##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 Washington, D.C. 20549
 
 FORM 10-K
  þ
    
    ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the fiscal year ended: September 26, 2010
 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
    
    (IRS Employer Identification No.)organization)
 301 S. Tippecanoe AvenueSan Bernardino, California
    
    92408(Address of principal executive offices)
    
    (Zip Code)
 (909) 733-5000
   o þ
 o þ
 þ o
 þ o
 o o
  Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ(Do not check if a smaller reporting company)
Smaller reporting company o o þ
   DOCUMENTS INCORPORATED BY REFERENCE
None




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##### 



Page NumberPART IItem 1
    
    Business
    
    
    3Item 1A
    
    Risk Factors
    
    
    8Item 1B
    
    Unresolved Staff Comments
    
    
    9Item 2
    
    Properties
    
    
    9Item 3
    
    Legal Proceedings
    
    
    10Item 4
    
    Submission of Matters to a Vote of Security Holders
    
    
    10PART IIItem 5
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    
    
    11Item 6
    
    Selected Financial Data
    
    
    11Item 7
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
    
    
    13Item 7A
    
    Quantitative and Qualitative Disclosure about Market Risk
    
    
    24Item 8
    
    Financial Statements and Supplementary Data
    
    
    25Item 9
    
    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
    
    
    25Item 9A
    
    Controls and Procedures
    
    
    25Item 9B
    
    Other Information
    
    
    26PART IIIItem 10
    
    Directors and Executive Officers of the Registrant
    
    
    27Item 11
    
    Executive Compensation
    
    
    29Item 12
    
    Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
    
    
    38Item 13
    
    Certain Relationships and Related Transactions
    
    
    39Item 14
    
    Principal Accounting Fees and Services
    
    
    39PART IVItem 15
    
    Exhibits and Financial Statement Schedules
    
    
    40Signatures
    
    
    44EX-12.1EX-31.1EX-31.2EX-32.1
  2




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##### Table of Contents



PART I
 
 Item 1.
    
    Business
 General
    Available Information
 http://www.sec.gov
 Ownership of the Company
  3




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##### Table of Contents



Item 1.
    
    Business (contd.)
 Store Profile and Locations
     Store Expansion and Remodeling
    4




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##### Table of Contents



Item 1.
    
    Business (contd.)
 Store Expansion and Remodeling (contd.)
  Fiscal Years EndedSept. 24,
    
    Sept. 30,
    
    Sept. 28,
    
    Sept. 27,
    
    Sept. 26,2006
    
    2007
        
    2008
    
    2009
    
    2010Number of supermarkets:Opened
    
    
    3
    
    
    
    3
    
    
    
    1
    
    
    
    3
    
    
    
    Closed
    
    
    (2
    )
    
    
    (1
    )
    
    
    
    
    
    
    (1
    )
    
    
    Total at end of year
    
    
    162
    
    
    
    164
    
    
    
    165
    
    
    
    167
    
    
    
    167Minor remodel
    
    
    34
    
    
    
    6
    
    
    
    3
    
    
    
    3
    
    
    
    2Major remodel
    
    
    14
    
    
    
    12
    
    
    
    10
    
    
    
    9
    
    
    
    4
  Corporate Offices and Distribution Center
    5




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##### Table of Contents



Item 1.
    
    Business (contd.)
 Purchasing and Marketing
   Retail Operations
  Store Management
 Customer Service
 6




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##### Table of Contents



Item 1.
    
    Business (contd.)
 Employees
    Competition
    7




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##### Table of Contents



Item 1.
    
    Business (contd.)
 Financial Information about Segments
  Government Regulation
  Environmental
  
 Item 1A.
    
    Risk Factors
      8




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Item 1B.
    
    Unresolved Staff Comments
  
 Item 2.
    
    Properties
  SquareClassification
    
    FeetGrocery
    
    
    1,078,000Refrigerated
    
    
    664,000Distribution support
    
    
    418,000Bread
    
    
    46,000Administrative offices
    
    
    176,000Total
    
    
    2,382,000
  Total Square FeetNo. of Stores

    
    Under
    
    25,000-
    
    30,000-
    
    35,000-
    
    OverCounty
    
    Total
    
    Owned
    
    Leased
    
    25,000
    
    29,999
    
    34,999
    
    40,000
    
    40,000San Bernardino
    
    
    52
    
    
    
    13
    
    
    
    39
    
    
    
    5
    
    
    
    16
    
    
    
