UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

______________________________________________________________________________________________


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

For the quarterly period ended ~~October 1, 2021~~September 30, 2022


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

For the transition period from ___________ to ___________

Commission File Number: 0-9286

COCA-COLA CONSOLIDATED, INC.

(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, NC			28211
(Address of principal executive offices)			(Zip Code)

Registrant’s telephone number, including area code: (704) 557-4400

Securities registered pursuant to Section 12(b) of the Act:


Title of each class Common Stock, par value $1.00 per share			Trading Symbol(s) COKE			Name of each exchange on which registered NASDAQ Global Select Market

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 ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted 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 such files). Yes ☒ No ☐

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

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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

As of October ~~29, 2021,~~21, 2022, there were ~~7,141,447~~8,368,993 shares of the registrant’s Common Stock, par value $1.00 per share, and ~~2,232,242~~1,004,696 shares of the registrant’s Class B Common Stock, par value $1.00 per share, outstanding.

COCA‑COLA CONSOLIDATED, INC.

QUARTERLY REPORT ON FORM 10-Q

FOR THE QUARTERLY PERIOD ENDED ~~OCTOBER 1, 2021~~SEPTEMBER 30, 2022

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.

COCA‑COLA CONSOLIDATED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands, except per share data)	(in thousands, except per share data)	2021		2020		2021		2020		(in thousands, except per share data)	2022		2021		2022		2021
Net sales	Net sales	$	1,457,432	$	1,328,484	$	4,160,375	$	3,728,720	Net sales	$	1,628,589	$	1,457,432	$	4,628,162	$	4,160,375
Cost of sales	Cost of sales	939,720		856,046		2,699,020		2,421,686		Cost of sales	1,007,482		939,720		2,948,820		2,699,020
Gross profit	Gross profit	517,712		472,438		1,461,355		1,307,034		Gross profit	621,107		517,712		1,679,342		1,461,355
Selling, delivery and administrative expenses	Selling, delivery and administrative expenses	380,681		368,594		1,109,279		1,087,251		Selling, delivery and administrative expenses	431,177		380,681		1,211,134		1,109,279
Income from operations	Income from operations	137,031		103,844		352,076		219,783		Income from operations	189,930		137,031		468,208		352,076
Interest expense, net	Interest expense, net	8,097		9,033		25,208		27,778		Interest expense, net	6,083		8,097		20,928		25,208
Other expense, net	Other expense, net	34,982		21,394		94,078		39,826		Other expense, net	24,746		34,982		27,666		94,078
Income before income taxes		93,952		73,417		232,790		152,179
Income before taxes										Income before taxes	159,101		93,952		419,614		232,790
Income tax expense	Income tax expense	25,022		18,363		62,317		38,911		Income tax expense	40,340		25,022		107,901		62,317
Net income	Net income	68,930		55,054		170,473		113,268		Net income	$	118,761	$	68,930	$	311,713	$	170,473
Less: Net income attributable to noncontrolling interest		—		3,170		—		7,153
Net income attributable to Coca‑Cola Consolidated, Inc.		$	68,930	$	51,884	$	170,473	$	106,115

Basic net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:
Basic net income per share:										Basic net income per share:
Common Stock	Common Stock	$	7.36	$	5.53	$	18.19	$	11.32	Common Stock	$	12.67	$	7.36	$	33.25	$	18.19
Weighted average number of Common Stock shares outstanding	Weighted average number of Common Stock shares outstanding	7,141		7,141		7,141		7,141		Weighted average number of Common Stock shares outstanding	8,369		7,141		8,032		7,141

Class B Common Stock	Class B Common Stock	$	7.36	$	5.53	$	18.19	$	11.32	Class B Common Stock	$	12.67	$	7.36	$	33.29	$	18.19
Weighted average number of Class B Common Stock shares outstanding	Weighted average number of Class B Common Stock shares outstanding	2,232		2,232		2,232		2,232		Weighted average number of Class B Common Stock shares outstanding	1,005		2,232		1,342		2,232

Diluted net income per share based on net income attributable to Coca‑Cola Consolidated, Inc.:
Diluted net income per share:										Diluted net income per share:
Common Stock	Common Stock	$	7.32	$	5.51	$	18.11	$	11.25	Common Stock	$	12.63	$	7.32	$	33.13	$	18.11
Weighted average number of Common Stock shares outstanding – assuming dilution	Weighted average number of Common Stock shares outstanding – assuming dilution	9,409		9,430		9,413		9,430		Weighted average number of Common Stock shares outstanding – assuming dilution	9,406		9,409		9,410		9,413

Class B Common Stock	Class B Common Stock	$	7.31	$	5.51	$	18.10	$	11.24	Class B Common Stock	$	12.62	$	7.31	$	33.15	$	18.10
Weighted average number of Class B Common Stock shares outstanding – assuming dilution	Weighted average number of Class B Common Stock shares outstanding – assuming dilution	2,268		2,289		2,272		2,289		Weighted average number of Class B Common Stock shares outstanding – assuming dilution	1,037		2,268		1,378		2,272

Cash dividends per share:	Cash dividends per share:									Cash dividends per share:
Common Stock	Common Stock	$	0.25	$	0.25	$	0.75	$	0.75	Common Stock	$	0.25	$	0.25	$	0.75	$	0.75
Class B Common Stock	Class B Common Stock	$	0.25	$	0.25	$	0.75	$	0.75	Class B Common Stock	$	0.25	$	0.25	$	0.75	$	0.75

See accompanying notes to condensed consolidated financial statements.

COCA‑COLA CONSOLIDATED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Net income	Net income	$	68,930	$	55,054	$	170,473	$	113,268	Net income	$	118,761	$	68,930	$	311,713	$	170,473

Other comprehensive income, net of tax:	Other comprehensive income, net of tax:									Other comprehensive income, net of tax:
Defined benefit plans reclassification including pension costs:	Defined benefit plans reclassification including pension costs:									Defined benefit plans reclassification including pension costs:
Actuarial gains		916		896		2,745		2,689
Actuarial gain										Actuarial gain	746		916		2,237		2,745
Prior service credits	Prior service credits	1		4		2		11		Prior service credits	—		1		—		2
Postretirement benefits reclassification including benefits costs:
Actuarial gains		140		66		419		198
Postretirement benefits reclassification including benefit costs:										Postretirement benefits reclassification including benefit costs:
Actuarial gain										Actuarial gain	69		140		207		419
Interest rate swap	Interest rate swap	—		303		556		(710)		Interest rate swap	—		—		—		556
Foreign currency translation adjustment	Foreign currency translation adjustment	(6)		11		(15)		13		Foreign currency translation adjustment	—		(6)		—		(15)
Other comprehensive income, net of tax	Other comprehensive income, net of tax	1,051		1,280		3,707		2,201		Other comprehensive income, net of tax	815		1,051		2,444		3,707

Comprehensive income	Comprehensive income	69,981		56,334		174,180		115,469		Comprehensive income	$	119,576	$	69,981	$	314,157	$	174,180
Less: Comprehensive income attributable to noncontrolling interest		—		3,170		—		7,153
Comprehensive income attributable to Coca‑Cola Consolidated, Inc.		$	69,981	$	53,164	$	174,180	$	108,316

See accompanying notes to condensed consolidated financial statements.

COCA‑COLA CONSOLIDATED, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)

(in thousands, except share data) October 1, 2021 December 31, 2020
ASSETS
Current Assets:
Cash and cash equivalents $ 186,878 $ 54,793
Accounts receivable, trade 482,211 425,445
Allowance for doubtful accounts (16,610) (21,620)
Accounts receivable from The Coca‑Cola Company 58,323 49,203
Accounts receivable, other 29,238 37,084
Inventories 240,495 225,757
Prepaid expenses and other current assets 84,152 74,146
Assets held for sale 6,932 6,429
Total current assets 1,071,619 851,237
Property, plant and equipment, net 1,009,325 1,022,722
Right-of-use assets - operating leases 140,410 134,383
Leased property under financing leases, net 65,625 69,867
Other assets 120,230 111,781
Goodwill 165,903 165,903
Distribution agreements, net 835,403 853,753
Customer lists, net 11,425 12,804
Total assets $ 3,419,940 $ 3,222,450
LIABILITIES AND EQUITY
Current Liabilities:
Current portion of obligations under operating leases $ 20,650 $ 19,766
Current portion of obligations under financing leases 6,009 5,860
Accounts payable, trade 270,937 217,560
Accounts payable to The Coca‑Cola Company 153,701 107,181
Other accrued liabilities 214,101 205,141
Accrued compensation 96,617 87,608
Accrued interest payable 6,281 3,944
Total current liabilities 768,296 647,060
Deferred income taxes 151,558 139,423
Pension and postretirement benefit obligations 110,582 113,325
Other liabilities 726,292 679,280
Noncurrent portion of obligations under operating leases 123,627 119,923
Noncurrent portion of obligations under financing leases 66,268 69,984
Long-term debt 793,177 940,465
Total liabilities 2,739,800 2,709,460
Commitments and Contingencies 0 0
Equity:
Common Stock, $1.00 par value: 30,000,000 shares authorized; 10,203,821 shares issued 10,204 10,204
Class B Common Stock, $1.00 par value: 10,000,000 shares authorized; 2,860,356 shares issued 2,860 2,860
Additional paid-in capital 135,953 135,953
Retained earnings 707,723 544,280
Accumulated other comprehensive loss (115,346) (119,053)
Treasury stock, at cost: Common Stock – 3,062,374 shares (60,845) (60,845)
Treasury stock, at cost: Class B Common Stock – 628,114 shares (409) (409)
Total equity 680,140 512,990
Total liabilities and equity $ 3,419,940 $ 3,222,450


(in thousands, except share data)	September 30, 2022		December 31, 2021
ASSETS
Current Assets:
Cash and cash equivalents	$	163,244	$	142,314
Accounts receivable, trade	557,026		472,270
Allowance for doubtful accounts	(15,617)		(17,336)
Accounts receivable from The Coca‑Cola Company	46,745		57,737
Accounts receivable, other	70,168		33,878
Inventories	313,699		302,851
Prepaid expenses and other current assets	91,959		78,068
Assets held for sale	3,045		6,880
Total current assets	1,230,269		1,076,662
Property, plant and equipment, net	1,082,940		1,030,688
Right-of-use assets - operating leases	140,977		139,877
Leased property under financing leases, net	6,843		64,211
Other assets	112,474		120,486
Goodwill	165,903		165,903
Distribution agreements, net	848,257		836,777
Customer lists, net	9,615		10,966
Total assets	$	3,597,278	$	3,445,570

LIABILITIES AND EQUITY
Current Liabilities:
Current portion of obligations under operating leases	$	26,465	$	22,048
Current portion of obligations under financing leases	2,259		6,060
Accounts payable, trade	323,352		319,318
Accounts payable to The Coca‑Cola Company	189,885		145,671
Other accrued liabilities	207,250		226,769
Accrued compensation	121,592		110,894
Accrued interest payable	5,892		4,096
Total current liabilities	876,695		834,856
Deferred income taxes	147,976		136,432
Pension and postretirement benefit obligations	76,375		93,391
Other liabilities	750,814		758,610
Noncurrent portion of obligations under operating leases	119,617		122,046
Noncurrent portion of obligations under financing leases	8,110		65,006
Long-term debt	598,778		723,443
Total liabilities	2,578,365		2,733,784
Commitments and Contingencies
Equity:
Common Stock, $1.00 par value: 30,000,000 shares authorized; 11,431,367 and 10,203,821 shares issued, respectively	11,431		10,204
Class B Common Stock, $1.00 par value: 10,000,000 shares authorized; 1,632,810 and 2,860,356 shares issued, respectively	1,633		2,860
Additional paid-in capital	135,953		135,953
Retained earnings	1,029,169		724,486
Accumulated other comprehensive loss	(98,019)		(100,463)
Treasury stock, at cost: Common Stock – 3,062,374 shares	(60,845)		(60,845)
Treasury stock, at cost: Class B Common Stock – 628,114 shares	(409)		(409)
Total equity	1,018,913		711,786
Total liabilities and equity	$	3,597,278	$	3,445,570

See accompanying notes to condensed consolidated financial statements.

COCA‑COLA CONSOLIDATED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


		First Nine Months					First Nine Months
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Cash Flows from Operating Activities:	Cash Flows from Operating Activities:					Cash Flows from Operating Activities:
Net income	Net income	$	170,473	$	113,268	Net income	$	311,713	$	170,473
Adjustments to reconcile net income to net cash provided by operating activities:	Adjustments to reconcile net income to net cash provided by operating activities:					Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation expense from property, plant and equipment and financing leases		117,910		117,203
Depreciation and amortization expense from property, plant and equipment and financing leases						Depreciation and amortization expense from property, plant and equipment and financing leases	110,661		117,910
Amortization of intangible assets and deferred proceeds, net	Amortization of intangible assets and deferred proceeds, net	17,431		17,286		Amortization of intangible assets and deferred proceeds, net	17,722		17,431
Fair value adjustment of acquisition related contingent consideration	Fair value adjustment of acquisition related contingent consideration	90,905		35,068		Fair value adjustment of acquisition related contingent consideration	21,132		90,905
Deferred payroll taxes under CARES Act	Deferred payroll taxes under CARES Act	(18,739)		24,648		Deferred payroll taxes under CARES Act	(18,739)		(18,739)
Deferred income taxes	Deferred income taxes	10,907		5,302		Deferred income taxes	10,749		10,907
Loss on sale of property, plant and equipment	Loss on sale of property, plant and equipment	4,017		3,656		Loss on sale of property, plant and equipment	2,855		4,017
Amortization of debt costs						Amortization of debt costs	768		790
Impairment and abandonment of property, plant and equipment	Impairment and abandonment of property, plant and equipment	3,200		7,908		Impairment and abandonment of property, plant and equipment	—		3,200
Amortization of debt costs		790		778
Change in current assets less current liabilities	Change in current assets less current liabilities	60,546		57,651		Change in current assets less current liabilities	(61,657)		60,546
Change in other noncurrent assets	Change in other noncurrent assets	10,355		16,360		Change in other noncurrent assets	27,806		10,355
Change in other noncurrent liabilities	Change in other noncurrent liabilities	(27,905)		(23,775)		Change in other noncurrent liabilities	(28,701)		(27,920)
Other		(15)		1,048
Total adjustments	Total adjustments	269,402		263,133		Total adjustments	82,596		269,402
Net cash provided by operating activities	Net cash provided by operating activities	$	439,875	$	376,401	Net cash provided by operating activities	$	394,309	$	439,875

Cash Flows from Investing Activities:	Cash Flows from Investing Activities:					Cash Flows from Investing Activities:
Additions to property, plant and equipment	Additions to property, plant and equipment	$	(119,620)	$	(110,717)	Additions to property, plant and equipment	$	(183,929)	$	(119,620)
Acquisition of BODYARMOR distribution rights						Acquisition of BODYARMOR distribution rights	(30,149)		(1,998)
Proceeds from the sale of property, plant and equipment	Proceeds from the sale of property, plant and equipment	4,215		2,397		Proceeds from the sale of property, plant and equipment	5,348		4,215
Investment in CONA Services LLC	Investment in CONA Services LLC	(2,194)		(1,770)		Investment in CONA Services LLC	(1,538)		(2,194)
Other distribution agreements		(1,998)		—
Net cash used in investing activities	Net cash used in investing activities	$	(119,597)	$	(110,090)	Net cash used in investing activities	$	(210,268)	$	(119,597)

Cash Flows from Financing Activities:	Cash Flows from Financing Activities:					Cash Flows from Financing Activities:
Borrowings under revolving credit facility		$	55,000	$	235,000
Payments on revolving credit facility		(55,000)		(280,000)
Borrowings under term loan facility		70,000		—
Payments on term loan facility		(217,500)		(22,500)
Payments on term loan facility and senior notes						Payments on term loan facility and senior notes	$	(125,000)	$	(217,500)
Payments of acquisition related contingent consideration	Payments of acquisition related contingent consideration	(28,640)		(31,999)		Payments of acquisition related contingent consideration	(28,421)		(28,640)
Cash dividends paid	Cash dividends paid	(7,030)		(7,030)		Cash dividends paid	(7,030)		(7,030)
Payments on financing lease obligations	Payments on financing lease obligations	(3,567)		(4,428)		Payments on financing lease obligations	(2,441)		(3,567)
Debt issuance fees	Debt issuance fees	(1,456)		(145)		Debt issuance fees	(219)		(1,456)
Borrowings under term loan facility						Borrowings under term loan facility	—		70,000
Payments on revolving credit facility						Payments on revolving credit facility	—		(55,000)
Borrowings under revolving credit facility						Borrowings under revolving credit facility	—		55,000
Net cash used in financing activities	Net cash used in financing activities	$	(188,193)	$	(111,102)	Net cash used in financing activities	$	(163,111)	$	(188,193)

Net increase in cash during period	Net increase in cash during period	$	132,085	$	155,209	Net increase in cash during period	$	20,930	$	132,085
Cash at beginning of period	Cash at beginning of period	54,793		9,614		Cash at beginning of period	142,314		54,793
Cash at end of period	Cash at end of period	$	186,878	$	164,823	Cash at end of period	$	163,244	$	186,878

Significant non-cash investing and financing activities:	Significant non-cash investing and financing activities:					Significant non-cash investing and financing activities:
Reductions to leased property under financing leases						Reductions to leased property under financing leases	$	55,465	$	—
Additions to property, plant and equipment accrued and recorded in accounts payable, trade						Additions to property, plant and equipment accrued and recorded in accounts payable, trade	20,049		9,612
Right-of-use assets obtained in exchange for operating lease obligations	Right-of-use assets obtained in exchange for operating lease obligations	$	21,759	$	38,317	Right-of-use assets obtained in exchange for operating lease obligations	18,703		21,759
Additions to property, plant and equipment accrued and recorded in accounts payable, trade		9,612		25,477
Additions to leased property under financing leases		—		61,121

See accompanying notes to condensed consolidated financial statements.

COCA‑COLA CONSOLIDATED, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY

(Unaudited)


(in thousands, except share data)																						(in thousands, except share data)	Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock - Common Stock		Treasury Stock - Class B Common Stock		Total Equity
Balance on July 1, 2022																						Balance on July 1, 2022	$	11,431	$	1,633	$	135,953	$	912,751	$	(98,834)	$	(60,845)	$	(409)	$	901,680
Net income																						Net income	—		—		—		118,761		—		—		—		118,761
Other comprehensive income, net of tax																						Other comprehensive income, net of tax	—		—		—		—		815		—		—		815
Cash dividends paid:																						Cash dividends paid:
Common Stock ($0.25 per share)																						Common Stock ($0.25 per share)	—		—		—		(2,092)		—		—		—		(2,092)
Class B Common Stock ($0.25 per share)																						Class B Common Stock ($0.25 per share)	—		—		—		(251)		—		—		—		(251)
Balance on September 30, 2022																						Balance on September 30, 2022	$	11,431	$	1,633	$	135,953	$	1,029,169	$	(98,019)	$	(60,845)	$	(409)	$	1,018,913

Balance on December 31, 2021																						Balance on December 31, 2021	$	10,204	$	2,860	$	135,953	$	724,486	$	(100,463)	$	(60,845)	$	(409)	$	711,786
Net income																						Net income	—		—		—		311,713		—		—		—		311,713
Other comprehensive income, net of tax																						Other comprehensive income, net of tax	—		—		—		—		2,444		—		—		2,444
Cash dividends paid:																						Cash dividends paid:
Common Stock ($0.75 per share)																						Common Stock ($0.75 per share)	—		—		—		(5,970)		—		—		—		(5,970)
Class B Common Stock ($0.75 per share)																						Class B Common Stock ($0.75 per share)	—		—		—		(1,060)		—		—		—		(1,060)
Conversion of 1,227,546 shares of Class B Common Stock																						Conversion of 1,227,546 shares of Class B Common Stock	1,227		(1,227)		—		—		—		—		—		—
Balance on September 30, 2022																						Balance on September 30, 2022	$	11,431	$	1,633	$	135,953	$	1,029,169	$	(98,019)	$	(60,845)	$	(409)	$	1,018,913

(in thousands, except share data)	(in thousands, except share data)	Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock - Common Stock		Treasury Stock - Class B Common Stock		Total Equity of Coca‑Cola Consolidated, Inc.		Non- controlling Interest		Total Equity		(in thousands, except share data)	Common Stock		Class B Common Stock		Additional Paid-in Capital		Retained Earnings		Accumulated Other Comprehensive Loss		Treasury Stock - Common Stock		Treasury Stock - Class B Common Stock		Total Equity
Balance on July 2, 2021	Balance on July 2, 2021	$	10,204	$	2,860	$	135,953	$	641,136	$	(116,397)	$	(60,845)	$	(409)	$	612,502	$	—	$	612,502	Balance on July 2, 2021	$	10,204	$	2,860	$	135,953	$	641,136	$	(116,397)	$	(60,845)	$	(409)	$	612,502
Net income	Net income	—		—		—		68,930		—		—		—		68,930		—		68,930		Net income	—		—		—		68,930		—		—		—		68,930
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		—		—		1,051		—		—		1,051		—		1,051		Other comprehensive income, net of tax	—		—		—		—		1,051		—		—		1,051
Cash dividends paid:	Cash dividends paid:																					Cash dividends paid:
Common Stock ($0.25 per share)	Common Stock ($0.25 per share)	—		—		—		(1,785)		—		—		—		(1,785)		—		(1,785)		Common Stock ($0.25 per share)	—		—		—		(1,785)		—		—		—		(1,785)
Class B Common Stock ($0.25 per share)	Class B Common Stock ($0.25 per share)	—		—		—		(558)		—		—		—		(558)		—		(558)		Class B Common Stock ($0.25 per share)	—		—		—		(558)		—		—		—		(558)
Balance on October 1, 2021	Balance on October 1, 2021	$	10,204	$	2,860	$	135,953	$	707,723	$	(115,346)	$	(60,845)	$	(409)	$	680,140	$	—	$	680,140	Balance on October 1, 2021	$	10,204	$	2,860	$	135,953	$	707,723	$	(115,346)	$	(60,845)	$	(409)	$	680,140

Balance on December 31, 2020	Balance on December 31, 2020	$	10,204	$	2,860	$	135,953	$	544,280	$	(119,053)	$	(60,845)	$	(409)	$	512,990	$	—	$	512,990	Balance on December 31, 2020	$	10,204	$	2,860	$	135,953	$	544,280	$	(119,053)	$	(60,845)	$	(409)	$	512,990
Net income	Net income	—		—		—		170,473		—		—		—		170,473		—		170,473		Net income	—		—		—		170,473		—		—		—		170,473
Other comprehensive income, net of tax	Other comprehensive income, net of tax	—		—		—		—		3,707		—		—		3,707		—		3,707		Other comprehensive income, net of tax	—		—		—		—		3,707		—		—		3,707
Cash dividends paid:	Cash dividends paid:																					Cash dividends paid:
Common Stock ($0.75 per share)	Common Stock ($0.75 per share)	—		—		—		(5,356)		—		—		—		(5,356)		—		(5,356)		Common Stock ($0.75 per share)	—		—		—		(5,356)		—		—		—		(5,356)
Class B Common Stock ($0.75 per share)	Class B Common Stock ($0.75 per share)	—		—		—		(1,674)		—		—		—		(1,674)		—		(1,674)		Class B Common Stock ($0.75 per share)	—		—		—		(1,674)		—		—		—		(1,674)
Balance on October 1, 2021	Balance on October 1, 2021	$	10,204	$	2,860	$	135,953	$	707,723	$	(115,346)	$	(60,845)	$	(409)	$	680,140	$	—	$	680,140	Balance on October 1, 2021	$	10,204	$	2,860	$	135,953	$	707,723	$	(115,346)	$	(60,845)	$	(409)	$	680,140

(in thousands, except share data) Common
Stock Class B
Common
Stock Additional
Paid-in
Capital Retained
Earnings Accumulated
Other
Comprehensive
Loss Treasury
Stock - Common
Stock Treasury
Stock - Class B
Common
Stock Total
Equity
of Coca‑Cola
Consolidated,
Inc. Non-
controlling
Interest Total
Equity
Balance on June 28, 2020 $ 10,204 $ 2,860 $ 128,983 $ 430,706 $ (114,081) $ (60,845) $ (409) $ 397,418 $ 108,147 $ 505,565
Net income — — — 51,884 — — — 51,884 3,170 55,054
Other comprehensive income, net of tax — — — — 1,280 — — 1,280 — 1,280
Cash dividends paid:
Common Stock
($0.25 per share)
— — — (1,785) — — — (1,785) — (1,785)
Class B Common Stock
($0.25 per share)
— — — (559) — — — (559) — (559)
Balance on September 27, 2020 $ 10,204 $ 2,860 $ 128,983 $ 480,246 $ (112,801) $ (60,845) $ (409) $ 448,238 $ 111,317 $ 559,555
Balance on December 29, 2019 $ 10,204 $ 2,860 $ 128,983 $ 381,161 $ (115,002) $ (60,845) $ (409) $ 346,952 $ 104,164 $ 451,116
Net income — — — 106,115 — — — 106,115 7,153 113,268
Other comprehensive income, net of tax — — — — 2,201 — — 2,201 — 2,201
Cash dividends paid:
Common Stock
($0.75 per share)
— — — (5,356) — — — (5,356) — (5,356)
Class B Common Stock
($0.75 per share)
— — — (1,674) — — — (1,674) — (1,674)
Balance on September 27, 2020 $ 10,204 $ 2,860 $ 128,983 $ 480,246 $ (112,801) $ (60,845) $ (409) $ 448,238 $ 111,317 $ 559,555

See accompanying notes to condensed consolidated financial statements.

