##### 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
   o TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934  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 Road
Colton, California
    
    92324(Address of principal executive offices)
    
    (Zip Code)
 Registrants telephone number, including area code
    
    (909) 783-5000
  
  Yes þ No o .
 Yes o No þ .
 
   1




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##### Table of Contents



STATER BROS. HOLDINGS INC.
June 26, 2005
 INDEX
 PagePART I
    
    FINANCIAL INFORMATIONItem 1.
    
    Financial StatementsConsolidated Balance Sheets as of September 26, 2004 and
June 26, 2005 (Unaudited)
    
    
    3Consolidated Statements of Operations (Unaudited) for the 13 weeks
ended June 27, 2004 (as restated) and June 26, 2005
    
    
    5Consolidated Statements of Income (Unaudited) for the 39 weeks
ended June 27, 2004 (as restated) and June 26, 2005
    
    
    6Consolidated Statements of Cash Flows (Unaudited) for the 39 weeks
ended June 27, 2004 (as restated) and June 26, 2005
    
    
    7Notes to Consolidated Financial Statements (Unaudited)
    
    
    8Item 2.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations
    
    
    15Item 3.
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    27Item 4.
    
    Controls and Procedures
    
    
    27PART II
    
    OTHER INFORMATIONItem 1.
    
    Legal Proceedings
    
    
    28Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds
    
    
    28Item 3.
    
    Defaults Upon Senior Securities
    
    
    28Item 4.
    
    Submission of Matters to a Vote of Security Holders
    
    
    28Item 5.
    
    Other Information
    
    
    28Item 6.
    
    Exhibits
    
    
    29SIGNATURES
    
    
    30Exhibit 10.38Exhibit 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. 26,
    
    
    June 26,2004
    
    
    2005(Unaudited)Current assetsCash and cash equivalents
    
    $
    301,947
    
    
    $
    253,501Restricted cash
    
    
    20,000
    
    
    
    29,000Receivables
    
    
    39,258
    
    
    
    36,874Income tax receivables
    
    
    
    
    
    
    141Inventories
    
    
    185,567
    
    
    
    188,522Prepaid expenses
    
    
    8,847
    
    
    
    8,628Deferred income taxes
    
    
    25,416
    
    
    
    23,963Total current assets
    
    
    581,035
    
    
    
    540,629Property and equipmentLand
    
    
    68,120
    
    
    
    87,626Buildings and improvements
    
    
    252,715
    
    
    
    281,377Store fixtures and equipment
    
    
    337,589
    
    
    
    365,396Property subject to capital leases
    
    
    25,891
    
    
    
    25,891684,315
    
    
    
    760,290Less accumulated depreciation and amortization
    
    
    279,459
    
    
    
    312,225404,856
    
    
    
    448,065Deferred debt issuance costs, net
    
    
    21,891
    
    
    
    19,766Deferred income taxes, long-term
    
    
    
    
    
    
    4,748Other assets
    
    
    6,339
    
    
    
    6,33928,230
    
    
    
    30,853Total assets
    
    $
    1,014,121
    
    
    $
    1,019,547
  3




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (contd.)
 LIABILITIES AND STOCKHOLDERS DEFICIT
 Sept. 26,
    
    
    June 26,2004
    
    
    2005(Unaudited)Current liabilitiesAccounts payable
    
    $
    142,077
    
    
    $
    136,839Accrued payroll and related expenses
    
    
    55,049
    
    
    
    54,936Other accrued liabilities
    
    
    62,745
    
    
    
    52,423Accrued income taxes
    
    
    62
    
    
    
    Current portion of capital lease obligations
    
    
    1,247
    
    
    
    1,165Total current liabilities
    
    
    261,180
    
    
    
    245,363Deferred income taxes
    
    
    2,209
    
    
    
    Long-term debt
    
    
    700,000
    
    
    
    700,000Capital lease obligations, less current portion
    
    
    9,470
    
    
    
    8,592Long-term portion of self-insurance and other reserves
    
    
    35,654
    
    
    
    41,306Other long-term liabilities
    
    
    45,249
    
    
    
    49,788Total liabilities
    
    
    1,053,762
    
    
    
    1,045,049Stockholders deficitCommon Stock, $0.01 par value:
Authorized shares - 100,000
Issued and outstanding shares - 0
    
    
    
    
    
