##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
 (Mark One)
 þ
    
    QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the quarterly period ended March 27, 2011
 or
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition from ________ to ________
 Commission file number 001-13222
 STATER BROS. HOLDINGS INC.
  Delaware
    
    33-0350671(State or other jurisdiction of incorporation or 
organization)
    
    (I.R.S. Employer Identification No.)
 301 S. Tippecanoe Avenue 
San Bernardino, California
    
    92408(Address of principal executive offices)
    
    (Zip Code)
 (909) 733-5000
 
 þ o
 þ o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)Smaller reporting company o o þ




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##### 



STATER BROS. HOLDINGS INC.
March 27, 2011
 INDEX
 PagePART I FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of September 26, 2010 and
March 27, 2011 (Unaudited)
    
    
    3Consolidated Statements of Income (Unaudited) for the 13 weeks ended
March 28, 2010 and March 27, 2011
    
    
    5Consolidated Statements of Income (Unaudited) for the 26 weeks ended
March 28, 2010 and March 27, 2011
    
    
    6Consolidated Statements of Cash Flows (Unaudited) for the 26 weeks
ended March 28, 2010 and March 27, 2011
    
    
    7Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    14Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    22Item 4.
    
    Controls and Procedures
    
    
    22PART II OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    22Item 1A.
    
    Risk Factors
    
    
    23Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    24Item 3.
    
    Defaults Upon Senior Securities
    
    
    24Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    24Item 5.
    
    Other Information
    
    
    24Item 6.
    
    Exhibits
    
    
    24SIGNATURES
    
    
    
    
    25EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I  FINANCIAL INFORMATION
 
 Item 1. FINANCIAL STATEMENTS
 
 STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
 ASSETS
 Sept. 26,
    
    
    Mar. 27,2010
    
    
    2011(Unaudited)Current assetsCash and cash equivalents
    
    $
    325,005
    
    
    $
    172,888Restricted cash
    
    
    3,121
    
    
    
    3,121Receivables, net of allowance of $1,219 and $1,237
    
    
    35,614
    
    
    
    40,150Income tax receivables
    
    
    
    
    
    
    2,399Inventories
    
    
    203,702
    
    
    
    235,608Prepaid expenses
    
    
    12,678
    
    
    
    12,057Deferred income taxes
    
    
    27,428
    
    
    
    25,172Current portion of long-term note receivable
    
    
    
    
    
    
    600Current portion of long-term receivable
    
    
    16,001
    
    
    
    15,501Total current assets
    
    
    623,549
    
    
    
    507,496Property and equipmentLand
    
    
    97,770
    
    
    
    101,102Buildings and improvements
    
    
    559,500
    
    
    
    563,125Store fixtures and equipment
    
    
    438,306
    
    
    
    442,819Property subject to capital leases
    
    
    9,983
    
    
    
    9,9831,105,559
    
    
    
    1,117,029Less accumulated depreciation and amortization
    
    
    461,495
    
    
    
    488,856644,064
    
    
    
    628,173Deferred income taxes, long-term
    
    
    38,272
    
    
    
    38,304Deferred debt issuance cost, net
    
    
    8,074
    
    
    
    11,729Long-term note receivable, less current portion
    
    
    
    
    
    
    2,418Other assets
    
    
    8,828
    
    
    
    8,66855,174
    
    
    
    61,119Total assets
    
    $
    1,322,787
    
    
    $
    1,196,788
  3




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (contd.)
 LIABILITIES AND STOCKHOLDERS EQUITY
 Sept. 26,
    
    
    Mar. 27,2010
    
    
    2011(Unaudited)Current liabilitiesAccounts payable
    
    $
    135,642
    
    
    $
    139,659Accrued payroll and related expenses
    
    
    85,404
    
    
    
    88,902Accrued interest
    
    
    21,845
    
    
    
    17,657Other accrued liabilities
    
    
    40,196
    
    
    