COCA‑COLA CONSOLIDATED, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

1. Critical Accounting Policies ~~and Recent Accounting Pronouncements~~

The condensed consolidated financial statements include the accounts and the consolidated operations of Coca‑Cola Consolidated, Inc. and its majority-owned subsidiaries (the “Company”). All significant intercompany accounts and transactions have been eliminated. The condensed consolidated financial statements reflect all adjustments, including normal, recurring accruals, which, in the opinion of management, are necessary for a fair statement of the results for the periods presented.

Each of the Company’s quarters, other than the fourth quarter, ends on the Friday closest to the last day of the corresponding quarterly calendar period. The Company’s fourth quarter and fiscal year end on December 31 regardless of the day of the week on which December 31 falls. The condensed consolidated financial statements presented are:

•The financial position as of ~~October 1, 2021~~September 30, 2022 and December 31, ~~2020.~~2021.

•The results of operations, comprehensive income and changes in stockholders’ equity for the three-month periods ended September 30, 2022 (the “third quarter” of fiscal 2022 (“2022”)) and October 1, 2021 (the “third quarter” of fiscal 2021 (“2021”)) and ~~September 27, 2020 (the “third quarter” of fiscal 2020 (“2020”)) and~~ the nine-month periods ended September 30, 2022 (the “first nine months” of 2022) and October 1, 2021 (the “first nine months” of 2021) ~~and September 27, 2020 (the “first nine months” of 2020)~~.

•The changes in cash flows for the first nine months of ~~2021~~2022 and the first nine months of ~~2020.~~2021.

The condensed consolidated financial statements include the consolidated operations of the Company and its majority-owned subsidiaries. During 2020, Piedmont Coca-Cola Bottling Partnership (“Piedmont”) was the Company’s only subsidiary that had a significant noncontrolling interest. On December 9, 2020, an indirect wholly owned subsidiary of the Company purchased the remaining 22.7% general partnership interest in Piedmont from an indirect wholly owned subsidiary of The Coca‑Cola Company, and Piedmont became an indirect wholly owned subsidiary of the Company.

The condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and the instructions to Form 10-Q and Article 10 of Regulation S-X. 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 ~~2020~~2021 filed with the United States Securities and Exchange ~~Commission.~~Commission (the “SEC”).

The preparation of condensed consolidated financial statements, in conformity with GAAP, requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the 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.

Critical Accounting ~~Policies~~Estimates

In the ordinary course of business, the Company has made a number of estimates and assumptions relating to the reporting of its results of operations and financial position in the preparation of its condensed consolidated financial statements in conformity with GAAP. 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 ~~2020~~2021 under the caption “Discussion of Critical Accounting ~~Policies and Estimates and Recent Accounting Pronouncements”~~Estimates” in “Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations,” a discussion of the Company’s most critical accounting ~~policies,~~estimates, which are those the Company believes to be the most important to the portrayal of its 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.

Any changes in critical accounting ~~policies and~~ estimates are discussed with the Audit Committee of the Company’s Board of Directors during the quarter in which a change is contemplated and prior to making such change.

~~Recently Adopted Accounting Pronouncements~~

In December 2019, the Financial Accounting Standards Board (the “FASB”) issued Accounting Standards Update (“ASU”) 2019‑12, “Simplifying the Accounting for Income Taxes,” which simplifies the accounting for income taxes by removing certain exceptions to the general principles in income tax accounting and improves consistent application of and simplifies GAAP for

other areas of income tax accounting by clarifying and amending existing guidance. The new guidance is effective for fiscal years beginning after December 15, 2020, including interim periods within those fiscal years. The Company adopted ASU 2019-12 in the first quarter of 2021 and the adoption did not have a material impact on its condensed consolidated financial statements.

2. Related Party Transactions

The Coca‑Cola Company

The Company’s business consists primarily of the distribution, marketing and manufacture of nonalcoholic beverages of The Coca‑Cola Company, which is the sole owner of the formulas under which the primary components of its soft drink products, either concentrate or syrup, are manufactured.

On March 17, 2022, the Company entered into a stockholder conversion agreement (the “Stockholder Conversion Agreement”) with the JFH Family Limited Partnership—SW1, the Anne Lupton Carter Trust f/b/o Sue Anne H. Wells, the JFH Family Limited Partnership—DH1 and the Anne Lupton Carter Trust f/b/o Deborah S. Harrison (collectively, the “Converting Stockholders”),

pursuant to which the Company and the Converting Stockholders agreed upon the process for converting an aggregate of 1,227,546 shares of the Company’s Class B Common Stock owned by the Converting Stockholders on a one share for one share basis into shares of the Company’s Common Stock, effective as of March 17, 2022 (the “Converted Shares”). In the Stockholder Conversion Agreement, the Company agreed to cause the Converted Shares to be registered for resale pursuant to the Company’s existing automatic shelf registration statement and the Converting Stockholders agreed to certain restrictions on their resale of the Converted Shares, including a trade volume limitation that prohibits the sale of more than 175,000 of the Converted Shares in the aggregate during any three-consecutive month period. On June 21, 2022, the Company filed a prospectus supplement with the SEC pursuant to the Company’s existing automatic shelf registration statement, registering the Converted Shares for resale by the Converting Stockholders. The Company will not receive any proceeds from any resale of the Converted Shares by the Converting Stockholders.

J. Frank Harrison, III, Chairman of the Board of Directors and Chief Executive Officer of the Company, ~~together with the trustees of certain trusts established for the benefit of certain relatives~~controls 1,004,394 shares of the ~~late J. Frank Harrison, Jr., control shares representing~~Company’s Class B Common Stock, which represent approximately ~~86%~~71% of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis. In addition, other members of the Harrison family control shares of the Company’s Common Stock representing approximately 4% of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated basis.

As of ~~October 1, 2021,~~September 30, 2022, The Coca‑Cola Company owned ~~approximately 27%~~shares of the Company’s Common Stock representing approximately 9% of the total voting power of the Company’s outstanding Common Stock and Class B Common Stock on a consolidated ~~basis, representing approximately 5% of the total voting power of the Company’s Common Stock and Class B Common Stock voting together.~~basis. The number of shares of the Company’s Common Stock currently held by The Coca‑Cola Company gives it the right to have a designee proposed by the Company for nomination to the Company’s Board of Directors in the Company’s annual proxy statement. J. Frank Harrison, III and the trustees of certain trusts established for the benefit of descendants of the late J. Frank Harrison, Jr. ~~family trusts described above,~~, have agreed to vote the shares of the Company’s Class B Common Stock and Common Stock that they control in favor of such designee. The Coca‑Cola Company does not own any shares of the Company’s Class B Common Stock.

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


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Payments made by the Company to The Coca-Cola Company(1)	Payments made by the Company to The Coca-Cola Company(1)	$	403,889	$	369,186	$	1,120,042	$	1,012,568	Payments made by the Company to The Coca-Cola Company(1)	$	481,021	$	403,889	$	1,411,300	$	1,120,042
Payments made by The Coca-Cola Company to the Company	Payments made by The Coca-Cola Company to the Company	51,024		30,458		131,026		91,086		Payments made by The Coca-Cola Company to the Company	67,540		51,024		187,810		131,026

(1)This excludes acquisition related sub-bottling payments made by the Company to Coca-Cola Refreshments USA, Inc., a wholly owned subsidiary of The Coca‑Cola Company, but includes the purchase price of certain additional BODYARMOR distribution rights, each as discussed inbelow.

On January 1, 2022, the ~~next section.~~Company entered into an agreement to acquire $30.1 million of additional BODYARMOR distribution rights with an estimated useful life of 40 years.

More than 80% of the payments made by the Company to The Coca‑Cola Company were for concentrate, syrup, sweetener and other finished goods products, which were recorded in cost of sales in the condensed consolidated statements of operations and represent the primary components of the soft drink products the Company manufactures and distributes. Payments made by the Company to The Coca‑Cola Company also included payments for marketing programs associated with large, national customers managed by The Coca‑Cola Company on behalf of the Company, which were recorded as a reduction to net sales in the condensed consolidated statements of operations. Other payments made by the Company to The Coca‑Cola Company related to cold drink equipment parts, fees associated with the rights to distribute certain brands and other customary items.

Payments made by The Coca‑Cola Company to the Company included annual funding in connection with the Company’s agreement to support certain business initiatives developed by The Coca‑Cola Company and funding associated with the delivery of post-mix products to various customers, both of which were recorded as a reduction to cost of sales in the condensed consolidated statements of operations. Post-mix products are dispensed through equipment that mixes fountain syrups with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses. Payments made by The Coca‑Cola Company to the Company also included transportation services and fountain product delivery and equipment repair services performed by the Company on The Coca‑Cola Company’s equipment, all of which were recorded in net sales in the condensed consolidated statements of operations.

Coca‑Cola Refreshments USA, Inc. (“CCR”)

The Company, The Coca‑Cola Company and CCR entered into comprehensive beverage agreements (collectively, the “CBA”), related to a multi-year series of transactions, which were completed in October 2017, through which the Company acquired and exchanged distribution territories and manufacturing plants (the “System Transformation”). The CBA requires the Company to make quarterly sub-bottling payments to CCR on a continuing basis in exchange for the grant of exclusive rights to distribute, promote, market and sell the authorized brands of The Coca‑Cola Company and related products in certain distribution territories the Company acquired from CCR. These sub-bottling payments are based on gross profit derived

from the Company’s sales of certain beverages and beverage products that are sold under the same trademarks that identify a covered beverage, a beverage product or certain cross-licensed ~~brands.~~brands applicable to the System Transformation (“acquisition related sub-bottling payments”).

~~Sub-bottling~~Acquisition related sub-bottling payments to CCR were $28.4 million in the first nine months of 2022 and $28.6 million in the first nine months of ~~2021 and $32.0 million in the first nine months of 2020.~~2021. The following table summarizes the liability recorded by the Company to reflect the estimated fair value of contingent consideration related to future expected acquisition related sub‑bottling payments to CCR:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Current portion of acquisition related contingent consideration	Current portion of acquisition related contingent consideration	$	47,212	$	36,020	Current portion of acquisition related contingent consideration	$	33,186	$	51,518
Noncurrent portion of acquisition related contingent consideration	Noncurrent portion of acquisition related contingent consideration	449,447		398,674		Noncurrent portion of acquisition related contingent consideration	503,730		490,587
Total acquisition related contingent consideration	Total acquisition related contingent consideration	$	496,659	$	434,694	Total acquisition related contingent consideration	$	536,916	$	542,105

Southeastern Container (“Southeastern”)

The Company is a shareholder of Southeastern, a plastic bottle manufacturing cooperative. The Company accounts for Southeastern as an equity method investment. The Company’s investment in Southeastern, which was classified as other assets in the condensed consolidated balance sheets, was ~~$22.4~~$21.8 million as of ~~October 1, 2021~~September 30, 2022 and ~~$21.9~~$21.7 million as of December 31, ~~2020.~~2021.

South Atlantic Canners, Inc. (“SAC”)

The Company is a shareholder of SAC, a manufacturing cooperative located in Bishopville, South Carolina. All of SAC’s shareholders are Coca‑Cola bottlers and each has equal voting rights. The Company accounts for SAC as an equity method investment. The Company’s investment in SAC, which was classified as other assets in the condensed consolidated balance sheets, was $8.2 million as of ~~October 1, 2021~~both September 30, 2022 and ~~$8.0 million as of~~ December 31, ~~2020.~~2021. The Company also guarantees a portion of SAC’s debt; see Note 20 for additional information.

The Company receives a fee for managing the day-to-day operations of SAC pursuant to a management agreement. Proceeds from management fees received from SAC, which were recorded as a reduction to cost of sales in the condensed consolidated statements of operations, were $6.7 million in the first nine months of 2022 and $6.6 million in the first nine months of ~~2021 and $6.9 million in the first nine months of 2020.~~2021.

Coca‑Cola Bottlers’ Sales ~~and~~& Services Company LLC (“CCBSS”)

Along with all other Coca‑Cola bottlers in the United States and Canada, the Company is a member of CCBSS, a company formed to provide certain procurement and other services with the intention of enhancing the efficiency and competitiveness of the Coca‑Cola bottling system. The Company accounts for CCBSS as an equity method investment and its investment in CCBSS is not material.

CCBSS negotiates the procurement for the majority of the Company’s raw materials, excluding concentrate, and the Company receives a rebate from CCBSS for the purchase of these raw materials. The Company had rebates due from CCBSS of ~~$4.4~~$40.5 million on ~~October 1, 2021~~September 30, 2022 and ~~$6.3~~$7.9 million on December 31, ~~2020,~~2021, which were classified as accounts receivable, other in the condensed consolidated balance sheets. Changes in rebates receivable relate to volatility in raw material prices and the timing of cash receipts of rebates.

In addition, the Company pays an administrative fee to CCBSS for its services. The Company incurred administrative fees to CCBSS of $1.9 million in the first nine months of 2022 and $2.2 million in the first nine months of 2021, ~~and $2.1 million in the first nine months of 2020,~~ which were classified as selling, delivery and administrative (“SD&A”) expenses in the condensed consolidated statements of operations.

CONA Services LLC (“CONA”)

The Company is a member of CONA, an entity formed with The Coca‑Cola Company and certain other Coca‑Cola bottlers to provide business process and information technology services to its members. The Company accounts for CONA as an equity method investment. The Company’s investment in CONA, which was classified as other assets in the condensed consolidated balance sheets, was ~~$13.3~~$16.3 million as of ~~October 1, 2021~~September 30, 2022 and ~~$11.5~~$13.7 million as of December 31, ~~2020.~~2021.

Pursuant to an amended and restated master services agreement with CONA, the Company is authorized to use the Coke One North America system (the “CONA System”), a uniform information technology system developed to promote operational efficiency and uniformity among North American Coca‑Cola bottlers. In exchange for the Company’s rights to use the CONA System and receive CONA-related services, it is charged service fees by CONA. The Company incurred ~~CONA~~ service fees to CONA of $19.9 million in the first nine months of 2022 and $18.9 million in the first nine months of ~~2021 and $17.4 million in the first nine months of 2020.~~

2021.

Related Party Leases

The Company leases its headquarters office facility and an adjacent office facility in Charlotte, North Carolina from Beacon Investment Corporation, of which J. Frank Harrison, III is the majority stockholder and Morgan H. Everett, Vice Chair of the Company’s Board of Directors, is a minority stockholder. The annual base rent the Company is obligated to pay under this lease is subject to an adjustment for an inflation factor and the lease expires on December 31, 2029. The principal balance outstanding under this lease was ~~$28.9~~$26.2 million on ~~October 1, 2021~~September 30, 2022 and ~~$30.8~~$28.2 million on December 31, ~~2020.~~2021.

The Company ~~leases~~previously leased the Snyder Production Center and an adjacent sales facility in Charlotte, North Carolina (together, the “Snyder Production Center”) from Harrison Limited Partnership One (“HLP”), which is directly and indirectly owned by trusts of which J. Frank Harrison, III and Sue Anne H. Wells, a former director of the Company, are trustees and beneficiaries and of which Morgan H. Everett is a permissible, discretionary beneficiary. ~~The annual base rent~~On March 17, 2022, CCBCC Operations, LLC (“Operations”), a wholly owned subsidiary of the Company, ~~is obligated~~entered into a definitive purchase and sale agreement with HLP, pursuant to ~~pay under this~~which Operations purchased the Snyder Production Center from HLP on such date for a purchase price of $60.0 million. This lease, ~~is subject~~which was scheduled to ~~an adjustment for an inflation factor and the lease expires~~expire on December 31, ~~2035. The~~2035, was terminated in connection with the purchase of the Snyder Production Center by Operations. There was no principal balance outstanding under this lease on September 30, 2022 and there was ~~$59.8 million on October 1, 2021 and $61.9~~a principal balance outstanding of $59.1 million on December 31, ~~2020.~~2021.

A summary of rental payments for these leases related to the third quarter and the first nine months of ~~2021~~2022 and ~~2020~~2021 is as follows:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Company headquarters	Company headquarters	$	944	$	826	$	2,834	$	2,478	Company headquarters	$	963	$	944	$	2,890	$	2,834
Snyder Production Center	Snyder Production Center	1,112		1,112		3,338		3,338		Snyder Production Center	—		1,112		927		3,338

Long-Term Performance Equity Plan

The Long-Term Performance Equity Plan compensates J. Frank Harrison, III based on the Company’s performance. Awards granted to Mr. Harrison under the Long-Term Performance Equity Plan are earned based on the Company’s attainment during a performance period of certain performance measures, each as specified by the Compensation Committee of the Company’s Board of Directors. These awards may be settled in cash and/or shares of the Company’s Class B Common Stock, based on the average of the closing prices of shares of the Company’s Common Stock during the last 20 trading days of the performance period. Compensation expense for the Long-Term Performance Equity Plan, which was included in SD&A expenses in the condensed consolidated statements of operations, was $2.3 million and $2.1 million in the third quarter of 2022 and the third quarter of 2021, respectively, and $7.9 million and $7.6 million in the first nine months of ~~2021~~2022 and ~~$7.2 million in~~ the first nine months of ~~2020.~~2021, respectively.

3. Revenue Recognition

The Company’s sales are divided into 2two main categories: (i) bottle/can sales and (ii) other sales. Bottle/can sales include products packaged primarily in plastic bottles and aluminum cans. Bottle/can net pricing is based on the invoice price charged to customers reduced by any promotional allowances. Bottle/can net pricing per unit is impacted by the price charged per package, the sales volume generated for each package and the channels in which those packages are sold. Other sales include sales to other Coca‑Cola bottlers, post-mix ~~products,~~sales, transportation revenue and equipment maintenance revenue.

The Company’s contracts are derived from customer orders, including customer sales incentives, generated through an order processing and replenishment model. Generally, the Company’s service contracts and contracts related to the delivery of specifically identifiable products have a single performance obligation. Revenues do not include sales or other taxes collected from customers. The Company has defined its performance obligations for its contracts as either at a point in time or over time. Bottle/can sales, sales to other Coca‑Cola bottlers and post-mix sales are recognized when control transfers to a customer, which is generally upon delivery and is considered a single point in time (“point in time”). Point in time sales accounted for approximately 97% of the Company’s net sales in both the first nine months of ~~2021~~2022 and the first nine months of ~~2020.~~2021.

Other sales, which include revenue for service fees related to the repair of cold drink equipment and delivery fees for freight hauling and brokerage services, are recognized over time (“over time”). Revenues related to cold drink equipment repair are recognized as the respective services are completed using a cost-to-cost input method. Repair services are generally completed in less than one day but can extend up to one month. Revenues related to freight hauling and brokerage services are recognized as the delivery occurs using a miles driven output method. Generally, delivery occurs and freight charges are recognized in the same day. Over time sales orders open at the end of a financial period are not material to the condensed consolidated financial statements.

The following table represents a disaggregation of revenue from contracts with customers:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Point in time net sales:	Point in time net sales:									Point in time net sales:
Nonalcoholic Beverages - point in time	Nonalcoholic Beverages - point in time	$	1,415,643	$	1,286,542	$	4,029,846	$	3,607,502	Nonalcoholic Beverages - point in time	$	1,587,771	$	1,415,643	$	4,500,277	$	4,029,846
Total point in time net sales	Total point in time net sales	$	1,415,643	$	1,286,542	$	4,029,846	$	3,607,502	Total point in time net sales	$	1,587,771	$	1,415,643	$	4,500,277	$	4,029,846

Over time net sales:	Over time net sales:									Over time net sales:
Nonalcoholic Beverages - over time	Nonalcoholic Beverages - over time	$	11,328	$	8,729	$	32,130	$	25,874	Nonalcoholic Beverages - over time	$	12,294	$	11,328	$	35,023	$	32,130
All Other - over time	All Other - over time	30,461		33,213		98,399		95,344		All Other - over time	28,524		30,461		92,862		98,399
Total over time net sales	Total over time net sales	$	41,789	$	41,942	$	130,529	$	121,218	Total over time net sales	$	40,818	$	41,789	$	127,885	$	130,529

Total net sales	Total net sales	$	1,457,432	$	1,328,484	$	4,160,375	$	3,728,720	Total net sales	$	1,628,589	$	1,457,432	$	4,628,162	$	4,160,375

The Company’s allowance for doubtful accounts in the condensed consolidated balance sheets includes a reserve for customer returns and an allowance for credit losses. The Company experiences customer returns primarily as a result of damaged or out-of-date product. At any given time, the Company estimates less than 1% of bottle/can sales and post-mix sales could be at risk for return by customers. Returned product is recognized as a reduction to net sales. The Company’s reserve for customer returns was $3.0 million as of ~~October 1, 2021~~both September 30, 2022 and ~~$3.6 million as of~~ December 31, ~~2020.~~2021.

