UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C. 20549

FORM 10-K

(Mark one)[ X
      ]
    
    ANNUAL
      REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
      1934For the
      Fiscal Year Ended: September 28,
      2008OR[    ]
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
      EXCHANGE ACT OF 1934For the
      transition period from __________ to __________**Commission File
      Number:****1-6905**


|**RUDDICK CORPORATION**                                     
|------------------------------------------------------------
|(Exact name of registrant as
      specified in its charter)

|North Carolina                  |  | 56-0905940            
|------------------------------- |  | ----------------------
|(State or other jurisdiction of |  | (I.R.S.
      Employer
|incorporation or organization)  |  | Identification Number)
|                               

| | **301
      S. Tryon St., Suite 1800, Charlotte, North Carolina** |  | 28202      | 
| | ----------------------------------------------------------------- |  | ---------- | 
| | (Address of principal executive
      offices)                    |  | (Zip Code) | 

Registrant's telephone number, including
area code: (704) 372-5404

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

|Title of each class:                           |  | Name of exchange on which
      registered:
|---------------------------------------------- |  | -------------------------------------------
|Common
      Stock                             |  | New York Stock
      Exchange, Inc.        
|Rights to
      Purchase Series A Junior       |  |                                            
|Participating Additional
      Preferred Stock |  | New York Stock
      Exchange, Inc.        

Securities registered pursuant to
Section 12(g) of the Act: None





Indicate
by check mark if the registrant is a well-known seasoned issuer, as defined in
Rule 405 of the Securities Act.
YesXNo

Indicate
by check mark if the registrant is not required to file reports pursuant to
Section 13 or Section 15(d) of the Act.
Yes No X

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 XNo

Indicate by check mark if disclosure
of delinquent filers pursuant to Item 405 of Regulation S-K is not contained
herein, and will not be contained, to the best of registrant's knowledge, in
definitive proxy or information statements incorporated by reference in Part III
of this Form 10-K or any amendment to this Form 10-K. [  ]

Indicate by
check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer, or a smaller reporting company. See
definition of large accelerated filer, accelerated filer and smaller
reporting company in Rule 12b-2 of the Exchange Act. (Check
one):

Large
      accelerated filer X_
    
    Accelerated
      filerNon-accelerated
      filer
    
    Smaller
      reporting company(Do not check if
      a smaller reporting company)


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

The aggregate market value of the
voting stock held by non-affiliates of the registrant, computed by reference to
the closing price as of the last business day of the registrants most recently
completed second fiscal quarter, March 30, 2008, was $1,478,681,000. The
registrant has no non-voting stock.

As of November 14, 2008, the
registrant had outstanding 48,314,827 shares of Common Stock.

---

DOCUMENTS INCORPORATED BY REFERENCE

Part III:
Portions of the Definitive Proxy Statement to be filed with the Securities and
Exchange Commission in connection with the solicitation of proxies for the
Companys 2009 Annual Meeting of Shareholders to be held on February 19, 2009
are incorporated by reference into Part III. (With the exception of those
portions which are specifically incorporated by reference in this Form 10-K, the
Proxy Statement is not deemed to be filed or incorporated by reference as part
of this report.)

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RUDDICK CORPORATION AND
CONSOLIDATED SUBSIDIARIES

FORM 10-K FOR THE FISCAL YEAR ENDED
SEPTEMBER 28, 2008

TABLE OF CONTENTS

|PART
      I   |  |                                                                    |     
|-------------- |  | ------------------------------------------------------------------ | ----
|               |  |                                                                    | Page
|Item 1.        |  | Business                                                           | 1   
|Item
    1A.   |  | Risk
      Factors                                                 | 3   
|Item 1B.       |  | Unresolved Staff Comments                                          | 6   
|Item
    2.    |  | Properties                                                         | 6   
|Item 3.        |  | Legal Proceedings                                                  | 7   
|Item
    4.    |  | Submission of
      Matters to a Vote of Security Holders          | 7   
|Item 4A.       |  | Executive Officers of the Registrant                               | 7   
|              
|PART
      II  |  |                                                                    |     
|              
|Item 5.        |  | Market for Registrant's Common Equity, Related
    Shareholder     |     
|               |  | Matters and Issuer Purchases of Equity Securities                  | 8   
|Item
    6.    |  | Selected
      Financial Data                                      | 10  
|Item 7.        |  | Management's Discussion and Analysis of Financial
    Condition    |     
|               |  | and Results of Operations                                          | 10  
|Item
    7A.   |  | Quantitative and
      Qualitative Disclosures about Market Risk   | 22  
|Item 8.        |  | Financial Statements and Supplementary Data                        | 23  
|Item
    9.    |  | Changes in and
      Disagreements with Accountants on Accounting  |     
|               |  | and Financial
      Disclosure                                     | 47  
|Item 9A.       |  | Controls and Procedures                                            | 47  
|Item
    9B.   |  | Other
      Information                                            | 48  
|              
|PART
      III |  |                                                                    |     
|              
|Item 10.       |  | Directors and Executive Officers of the Registrant                 | 49  
|Item
    11.   |  | Executive
      Compensation                                       | 49  
|Item 12.       |  | Security Ownership of Certain Beneficial Owners and                |     
|               |  | Management and Related Shareholder Matters                         | 49  
|Item
    13.   |  | Certain
      Relationships and Related Transactions, and Director |     
|               |  | Independence                                                       | 49  
|Item 14.       |  | Principal Accountant Fees and Services                             | 49  
|              
|PART
      IV  |  |                                                                    |     
|              
|Item 15.       |  | Exhibits and Financial Statement Schedules                         | 50  

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PART I

Item 1.Business

Ruddick Corporation (the Company) is
a holding company which, through its wholly-owned subsidiaries, is engaged in
two primary businesses: Harris Teeter, Inc. (Harris Teeter) currently operates
a regional chain of supermarkets in eight states in the southeastern U.S. and
the District of Columbia, while American & Efird, Inc. (A&E)
manufactures and distributes industrial sewing thread, embroidery thread and
technical textiles on a global basis.

At September 28, 2008, the Company and
its subsidiaries had total consolidated assets of $1,696,407,000 and had
approximately 25,500 employees. The principal executive office of the Company is
located at 301 S. Tryon Street, Suite 1800, Charlotte, North Carolina, 28202.

Ruddick Corporation, which is
incorporated under North Carolina law, was created in 1968 through the
consolidation of the predecessor companies of Ruddick Investment Company (which
was subsequently merged into Ruddick Operating Company) and A&E. In 1969,
the Company acquired Harris Teeter. Ruddick Operating Company is not
classified as a separate operating component of the Company due to its limited
operations and relative size to the consolidated group. Ruddick Operating
Company manages venture capital holdings in a limited number of entities and has
investments in various independently managed venture capital investment funds.
For information regarding the Companys investments, see the Note entitled
Summary of Significant Accounting Policies of the Notes to Consolidated
Financial Statements in Item 8 hereof.

The two primary businesses of the
Company, together with financial information and competitive aspects of such
businesses, are discussed separately below. For other information regarding
industry segments, see the Note entitled Industry Segment Information of the
Notes to Consolidated Financial Statements in Item 8 hereof.

The only foreign operations conducted
by the Company are through A&E. Neither of the two primary businesses would
be characterized as seasonal. The following analysis is based upon the Companys
operating locations for the fiscal periods and year end (in thousands):

2008
    
    2007
    
    2006Net Sales for the Fiscal Year:Domestic United States
    $
    3,810,635
    
    $
    3,454,198
    
    $
    3,089,776Foreign
      Countries
    
    181,762
    
    
    185,010
    
    
    176,080$
    3,992,397
    
    $
    3,639,208
    
    $
    3,265,856Net Long-Lived Assets at Fiscal Year End:Domestic United States
    $
    978,363
    
    $
    860,493
    
    $
    726,128Foreign
      Countries
    
    40,625
    
    
    41,990
    
    
    42,748$
    1,018,988
    
    $
    902,483
    
    $
    768,876


The Companys consolidated working
capital as of September 28, 2008 consisted of $477,156,000 in current assets and
$410,803,000 in current liabilities. Normal operating fluctuations in these
balances can result in changes to cash flow from operating activities presented
in the statements of consolidated cash flows that are not necessarily indicative
of long-term operating trends. There are no unusual industry practices or
requirements relating to working capital items in either of the Companys
subsidiary operations.

The Company employs fifteen people at
its corporate headquarters, including two executive officers who formulate and
implement overall corporate objectives and policies. The Companys employees
perform functions in a number of areas including finance, accounting, internal
audit, risk management, financial reporting, employee benefits and public and
shareholder relations. The Company assists its subsidiaries in developing
long-range goals, in strengthening management personnel and their operations and
financing. Management of each subsidiary is responsible for implementing
operating policies and reports directly to management of the Company.

Harris Teeter

As of September 28, 2008, Harris Teeter
operated 176 supermarkets located in North Carolina (127), Virginia (28), South
Carolina (9), Maryland (3), Tennessee (3), Delaware (2), District of Columbia
(2), Florida (1) and Georgia (1). These supermarkets offer a full assortment of
groceries, produce, meat and seafood, delicatessen items, bakery items, wines
and non-food items such as health and beauty care, general merchandise and
floral. In addition, Harris Teeter operated pharmacies in 112 of their
supermarkets as of September 28, 2008. Retail supermarket operations are
supported by two company-owned distribution centers and one company-owned dairy
production facility. Other than milk and ice cream produced by the company-owned
facility, Harris Teeter purchases most of the products it sells, including its
private label brands, from outside suppliers or directly from the manufacturers.
Harris Teeters sales constituted 92% of the Companys consolidated sales in
fiscal 2008 (91% in fiscal 2007 and 89% in fiscal 2006).

1

---

The supermarket industry is highly
competitive. Harris Teeter competes with local, regional and national food
chains along with independent merchants. In addition to the more traditional
food stores, Harris Teeter also competes with discount retailers (including
supercenters that carry a full line of food items), many of which are larger in
terms of assets and sales. In the past several years, considerable consolidation
of competitors has taken place in the supermarket industry which has reduced the
number of local food chains and independent merchants. Additionally, some
discount supercenter operators, such as Wal-Mart and Target, are continuing to
expand and offer more items typically found in supermarket formats. As a result,
Harris Teeter is likely to compete with more, larger food chains in its markets.
Principal competitive factors include store location, price, service,
convenience, cleanliness, product quality and product variety. No one customer
or group of related customers has a material effect upon the business of Harris
Teeter.

As of September 28, 2008, Harris Teeter
employed approximately 10,300 full-time and 11,800 part-time individuals, none
of whom were represented by a union. Harris Teeter considers its employee
relations to be good.

American & Efird, Inc.

A&E is one of the worlds largest
global manufacturers and distributors of industrial sewing thread, embroidery
thread and technical textiles, produced from natural and synthetic fibers.
Manufacturers of apparel, automotive materials, home furnishings, medical
supplies and footwear rely on A&E industrial sewing thread to manufacture
their products. A&Es primary products are industrial sewing thread,
embroidery thread and technical textiles sold through its employed sales
representatives, commissioned agents and distributors. A&E also distributes
sewing supplies manufactured by other companies. A&E sales constituted 8% of
the Companys consolidated sales in fiscal 2008 (9% in fiscal 2007 and 11% in
fiscal 2006).

A majority of A&Es sales are
industrial thread for use in apparel products. The apparel market is made up of
many categories servicing both genders and diverse age groups, including
jeanswear, underwear, menswear, womenswear, outerwear, intimate apparel,
workwear and childrenswear. A&E also manufactures industrial thread for use
in a wide variety of non-apparel products including home furnishings,
automotive, footwear, upholstered furniture, sporting goods, caps and hats,
gloves, leather products, medical products and tea bag strings.

Headquartered in Mt. Holly, North
Carolina, the company operated six modern manufacturing facilities in North
Carolina and six distribution centers strategically located in the United States
as of the fiscal year ended September 28, 2008. The manufacturing facilities
have been designed for flexibility and efficiency to accommodate changing
customer product demands.

A&E also has wholly-owned
operations in Canada, China, Colombia, Costa Rica, El Salvador, England,
Guatemala, Honduras, Hong Kong, Nicaragua, Italy, Mexico, Malaysia, The
Netherlands, Turkey, Poland and Slovenia; majority-owned joint ventures in China
(two), Dominican Republic and South Africa; minority interest in ventures with
ongoing operations in Bangladesh, Brazil, India and Sri Lanka; and a 50%
ownership interest in a joint venture in China. A&Es consolidated assets in
these foreign operations total approximately $174 million. Management expects to
continue to expand foreign production and distribution operations, through
acquisitions, joint ventures or new start-up operations.

The domestic order backlog, believed to
be firm, as of September 28, 2008, was approximately $10,535,000 versus
$11,576,000 at the end of the preceding fiscal year. The international order
backlog as of the end of fiscal 2008 was approximately $2,685,000 versus
$3,387,000 at the end of the preceding fiscal year. The majority of the domestic
and international order backlog was filled within five weeks of the fiscal 2008
year end. As of September 28, 2008, A&E had approximately 7,300 domestic and
6,900 international active customer accounts. In fiscal 2008, no single customer
accounted for more than 4% of A&Es total net sales, and the ten largest
customers accounted for approximately 15% of A&Es total net
sales.

A&E purchases cotton from farmers
and domestic cotton merchants. There is presently a sufficient supply of cotton
worldwide and in the domestic market. Synthetic fibers are bought from the
principal American synthetic fiber producers for domestic operations and from
the principal Asian and American synthetic fiber producers for operations in
China. There is currently an adequate supply of synthetic fiber for A&Es
global operations.

2

---

A&E has two
patents issued. There are no material licenses, franchises or concessions held
by A&E. Research and development expenditures were $509,000, $487,000, and
$445,000 in fiscal 2008, 2007 and 2006, respectively, none of which were
sponsored by customers. Two full-time employees are currently engaged in this
activity.

The industrial sewing thread industry
is highly competitive. A&E is one of the worlds largest manufacturers of
industrial sewing threads and also manufactures and distributes consumer sewing
thread, embroidery thread and technical textiles. A&E competes globally with
Coats plc, as well as regional producers and merchants in the industrial thread,
embroidery thread and technical textile markets. The key competitive factors are
quality, service and price.

A&E and its consolidated
subsidiaries employed approximately 3,400 individuals worldwide as of September
28, 2008. None of the domestic employees and an insignificant number of
employees of foreign operations are represented by a union. A&E considers
its employee relations to be good.

Available Information

The Companys Internet address is
*www.ruddickcorp.com.* The Company makes available, free of charge, on or
through its website, our annual report on Form 10-K, quarterly reports on Form
10-Q, current reports on Form 8-K, and amendments to those reports filed or
furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of
1934, and beneficial ownership reports on Forms 3, 4, and 5 as soon as
reasonably practicable after electronically filing such material with, or
furnishing it to, the Securities and Exchange Commission.

Item 1A.Risk Factors

This report contains certain statements
that are forward-looking within the meaning of the Private Securities Litigation
Reform Act of 1995. These statements are not guarantees of future performance
and involve certain risks, uncertainties and assumptions that are difficult to
predict. Actual outcomes and results may differ materially from those expressed
in, or implied by, our forward-looking statements. Words such as expects,
anticipates, believes, estimates and other similar expressions or future
or conditional verbs such as will, should, would and could are intended
to identify such forward-looking statements. Readers of this report should not
rely solely on the forward-looking statements and should consider all
uncertainties and risks throughout this report. The statements are
representative only as of the date they are made, and we undertake no obligation
to update any forward-looking statement.

All forward-looking statements, by
their nature, are subject to risks and uncertainties. Our actual future results
may differ materially from those set forth in our forward-looking statements. We
face risks that are inherent in the businesses and the market places in which
Harris Teeter and A&E operate. The following discussion sets forth certain
risks and uncertainties that we believe could cause actual future results to
differ materially from expected results. In addition to the factors discussed
below, other factors that might cause our future financial performance to vary
from that described in our forward-looking statements include: (i) changes in
federal, state or local laws or regulations; (ii) cost and stability of energy
sources; (iii) cost and availability of energy and raw materials; (iv)
managements ability to predict accurately the adequacy of the Companys present
liquidity to meet future financial requirements; (v) continued solvency of any
third parities on leases the Company has guaranteed; (vi) managements ability
to predict the required contributions to the pension plans of the Company; (vii)
the Companys requirement to impair recorded goodwill; (viii) changes in labor
and employee benefit costs, such as increased health care and other insurance
costs; (ix) ability to recruit, train and retain effective employees and
management in both of the Companys operating subsidiaries; (x) the extent and
speed of successful execution of strategic initiatives; (xi) volatility of
financial and credit markets which would affect access to capital for the
Company; and (xii) unexpected outcomes of any legal proceedings arising in the
normal course of business of the Company. Additional risks and uncertainties not
presently known to us or that we currently deem immaterial also may impair our
business operations and also could cause actual results to differ materially
from those included, contemplated or implied by the forward-looking statements
made in this report, and the reader should not consider any of the above list of
factors and the following discussion to be a complete set of all potential risks
or uncertainties.

Risks Related to Harris Teeter

The Supermarket Industry is Highly
Competitive. The supermarket industry is
characterized by narrow profit margins and competes on value, location and
service. Harris Teeter faces increased competitive pressure in all of its
markets from existing competitors and from the threatened entry by one or more
major new competitors. The number and type of competitors faced by Harris Teeter
vary by location and include: traditional grocery retailers (both national and
regional), discount retailers such as supercenters and club and warehouse
stores, specialty supermarkets, drug stores, dollar stores, convenience stores
and restaurants. In addition, certain Harris Teeter supermarkets also compete
with local video stores, florists, book stores and pharmacies. Aggressive
supercenter expansion, increasing fragmentation of retail formats, entry of
non-traditional competitors and market consolidation have further contributed to
an increasingly competitive marketplace.

3

---

Additionally, increasingly competitive
markets and economic uncertainty have made it difficult generally for grocery
store operators to achieve comparable store sales gains. Because sales growth
has been difficult to attain, Harris Teeters competitors have attempted to
maintain market share through increased levels of promotional activities and
discount pricing, creating a more difficult environment in which to achieve
consistent sales gains. Some of Harris Teeters competitors have greater
financial resources and could use these resources to take measures which could
adversely affect Harris Teeters competitive position. Accordingly, Harris
Teeters business, financial condition or results of operations could be
adversely affected by competitive factors, including product mix and pricing
changes which may be made in response to competition from existing or new
competitors.

Harris Teeters Expansion Plans Are
Subject toRisk. Harris Teeter has spent, and
intends to continue to spend, significant capital and management resources on
the development and implementation of expansion and renovation plans. Harris
Teeters new store opening program has accelerated in recent years and involves
expanding the companys Washington, D.C. metro market area which incorporates
northern Virginia, the District of Columbia, southern Maryland and coastal
Delaware. The successful implementation of Harris Teeters renovation and
expansion plans are subject to several factors including: the availability of
new, suitable locations on reasonable commercial terms, or at all; the success
of new stores, including those in new markets; managements ability to manage
expansion, including the effect on sales at existing stores when a new store is
opened nearby; the ability to secure any necessary financing; change in regional
and national economic conditions; and increasing competition or changes in the
competitive environment in Harris Teeters markets.

Harris Teeters new stores may
initially operate at a loss, depending on factors such as prevailing competition
and market position in the surrounding communities and the level of sales and
profit margins in existing stores may not be duplicated in new stores. Pursuing
a strategy of growth, renovation and expansion in light of current highly
competitive industry conditions could lead to a near-term decline in earnings as
a result of opening and operating a substantial number of new stores,
particularly with respect to stores in markets where Harris Teeter does not have
a significant presence. If Harris Teeters expansion and renovation plans are
unsuccessful, it could adversely affect Harris Teeters cash flow, business and
financial condition due to the significant amount of capital and management
resources invested.

Food Safety Issues Could Result in a
Loss of Consumer Confidence and Product Liability Claims.Harris Teeter could be adversely affected if consumers lose
confidence in the safety and quality of the food supply chain. These concerns
could cause shoppers to avoid purchasing certain products from Harris Teeter, or
to seek alternative sources of supply for their food needs, even if the basis
for the concern is not valid and/or is outside of the companys control. Adverse
publicity about these types of concerns, whether or not valid, could discourage
consumers from buying our products and any lost confidence on the part of our
customers would be difficult and costly to reestablish. As such, any issue
regarding the safety of any food items sold by Harris Teeter, regardless of the
cause, could have a substantial and adverse effect on the companys
operations.

Harris Teeters Geographic
Concentration May Expose it to Regional or Localized Downturns.Harris Teeter operates primarily in the southeastern United
States, with a strong concentration in North Carolina, Virginia and South
Carolina. As a result, Harris Teeters business is more susceptible to regional
factors than the operations of more geographically diversified competitors.
These factors include, among others, changes in the economy, weather conditions,
demographics and population. Although the southeast region has experienced
economic and demographic growth over the past several years, a significant
economic downturn in the region could have a material adverse effect on Harris
Teeters business, financial condition or results of operations.

The Ownership and Development of
Real Estate May Subject Harris Teeter to Environmental Liability.Under applicable environmental laws, as an
owner or developer of real estate, Harris Teeter may be responsible for
remediation of environmental conditions that may be discovered and may be
subject to associated liabilities (including liabilities resulting from lawsuits
brought by private litigants) relating to Harris Teeter supermarkets and other
buildings and the land on which those building are situated, whether the
properties are leased or owned, and whether such environmental conditions, if in
existence, were created by Harris Teeter or by a prior owner or tenant. The
discovery of contamination from hazardous or toxic substances, or the failure to
properly remediate such contaminated property, may adversely affect Harris
Teeters ability to sell or rent real property or to borrow using real property
as collateral. Liabilities or costs resulting from noncompliance with current or
future applicable environmental laws or other claims relating to environmental
matters could have a material adverse effect on Harris Teeters business,
financial condition or results of operations.

4

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Risks
Related to A&E

A&E Operates in a Competitive
Global Industry.A&E competes on a global
basis with a large number of manufacturers in the highly competitive sewing
thread, embroidery thread and technical textile industries. Maintaining
A&Es competitive position may require substantial investments in product
development efforts, manufacturing facilities, distribution network and sales
and marketing activities. Competitive pressures may also result in decreased
demand for A&Es products or force A&E to lower its prices. Other
generally adverse economic and industry conditions, including a decline in
consumer demand for apparel products, could have a material adverse effect on
A&Es business.

A&E may not Succeed at
Integrating Its Acquisitions.In recent
years, A&E has expanded its foreign production and distribution capacity by
acquiring other manufacturers, entering into joint ventures or starting new
businesses. Management expects A&E to continue this activity and expand
foreign production and distribution operations through acquisitions, joint
ventures or new start-up operations. The process of combining these acquisitions
with A&Es existing businesses involves risks. A&E will face challenges
in consolidating functions, integrating organizations, procedures, operations
and product lines in a timely and efficient manner and retaining key personnel.
Failure to successfully manage and integrate acquisitions, joint ventures or new
start-up businesses could lead to the potential loss of customers, the potential
loss of employees who may be vital to the new operations, the potential loss of
business opportunities or other adverse consequences that could affect A&Es
financial condition and results of operations. Even if integration occurs
successfully, failure of future acquisitions to achieve levels of anticipated
sales growth, profitability or productivity may adversely impact A&Es
financial condition and results of operations. Additionally, expansions
involving foreign markets may present other complexities that may require
additional attention from members of management. The diversion of management
attention and any difficulties encountered in the transition and integration
process could have a material adverse effect on A&Es revenues, level of
expenses and operating results.

A&E Has Substantial
International Operations.In fiscal 2008,
approximately 55% of A&Es net sales and a large portion of A&Es
production occurred outside the United States, primarily in Europe, Latin
America and Asia. A&Es corporate strategy includes the expansion and growth
of its international business on a worldwide basis. As a result, A&Es
operations are subject to various political, economic and other uncertainties,
including risks of restrictive taxation policies, changing political conditions
and governmental regulations. A&Es foreign operations also subjects A&E
to the risks inherent in currency translations. A&Es global operations make
it impossible to eliminate completely all foreign currency translation risks and
its impact on A&Es financial results.

A&E Has Raw Material Price
Volatility. The significant price volatility
of many of A&Es raw materials may result in increased production costs,
which A&E may not be able to pass on to its customers.A significant portion of
the raw materials A&E uses in manufacturing thread and technical textiles
are petroleum-based. The prices for petroleum and petroleum-related products are
volatile. While A&E at times in the past has been able to increase product
prices due to raw material increases, A&E generally is not able to
immediately raise product prices and may be unable to completely pass on
underlying cost increases to its customers. Additional raw material and energy
cost increases that A&E is not able to fully pass on to customers or the
loss of a large number of customers to competitors as a result of price
increases could have a material adverse effect on its business, financial
condition, results of operations or cash flows.

Other Risks

Our Self-Insurance Reserves are
Subject to Variability and Unpredictable External Factors.As discussed in more detail below in Managements Discussion
and Analysis of Financial Condition and Results of OperationsCritical
Accounting PoliciesSelf-insurance Reserves for Workers Compensation,
Healthcare and General Liability, the Company is primarily self-insured for
most U.S. workers compensation claims, healthcare claims and general liability
and automotive liability losses. Accordingly, the Company determines the
estimated reserve required for claims in each accounting period, which requires
that management determine estimates of the costs of claims incurred and accrue
for such expenses in the period in which the claims are incurred. The
liabilities that have been recorded for these claims represent our best estimate
of the ultimate obligations for reported claims plus those incurred but not
reported. Changes in legal trends and interpretations, variability in inflation
rates, changes in the nature and method of claims settlement, benefit level
changes due to changes in applicable laws, and changes in discount rates could
all affect ultimate settlements of claims or the assumptions underlying our
liability estimates, which could cause a material change for our self-insurance
liability reserves and impact earnings.

The Company may Incur Increased
Pension Expenses.The Company maintains
certain retirement benefit plans for substantially all domestic full-time
employees and a supplemental retirement benefit plan for certain selected
officers of the Company and its subsidiaries, including a qualified pension plan
which is a non-contributory, funded defined benefit plan and a non-qualified
supplemental pension plan for executives which is an unfunded, defined benefit
plan. The Company has frozen participation and benefit accruals under the
Company-sponsored defined benefit plan effective September 30, 2005 for all
participants, with certain transition benefits provided to those participants
that have achieved specified age and service levels on December 31, 2005;
however, at September 28, 2008, the Companys pension plans had projected
benefit obligations in excess of the fair value of plan assets. The amount of
any increase or decrease in our required contributions to our pension plans will
depend on government regulation, returns on plan assets and actuarial
assumptions regarding our future funding obligations. For more information,
refer to the Note entitled Employee Benefit Plans in the Notes to Consolidated
Financial Statements in Item 8 hereof.