    34,815Accrued income taxes
    
    
    527
    
    
    
    Current portion of capital lease obligations
    
    
    1,562
    
    
    
    1,569Current portion of long-term debt
    
    
    132,250
    
    
    
    7,250Total current liabilities
    
    
    417,426
    
    
    
    289,852Capital lease obligations, less current portion
    
    
    2,206
    
    
    
    1,449Long-term debt, less current portion
    
    
    677,750
    
    
    
    677,750Long-term portion of self-insurance and other reserves
    
    
    40,565
    
    
    
    45,571Long-term deferred benefits
    
    
    75,634
    
    
    
    76,461Other long-term liabilities
    
    
    36,073
    
    
    
    37,074Total liabilities
    
    
    1,249,654
    
    
    
    1,128,157Commitments and contingenciesStockholders equityCommon Stock, $.01 par value:
Authorized shares  100,000Issued and outstanding shares  0
    
    
    
    
    
    
    Class A Common Stock, $.01 par value:
Authorized shares  100,000
Issued and outstanding shares  34,552 in 2010, 33,837 in 2011
    
    
    
    
    
    
    Additional paid-in capital
    
    
    8,786
    
    
    
    8,605Accumulated other comprehensive loss
    
    
    (18,926
    )
    
    
    (18,926
    )Retained earnings
    
    
    83,273
    
    
    
    78,952Total stockholders equity
    
    
    73,133
    
    
    
    68,631Total liabilities and stockholders equity
    
    $
    1,322,787
    
    
    $
    1,196,788
  4




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME
  13 Weeks EndedMar. 28,
    
    
    Mar. 27,2010
    
    
    2011Sales
    
    $
    885,537
    
    
    $
    913,397Cost of goods sold
    
    
    649,092
    
    
    
    668,260Gross profit
    
    
    236,445
    
    
    
    245,137Operating expensesSelling, general and administrative expenses
    
    
    198,018
    
    
    
    205,959Gain on sale of dairy assets
    
    
    (1,446
    )
    
    
    Depreciation and amortization
    
    
    12,788
    
    
    
    12,071Total operating expenses
    
    
    209,360
    
    
    
    218,030Operating profit
    
    
    27,085
    
    
    
    27,107Interest income
    
    
    26
    
    
    
    216Interest expense
    
    
    (17,374
    )
    
    
    (12,637
    )Other income, net
    
    
    16
    
    
    
    2Income before income taxes
    
    
    9,753
    
    
    
    14,688Income taxes
    
    
    3,786
    
    
    
    5,914Net income
    
    $
    5,967
    
    
    $
    8,774Earnings per average common share outstanding
    
    $
    172.60
    
    
    $
    256.50Average common shares outstanding
    
    
    34,572
    
    
    
    34,206Shares outstanding at end of period
    
    
    34,552
    
    
    
    33,837
  5




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME
 26 Weeks EndedMar. 28,
    
    
    Mar. 27,2010
    
    
    2011Sales
    
    $
    1,809,401
    
    
    $
    1,812,434Cost of goods sold
    
    
    1,334,806
    
    
    
    1,328,524Gross profit
    
    
    474,595
    
    
    
    483,910Operating expensesSelling, general and administrative expenses
    
    
    403,306
    
    
    
    409,477Gain on sale of dairy assets
    
    
    (9,396
    )
    
    
    Depreciation and amortization
    
    
    25,454
    
    
    
    24,515Total operating expenses
    
    
    419,364
    
    
    
    433,992Operating profit
    
    
    55,231
    
    
    
    49,918Interest income
    
    
    85
    
    
    
    475Interest expense
    
    
    (34,563
    )
    
    
    (31,835
    )Interest related to debt purchase
    
    
    
    
    
    
    (1,775
    )Other income (expense), net
    
    
    5
    
    
    
    (90
    )Income before income taxes
    
    
    20,758
    
    
    
