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 27,
      2009OR[    ]
    
    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. Yes XNo

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 whether the
registrant has submitted electronically and posted on its corporate Web site, if
any, every Interactive Data File required to be submitted and posted pursuant to
Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12
months (or for such shorter period that the registrant was required to submit
and post such files). Yes No

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). YesNo 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 29, 2009, was $949,348,000. The
registrant has no non-voting stock.

As of November 13, 2009, the
registrant had outstanding 48,572,319 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 2010 Annual
Meeting of Shareholders to be held on February 18, 2010 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 27, 2009

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                               | 8   
|              
|PART
      II  |  |                                                                    |     
|              
|Item 5.        |  | Market for Registrant's Common Equity, Related
    Shareholder     |     
|               |  | Matters and Issuer Purchases of Equity Securities                  | 9   
|Item
    6.    |  | Selected
      Financial Data                                      | 11  
|Item 7.        |  | Management's Discussion and Analysis of Financial
    Condition    |     
|               |  | and Results of Operations                                          | 12  
|Item
    7A.   |  | Quantitative and
      Qualitative Disclosures about Market Risk   | 25  
|Item 8.        |  | Financial Statements and Supplementary Data                        | 26  
|Item
    9.    |  | Changes in and
      Disagreements with Accountants on Accounting  |     
|               |  | and Financial
      Disclosure                                     | 50  
|Item 9A.       |  | Controls and Procedures                                            | 51  
|Item
    9B.   |  | Other
      Information                                            | 51  
|              
|PART
      III |  |                                                                    |     
|              
|Item 10.       |  | Directors and Executive Officers of the Registrant                 | 52  
|Item
    11.   |  | Executive
      Compensation                                       | 52  
|Item 12.       |  | Security Ownership of Certain Beneficial Owners and                |     
|               |  | Management and Related Shareholder Matters                         | 52  
|Item
    13.   |  | Certain
      Relationships and Related Transactions, and Director |     
|               |  | Independence                                                       | 52  
|Item 14.       |  | Principal Accountant Fees and Services                             | 52  
|              
|PART
      IV  |  |                                                                    |     
|              
|Item 15.       |  | Exhibits and Financial Statement Schedules                         | 53  

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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 primarily in the southeastern
and mid-Atlantic United States, including the District of Columbia; and American
& Efird, Inc. (A&E) manufactures and distributes industrial sewing
thread, embroidery thread and technical textiles on a global basis.

At September 27, 2009, the Company and
its subsidiaries had total consolidated assets of $1,844,321,000 and had
approximately 24,800 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):

2009
    
    2008
    
    2007Net Sales for the Fiscal Year:Domestic United States
    $
    3,940,608
    
    $
    3,810,635
    
    $
    3,454,198Foreign
      Countries
    
    137,214
    
    
    181,762
    
    
    185,010$
    4,077,822
    
    $
    3,992,397
    
    $
    3,639,208Net Long-Lived Assets at Fiscal Year End:Domestic United States
    $
    1,088,602
    
    $
    978,363
    
    $
    860,493Foreign
      Countries
    
    36,238
    
    
    40,625
    
    
    41,990$
    1,124,840
    
    $
    1,018,988
    
    $
    902,483


The Companys consolidated working
capital as of September 27, 2009 consisted of $474,286,000 in current assets and
$402,865,000 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.

1

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**Harris Teeter**

As of September 27, 2009, Harris Teeter
operated 189 supermarkets located in North Carolina (132), Virginia (33), South
Carolina (11), Maryland (3), Tennessee (4), 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 118 of their
supermarkets as of September 27, 2009. 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
store brand products, from outside suppliers or directly from the manufacturers.
Harris Teeters sales constituted 94% of the Companys consolidated sales in
fiscal 2009 (92% in fiscal 2008 and 91% in fiscal 2007).

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. The consolidation of competitors within the
supermarket industry that has occurred over the past several years 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 27, 2009, Harris Teeter
employed approximately 10,000 full-time and 11,900 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 6% of
the Companys consolidated sales in fiscal 2009 (8% in fiscal 2008 and 9% in
fiscal 2007).

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, A&E operated six modern manufacturing facilities in North Carolina
and four distribution centers strategically located in the United States as of
the fiscal year ended September 27, 2009. Subsequent to the end of fiscal 2009,
A&E completed the consolidation of one of its manufacturing facilities into
one of its other North Carolina operations, thus reducing the number of
manufacturing facilities in North Carolina to five. 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,
Honduras, Hong Kong, 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 $169 million at the end of fiscal 2009. 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 27, 2009, was approximately $10,770,000 versus
$10,535,000 at the end of the preceding fiscal year. The international order
backlog as of the end of fiscal 2009 was approximately $1,984,000 versus
$2,685,000 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 2009
year end. As of September 27, 2009, A&E had approximately 7,500 domestic and
6,000 international active customer accounts. In fiscal 2009, no single customer
accounted for more than 4% of A&Es total net sales, and the ten largest
customers accounted for approximately 14% of A&Es total net
sales.

2

---

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.

A&E has three patents issued. There
are no material licenses, franchises or concessions held by A&E. Research
and development expenditures were $428,000, $509,000, and $487,000 in fiscal
2009, 2008 and 2007, 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 2,900 individuals worldwide as of September
27, 2009. 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 or long-lived assets;
(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.

3

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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.

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 in the past, 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 2009,
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, with an emphasis on Asia. 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

Narrow Profit Margins may Adversely
Affect the Companys Business.Profit margins in the supermarket and thread
industries are very narrow. In order to increase or maintain the Companys
profit margins, strategies are used to reduce costs, such as productivity
improvements, shrink reduction, distribution efficiencies, energy efficiency
programs and other similar strategies. Changes in product mix also may
negatively affect certain financial measures. If the Company is unable to
achieve forecasted cost reductions there may be an adverse effect on the
Companys business.

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.

5

---

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 27, 2009, 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.

Adverse Economic Conditions may
Negatively Impact the Companys Operating Results. The increase in unemployment and loss of consumer confidence can alter
the consumers buying habits and demand for apparel products. In addition,
consumers may decrease their purchases of more discretionary items and increase
their purchase of lower cost food products. Adverse economic conditions in the
financial markets, including the availability of financing, could also adversely
affect the Company's operating results by increasing costs related to obtaining
financing at acceptable rates and reduce our customers liquidity position.
These conditions could materially affect the Companys customers causing
reductions or cancellations of existing sales orders and inhibit the Companys
ability to collect 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 27,
2009, Harris Teeter held title to the land and buildings of four 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. Harris
Teeters supermarkets range in size from approximately 16,000 square feet to
73,000 square feet, with an average size of approximately 47,300 square
feet.

6

---

The following table sets forth selected
statistics with respect to Harris Teeter stores for each of the last three
fiscal years:

2009
    
    2008
    
    2007Stores Open at Period End
    
    189
    
    
    176
    
    
    164Average Weekly Net Sales Per Store*
    $
    405,356
    
    $
    414,101
    
    $
    402,982Average Square Footage Per Store at Period
      End
    
    47,277
    
    
    46,708
    
    
    46,197Average Square Footage Per New Store OpenedDuring Period
    
    51,698
    
    
    48,330
    
    
    51,737Total Square Footage at Period End
    
    8,935,271
    
    
    8,220,583
    
    
    7,576,302____________________*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 1,537,000 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 three distribution centers
strategically located in its domestic markets with an aggregate of approximately
84,000 square feet of floor space.

Through consolidated subsidiaries,
A&E also owns seven international manufacturing and/or distribution
facilities with an aggregate of approximately 799,000 square feet of floor
space. A&E also leases another 19 international manufacturing and/or
distribution facilities with an aggregate of approximately 427,000 square feet
of floor space. The foreign consolidated subsidiaries engaged in manufacturing
have a dyeing production capacity of approximately 22,480,000 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.

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.

7

---

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 54, 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, A&E.

John B. Woodlief, age 59, 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 58, 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s Senior Vice President of Operations from October 1995 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 59, 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. No other executive officer has a family relationship as close as
first cousin with any other executive officer or director or nominee for
director.

8

---

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
2009 and 2008 is set forth below.

The Common Stock is listed on the New
York Stock Exchange. As of November 13, 2009, there were approximately 4,500
holders of record of Common Stock.

Quarterly Information

First
    
    
    Second
    
    
    Third
    
    
    FourthQuarter
    
    
    Quarter
    
    
    Quarter
    
    
    QuarterFiscal 2009Dividend Per
      Share
    $
    0.12
    
    $
    0.12
    
    $
    0.12
    
    $
    0.12Market Price Per ShareHigh
    
    33.74
    
    
    29.20
    
    
    26.87
    
    
    28.00Low
    
    23.81
    
    
    18.86
    
    
    22.00
    
    
    21.77Fiscal 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
    
    
    29.47


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 27, 2009 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                         |  | 509,184                          |  | $19.29                              |  | 1,465,221                                
|Equity
      compensation plans |  |                                  |  |                                     |  |                                          
|not approved by
      security  |  |                                  |  |                                     |  |                                          
|holders                         |  | -0-                              |  | -0-                                 |  | -0-                                      
|Total                           |  | 509,184                          |  | $19.29                              |  | 1,465,221                                

|(1) |  | Includes grants of 136,700
      performance shares outstanding as of September 27, 2009. Excludes 106,884
      shares of Common Stock that are deliverable in connection with the 106,884
      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 27, 2009 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 27, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

9

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Comparison of Total Cumulative
Shareholder Return for Five-Year Period Ending September 27, 2009

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 27, 2009.

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



|                                          |  | Cumulative Total Return
|----------------------------------------- |  | -----------------------
|                                          |  | 9/30/04                
|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 9/30/04 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.

10

---

Issuer Purchases of Equity
Securities

The following table summarizes the
Companys purchases of its common stock during the quarter ended September 27,
2009.

|                        |  |                       |  |                     |  | 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 29, 2009 to        |  |                       |  |                     |  |                           |  |                         
|August 2, 2009          |  | - 0 -                 |  | n.a.                |  | - 0 -                     |  | 2,822,469               
|August 3, 2009
      to |  |                       |  |                     |  |                           |  |                         
|August 30,
      2009   |  | - 0 -                 |  | n.a.                |  | - 0 -                     |  | 2,822,469               
|August 31, 2009 to      |  |                       |  |                     |  |                           |  |                         
|September 27, 2009      |  | - 0 -                 |  | n.a.                |  | - 0 -                     |  | 2,822,469               
|                       
|Total                   |  | - 0 -                 |  | n.a.                |  | - 0 -                     |  | 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 27, 2009, the Company had purchased and
      retired 1,817,520 shares under this authorization and no shares were
      purchased during the quarter ended September 27, 2009. The stock buyback
      program has no set expiration or termination
date.
|--- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

**2009**(1)
    
    
    2008
    
    
    2007
    
    
    2006
    
    
    2005Net sales
    $
    4,077,822
    
    $
    3,992,397
    
    $
    3,639,208
    
    $
    3,265,856
    
    $
    2,964,655Operating
      profit
    
    154,851
    
    
    173,785
    
    
    148,174
    
    
    123,069
    
    
    115,260Net income
    
    85,964
    
    
    96,752
    
    
    80,688
    
    
    72,336
    
    
    68,598Net income per
      shareBasic
    
    1.79
    
    
    2.02
    
    
    1.69
    
    
    1.53
    
    
    1.45Diluted
    
    1.78
    
    
    2.00
    
    
    1.68
    
    
    1.52
    
    
    1.44Dividend per share
    
    0.48
    
    
    0.48
    
    
    0.44
    
    
    0.44
    
    
    0.44Total
      assets
    
    1,844,321
    
    
    1,696,407
    
    
    1,529,689
    
    
    1,362,936
    
    
    1,203,640Long-term debt -- includingcurrent portion
    
    365,087
    
    
    320,578
    
    
    264,392
    
    
    237,731
    
    
    163,445Shareholders' equity
    
    812,179
    
    
    823,835
    
    
    736,610
    
    
    670,517
    
    
    608,942Book value per share
    
    16.73
    
    
    17.06
    
    
    15.31
    
    
    14.10
    
    
    12.82


Note: The Companys fiscal year ends on
the Sunday nearest to September 30. Fiscal years 2009, 2008, 2007, 2006 and 2005
includes the 52 weeks ended September 27, 2009, September 28, 2008, September
30, 2007, October 1, 2006 and October 2, 2005.

|(1) |  | Reference is made to Item 7,
      Managements Discussion and Analysis of Financial Condition and Results
      of Operations  Results of Operations  Goodwill and Long-Lived Asset
      Impairments which describes certain asset impairment charges as
      follows:
|--- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

- Fiscal 2009  Non-cash charges of $9,891,000 ($6,099,000
  after tax benefits, or $0.13 per diluted share) related to goodwill and
  long-lived asset impairments recognized by A&E.

11

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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.

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 A&E. Harris Teeter is a regional
supermarket chain operating primarily in the southeastern and mid-Atlantic
United States, including the District of Columbia. A&E 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.

The economic environment has motivated changes in
the consumption habits of the retail consumer which has impacted the financial
results of both operating subsidiaries. Unprecedented economic uncertainty,
tumultuous market conditions, and a decreasing level of consumer confidence has
created a more cautious consumer and increased the competitive environment in
Harris Teeters primary markets. Harris Teeter competes with other traditional
grocery retailers, as well as other retail outlets including, but not limited
to, discount retailers such as neighborhood or supercenters and club and
warehouse stores, specialty supermarkets and drug stores. Generally, Harris
Teeters markets 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 along with Harris Teeters new store development program have
resulted in overall gains in market share within Harris Teeters primary
markets.

Harris Teeter continued its planned new store
development program and has opened 15 new stores during fiscal 2009, 15 new
stores during fiscal 2008 and 19 new stores during fiscal 2007. 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 new store activity, and its
associated pre-opening and incremental start-up costs, has required additional
borrowings under the Companys revolving credit facility.

