<PAGE>   1

                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

                                   (Mark One)
     [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934


                For the quarterly period ended December 26, 1999

                                       OR

     [ ] 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.
             (Exact name of registrant as specified in its charter)


            Delaware                                             33-0350671
            --------                                             ----------
(State or other jurisdiction of                               (I.R.S. Employer
incorporation or organization)                               Identification No.)



           21700 Barton Road
           Colton, California                                      92324
(Address of principal executive offices)                         (Zip Code)

Registrant's telephone number, including area code             (909) 783-5000


                                 Not Applicable
              (Former name, former address and former fiscal year,
                         if changed since last report.)


        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   [X]   NO   [ ]

                    As of January 28, 2000, there were issued and
                    outstanding 50,000 shares of the registrant's
                    Class A Common Stock.



<PAGE>   2

                           STATER BROS. HOLDINGS INC.
                                DECEMBER 26, 1999


                                      INDEX


<TABLE>
<CAPTION>
PART I         FINANCIAL INFORMATION (UNAUDITED)                                        PAGE
------         ---------------------------------                                        ----
<S>            <C>                                                                      <C>
ITEM 1.        FINANCIAL STATEMENTS

               CONSOLIDATED BALANCE SHEETS (UNAUDITED) AS OF SEPTEMBER 26, 1999
                 AND DECEMBER 26, 1999                                                    3

               CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) FOR THE 13 WEEKS ENDED
                 DECEMBER 27, 1998 AND DECEMBER 26, 1999                                  5

               CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) FOR THE 13 WEEKS ENDED
                 DECEMBER 27, 1998 AND DECEMBER 26, 1999                                  6

               NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)                     7

ITEM 2.        MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
                 CONDITION AND RESULTS OF OPERATIONS                                      9

ITEM 3.        QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK                  15


PART II        OTHER INFORMATION
-------        -----------------


ITEM 1.        LEGAL PROCEEDINGS                                                          16

ITEM 2.        CHANGES IN SECURITIES AND USE OF PROCEEDS                                  16

ITEM 3.        DEFAULTS UPON SENIOR SECURITIES                                            16

ITEM 4.        SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS                        16

ITEM 5.        OTHER INFORMATION                                                          16

ITEM 6.        EXHIBITS AND REPORTS ON FORM 8-K                                           16


SIGNATURES                                                                                17
</TABLE>



                                       2
<PAGE>   3

PART I - FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

                           STATER BROS. HOLDINGS INC.
                           CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                                 (In thousands)

                                     ASSETS

<TABLE>
<CAPTION>
                                                           SEPT. 26,         DEC. 26,
                                                             1999              1999
                                                           --------          --------
<S>                                                        <C>               <C>
Current Assets
   Cash and cash equivalents ....................          $ 93,352          $ 66,248
   Receivables ..................................            34,238            39,129
   Inventories ..................................           155,361           172,235
   Prepaid expenses .............................             5,926             9,469
   Deferred income taxes ........................             3,523             3,523
   Properties held for sale .....................             3,886             3,881
                                                           --------          --------

Total current assets ............................           296,286           294,485

Investment in unconsolidated affiliate ..........             9,599             9,738


Property and equipment
   Land .........................................            44,941            45,520
   Buildings and improvements ...................           160,406           163,518
   Store fixtures and equipment .................           150,027           160,022
   Property subject to capital leases ...........            25,261            25,261
                                                           --------          --------
                                                            380,635           394,321


   Less accumulated depreciation and amortization           120,906           126,883
                                                           --------          --------
                                                            259,729           267,438


Deferred income taxes ...........................             4,297             4,297
Deferred debt issuance costs, net ...............            16,774            16,675
Lease guarantee escrow ..........................            11,280            11,489
Other assets ....................................             5,952             6,163
                                                           --------          --------


Total assets.....................................          $603,917          $610,285
                                                           ========          ========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       3
<PAGE>   4

                           STATER BROS. HOLDINGS INC.
                     CONSOLIDATED BALANCE SHEETS (Continued)
                                   (Unaudited)
                      (In thousands, except share amounts)

                 LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)

<TABLE>
<CAPTION>
                                                                SEPT. 26,            DEC. 26,
                                                                   1999                1999
                                                                ---------           ---------
<S>                                                             <C>                 <C>
Current Liabilities
   Accounts payable ..................................          $  97,169           $  89,974
   Accrued payroll and related expenses ..............             35,757              32,974
   Other accrued liabilities .........................             30,501              45,526
   Current portion of capital lease obligations ......              1,944               1,943
                                                                ---------           ---------

