##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  X quarterly report pursuant to section or of the securities
 exchange act of 1934
  or
 transition report pursuant to section or of the
securities  exchange act of 1934
  001-13222
   Delaware
(State or other jurisdiction of incorporation or 
organization)
    
    33-0350671
(I.R.S. Employer Identification No.)
 301 S. Tippecanoe AvenueSan Bernardino, California
          (Address of principal executive offices)
    
    92408
  (Zip Code)
 Registrants telephone number, including area code
    
    (909) 733-5000
 Not Applicable
 x o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer x
    
    Smaller reporting company o(Do not check if a smaller reporting company)
 o x
 1




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##### 



STATER BROS. HOLDINGS INC.  June 29, 2008
 INDEX
 PART I
    
    FINANCIAL INFORMATION
    
    
    PageItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of September 30, 2007 and
June 29, 2008 (Unaudited)
    
    
    3Consolidated Statements of Income (Unaudited) for the 13 weeks ended
June 24, 2007 and June 29, 2008
    
    
    5Consolidated Statements of Income (Unaudited) for the 39 weeks ended
June 24, 2007 and June 29, 2008
    
    
    6Consolidated Statements of Cash Flows (Unaudited) for the 39 weeks
ended June 24, 2007 and June 29, 2008
    
    
    7Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    16Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    28Item 4T.
    
    Controls and Procedures
    
    
    28PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    29Item 1A.
    
    Risk Factors
    
    
    29Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    30Item 3.
    
    Defaults Upon Senior Securities
    
    
    30Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    30Item 5.
    
    Other Information
    
    
    30Item 6.
    
    Exhibits
    
    
    30SIGNATURES

    
    
    31EXHIBIT 31.1EXHIBIT 31.2EXHIBIT 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. 30,
    
    June 29,2007
    
    2008(Unaudited)Current assetsCash and cash equivalents
    
    $
    277,062
    
    
    $
    164,070Restricted cash
    
    
    8,121
    
    
    
    5,621Receivables, net of allowance of $1,006 in 2007 and $2,060 in 2008
    
    
    46,391
    
    
    
    53,155Inventories
    
    
    202,073
    
    
    
    221,290Prepaid expenses
    
    
    11,026
    
    
    
    10,432Deferred income taxes
    
    
    23,939
    
    
    
    25,484Total current assets
    
    
    568,612
    
    
    
    480,052Property and equipmentLand
    
    
    112,029
    
    
    
    111,492Buildings and improvements
    
    
    479,808
    
    
    
    587,170Store fixtures and equipment
    
    
    403,052
    
    
    
    424,595Property subject to capital leases
    
    
    24,747
    
    
    
    10,0611,019,636
    
    
    
    1,133,318Less accumulated depreciation and amortization
    
    
    389,992
    
    
    
    413,221629,644
    
    
    
    720,097Deferred income taxes, long-term
    
    
    22,889
    
    
    
    29,510Deferred debt issuance cost, net
    
    
    17,671
    
    
    
    15,272Long-term receivable
    
    
    22,228
    
    
    
    22,228Goodwill
    
    
    2,894
    
    
    
    2,894Other assets
    
    
    6,340
    
    
    
    6,33772,022
    
    
    
    76,241Total assets
    
    $
    1,270,278
    
    
    $
    1,276,390
  3




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (contd.)
 LIABILITIES AND STOCKHOLDERS EQUITY
 Sept. 30,
    
    June 29,2007
    
    2008(Unaudited)Current liabilitiesAccounts payable
    
    $
    187,978
    
    
    $
    184,139Accrued payroll and related expenses
    
    
    60,761
    
    
    
    55,306Other accrued liabilities
    
    
    77,109
    
    
    
    50,213Accrued income taxes
    
    
    4,727
    
    
    
    31Current portion of capital lease obligations
    
    
    1,008
    
    
    
    1,121Total current liabilities
    
    
    331,583
    
    
    
    290,810Long-term debt
    
    
    810,000
    
    
    
    810,000Capital lease obligations, less current portion
    
    
    6,285
    
    
    
    5,430Long-term portion of self-insurance and other reserves
    
    
    36,307
    
    
    
    40,497Long-term deferred benefits
    
    
    57,388
    
    
    
    67,923Other long-term liabilities
    
    
    19,436
    
    
    
    18,990Total liabilities
    
    
    1,260,999
    
    
    
    1,233,650Commitment 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 - 100,000Issued and outstanding shares - 35,770
    
    
    -
    
    
    
    -Additional paid-in capital
    
    
    9,096
    
    
    