Business conditions for A&Es customers have
also been negatively impacted by the current economic environment and the
cautious consumer. A&E has experienced a significant decline in sales as a
result of the serious global economic conditions facing its customers in the
apparel and non-apparel markets. In addition, apparel production in the Americas
has continued to decline due to the shift of apparel sourcing 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, approximately 74% in 2008 and
approximately 76% for the first eight months in 2009. This has greatly impacted
A&Es operations in the Americas. 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.

12

---

A&Es growth in China, India 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. During the first quarter of fiscal
2009, A&E exercised its option to purchase an additional 14% ownership
interest in Vardhman under the terms of the original joint venture agreement,
which increased A&Es total ownership interest in Vardhman to 49%. 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 (Linhas). During the first quarter of
fiscal 2009, A&E acquired an additional 13% ownership interest in Linhas,
which increased A&Es total ownership interest in Linhas to 43%. In
addition, A&E obtained a majority ownership interest in its two joint
ventures in South Africa during fiscal 2006.

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.

A&E continues to face increased operating
costs and highly competitive pricing in its markets. A&E has completed the
integration and consolidation of the strategic investments made in the past few
years. Management at A&E intends to continue to reduce expenses at its U.S.
operations and certain foreign operations, and focus on its strategic plans to
become more Asian centric.

Results of Operations

Goodwill and Long-Lived Asset
Impairments

The continuing deterioration of the economic
environment during 2009, particularly with respect to A&Es customers in the
retail apparel and non-apparel markets, caused management to lower the expected
future cash flows of A&Es U.S. operating segment during the Companys
annual strategic planning process. Based on the revised expectations, A&E
was required to perform an interim test for goodwill impairment and, as a
result, recorded non-cash impairment charges related to its U.S. operating
segment during the third quarter of fiscal 2009. Impairment charges included the
write-off of all of the goodwill associated with its U.S. acquisitions
previously made in 1995 and 1996 and the write-down of certain long-lived assets
of its U.S. operating segment. During fiscal 2009, A&E wrote off $7,654,000
of goodwill and wrote down certain long-lived assets of its U.S. operating
segment by $2,237,000. A&E also recorded deferred tax benefits of $3,792,000
related to the impairment charges.

13

---

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 27, 2009
(fiscal 2009), September 28, 2008 (fiscal 2008), and September 30, 2007 (fiscal
2007). 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 2009 |   |  |       | Fiscal 2008 |  |   |           | Fiscal 2007 |  |       | % Inc. (Dec.) | 
|------------------------------ | - | ----------- | - |  | ----- | ----------- |  | - | --------- | ----------- |  | ----- | ------------- | 
|                               |   |             |   |  | % to  |             |  |   |           |             |  | % to  |               | 
|                               |   |             |   |  | Sales |             |  |   |           |             |  | Sales |               | 
|Net
      Sales                |   |             |   |  |       |             |  |   |           |             |  |       |               | 
|Harris Teeter                  | $ | 3,827,005   |   |  | 93.8  |             |  | $ | 3,664,804 |             |  | 91.8  |               | 
|American
      & Efird         |   | 250,817     |   |  | 6.2   |             |  |   | 327,593   |             |  | 8.2   |               | 
|Total                          | $ | 4,077,822   |   |  | 100.0 |             |  | $ | 3,992,397 |             |  | 100.0 |               | 
|                              
|Gross
      Profit             |   |             |   |  |       |             |  |   |           |             |  |       |               | 
|Harris
      Teeter            | $ | 1,169,441   |   |  | 28.68 |             |  | $ | 1,138,857 |             |  | 28.53 |               | 
|American & Efird               |   | 47,916      |   |  | 1.17  |             |  |   | 69,590    |             |  | 1.74  |               | 
|Total                          |   | 1,217,357   |   |  | 29.85 |             |  |   | 1,208,447 |             |  | 30.27 |               | 
|                              
|SG&A
      Expenses            |   |             |   |  |       |             |  |   |           |             |  |       |               | 
|Harris
      Teeter            |   | 993,850     |   |  | 24.37 |             |  |   | 961,092   |             |  | 24.08 |               | 
|American & Efird               |   | 52,646      |   |  | 1.29  |             |  |   | 67,262    |             |  | 1.68  |               | 
|Corporate                      |   | 6,119       |   |  | 0.15  |             |  |   | 6,308     |             |  | 0.16  |               | 
|Total                          |   | 1,052,615   |   |  | 25.81 |             |  |   | 1,034,662 |             |  | 25.92 |               | 
|                              
|Impairment
      Charges  A&E |   |             |   |  |       |             |  |   |           |             |  |       |               | 
|Goodwill                       |   | 7,654       |   |  | 0.19  |             |  |   | -         |             |  | -     |               | 
|Long-Lived Assets              |   | 2,237       |   |  | 0.05  |             |  |   | -         |             |  | -     |               | 
|Total                          |   | 9,891       |   |  | 0.24  |             |  |   | -         |             |  | -     |               | 
|                              
|Operating
      Profit (Loss)  |   |             |   |  |       |             |  |   |           |             |  |       |               | 
|Harris
      Teeter            |   | 175,591     |   |  | 4.31  |             |  |   | 177,765   |             |  | 4.45  |               | 
|American & Efird               |   | (14,621     | ) |  | (0.36 | )           |  |   | 2,328     |             |  | 0.06  |               | 
|Corporate                      |   | (6,119      | ) |  | (0.15 | )           |  |   | (6,308    | )           |  | (0.16 | )             | 
|Total                          |   | 154,851     |   |  | 3.80  |             |  |   | 173,785   |             |  | 4.35  |               | 
|                              
|Other
      Expense, net       |   | 16,662      |   |  | 0.41  |             |  |   | 19,674    |             |  | 0.49  |               | 
|Income Tax Expense             |   | 52,225      |   |  | 1.28  |             |  |   | 57,359    |             |  | 1.44  |               | 
|Net Income                     | $ | 85,964      |   |  | 2.11  |             |  | $ | 96,752    |             |  | 2.42  |               | 

Consolidated net sales increased 2.1% in fiscal
2009 and 9.7% in fiscal 2008 when compared to prior years as a result of strong
sales gains at Harris Teeter. The fiscal 2009 and 2008 increases were partially
offset by sales declines at A&E. Foreign sales for fiscal 2009 represented
3.4% of the consolidated sales of the Company, compared to 4.6% for fiscal 2008
and 5.1% for fiscal 2007.  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. 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 increase for fiscal 2009 was
driven by increased gross profit at Harris Teeter that was offset, in part, by a
gross profit decline at A&E when compared to fiscal 2008. The increase in
gross profit, and its percent to sales, for fiscal 2008 was driven by a gross
profit increase at Harris Teeter that was offset, in part, by a gross profit
decline at A&E from fiscal 2007 to fiscal 2008. 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 increased during fiscal 2009, when compared to the prior
year, as a result of the increased operating costs at Harris Teeter driven by
store expansion. The increase in SG&A expenses in fiscal 2009 was partially
offset by reduced SG&A expenses at A&E and Corporate. SG&A expenses,
as a percent to consolidated net sales, decreased in fiscal 2009 from fiscal
2008 and fiscal 2007 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. 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.

14

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As discussed previously, A&E recorded non-cash
impairment charges of $9,891,000 related to its U.S. operating unit during
fiscal 2009. The related income tax benefit of these charges amounted to
$3,792,000, resulting in a net income reduction of $6,099,000. Refer to the
discussion of segment operations under the caption 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) decreased $2.3 million
in fiscal 2009 from fiscal 2008. The decrease in interest expense was driven by
lower average interest rates on outstanding debt balances. Average outstanding
debt balances increased between the comparable periods as a result of increased
borrowings under the Companys credit facility and new capital leases entered
into in support of Harris Teeters new store development program. Net interest
expense increased $1.8 million in fiscal 2008 over fiscal 2007 as a result of
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.

The effective consolidated income tax rate for
fiscal 2009 was 37.8% as compared to 37.2% for fiscal 2008 and 38.2% for fiscal
2007. Income tax expense for fiscal 2009 included the removal of $1.6 million of
valuation allowances associated with foreign tax credits which management now
believes will be realized and adjustments made for an increase in the Companys
state income taxes. 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.

As a result of the items discussed above,
consolidated net income for fiscal 2009 decreased by $10.8 million, or 11.1%,
over fiscal 2008 and net income per diluted share decreased by 11.0% to $1.78
per share in fiscal 2009 from $2.00 per share in fiscal 2008. The non-cash
impairment charges recorded by A&E during fiscal 2009 reduced consolidated
net income by $6.1 million, or $0.13 per diluted share. 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.

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 2009, 2008, and 2007. The table also sets forth the
percent to sales and the percentage increase or decrease over the prior year (in
thousands):

|                   |   | Fiscal 2009 |  |        | Fiscal 2008 |   |           | Fiscal 2007 |        | % Inc. (Dec.)
|------------------ | - | ----------- |  | ------ | ----------- | - | --------- | ----------- | ------ | -------------
|                   |   |             |  | % to   |             |   |           |             | % to   |              
|                   |   |             |  | Sales  |             |   |           |             | Sales  |              
|Net
      Sales    | $ | 3,827,005   |  | 100.00 |             | $ | 3,664,804 |             | 100.00 |              
|Cost of Sales      |   | 2,657,564   |  | 69.44  |             |   | 2,525,947 |             | 68.92  |              
|Gross
      Profit |   | 1,169,441   |  | 30.56  |             |   | 1,138,857 |             | 31.08  |              
|SG&A Expenses      |   | 993,850     |  | 25.97  |             |   | 961,092   |             | 26.23  |              
|Operating Profit   | $ | 175,591     |  | 4.59   |             | $ | 177,765   |             | 4.85   |              

Sales increased 4.4% in fiscal 2009 over fiscal
2008 and 11.1% in fiscal 2008 over fiscal 2007. The increase in sales in fiscal
2009 was attributable to incremental new stores that was partially offset by a
decline in comparable store sales, whereas the increase in sales in fiscal 2008
was attributable to both incremental new stores and comparable store sales
increases. During fiscal 2009, Harris Teeter opened 15 new stores (2 of which
were replacements) and closed 2 stores. During fiscal 2008, Harris Teeter opened
15 new stores (2 of which were replacements) and closed 3 stores and during
fiscal 2007 Harris Teeter opened 19 new stores (2 of which were replacements)
and closed 7 stores. The increase in sales from new stores exceeded the loss of
sales from closed stores by $225.4 million in fiscal 2009, $275.7 million in
fiscal 2008 and $230.1 million in fiscal 2007. Comparable store sales (see
definition below) decreased 1.49% ($53.1 million) for fiscal 2009, as compared
to increases of 2.86% ($91.3 million) for fiscal 2008 and 4.87% ($136.4 million)
for fiscal 2007. Comparable store sales were negatively impacted by retail price
deflation and, to some extent, the cannibalization created by strategically
opening stores in key major markets that have a close proximity to existing
stores. In addition, Harris Teeter customers, in theses economic times, are
choosing lower priced store branded products and reducing their purchases of
more discretionary categories such as floral, tobacco, and certain general
merchandise. Store brand product penetration was 25.38% in fiscal 2009, an
increase of 10 basis points over fiscal 2008. The number of shopping visits and
items sold increased, however the average ticket size was down in fiscal 2009
from fiscal 2008. In addition, Harris Teeter experienced average increases in
active households per comparable store (based on VIC data) in fiscal 2009 of
3.31% for the fourth quarter and 1.86% for year, evidencing a growing customer
base in those stores. Harris Teeters strategy of opening additional stores in
its core markets that have a close proximity to existing stores can negatively
impact comparable store sales. 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.

15

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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.

Fiscal 2009 gross profit as a percent to sales
declined 52 basis points from fiscal 2008 as a result of additional promotional
activity designed to provide more value to Harris Teeters customers. Management
continues to adjust Harris Teeters promotional spending programs in response to
the changing purchasing habits of Harris Teeters customers. The decline in the
gross profit margin for fiscal 2009 was offset, in part, by managements
emphasis on distribution and manufacturing cost controls, decreasing fuel costs
and a lower LIFO charge. Gross profit, and its percent to sales, for fiscal 2008
improved as a result of changes in Harris Teeters market mix and its retail
pricing and targeted promotional spending strategies. The annual LIFO charge
reduced gross profit by $4.4 million (0.12% to sales) in fiscal 2009, $8.8
million (0.24% to sales) in fiscal 2008 and $1.4 million (0.04% to sales) in
fiscal 2007.

SG&A expenses for fiscal 2009 increased from
fiscal 2008 as a result of incremental costs associated with Harris Teeters new
store program (pre-opening costs and incremental start-up costs), increased
credit and debit card fees and other occupancy costs. However, SG&A expenses
as a percent to sales decreased 26 basis points in fiscal 2009 from fiscal 2008
as a result of the leverage created through sales gains that apply against fixed
costs, along with improved labor management and additional cost controls in
support departments. SG&A expenses as a percent to sales decreased in fiscal
2008 from fiscal 2007 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 $14.4 million (0.37% of sales) in fiscal 2009, $15.4 million (0.42%
of sales) in fiscal 2008 and $17.9 million (0.54% of sales) in fiscal 2007.
Pre-opening costs fluctuate between periods depending on the new store opening
schedule and market location.

As a result of the sales and cost elements
described above, operating profit declined 1.2% in fiscal 2009 from fiscal 2008
and increased 15.4% in fiscal 2008 from fiscal 2007. Harris Teeter continues to
invest within its core markets, which management believes have greater potential
for improved returns on investment in the foreseeable future. Harris Teeter had
189 stores in operation at September 27, 2009, compared to 176 stores at
September 28, 2008 and 164 stores at September 30, 2007.