    
    Class A Common Stock, $0.01 par value:
Authorized shares - 100,000
Issued and outstanding shares - 38,301
    
    
    
    
    
    
    Additional paid-in capital
    
    
    9,740
    
    
    
    9,740Retained deficit
    
    
    (49,381
    )
    
    
    (35,242
    )Total stockholders deficit
    
    
    (39,641
    )
    
    
    (25,502
    )Total liabilities and stockholders deficit
    
    $
    1,014,121
    
    
    $
    1,019,547
  4




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
 13 Weeks EndedJune 27,
    
    
    June 26,2004
    
    
    2005(as restated)Sales
    
    $
    847,984
    
    
    $
    840,430Cost of goods sold
    
    
    623,261
    
    
    
    608,835Gross profit
    
    
    224,723
    
    
    
    231,595Operating expenses:Selling, general and administrative expenses
    
    
    188,323
    
    
    
    196,380Depreciation and amortization
    
    
    8,339
    
    
    
    10,090Total operating expenses
    
    
    196,662
    
    
    
    206,470Operating profit
    
    
    28,061
    
    
    
    25,125Interest income
    
    
    157
    
    
    
    1,864Interest expense
    
    
    (13,103
    )
    
    
    (14,530
    )Interest expense related to debt purchase
    
    
    (25,495
    )
    
    
    Other expenses  net
    
    
    (308
    )
    
    
    (282
    )Income (loss) before income taxes (benefit)
    
    
    (10,688
    )
    
    
    12,177Income taxes (benefit)
    
    
    (4,826
    )
    
    
    4,901Net income (loss)
    
    $
    (5,862
    )
    
    $
    7,276Earnings (loss) per share
    
    $
    (153.05
    )
    
    $
    189.97Dividends per share
    
    $
    1,174.90
    
    
    $
    Average common shares outstanding
    
    
    38,301
    
    
    
    38,301Shares outstanding at end of period
    
    
    38,301
    
    
    
    38,301
  5




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STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME
 39 Weeks EndedJune 27,
    
    
    June 26,2004
    
    
    2005(as restated)Sales
    
    $
    2,863,955
    
    
    $
    2,522,347Cost of goods sold
    
    
    2,038,011
    
    
    
    1,855,501Gross profit
    
    
    825,944
    
    
    
    666,846Operating expenses:Selling, general and administrative expenses
    
    
    631,018
    
    
    
    574,876Depreciation and amortization
    
    
    23,921
    
    
    
    29,187Total operating expenses
    
    
    654,939
    
    
    
    604,063Operating profit
    
    
    171,005
    
    
    
    62,783Interest income
    
    
    1,005
    
    
    
    4,525Interest expense
    
    
    (39,416
    )
    
    
    (43,204
    )Interest expense related to debt purchase
    
    
    (34,017
    )
    
    
    Equity in earnings from unconsolidated affiliate
    
    
    929
    
    
    
    Other expenses  net
    
    
    (1,017
    )
    
    
    (581
    )Income before income taxes
    
    
    98,489
    
    
    
    23,523Income taxes
    
    
    39,614
    
    
    
    9,384Net income
    
    $
    58,875
    
    
    $
    14,139Earnings per share
    
    $
    1,537.17
    
    
    $
    369.15Dividends per share
    
    $
    1,174.90
    
    
    $
    Average common shares outstanding
    
    
    38,301
    
    
    
    38,301Shares outstanding at end of period
    
    
    38,301
    
    
    
    38,301
  6




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STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
 39 Weeks EndedJune 27,
    
    
    June 26,2004
    
    
    2005(as restated)Operating activities:Net income
    
    $
    58,875
    
    
    $
    14,139Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    31,147
    
    
    
    38,373Gain from litigation settlement
    
    
    (22,371
    )
    
    
    Deferred income taxes
    
    
    (896
    )
    
    
    (5,504
    )Loss on disposals of assets
    
    
    1,115
    
    
    
    719Net undistributed gain in investment in unconsolidated affiliate
    
    
    (929
    )
    
    
    Changes in operating assets and liabilities:Increase in restricted cash
    
    
    (20,000
    )
    
    
    (9,000
    )Decrease in receivables
    
    
    1,276
    
    
    
    2,384Increase in income tax receivables
    
    
    (4,931
    )
    
    
    (141
    )Increase in inventories
    
    
    (15,285
    )
    