    9,096Accumulated other comprehensive loss
    
    
    (9,037
    )
    
    
    (9,037
    )Retained earnings
    
    
    9,220
    
    
    
    42,681Total stockholders equity
    
    
    9,279
    
    
    
    42,740Total liabilities and stockholders equity
    
    $
    1,270,278
    
    
    $
    1,276,390
  4




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
   13 Weeks EndedJune 24,
    
    June 29,2007
    
    2008Sales
    
    $
    910,229
    
    
    $
    932,668Cost of goods sold
    
    
    656,442
    
    
    
    683,447Gross profit
    
    
    253,787
    
    
    
    249,221Operating expensesSelling, general and administrative expenses
    
    
    199,849
    
    
    
    207,853Depreciation and amortization
    
    
    12,313
    
    
    
    12,996Total operating expenses
    
    
    212,162
    
    
    
    220,849Operating profit
    
    
    41,625
    
    
    
    28,372Interest income
    
    
    4,930
    
    
    
    962Interest expense
    
    
    (16,829
    )
    
    
    (14,904
    )Interest related to debt purchase
    
    
    (3,953
    )
    
    
    -Other income, net
    
    
    159
    
    
    
    99Income before income taxes
    
    
    25,932
    
    
    
    14,529Income taxes
    
    
    10,330
    
    
    
    5,350Net income
    
    $
    15,602
    
    
    $
    9,179Earnings per average common share outstanding
    
    $
    431.26
    
    
    $
    256.61Average common shares outstanding
    
    
    36,178
    
    
    
    35,770Shares outstanding at end of period
    
    
    35,770
    
    
    
    35,770
  5




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
   39 Weeks EndedJune 24,
    
    June 29,2007
    
    2008Sales
    
    $
    2,680,645
    
    
    $
    2,801,059Cost of goods sold
    
    
    1,935,524
    
    
    
    2,051,131Gross profit
    
    
    745,121
    
    
    
    749,928Operating expensesSelling, general and administrative expenses
    
    
    605,335
    
    
    
    620,703Depreciation and amortization
    
    
    36,282
    
    
    
    39,069Total operating expenses
    
    
    641,617
    
    
    
    659,772Operating profit
    
    
    103,504
    
    
    
    90,156Interest income
    
    
    10,475
    
    
    
    4,975Interest expense
    
    
    (44,863
    )
    
    
    (42,907
    )Interest related to debt purchase
    
    
    (3,953
    )
    
    
    -Other income (expenses), net
    
    
    (9
    )
    
    
    2,839Income before income taxes
    
    
    65,154
    
    
    
    55,063Income taxes
    
    
    26,190
    
    
    
    21,602Net income
    
    $
    38,964
    
    
    $
    33,461Earnings per average common share outstanding
    
    $
    1,062.96
    
    
    $
    935.45Average common shares outstanding
    
    
    36,656
    
    
    
    35,770Shares outstanding at end of period
    
    
    35,770
    
    
    
    35,770
  6




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
   39 Weeks EndedJune 24,
    
    June 29,2007
    
    2008Operating activities:Net income
    
    $
    38,964
    
    
    $
    33,461Adjustments to reconcile net income to net cash
provided by operating activities:Premium paid on purchase of debt
    
    
    (1,750
    )
    
    
    -Depreciation and amortization
    
    
    45,060
    
    
    
    49,894Amortization of debt issuance costs
    
    
    4,623
    
    
    
    2,399Increase in deferred income taxes
    
    
    (6,115
    )
    
    
    (8,166
    )(Gain) Loss on disposals of assets
    
    
    143
    
    
    
    (2,544
    )Changes in operating assets and liabilities:Decrease in restricted cash
    
    
    16,000
    
    
    
    2,500Increase in receivables
    
    
    (9,363
    )
    
    
    (541
    )Decrease in income tax receivables
    
    
    3,863
    
    
    
    -Increase in inventories
    
    
    (3,297
    )
    
    
    (19,217
    )Decrease in prepaid expenses
    
    
    1,411
    
    
    
    582(Increase) decrease in other assets
    
    
    (287
    )
    
    
    3Decrease in accounts payable
    
    
    (2,192
    )
    
    
    (3,839
    )Increase (decrease) in accrued
income taxes
    
    
    7,093
    
    
    
    (4,696
    )Decrease in other accrued liabilities
    
    
    (14,429
    )
    
    
    (32,351
    )Increase in long-term reserves
    
    
    12,413
    
    
    