5

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The current global economic
conditions could adversely affect the Company's operating results by increasing
costs related to obtaining financing at acceptable rates and by negatively
impacting our customers.These conditions
could materially affect the Companys customers causing reductions or
cancellations of existing sales orders and inhibit the collectibility of
receivables. In addition, the Companys suppliers may be unable to fulfill the
Companys outstanding orders or could change credit terms that would negatively
affect the Companys liquidity. All of these factors could adversely impact the
Companys results of operations, financial condition and cash flows.

Item 1B.Unresolved Staff Comments

None.

Item 2.Properties

The executive office of the Company is
located in a leased space of a downtown office tower at 301 S. Tryon Street,
Suite 1800, Charlotte, North Carolina, 28202.

Harris Teeter owns its principal
offices near Charlotte, North Carolina, a 517,000 square foot distribution
facility east of Charlotte, a 913,000 square foot distribution facility in
Greensboro, North Carolina, and a 90,500 square foot dairy processing plant in
High Point, North Carolina. Both distribution facilities contain dry grocery
warehousing space and refrigerated storage for perishable goods. In addition,
the Greensboro facility has frozen goods storage and a single pick facility for
health and beauty care products and other general merchandise. Harris Teeter
operates its retail stores primarily from leased properties. As of September 28,
2008, Harris Teeter held title to the land and buildings of approximately 2.3%
of its supermarkets. The remaining supermarkets are either leased in their
entirety or the building is owned and situated on leased land. In addition,
Harris Teeter holds interest in properties that are under development for store
sites. In future years the proportion of store development and store ownership
may increase. Harris Teeters supermarkets range in size from approximately
16,000 square feet to 73,000 square feet, with an average size of approximately
46,700 square feet. The following table sets forth selected statistics with
respect to Harris Teeter stores for each of the last three fiscal years:

2008
    
    2007
    
    2006Stores Open at Period End
    
    176
    
    
    164
    
    
    152Average Weekly Net Sales Per Store*
    $
    414,101
    
    $
    402,982
    
    $
    380,812Average Square Footage Per Store at Period
      End
    
    46,708
    
    
    46,197
    
    
    44,535Average Square Footage Per New Store OpenedDuring Period
    
    48,330
    
    
    51,737
    
    
    51,607Total Square Footage at Period End
    
    8,220,583
    
    
    7,576,302
    
    
    6,769,245____________________*Computed on the basis of aggregate sales of stores open for a full
      year.


A&E's principal offices, six
domestic manufacturing plants and one distribution center are all owned by
A&E and are all located in North Carolina. Domestic manufacturing and
related warehouse facilities have an aggregate of approximately 1,662,000 square
feet of floor space. A&E has a domestic dyeing production capacity of
approximately 27,000,000 pounds per year. Capacities are based on 168 hours of
operations per week. In addition, A&E leases five distribution centers
scattered throughout its domestic markets with an aggregate of approximately
149,000 square feet of floor space.

Through consolidated subsidiaries,
A&E also owns seven international manufacturing and/or distribution
facilities with an aggregate of approximately 794,000 square feet of floor
space. A&E also leases another 24 international manufacturing and/or
distribution facilities with an aggregate of approximately 613,000 square feet
of floor space. The foreign consolidated subsidiaries engaged in manufacturing
have a dyeing production capacity of approximately 22,450,000 pounds per year.
Capacities are based on 168 hours of operations per week. In addition to its
consolidated subsidiaries, A&E also has minority interests in various joint ventures and a 50%
ownership interest in a joint venture in China.

6

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The Company believes its facilities and
those of its operating subsidiaries are adequate for its current operations and
expected growth for the foreseeable future.

Item 3.Legal Proceedings

The Company and its subsidiaries are
involved in various legal matters from time to time in connection with their
operations, including various lawsuits and patent and environmental matters.
These matters considered in the aggregate have not had, nor does the Company
expect them to have, a material effect on the Companys results of operations,
financial position or cash flows.

Item 4.Submission of Matters to a Vote of Security
Holders

Not applicable.

Item 4A.Executive Officers of the Registrant

The following list contains the name,
age, positions and offices held and period served in such positions or offices
for each of the executive officers of the Registrant.

Thomas W. Dickson, age 53, is the Chairman of the Board of Directors, President
and Chief Executive Officer of the Company, and has been Chairman of the Board
of Directors since March 2006 and President and principal executive officer
since February 1997. Prior to that time, he served as Executive Vice President
of the Company from February 1996 to February 1997. Prior to that time, from
February 1994 to February 1996 he served as President of, and from February 1991
to February 1994 he served as Executive Vice President of, American & Efird,
Inc.

John B. Woodlief, age 58, is the Vice President  Finance and Chief Financial
Officer of the Company, and has been the Vice President  Finance and principal
financial officer of the Company since November 1999. Prior to that time, he
served as a partner in PricewaterhouseCoopers since 1998 and a partner in Price
Waterhouse from 1985 to 1998. He served as Managing Partner of theCharlotte, North Carolina office of
Price Waterhouse and PricewaterhouseCoopers from January of 1997 to June of
1999. He joined Price Waterhouse in 1972.

Frederick J. Morganthall,
II, age 57, was elected President of Harris
Teeter on October 30, 1997. Prior to that time, and beginning in October 1996,
he served as Executive Vice President of Harris Teeter. He was also Harris
TeetersSenior Vice President of Operations from
October1995 to October
1996, Vice President of Operations from April 1994 to October 1995 and Vice
President of Sales and Distribution from October 1992 to April 1994.

Fred A. Jackson, age 58, has been President of A&E since August 1996.
Prior to that time, and beginning in January 1996, he served as Executive Vice
President of A&E. He was also A&Es Senior Vice President - Industrial
ThreadSales from October 1993 to January 1996.

The executive officers of the Company
and its subsidiaries are elected annually by their respective Boards of
Directors. Thomas W. Dickson is the nephew of Alan T. Dickson who is a director
of the Company and is the son of R. Stuart Dickson who was a director of the
Company during the fiscal year ended September 28, 2008. No other executive
officer has a family relationship as close as first cousin with any other
executive officer or director or nominee for director.

7

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PART II

Item 5.Market for Registrant's Common Equity, Related Shareholder
Matters and Issuer Purchases of Equity Securities

Information regarding the principal
market for the Companys common stock (the Common Stock), number of
shareholders of record, market price information per share of Common Stock and
dividends declared per share of Common Stock for each quarterly period in fiscal
2008 and 2007 is set forth below.

The Common Stock is listed on the New
York Stock Exchange. As of November 14, 2008, there were approximately 4,700
holders of record of Common Stock.

Quarterly Information

First
    
    Second
    
    Third
    
    FourthQuarter
    
    Quarter
    
    Quarter
    
    QuarterFiscal 2008Dividend Per
      Share
    $
    0.12
    
    $
    0.12
    
    $
    0.12
    
    $
    0.12Market Price Per ShareHigh
    
    38.03
    
    
    36.99
    
    
    39.79
    
    
    38.98Low
    
    31.15
    
    
    31.71
    
    
    33.89
    
    
    29.47Fiscal 2007Dividend Per
      Share
    $
    0.11
    
    $
    0.11
    
    $
    0.11
    
    $
    0.11Market Price Per ShareHigh
    
    28.91
    
    
    30.50
    
    
    32.39
    
    
    37.28Low
    
    25.20
    
    
    26.30
    
    
    29.53
    
    
    27.53


The Company expects to continue paying
dividends on a quarterly basis which is at the discretion of the Board of
Directors and subject to legal and contractual requirements. Information
regarding restrictions on the ability of the Company to pay cash dividends is
set forth in "Management's Discussion and Analysis of Financial Condition and
Results of Operations - Capital Resources and Liquidity" in Item 7 hereof.

Equity Compensation Plan Information

The following table provides
information as of September 28, 2008 regarding the number of shares of Common
Stock that may be issued under the Companys equity compensation
plans.

|                                |  |                                  |  |                                     |  | Number of
      securities remaining     
|------------------------------- |  | -------------------------------- |  | ----------------------------------- |  | -----------------------------------------
|                                |  | Number of
      securities to be |  | Weighted-average exercise           |  | available for
      future issuance under
|                                |  | issued upon
      exercise of    |  | price of
      outstanding options, |  | equity
      compensation plans          
|                                |  | outstanding
      options,       |  | warrants and
      rights           |  | (excluding
      securities              
|                                |  | warrants and
      rights        |  |                                     |  | reflected in
      column (a))           
|Plan category                   |  | (a) (1)                          |  | (b) (2)                             |  | (c)                                      
|Equity compensation plans       |  |                                  |  |                                     |  |                                          
|approved by security            |  |                                  |  |                                     |  |                                          
|holders                         |  | 618,756                          |  | $16.40                              |  | 1,679,200                                
|Equity
      compensation plans |  |                                  |  |                                     |  |                                          
|not approved by
      security  |  |                                  |  |                                     |  |                                          
|holders                         |  | -0-                              |  | -0-                                 |  | -0-                                      
|Total                           |  | 618,756                          |  | $16.40                              |  | 1,679,200                                

|(1) |  | Includes grants of 135,770
      performance shares outstanding as of September 28, 2008. Excludes 99,294
      shares of Common Stock that are deliverable in connection with the 99,294
      stock units outstanding under the Ruddick Corporation Director Deferral
      Plan (the Deferral Plan) that have been accumulated in a rabbi trust for
      the purpose of funding distributions from the Deferral Plan. Does not
      include any shares of restricted stock that were outstanding as of
      September 28, 2008 since these shares are already outstanding and do not
      represent potential dilution. For more information on the Companys
      restricted stock and performance share grants, see the Note entitled
      Stock Options and Stock Awards of the Notes to Consolidated Financial
      Statements in Item 8 hereof.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|(2) |  | The weighted average exercise
      price does not take into account performance share awards or restricted
      stock units outstanding as of September 28,
2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

8

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Comparison of Total Cumulative Shareholder
Return for Five-Year Period Ending September 28, 2008

The following graph presents a comparison of the
yearly percentage change in the Companys cumulative total shareholders return
on Common Stock with the (i) Standard & Poors 500 Index, (ii) Standard
& Poors Midcap 400 Index, (iii) Standard & Poors Food Retail Index,
and (iv) Standard & Poors Apparel, Accessories & Luxury Goods Index for
the five-year period ended September 28, 2008.

Comparison of Five-Year Cumulative Total Return*
Among Ruddick Corporation and Certain Indicies**



|                                                | Cumulative Total Return
|----------------------------------------------- | -----------------------
|                                                | 9/30/03                
|Ruddick
      Corporation                       | 100.00                 
|S & P 500                                       | 100.00                 
|S & P
      Midcap 400                          | 100.00                 
|S & P Food
      Retail                         | 100.00                 
|S & P
      Apparel, Accessories & Luxury Goods | 100.00                 

____________________

* $100 invested on 9/30/03 in stock or index,
including reinvestment of dividends.

** The Company utilizes two indices, rather than a
single index, for its peer group comparison: Standard & Poors Food Retail
Index and Standard & Poors Apparel, Accessories & Luxury Goods Index.
The Company believes that the separate presentation of these indices more
accurately corresponds to the Companys primary lines of business.

9

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Issuer Purchases of Equity
Securities

The following table summarizes the
Companys purchases of its common stock during the quarter ended September 28,
2008.

|                        |  |                       |  |                     |  | Total Number
      of     |  | Maximum
      Number    
|----------------------- |  | --------------------- |  | ------------------- |  | ------------------------- |  | ------------------------
|                        |  |                       |  |                     |  | Shares
      Purchased as |  | of Shares that
      May
|                        |  |                       |  |                     |  | Part of
      Publicly    |  | Yet Be
      Purchased  
|                        |  | Total Number
      of |  | Average
      Price |  | Announced
      Plans or  |  | Under the
      Plans or
|Period                  |  | Shares Purchased      |  | Paid per Share      |  | Programs (1)              |  | Programs                
|June 30, 2008 to        |  |                       |  |                     |  |                           |  |                         
|August 3, 2008          |  | - 0 -                 |  | n.a.                |  | - 0 -                     |  | 2,868,569               
|August 4, 2008
      to |  |                       |  |                     |  |                           |  |                         
|August 31,
      2008   |  | 46,100                |  | $30.35              |  | 46,100                    |  | 2,822,469               
|September 1, 2008 to    |  |                       |  |                     |  |                           |  |                         
|September 28, 2008      |  | - 0 -                 |  | n.a.                |  | - 0 -                     |  | 2,822,469               
|                       
|Total                   |  | 46,100                |  | $30.35              |  | 46,100                    |  | 2,822,469               

| | (1) |  | In February 1996, the Company
      announced the adoption of a stock buyback program, authorizing, at
      managements discretion, the Company to purchase and retire up to
      4,639,989 shares, 10% of the then-outstanding shares of the Companys
      common stock, for the purpose of preventing dilution as a result of the
      operation of the Companys comprehensive stock option and awards plans.
      The stock purchases are effected from time to time pursuant to this
      authorization. As of September 28, 2008, the Company had purchased and
      retired 1,817,520 shares under this authorization, of which 46,100 shares
      were purchased during the quarter ended September 28, 2008. The stock
      buyback program has no set expiration or termination
  date.
| | --- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Item 6.Selected Financial Data (dollars in thousands, except per
share data)

2008
    
    2007
    
    2006
    
    2005
    
    2004Net sales
    $
    3,992,397
    
    $
    3,639,208
    
    $
    3,265,856
    
    $
    2,964,655
    
    $
    2,868,597Operating
      profit
    
    173,785
    
    
    148,174
    
    
    123,069
    
    
    115,260
    
    
    112,414Net income
    
    96,752
    
    
    80,688
    
    
    72,336
    
    
    68,598
    
    
    64,659Net income per
      shareBasic
    
    2.02
    
    
    1.69
    
    
    1.53
    
    
    1.45
    
    
    1.39Diluted
    
    2.00
    
    
    1.68
    
    
    1.52
    
    
    1.44
    
    
    1.38Dividend per share
    
    0.48
    
    
    0.44
    
    
    0.44
    
    
    0.44
    
    
    0.40Total
      assets
    
    1,696,407
    
    
    1,529,689
    
    
    1,362,936
    
    
    1,203,640
    
    
    1,109,097Long-term debt -- includingcurrent
      portion
    
    320,578
    
    
    264,392
    
    
    237,731
    
    
    163,445
    
    
    166,287Shareholders'
      equity
    
    823,835
    
    
    736,610
    
    
    670,517
    
    
    608,942
    
    
    549,710Book value per share
    
    17.06
    
    
    15.31
    
    
    14.10
    
    
    12.82
    
    
    11.76


Note: The
Companys fiscal year ends on the Sunday nearest to September 30. Fiscal years
2008, 2007, 2006 and 2005 includes the 52 weeks ended September 28, 2008,
September 30, 2007, October 1, 2006 and October 2, 2005. Fiscal year 2004
includes the 53 weeks ended October 3, 2004.

Item 7.Management's Discussion and Analysis of Financial Condition
and Results of Operations

This Managements Discussion and
Analysis of Financial Condition and Results of Operations includes
forward-looking statements. We have based these forward-looking statements on
our current plans, expectations and beliefs about future events. In light of the
risks, uncertainties and assumptions discussed under Item 1A Risk Factors of
this Annual Report on Form 10-K and other factors discussed in this section,
there are risks that our actual experience will differ materially from the
expectations and beliefs reflected in the forward-looking statements in this
section and throughout this report. For more information regarding what
constitutes a forward-looking statement, please refer to Risk Factors in Item
1A hereof.

10

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Overview

The Company operates primarily in two
business segments through two wholly owned subsidiaries: retail grocery
(including related real estate and store development activities)  operated by
Harris Teeter, and industrial sewing thread (textile primarily), including
embroidery thread and technical textiles  operated by American & Efird.
Harris Teeter is a regional supermarket chain operating primarily in the
southeastern United States, including Delaware and the District of Columbia.
American & Efird is a global manufacturer and distributor of sewing thread
for the apparel and other markets, embroidery thread and technical textiles. The
Company evaluates the performance of its two businesses utilizing various
measures which are based on operating profit.

During fiscal 2008, Harris Teeters
market environment continued to be highly competitive, characterized by
competition from other traditional grocery retailers, as well as other
competitors including, but not limited to, discount retailers such as
neighborhood or supercenters and club and warehouse stores, specialty
supermarkets and drug stores. Generally, the markets in the southeastern United
States continue to experience new store opening activity and aggressive feature
pricing or everyday low prices by competitors. In response, Harris Teeter
utilizes information gathered from various sources, including its Very Important
Customer ("VIC") loyalty card program, and works with suppliers to deliver
effective retail pricing and targeted promotional spending programs that drive
customer traffic and create value for Harris Teeter customers. In addition,
Harris Teeter differentiates itself from its competitors with its product
selection, assortment and variety, and its focus on customer service. These
efforts have resulted in overall gains in market share within Harris Teeters
primary markets.

Harris Teeter has continued its
aggressive new store development program with the opening of 15 new stores
during fiscal 2008. Harris Teeter opened 19 new stores during fiscal 2007 and 16
new stores during fiscal 2006. Much of Harris Teeters new store growth is
focused on expanding its Washington, D.C. metro market area which incorporates
northern Virginia, the District of Columbia, southern Maryland and coastal
Delaware. The aggressive new store activity has resulted in higher pre-opening
and incremental start-up costs associated with the new store openings and has
required additional borrowings under the Companys revolving credit facility.

Business conditions for A&Es
customers in the textile and apparel industry remain difficult in the Americas
due to the continued shift of apparel sourcing outside the Americas and the
challenging retail environment faced in many parts of the world due to general
economic conditions. Over the past several years, apparel production has shifted
from the Americas to other regions of the world, predominately Asia. It has been
estimated by the U.S. Department of Commerce Office of Textiles and Apparel that
Asia and the Indian sub-continent accounted for approximately 69% of the apparel
imports into the U.S. in 2006, approximately 73% in 2007 and approximately 75%
for the first eight months in 2008. This has greatly impacted A&E operations
in the U.S., Canada and Mexico. As a result, A&Es strategic plans have
included the expansion of its operations in the Asian markets and the expansion
of product lines beyond apparel sewing thread.

A&Es growth in China and other
Asian markets has been accomplished through additional investments in its wholly
owned subsidiaries by way of capital expenditures and through strategic joint
ventures. In fiscal 2003, A&E entered into a joint venture in China
resulting in a 50% ownership interest in Huamei Thread Company Limited, which is
one of the largest thread producers in the China market. During fiscal 2005,
A&E acquired an 80% ownership interest in Jimei Spinning Company Limited (a
thread yarn spinning company located in China) and increased its ownership
interest in Hengmei Spinning Company Limited (another thread yarn spinning
company in China) from 60% to 80%. During the third quarter of fiscal 2008,
A&E entered into a joint venture with Vardhman Textiles Limited in India
(Vardhman) to manufacture, distribute and sell sewing thread for industrial
and consumer markets within India and for export markets. A&E continues to
transform its business to be more Asian centric, which is in line with the
global shifting of A&Es customer base.

A&E also expanded its global
presence during fiscal 2005 by entering into a joint venture in Brazil resulting
in a 30% ownership interest in Linhas Bonfio S.A. In addition, in fiscal 2006,
A&E obtained a majority ownership interest in its two joint ventures in
South Africa.

A&Es fiscal 2004 acquisition of
certain assets and the U.S. business of Synthetic Thread Company, Inc. provided
A&E with an entry into the technical textiles market. A&E expanded its
customer base and product line offerings in the technical textiles arena by
acquiring certain assets and the U.S. business of Ludlow Textiles Company, Inc.
in fiscal 2005. Technical textiles represent non-apparel yarns A&E supplies
to its customers in the automotive, telecommunication, wire and cable, paper
production and other industries. Further diversification was achieved in fiscal
2005 by A&Es acquisition of certain assets and the business of
Robison-Anton Textile Co., a U.S. producer of high-quality embroidery threads.
The sale of non-apparel threads and yarns resulting from these acquisitions has
partially offset sales declines in the U.S. resulting from the shifting of
apparel manufacturing. In fiscal 2006, A&E expanded its production and distribution of
non-apparel products through the acquisition of TSP Tovarna Sukancev in Trakov
d.d. (TSP) located in Maribor, Slovenia. A&E continues to expand the
manufacturing and distribution of non-apparel products throughout its global
operations.

11

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A&E continues to face increased
operating costs and highly competitive pricing in its markets. A&E has
substantially completed the integration and consolidation of the strategic
investments made in the past few years and has rationalized its U.S.
operations.

Results of Operations

Rental Costs Incurred during a
Construction Period

On October 6, 2005, the FASB issued
Staff Position (FSP) FAS 13-1, Accounting for Rental Costs Incurred during a
Construction Period. The FSP generally applies to leases of land or pad leases,
including cold dark shells where the Company assumes responsibility for store
and site construction. Harris Teeters construction period typically extends for
six to nine months. Under this FSP, rental costs that are incurred during the
construction period are recognized as rental expense. Prior to the beginning of
the second quarter of fiscal 2006, the Company capitalized such costs during the
construction period. As required by FAS 13-1, the Company ceased capitalization
of construction period rents effective January 2, 2006. Although the guidance
permits retrospective application to prior periods, the Company did not restate
prior periods due to the relatively small percentage of land leases in those
periods. Construction period rent required to be expensed as a non-cash charge
is included with the pre-opening costs in the discussion of segment operations
under the caption Harris Teeter, Retail Grocery Segment below.

Consolidated
Overview

The following table sets forth the
operating profit components by each of the Company's operating segments and for
the holding company ("Corporate") for the 52 weeks ended September 28, 2008
(fiscal 2008), September 30, 2007 (fiscal 2007), and October 1, 2006 (fiscal
2006). The table also sets forth each of the segments net income components as
a percent to total net sales and the percentage increase or decrease of such
components over the prior year (in thousands):

|                        |  | Fiscal 2008         |  | Fiscal 2007 |  | Fiscal 2006         |  | % Inc. (Dec.)
|----------------------- |  | ------------------- |  | ----------- |  | ------------------- |  | -------------
|                        |  |                     |  | % to        |  |                     |  | % to         
|                        |  |                     |  | Sales       |  |                     |  | Sales        
|Net Sales               |  |                     |  |             |  |                     |  |              
|Harris Teeter           |  | $
      3,664,804   |  | 91.8        |  | $
      3,299,377   |  | 90.7         
|American & Efird        |  | 327,593             |  | 8.2         |  | 339,831             |  | 9.3          
|Total                   |  | $ 3,992,397         |  | 100.0       |  | $ 3,639,208         |  | 100.0        
|                       
|Gross Profit            |  |                     |  |             |  |                     |  |              
|Harris Teeter           |  | $
      1,138,857   |  | 28.53       |  | $
      1,021,739   |  | 28.07        
|American & Efird        |  | 69,590              |  | 1.74        |  | 74,608              |  | 2.05         
|Total                   |  | 1,208,447           |  | 30.27       |  | 1,096,347           |  | 30.12        
|                       
|SG&A Expenses           |  |                     |  |             |  |                     |  |              
|Harris Teeter           |  | 961,092             |  | 24.08       |  | 867,656             |  | 23.84        
|American & Efird        |  | 67,262              |  | 1.68        |  | 73,184              |  | 2.01         
|Corporate               |  | 6,308               |  | 0.16        |  | 7,333               |  | 0.20         
|Total                   |  | 1,034,662           |  | 25.92       |  | 948,173             |  | 26.05        
|                       
|Operating Profit (Loss) |  |                     |  |             |  |                     |  |              
|Harris Teeter           |  | 177,765             |  | 4.45        |  | 154,083             |  | 4.23         
|American & Efird        |  | 2,328               |  | 0.06        |  | 1,424               |  | 0.04         
|Corporate               |  | (6,308)             |  | (0.16)      |  | (7,333)             |  | (0.20)       
|Total                   |  | 173,785             |  | 4.35        |  | 148,174             |  | 4.07         
|                       
|Other Expense, net      |  | 19,674              |  | 0.49        |  | 17,683              |  | 0.48         
|Income Tax Expense      |  | 57,359              |  | 1.44        |  | 49,803              |  | 1.37         
|Net Income              |  | $    
       96,752 |  | 2.42        |  | $     
      80,688 |  | 2.22         

12

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Consolidated net sales increased 9.7%
in fiscal 2008 and 11.4% in fiscal 2007 when compared to prior years as a result
ofstrong sales gains at
Harris Teeter. The fiscal 2008 and 2007 increases were partially offset by sales
declines at A&E. Over the past several years, A&E has pursued a global
expansion strategy along with the diversification of its product lines; however,
the percentage of foreign sales to consolidated net sales has declined during
these periods as a result of the sales mix between the operating subsidiaries.
Foreign sales for fiscal 2008 represented 4.6% of the consolidated sales of the
Company, compared to 5.1% for fiscal 2007 and 5.4% for fiscal 2006. Refer to the
discussion of segment operations under the captions Harris Teeter, Retail
Grocery Segment and American & Efird, Industrial Thread Segment for a
further analysis of the segment operating results.

The gross profit margin increase for
fiscal 2008 was driven by a gross profit margin improvement at Harris Teeter
that was offset, in part, by a gross profit margin decline at A&E from
fiscal 2007 to fiscal 2008. The increase in gross profit as a percent to sales
for fiscal 2007 resulted primarily from improved gross profit margins at Harris
Teeter, although A&E also realized improved gross profit as a percent to its
sales for fiscal 2007. Refer to the discussion of segment operations under the
captions Harris Teeter, Retail Grocery Segment and American & Efird,
Industrial Thread Segment for a further analysis of the segment operating
results.

Consolidated selling, general &
administrative (SG&A) expenses, as a percent to consolidated net sales,
decreased in fiscal 2008 as a result of the leverage created through sales gains
that apply against fixed costs at Harris Teeter and lower SG&A expenses at
A&E and Corporate. SG&A expenses, and its percent to sales, increased in
fiscal 2007 and fiscal 2006 as a result of increased operating costs at both
subsidiaries. As previously disclosed, Corporate SG&A expenses for fiscal
2006 included income of $2.2 million for life insurance proceeds and a pre-tax
charge of $1.5 million related to new Supplemental Executive Retirement Plans.
Refer to the discussion of segment operations under the caption Harris Teeter,
Retail Grocery Segment and American & Efird, Industrial Thread Segment
for a further analysis of the segment operating results.