Total current liabilities ............................            165,371             170,417

Long-term debt, less current portion .................            455,048             455,048
Capital lease obligations, less current portion ......             15,625              15,149
Long-term portion of self-insurance and other reserves              7,450               7,450
Other long-term liabilities ..........................              3,510               3,456
                                                                ---------           ---------

Total liabilities ....................................            647,004             651,520

Stockholders' equity (deficit)
Class A Common Stock, $.01 par value:
      Authorized shares - 100,000
      Issued and outstanding shares - 50,000 .........                  1                   1
   Additional paid-in capital ........................             12,715              12,715
   Retained earnings (deficit) .......................            (55,803)            (53,951)
                                                                ---------           ---------

Total stockholders' equity (deficit) .................            (43,087)            (41,235)
                                                                ---------           ---------

Total liabilities and stockholders' equity (deficit) .          $ 603,917           $ 610,285
                                                                =========           =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.

                                       4
<PAGE>   5

                           STATER BROS. HOLDINGS INC.
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
               (In thousands, except per share and share amounts)


<TABLE>
<CAPTION>
                                                                 13 Weeks Ended
                                                          -----------------------------
                                                           DEC. 27,            DEC. 26,
                                                             1998                1999
                                                          ---------           ---------
<S>                                                       <C>                 <C>
Sales ..........................................          $ 441,422           $ 597,168
Cost of goods sold .............................            339,021             441,346
                                                          ---------           ---------
Gross profit ...................................            102,401             155,822

Operating expenses:
   Selling, general and administrative expenses              88,671             133,563
   Depreciation and amortization ...............              3,903               6,014
   Acquisition integration expenses ............                  -                 668
                                                          ---------           ---------
Total operating expenses .......................             92,574             140,245
                                                          ---------           ---------

Operating profit ...............................              9,827              15,577

Interest income ................................                775                 995
Interest expense ...............................             (7,531)            (13,571)
Equity in earnings from unconsolidated affiliate                798                 139
Other income (loss) - net ......................                (58)                 (1)
                                                          ---------           ---------

Income before income taxes .....................              3,811               3,139
Income taxes ...................................              1,524               1,287
                                                          ---------           ---------

Net income .....................................          $   2,287           $   1,852
                                                          =========           =========

Earnings per share .............................          $   45.74           $   37.04
                                                          =========           =========

Average common shares outstanding ..............             50,000              50,000
                                                          =========           =========

Shares outstanding at end of period ............             50,000              50,000
                                                          =========           =========
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.


                                       5
<PAGE>   6

                           STATER BROS. HOLDINGS INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                            13 Weeks Ended
                                                                      ---------------------------
                                                                      DEC. 27,           DEC. 26,
                                                                        1998               1999
                                                                      --------           --------
<S>                                                                   <C>                <C>
OPERATING ACTIVITIES:
Net income .................................................          $  2,287           $  1,852
Adjustments to reconcile net income to net cash provided
 by operating activities:
   Depreciation and amortization ...........................             3,903              6,014
   Provision for deferred income taxes .....................                (1)                 -
   Loss on disposals of assets .............................                58                  2
   Net undistributed (gain) in investment
     in unconsolidated affiliate ...........................              (798)              (139)
   Changes in operating assets and liabilities:
    (Increase) decrease in receivables .....................            (1,680)            (4,891)
    (Increase) decrease in inventories .....................            (1,675)           (16,874)
    (Increase) decrease in prepaid expenses ................            (1,307)            (3,549)
    (Increase) decrease in other assets ....................              (841)              (321)
    Increase (decrease) in accounts payable ................             4,820             (7,195)
    Increase (decrease) in accrued liabilities and long-term
     portion of self-insurance reserves ....................             9,512             12,188
                                                                      --------           --------

Net cash provided by (used in) operating activities ........            14,278            (12,913)
                                                                      --------           --------

INVESTING ACTIVITIES:
Purchase of property and equipment .........................            (7,811)           (13,714)
Proceeds from sale of property and equipment and properties
 held for sale .............................................               711                  -
                                                                      --------           --------

Net cash (used in) investing activities ....................            (7,100)           (13,714)
                                                                      --------           --------

FINANCING ACTIVITIES:
Principal payments on capital lease obligations ............              (317)              (477)
                                                                      --------           --------

Net cash (used in) financing activities ....................              (317)              (477)
                                                                      --------           --------

Net increase (decrease) in cash and cash equivalents .......             6,861            (27,104)
Cash and cash equivalents at beginning of period ...........            57,281             93,352
                                                                      --------           --------

Cash and cash equivalents at end of period .................          $ 64,142           $ 66,248
                                                                      ========           ========

Interest paid ..............................................          $    123           $    698
Income taxes paid ..........................................          $  1,675           $      -
</TABLE>

     See accompanying notes to unaudited consolidated financial statements.