The Company estimates an allowance for credit losses, based on historic days’ sales outstanding trends, aged customer balances, previously written-off balances and expected recoveries up to balances previously written off, in order to present the net amount expected to be collected. Accounts receivable balances are written off when determined uncollectible and are recognized as a reduction to the allowance for credit losses. ~~A reconciliation~~Following is a summary of ~~the~~ activity for the allowance for credit losses ~~is as follows:~~during the first nine months of 2022 and the first nine months of 2021:


		First Nine Months					First Nine Months
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Beginning balance - allowance for credit losses	Beginning balance - allowance for credit losses	$	18,070	$	10,232	Beginning balance - allowance for credit losses	$	14,336	$	18,070
Additions charged to costs and expenses		2,619		14,238
Additions charged to expenses and as reductions to net sales						Additions charged to expenses and as reductions to net sales	1,987		2,619
Deductions	Deductions	(7,079)		(2,970)		Deductions	(3,706)		(7,079)
Ending balance - allowance for credit losses	Ending balance - allowance for credit losses	$	13,610	$	21,500	Ending balance - allowance for credit losses	$	12,617	$	13,610

4. Segments

The Company evaluates segment reporting in accordance with ~~FASB~~Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (the “CODM”). The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM. Asset information is not provided to the CODM.

The Company believes 3three operating segments exist. Nonalcoholic Beverages represents the vast majority of the Company’s consolidated net sales and income from operations. The additional 2two operating segments do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and, therefore, have been combined into “All Other.”

The Company’s segment results are as follows:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Net sales:	Net sales:									Net sales:
Nonalcoholic Beverages	Nonalcoholic Beverages	$	1,426,971	$	1,295,271	$	4,061,976	$	3,633,376	Nonalcoholic Beverages	$	1,600,065	$	1,426,971	$	4,535,300	$	4,061,976
All Other	All Other	88,991		84,776		272,132		246,406		All Other	101,136		88,991		303,209		272,132
Eliminations(1)	Eliminations(1)	(58,530)		(51,563)		(173,733)		(151,062)		Eliminations(1)	(72,612)		(58,530)		(210,347)		(173,733)
Consolidated net sales	Consolidated net sales	$	1,457,432	$	1,328,484	$	4,160,375	$	3,728,720	Consolidated net sales	$	1,628,589	$	1,457,432	$	4,628,162	$	4,160,375

Income from operations:										Income from operations:
Nonalcoholic Beverages										Nonalcoholic Beverages	$	189,218	$	144,130	$	467,788	$	363,544
All Other										All Other	712		(7,099)		420		(11,468)
Consolidated income from operations										Consolidated income from operations	$	189,930	$	137,031	$	468,208	$	352,076

Depreciation and amortization:										Depreciation and amortization:
Nonalcoholic Beverages										Nonalcoholic Beverages	$	39,578	$	44,313	$	119,635	$	126,088
All Other										All Other	2,953		3,145		8,748		9,253
Consolidated depreciation and amortization										Consolidated depreciation and amortization	$	42,531	$	47,458	$	128,383	$	135,341

(1)The entire net sales elimination represents net sales from the All Other segment to the Nonalcoholic Beverages segment. Sales between these segments are recognized at either fair market value or cost depending on the nature of the transaction.

Third Quarter First Nine Months
(in thousands) 2021 2020 2021 2020
Income from operations:
Nonalcoholic Beverages $ 144,130 $ 108,035 $ 363,544 $ 227,559
All Other (7,099) (4,191) (11,468) (7,776)
Consolidated income from operations $ 137,031 $ 103,844 $ 352,076 $ 219,783
Depreciation and amortization:
Nonalcoholic Beverages $ 44,313 $ 45,066 $ 126,088 $ 125,733
All Other 3,145 3,027 9,253 8,756
Consolidated depreciation and amortization $ 47,458 $ 48,093 $ 135,341 $ 134,489

5. 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:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands, except per share data)	(in thousands, except per share data)	2021		2020		2021		2020		(in thousands, except per share data)	2022		2021		2022		2021
Numerator for basic and diluted net income per Common Stock and Class B Common Stock share:	Numerator for basic and diluted net income per Common Stock and Class B Common Stock share:									Numerator for basic and diluted net income per Common Stock and Class B Common Stock share:
Net income attributable to Coca‑Cola Consolidated, Inc.		$	68,930	$	51,884	$	170,473	$	106,115
Net income										Net income	$	118,761	$	68,930	$	311,713	$	170,473
Less dividends:	Less dividends:									Less dividends:
Common Stock	Common Stock	1,785		1,785		5,356		5,356		Common Stock	2,092		1,785		5,970		5,356
Class B Common Stock	Class B Common Stock	558		559		1,674		1,674		Class B Common Stock	251		558		1,060		1,674
Total undistributed earnings	Total undistributed earnings	$	66,587	$	49,540	$	163,443	$	99,085	Total undistributed earnings	$	116,418	$	66,587	$	304,683	$	163,443

Common Stock undistributed earnings – basic	Common Stock undistributed earnings – basic	$	50,731	$	37,743	$	124,522	$	75,490	Common Stock undistributed earnings – basic	$	103,937	$	50,731	$	261,064	$	124,522
Class B Common Stock undistributed earnings – basic	Class B Common Stock undistributed earnings – basic	15,856		11,797		38,921		23,595		Class B Common Stock undistributed earnings – basic	12,481		15,856		43,619		38,921
Total undistributed earnings – basic	Total undistributed earnings – basic	$	66,587	$	49,540	$	163,443	$	99,085	Total undistributed earnings – basic	$	116,418	$	66,587	$	304,683	$	163,443

Common Stock undistributed earnings – diluted	Common Stock undistributed earnings – diluted	$	50,536	$	37,515	$	123,993	$	75,034	Common Stock undistributed earnings – diluted	$	103,583	$	50,536	$	260,065	$	123,993
Class B Common Stock undistributed earnings – diluted	Class B Common Stock undistributed earnings – diluted	16,051		12,025		39,450		24,051		Class B Common Stock undistributed earnings – diluted	12,835		16,051		44,618		39,450
Total undistributed earnings – diluted	Total undistributed earnings – diluted	$	66,587	$	49,540	$	163,443	$	99,085	Total undistributed earnings – diluted	$	116,418	$	66,587	$	304,683	$	163,443

Numerator for basic net income per Common Stock share:	Numerator for basic net income per Common Stock share:									Numerator for basic net income per Common Stock share:
Dividends on Common Stock	Dividends on Common Stock	$	1,785	$	1,785	$	5,356	$	5,356	Dividends on Common Stock	$	2,092	$	1,785	$	5,970	$	5,356
Common Stock undistributed earnings – basic	Common Stock undistributed earnings – basic	50,731		37,743		124,522		75,490		Common Stock undistributed earnings – basic	103,937		50,731		261,064		124,522
Numerator for basic net income per Common Stock share	Numerator for basic net income per Common Stock share	$	52,516	$	39,528	$	129,878	$	80,846	Numerator for basic net income per Common Stock share	$	106,029	$	52,516	$	267,034	$	129,878

Numerator for basic net income per Class B Common Stock share:
Dividends on Class B Common Stock		$	558	$	559	$	1,674	$	1,674
Class B Common Stock undistributed earnings – basic		15,856		11,797		38,921		23,595
Numerator for basic net income per Class B Common Stock share		$	16,414	$	12,356	$	40,595	$	25,269

Numerator for diluted net income per Common Stock share:
Dividends on Common Stock		$	1,785	$	1,785	$	5,356	$	5,356
Dividends on Class B Common Stock assumed converted to Common Stock		558		559		1,674		1,674
Common Stock undistributed earnings – diluted		66,587		49,540		163,443		99,085
Numerator for diluted net income per Common Stock share		$	68,930	$	51,884	$	170,473	$	106,115

Numerator for diluted net income per Class B Common Stock share:
Dividends on Class B Common Stock		$	558	$	559	$	1,674	$	1,674
Class B Common Stock undistributed earnings – diluted		16,051		12,025		39,450		24,051
Numerator for diluted net income per Class B Common Stock share		$	16,609	$	12,584	$	41,124	$	25,725


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands, except per share data)	(in thousands, except per share data)	2021		2020		2021		2020		(in thousands, except per share data)	2022		2021		2022		2021
Numerator for basic net income per Class B Common Stock share:										Numerator for basic net income per Class B Common Stock share:
Dividends on Class B Common Stock										Dividends on Class B Common Stock	$	251	$	558	$	1,060	$	1,674
Class B Common Stock undistributed earnings – basic										Class B Common Stock undistributed earnings – basic	12,481		15,856		43,619		38,921
Numerator for basic net income per Class B Common Stock share										Numerator for basic net income per Class B Common Stock share	$	12,732	$	16,414	$	44,679	$	40,595

Numerator for diluted net income per Common Stock share:										Numerator for diluted net income per Common Stock share:
Dividends on Common Stock										Dividends on Common Stock	$	2,092	$	1,785	$	5,970	$	5,356
Dividends on Class B Common Stock assumed converted to Common Stock										Dividends on Class B Common Stock assumed converted to Common Stock	251		558		1,060		1,674
Common Stock undistributed earnings – diluted										Common Stock undistributed earnings – diluted	116,418		66,587		304,683		163,443
Numerator for diluted net income per Common Stock share										Numerator for diluted net income per Common Stock share	$	118,761	$	68,930	$	311,713	$	170,473

Numerator for diluted net income per Class B Common Stock share:										Numerator for diluted net income per Class B Common Stock share:
Dividends on Class B Common Stock										Dividends on Class B Common Stock	$	251	$	558	$	1,060	$	1,674
Class B Common Stock undistributed earnings – diluted										Class B Common Stock undistributed earnings – diluted	12,835		16,051		44,618		39,450
Numerator for diluted net income per Class B Common Stock share										Numerator for diluted net income per Class B Common Stock share	$	13,086	$	16,609	$	45,678	$	41,124

Denominator for basic net income per Common Stock and Class B Common Stock share:	Denominator for basic net income per Common Stock and Class B Common Stock share:									Denominator for basic net income per Common Stock and Class B Common Stock share:
Common Stock weighted average shares outstanding – basic	Common Stock weighted average shares outstanding – basic	7,141		7,141		7,141		7,141		Common Stock weighted average shares outstanding – basic	8,369		7,141		8,032		7,141
Class B Common Stock weighted average shares outstanding – basic	Class B Common Stock weighted average shares outstanding – basic	2,232		2,232		2,232		2,232		Class B Common Stock weighted average shares outstanding – basic	1,005		2,232		1,342		2,232

Denominator for diluted net income per Common Stock and Class B Common Stock share:	Denominator for diluted net income per Common Stock and Class B Common Stock share:									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)	Common Stock weighted average shares outstanding – diluted (assumes conversion of Class B Common Stock to Common Stock)	9,409		9,430		9,413		9,430		Common Stock weighted average shares outstanding – diluted (assumes conversion of Class B Common Stock to Common Stock)	9,406		9,409		9,410		9,413
Class B Common Stock weighted average shares outstanding – diluted	Class B Common Stock weighted average shares outstanding – diluted	2,268		2,289		2,272		2,289		Class B Common Stock weighted average shares outstanding – diluted	1,037		2,268		1,378		2,272

Basic net income per share:	Basic net income per share:									Basic net income per share:
Common Stock	Common Stock	$	7.36	$	5.53	$	18.19	$	11.32	Common Stock	$	12.67	$	7.36	$	33.25	$	18.19
Class B Common Stock	Class B Common Stock	$	7.36	$	5.53	$	18.19	$	11.32	Class B Common Stock	$	12.67	$	7.36	$	33.29	$	18.19

Diluted net income per share:	Diluted net income per share:									Diluted net income per share:
Common Stock	Common Stock	$	7.32	$	5.51	$	18.11	$	11.25	Common Stock	$	12.63	$	7.32	$	33.13	$	18.11
Class B Common Stock	Class B Common Stock	$	7.31	$	5.51	$	18.10	$	11.24	Class B Common Stock	$	12.62	$	7.31	$	33.15	$	18.10

NOTES TO TABLE

(1)For purposes of the diluted net income per share computation for Common Stock, all shares of Class B Common Stock are assumed to be converted; therefore, 100% of undistributed earnings is allocated to Common Stock.

(2)For purposes of the diluted net income per share computation for Class B Common Stock, weighted average shares of Class B Common Stock are assumed to be outstanding for the entire period and not converted.

(3)For periods presented during which the Company has net income, the denominator for diluted net income per share for Common Stock and Class B Common Stock includes the dilutive effect of shares relative to the Long-Term Performance Equity Plan. For periods presented during which the Company has net loss, the unvested shares granted pursuant to the Long-Term Performance Equity Plan are excluded from the computation of diluted net loss per share, as the effect would have been anti-dilutive. See Note 2 for additional information on the Long-Term Performance Equity Plan.

(4)The Long-Term Performance Equity Plan awards may be settled in cash and/or shares of the Company’s Class B Common Stock. Once an election has been made to settle an award in cash, the dilutive effect of shares relative to such award is prospectively removed from the denominator in the computation of diluted net income per share.

(5)The Company did not have anti-dilutive shares for any periods presented.

(6)1,227,546 shares of the Company’s Class B Common Stock were converted on a one share for one share basis into shares of the Company’s Common Stock, effective as of March 17, 2022. See Note 2 for additional information on the Stockholder Conversion Agreement.

6. Inventories

Inventories consisted of the following:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Finished products	Finished products	$	142,715	$	140,080	Finished products	$	204,046	$	181,751
Manufacturing materials	Manufacturing materials	55,296		47,081		Manufacturing materials	63,052		81,183
Plastic shells, plastic pallets and other inventories	Plastic shells, plastic pallets and other inventories	42,484		38,596		Plastic shells, plastic pallets and other inventories	46,601		39,917
Total inventories	Total inventories	$	240,495	$	225,757	Total inventories	$	313,699	$	302,851

7. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Repair parts	Repair parts	$	27,537	$	26,811	Repair parts	$	35,162	$	26,643
Commodity hedges at fair market value		8,807		2,417
Prepaid software	Prepaid software	6,185		6,650		Prepaid software	6,579		7,038
Prepaid marketing	Prepaid marketing	5,723		4,773		Prepaid marketing	5,516		4,380
Prepaid taxes	Prepaid taxes	4,411		8,428		Prepaid taxes	5,455		4,079
Commodity hedges at fair market value						Commodity hedges at fair market value	5,005		7,714
Other prepaid expenses and other current assets	Other prepaid expenses and other current assets	31,489		25,067		Other prepaid expenses and other current assets	34,242		28,214
Total prepaid expenses and other current assets	Total prepaid expenses and other current assets	$	84,152	$	74,146	Total prepaid expenses and other current assets	$	91,959	$	78,068

8. Assets Held for Sale

As of ~~October 1, 2021,~~September 30, 2022, certain properties owned by the Company met the accounting guidance criteria to be classified as assets held for sale. The properties primarily relate to warehousing and distribution operations that have been consolidated into new facilities. All properties classified as held for sale are included in the Nonalcoholic Beverages segment. There are not any liabilities held for sale associated with these properties and none meet the accounting guidance criteria to be classified as discontinued operations.

Following is a summary of the assets held for sale:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Land	Land	$	2,918	$	2,559	Land	$	1,691	$	2,906
Buildings and leasehold and land improvements	Buildings and leasehold and land improvements	4,014		3,870		Buildings and leasehold and land improvements	1,354		3,974
Total assets held for sale	Total assets held for sale	$	6,932	$	6,429	Total assets held for sale	$	3,045	$	6,880

9. Property, Plant and Equipment, Net

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


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		Estimated Useful Lives	(in thousands)	September 30, 2022		December 31, 2021		Estimated Useful Lives
Land	Land	$	80,261	$	81,981		Land	$	87,037	$	80,261
Buildings	Buildings	261,976		240,173		8-50 years	Buildings	341,700		265,070		8-50 years
Machinery and equipment	Machinery and equipment	436,049		392,998		5-20 years	Machinery and equipment	454,506		443,592		5-20 years
Transportation equipment	Transportation equipment	454,999		445,218		3-20 years	Transportation equipment	487,680		466,238		3-20 years
Furniture and fixtures	Furniture and fixtures	93,640		96,606		3-10 years	Furniture and fixtures	97,700		95,062		3-10 years
Cold drink dispensing equipment	Cold drink dispensing equipment	440,221		465,881		3-17 years	Cold drink dispensing equipment	435,152		436,954		3-17 years
Leasehold and land improvements	Leasehold and land improvements	171,871		155,077		5-20 years	Leasehold and land improvements	170,346		178,809		5-20 years
Software for internal use	Software for internal use	48,043		46,569		3-10 years	Software for internal use	48,213		47,982		3-10 years
Construction in progress	Construction in progress	12,661		54,505			Construction in progress	45,926		23,496
Total property, plant and equipment, at cost	Total property, plant and equipment, at cost	1,999,721		1,979,008			Total property, plant and equipment, at cost	2,168,260		2,037,464
Less: Accumulated depreciation and amortization	Less: Accumulated depreciation and amortization	990,396		956,286			Less: Accumulated depreciation and amortization	1,085,320		1,006,776
Property, plant and equipment, net	Property, plant and equipment, net	$	1,009,325	$	1,022,722		Property, plant and equipment, net	$	1,082,940	$	1,030,688

10. Leases

Following is a summary of the weighted average remaining lease term and the weighted average discount rate for the Company’s leases:

October 1, 2021

December 31, 2020

September 30, 2022

December 31, 2021

Weighted average remaining lease term:

Operating leases

8.6 years

9.4 years

Operating leases

7.5 years

8.3 years

Financing leases

12.7 years

13.4 years

Financing leases

4.6 years

12.5 years

Weighted average discount rate:

Operating leases

3.7

4.0

Operating leases

3.6

Financing leases

3.1

3.2

Financing leases

5.2

3.1

On March 17, 2022, the Company terminated its financing lease for the Snyder Production Center, which was scheduled to expire on December 31, 2035. See Note 2 for additional information on the lease termination.

Following is a summary of the Company’s leases within the condensed consolidated statements of operations:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Operating lease costs	Operating lease costs	$	6,828	$	6,243	$	19,647	$	18,392	Operating lease costs	$	7,750	$	6,828	$	22,389	$	19,647
Short-term and variable leases	Short-term and variable leases	4,561		3,982		12,932		10,980		Short-term and variable leases	3,731		4,561		11,006		12,932
Depreciation expense from financing leases	Depreciation expense from financing leases	1,414		1,415		4,242		3,264		Depreciation expense from financing leases	411		1,414		1,903		4,242
Interest expense on financing lease obligations	Interest expense on financing lease obligations	575		613		1,738		1,120		Interest expense on financing lease obligations	139		575		753		1,738
Total lease cost	Total lease cost	$	13,378	$	12,253	$	38,559	$	33,756	Total lease cost	$	12,031	$	13,378	$	36,051	$	38,559

The future minimum lease payments related to the Company’s leases include renewal options the Company has determined to be reasonably certain and exclude payments to landlords for real estate taxes and common area maintenance. Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of ~~October 1, 2021:~~September 30, 2022:


(in thousands)	(in thousands)	Operating Leases		Financing Leases		(in thousands)	Operating Leases		Financing Leases
Remainder of 2021		$	6,212	$	1,774
2022		24,389		7,145
Remainder of 2022						Remainder of 2022	$	7,160	$	678
2023	2023	23,273		7,201		2023	30,211		2,750
2024	2024	19,211		7,396		2024	25,409		2,808
2025	2025	16,680		7,593		2025	19,582		2,869
2026						2026	18,332		1,233
Thereafter	Thereafter	81,220		55,828		Thereafter	68,457		1,304
Total minimum lease payments including interest	Total minimum lease payments including interest	$	170,985	$	86,937	Total minimum lease payments including interest	$	169,151	$	11,642
Less: Amounts representing interest	Less: Amounts representing interest	26,708		14,660		Less: Amounts representing interest	23,069		1,273
Present value of minimum lease principal payments	Present value of minimum lease principal payments	144,277		72,277		Present value of minimum lease principal payments	146,082		10,369
Less: Current portion of lease liabilities	Less: Current portion of lease liabilities	20,650		6,009		Less: Current portion of lease liabilities	26,465		2,259
Noncurrent portion of lease liabilities	Noncurrent portion of lease liabilities	$	123,627	$	66,268	Noncurrent portion of lease liabilities	$	119,617	$	8,110

Following is a summary of future minimum lease payments for all noncancelable operating leases and financing leases as of December 31, ~~2020:~~2021:


(in thousands)	(in thousands)	Operating Leases		Financing Leases		(in thousands)	Operating Leases		Financing Leases
2021		$	24,056	$	7,079
2022	2022	20,970		7,145		2022	$	26,026	$	7,145
2023	2023	18,125		7,201		2023	24,893		7,201
2024	2024	15,330		7,396		2024	20,639		7,396
2025	2025	13,747		7,593		2025	16,740		7,593
2026						2026	15,575		6,100
Thereafter	Thereafter	77,353		55,827		Thereafter	65,695		49,728
Total minimum lease payments including interest	Total minimum lease payments including interest	$	169,581	$	92,241	Total minimum lease payments including interest	$	169,568	$	85,163
Less: Amounts representing interest	Less: Amounts representing interest	29,892		16,397		Less: Amounts representing interest	25,474		14,097
Present value of minimum lease principal payments	Present value of minimum lease principal payments	139,689		75,844		Present value of minimum lease principal payments	144,094		71,066
Less: Current portion of lease liabilities	Less: Current portion of lease liabilities	19,766		5,860		Less: Current portion of lease liabilities	22,048		6,060
Noncurrent portion of lease liabilities	Noncurrent portion of lease liabilities	$	119,923	$	69,984	Noncurrent portion of lease liabilities	$	122,046	$	65,006

Following is a summary of the Company’s leases within the condensed consolidated statements of cash flows:


		First Nine Months					First Nine Months
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Cash flows from operating activities impact:	Cash flows from operating activities impact:					Cash flows from operating activities impact:
Operating leases	Operating leases	$	21,112	$	14,134	Operating leases	$	21,502	$	21,112
Interest payments on financing lease obligations	Interest payments on financing lease obligations	1,738		1,120		Interest payments on financing lease obligations	753		1,738
Total cash flows from operating activities impact	Total cash flows from operating activities impact	$	22,850	$	15,254	Total cash flows from operating activities impact	$	22,255	$	22,850

Cash flows from financing activities impact:	Cash flows from financing activities impact:					Cash flows from financing activities impact:
Principal payments on financing lease obligations	Principal payments on financing lease obligations	$	3,567	$	4,428	Principal payments on financing lease obligations	$	2,441	$	3,567
Total cash flows from financing activities impact	Total cash flows from financing activities impact	$	3,567	$	4,428	Total cash flows from financing activities impact	$	2,441	$	3,567

~~As of October 1, 2021,~~Subsequent to quarter-end, the Company ~~had 1~~entered into three operating lease ~~commitment that had not yet commenced. This~~commitments with lease ~~commitment has a~~terms of three years. These lease ~~term of approximately three years and is~~commitments are expected to commence during the fourth quarter of ~~2021.~~2022. The additional lease liability associated with ~~this~~these lease ~~commitment~~commitments is expected to be ~~$2.0~~approximately $3.8 million.