Other expense, net includes interest
expense, interest income, investment gains and losses, and minority interest.
Net interest expense (interest expense less interest income) increased $1.8
million in fiscal 2008 over fiscal 2007 and $3.9 million in fiscal 2007 over
fiscal 2006. The increase for both periods resulted from additional interest
expense associated with increased borrowings under the Companys credit facility
in support of Harris Teeters new store development program. In addition,
incremental borrowings were required for A&Es fiscal 2008 equity investment
in Vardhman. The increase in interest expense was offset, in part, by a lower
weighted average interest rate realized during fiscal 2008. As previously
disclosed, fiscal 2006 includes an investment gain of $4.0 million related to
the sale of a real estate investment held by Corporate.

The effective consolidated income tax
rate for fiscal 2008 was 37.2% as compared to 38.2% for fiscal 2007 and 36.2%
for fiscal 2006. Income tax expense for fiscal 2008 included refund claims
related to prior years of approximately $2.4 million associated with A&Es
foreign operations. The effective tax rate for fiscal 2006 was lower primarily
due to tax savings associated with non-taxable life insurance proceeds.

As a result of the items discussed
above, consolidated net income for fiscal 2008 increased by $16.1 million, or
19.9%, over fiscal 2007 and net income per diluted share increased by 19.0% to
$2.00 per share in fiscal 2008 from $1.68 per share in fiscal 2007. Consolidated
net income for fiscal 2007 increased by $8.4 million, or 11.5%, over fiscal 2006
and the net income per diluted share of $1.68 increased by 10.5% from $1.52 per
share in fiscal 2006.

Harris Teeter, Retail Grocery
Segment

The following table sets forth the
consolidated operating profit components for the Company's Harris Teeter
supermarket subsidiary for fiscal years 2008, 2007, and 2006. The table also
sets forth the percent to sales and the percentage increase or decrease over the
prior year (in thousands):

|                       |  | Fiscal 2008 |           | Fiscal 2007 |        | Fiscal 2006 |   | % Inc. (Dec.)
|---------------------- |  | ----------- | --------- | ----------- | ------ | ----------- | - | -------------
|                       |  |             |           | % to        |        |             |   | % to         
|                       |  |             |           | Sales       |        |             |   | Sales        
|Net
      Sales        |  | $           | 3,664,804 |             | 100.00 |             | $ | 3,299,377    
|Cost of
      Sales    |  |             | 2,525,947 |             | 68.92  |             |   | 2,277,638    
|Gross
      Profit     |  |             | 1,138,857 |             | 31.08  |             |   | 1,021,739    
|SG&A
      Expenses    |  |             | 961,092   |             | 26.23  |             |   | 867,656      
|Operating
      Profit |  | $           | 177,765   |             | 4.85   |             | $ | 154,083      

Sales increased 11.1% in fiscal 2008
over fiscal 2007 and 12.9% in fiscal 2007 over fiscal 2006, as a result of
incremental new stores and comparable store sales increases. During fiscal 2008,
Harris Teeter opened 15 new stores (2 of which were replacements) and closed 3
stores. During fiscal 2007, Harris Teeter opened 19 new stores (2 of which were
replacements) and closed 7 stores and during fiscal 2006 Harris Teeter opened 16
new stores (3 of which were replacements and 6 of which were acquired from Winn-Dixie in fiscal 2005) and closed
or divested 9 stores. The increase in sales from new stores exceeded the loss of
sales from closed stores by $275.7 million in fiscal 2008, $230.1 million in
fiscal 2007 and $199.4 million in fiscal 2006. Comparable store sales (see
definition below) increased 2.86% ($91.3 million) for fiscal 2008 as compared to
increases of 4.87% ($136.4 million) for fiscal 2007 and 3.20% ($81.8 million)
for fiscal 2006. Comparable store sales were negatively impacted by Harris
Teeters strategy of opening additional stores in its core markets that have a
close proximity to existing stores. However, management expects these stores,
and any similar new additions in the foreseeable future, to have a strategic
benefit of enabling Harris Teeter to capture sales and expand market share as
the markets it serves continue to grow.

13

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Harris Teeter considers its reporting
of comparable store sales growth to be effective in determining core sales
growth during periods of fluctuation in the number of stores in operation, their
locations and their sizes. While there is no standard industry definition of
"comparable store sales," Harris Teeter has been consistently applying the
following definition. Comparable store sales are computed using corresponding
calendar weeks to account for the occasional extra week included in a fiscal
year. A new store must be in operation for 14 months before it enters into the
calculation of comparable store sales. A closed store is removed from the
calculation in the month in which its closure is announced. A new store opening
within an approximate two-mile radius of an existing store that is to be closed
upon the new store opening is included as a replacement store in the comparable
store sales measurement as if it were the same store. Sales increases resulting
from existing comparable stores that are expanded in size are included in the
calculations of comparable store sales, if the store remains open during the
construction period.

Gross profit, and its percent to sales,
for fiscal 2008 and 2007 continued to improve as a result of changes in Harris
Teeters market mix and its retail pricing and targeted promotional spending
strategies. Improvements have also been realized from the continued emphasis
Harris Teeter places on distribution, manufacturing and store level productivity
efforts, private label branding, assortment and product mix, in addition to
volume increases. These improvements help offset higher fuel costs and increased
LIFO charges.

SG&A expenses as a percent to sales
has continued to decrease from prior years, as a result of the leverage created
through sales gains that apply against fixed costs. Included with SG&A
expenses are pre-opening costs, which consist of pre-opening rent, labor and
associated fringe benefits and recruiting and relocations costs incurred prior
to a new store opening and amounted to $15.4 million (0.42% of sales) in fiscal
2008, $17.9 million (0.54% of sales) in fiscal 2007 and $15.8 million (0.54% of
sales) in fiscal 2006. These costs will fluctuate between reporting periods
depending on the new store opening schedule and market location. As previously
disclosed, incremental costs associated with the 2005 Winn-Dixie store
acquisition amounted to $2.3 million (0.08% of sales) in fiscal 2006. The sales
increases along with a continued emphasis on operational efficiencies and
overhead cost containment during this time of expansion, have provided the
savings that offset the increased costs associated with Harris Teeters new
store program (pre-opening costs and incremental start-up costs), increased
petroleum-based supply costs, associate benefit costs, credit and debit card
fees, and new store occupancy costs.

The improvements in operating profit as
a percent to sales in each of fiscal 2008 and fiscal 2007 resulted from the
sales and cost elements described above. Harris Teeter continues to concentrate
on its core markets, which management believes have greater potential for
improved returns on investment in the foreseeable future. Harris Teeter had 176
stores in operation at September 28, 2008, compared to 164 stores at September
30, 2007 and 152 stores at October 1, 2006.

American & Efird, Industrial
Thread Segment

The following table sets forth the
consolidated operating profit components for the Company's A&E textile
subsidiary for fiscal years 2008, 2007 and 2006. The table also sets forth the
percent to sales and the percentage increase or decrease over the prior year (in
thousands):

|                    |  | Fiscal 2008       |  | Fiscal 2007 |  | Fiscal 2006       |  | % Inc. (Dec.)
|------------------- |  | ----------------- |  | ----------- |  | ----------------- |  | -------------
|                    |  |                   |  | % to        |  |                   |  | % to         
|                    |  |                   |  | Sales       |  |                   |  | Sales        
|Net Sales           |  | $ 327,593         |  | 100.00      |  | $ 339,831         |  | 100.00       
|Cost of
      Sales |  | 258,003           |  | 78.76       |  | 265,223           |  | 78.05        
|Gross Profit        |  | 69,590            |  | 21.24       |  | 74,608            |  | 21.95        
|SG&A
      Expenses |  | 67,262            |  | 20.53       |  | 73,184            |  | 21.53        
|Operating Profit    |  | $   
       2,328 |  | 0.71        |  | $    
      1,424 |  | 0.42         

14

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Sales decreased 3.6% in fiscal 2008 from fiscal
2007 and 1.0% in fiscal 2007 from fiscal 2006. The decreases in sales were
driven primarily by sales declines in the United States, Canada and Mexico (the
North American Free TradeAssociation Region or
NAFTA) between the comparable fiscal years. Sales gains in A&Es Asian
operations havebeen
offset by the sales declines realized in NAFTA. As previously disclosed, the
fiscal 2007 sales decrease was partially offset by sales gains attributable to
the fiscal 2006 acquisition of TSP and obtaining a majority ownership interest
in two joint ventures in South Africa, resulting in the consolidation of those
entities.

Foreign sales for fiscal 2008 accounted
for approximately 55% of total A&E sales as compared to approximately 54% in
fiscal 2007 and 51% in fiscal 2006. Foreign sales, especially in the Asian
markets, will continue to be a significant proportion of total A&E sales as
a result of the shifting global production of its customers and A&E's
strategy of increasing its presence in such global markets. Management
recognizes that a major challenge facing A&E is the geographic shift of its
customer base and, as a result, management remains committed to its strategic
plans that will transform A&Es business to a more Asian-centric global
supplier of sewing thread, embroidery thread and technical textiles.

Gross profit, and its percent to net
sales, decreased in fiscal 2008 from fiscal 2007, primarily as a result of weak
sales and poor overhead absorption in the U.S. operations, and $273,000 of
severance costs associated with the consolidation of one of A&Es
manufacturing facilities in North Carolina into A&Es remaining North
Carolina operations. Gross profit as a percent to net sales increased in fiscal
2007 from fiscal 2006, primarily as a result of improved operating schedules in
several of the A&Es foreign operations. As previously disclosed, the
increase in fiscal 2007 was partially offset by $448,000 of severance costs
associated with the consolidation of the operations of two of A&Es
manufacturing facilities in Pennsylvania into A&Es North Carolina
operations. In addition, the production from one North Carolina manufacturing
facility was consolidated into the remaining North Carolina operations in fiscal
2007, but there were no layoffs as a result. The shifting of apparel production
from the Americas to Asia has continued and management is focused on optimizing
costs and manufacturing capacities through the rationalization of its domestic
operations.

SG&A expenses, and its percent to
sales, in fiscal 2008 decreased from fiscal 2007, primarily as a result of
increased net profit realized from non-consolidated subsidiaries and reduced
costs in A&E's U.S. operations. In addition, SG&A expenses were offset
by an expense reversal of approximately $0.9 million for costs associated with
certain import duties levied against A&Es Mexico operations and previously
accrued by A&E. As disclosed in prior filings, A&E resolved the dispute
through an amnesty program provided by the Mexican authorities during the first
quarter of fiscal 2008. The net decrease in fiscal 2008 was offset, in part, by
increases in certain items, such as employee health care costs. SG&A
expenses increased slightly in fiscal 2007 from fiscal 2006 and included
incremental costs associated with the integration of acquired businesses. The
incremental costs and other cost increases in fiscal 2007 were offset, in part,
by a gain realized from the disposal of assets utilized in A&Es U.S.
operations. As previously disclosed, SG&A expenses for fiscal 2007 included
$378,000 of severance and impairment costs associated with the consolidation of
A&Es U.S. operations.

A&Es operating profit improvement
for fiscal 2008 and the decrease in fiscal 2007 as compared to fiscal 2006
resulted from the sales and cost elements described above. A&Es operating
results continue to be adversely impacted by the challenging retail apparel
environment that has continued to exist in many parts of the world.

Outlook

Harris Teeters continued improvement
in operating performance and financial position provides the flexibility to
support its store development program that includes new and replacement stores
along with the remodeling and expansion of existing stores. During fiscal 2009,
Harris Teeter plans to open 17 new stores (2 of which will be replacements for
existing stores) and complete 4 major remodels (1 of which will be expanded in
size). The new store opening program for fiscal 2009 is expected to result in a
9.8% increase in retail square footage as compared to an 8.5% increase in fiscal
2008. The annual number of new store openings planned for fiscal year 2010 and
thereafter are expected to be somewhat less than that of fiscal 2009. The
Company routinely evaluates its existing store operations in regards to its
overall business strategy and from time to time will close or divest older or
underperforming stores. In addition, management continues to evaluate Harris
Teeters capital expenditures during these times of economic uncertainty and
adjusts its strategic plan accordingly.

The new store program for fiscal 2009
anticipates the continued expansion of Harris Teeters existing markets,
including the Washington, D.C. metro market area which incorporates northern
Virginia, the District of Columbia, southern Maryland and coastal Delaware. Real
estate development by its nature is both unpredictable and subject to external
factors including weather, construction schedules and costs. Any change in the
amount and timing of new store development would impact the expected capital
expenditures, sales and operating results.

Startup costs associated with opening
new stores under Harris Teeters store development program can negatively impact
operating margins and net income. In the current competitive environment,
promotional costs to maintain market share could also negatively impact
operating margins and net income in future periods. The continued execution of
productivity initiatives implemented throughout all stores, maintaining controls
over waste, implementation of operating efficiencies and effective merchandising strategies will
dictate the pace at which Harris Teeters operating results could improve, if at
all.

15

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A&E has been able to diversify its
customer base, product mix and geographical locations through acquisitions and
joint venture agreements completed in recent years. In addition, A&E
continues to increase its investment in China and India to support the rapidly
growing apparel production in these regions and to become more Asian-centric.
A&E will find it difficult to generate significant improvements in
profitability in the absence of a more favorable retail environment. A&E
management continues to focus on providing best-in-class service to its
customers and expanding its product lines throughout A&Es global supply
chain. In addition, management continues to evaluate ways to further rationalize
A&Es U.S. operations and to evaluate its structure to best position A&E
to take advantage of opportunities available through its enhanced international
operations.

The Companys management is cautious in
its expectations for fiscal 2009 due to the current economic environment and its
impact on our customers. The Company will continue to refine its merchandising
strategies to respond to the changing shopping demands as a result of the
challenging economic environment. The retail grocery market remains intensely
competitive and the textile and apparel environment faces additional challenges
during this recessionary period. Further operating improvement will be dependent
on the Companys ability to increase Harris Teeters market share, rationalize
A&Es operations, offset increased operating costs with additional operating
efficiencies, and to effectively execute the Companys strategic expansion
plans.

Capital Resources and Liquidity

The Company is a holding company which,
through its wholly-owned operating subsidiaries, Harris Teeter and A&E, is
engaged in the primary businesses of retail grocery and the manufacturing and
distribution of industrial thread, technical textiles and embroidery thread,
respectively. The Company has no material independent operations, nor material
assets, other than the investments in its operating subsidiaries, as well as
investments in certain fixed assets, cash equivalents and life insurance
contracts to support corporate-wide operations and benefit programs. The Company
provides a variety of services to its subsidiaries and is dependent upon income
and upstream dividends from its operating subsidiaries. There are no
restrictions on the subsidiary dividends, which have historically been
determined as a percentage of net income of each subsidiary.

The Company's principal source of
liquidity has been cash generated from operating activities and borrowings
available under the Companys credit facility. During fiscal 2008, the net cash
provided by operating activities was $227.2 million, compared to $212.6 million
during fiscal 2007 and $159.7 million during fiscal 2006. Investing activities
during fiscal 2008 required net cash of $226.2 million compared to $204.8
million during fiscal 2007 and $229.2 million during fiscal 2006. Capital
spending has been financed by cash provided by operating activities along with
borrowings under the Companys credit facility. Financing activities for fiscal
2008 provided $2.0 million of cash and included an additional $38.0 million of
borrowings under the Companys credit facility ($100 million term loan less net
reduction on revolver borrowings of $62.0 million) and $8.0 million for the
purchase and retirement of 249,600 shares of the Companys common stock (at an
average price of $32.05 per share). Financing activity also includes $23.2
million for the payment of dividends in fiscal 2008 compared to $21.1 million in
fiscal 2007 and $20.9 million in fiscal 2006.

During fiscal 2008, consolidated
capital expenditures totaled $199.5 million. Harris Teeter capital expenditures
were $192.2 million in fiscal 2008 compared to $205.5 million in fiscal 2007 and
$210.3 million in fiscal 2006. A&E's capital expenditures were $7.3 million
during fiscal 2008 compared to $7.7 million in fiscal 2007 and $7.6 million in
fiscal 2006. During fiscal 2008, Harris Teeter made an additional net investment
of $19.0 million ($22.7 million additional investments less $3.7 million
received from property investment sales and partnership distributions) in
connection with the development of certain of its new stores. Additionally,
A&E invested $24.1 million for its equity interest in Vardhman. Fiscal 2009
consolidated capital expenditures are planned to total approximately $247
million, consisting of $241 million for Harris Teeter and $6 million for
A&E. In addition to the fiscal 2009 planned capital expenditures, A&E
invested an additional $8.7 million in the first quarter of fiscal 2009 in
connection with its increased investment in Vardhman. Harris Teeter anticipates
that its capital for new store growth and store remodels will be applied in its
existing markets in fiscal 2009 as well as the foreseeable future. A&E
expects to invest in the expansion and modernization of its global operations.
Such capital investment is expected to be financed by internally generated
funds, liquid assets and borrowings under the Companys credit facility. The
Companys credit facility provides substantially more liquidity than what the
Company expects to be required during the credit facility term.

16

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On December 20, 2007, the Company and
eleven banks entered into a new credit agreement that provides for a five-year
revolving credit facility (Revolving Credit Facility) in the aggregate amount
of up to $350 million and a non-amortizing term loan of $100 million due
December 20, 2012. The new credit agreement also provides for an optional
increase of the Revolving Credit Facility by an additional amount of up to $100
million and two 1-year maturity extension options, both of which require consent
of the lenders. The new credit agreement replaced a previously existing $350
million revolving credit facility dated June 7, 2006. The amount which may be
borrowed from time to time and the interest rate on any outstanding borrowings
are each dependent on a leverage factor. The leverage factor is based on a ratio
of rent-adjusted consolidated funded debt divided by earnings before interest,
taxes, depreciation, amortization and operating rents, as set forth in the new
credit agreement. The more significant of the financial covenants which the
Company must meet during the term of the new credit agreement include a maximum
leverage ratio and a minimum fixed charge coverage ratio. As of September 28,
2008, the Company was in compliance with all financial covenants of the new
credit agreement and $29.0 million of borrowings were outstanding under
Revolving Credit Facility. Issued letters of credit reduce the amount available
for borrowings under the Revolving Credit Facility and amounted to $28.5 million
as of September 28, 2008. In addition to the $292.5 million of borrowings
available under the Revolving Credit Facility as of September 28, 2008, the
Company has the capacity to borrow up to an aggregate amount of $44.5 million
from two major U.S. life insurance companies utilizing certain insurance assets
as collateral. In the normal course of business, the Company will continue to
monitor the liquidity under its bank facility and evaluate other financing
opportunities based on the Companys needs and market conditions.

Covenants in certain of the Companys
long-term debt agreements limit the total indebtedness that the Company may
incur. The most restrictive of these covenants is a consolidated maximum
leverage ratio and a minimum fixed charge coverage ratio as defined in the
Companys credit agreement. As of September 28, 2008, the amount of additional
debt that could be incurred within the limitations of the debt covenants
exceeded the additional borrowings available under the Revolving Credit
Facility. As such, management believes that the limit on indebtedness does not
restrict the Companys ability to meet future liquidity requirements through
borrowings available under the Companys Revolving Credit Facility, including
any liquidity requirements expected in connection with the Companys expansion
plans for the foreseeable future.

Contractual Obligations and
Commercial Commitments

The Company has assumed various
financial obligations and commitments in the normal course of its operations and
financing activities. Financial obligations are considered to represent known
future cash payments that the Company is required to make under existing
contractual arrangements, such as debt and lease agreements. Management expects
that cash provided by operations and other sources of liquidity, such as the
Companys Revolving Credit Facility, will be sufficient to meet these
obligations on a short and long-term basis. The following table represents the
scheduled maturities of the Companys contractual obligations as of September
28, 2008 (in thousands):

|                                                     |  |       |           |        | Less
      than |           |  |           |         |         |   |         | More
      than
|---------------------------------------------------- |  | ----- | --------- | ------ | --------------- | --------- |  | --------- | ------- | ------- | - | ------- | ---------------
|                                                     |  | Total |           | 1 Year |                 | 1-3 Years |  | 3-5 Years |         | 5 Years
|Long-Term Debt (1)                                   |  | $     | 346,877   |        | $               | 23,089    |  | $         | 44,291  |         | $ | 151,513 |                
|Operating Leases
      (1) (2)                       |  |       | 1,520,763 |        |                 | 91,913    |  |           | 192,562 |         |   | 195,374 |                
|Capital Lease Obligations (1) (2)                    |  |       | 149,908   |        |                 | 7,566     |  |           | 15,177  |         |   | 15,302  |                
|Purchase
      Obligations  Fixed Assets            |  |       | 73,546    |        |                 | 73,546    |  |           | -       |         |   | -       |                
|Purchase Obligations  Inventory                     |  |       | 578       |        |                 | 578       |  |           | -       |         |   | -       |                
|Purchase
      Obligations  Service Contracts/Other |  |       | 21,599    |        |                 | 10,957    |  |           | 9,714   |         |   | 928     |                
|Other(3)                                             |  |       | 16,424    |        |                 | 1,592     |  |           | 3,208   |         |   | 3,115   |                
|Total Contractual Cash
      Obligations             |  | $     | 2,129,695 |        | $               | 209,241   |  | $         | 264,952 |         | $ | 366,232 |                

|(1) |  | For a more detailed
      description of the obligations refer to the Notes entitled Leases and
      Long-Term Debt of the Notes to Consolidated Financial Statements in Item
      8 hereof. Amounts represent total expected payments of principal and
      interest. Payment on variable interest debt is estimated using an interest
      rate of 4.5% applied to the outstanding balance.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   
|(2) |  | Represents the minimum
      rents payable and includes leases associated with closed stores. The
      obligations related to the closed store leases are discussed below.
      Amounts are not offset by expected sublease income and do not include
      various contingent liabilities associated with assigned leases as
      discussed below.                                               
|   
|(3) |  | Represents the
      projected cash payments associated with certain deferred compensation
      contracts. The net present value of these obligations is recorded by the
      Company and included with other long-term liabilities in the Companys
      consolidated balance sheets.                                                                                                            

17

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In connection with the closing of
certain store locations, Harris Teeter has assigned leases to several other
merchants with recourse. These leases expire over the next 13 years, and the
future minimum lease payments of approximately $57.7 million, in the aggregate,
over that future period have been assumed by these merchants. In the highly
unlikely event, in management's opinion based on the current operations and
credit worthiness of the assignees, that all such contingent obligations would
be payable by Harris Teeter, the approximate aggregate amounts due by year would
be as follows: $8.4 million in fiscal 2009 (28 stores), $7.4 million in fiscal
2010 (22 stores), $7.0 million in fiscal 2011 (18 stores), $6.4 million in
fiscal 2012 (16 stores), $5.7 million in fiscal 2013 (13 stores) and $22.8
million in aggregate during all remaining years thereafter.

The Company utilizes various standby
letters of credit and bonds as required from time to time by certain programs,
most significantly for self-insured programs such as workers compensation and
various casualty insurance. These letters of credit and bonds do not represent
additional obligations of the Company since the underlying liabilities are
recorded as insurance reserves and included with other current liabilities on
the Companys consolidated balance sheets. In addition, the Company occasionally
utilizes documentary letters of credit for the purchase of merchandise in the
normal course of business. Issued and outstanding letters of credit totaled
$28.5 million at September 28, 2008.

Off Balance Sheet Arrangements

The Company is not a party to any
off-balance sheet arrangements that have, or are reasonably likely to have, a
current or future material effect on the Companys financial condition, results
of operations or cash flows.

Critical Accounting Policies

The preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions about future events that affect the reported
amounts of assets, liabilities, revenues and expenses and the disclosures of
contingent assets and liabilities. Future events and their effects cannot be
determined with absolute certainty. Therefore, managements determination of
estimates and judgments about the carrying values of assets and liabilities
requires the exercise of judgment in the selection and application of
assumptions based on various factors including historical experience, current
and expected economic conditions and other factors believed to be reasonable
under the circumstances. Actual results could differ from those estimates. The
Company constantly reviews the relevant, significant factors and makes
adjustments where the facts and circumstances dictate.

Management has identified the following
accounting policies as the most critical in the preparation of the Companys
financial statements because they involve the most difficult, subjective or
complex judgments about the effect of matters that are inherently uncertain.

Vendor Rebates, Credits and
Promotional Allowances

Consistent with standard practices in
the retail industry, Harris Teeter receives allowances from vendors through a
variety of programs and arrangements. Given the highly promotional nature of the
retail supermarket industry, the allowances are generally intended to defray the
costs of promotion, advertising and selling the vendors products. Examples of
such arrangements include, but are not limited to, promotional, markdown and
rebate allowances; cooperative advertising funds; volume allowances; store
opening discounts and support; and slotting, stocking and display allowances.
The amount of such allowances may be determined on the basis of (1) a fixed
dollar amount negotiated with the vendor, (2) an amount per unit purchased or as
a percentage of total purchases from the vendor, or (3) amounts based on sales
to the customer, number of stores, in-store displays or advertising. The proper
recognition and timing of accounting for these items are significant to the
reporting of the results of operations of the Company. The Company applies the
authoritative guidance of the Securities and Exchange Commissions Staff
Accounting Bulletin No. 104 (SAB No. 104) Revenue Recognition, Emerging Issues
Task Force Issue No. 02-16 (EITF 02-16) Accounting by a Customer (Including a Reseller) for Certain
Considerations Received from a Vendor, and
other authoritative guidance as appropriate. Under SAB No. 104, revenue
recognition requires, as a prerequisite, the completion of the earnings process
and its realization or assurance of realizability. Vendor rebates, credits and
other promotional allowances that relate to Harris Teeters buying and
merchandising activities, including lump-sum payments associated with long-term
contracts, are recorded as a component of cost of sales as they are earned, the
recognition of which is determined in accordance with the underlying agreement
with the vendor, the authoritative guidance and completion of the earning
process. Portions of vendor allowances that are refundable to the vendor, in
whole or in part, by the nature of the provisions of the contract are deferred
from recognition until realization is reasonably assured.

18

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Harris Teeters practices are in
accordance with EITF 02-16 and are based on the premise that the accounting for
these vendor allowances should follow the economic substance of the underlying
transactions, which is evidenced by the agreement with the vendor as long as the
allowance is distinguishable from the merchandise purchase. Consistent with this
premise, Harris Teeter recognizes allowances when the purpose for which the
vendor funds were intended and committed to be used has been fulfilled and a
cost has been incurred by the retailer. Thus, it is the Companys policy to
recognize the vendor allowance consistent with the timing of the recognition of
the expense that the allowance is intended to reimburse and to determine the
accounting classification consistent with the economic substance of the
underlying transaction. Where the Company provides an identifiable benefit or
service to the vendor apart from the purchase of merchandise, that transaction
is recorded separately. For example, co-operative advertising allowances are
accounted for as a reduction of advertising expense in the period in which the
advertising cost is incurred. If the advertising allowance exceeds the cost of
advertising, then the excess is recorded against the cost of sales in the period
in which the related expense is recognized.