                                       6
<PAGE>   7

                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                DECEMBER 26, 1999


NOTE 1 - BASIS OF PRESENTATION

        In the opinion of management, the accompanying unaudited consolidated
financial statements contain all normal recurring adjustments necessary to
present fairly the financial position of Stater Bros. Holdings Inc. (the
"Company") and its subsidiaries as of September 26, 1999 and December 26, 1999
and the results of its operations and cash flows for the thirteen weeks ended
December 27, 1998 and December 26, 1999. These consolidated financial statements
should be read in conjunction with the audited financial statements and notes
thereto included in the Company's latest annual report filed on Form 10-K. The
operating results for the thirteen weeks ended December 26, 1999 are not
necessarily indicative of the results of operations for a full year.

NOTE 2 - INCOME TAXES

        The provision for income taxes for the thirteen weeks ended December 27,
1998 and December 26, 1999 consists of the following:

<TABLE>
<CAPTION>
                                         13 Weeks Ended
                                   -----------------------------
                                   Dec. 27, 1998   Dec. 26, 1999
                                   -------------   -------------
                                           (In thousands)
<S>                                <C>             <C>
      Federal income taxes            $  1,296       $  1,009
      State income taxes                   228            278
                                      --------       --------
                                      $  1,524       $  1,287
                                      ========       ========
</TABLE>

NOTE 3 - UNCONSOLIDATED AFFILIATE

        The Company owns 50% of Santee Dairies LLC. Through its wholly owned
subsidiary, Santee Dairies, Inc. ("Santee"), it operates a fluid milk processing
plant located in City of Industry, California, and the Company is not the
controlling stockholder. Accordingly, the Company accounts for its investment in
Santee Dairies LLC using the equity method of accounting and recognized income
of $798,000 and $139,000 for the thirteen weeks ended December 27, 1998 and
December 26, 1999, respectively. The Company is a significant customer of Santee
which supplies the Company with a substantial portion of its fluid milk and
dairy products.

Summary of unaudited financial information for Santee Dairies LLC is as follows:

<TABLE>
<CAPTION>
                                              13 Weeks Ended
                                        -----------------------------
                                        Dec. 27, 1998   Dec. 26, 1999
                                        -------------   -------------
                                                (In thousands)
<S>                                     <C>             <C>
      Current assets                    $    16,585     $   15,115
      Non-current assets                    109,870        105,067
      Current liabilities                    26,652         24,101
      Non-current liabilities                81,260         76,604
      Shareholder's equity                   18,543         19,477

      Sales                                  48,227         46,954
      Gross profit                            6,991          7,010
      Net income (loss)                 $     1,602     $      279
</TABLE>



                                       7
<PAGE>   8

                           STATER BROS. HOLDINGS INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                                DECEMBER 26, 1999


NOTE 4 - COVENANT NOT TO COMPETE

        On March 8, 1994, the Company entered into a $5.0 million prepaid five
year covenant not to compete which was included in a Consulting Agreement with
Craig Corporation (previously, a shareholder of the Company) and was amortized
to earnings over the five year term of the covenant not to compete. The covenant
not to compete terminated in March 1999.

NOTE 5 - RECLASSIFICATIONS

        Certain amounts in the prior periods have been reclassified to conform
to the current period financial statement presentation.

NOTE 6 - USE OF ESTIMATES

        The preparation of financial statements in conformity with Generally
Accepted Accounting Principles requires management to make estimates and
assumptions that effect the amounts reported in the financial statements and
accompanying notes. Actual results could differ from those estimates.

NOTE 7 - PRO FORMA SUMMARY FINANCIAL INFORMATION

        On May 7, 1999, the Company entered into an agreement with Albertson's
to acquire 43 supermarkets and one future store site and the supermarkets were
acquired in August 1999. The stores were formerly operated by Albertson's or
Lucky Stores and were divested in connection with the merger of Albertson's and
American Stores Company, the parent of Lucky Stores.