11. Distribution Agreements, Net

Distribution agreements, net, which are amortized on a straight-line basis and have an estimated useful life of 1020 to 40 years, consisted of the following:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Distribution agreements at cost	Distribution agreements at cost	$	952,547	$	952,533	Distribution agreements at cost	$	990,191	$	960,042
Less: Accumulated amortization	Less: Accumulated amortization	117,144		98,780		Less: Accumulated amortization	141,934		123,265
Distribution agreements, net	Distribution agreements, net	$	835,403	$	853,753	Distribution agreements, net	$	848,257	$	836,777

Following is a summary of activity for distribution agreements, net during the first nine months of 2022 and the first nine months of 2021:


	First Nine Months
(in thousands)	2022		2021
Beginning balance - distribution agreements, net	$	836,777	$	853,753
BODYARMOR distribution rights	30,149		14
Additional accumulated amortization	(18,669)		(18,364)
Ending balance - distribution agreements, net	$	848,257	$	835,403

12. Customer Lists, Net

Customer lists, net, which are amortized on a straight-line basis and have an estimated useful life of five to 12 years, consisted of the following:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Customer lists at cost	Customer lists at cost	$	25,288	$	25,288	Customer lists at cost	$	25,288	$	25,288
Less: Accumulated amortization	Less: Accumulated amortization	13,863		12,484		Less: Accumulated amortization	15,673		14,322
Customer lists, net	Customer lists, net	$	11,425	$	12,804	Customer lists, net	$	9,615	$	10,966

13. Other Accrued Liabilities

Other accrued liabilities consisted of the following:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Accrued insurance costs	Accrued insurance costs	$	51,401	$	48,318	Accrued insurance costs	$	53,074	$	51,645
Current portion of acquisition related contingent consideration		47,212		36,020
Accrued marketing costs	Accrued marketing costs	34,559		38,539		Accrued marketing costs	36,838		32,249
Employee and retiree benefit plan accruals	Employee and retiree benefit plan accruals	33,707		31,653		Employee and retiree benefit plan accruals	33,306		32,007
Current portion of acquisition related contingent consideration						Current portion of acquisition related contingent consideration	33,186		51,518
Accrued taxes (other than income taxes)	Accrued taxes (other than income taxes)	7,662		6,178		Accrued taxes (other than income taxes)	6,684		6,638

Current deferred proceeds from related parties	Current deferred proceeds from related parties	3,064		3,085		Current deferred proceeds from related parties	3,064		3,064
Current portion of deferred payroll taxes under CARES Act	Current portion of deferred payroll taxes under CARES Act	—		18,706		Current portion of deferred payroll taxes under CARES Act	—		18,739
All other accrued expenses	All other accrued expenses	36,496		22,642		All other accrued expenses	41,098		30,909
Total other accrued liabilities	Total other accrued liabilities	$	214,101	$	205,141	Total other accrued liabilities	$	207,250	$	226,769

The Company ~~has taken~~took advantage of certain provisions of the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”), which ~~allow~~allowed an employer to defer the deposit and payment of the employer’s portion of social security taxes that would otherwise have been due on or after March 27, 2020 and before January 1, 2021. The law permits an employer to deposit half of these deferred payments by December 31, 2021 and the other half by December 31, 2022. ~~During the third quarter of 2021, the~~The Company repaid ~~the~~a portion of the deferred payroll taxes ~~classified as current as of December 31, 2020. The Company intends to~~

~~repay~~during 2021 and repaid the remaining portion of the deferred payroll taxes during the ~~fourth~~third quarter of ~~2022, and, thus, classified the balance as noncurrent as of October 1, 2021.~~2022.

14. Commodity Derivative ~~Financial~~ Instruments

The Company is subject to the risk of increased costs arising from adverse changes in certain commodity prices. In the normal course of business, the Company manages ~~these risks~~this risk through a variety of strategies, including the use of commodity derivative instruments. The Company does not use commodity derivative instruments for trading or speculative purposes. These commodity derivative instruments are not designated as hedging instruments under GAAP and are used as “economic hedges” to manage certain commodity price risk. The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. While the Company would be exposed to credit loss in the event of nonperformance by these counterparties, the Company does not anticipate nonperformance by these counterparties.

Commodity derivative instruments held by the Company are marked to market on a monthly basis and are recognized in earnings consistent with the expense classification of the underlying hedged item. The Company generally pays a fee for these commodity derivative instruments, which is amortized over the corresponding period of each commodity derivative instrument. Settlements of commodity derivative instruments are included in cash flows from operating activities in the condensed consolidated statements of cash flows. The following table summarizes pre-tax changes in the fair values of the Company’s commodity derivative instruments and the classification of such changes in the condensed consolidated statements of operations:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Cost of sales	Cost of sales	$	3,794	$	1,194	$	6,210	$	924	Cost of sales	$	1,100	$	3,794	$	(5,069)	$	6,210
Selling, delivery and administrative expenses	Selling, delivery and administrative expenses	426		575		1,491		(949)		Selling, delivery and administrative expenses	(4,711)		426		2,512		1,491
Total gain (loss)	Total gain (loss)	$	4,220	$	1,769	$	7,701	$	(25)	Total gain (loss)	$	(3,611)	$	4,220	$	(2,557)	$	7,701

All commodity derivative instruments are recorded at fair value as either assets or liabilities in the condensed consolidated balance sheets. The Company has master agreements with the counterparties to its commodity derivative instruments that provide for net settlement of derivative transactions. Accordingly, the net amounts of derivative assets are recognized in either prepaid

expenses and other current assets or other assets in the condensed consolidated balance sheets and the net amounts of derivative liabilities are recognized in either other accrued liabilities or other liabilities in the condensed consolidated balance sheets. The following table summarizes the fair values of the Company’s commodity derivative instruments and the classification of such instruments in the condensed consolidated balance sheets:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Assets:						Assets:
Prepaid expenses and other current assets	Prepaid expenses and other current assets	$	8,807	$	2,417	Prepaid expenses and other current assets	$	5,005	$	7,714
Other assets	Other assets	1,367		56		Other assets	777		—
Total assets	Total assets	$	10,174	$	2,473	Total assets	$	5,782	$	7,714

Liabilities:						Liabilities:
Other accrued liabilities						Other accrued liabilities	$	625	$	—
Total liabilities						Total liabilities	$	625	$	—

The following table summarizes the Company’s gross commodity derivative instrument assets and gross commodity derivative instrument liabilities in the condensed consolidated balance sheets:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Gross commodity derivative instrument assets	Gross commodity derivative instrument assets	$	10,643	$	2,473	Gross commodity derivative instrument assets	$	6,631	$	9,200
Gross commodity derivative instrument liabilities	Gross commodity derivative instrument liabilities	469		—		Gross commodity derivative instrument liabilities	1,474		1,486

The following table summarizes the Company’s outstanding commodity derivative instruments:

(in thousands)

October 1, 2021

December 31, 2020

(in thousands)

September 30, 2022

December 31, 2021

Notional amount of outstanding commodity derivative instruments

65,541

23,030

Notional amount of outstanding commodity derivative instruments

66,545

74,558

Latest maturity date of outstanding commodity derivative instruments

December 2022

December 2021

Latest maturity date of outstanding commodity derivative instruments

December 2023

December 2022

15. Fair Values of Financial Instruments

GAAP requires assets and liabilities carried at fair value to 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 below methods and assumptions were used by the Company in estimating the fair values of its financial instruments. There were no transfers of assets or liabilities between levels in any period presented.

Financial Instrument

Fair Value
Level

Methods and Assumptions

Deferred compensation plan assets and liabilities

Level 1

The fair value of the Company’s nonqualified deferred compensation plan for certain executives and other highly compensated employees is based on the fair values of associated assets and liabilities, which are held in mutual funds and are based on the quoted market values of the securities held within the mutual funds.

Commodity derivative instruments

Level 2

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

Long-term debt

Level 2

The carrying amounts of the Company’s variable rate debt approximate the fair values due to variable interest rates with short reset periods. The fair values of the Company’s fixed rate debt are based on estimated current market prices.

Acquisition related contingent consideration

Level 3

The fair value of the Company’s acquisition related contingent consideration is based on internal forecasts and the weighted average cost of capital (“WACC”) derived from market data.

The following tables summarize the carrying amounts and the fair values by level of the Company’s deferred compensation plan assets and liabilities, commodity derivative instruments, ~~long-term~~long‑term debt and acquisition related contingent consideration:


		October 1, 2021											September 30, 2022
(in thousands)	(in thousands)	Carrying Amount		Total Fair Value		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3		(in thousands)	Carrying Amount		Total Fair Value		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Assets:	Assets:											Assets:
Deferred compensation plan assets	Deferred compensation plan assets	$	57,005	$	57,005	$	57,005	$	—	$	—	Deferred compensation plan assets	$	47,453	$	47,453	$	47,453	$	—	$	—
Commodity derivative instruments	Commodity derivative instruments	10,174		10,174		—		10,174		—		Commodity derivative instruments	5,782		5,782		—		5,782		—
Liabilities:	Liabilities:											Liabilities:
Deferred compensation plan liabilities	Deferred compensation plan liabilities	57,005		57,005		57,005		—		—		Deferred compensation plan liabilities	47,453		47,453		47,453		—		—

Commodity derivative instruments												Commodity derivative instruments	625		625		—		625		—
Long-term debt	Long-term debt	793,177		857,200		—		857,200		—		Long-term debt	598,778		568,500		—		568,500		—
Acquisition related contingent consideration	Acquisition related contingent consideration	496,659		496,659		—		—		496,659		Acquisition related contingent consideration	536,916		536,916		—		—		536,916


		December 31, 2020											December 31, 2021
(in thousands)	(in thousands)	Carrying Amount		Total Fair Value		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3		(in thousands)	Carrying Amount		Total Fair Value		Fair Value Level 1		Fair Value Level 2		Fair Value Level 3
Assets:	Assets:											Assets:
Deferred compensation plan assets	Deferred compensation plan assets	$	51,742	$	51,742	$	51,742	$	—	$	—	Deferred compensation plan assets	$	60,461	$	60,461	$	60,461	$	—	$	—
Commodity derivative instruments	Commodity derivative instruments	2,473		2,473		—		2,473		—		Commodity derivative instruments	7,714		7,714		—		7,714		—
Liabilities:	Liabilities:											Liabilities:
Deferred compensation plan liabilities	Deferred compensation plan liabilities	51,742		51,742		51,742		—		—		Deferred compensation plan liabilities	60,461		60,461		60,461		—		—
Long-term debt	Long-term debt	940,465		1,015,700		—		1,015,700		—		Long-term debt	723,443		772,600		—		772,600		—
Acquisition related contingent consideration	Acquisition related contingent consideration	434,694		434,694		—		—		434,694		Acquisition related contingent consideration	542,105		542,105		—		—		542,105

The acquisition related contingent consideration was valued using a probability weighted discounted cash flow model based on internal forecasts and the WACC derived from market data, which are considered Level 3 inputs. Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories subject to ~~sub-~~

~~bottling fees~~acquisition related sub-bottling payments to fair value by discounting future expected acquisition related sub-bottling payments required under the CBA using the Company’s estimated WACC.

The future expected acquisition related sub-bottling payments extend through the life of the applicable distribution assets acquired from CCR, which is generally 40 years. As a result, the fair value of the acquisition related contingent consideration liability is impacted by the Company’s WACC, management’s estimate of the ~~amounts~~acquisition related sub-bottling payments that will be ~~paid~~made in the future under the CBA, and current acquisition related sub-bottling payments (all Level 3 inputs). Changes in any of these Level 3 inputs, particularly the underlying risk-free interest rate used to estimate the Company’s WACC, could result in material changes to the fair value of the acquisition related contingent consideration liability and could materially impact the amount of non-cash expense (or income) recorded each reporting period.

The acquisition related contingent consideration liability is the Company’s only Level 3 asset or liability. A summary of the Level 3 activity is as follows:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Beginning balance - Level 3 liability	Beginning balance - Level 3 liability	$	473,055	$	441,113	$	434,694	$	446,684	Beginning balance - Level 3 liability	$	522,259	$	473,055	$	542,105	$	434,694
Payments of acquisition related contingent consideration	Payments of acquisition related contingent consideration	(8,720)		(11,468)		(28,640)		(31,999)		Payments of acquisition related contingent consideration	(9,711)		(8,720)		(28,421)		(28,640)
Reclassification to current payables	Reclassification to current payables	(1,600)		(800)		(300)		(1,100)		Reclassification to current payables	1,800		(1,600)		2,100		(300)
Increase in fair value	Increase in fair value	33,924		19,808		90,905		35,068		Increase in fair value	22,568		33,924		21,132		90,905
Ending balance - Level 3 liability	Ending balance - Level 3 liability	$	496,659	$	448,653	$	496,659	$	448,653	Ending balance - Level 3 liability	$	536,916	$	496,659	$	536,916	$	496,659

As of September 30, 2022 and October 1, 2021, ~~and September 27, 2020,~~ discount rates of ~~7.6%~~9.3% and ~~7.4%~~7.6%, respectively, were utilized in the valuation of the Company’s acquisition related contingent consideration liability. The increase in the fair value of the acquisition related contingent consideration liability in the first nine months of ~~2021~~2022 was ~~primarily~~ driven by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling ~~fees.~~payments, partially offset by an increase in the discount rate used to calculate fair value. This fair value adjustment was recorded in other expense, net in the condensed consolidated statement of operations for the first nine months of ~~2021.~~2022.

The Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to acquisition related sub-bottling ~~fees~~payments will be in the range of ~~$32~~$35 million to ~~$59~~$75 million.

16. Income Taxes

The Company’s effective income tax rate was 25.7% for the first nine months of 2022 and 26.8% for the first nine months of ~~2021 and 25.6%~~2021. The Company’s income tax expense was $107.9 million for the first nine months of ~~2020. The Company’s income tax expense was~~2022 and $62.3 million for the first nine months of ~~2021 and $38.9 million for the first nine months of 2020.~~2021. The increase in income tax expense was primarily attributable to ~~improved financial results~~higher income before taxes during the first nine months of ~~2021~~2022 compared to the first nine months of ~~2020.~~2021.

The Company had uncertain tax positions, including accrued interest, of ~~$2.8~~$1.8 million on ~~October 1, 2021~~September 30, 2022 and ~~$2.6~~$1.7 million on December 31, ~~2020,~~2021, all of which would affect the Company’s effective income tax rate if recognized. While it is expected the amount of uncertain tax positions may change in the next 12 months, the Company does not expect such change would have a ~~significant~~material impact on the condensed consolidated financial statements.

Prior tax years beginning in year ~~2007~~2018 remain open to examination by the Internal Revenue Service, and various tax years beginning in year ~~1998~~1999 remain open to examination by certain state ~~taxing authorities.~~tax jurisdictions due to loss carryforwards.

17. Pension and Postretirement Benefit Obligations

Pension Plans

There are 2two Company-sponsored pension plans. The primary Company-sponsored pension plan (the “Primary Plan”) was frozen as of June 30, 2006 and no benefits accrued to participants after that date. The second Company-sponsored pension plan (the “Bargaining Plan”) is for certain employees under collective bargaining agreements. Benefits under the Bargaining Plan are determined in accordance with negotiated formulas for the respective participants. Contributions to the plans are based on actuarially determined amounts and are limited to the amounts currently deductible for income tax purposes.

The components of net periodic pension cost were as follows:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Service cost	Service cost	$	1,863	$	1,659	$	5,589	$	4,976	Service cost	$	1,860	$	1,863	$	5,581	$	5,589
Interest cost	Interest cost	2,452		2,760		7,360		8,280		Interest cost	2,659		2,452		7,977		7,360
Expected return on plan assets	Expected return on plan assets	(3,250)		(3,382)		(9,748)		(10,148)		Expected return on plan assets	(2,036)		(3,250)		(6,107)		(9,748)
Recognized net actuarial loss	Recognized net actuarial loss	1,219		1,189		3,654		3,568		Recognized net actuarial loss	989		1,219		2,966		3,654
Amortization of prior service cost	Amortization of prior service cost	1		5		2		14		Amortization of prior service cost	—		1		—		2
Net periodic pension cost	Net periodic pension cost	$	2,285	$	2,231	$	6,857	$	6,690	Net periodic pension cost	$	3,472	$	2,285	$	10,417	$	6,857

The Company contributed ~~$6.8~~$26.0 million to the 2two Company-sponsored pension plans during the first nine months of ~~2021~~2022 and does not anticipate making additional contributions during the fourth quarter of ~~2021.~~2022.

During the first nine months of 2022, the Company began the process of terminating the Primary Plan. During 2023, the Company expects to offer a lump sum benefit payout option to certain plan participants prior to completing the purchase of group annuity contracts that will transfer the pension benefit obligation to an insurance company.

Postretirement Benefits

The Company provides postretirement benefits for employees meeting specified criteria. The Company recognizes the cost of postretirement benefits, which consist principally of medical benefits, during employees’ periods of active service. The Company does not prefund 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:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Service cost	Service cost	$	403	$	376	$	1,209	$	1,128	Service cost	$	383	$	403	$	1,150	$	1,209
Interest cost	Interest cost	447		504		1,342		1,511		Interest cost	474		447		1,423		1,342
Recognized net actuarial loss	Recognized net actuarial loss	186		88		557		263		Recognized net actuarial loss	92		186		275		557
Net periodic postretirement benefit cost	Net periodic postretirement benefit cost	$	1,036	$	968	$	3,108	$	2,902	Net periodic postretirement benefit cost	$	949	$	1,036	$	2,848	$	3,108

18. Other Liabilities

Other liabilities consisted of the following:


(in thousands)	(in thousands)	October 1, 2021		December 31, 2020		(in thousands)	September 30, 2022		December 31, 2021
Noncurrent portion of acquisition related contingent consideration	Noncurrent portion of acquisition related contingent consideration	$	449,447	$	398,674	Noncurrent portion of acquisition related contingent consideration	$	503,730	$	490,587
Accruals for executive benefit plans	Accruals for executive benefit plans	142,853		144,101		Accruals for executive benefit plans	130,090		147,135
Noncurrent deferred proceeds from related parties	Noncurrent deferred proceeds from related parties	107,070		109,361		Noncurrent deferred proceeds from related parties	104,006		106,304
Noncurrent portion of deferred payroll taxes under CARES Act		18,739		18,706
Other	Other	8,183		8,438		Other	12,988		14,584
Total other liabilities	Total other liabilities	$	726,292	$	679,280	Total other liabilities	$	750,814	$	758,610

19. Long-Term Debt

Following is a summary of the Company’s long-term debt:

(in thousands)

Maturity
Date

Interest
Rate

Interest
Paid

Public/
Nonpublic

October 1,
2021

December 31,
2020

(in thousands)

Maturity
Date

Interest
Rate

Interest
Paid

Public/
Nonpublic

September 30,
2022

December 31,
2021

2016 Term Loan Facility(1)

6/7/2021

Variable

Varies

Nonpublic

—

217,500

Senior notes

2/27/2023

3.28%

Semi-annually

Nonpublic

125,000

Senior notes

2/27/2023

3.28%

Semi-annually

Nonpublic

—

125,000

2018 Revolving Credit Facility

6/8/2023

Variable

Varies

Nonpublic

—

2021 Term Loan Facility

7/9/2024

Variable

Varies

Nonpublic

70,000

—

Senior bonds(2)

11/25/2025

3.80%

Semi-annually

Public

350,000

Senior bonds(1)

11/25/2025

3.80%

Semi-annually

Public

350,000

2021 Revolving Credit Facility

7/9/2026

Variable

Varies

Nonpublic

—

2021 Revolving Credit Facility

7/9/2026

Variable

Varies

Nonpublic

—

Senior notes

10/10/2026

3.93%

Quarterly

Nonpublic

100,000

Senior notes

10/10/2026

3.93%

Quarterly

Nonpublic

100,000

Senior notes

3/21/2030

3.96%

Quarterly

Nonpublic

150,000

Senior notes

3/21/2030

3.96%

Quarterly

Nonpublic

150,000

Unamortized discount on senior bonds(2)

11/25/2025

(36)

(43)

Unamortized discount on senior bonds(1)

11/25/2025

(28)

(34)

Debt issuance costs

(1,787)

(1,992)

Debt issuance costs

(1,194)

(1,523)

Total long-term debt

793,177

940,465

Total long-term debt

598,778

723,443

(1)As of December 31, 2020, the 2016 Term Loan Facility (as defined below) balance was classified as long term as the Company intended to refinance outstanding principal payments due in the next 12 months using the 2018 Revolving Credit Facility (as defined below), which was classified as long-term debt, and the Company was not restricted by any subjective acceleration clause within the agreement for the 2018 Revolving Credit Facility.

~~(2)~~The senior bonds due in 2025 were issued at 99.975% of par.

The Company mitigates its financing risk by using multiple financial institutions and only entering into credit arrangements with institutions with investment grade credit ratings. The Company monitors counterparty credit ratings on an ongoing basis.

On ~~June 7, 2021,~~September 13, 2022, the Company used ~~a combination of~~ cash on hand ~~and borrowings under its previous revolving credit facility (the “2018 Revolving Credit Facility”)~~ to repay the ~~remaining balance~~$125 million of ~~its previous term loan facility (the “2016 Term Loan Facility”) that matured on that date.~~

~~On July 9, 2021, the Company entered into~~senior notes with a credit agreement, providing for a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $500 million (the “2021 Revolving Credit Facility”), maturing on July 9, 2026. Borrowings under the 2021 Revolving Credit Facility bear interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”). In addition, the Company must pay a facility fee on the lenders’ aggregate commitments under the 2021 Revolving Credit Facility ranging from 0.060% to 0.175% per annum, depending on the Company’s Debt Rating. The Company currently believes all banks participating in the 2021 Revolving Credit Facility have the ability to and will meet any funding requests from the Company. The 2021 Revolving Credit Facility replaced the 2018 Revolving Credit Facility, which had astated maturity date of ~~June 8,~~February 27, 2023.

~~Also on July 9, 2021,~~ There was no penalty for the Company entered into a term loan agreement, providing for a three-year senior unsecured term loan facility in the aggregate principal amount of $70 million (the “2021 Term Loan Facility”), maturing on July 9, 2024. Borrowings under the 2021 Term Loan Facility bear interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the Company’s Debt Rating. The entire amountearly repayment of the 2021 Term Loan Facility was fully drawn on July 9, 2021. The Company used approximately $55 million of the proceeds of the 2021 Term Loan Facility to repay outstanding indebtedness under the 2018 Revolving Credit Facility and used the remaining proceeds for general corporate purposes. Subsequent to the end of the third quarter of 2021, the Company notified the lender of its intent to repay the $70 million of borrowings outstanding under the 2021 Term Loan Facility during the fourth quarter of 2021.senior notes.

The indenture under which the Company’s senior bonds were issued does not include financial covenants but does limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts. The agreements under which the Company’s nonpublic debt was issued include 2two financial covenants: a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreement. The Company was in compliance with these covenants as of ~~October 1, 2021.~~September 30, 2022. These covenants dohave not ~~currently,~~restricted, and are not expected to restrict, the ~~Company does not anticipate they will, restrict its~~Company’s liquidity or capital resources.

