• Areas of Emphasis - a summary of the Company's key priorities.

• Overview of Operations and Financial Condition - a summary of key information and trends concerning the financial results for the third quarter of 2008 ("Q3 2008") and the first nine months of 2008 ("YTD 2008") and changes from the third quarter of 2007 ("Q3 2007") and the first nine months of 2007 ("YTD 2007").

• Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements - a discussion of accounting policies that are most important to the portrayal of the Company's financial condition and results of operations and that require critical judgments and estimates and the expected impact of new accounting pronouncements.

• Results of Operations - an analysis of the Company's results of operations for Q3 2008 and YTD 2008 compared to Q3 2007 and YTD 2007.

• Financial Condition - an analysis of the Company's financial condition as of the end of Q3 2008 compared to year-end 2007 and the end of Q3 2007 as presented in the consolidated financial statements.

• Liquidity and Capital Resources - an analysis of capital resources, cash sources and uses, investing activities, financing activities, off-balance sheet arrangements, aggregate contractual obligations and hedging activities.

• Cautionary Information Regarding Forward-Looking Statements.

The consolidated financial statements include the consolidated operations of the Company and its majority-owned subsidiaries including Piedmont Coca-Cola Bottling Partnership ("Piedmont"). Minority interest consists of The Coca-Cola Company's interest in Piedmont, which was 22.7% for all periods presented. Our Business and the Nonalcoholic Beverage Industry The Company produces, markets and distributes nonalcoholic beverages, primarily products of The Coca-Cola Company, which include some of the most recognized and popular beverage brands in the world. The Company is the second largest bottler of products of The Coca-Cola Company in the United States, distributing these products in eleven states primarily in the Southeast. The Company also distributes several other beverage brands. These product offerings include both sparkling and still beverages. Sparkling beverages are primarily carbonated beverages including energy products. Still beverages are primarily noncarbonated beverages such as bottled water, tea, ready to drink coffee, enhanced water, juices and sports drinks. The Company had net sales of approximately $1.4 billion in 2007.
The nonalcoholic beverage market is highly competitive. The Company's competitors include bottlers and distributors of nationally and regionally advertised and marketed products and private label products. In each region in which the Company operates, between 75% and 95% of sparkling beverage sales in bottles, cans and other containers are accounted for by the Company and its principal competitors, which in each region includes

the local bottler of Pepsi-Cola and, in some regions, the local bottler of Dr Pepper, Royal Crown and/or 7-Up products. During the last several years, industry sales of sugar sparkling beverages, other than energy products, have declined. The decline in sugar sparkling beverages has generally been offset by volume growth in other nonalcoholic product categories. The sparkling beverage category (including energy products) represents 80% of the Company's YTD 2008 bottle/can net sales.
The principal methods of competition in the nonalcoholic beverage industry are point-of-sale merchandising, new product introductions, new vending and dispensing equipment, packaging changes, pricing, price promotions, product quality, retail space management, customer service, frequency of distribution and advertising. The Company believes it is competitive in its territories with respect to each of these methods.
Historically, operating results for the third quarter and first nine months 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.
The Company performs its annual impairment test of franchise rights and goodwill as of the first day of the fourth quarter. During Q3 2008, the Company believes it did not experience any 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 did not perform an interim impairment test during Q3 2008 and did not record any impairments of franchise rights or goodwill. Net sales by product category were as follows:

                                                        Third Quarter                         First Nine Months
In Thousands                                       2008               2007                2008                 2007

Bottle/can sales:
Sparkling beverages (including energy
products)                                       $ 258,200          $ 255,804          $   762,741          $   760,359
Still beverages                                    66,160             58,897              186,020              158,280

Total bottle/can sales                            324,360            314,701              948,761              918,639

Other sales:
Sales to other Coca-Cola bottlers                  31,231             27,804               94,356              101,774
Post-mix and other                                 25,972             24,855               72,123               74,946

Total other sales                                  57,203             52,659              166,479              176,720


Total net sales                                 $ 381,563          $ 367,360          $ 1,115,240          $ 1,095,359

Areas of Emphasis
Key priorities for the Company include revenue management, product innovation and beverage portfolio expansion, distribution cost management and productivity. Revenue Management
Revenue management requires a strategy which reflects consideration for pricing of brands and packages within product categories and channels, highly effective working relationships with customers and disciplined fact-based decision-making. Revenue management has been and continues to be a key performance driver which has significant impact on the Company's results of operations.

