##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 FORM 10-Q
  þ
    

QUARTERLY
REPORT PURSUANT TO SECTION 13 OR  15(d)
 OF THE SECURITIES EXCHANGE
ACT OF 1934
 For the quarterly period ended June 24, 2007
 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.)21700 Barton RoadColton, California
    
    92324(Address of principal executive offices)
    
    (Zip Code)
 (909) 783-5000
 (Former name, former address and former fiscal year, if changed since last report.)
 þ o
  o o þ
 o þ




---



##### 



STATER BROS. HOLDINGS INC.  June 24, 2007
 INDEX
 PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of September 24, 2006 and
June 24, 2007 (Unaudited)
    
    
    3Consolidated Statements of Income (Unaudited) for the 13 weeks ended
June 25, 2006 and June 24, 2007
    
    
    5Consolidated Statements of Income (Unaudited) for the 39 weeks ended
June 25, 2006 and June 24, 2007
    
    
    6Consolidated Statements of Cash Flows (Unaudited) for the 39 weeks
ended June 25, 2006 and June 24, 2007
    
    
    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
    
    
    28Item 4.
    
    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




---



##### Table of Contents



Item 1.
    
    FINANCIAL STATEMENTS
 STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED BALANCE SHEETS
  ASSETS
 Sept. 24,
    
    
    June 24,2006
    
    
    2007(Unaudited)Current assetsCash and cash equivalents
    
    $
    198,545
    
    
    $
    274,096Restricted cash
    
    
    24,121
    
    
    
    8,121Short-term investments
    
    
    26,849
    
    
    
    Receivables, net of allowance of $936 and $903
    
    
    35,310
    
    
    
    48,352Income tax receivables
    
    
    3,863
    
    
    
    Inventories
    
    
    196,031
    
    
    
    199,328Prepaid expenses
    
    
    8,513
    
    
    
    7,102Deferred income taxes
    
    
    21,609
    
    
    
    23,649Total current assets
    
    
    514,841
    
    
    
    560,648Property and equipmentLand
    
    
    110,479
    
    
    
    112,013Buildings and improvements
    
    
    323,805
    
    
    
    411,401Store fixtures and equipment
    
    
    397,491
    
    
    
    414,718Property subject to capital leases
    
    
    25,836
    
    
    
    24,747857,611
    
    
    
    962,879Less accumulated depreciation and amortization
    
    
    360,538
    
    
    
    398,611497,073
    
    
    
    564,268Deferred debt issuance costs, net
    
    
    15,972
    
    
    
    17,828Deferred income taxes, long-term
    
    
    8,845
    
    
    
    12,920Long-term receivable
    
    
    12,160
    
    
    
    22,228Goodwill
    
    
    2,894
    
    
    
    2,894Other assets
    
    
    6,307
    
    
    
    6,58246,178
    
    
    
    62,452Total assets
    
    $
    1,058,092
    
    
    $
    1,187,368
  3




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (contd.)
 LIABILITIES AND STOCKHOLDERS EQUITY (DEFICIT)
 Sept. 24,
    
    
    June 24,2006
    
    
    2007(Unaudited)Current liabilitiesAccounts payable
    
    $
    155,827
    
    
    $
    153,635Accrued payroll and related expenses
    
    
    55,582
    
    
    
    61,905Accrued income taxes
    
    
    
    
    
    
    7,093Other accrued liabilities
    
    
    69,098
    
    
    
    46,596Current portion of capital lease obligations
    
    
    1,054
    
    
    
    974Total current liabilities
    
    
    281,561
    
    
    
    270,203Long-term debt
    
    
    700,000
    
    
    
    810,000Capital lease obligations, less current portion
    
    
    7,294
    
    
    
    6,551Long-term portion of self-insurance and other reserves
    
    
    33,112
    
    
    
    35,046Long-term deferred benefits
    
    
    43,573
    
    
    
    54,615Other long-term liabilities
    
    
    3,631
    
    
    
    3,068Total liabilities
    
    
    1,069,171
    
    
    