All outstanding ~~long-term~~long‑term debt has been issued by the Company and none has been issued by any of its subsidiaries. There are no guarantees of the Company’s long‑term debt.

20. Commitments and Contingencies

Manufacturing Cooperatives

The Company is obligated to purchase at least 80% of its requirements of plastic bottles for certain designated territories from Southeastern. The Company is also obligated to purchase 17.5 million cases of finished product from SAC on an annual basis through June 2024. The Company purchased ~~21.0~~20.1 million cases and ~~21.9~~21.0 million cases of finished product from SAC in the first nine months of ~~2021~~2022 and the first nine months of ~~2020,~~2021, respectively.

The following table summarizes the Company’s purchases from these manufacturing cooperatives:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Purchases from Southeastern	Purchases from Southeastern	$	31,417	$	31,196	$	92,990	$	94,835	Purchases from Southeastern	$	40,358	$	31,417	$	113,626	$	92,990
Purchases from SAC	Purchases from SAC	41,867		37,006		125,677		119,225		Purchases from SAC	48,585		41,867		144,513		125,677
Total purchases from manufacturing cooperatives	Total purchases from manufacturing cooperatives	$	73,284	$	68,202	$	218,667	$	214,060	Total purchases from manufacturing cooperatives	$	88,943	$	73,284	$	258,139	$	218,667

The Company guarantees a portion of SAC’s debt, which expires ~~at various dates through~~in 2024. The amount guaranteed was ~~$14.7~~$9.5 million on both ~~October 1, 2021~~September 30, 2022 and December 31, ~~2020.~~2021. In the event SAC fails to fulfill its commitments under the related debt, the Company would be responsible for payment to the lenders up to the level of the guarantee. The Company does not anticipate SAC will fail to fulfill its commitments related to the debt. The Company further believes SAC has sufficient assets, including production equipment, facilities and working capital, and the ability to adjust the selling prices of its products to adequately mitigate the risk of material loss from the Company’s guarantee.

The Company holds no assets as collateral against the SAC guarantee, the fair value of which is immaterial to the condensed consolidated financial statements. The Company monitors its investment in SAC and would be required to write down its investment if an impairment, other than a temporary impairment, was identified. No impairment of the Company’s investment in SAC was identified as of ~~October 1, 2021,~~September 30, 2022, and there was no impairment identified in ~~2020.~~2021.

Other Commitments and Contingencies

The Company has standby letters of credit, primarily related to its property and casualty insurance programs. These letters of credit totaled $37.6 million on both ~~October 1, 2021~~September 30, 2022 and December 31, ~~2020.~~2021.

The Company participates in long-term marketing contractual arrangements with certain prestige properties, athletic venues and other locations. As of ~~October 1, 2021,~~September 30, 2022, the future payments related to these contractual arrangements, which expire at various dates through 2033, amounted to ~~$140.6~~$132.7 million.

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

21. Accumulated Other Comprehensive Income (Loss)

Accumulated other comprehensive income (loss) (“AOCI(L)”) is comprised of adjustments to the Company’s pension and postretirement medical benefit plans and the foreign currency translation for a subsidiary of the Company that performs data analysis and provides consulting services outside the United States.

Following is a summary of AOCI(L) for the third quarter of ~~2021~~2022 and the third quarter of ~~2020:~~2021:


(in thousands)	July 1, 2022		Pre-tax Activity		Tax Effect		September 30, 2022
Net pension activity:
Actuarial loss	$	(77,391)	$	989	$	(243)	$	(76,645)
Prior service credits	11		—		—		11
Net postretirement benefits activity:
Actuarial loss	(1,101)		92		(23)		(1,032)
Prior service costs	(624)		—		—		(624)
Foreign currency translation adjustment	(9)		—		—		(9)
Reclassification of stranded tax effects	(19,720)		—		—		(19,720)
Total AOCI(L)	$	(98,834)	$	1,081	$	(266)	$	(98,019)


(in thousands)	July 2, 2021		Pre-tax Activity		Tax Effect		October 1, 2021
Net pension activity:
Actuarial loss	$	(92,018)	$	1,219	$	(303)	$	(91,102)
Prior service credits	9		1		—		10
Net postretirement benefits activity:
Actuarial loss	(4,049)		186		(46)		(3,909)
Prior service costs	(624)		—		—		(624)
Foreign currency translation adjustment	5		(8)		2		(1)
Reclassification of stranded tax effects	(19,720)		—		—		(19,720)
Total AOCI(L)	$	(116,397)	$	1,398	$	(347)	$	(115,346)

(in thousands) June 28, 2020 Pre-tax Activity Tax Effect September 27, 2020
Net pension activity:
Actuarial loss $ (91,381) $ 1,189 $ (293) $ (90,485)
Prior service credits — 5 (1) 4
Net postretirement benefits activity:
Actuarial loss (1,059) 88 (22) (993)
Prior service costs (624) — — (624)
Interest rate swap(1)
(1,283) 402 (99) (980)
Foreign currency translation adjustment (14) 15 (4) (3)
Reclassification of stranded tax effects (19,720) — — (19,720)
Total AOCI(L) $ (114,081) $ 1,699 $ (419) $ (112,801)
Following is a summary of AOCI(L) for the first nine months of 2022 and the first nine months of 2021:


(in thousands)	December 31, 2021		Pre-tax Activity		Tax Effect		September 30, 2022
Net pension activity:
Actuarial loss	$	(78,882)	$	2,966	$	(729)	$	(76,645)
Prior service credits	11		—		—		11
Net postretirement benefits activity:
Actuarial loss	(1,239)		275		(68)		(1,032)
Prior service costs	(624)		—		—		(624)
Foreign currency translation adjustment	(9)		—		—		(9)
Reclassification of stranded tax effects	(19,720)		—		—		(19,720)
Total AOCI(L)	$	(100,463)	$	3,241	$	(797)	$	(98,019)


(in thousands)	December 31, 2020		Pre-tax Activity		Tax Effect		October 1, 2021
Net pension activity:
Actuarial loss	$	(93,847)	$	3,654	$	(909)	$	(91,102)
Prior service credits	8		2		—		10
Net postretirement benefits activity:
Actuarial loss	(4,328)		557		(138)		(3,909)
Prior service costs	(624)		—		—		(624)
Interest rate swap(1)	(556)		739		(183)		—
Foreign currency translation adjustment	14		(21)		6		(1)
Reclassification of stranded tax effects	(19,720)		—		—		(19,720)
Total AOCI(L)	$	(119,053)	$	4,931	$	(1,224)	$	(115,346)

(1)In 2019, the Company entered into a $100 million fixed rate swap to hedge a portion of the interest rate risk on ~~the 2016 Term Loan Facility,~~its previous term loan facility, both of which matured on June 7, 2021. This interest rate swap was designated as a cash flow hedging instrument and changes in its fair value were not material to the condensed consolidated balance sheets.

~~Following is a summary of AOCI(L) for the first nine months of 2021 and the first nine months of 2020:~~

(in thousands) December 31, 2020 Pre-tax Activity Tax Effect October 1, 2021
Net pension activity:
Actuarial loss $ (93,847) $ 3,654 $ (909) $ (91,102)
Prior service credits 8 2 — 10
Net postretirement benefits activity:
Actuarial loss (4,328) 557 (138) (3,909)
Prior service costs (624) — — (624)
Interest rate swap (556) 739 (183) —
Foreign currency translation adjustment 14 (21) 6 (1)
Reclassification of stranded tax effects (19,720) — — (19,720)
Total AOCI(L) $ (119,053) $ 4,931 $ (1,224) $ (115,346)

(in thousands) December 29, 2019 Pre-tax Activity Tax Effect September 27, 2020
Net pension activity:
Actuarial loss $ (93,174) $ 3,568 $ (879) $ (90,485)
Prior service credits (costs) (7) 14 (3) 4
Net postretirement benefits activity:
Actuarial loss (1,191) 263 (65) (993)
Prior service costs (624) — — (624)
Interest rate swap (270) (942) 232 (980)
Foreign currency translation adjustment (16) 18 (5) (3)
Reclassification of stranded tax effects (19,720) — — (19,720)
Total AOCI(L) $ (115,002) $ 2,921 $ (720) $ (112,801)

Following is a summary of the impact of AOCI(L) on the condensed consolidated statements of operations:


	Third Quarter 2022
(in thousands)	Net Pension Activity		Net Postretirement Benefits Activity		Total
Cost of sales	$	265	$	38	$	303
Selling, delivery and administrative expenses	724		54		778
Subtotal pre-tax	989		92		1,081
Income tax expense	243		23		266
Total after tax effect	$	746	$	69	$	815


	Third Quarter 2021
(in thousands)	Net Pension Activity		Net Postretirement Benefits Activity		Foreign Currency Translation Adjustment		Total
Cost of sales	$	364	$	97	$	—	$	461
Selling, delivery and administrative expenses	856		89		(8)		937
Subtotal pre-tax	1,220		186		(8)		1,398
Income tax expense	303		46		(2)		347
Total after tax effect	$	917	$	140	$	(6)	$	1,051


		Third Quarter 2020											First Nine Months 2022
(in thousands)	(in thousands)	Net Pension Activity		Net Postretirement Benefits Activity		Interest Rate Swap		Foreign Currency Translation Adjustment		Total		(in thousands)	Net Pension Activity		Net Postretirement Benefits Activity		Total
Cost of sales	Cost of sales	$	363	$	55	$	—	$	—	$	418	Cost of sales	$	809	$	116	$	925
Selling, delivery and administrative expenses	Selling, delivery and administrative expenses	831		33		402		15		1,281		Selling, delivery and administrative expenses	2,157		159		2,316
Subtotal pre-tax	Subtotal pre-tax	1,194		88		402		15		1,699		Subtotal pre-tax	2,966		275		3,241
Income tax expense	Income tax expense	294		22		99		4		419		Income tax expense	729		68		797
Total after tax effect	Total after tax effect	$	900	$	66	$	303	$	11	$	1,280	Total after tax effect	$	2,237	$	207	$	2,444


	First Nine Months 2021
(in thousands)	Net Pension Activity		Net Postretirement Benefits Activity		Interest Rate Swap		Foreign Currency Translation Adjustment		Total
Cost of sales	$	1,068	$	304	$	—	$	—	$	1,372
Selling, delivery and administrative expenses	2,588		253		739		(21)		3,559
Subtotal pre-tax	3,656		557		739		(21)		4,931
Income tax expense	909		138		183		(6)		1,224
Total after tax effect	$	2,747	$	419	$	556	$	(15)	$	3,707

First Nine Months 2020
(in thousands) Net Pension Activity Net Postretirement Benefits Activity Interest Rate Swap Foreign Currency Translation Adjustment Total
Cost of sales $ 1,057 $ 160 $ — $ — $ 1,217
Selling, delivery and administrative expenses 2,525 103 (942) 18 1,704
Subtotal pre-tax 3,582 263 (942) 18 2,921
Income tax expense 882 65 (232) 5 720
Total after tax effect $ 2,700 $ 198 $ (710) $ 13 $ 2,201

22. Supplemental Disclosures of Cash Flow Information

Changes in current assets and current liabilities affecting cash ~~flows~~ were as follows:


		First Nine Months					First Nine Months
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Accounts receivable, trade	Accounts receivable, trade	$	(56,766)	$	(19,850)	Accounts receivable, trade	$	(84,756)	$	(56,766)
Allowance for doubtful accounts	Allowance for doubtful accounts	(5,010)		11,268		Allowance for doubtful accounts	(1,719)		(5,010)
Accounts receivable from The Coca‑Cola Company	Accounts receivable from The Coca‑Cola Company	(9,120)		7,895		Accounts receivable from The Coca‑Cola Company	10,992		(9,120)
Accounts receivable, other	Accounts receivable, other	7,846		(1,475)		Accounts receivable, other	(36,290)		7,846
Inventories	Inventories	(14,738)		18,153		Inventories	(10,848)		(14,738)
Prepaid expenses and other current assets	Prepaid expenses and other current assets	(10,006)		(368)		Prepaid expenses and other current assets	(13,891)		(10,006)
Accounts payable, trade	Accounts payable, trade	62,775		40,937		Accounts payable, trade	18,927		62,775
Accounts payable to The Coca‑Cola Company	Accounts payable to The Coca‑Cola Company	46,520		26,957		Accounts payable to The Coca‑Cola Company	44,214		46,520
Other accrued liabilities	Other accrued liabilities	27,699		(14,578)		Other accrued liabilities	(780)		27,699
Accrued compensation	Accrued compensation	9,009		(13,035)		Accrued compensation	10,698		9,009
Accrued interest payable	Accrued interest payable	2,337		1,747		Accrued interest payable	1,796		2,337
Change in current assets less current liabilities	Change in current assets less current liabilities	$	60,546	$	57,651	Change in current assets less current liabilities	$	(61,657)	$	60,546

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following Management’s Discussion and Analysis of Financial Condition and Results of Operations of Coca‑Cola Consolidated, Inc., a Delaware corporation (together with its majority-owned subsidiaries, the “Company,” “we,” “us” or “our”), should be read in conjunction with the condensed consolidated financial statements of the Company and the accompanying notes to the condensed consolidated financial statements. The condensed consolidated financial statements include the consolidated operations of the Company and its majority-owned subsidiaries. All comparisons are to the corresponding period in the prior year unless specified otherwise.

•The financial position as of ~~October 1, 2021~~September 30, 2022 and December 31, ~~2020.~~2021.

•The changes in cash flows for the first nine months of ~~2021~~2022 and the first nine months of ~~2020.~~2021.

Our Business and the Nonalcoholic Beverage Industry

We distribute, market and manufacture nonalcoholic beverages in territories spanning 14 states and the District of Columbia. The Company was incorporated in 1980 and, together with its predecessors, has been in the nonalcoholic beverage manufacturing and distribution business since 1902. We are the largest Coca‑Cola bottler in the United States. Approximately ~~82%~~86% of our total bottle/can sales volume to retail customers consists of products of The Coca‑Cola Company, which include some of the most recognized and popular beverage brands in the world. We also distribute products for several other beverage companies, including ~~BA Sports Nutrition, LLC (“BODYARMOR”),~~ Keurig Dr Pepper Inc. (“Dr Pepper”) and Monster Energy ~~Company (“Monster Energy”).~~Company. Our purpose is to honor God in all we do, serve others, pursue excellence and grow profitably. Our ~~stock~~Common Stock is traded on the NASDAQ Global Select Market under the symbol COKE.

We offer a range of nonalcoholic beverage products and flavors, including both sparkling and still beverages, designed to meet the demands of our consumers. Sparkling beverages are carbonated beverages and the Company’s principal sparkling beverage is Coca‑Cola. Still beverages include energy products and noncarbonated beverages such as bottled water, ready to drink tea, ready to drink coffee, enhanced water, juices and sports drinks.

Our sales are divided into two main categories: (i) bottle/can sales and (ii) other sales. Bottle/can sales include products packaged primarily in plastic bottles and aluminum cans. Bottle/can net pricing is based on the invoice price charged to customers reduced by any promotional allowances. Bottle/can net pricing per unit is impacted by the price charged per package, the sales volume generated for each package and the channels in which those packages are sold. Other sales include sales to other Coca‑Cola bottlers, post-mix ~~products,~~sales, transportation revenue and equipment maintenance revenue. Post-mix products are dispensed through equipment that mixes fountain syrups with carbonated or still water, enabling fountain retailers to sell finished products to consumers in cups or glasses.

The Company’s products are sold and distributed in the United States through various channels, which include selling directly to customers, including grocery stores, mass merchandise stores, club stores, convenience stores and drug stores, selling to on-premise locations, where products are typically consumed immediately, such as restaurants, schools, amusement parks and recreational facilities, and selling through other channels such as vending machine outlets.

The nonalcoholic beverage industry is highly competitive for both sparkling and still beverages. Our competitors include bottlers and distributors of nationally and regionally advertised and marketed products, as well as bottlers and distributors of private label beverages. Our principal competitors include local bottlers of PepsiCo, Inc. products and, in some regions, local bottlers of Dr Pepper products.

The principal methods of competition in the nonalcoholic beverage industry are new brand and product introductions, point-of-sale merchandising, new vending and dispensing equipment, packaging changes, pricing, sales promotions, product quality, retail space management, customer service, frequency of distribution and advertising. We believe we are competitive in our territories with respect to these methods of competition.

Business seasonality results primarily from higher unit sales of the Company’s products in the second and third quarters of the fiscal year, as sales of our products are typically correlated with warmer weather. We believe that we and other manufacturers from whom we purchase finished products have adequate production capacity to meet sales demand for sparkling and still beverages during these peak periods. Sales volume can also be impacted by weather conditions. Fixed costs, such as depreciation expense, are not significantly impacted by business seasonality.

Executive Summary

Net sales increased ~~10%~~12% to ~~$1.46~~$1.63 billion in the third quarter of 2022, while physical case volume ~~decreased~~increased 0.6%. The increase in net sales was driven primarily by ~~pricing actions~~price increases taken ~~throughout the third quarter of 2021~~ on ~~most of~~ our Sparkling and Still ~~beverages. These pricing actions were taken to help offset increases to our major input costs including aluminum, PET resin~~beverages during the quarter and ~~transportation costs.~~earlier this year. Sparkling beverage volume ~~decreased 0.6%~~increased 0.8% in the ~~third~~ quarter, ~~of 2021,~~ outperforming the price elasticity ~~historically associated~~we generally have experienced with higher pricing. Volume growth was particularly strong in our value, club and small store sales channels. We also experienced solid demand in our on‑premise sales channels, including restaurants, universities, sports venues, amusement parks and other immediate consumption outlets, as consumer traffic has increased compared to the prior year period. Still beverage volume ~~decreased 0.7%, while net~~increased 0.1% in the quarter, led by growth in Monster and smartwater. Net sales increased 8%. We experienced significant supply chain challenges with several of our Still beverage brands during the third quarter of 2021, which negatively impacted our growth trend in the Still beverage category. Physical11% and physical case volume ~~and net sales~~ increased ~~3.3% and 12%, respectively, for~~0.4% in the first nine months of ~~2021.~~2022.

Gross profit in the third quarter of ~~2021~~2022 increased ~~$45.3~~$103.4 million, or ~~10%~~20%, while gross margin ~~decreased 10~~improved 260 basis points to ~~35.5%~~38.1%. The improvement in gross profit ~~was primarily due to~~resulted from strong price realization and solid volume growth in our Sparkling category. Gross margins also benefited during the ~~pricing actions taken throughout the third~~ quarter ~~of 2021. As we anticipated, the benefit of increased selling prices was partially offset by higher input costs, which resulted~~from a pullback in ~~relatively stable gross margin when compared to the third quarter of 2020. We expect higher input costs to continue in the fourth quarter of 2021 as~~certain commodity ~~markets continue to be volatile and supply chains continue to be challenged.~~prices. Gross profit in the first nine months of ~~2021~~2022 increased ~~$154.3~~$218.0 million, or ~~12%~~15%.

Selling, delivery and administrative (“SD&A”) expenses in the third quarter of ~~2021~~2022 increased ~~$12.1~~$50.5 million, or 3%13%. SD&A expenses as a percentage of net sales ~~decreased 160~~increased 40 basis points ~~in the third quarter of 2021.~~to 26.5%. The increase in SD&A expenses related primarily to an increase in labor costs as compared to the third quarter of ~~2020. During~~2021. Over the ~~third quarter~~last year, we have made certain compensation adjustments across our workforce to remain competitive in a challenging labor market and to reward our teammates for their contributions in achieving strong operating results. In addition, we experienced broad inflationary increases across a number of 2021, we provided incentives to attract, reward and retain our front-line teammates and we increased the base pay in certain competitive markets. We also experienced higher overtime in the quarter as the labor pool for our front-line positions continues to be challenging.SD&A categories. SD&A expenses in the first nine months of ~~2021~~2022 increased ~~$22.0~~$101.9 million, or 2%9%. SD&A expenses as a percentage of net sales in the first nine months of ~~2021~~2022 decreased ~~250~~50 basis points to 26.2% as compared to the first nine months of ~~2020.~~2021.

Income from operations in the third quarter of ~~2021~~2022 was ~~$137.0~~$189.9 million, compared to ~~$103.8~~$137.0 million in the third quarter of ~~2020,~~2021, an increase of ~~32%~~$52.9 million, or 39%. On an adjusted basis, as defined in the “Adjusted ~~Non-GAAP Results”~~Results (Non-GAAP)” section, ~~below,~~ income from operations in the third quarter of ~~2021~~2022 was ~~$137.2~~$193.9 million, an increase of ~~30%~~41%. For the first nine months of ~~2021,~~2022, income from operations increased ~~$132.3~~$116.1 million to ~~$352.1~~$468.2 million.

Net income in the third quarter of ~~2021~~2022 was ~~$68.9~~$118.8 million, compared to ~~$51.9~~$68.9 million in the third quarter of ~~2020,~~2021, an improvement of ~~$17.0~~$49.8 million. Net income in the third quarter of ~~2021~~2022 was adversely impacted by fair value adjustments to our acquisition related contingent consideration liability, driven primarily by changes in future cash flow projections. Fair value adjustments to this liability are routine and ~~non-cash~~non‑cash in nature. ~~Income tax expense in the third quarter of 2021 was $25.0 million, compared to $18.4 million in the third quarter of 2020.~~ Net income increased ~~$64.4~~$141.2 million in the first nine months of ~~2021~~2022 to ~~$170.5~~$311.7 million as compared to the first nine months of ~~2020.~~2021.

Cash flows provided by operations for the first nine months of ~~2021~~2022 were ~~$439.9~~$394.3 million, compared to ~~$376.4~~$439.9 million for the first nine months of ~~2020. The significant increase in operating cash~~2021. Cash flows ~~for~~from operations were impacted by the ~~first nine months~~timing of ~~2021 was a result of our strong operating performance. The Company reduced outstanding indebtedness by $147.3 million~~certain working capital payments and receipts during the ~~first nine months of 2021.~~third quarter. We ~~remain focused on the effective management of our working capital and~~ continue to invest in ~~long-term~~long‑term strategic projects to optimize our supply chain and ~~better serve~~reduce our ~~customers.~~debt obligations. During the third quarter, the Company repaid $125 million of senior notes prior to their stated maturity date of February 27, 2023.

COVID-19 Impact

The Company continues to diligently monitor and manage through the impact of the ongoing COVID-19 pandemic on all aspects of its business, including the impact on its teammates, communities and customers.

The Company continues to implement its COVID-19 Response Program as dictated by current conditions, including numerous actions to protect and promote the health and safety of its consumers, customers, suppliers, teammates and ~~communities, while it continues to manufacture and distribute products.~~communities. Such actions include following prescribed Company and other accepted health and safety standards and protocols, including those adopted by the Centers for Disease Control and Prevention (the “CDC”) and local health ~~authorities, and working closely with local health departments and appropriate agencies to manage and monitor teammate cases and exposures.~~authorities. Risk mitigation and safety activities continue; examples include adhering to sanitation protocols and promoting hygiene practices recommended by the CDC; ~~implementing work-from-home routines for teammates whose work duties permit it;~~

offering supplemental sick time for non-exempt teammates; providing access to personal protective equipment and educational resources; and modifying our health ~~welfare~~ and ~~retirement~~welfare plans for COVID-19-related events. The Company is actively monitoring announced and potential regulations concerning vaccination for COVID-19 and the impact that such regulations may have on its workforce. If a significant number of our teammates are negatively impacted by regulations requiring vaccination or periodic testing of unvaccinated teammates, it may result in teammate attrition and our business operations may be adversely effected.