Product Innovation and Beverage Portfolio Expansion Sparkling beverages volume, other than energy products, has declined over the past several years. Innovation of both new brands and packages has been and will continue to be critical to the Company's overall revenue. The Company introduced the following new products during 2007: smartwater, vitaminwater, vitaminenergy, Gold Peak and Country Breeze tea products, Diet Coke Plus, Dasani Plus, juice products from FUZE (a subsidiary of The Coca-Cola Company) and V8 juice products from Campbell's. The Company also modified its energy product portfolio in 2007 with the addition of NOS© products from FUZE.
In August 2007, the Company entered into a distribution agreement with Energy Brands Inc. ("Energy Brands"), a wholly-owned subsidiary of The Coca-Cola Company. Energy Brands, also known as glacιau, is a producer and distributor of branded enhanced beverages including vitaminwater, smartwater and vitaminenergy. The distribution agreement was effective November 1, 2007 for a period of ten years and, unless earlier terminated, will be automatically renewed for succeeding ten-year terms, subject to a one year non-renewal notification by the Company. In conjunction with the execution of the distribution agreement, the Company entered into an agreement with The Coca-Cola Company whereby the Company agreed not to introduce new third party brands or certain third party brand extensions in the United States through August 31, 2010 unless mutually agreed to by the Company and The Coca-Cola Company.
The Company has invested in its own brand portfolio with products such as Respect, a vitamin and mineral enhanced beverage, Tum-E Yummies, a vitamin C enhanced flavored drink, Country Breeze and diet Country Breeze tea and its own energy drink. The Company is also the exclusive licensee of Cinnabon Premium Coffee Lattes in North America. These brands enable the Company to participate in strong growth categories and capitalize on distribution channels that may include the Company's traditional Coca-Cola franchise territory as well as third party distributors outside the Company's traditional Coca-Cola franchise territory. While the growth prospects of Company-owned or exclusive licensed brands appear promising, the cost of developing, marketing and distributing these brands is anticipated to be significant.
The Company entered into a distribution agreement in October 2008 with subsidiaries of Hansen Natural Corporation, the developer, marketer, seller and distributor of Monster Energy drinks, the leading volume brand in the U.S. energy drink category. Under this agreement, the Company has the right to distribute Monster Energy drinks in certain of the Company's territories beginning in November 2008.

Distribution Cost Management
Distribution costs represent the costs of transporting finished goods from Company locations to customer outlets. Total distribution costs amounted to $152.5 million and $144.1 million in YTD 2008 and YTD 2007, respectively. Over the past several years, the Company has focused on converting its distribution system from a conventional routing system to a predictive system. This conversion to a predictive system has allowed the Company to more efficiently handle increasing numbers of products. In addition, the Company has closed a number of smaller sales distribution centers over the past several years reducing its fixed warehouse-related costs.
The Company has three primary delivery systems for its current business:
• bulk delivery for large supermarkets, mass merchandisers and club stores;

• advanced sales delivery for convenience stores, drug stores, small supermarkets and certain on-premise accounts; and

• full service delivery for its full service vending customers.

Distribution cost management will continue to be a key area of emphasis for the Company.
Productivity
A key driver in the Company's selling, delivery and administrative ("S,D&A") expense management relates to ongoing improvements in labor productivity and asset productivity. The Company initiated plans to reorganize the structure in its operating units and support services in July 2008. The reorganization resulted in the elimination of approximately 350 positions, or approximately 5%, of the Company's workforce. The Company implemented these changes in order to improve its efficiency and to help offset significant increases in the cost of raw materials and operating expenses. The Company anticipates annual savings of $25 million to $30 million from this reorganization plan. The plan was substantially completed in Q3 2008. The Company continues to focus on its supply chain and distribution functions for ongoing opportunities to improve productivity.