    1,179,483Commitment and ContingenciesStockholders equity (deficit)Common 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 - 36,895 in 2006
and 35,770 in 2007
    
    
    
    
    
    
    Additional paid-in capital
    
    
    9,382
    
    
    
    9,096Retained deficit
    
    
    (20,461
    )
    
    
    (1,211
    )Total stockholders equity (deficit)
    
    
    (11,079
    )
    
    
    7,885Total liabilities and stockholders equity (deficit)
    
    $
    1,058,092
    
    
    $
    1,187,368
  4




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
   13 Weeks EndedJune 25,
    
    
    June 24,2006
    
    
    2007Sales
    
    $
    886,221
    
    
    $
    910,229Cost of goods sold
    
    
    656,521
    
    
    
    656,442Gross profit
    
    
    229,700
    
    
    
    253,787Operating expensesSelling, general and administrative expenses
    
    
    193,451
    
    
    
    199,849Depreciation and amortization
    
    
    11,898
    
    
    
    12,313Total operating expenses
    
    
    205,349
    
    
    
    212,162Operating profit
    
    
    24,351
    
    
    
    41,625Interest income
    
    
    2,627
    
    
    
    4,930Interest expense
    
    
    (14,731
    )
    
    
    (16,829
    )Interest related to debt purchase
    
    
    
    
    
    
    (3,953
    )Other income (expenses), net
    
    
    (702
    )
    
    
    159Income before income taxes
    
    
    11,545
    
    
    
    25,932Income taxes
    
    
    5,803
    
    
    
    10,330Net income
    
    $
    5,742
    
    
    $
    15,602Earnings per share
    
    $
    155.63
    
    
    $
    431.26Average common shares outstanding
    
    
    36,895
    
    
    
    36,178Shares outstanding at end of period
    
    
    36,895
    
    
    
    35,770
  5




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
   39 Weeks EndedJune 25,
    
    
    June 24,2006
    
    
    2007Sales
    
    $
    2,617,138
    
    
    $
    2,680,645Cost of goods sold
    
    
    1,928,211
    
    
    
    1,935,524Gross profit
    
    
    688,927
    
    
    
    745,121Operating expensesSelling, general and administrative expenses
    
    
    590,227
    
    
    
    605,335Depreciation and amortization
    
    
    33,315
    
    
    
    36,282Total operating expenses
    
    
    623,542
    
    
    
    641,617Operating profit
    
    
    65,385
    
    
    
    103,504Interest income
    
    
    7,515
    
    
    
    10,475Interest expense
    
    
    (44,271
    )
    
    
    (44,863
    )Interest related to debt purchase
    
    
    
    
    
    
    (3,953
    )Other expenses, net
    
    
    (1,395
    )
    
    
    (9
    )Income before income taxes
    
    
    27,234
    
    
    
    65,154Income taxes
    
    
    11,984
    
    
    
    26,190Net income
    
    $
    15,250
    
    
    $
    38,964Earnings per share
    
    $
    406.14
    
    
    $
    1,062.96Average common shares outstanding
    
    
    37,549
    
    
    
    36,656Shares outstanding at end of period
    
    
    36,895
    
    
    
    35,770
  6




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
   39 Weeks EndedJune 25,
    
    
    June 24,2006
    
    
    2007Operating activities:Net income
    
    $
    15,250
    
    
    $
    38,964Adjustments to reconcile net income to net cash
provided by operating activities:Premium paid on purchase of debt
    
    
    
    
    
    
    (1,750
    )Depreciation and amortization
    
    
    42,141
    
    
    
    45,060Deferred income taxes
    
    
    (2,694
    )
    
    
    (6,115
    )Amortization of debt issuance costs
    
    
    2,284
    
    
    
    4,623Loss on disposals of assets
    
    
    1,770
    
    
    
    143Changes in operating assets and liabilities:Decrease in restricted cash
    
    
    4,879
    
    
    
    16,000(Increase) decrease in receivables
    
    
    4,825
    
    
    
    (9,363
    )(Increase) decrease in income tax receivables
    
    
    (2,622
    )
    