        The following table provides unaudited pro forma financial data for the
Company reflecting the completion of the Acquisition as if it occurred September
28, 1998. These unaudited pro forma results have been prepared for comparative
purposes only and include certain pro forma adjustments. Such pro forma amounts
are not necessarily indicative of what actual results of operations might have
been or will be in the future. Pro forma results of operations for the prior
period exclude a non-recurring extraordinary loss of approximately $17.3 million
($28.5 million less tax effect of $11.2 million) related to the early
extinguishment of debt.

<TABLE>
<CAPTION>
                                                            13 Weeks Ended
                                                   --------------------------------
                                                   Dec. 27, 1998      Dec. 26, 1999
                                                   -------------      -------------
                                                (In thousands, except per share amounts)

                                                    (Pro forma)        (Unaudited)
<S>                                                <C>                <C>
Sales                                              $    604,814       $    597,168

Net income (loss) before
      extraordinary loss                           $       (597)      $      1,852

Earnings (loss) per common share                   $     (11.94)      $      37.04
</TABLE>



                                       8
<PAGE>   9

                           STATER BROS. HOLDINGS INC.
                                DECEMBER 26, 1999


PART I - FINANCIAL INFORMATION (CONTD.)


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
        RESULTS OF OPERATIONS

        RECAPITALIZATION TRANSACTION
        In March 1994, the Company completed a Recapitalization Transaction (the
        "Recapitalization") which transferred effective voting control of the
        Company to La Cadena Investments ("La Cadena"), reclassified the
        Company's outstanding equity, provided for certain cash payments and
        distributions to Craig Corporation ("Craig"), previously a shareholder
        of the Company, and provided the Company with an option to acquire
        Craig's remaining equity in the Company. The Recapitalization was funded
        through an offering of $165.0 million of 11% Senior Notes due 2001 (the
        "11% Notes"). Substantially all of the 11% Notes ($160.0 million) were
        redeemed in August 1999.

        Effective March 8, 1996, pursuant to options available to the Company,
        the Company exercised its right to convert all of its outstanding shares
        of Common Stock (previously held by Craig) into 693,650 shares of its
        Series B Preferred Stock. The Series B Preferred Stock had a redemption
        value of approximately $69.4 million and paid dividends at the rate of
        10.5% per annum. In August 1997, the Company redeemed all of the
        outstanding shares of its Series B Preferred Stock for $69.4 million
        plus accrued and unpaid dividends. The Series B Preferred Stock
        redemption was funded through an offering of $100 million of 9% Senior
        Subordinated Notes due 2004 (the "9% Notes"). The 9% Notes were redeemed
        in August 1999.

        OWNERSHIP OF THE COMPANY
        Effective August 1997, La Cadena became the sole shareholder of the
        Company and holds all of the shares of the Company's Class A Common
        Stock which are entitled to 1.1 votes per share. La Cadena Investments
        is a California General Partnership whose partners include Jack H.
        Brown, Chairman of the Board, President and Chief Executive Officer of
        the Company and two other members of senior management of the Company.
        Jack H. Brown has a majority interest in La Cadena and is the managing
        general partner with the power to vote the shares of the Company held by
        La Cadena.

        ACQUISITION
        Comparisons between the first quarter of fiscal 2000 and fiscal 1999 are
        difficult due to the acquisition of 43 supermarkets and one future site
        in August 1999, expenses incurred to integrate the acquired supermarkets
        into the Company's retail operating and distribution systems and the
        issuance of $450.0 million of 10.75% Notes and related redemptions,
        together with early redemption premiums, on all of the 9% Notes and
        substantially all the 11% Notes in August 1999. On May 7, 1999, the
        Company entered into an agreement with Albertson's to acquire 43
        supermarkets and one future store site. The stores were formerly
        operated by Albertson's or Lucky Stores and were divested in connection
        with the merger of Albertson's and American Stores Company, the parent
        of Lucky Stores. The supermarkets were acquired sequentially beginning
        August 9, 1999, with 8 supermarkets acquired during the week ended
        August 15, 1999, 15 supermarkets were acquired during the week ended
        August 22, 1999, an



                                       9
<PAGE>   10

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


        additional 15 supermarkets were acquired during the week ended August
        29, 1999 and the remaining 5 supermarkets were acquired by September 1,
        1999. The purchase price for the property, plant, equipment and
        inventories of 43 supermarkets and one future store site was
        approximately $134.0 million plus capital lease obligations assumed of
        $13.3 million and approximately $2.2 million of capitalized costs
        related to the transfer of ownership of the supermarkets. The
        acquisition was accounted for using the purchase method of accounting
        and the results of operations of the 43 supermarkets are included in the
        Company's consolidated results of operations from the acquisition date
        of each supermarket.