Overview of Operations and Financial Condition The following overview provides a summary of key information concerning the Company's financial results for Q3 2008 and YTD 2008 compared to Q3 2007 and YTD 2007.
The following items affect the comparability of the financial results presented below:
Q3 2008 and YTD 2008
• a $13.8 million ($7.2 million after-tax, or basic net loss per share of $.78) charge to freeze the Company's liability to the Central States, Southeast and Southwest Areas Pension Fund ("Central States"), a multi-employer pension fund, while preserving the pension benefits previously earned by Company employees covered by this plan; and

• a $4.0 million ($2.1 million after-tax, or basic net loss per share of $.23) charge for restructuring expense related to the Company's plan initiated in Q3 2008 to reorganize the structure of its operating units and support services, which resulted in the elimination of approximately 350 positions.

   YTD 2007
    •    a $2.6 million ($1.6 million after-tax, or basic net loss per share of
         $.18) charge related to a simplification of the Company's operating
         management structure and reduction in workforce.



                                                Third Quarter                           %
   In Thousands (Except Per Share Data)      2008          2007         Change       Change

   Net sales                              $ 381,563     $ 367,360     $  14,203         3.9
   Gross margin                             155,827       155,212           615         0.4
   S,D&A expenses                           149,384       134,972        14,412        10.7
   Income from operations                     6,443        20,240       (13,797 )     (68.2 )
   Interest expense                           9,406        12,135        (2,729 )     (22.5 )
   Income (loss) before income taxes         (3,668 )       7,995       (11,663 )        NM *
   Income tax provision (benefit)              (523 )       2,722        (3,245 )        NM *
   Net income (loss)                         (3,145 )       5,273        (8,418 )        NM *

   Basic net income (loss) per share:
   Common Stock                           $    (.34 )   $     .58     $    (.92 )        NM *
   Class B Common Stock                   $    (.34 )   $     .58     $    (.92 )        NM *
   Diluted net income (loss) per share:
   Common Stock                           $    (.34 )   $     .58     $    (.92 )        NM *
   Class B Common Stock                   $    (.34 )   $     .58     $    (.92 )        NM *


* Not meaningful

                                              First Nine Months                           %
 In Thousands (Except Per Share Data)       2008            2007          Change       Change

 Net sales                              $ 1,115,240     $ 1,095,359     $  19,881         1.8
 Gross margin                               467,625         475,993        (8,368 )      (1.8 )
 S,D&A expenses                             421,300         402,710        18,590         4.6
 Income from operations                      46,325          73,283       (26,958 )     (36.8 )
 Interest expense                            29,789          36,647        (6,858 )     (18.7 )
 Income before income taxes                  14,810          34,676       (19,866 )     (57.3 )
 Income tax provision                         7,135          13,061        (5,926 )     (45.4 )
 Net income                                   7,675          21,615       (13,940 )     (64.5 )

 Basic net income per share:
 Common Stock                           $      0.84     $      2.37     $   (1.53 )     (64.6 )
 Class B Common Stock                   $      0.84     $      2.37     $   (1.53 )     (64.6 )
 Diluted net income per share:
 Common Stock                           $      0.84     $      2.36     $   (1.52 )     (64.4 )
 Class B Common Stock                   $      0.83     $      2.36     $   (1.53 )     (64.8 )

The Company's net sales grew 3.9% and 1.8% in Q3 2008 and YTD 2008, respectively, from the same periods in 2007. The net sales increase in Q3 2008 was primarily due to a 5.3% increase in bottle/can sales price per unit and a 9.5% increase in sales price per unit of other Coca-Cola bottlers sales ("bottler sales") offset by a 10% decrease in post-mix volume. These increases were recognized primarily to help offset increases in product costs. Bottle/can volume decreased by 1.5% in Q3 2008 compared to Q3 2007. The increases in sales price per unit were primarily due to a per unit price increase in all product categories except energy products and bottled water and increased sales of enhanced water which have a higher per unit price offset by decreases in higher price packages in higher margin channels. The net sales increase in YTD 2008 was