    
    3,863Increase in inventories
    
    
    (18,257
    )
    
    
    (3,297
    )(Increase) decrease in prepaid expenses
    
    
    (260
    )
    
    
    1,411(Increase) decrease in other assets
    
    
    68
    
    
    
    (287
    )Increase (decrease) in accounts payable
    
    
    11,706
    
    
    
    (2,192
    )Increase in accrued income taxes
    
    
    
    
    
    
    7,093Decrease in other accrued liabilities
    
    
    (28,223
    )
    
    
    (14,429
    )Increase in long-term reserves
    
    
    5,853
    
    
    
    12,413Net cash provided by operating activities
    
    
    36,720
    
    
    
    92,137Financing activities:Stock redemption
    
    
    (18,750
    )
    
    
    (15,000
    )Debt issuance costs
    
    
    
    
    
    
    (6,479
    )Proceeds from issuance of long-term debt
    
    
    
    
    
    
    285,000Principal payment on long-term debt
    
    
    
    
    
    
    (175,000
    )Dividends paid
    
    
    
    
    
    
    (5,000
    )Principal payments on capital lease obligation
    
    
    (815
    )
    
    
    (823
    )Net cash (used in) provided by financing activities
    
    
    (19,565
    )
    
    
    82,698Investing activities:Decrease in short-term investments
    
    
    
    
    
    
    26,849Increase in store construction reimbursements
    
    
    (3,702
    )
    
    
    (3,679
    )Increase in long-term receivable
    
    
    
    
    
    
    (10,068
    )Purchase of property and equipment
    
    
    (83,026
    )
    
    
    (112,590
    )Proceeds from sale of property and equipment
    
    
    648
    
    
    
    204Net cash used in investing activities
    
    
    (86,080
    )
    
    
    (99,284
    )Net increase (decrease) in cash and cash equivalents
    
    
    (68,925
    )
    
    
    75,551Cash and cash equivalents at beginning of period
    
    
    263,397
    
    
    
    198,545Cash and cash equivalents at end of period
    
    $
    194,472
    
    
    $
    274,096Interest paid
    
    $
    54,269
    
    
    $
    57,278Income taxes paid
    
    $
    17,300
    
    
    $
    21,350
  7




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 JUNE 24, 2007
 Note 1  Basis of Presentation
    Note 2  Reclassifications
  Note 3  Recent Accounting Pronouncements
    8




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   JUNE 24, 2007
 Note 4  Use of Estimates
  Note 5  Restricted Cash
  Note 6  Retirement Plans
   13 Weeks Ended
    
    
    39 Weeks EndedJun. 25,
    
    
    Jun. 24,
    
    
    Jun. 25,
    
    
    Jun. 24,2006
    
    
    2007
    
    
    2006
    
    
    2007(in thousands)
    
    
    (in thousands)Expected return on assets
    
    $
    (425
    )
    
    $
    (519
    )
    
    $
    (1,275
    )
    
    $
    (1,557
    )Service cost
    
    
    715
    
    
    
    683
    
    
    
    2,147
    
    
    
    2,050Interest cost
    
    
    738
    
    
    
    817
    
    
    
    2,215
    
    
    
    2,452Amortization of prior service cost
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (2
    )Amortization of recognized losses
    
    
    262
    
    
    
    214
    
    
    
    785
    
    
    
    644Net pension expense
    
    $
    1,289
    
    
    $
    1,194
    
    
    $
    3,870
    
    
    $
    3,587Actuarial assumptions used to determine net pension expense were:Discount rate
    
    
    5.50
    %
    
    
    5.80
    %
    
    
    5.50
    %
    
    
    5.80
    %Rate of increase in compensation levels
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %Expected long-term rate of return on
assets
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %
    
    
    5.00
    %
 9




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   JUNE 24, 2007
 Note 7  Segment Information
   Thirteen Weeks
    
    Thirty-Nine WeeksRetail
    
    All Other
    
    Total
    
    Retail
    
    All Other
    
    Total(in thousands)
    