    5
    
    
    
    14
    
    
    
    12Riverside
    
    
    47
    
    
    
    11
    
    
    
    36
    
    
    
    9
    
    
    
    13
    
    
    
    3
    
    
    
    5
    
    
    
    17Orange
    
    
    30
    
    
    
    11
    
    
    
    19
    
    
    
    4
    
    
    
    13
    
    
    
    1
    
    
    
    4
    
    
    
    8Los Angeles
    
    
    25
    
    
    
    8
    
    
    
    17
    
    
    
    3
    
    
    
    7
    
    
    
    1
    
    
    
    3
    
    
    
    11San Diego
    
    
    11
    
    
    
    5
    
    
    
    6
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    8Kern
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    Total
    
    
    167
    
    
    
    48
    
    
    
    119
    
    
    
    21
    
    
    
    50
    
    
    
    11
    
    
    
    29
    
    
    
    56
  9




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Item 3.
    
    Legal Proceedings
   
 Item 4.
    
    Submission of Matters to a Vote of Security Holders
  10




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##### Table of Contents



PART II
 
 Item 5.
    
    Market for the Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
    Authorized
    
    OutstandingCommon Stock
    
    
    100,000
    
    
    
    0Class A Common Stock
    
    
    100,000
    
    
    
    34,552
     
 Item 6.
    
    Selected Financial Data
  Fiscal Year EndedSept. 24, (5)
    
    
    Sept. 30, (5)
    
    
    Sept. 28, (5)
    
    
    Sept. 27, (5)
    
    
    Sept. 26, (5)2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(In thousands, except per share amounts)Statement of Earnings Data:Sales
    
    $
    3,508,794
    
    
    $
    3,674,427
    
    
    $
    3,741,254
    
    
    $
    3,766,040
    
    
    $
    3,606,839Cost of goods sold
    
    
    2,578,435
    
    
    
    2,674,563
    
    
    
    2,743,074
    
    
    
    2,764,004
    
    
    
    2,636,891Gross profit
    
    
    930,359
    
    
    
    999,864
    
    
    
    998,180
    
    
    
    1,002,036
    
    
    
    969,948Selling, general and administrative
expenses
    
    
    790,756
    
    
    
    818,863
    
    
    
    829,697
    
    
    
    827,192
    
    
    
    819,698Gain on sale of dairy assets
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,396
    )Depreciation and amortization
    
    
    46,642
    
    
    
    48,715
    
    
    
    52,987
    
    
    
    53,536
    
    
    
    50,822Total operating expenses
    
    
    837,398
    
    
    
    867,578
    
    
    
    882,684
    
    
    
    880,728
    
    
    
    861,124Operating profit
    
    
    92,961
    
    
    
    132,286
    
    
    
    115,496
    
    
    
    121,308
    
    
    
    108,824Interest and other income
    
    
    8,288
    
    
    
    13,927
    
    
    
    8,598
    
    
    
    1,194
    
    
    
    863Interest expense
    
    
    (57,238
    )
    
    
    (59,586
    )
    
    
    (57,464
    )
    
    
    (68,252
    )
    
    
    (68,516
    )Interest expense related to purchase
of debt
    
    
    
    
    
    
    (3,953
    )
    
    
    
    
    
    
    
    
    
    
    Income before income taxes
    
    
    44,011
    
    
    
    82,674
    
    
    
    66,630
    
    
    
    54,250
    
    
    
    41,171Income taxes
    
    
    17,945
    
    
    
    33,279
    
    
    
    26,000
    
    
    
    19,481
    
    
    
    16,587Net income
    
    $
    26,066
    
    
    $
    49,395
    
    
    $
    40,630
    
    
    $
    34,769
    
    
    $
    24,584Earnings per average common shares
outstanding
    
    $
    697.21
    
    
    $
    1,356.19
    
    
    $
    1,136.03
    
    
    $
    989.10
    
    
    $
    708.33
 11




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##### Table of Contents



Item 6.
    