    16,693Income taxes
    
    
    8,080
    
    
    
    6,655Net income
    
    $
    12,678
    
    
    $
    10,038Earnings per average common share outstanding
    
    $
    363.66
    
    
    $
    291.98Average common shares outstanding
    
    
    34,862
    
    
    
    34,379Shares outstanding at end of period
    
    
    34,552
    
    
    
    33,837
  6




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 26 Weeks EndedMarch 28,
    
    
    March 27,2010
    
    
    2011Operating activities:Net income
    
    $
    12,678
    
    
    $
    10,038Adjustments to reconcile net income to net cash
provided by operating activities:Depreciation and amortization
    
    
    31,163
    
    
    
    30,169Amortization of debt issuance costs
    
    
    1,614
    
    
    
    4,871Premium paid on early retirement of debt
    
    
    
    
    
    
    1,775(Increase) decrease in deferred income taxes
    
    
    (4,502
    )
    
    
    2,224Gain on sale of dairy assets
    
    
    (9,396
    )
    
    
    (Gain) loss on disposals of assets
    
    
    (3
    )
    
    
    93Changes in operating assets and liabilities:Increase in receivables
    
    
    (1,146
    )
    
    
    (4,536
    )Increase in income tax receivables
    
    
    (1,419
    )
    
    
    (2,399
    )Increase in inventories
    
    
    (13,109
    )
    
    
    (31,906
    )(Increase) decrease in prepaid expenses
    
    
    (1,584
    )
    
    
    621Decrease in assets held for sale
    
    
    215
    
    
    
    Decrease in other assets
    
    
    703
    
    
    
    160Increase (decrease) in accounts payable
    
    
    (8,787
    )
    
    
    4,017Decrease in income taxes payable
    
    
    
    
    
    
    (527
    )Increase in liabilities held for sale
    
    
    1,014
    
    
    
    Increase (decrease) in other accrued liabilities
    
    
    3,118
    
    
    
    (7,846
    )Increase in long-term reserves
    
    
    5,054
    
    
    
    6,834Net cash provided by operating activities
    
    
    15,613
    
    
    
    13,588Financing activities:Proceeds from issuance of long-term debt
    
    
    
    
    
    
    400,000Debt issuance costs
    
    
    
    
    
    
    (8,526
    )Principal payments on long-term debt
    
    
    
    
    
    
    (525,000
    )Principal payments on capital lease obligations
    
    
    (642
    )
    
    
    (750
    )Stock redemption
    
    
    (8,000
    )
    
    
    (9,540
    )Dividend paid
    
    
    (5,000
    )
    
    
    (5,000
    )Net cash used in financing activities
    
    
    (13,642
    )
    
    
    (148,816
    )Investing activities:Decrease in long-term note receivable
    
    
    300
    
    
    
    Decrease in long term receivable
    
    
    
    
    
    
    500Proceeds from sale of dairy assets, net of fees
    
    
    85,833
    
    
    
    Purchase of property and equipment
    
    
    (21,132
    )
    
    
    (17,531
    )Proceeds from sale of property and equipment
    
    
    43
    
    
    
    142Net cash provided by (used in) investing activities
    
    
    65,044
    
    
    
    (16,889
    )Net increase (decrease) in cash and cash equivalents
    
    
    67,015
    
    
    
    (152,117
    )Cash and cash equivalents at beginning of period
    
    
    196,914
    
    
    
    325,005Cash and cash equivalents at end of period
    
    $
    263,929
    
    
    $
    172,888Interest paid
    
    $
    32,784
    
    
    $
    33,014Income taxes paid
    
    $
    14,000
    
    
    $
    7,355
  7




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 27, 2011
 Note 1  Basis of Presentation
    Note 2  Principles of Consolidation
  Note 3  Subsequent Events
  Note 4  Use of Estimates
  Note 5  Income Taxes
     8