16

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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 2009, 2008 and 2007. The table also sets forth the percent to sales
and the percentage increase or decrease over the prior year (in
thousands):

|                             |   | Fiscal 2009 |   |  |        | Fiscal 2008 |  |   | Fiscal 2007 |  | % Inc. (Dec.) | 
|---------------------------- | - | ----------- | - |  | ------ | ----------- |  | - | ----------- |  | ------------- | 
|                             |   |             |   |  | % to   |             |  |   |             |  | % to          | 
|                             |   |             |   |  | Sales  |             |  |   |             |  | Sales         | 
|Net
      Sales              | $ | 250,817     |   |  | 100.00 |             |  | $ | 327,593     |  | 100.00        | 
|Cost of Sales                |   | 202,901     |   |  | 80.90  |             |  |   | 258,003     |  | 78.76         | 
|Gross
      Profit           |   | 47,916      |   |  | 19.10  |             |  |   | 69,590      |  | 21.24         | 
|SG&A Expenses                |   | 52,646      |   |  | 20.99  |             |  |   | 67,262      |  | 20.53         | 
|Goodwill
      Impairment    |   | 7,654       |   |  | 3.05   |             |  |   | -           |  | -             | 
|Long-Lived Asset Impairments |   | 2,237       |   |  | 0.89   |             |  |   | -           |  | -             | 
|Operating (Loss) Profit      | $ | (14,621     | ) |  | (5.83  | )           |  | $ | 2,328       |  | 0.71          | 

Sales decreased 23.4% in fiscal 2009 from fiscal
2008 and 3.6% in fiscal 2008 from fiscal 2007. The decrease in fiscal 2009 was
driven primarily by sales declines for all regions between the comparable fiscal
years. The global recession and its continuing negative impact on consumer
spending is depressing the worldwide supply chain and A&Es customers have
cut back orders in response to the reduction of retail sales. The decrease in
fiscal 2008 was driven primarily by sales declines in the United States, Canada
and Mexico (the North American Free Trade Association Region or NAFTA) from
fiscal 2007. Sales gains during fiscal 2008 in A&Es Asian operations were
offset by the sales declines realized in NAFTA.

Foreign sales accounted for approximately 55% of
total A&E sales in both fiscal 2009 and fiscal 2008, and 54% in fiscal 2007.
Foreign sales, especially in the Asian markets, will continue to be a
significant proportion of total A&E sales due to 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 during fiscal 2009 and fiscal 2008 when compared to the prior fiscal
years primarily as a result of weak sales and poor overhead absorption in the
U.S. operations and certain other foreign operations. Fiscal 2009 gross profit
was reduced by $300,000 for severance costs associated with the consolidation of
one of A&Es manufacturing facilities in North Carolina into one of
A&Es other North Carolina operations, which was completed subsequent to the
end of fiscal 2009. The shifting of apparel production from the Americas to Asia
has continued and management is focused on optimizing costs and manufacturing
capacities in its domestic and foreign operations.

SG&A expenses decreased in fiscal 2009 from
fiscal 2008, as a result of increased net profit from non-consolidated
subsidiaries and A&E reducing expenses to more closely match the decline in
sales volume; however SG&A expenses as a percent to sales increased
primarily due to sales declining faster than the expense reductions achieved
during fiscal 2009. Expense reductions have been realized through the
consolidation and rationalization of A&E's operations in the U.S. and
certain foreign locations. SG&A expenses, and its percent to sales, in
fiscal 2008 decreased from fiscal 2007, primarily as a result of increased net
profit from non-consolidated subsidiaries and reduced costs in A&E's U.S.
operations. In addition, SG&A expenses in fiscal 2008 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. Net profit from
non-consolidated subsidiaries is recorded as a reduction to SG&A expenses
and amounted to $4.4 million in fiscal 2009, as compared to $3.4 million in
fiscal 2008 and $1.4 million in fiscal 2007. The increase in net profit from
non-consolidated subsidiaries was driven primarily by A&Es investments in
Vardhman during fiscal 2008 and 2009.

As discussed above, A&E recorded non-cash
impairment charges during fiscal 2009 totaling $9.9 million related to its U.S.
operating unit. Impairment charges included $7.7 million for the write-off of
all of the goodwill associated with its U.S. acquisitions previously made in
1995 and 1996, and $2.2 million for the write-down of long-lived
assets.

A&Es operating loss for fiscal 2009 was
comprised of $9.9 million of impairment charges discussed above and $4.7 million
of operating losses resulting from the challenging economic environment in many
parts of the world and its impact on A&Es customers. Although A&E has
significantly reduced expenses, it was not enough to offset the decline in sales
and reduced operating schedules. Management at A&E intends to continue to
reduce expenses at its U.S. operations and certain foreign operations and focus
on its strategic plans to become more Asian centric.

17

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For fiscal 2009, all geographic areas of A&Es
operations, including Asia, experienced weak business conditions as a result of
poor retail sales on a global basis. However, the accomplishments made in
expense reduction, and overall improved sales and operating profit in Asia,
enabled A&E to realize a significant increase in operating profit during the
fourth quarter of fiscal 2009 over the fourth quarter of fiscal 2008. A&Es
operating results are not indicative of the progress that has been made in
becoming more Asian centric due to the fact that increased sales and improved
operating profit of its consolidated Asian operations realized during fiscal
2008 and the fourth quarter of fiscal 2009 have been offset by weakness in the
U.S. and other operating areas outside of Asia. In addition, A&E has
minority interests in certain Asian operations that are not consolidated with
A&Es reported sales, but have substantial sales and good operating
results.

Outlook

Harris Teeters operating performance and the
Companys strong financial position provides the flexibility to continue with
Harris Teeters store development program that includes new and replacement
stores along with the remodeling and expansion of existing stores. During fiscal
2010, Harris Teeter plans to open 13 new stores (2 of which will be replacements
for existing stores) and complete 2 major remodels (1 of which will be expanded
in size). The new store opening program for fiscal 2010 is expected to result in
a 6.8% increase in retail square footage as compared to an 8.7% increase in
fiscal 2009. The annual number of new store openings for fiscal year 2011 and
thereafter are expected to be similar to that of fiscal 2010 which is down from
fiscal 2009. Management will continue to evaluate Harris Teeters capital
expenditures during these times of economic uncertainty and will adjust its
strategic plan accordingly. In addition, 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.

The new store program for fiscal 2010 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.

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 growth opportunities
in these countries 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 intends to
continue to reduce expenses at its U.S. operations and certain foreign
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 2010 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. Operating improvement will be dependent on the
Companys ability to increase Harris Teeters market share, optimize 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
certain property and equipment, 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
associated cash flows from its operating subsidiaries.

18

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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 2009, the net cash provided by
operating activities was $233.7 million, compared to $227.2 million during
fiscal 2008 and $212.6 million during fiscal 2007. Investing activities during
fiscal 2009 required net cash of $218.8 million, compared to $226.2 million
during fiscal 2008 and $204.8 million during fiscal 2007. Capital spending has
been financed by cash provided by operating activities along with borrowings
under the Companys credit facility. Financing activities for fiscal 2009
utilized $6.9 million of cash and included an additional $23.9 million of
borrowings under the Companys credit facility. Financing activity also includes
$17.5 million for the payment of dividends in fiscal 2009, compared to $23.2
million in fiscal 2008 and $21.1 million in fiscal 2007.

During fiscal 2009, consolidated capital
expenditures totaled $209.2 million. Harris Teeter capital expenditures were
$206.7 million in fiscal 2009, compared to $192.2 million in fiscal 2008 and
$205.5 million in fiscal 2007. A&E's capital expenditures were $2.5 million
during fiscal 2009, compared to $7.3 million in fiscal 2008 and $7.7 million in
fiscal 2007. In connection with the development of certain of its new stores,
Harris Teeter invested an additional $7.6 million which was effectively offset
by $7.5 million received from property investment sales and partnership
distributions during fiscal 2009. Also in fiscal 2009, A&E invested an
additional $8.7 million in Vardhman and an additional $0.7 million in its joint
venture in Brazil. Fiscal 2010 consolidated capital expenditures are planned to
total approximately $155 million, consisting of $150 million for Harris Teeter
and $5 million for A&E. Harris Teeter anticipates that its capital for new
store growth and store remodels will be concentrated in its existing markets in
fiscal 2010 as well as the foreseeable future. A&E expects to mainly invest
in the 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. Management believes that the
Companys revolving line of credit provides sufficient liquidity for what
management expects the Company will require through the expiration of the line
of credit in December 2012.

The Companys credit facility was entered into on
December 20, 2007 with eleven banks and 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 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 the consent of the
lenders. 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 credit agreement. The more significant of
the financial covenants which the Company must meet during the term of the
credit agreement include a maximum leverage ratio and a minimum fixed charge
coverage ratio. As of September 27, 2009, the Company was in compliance with all
financial covenants of the credit agreement and $52.9 million of borrowings were
outstanding under the Revolving Credit Facility. Issued letters of credit reduce
the amount available for borrowings under the Revolving Credit Facility and
amounted to $22.1 million as of September 27, 2009. In addition to the $275.0
million of borrowings available under the Revolving Credit Facility as of
September 27, 2009, the Company has the capacity to borrow up to an aggregate
amount of $32.3 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 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. As of
September 27, 2009, the amount of additional debt that could be incurred within
the limitations of the most restrictive 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.

19

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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 and new sources of financing available to
the Company, 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 27, 2009 (in thousands):

|                                               |       |           |        | Less
      than |           |  |           |         |         |   |         | More
      than
|---------------------------------------------- | ----- | --------- | ------ | --------------- | --------- |  | --------- | ------- | ------- | - | ------- | ---------------
|                                               | Total |           | 1 Year |                 | 1-3 Years |  | 3-5 Years |         | 5 Years
|Long-Term Debt (1)                             | $     | 339,377   |        | $               | 18,698    |  | $         | 29,857  |         | $ | 168,882 |                
|Operating Leases (1)(2)                        |       | 1,467,802 |        |                 | 93,876    |  |           | 191,287 |         |   | 193,898 |                
|Capital Lease Obligations (1)(2)               |       | 202,353   |        |                 | 9,651     |  |           | 21,349  |         |   | 21,436  |                
|Purchase Obligations  Fixed Assets            |       | 39,326    |        |                 | 39,326    |  |           | -       |         |   | -       |                
|Purchase Obligations  Inventory               |       | 948       |        |                 | 948       |  |           | -       |         |   | -       |                
|Purchase Obligations  Service Contracts/Other |       | 17,030    |        |                 | 7,119     |  |           | 7,754   |         |   | 2,157   |                
|Unrecognized Tax Liability (3)                 |       | 5,003     |        |                 | 1,967     |  |           | 3,036   |         |   | -       |                
|Other (4)                                      |       | 14,833    |        |                 | 1,609     |  |           | 3,195   |         |   | 2,957   |                
|Total Contractual Cash
      Obligations       | $     | 2,086,672 |        | $               | 173,194   |  | $         | 256,478 |         | $ | 389,330 |                

|(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 2.0% 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) |  | For a more detailed
      description of the obligation refer to the Note entitled Income Taxes of
      the Notes to Consolidated Financial Statements in Item 8 hereof. The
      timing of payment, if any, for the unrecognized tax liability is not
      certain. However, we believe that we could possibly reach a settlement or
      resolution on the tax issues within the next three years.
|   
|(4) |  | 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.                                                                                                                 

In connection with the closing of
certain store locations, Harris Teeter has assigned leases to several
sub-tenants with recourse. These leases expire over the next 12 years, and the
future minimum lease payments of approximately $51.2 million, in the aggregate,
over that future period have been assumed by these sub-tenants In the 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: $8.0 million in fiscal 2010 (25 stores), $7.6 million in fiscal 2011
(22 stores), $7.3 million in fiscal 2012 (21 stores), $6.1 million in fiscal
2013 (17 stores), $5.2 million in fiscal 2014 (14 stores) and $17.0 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
$22.1 million at September 27, 2009.

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.

20

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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, Subtopic 605-50
of the Financial Accounting Standards Board (FASB) Accounting Standards
Codification (ASC), 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.

Harris Teeters practices are in
accordance with ASC topic 605-50 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 relatedmerchandise is sold. Generally, volume rebates
under a structured purchase program with allowances awarded basedon 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.

21

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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.

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 anaverage maturity equal to
the average payout of the related liability. Harris Teeter liabilities represent
approximately 95% 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.

22

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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 estimates and
assumptions of projected cash flows, 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.

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-qualifiedsupplemental retirement benefit plans are unfunded, defined benefit
plans. The Companys current funding policy forits qualified pension plan is to
contribute annually an amount in excess of the contributions required by
regulatory authorities to meet minimum funding requirements, as determined by
its actuaries to be effective in increasing the funding ratios and reducing the
volatility of future contributions.

23

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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.

Recent Accounting Standards

The FASB Accounting Standards
Codification (ASC) became effective for the Company as of its fiscal year
ending September 27, 2009. The ASC is now the authoritative reference for
nongovernment U.S. GAAP, except for Securities and Exchange Commission (SEC)
rules and interpretive releases, which are also authoritative GAAP for SEC
registrants. The ASC brings together in one place all authoritative GAAP
previously in the superseded GAAP hierarchy that has been issued by standard
setters, e.g., FASB Statements, FASB Interpretations, EITF Abstracts, FASB Staff
Positions, and AICPA Statements of Position and Audit and Accounting Guides.
Nonauthoritative GAAP includes items previously in the GAAP hierarchys lowest
level (e.g., prevalent industry practice) and other accounting guidance, such as
textbooks and articles. Going forward, accounting pronouncements issued by the
FASB will be called Accounting Standards Updates (ASU).