There are numerous types of rebates and
allowances in the retail industry. The Companys accounting practices with
regard to some of the more typical arrangements are discussed as follows. Vendor
allowances for price markdowns are credited to the cost of sales during the
period in which the related markdown was taken and charged to the cost of sales.
Slotting and stocking allowances received from a vendor to ensure that its
products are carried or to introduce a new product at the Companys stores are
recorded as a reduction of cost of sales over the period covered by the
agreement with the vendor based on the estimated inventory turns of the
merchandise to which the allowance applies. Display allowances are recognized as
a reduction of cost of sales in the period earned in accordance with the vendor
agreement based on the estimated inventory turns of the merchandise to which the
allowance applies. Volume rebates by the vendor in the form of a reduction of
the purchase price of the merchandise reduce the cost of sales when the related
merchandise is sold. Generally, volume rebates under a structured purchase
program with allowances awarded based on the level of purchases are recognized,
when realization is assured, as a reduction in the cost of sales in the
appropriate monthly period based on the actual level of purchases in the period
relative to the total purchase commitment and adjusted for the estimated
inventory turns of the merchandise. Some of these typical vendor rebate, credit
and promotional allowance arrangements require that the Company make assumptions
and judgments regarding, for example, the likelihood of attaining specified
levels of purchases or selling specified volumes of products, the duration of
carrying a specified product and the estimation of inventory turns. The Company
constantly reviews the relevant, significant factors and makes adjustments where
the facts and circumstances dictate.

Inventory Valuation

The inventories of the Companys
operating subsidiaries are valued at the lower of cost or market with the cost
of substantially all domestic U.S. inventories being determined using the
last-in, first-out (LIFO) method. Foreign inventories and limited categories of
domestic inventories are valued on the weighted average and on the first-in,
first-out (FIFO) cost methods. LIFO assumes that the last costs in are the ones
that should be used to measure the cost of goods sold, leaving the earlier costs
residing in the ending inventory valuation. The Company uses the link chain
method of computing dollar value LIFO whereby the base year values of beginning
and ending inventories are determined using a cumulative price index. The
Company generates an estimated internal index to link current costs to the
original costs of the base years in which the Company adopted LIFO. The
Companys determination of the LIFO index is driven by the change in current
year costs, as well as the change in inventory quantities on hand. Under the
LIFO valuation method at Harris Teeter, all retail store inventories are
initially stated at estimated cost as calculated by the Retail Inventory Method
(RIM). Under RIM, the valuation of inventories at cost and the resulting gross
margins are calculated by applying a calculated cost-to-retail ratio to the
retail value of inventories. RIM is an averaging method that has been widely
used in the retail industry due to its practicality. Inherent in the RIM
calculation are certain significant management judgments and estimates,
including markups, markdowns, lost inventory (shrinkage) percentages and the
purity and similarity of inventory sub-categories as to their relative inventory
turns, gross margins and on hand quantities. These judgments and estimates
significantly impact the ending inventory valuation at cost, as well as gross
margin. Management believes that the Companys RIM provides an inventory
valuation which reasonably approximates cost and results in carrying the
inventory at the lower of cost or market. Management does not believe that the
likelihood is significant that materially higher LIFO reserves are required
given its current expectations of on-hand inventory quantities and
costs.

The proper valuation of inventory also
requires management to estimate the net realizable value of the Companys
obsolete and slow-moving inventory at the end of each period. Management bases
its net realizable values upon many factors including historical recovery rates,
the aging of inventories on hand, the inventory movement of specific products
and the current economic conditions. When management has determined inventory to
be obsolete or slow moving, the inventory is reduced to its net realizable value
by recording an obsolescence reserve. Given the Companys experiences in selling
obsolete and slow-moving inventory, management believes that the amounts of the
obsolescence reserves to the carrying values of its inventories are materially
adequate.

With regard to the proper valuations of
inventories, management reviews its judgments, assumptions and other relevant,
significant factors on a routine basis and makes adjustments where the facts and
circumstances dictate.

19

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Self-insurance Reserves for Workers
Compensation, Healthcare and General Liability

The Company is primarily self-insured
for most U.S. workers compensation claims, healthcare claims and general
liability and automotive liability losses. The Company has purchased insurance
coverage in order to establish certain limits to its exposure on a per claim
basis.

Actual U.S. workers compensation
claims, and general liability and automotive liability losses, are reported to
the Company by third party administrators. The third party administrators also
report initial estimates of related loss reserves. The open claims and initial
loss reserves are subjected to examination by the Companys risk management and
accounting management utilizing a consistent methodology which involves various
assumptions, judgment and other factors. Such factors include but are not
limited to the probability of settlement, the amount at which settlement can be
achieved, the probable duration of the claim, the cost development pattern of
the claim and the applicable cost development factor. The Company determines the
estimated reserve required for U.S. worker compensation claims in each
accounting period. This requires that management determine estimates of the
costs of claims incurred and accrue for such expenses in the period in which the
claims are incurred. The Company measures the liabilities associated with claims
for workers compensation, general liability and automotive liability at Harris
Teeter through the use of actuarial methods to project an estimate of ultimate
cost for claims incurred. The estimated cost for claims incurred are discounted
to present values using a discount rate representing a return on high-quality
fixed income securities with an average maturity equal to the average payout of
the related liability. Harris Teeter liabilities represent approximately 96% of
the total Company self-insurance reserves for workers compensation, general
liability and automotive liability claims. For liabilities associated with
A&Es workers compensation, general liability and automotive liability
claims, management estimates the ultimate cost for claims incurred based on
actual claims, reviewed for the status and probabilities associated with
potential settlement and then adjusts them by development factors from published
insurance industry sources. The Company constantly reviews the relevant,
significant factors and makes adjustments where the facts and circumstances
dictate. Management does not believe the likelihood is significant that existing
worker compensation claims, general liability claims and automotive liability
claims will be settled for materially higher amounts than those
accrued.

The variety of healthcare plans
available to employees are primarily self-insured, although some locations have
insured health maintenance organization plans. The Company records an accrual
for the estimated amount of self-insured healthcare claims incurred by all
participants but not yet reported (IBNR) using an actuarial method of applying a
development factor to the reported claims amount. The most significant factors
which impact on the determination of the required accrual are the historical
pattern of the timeliness of claims processing, changes in the nature or types
of benefit plans, changes in the plan benefit designs, employer-employee cost
sharing factors, and medical trends and inflation. Historical experience and
industry trends are continually monitored, and accruals are adjusted when
warranted by changes in facts and circumstances. The Company believes that the
total healthcare cost accruals are reasonable and adequate to cover future
payments on pre-existing claims.

Impairment of Long-lived Assets and
Closed Store Obligations

The Company assesses its long-lived
assets for possible impairment whenever events or changes in circumstances
indicate the carrying value of an asset may not be recoverable. Recoverability
is measured by a comparison of the carrying amount to the net non-discounted
cash flows expected to be generated by the asset. An impairment loss is
recognized for any excess of net book value over the estimated fair value of the
asset impaired. The fair value is estimated based on expected future cash
flows.

The value of property and equipment
associated with closed stores and facilities is adjusted to reflect recoverable
values based on the Company's prior history of disposing of similar assets and
current economic conditions. Management continually reviews its fair value
estimates and records impairment charges for assets held for sale when
management determines, based on new information which it believes to be
reliable, that such charges are appropriate.

The results of impairment tests are
subject to management's estimates and assumptions of projected cash flows and
operating results. The Company believes that, based on current conditions,
materially different reported results are not likely to result from long-lived
asset impairments. However, a change in assumptions or market conditions could
result in a change in estimated future cash flows and the likelihood of
materially different reported results.

The Company records liabilities for
closed stores that are under long-term lease agreements. The liability
represents an estimate of the present value of the remaining non-cancelable
lease payments after the anticipated closing date, net of estimated subtenant
income. The closed store liabilities usually are paid over the lease terms
associated with the closed stores, unless settled earlier. Harris Teeter
management estimates the subtenant income and future cash flows based on its
historical experience and knowledge of (1) the market in which the store is
located, (2) the results of its previous efforts to dispose of similar assets
and (3) the current economic conditions. The actual cost of disposition for
these leases is affected by specific real estate markets, inflation rates and
general economic conditions and may differ significantly from those assumed and
estimated.

20

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Store closings generally are completed
within one year after the decision to close. Adjustments to closed store
liabilities primarily relate to changes in subtenants and actual costs differing
from original estimates. Adjustments are made for changes in estimates in the
period in which the change becomes known. Any excess store closing liability
remaining upon settlement of the obligation is reversed to income in the period
that such settlement is determined. The Company constantly reviews the relevant,
significant factors used in its estimates and makes adjustments where the facts
and circumstances dictate.

Retirement Plans and Post-Retirement
Benefit Plans

The Company maintains certain
retirement benefit plans for substantially all domestic full-time employees and
supplemental retirement benefit plans for certain selected directors and
officers of the Company and its subsidiaries. Employees in foreign subsidiaries
participate to varying degrees in local pension plans, which, in the aggregate,
are not significant. The qualified pension plan is a non-contributory, funded
defined benefit plan, while the non-qualified supplemental retirement benefit
plans are unfunded, defined benefit plans. The Companys current funding policy
for its qualified pension plan is to contribute annually the amount required by
regulatory authorities to meet minimum funding requirements and an amount to
increase the funding ratios over future years to a level determined by its
actuaries to be effective in reducing the volatility of contributions.

The Company has certain deferred
compensation arrangements which allow or allowed in prior years its directors,
officers and selected key management personnel to forego the receipt of earned
compensation for specified periods of time. The Company may also, from time to
time, make discretionary annual contributions into the Director Deferral Plan on
behalf of its outside directors. These plans are unfunded. The Company utilizes
a rabbi trust to hold assets set aside to pay the respective liabilities of
these plans. For further disclosures regarding the Companys pension and
deferred compensation plans, see the Note entitled Employee Benefit Plans of
the Notes to Consolidated Financial Statements in Item 8 hereof.

The Company maintains a post-retirement
healthcare plan for retirees whose sum of age and years of service equal at
least 75 at retirement. The plan continues coverage from early retirement date
until the earlier date of eligibility for Medicare or any other employers
medical plan. The Company requires that the retiree pay the estimated full cost
of the coverage. The Company also provides a $5,000 post-retirement mortality
benefit to a small number of retirees under a prior plan. The obligations and
expenses associated with each of these benefit plans are not material.

The determination of the Companys
obligation and expense for pension, deferred compensation and other
post-retirement benefits is dependent on certain assumptions selected by
management and used by the Company and its actuaries in calculating such
amounts. The more significant of those assumptions applicable to the qualified
pension plan include the discount rate, the expected long-term rate of return on
plan assets, the rates of increase in future compensation and the rates of
future employee turnover. Those assumptions also apply to determinations of the
obligations and expense of the following plans, except as noted: (1)
supplemental pension  no funded assets to be measured, and (2) deferred
compensation arrangement and post-retirement mortality benefit  no funded
assets to be measured and no dependency on future rates of compensation or
turnover.

In accordance with generally accepted
accounting principles, actual results that differ from managements assumptions
are accumulated and amortized over future periods and, therefore, generally
affect the Companys recognized expense and recorded obligation in such future
periods. While management believes that its selections of values for the various
assumptions are appropriate, significant differences in actual experience or
significant changes in the assumptions may materially affect pension and other
post-retirement obligations and future expense. As an example, as of September 28, 2008,
each 25 basis point reduction in the discount rate would effectively increase total pension liabilities (the
qualified pension plan and the supplemental retirement benefit plan) by
approximately $9.2 million and could increase future pension expense through the
amortization of accumulated unrecognized actuarial losses.

Recent Accounting Standards

In September 2006, the FASB issued
Statement of Financial Accounting Standards (SFAS) No. 157, "Fair Value
Measurements." SFAS No. 157 defines fair value, establishes a framework for
measuring fair value in generally accepted accounting principles, and expands
disclosures about fair value measurements. SFAS No. 157 does not require any new
fair value measurements. SFAS No. 157 becomes effective for the Companys 2009
fiscal year beginning on September 29, 2008, with the exception of its
application to nonfinancial assets and nonfinancial liabilities which has been
delayed for one year as a result of the FASBs February 2008 issuance of Staff
Position 157-2, Effective Date of FASB Statement No. 157. The adoption of this
standard is not expected to have a material effect on the Companys financial
position, results of operations or cash flows.

21

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In October 2008, the FASB issued Staff
Position (FSP) No. FAS 157-3, Determining the Fair Value of a Financial Asset
When the Market for That Asset Is Not Active. This FSP applies to financial
assets within the scope of accounting pronouncements that require or permit fair
value measurements in accordance with SFAS No. 157. FSP No. FAS 157-3 clarifies
the application of SFAS No. 157 in a market that is not active and provides an
example to illustrate key considerations in determining the fair value of a
financial asset when the market for that financial asset is not active. This FSP
became effective upon issuance, including prior periods for which financial
statements have not been issued and did not have a material effect on the
Companys financial position, results of operations or cash flows.

In February 2007, the FASB issued SFAS
No. 159, The Fair Value Option for Financial Assets and Financial Liabilities -
Including an amendment of FASB Statement No. 115. SFAS No. 159 permits
companies to measure many financial instruments and certain other items at fair
value at specified election dates. Unrealized gains and losses on these items
will be reported in earnings at each subsequent reporting date. The fair value
option may be applied instrument by instrument (with a few exceptions), is
irrevocable and is applied only to entire instruments and not to portions of
instruments. This new standard becomes effective for the Companys 2009 fiscal
year beginning on September 29, 2008. The adoption of this standard is not
expected to have a material effect on the Companys financial position, results
of operations or cash flows.

In December 2007, the FASB issued SFAS
No. 141(R), Business Combinations. SFAS No. 141(R) is a revision of SFAS No.
141 that requires most identifiable assets, liabilities, noncontrolling
interest, and goodwill acquired in a business combination to be recorded at
full fair value. This new standard applies to all business combinations,
including combinations among mutual entities and combinations by contract alone.
SFAS No. 141(R) becomes effective for the Companys 2010 fiscal year beginning
on September 28, 2009 and will be applied to business combinations occurring
after the effective date.

In December 2007, the FASB issued SFAS
No. 160, Noncontrolling Interests in Consolidated Financial Statements. SFAS
No. 160 requires noncontrolling interest (previously referred to as minority
interests) to be treated as a separate component of equity, not as a liability
or other item outside of permanent equity. This new standard applies to the
accounting for noncontrolling interest and transactions with noncontrolling
interest holders in consolidated financial statements and will become effective
for the Companys 2010 fiscal year beginning on September 28, 2009. The Company
is currently evaluating the impact of SFAS No. 160 on its consolidated financial
statements.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

The Company is subject to interest rate
risk on its fixed interest rate debt obligations. Generally, the fair value of
debt with a fixed interest rate will increase as interest rates fall, and the
fair value will decrease as interest rates rise. As of September 28, 2008, the
Company had no significant foreign exchange exposure and no significant
outstanding derivative transactions.

The table below presents principal cash
flows and related weighted average interest rates by expected maturity dates for
the Companys significant fixed interest rate debt obligations ($121.4 million
of Senior Notes due at various dates through 2017):

|                                     |  | 2009 |       | 2010 |   | 2011  |  | 2012 |       | 2013 |   | Thereafter |  | Total |   | Fair Value
|------------------------------------ |  | ---- | ----- | ---- | - | ----- |  | ---- | ----- | ---- | - | ---------- |  | ----- | - | ----------
|Fixed rate debt obligations          |  | $    | 7,143 |      | $ | 7,143 |  | $    | 7,142 |      | $ | -          |  | $     | - |           
|Weighted average
      interest rate |  |      | 6.48% |      |   | 6.48% |  |      | 6.48% |      |   | -          |  |       | - |           

For a more detail description of fair
value, refer to the Note entitled Financial Instruments of the Notes to
Consolidated Financial Statements in Item 8 hereof.

22

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Item 8.Financial Statements and Supplementary Data

RUDDICK CORPORATION AND
CONSOLIDATED SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS AND SCHEDULE

|                                                                                           |  | Page
|------------------------------------------------------------------------------------------ |  | ----
|Reports of Independent Registered Public Accounting
      Firm                             |  | 24  
|                                                                                           |  |     
|Consolidated Balance Sheets, September 28, 2008 and September 30,
      2007               |  | 26  
|                                                                                           |  |     
|Statements of Consolidated Income for the fiscal years ended
      September 28, 2008,     |  |     
|September 30, 2007 and October 1, 2006                                                     |  | 27  
|                                                                                           |  |     
|Statements of Consolidated Shareholders Equity and Comprehensive
      Income for the     |  |     
|fiscal years ended September 28, 2008, September 30, 2007 and
      October 1, 2006        |  | 28  
|                                                                                           |  |     
|Statements of Consolidated Cash Flows for the fiscal years ended
      September 28, 2008, |  |     
|September 30, 2007 and October 1, 2006                                                     |  | 29  
|                                                                                           |  |     
|Notes to Consolidated Financial Statements                                                 |  | 30  
|                                                                                           |  |     
|Schedule I- Valuation and Qualifying Accounts and Reserves for the
      fiscal            |  |     
|years ended September 28, 2008, September 30, 2007 and October 1,
      2006               |  | S-1 

23

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Report of Independent Registered
Public Accounting Firm

The Board of Directors and Shareholders
Ruddick Corporation:

We have audited the accompanying
consolidated balance sheets of Ruddick Corporation and subsidiaries (the
Company) as of September 28, 2008 and September 30, 2007, and the related
consolidated statements of income, shareholders equity and comprehensive
income, and cash flows for each of the years in the three-year period ended
September 28, 2008. In connection with our audits of the consolidated financial
statements, we also have audited the financial statement schedule Valuation and
Qualifying Accounts and Reserves. These consolidated financial statements and
financial statement schedule are the responsibility of the Companys management.
Our responsibility is to express an opinion on these consolidated financial
statements and financial statement schedule based on our audits.

We conducted our audits in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated
financial statements referred to above present fairly, in all material respects,
the financial position of the Company and subsidiaries as of September 28, 2008
and September 30, 2007, and the results of their operations and their cash flows
for each of the years in the three-year period ended September 28, 2008, in
conformity with U.S. generally accepted accounting principles. Also in our
opinion, the related financial statement schedule, when considered in relation
to the basic consolidated financial statements taken as a whole, present fairly,
in all material respects, the information set forth therein.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the Companys internal control over financial reporting as of September
28, 2008, based on criteria established in Internal Control  Integrated
Framework issued by the Committee of Sponsoring Organizations of the
Treadway Commission (COSO), and our report dated November 21, 2008,
expressed,an unqualified opinion on the effectiveness of the Companys
internal control over financial reporting.

As discussed in the Summary of
Significant Accounting Policies, the Company adopted Financial Accounting
Standards Board Staff Position 13-1, Accounting for Rental Costs Incurred During a Construction
Period effective January 2, 2006.
Additionally, the Company adopted the provisions of the Financial Accounting
Standards Boards Statement of Financial Accounting Standards No. 158,Employers Accounting for Defined Benefit
Pension and Other Postretirement Plansas of
September 30, 2007, and Financial Accounting Standards Board Interpretation No.
48, Accounting for Uncertainty in Income
Taxes  an Interpretation of FASB Statement 109effective October 1, 2007.

KPMG LLPCharlotte, North Carolina November 21, 2008

24

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Report of Independent Registered
Public Accounting Firm

The Board of Directors and Shareholders
Ruddick Corporation:

We have audited Ruddick Corporation and
subsidiaries (the Company) internal control over financial reporting as of
September 28, 2008, based on criteria established inInternal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO). The Companys management is responsible for maintaining
effective internal control over financial reporting and for its assessment of
the effectiveness of internal control over financial reporting, included in the
accompanying Managements Annual Report on Internal Controls over Financial
Reporting. Our responsibility is to express an opinion on the Companys internal
control over financial reporting based on our audit.

We conducted our audit in accordance
with the standards of the Public Company Accounting Oversight Board (United
States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial
reporting was maintained in all material respects. Our audit included obtaining
an understanding of internal control over financial reporting, assessing the
risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our
audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for
our opinion.

A companys internal control over
financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted
accounting principles. A companys internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of
records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the company are
being made only in accordance with authorizations of management and directors of
the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the companys
assets that could have a material effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

In our opinion, the Company maintained,
in all material respects, effective internal control over financial reporting as
of September 28, 2008, based on criteria established in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the
Treadway Commission.

We also have audited, in accordance
with the standards of the Public Company Accounting Oversight Board (United
States), the consolidated balance sheets of Ruddick Corporation and subsidiaries
as of September 28, 2008 and September 30, 2007, and the related consolidated
statements of operations, shareholders equity and comprehensive income, and
cash flows for each of the years in the three-year period ended September 28,
2008, and our report dated November 21, 2008 expressed an unqualified opinion on
those consolidated financial statements.

KPMG LLPCharlotte, North Carolina November 21, 2008

25

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CONSOLIDATED BALANCE SHEETSRUDDICK CORPORATION AND
SUBSIDIARIES(dollars in thousands)

|                                                                                       |  | September 28, |           | September 30,
|-------------------------------------------------------------------------------------- |  | ------------- | --------- | -------------
|                                                                                       |  | 2008          |           | 2007         
|ASSETS                                                                                 |  |               |           |              
|Current
      Assets                                                                   |  |               |           |              
|Cash and Cash
      Equivalents                                                        |  | $             | 29,759    |              
|Accounts Receivable, Net of
      Allowance For Doubtful Accounts of $2,819 and $3,962 |  |               | 91,528    |              
|Refundable Income
    Taxes                                                            |  |               | 8,607     |              
|Inventories                                                                            |  |               | 312,589   |              
|Deferred Income
Taxes                                                                  |  |               | 6,477     |              
|Prepaid Expenses and Other Current Assets                                              |  |               | 28,196    |              
|Total Current Assets                                                                   |  |               | 477,156   |              
|Property                                                                               |  |               |           |              
|Land                                                                                   |  |               | 21,375    |              
|Buildings and
      Improvements                                                       |  |               | 238,413   |              
|Machinery and
    Equipment                                                            |  |               | 942,213   |              
|Leasehold Improvements                                                                 |  |               | 619,677   |              
|Total, at Cost                                                                         |  |               | 1,821,678 |              
|Accumulated Depreciation and Amortization                                              |  |               | 854,347   |              
|Property, Net                                                                          |  |               | 967,331   |              
|Investments                                                                            |  |               | 143,902   |              
|Deferred Income Taxes                                                                  |  |               | 361       |              
|Goodwill                                                                               |  |               | 8,169     |              
|Intangible Assets                                                                      |  |               | 26,355    |              
|Other Long-Term Assets                                                                 |  |               | 73,133    |              
|Total Assets                                                                           |  | $             | 1,696,407 |              
|                                                                                      
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                   |  |               |           |              
|Current
      Liabilities                                                              |  |               |           |              
|Notes Payable                                                                          |  | $             | 11,150    |              
|Current Portion of Long-Term
      Debt and Capital Lease Obligations                  |  |               | 9,625     |              
|Accounts Payable                                                                       |  |               | 236,649   |              
|Deferred Income
Taxes                                                                  |  |               | 347       |              
|Accrued Compensation                                                                   |  |               | 63,826    |              
|Other Current Liabilities                                                              |  |               | 89,206    |              
|Total Current Liabilities                                                              |  |               | 410,803   |              
|Long-Term Debt
      and Capital Lease Obligations                                     |  |               | 310,953   |              
|Deferred Income Taxes                                                                  |  |               | 10,877    |              
|Pension
      Liabilities                                                              |  |               | 44,306    |              
|Other Long-Term Liabilities                                                            |  |               | 89,685    |              
|Minority
      Interest                                                                |  |               | 5,948     |              
|Commitments and Contingencies                                                          |  |               | -         |              
|Shareholders'
      Equity                                                             |  |               |           |              
|Common Stock, no par value -
      Shares Outstanding: 2008  48,278,136;              |  |               |           |              
|2007  48,127,252                                                                      |  |               | 83,252    |              
|Retained Earnings                                                                      |  |               | 767,562   |              
|Accumulated Other
      Comprehensive Income (Loss), Net of Income Taxes               |  |               | (26,979)  |              
|Total Shareholders'
      Equity                                                       |  |               | 823,835   |              
|Total Liabilities and
      Shareholders' Equity                                       |  | $             | 1,696,407 |              

See Notes to Consolidated Financial
Statements

26

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STATEMENTS OF CONSOLIDATED INCOME
RUDDICK CORPORATION AND SUBSIDIARIES (dollars in thousands, except per
share data)

|                                                                     |  | 52
      Weeks Ended |           | 52
      Weeks Ended |   | 52
      Weeks Ended
|-------------------------------------------------------------------- |  | -------------------- | --------- | -------------------- | - | --------------------
|                                                                     |  | September 28,        |           | September 30,        |   | October 1,          
|                                                                     |  | 2008                 |           | 2007                 |   | 2006                
|Net Sales                                                            |  | $                    | 3,992,397 |                      | $ | 3,639,208           
|Cost of
      Sales                                                  |  |                      | 2,783,950 |                      |   | 2,542,861           
|Selling, General and
      Administrative Expenses                   |  |                      | 1,034,662 |                      |   | 948,173             
|Operating Profit                                                     |  |                      | 173,785   |                      |   | 148,174             
|Interest Expense                                                     |  |                      | 20,334    |                      |   | 17,654              
|Interest
      Income                                                |  |                      | (1,185)   |                      |   | (307)               
|Net Investment Loss (Gain)                                           |  |                      | 41        |                      |   | (228)               
|Minority Interest                                                    |  |                      | 484       |                      |   | 564                 
|Income Before Taxes                                                  |  |                      | 154,111   |                      |   | 130,491             
|Income Tax Expense                                                   |  |                      | 57,359    |                      |   | 49,803              
|Net Income                                                           |  | $                    | 96,752    |                      | $ | 80,688              
|                                                                    
|Net Income Per Share:                                                |  |                      |           |                      |   |                     
|Basic                                                                |  | $                    | 2.02      |                      | $ | 1.69                
|Diluted                                                              |  | $                    | 2.00      |                      | $ | 1.68                
|                                                                    
|Weighted Average Number of Shares of Common Stock
      Outstanding: |  |                      |           |                      |   |                     
|Basic                                                                |  |                      | 47,824    |                      |   | 47,605              
|Diluted                                                              |  |                      | 48,295    |                      |   | 48,139              