    Selected Financial Data (contd.)
 Fiscal Year EndedSept. 24,(5)
    
    
    Sept. 30,(5)
    
    
    Sept. 28,(5)
    
    
    Sept. 27,(5)
    
    
    Sept. 26,(5)2006
    
    
    2007
    
    
    2008
    
    
    2009
    
    
    2010(In thousands, except per share amounts)Balance Sheet Data (end of fiscal year):(1)Working capital
    
    $
    303,397
    
    
    $
    304,407
    
    
    $
    234,032
    
    
    $
    274,353
    
    
    $
    206,123Total assets
    
    
    1,057,585
    
    
    
    1,269,825
    
    
    
    1,276,227
    
    
    
    1,314,735
    
    
    
    1,322,787Long-term debt
    
    
    700,000
    
    
    
    810,000
    
    
    
    810,000
    
    
    
    810,000
    
    
    
    677,750Long-term capitalized lease obligations
    
    
    7,245
    
    
    
    6,252
    
    
    
    5,104
    
    
    
    3,768
    
    
    
    2,206Other long-term liabilities
    
    
    80,084
    
    
    
    113,005
    
    
    
    113,100
    
    
    
    144,228
    
    
    
    152,272Common stockholders equity (deficit)
    
    
    (11,079
    )
    
    
    9,279
    
    
    
    40,506
    
    
    
    63,755
    
    
    
    73,133Dividends paid per share, Class A
common stock
    
    $
    135.52
    
    
    $
    139.78
    
    
    $
    142.24
    
    
    $
    
    
    
    $
    144.71Cash Flow Data:(1)Cash provided by operating activities
    
    
    90,656
    
    
    
    171,507
    
    
    
    57,466
    
    
    
    122,410
    
    
    
    87,101Cash provided by (used in)
financing activities
    
    
    (24,598
    )
    
    
    81,901
    
    
    
    (14,230
    )
    
    
    (1,149
    )
    
    
    (14,336
    )Cash provided by (used in) investing activities
    
    
    (127,508
    )
    
    
    (174,740
    )
    
    
    (175,837
    )
    
    
    (63,498
    )
    
    
    55,326Other Operating and Financial Data:Sales increases (decreases):Total sales
    
    
    4.0
    %
    
    
    4.7
    %
    
    
    1.8
    %
    
    
    0.7
    %
    
    
    (4.2
    )%Like stores sales (comparable
52-weeks)(2)
    
    
    1.5
    %
    
    
    1.7
    %
    
    
    2.5
    %
    
    
    0.0
    %
    
    
    (2.4
    )%Operating profit
    
    $
    92,961
    
    
    $
    132,286
    
    
    $
    115,496
    
    
    $
    121,308
    
    
    $
    108,824Fixed charge coverage ratio(3)
    
    
    2.74
    
    
    
    3.02
    
    
    
    2.96
    
    
    
    2.95
    
    
    
    2.63Gross profit as a percentage of sales
    
    
    26.52
    %
    
    
    27.21
    %
    
    
    26.68
    %
    
    
    26.61
    %
    
    
    26.89
    %Selling, general and administrative
expenses as a percentage of sales
    
    
    22.54
    %
    
    
    22.29
    %
    
    
    22.18
    %
    
    
    21.96
    %
    
    
    22.72
    %Store Data:(4)Number of stores (at end of fiscal year)
    
    
    162
    
    
    
    164
    
    
    
    165
    
    
    
    167
    
    
    
    167Average sales per store (000s)
    
    $
    20,937
    
    
    $
    21,860
    
    
    $
    21,961
    
    
    $
    21,945
    
    
    $
    21,375Average store size:Total square feet
    
    
    33,778
    
    
    
    34,028
    
    
    
    34,178
    
    
    
    34,405
    
    
    
    34,497Selling square feet
    
    
    24,028
    
    
    
    24,165
    
    
    
    24,237
    
    
    
    24,340
    
    
    
    24,386Total square feet (at end of
fiscal year) (000s)
    
    
    5,491
    
    
    
    5,599
    
    
    
    5,644
    
    
    
    5,761
    
    
    
    5,761Total selling square feet (at end of
fiscal year) (000s)
    
    
    3,904
    
    
    
    3,972
    
    
    
    4,001
    
    
    
    4,072
    
    
    
    4,072Sales per average square foot
    
    $
    620
    
    
    $
    642
    
    
    $
    643
    
    
    $
    638
    
    
    $
    620Sales per average selling square foot
    
    $
    871
    
    
    $
    905
    
    
    $
    906
    
    
    $
    902
    
    
    $
    877
 
 (1)
    
    Certain balance sheet and corresponding cash flow line items for prior periods have been
reclassified to conform with current presentation related to the Dairy Transaction and the
presentation of such assets and liabilities as held for sale. (footnotes continued on following page)
 12




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Item 6.
    