In December 2007, the FASB issued an
update to its authoritative literature for business combinations. The guidance
is incorporated in ASC Subtopic 805-10 and requires most identifiable assets,
liabilities, noncontrolling interest, and goodwill acquired in a business
combination to be recorded at full fair value. The updated standard applies to
all business combinations, including combinations among mutual entities and
combinations by contract alone. The updated standards become 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 an
update to its authoritative literature for reporting noncontrolling interest in
consolidated financial statements. The guidance is incorporated in ASC Subtopic
810-10 and 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. The updated 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. Compliance
with the updated standard is not expected to have a material impact on the
Companys results of operations, financial position or cash flows.

24

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In November 2008, the FASB ratified the
consensus reached by the Task Force in EITF Issue No. 08-6 regardinginvestments accounted for
under the equity method. The guidance is incorporated in ASC Subtopic 323-10 and
applies to all investments accounted for under the equity method and clarifies
the accounting for certain transactions and impairment considerations involving
those investments. The updated standards become effective for the Companys 2010
fiscal year beginning on September 28, 2009. Compliance with the updated
standard is not expected to have a material impact on the Companys results of
operations, financial position or cash flows.

In December 2008, the FASB issued an
update to its authoritative literature for disclosures about pensions and other
postretirement benefits. The guidance is incorporated in ASC Sections 715-20-50
and 55, and requires employers to disclose more information about how investment
allocation decisions are made, more information about major categories of plan
assets, including concentrations of risk and fair-value measurements, and the
fair-value techniques and inputs used to measure plan assets. The updated
disclosure requirements become effective for the Companys 2010 fiscal year
ending on October 3, 2010.

In June 2009, the FASB issued an update
to its authoritative literature for the consolidation of variable interest
entities (VIE). The guidance is incorporated in ASC Topic 810 and requires
reporting entities to evaluate former qualifying special purpose entities for
consolidation, changes the approach to determining a VIEs primary beneficiary
from a quantitative assessment to a qualitative assessment designed to identify
a controlling financial interest, and increases the frequency of required
reassessments to determine whether a company is the primary beneficiary of a
VIE. It also clarifies, but does not significantly change, the characteristics
that identify a VIE. The new guidance also requires additional year-end and
interim disclosures. The updated standards become effective for the Companys
2011 fiscal year beginning on October 4, 2010. The Company is currently
evaluating the impact of the updated standards on its consolidated financial
statements.

Item 7A.Quantitative and Qualitative Disclosures about Market Risk

The Company does not utilize financial
instruments for trading or other speculative purposes, nor does it utilize
leveraged financial instruments. The Companys exposure to market risks results
primarily from changes in interest rates. 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 27, 2009, the Company had
no significant foreign exchange exposure and two interest rate swap agreements
accounted for as cash flow hedge derivatives.

The table below presents principal cash
flows and related weighted average interest rates by expected maturity dates for
the Companys Senior Notes due at various dates through 2017 (which
accounts for 99% of the Companys fixed interest debt obligations):

|                                     | 2010 |       | 2011 |   | 2012  |  | 2013 |   | 2014 |   | Thereafter |  | Total |   | Fair Value
|------------------------------------ | ---- | ----- | ---- | - | ----- |  | ---- | - | ---- | - | ---------- |  | ----- | - | ----------
|Senior Notes                         | $    | 7,143 |      | $ | 7,142 |  | $    | - |      | $ | -          |  | $     | - |           
|Weighted average
      interest rate |      | 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.

During fiscal 2009, the Company entered
into two separate three-year interest rate swap agreements with an aggregate
notional amount of $80 million. The swap agreements effectively fixed the
interest rate on $80 million of the Companys term loan, of which $40 million is
at 1.81% and $40 million is at 1.80%, excluding the applicable margin and
associated fees. The fair value of these derivatives are recorded on the balance
sheet at their respective fair value and amounted to a liability of $586,000 as
of September 27, 2009. For a more detail description of fair value, refer to the
Note entitled Derivatives of the Notes to Consolidated Financial Statements in
Item 8 hereof.

25

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Item 8.Financial Statements and Supplementary Data

RUDDICK CORPORATIONAND
CONSOLIDATED SUBSIDIARIES

INDEX TO CONSOLIDATED FINANCIAL
STATEMENTS AND SCHEDULE

|                                                                                           | Page
|------------------------------------------------------------------------------------------ | ----
|Reports of Independent Registered Public Accounting Firm                                   | 27  
|                                                                                           |     
|Consolidated Balance Sheets, September 27, 2009 and September 28,
      2008               | 29  
|                                                                                           |     
|Statements of Consolidated Income for the fiscal years ended
      September 27, 2009,     |     
|September 28, 2008 and September 30, 2007                                                  | 30  
|                                                                                           |     
|Statements of Consolidated Shareholders Equity and Comprehensive
      Income for the     |     
|fiscal years ended September 27, 2009, September 28, 2008 and
      September 30, 2007     | 31  
|                                                                                           |     
|Statements of Consolidated Cash Flows for the fiscal years ended
      September 27, 2009, |     
|September 28, 2008 and September 30, 2007                                                  | 32  
|                                                                                           |     
|Notes to Consolidated Financial Statements                                                 | 33  
|                                                                                           |     
|Schedule I- Valuation and Qualifying Accounts and Reserves for the
      fiscal            |     
|years ended September 27, 2009, September 28, 2008 and September
      30, 2007            | S-1 

26

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Report of Independent Registered
Public Accounting Firm

The Board of Directors and
ShareholdersRuddick Corporation:

We have audited the accompanying
consolidated balance sheets of Ruddick Corporation and subsidiaries (the
Company) as of September 27, 2009 and September 28, 2008, 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 27, 2009. 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 27, 2009
and September 28, 2008, and the results of their operations and their cash flows
for each of the years in the three-year period ended September 27, 2009, 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
27, 2009, based on criteria established in Internal Control  Integrated Frameworkissued by the Committee of Sponsoring Organizations of the Treadway
Commission (COSO), and our report dated November 20, 2009,
expressed,an unqualified opinion on the effectiveness of the Companys internal
control over financial reporting.

As discussed in the notes to the
consolidated financial statements, the Company has changed its method of
accounting for uncertain tax positions effective October 1, 2007, due
to the adoption of Accounting Standards Codification Subtopic 740-10.

/s/ KPMG LLPCharlotte, North CarolinaNovember 20, 2009

27

---

Report of Independent Registered
Public Accounting Firm

The Board of Directors and
ShareholdersRuddick Corporation:

We have audited Ruddick Corporation and
subsidiaries (the Company) internal control over financial reporting as of
September 27, 2009, 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 27, 2009, 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 27, 2009 and September 28, 2008, 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 27,
2009, and our report dated November 20, 2009 expressed an unqualified opinion on
those consolidated financial statements.

/s/ KPMG LLPCharlotte, North CarolinaNovember 20, 2009

28

---

CONSOLIDATED BALANCE
SHEETSRUDDICK CORPORATION AND
SUBSIDIARIES(dollars in thousands)

|                                                                                             | September 27, |           |   | September 28, |  
|-------------------------------------------------------------------------------------------- | ------------- | --------- | - | ------------- | -
|                                                                                             | 2009          |           |   | 2008          |  
|ASSETS                                                                                       |               |           |   |               |  
|Current
      Assets                                                                         |               |           |   |               |  
|Cash and Cash
      Equivalents                                                              | $             | 37,310    |   |               | $
|Accounts
      Receivable, Net of Allowance For Doubtful Accounts of $3,690 and
      $2,819 |               | 80,146    |   |               |  
|Refundable
      Income Taxes                                                                |               | 9,707     |   |               |  
|Inventories                                                                                  |               | 310,271   |   |               |  
|Deferred
      Income Taxes                                                                  |               | 6,502     |   |               |  
|Prepaid Expenses and Other Current Assets                                                    |               | 30,350    |   |               |  
|Total Current Assets                                                                         |               | 474,286   |   |               |  
|Property                                                                                     |               |           |   |               |  
|Land                                                                                         |               | 21,430    |   |               |  
|Buildings and
      Improvements                                                             |               | 270,145   |   |               |  
|Machinery and
      Equipment                                                                |               | 1,000,886 |   |               |  
|Leasehold Improvements                                                                       |               | 734,073   |   |               |  
|Total, at Cost                                                                               |               | 2,026,534 |   |               |  
|Accumulated Depreciation and Amortization                                                    |               | 946,208   |   |               |  
|Property, Net                                                                                |               | 1,080,326 |   |               |  
|Investments                                                                                  |               | 156,434   |   |               |  
|Deferred Income Taxes                                                                        |               | 30,285    |   |               |  
|Goodwill                                                                                     |               | 515       |   |               |  
|Intangible Assets                                                                            |               | 23,754    |   |               |  
|Other Long-Term Assets                                                                       |               | 78,721    |   |               |  
|Total Assets                                                                                 | $             | 1,844,321 |   |               | $
|                                                                                             |               |           |   |               |  
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                         |               |           |   |               |  
|Current
      Liabilities                                                                    |               |           |   |               |  
|Notes
      Payable                                                                          | $             | 7,056     |   |               | $
|Current
      Portion of Long-Term Debt and Capital Lease Obligations                        |               | 9,526     |   |               |  
|Accounts
      Payable                                                                       |               | 227,901   |   |               |  
|Dividends
      Payable                                                                      |               | 5,825     |   |               |  
|Deferred
      Income Taxes                                                                  |               | 68        |   |               |  
|Accrued
      Compensation                                                                   |               | 65,295    |   |               |  
|Other Current Liabilities                                                                    |               | 87,194    |   |               |  
|Total Current Liabilities                                                                    |               | 402,865   |   |               |  
|Long-Term Debt and Capital Lease Obligations                                                 |               | 355,561   |   |               |  
|Deferred Income
      Taxes                                                                  |               | 580       |   |               |  
|Pension Liabilities                                                                          |               | 168,060   |   |               |  
|Other Long-Term
      Liabilities                                                            |               | 98,892    |   |               |  
|Minority Interest                                                                            |               | 6,184     |   |               |  
|Commitments and
      Contingencies                                                          |               | -         |   |               |  
|Shareholders' Equity                                                                         |               |           |   |               |  
|Common Stock,
      no par value - Shares Outstanding: 2009  48,545,080                     |               |           |   |               |  
|2008  48,278,136                                                                            |               | 89,878    |   |               |  
|Retained
      Earnings                                                                      |               | 830,236   |   |               |  
|Accumulated Other Comprehensive Loss                                                         |               | (107,935  | ) |               |  
|Total Shareholders' Equity                                                                   |               | 812,179   |   |               |  
|Total Liabilities and Shareholders' Equity                                                   | $             | 1,844,321 |   |               | $

See Notes to Consolidated Financial
Statements

29

---

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

|                                                                     | 52
      Weeks Ended |           |   | 52
      Weeks Ended |   |           | 52
      Weeks Ended | 
|-------------------------------------------------------------------- | -------------------- | --------- | - | -------------------- | - | --------- | -------------------- | 
|                                                                     | September 27,        |           |   | September 28,        |   |           | September 30,        | 
|                                                                     | 2009                 |           |   | 2008                 |   |           | 2007                 | 
|Net Sales                                                            | $                    | 4,077,822 |   |                      | $ | 3,992,397 |                      | 
|Cost of
      Sales                                                  |                      | 2,860,465 |   |                      |   | 2,783,950 |                      | 
|Selling, General and Administrative Expenses                         |                      | 1,052,615 |   |                      |   | 1,034,662 |                      | 
|Goodwill
      Impairment Charge                                     |                      | 7,654     |   |                      |   | -         |                      | 
|Long-Lived Asset Impairment
      Charge                             |                      | 2,237     |   |                      |   | -         |                      | 
|Operating Profit                                                     |                      | 154,851   |   |                      |   | 173,785   |                      | 
|Interest Expense                                                     |                      | 17,307    |   |                      |   | 20,334    |                      | 
|Interest
      Income                                                |                      | (493      | ) |                      |   | (1,185    | )                    | 
|Net Investment (Gain) Loss                                           |                      | (746      | ) |                      |   | 41        |                      | 
|Minority Interest                                                    |                      | 594       |   |                      |   | 484       |                      | 
|Income Before Taxes                                                  |                      | 138,189   |   |                      |   | 154,111   |                      | 
|Income Tax Expense                                                   |                      | 52,225    |   |                      |   | 57,359    |                      | 
|Net Income                                                           | $                    | 85,964    |   |                      | $ | 96,752    |                      | 
|                                                                     |                      |           |   |                      |   |           |                      | 
|Net Income Per Share:                                                |                      |           |   |                      |   |           |                      | 
|Basic                                                                | $                    | 1.79      |   |                      | $ | 2.02      |                      | 
|Diluted                                                              | $                    | 1.78      |   |                      | $ | 2.00      |                      | 
|                                                                     |                      |           |   |                      |   |           |                      | 
|Weighted Average Number of Shares of Common Stock
      Outstanding: |                      |           |   |                      |   |           |                      | 
|Basic                                                                |                      | 47,964    |   |                      |   | 47,824    |                      | 
|Diluted                                                              |                      | 48,337    |   |                      |   | 48,295    |                      | 