    
    (2,955
    )(Increase) decrease in prepaid expenses
    
    
    (3,311
    )
    
    
    219Decrease in other assets
    
    
    12,944
    
    
    
    2,057Increase (decrease) in accounts payable
    
    
    26,693
    
    
    
    (5,238
    )Decrease in income taxes payable
    
    
    
    
    
    
    (62
    )Increase (decrease) in accrued liabilities, long-term portion
of self-insurance reserves and other liabilities
    
    
    52,274
    
    
    
    (244
    )Net cash provided by operating activities
    
    
    116,601
    
    
    
    34,747Investing activities:Purchase of property and equipment
    
    
    (45,389
    )
    
    
    (82,270
    )Proceeds from sale of property and equipment
    
    
    124
    
    
    
    37Net cash used in investing activities
    
    
    (45,265
    )
    
    
    (82,233
    )Financing activities:Proceeds from issuance of long-term debt
    
    
    700,000
    
    
    
    Proceeds from equipment financing
    
    
    718
    
    
    
    Debt issuance costs
    
    
    (22,318
    )
    
    
    Amortization of debt issuance costs related to debt purchase
    
    
    8,599
    
    
    
    Premium, fees and make-whole payments related to debt purchase
    
    
    (25,418
    )
    
    
    Principal payments on long-term debt
    
    
    (471,300
    )
    
    
    Principal payments on capital lease obligations
    
    
    (858
    )
    
    
    (960
    )Dividends paid
    
    
    (45,000
    )
    
    
    Net cash provided by (used in) financing activities
    
    
    144,423
    
    
    
    (960
    )Net increase (decrease) in cash and cash equivalents
    
    
    215,759
    
    
    
    (48,446
    )Cash and cash equivalents at beginning of period
    
    
    111,152
    
    
    
    301,947Cash and cash equivalents at end of period
    
    $
    326,911
    
    
    $
    253,501Interest paid
    
    $
    66,505
    
    
    $
    51,550Income taxes paid
    
    $
    42,200
    
    
    $
    15,165
  7




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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   June 26, 2005
 Note 1  Basis of Presentation
    Note 2  Restatement of Previously Issued Financial Statements
   8




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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   June 26, 2005
 Note 2  Restatement of Previously Issued Financial Statements (contd.)
  As PreviouslyReported
    
    
    Adjustments
    
    
    RestatedSelling, general and administrative expenses
    
    $
    188,365
    
    
    $
    (42
    )
    
    $
    188,323Depreciation and amortization
    
    
    8,145
    
    
    
    194
    
    
    
    8,339Total operating expenses
    
    
    196,510
    
    
    
    152
    
    
    
    196,662Operating profit
    
    
    28,213
    
    
    
    (152
    )
    
    
    28,061Loss before income tax benefit
    
    
    (10,536
    )
    
    
    (152
    )
    
    
    (10,688
    )Income tax benefit
    
    
    (4,763
    )
    
    
    (63
    )
    
    
    (4,826
    )Net loss
    
    $
    (5,773
    )
    
    $
    (89
    )
    
    $
    (5,862
    )Loss per common share
    
    $
    (150.73
    )
    
    $
    (2.32
    )
    
    $
    (153.05
    )
  As PreviouslyReported
    
    
    Adjustments
    
    
    RestatedSelling, general and administrative expenses
    
    $
    631,145
    
    
    $
    (127
    )
    
    $
    631,018Depreciation and amortization
    
    
    23,331
    
    
    
    590
    
    
    
    23,921Total operating expenses
    
    
    654,476
    
    
    
    463
    
    
    
    654,939Operating profit
    
    
    171,468
    
    
    
    (463
    )
    
    
    171,005Income before income taxes
    
    
    98,952
    
    
    
    (463
    )
    
    
    98,489Income taxes
    
    
    39,803
    
    
    
    (189
    )
    
    
    39,614Net income
    
    $
    59,149
    
    
    $
    (274
    )
    
    $
    58,875Earnings per common share
    
    $
    1,544.32
    
    
    $
    (7.15
    )
    
    $
    1,537.17
  As PreviouslyReported
    
    
    Adjustments
    
    
    RestatedNet income
    
    $
    59,149
    
    
    $
    (274
    )
    
    $
    58,875Depreciation and amortization
    
    
    30,557
    
    
    