    Selected Financial Data (contd.)
 (2)
    
    We calculate like store sales by comparing year-to-year sales for stores that are
opened in both years. For stores that were not opened for the entire previous year, we
only use the current years weekly sales that correspond to the weeks the stores were open
in the previous year. For replacement store sales, we include sales for the entire year in
the like store sales calculation. For stores that were closed during the year, we only
include prior year sales that correspond to the week the stores were opened in the current
year.
 (3)
    
    Fixed charge coverage ratio is calculated based on definitions from the indentures to our
Senior Notes. Exhibit 12.1 included in this Form 10-K shows the calculation of the fixed
charge coverage ratio.
 (4)
    
    Average sales per store, sales per total square feet and sales per selling square feet
are calculated by prorating the number of stores, total square feet and selling square feet
by the period of time the store was opened, for new stores, or the period of time the
expanded square footage was in service, for expanded stores.
 (5)
    
    Fiscal years 2006, 2008, 2009 and 2010 were 52-week years while fiscal 2007 was a 53-week
year.
 
 Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations
 Critical Accounting Policies
  Self-Insurance Reserves
  Employee Benefit Plans
  13




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations (contd.)
 Critical Accounting Policies (contd.)
 Employee Benefit Plans (contd.)
   Income Taxes
  Significant Accounting Policies
  14




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial Condition and Results of Operations (contd.)
 Ownership of the Company
  Executive Overview
    15




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Results of Operations
 Sales and Gross Profit (in thousands)
 ChangeFiscal Year Ended
    
    2009 to
    
    2010 toSept. 28,
    
    Sept. 27,
    
    Sept. 26,
    
    2008
    
    20092008
    
    2009
    
    2010
    
    Dollar
    
    %
    
    Dollar
    
    %Sales
    
    $
    3,741,254
    
    
    $
    3,766,040
    
    
    $
    3,606,839
    
    
    $
    24,786
    
    
    
    0.66
    %
    
    $
    (159,201
    )
    
    
    (4.23
    )%Gross Profit
    
    $
    998,180
    
    
    $
    1,002,036
    
    
    $
    969,948
    
    
    $
    3,856
    
    
    
    0.39
    %
    
    $
    (32,088
    )
    
    
    (3.20
    )%as a % of sales
    
    
    26.68
    %
    
    
    26.61
    %
    
    
    26.89
    %
 Sales
   Like Store Sales
      16




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Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Results of Operations (contd.)
 Gross Profit
   Operating Expenses and Income (in thousands)
 Fiscal Year Ended
    
    ChangeSept. 28,
    
    Sept. 27,
    
    Sept. 26,
    
    2009 to
    
    2010 to2008
    
    2009
    
    2010
    
    2008
    
    2009Dollar
    
    %
    
    Dollar
    
    %Operating Expenses:Selling, general and
administrative
expenses
    
    $
    829,697
    
    
    $
    827,192
    
    
    $
    819,698
    
    
    $
    (2,505
    )
    
    
    (0.30
    )%
    
    $
    (7,494
    )
    
    
    (0.91
    )%as a % of sales
    
    
    22.17
    %
    
    
    21.97
    %
    
    
    22.73
    %Gain on sale of assets
    
    
    
    
    
    
    
    
    
    $
    (9,396
    )
    
    
    
    
    
    
    
    
    
    $
    (9,396
    )
    
    
    as a % of sales
    
    
    
    
    
    
    
    
    
    
    (0.26
    )%Depreciation and amortization
    
    $
    52,987
    
    
    $
    53,536
    
    
    $
    50,822
    
    
    $
    549
    
    
    
    1.04
    %
    
    $
    (2,714
    )
    
    
    (5.07
    )%as a % of sales
    
    
    1.42
    %
    
    
    1.42
    %
    
    
    1.41
    %Operating profit
    
    $
    115,496
    
    
    $
    121,308
    
    
    $
    108,824
    
    
    $
    5,812
    
    
    
    5.03
    %
    
    $
    (12,484
    )
    
    
    (10.29
    )%as a % of sales
    
    
    3.09
    %
    
    
    3.22
    %
    
    
    3.02
    %
 Selling, General and Administrative Expenses
    17




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Results of Operations (contd.)
 Gain on Sale of Assets
  Depreciation and Amortization
  Interest Income
  Interest Expense
  Income Before Income Taxes
  Income Taxes
  Net Income
  18




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Liquidity and Capital Resources
        Expected Capital Expenditures Fiscal 2011(In thousands)New store construction
    