See Notes to Consolidated Financial
Statements

30

---

STATEMENTS OF CONSOLIDATED SHAREHOLDERS' EQUITY
AND COMPREHENSIVE INCOMERUDDICK 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 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 Taxes    | -              |   |  |        | -      |   |          |          | -             |               |                         | 3,617         |        |       |               | 3,617   |   |  |  
|Pension
      Liability Adjustment,        |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Net of $10,774
      for Taxes             | -              |   |  |        | -      |   |          |          | -             |               |                         | 16,881        |        |       |               | 16,881  |   |  |  
|Impact of SFAS 158
      Adoption,         |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Net of Tax Benefits 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 Taxes    | -              |   |  |        | -      |   |          |          | -             |               |                         | 1,079         |        |       |               | 1,079   |   |  |  
|Pension
      Liability Adjustment,        |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Net of $6,988 for
      Taxes              | -              |   |  |        | -      |   |          |          | -             |               |                         | 10,855        |        |       |               | 10,855  |   |  |  
|Postemployment Benefits Liability          |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Adjustment, Net of $95 for Taxes           | -              |   |  |        | -      |   |          |          | -             |               |                         | 146           |        |       |               | 146     |   |  |  
|Balance at
      September 28, 2008        | 48,278,136     |   |  |        | 83,252 |   |          |          | 767,562       |               |                         | (26,979       | )      |       |               | 823,835 |   |  | $
|Exercise of
      Stock Options, Including |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Tax Benefits of
      $482                 | 104,199        |   |  |        | 2,080  |   |          |          | -             |               |                         | -             |        |       |               | 2,080   |   |  |  
|Share-Based
      Compensation             | 206,259        |   |  |        | 5,722  |   |          |          | -             |               |                         | -             |        |       |               | 5,722   |   |  |  
|Shares
      Effectively Purchased and     |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Retired for
      Withholding Taxes        | (43,514        | ) |  |        | (1,176 | ) |          |          | -             |               |                         | -             |        |       |               | (1,176  | ) |  |  
|Net
      Earnings                         | -              |   |  |        | -      |   |          |          | 85,964        |               |                         | -             |        |       |               | 85,964  |   |  | $
|Dividends
      ($0.48 a Share)            | -              |   |  |        | -      |   |          |          | (23,290       | )             |                         | -             |        |       |               | (23,290 | ) |  |  
|Foreign
      Currency Translation Adj.,   |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Adjustment,
      Including $400 for Taxes | -              |   |  |        | -      |   |          |          | -             |               |                         | (1,653        | )      |       |               | (1,653  | ) |  |  
|Pension
      Liability Adjustment,        |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Net of Tax
      Benefits of $50,535       | -              |   |  |        | -      |   |          |          | -             |               |                         | (78,640       | )      |       |               | (78,640 | ) |  |  
|Postemployment Benefits Liability          |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Net of Tax
      Benefits of $181          | -              |   |  |        | -      |   |          |          | -             |               |                         | (309          | )      |       |               | (309    | ) |  |  
|Unrealized
      Loss on Cash Flow Hedge,  |                |   |  |        |        |   |          |          |               |               |                         |               |        |       |               |         |   |  |  
|Net of Tax Benefits of $231                | -              |   |  |        | -      |   |          |          | -             |               |                         | (354          | )      |       |               | (354    | ) |  |  
|Balance at September 27, 2009              | 48,545,080     |   |  | $      | 89,878 |   |          | $        | 830,236       |               | $                       | (107,935      | )      |       | $             | 812,179 |   |  | $

See Notes to Consolidated Financial
Statements

31

---

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

|                                                                 |  | 52
      Weeks Ended |          |   | 52
      Weeks Ended |   |          | 52
      Weeks Ended | 
|---------------------------------------------------------------- |  | -------------------- | -------- | - | -------------------- | - | -------- | -------------------- | 
|                                                                 |  | September 27,        |          |   | September 28,        |   |          | September 30,        | 
|                                                                 |  | 2009                 |          |   | 2008                 |   |          | 2007                 | 
|CASH FLOW FROM OPERATING ACTIVITIES:                             |  |                      |          |   |                      |   |          |                      | 
|Net
    Income                                                   |  | $                    | 85,964   |   |                      | $ | 96,752   |                      | 
|Non-Cash Items Included in Net Income:                           |  |                      |          |   |                      |   |          |                      | 
|Depreciation and
      Amortization                              |  |                      | 125,487  |   |                      |   | 114,405  |                      | 
|Deferred Income
      Taxes                                      |  |                      | 10,393   |   |                      |   | 13,665   |                      | 
|Net Gain on Property
      Sales                                 |  |                      | (792     | ) |                      |   | (1,789   | )                    | 
|Impairment Losses                                                |  |                      | 9,891    |   |                      |   | -        |                      | 
|Share-Based
      Compensation                                   |  |                      | 5,722    |   |                      |   | 5,376    |                      | 
|Other, Net                                                       |  |                      | (2,652   | ) |                      |   | 1,832    |                      | 
|Changes in
      Operating Accounts Providing (Utilizing) Cash:  |  |                      |          |   |                      |   |          |                      | 
|Accounts
      Receivable                                        |  |                      | 11,470   |   |                      |   | 1,552    |                      | 
|Inventories                                                      |  |                      | 1,833    |   |                      |   | (16,853  | )                    | 
|Prepaid Expenses and
      Other Current Assets                  |  |                      | (6,769   | ) |                      |   | (3,464   | )                    | 
|Accounts Payable                                                 |  |                      | (9,196   | ) |                      |   | 7,116    |                      | 
|Other Current
      Liabilities                                  |  |                      | 5,550    |   |                      |   | 8,331    |                      | 
|Other Long-Term Operating
      Accounts                         |  |                      | (4,102   | ) |                      |   | (235     | )                    | 
|Dividends Received from
      Non-Consolidated Subsidiaries      |  |                      | 940      |   |                      |   | 500      |                      | 
|Net Cash Provided by Operating
      Activities                  |  |                      | 233,739  |   |                      |   | 227,188  |                      | 
|                                                                
|INVESTING ACTIVITIES:                                            |  |                      |          |   |                      |   |          |                      | 
|Capital
      Expenditures                                       |  |                      | (209,203 | ) |                      |   | (199,500 | )                    | 
|Purchase of Other Investments                                    |  |                      | (16,980  | ) |                      |   | (46,799  | )                    | 
|Acquired
      Favorable Leases                                  |  |                      | -        |   |                      |   | (1,136   | )                    | 
|Proceeds from Sale of Property                                   |  |                      | 5,944    |   |                      |   | 24,606   |                      | 
|Return of
      Partnership Investments                          |  |                      | 3,152    |   |                      |   | 129      |                      | 
|Investments in Company-Owned Life Insurance                      |  |                      | (702     | ) |                      |   | (1,879   | )                    | 
|Other, Net                                                       |  |                      | (996     | ) |                      |   | (1,647   | )                    | 
|Net Cash Used in Investing
      Activities                      |  |                      | (218,785 | ) |                      |   | (226,226 | )                    | 
|                                                                
|FINANCING ACTIVITIES:                                            |  |                      |          |   |                      |   |          |                      | 
|Net (Payments
      on) Proceeds from Short-Term Debt Borrowings |  |                      | (3,836   | ) |                      |   | 865      |                      | 
|Net Proceeds from (Payments on) Revolver Borrowings              |  |                      | 23,900   |   |                      |   | (62,000  | )                    | 
|Proceeds from
      Long-Term Debt Borrowings                    |  |                      | 1,652    |   |                      |   | 100,371  |                      | 
|Payments on Long-Term Debt and Capital Lease Obligations         |  |                      | (12,212  | ) |                      |   | (10,207  | )                    | 
|Dividends
      Paid                                             |  |                      | (17,465  | ) |                      |   | (23,182  | )                    | 
|Proceeds from Stock Issued                                       |  |                      | 1,598    |   |                      |   | 3,359    |                      | 
|Share-Based
      Compensation Tax Benefits                      |  |                      | 482      |   |                      |   | 1,917    |                      | 
|Purchase and Retirement of Common Stock                          |  |                      | -        |   |                      |   | (8,000   | )                    | 
|Other, Net                                                       |  |                      | (1,041   | ) |                      |   | (1,139   | )                    | 
|Net Cash (Used in) Provided by
      Financing Activities        |  |                      | (6,922   | ) |                      |   | 1,984    |                      | 
|Increase (Decrease) in Cash and Cash Equivalents                 |  |                      | 8,032    |   |                      |   | 2,946    |                      | 
|Effect of Foreign Currency Fluctuations on Cash                  |  |                      | (481     | ) |                      |   | 66       |                      | 
|Cash and Cash Equivalents at
      Beginning of Year             |  |                      | 29,759   |   |                      |   | 26,747   |                      | 
|Cash and Cash Equivalents at End
      of Year                   |  | $                    | 37,310   |   |                      | $ | 29,759   |                      | 
|                                                                
|Supplemental Disclosures of Cash Flows Information:              |  |                      |          |   |                      |   |          |                      | 
|Cash Paid During
      the Year For:                             |  |                      |          |   |                      |   |          |                      | 
|Interest, Net of Amounts
      Capitalized                       |  | $                    | 17,360   |   |                      | $ | 19,263   |                      | 
|Income Taxes                                                     |  |                      | 43,588   |   |                      |   | 46,072   |                      | 
|Non-Cash Activity:                                               |  |                      |          |   |                      |   |          |                      | 
|Assets Acquired under
      Capital Leases                       |  |                      | 30,034   |   |                      |   | 26,844   |                      | 

See Notes to Consolidated Financial
Statements

32

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RUDDICK CORPORATION AND
SUBSIDIARIESNOTES 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. (Harris Teeter) and American & Efird, Inc. (A&E), 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 ASC paragraph 810-10-05-8. The Company will
consolidate those VIEs in which the Company is the primary beneficiary of the
entity. The Company concluded that it did not have any VIEs that required
consolidation in fiscal years 2009, 2008 or 2007.

The Company has evaluated subsequent
events through November 20, 2009, the filing date of this Form 10-K, and has
determined that there were no subsequent events to recognize or disclose in
these financial statements.

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 2009,
2008 and 2007 include the 52 weeks ended September 27, 2009 (September 29, 2009
for Harris Teeter), September 28, 2008 (September 30, 2008 for Harris Teeter)
and September 30, 2007 (October 2, 2007 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.

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.

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.

33

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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 $88,373,000 and $46,224,000 of accumulated costs for
construction in progress at September 27, 2009 and September 28, 2008,
respectively.

Impairment of Long-lived Assets and
Closed Store ObligationsThe 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 continuing deterioration of the
economy during fiscal 2009, particularly with respect to A&Es customers in
the retail apparel and non-apparel markets, caused management to lower the
expected future cash flows of A&Es U.S. operating segment used in the
strategic plan that is completed annually in third fiscal quarter. As a result,
A&E recorded an impairment charge of $2,237,000 for the write-down of
long-lived assets of its U.S. operating segment, along with related deferred tax
benefits of $860,000 in the third quarter of fiscal 2009.

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.

34

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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. A&E 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 as discussed above. Investments accounted for
under the equity method totaled $110,515,000 and $91,194,000 at September 27,
2009 and September 28, 2008, respectively. Investments accounted for under the
cost method totaled $45,919,000 and $52,708,000 at September 27, 2009 and
September 28, 2008, respectively.

Goodwill and Other
IntangiblesGoodwill and certain other
intangibles with indefinite lives are tested for impairment at least annually,
or more frequently, if circumstances indicate a potential impairment. Intangible
assets with finite, measurable lives are amortized over their respective useful
lives until they reach their estimated residual values, and are reviewed for
impairment along with other long-lived assets as discussed above.

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. The Company
expenses construction period rent as incurred.

DerivativesThe Company utilizes derivative financial instruments to hedge
its exposure to changes in interest rates. All derivative financial instruments
are recorded on the balance sheet at their respective fair value. The Company
does not use financial instruments or derivatives for any trading or other
speculative purposes.

ASC paragraph 815-10-05-4 requires that
derivatives be carried at fair value on the balance sheet and provides for hedge
accounting when certain conditions are met. In accordance with this standard,
the Companys derivative financial instruments are recognized on the balance
sheet at fair value. Changes in the fair value of derivative instruments
designated as cash flow hedges, to the extent the hedges are highly effective,
are recorded in other comprehensive income, net of tax effects. Ineffective
portions of cash flow hedges, if any, are recognized in current period earnings.
Other comprehensive income or loss is reclassified into current period earnings
when the hedged transaction affects earnings.

The Company assesses, both at the
inception of the hedge and on an ongoing basis, whether derivatives used as
hedging instruments are highly effective in offsetting the changes in the cash
flow of the hedge items. If it is determined that a derivative is not highly
effective as a hedge or ceases to be highly effective, the Company will
discontinue hedge accounting prospectively.

35

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Harris Teeter enters into purchase
commitments for a portion of the fuel utilized in its distribution operations.
Harris Teeter expects to take delivery of and to utilize these resources in a
reasonable period of time and in the conduct of normal business. Accordingly,
these fuel purchase commitments qualify as normal purchases.

Counterparty Credit
RiskBy entering into derivative
instrument contracts, the Company exposes itself, from time to time, to
counterparty credit risk. Counterparty credit risk is the failure of the
counterparty to perform under the terms of the derivative contract. When the
fair value of a derivative contract is in an asset position, the counterparty
has a liability to the Company, which creates credit risk for the Company. The
Company attempts to minimize this risk by selecting counterparties with
investment grade credit ratings, limiting its exposure to any single
counterparty and regularly monitoring its market position with each
counterparty.

Credit-Risk Related Contingent
FeaturesThe Companys derivative
instruments do not contain any credit-risk related contingent
features.

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.

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 profit of unconsolidated subsidiaries within selling, general
and administrative expenses. The net profit from non-consolidated subsidiaries
included in selling, general and administrative expenses amounted to $4,435,000
in fiscal 2009, $3,445,000 in fiscal 2008 and $1,386,000 in fiscal 2007.

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.

36

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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 $1,972,000, $1,717,000 and $1,635,000 in fiscal 2009, 2008 and 2007,
respectively. Net advertising expenses of $24,312,000, $25,818,000, and
$24,486,000 were included in the Company's results of operations for fiscal
2009, 2008 and 2007, 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.

The Company adopted the provisions on
accounting for uncertainty in income taxes as prescribed by ASC Subtopic 740-10
on October 1, 2007. This standard 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. ASC Subtopic 740-10 also provides
guidance on derecognition, measurement, classification, interest and penalties,
accounting in interim periods, disclosure and transition. 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.

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.