See Notes to Consolidated Financial
Statements

27

---

STATEMENTS OF CONSOLIDATED
SHAREHOLDERS' EQUITY AND COMPREHENSIVE INCOME RUDDICK CORPORATION AND
SUBSIDIARIES(dollars in thousands, except share and per share amounts)

|                                       |  | Common
      Stock |  |        |         |          |   |               |  | Accumulated Other |          | Total         |   |          | 
|-------------------------------------- |  | ------------------ |  | ------ | ------- | -------- | - | ------------- |  | ----------------- | -------- | ------------- | - | -------- | 
|                                       |  | Shares             |  | Common |         | Retained |   | Comprehensive |  | Shareholders'     |          | Comprehensive
|                                       |  | (No Par Value)     |  | Stock  |         | Earnings |   | Income (Loss) |  | Equity            |          | Income       
|Balance at October 2, 2005             |  | 47,488,979         |  | $      | 70,558  |          | $ | 582,953       |  | $                 | (44,569) |               | $ | 608,942  | 
|Exercise of
      stock options,       |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|including tax benefits of
      $914   |  | 313,814            |  |        | 5,597   |          |   | -             |  |                   | -        |               |   | 5,597    | 
|Directors' stock plan                  |  | -                  |  |        | 2       |          |   | -             |  |                   | -        |               |   | 2        | 
|Share-Based
      Compensation         |  | 153,692            |  |        | 2,545   |          |   | -             |  |                   | -        |               |   | 2,545    | 
|Shares effectively purchased and       |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|retired for withholding
      taxes    |  | (3,591)            |  |        | (74)    |          |   | -             |  |                   | -        |               |   | (74)     | 
|Shares purchased
      and retired     |  | (395,000)          |  |        | (7,899) |          |   | -             |  |                   | -        |               |   | (7,899)  | 
|Net earnings                           |  | -                  |  |        | -       |          |   | 72,336        |  |                   | -        |               |   | 72,336   | 
|Dividends ($0.44
      a share)        |  | -                  |  |        | -       |          |   | (20,867)      |  |                   | -        |               |   | (20,867) | 
|Foreign currency translation           |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|adjustment (net of $216 for
      tax) |  | -                  |  |        | -       |          |   | -             |  |                   | 1,301    |               |   | 1,301    | 
|Pension
      liability adjustment     |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|(net of $5,668 for tax)                |  | -                  |  |        | -       |          |   | -             |  |                   | 8,634    |               |   | 8,634    | 
|Balance at October 1, 2006             |  | 47,557,894         |  |        | 70,729  |          |   | 634,422       |  |                   | (34,634) |               |   | 670,517  | 
|Exercise of
      stock options,       |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|including tax benefits of
      $1,820 |  | 400,262            |  |        | 7,531   |          |   | -             |  |                   | -        |               |   | 7,531    | 
|Directors' stock plan                  |  | -                  |  |        | 1       |          |   | -             |  |                   | -        |               |   | 1        | 
|Share-Based
      Compensation         |  | 184,365            |  |        | 3,853   |          |   | -             |  |                   | -        |               |   | 3,853    | 
|Shares effectively purchased and       |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|retired for withholding
      taxes    |  | (15,269)           |  |        | (437)   |          |   | -             |  |                   | -        |               |   | (437)    | 
|Net
      earnings                     |  | -                  |  |        | -       |          |   | 80,688        |  |                   | -        |               |   | 80,688   | 
|Dividends ($0. 44 a share)             |  | -                  |  |        | -       |          |   | (21,118)      |  |                   | -        |               |   | (21,118) | 
|Foreign currency
      translation     |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|adjustment (net of $298 for
      tax) |  | -                  |  |        | -       |          |   | -             |  |                   | 3,617    |               |   | 3,617    | 
|Pension liability adjustment           |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|(net of $10,774 for
    tax)           |  | -                  |  |        | -       |          |   | -             |  |                   | 16,881   |               |   | 16,881   | 
|Impact of SFAS
      158 Adoption      |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|(net of tax benefit of $16,072)        |  | -                  |  |        | -       |          |   | -             |  |                   | (24,923) |               |   | (24,923) | 
|Balance at September 30, 2007          |  | 48,127,252         |  |        | 81,677  |          |   | 693,992       |  |                   | (39,059) |               |   | 736,610  | 
|Exercise of
      stock options,       |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|including tax benefits of
      $1,917 |  | 233,158            |  |        | 5,276   |          |   | -             |  |                   | -        |               |   | 5,276    | 
|Directors' stock plan                  |  | -                  |  |        | (12)    |          |   | -             |  |                   | -        |               |   | (12)     | 
|Share-Based
      Compensation         |  | 196,494            |  |        | 5,376   |          |   | -             |  |                   | -        |               |   | 5,376    | 
|Shares effectively purchased and       |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|retired for withholding
      taxes    |  | (29,168)           |  |        | (1,065) |          |   | -             |  |                   | -        |               |   | (1,065)  | 
|Shares purchased
      and retired     |  | (249,600)          |  |        | (8,000) |          |   | -             |  |                   | -        |               |   | (8,000)  | 
|Net earnings                           |  | -                  |  |        | -       |          |   | 96,752        |  |                   | -        |               |   | 96,752   | 
|Dividends ($0.48
      a share)        |  | -                  |  |        | -       |          |   | (23,182)      |  |                   | -        |               |   | (23,182) | 
|Foreign currency translation           |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|adjustment (net of $384 for
      tax) |  | -                  |  |        | -       |          |   | -             |  |                   | 1,079    |               |   | 1,079    | 
|Pension
      liability adjustment     |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|(net of $6,988 for
    tax)            |  | -                  |  |        | -       |          |   | -             |  |                   | 10,855   |               |   | 10,855   | 
|Postemployment benefits liability      |  |                    |  |        |         |          |   |               |  |                   |          |               |   |          | 
|adjustment (net of $95 for
      tax)  |  | -                  |  |        | -       |          |   | -             |  |                   | 146      |               |   | 146      | 
|Balance at September 28,
2008          |  | 48,278,136         |  | $      | 83,252  |          | $ | 767,562       |  | $                 | (26,979) |               | $ | 823,835  | 

See Notes to Consolidated Financial
Statements

28

---

STATEMENTS OF CONSOLIDATED CASH
FLOWS RUDDICK CORPORATION AND SUBSIDIARIES (dollars in thousands)

|                                                                 |  | 52
      Weeks Ended |           | 52
      Weeks Ended |   | 52
      Weeks Ended
|---------------------------------------------------------------- |  | -------------------- | --------- | -------------------- | - | --------------------
|                                                                 |  | September 28,        |           | September 30,        |   | October 1,          
|                                                                 |  | 2008                 |           | 2007                 |   | 2006                
|CASH FLOW FROM OPERATING ACTIVITIES:                             |  |                      |           |                      |   |                     
|Net
      Income                                                 |  | $                    | 96,752    |                      | $ | 80,688              
|Non-Cash Items Included in Net Income:                           |  |                      |           |                      |   |                     
|Depreciation and
      Amortization                              |  |                      | 114,405   |                      |   | 100,798             
|Deferred Income
Taxes                                            |  |                      | 13,665    |                      |   | (3,108)             
|Net Gain on Property
      Sales                                 |  |                      | (1,789)   |                      |   | (2,432)             
|Impairment Losses                                                |  |                      | 129       |                      |   | 618                 
|Share-Based
    Compensation                                     |  |                      | 5,376     |                      |   | 3,853               
|Other, Net                                                       |  |                      | 1,703     |                      |   | (2,649)             
|Changes in
      Operating Accounts Providing (Utilizing) Cash:  |  |                      |           |                      |   |                     
|Accounts Receivable                                              |  |                      | 1,552     |                      |   | (2,588)             
|Inventories                                                      |  |                      | (16,853)  |                      |   | (28,213)            
|Prepaid Expenses and Other
      Current Assets                  |  |                      | (3,464)   |                      |   | 303                 
|Accounts Payable                                                 |  |                      | 7,116     |                      |   | 40,132              
|Other Current
      Liabilities                                  |  |                      | 8,331     |                      |   | 13,054              
|Other Long-Term Operating
      Accounts                         |  |                      | (235)     |                      |   | 11,662              
|Other, Net                                                       |  |                      | 500       |                      |   | 500                 
|Net Cash Provided by Operating
      Activities                  |  |                      | 227,188   |                      |   | 212,618             
|                                                                
|INVESTING ACTIVITIES:                                            |  |                      |           |                      |   |                     
|Capital
      Expenditures                                       |  |                      | (199,500) |                      |   | (219,903)           
|Purchase of Other Investments                                    |  |                      | (46,799)  |                      |   | (9,835)             
|Acquired
      Favorable Leases                                  |  |                      | (1,136)   |                      |   | -                   
|Proceeds from Sale of Property                                   |  |                      | 24,606    |                      |   | 14,989              
|Return of
      Partnership Investments                          |  |                      | 129       |                      |   | 12,557              
|Proceeds from Sale of Temporary Investments                      |  |                      | -         |                      |   | -                   
|Purchase of
      Temporary Investments                          |  |                      | -         |                      |   | -                   
|Investments in Company-Owned Life Insurance                      |  |                      | (1,879)   |                      |   | (1,881)             
|Other, Net                                                       |  |                      | (1,647)   |                      |   | (735)               
|Net Cash Used in Investing
      Activities                      |  |                      | (226,226) |                      |   | (204,808)           
|                                                                
|FINANCING ACTIVITIES:                                            |  |                      |           |                      |   |                     
|Net Proceeds
      from (Payments on) Short-Term Debt Borrowings |  |                      | 865       |                      |   | 750                 
|Net (Payments on) Proceeds from Revolver Borrowings              |  |                      | (62,000)  |                      |   | 10,200              
|Proceeds from
      Long-Term Debt Borrowings                    |  |                      | 100,371   |                      |   | 319                 
|Payments on Long-Term Debt and Capital Lease Obligations         |  |                      | (10,207)  |                      |   | (8,387)             
|Dividends
      Paid                                             |  |                      | (23,182)  |                      |   | (21,118)            
|Proceeds from Stock Issued                                       |  |                      | 3,359     |                      |   | 5,711               
|Share-Based
      Compensation Tax Benefits                      |  |                      | 1,917     |                      |   | 1,820               
|Purchase and Retirement of Common Stock                          |  |                      | (8,000)   |                      |   | -                   
|Other, Net                                                       |  |                      | (1,139)   |                      |   | (210)               
|Net Cash Provided by (Used in)
      Financing Activities        |  |                      | 1,984     |                      |   | (10,915)            
|Increase
      (Decrease) in Cash and Cash Equivalents           |  |                      | 2,946     |                      |   | (3,105)             
|Effect of Foreign Currency Fluctuations on Cash                  |  |                      | 66        |                      |   | 664                 
|Cash and Cash Equivalents at Beginning
      of Year             |  |                      | 26,747    |                      |   | 29,188              
|Cash and Cash Equivalents at End
      of Year                   |  | $                    | 29,759    |                      | $ | 26,747              

See Notes to Consolidated Financial
Statements

29

---

RUDDICK CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

SUMMARY OF SIGNIFICANT ACCOUNTING
POLICIES

Principles of
ConsolidationThe accompanying
consolidated financial statements include the accounts of Ruddick Corporation
and subsidiaries, including its wholly owned operating companies, Harris Teeter,
Inc. and American & Efird, Inc., collectively referred to herein as the
Company. All material intercompany amounts have been eliminated. To the extent
that non-affiliated parties held minority equity investments in joint ventures
of the Company, such investments are classified as minority interest.

The Company reviews its investments in
entities to determine if such entities are deemed to be variable interest
entities (VIEs) as defined by FIN 46 and FIN 46-R. The Company will consolidate
those VIEs in which the Company is the primary beneficiary of the entity. As of
the fiscal year ended on September 28, 2008, the Company concluded that it does
not have any VIEs that required consolidation.

Fiscal YearThe Company's fiscal year ends on the Sunday nearest to
September 30. However, the Companys Harris Teeter subsidiarys fiscal periods
end on the Tuesday following the Companys fiscal period end. Fiscal years 2008,
2007 and 2006 include the 52 weeks ended September 28, 2008 (September 30, 2008
for Harris Teeter), September 30, 2007 (October 2, 2007 for Harris Teeter) and
October 1, 2006 (October 3, 2006 for Harris Teeter), respectively.

Use of EstimatesThe preparation of financial statements
in conformity with generally accepted accounting principles requires management
to make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenues and expenses
during the reporting period. Actual amounts could differ from those estimates.

Cash and Cash
EquivalentsFor purposes of the statements
of consolidated cash flows, the Company considers all highly liquid cash
investments purchased with a maturity of three months or less to be cash
equivalents.

Temporary
InvestmentsThe Company has historically
invested in various municipal and tax-exempt bonds and other similar investments
in order to enhance its return on excess cash. The Company selected specific
investments based on certain criteria, which include, but are not limited to,
suitable liquidity and credit quality requirements.

InventoriesThe Companys inventories are valued at the lower of cost or
market with the cost of substantially all domestic U.S. inventories being
determined using the last-in, first-out (LIFO) method. Foreign inventories and
limited categories of domestic inventories are valued on the weighted average
and on the first-in, first-out (FIFO) cost methods. Under the LIFO valuation
method at Harris Teeter, all retail store inventories are initially stated at
estimated cost as calculated by the Retail Inventory Method (RIM). Under RIM,
the valuation of inventories at cost and the resulting gross margins are
calculated by applying a calculated cost-to-retail ratio to the retail value of
inventories. LIFO indices are developed approximately one month prior to year
end except for inventory held at Harris Teeters distribution facilities which
are developed at year end. The annual LIFO measurement is achieved by applying
the indices to the actual inventory on hand as of year end.

Vendor Rebates, Credits and
Promotional AllowancesConsistent with
standard practices in the retail industry, Harris Teeter receives allowances
from vendors through a variety of programs and arrangements. These allowances
are generally intended to defray the costs of promotion, advertising and selling
the vendors products. Vendor rebates, credits and other promotional allowances
that relate to Harris Teeters buying and merchandising activities, including
lump-sum payments associated with long-term contracts, are recorded as a
component of cost of sales as they are earned, the recognition of which is
determined in accordance with the underlying agreement with the vendor, the
authoritative guidance and completion of the earning process. Portions of vendor
allowances that are refundable to the vendor, in whole or in part, by the nature
of the provisions of the contract are deferred from recognition until
realization is reasonably assured.

30

---

Harris Teeter recognizes allowances
when the purpose for which the vendor funds were intended and committed to be
used has been fulfilled and a cost has been incurred by the retailer. Thus, it
is the Companys policy to recognize the vendor allowance consistent with the
timing of the recognition of the expense that the allowance is intended to
reimburse and to determine the accounting classification consistent with the
economic substance of the underlying transaction. Where the Company provides an
identifiable benefit or service to the vendor apart from the purchase of
merchandise, that transaction is recorded separately. For example, co-operative
advertising allowances are accounted for as a reduction of advertising expense
in the period in which the advertising cost is incurred. If the advertising
allowance exceeds the cost of advertising, then the excess is recorded against
the cost of sales in the period in which the related expense is recognized.

Vendor allowances for price markdowns
are credited to the cost of sales during the period in which the related
markdown was taken and charged to the cost of sales. Slotting and stocking
allowances received from a vendor to ensure that its products are carried or to
introduce a new product at the Companys stores are recorded as a reduction of
cost of sales over the period covered by the agreement with the vendor based on
the estimated inventory turns of the merchandise to which the allowance applies.
Display allowances are recognized as a reduction of cost of sales in the period
earned in accordance with the vendor agreement. Volume rebates by the vendor in
the form of a reduction of the purchase price of the merchandise reduce the cost
of sales when the related merchandise is sold. Generally, volume rebates under a
structured purchase program with allowances awarded based on the level of
purchases are recognized, when realization is assured, as a reduction in the
cost of sales in the appropriate monthly period based on the actual level of
purchases in the period relative to the total purchase commitment and adjusted
for the estimated inventory turns of the merchandise.

Property and
DepreciationProperty is recorded at cost
and is depreciated, using principally the straight-line method, over the
following useful lives:

Land improvements
    10-40 yearsBuildings
    15-40
      yearsMachinery and equipment
    3-15 years


Leasehold improvements are depreciated
over the lesser of the estimated useful life or the remaining term of the lease.
Assets under capital leases are amortized on a straight-line basis over the
lesser of the estimated useful life or the lease term. Maintenance and repairs
are charged against income when incurred. Expenditures for major renewals,
replacements and betterments are added to property. The cost and the related
accumulated depreciation of assets retired are eliminated from the accounts with
gains or losses on disposal being added to or deducted from income. Property
categories include $46,224,000 and $57,889,000 of accumulated costs for
construction in progress at September 28, 2008 and September 30, 2007,
respectively.

Impairment of Long-lived Assets and
Closed Store ObligationsIn accordance
with Statement of Financial Accounting Standards (SFAS) No. 144 Impairment of
Long-Lived Assets, the Company assesses its long-lived assets for possible
impairment whenever events or changes in circumstances indicate the carrying
value of an asset may not be recoverable. Recoverability is measured by a
comparison of the carrying amount to the net non-discounted cash flows expected
to be generated by the asset. An impairment loss is recognized for any excess of
net book value over the estimated fair value of the asset impaired, and recorded
as an offset to the asset value. The fair value is estimated based on expected
future cash flows or third party valuations, if available.

The value of property and equipment
associated with closed stores and facilities is adjusted to reflect recoverable
values based on the Company's prior history of disposing of similar assets and
current economic conditions. Management continually reviews its fair value
estimates and records impairment charges for assets held for sale when
management determines, based on new information which it believes to be
reliable, that such charges are appropriate.

The Company records liabilities for
closed stores that are under long-term lease agreements. The liability
represents an estimate of the present value of the remaining non-cancelable
lease payments after the anticipated closing date, net of estimated subtenant
income. The closed store liabilities usually are paid over the lease terms
associated with the closed stores, unless settled earlier. Harris Teeter
management estimates the subtenant income and future cash flows based on its
historical experience and knowledge of (1) the market in which the store is
located, (2) the results of its previous efforts to dispose of similar assets
and (3) the current economic conditions.

31

---

InvestmentsThe Companys Harris Teeter subsidiary invests in certain real
estate development projects, with a managing partner or partners, in which
Harris Teeter either operates or plans to operate a supermarket. American &
Efird has investments in various non-consolidated foreign entities in which they
hold a minority interest and a 50% ownership interest in a joint venture in
China. These investments, depending on the state of development, are accounted
for either under the equity method of accounting or at cost. In addition, the
Company continues to hold certain equity investments in a few emerging growth
companies as a result of investments made in certain venture capital funds
during prior years. Real estate and other investments are carried at the lower
of cost or market and are periodically reviewed for potential impairment in
accordance SFAS No. 144 Accounting for the Impairment or Disposal of Long-Lived
Assets. Investments accounted for under the equity method totaled $91,194,000
and $64,305,000 at September 28, 2008 and September 30, 2007, respectively.
Investments accounted for under the cost method totaled $52,708,000 and
$36,431,000 at September 28, 2008 and September 30, 2007, respectively.

Goodwill and Other IntangiblesIn accordance with SFAS No. 142,
Goodwill and Other Intangible Assets, goodwill and certain other intangibles
with indefinite lives are no longer amortized, but instead are tested for
impairment at least annually, or more frequently, if circumstances indicate a
potential impairment. Intangible assets with finite, measurable lives continue
to be amortized over their respective useful lives until they reach their
estimated residual values, and are reviewed for impairment in accordance with
SFAS No. 144, Accounting for the Impairment or Disposal of Long-Lived
Assets.

InsuranceThe Company utilizes a combination of self-insured retention
and high-deductible programs for most U.S. workers compensation claims,
healthcare claims, and general liability and automotive liability losses. The
Company has purchased insurance coverage in order to establish certain limits to
its exposure on a per claim basis. The Company determines the estimated reserve
required for U.S. worker compensation claims, general liability and automotive
liability by first analyzing the costs of claims incurred and then adjusts such
estimates by development factors from published insurance industry sources. The
Company measures the cost associated with workers compensation claims, and
general liability and automotive liability losses at Harris Teeter based upon a
projection of the ultimate cost for claims incurred. The estimated total
expected costs of claims includes an estimate for claims incurred but not
reported (IBNR) and is discounted to present values using a discount rate
representing a return on high-quality fixed income securities with an average
maturity equal to the average payout of the related liability.

The Company records an accrual for the
estimated amount of self-insured healthcare IBNR claims. These reserves are
recorded based on historical experience and industry trends, which are
continually monitored, and accruals are adjusted when warranted by changes in
facts and circumstances.

Deferred RentThe Company recognizes rent holidays, including the period of
time the Company has access prior to the store opening, which typically includes
construction and fixturing activity, and rent escalations on a straight-line
basis over the term of the lease. The deferred rent amount is included in Other
Long-Term Liabilities on the Companys Consolidated Balance Sheets. In
accordance with Financial Accounting Standards Board Staff Position 13-1,
Accounting for Rental Costs Incurred during a Construction Period, the Company
began expensing construction period rent as incurred as of the beginning of the
second quarter of fiscal 2006.

DerivativesThe Company does not enter into derivative financial
instruments for trading purposes. Derivative instruments (including certain
derivative instruments embedded in other contracts) entered into in the normal
course of business were not significant during any of the periods presented.

Revenue RecognitionThe Company recognizes revenue from
retail operations at the point of sale to its customers and from manufacturing
operations at the point of shipment to its customers, based on shipping terms.

Cost of SalesThe major components of cost of sales in the retail
supermarket segment are (a) the cost of products sold determined under the
Retail Inventory Method (see "Inventories above) reduced by purchase cash
discounts and vendor purchase allowances and rebates, (b) the cost of various
sales promotional activities reduced by vendor promotional allowances, and
reduced by cooperative advertising allowances to the extent an advertising
allowance exceeds the cost of the advertising, (c) the cost of product waste,
including, but not limited to, physical waste and theft, (d) the cost of product
distribution, including warehousing, freight and delivery, and (e) any charges,
or credits, associated with LIFO reserves and reserves for obsolete and slow
moving inventories. Additionally, the costs of production of product sold by the
dairy operation to outsiders are included in cost of sales in the period in
which the sales are recognized in revenues.

32

---

The major components of cost of sales
in the textile manufacturing and distribution segment are (a) the materials and
supplies, labor costs and overhead costs associated with the manufactured
products sold, (b) the purchased cost of products bought for resale, (c) any
charges, or credits, associated with LIFO reserves and reserves for obsolete and
slow moving inventories, (d) the freight costs incurred to deliver the products
to the customer from the point of sale, and (e) all other costs required to be
classified as cost of sales under authoritative accounting
pronouncements.

Selling, General and Administrative
ExpensesThe major components of selling,
general and administrative expenses in the retail supermarket segment are (a)
the costs associated with store operations, including store labor and training,
fringe benefits and incentive compensation, supplies and maintenance, regional
and district management and store support, store rent and other occupancy costs,
property management and similar costs, (b) advertising costs, (c) shipping and
handling costs, excluding freight, warehousing and distribution costs, (d)
merchandising and purchasing department staffing, supplies and associated costs,
(e) customer service and support, and (f) the costs of maintaining general and
administrative support functions, including, but not limited to, personnel
administration, finance and accounting, treasury, credit, information systems,
marketing, and environmental, health and safety, based on appropriate
classification under generally accepted accounting principles.

The major components of selling,
general and administrative expenses in the textile manufacturing and
distribution segment are (a) the costs of maintaining a sales force, including
compensation, incentive compensation, benefits, office and occupancy costs,
travel and all other costs of the sales force, (b) shipping and handling costs,
excluding freight, (c) the costs of advertising, customer service, sales support
and other similar costs, and (d) the costs of maintaining general and
administrative support functions, including, but not limited to, personnel
administration, finance and accounting, treasury, credit, information systems,
training, marketing, and environmental, health and safety, to the extent that
such overhead activities are not allocable to indirect manufacturing costs in
cost of sales under generally accepted accounting principles. The Company also
includes the net income of unconsolidated subsidiaries within selling, general
and administrative expenses.

The major components of selling,
general and administrative expenses in the corporate segment are (a) the costs
associated with a portion of compensation and benefits of holding company
employees, and (b) certain other costs that are not related to the operating
companies.

AdvertisingCosts incurred to produce media advertising are expensed in
the period in which the advertising first takes place. All other advertising
costs are also expensed when incurred. Cooperative advertising income from
vendors is recorded in the period in which the related expense is incurred and
amounted to $1,717,000, $1,635,000 and $1,745,000 in fiscal 2008, 2007 and 2006,
respectively. Net advertising expenses of $25,818,000, $24,486,000, and
$23,311,000 were included in the Company's results of operations for fiscal
2008, 2007 and 2006, respectively.

Foreign CurrencyAssets and liabilities of foreign operations (if applicable)
are translated at the current exchange rates as of the end of the accounting
period, and revenues and expenses are translated using average exchange rates.
The resulting translation adjustments are net of income taxes and accumulated as
a component of other comprehensive income in shareholders equity.

Income TaxesThe Company and its subsidiaries file a consolidated federal
income tax return. Tax credits are recorded as a reduction of income taxes in
the years in which they are generated. Deferred tax liabilities or assets at the
end of each period are determined using the tax rate expected to be in effect
when taxes are settled or realized. Accordingly, income tax expense will
increase or decrease in the same period in which a change in tax rates is
enacted. A valuation allowance is established for deferred tax assets for which
realization is not more likely than not.

Earnings Per Share (EPS)Basic EPS is based on the weighted
average outstanding common shares. Diluted EPS is based on the weighted average
outstanding common shares adjusted by the dilutive effect of potential common
stock equivalents resulting from the operation of the Companys comprehensive
stock option and awards plans.

33

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Stock Options and Stock
AwardsThe Company adopted SFAS 123R as of
the beginning of the first quarter of fiscal 2006 utilizing the modified
prospective method which requires fair-value accounting for all share-based
payments to employees for new awards and previously granted awards that were not
vested as of the adoption date. Compensation expense for stock awards are based
on the grant date fair value and are expensed ratably over their vesting period,
resulting in more expense in the early years. Income tax benefits attributable
to stock options exercised are credited to capital stock.