    (in thousands)Sales to external customers
    
    $
    862,276
    
    
    $
    23,945
    
    
    $
    886,221
    
    
    $
    2,540,681
    
    
    $
    76,457
    
    
    $
    2,617,138Intersegment sales
    
    
    
    
    
    
    17,869
    
    
    
    17,869
    
    
    
    
    
    
    
    56,902
    
    
    
    56,902Operating profit (loss)
    
    
    24,661
    
    
    
    (310
    )
    
    
    24,351
    
    
    
    63,198
    
    
    
    2,187
    
    
    
    65,385Net income (loss)
    
    
    14,465
    
    
    
    (8,723
    )
    
    
    5,742
    
    
    
    39,428
    
    
    
    (24,178
    )
    
    
    15,250
   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
  10




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   JUNE 24, 2007
 Note 8  Subsidiary Guarantee
   Note 9  Corporate Office and Distribution Center
   
    
    Component 1: corporate offices and satellite buildings;
    
    Component 2: dry goods warehouse; and
    
    Component 3: refrigeration warehouse.
  Note 10  Notes Payable
 New Senior Notes
  Note Redemption
  11




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   JUNE 24, 2007
 Note 11  Stock Redemption and Dividend
 Stock Redemption
  Dividend
  Note 12  Credit Facilities
 Credit Facility
     Santee Credit Facility
    12




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   JUNE 24, 2007
 Note 13  Litigation Matters
  Note 14  Subsequent Events
  13




---



##### 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
   14




---



##### 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
  15




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES (contd.)
 Store Closing Costs
  Advertising Allowances
   Gift Cards and Certificates
  Significant Accounting Policies
  16




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 OWNERSHIP OF THE COMPANY
  EXECUTIVE OVERVIEW
       17




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS
 13 Weeks Ended
    
    ChangeJun. 25,
    
    Jun. 24,
    
    2007 to 2006($ in thousands)
    
    2006
    
    2007
    
    Dollar
    
    %Sales
    
    $
    886,221
    
    
    $
    910,229
    
    
    $
    24,008
    
    
    
    2.71
    %Gross Profit
    
    $
    229,700
    
    
    $
    253,787
    
    
    $
    24,087
    
    
    
    10.49
    %as a % of sales
    
    
    25.92
    %
    
    
    27.88
    %
 39 Weeks Ended
    
    ChangeJun. 25,
    
    Jun. 24,
    
    2007 to 2006($ in thousands)
    
    2006
    
    2007
    
    Dollar
    
    %Sales
    
    $
    2,617,138
    
    
    $
    2,680,645
    
    
    $
    63,507
    
    
    
    2.43
    %Gross Profit
    
    $
    688,927
    
    
    $
    745,121
    
    
    $
    56,194
    
    
    
    8.16
    %as a % of sales
    
    
    26.32
    %
    
    
    27.80
    %
 Sales
  Like Store Sales
     18




---



##### 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
 13 Weeks Ended
    
    ChangeJun. 25,
    
    Jun. 24,
    
    2007 to 2006($ in thousands)
    
    2006
    
    2007
    
    Dollar
    
    %Operating Expenses:Selling, general and
administrative expenses
    
    $
    193,451
    
    
    $
    199,849
    
    
    $
    6,398
    
    
    
    3.31
    %as a % of sales
    
    
    21.83
    %
    
    
    21.96
    %Depreciation and amortization
    
    $
    11,898
    
    
    $
    12,313
    
    
    $
    415
    
    
    
    3.49
    %as a % of sales
    
    
    1.34
    %
    
    
    1.35
    %Operating profit
    
    $
    24,351
    
    
    $
    41,625
    
    
    $
    17,274
    
    
    
    70.94
    %as a % of sales
    
    
    2.75
    %
    
    
    4.57
    %
 39 Weeks Ended
    
    ChangeJun. 25,
    
    Jun. 24,
    
    2007 to 2006($ in thousands)
    
    2006
    
    2007
    
    Dollar
    
    %Operating Expenses:Selling, general and
administrative expenses
    
    $
    590,227
    
    
    $
    605,335
    
    
    $
    15,108
    
    
    