        RESULTS OF OPERATIONS
        The following table sets forth certain income statement components
        expressed as a percent of sales for the thirteen weeks ended December
        27, 1998 and December 26, 1999.

<TABLE>
<CAPTION>
                                                            13 Weeks Ended
                                                      -----------------------------
                                                      Dec. 27, 1998   Dec. 26, 1999
                                                      -------------   -------------
<S>                                                   <C>             <C>
        Sales                                             100.00%         100.00%
        Gross profit                                       23.20           26.09
        Operating expenses:
          Selling, general and administrative
          expense                                          20.09           22.36
          Depreciation and amortization                      .89            1.01
          Acquisition integration expenses                     -             .11
        Operating profit                                    2.22            2.61
        Interest income                                      .18             .17
        Interest expense                                   (1.71)          (2.27)
        Equity in earnings from
          unconsolidated affiliate                           .18             .02
        Other income (loss) - (net)                         (.01)              -
        Income before income taxes                           .86%            .53%
</TABLE>

        Total sales for the thirteen weeks ended December 26, 1999, the first
        quarter of fiscal 2000, increased 35.3% and amounted to $597.2 million
        compared to $441.4 million for the same period in the prior year. The
        increase in total sales in the first quarter of fiscal 2000 was due
        primarily to the acquisition of 43 supermarkets in August 1999, from
        Albertson's. The 43 acquired supermarkets were opened in less than two
        days after their respective acquisition dates as fully integrated Stater
        Bros. Markets. The Company acquired 8 supermarkets during the week ended
        August 15, 1999, 15 supermarkets during the week ended August 22, 1999,
        15 supermarkets during the week ended August 29, 1999 and acquired the
        remaining 5 supermarkets during the week ended September 5, 1999.
        Results of operations of the 43 supermarkets have been included in the
        Company's consolidated results of operations from the acquisition date
        of each supermarkets. Like store sales increased 2.0% (before erosion of
        like store sales of 0.7% to newly acquired stores) for the thirteen week
        period ended December 26, 1999 and was due to favorable customer
        response to the Company's first quarter marketing plan, which emphasized
        the Company's high quality and expanded product selections in the
        produce and other perishable departments. The Company operated 155 and
        112 supermarkets at December 26, 1999 and December 27, 1998,
        respectively.

        Gross profits for the thirteen weeks ended December 26, 1999, amounted
        to $155.8 million or 26.09% of sales compared to $102.4 million or
        23.20% of sales in the same



                                       10
<PAGE>   11

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



        period of the prior year. The increase in the first quarter of fiscal
        2000 gross profits, as a percent of sales, was due to several factors
        including the introduction of higher gross margin products achieved
        through the Company's general merchandise expansion program and
        significant investments in perishable product display fixtures in the
        newly acquired supermarkets. Gross profits for the first quarter of
        fiscal 2000 included an incremental price increase in the cost of fluid
        dairy products purchased from Santee Dairies, Inc ("Santee") of
        approximately $48,000 compared to approximately $3.1 million for the
        first quarter of fiscal 1999. Santee terminated the incremental pricing
        charge to the Company on October 1, 1999.

        Operating expenses include selling, general and administrative expenses,
        depreciation and amortization, and acquisition integration expenses. For
        the thirteen weeks ended December 26, 1999, selling, general and
        administrative expenses amounted to $133.6 million or 22.36% of sales
        compared to $88.7 million or 20.09% of sales for the thirteen weeks
        ended December 27, 1998. The increase in selling, general and
        administrative expenses as a percentage of sales in the first quarter of
        fiscal 2000 included expenses incurred to operate the additional 43
        supermarkets acquired in August 1999, from increased labor costs due to
        contractual wage and benefit increases, and from increased advertising
        expenses incurred to campaign the Company's Aggressive Everyday Low
        Price leadership strategy.

        Depreciation and amortization expenses amounted to $6.0 million for the
        thirteen weeks ended December 26, 1999 and amounted to $3.9 million for
        the like period of the prior year. Depreciation expense in fiscal 1999
        included amortization of $250,000 from a five-year prepaid covenant not
        to compete, which terminated in March 1999. The increase in depreciation
        and amortization expense in fiscal 2000 was primarily due to the
        acquisition of the 43 supermarkets in August 1999.

        Acquisition integration expenses amounted to $668,000 for the thirteen
        weeks ended December 26, 1999 and were related to the acquisition of the
        43 supermarkets. Acquisition integration expenses consist of salaries
        and wages and non-recurring advertising expenses incurred during the
        integration of the supermarkets and the grand openings of service meat
        departments in fourteen of the acquired supermarkets.