Other Comprehensive IncomeOther comprehensive income refers to
revenues, expenses, gains and losses that are not included in net earnings but
rather are recorded directly in shareholders equity. The accumulated components
of other comprehensive income, net of taxes at September 28, 2008 were
accumulated net losses for minimum pension liabilities of $33,527,000,
accumulated net gains for postemployment liabilities of $78,000 and accumulated
net gains for foreign currency translation adjustments of $6,470,000.

ReclassificationsTo conform with classifications used in
the current year, the financial statements for the prior year reflect certain
reclassifications.

INVENTORIES

Inventories are valued at the lower of
cost or market with the cost of substantially all domestic U.S. inventories
being determined using the last-in, first-out (LIFO) method. The LIFO cost of
such inventories was $32,651,000 and $22,175,000 less than the first-in,
first-out (FIFO) cost method at September 28, 2008 and September 30, 2007,
respectively. Foreign inventories and limited categories of domestic
inventories, totaling $76,360,000 for fiscal 2008 and $72,616,000 for fiscal
2007, are valued on the weighted average and on the FIFO cost methods. The
following table summarizes the components of inventories at September 28, 2008
and September 30, 2007 (in thousands):

|                                 |  | 2008 |         | 2007
|-------------------------------- |  | ---- | ------- | ----
|Finished Goods                   |  | $    | 281,952 |     
|Raw Materials
      and Supplies |  |      | 23,901  |     
|Work in Process                  |  |      | 6,736   |     
|Total Inventories                |  | $    | 312,589 |     

COMPANY OWNED LIFE INSURANCE
(COLI)

The Company has purchased life
insurance policies to fund its obligations under certain benefit plans for
officers, key employees and directors. The cash surrender value of these
policies is recorded net of policy loans and included with other long-term
assets in the Companys consolidated balance sheets. The cash value of the
Companys life insurance policies were $54,880,000 at September 28, 2008 and
$52,055,000 at September 30, 2007, and no policy loans were outstanding at
either date.

INTANGIBLE ASSETS

The carrying amount of intangible
assets at September 28, 2008 and September 30, 2007 was as follows (in
thousands):

|                                                               |  | 2008 |         | 2007
|-------------------------------------------------------------- |  | ---- | ------- | ----
|Amortizing Intangible Assets:                                  |  |      |         |     
|Acquired favorable operating
      leases                      |  |      | 18,170  |     
|Customer lists                                                 |  |      | 5,534   |     
|Land use rights  foreign
      operations                     |  |      | 4,439   |     
|Non-compete
    agreements                                     |  |      | 4,054   |     
|Trademarks, licenses and other                                 |  |      | 2,554   |     
|Total amortizing intangibles                                   |  |      | 34,751  |     
|Accumulated amortization                                       |  |      | (8,396) |     
|Total intangible assets, net of
      accumulated amortization |  | $    | 26,355  |     

Acquired favorable operating leases are
recorded at Harris Teeter. All other amortizing intangible assets are recorded
by American & Efird. Amortization expense for intangible assets was
$2,658,000, $2,619,000 and $2,281,000 in fiscal years 2008, 2007, and 2006,
respectively. Amortizing intangible assets have remaining useful lives from one
year to 47 years. Projected amortization expense for intangible assets existing
as of September 28, 2008 is: $2,573,000, $2,340,000, $1,902,000, $1,624,000 and
$1,406,000 for fiscal years 2009, 2010, 2011, 2012 and 2013,
respectively.

34

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GOODWILL

Goodwill is recorded by the Companys
American & Efird textile subsidiary. In accordance with SFAS No. 142,
Goodwill and Other Intangible Assets, the Company conducts an annual review
during the first fiscal quarter to determine if there exits any impairment of
goodwill. There has been no goodwill impairment charge required for the periods
presented.

LEASES

The Company leases certain equipment
under agreements expiring during the next 6 years. Harris Teeter leases most of
its stores under leases that expire during the next 25 years. It is expected
that such leases will be renewed by exercising options or replaced by leases of
other properties. Most store leases provide for additional rentals based on
sales, and certain store facilities are sublet under leases expiring during the
next 10 years. Certain leases also contain rent escalation clauses (step rents)
that require additional rental amounts in the later years of the
term.

Rent expense for the fiscal years was
as follows (in thousands):

|                                |  | 2008 |        | 2007 |   | 2006  
|------------------------------- |  | ---- | ------ | ---- | - | ------
|Minimum, net of sublease income |  | $    | 85,693 |      | $ | 84,106
|Contingent                      |  |      | 1,932  |      |   | 1,597 
|Total                           |  | $    | 87,625 |      | $ | 85,703

Future minimum lease commitments
(excluding leases assigned - see below) and total minimum sublease rental income
to be received under non-cancelable subleases at September 28, 2008 were as
follows (in thousands):

|                                                                             |  | Operating |           |           |   |          | Capital
|---------------------------------------------------------------------------- |  | --------- | --------- | --------- | - | -------- | -------
|Fiscal Year                                                                  |  | Leases    |           | Subleases |   | Leases  
|2009                                                                         |  | $         | 91,913    |           | $ | (2,486)  |        
|2010                                                                         |  |           | 95,344    |           |   | (2,403)  |        
|2011                                                                         |  |           | 97,218    |           |   | (2,176)  |        
|2012                                                                         |  |           | 97,927    |           |   | (2,075)  |        
|2013                                                                         |  |           | 97,447    |           |   | (1,669)  |        
|Later years                                                                  |  |           | 1,040,914 |           |   | (4,346)  |        
|Total minimum lease obligations
      (receivables)                          |  | $         | 1,520,763 |           | $ | (15,155) |        
|Amount representing interest                                                 |  |           |           |           |   |          |        
|Present value of net minimum
      obligation (included with long-term debt) |  |           |           |           |   |          |        

In connection with the closing of
certain store locations, Harris Teeter has assigned leases to other merchants
with recourse. These leases expire over the next 13 years and the future minimum
lease payments totaling $57,745,000 over this period have been assumed by these
merchants.

LONG-TERM DEBT

On December 20, 2007, the Company and
eleven banks entered into a new credit agreement that provides for a five-year
revolving credit facility in the aggregate amount of up to $350 million and a
non-amortizing term loan of $100 million due December 20, 2012. The new credit
agreement also provides for an optional increase of the revolving credit
facility by an additional amount of up to $100 million and two 1-year maturity
extension options, both of which require consent of the lenders. The new credit
agreement replaced a previously existing $350 million revolving credit facility
dated June 7, 2006. Outstanding borrowings under the new credit agreement bear
interest at a variable rate based on a reference to: rates on federal funds
transactions with members of the Federal Reserve System or the prime rate in
effect on the interest determination date; the LIBOR Market Index Rate; or, the
LIBOR Rate, each plus an applicable margin. The amount which may be borrowed
from time to time and the applicable margin to the referenced interest rate are
each dependent on a leverage factor. The leverage factor is based on a ratio of
rent-adjusted consolidated funded debt divided by earnings before interest,
taxes, depreciation, amortization and operating rents, as set forth in the
credit agreement. The more significant of the financial covenants which the
Company must meet during the term of the new credit agreement include a maximum
leverage ratio and a minimum fixed charge coverage ratio. As of September 28,
2008, the Company was in compliance with all financial covenants of the credit
agreement. Issued letters of credit reduce the amount available for borrowings
under the revolving credit facility and amounted to $28,540,000 as of September
28, 2008. The Company is charged a variable commitment fee based on the amount
available for borrowings, which amounted to $292,460,000 as of September 28,
2008. The commitment fee rate applied to the net unused balance was 0.120%,
0.120% and 0.120% for fiscal 2008, 2007 and 2006, respectively.

35

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Covenants in certain of the Companys
long-term debt agreements limit the total indebtedness that the Company may
incur. The most restrictive of these covenants is a consolidated maximum
leverage ratio and a minimum fixed charge coverage ratio as defined in the
Companys credit agreement. As of September 28, 2008, the amount of additional
debt that could be incurred within the limitations of the debt covenants
exceeded the additional borrowings available under the revolving credit
facility. As such, management believes that the limit on indebtedness does not
restrict the Companys ability to meet future liquidity requirements through
borrowings available under the Companys revolving credit facility, including
any liquidity requirements expected in connection with the Companys expansion
plans for the foreseeable future.

Long-term debt at September 28, 2008
and September 30, 2007 was as follows (in thousands):

|                                                           |   | 2008    |  |   | 2007   
|---------------------------------------------------------- | - | ------- |  | - | -------
|6.48% Senior Note due $7,143 annually through April, 2011  | $ | 21,428  |  | $ | 28,572 
|7.72% Senior
      Note due April, 2017                    |   | 50,000  |  |   | 50,000 
|7.55% Senior Note due July, 2017                           |   | 50,000  |  |   | 50,000 
|Bank Term Loan
      due December, 2012, variable interest |   | 100,000 |  |   | -      
|Revolving Line of Credit, variable interest                |   | 29,000  |  |   | 91,000 
|Capital lease
      obligations                            |   | 66,558  |  |   | 39,327 
|Other obligations                                          |   | 3,592   |  |   | 5,493  
|Total                                                      |   | 320,578 |  |   | 264,392
|Less current portion                                       |   | 9,625   |  |   | 8,535  
|Total long-term debt                                       | $ | 310,953 |  | $ | 255,857

Long-term debt maturities (including
capital lease obligations) in each of the next five fiscal years are as follows:
2009 - $9,625,000; 2010 - $ 9,780,000; 2011 - $ 9,529,000; 2012 - $ 1,745,000;
2013 - $ 130,823,000.

Total interest expense, net of amounts
capitalized, on debt and capital lease obligations was $20,334,000, $17,654,000
and $14,125,000 for fiscal 2008, 2007 and 2006, respectively. Capitalized
interest totaled $2,220,000, $2,318,000 and $1,083,000 for fiscal 2008, 2007 and
2006, respectively.

FINANCIAL INSTRUMENTS

Financial instruments which potentially
subject the Company to concentration of credit risk consist principally of cash
equivalents and receivables. The Company limits the amount of credit exposure to
each individual financial institution and places its temporary cash into
investments of high credit quality. Concentrations of credit risk with respect
to receivables are limited due to their dispersion across various companies and
geographies.

The carrying amounts for certain of the
Company's financial instruments, including cash and cash equivalents, accounts
and notes receivable, accounts payable and other accrued liabilities approximate
fair value because of their short maturities. The fair value of variable
interest debt is equal to its carrying amount. The estimated fair value of the
Companys significant fixed interest debt obligations (Senior Notes due at
various dates through 2017) outstanding as of September 28, 2008 was
$127,053,000 as compared to its carrying amount of $121,428,000. This estimated
fair value is computed based on borrowing rates currently available to the
Company for loans with similar terms and maturities.

CAPITAL STOCK

The capital stock of the Company
authorized at September 28, 2008 was 75,000,000 shares of no par value Common
Stock, 4,000,000 shares of Preference Stock (non-cumulative voting $0.56
convertible, $10 liquidation value), and 1,000,000 shares of Additional
Preferred Stock. No shares of Preference Stock or Additional Preferred Stock
were issued or outstanding at September 28, 2008.

36

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One preferred share purchase right is
attached to each outstanding share of common stock, which rights expire onNovember 16, 2010. Each
right entitles the holder to purchase one one-hundredth of a share of a new
Series A Junior Participating Additional Preferred Stock for $60. The rights
will become exercisable only under certain circumstances related to a person or
group acquiring or offering to acquire a substantial portion of the Company's
common stock. If certain additional events then occur, each right would entitle
the rightholder to acquire common stock of the Company, or in some cases of an
acquiring entity, having a value equal to twice the exercise price. Under
certain circumstances the Board of Directors may extinguish the rights by
exchanging one share of common stock or an equivalent security for each
qualifying right or may redeem each right at a price of $0.01. There are 600,000
shares of Series A Junior Participating Additional Preferred Stock reserved for
issuance upon exercise of the rights.

The Board of Directors adopted a stock
buyback program in 1996, authorizing, at managements discretion, the Company to
purchase and retire up to 10% of the then outstanding shares of the Companys
common stock for the purpose of preventing dilution as a result of the operation
of the Companys comprehensive stock option and awards plans. Pursuant to this
plan, the Company purchased and retired 250,000 shares at a total cost of
$8,000,000, or an average price of $32.05 per share and 395,000 shares at a
total cost of $7,899,000, or an average price of $20.00 per share during fiscal
2008 and 2006, respectively. There were no stock purchases during fiscal 2007.

STOCK OPTIONS AND STOCK
AWARDS

At September 28, 2008, the Company has
1993, 1995, 1997, 2000 and 2002 equity incentive plans, which were approved by
the Companys shareholders and authorized the issuance of 5,500,000 shares of
common stock pursuant thereto. Under certain stock option plans, the Company has
granted incentive stock options to employees or nonqualified stock options to
employees and outside directors. The Companys incentive stock options generally
become exercisable in installments of 20% per year at each of the first through
fifth anniversaries from grant date and expire seven years from grant date and
nonqualified stock options expire ten years from grant date. Historically and
pursuant to the terms of certain plans, the Company grants a single, one-time
nonqualified stock option of 10,000 shares, generally vested immediately, to
each of its outside directors at the time of their initial election to the
Board. Under each of the stock option plans, the exercise price of each stock
option shall be no less than the market price of the Company's stock on the date
of grant, and an option's maximum term is ten years. At the discretion of the
Company, under certain plans a stock appreciation right may be granted and
exercised in lieu of the exercise of the related option (which is then
forfeited). Certain of the plans also allow the Company to grant stock awards
such as restricted stock. Under the plans, as of September 28, 2008 the Company
may grant additional options or stock awards and performance shares in the
amount of 1,309,000 shares.

Beginning in November 2004, the Board
of Directors began approving equity awards in lieu of stock options.
Historically these awards were apportioned 50% as a fixed award of restricted
stock (restricted from sale or transfer until vesting ratably over a five-year
period of continued employment) and 50% as performance share awards, based on
the attainment of certain performance targets for the ensuing fiscal year. If
the fiscal year performance targets are met, the performance shares are
subsequently issued as restricted stock and vest over four years of continued
employment.

In December 2004, the FASB issued SFAS
No. 123R, "Share-Based Payment" (SFAS 123R) as a replacement to SFAS No. 123,
Accounting for Stock-Based Compensation. SFAS 123R supersedes APB No. 25,
Accounting for Stock Issued to Employees and related interpretations, which
allowed companies to use the intrinsic method of valuing share-based payment
transactions. SFAS 123R requires all share-based payments to employees,
including grants of employee stock options, to be recognized in the financial
statements based on the fair-value method as defined in SFAS 123. The Company
adopted SFAS 123R as of the beginning of the first quarter of fiscal 2006
utilizing the modified prospective method which requires fair-value accounting
for all share-based payments to employees for new awards and previously granted
awards that were not vested as of the adoption date.

Stock awards are being expensed ratably
over the employees five-year requisite service period in accordance with the
graded vesting schedule, resulting in more expense being recognized in the early
years. Compensation expense related to restricted awards totaled $5,339,000,
$3,529,000 and $1,901,000 for fiscal years 2008, 2007 and 2006, respectively.
The remaining unamortized expense as of September 28, 2008 is $7,560,000, with a
weighted average recognition period of 1.81 years.

Compensation expense related to stock
options totaled $37,000, $324,000 and $645,000 for fiscal years 2008, 2007 and
2006, respectively. The fair value of the stock options was estimated at the
date of grant using the Black-Scholes option pricing model. The Company used
historical data to estimate the expected life, volatility and expected
forfeitures of the stock option value. The risk-free rate was based on the U.S.
Treasury rate in effect at the time of grant. The weighted average fair value
for stock options granted in fiscal 2008 was $11.28 per option and was based on
the following weighted average assumptions: an expected life of 6.32 years; a
risk-free interest rate of 3.23%; volatility of 31.51%; and a dividend yield of 1.38%. No
options were granted in fiscal years 2007 or 2006.

37

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A summary of the status of the
Company's restricted stock awards as of September 28, 2008, September 30, 2007
and October 1, 2006, changes during the periods ending on those dates and
weighted average grant-date fair value (WAGFV) is presented below (shares in
thousands):

|Stock Awards                      |  | September 28, 2008 |  | September 30, 2007 |  | October 1, 2006
|--------------------------------- |  | ------------------ |  | ------------------ |  | ---------------
|                                  |  | Shares             |  | WAGFV              |  | Shares         
|Non-vested at beginning of period |  | 477                |  | 25.17              |  | 325            
|Granted                           |  | 278                |  | 36.69              |  | 269            
|Vested                            |  | (90)               |  | 23.62              |  | (50)           
|Forfeited                         |  | (76)               |  | 29.02              |  | (67)           
|Non-vested at end of period       |  | 589                |  | 30.34              |  | 477            

The total fair value of stock awards
that vested during fiscal years 2008, 2007 and 2006 was $3,280,000, $1,417,000
and $304,000, respectively.

A summary of the status of the
Company's stock option plans as of September 28, 2008, September 30, 2007, and
October 1, 2006, changes during the years ending on those dates and related
weighted average exercise price is presented below (shares in thousands):

|                                      |  | 2008   |  | 2007 |       | 2006
|------------------------------------- |  | ------ |  | ---- | ----- | ----
|Stock Options                         |  | Shares |  |      | Price |     
|Outstanding at beginning of year      |  | 731    |  | $    | 16.01 |     
|Granted                               |  | 10     |  |      | 35.24 |     
|Exercised                             |  | (248)  |  |      | 16.01 |     
|Forfeited                             |  | (8)    |  |      | 16.70 |     
|Expired                               |  | (2)    |  |      | 15.11 |     
|Outstanding at end of year            |  | 483    |  | $    | 16.40 |     
|Options exercisable at year
      end |  | 386    |  | $    | 16.27 |     

The option price per share for stock
options outstanding as of September 28, 2008 ranged from $11.50 to $35.24 and
the average period remaining to vest and become exercisable was 0.14 years. The
weighted average contractual term of stock options outstanding at
September 28, 2008 was 2.9 years. The total cash received from stock options
exercised for the exercise price and related tax deductions are included in the
Consolidated Condensed Statements of Shareholders Equity and Comprehensive
Income. The Company has historically issued new shares to satisfy the stock
options exercised. The aggregate intrinsic value of stock options as of the
balance sheet dates and stock options exercised during the periods ending on
those dates is presented below (in thousands):

|                                                                        |  | 2008   |  | 2007     |  | 2006    
|----------------------------------------------------------------------- |  | ------ |  | -------- |  | --------
|Intrinsic value of outstanding options at end of period                 |  | $8,346 |  | $ 12,923 |  | $ 12,288
|Intrinsic value
      of options exercisable at end of period           |  | 6,713  |  | 7,984    |  | 6,512   
|Intrinsic value of stock options exercised during the fiscal
      year |  | 4,847  |  | 6,178    |  | 2,589   

INCOME TAXES

The Company adopted the provisions of
Financial Accounting Standards Board (FASB) Interpretation No. 48, Accounting
for Uncertainty in Income Taxes - an interpretation of FASB Statement No. 109
(FIN 48), on October1, 2007. FIN 48 clarifies
the accounting for uncertainty in income taxes by prescribing a minimum
recognition threshold for a tax position taken or expected to be taken in a tax
return that is required to be met before being recognized in the financial
statements. FIN 48 also provides guidance on derecognition, measurement,
classification, interest and penalties, accounting in interim periods,
disclosure and transition.

At the date of adoption of FIN 48, the
Companys consolidated balance sheet included $6.7 million of tax positions that
are highly certain but for which there is uncertainty about the timing. Because
of the impact of deferred tax accounting, other than interest and penalties, the
disallowance of these positions would not affect the annual effective tax rate
but would accelerate the payment of cash to the tax authority to an earlier
period. Also as of the adoption date, the Company had accrued interest expense
related to the unrecognized tax benefits of approximately $1.2 million. The
Company has elected to record interest expense related to unrecognized tax
benefits in interest expense. Penalties, if incurred, would be recorded as a component of income tax
expense. Due to the timing nature of the tax positions and the amount of related
interest previously accrued, there was no cumulative effect of adopting FIN 48
required to be recorded against retained earnings or material effect on the
Companys financial position, results of operations or cash flows.

38

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The following table provides a
reconciliation of the unrecognized tax benefits for fiscal 2008 (in thousands):

|                                                                 |  | 2008
|---------------------------------------------------------------- |  | ----
|Balance at beginning of year                                     |  | $   
|Reclassification
      of uncertain positions from taxes payable |  |     
|Additions based on tax positions related to the current year     |  |     
|Additions for
      tax positions of prior years                 |  |     
|Reductions for tax positions of prior years                      |  |     
|Reductions for
      settlements                                 |  |     
|Reductions for deposits
      made                               |  |     
|Balance at end of year                                           |  | $   

The Company and its subsidiaries file a
consolidated U.S. federal income tax return. The U.S. federal statute of
limitations remains open for the fiscal year 1999 and onward with fiscal years
1999 to 2004 under examination by the Internal Revenue Service (the IRS). In
connection with the fiscal years under examination, the Company has filed a
protest with respect to certain IRS-proposed adjustments with which it does not
agree. Those adjustments will be addressed with the Appeals Division of the IRS.
Although there have been discussions with the Appeals Division, the timing of
any resolution is currently uncertain. The Company and some of its subsidiaries
file separate tax returns with the state of North Carolina. The North Carolina
statute of limitations for several entities remains open for the fiscal years
2004 to 2006. Foreign and U.S. state jurisdictions have statutes of limitations
generally ranging from 3 to 5 years.

Although the timing of any resolution
of the tax matters for those years currently in appeals is uncertain, the
Company believes it is reasonably possible that a settlement could occur within
the next twelve months and has included the related liabilities with Other
Current Liabilities in the Companys Consolidated Balance Sheets. Any outcomes
and the timing of audit settlement are subject to significant uncertainty;
however, management believes appropriate provisions for all outstanding issues
have been made for all jurisdictions and all open tax years.

The provision for income taxes consisted of the
following (in thousands):

|                           |  | 2008 |        | 2007 |   | 2006   
|-------------------------- |  | ---- | ------ | ---- | - | -------
|CURRENT                    |  |      |        |      |   |        
|Federal                    |  | $    | 34,313 |      | $ | 44,147 
|State and other            |  |      | 9,381  |      |   | 8,764  
|                           |  |      | 43,694 |      |   | 52,911 
|DEFERRED                   |  |      |        |      |   |        
|Federal                    |  |      | 12,398 |      |   | (3,550)
|State and other            |  |      | 1,267  |      |   | 442    
|                           |  |      | 13,665 |      |   | (3,108)
|Provision for income taxes |  | $    | 57,359 |      | $ | 49,803 

Income from foreign operations before
income taxes in fiscal years 2008, 2007 and 2006 was $1,420,000, $2,868,000 and
$4,040,000, respectively. Income taxes provided for income from foreign
operations in fiscal years 2008, 2007 and 2006 was $931,000, $425,000 and
$422,000, respectively, including the minority interest in such taxes.

39

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Income tax expense differed from an
amount computed by applying the statutory tax rates to pre-tax income asfollows (in thousands):

|                                                                      |  | 2008 |         | 2007 |   | 2006   
|--------------------------------------------------------------------- |  | ---- | ------- | ---- | - | -------
|Income tax on pre-tax income at the statutory                         |  |      |         |      |   |        
|federal rate of 35%                                                   |  | $    | 53,939  |      | $ | 45,672 
|Increase
      (decrease) attributable to:                            |  |      |         |      |   |        
|State and other income taxes, net of federal income tax
      benefit |  |      | 7,277   |      |   | 5,933  
|Tax
      credits                                                     |  |      | (2,820) |      |   | (424)  
|Employee Stock Ownership Plan (ESOP)                                  |  |      | (920)   |      |   | (1,010)
|COLI                                                                  |  |      | (459)   |      |   | (1,081)
|Other items, net                                                      |  |      | 342     |      |   | 713    
|Income tax expense                                                    |  | $    | 57,359  |      | $ | 49,803 

The tax effects of temporary
differences giving rise to the Company's consolidated deferred tax assets and
liabilities at September 28, 2008 and September 30, 2007 are as follows (in
thousands):

|                                               |  | 2008 |          | 2007
|---------------------------------------------- |  | ---- | -------- | ----
|Deferred Tax Assets:                           |  |      |          |     
|Employee benefits                              |  | $    | 27,466   |     
|Rent
      obligations                         |  |      | 20,997   |     
|Reserves not currently deductible              |  |      | 16,075   |     
|Vendor allowances                              |  |      | 7,656    |     
|Other                                          |  |      | 3,978    |     
|Total deferred tax assets                      |  | $    | 76,172   |     
|                                              
|Deferred Tax Liabilities:                      |  |      |          |     
|Property, plant and equipment                  |  | $    | (60,296) |     
|Inventories                                    |  |      | (14,205) |     
|Undistributed earnings on foreign subsidiaries |  |      | (3,695)  |     
|Other                                          |  |      | (2,362)  |     
|Total deferred tax liabilities                 |  | $    | (80,558) |     

As of September 28, 2008, the Company
had approximately $7,961,000 of state cumulative net operating loss
carryforwards, $3,940,000 of foreign cumulative net operating loss carryforwards
and $1,608,000 of foreign tax credit carryforwards. The state net operating
losses will begin to expire in fiscal 2022, the foreign net operating losses
begin to expire in fiscal 2009 and the foreign tax credits begin to expire in
fiscal 2010. A valuation allowance of $2,553,000 and $1,436,000 is included with
deferred income taxes as of September 28, 2008 and September 30, 2007,
respectively. The valuation allowance increased by $1,117,000 from fiscal 2007
to fiscal 2008, increased $697,000 from fiscal 2006 to fiscal 2007 and decreased
$1,622,000 from fiscal 2005 to fiscal 2006. The allowance was developed based
upon the uncertainty of the realization of certain state and foreign deferred
tax assets related to net operating losses and other foreign tax items. Although
realization is not assured for the remaining deferred tax assets, it is
considered more likely than not the deferred tax assets will be realized through
future taxable earnings.

Undistributed earnings of the Company's
foreign operations amount to approximately $20.8 million at September 28, 2008.
Of those earnings, approximately $11.4 million are considered to be indefinitely
reinvested and accordingly, no provision for U.S. federal and state income taxes
is required to be provided thereon. If those earnings were distributed, the
Company would be subject to U.S. federal taxes and withholding taxes payable to
the various foreign countries of approximately $4.4 million (less any applicable
U.S. foreign tax credits).