    $
    15,458Store remodels
    
    
    13,872MIS equipment and software
    
    
    8,573Store equipment
    
    
    11,984Distribution equipment
    
    
    1,776Transportation equipment
    
    
    621$
    52,284
  19




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Existing Credit Facility
      New Credit Facility
  20




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 New Credit Facility (contd.)
         21




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Labor Relations
   Off-Balance Sheet Arrangements
  22




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##### Table of Contents



Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Tabular Disclosure of Contractual Cash Obligations
  Contractual Cash Obligations(in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 Years8.125% Senior Notes due 2012 (1)Principal
    
    $
    525,000
    
    
    $
    
    
    
    $
    525,000
    
    
    $
    
    
    
    $
    Interest
    
    
    85,312
    
    
    
    42,656
    
    
    
    42,656
    
    
    
    
    
    
    
    610,312
    
    
    
    42,656
    
    
    
    567,656
    
    
    
    
    
    
    
    7.75% Senior Notes due 2015Principal
    
    
    285,000
    
    
    
    
    
    
    
    
    
    
    
    285,000
    
    
    
    Interest
    
    
    110,438
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    44,175
    
    
    
    395,438
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    329,175
    
    
    
    Capital lease obligations (2)Principal
    
    
    3,768
    
    
    
    1,562
    
    
    
    1,906
    
    
    
    300
    
    
    
    Interest
    
    
    989
    
    
    
    533
    
    
    
    440
    
    
    
    16
    
    
    
    4,757
    
    
    
    2,095
    
    
    
    2,346
    
    
    
    316
    
    
    
    Operating leases (2)
    
    
    350,226
    
    
    
    38,568
    
    
    
    68,631
    
    
    
    52,274
    
    
    
    190,753Total contractual cash obligations
    
    $
    1,360,733
    
    
    $
    105,407
    
    
    $
    682,808
    
    
    $
    381,765
    
    
    $
    190,753Other Commercial Commitments(in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsStandby letters of credit (3)
    
    $
    49,762
    
    
    $
    49,762
    
    
    $
    
    
    
    $
    
    
    
    $
    Total other commercial commitments
    
    $
    49,762
    
    
    $
    49,762
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    The maturity and interest payment shown here on our 8.125%
Senior Notes due 2012 (the Old
Notes) reflects the contractual due date of June 15, 2012.
On November 29, 2010, we early redeemed
approximately $477.5 million of the Old Notes and on January 14, 2011 we will call all remaining
outstanding Old Notes. See Note 2  New Debt and Early Extinguishment of Debt to our Audited
Consolidated Financial Statements contained elsewhere herein.(2)
    
    We lease the majority of our retail stores. We have subleased our former headquarters
buildings and certain former distribution facilities located in Colton, California under an initial
15 year term for an amount equal to our lease payments. For purposes of contractual cash
obligation shown here, minimum lease payments on this lease are shown without sub-lease offset.
Certain of our operating leases provide for minimum annual payments that change over the primary
term of the lease. For purposes of contractual cash obligations shown here, contractual step
increases or decreases are shown in the period they are due. Certain leases provide for additional
rents based on sales. Primary lease terms range from 3 to 55 years and substantially all leases
provide for renewal options.(3)
    
    Letters of credit are committed as security for workers compensation. Outstanding letters of
credit expire between December 2010 and October 2011. Outstanding letters of credit continue to be
issued and outstanding under our New Revolving Credit Facility. 23




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Item 7.
    
    Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Cautionary Statement
  
 Item 7A. Quantitative and Qualitative Disclosure about Market Risk
  Expected Year of Maturity(In thousands)Fair2011
    
    2012
    
    2013
    
    2014
    
    2015
    
    Thereafter
    
    ValueLong-term debt and
capital lease obligations
    
    $
    1,562
    
    
    $
    526,107
    
    
    $
    799
    
    
    $
    300
    
    
    $
    285,000
    
    
    $
    
    
    
    $
    819,413Average interest rate
    
    
    8.03
    %
    
    
    7.99
    %
    
    
    7.78
    %
    
    
    7.75
    %
    
    
    7.75
    %
    
    
    0.00
    %
 24




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##### Table of Contents



Item 8. Financial Statements and Supplementary Data
  INDEX TO AUDITED CONSOLIDATED FINANCIAL STATEMENTS
 Page NumberReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at September 27, 2009
and September 26, 2010
    