primarily due to a 2.6% increase in bottle/can sales price per unit and a .6% increase in bottle/can volume offset by a 7.3%, or $7.4 million, decrease in bottler sales. The increase in bottle/can sales price per unit was primarily due to an increase in per unit price of sparkling products (other than energy products) and increases in sales of enhanced water which has a higher per unit sales price, offset by decreases in sales of higher price packages in higher margin channels (primarily convenience) and lower sales price per unit for bottled water. The increase in bottle/can volume was primarily due to increases in enhanced water volume offset by a decrease in bottled water volume. The decreases in bottler sales were primarily the result of decreased volume in energy and tea products.
Gross margin dollars increased .4% in Q3 2008 compared to Q3 2007 and decreased 1.8% in YTD 2008 compared to YTD 2007. The Company's gross margin percentage decreased from 42.3% for Q3 2007 to 40.8% for Q3 2008 and from 43.5% in YTD 2007 to 41.9% in YTD 2008. The decrease in gross margin as a percentage of net sales in Q3 2008 compared to Q3 2007 was primarily due to increased raw material costs and increased sales of purchased products (which have lower margin percentages) partially offset by higher sales prices per unit. The decrease in gross margin as a percentage of net sales in YTD 2008 compared to YTD 2007 was primarily due to increased raw material costs, increased sales of purchased products (which have lower margin percentages), a shift in product and package mix to lower margin items and lower sales price per unit for bottled water partially offset by higher sales prices per unit for other products. Purchased products include FUZE, Campbell's products, smartwater, vitaminwater and NOS© energy products. S,D&A expenses increased 10.7% in Q3 2008 from Q3 2007 and increased 4.6% in YTD 2008 from YTD 2007. The increases in S,D&A expenses in Q3 2008 and YTD 2008 were primarily attributable to the $13.8 million charge that resulted from the new collective bargaining agreement that allowed the Company to freeze its liability for the union pension plan, restructuring expenses and increased fuel costs. Net interest expense decreased 22.5% and 18.7% in Q3 2008 and YTD 2008 compared to Q3 2007 and YTD 2007, respectively. The decrease was primarily due to lower effective interest rates and lower borrowing levels offset by a $.9 million and $2.3 million decrease in interest earned on short-term cash investments in Q3 2008 and YTD 2008 as compared to Q3 2007 and YTD 2007, respectively. The Company's overall weighted average interest rate decreased to 5.7% during YTD 2008 from 6.7% during YTD 2007.
Net debt and capital lease obligations were summarized as follows:

                                                           Sept. 28,          December 30,          Sept. 30,
In Thousands                                                 2008                 2007                2007

Debt                                                      $ 591,450          $    598,850          $ 691,450
Capital lease obligations                                    78,280                80,215             80,839

Total debt and capital lease obligations                    669,730               679,065            772,289
Less: Cash and cash equivalents                              20,583                 9,871             88,400

Total net debt and capital lease obligations (1)          $ 649,147          $    669,194          $ 683,889

(1) The non-GAAP measure "Total net debt and capital lease obligations" is used to provide readers with additional information to more clearly evaluate the Company's capital structure and financial leverage.