Stock Options and Stock
AwardsThe
Company uses fair-value accounting for all share-based payments to employees for
new awards and previously granted awards that were not vested as of the first
quarter of fiscal 2006. 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 components of
accumulated other comprehensive loss, net of taxes at September 27, 2009,
September 28, 2008 and September 29, 2007 consisted of the following (in
thousands):

|                                                                         |  | 2009 |          |   | 2008 |   |         | 2007 | 
|------------------------------------------------------------------------ |  | ---- | -------- | - | ---- | - | ------- | ---- | 
|Accumulated unrecognized losses for minimum pension
      liabilities    |  | $    | (112,168 | ) |      | $ | (33,527 | )    | 
|Accumulated
      unrecognized losses for postemployment liabilities     |  |      | (230     | ) |      |   | 78      |      | 
|Accumulated unrecognized losses on cash flow hedges                      |  |      | (354     | ) |      |   | -       |      | 
|Accumulated net gains for foreign
      currency translation adjustments |  |      | 4,817    |   |      |   | 6,470   |      | 
|Total accumulated other
      comprehensive loss                         |  | $    | (107,935 | ) |      | $ | (26,979 | )    | 

Cash FlowsA portion of the sales and operating costs of A&E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.

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

37

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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 $37,131,000 and $32,651,000 less than the first-in,
first-out (FIFO) cost method at September 27, 2009 and September 28, 2008,
respectively. Foreign inventories and limited categories of domestic
inventories, totaling $69,500,000 for fiscal 2009 and $76,360,000 for fiscal
2008, are valued on the weighted average and on the FIFO cost
methods.

The following table summarizes the
components of inventories at September 27, 2009 and September 28, 2008 (in
thousands):

|                                 |  | 2009 |         | 2008
|-------------------------------- |  | ---- | ------- | ----
|Finished Goods                   |  | $    | 286,113 |     
|Raw Materials
      and Supplies |  |      | 19,504  |     
|Work in Process                  |  |      | 4,654   |     
|Total Inventories                |  | $    | 310,271 |     

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 $57,965,000 at September 27, 2009 and
$54,880,000 at September 28, 2008, and no policy loans were outstanding at
either date.

INTANGIBLE ASSETS

The carrying amount of intangible
assets at September 27, 2009 and September 28, 2008 was as follows (in
thousands):

|                                                               |  | 2009 |        | 2008 |  
|-------------------------------------------------------------- |  | ---- | ------ | ---- | -
|Acquired favorable operating leases                            |  | $    | 18,170 |      | $
|Customer
      lists                                           |  |      | 5,534  |      |  
|Land use rights  foreign operations                           |  |      | 4,451  |      |  
|Non-compete
      agreements                                   |  |      | 2,963  |      |  
|Trademarks, licenses and
      other                           |  |      | 2,554  |      |  
|Total amortizing
      intangibles                             |  |      | 33,672 |      |  
|Accumulated amortization                                       |  |      | (9,918 | )    |  
|Total intangible assets, net of
      accumulated amortization |  | $    | 23,754 |      | $

Acquired favorable operating leases are
recorded at Harris Teeter. All other intangible assets are recorded by A&E.
The Company has no non-amortizing intangible assets. Amortization expense for
intangible assets was $2,613,000, $2,658,000 and $2,619,000 in fiscal years
2009, 2008, and 2007, respectively. Amortizing intangible assets have remaining
useful lives from one year to 46 years. Projected amortization expense for
intangible assets existing as of September 27, 2009 is: $2,340,000, $1,898,000,
$1,697,000, $1,595,000 and $1,544,000 for fiscal years 2010, 2011, 2012, 2013
and 2014, respectively.

GOODWILL

Goodwill is recorded by A&E. On an
annual basis, A&E performs a fair value-based impairment test on the net
book value of goodwill and will perform the same procedures on an interim basis
if certain events or circumstances indicate that an impairment loss may have
occurred. The annual review was conducted in the first quarter of fiscal 2009,
resulting in no goodwill impairment charge being required. However, the
continuing deterioration of the economy during fiscal 2009, particularly with
respect to A&Es customers in the retail apparel and non-apparel markets,
caused management to lower the expected future cash flows of A&Es U.S.
operating segment used in the strategic plan that is completed annually in third
fiscal quarter. The reduced cash flow projections indicated the possibility of
impairment which required A&E to perform an interim impairment test of
goodwill. As a result of the interim goodwill impairment test, A&E recorded
a non-cash impairment charge related to all of the goodwill of its U.S.
operating segment of $7,654,000 in the third quarter of fiscal 2009. A&E
also recorded related deferred tax benefits of $2,932,000. There were no
goodwill impairment charges required for fiscal 2008 or fiscal 2007.

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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 26 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 9 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):

|                                |  | 2009 |        | 2008 |   | 2007  
|------------------------------- |  | ---- | ------ | ---- | - | ------
|Minimum, net of sublease income |  | $    | 95,010 |      | $ | 85,693
|Contingent                      |  |      | 1,688  |      |   | 1,932 
|Total                           |  | $    | 96,698 |      | $ | 87,625

Future minimum lease commitments
(excluding leases assigned - see below) and total minimum sublease rental income
to be received under non-cancelable subleases at September 27, 2009 were as
follows (in thousands):

|                                                                             |  | Operating |           |           |   |         | Capital | 
|---------------------------------------------------------------------------- |  | --------- | --------- | --------- | - | ------- | ------- | 
|Fiscal Year                                                                  |  | Leases    |           | Subleases |   |         | Leases  | 
|2010                                                                         |  | $         | 93,877    |           | $ | (2,209  | )       | 
|2011                                                                         |  |           | 95,760    |           |   | (1,982  | )       | 
|2012                                                                         |  |           | 95,527    |           |   | (1,791  | )       | 
|2013                                                                         |  |           | 97,082    |           |   | (1,383  | )       | 
|2014                                                                         |  |           | 96,816    |           |   | (1,124  | )       | 
|Later years                                                                  |  |           | 988,740   |           |   | (2,393  | )       | 
|Total minimum lease obligations
      (receivables)                          |  | $         | 1,467,802 |           | $ | (10,882 | )       | 
|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 several
sub-tenants with recourse. These leases expire over the next 12 years and the
future minimum lease payments totaling $51,167,000 over this period have been
assumed by these sub-tenants.

LONG-TERM DEBT

On December 20, 2007, the Company and
eleven banks entered into a 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 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. Outstanding
borrowings under the 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
credit agreement include a maximum leverage ratio and a minimum fixed charge
coverage ratio. As of September 27, 2009, 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 $22,147,000 as of September 27, 2009. The Company is charged a variable
commitment fee based on the amount available for borrowings, which amounted to
$274,953,000 as of September 27, 2009. The commitment fee rate applied to the
net unused balance was 0.120%, per annum for each of fiscal 2009, 2008 and
2007.

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 27, 2009, 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.

39

---

Long-term debt at September 27, 2009
and September 28, 2008 was as follows (in thousands):

|                                                                                         |  | 2009 |         | 2008
|---------------------------------------------------------------------------------------- |  | ---- | ------- | ----
|6.48% Senior Note due $7,143 annually through April, 2011                                |  | $    | 14,286  |     
|7.72% Senior
      Note due April, 2017                                                  |  |      | 50,000  |     
|7.55% Senior Note due July, 2017                                                         |  |      | 50,000  |     
|Bank Term Loan
      due December, 2012, variable interest (2.24% and 3.55% at           |  |      |         |     
|September 27, 2009 and
      September 28, 2008, respectively)                           |  |      | 100,000 |     
|Revolving Line of Credit, variable interest (1.00% and 4.46% at
      September 27, 2009 |  |      |         |     
|and September 28, 2008,
      respectively)                                              |  |      | 52,900  |     
|Capital lease
      obligations                                                          |  |      | 96,241  |     
|Other obligations                                                                        |  |      | 1,660   |     
|Total                                                                                    |  |      | 365,087 |     
|Less current portion                                                                     |  |      | 9,526   |     
|Total long-term debt                                                                     |  | $    | 355,561 |     

Long-term debt maturities (including
capital lease obligations) in each of the next five fiscal years are as follows:
2010 - $9,526,000; 2011 - $10,374,000; 2012 - $2,647,000; 2013 - $155,623,000;
2014 - $2,877,000.

Total interest expense, net of amounts
capitalized, on debt and capital lease obligations was $17,673,000, $20,085,000
and $17,654,000 for fiscal 2009, 2008 and 2007, respectively. Capitalized
interest totaled $2,881,000, $2,220,000 and $2,318,000 for fiscal 2009, 2008 and
2007, respectively.

INTEREST RATE SWAP AGREEMENTS

During fiscal 2009, the Company entered
into two separate three-year interest rate swap agreements with an aggregate
notional amount of $80 million. The swap agreements effectively fixed the
interest rate on $80 million of the Companys term loan, of which $40 million is
at 1.81% and $40 million is at 1.80%, excluding the applicable margin and
associated fees. Both interest rate swaps were designated as cash flow
hedges.

The following tables present the
required quantitative disclosures under ASC paragraph 820-10-50-1, on a combined
basis, for the Companys financial instruments, designated as cash flow hedges
(in thousands):

|                                     |  | Fair Value Measurements at September
      27, 2009
|------------------------------------ |  | ---------------------------------------------------
|                                     |  | Carrying Value                                     
|Interest rate swaps (included with   |  |                                                    
|Other Long-Term
      Liabilities on |  |                                                    
|the balance sheet)                   |  | $                                                  

The pre-tax unrealized loss associated
with the cash flow hedges for the fiscal years was as follows (in thousands):

|                                                         |  | 2009 |     | 2008 |   | 2007
|-------------------------------------------------------- |  | ---- | --- | ---- | - | ----
|Unrealized loss included with other comprehensive income |  | $    | 585 |      | $ | -   

40

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FINANCIAL INSTRUMENTS

Financial instruments which potentially
subject the Company to concentration of credit risk consist principally of cash
equivalents and notes 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 Senior Notes due at various dates through 2017 (which accounts for 99%
of the Companys fixed interest debt obligations) is computed based on borrowing
rates currently available to the Company for loans with similar terms and
maturities. The estimated fair value of the Companys Senior Notes and its
carrying amount outstanding as of September 27, 2009 and September 28, 2008 is
as follows (in thousands):

|                                     |  | 2009 |         | 2008
|------------------------------------ |  | ---- | ------- | ----
|Senior Notes  estimated fair value  |  | $    | 134,322 |     
|Senior Notes 
      carrying amount |  |      | 114,285 |     

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 27, 2009 or September 28, 2008.

One preferred share purchase right is
attached to each outstanding share of common stock, which rights expire on
November 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 during fiscal 2008. There
were no stock purchases in fiscal years 2009 or 2007.

STOCK OPTIONS AND STOCK AWARDS

At September 27, 2009, 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 27, 2009, the Company
may grant additional options or stock awards and performance shares in the
amount of 1,103,000 shares.

41

---

The Board of Directors began approving
equity awards in lieu of stock options in November 2004. These awards have
historically been apportioned 50% as a fixed award of restricted stock
(restricted from sale or transfer until vestingratably 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.

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 $5,710,000,
$5,339,000 and $3,529,000 for fiscal years 2009, 2008 and 2007, respectively.
The remaining unamortized expense as of September 27, 2009 is $7,351,000, with a
weighted average recognition period of 1.70 years.

Compensation expense related to stock
options totaled $12,000, $37,000 and $324,000 for fiscal years 2009, 2008 and
2007, 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 2009 or 2007.

A summary of the status of the
Company's restricted stock awards as of September 27, 2009, September 28, 2008
and September 30, 2007, 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 27, 2009 |   | September 28, 2008 |       | September 30, 2007
|--------------------------------- |  | ------------------ | - | ------------------ | ----- | ------------------
|                                  |  | Shares             |   |                    | WAGFV |                   
|Non-vested at beginning of period |  | 589                |   |                    | 30.34 |                   
|Granted                           |  | 268                |   |                    | 26.54 |                   
|Vested                            |  | (129               | ) |                    | 26.97 |                   
|Forfeited                         |  | (61                | ) |                    | 35.18 |                   
|Non-vested at end of
    period   |  | 667                |   |                    | 29.02 |                   

The total fair value of stock awards
that vested during fiscal years 2009, 2008 and 2007 was $3,514,000, $3,280,000
and $1,417,000, respectively.

A summary of the status of the
Company's stock option plans as of September 27, 2009, September 28, 2008, and
September 30, 2007, changes during the years ending on those dates and related
weighted average exercise price is presented below (shares in thousands):

|                                      |  | 2009   |   | 2008 |       | 2007 
|------------------------------------- |  | ------ | - | ---- | ----- | -----
|Stock Options                         |  | Shares |   |      | Price |      
|Outstanding at beginning of year      |  | 483    |   |      | $     | 16.40
|Granted                               |  | -      |   |      |       | -    
|Exercised                             |  | (110   | ) |      |       | 16.07
|Forfeited                             |  | -      |   |      |       | -    
|Expired                               |  | -      |   |      |       | -    
|Outstanding at end of year            |  | 373    |   |      | $     | 16.49
|Options exercisable at year
      end |  | 373    |   |      | $     | 16.49

As of September 27, 2009, all
outstanding stock options were exercisable and the price per share ranged from
$11.50 to $35.24. 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 outstanding at
September 27, 2009 and September 28, 2008 was as follows (in thousands):

|                                                                   |  | 2009 |       | 2008
|------------------------------------------------------------------ |  | ---- | ----- | ----
|Intrinsic value of outstanding options at end of fiscal
    year   |  | $    | 3,859 |     
|Intrinsic value
      of options exercisable at end of fiscal year |  |      | 3,859 |     

42

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The aggregate intrinsic value of stock
options exercised during fiscal 2009, 2008 and 2007 was $1,153,000, $4,847,000
and $6,178,000, respectively.