    
    F-3Fiscal years ended September 28, 2008, September 27, 2009 and
September 26, 2010:Consolidated Statements of Income
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Consolidated Statements of Stockholders Equity
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 
 Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 Disclosure Controls and Procedures
  Changes in Internal Controls Over Financial Reporting
  25




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##### Table of Contents



Item 9A. Controls and Procedures (contd.)
 Managements Report on Internal Control Over financial Reporting
      
 Item 9B. Other Information
  26




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##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    PositionJack H. Brown
    
    
    72
    
    
    Chairman of the Board, President
and Chief Executive OfficerPhillip J. Smith
    
    
    63
    
    
    Executive Vice President and Chief Financial OfficerJames W. Lee
    
    
    59
    
    
    President and Chief Operating Officer of MarketsDennis L. McIntyre
    
    
    50
    
    
    Executive Vice President of Marketing of MarketsGeorge A. Frahm
    
    
    57
    
    
    Executive Vice President of Retail Operations and
Administration of MarketsBruce D. Varner
    
    
    74
    
    
    Director and SecretaryThomas W. Field, Jr.
    
    
    77
    
    
    Vice Chairman of the Board of DirectorsRonald G. Skipper
    
    
    70
    
    
    Director
 Background of Directors and Executive Officers
 Jack H. Brown
 Phillip J. Smith
 James W. Lee
 27




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##### Table of Contents



Item 10. Directors and Executive Officers of the Registrant (contd.)
 Background of Directors and Executive Officers (contd.)
 Dennis L. McIntyre
 George A. Frahm
 Bruce D. Varner
 Thomas W. Field, Jr.
 Ronald G. Skipper
 Director Compensation
  Annual Board Retainer
  Meeting Fees
  28




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##### Table of Contents



Item 10. Directors and Executive Officers of the Registrant (contd.)
 Director Compensation For fiscal Year 2010
 Director
    
    MeetingName
    
    Fees
    
    Fees
    
    TotalThomas W. Field, Jr.
    
    $
    50,000
    
    
    $
    4,000
    
    
    $
    54,000Bruce D. Varner
    
    $
    50,000
    
    
    $
    4,000
    
    
    $
    54,000Ronald G. Skipper
    
    $
    50,000
    
    
    $
    4,000
    
    
    $
    54,000
  
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
     29




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Item 11. Executive Compensation (contd.)
 Compensation Discussion and Analysis (contd.)
 Salary
  Bonus
  Deferred Compensation
 .
 Retirement Benefits
  30




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##### Table of Contents



Item 11. Executive Compensation (contd.)
 Compensation Discussion and Analysis (contd.)
 Other Benefits
  Employment and Severance Agreements
  Compensation Committee Report
  31




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##### Table of Contents



Item 11.
    
    Executive Compensation (contd.)
  Change inPensionValue andNon-qual.Def. Comp
    
    All OtherName & Principal Position
    
    Year
    
    Salary
    
    Bonus (1)
    
    Earnings (2)
    
    Compensation (3)
    
    TotalJack H. Brown
Chairman, President and
    
    
    2010
    
    
    $
    1,901,527
    
    
    $
    
    
    
    $
    109,987
    
    
    $
    52,000
    
    
    $
    2,054,514Chief Executive Officer
    
    
    2009
    
    
    $
    1,901,365
    
    
    $
    
    
    
    $
    227,755
    
    
    $
    51,500
    
    
    $
    2,180,6202008
    
    
    $
    1,847,233
    
    
    $
    1,700,000
    
    
    $
    (108,506
    )
    
    $
    51,000
    
    
    $
    3,489,727Phillip J. Smith
Executive Vice President and
    
    
    2010
    
    
    $
    356,848
    
    
    $
    
    
    
    $
    803,950
    
    
    $
    
    
    
    $
    1,160,798Chief Financial Officer
    
    
    2009
    
    
    $
    356,715
    
    
    $
    
    
    
    $
    1,187,697
    
    
    $
    
    
    
    $
    1,544,4122008
    
    
    $
    346,160
    
    
    $
    100,000
    
    
    $
    977,318
    
    
    $
    
    
    
    $
    1,423,478James W. Lee
President and Chief Operating
    
    
    2010
    
    
    $
    406,178
    
    
    $
    
    
    
    $
    539,962
    
    
    $
    
    
    
    $
    946,140Officer of Markets
    
    
    2009
    
    
    $
    406,301
    
    
    $
    
    
    