    14,279Net cash provided by operating activities
    
    
    92,137
    
    
    
    31,764Financing activities:Stock redemption
    
    
    (15,000
    )
    
    
    -Debt issuance costs
    
    
    (6,479
    )
    
    
    -Proceeds from issuance of long-term debt
    
    
    285,000
    
    
    
    -Principal payment on long-term debt
    
    
    (175,000
    )
    
    
    -Dividends paid
    
    
    (5,000
    )
    
    
    -Principal payments on capital lease obligation
    
    
    (823
    )
    
    
    (742
    )Net cash provided by (used in) financing activities
    
    
    82,698
    
    
    
    (742
    )Investing activities:Decrease in short-term investments
    
    
    26,849
    
    
    
    -Increase in store construction reimbursements
    
    
    (3,679
    )
    
    
    (6,223
    )Increase in long-term receivable
    
    
    (10,068
    )
    
    
    -Purchase of property and equipment
    
    
    (112,590
    )
    
    
    (141,060
    )Proceeds from sale of property and equipment
    
    
    204
    
    
    
    3,269Net cash used in investing activities
    
    
    (99,284
    )
    
    
    (144,014
    )Net increase (decrease) in cash and cash equivalents
    
    
    75,551
    
    
    
    (112,992
    )Cash and cash equivalents at beginning of period
    
    
    198,545
    
    
    
    277,062Cash and cash equivalents at end of period
    
    $
    274,096
    
    
    $
    164,070Interest paid
    
    $
    57,278
    
    
    $
    65,437Income taxes paid
    
    $
    21,350
    
    
    $
    34,550
  7




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 1 Basis of Presentation
  Note 2 Principles of Consolidation
  Note 3 Recent Accounting Pronouncements
  .
  8




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STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 3 Recent Accounting Pronouncements (contd.)
 The Hierarchy of Generally Accepted Accounting
Principles. The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles
 Note 4 Use of Estimates
  Note 5 Restricted Cash
  Note 6 Income Taxes
    9




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 7 Retirement Plans
   Thirteen Weeks Ended
    
    
    Thirty-Nine Weeks EndedJune 24,
    
    
    June 29,
    
    
    June 24,
    
    
    June 29,2007
    
    
    2008
    
    
    2007
    
    
    2008(in thousands)
    
    
    (in thousands)Expected return on assets
    
    $
    (663
    )
    
    $
    (784
    )
    
    $
    (1,989
    )
    
    $
    (2,353
    )Service cost
    
    
    664
    
    
    
    658
    
    
    
    1,994
    
    
    
    1,973Interest cost
    
    
    813
    
    
    
    899
    
    
    
    2,438
    
    
    
    2,699Amortization of prior service cost
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (2
    )Amortization of recognized losses
    
    
    223
    
    
    
    150
    
    
    
    669
    
    
    
    452Net pension expense
    
    $
    1,036
    
    
    $
    922
    
    
    $
    3,110
    
    
    $
    2,769Actuarial assumptions used to determine net pension expense were:Discount rate
    
    
    5.80
    %
    
    
    6.25
    %
    
    
    5.80
    %
    
    
    6.25
    %Rate of increase in compensation levels
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %Expected long-term rate of return on
assets
    
    
    5.00
    %
    
    
    6.50
    %
    
    
    5.00
    %
    
    
    6.50
    %
  10




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 8 Segment Information
   Thirteen Weeks
    
    
    Thirty-Nine WeeksRetail
    
    
    All Other
    
    
    Total
    
    
    Retail
    
    
    All Other
    
    
    Total(in thousands)
    
    (in thousands)Sales to external customers
    
        $
    885,478
    
    
        $
    24,751
    
    
        $
    910,229
    
    
        $
    2,608,793
    
    
        $
    71,852
    
    
        $
    2,680,645Intersegment sales
    
        $
    -
    
    
        $
    21,775
    
    
        $
    21,775
    
    
        $
    -
    
    
        $
    59,841
    
    
        $
    59,841Operating profit (loss)
    
        $
    41,694
    
    
        $
    (69
    )
    
        $
    41,625
    
    
        $
    104,631
    
    
        $
    (1,127
    )
    
        $
    103,504Net income (loss)
    
        $
    26,756
    
    
        $
    (11,154
    )
    
        $
    15,602
    
    
        $
    67,539
    
    
        $
    (28,575
    )
    
        $
    38,964
   Thirteen Weeks
    
    
    Thirty-Nine WeeksRetail
    
    
    All Other
    
    
    Total
    
    
    Retail
    
    
    All Other
    
    
    Total(in thousands)
  