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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 27, 2011
 Note 6
 Retirement Plans
   Thirteen Weeks Ended
    
    
    Twenty-Six Weeks EndedMar. 28,
    
    
    Mar. 27,
    
    
    Mar. 28,
    
    
    Mar. 27,2010
    
    
    2011
    
    
    2010
    
    
    2011(in thousands)
    
    
    (in thousands)Expected return on assets
    
    $
    (866
    )
    
    $
    (971
    )
    
    $
    (1,732
    )
    
    $
    (1,942
    )Service cost
    
    
    825
    
    
    
    943
    
    
    
    1,651
    
    
    
    1,887Interest cost
    
    
    1,000
    
    
    
    1,072
    
    
    
    2,001
    
    
    
    2,144Amortization of prior service cost
    
    
    
    
    
    
    
    
    
    
    (1
    )
    
    
    1Amortization of recognized losses
    
    
    350
    
    
    
    393
    
    
    
    699
    
    
    
    785Net pension expense
    
    $
    1,309
    
    
    $
    1,437
    
    
    $
    2,618
    
    
    $
    2,875Actuarial assumptions used to determine net pension expense
were:Discount rate
    
    
    5.50
    %
    
    
    5.00
    %
    
    
    5.50
    %
    
    
    5.00
    %Rate of increase in compensation levels
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %Expected long-term rate of return on assets
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.50
    %
  Note 7
 Asset Sale
    9




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 27, 2011
 Note 8
 New Debt Issuance and Early Extinguishment of Debt
 Issuance of New Notes
  Issuance of New Credit Facility
      10




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 27, 2011
 Note 8
 New Debt Issuance and Early Extinguishment of Debt (contd.)
 Issuance of New Credit Facility (contd.)
   Early Extinguishment of Debt
  Note 9
 Subsidiary Guarantee
   11




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 27, 2011
 Note
10  Litigation Matters
   Note
11  Long-Term Receivable
  Note
12  Dividends and Stock Redemptions
     Note
13  Note Receivable
  12




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
MARCH 27, 2011
 Note 14  Fair Value of Financial Instruments
  Cash and Cash Equivalents
  Receivables
  Long-Term Note Receivable
  Current Portion of Long-Term Receivable
  Long-Term Debt and Capital Lease Obligations
   As ofMar. 27, 2011(In thousands)Carrying
    
    FairAmount
    
    ValueCash and cash equivalents
    
    $
    172,888
    
    
    $
    172,888Receivables
    
    $
    42,549
    
    
    $
    42,549Long-term note receivable
    
    $
    3,018
    
    
    $
    3,018Current portion of long-term receivable
    
    $
    15,501
    
    
    $
    15,501Long-term debt
    
    $
    685,000
    
    
    $
    705,251Capital lease obligations
    
    $
    3,018
    
    
    $
    3,018
 13




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 PART I    FINANCIAL INFORMATION (contd.)
 
 Item 2.
    
    MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES
   SIGNIFICANT ACCOUNTING POLICIES
  14




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OWNERSHIP OF THE COMPANY
  AVAILABLE INFORMATION
 http://www.sec.gov.
 EXECUTIVE OVERVIEW
    15




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS
 Sales and Cost of Goods Sold
 Thirteen Weeks Ended
    
    ChangeMar. 28,
    
    Mar. 27,
    
    2011 to 2010($ in thousands)
    
    2010
    
    2011
    
    Dollar
    
    %Sales
    
    $
    885,537
    
    
    $
    913,397
    
    
    $
    27,860
    
    
    
    3.15
    %Gross Profit
    
    $
    236,445
    
    
    $
    245,137
    
    
    $
    8,692
    
    
    
    3.68
    %as a % of sales
    
    
    26.70
    %
    
    
    26.84
    %
 Twenty-Six Weeks Ended
    
    ChangeMar. 28,
    
    Mar. 27,
    
    2011 to 2010($ in thousands)
    