    $
    766,141
    
    
    $
    
    
    
    $
    1,172,4422008
    
    
    $
    400,169
    
    
    $
    100,000
    
    
    $
    672,738
    
    
    $
    
    
    
    $
    1,172,907Dennis L. McIntyre
Executive Vice President of
    
    
    2010
    
    
    $
    358,172
    
    
    $
    
    
    
    $
    429,100
    
    
    $
    
    
    
    $
    787,272Marketing of Markets
    
    
    2009
    
    
    $
    358,730
    
    
    $
    
    
    
    $
    641,236
    
    
    $
    
    
    
    $
    999,9662008
    
    
    $
    347,529
    
    
    $
    85,000
    
    
    $
    480,960
    
    
    $
    
    
    
    $
    913,489George A. Frahm
Executive Vice President of Retail
    
    
    2010
    
    
    $
    302,568
    
    
    $
    
    
    
    $
    375,318
    
    
    $
    
    
    
    $
    677,886Operations and Administration of Markets
    
    
    2009
    
    
    $
    302,581
    
    
    $
    
    
    
    $
    565,773
    
    
    $
    
    
    
    $
    868,3542008
    
    
    $
    292,283
    
    
    $
    55,000
    
    
    $
    384,169
    
    
    $
    
    
    
    $
    731,452
 
 (1)
    
    There will be no annual bonuses paid to the named executive officers for fiscal 2010.(2)
    
    The amount shown represents the change in pension value and change in nonqualified deferred
compensation during fiscal 2010, fiscal 2009 and fiscal year 2008, respectively.(3)
    
    The value of perquisites and other benefits is only included here if the aggregate amount of
such compensation for a named executive officer is greater than $10,000. Mr. Brown is a
Director of Holdings and amount shown is the Director fees paid during fiscal 2010 of $52,000,
fiscal 2009 of $51,500 and fiscal year 2008 of $51,000. 32




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##### Table of Contents



Item 11.
    
    Executive Compensation (contd.)
  Number of
    
    Present Value
    
    PaymentsYears of
    
    of Accum
    
    During LastName
    
    Plan Name
    
    Credited Service
    
    Benefit
    
    Fiscal YearJack H. Brown
Chairman, President and
    
    Pension Plan forChief Executive Officer
    
    Salaried Employees
    
    
    29
    
    
    $
    1,596,200
    
    
    $
    Phillip J. Smith
Executive Vice President and
    
    Pension Plan forChief Financial Officer
    
    Salaried Employees
    
    
    24
    
    
    $
    718,991
    
    
    $
    James W. Lee
President and Chief Operating
    
    Pension Plan forOfficer of Markets
    
    Salaried Employees
    
    
    8
    
    
    $
    246,763
    
    
    $
    Dennis L. McIntyre
Executive Vice President of
    
    Pension Plan forMarketing of Markets
    
    Salaried Employees
    
    
    33
    
    
    $
    311,172
    
    
    $
    George A. Frahm
Executive Vice President of Retail
    
    Pension Plan forOperations and Administration of Markets
    
    Salaried Employees
    
    
    34
    
    
    $
    473,178
    
    
    $
    
 33




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##### Table of Contents



Item 11.
    
    Executive Compensation (contd.)
  Executive
    
    Registrant
    
    Aggregate
    
    Aggregate
    
    AggregateContributions in
    
    Contributions in
    
    Earnings in
    
    Withdrawals
    
    Balance atName
    
    Last FY
    
    Last FY (1)
    
    Last FY
    
    /Distributions (2)
    
    Last FYE (3)Jack H. Brown
Chairman, President and
Chief Executive Officer
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Phillip J. Smith
Executive Vice President and
Chief Financial Officer
    
    $
    
    
    
    $
    691,894
    
    
    $
    
    
    
    $
    300,000
    
    
    $
    5,939,263James W. Lee
President and Chief Operating
Officer of Markets
    
    $
    
    
    
    $
    477,353
    
    
    $
    
    
    
    $
    250,000
    
    
    $
    4,317,236Dennis L. McIntyre
Executive Vice President
of Marketing of Markets
    
    $
    
    
    
    $
    361,083
    
    
    $
    
    
    
    $
    250,000
    
    
    $
    3,714,947George A. Frahm
Executive Vice President of Retail
Operations and Administration of Markets
    
    $
    
    
    
    $
    286,812
    
    
    $
    
    
    