    2.56
    %as a % of sales
    
    
    22.55
    %
    
    
    22.59
    %Depreciation and
amortization
    
    $
    33,315
    
    
    $
    36,282
    
    
    $
    2,967
    
    
    
    8.91
    %as a % of sales
    
    
    1.27
    %
    
    
    1.35
    %Operating profit
    
    $
    65,385
    
    
    $
    103,504
    
    
    $
    38,119
    
    
    
    58.30
    %as a % of sales
    
    
    2.50
    %
    
    
    3.86
    %
 19




---



##### 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
  Interest Income
  20




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
 Interest Expense
  Interest Related to Debt Purchase
  Income Before Income Taxes
  Income Taxes
  Net Income
  LIQUIDITY AND CAPITAL RESOURCES
  21




---



##### 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
    
    
    213,281
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    85,312
    
    
    
    738,281
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    610,312
    
    
    
    Floating Rate Senior Notes due June 2015Principal
    
    $
    285,000
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    285,000Interest
    
    
    176,516
    
    
    
    21,903
    
    
    
    44,175
    
    
    
    44,175
    
    
    
    66,263461,516
    
    
    
    21,903
    
    
    
    44,175
    
    
    
    44,175
    
    
    
    351,263Capital lease obligations (1)Principal
    
    $
    7,525
    
    
    $
    974
    
    
    $
    2,421
    
    
    $
    2,854
    
    
    $
    1,276Interest
    
    
    4,098
    
    
    
    1,140
    
    
    
    1,799
    
    
    
    940
    
    
    
    21911,623
    
    
    
    2,114
    
    
    
    4,220
    
    
    
    3,794
    
    
    
    1,495Operating leases (1)
    
    
    271,986
    
    
    
    39,167
    
    
    
    52,260
    
    
    
    37,956
    
    
    
    142,603Total contractual cash obligations
    
    $
    1,483,406
    
    
    $
    105,840
    
    
    $
    185,968
    
    
    $
    696,237
    
    
    $
    495,361Other Commercial Commitments(in thousands)Less than
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    1 Year
    
    1-3 Years
    
    4-5 Years
    
    5 YearsStandby letters of credit (2)
    
    $
    50,433
    
    
    $
    50,433
    
    
    $
    
    
    
    $
    
    
    
    $
    Total other commercial commitments
    
    $
    50,433
    
    
    $
    50,433
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    We lease the majority of our retail stores, offices, warehouses and distribution
facilities. 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.(2)
    
    Standby letters of credit are committed as security for workers compensation
obligations. Outstanding letters of credit expire between September 2007 and February 2008. 22




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 LIQUIDITY AND CAPITAL RESOURCES (contd.)
      Credit Facilities
 Markets Credit Agreement
   23




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 LIQUIDITY AND CAPITAL RESOURCES (contd.)
      Santee Credit Agreement
  24




---



##### 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
   25




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Labor Relations (contd.)
   RECENT ACCOUNTING PRONOUNCEMENTS
    26




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CAUTIONARY STATEMENT FOR PURPOSES OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
  27




---



##### Table of Contents



STATER BROS. HOLDINGS INC.June 24, 2007
 PART I  FINANCIAL INFORMATION (contd.)
 
 Item 3.
    
    QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
    28




---



##### Table of Contents



STATER BROS. HOLDINGS INC.June 24, 2007
 
 PART II  OTHER INFORMATION
 
 Item 1.
    
    LEGAL PROCEEDINGS
   
 Item 1A.
    
    RISK FACTORS
    29




---



##### Table of Contents



STATER BROS. HOLDINGS INC.June 24, 2007
 PART II  OTHER INFORMATION (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




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
   Date: August 8, 2007
    
    /s/
    Jack H. BrownJack H. BrownChairman of the Board, President,and Chief Executive Officer(Principal Executive Officer)Date: August 8, 2007
    
    /s/

Phillip J. SmithPhillip J. SmithExecutive Vice Presidentand Chief Financial Officer(Principal Financial Officer)
 31