        Operating profit for the thirteen weeks ended December 26, 1999 amounted
        to $15.6 million or 2.61% of sales compared to $9.8 million or 2.22% of
        sales for the thirteen weeks ended December 27, 1998.

        Interest expense amounted to $13.6 million for the thirteen weeks ended
        December 26, 1999 compared to $7.5 million for the thirteen weeks ended
        December 27, 1998. The increase in interest expense was due to the
        issuance of $450.0 million of 10.75% Senior Notes due 2006 in August
        1999 related to the acquisition of the 43 supermarkets and the
        redemption in August 1999 of all the 9% Notes and substantially all
        ($5.1 million remain outstanding) of the 11% Notes.

        The Company's equity in earnings from unconsolidated affiliate, amounted
        to $139,000 for the first quarter of fiscal 2000 compared $798,000 in
        the first quarter of the prior year. The decrease in earnings is
        primarily due to the termination of incremental prices paid by the two
        owners of Santee Dairies LLC (Hughes and Stater Bros. Markets) in the
        first quarter of fiscal 2000 compared to incremental prices paid by the
        owners in the first quarter of fiscal 1999 of approximately $4.6
        million. The incremental prices paid to Santee by the owners terminated
        in October 1999. The incremental prices in the cost of products
        purchased from Santee by the Company is



                                       11
<PAGE>   12

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


        included in the Company's cost of goods sold and amounted to
        approximately $48,000 in the first quarter of fiscal 2000 compared to
        approximately $3.1 million in the first quarter of fiscal 1999.

        Income before income taxes amounted to $3.1 million for the thirteen
        weeks ended December 26, 1999 compared to $3.8 million for the thirteen
        weeks ended December 27, 1998.

        Net income for the thirteen week first quarter ended December 26, 1999,
        amounted to $1.9 million compared to $2.3 million for the thirteen week
        first quarter of the prior year.

        LIQUIDITY AND CAPITAL RESOURCES

        The Company historically has funded its daily cash flow requirements
        through funds provided by operations and through borrowings from
        short-term revolving credit facilities. The Company's credit agreement
        became effective August 6, 1999 and expires in August 2002, and consists
        of a revolving loan facility for working capital of $50.0 million, which
        was available at December 26, 1999 and a letter of credit facility with
        a maximum availability of $25.0 million, of which $14.2 million was
        available at December 26, 1999. The letter of credit facility is
        maintained pursuant to the Company's workers' compensation and general
        liability self-insurance requirements.

        Working capital amounted to $124.1 million at December 26, 1999 and
        $130.9 million at September 26, 1999, and the Company's current ratios
        were 1.73:1, and 1.79:1, respectively. Fluctuations in working capital
        and current ratios are not unusual in the industry.

        The net cash used in operating activities in the thirteen weeks ended
        December 26, 1999 amounted to $12.9 million compared to net cash
        provided by operating activities of $14.3 million for the thirteen weeks
        ended December 27, 1998. Fluctuations in net cash provided by or used in
        operating activities are not unusual in the industry. Cash used in
        operating activities in fiscal 2000 of $12.9 million consisted of
        increases in inventories in both the warehouses and the supermarkets of
        $16.9 million and a decrease in accounts payable of $7.2 million,
        partially offset by increases in accrued liabilities, such as interest,
        utilities and rents, of approximately $12.2 million.

        Net cash used in investing activities for the thirteen weeks ended
        December 26, 1999, amounted to $13.7 million, compared to $7.1 million
        for the thirteen weeks ended December 27, 1998. The difference in net
        cash used in investing activities between the comparable periods is due
        to the Company's capital expenditures during such periods, net of
        proceeds from asset dispositions. Capital expenditures amounted to $13.7
        million in the first quarter of fiscal 2000 compared to $7.8 million in
        the first quarter of fiscal 1999. During the first quarter of fiscal
        2000, capital expenditures of $10.5 million were incurred to fund
        projects related to the acquisition of the 43 supermarkets and related
        warehouse expansions. Additional capital expenditures were used to
        acquire land for a store site, fund the remaining Year 2000 projects as
        well as to fund normal maintenance capital expenditures.

        Net cash used by financing activities amounted to $477,000 and $317,000
        for the thirteen weeks ended December 26, 1999, and December 27, 1998,
        respectively, and consisted of payments on the Company's capitalized
        lease obligations.