INCOME TAXES

The Company adopted the provisions on
accounting for uncertainty in income taxes as prescribed by ASC Subtopic 740-10
at the beginning of fiscal 2008. At the date of adoption, 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 liabilities of approximately $1.2 million. Due
to the timing nature of the tax positions and the amount of related interest
previously accrued, there was no cumulative effect of adopting the new
provisions required to be recorded against retained earnings or material effect
on the Companys financial position, results of operations or cash flows.

The following table provides a
reconciliation of the unrecognized tax liability for fiscal years 2009 and 2008
(in thousands):

|                                                                         |  | 2009 |        | 2008 |  
|------------------------------------------------------------------------ |  | ---- | ------ | ---- | -
|Gross taxes at beginning of year                                         |  | $    | 5,036  |      | $
|Additions based
      on tax positions related to the current year       |  |      | -      |      |  
|Additions for tax positions of prior years                               |  |      | 510    |      |  
|Reductions for
      tax positions of prior years                        |  |      | (1,590 | )    |  
|Reductions for settlements                                               |  |      | -      |      |  
|Reductions for deposits made                                             |  |      | -      |      |  
|Gross taxes at end of year                                               |  |      | 3,956  |      |  
|Accumulated
      interest                                               |  |      | 1,239  |      |  
|Federal tax benefit of state
      income tax deduction                  |  |      | (192   | )    |  
|Balance included in the Consolidated
      Balance Sheets at end of year |  | $    | 5,003  |      | $

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 reached a
settlement with the Appeals Division of the IRS and is in the process of
completing the required documents and amending tax returns where required. The
Company and some of its subsidiaries file separate tax returns with the state of
North Carolina. The North Carolina statute of limitations for a few entities
remains open for the fiscal years 2004 to 2006 due to an on-going audit by the
North Carolina Department of Revenue (NCDR). The Company is currently in
settlement negotiations with the NCDR and expects to conclude the matter within
the next twelve months. Foreign and U.S. state jurisdictions have statutes of
limitations generally ranging from 3 to 5 years.

Liabilities related to tax matters
currently in the process of being settled are included with Other Current
Liabilities in the Companys Consolidated Balance Sheets. 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):

|                               |  | 2009 |        | 2008 |   | 2007   | 
|------------------------------ |  | ---- | ------ | ---- | - | ------ | 
|CURRENT                        |  |      |        |      |   |        | 
|Federal                        |  | $    | 34,981 |      | $ | 34,313 | 
|State and other                |  |      | 6,851  |      |   | 9,381  | 
|                               |  |      | 41,832 |      |   | 43,694 | 
|DEFERRED                       |  |      |        |      |   |        | 
|Federal                        |  |      | 8,092  |      |   | 12,398 | 
|State and other                |  |      | 2,301  |      |   | 1,267  | 
|                               |  |      | 10,393 |      |   | 13,665 | 
|Provision for income
    taxes |  | $    | 52,225 |      | $ | 57,359 | 

43

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Income (loss) from foreign operations
before income taxes in fiscal years 2009, 2008 and 2007 was $(1,949,000),
$1,420,000 and $2,868,000, respectively. Income taxes provided on foreign
operations in fiscal years 2009, 2008 and 2007 was $96,000, $931,000 and
$425,000, respectively, including the minority interest in such
taxes.

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

|                                                                      | 2009 |        |   | 2008 |   |        | 2007 | 
|--------------------------------------------------------------------- | ---- | ------ | - | ---- | - | ------ | ---- | 
|Income tax on pre-tax income at the statutory                         |      |        |   |      |   |        |      | 
|federal rate of 35%                                                   | $    | 48,366 |   |      | $ | 53,939 |      | 
|Increase
      (decrease) attributable to:                            |      |        |   |      |   |        |      | 
|State and other
      income taxes, net of federal income tax benefit |      | 6,585  |   |      |   | 6,589  |      | 
|Tax credits                                                           |      | (2,640 | ) |      |   | (2,820 | )    | 
|Employee Stock
      Ownership Plan (ESOP)                            |      | (806   | ) |      |   | (920   | )    | 
|COLI                                                                  |      | (823   | ) |      |   | (459   | )    | 
|Foreign
      Subsidiaries Loss (indefinitely invested)               |      | 961    |   |      |   | 260    |      | 
|Other items,
    net                                                  |      | 582    |   |      |   | 770    |      | 
|Income tax expense                                                    | $    | 52,225 |   |      | $ | 57,359 |      | 

The tax effects of temporary
differences giving rise to the Company's consolidated deferred tax assets and
liabilities at September 27, 2009 and September 28, 2008 are as follows (in
thousands):

|                                                     | 2009 |         |   | 2008 |  
|---------------------------------------------------- | ---- | ------- | - | ---- | -
|Deferred Tax Assets:                                 |      |         |   |      |  
|Employee
    benefits                                | $    | 76,960  |   |      | $
|Rent
      obligations                               |      | 23,132  |   |      |  
|Reserves not currently deductible                    |      | 16,517  |   |      |  
|Vendor
      allowances                              |      | 6,766   |   |      |  
|Other                                                |      | 6,103   |   |      |  
|Total deferred tax
    assets                        | $    | 129,478 |   |      | $
|                                                    
|Deferred Tax Liabilities:                            |      |         |   |      |  
|Property, plant and
      equipment                  | $    | (75,043 | ) |      | $
|Inventories                                          |      | (13,723 | ) |      |  
|Undistributed earnings on
      foreign subsidiaries |      | (3,696  | ) |      |  
|Other                                                |      | (877    | ) |      |  
|Total deferred tax
    liabilities                   | $    | (93,339 | ) |      | $

As of September 27, 2009, the Company
had approximately $6,108,000 of state cumulative net operating loss
carryforwards, $9,169,000 of foreign cumulative net operating loss carryforwards
and $309,000 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 2011 and the foreign tax credits begin to expire in fiscal
2010. A valuation allowance of $2,217,000 and $2,553,000 is included with
deferred income taxes as of September 27, 2009 and September 28, 2008,
respectively. The valuation allowance decreased by $336,000 from fiscal 2008 to
fiscal 2009, increased by $1,117,000 from fiscal 2007 to fiscal 2008 and
increased $697,000 from fiscal 2006 to fiscal 2007. 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 $20.9 million at September 27, 2009.
Of those earnings, approximately $9.5 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 $3.3 million.

44

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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  A&E. Harris Teeter
operates a regional chain of supermarkets in the southeastern United States.
A&E 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
2009, 2008 and 2007 is as follows (in millions):

|                                    | Industrial |       |   | Retail  |   |               |  |   |             
|----------------------------------- | ---------- | ----- | - | ------- | - | ------------- |  | - | ------------
|                                    | Thread     |       |   | Grocery |   | Corporate (1) |  |   | Consolidated
|2009                                |            |       |   |         |   |               |  |   |             
|Net Sales                           | $          | 250.8 |   |         | $ | 3,827.0       |  |   |             
|Gross
      Profit                  |            | 47.9  |   |         |   | 1,169.5       |  |   |             
|Operating Profit
      (Loss)       |            | (14.6 | ) |         |   | 175.6         |  | $ | (6.1        
|Assets
      Employed at Year End   |            | 261.4 |   |         |   | 1,463.5       |  |   | 119.4       
|Depreciation and
      Amortization |            | 15.6  |   |         |   | 109.8         |  |   | 0.1         
|Capital
      Expenditures          |            | 2.5   |   |         |   | 206.7         |  |   | -           
|                                   
|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         

|(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 investments in
      certain property and equipment, cash equivalents and life insurance
      contracts to support corporate-wide operations and benefit
      programs.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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):

|                                                     | 2009 |           | 2008 |   | 2007     
|---------------------------------------------------- | ---- | --------- | ---- | - | ---------
|Net
      Revenues  Domestic United States          | $    | 3,940,608 |      | $ | 3,810,635
|Net Revenues  Foreign                               |      | 137,214   |      |   | 181,762  
|                                                     | $    | 4,077,822 |      | $ | 3,992,397
|                                                    
|Net
      Long-Lived Assets  Domestic United States | $    | 1,088,602 |      | $ | 978,363  
|Net Long-Lived Assets  Foreign                      |      | 36,238    |      |   | 40,625   
|                                                     | $    | 1,124,840 |      | $ | 1,018,988

45

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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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 27, 2009 and September 28, 2008 for the
Pension Plan and SERP (in thousands):

|                                                      | Pension Plan |          |   | SERP |  
|----------------------------------------------------- | ------------ | -------- | - | ---- | -
|                                                      | 2009         |          |   | 2008 |  
|Change in benefit obligation:                         |              |          |   |      |  
|Benefit obligation at the
      beginning of year     | $            | 228,719  |   |      | $
|Service cost                                          |              | 310      |   |      |  
|Interest cost                                         |              | 18,181   |   |      |  
|Actuarial loss
(Gain)                                 |              | 91,251   |   |      |  
|Special Termination
      Benefits                    |              | 192      |   |      |  
|Benefits paid                                         |              | (11,217  | ) |      |  
|Pension benefit obligation at end of
      year       |              | 327,436  |   |      |  
|Change in plan assets:                                |              |          |   |      |  
|Fair value of assets at the
      beginning of year   |              | 211,863  |   |      |  
|Actual return on plan
      assets                    |              | (7,463   | ) |      |  
|Employer
contribution                                 |              | 7,500    |   |      |  
|Benefits paid                                         |              | (11,217  | ) |      |  
|Non-investment expenses                               |              | (1,378   | ) |      |  
|Fair value of assets at end of
      year             |              | 199,305  |   |      |  
|Funded
      status                                   |              | (128,131 | ) |      |  
|Unrecognized net actuarial loss                       |              | 169,477  |   |      |  
|Unrecognized prior service
    cost                   |              | 353      |   |      |  
|Prepaid (accrued) benefit
      cost                  | $            | 41,699   |   |      | $
|                                                     
|Amounts recognized in the Consolidated Balance Sheets |              |          |   |      |  
|consist of:                                           |              |          |   |      |  
|(Prepaid) Accrued benefit
      liability             | $            | (41,699  | ) |      | $
|Accumulated other comprehensive income                |              | 169,830  |   |      |  
|Net amount recognized                                 | $            | 128,131  |   |      | $

46

---

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
|------------------------------------ | ------------ | ------- | ----
|                                     | 2009         |         | 2008
|Projected benefit obligation         | $            | 327,436 |     
|Accumulated
      benefit obligation |              | 288,937 |     
|Fair value of plan assets            |              | 199,305 |     

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 2009, 2008 and 2007
included the following components (in thousands):

|Pension Plan                             | 2009 |         |   | 2008 |   |         | 2007 | 
|---------------------------------------- | ---- | ------- | - | ---- | - | ------- | ---- | 
|Service cost                             | $    | 310     |   |      | $ | 1,588   |      | 
|Interest
      cost                      |      | 18,181  |   |      |   | 17,010  |      | 
|Expected return on plan assets           |      | (18,555 | ) |      |   | (18,598 | )    | 
|Amortization of
      prior service cost |      | 155     |   |      |   | 220     |      | 
|Recognized net actuarial
      loss      |      | -       |   |      |   | 4,424   |      | 
|Net periodic pension expense             | $    | 91      |   |      | $ | 4,644   |      | 
|                                        
|SERP                                     |      |         |   |      |   |         |      | 
|Service
      cost                       | $    | 664     |   |      | $ | 822     |      | 
|Interest cost                            |      | 2,119   |   |      |   | 1,889   |      | 
|Amortization of
      prior service cost |      | 247     |   |      |   | 248     |      | 
|Recognized net actuarial
      loss      |      | -       |   |      |   | 461     |      | 
|Net periodic pension expense             | $    | 3,030   |   |      | $ | 3,420   |      | 

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:

|                                                                     | 2009              |   |  | 2008              |   |  | 2007              |  
|-------------------------------------------------------------------- | ----------------- | - |  | ----------------- | - |  | ----------------- | -
|Weighted Average Discount Rate  Pension Plan                        | 5.75%             |   |  | 7.90%             |   |  | 6.25%             |  
|Weighted Average
      Discount Rate  SERP                          | 5.60%             |   |  | 7.90%             |   |  | 6.25%             |  
|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%             |   |  | 8.00%             |   |  | 8.25%             |  



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
2009 of 5.75% for the Pension Plan represents a decrease of 215 basis points
over the prior year and significantly increased the recorded pension
liabilities, under-funded status and unrecognized net actuarial loss as of the
end of fiscal 2009. These increases will require the Company to recognize
approximately $9.0 million of net actuarial losses as part of the Pension Plans
net periodic pension expense in fiscal 2010.

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 rate of return is based.

47

---

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                                 | 2009  |  | 2008 
|------------------------------------------- | ----- |  | -----
|Fixed income                                | 40.2% |  | 30.3%
|Domestic
      equities                     | 31.5  |  | 37.1 
|International equities                      | 8.1   |  | 7.5  
|Tactical asset
      allocation fund        | -     |  | 11.1 
|Alternative Investments  Real Estate       | 3.1   |  | 4.5  
|Alternative
      Investments  Hedge Funds | 3.4   |  | 4.7  
|Guaranteed investment contracts             | 1.0   |  | 0.9  
|Cash equivalents                            | 12.7  |  | 3.9  
|                                            | 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%            |  | 40.0%  |  | 50.0%           
|Domestic
      equities:                           | 25.0             |  | 40.0   |  | 55.0            
|Large cap value                                    | 3.0              |  | 9.0    |  | 20.0            
|Large cap growth                                   | 3.0              |  | 9.0    |  | 20.0            
|Large cap core                                     | 3.0              |  | 10.0   |  | 20.0            
|Small cap
      value                              | 0.0              |  | 6.0    |  | 12.0            
|Small cap growth                                   | 0.0              |  | 6.0    |  | 12.0            
|International
      equities:                      | 5.0              |  | 10.0   |  | 15.0            
|International growth                               | 0.0              |  | 5.0    |  | 10.0            
|International value                                | 0.0              |  | 5.0    |  | 10.0            
|Alternative Investments:                           | 0.0              |  | 10.0   |  | 20.0            
|Real Estate                                        | 0.0              |  | 5.0    |  | 10.0            
|Hedge Funds                                        | 0.0              |  | 5.0    |  | 10.0            

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.                                                                                                                                                   

The Company plans to contribute $7.5
million to the Pension Plan and approximately $1.3 million to the SERP during
fiscal 2010. Due to the current economic environment that has resulted in a
significant decrease in the market value of Pension Plan assets during fiscal
2009, the Company may increase the planned contribution in fiscal 2010. The
Companys contribution to the SERP represents the benefit payments made during
the fiscal year.