    (in thousands)Sales to external customers
    
        $
    908,169
    
    
        $
    24,499
    
    
        $
    932,668
    
    
        $
    2,719,826
    
    
        $
    81,233
    
    
        $
    2,801,059Intersegment sales
    
        $
    -
    
    
        $
    23,786
    
    
        $
    23,786
    
    
        $
    -
    
    
        $
    (76,000
    )
    
        $
    (76,000
    )Operating profit (loss)
    
        $
    28,889
    
    
        $
    (517
    )
    
        $
    28,372
    
    
        $
    90,306
    
    
        $
    (150
    )
    
        $
    90,156Net income (loss)
    
        $
    17,636
    
    
        $
    (8,457
    )
    
        $
    9,179
    
    
        $
    56,056
    
    
        $
    (22,595
    )
    
        $
    33,461
  11




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 9 Subsidiary Guarantee
   Note 10 Issuance of New Debt and Early Extinguishment of Debt
   Note 11 Stock Redemption and Dividend
 Stock Redemption
  Dividend
  12




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 12 New Corporate Office and Distribution Center
    Thirteen
    
    
    Thirty-nineweeks ended
    
    
    weeks endedJune 29, 2008
    
    
    June 29, 2008(in thousands)
    
    
    (in thousands)Reserve for closures at beginning of period
    
    $
    2,588
    
    
    $
    731Additional amounts reserved during period
    
    
    834
    
    
    
    2,800Amounts paid or otherwise settled during period
    
    
    (1,299)
    
    
    
    (1,408)Reserve for closures at end of period
    
    $
    2,123
    
    
    $
    2,123
 Note 13 Credit Facilities
 Markets Credit Facility
   13




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 13 Credit Facilities (contd.)
    Santees Revolver
       14




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
  June 29, 2008
 Note 14 Litigation Matters
   15




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 MANAGEMENTS 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
 Self-Insurance Reserves
 Employee Benefit Plans
  16




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES (contd.)
 Employee Benefit Plans (contd.)
 Long-Lived Assets
  Income Taxes
 Goodwill
 17




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES (contd.)
 Facility Closing Costs
 Advertising Allowances
  Gift Cards and Certificates
 Significant Accounting Policies
 18




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OWNERSHIP OF THE COMPANY
 EXECUTIVE OVERVIEW
     19




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS
 Thirteen Weeks Ended
    
    ChangeJune 24,
    
    June 29,
    
    2008 to 2007($ in thousands)
    
    2007
    
    2008
    
    Dollar
    
    %Sales
    
        $
    910,229
    
    
        $
    932,668
    
    
        $
    22,439
    
    
    
    2.47%Gross Profit
    
        $
    253,787
    
    
        $
    249,221
    
    
        $
    (4,566)
    
    
    
    (1.80)%as a % of sales
    
    
    27.88%
    
    
    
    26.72%
 Thirteen Weeks Ended
    
    ChangeJune 24,
    
    June 29,
    
    2008 to 2007($ in thousands)
    
    2007
    
    2008
    
    Dollar
    
    %Sales
    
        $
    2,680,645
    
    
        $
    2,801,059
    
    
        $
    120,414
    
    
    
    4.49%Gross Profit
    
        $
    745,121
    
    
        $
    749,928
    
    
        $
    4,807
    
    
    
    0.65%as a % of sales
    
    
    27.80%
    
    
    
    26.77%
 Sales
 Like Store Sales
    20




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
 Santee Sales
 Gross Profit
 Operating Expenses and Income
 Thirteen Weeks Ended
    
    ChangeJune 24,
    
    June 29,
    
    2008 to 2007($ in thousands)
    
    2007
    
    2008
    
    Dollar
    
    %Operating Expenses:Selling, general andadministrative expenses
    
    $
    199,849
    
    
    $
    207,853
    
    
    $
    8,004
    
    
    
    4.01%as a % of sales
    
    
    21.96%
    
    
    
    22.29%Depreciation and amortization
    
    $
    12,313
    
    
    $
    12,996
    
    
    $
    683
    
    
    
    5.55%as a % of sales
    
    
    1.35%
    
    
    
    1.39%Operating profit
    
    $
    41,625
    
    
    $
    28,372
    
    
    $
    (13,253
    )
    
    
    (31.84)%as a % of sales
    
    
    4.57%
    
    
    
    3.04%
 Thirty-Nine Weeks Ended
    
    ChangeJune 24,
    
    June 29,
    
    2008 to 2007($ in thousands)
    