40

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INDUSTRY SEGMENT INFORMATION

The Company operates primarily in two
businesses: retail grocery (including the real estate and store development
activities of the Company) - Harris Teeter and industrial thread (textile
primarily), including technical textiles and embroidery thread -American &
Efird. Harris Teeter operates a regional chain of supermarkets in the
southeastern United States. American & Efird manufactures and distributes
sewing thread for the apparel and other markets, technical textiles and
embroidery thread throughout their global operations. The Company evaluates
performance of its two businesses utilizing various measures which are based on
operating profit.

Summarized financial information for
fiscal years 2008, 2007 and 2006 is as follows (in millions):

|                                    |  | Industrial |       | Retail  |   |               |  |              |       | 
|----------------------------------- |  | ---------- | ----- | ------- | - | ------------- |  | ------------ | ----- | 
|                                    |  | Thread     |       | Grocery |   | Corporate (1) |  | Consolidated
|2008                                |  |            |       |         |   |               |  |              |       | 
|Net Sales                           |  | $          | 327.6 |         | $ | 3,664.8       |  |              |       | 
|Gross Profit                        |  |            | 69.6  |         |   | 1,138.8       |  |              |       | 
|Operating Profit
      (Loss)       |  |            | 2.3   |         |   | 177.8         |  | $            | (6.3) | 
|Assets Employed at Year End         |  |            | 291.4 |         |   | 1,306.2       |  |              | 98.8  | 
|Depreciation and
      Amortization |  |            | 17.9  |         |   | 96.4          |  |              | 0.1   | 
|Capital Expenditures                |  |            | 7.3   |         |   | 192.2         |  |              | -     | 
|                                   
|2007                                |  |            |       |         |   |               |  |              |       | 
|Net Sales                           |  | $          | 339.8 |         | $ | 3,299.4       |  |              |       | 
|Gross Profit                        |  |            | 74.6  |         |   | 1,021.7       |  |              |       | 
|Operating Profit
      (Loss)       |  |            | 1.4   |         |   | 154.1         |  | $            | (7.3) | 
|Assets Employed at Year End         |  |            | 284.3 |         |   | 1,150.5       |  |              | 94.9  | 
|Depreciation and
      Amortization |  |            | 19.1  |         |   | 81.1          |  |              | 0.6   | 
|Capital Expenditures                |  |            | 7.7   |         |   | 205.5         |  |              | 6.7   | 
|                                   
|2006                                |  |            |       |         |   |               |  |              |       | 
|Net Sales                           |  | $          | 343.2 |         | $ | 2,922.7       |  |              |       | 
|Gross Profit                        |  |            | 74.3  |         |   | 897.6         |  |              |       | 
|Operating Profit
      (Loss)       |  |            | 1.6   |         |   | 127.6         |  | $            | (6.1) | 
|Assets Employed at Year End         |  |            | 297.1 |         |   | 980.1         |  |              | 85.7  | 
|Depreciation and
      Amortization |  |            | 18.1  |         |   | 69.6          |  |              | 1.2   | 
|Capital Expenditures                |  |            | 7.6   |         |   | 210.3         |  |              | 0.6   | 

|(1) |  | Corporate Operating Profit (Loss)
      includes a portion of compensation and benefits of holding company
      employees and certain other costs that are not related to the operating
      companies. Operating profit of the operating companies include all direct
      expenses and the common expenses incurred by the holding company on behalf
      of its operating subsidiaries. Corporate Assets Employed include property,
      equipment, cash and investment assets, and net cash surrender value of
      Company-owned life insurance.
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Geographic information for the
Companys fiscal years is based on the operating locations where the items were
produced or distributed as follows (in thousands):

|                                               |  | 2008         |  | 2007        |  | 2006       
|---------------------------------------------- |  | ------------ |  | ----------- |  | -----------
|Net Revenues  Domestic United States          |  | $ 3,810,635  |  | $ 3,454,198 |  | $ 3,089,776
|Net Revenues  Foreign                         |  | 181,762      |  | 185,010     |  | 176,080    
|                                               |  | $ 3,992,397  |  | $ 3,639,208 |  | $ 3,265,856
|                                              
|Net Long-Lived Assets  Domestic United States |  | $    978,363 |  | $ 860,493   |  | $ 726,128  
|Net Long-Lived Assets  Foreign                |  | 40,625       |  | 41,990      |  | 42,748     
|                                               |  | $ 1,018,988  |  | $ 902,483   |  | $ 768,876  

41

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EMPLOYEE BENEFIT
PLANS

The Company maintains various
retirement benefit plans for substantially all domestic full-time employees of
the Company and its subsidiaries. These plans include the Ruddick Retirement and
Savings Plan (Savings Plan) which is a defined contribution retirement plan,
the Ruddick Corporation Employees Pension Plan (Pension Plan) which is a
qualified non-contributory defined benefit plan and the Supplemental Executive
Retirement Plan (SERP) which is a non-qualified supplemental defined benefit
pension plan for certain executive officers. Effective September 30, 2005,
participation in the Pension Plan was closed to new entrants and frozen for all
participants, with certain transition benefits provided to those participants
that have achieved specified age and service levels on December 31,
2005.

Substantially all domestic full-time
employees of the Company and its subsidiaries participate in one of the Company
sponsored retirement plans. Employees in foreign subsidiaries participate to
varying degrees in local pension plans, which, in the aggregate, are not
significant. Employee retirement benefits or Company contribution amounts under
the various plans are a function of both the years of service and compensation
for a specified period of time before retirement. The Company's current funding
policy for the Pension Plan is to contribute annually the amount required by
regulatory authorities to meet minimum funding requirements and an amount to
increase the funding ratios over future years to a level determined by its
actuaries to be effective in reducing the volatility of
contributions.

The Company adopted SFAS No. 158,
Employers Accounting for Defined Benefit Pension and Other Postretirement
Plans as of the end of fiscal 2007. SFAS No. 158 required the Company to
recognize the funded status of its defined benefit pension plans based on the
projected benefit obligation and measure the benefit obligation for
postretirement benefit plans based on the accumulated benefit obligation. The
adoption of the new standard effectively increased pension and other long-term
liabilities by $40.3 million, reduced shareholders equity (increased
accumulated other comprehensive income (loss)) by $24.9 million, increased
deferred tax benefits by $16.1 million and reduced intangible assets by $0.7
million. However, due to an increase in discount rates from September 30, 2006
to September 30, 2007 and actual returns for pension assets exceeding the
expected rate of return, the actual increase in pension liabilities and
reduction in equity in fiscal 2007 was $13.4 million and $8.0 million,
respectively.

The Companys fiscal year end is used
as the measurement date for Company-sponsored defined benefit plans. The
following table sets forth the change in the benefit obligation and plan assets,
as well as the funded status and amounts recognized in the Company's
consolidated balance sheets at September 28, 2008 and September 30, 2007 for the
Pension Plan and SERP (in thousands):

|                                                |  | Pension Plan |          | SERP
|----------------------------------------------- |  | ------------ | -------- | ----
|                                                |  | 2008         |          | 2007
|Change in benefit obligation:                   |  |              |          |     
|Benefit obligation at the beginning of year     |  | $            | 280,151  |     
|Service cost                                    |  |              | 1,588    |     
|Interest cost                                   |  |              | 17,010   |     
|Plan change                                     |  |              | -        |     
|Actuarial (Gain) loss                           |  |              | (58,932) |     
|Benefits
      paid                             |  |              | (11,098) |     
|Pension benefit obligation at end of
      year |  |              | 228,719  |     
|Change in plan assets:                          |  |              |          |     
|Fair value of assets at the beginning of year   |  |              | 248,193  |     
|Actual return on plan assets                    |  |              | (31,402) |     
|Employer contribution                           |  |              | 7,500    |     
|Benefits paid                                   |  |              | (11,098) |     
|Non-investment expenses                         |  |              | (1,330)  |     
|Fair value of assets at end of
      year       |  |              | 211,863  |     
|Funded
      status                             |  |              | (16,856) |     
|Unrecognized net actuarial loss                 |  |              | 50,830   |     
|Unrecognized prior service cost                 |  |              | 508      |     
|Prepaid (accrued) benefit
      cost            |  | $            | 34,482   |     

42

---

|                                                                                                                                                                                  |  | Pension Plan |          | SERP
|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | -------- | ----
|                                                                                                                                                                                  |  | 2008         |          | 2007
|Amounts recognized in the Consolidated Balance Sheets                                                                                                                             |  |              |          |     
|consist of:                                                                                                                                                                       |  |              |          |     
|(Prepaid) Accrued benefit liability                                                                                                                                               |  | $            | (34,482) |     
|Accumulated other comprehensive income                                                                                                                                            |  |              | 51,338   |     
|Net amount recognized                                                                                                                                                             |  | $            | 16,856   |     
|                                                                                                                                                                                  |  |              |          |     
|The Companys defined benefit
      pension plans had projected and accumulated benefit obligations in excess
      of the fair value of plan assets as follows (in
  thousands):
|                                                                                                                                                                                  |  |              |          |     
|                                                                                                                                                                                  |  | Pension Plan |          | SERP
|                                                                                                                                                                                  |  | 2008         |          | 2007
|Projected
      benefit obligation                                                                                                                                                |  | $            | 228,719  |     
|Accumulated benefit
      obligation                                                                                                                                              |  |              | 207,093  |     
|Fair value
      of plan assets                                                                                                                                                   |  |              | 211,863  |     

A minimum pension liability adjustment
is required when the projected benefit obligation exceeds the fair value of plan
assets and accrued pension liabilities. This adjustment also requires the
elimination of any previously recorded pension assets. The minimum liability
adjustment, net of tax benefit, is reported as a component of other
comprehensive income and included in the Statements of Consolidated
Shareholders Equity and Comprehensive Income.

Net periodic pension expense for the
Companys defined benefit pension plans for fiscal years 2008, 2007 and 2006
included the following components (in thousands):

|Pension Plan                             |  | 2008 |          | 2007 |   | 2006    
|---------------------------------------- |  | ---- | -------- | ---- | - | --------
|Service cost                             |  | $    | 1,588    |      | $ | 2,040   
|Interest
      cost                      |  |      | 17,010   |      |   | 16,157  
|Expected return on plan assets           |  |      | (18,598) |      |   | (17,335)
|Amortization of
      prior service cost |  |      | 220      |      |   | 220     
|Recognized net actuarial
      loss      |  |      | 4,424    |      |   | 6,971   
|Net periodic pension expense             |  | $    | 4,644    |      | $ | 8,053   
|                                        
|SERP                                     |  |      |          |      |   |         
|Service
      cost                       |  | $    | 822      |      | $ | 800     
|Interest cost                            |  |      | 1,889    |      |   | 1,741   
|Amortization of
      prior service cost |  |      | 248      |      |   | 109     
|Recognized net actuarial
      loss      |  |      | 461      |      |   | 767     
|Net periodic pension expense             |  | $    | 3,420    |      | $ | 3,417   

Net periodic pension expense for the
Companys defined benefit pension plans is determined using assumptions as of
the beginning of each year. The projected benefit obligation and related funded
status are determined using assumptions as of the end of each year. The
following table summarizes the assumptions utilized:

|                                                                                                               | 2008         |  | 2007         |  | 2006        
|-------------------------------------------------------------------------------------------------------------- | ------------ |  | ------------ |  | ------------
|Weighted Average Discount Rate (both Plans)  End of Year                                                      | 7.90%        |  | 6.25%        |  | 5.75%       
|Rate of Increase
      in Future Payroll Costs:                                                                |              |  |              |  |             
|Pension Plan                                                                                                   | 3.0% - 8.0%* |  | 3.0% - 8.0%* |  | 3.0% - 8.0%*
|SERP                                                                                                           | 6.0%         |  | 6.0%         |  | 6.0%        
|Assumed Long-Term Rate of Return on Assets (Pension Plan
      only)                                           | 8.00%        |  | 8.25%        |  | 8.25%       
|____________________     * Rate varies by age, higher rates are associated with
      lower aged participants. |              |  |              |  |             

43

---

Discount rates are based on the
expected timing and amounts of the expected employer paid benefits and are
established by reference to a representative yield curve of non-callable bonds
with a credit rating of Aa and above with durations similar to the pension
liabilities. The weighted average discount rate utilized at the end of fiscal
2008 of 7.90%represents
an increase of 165 basis points over the prior year and significantly reduced
the recorded pension liabilities. A discount rate of 6.25% (consistent with
fiscal 2007), would have resulted in pension liabilities totaling approximately
$105 million, or approximately $61 million higher than what was recorded as of
September 28, 2008. Expected long-term return on plan assets is estimated by
asset class and is generally based on historical returns, volatilities and risk
premiums. Based upon the plans asset allocation, composite return percentiles
are developed upon which the plans expected long-term is based.

The SERP is unfunded, with benefit
payments being made from the Companys general assets. Assets of the Pension
Plan are invested in directed trusts. Assets in the directed trusts as of the
fiscal year end were invested as follows:

|Asset Class                                 |  | 2008  |  | 2007 
|------------------------------------------- |  | ----- |  | -----
|Fixed income                                |  | 30.3% |  | 25.8%
|Domestic
      equities                     |  | 37.1  |  | 43.1 
|International equities                      |  | 7.5   |  | 8.4  
|Tactical asset
      allocation fund        |  | 11.1  |  | 11.6 
|Alternative Investments  Real Estate       |  | 4.5   |  | 4.0  
|Alternative
      Investments  Hedge Funds |  | 4.7   |  | 4.5  
|Guaranteed investment contracts             |  | 0.9   |  | 0.7  
|Cash equivalents                            |  | 3.9   |  | 1.9  
|                                            |  | 100%  |  | 100% 

Investments in the pension trust are
overseen by the Retirement Plan Committee which is made up of officers of the
Company and directors. The plan assets are split into two segments: the
Strategic Allocation segment over which the Committee retains responsibility for
directing and monitoring asset allocation, and the Tactical Allocation segment
which is directed by an advisor selected by the Committee.

The Company has developed an Investment
Policy Statement based on the need to satisfy the long-term liabilities of the
Pension Plan. The Company seeks to maximize return with reasonable and prudent
levels of risk. Risk management is accomplished through diversification across
asset classes, multiple investment manager portfolios and both general and
portfolio-specific investment guidelines. Asset guidelines for the Strategic
Allocation segment are:

|Asset Class                                        |  | Minimum Exposure |       | Target |  | Maximum Exposure
|-------------------------------------------------- |  | ---------------- | ----- | ------ |  | ----------------
|Investment grade fixed income and cash equivalents |  |                  | 30.0% |        |  |                 
|Domestic
      equities:                           |  |                  | 25.0  |        |  |                 
|Large cap value                                    |  |                  | 3.0   |        |  |                 
|Large cap growth                                   |  |                  | 3.0   |        |  |                 
|Large cap core                                     |  |                  | 3.0   |        |  |                 
|Small cap value                                    |  |                  | 0.0   |        |  |                 
|Small cap growth                                   |  |                  | 0.0   |        |  |                 
|International
      equities:                      |  |                  | 5.0   |        |  |                 
|International growth                               |  |                  | 0.0   |        |  |                 
|International value                                |  |                  | 0.0   |        |  |                 
|Alternative Investments:                           |  |                  | 0.0   |        |  |                 
|Real Estate                                        |  |                  | 0.0   |        |  |                 
|Hedge Funds                                        |  |                  | 0.0   |        |  |                 

Managers are expected to generate a
total return consistent with their philosophy, offer protection in down markets
and achieve a rate of return which ranks in the top 40% of a universe of
similarly managed portfolios and outperforms a target index, net of expenses,
over rolling three year periods.

The Investment Policy Statement
contains the following guidelines:



| |  | Categorical restrictions such as limiting
      the average weighted duration of fixed income investments, limiting the
      aggregate amount of American Depository Receipts (ADRs), no direct foreign
      currency speculation, limited foreign exchange contracts, and limiting the
      use of derivatives;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|  |  |                                                                                                                                                                                                                                                                                                                    
| |  | Portfolio restrictions that address such
      things as investment restrictions, proxy voting, and brokerage
      arrangements; and                                                                                                                                                                              
|  |  |                                                                                                                                                                                                                                                                                                                    
| |  | Asset class restrictions that address such
      things as single security or sector concentration, capitalization limits
      and minimum quality standards.                                                                                                                                                     

44

---

The Company
plans to contribute $7.5 million to the Pension Plan and approximately $1.3
million to the SERP during fiscal 2009. Due to the current economic environment
that has resulted in a significant decrease in the market value of Pension Plan
assets subsequent to year end, the Company may increase the planned contribution
in fiscal 2009. The Companys contribution to the SERP represents the benefit
payments made during the fiscal year.

The following benefit payments, which
reflect expected future service, as appropriate, are expected to be paid by the
Companys defined benefit pension plans (in thousands):

|                      |  | Pension Plan |         |  | SERP
|--------------------- |  | ------------ | ------- |  | ----
|2009                  |  |              | $11,418 |  | $   
|2010                  |  |              | 12,218  |  |     
|2011                  |  |              | 13,040  |  |     
|2012                  |  |              | 13,928  |  |     
|2013                  |  |              | 14,853  |  |     
|Years
      2014-2018 |  |              | 87,774  |  |     

The Savings Plan is a defined
contribution retirement plan pursuant to Section 401(k) of the Internal Revenue
Code, that was authorized for the purpose of providing retirement benefits for
employees of the Company. The Company provides a matching contribution based on
the amount of eligible compensation contributed by the associate and an
automatic retirement contribution based on age and years of service.

In prior years the Company sponsored an
Employee Stock Ownership Plan (ESOP). In connection with other changes made to
the Companys retirement plans, the Company has ceased contributions to the ESOP
and participants became fully vested in their ESOP account balances as of
September 30, 2005. In May 2007, the Companys Board of Directors approved a
merger of the ESOP into the Savings Plan and in December 2007, the assets of the
ESOP were transferred to the Savings Plan. Historically, the Company provided
cash contributions, as determined by the Board of Directors, to a trust for the
purpose of purchasing shares of the Company's common stock on the open market.
Such contributions were based on the Companys net income for the fiscal year as
a percentage of average shareholders equity. The total amount contributed was
comprised of a base contribution of 1.5% of participants eligible compensation
and an additional contribution of up to 3.5% of eligible compensation. The
Companys final contribution to the ESOP was made in December 2005 based on
fiscal 2005 results. At September 28, 2008, approximately 11% of the Company's
common shares outstanding were owned by employees as participants in the
ESOP.

The Company has certain deferred
compensation arrangements which allow, or allowed in prior years, its directors,
officers and selected key management personnel to forego the receipt of earned
compensation for specified periods of time. These arrangements include (1) a
directors compensation deferral plan, funded in a rabbi trust, the benefit and
payment under such plan being made in the Companys common stock that has
historically been purchased on the open market, (2) a key management deferral
plan, unfunded, the benefit liability under such plan determined on the basis of
the performance of selected market investment indices, and (3) other
compensation deferral arrangements, unfunded and only available to directors and
select key management in prior years, the benefit liability for which is
determined based on fixed rates of interest.

Expense associated with the Savings
Plan, deferred compensation arrangements and other plans, were as follows (in
thousands):

2008
    
    2007
    
    2006Savings
      Plan
    
    $19,189
    
    $18,350
    
    $16,864Deferred Compensation and
      other
    
    394
    
    1,679
    
    3,159


45

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COMPUTATION OF EARNINGS PER SHARE
(EPS)

The following table details the
computation of EPS for fiscal 2008, 2007 and 2006 (in thousands except per share
data):

|                                                             |  |   | 2008   |  |   | 2007   |  |   | 2006  
|------------------------------------------------------------ |  | - | ------ |  | - | ------ |  | - | ------
|Basic EPS:                                                   |  |   |        |  |   |        |  |   |       
|Net income                                                   |  | $ | 96,752 |  | $ | 80,688 |  | $ | 72,336
|Weighted average common shares outstanding                   |  |   | 47,824 |  |   | 47,605 |  |   | 47,233
|Basic EPS                                                    |  | $ | 2.02   |  | $ | 1.69   |  | $ | 1.53  
|                                                            
|Diluted EPS:                                                 |  |   |        |  |   |        |  |   |       
|Net income                                                   |  | $ | 96,752 |  | $ | 80,688 |  | $ | 72,336
|Weighted average common shares outstanding                   |  |   | 47,824 |  |   | 47,605 |  |   | 47,233
|Net potential common share equivalents - stock
      options |  |   | 260    |  |   | 379    |  |   | 377   
|Net potential common share equivalents - stock
      awards  |  |   | 211    |  |   | 155    |  |   | 77    
|Weighted average common shares outstanding                   |  |   | 48,295 |  |   | 48,139 |  |   | 47,687
|Diluted EPS                                                  |  | $ | 2.00   |  | $ | 1.68   |  | $ | 1.52  

Stock awards that are based on
performance are excluded from the calculation of potential common share
equivalents until the performance criteria are met. Accordingly, the impact of
139,270, 114,393 and 99,349 performance shares for the fiscal years 2008, 2007
and 2006, respectively, were excluded from the computation of diluted shares.
Anti-dilutive common share equivalents excluded from the calculation of common
share equivalents amounted to 6,071 shares for stock options and 276 shares for
stock awards for fiscal 2008. There were no anti-dilutive common share
equivalents excluded from the calculation of common share equivalents for 2007
and 2006.

COMMITMENTS AND CONTINGENCIES

The Company is involved in various
lawsuits and environmental and patent matters arising in the normal course of
business. Management believes that such matters will not have a material effect
on the financial condition or results of operations of the Company.

See "Leases" above in this Item 8 for
additional commitments and contingencies.

STATEMENTS OF CONSOLIDATED CASH
FLOWS

A portion of the sales and operating
costs of American & Efirds foreign operations are denominated in currencies
other than the U.S. dollar. This creates an exposure to foreign currency
exchange rates. The impact of changes in the relationship of other currencies to
the U.S. dollar has historically not been significant, and such changes in the
future are not expected to have a material impact on the Companys results of
operations or cash flows.

The following table sets forth selected
cash payments and non-cash activity for fiscal years 2008, 2007 and 2006 (in
thousands):

|                                     | 2008     |  | 2007     |  | 2006    
|------------------------------------ | -------- |  | -------- |  | --------
|Cash paid during the year for:       |          |  |          |  |         
|Interest, Net of Amounts Capitalized | $ 19,263 |  | $ 17,295 |  | $ 15,402
|Income Taxes                         | 46,072   |  | 52,384   |  | 60,536  
|Non-cash
      activity:             |          |  |          |  |         
|Assets Acquired under Capital Leases | 26,844   |  | 23,207   |  | -       

46

---

QUARTERLY INFORMATION (UNAUDITED)

The Companys stock is listed and
traded on the New York Stock Exchange. The following table sets forth certain
financial information, the high and low sales prices and dividends declared for
the common stock for the periods indicated (in millions, except per share
data):

|                         |  | First   |  | Second  |  | Third           |  | Fourth          |  | Fiscal  
|------------------------ |  | ------- |  | ------- |  | --------------- |  | --------------- |  | --------
|                         |  | Quarter |  | Quarter |  | Quarter         |  | Quarter         |  | Year    
|2008 Operating Results   |  |         |  |         |  |                 |  |                 |  |         
|Net
      Sales          |  | $976.7  |  | $975.6  |  | $
      1,013.6 |  | $
      1,026.5 |  | $3,992.4
|Gross Profit             |  | 291.0   |  | 301.4   |  | 307.4           |  | 308.6           |  | 1,208.4 
|Net
      Income         |  | 23.4    |  | 24.1    |  | 24.5            |  | 24.8            |  | 96.8    
|Net Income Per Share:    |  |         |  |         |  |                 |  |                 |  |         
|Basic                    |  | 0.49    |  | 0.50    |  | 0.51            |  | 0.52            |  | 2.02    
|Diluted                  |  | 0.48    |  | 0.50    |  | 0.51            |  | 0.51            |  | 2.00    
|Dividend Per
      Share |  | 0.12    |  | 0.12    |  | 0.12            |  | 0.12            |  | 0.48    
|Market Price Per Share:  |  |         |  |         |  |                 |  |                 |  |         
|High                     |  | 38.03   |  | 36.99   |  | 39.79           |  | 38.98           |  | 39.79   
|Low                      |  | 31.15   |  | 31.71   |  | 33.89           |  | 29.47           |  | 29.47   
|                        
|2007 Operating Results   |  |         |  |         |  |                 |  |                 |  |         
|Net
      Sales          |  | $880.8  |  | $891.8  |  | $
      923.0   |  | $
      943.6   |  | $3,639.2
|Gross Profit             |  | 261.4   |  | 269.9   |  | 281.5           |  | 283.5           |  | 1,096.3 
|Net
      Income         |  | 18.3    |  | 20.0    |  | 21.2            |  | 21.2            |  | 80.7    
|Net Income Per Share:    |  |         |  |         |  |                 |  |                 |  |         
|Basic                    |  | 0.39    |  | 0.42    |  | 0.44            |  | 0.44            |  | 1.69    
|Diluted                  |  | 0.38    |  | 0.42    |  | 0.44            |  | 0.44            |  | 1.68    
|Dividend Per
      Share |  | 0.11    |  | 0.11    |  | 0.11            |  | 0.11            |  | 0.44    
|Market Price Per Share:  |  |         |  |         |  |                 |  |                 |  |         
|High                     |  | 28.91   |  | 30.50   |  | 32.39           |  | 37.28           |  | 37.28   
|Low                      |  | 25.20   |  | 26.30   |  | 29.53           |  | 27.53           |  | 25.20   

Item 9.Changes in and Disagreements with Accountants on Accounting
and Financial Disclosure

None

Item 9A.Controls and Procedures

(a)Evaluation of disclosure controls and procedures. As of September 28, 2008, an evaluation of the effectiveness
of the Companys disclosure controls and procedures (as defined in Rule
13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934,
as amended (the Exchange Act)) was performed under the supervision and with
the participation of the Companys management, including the Chief Executive
Officer and Chief Financial Officer. Based on that evaluation, the Companys
Chief Executive Officer and Chief Financial Officer have concluded that the
Companys disclosure controls and procedures are effective to ensure that
information required to be disclosed by the Company in its reports that it files
or submits under the Exchange Act is recorded, processed, summarized and
reported within the time periods specified in the Securities Exchange Commission
rules and forms, and that information required to be disclosed by the Company in
the reports the Company files or submits under the Exchange Act is accumulated
and communicated to the Companys management, including its Chief Executive
Officer and Chief Financial Officer, as appropriate to allow timely decisions
regarding required disclosure.