    590
    
    
    
    31,147Deferred income taxes
    
    
    (707
    )
    
    
    (189
    )
    
    
    (896
    )Accrued liabilities, long-term portion of self
insurance reserves and other liabilities
    
    
    52,401
    
    
    
    (127
    )
    
    
    52,274Net cash provided by operating activities
    
    $
    116,601
    
    
    $
    
    
    
    $
    116,601
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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   June 26, 2005
 Note 3  Use of Estimates
  Note 4  Restricted Cash
  Note 5  Retirement Plans
   13 Weeks Ended
    
    
    39 Weeks EndedJune 27,
    
    
    June 26,
    
    
    June 27,
    
    
    June 26,2004
    
    
    2005
    
    
    2004
    
    
    2005(in thousands)
    
    
    (in thousands)Service cost  benefits earned during
the period
    
    $
    521
    
    
    $
    603
    
    
    $
    1,664
    
    
    $
    1,810Interest cost on projected benefit
obligation
    
    
    641
    
    
    
    695
    
    
    
    1,867
    
    
    
    2,086Actual return on assets
    
    
    (462
    )
    
    
    (388
    )
    
    
    (1,458
    )
    
    
    (1,167
    )Net amortization and deferral
    
    
    7
    
    
    
    
    
    
    
    20
    
    
    
    Recognized gains or losses
    
    
    225
    
    
    
    192
    
    
    
    540
    
    
    
    576Prior service cost recognized
    
    
    (1
    )
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )Net periodic pension cost
    
    $
    931
    
    
    $
    1,101
    
    
    $
    2,632
    
    
    $
    3,303Assumptions used for accounting were:Discount rate
    
    
    6.00
    %
    
    
    6.00
    %
    
    
    6.00
    %
    
    
    6.00
    %Rate of increase in compensation levels
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %
    
    
    4.00
    %Expected long-term rate of return on
assets
    
    
    7.00
    %
    
    
    5.00
    %
    
    
    7.00
    %
    
    
    5.00
    %
 10




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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   June 26, 2005
 Note 6  Santee
     Feb. 6, 2004(in thousands)Current assets
    
    $
    13,246Property and equipment
    
    
    47,630Other long-term assets
    
    
    550Total assets acquired
    
    
    61,426Current liabilities
    
    
    14,005Long-term liabilities
    
    
    25,600Total liabilities assumed
    
    
    39,605Net assets acquired
    
    $
    21,821
 11




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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   June 26, 2005
 Note 6  Santee (contd.)
    
 39 Weeks EndedJune 27,2004(as restated)Sales
    
    $
    2,910,348Income before income taxes
    
    $
    100,410Net income
    
    $
    60,037Earnings per share
    
    $
    1,567.50
 12




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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   June 26, 2005
 Note 7  Issuance of Debt and Early Extinguishment of Debt
    Note 8  Corporate Office and Distribution Facilities
  13




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STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS   June 26, 2005
 Note 8  Corporate Office and Distribution Facilities (contd.)
  Note 9  Subsequent Events
  14




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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
  15




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STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 CRITICAL ACCOUNTING POLICIES (contd.)
 Advertising Allowances
   Employee Benefit Plans
    16




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STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 Significant Accounting Policies
  OWNERSHIP OF THE COMPANY
  RESULTS OF OPERATIONS
  Thirteen Weeks
    
    
    Thirty-nine Weeks2004
    
    
    2005
    
    
    2004
    
    
    2005(as restated)
    
    
    
    
    
    
    (as restated)Sales
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %
    
    
    100.00
    %Gross profit
    
    
    26.50
    
    
    
    27.56
    
    
    
    28.84
    
    
    
    26.44Operating expenses:Selling, general and
administrative expenses
    
    
    22.21
    
    
    
    23.37
    
    
    
    22.03
    
    
    
    22.79Depreciation and amortization
    
    
    0.98
    
    
    
    1.20
    
    
    
    0.84
    
    
    
    1.16Operating profit
    
    
    3.31
    
    
    
    2.99
    
    
    
    5.97
    
    
    
    2.49Interest income
    
    
    0.02
    
    
    
    0.22
    
    
    
    0.04
    
    
    
    0.18Interest expense
    
    
    (1.55
    )
    
    
    (1.73
    )
    
    
    (1.38
    )
    