At this time and based on current trends, we do not ~~currently~~ expect the COVID-19 pandemic to materially impact our liquidity position or access to capital in ~~2021.~~2022. We also have not experienced, and do not expect, any material impairments or adjustments to the fair values of our assets or the collectability of our receivables as a result of the COVID-19 pandemic.

We have assessed COVID-19-related circumstances around work routines, including remote work arrangements, and the impact on our internal controls over financial reporting. We have not identified, and do not anticipate, any material impact to our control procedures that would materially affect our internal controls over financial reporting. We will continue to monitor the impact of the COVID-19 pandemic on our business and make adjustments as needed.

Areas of Emphasis

Key priorities for the Company include commercial execution, revenue management, supply chain optimization and cash flow generation.

Commercial Execution: Our success is dependent on our ability to execute our commercial strategy within our customers’ stores. Our ability to obtain shelf space within stores and remain in-stock across our portfolio of brands and packages in a profitable manner will have a significant impact on our results. We are focused on execution at every step in our supply chain, including raw material and finished product procurement, manufacturing conversion, transportation, warehousing and distribution, to ensure in-store execution can occur. We continue to invest in tools and technology to enable our teammates to operate more effectively and efficiently with our customers and drive long-term value in our business.

Revenue Management: Our revenue management strategy focuses on pricing our brands and packages optimally within product categories and channels, creating effective working relationships with our customers and making disciplined fact-based decisions. Pricing decisions are made considering a variety of factors, including brand strength, competitive environment, input costs, the roles certain brands play in our product portfolio and other market conditions.

Supply Chain Optimization: ~~In fiscal 2017, we completed a multi-year series of transactions through which we acquired and exchanged distribution territories and manufacturing plants.~~ We are continually focused on optimizing our supply chain, ~~as we continue to integrate the acquired territories and facilities into our operations. This optimization~~which includes identifying nearby warehousing and distribution operations that can be consolidated into new facilities ~~which is expected~~ to increase capacity, expand production capabilities, reduce overall production costs and add automation to allow the Company to better serve its customers and consumers.

Cash Flow Generation: We have several initiatives in place to optimize cash flow, improve profitability and prudently manage capital expenditures, as we continue to prioritize debt repayment and to focus on strengthening our balance sheet.

Results of Operations

Third Quarter Results

The Company’s results of operations for the third quarter of ~~2021~~2022 and the third quarter of ~~2020~~2021 are highlighted in the table below and discussed in the following paragraphs.


		Third Quarter							Third Quarter
(in thousands)	(in thousands)	2021		2020		Change		(in thousands)	2022		2021		Change
Net sales	Net sales	$	1,457,432	$	1,328,484	$	128,948	Net sales	$	1,628,589	$	1,457,432	$	171,157
Cost of sales	Cost of sales	939,720		856,046		83,674		Cost of sales	1,007,482		939,720		67,762
Gross profit	Gross profit	517,712		472,438		45,274		Gross profit	621,107		517,712		103,395
Selling, delivery and administrative expenses	Selling, delivery and administrative expenses	380,681		368,594		12,087		Selling, delivery and administrative expenses	431,177		380,681		50,496
Income from operations	Income from operations	137,031		103,844		33,187		Income from operations	189,930		137,031		52,899
Interest expense, net	Interest expense, net	8,097		9,033		(936)		Interest expense, net	6,083		8,097		(2,014)
Other expense, net	Other expense, net	34,982		21,394		13,588		Other expense, net	24,746		34,982		(10,236)
Income before income taxes		93,952		73,417		20,535
Income before taxes								Income before taxes	159,101		93,952		65,149
Income tax expense	Income tax expense	25,022		18,363		6,659		Income tax expense	40,340		25,022		15,318
Net income	Net income	68,930		55,054		13,876		Net income	118,761		68,930		49,831
Less: Net income attributable to noncontrolling interest		—		3,170		(3,170)
Net income attributable to Coca‑Cola Consolidated, Inc.		$	68,930	$	51,884	$	17,046
Other comprehensive income, net of tax	Other comprehensive income, net of tax	1,051		1,280		(229)		Other comprehensive income, net of tax	815		1,051		(236)
Comprehensive income attributable to Coca‑Cola Consolidated, Inc.		$	69,981	$	53,164	$	16,817
Comprehensive income								Comprehensive income	$	119,576	$	69,981	$	49,595

Net Sales

Net sales increased ~~$128.9~~$171.2 million, or ~~9.7%~~11.7%, to $1.63 billion in the third quarter of 2022, as compared to $1.46 billion in the third quarter of ~~2021, as compared to $1.33 billion in the third quarter of 2020.~~2021. The increase in net sales was primarily attributable to the following (in millions):


Third Quarter ~~2021~~2022		Attributable to:
$	~~115.3~~180.9	Increase in net sales related to price increases and the shift in product mix. Approximately ~~75%~~90% of this increase was driven by an increase in average bottle/can sales price per unit charged to retail ~~customers, while approximately 25% was related to the shift in product mix to higher revenue still products in order to meet consumer preferences.~~customers.
~~9.4~~4.9		~~The increase in fountain syrup and other related sales mainly sold in on-premise locations~~Increased physical case volume



~~4.2~~ (14.6)		Other
$	~~128.9~~171.2	Total increase in net sales

Net sales by product category were as follows:


		Third Quarter							Third Quarter
(in thousands)	(in thousands)	2021		2020		% Change		(in thousands)	2022		2021		% Change
Bottle/can sales:	Bottle/can sales:							Bottle/can sales:
Sparkling beverages	Sparkling beverages	$	773,489	$	703,549	9.9	%	Sparkling beverages	$	917,162	$	773,489	18.6	%
Still beverages	Still beverages	503,990		464,921		8.4	%	Still beverages	548,333		503,990		8.8	%
Total bottle/can sales	Total bottle/can sales	1,277,479		1,168,470		9.3	%	Total bottle/can sales	1,465,495		1,277,479		14.7	%

Other sales:	Other sales:							Other sales:
Sales to other Coca‑Cola bottlers	Sales to other Coca‑Cola bottlers	89,618		84,852		5.6	%	Sales to other Coca‑Cola bottlers	83,644		89,618		(6.7)	%
Post-mix and other		90,335		75,162		20.2	%
Post-mix sales and other								Post-mix sales and other	79,450		90,335		(12.0)	%
Total other sales	Total other sales	179,953		160,014		12.5	%	Total other sales	163,094		179,953		(9.4)	%

Total net sales	Total net sales	$	1,457,432	$	1,328,484	9.7	%	Total net sales	$	1,628,589	$	1,457,432	11.7	%

Product category sales volume of physical cases ~~as a percentage of total bottle/can sales volume~~ and the percentage change by product category were as follows:

Bottle/Can Sales Volume
Third Quarter Bottle/Can Sales Volume
Product Category 2021 2020 % Change
Sparkling beverages 67.5 % 67.5 % (0.6) %
Still beverages 32.5 % 32.5 % (0.7) %
Total bottle/can sales volume 100.0 % 100.0 % (0.6) %

As the Company introduces new products, it reassesses the category assigned to its products at the SKU level, therefore categorization could differ from previously presented results to conform with current period categorization. Any differences are not material.


	Third Quarter
(in thousands)	2022	2021	% Change
Bottle/can sales volume:
Sparkling beverages	63,656	63,158	0.8	%
Still beverages	30,412	30,368	0.1	%
Total bottle/can sales volume	94,068	93,526	0.6	%

Cost of Sales

Inputs representing a substantial portion of the Company’s cost of sales include: (i) purchases of finished products, (ii) raw material costs, including aluminum cans, plastic bottles and sweetener, (iii) concentrate costs and (iv) manufacturing costs, including labor, overhead and warehouse costs. In addition, cost of sales includes shipping, handling and fuel costs related to the movement of finished products from manufacturing plants to distribution centers, amortization expense of distribution rights, distribution fees of certain products and marketing credits from brand companies. Raw material costs represent approximately 20% of total cost of sales on an annual basis.

Cost of sales increased ~~$83.7~~$67.8 million, or ~~9.8%~~7.2%, to $1.01 billion in the third quarter of 2022, as compared to $939.7 million in the third quarter of ~~2021, as compared to $856.0 million in the third quarter of 2020.~~2021. The increase in cost of sales was primarily attributable to the following (in millions):


Third Quarter ~~2021~~2022		Attributable to:
$	~~69.7~~91.3	Increased input costs, including aluminum, PET resin and transportation costs, partially due to the impacts of inflation and supply chain challenges, as well as the shift in product mix to meet consumer preferences
~~6.6~~2.5		~~The increase in fountain syrup and other related sales mainly sold in on-premise locations~~Increased physical case volume



~~7.4~~ (26.0)		Other
$	~~83.7~~67.8	Total increase in cost of sales

The Company relies extensively on advertising and sales promotions in the marketing of its products. The Coca‑Cola Company and other beverage companies that supply concentrates, syrups and finished products to the Company make substantial marketing and advertising expenditures, including national advertising programs, to develop their brand identities and promote sales in the Company’s territories. Certain of ~~the~~these marketing ~~expenditures by The Coca‑Cola Company~~ and ~~other beverage companies~~advertising expenditures are made pursuant to annual arrangements. ~~The Company also benefits from national advertising programs conducted by The Coca‑Cola Company and other beverage companies.~~ Total marketing funding support from The Coca‑Cola Company and other beverage companies, which includes both direct payments to the Company and payments to customers for marketing programs, was $39.6 million in the third quarter of 2022 and $36.4 million in the third quarter of ~~2021 and $33.8 million in the third quarter of 2020.~~2021.

Selling, Delivery and Administrative Expenses

SD&A expenses include the following: sales management labor costs, distribution costs resulting from transporting finished products from distribution centers to customer locations, distribution center overhead including depreciation expense, distribution center warehousing costs, delivery vehicles and cold drink equipment, point-of-sale expenses, advertising expenses, cold drink equipment repair costs, amortization of intangible assets and administrative support labor and operating costs.

SD&A expenses increased ~~by $12.1~~$50.5 million, or ~~3.3%~~13.3%, to $431.2 million in the third quarter of 2022, as compared to $380.7 million in the third quarter of ~~2021, as compared to $368.6 million in the third quarter of 2020.~~2021. SD&A expenses as a percentage of net sales ~~decreased~~increased to 26.5% in the third quarter of 2022 from 26.1% in the third quarter of

~~2021 from 27.7% in the third quarter of 2020.~~ 2021. The increase in SD&A expenses was primarily attributable to the following (in millions):


Third Quarter ~~2021~~2022		Attributable to:
$	~~9.5~~31.5	Increase in labor costs ~~as channels of business and local economies have re-opened compared~~due to ~~the prior year. In addition, investments were made~~compensation adjustments across our workforce to ~~attract, reward and retain front-line employees~~remain competitive in ~~this~~a challenging labor ~~environment.~~market and to reward our teammates for their contributions in achieving strong operating results
~~2.6~~8.3		Increase in fleet-related expenses, including fuel costs
1.9		Increase in commitments to various charities and donor-advised funds in light of the Company’s financial performance
8.8		Other
$	~~12.1~~50.5	Total increase in SD&A expenses

Shipping and handling costs included in SD&A expenses were $195.8 million in the third quarter of 2022 and $176.2 million in the third quarter of ~~2021 and $155.8 million in the third quarter of 2020.~~2021.

Interest Expense, Net

Interest expense, net decreased ~~$0.9~~$2.0 million, or ~~10.4%~~24.9%, to $6.1 million in the third quarter of 2022, as compared to $8.1 million in the third quarter of ~~2021, as compared to $9.0 million in the third quarter of 2020. The decrease was primarily a result of lower average debt balances.~~2021.

Other Expense, Net

A summary of other expense, net is as follows:


		Third Quarter					Third Quarter
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Increase in the fair value of the acquisition related contingent consideration liability	Increase in the fair value of the acquisition related contingent consideration liability	$	33,924	$	19,808	Increase in the fair value of the acquisition related contingent consideration liability	$	22,568	$	33,924
Non-service cost component of net periodic benefit cost	Non-service cost component of net periodic benefit cost	1,058		1,586		Non-service cost component of net periodic benefit cost	2,178		1,058
Total other expense, net	Total other expense, net	$	34,982	$	21,394	Total other expense, net	$	24,746	$	34,982

Each reporting period, the Company adjusts its acquisition related contingent consideration liability related to the distribution territories subject to acquisition related sub-bottling ~~fees~~payments to fair value. The fair value is determined by discounting future expected acquisition related sub-bottling payments required under the Company’s comprehensive beverage agreements, which extend through the life of the applicable distribution assets, using the Company’s estimated weighted average cost of capital (“WACC”), which is impacted by many factors, including long-term interest rates and future cash flow projections. The life of these distribution assets is generally 40 years. The Company is required to pay the current portion of the acquisition related sub-bottling ~~fee~~payments on a quarterly basis.

The ~~increase~~change in the fair value of the acquisition related contingent consideration liability in the third quarter of ~~2021~~2022 as compared to the third quarter of ~~2020~~2021 was primarily driven by an increase in the discount rate used to calculate fair value, partially offset by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling ~~fees.~~payments.

Income Tax Expense

The Company’s effective income tax rate was 25.4% for the third quarter of 2022 and 26.6% for the third quarter of ~~2021 and 25.0% for the third quarter of 2020.~~2021. The Company’s income tax expense increased ~~$6.7~~$15.3 million, or ~~36.3%~~61.2%, to $40.3 million for the third quarter of 2022, as compared to $25.0 million for the third quarter of ~~2021, as compared to $18.4 million for the third quarter of 2020.~~2021. The increase in income tax expense was primarily attributable to ~~improved financial results~~higher income before taxes during the third quarter of ~~2021~~2022 compared to the third quarter of ~~2020.~~

~~Noncontrolling Interest~~

The Company recorded net income attributable to noncontrolling interest of $3.2 million in the third quarter of 2020 related to the portion of Piedmont owned by The Coca‑Cola Company prior to the purchase by an indirect wholly owned subsidiary of the Company of the remaining 22.7% general partnership interest in Piedmont on December 9, 2020.2021.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax was $0.8 million in the third quarter of 2022 and $1.1 million in the third quarter of ~~2021 and $1.3 million in the third quarter of 2020.~~2021.

First Nine Months Results

Our results of operations for the first nine months of ~~2021~~2022 and the first nine months of ~~2020~~2021 are highlighted in the table below and discussed in the following paragraphs.


		First Nine Months							First Nine Months
(in thousands)	(in thousands)	2021		2020		Change		(in thousands)	2022		2021		Change
Net sales	Net sales	$	4,160,375	$	3,728,720	$	431,655	Net sales	$	4,628,162	$	4,160,375	$	467,787
Cost of sales	Cost of sales	2,699,020		2,421,686		277,334		Cost of sales	2,948,820		2,699,020		249,800
Gross profit	Gross profit	1,461,355		1,307,034		154,321		Gross profit	1,679,342		1,461,355		217,987
Selling, delivery and administrative expenses	Selling, delivery and administrative expenses	1,109,279		1,087,251		22,028		Selling, delivery and administrative expenses	1,211,134		1,109,279		101,855
Income from operations	Income from operations	352,076		219,783		132,293		Income from operations	468,208		352,076		116,132
Interest expense, net	Interest expense, net	25,208		27,778		(2,570)		Interest expense, net	20,928		25,208		(4,280)
Other expense, net	Other expense, net	94,078		39,826		54,252		Other expense, net	27,666		94,078		(66,412)
Income before income taxes		232,790		152,179		80,611
Income before taxes								Income before taxes	419,614		232,790		186,824
Income tax expense	Income tax expense	62,317		38,911		23,406		Income tax expense	107,901		62,317		45,584
Net income	Net income	170,473		113,268		57,205		Net income	311,713		170,473		141,240
Less: Net income attributable to noncontrolling interest		—		7,153		(7,153)
Net income attributable to Coca‑Cola Consolidated, Inc.		$	170,473	$	106,115	$	64,358
Other comprehensive income, net of tax	Other comprehensive income, net of tax	3,707		2,201		1,506		Other comprehensive income, net of tax	2,444		3,707		(1,263)
Comprehensive income attributable to Coca‑Cola Consolidated, Inc.		$	174,180	$	108,316	$	65,864
Comprehensive income								Comprehensive income	$	314,157	$	174,180	$	139,977

Net Sales

Net sales increased ~~$431.7~~$467.8 million, or ~~11.6%~~11.2%, to $4.63 billion in the first nine months of 2022, as compared to $4.16 billion in the first nine months of ~~2021, as compared to $3.73 billion in the first nine months of 2020.~~2021. The increase in net sales was primarily attributable to the following (in millions):


First Nine Months ~~2021~~2022		Attributable to:
$	~~262.4~~468.7	Increase in net sales related to price increases and the shift in product mix. Approximately ~~65%~~90% of this increase was driven by an increase in average bottle/can sales price per unit charged to retail ~~customers, while approximately 35% was related to the shift in product mix to higher revenue still products in order to meet consumer preferences.~~customers.
~~133.3~~8.2		Increased ~~sales~~physical case volume
~~23.3~~ (9.1)		~~The increase in fountain syrup and other related sales mainly sold in on-premise locations~~
~~9.8~~		~~Increased sales volume to other Coca-Cola bottlers~~
~~2.9~~		~~Increased volume of external freight revenue to external customers (other than nonalcoholic beverages)~~Other
$	~~431.7~~467.8	Total increase in net sales

Net sales by product category were as follows:


		First Nine Months							First Nine Months
(in thousands)	(in thousands)	2021		2020		% Change		(in thousands)	2022		2021		% Change
Bottle/can sales:	Bottle/can sales:							Bottle/can sales:
Sparkling beverages	Sparkling beverages	$	2,221,355	$	2,040,139	8.9	%	Sparkling beverages	$	2,573,376	$	2,221,355	15.8	%
Still beverages	Still beverages	1,424,069		1,239,335		14.9	%	Still beverages	1,556,438		1,424,069		9.3	%
Total bottle/can sales	Total bottle/can sales	3,645,424		3,279,474		11.2	%	Total bottle/can sales	4,129,814		3,645,424		13.3	%

Other sales:	Other sales:							Other sales:
Sales to other Coca‑Cola bottlers	Sales to other Coca‑Cola bottlers	259,771		249,994		3.9	%	Sales to other Coca‑Cola bottlers	262,099		259,771		0.9	%
Post-mix and other		255,180		199,252		28.1	%
Post-mix sales and other								Post-mix sales and other	236,249		255,180		(7.4)	%
Total other sales	Total other sales	514,951		449,246		14.6	%	Total other sales	498,348		514,951		(3.2)	%

Total net sales	Total net sales	$	4,160,375	$	3,728,720	11.6	%	Total net sales	$	4,628,162	$	4,160,375	11.2	%

Product category sales volume of physical cases ~~as a percentage of total bottle/can sales volume~~ and the percentage change by product category were as follows:

Bottle/Can Sales Volume
First Nine Months Bottle/Can Sales Volume
Product Category 2021 2020 % Change
Sparkling beverages 68.5 % 69.9 % 1.2 %
Still beverages 31.5 % 30.1 % 8.1 %
Total bottle/can sales volume 100.0 % 100.0 % 3.3 %


	First Nine Months
(in thousands)	2022	2021	% Change
Bottle/can sales volume:
Sparkling beverages	190,613	189,750	0.5	%
Still beverages	87,266	87,104	0.2	%
Total bottle/can sales volume	277,879	276,854	0.4	%

The following table summarizes the percentage of the Company’s total bottle/can sales volume to its largest customers, as well as the percentage of the Company’s total net sales that such volume represents:


		First Nine Months					First Nine Months
		2021		2020			2022		2021
Approximate percent of the Company’s total bottle/can sales volume:	Approximate percent of the Company’s total bottle/can sales volume:					Approximate percent of the Company’s total bottle/can sales volume:
Wal-Mart Stores, Inc.	Wal-Mart Stores, Inc.	20	%	19	%	Wal-Mart Stores, Inc.	20	%	20	%
The Kroger Company	The Kroger Company	13	%	13	%	The Kroger Company	12	%	13	%
Total approximate percent of the Company’s total bottle/can sales volume	Total approximate percent of the Company’s total bottle/can sales volume	33	%	32	%	Total approximate percent of the Company’s total bottle/can sales volume	32	%	33	%

Approximate percent of the Company’s total net sales:	Approximate percent of the Company’s total net sales:					Approximate percent of the Company’s total net sales:
Wal-Mart Stores, Inc.	Wal-Mart Stores, Inc.	14	%	14	%	Wal-Mart Stores, Inc.	16	%	14	%
The Kroger Company	The Kroger Company	9	%	10	%	The Kroger Company	9	%	9	%
Total approximate percent of the Company’s total net sales	Total approximate percent of the Company’s total net sales	23	%	24	%	Total approximate percent of the Company’s total net sales	25	%	23	%

Cost of Sales

Cost of sales increased ~~$277.3~~$249.8 million, or ~~11.5%~~9.3%, to $2.95 billion in the first nine months of 2022, as compared to $2.70 billion in the first nine months of ~~2021, as compared to $2.42 billion in the first nine months of 2020.~~2021. The increase in cost of sales was primarily attributable to the following (in millions):


First Nine Months ~~2021~~2022		Attributable to:
$	~~156.1~~268.3	Increased input costs, including aluminum, PET resin and transportation costs, partially due to the impacts of inflation and supply chain challenges, as well as the shift in product mix to meet consumer preferences
~~89.2~~4.4		Increased ~~sales~~physical case volume
~~13.3~~ (22.9)		~~The increase in fountain syrup and other related sales mainly sold in on-premise locations~~
~~10.7~~		~~Increased sales volume to other Coca-Cola bottlers~~
~~8.0~~		~~Increased volume of external freight revenue to external customers (other than nonalcoholic beverages)~~Other
$	~~277.3~~249.8	Total increase in cost of sales

Total marketing funding support from The Coca‑Cola Company and other beverage companies was $111.3 million in the first nine months of 2022, as compared to $102.1 million in the first nine months of ~~2021, as compared to $90.4 million in the first nine months of 2020.~~2021.