    2010
    
    2011
    
    Dollar
    
    %Sales
    
    $
    1,809,401
    
    
    $
    1,812,434
    
    
    $
    3,033
    
    
    
    0.17
    %Gross Profit
    
    $
    474,595
    
    
    $
    483,910
    
    
    $
    9,315
    
    
    
    1.96
    %as a % of sales
    
    
    26.23
    %
    
    
    26.70
    %
 Sales
  Like Store Sales
    16




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
 Gross Profit
  Operating Expenses and Operating Profit
 Thirteen Weeks Ended
    
    ChangeMar. 28,
    
    Mar. 27,
    
    2011 to 2010($ in thousands)
    
    2010
    
    2011
    
    Dollar
    
    %Operating Expenses:Selling, general and
administrative expenses
    
    $
    198,018
    
    
    $
    205,959
    
    
    $
    7,941
    
    
    
    4.01
    %as a % of sales
    
    
    22.36
    %
    
    
    22.55
    %Gain on sale of assets
    
    $
    (1,446
    )
    
    $
    
    
    
    $
    1,446
    
    
    
    as a % of sales
    
    
    (0.16
    )%
    
    
    0.00
    %Depreciation and amortization
    
    $
    12,788
    
    
    $
    12,071
    
    
    $
    (717
    )
    
    
    (5.61
    )%as a % of sales
    
    
    1.44
    %
    
    
    1.32
    %Operating profit
    
    $
    27,085
    
    
    $
    27,107
    
    
    $
    22
    
    
    
    0.08
    %as a % of sales
    
    
    3.06
    %
    
    
    2.97
    %
 17




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
 Operating Expenses and Operating Profit (contd.)
 Twenty-Six Weeks Ended
    
    ChangeMar. 28,
    
    Mar. 27,
    
    2011 to 2010($ in thousands)
    
    2010
    
    2011
    
    Dollar
    
    %Operating Expenses:Selling, general and
administrative expenses
    
    $
    403,306
    
    
    $
    409,477
    
    
    $
    6,171
    
    
    
    1.53
    %as a % of sales
    
    
    22.29
    %
    
    
    22.60
    %Gain on sale of assets
    
    $
    (9,396
    )
    
    $
    
    
    
    $
    9,396
    
    
    
    as a % of sales
    
    
    (0.52
    )%
    
    
    0.00
    %Depreciation and amortization
    
    $
    25,454
    
    
    $
    24,515
    
    
    $
    (939
    )
    
    
    (3.69
    )%as a % of sales
    
    
    1.41
    %
    
    
    1.35
    %Operating profit
    
    $
    55,231
    
    
    $
    49,918
    
    
    $
    (5,313
    )
    
    
    (9.62
    )%as a % of sales
    
    
    3.05
    %
    
    
    2.75
    %
 Selling, General and Administrative Expenses
   Gain on Sale of Dairy Assets
  Depreciation and Amortization
  18




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
 Interest Income
  Interest Expense
  Interest Related to Debt Purchase
  Income Before Income Taxes
  Income Taxes
  Net Income
  LIQUIDITY AND CAPITAL RESOURCES
    19




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 LIQUIDITY AND CAPITAL RESOURCES (contd.)
  Contractual Cash Obligations(in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsTerm Loan due November 2014 (1)Principal
    
    $
    145,000
    
    
    $
    7,250
    
    
    $
    25,375
    
    
    $
    112,375
    
    
    $
    Interest
    
    
    16,870
    
    
    
    5,049
    
    
    
    9,451
    
    
    
    2,370
    
    
    
    161,870
    
    
    
    12,299
    
    
    
    34,826
    
    
    
    114,745
    
    
    
    7.75% Senior Notes due April 2015Principal
    
    
    285,000
    
    
    
    
    
    
    
    
    
    
    
    285,000
    
    
    
    Interest
    
    
    99,394
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    33,131
    
    
    