48

---

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
|--------------------- | ------------ | ------ | ----
|2010                  | $            | 11,809 |     
|2011                  |              | 12,720 |     
|2012                  |              | 13,703 |     
|2013                  |              | 14,733 |     
|2014                  |              | 15,794 |     
|Years
      2015-2019 |              | 95,876 |     

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.

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):

2009
    
    2008
    
    2007Savings
    Plan
    
    $ 21,608
    
    $ 19,189
    
    $ 18,350Deferred Compensation and
      other
    
    1,734
    
    394
    
    1,679


COMPUTATION OF EARNINGS PER SHARE
(EPS)

The following table details the
computation of EPS for fiscal years 2009, 2008 and 2007 (in thousands except per
share data):

|                                                             | 2009 |        | 2008 |   | 2007  
|------------------------------------------------------------ | ---- | ------ | ---- | - | ------
|Basic EPS:                                                   |      |        |      |   |       
|Net income                                                   | $    | 85,964 |      | $ | 96,752
|Weighted average common shares outstanding                   |      | 47,964 |      |   | 47,824
|Basic EPS                                                    | $    | 1.79   |      | $ | 2.02  
|                                                            
|Diluted EPS:                                                 |      |        |      |   |       
|Net income                                                   | $    | 85,964 |      | $ | 96,752
|Weighted average common shares
      outstanding             |      | 47,964 |      |   | 47,824
|Net potential common share
      equivalents - stock options |      | 119    |      |   | 260   
|Net potential common share
      equivalents - stock awards  |      | 254    |      |   | 211   
|Weighted average common shares
      outstanding             |      | 48,337 |      |   | 48,295
|Diluted EPS                                                  | $    | 1.78   |      | $ | 2.00  
|                                                            
|Excluded from the calculation of common share
equivalents:   |      |        |      |   |       
|Anti-dilutive common share
      equivalents  stock options |      | 10     |      |   | 6     
|Anti-dilutive common share
      equivalents  stock awards  |      | -      |      |   | -     

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
137,000, 139,000 and 114,000 performance shares for the fiscal years 2009, 2008
and 2007, respectively, were excluded from the computation of diluted
shares.

49

---

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.

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  
|2009 Operating Results (1) |         |       |         |   |         |  |         |         |       
|Net
    Sales              | $       | 995.0 |         | $ | 1,010.0 |  | $       | 1,024.9 |       
|Gross Profit               |         | 300.9 |         |   | 304.9   |  |         | 305.2   |       
|Net
    Income             |         | 22.9  |         |   | 22.9    |  |         | 16.5    |       
|Net Income Per Share:      |         |       |         |   |         |  |         |         |       
|Basic                      |         | 0.48  |         |   | 0.48    |  |         | 0.34    |       
|Diluted                    |         | 0.47  |         |   | 0.48    |  |         | 0.34    |       
|Dividend Per
      Share   |         | 0.12  |         |   | 0.12    |  |         | 0.12    |       
|Market Price Per Share:    |         |       |         |   |         |  |         |         |       
|High                       |         | 33.74 |         |   | 29.20   |  |         | 26.87   |       
|Low                        |         | 23.81 |         |   | 18.86   |  |         | 22.00   |       
|                          
|2008 Operating Results     |         |       |         |   |         |  |         |         |       
|Net
    Sales              | $       | 976.7 |         | $ | 975.6   |  | $       | 1,013.6 |       
|Gross Profit               |         | 291.0 |         |   | 301.4   |  |         | 307.4   |       
|Net
    Income             |         | 23.4  |         |   | 24.1    |  |         | 24.5    |       
|Net Income Per Share:      |         |       |         |   |         |  |         |         |       
|Basic                      |         | 0.49  |         |   | 0.50    |  |         | 0.51    |       
|Diluted                    |         | 0.48  |         |   | 0.50    |  |         | 0.51    |       
|Dividend Per
      Share   |         | 0.12  |         |   | 0.12    |  |         | 0.12    |       
|Market Price Per Share:    |         |       |         |   |         |  |         |         |       
|High                       |         | 38.03 |         |   | 36.99   |  |         | 39.79   |       
|Low                        |         | 31.15 |         |   | 31.71   |  |         | 33.89   |       

|(1) |  | Operating results include
      non-cash charges of $9,891,000 ($6,099,000 after tax benefits, or $0.13
      per diluted share) related to goodwill and long-lived asset impairments
      recognized by A&E in the third quarter of fiscal
  2009.
|--- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

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

None

50

---

Item 9A. Controls and Procedures

(a) Evaluation of disclosure controls and procedures. As of September 27, 2009, 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 and 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.

(b) Managements annual report on internal control over financial
reporting. Management of the Company is
responsible 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 27,
2009, based on the framework set forth by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO) in Internal Control-Integrated Framework.
Based on that assessment, management concluded that, as of September 27, 2009,
the Companys internal control over financial reporting is effective based on
the criteria established in Internal
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 27, 2009 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 27, 2009.

(d) Changes in internal control over financial reporting. During the Companys fourth fiscal quarter of 2009, 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.

51

---

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 2010 Annual Meeting of Shareholders (the "2010 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 2010 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 2010 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 Persons and Corporate Governance Matters
in the 2010 Proxy Statement.

Item 14. Principal Accountant Fees and Services

The information required by this item
is incorporated herein by reference to the section entitled Ratification of the
Independent Registered Public Accounting Firm in the 2010 Proxy
Statement.

52

---

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 27, 2009 and September 28,
      2008                                                                                                              
|    |  |                                                           |  |                                                                                                                                                                                           
|    |  |                                                           |  | Statements of Consolidated Income for the fiscal years ended
      September 27, 2009, September 28, 2008, and September 30, 2007                                                         
|    |  |                                                           |  |                                                                                                                                                                                           
|    |  |                                                           |  | Statements of Consolidated Shareholders Equity and Comprehensive
      Income for the fiscal years ended September 27, 2009, September 28, 2008,
      and September 30, 2007            
|    |  |                                                           |  |                                                                                                                                                                                           
|    |  |                                                           |  | Statements of Consolidated Cash Flows for the fiscal years ended
      September 27, 2009, September 28, 2008, and September 30, 2007                                                     
|    |  |                                                           |  |                                                                                                                                                                                           
|    |  |                                                           |  | 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).

53

---

|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*   |  | Ruddick Supplemental Executive Retirement
      Plan, as amended and restated, incorporated herein by reference to Exhibit
      10.1 of the registrants Current Report on Form 8-K dated December 9, 2008
      (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,
      as amended and restated, incorporated herein by reference to Exhibit 10.3
      of the registrants Current Report on Form 8-K dated December 9, 2008
      (Commission File No. 1-6905).**                                                                                                                                                                                                                                                                                                                                                                                                                                

54

---

|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 
      Amendment and Restatement Effective July 1, 2009, incorporated herein by
      reference to Exhibit 10.2 of the registrants Quarterly Report on Form
      10-Q for the quarterly period ended June 28, 2009 (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 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).**                                            
|        |  |                                                                                                                                                                                                                                                                                                                                                 
|10.23*  |  | 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).**                                          
|        |  |                                                                                                                                                                                                                                                                                                                                                 
|10.24*  |  | 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).**                                                                                                                              
|        |  |                                                                                                                                                                                                                                                                                                                                                 
|10.25*  |  | 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).**                                                                                 

55

---

|Exhibit |  |                                                                                                                                                                                                                                                                                                             
|------- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Number  |  | Description of Exhibit                                                                                                                                                                                                                                                                                      
|10.26*  |  | 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).**              
|       
|10.27*  |  | 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).**              
|       
|10.28*  |  | 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).**
|       
|10.29*  |  | 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).**               
|       
|10.30*  |  | 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).**                                  
|       
|10.31*  |  | First
      Amendment to the Ruddick Corporation Director Deferral 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 29, 2009 (Commission
      File No. 1-6905).**                                 
|       
|10.32*  |  | Second
      Amendment to the Ruddick Corporation Director Deferral 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 28, 2009 (Commission File
      No. 1-6905).**                                 
|       
|10.33+  |  | 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.                                                                          

56

---

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
      20, 2009 | By: |  | /s/ THOMAS W. DICKSON               
|                               |     |  | Thomas
      W. Dickson,            
|                               |     |  | Chairman of the Board, President and
|                               |     |  | Chief
      Executive Officer       

Pursuant to the requirements of the Securities Exchange Act of 1934, this
report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:

|Name                            |  | Title                                                 |  | Date                   
|------------------------------- |  | ----------------------------------------------------- |  | -----------------------
|/s/THOMAS W.
      DICKSON      |  | Chairman of the
      Board , President and           |  | November 20,
      2009
|Thomas W.
      Dickson         |  | Chief Executive
      Officer and Director            |  |                        
|                                |  | (Principal
      Executive Officer)                   |  |                        
|                               
|/s/JOHN B.
      WOODLIEF       |  | Vice President 
      Finance and Chief              |  | November 20,
      2009
|John B.
      Woodlief          |  | Financial
      Officer (Principal Financial Officer) |  |                        
|                               
|/s/RONALD H.
      VOLGER       |  | Vice President
      and Treasurer                    |  | November 20,
      2009
|Ronald H.
      Volger          |  | (Principal
      Accounting Officer)                  |  |                        
|                               
|/s/JOHN R.
      BELK           |  | Director                                              |  | November 20,
      2009
|John R.
      Belk              |  |                                                       |  |                        
|                               
|/s/JOHN P.
      DERHAM CATO    |  | Director                                              |  | November 20,
      2009
|John P. Derham
      Cato       |  |                                                       |  |                        
|                               
|/s/ALAN T.
      DICKSON        |  | Director                                              |  | November 20,
      2009
|Alan T.
      Dickson           |  |                                                       |  |                        
|                               
|/s/JAMES E.
      S. HYNES      |  | Director                                              |  | November 20,
      2009
|James E. S.
      Hynes         |  |                                                       |  |                        
|                               
|/s/ANNA S.
      NELSON         |  | Director                                              |  | November 20,
      2009
|Anna S.
      Nelson            |  |                                                       |  |                        
|                               
|/s/BAILEY W.
      PATRICK      |  | Director                                              |  | November 20,
      2009
|Bailey W.
      Patrick         |  |                                                       |  |                        
|                               
|                                |  | Director                                              |  | November __,
      2009
|Robert H.
      Spilman, Jr.    |  |                                                       |  |                        
|                               
|/s/HAROLD C.
      STOWE        |  | Director                                              |  | November 20,
      2009
|Harold C.
      Stowe           |  |                                                       |  |                        
|                               
|/s/ISAIAH
      TIDWELL         |  | Director                                              |  | November 20,
      2009
|Isaiah
      Tidwell            |  |                                                       |  |                        
|                               
|/s/WILLIAM
      C. WARDEN, JR. |  | Director                                              |  | November 20,
      2009
|William C.
      Warden, Jr.    |  |                                                       |  |                        

57

---

SCHEDULE I

RUDDICK CORPORATION AND SUBSIDIARIESVALUATION AND QUALIFYING ACCOUNTS AND RESERVESFor
the Fiscal Years EndedSeptember 27, 2009,
September 28, 2008and September 30, 2007(in thousands)

|COLUMN A                              | COLUMN
      B     |       | COLUMN
      C  |           | COLUMN
      D |  |   |       | COLUMN
      E
|------------------------------------- | ------------------ | ----- | --------------- | --------- | -------------- |  | - | ----- | --------------
|                                      |                    |       |                 | ADDITIONS |                |  |   |       |               
|                                      | BALANCE            |       | CHARGED TO      |           |                |  |   |       |               
|                                      | AT
      BEGINNING |       | COSTS
      AND |           |                |  |   |       |               
|DESCRIPTION                           | OF FISCAL YEAR     |       | EXPENSES        |           | DEDUCTIONS     |  |   |       | OF PERIOD     
|Fiscal Year Ended September 30, 2007: |                    |       |                 |           |                |  |   |       |               
|Reserves deducted from
      assets   |                    |       |                 |           |                |  |   |       |               
|to which they apply -                 |                    |       |                 |           |                |  |   |       |               
|Allowance For Doubtful Accounts       | $                  | 3,719 |                 | $         | 971            |  | $ | 728   |               
|                                     
|Fiscal Year Ended September 28, 2008: |                    |       |                 |           |                |  |   |       |               
|Reserves
      deducted from assets   |                    |       |                 |           |                |  |   |       |               
|to which they apply -                 |                    |       |                 |           |                |  |   |       |               
|Allowance For Doubtful Accounts       | $                  | 3,962 |                 | $         | 32             |  | $ | 1,175 |               
|                                     
|Fiscal Year Ended September 27, 2009: |                    |       |                 |           |                |  |   |       |               
|Reserves
      deducted from assets   |                    |       |                 |           |                |  |   |       |               
|to which they apply -                 |                    |       |                 |           |                |  |   |       |               
|Allowance For Doubtful Accounts       | $                  | 2,819 |                 | $         | 1,360          |  | $ | 489   |               

*Represents accounts receivable balances written off as uncollectible,
less recoveries.

S-1

---