Selling, Delivery and Administrative Expenses

SD&A expenses increased ~~by $22.0~~$101.9 million, or ~~2.0%~~9.2%, to $1.21 billion in the first nine months of 2022, as compared to $1.11 billion in the first nine months of ~~2021, as compared to $1.09 billion in the first nine months of 2020.~~2021. SD&A expenses as a percentage of net sales decreased to ~~26.7% in the first nine~~

~~months of 2021 from 29.2%~~26.2% in the first nine months of ~~2020.~~2022 from 26.7% in the first nine months of 2021. The increase in SD&A expenses was primarily attributable to the following (in millions):


First Nine Months ~~2021~~2022		Attributable to:
$	~~25.7~~70.3	Increase in labor costs ~~as channels of business and local economies have re-opened compared~~due to ~~the prior year. In addition, investments were made~~compensation adjustments across our workforce to ~~attract, reward and retain front-line employees~~remain competitive in ~~this~~a challenging labor ~~environment.~~market and to reward our teammates for their contributions in achieving strong operating results
~~(3.7)~~13.1		Increase in commitments to various charities and donor-advised funds in light of the Company’s financial performance
6.4		Increase in fleet-related expenses, including fuel costs
12.1		Other
$	~~22.0~~101.9	Total increase in SD&A expenses

Shipping and handling costs included in SD&A expenses were $567.0 million in the first nine months of 2022 and $502.7 million in the first nine months of ~~2021 and $465.0 million in the first nine months of 2020.~~2021.

Interest Expense, Net

Interest expense, net decreased ~~$2.6~~$4.3 million, or ~~9.3%~~17.0%, to $20.9 million in the first nine months of 2022, as compared to $25.2 million in the first nine months of ~~2021, as compared to $27.8 million in the first nine months of 2020.~~2021. The decrease was primarily a result of lower average debt balances.

Other Expense, Net

A summary of other expense, net is as follows:


		First Nine Months					First Nine Months
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Increase in the fair value of the acquisition related contingent consideration liability	Increase in the fair value of the acquisition related contingent consideration liability	$	90,905	$	35,068	Increase in the fair value of the acquisition related contingent consideration liability	$	21,132	$	90,905
Non-service cost component of net periodic benefit cost	Non-service cost component of net periodic benefit cost	3,173		4,758		Non-service cost component of net periodic benefit cost	6,534		3,173
Total other expense, net	Total other expense, net	$	94,078	$	39,826	Total other expense, net	$	27,666	$	94,078

The ~~increase~~change in the fair value of the acquisition related contingent consideration liability in the first nine months of ~~2021~~2022 as compared to the first nine months of ~~2020~~2021 was primarily driven by an increase in the discount rate used to calculate fair value, partially offset by higher projections of future cash flows in the distribution territories subject to acquisition related sub-bottling ~~fees.~~payments.

Income Tax Expense

The Company’s effective income tax rate was 25.7% for the first nine months of 2022 and 26.8% for the first nine months of ~~2021 and 25.6%~~2021. The Company’s income tax expense increased $45.6 million, or 73.1%, to $107.9 million for the first nine months of ~~2020. The Company’s income tax expense increased $23.4 million, or 60.2%,~~2022, as compared to $62.3 million for the first nine months of ~~2021, as compared to $38.9 million for the first nine months of 2020.~~2021. The increase in income tax expense was primarily attributable to ~~improved financial results~~higher income before taxes during the first nine months of ~~2021~~2022 compared to the first nine months of ~~2020.~~

~~Noncontrolling Interest~~

The Company recorded net income attributable to noncontrolling interest of $7.2 million in the first nine months of 2020 related to the portion of Piedmont owned by The Coca‑Cola Company prior to the purchase by an indirect wholly owned subsidiary of the Company of the remaining 22.7% general partnership interest in Piedmont on December 9, 2020.2021.

Other Comprehensive Income, Net of Tax

Other comprehensive income, net of tax was ~~$3.7~~$2.4 million in the first nine months of ~~2021~~2022 and ~~$2.2~~$3.7 million in the first nine months ~~of 2020. The improvement was primarily related to the Company’s interest rate swap on the 2016 Term Loan Facility (as defined below), which matured during the second quarter~~ of 2021.

Segment Operating Results

The Company evaluates segment reporting in accordance with ~~the~~ Financial Accounting Standards Board Accounting Standards Codification Topic 280, Segment Reporting, each reporting period, including evaluating the reporting package reviewed by the Chief Operating Decision Maker (the “CODM”). The Company has concluded the Chief Executive Officer, the Chief Operating Officer and the Chief Financial Officer, as a group, represent the CODM. Asset information is not provided to the CODM.

3332

The Company believes three operating segments exist. Nonalcoholic Beverages represents the vast majority of the Company’s consolidated net sales and income from operations. The additional two operating segments do not meet the quantitative thresholds for separate reporting, either individually or in the aggregate, and, therefore, have been combined into “All Other.”

The Company’s segment results are as follows:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Net sales:	Net sales:									Net sales:
Nonalcoholic Beverages	Nonalcoholic Beverages	$	1,426,971	$	1,295,271	$	4,061,976	$	3,633,376	Nonalcoholic Beverages	$	1,600,065	$	1,426,971	$	4,535,300	$	4,061,976
All Other	All Other	88,991		84,776		272,132		246,406		All Other	101,136		88,991		303,209		272,132
Eliminations(1)	Eliminations(1)	(58,530)		(51,563)		(173,733)		(151,062)		Eliminations(1)	(72,612)		(58,530)		(210,347)		(173,733)
Consolidated net sales	Consolidated net sales	$	1,457,432	$	1,328,484	$	4,160,375	$	3,728,720	Consolidated net sales	$	1,628,589	$	1,457,432	$	4,628,162	$	4,160,375

Income from operations:	Income from operations:									Income from operations:
Nonalcoholic Beverages	Nonalcoholic Beverages	$	144,130	$	108,035	$	363,544	$	227,559	Nonalcoholic Beverages	$	189,218	$	144,130	$	467,788	$	363,544
All Other	All Other	(7,099)		(4,191)		(11,468)		(7,776)		All Other	712		(7,099)		420		(11,468)
Consolidated income from operations	Consolidated income from operations	$	137,031	$	103,844	$	352,076	$	219,783	Consolidated income from operations	$	189,930	$	137,031	$	468,208	$	352,076

Adjusted ~~Non-GAAP~~ Results (Non-GAAP)

The Company reports its financial results in accordance with accounting principles generally accepted in the United States (“GAAP”). However, management believes that certain non-GAAP financial measures provide users of the financial statements with additional, meaningful financial information that should be considered when assessing the Company’s ongoing performance. Management also uses these non-GAAP financial measures in making financial, operating and planning decisions and in evaluating the Company’s performance.

Non-GAAP financial measures should be viewed in addition to, and not as an alternative for, the Company’s reported results prepared in accordance with GAAP. The Company’s non-GAAP financial information does not represent a comprehensive basis of accounting.

The following tables reconcile reported results (GAAP) to adjusted results (non-GAAP):


		Third Quarter 2021													Third Quarter 2022
(in thousands, except per share data)	(in thousands, except per share data)	Gross profit		SD&A expenses		Income from operations		Income before income taxes		Net income		Basic net income per share		(in thousands, except per share data)	Gross profit		SD&A expenses		Income from operations		Income before taxes		Net income		Basic net income per share
Reported results (GAAP)	Reported results (GAAP)	$	517,712	$	380,681	$	137,031	$	93,952	$	68,930	$	7.36	Reported results (GAAP)	$	621,107	$	431,177	$	189,930	$	159,101	$	118,761	$	12.67
Fair value adjustment of acquisition related contingent consideration(1)	Fair value adjustment of acquisition related contingent consideration(1)	—		—		—		33,924		25,488		2.72		Fair value adjustment of acquisition related contingent consideration(1)	—		—		—		22,568		16,993		1.82
Fair value adjustments for commodity derivative instruments(2)	Fair value adjustments for commodity derivative instruments(2)	(3,794)		426		(4,220)		(4,220)		(3,169)		(0.34)		Fair value adjustments for commodity derivative instruments(2)	(1,100)		(4,711)		3,611		3,611		2,719		0.29
Supply chain optimization(3)	Supply chain optimization(3)	4,360		(35)		4,395		4,395		3,299		0.35		Supply chain optimization(3)	369		(6)		375		375		283		0.03
Total reconciling items	Total reconciling items	566		391		175		34,099		25,618		2.73		Total reconciling items	(731)		(4,717)		3,986		26,554		19,995		2.14
Adjusted results (non-GAAP)	Adjusted results (non-GAAP)	$	518,278	$	381,072	$	137,206	$	128,051	$	94,548	$	10.09	Adjusted results (non-GAAP)	$	620,376	$	426,460	$	193,916	$	185,655	$	138,756	$	14.81


	Third Quarter 2021
(in thousands, except per share data)	Gross profit		SD&A expenses		Income from operations		Income before taxes		Net income		Basic net income per share
Reported results (GAAP)	$	517,712	$	380,681	$	137,031	$	93,952	$	68,930	$	7.36
Fair value adjustment of acquisition related contingent consideration(1)	—		—		—		33,924		25,488		2.72
Fair value adjustments for commodity derivative instruments(2)	(3,794)		426		(4,220)		(4,220)		(3,169)		(0.34)
Supply chain optimization(3)	4,360		(35)		4,395		4,395		3,299		0.35
Total reconciling items	566		391		175		34,099		25,618		2.73
Adjusted results (non-GAAP)	$	518,278	$	381,072	$	137,206	$	128,051	$	94,548	$	10.09

3433


		Third Quarter 2020													First Nine Months 2022
(in thousands, except per share data)	(in thousands, except per share data)	Gross profit		SD&A expenses		Income from operations		Income before income taxes		Net income		Basic net income per share		(in thousands, except per share data)	Gross profit		SD&A expenses		Income from operations		Income before taxes		Net income		Basic net income per share
Reported results (GAAP)	Reported results (GAAP)	$	472,438	$	368,594	$	103,844	$	73,417	$	51,884	$	5.53	Reported results (GAAP)	$	1,679,342	$	1,211,134	$	468,208	$	419,614	$	311,713	$	33.25
Fair value adjustment of acquisition related contingent consideration(1)	Fair value adjustment of acquisition related contingent consideration(1)	—		—		—		19,808		14,895		1.60		Fair value adjustment of acquisition related contingent consideration(1)	—		—		—		21,132		15,912		1.70
Fair value adjustments for commodity derivative instruments(2)	Fair value adjustments for commodity derivative instruments(2)	(1,194)		575		(1,769)		(1,769)		(1,330)		(0.14)		Fair value adjustments for commodity derivative instruments(2)	5,069		2,512		2,557		2,557		1,925		0.21
Supply chain optimization(3)	Supply chain optimization(3)	3,122		—		3,122		3,122		2,348		0.25		Supply chain optimization(3)	458		(78)		536		536		404		0.04
Total reconciling items	Total reconciling items	1,928		575		1,353		21,161		15,913		1.71		Total reconciling items	5,527		2,434		3,093		24,225		18,241		1.95
Adjusted results (non-GAAP)	Adjusted results (non-GAAP)	$	474,366	$	369,169	$	105,197	$	94,578	$	67,797	$	7.24	Adjusted results (non-GAAP)	$	1,684,869	$	1,213,568	$	471,301	$	443,839	$	329,954	$	35.20

First Nine Months 2021
(in thousands, except per share data) Gross
profit SD&A
expenses Income from
operations Income before
income taxes Net
income Basic net income
per share
Reported results (GAAP) $ 1,461,355 $ 1,109,279 $ 352,076 $ 232,790 $ 170,473 $ 18.19
Fair value adjustment of acquisition related contingent consideration(1)
— — — 90,905 68,224 7.28
Fair value adjustments for commodity derivative instruments(2)
(6,210) 1,491 (7,701) (7,701) (5,780) (0.62)
Supply chain optimization(3)
6,464 (793) 7,257 7,257 5,446 0.58
Total reconciling items 254 698 (444) 90,461 67,890 7.24
Adjusted results (non-GAAP) $ 1,461,609 $ 1,109,977 $ 351,632 $ 323,251 $ 238,363 $ 25.43


		First Nine Months 2020													First Nine Months 2021
(in thousands, except per share data)	(in thousands, except per share data)	Gross profit		SD&A expenses		Income from operations		Income before income taxes		Net income		Basic net income per share		(in thousands, except per share data)	Gross profit		SD&A expenses		Income from operations		Income before taxes		Net income		Basic net income per share
Reported results (GAAP)	Reported results (GAAP)	$	1,307,034	$	1,087,251	$	219,783	$	152,179	$	106,115	$	11.32	Reported results (GAAP)	$	1,461,355	$	1,109,279	$	352,076	$	232,790	$	170,473	$	18.19
Fair value adjustment of acquisition related contingent consideration(1)	Fair value adjustment of acquisition related contingent consideration(1)	—		—		—		35,068		26,371		2.82		Fair value adjustment of acquisition related contingent consideration(1)	—		—		—		90,905		68,224		7.28
Fair value adjustments for commodity derivative instruments(2)	Fair value adjustments for commodity derivative instruments(2)	(924)		(949)		25		25		19		—		Fair value adjustments for commodity derivative instruments(2)	(6,210)		1,491		(7,701)		(7,701)		(5,780)		(0.62)
Supply chain optimization(3)	Supply chain optimization(3)	4,441		601		3,840		3,840		2,888		0.31		Supply chain optimization(3)	6,464		(793)		7,257		7,257		5,446		0.58
Total reconciling items	Total reconciling items	3,517		(348)		3,865		38,933		29,278		3.13		Total reconciling items	254		698		(444)		90,461		67,890		7.24
Adjusted results (non-GAAP)	Adjusted results (non-GAAP)	$	1,310,551	$	1,086,903	$	223,648	$	191,112	$	135,393	$	14.45	Adjusted results (non-GAAP)	$	1,461,609	$	1,109,977	$	351,632	$	323,251	$	238,363	$	25.43

Following is an explanation of non-GAAP adjustments:

(1)This non-cash, fair value adjustment of acquisition related contingent consideration fluctuates based on factors such as long-term interest rates and future cash flow projections of the distribution territories subject to acquisition related sub-bottling ~~fees.~~payments.

(2)The Company enters into commodity derivative instruments from time to time to hedge some or all of its projected purchases of aluminum, PET resin, diesel fuel and unleaded gasoline in order to mitigate commodity price risk. The Company accounts for its commodity derivative instruments on a mark-to-market basis.

(3)Adjustment reflects expenses within the Nonalcoholic Beverages segment as the Company continues to optimize efficiency opportunities across its business.

Financial Condition

Total assets were ~~$3.42~~$3.60 billion as of ~~October 1, 2021,~~September 30, 2022, which was an increase of ~~$197.5~~$151.7 million from December 31, ~~2020.~~2021. Net working capital, defined as current assets less current liabilities, was ~~$303.3~~$353.6 million as of ~~October 1, 2021,~~September 30, 2022, which was an increase of ~~$99.1~~$111.8 million from December 31, ~~2020.~~2021.

Significant changes in net working capital as of ~~October 1, 2021~~September 30, 2022 as compared to December 31, ~~2020~~2021 were as follows:

•An increase in ~~cash and cash equivalents of $132.1 million primarily as a result of our strong operating performance.~~

•~~An increase in~~ accounts receivable, trade of ~~$56.8~~$84.8 million, driven primarily by increased net sales ~~volume~~ and the timing of cash receipts.

•An increase in accounts ~~payable, trade~~receivable, other of ~~$53.4~~$36.3 million due to ~~the extension~~increased rebates due from CCBSS, primarily as a result of ~~payment terms for certain vendors~~volatility in raw material prices and the timing of cash ~~payments.~~receipts of rebates.

•An increase in accounts payable to The ~~Coca‑Cola~~Coca-Cola Company of ~~$46.5~~$44.2 million ~~primarily as a result of~~due to the timing of cash payments.

Liquidity and Capital Resources

The Company’s sources of capital include cash flows from operations, available credit facilities and the issuance of debt and equity securities. As of ~~October 1, 2021,~~September 30, 2022, the Company had ~~$186.9~~$163.2 million in cash and cash equivalents. The Company has obtained its ~~long-term~~long‑term debt from public markets, private placements and bank facilities. Management believes the Company has sufficient sources of capital available to finance its business plan, meet its working capital requirements and maintain an appropriate level of capital spending for at least the next 12 months from the issuance of the condensed consolidated financial statements. ~~At this time, the Company does not expect the COVID-19 pandemic to have a material impact on its liquidity or access to capital.~~

The Company’s long-term debt as of ~~October 1, 2021~~September 30, 2022 and December 31, ~~2020~~2021 was as follows:


(in thousands)	(in thousands)	Maturity Date	October 1, 2021		December 31, 2020		(in thousands)	Maturity Date	September 30, 2022		December 31, 2021
2016 Term Loan Facility(1)		6/7/2021	$	—	$	217,500
Senior notes	Senior notes	2/27/2023	125,000		125,000		Senior notes	2/27/2023	$	—	$	125,000
2018 Revolving Credit Facility		6/8/2023	—		—
2021 Term Loan Facility		7/9/2024	70,000		—
Senior bonds and unamortized discount on senior bonds(2)		11/25/2025	349,964		349,957
Senior bonds and unamortized discount on senior bonds(1)							Senior bonds and unamortized discount on senior bonds(1)	11/25/2025	349,972		349,966
2021 Revolving Credit Facility	2021 Revolving Credit Facility	7/9/2026	—		—		2021 Revolving Credit Facility	7/9/2026	—		—
Senior notes	Senior notes	10/10/2026	100,000		100,000		Senior notes	10/10/2026	100,000		100,000
Senior notes	Senior notes	3/21/2030	150,000		150,000		Senior notes	3/21/2030	150,000		150,000
Debt issuance costs	Debt issuance costs		(1,787)		(1,992)		Debt issuance costs		(1,194)		(1,523)
Total long-term debt	Total long-term debt		$	793,177	$	940,465	Total long-term debt		$	598,778	$	723,443

~~(2)~~The senior bonds due in 2025 were issued at 99.975% of par.

~~On July 9, 2021, the Company entered into~~senior notes with a credit agreement, providing for a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $500 million (the “2021 Revolving Credit Facility”), maturing on July 9, 2026. Subject to obtaining commitments from the lenders and satisfying other conditions specified in the 2021 Revolving Credit Facility Agreement, at the Company’s option, additional incremental revolving commitments of up to $250 million may be established under the 2021 Revolving Credit Facility to increase the aggregate revolving commitments under the 2021 Revolving Credit Facility to up to$750 million. Borrowings under the 2021 Revolving Credit Facility bear interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”). In addition, the Company must pay a facility fee on the lenders’ aggregate commitments under the 2021 Revolving Credit Facility ranging from 0.060% to 0.175% per annum, depending on the Company’s Debt Rating. The Company currently believes all banks participating in the 2021 Revolving Credit Facility have the ability to and will meet any funding requests from the Company. The 2021 Revolving Credit Facility replaced the 2018 Revolving Credit Facility, which had astated maturity date of ~~June 8,~~February 27, 2023.

~~Also on July 9, 2021,~~ There was no penalty for the Company entered into a term loan agreement, providing for a three-year senior unsecured term loan facility in the aggregate principal amount of $70 million (the “2021 Term Loan Facility”), maturing on July 9, 2024. Subject to obtaining commitments from the lenders and satisfying other conditions specified in the 2021 Term Loan Facility Agreement, at the Company’s option, additional incremental term loans of up to $50 million may be established under the 2021 Term Loan Facility to increase the aggregate principal amount of term loans under the 2021 Term Loan Facility to up to $120 million. Borrowings under the 2021 Term Loan Facility bear interest at a base rate or adjusted LIBOR, at the Company’s option, plus an applicable rate, depending on the Company’s Debt Rating. The entire amountearly repayment of the 2021 Term Loan Facility was fully drawn on July 9, 2021. The Company used approximately $55 million of the proceeds of the 2021 Term Loan Facility to repay outstanding indebtedness under the 2018 Revolving Credit Facility and used the remaining proceeds for general corporate purposes. Subsequent to the end of the third quarter of 2021, the Company notified the lender of its intent to repay the $70 million of borrowings outstanding under the 2021 Term Loan Facility during the fourth quarter of 2021.senior notes.

The indenture under which the Company’s senior bonds were issued does not include financial covenants but does limit the incurrence of certain liens and encumbrances as well as indebtedness by the Company’s subsidiaries in excess of certain amounts. The agreements under which the Company’s nonpublic debt was issued include two financial covenants: a consolidated cash flow/fixed charges ratio and a consolidated funded indebtedness/cash flow ratio, each as defined in the respective agreement. The Company was in compliance with these covenants as of ~~October 1, 2021.~~September 30, 2022. These covenants dohave not ~~currently,~~restricted, and are not expected to restrict, the ~~Company does not anticipate they will, restrict its~~Company’s liquidity or capital resources.

All outstanding ~~long-term~~long‑term debt has been issued by the Company and none has been issued by any of its subsidiaries. There are no guarantees of the Company’s long‑term debt.

The Company’s Board of Directors has declared, and the Company has paid, dividends on the Common Stock and the Class B Common Stock and each class of common stock has participated equally in all dividends each quarter for more than 25 years. The amount and frequency of future dividends will be determined by the Company’s Board of Directors in light of the earnings and financial condition of the Company at such time, and no assurance can be given that dividends will be declared or paid in the future.

The Company’s credit ratings are reviewed periodically by certain nationally recognized rating agencies. Changes in the Company’s operating results or financial position could result in changes in the Company’s credit ratings. Lower credit ratings could result in higher borrowing costs for the Company or reduced access to capital markets, which could have a material adverse impact on the Company’s operating results or financial position. As of ~~October 1, 2021,~~September 30, 2022, the Company’s credit ratings and outlook for its ~~long-term~~long‑term debt were as follows:

Credit Rating

Rating Outlook

Moody’s

Baa1

Stable

Standard & Poor’s

BBB

Positive

~~Moody’s~~

~~Baa1~~

~~Stable~~

Subsequent to quarter end, on October 26, 2022, Standard & Poor’s upgraded the Company’s credit rating to BBB+ with a stable outlook.