Discussion of Critical Accounting Policies, Estimates and New Accounting Pronouncements
Critical Accounting Policies
In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of results of operations and financial position in the preparation of its consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. Actual results could differ significantly from those estimates under different assumptions and conditions. The Company included in its Annual Report on Form 10-K for the year ended December 30, 2007 a discussion of the Company's most critical accounting policies, which are those most important to the portrayal of the Company's financial condition and results of operations and require management's most difficult, subjective and complex judgments, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.
The Company did not make changes in any critical accounting policies during YTD 2008. Any changes in critical accounting policies and estimates are discussed with the Audit Committee of the Board of Directors of the Company during the quarter in which a change is made.
New Accounting Pronouncements
Recently Adopted Pronouncements
In September 2006, the Financial Accounting Standards Board ("FASB") issued Statement of Financial Accounting Standards ("SFAS") No. 158, "Employers' Accounting for Defined Pension and Other Postretirement Plans," which was effective for the year ending December 31, 2006 except for the requirement that benefit plan assets and obligations be measured as of the date of the employer's statement of financial position, which was effective for the year ending December 28, 2008. The impact of the adoption of the change in measurement dates was not material to the consolidated financial statements. See Note 16 and Note 18 of the consolidated financial statements for additional information. In September 2006, FASB issued SFAS No. 157, "Fair Value Measurement." This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles (GAAP) and expands disclosures about fair value measurements. The Statement does not require any new fair value measurements but could change the current practices in measuring current fair value measurements. The Statement was effective at the beginning of the first quarter of 2008 ("Q1 2008") for all financial assets and liabilities and for nonfinancial assets and liabilities recognized or disclosed at fair value on a recurring basis. The adoption of this Statement did not have a material impact on the consolidated financial statements. See Note 12 to the consolidated financial statements for additional information. In February 2008, FASB issued FASB Staff Position SFAS No. 157-2, "Effective Date of FASB Statement No. 157," which defers the application date of the provisions of SFAS No. 157 for all nonfinancial assets and liabilities until the first quarter of 2009 except for items that are recognized or disclosed at fair value in the financial statements on a recurring basis. The Company is in the process of evaluating the impact related to the Company's nonfinancial assets and liabilities not valued on a recurring basis.
In February 2007, FASB issued SFAS No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities." This Statement permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement was effective at the beginning of Q1 2008. The Company has not applied the fair value option to any of its outstanding instruments; therefore, the Statement did not have an impact on the consolidated financial statements.

Recently Issued Pronouncements
In December 2007, FASB issued SFAS No. 160, "Noncontrolling Interest in Consolidated Financial Statements - an amendment of ARB No. 51." This Statement amends Accounting Research Bulletin No. 51 to establish accounting and reporting standards for the noncontrolling interest in a subsidiary (commonly referred to as minority interest) and for the deconsolidation of a subsidiary. The Statement is effective for fiscal years beginning on or after December 15, 2008. The Company anticipates that the adoption of this Statement will not have a material impact on the consolidated financial statements, although changes in financial statement presentation will be required.
In December 2007, FASB revised SFAS No. 141, "Business Combinations" (SFAS No. 141(R)). This Statement established principles and requirements for recognizing and measuring identifiable assets and goodwill acquired, liabilities assumed and any noncontrolling interest in an acquisition, at their fair values as of the acquisition date. The Statement is effective for fiscal years beginning on or after December 15, 2008. The impact on the Company of adopting SFAS No. 141(R) will depend on the nature, terms and size of business combinations completed after the effective date.
In March 2008, FASB issued SFAS No. 161, "Disclosures about Derivative Instruments and Hedging Activities - an amendment of FASB Statement No. 133" ("SFAS No. 161"). This Statement amends and expands the disclosure requirements of Statement No. 133 to provide an enhanced understanding of why an entity uses derivative instruments, how derivative instruments and related hedged items are accounted for and how they affect an entity's financial position, financial performance and cash flows. The Statement is effective for fiscal years and interim periods beginning on or after November 15, 2008. The adoption of this Statement will not impact the consolidated financial statements other than expanded footnote disclosures related to derivative instruments and related hedged items.
In April 2008, FASB issued FASB Staff Position No. 142-3, "Determination of the Useful Life of Intangible Assets" ("FSP 142-3"). FSP 142-3 amends the factors to be considered in developing renewal or extension assumptions used to determine the useful life of intangible assets under SFAS No. 142, "Goodwill and Other Intangible Assets." The intent of FSP 142-3 is to improve the consistency between the useful life of an intangible asset and the period of expected cash flows used to measure its fair value. FSP 142-3 is effective for fiscal years beginning after December 15, 2008. The Company is in the process of evaluating the impact of FSP 142-3, but does not expect it to have a material impact on the Company's consolidated financial statements.
In May 2008, the FASB issued SFAS No. 162, "The Hierarchy of Generally Accepted Accounting Principles." This Statement identifies the sources of accounting principles and the framework for selecting the principles to be used in the preparation of financial statements that are presented in conformity with generally accepted accounting principles in the United States. This Statement is . . .