                                       12
<PAGE>   13

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


        THE CREDIT FACILITIES

        Stater Bros.' principal operating subsidiary, Stater Bros. Markets,
        signed a new credit facility with Bank of America N.A. on August 6,
        1999. The credit facility provides for (i) a $50.0 million three-year
        revolving loan facility and (ii) a $25.0 million three-year letter of
        credit facility. Borrowings under the revolving loan facility are
        unsecured and expected to be used for certain working capital and
        corporate purposes. Letters of credit under the letter of credit
        facility are expected to be used to support the purchase of inventory,
        obligations incurred in connection with the construction of stores, and
        workmen's compensation insurance obligations. The availability of the
        loans and letters of credit are subject to certain sub-limits and other
        borrowing restrictions.

        Indebtedness of Stater Bros. Markets under the credit facility is
        guaranteed by Stater Bros. Development, Inc., a subsidiary of the
        Company, and any subsidiaries that Stater Bros. Markets or Stater Bros.
        Development, Inc. acquires or forms after the date of the new credit
        facility.

        Loans under the credit facility bear interest at a rate based upon
        either (i) the "Base Rate" (defined as the higher of (a) the rate of
        interest publicly announced by Bank of America as its "reference rate"
        and (b) the federal funds effective rate from time to time plus 0.50%),
        plus 1.00%, or (ii) the "Offshore Rate" (defined as the rate (adjusted
        for statutory reserve requirements for eurocurrency liabilities) at
        which eurodollar deposits for one, two, three or six months (as selected
        by Stater Bros. Markets) are offered to Bank of America in the
        inter-bank eurodollar market), plus 2.25%. The loans under the revolving
        loan facility must be repaid for a period of ten consecutive days
        semi-annually.

        The credit facility requires Stater Bros. Markets to meet certain
        financial tests, including minimum net worth and minimum EBITDA tests.
        The credit facility contains covenants which, among other things, will
        limit indebtedness, liens, guarantee obligations, mergers,
        consolidations, liquidations and dissolutions, asset sales, leases,
        investments, loans and advances, transactions with affiliates, sale and
        leasebacks, other matters customarily restricted in such agreements and
        modifications to the holding company status of Stater Bros.

        The credit facility also contains covenants that apply to Stater Bros.
        Holdings Inc., and Stater Bros. Holdings Inc. is a party to the new
        credit facility for purposes of these covenants. These covenants, among
        other things, limit dividends and other payments in respect of Stater
        Bros. Holdings Inc.'s capital stock, prepayments and redemptions of the
        exchange notes and other debt, and limit indebtedness, investments,
        loans and advances by Stater Bros. Holdings Inc. The credit facility
        requires Stater Bros. Holdings Inc. and Stater Bros. Markets to comply
        with certain covenants intended to ensure that their legal identities
        remain separate.

        The credit facility contains customary events of default, including
        payment defaults; material inaccuracies in representations and
        warranties; covenant defaults; cross-defaults to certain other
        indebtedness; certain bankruptcy events; certain ERISA events; judgment;
        defaults; invalidity of any guaranty; failure of Jack H. Brown to be
        Chairman of the Board and Chief Executive Officer of Stater Bros.
        Markets; and change of control.



                                       13
<PAGE>   14

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS



        As of December 26, 1999, for purposes of the credit facility with Bank
        of America, Stater Bros. Markets was in compliance with all restrictive
        covenants and exceeded the minimum net worth covenant by approximately
        $113.7 million. The minimum EBITDA (as defined) covenant measurement
        period begins in the quarter ending March 26, 2000, and requires an
        annualized minimum EBITDA of $75.0 million.

        As of December 26, 1999, for the purposes of the credit facility with
        Bank of America, Stater Bros. Holdings Inc. was in compliance with all
        restrictive covenants.

        The Company is also subject to certain covenants associated with its 11%
        Senior Notes due 2001 and its 10.75% Senior Notes due 2006. As of
        December 26, 1999, the Company was in compliance with all such
        covenants. However, there can be no assurance that the Company will be
        able to achieve the expected operating results or implement the capital
        expenditure strategy upon which future compliance with such covenants is
        based.

        LABOR RELATIONS

        The Company and other major supermarket employers in Southern California
        negotiated a four-year contract, beginning October 1999, with the United
        Food and Commercial Workers Union. The Company's collective bargaining
        agreement with the International Brotherhood of Teamsters was renewed in
        1998 and expires in September 2002. Management believes it has good
        relations with its employees.