The Company’s only Level 3 asset or liability is the acquisition related contingent consideration liability. There were no transfers from Level 1 or Level 2 in any period presented. Fair value adjustments were non-cash, and, therefore, did not impact the Company’s liquidity or capital resources. Following is a summary of the Level 3 activity:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Beginning balance - Level 3 liability	Beginning balance - Level 3 liability	$	473,055	$	441,113	$	434,694	$	446,684	Beginning balance - Level 3 liability	$	522,259	$	473,055	$	542,105	$	434,694
Payments of acquisition related contingent consideration	Payments of acquisition related contingent consideration	(8,720)		(11,468)		(28,640)		(31,999)		Payments of acquisition related contingent consideration	(9,711)		(8,720)		(28,421)		(28,640)
Reclassification to current payables	Reclassification to current payables	(1,600)		(800)		(300)		(1,100)		Reclassification to current payables	1,800		(1,600)		2,100		(300)
Increase in fair value	Increase in fair value	33,924		19,808		90,905		35,068		Increase in fair value	22,568		33,924		21,132		90,905
Ending balance - Level 3 liability	Ending balance - Level 3 liability	$	496,659	$	448,653	$	496,659	$	448,653	Ending balance - Level 3 liability	$	536,916	$	496,659	$	536,916	$	496,659

3735

Cash Sources and Uses

A summary of cash-based activity is as follows:


		First Nine Months					First Nine Months
(in thousands)	(in thousands)	2021		2020		(in thousands)	2022		2021
Cash Sources:	Cash Sources:					Cash Sources:
Net cash provided by operating activities(1)	Net cash provided by operating activities(1)	$	439,875	$	376,401	Net cash provided by operating activities(1)	$	394,309	$	439,875
Proceeds from the sale of property, plant and equipment						Proceeds from the sale of property, plant and equipment	5,348		4,215
Borrowings under term loan facility	Borrowings under term loan facility	70,000		—		Borrowings under term loan facility	—		70,000
Borrowings under revolving credit facility	Borrowings under revolving credit facility	55,000		235,000		Borrowings under revolving credit facility	—		55,000
Proceeds from the sale of property, plant and equipment		4,215		2,397
Total cash sources	Total cash sources	$	569,090	$	613,798	Total cash sources	$	399,657	$	569,090

Cash Uses:	Cash Uses:					Cash Uses:
Payments on term loan facility		$	217,500	$	22,500
Additions to property, plant and equipment	Additions to property, plant and equipment	119,620		110,717		Additions to property, plant and equipment	$	183,929	$	119,620
Payments on revolving credit facility		55,000		280,000
Payments on term loan facility and senior notes						Payments on term loan facility and senior notes	125,000		217,500
Acquisition of BODYARMOR distribution rights						Acquisition of BODYARMOR distribution rights	30,149		1,998
Payments of acquisition related contingent consideration	Payments of acquisition related contingent consideration	28,640		31,999		Payments of acquisition related contingent consideration	28,421		28,640
Cash dividends paid	Cash dividends paid	7,030		7,030		Cash dividends paid	7,030		7,030
Payments on financing lease obligations	Payments on financing lease obligations	3,567		4,428		Payments on financing lease obligations	2,441		3,567
Other distribution agreements		1,998		—
Payments on revolving credit facility						Payments on revolving credit facility	—		55,000
Other	Other	3,650		1,915		Other	1,757		3,650
Total cash uses	Total cash uses	$	437,005	$	458,589	Total cash uses	$	378,727	$	437,005
Net increase in cash during period	Net increase in cash during period	$	132,085	$	155,209	Net increase in cash during period	$	20,930	$	132,085

(1)Net cash provided by operating activities in the first nine months of 2022 included net income tax payments of $96.5 million, payment of deferred payroll taxes under the Coronavirus Aid, Relief and Economic Security Act (the “CARES Act”) of $18.7 million and pension plan contributions of $26.0 million. Net cash provided by operating activities in the first nine months of 2021 included net income tax payments of $45.6 million, payment of deferred payroll taxes under the CARES Act of $18.7 million and pension plan contributions of $6.8 million. Net cash provided by operating activities in the first nine months of 2020 included net income tax payments of $36.9 million, deferral of payroll taxes under the CARES Act of $24.6 million and pension plan contributions of $16.3 million.

Cash Flows From Operating Activities

During the first nine months of ~~2021,~~2022, cash provided by operating activities was ~~$439.9~~$394.3 million, which was ~~an increase~~a decrease of ~~$63.5~~$45.6 million as compared to the first nine months of ~~2020.~~2021. The ~~increase was primarily~~cash flows from operations were impacted by the ~~result~~timing of ~~strong operating performance.~~certain working capital payments and receipts.

Cash Flows From Investing Activities

During the first nine months of ~~2021,~~2022, cash used in investing activities was ~~$119.6~~$210.3 million, which was an increase of ~~$9.5~~$90.7 million as compared to the first nine months of ~~2020.~~2021. The increase was primarily a result of additions to property, plant and equipment, which were $183.9 million during the first nine months of 2022 and $119.6 million during the first nine months of ~~2021 and $110.7 million during the first nine months of 2020.~~2021. There were ~~$9.6~~$20.0 million and ~~$25.5~~$9.6 million of additions to property, plant and equipment accrued in accounts payable, trade as of September 30, 2022 and October 1, 2021, ~~and September 27, 2020,~~ respectively.

~~The~~On January 1, 2022, the Company ~~anticipates~~acquired $30.1 million of additional BODYARMOR distribution rights. On March 17, 2022, CCBCC Operations, LLC, a wholly owned subsidiary of the Company, purchased the Snyder Production Center and an adjacent sales facility in Charlotte, North Carolina for a purchase price of $60.0 million, which was included in additions to property, plant and ~~equipment for 2021 to be in the range of $170 million to $190 million, with remaining anticipated expenditures in the fourth quarter of 2021 of $50 million to $70 million.~~equipment.

Cash Flows From Financing Activities

During the first nine months of ~~2021,~~2022, cash used in financing activities was ~~$188.2~~$163.1 million, which was ~~an increase~~a decrease of ~~$77.1~~$25.1 million as compared to the first nine months of ~~2020.~~2021. The ~~increase~~decrease was primarily a result of ~~the repayment~~higher repayments of ~~$217.5 million on the 2016 Term Loan Facility~~debt during the first nine months of 2021 as compared to the first nine months of 2022, partially offset by borrowings ~~of $70.0 million~~ under the ~~2021 Term Loan Facility.~~Company’s credit facilities during the first nine months of 2021.

The Company had cash payments for acquisition related contingent consideration of $28.4 million during the first nine months of 2022 and $28.6 million during the first nine months of ~~2021 and $32.0 million during the first nine months of 2020.~~2021. The Company anticipates that the amount it could pay annually under the acquisition related contingent consideration arrangements for the distribution territories subject to acquisition related sub-bottling ~~fees~~payments will be in the range of ~~$32~~$35 million to ~~$59~~$75 million.

~~Critical Accounting Policies~~On September 13, 2022, the Company used cash on hand to repay the $125 million of senior notes with a stated maturity date of February 27, 2023. There was no penalty for the early repayment of the senior notes.

~~See Note 1~~During 2021, the Company used a combination of cash on hand and borrowings under its previous revolving credit facility (the “2018 Revolving Credit Facility”) to repay the ~~condensed consolidated financial statements~~remaining balance of its previous term loan facility that matured on June 7, 2021.

Also during 2021, the Company entered into a credit agreement, providing for ~~information~~a five-year unsecured revolving credit facility with an aggregate maximum borrowing capacity of $500 million (the “2021 Revolving Credit Facility”), maturing on July 9, 2026. Borrowings under the 2021 Revolving Credit Facility bear interest at a base rate or adjusted London InterBank Offered Rate (“LIBOR”), at the Company’s option, plus an applicable rate, depending on the rating for the Company’s long-term senior unsecured, non-credit-enhanced debt (“Debt Rating”). The 2021 Revolving Credit Facility’s underlying credit agreement includes successor LIBOR provisions, providing that the Secured Overnight Financing Rate will be used as the LIBOR replacement rate for borrowings under the facility after June 30, 2023, unless the Company and its lenders agree to an alternative reference rate based on prevailing market convention at the replacement date. In addition, the Company must pay a facility fee on the lenders’ aggregate commitments under the 2021 Revolving Credit Facility ranging from 0.060% to 0.175% per annum, depending on the Company’s ~~critical accounting policies.~~Debt Rating. The Company currently believes all banks participating in the 2021 Revolving Credit Facility have the ability to and will meet any funding requests from the Company. The 2021 Revolving Credit Facility replaced the 2018 Revolving Credit Facility.

~~Off-Balance Sheet Arrangements~~

The Company is a shareholder of South Atlantic Canners, Inc. (“SAC”), a manufacturing cooperative located in Bishopville, South Carolina. All of SAC’s shareholders are Coca‑Cola bottlers and each has equal voting rights. As of October 1,Also during 2021, the Company ~~had guaranteed $14.7~~entered into a term loan agreement, providing for a three-year senior unsecured term loan facility in the aggregate principal amount of $70 million ~~of SAC’s debt. In the event SAC fails to fulfill its commitments~~(the “2021 Term Loan Facility”), maturing on July 9, 2024. Borrowings under the ~~related debt,~~2021 Term Loan Facility bore interest at a base rate or adjusted LIBOR, at the ~~Company would be responsible for payment to~~Company’s option, plus an applicable rate, depending on the ~~lenders up to the level~~Company’s Debt Rating. The entire amount of the guarantee. The Company does not anticipate SAC will fail to fulfill its commitments related to the debt. The Company further believes SAC has sufficient assets, including production equipment, facilities2021 Term Loan Facility was fully drawn and working capital, and the ability to adjust selling prices of its products to adequately mitigate the risk of material loss from the Company’s guarantee. See Note 20 to the condensed consolidated financial statements for additional information.subsequently repaid during 2021.

Hedging Activities

The Company uses commodity derivative instruments to manage its exposure to fluctuations in certain commodity prices. Fees paid by the Company for commodity derivative instruments are amortized over the corresponding period of the instrument. The Company accounts for its commodity derivative instruments on a mark-to-market basis with any expense or income being reflected as an adjustment to cost of sales or SD&A expenses, consistent with the expense classification of the underlying hedged item.

The Company uses several different financial institutions for commodity derivative instruments to minimize the concentration of credit risk. The Company has master agreements with the counterparties to its commodity derivative instruments that provide for net settlement of derivative transactions. The net impact of the commodity derivative instruments on the condensed consolidated statements of operations was as follows:


		Third Quarter				First Nine Months					Third Quarter				First Nine Months
(in thousands)	(in thousands)	2021		2020		2021		2020		(in thousands)	2022		2021		2022		2021
Increase (decrease) in cost of sales	Increase (decrease) in cost of sales	$	(5,923)	$	(814)	$	(12,576)	$	1,778	Increase (decrease) in cost of sales	$	484	$	(5,923)	$	3,413	$	(12,576)
Increase (decrease) in SD&A expenses	Increase (decrease) in SD&A expenses	(965)		296		(2,876)		3,291		Increase (decrease) in SD&A expenses	683		(965)		(14,459)		(2,876)
Net impact	Net impact	$	(6,888)	$	(518)	$	(15,452)	$	5,069	Net impact	$	1,167	$	(6,888)	$	(11,046)	$	(15,452)

Cautionary ~~Information~~Note Regarding Forward-Looking Statements

Certain statements ~~contained~~made in this report, or in other public filings, press releases, or other written or oral communications made by the Company, ~~or its representatives,~~ which are not historical facts, are forward-looking statements subject to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements ~~address, among other things, Company plans, activities or events~~involve risks and uncertainties which ~~the Company expects~~we expect will or may occur in the future and may include express or implied projections of revenue or expenditures; statements of plans and objectives for future operations, growth or initiatives; statements of future economic performance, including, but not limited to, the state of the economy, capital investment and financing plans, net sales, cost of sales, SD&A expenses, gross profit, income tax rates, net income per diluted share, dividends, pension plan contributions and estimated acquisition related contingent consideration payments; statements regarding the outcome or impact ~~of certain recent accounting pronouncements and pending or threatened litigation; or statements regarding the impact of the COVID-19 pandemic on the Company’s~~our business, financial condition and results of ~~operations or cash flows.~~

operations. The words “anticipate,” “believe,” “expect,” “intend,” “project,” “may,” “will,” “should,” “could” and similar expressions are intended to identify those forward-looking statements.

These forward-looking statements reflect the Company’s best judgment based on current information, and, although we base these statements on circumstances that we believe to be reasonable when made, there can be

no assurance that future events will not affect the accuracy of such forward-looking information. As such, the forward-looking statements are not guarantees of future performance, and actual results may ~~be identified by~~vary materially from the use of the words “will,” “may,” “believe,” “plan,” “estimate,” “expect,” “anticipate,” “probably,” “should,” “project,” “intend,” “continue,” “could,” “strive”projected results and ~~other similar terms and expressions. Various factors, risks and uncertainties may~~expectations discussed in this report. Factors that might cause the Company’s actual results to differ materially from those ~~expressed or implied~~anticipated in ~~any~~ forward-looking ~~statements. Factors, risks and uncertainties that may result in actual results differing from such forward-looking information~~statements include, but are not limited to: increased costs (including due to ~~those listed~~inflation), disruption of supply or unavailability or shortages of raw materials, fuel and other supplies; the inability to attract and retain front-line employees in a tight labor market; the reliance on purchased finished products from external sources; changes in public and consumer perception and preferences, including concerns related to product safety and sustainability, artificial ingredients, brand reputation and obesity; the COVID-19 pandemic and other pandemic outbreaks in the future; changes in government regulations related to nonalcoholic beverages, including regulations related to obesity, public health, artificial ingredients and product safety and sustainability; decreases from historic levels of marketing funding support provided to us by The Coca‑Cola Company and other beverage companies; material changes in the performance requirements for marketing funding support or our inability to meet such requirements; decreases from historic levels of advertising, marketing and product innovation spending by The Coca‑Cola Company and other beverage companies, or advertising campaigns that are negatively perceived by the public; any failure of the several Coca‑Cola system governance entities of which we are a participant to function efficiently or on our best behalf and any failure or delay of ours to receive anticipated benefits from these governance entities; provisions in our beverage distribution and manufacturing agreements with The Coca‑Cola Company that could delay or prevent a change in control of us or a sale of our Coca‑Cola distribution or manufacturing businesses; the concentration of our capital stock ownership; our inability to meet requirements under our beverage distribution and manufacturing agreements; changes in the inputs used to calculate our acquisition related contingent consideration liability; technology failures or cyberattacks on our technology systems or our effective response to technology failures or cyberattacks on our customers’, suppliers’ or other third parties’ technology systems; unfavorable changes in the general economy; changes in our top customer relationships and marketing strategies; lower than expected net pricing of our products resulting from continued and increased customer and competitor consolidations and marketplace competition; the effect of changes in our level of debt, borrowing costs and credit ratings on our access to capital and credit markets, operating flexibility and ability to obtain additional financing to fund future needs; the failure to attract, train and retain qualified employees while controlling labor costs, and other labor issues; the failure to maintain productive relationships with our employees covered by collective bargaining agreements, including failing to renegotiate collective bargaining agreements; changes in accounting standards; our use of estimates and assumptions; changes in tax laws, disagreements with tax authorities or additional tax liabilities; changes in legal contingencies; natural disasters, changing weather patterns and unfavorable weather; climate change or legislative or regulatory responses to such change; and the risks discussed in “Item 1A. Risk Factors” of ~~our~~the Company’s Annual Report on Form 10-K for ~~2020, as well as other factors discussed throughout this report, including, without limitation,~~ the factors described under “Critical Accounting Policies” in Note 1 to the condensed consolidated financial statements, or in other filings or statements made by the Company. All of the forward-looking statementsfiscal year ended December 31, 2021 and elsewhere in this ~~report and other filings or statements are qualified by these and other factors, risks and uncertainties.~~report.

Caution should be taken not to place undue reliance on the forward-looking statements included in this report. The Company assumes no obligation to update any forward-looking statements ~~even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized,~~ except as may be required by law. In evaluating forward-looking statements, these risks and uncertainties should be considered, together with the other risks described from time to time in the Company’s ~~other~~ reports and ~~documents filed~~other filings with the United States Securities and Exchange Commission.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

The Company is subject to interest rate risk on its ~~variable rate debt, including the 2021 Revolving Credit Facility~~revolving credit facility and ~~the 2021 Term Loan Facility. Assuming~~did not have any outstanding borrowings on its revolving credit facility as of September 30, 2022. As such, assuming no changes in the Company’s capital structure, if market interest rates average 1% more over the next 12 months than the interest rates as of ~~October 1, 2021,~~September 30, 2022, there would be no change to interest expense for the next 12 months would increase by approximately $0.7 million. This amount was determined by calculating the effect of the hypothetical interest rate on the Company’s variable rate debt. This calculated, hypothetical increase in interest expense for the following 12 months may be different from the actual increase in interest expense from a 1% increase in interest rates due to varying interest rate reset dates on the Company’s variable rate debt.months.

The Company’s acquisition related contingent consideration liability, which is adjusted to fair value each reporting period, is also impacted by changes in interest rates. The risk-free interest rate used to estimate the Company’s WACC is a component of the discount rate used to calculate the present value of expected future ~~cash flows~~acquisition related sub-bottling payments due under the Company’s comprehensive beverage agreements. As a result, any changes in the underlying risk-free interest rate could result in material changes to the fair value of the acquisition related contingent consideration liability and could materially impact the amount of non-cash expense (or income) recorded each reporting period.

The Company is exposed to certain market risks and commodity price risk that arise in the ordinary course of business. The Company may enter into commodity derivative instruments to manage or reduce market risk. The Company does not ~~enter into~~use commodity derivative instruments for trading or speculative purposes.

The Company is also subject to commodity price risk arising from price movements for certain commodities included as part of its raw materials. The Company manages this commodity price risk in some cases by entering into contracts with adjustable prices to hedge commodity purchases. The Company periodically uses commodity derivative instruments in the management of this risk.

The Company estimates a 10% increase in the market prices of commodities included as part of its raw materials over the current market prices would cumulatively increase costs during the next 12 months by approximately ~~$63.8~~$71.2 million assuming no change in volume.

Fees paid by the Company for agreements to hedge commodity purchases are amortized over the corresponding period of the agreement. The Company accounts for its commodity derivative instruments on a mark-to-market basis with any expense or income being reflected as an adjustment to cost of sales or SD&A expenses, consistent with the expense classification of the underlying hedged item.

The ~~annual~~ rate of inflation in the United States, as measured by year-over-year changes in the Consumer Price Index (the “CPI”), was 8.2% in September 2022, as compared to 7.0% in December 2021 and 1.4% in ~~2020 and 2.3% in 2019.~~December 2020. Inflation in the prices of those commodities important to the Company’s business is reflected in changes in the CPI, but commodity prices are volatile and in recent years have moved at a faster rate of change than the CPI.

The principal effect of inflation in both commodity and consumer prices on the Company’s operating results is to increase costs, both of goods sold and SD&A expenses. Although the Company can offset these cost increases by increasing selling prices for its products, consumers may not have the buying power to cover these increased costs and may reduce their volume of purchases of those products. In that event, selling price increases may not be sufficient to offset completely the Company’s cost increases.

Item 4. Controls and Procedures.

As of the end of the period covered by this report, the Company carried out an evaluation, under the supervision and with the participation of the Company’s management, including the Company’s Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of the Company’s “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) pursuant to Rule 13a-15(b) of the Exchange Act. Based upon that evaluation, the Chief Executive Officer and the Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of ~~October 1, 2021.~~September 30, 2022.

There has been no change in the Company’s internal control over financial reporting during the quarter ended ~~October 1, 2021~~September 30, 2022 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

4139

PART II - OTHER INFORMATION

Item 1. Legal Proceedings.

Item 1A. Risk Factors.

There have been no material changes in the Company’s risk factors from those disclosed in “Item 1A. Risk Factors” of the Company’s Annual Report on Form 10‑K for ~~2020.~~2021.

4240

Item 6. Exhibits.

Exhibit

No.

Description

Incorporated by Reference or
Filed/Furnished Herewith

3.1

Restated Certificate of Incorporation of the Company.

Exhibit 3.1 to the Company’s Quarterly Report on Form 10-Q for the quarter ended July 2, 2017 (File No. 0-9286).

3.2

Certificate of Amendment to Restated Certificate of Incorporation of the Company.

Exhibit 3.1 to the Company’s Current Report on Form 8-K filed on January 2, 2019 (File No. 0-9286).

3.3

Amended and Restated By-laws of the Company.

Exhibit 3.2 to the Company’s Current Report on Form 8-K filed on January 2, 2019 (File No. 0-9286).

~~10.1~~

Credit Agreement, dated as of July 9, 2021, by and among the Company, Wells Fargo Bank, National Association, as administrative agent, swingline lender and issuing lender, and the other lenders party thereto.

~~Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on July 13, 2021 (File No. 0-9286).~~

~~10.2~~

~~Term Loan Agreement, dated as of July 9, 2021, by and among the Company, Wells Fargo Bank, National Association, as administrative agent, and the other lenders party thereto.~~

~~Exhibit 10.2 to the Company’s Current Report on Form 8-K filed on July 13, 2021 (File No. 0-9286).~~

31.1

Certification of Principal Executive Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

31.2

Certification of Principal Financial Officer pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

Filed herewith.

Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

Furnished herewith.

101.INS

Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Filed herewith.

101.SCH

Inline XBRL Taxonomy Extension Schema Document.

Filed herewith.

101.CAL

Inline XBRL Taxonomy Extension Calculation Linkbase Document.

Filed herewith.

101.DEF

Inline XBRL Taxonomy Extension Definition Linkbase Document.

Filed herewith.

101.LAB

Inline XBRL Taxonomy Extension Label Linkbase Document.

Filed herewith.

101.PRE

Inline XBRL Taxonomy Extension Presentation Linkbase Document.

Filed herewith.

104

Cover Page Interactive Data File – the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

Filed herewith.

4341

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


		COCA-COLA CONSOLIDATED, INC. (REGISTRANT)

Date: November ~~9, 2021~~1, 2022	By:	/s/ F. Scott Anthony
		F. Scott Anthony Executive Vice President and Chief Financial Officer (Principal Financial Officer of the Registrant)

Date: November ~~9, 2021~~1, 2022	By:	/s/ Matthew J. Blickley
		Matthew J. Blickley Senior Vice President, Financial Planning and Chief Accounting Officer (Principal Accounting Officer of the Registrant)

4442


		Page

	PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements (Unaudited)

	Condensed Consolidated Statements of Operations	1

	Condensed Consolidated Statements of Comprehensive Income	2

	Condensed Consolidated Balance Sheets	3

	Condensed Consolidated Statements of Cash Flows	4

	Condensed Consolidated Statements of Changes in Stockholders’ Equity	5

	Notes to Condensed Consolidated Financial Statements	6

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	25

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	4038

Item 4.	Controls and Procedures	4039

	PART II – OTHER INFORMATION

Item 1.	Legal Proceedings	4240

Item 1A.	Risk Factors	4240

Item 6.	Exhibits	4341

	Signatures	4442


(in thousands)	June 28, 2020		Pre-tax Activity		Tax Effect		September 27, 2020
Net pension activity:
Actuarial loss	$	(91,381)	$	1,189	$	(293)	$	(90,485)
Prior service credits	—		5		(1)		4
Net postretirement benefits activity:
Actuarial loss	(1,059)		88		(22)		(993)
Prior service costs	(624)		—		—		(624)
Interest rate swap(1)	(1,283)		402		(99)		(980)
Foreign currency translation adjustment	(14)		15		(4)		(3)
Reclassification of stranded tax effects	(19,720)		—		—		(19,720)
Total AOCI(L)	$	(114,081)	$	1,699	$	(419)	$	(112,801)


(in thousands)	December 29, 2019		Pre-tax Activity		Tax Effect		September 27, 2020
Net pension activity:
Actuarial loss	$	(93,174)	$	3,568	$	(879)	$	(90,485)
Prior service credits (costs)	(7)		14		(3)		4
Net postretirement benefits activity:
Actuarial loss	(1,191)		263		(65)		(993)
Prior service costs	(624)		—		—		(624)
Interest rate swap	(270)		(942)		232		(980)
Foreign currency translation adjustment	(16)		18		(5)		(3)
Reclassification of stranded tax effects	(19,720)		—		—		(19,720)
Total AOCI(L)	$	(115,002)	$	2,921	$	(720)	$	(112,801)


	Bottle/Can Sales Volume
	Third Quarter				Bottle/Can Sales Volume
Product Category	2021		2020		% Change
Sparkling beverages	67.5	%	67.5	%	(0.6)	%
Still beverages	32.5	%	32.5	%	(0.7)	%
Total bottle/can sales volume	100.0	%	100.0	%	(0.6)	%