    2007
    
    2008
    
    Dollar
    
    %Operating Expenses:Selling, general andadministrative expenses
    
    $
    605,335
    
    
    $
    620,703
    
    
    $
    15,368
    
    
    
    2.54%as a % of sales
    
    
    22.59%
    
    
    
    22.16%Depreciation and amortization
    
    $
    36,282
    
    
    $
    39,069
    
    
    $
    2,787
    
    
    
    7.68%as a % of sales
    
    
    1.35%
    
    
    
    1.39%Operating profit
    
    $
    103,504
    
    
    $
    90,156
    
    
    $
    (13,348
    )
    
    
    (12.90)%as a % of sales
    
    
    3.86%
    
    
    
    3.22%
 21




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
 Selling, General and Administrative Expenses
   Depreciation and Amortization
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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
 Interest Income
 Interest Expense
  Interest Related to Debt Purchase
 Other Income/Expenses, net
 Income Before Income Taxes
 Income Taxes
 Net Income
 23




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 LIQUIDITY AND CAPITAL RESOURCES
   24




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS 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 Years8.125%
Senior Notes due June 2012Principal
    
    $
    525,000
    
    
    $
    -
    
    
    $
    -
    
    
    $
    525,000
    
    
    $
    -Interest
    
    
    170,625
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    42,656
    
    
    
    -695,625
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    567,656
    
    
    
    -7.75 %
Senior Note due April 2015Principal
    
    $
    285,000
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
    
    
    $
    285,000Interest
    
    
    154,613
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    44,175
    
    
    
    44,175439,613
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    44,175
    
    
    
    329,175Capital
lease obligations
(1)Principal
    
    $
    6,551
    
    
    $
    1,121
    
    
    $
    2,810
    
    
    $
    2,106
    
    
    $
    514Interest
    
    
    2,957
    
    
    
    989
    
    
    
    1,403
    
    
    
    528
    
    
    
    379,508
    
    
    
    2,110
    
    
    
    4,213
    
    
    
    2,634
    
    
    
    551Operating leases (1)
    
    
    331,494
    
    
    
    37,382
    
    
    
    61,027
    
    
    
    49,723
    
    
    
    183,362Total contractual cash obligations
    
    $
    1,476,240
    
    
    $
    104,236
    
    
    $
    194,728
    
    
    $
    664,188
    
    
    $
    513,088Other Commercial Commitments(in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsStandby letters of credit (2)
    
    $
    49,774
    
    
    $
    49,774
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -Total other commercial commitments
    
    $
    49,774
    
    
    $
    49,774
    
    
    $
    -
    
    
    $
    -
    
    
    $
    -
 (1)
 (2)
 25




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 LIQUIDITY AND CAPITAL RESOURCES (contd.)
      Labor Relations
 26




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RECENT ACCOUNTING PRONOUNCEMENTS
  .
  The Hierarchy of Generally Accepted Accounting
Principles. The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles
 CAUTIONARY STATEMENT FOR PURPOSES OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995.
  27




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##### Table of Contents



STATER BROS. HOLDINGS INC.
JUNE 29, 2008
 PART
I - FINANCIAL INFORMATION (contd.)
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 Item 4T. CONTROLS AND PROCEDURES
 Disclosure Controls and Procedures
  Changes in Internal control Over Financial Reporting
  Limitations on Effectiveness of Controls
  28




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##### Table of Contents



STATER BROS. HOLDINGS INC.
JUNE 29, 2008
 
 PART
II - OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
    
 Item 1A. RISK FACTORS
   29




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##### Table of Contents



STATER BROS. HOLDINGS INC.
JUNE 29, 2008
 PART
II - OTHER INFORMATION (contd.)
 Item 1A. RISK FACTORS (contd.)
  
 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)
    
    Exhibits31.1
    
    Certification of Principal Executive Officer pursuant to Section 302
(a) of the Sarbanes-Oxley Act of 2002.31.2
    
    Certification of Principal Financial Officer pursuant to Section 302
(a) of the Sarbanes-Oxley Act of 2002.32.1
    
    Certification of Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 30




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##### Table of Contents



STATER BROS. HOLDINGS INC.
 
   Date: August 13, 2008
    
    /s/ Jack H. BrownJack H. BrownChairman of the Board, President,and Chief Executive Officer(Principal Executive Officer)Date: August 13, 2008
    
    /s/Phillip J. SmithPhillip J. SmithExecutive Vice President
and Chief Financial Officer(Principal Financial Officer)
 31