(32	)
Net postretirement benefits activity:
Actuarial loss			(12,799	)			341				(134	)			(12,592	)
Prior service costs			7,105				(446	)			175				6,834
Transition asset			22				(7	)			3				18
Ownership share of Southeastern OCI			(34	)			25				(10	)			(19	)
Foreign currency translation adjustment			9				(6	)			2				5
Total		$	(45,449	)		$	1,406			$	(552	)		$	(44,595	)

		March 29,				Pre-tax				Tax				June 28,
In Thousands		2009				Activity				Effect				2009
Net pension activity:
Actuarial loss		$	(55,299	)		$	2,339			$	(920	)		$	(53,880	)
Prior service costs			(42	)			4				(2	)			(40	)
Net postretirement benefits activity:
Actuarial loss			(9,494	)			218				(85	)			(9,361	)
Prior service costs			8,189				(447	)			175				7,917
Transition asset			37				(7	)			3				33
Foreign currency translation adjustment			8				7				(3	)			12
Total		$	(56,601	)		$	2,114			$	(832	)		$	(55,319	)

A summary of accumulated other comprehensive loss for YTD 2010 and YTD 2009 follows:

		Jan. 3,				Pre-tax				Tax				July 4,
In Thousands		2010				Activity				Effect				2010
Net pension activity:
Actuarial loss		$	(40,626	)		$	2,990			$	(1,173	)		$	(38,809	)
Prior service costs			(37	)			8				(3	)			(32	)
Net postretirement benefits activity:
Actuarial loss			(13,470	)			682				196				(12,592	)
Prior service costs			7,376				(892	)			350				6,834
Transition asset			26				(13	)			5				18
Ownership share of Southeastern OCI			(49	)			49				(19	)			(19	)
Foreign currency translation adjustment			13				(13	)			5				5
Total		$	(46,767	)		$	2,811			$	(639	)		$	(44,595	)

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

16. Accumulated Other Comprehensive Loss

		Dec. 28,				Pre-tax				Tax				June 28,
In Thousands		2008				Activity				Effect				2009
Net pension activity:
Actuarial loss		$	(56,717	)		$	4,678			$	(1,841	)		$	(53,880	)
Prior service costs			(45	)			8				(3	)			(40	)
Net postretirement benefits activity:
Actuarial loss			(9,625	)			435				(171	)			(9,361	)
Prior service costs			8,459				(893	)			351				7,917
Transition asset			41				(13	)			5				33
Foreign currency translation adjustment			14				(3	)			1				12
Total		$	(57,873	)		$	4,212			$	(1,658	)		$	(55,319	)

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 YTD 2010 and YTD 2009, dividends of $.50 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.

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

17. Capital Transactions

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.

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 YTD 2010 was $.9 million, which was based upon a share price of $46.24 on July 2, 2010. Compensation expense recognized in YTD 2009 was $1.2 million, which was based upon a share price of $58.18 on June 26, 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 YTD 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 YTD 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

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

18. Benefit Plans

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:

		Second Quarter								First Half
In Thousands		2010				2009				2010				2009
Service cost		$	19			$	22			$	38			$	45
Interest cost			2,857				2,789				5,714				5,577
Expected return on plan assets			(2,868	)			(2,270	)			(5,736	)			(4,540	)
Amortization of prior service cost			4				4				8				8
Recognized net actuarial loss			1,495				2,339				2,990				4,678
Net periodic pension cost		$	1,507			$	2,884			$	3,014			$	5,768

The Company contributed $1.1 million to its Company-sponsored pension plans during YTD 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:

		Second Quarter								First Half
In Thousands		2010				2009				2010				2009
Service cost		$	195			$	157			$	390			$	315
Interest cost			626				558				1,252				1,115
Amortization of unrecognized transitional assets			(6	)			(7	)			(12	)			(13	)
Recognized net actuarial loss			341				218				682				435
Amortization of prior service cost			(446	)			(447	)			(892	)			(893	)
Net periodic postretirement benefit cost		$	710			$	479			$	1,420			$	959

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.