    
    (1.71
    )Interest
expense related to debt purchase
    
    
    (3.00
    )
    
    
    
    
    
    
    (1.19
    )
    
    
    Equity in
earnings from unconsolidated affiliate
    
    
    
    
    
    
    
    
    
    
    0.03
    
    
    
    Other expenses  net
    
    
    (0.04
    )
    
    
    (0.03
    )
    
    
    (0.03
    )
    
    
    (0.03
    )Income (loss) before income taxes (benefit)
    
    
    (1.26
    )%
    
    
    1.45
    %
    
    
    3.44
    %
    
    
    0.93
    %
 17




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STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
      18




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STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
      19




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STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
        20




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STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 RESULTS OF OPERATIONS (contd.)
  LIQUIDITY AND CAPITAL RESOURCES
    21




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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
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    525,000Interest
    
    
    298,594
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    85,313
    
    
    
    85,312823,594
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    85,313
    
    
    
    610,312Floating Rate Senior Notes due June 2010(1)Principal
    
    
    175,000
    
    
    
    
    
    
    
    
    
    
    
    175,000
    
    
    
    Interest
    
    
    61,335
    
    
    
    12,260
    
    
    
    24,554
    
    
    
    24,521
    
    
    
    236,335
    
    
    
    12,260
    
    
    
    24,554
    
    
    
    199,521
    
    
    
    Capital lease obligations (2)Principal
    
    
    9,757
    
    
    
    1,165
    
    
    
    2,080
    
    
    
    2,393
    
    
    
    4,119Interest
    
    
    6,808
    
    
    
    1,435
    
    
    
    2,416
    
    
    
    1,796
    
    
    
    1,16116,565
    
    
    
    2,600
    
    
    
    4,496
    
    
    
    4,189
    
    
    
    5,280Operating leases (2)
    
    
    258,685
    
    
    
    34,736
    
    
    
    57,373
    
    
    
    35,548
    
    
    
    131,028Total contractual cash obligations
    
    $
    1,335,179
    
    
    $
    92,252
    
    
    $
    171,736
    
    
    $
    324,571
    
    
    $
    746,620Other Commercial
Commitments(in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsStandby letters of credit (3)
    
    $
    49,040
    
    
    $
    49,040
    
    
    $
    
    
    
    $
    
    
    
    $
    Total other commercial commitments
    
    $
    49,040
    
    
    $
    49,040
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
 (2)
 (3)
 22




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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.)
     Issuance of Debt and Early Retirement of Debt
    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 (contd.)
 The Credit Facilities
      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.)
 The Credit Facilities (contd.)
       Labor Relations
  25




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##### Table of Contents



STATER BROS. HOLDINGS INC.
MANAGEMENTS DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
 EFFECT OF INFLATION AND COMPETITION
    CAUTIONARY STATEMENT FOR PURPOSES OF SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES
LITIGATION REFORM ACT OF 1995.
  26




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##### Table of Contents



STATER BROS. HOLDINGS INC.JUNE 26, 2005
 PART I  FINANCIAL INFORMATION (contd.)
 
 Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
  
 Item 4. CONTROLS AND PROCEDURES
  27




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##### Table of Contents



STATER BROS. HOLDINGS INC.
JUNE 26, 2005
 
 PART II  OTHER INFORMATION
 
 Item 1. LEGAL PROCEEDINGS
    
 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
   28




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##### Table of Contents



Item 6. EXHIBITS
 10.38
    
    Asset Purchase Agreement dated as of July 11, 2005 by and between Super Rx, Inc.
and California Pharmacy Systems, Inc.31.1
    
    Certification of Principal Executive Officer pursuant to Section 302 (a) of the
Sarbanes-Oxley Act.31.2
    
    Certification of Principal Financial Officer pursuant to Section 302
(a) of the Sarbanes-Oxley Act.32.1
    
    Certification of Principal Executive Officer and Principal Financial
Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906
of the Sarbanes-Oxley Act of 2002.
 29




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##### Table of Contents



STATER BROS. HOLDINGS INC.
   Date:  August 3, 2005
    /s/ Jack H. BrownJack H. BrownChairman of the Board, President,
and Chief Executive Officer
(Principal Executive Officer) Date:  August 3, 2005
    /s/ Phillip J. SmithPhillip J. SmithSenior Vice President
and Chief Financial Officer
(Principal Financial Officer) 30