47

---

(b)Managements annual report on internal control over financial
reporting.Management of the Company isresponsible for
establishing and maintaining adequate internal control over financial reporting
(as defined in Rule 13a-15(f) and 15d-15(f) promulgated under the Exchange Act).
The Companys internal control over financial reporting is a process designed to
provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance
with generally accepted accounting principles. The Companys internal control
over financial reporting includes those policies and procedures that (i) pertain
to the maintenance of records that, in reasonable detail, accurately and fairly
reflect the transactions and dispositions of the assets of the Company; (ii)
provide reasonable assurance that transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally accepted
accounting principles, and that receipts and expenditures of the Company are
being made only in accordance with authorizations of management and directors of
the Company; and (iii) provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition, use, or disposition of the
Companys assets that could have a material effect on the financial statements.

Because of its inherent limitations,
internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future
periods are subject to the risk that controls may become inadequate because of
changes in conditions, or that the degree of compliance with the policies or
procedures may deteriorate.

Management assessed the effectiveness
of the Companys internal control over financial reporting as of September 28,
2008, based on the framework set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) inInternal Control-Integrated Framework.
Based on that assessment, management concluded that, as of September 28, 2008,
the Companys internal control over financial reporting is effective based on
the criteria established inInternal
Control-Integrated Framework.

(c)Attestation report of the registered public accounting
firm.The effectiveness of the Companys
internal control over financial reporting as of September 28, 2008 has been
audited by KPMG, LLP, an independent registered public accounting firm. Their
report, which appears in Item 8, Financial Statement and Supplementary Data
included herein, expresses an unqualified opinion on the effectiveness of the
Companys internal control over financial reporting as of September 28,
2008.

(d)Changes in internal control over financial reporting. During the Companys fourth fiscal quarter of 2008, there
has been no change in the Companys internal controls over financial reporting
that has materially affected, or is reasonably likely to materially affect, the
Companys internal controls over financial reporting.

Item 9B.Other Information

None.

48

---

PART III

Item 10.Directors and Executive Officers of the
Registrant

For information regarding executive
officers, refer to Executive Officers of the Registrant in Item 4A hereof.
Other information required by this item is incorporated herein by reference to
the sections entitled "Election of Directors," Corporate Governance Matters
and Section 16(a) Beneficial Ownership Reporting Compliance in the Company's
Proxy Statement to be filed with the Securities and Exchange Commission with
respect to the Company's 2009 Annual Meeting of Shareholders (the "2009 Proxy
Statement").

Code of Ethics and Code of Business
Conduct and EthicsThe Company has adopted
a written Code of Ethics (the Code of Ethics) that applies to our Chairman of
the Board, President and Chief Executive Officer, Vice President-Finance and
Chief Financial Officer and our Vice President and Treasurer. The Company has
also adopted a Code of Business Conduct and Ethics (the Code of Conduct) that
applies to all employees, officers and directors of the Company as well as any
subsidiary company officers that are executive officers of the Company. Each of
our operating subsidiaries maintains a code of ethics tailored to their
businesses. The Code of Ethics and Code of Conduct are available on the
Companys website,www.ruddickcorp.com, under the
Corporate Governance caption, and print copies are available to any
shareholder that requests a copy. Any such requests should be directed to:
Ruddick Corporation, 301 South Tryon Street, Suite 1800, Charlotte, North
Carolina 28202, Attention: Secretary of the Company. Any amendments to the Code
of Ethics or Code of Conduct, or any waivers of the Code of Ethics, or any
waiver of the Code of Conduct for directors or executive officers, will be
disclosed on the Companys website promptly following the date of such amendment
or waiver. Information on the Companys website, however, does not form a part
of this Form 10-K.

Corporate Governance Guidelines and
Committee ChartersIn furtherance of its
longstanding goal of providing effective governance of the Companys business
and affairs for the benefit of shareholders, the Board of Directors of the
Company has approved Corporate Governance Guidelines. The Guidelines contain
general principles regarding the functions of the Companys Board of Directors.
The Guidelines are available on the Companys website referenced above and print
copies are available to any shareholder that requests a copy. In addition,
committee charters for the Companys Audit Committee, Compensation Committee and
Corporate Governance and Nominating Committee are also included on the Companys
website and print copies are available to any shareholder that requests a copy
in accordance with the procedures set forth above.

Item 11.Executive Compensation

The information required by this item
is incorporated herein by reference to the sections entitled Election of
Directors -Directors' Fees and Attendance, Compensation Committee Interlocks
and Insider Participation in Compensation Decisions, Report of the
Compensation Committee, "Compensation Discussion and Analysis and Section
16(a) Beneficial Ownership Reporting Compliance in the 2009 Proxy Statement.

Item 12.Security Ownership of Certain Beneficial Owners and Management
and Related Shareholder Matters

The information required by this item
is incorporated herein by reference to the sections entitled Principal
Shareholders and Election of Directors-Beneficial Ownership of Company Stock
in the 2009 Proxy Statement and Equity Compensation Plan Information in Item 5
hereof.

Item 13.Certain Relationships and Related Transactions, and Director
Independence

The information required by this item
is incorporated herein by reference to the section entitled Transactions with
Related Persons and Certain Control Person and Corporate Governance Matters
in the 2009 Proxy Statement.

Item 14.Principal Accountant Fees and Services

The information required by this item
is incorporated herein by reference to the section entitled Approval of
Independent Registered Public Accounting Firm in the 2009 Proxy Statement.

49

---

PART IV

Item 15.Exhibits and Financial Statement Schedules

|(a) |  | The following documents are filed as part of this
      report: |  | Page                                                                          
|--- |  | --------------------------------------------------------------- |  | ------------------------------------------------------------------------------
|    |  | (1)                                                             |  | Financial Statements:                                                         
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | Report of Independent Registered Public Accounting
      Firm                 
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | Consolidated Balance Sheets, September 28, 2008 and
      September 30, 2007  
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | Statements of Consolidated Income for the fiscal years
      ended            
|    |  |                                                                 |  | September 28, 2008, September 30, 2007, and October 1,
      2006             
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | Statements of Consolidated Shareholders Equity and
      Comprehensive Income
|    |  |                                                                 |  | for the fiscal years ended September 28, 2008, September
      30, 2007,      
|    |  |                                                                 |  | and October 1, 2006                                                           
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | Statements of Consolidated Cash Flows for the fiscal
      years ended        
|    |  |                                                                 |  | September 28, 2008, September 30, 2007, and October 1,
      2006             
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | Notes to Consolidated Financial Statements                                    
|    |  |                                                                 |  |                                                                               
|    |  | (2)                                                             |  | Financial Statement Schedules: The following report and
      financial       
|    |  |                                                                 |  | statement schedules are filed herewith:                                       
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | Schedule I - Valuation and Qualifying Accounts and
      Reserves             
|    |  |                                                                 |  |                                                                               
|    |  |                                                                 |  | All other schedules are omitted as the required
      information is          
|    |  |                                                                 |  | inapplicable or the information is presented in the
      consolidated        
|    |  |                                                                 |  | financial statements or related notes thereto.                                
|    |  |                                                                 |  |                                                                               
|    |  | (3)                                                             |  | Index to Exhibits:The following exhibits are filed with this report           
|    |  |                                                                 |  | or, as noted, incorporated by reference
herein.                               

|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|       
|3.1*    |  | Restated Articles of
      Incorporation of the Company, dated December 14, 2000, incorporated herein
      by reference to Exhibit 3.1 of the registrants Annual Report on Form 10-K
      for the fiscal year ended October 1, 2000 (Commission File No.
      1-6905).                                                                                                                                                                                                                         
|       
|3.2*    |  | Amended and Restated Bylaws of
      Ruddick Corporation, incorporated herein by reference to Exhibit 3.1 of
      the registrants Current Report on Form 8-K dated February 21, 2008
      (Commission File No. 1-6905).                                                                                                                                                                                                                                                                         
|       
|4.1*    |  | $50,000,000 6.48% Series A Senior
      Notes due March 1, 2011 and $50,000,000 Private Shelf Facility dated March
      1, 1996 between Ruddick Corporation and The Prudential Insurance Company
      of America, incorporated herein by reference to Exhibit 4.1 of the
      registrants Quarterly Report on Form 10-Q for the quarterly period ended
      March 31, 1996 (Commission File No. 1-6905).                                                                                      
|       
|4.2*    |  | $50,000,000 7.55% Senior Series B
      Notes due July 15, 2017 and $50,000,000 7.72% Series B Senior Notes due
      April 15, 2017 under the Note Purchase and Private Shelf Agreement dated
      April 15, 1997 between Ruddick Corporation and The Prudential Insurance
      Company of America, incorporated herein by reference to Exhibit 4.3 of the
      registrants Annual Report on Form 10-K for the fiscal year period ended
      September 28, 1997 (Commission File No.
1-6905).

50

---

|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|       
|4.3*    |  | Credit Agreement, dated December
      20, 2007, among Ruddick Corporation, as Borrower, Wachovia Bank, National
      Association, Branch Banking and Trust Company, Regions Bank, Bank of
      America, N.A., JPMorgan Chase Bank, N.A., RBC Centura, CoBank, ACB,
      AgFirst Farm Credit Bank, U.S. AgBank, FCB, Farm Credit Bank of Texas and
      GreenStone Farm Credit Services, ACA, as Lenders, and Wachovia Bank,
      National Association, as administrative agent for the Lenders,
      incorporated herein by reference to Exhibit 10.1 of the registrants
      Current Report on Form 8-K dated December 20, 2007 (Commission File No.
      1-6905).
|       
|        |  | The Company has other long-term
      debt but has not filed the instruments evidencing such debt as part of
      Exhibit 4 as none of such instruments authorize the issuance of debt
      exceeding 10 percent of the total consolidated assets of the Company. The
      Company agrees to furnish a copy of each such agreement to the Commission
      upon request.                                                                                                                                                                                                                                                                                                  
|       
|10.1*   |  | Supplemental Executive Retirement
      Plan of Ruddick Corporation, as amended and restated, incorporated herein
      by reference to Exhibit 10.3 of the registrants Annual Report on Form
      10-K for the fiscal year ended September 30, 1990 (Commission File No.
      1-6905).**                                                                                                                                                                                                                                                                                                                                                                                 
|       
|10.2*   |  | Resolutions adopted by the Board
      of Directors of the Company and the Plan's Administrative Committee with
      respect to benefits payable under the Company's Supplemental Executive
      Retirement Plan to Alan T. Dickson and R. Stuart Dickson, incorporated
      herein by reference to Exhibit 10.3 of the registrants Annual Report on
      Form 10-K for the fiscal year ended September 29, 1991 (Commission File
      No. 1-6905).**                                                                                                                                                                                                                  
|       
|10.3*   |  | Deferred Compensation Plan for
      Key Employees of Ruddick Corporation and subsidiaries, as amended and
      restated, incorporated herein by reference to Exhibit 10.5 of the
      registrants Annual Report on Form 10-K for the fiscal year ended
      September 30, 1990 (Commission File No. 1-6905).**                                                                                                                                                                                                                                                                                                                                                          
|       
|10.4*   |  | 1993 Incentive Stock Option and
      Stock Appreciation Rights Plan, incorporated herein by reference to
      Exhibit 10.7 of the registrants Annual Report on Form 10-K for the fiscal
      year ended October 3, 1993 (Commission File No.
1-6905).**                                                                                                                                                                                                                                                                                                                                                                                                                  
|       
|10.5*   |  | Description of the Ruddick
      Corporation Long Term Key Management Incentive Program, incorporated
      herein by reference to Exhibit 10.7 of the registrants Annual Report on
      Form 10-K for the fiscal year ended September 29, 1991 (Commission File
      No. 1-6905).**                                                                                                                                                                                                                                                                                                                                                                                      
|       
|10.6*   |  | Ruddick Corporation Irrevocable
      Trust for the Benefit of Participants in the Long Term Key Management
      Incentive Program, incorporated herein by reference to Exhibit 10.9 of the
      registrant's Annual Report on Form 10-K for the fiscal year ended
      September 30, 1990 (Commission File No. 1-6905).**                                                                                                                                                                                                                                                                                                                                                
|       
|10.7*   |  | Rights Agreement dated November
      16, 2000 by and between the Company and First Union National Bank,
      incorporated herein by reference to Exhibit 10.9 of the registrants
      Annual Report on Form 10-K for the fiscal year ended October 1, 2000
      (Commission File No. 1-6905).                                                                                                                                                                                                                                                                                                                                                                           
|       
|10.8*   |  | Ruddick Corporation Senior
      Officers Insurance Program Plan Document and Summary Plan Description,
      incorporated herein by reference to Exhibit 10.10 of the registrants
      Annual Report on Form 10-K for the fiscal year ended September 27, 1992
      (Commission File No. 1-6905).**                                                                                                                                                                                                                                                                                                                                                                      
|       
|10.9*   |  | Ruddick Corporation 1995 Comprehensive Stock Option Plan (the 1995
      Plan), incorporated herein by reference to Exhibit 10.1 of the
      registrants Quarterly Report on Form 10-Q for the quarterly period ended
      June 30, 1996 (Commission File No. 1-6905).**                                                                                                                                                                                                                                                                                                                                                                                                
|       
|10.10*  |  | Ruddick Corporation 1997
      Comprehensive Stock Option and Award Plan (the 1997 Plan), incorporated
      herein by reference to Exhibit 10.1 of the registrants Quarterly Report
      on Form 10-Q for the quarterly period ended December 28, 1997 (Commission
      File No. 1-6905).**                                                                                                                                                                                                                                                                                                                                                                            
|       
|10.11*  |  | Ruddick Corporation Director
      Deferral Plan, incorporated herein by reference to Exhibit 10.2 of the
      registrants Quarterly Report on Form 10-Q for the quarterly period ended
      March 29, 1998 (Commission File No.
1-6905).**                                                                                                                                                                                                                                                                                                                                                                                                                               

51

---

|Exhibit |  |                                                                                                                                                                                                                                                                                                                                                 
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                                                          
|       
|10.12*  |  | Ruddick Corporation Senior Officers Insurance Program, incorporated
      herein by reference to Exhibit 10.3 of the registrants Quarterly Report
      on Form 10-Q for the quarterly period ended March 29, 1998 (Commission
      File No. 1-6905).**                                                                                       
|       
|10.13*  |  | Ruddick Corporation 2000 Comprehensive Stock Option and Award Plan
      (the 2000 Plan), incorporated herein by reference to Exhibit 10.1 of the
      registrants Quarterly Report on Form 10-Q for the quarterly period ended
      April 1, 2001 (Commission File No. 1-6905).**                                                         
|       
|10.14*  |  | Description of retirement arrangement between the Company and each
      of Alan T. Dickson and R. Stuart Dickson effective May 1, 2002,
      incorporated herein by reference to Exhibit 10.1 of the registrants
      Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2002
      (Commission File No. 1-6905).**      
|       
|10.15*  |  | Ruddick Corporation Flexible Deferral Plan, incorporated herein by
      reference to Exhibit 10.22 of the registrants Annual Report on Form 10-K
      for the fiscal year ended September 29, 2002 (Commission File No.
      1-6905).**                                                                                                     
|       
|10.16*  |  | Ruddick Corporation 2002 Comprehensive Stock Option and Award Plan
      (the 2002 Plan), incorporated herein by reference to Exhibit 10.1 of the
      Registrants Quarterly Report on Form 10-Q for the quarterly period ended
      March 30, 2003 (Commission File No. 1-6905).**                                                        
|       
|10.17*  |  | Form of Ruddick Corporation Non-Employee Director Nonqualified
      Stock Option Agreement for use in connection with the 1995 Plan, 1997
      Plan, 2000 Plan and 2002 Plan, incorporated herein by reference to Exhibit
      10.1 to the Companys Current Report on Form 8-K dated November 17, 2004
      (Commission File No. 1-6905).**
|       
|10.18*  |  | Form of Ruddick Corporation Incentive Stock Option Award Agreement
      for use in connection with the 1995 Plan, 1997 Plan, 2000 Plan and 2002
      Plan, incorporated herein by reference to Exhibit 10.2 to the Companys
      Current Report on Form 8-K dated November 17, 2004 (Commission File No.
      1-6905).**                   
|       
|10.19*  |  | Form of Ruddick Corporation Nonqualified Stock Option Agreement for
      use in connection with the 1995 Plan, 1997 Plan, 2000 Plan and 2002 Plan,
      incorporated herein by reference to Exhibit 10.3 to the Companys Current
      Report on Form 8-K dated November 17, 2004 (Commission File No.
      1-6905).**                      
|       
|10.20*  |  | Form of Ruddick Corporation Restricted Stock Award Agreement for
      use in connection with the 1997 Plan, 2000 Plan and 2002 Plan,
      incorporated herein by reference to Exhibit 10.4 to the Companys Current
      Report on Form 8-K dated November 17, 2004 (Commission File No.
      1-6905).**                                    
|       
|10.21*  |  | Summary of Executive Bonus Plan, incorporated by reference to
      Exhibit 10.26 of the registrants Annual Report on Form 10-K for the
      fiscal year ended October 3, 2004 (Commission File No.
  1-6905).**                                                                                                                              
|       
|10.22*  |  | Ruddick Corporation Director Deferral Plan, incorporated herein by
      reference to Exhibit 10.1 of the registrants Current Report on Form 8-K
      dated February 16, 2006 (Commission File No. 1-6905).**                                                                                                                                 
|       
|10.23*  |  | Ruddick Corporation Supplemental Executive Retirement Plan for the
      benefit of Alan T. Dickson effective March 31, 2006, incorporated herein
      by reference to Exhibit 10.1 of the registrants Current Report on Form
      8-K dated March 31, 2006 (Commission File No. 1-6905).**                                                  
|       
|10.24*  |  | Ruddick Corporation Supplemental Executive Retirement Plan for the
      benefit of R. Stuart Dickson effective March 31, 2006, incorporated herein
      by reference to Exhibit 10.2 of the registrants Current Report on Form
      8-K dated March 31, 2006 (Commission File No. 1-6905).**                                                
|       
|10.25*  |  | Ruddick Corporation Cash Incentive Plan, incorporated herein by
      reference to Exhibit 10.1 of the registrants Current Report on Form 8-K
      dated February 15, 2007 (Commission File No.
  1-6905).**                                                                                                                                  

52

---

|Exhibit |  |                                                                                                                                                                                                                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                      
|       
|10.26*  |  | Addendum to the Ruddick Corporation 2002 Comprehensive Stock Option
      and Award Plan, incorporated herein by reference to Exhibit 10.2 of the
      registrants Current Report on Form 8-K dated February 15, 2007
      (Commission File No. 1-6905).**                                               
|       
|10.27*  |  | Change-in-Control and Severance Agreement dated September 19, 2007
      between the registrant and Mr. Tomas W. Dickson, incorporated herein by
      reference to Exhibit 10.1 of the registrants Current Report on Form 8-K
      dated September 19, 2007 (Commission File No. 1-6905).**              
|       
|10.28*  |  | Change-in-Control and Severance Agreement dated September 19, 2007
      between the registrant and Mr. John B. Woodlief, incorporated herein by
      reference to Exhibit 10.2 of the registrants Current Report on Form 8-K
      dated September 19, 2007 (Commission File No. 1-6905).**              
|       
|10.29*  |  | Change-in-Control and Severance Agreement dated September 19, 2007
      between the registrant and Mr. Frederick J. Morganthall, II, incorporated
      herein by reference to Exhibit 10.3 of the registrants Current Report on
      Form 8-K dated September 19, 2007 (Commission File No.
  1-6905).**
|       
|10.30*  |  | Change-in-Control and Severance Agreement dated September 19, 2007
      between the registrant and Mr. Fred A. Jackson, incorporated herein by
      reference to Exhibit 10.4 of the registrants Current Report on Form 8-K
      dated September 19, 2007 (Commission File No. 1-6905).**               
|       
|10.31*  |  | Ruddick Supplemental Executive Retirement Plan, Amendment No. 2
      dated September 19, 2007, incorporated herein by reference to Exhibit 10.5
      of the registrants Current Report on Form 8-K dated September 19, 2007
      (Commission File No. 1-6905).**                                        
|       
|10.32+  |  | Summary of Non-Employee Director Compensation.                                                                                                                                                                                                                                                              
|       
|21+     |  | List of Subsidiaries of the Company.                                                                                                                                                                                                                                                                        
|       
|23+     |  | Consent of Independent Registered Public Accounting
      Firm.                                                                                                                                                                                                                                             
|       
|31.1+   |  | Certification of Chief Executive Officer pursuant to Rule
      13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                     
|       
|31.2+   |  | Certification of Chief Financial Officer pursuant to Rule
      13a-14(a)/15d-14(a) of the Securities Exchange Act of 1934, as adopted
      pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                     
|       
|32.1+   |  | Certification of Chief Executive Officer pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.                                                                                                                                              
|       
|32.2+   |  | Certification of Chief Financial Officer pursuant to 18 U.S.C.
      Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act
      of 2002.                                                                                                                                              

|*   |  | Incorporated by reference.                                                                  
|--- |  | --------------------------------------------------------------------------------------------
|    |  |                                                                                             
|**  |  | Indicates management contract or compensatory plan required to be
      filed as an Exhibit.
|    |  |                                                                                             
|+   |  | Indicates exhibits filed herewith and follow the signature
      pages.                     
|    |  |                                                                                             
|(b) |  | Exhibits                                                                                    
|    |  |                                                                                             
|    |  | See
      (a )(3) above.                                                                    
|    |  |                                                                                             
|(c) |  | Financial Statement Schedules                                                               
|    |  |                                                                                             
|    |  | See
      (a) (2) above.                                                                    

53

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SIGNATURES

Pursuant to
the requirements of Section 13 or 15(d) 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.

|                               |     | RUDDICK
      CORPORATION                 
|------------------------------ | --- | ------------------------------------------
|                               |     | (Registrant)                              
|                              
|Dated: November
      21, 2008 | By: | /s/ THOMAS W. DICKSON                     
|                               |     | Thomas W.
      Dickson,                  
|                               |     | Chairman of the
      Board, President and
|                               |     | Chief Executive
      Officer             

|Name                             |  | Title                                                 |  | Date                   
|-------------------------------- |  | ----------------------------------------------------- |  | -----------------------
|                                
|/s/ THOMAS W. DICKSON            |  | Chairman of the
      Board , President and           |  | November 21,
      2008
|Thomas W. Dickson                |  | Chief Executive
      Officer and Director            |  |                        
|                                 |  | (Principal
      Executive Officer)                   |  |                        
|                                
|/s/ JOHN B. WOODLIEF             |  | Vice President 
      Finance and Chief              |  | November 21,
      2008
|John B. Woodlief                 |  | Financial
      Officer (Principal Financial Officer) |  |                        
|                                
|/s/ RONALD H. VOLGER             |  | Vice President
      and Treasurer                    |  | November 21,
      2008
|Ronald H. Volger                 |  | (Principal
      Accounting Officer)                  |  |                        
|                                
|/s/ JOHN R. BELK                 |  | Director                                              |  | November 21,
      2008
|John R. Belk                     |  |                                                       |  |                        
|                                
|/s/ JOHN P. DERHAM CATO          |  | Director                                              |  | November 21,
      2008
|John P. Derham Cato              |  |                                                       |  |                        
|                                
|/s/ ALAN T. DICKSON              |  | Director                                              |  | November 21,
      2008
|Alan T. Dickson                  |  |                                                       |  |                        
|                                
|/s/ JAMES E. S. HYNES            |  | Director                                              |  | November 21,
      2008
|James E. S. Hynes                |  |                                                       |  |                        
|                                
|/s/ ANNA S. NELSON               |  | Director                                              |  | November 21,
      2008
|Anna S. Nelson                   |  |                                                       |  |                        
|                                
|/s/ BAILEY W. PATRICK            |  | Director                                              |  | November 21,
      2008
|Bailey W. Patrick                |  |                                                       |  |                        
|                                
|/s/ ROBERT H. SPILMAN,
      JR. |  | Director                                              |  | November 21,
      2008
|Robert H. Spilman, Jr.           |  |                                                       |  |                        
|                                
|/s/ HAROLD C. STOWE              |  | Director                                              |  | November 21,
      2008
|Harold C. Stowe                  |  |                                                       |  |                        
|                                
|/s/ ISAIAH TIDWELL               |  | Director                                              |  | November 21,
      2008
|Isaiah Tidwell                   |  |                                                       |  |                        
|                                
|/s/ WILLIAM C. WARDEN,
      JR. |  | Director                                              |  | November 21,
      2008
|William C. Warden, Jr.           |  |                                                       |  |                        

54

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SCHEDULE I

RUDDICK CORPORATION AND SUBSIDIARIESVALUATION AND QUALIFYING ACCOUNTS AND RESERVESFor the Fiscal Years EndedSeptember 28, 2008, September 30, 2007and October 1, 2006(in thousands)

|COLUMN A                              |  | COLUMN B           |  | COLUMN C         |  | COLUMN D   |  |   | COLUMN E    
|------------------------------------- |  | ------------------ |  | ---------------- |  | ---------- |  | - | ------------
|                                      |  |                    |  | ADDITIONS        |  |            |  |   |             
|                                      |  | BALANCE            |  | CHARGED
      TO |  |            |  |   | BALANCE     
|                                      |  | AT
      BEGINNING |  | COSTS
      AND  |  |            |  |   | AT
      END
|DESCRIPTION                           |  | OF FISCAL YEAR     |  | EXPENSES         |  | DEDUCTIONS |  |   | OF PERIOD   
|Fiscal Year Ended October 1, 2006:    |  |                    |  |                  |  |            |  |   |             
|Reserves deducted from assets         |  |                    |  |                  |  |            |  |   |             
|to which they apply -                 |  |                    |  |                  |  |            |  |   |             
|Allowance For Doubtful Accounts       |  | $4,131             |  | $731             |  | $ 1,143    |  | * | $3,719      
|                                     
|Fiscal Year Ended September 30, 2007: |  |                    |  |                  |  |            |  |   |             
|Reserves deducted from assets         |  |                    |  |                  |  |            |  |   |             
|to which they apply -                 |  |                    |  |                  |  |            |  |   |             
|Allowance For Doubtful Accounts       |  | $3,719             |  | $971             |  | $ 728      |  | * | $3,962      
|                                     
|Fiscal Year Ended September 28, 2008: |  |                    |  |                  |  |            |  |   |             
|Reserves deducted from assets         |  |                    |  |                  |  |            |  |   |             
|to which they apply -                 |  |                    |  |                  |  |            |  |   |             
|Allowance For Doubtful Accounts       |  | $3,962             |  | $32              |  | $ 1,175    |  | * | $2,819      

S-1

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