        YEAR 2000 COMPLIANCE

        The Company successfully achieved compliance with the Year 2000
        requirements and Year 2000 related issues had no material adverse effect
        on the Company's results of operations, liquidity or financial
        condition. However, no assurance can be given that unforeseen problems
        may not occur in the future that may have material adverse effect on the
        Company's results of operations, liquidity or financial condition.

        The Company's costs required to achieve Year 2000 compliance such as
        replace or modify Information Systems, including scheduled replacements
        of in-store Point of Sale equipment, was approximately $8.5 million, of
        which $7.0 million was capitalized and $1.5 million was expensed.

        EFFECT OF INFLATION AND COMPETITION

        The Company's performance is affected by inflation. In recent years the
        impact of inflation on the operations of the Company has been moderate.
        As inflation has increased expenses, the Company has recovered, to the
        extent permitted by competition, the increase in expenses by increasing
        prices over time. However, the economic and competitive environment in
        Southern California continues to challenge the Company to become more
        cost efficient as its ability to recover increases in expenses through
        price increases is diminished. The future results of operations of the
        Company will depend upon the ability of the Company to adapt to the
        current economic environment as well as the current competitive
        conditions.

        The Company conducts business in one industry segment, the operation of
        retail food supermarkets, which offer for sale to the public most
        merchandise typically found in supermarkets. The supermarket industry is
        highly competitive and is characterized by low profit margins. The
        Company's primary competitors include Vons, Albertson's, Ralphs and a
        number of independent supermarket operators. Competitive factors
        typically include the price, quality and selection of products offered
        for sale, customer



                                       14
<PAGE>   15

                           STATER BROS. HOLDINGS INC.
                     MANAGEMENT'S DISCUSSION AND ANALYSIS OF
                  FINANCIAL CONDITION AND RESULTS OF OPERATIONS


        service, and the convenience and location of retail facilities. The
        Company monitors competitive activity and Senior Management regularly
        reviews the Company's marketing and business strategy and periodically
        adjusts them to adapt to changes in the Company's primary trading area.

        CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE
        PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.

        The Private Securities Litigation Reform Act of 1995 provides a "safe
        harbor" for forward-looking statements. Certain information contained in
        the Company's filings with the Securities and Exchange Commission (as
        well as information included in oral statements or other written
        statements made or to be made by the Company) includes statements that
        are forward-looking, such as statements relating to plans for future
        activities. Such forward-looking information involves important risks
        and uncertainties that could significantly affect results in the future
        and, accordingly, such results may differ from those expressed in any
        forward-looking statements made by or on behalf of the Company. These
        risks and uncertainties include, but are not limited to, those relating
        to domestic economic conditions, seasonal and weather fluctuations,
        expansion and other activities of competitors, changes in federal or
        state laws and the administration of such laws and the general condition
        of the economy.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK

        Not Applicable.



                                       15
<PAGE>   16

                           STATER BROS. HOLDINGS INC.
                                DECEMBER 26, 1999

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

        Various legal actions and claims are pending against the Company in the
        ordinary course of business. In the opinion of management and its
        general legal counsel, the ultimate resolution of such pending legal
        actions and claims will not have a material adverse effect on the
        Company's consolidated financial position or its results of operations.

        For a description of legal proceedings, please refer to the footnote
        entitled "Legal Proceedings" contained in the Notes to Consolidated
        Financial Statements section of the Company's Form 10-K for the fiscal
        year ended September 26, 1999.

ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS

        None

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

        None

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

        None

ITEM 5. OTHER INFORMATION

        None

ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K

        (a)  Exhibits

             Exhibits are as follows:

<TABLE>
<CAPTION>
             EXHIBIT NO.       DESCRIPTION
             -----------       -----------
<S>                            <C>
                11             Calculation of Earnings Per Common Share.
                27             Financial Data Schedule
</TABLE>

                        Copies of Exhibits listed herein can be obtained by
                        writing and requesting such Exhibits from: Corporate
                        Secretary, P. O. Box 150, Colton, California 92324.

        (b)  Reports on Form 8-K

             None



                                       16
<PAGE>   17

                           STATER BROS. HOLDINGS INC.

                                   Signatures

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



             Date:  February 4, 2000       /s/ Jack H. Brown
                                           ---------------------------------
                                           Jack H. Brown
                                           Chairman of the Board, President,
                                           and Chief Executive Officer



             Date:  February 4, 2000       /s/ Dennis N. Beal
                                           ----------------------------------
                                           Dennis N. Beal
                                           Senior Vice President, Finance and
                                           Chief Financial Officer
                                           (Chief Accounting Officer)



                                       17