    384,394
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    318,131
    
    
    
    7.375% Senior Notes due November 2018Principal
    
    
    255,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    255,000Interest
    
    
    149,720
    
    
    
    18,075
    
    
    
    37,613
    
    
    
    37,613
    
    
    
    56,419404,720
    
    
    
    18,075
    
    
    
    37,613
    
    
    
    37,613
    
    
    
    311,419Capital lease obligations (2)Principal
    
    
    3,018
    
    
    
    1,569
    
    
    
    1,433
    
    
    
    16
    
    
    
    Interest
    
    
    692
    
    
    
    406
    
    
    
    286
    
    
    
    
    
    
    
    3,710
    
    
    
    1,975
    
    
    
    1,719
    
    
    
    16
    
    
    
    Operating leases (2)
    
    
    339,828
    
    
    
    37,816
    
    
    
    65,917
    
    
    
    51,594
    
    
    
    184,501Total contractual cash obligations
    
    $
    1,294,522
    
    
    $
    92,253
    
    
    $
    184,250
    
    
    $
    522,099
    
    
    $
    495,920Other Commercial Commitments(in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsStandby letters of credit (3)
    
    $
    49,737
    
    
    $
    49,737
    
    
    $
    
    
    
    $
    
    
    
    $
    Total other commercial commitments
    
    $
    49,737
    
    
    $
    49,737
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    As of March 27, 2011, interest on our Term Loan is based on the
Eurodollar Rate plus 2.500% and consisted of a ninety day rate of 2.800% on approximately $5.4
million and a twelve month rate of 3.287% on approximately $139.6 million. For purposes of
contractual cash obligations shown here, we have assumed the March 27, 2011 90 day and twelve
month interest rates for the respective assumed short-term and long-term portions of our Term
Loan.(2)
    
    We lease the majority of our retail stores. We have
subleased our former headquarters building and certain former distribution facilities located
in Colton, California under an initial 15 year term for an amount equal to our lease payment.
For purposes of contractual cash obligations shown here, minimum lease payments on this lease
are shown without sub-lease offsets. Certain of our operating leases provide for minimum
annual payments that change over the primary term of the lease. For purposes of contractual
cash obligations shown here, contractual step increases or decreases are shown in the period
they are due. Certain leases provide for additional rents based on sales. Primary lease
terms range from 3 to 55 years and substantially all leases provide for renewal options.(3)
    
    Standby letters of credit are committed as security for workers
compensation obligations. Outstanding letters of credit expire between September 2011 and
February 2012. 20




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 LIQUIDITY AND CAPITAL RESOURCES (contd.)
      Labor Relations
  CAUTIONARY STATEMENT FOR PURPOSES OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
  21




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MARCH 27, 2011
 PART I FINANCIAL INFORMATION (contd.)
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  
 PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
   22




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MARCH 27, 2011
 
 Item 1A. RISK FACTORS
      23




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MARCH 27, 2011
 
 Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
  
 Item 3. DEFAULTS UPON SENIOR SECURITIES
  
 Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
  
 Item 5. OTHER INFORMATION
  
 Item 6. EXHIBITS
 (a)
    
    Exhibits
 31.1
    
    Certification of Principal Executive Officer pursuant to Section 302
(a) of the Sarbanes-Oxley Act.31.2
    
    Certification of Principal Financial Officer pursuant to Section 302
(a) of the Sarbanes-Oxley Act.32.1
    
    Certification of Principal Executive Officer and Principal Financial
Officer pursuant to18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act.
 24




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 
   Date: May 10, 2011
    /s/ Jack H. BrownJack H. BrownChairman of the Board, President, and Chief Executive Officer
(Principal Executive Officer)Date:  May 10, 2011

/s/ Phillip J. SmithPhillip J. SmithExecutive Vice President
and Chief Financial Officer (Principal Financial Officer)
(Principal Accounting Officer) 25