    $
    150,000
    
    
    $
    2,617,161
 
 (1)
    
    These amounts represent the Companys contribution in fiscal year 2010 to the named
executive officers deferred compensation. This includes 20% vesting for units awarded
prior to fiscal year 2010 to Mr. Lee, Mr. Smith, Mr. McIntyre and Mr. Frahm and
appreciation of 40.1% for all units.(2)
    
    These amounts represent the one-time withdrawals of half the stated value of some of
the vested units in the deferred compensation plan. The stated value of each unit is $20.(3)
    
    The aggregate balance represents each named executive officers deferred compensation
balance as of September 26, 2010. This balance represents the vested portion of all units
plus appreciation, less any withdrawals. 34




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##### Table of Contents



Item 11.
    
    Executive Compensation (contd.)
 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
  CHANGE IN CONTROLTERMINATION
    
    
    
    
    
    
    Deferred
    
    Health &Severance Pay
    
    
    Salary & Bonus
    
    Compensation
    
    WelfareName & Principal Position
    
    (1)
    
    
    (2)
    
    (3)
    
    (4)
    
    TotalJack H. BrownChairman, President and 
Chief Executive Officer
    
    $
    438,814
    
    
    
    $
    10,887,936
    
    
    $
    
    
    
    $
    74,276
    
    
    $
    10,962,212Phillip J. SmithExecutive Vice President and
Chief Financial Officer
    
    $
    82,350
    
    
    
    $
    1,181,167
    
    
    $
    6,269,263
    
    
    $
    28,368
    
    
    $
    7,478,798James W. LeePresident and Chief Operating
Officer of Markets
    
    $
    93,733
    
    
    
    $
    1,344,449
    
    
    $
    4,549,236
    
    
    $
    28,368
    
    
    $
    5,922,053Dennis L. McIntyreExecutive Vice President of
Marketing of Markets
    
    $
    82,655
    
    
    
    $
    1,185,549
    
    
    $
    3,894,947
    
    
    $
    44,565
    
    
    $
    5,125,061George A. FrahmExecutive Vice President of Retail
Operations and Administration of Markets
    
    $
    69,823
    
    
    
    $
    1,001,500
    
    
    $
    2,759,161
    
    
    $
    28,368
    
    
    $
    3,789,029
 
 (1)
    
    Termination of employment by Mr. Brown or by the Board of Directors with the consent
of Mr. Brown entitles named executive officers to two weeks of severance pay for every
year of service to Markets, up to a maximum of twelve weeks. Severance Pay outlined above
represents 12 weeks of pay for Messrs. Brown, Smith, Lee, McIntyre and Frahm.(2)
    
    In accordance with each named executive officers employment and severance
agreements, the salary and bonus payable with a change in control represents the sum of
five times the base salary and five times the incentive bonus for Mr. Brown and the sum of
three times the base salary and three times the incentive bonus for Messrs. Smith, Lee,
McIntyre and Frahm with an estimated increase of 10% per year.(3)
    
    At a change in control, the named executive officer is entitled to the full vested
value and appreciation of all deferred compensation, less any withdrawals. The amounts
above reflect values as of September 26, 2010.(4)
    
    Represents continued group health benefits (medical, dental and vision) for the
executives and current dependents for a period of up to 5 years for Mr. Brown and 3 years
for Messrs. Smith, Lee, McIntyre and Frahm. 35




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##### Table of Contents



Item 11.
    
    Executive Compensation (contd.)
 Stock Options and SARs
  Pension Plan
   Pension Plan Table
 Years of ServiceRemuneration
    
    15
    
    20
    
    25
    
    30
    
    35$
    50,000
    
    
    $
    5,625
    
    
    $
    7,500
    
    
    $
    9,375
    
    
    $
    11,250
    
    
    $
    13,12575,000
    
    
    
    10,328
    
    
    
    13,770
    
    
    
    17,213
    
    
    
    20,655
    
    
    
    24,098100,000
    
    
    
    18,390
    
    
    
    24,520
    
    
    
    30,650
    
    
    
    36,780
    
    
    
    42,910125,000
    
    
    
    26,453
    
    
    
    35,270
    
    
    
    44,088
    
    
    
    52,905
    
    
    
    61,723150,000
    
    
    
    34,515
    
    
    
    46,020
    
    
    
    57,525
    
    
    
    69,030
    
    
    
    80,535175,000
    
    
    
    42,578
    
    
    
    56,770
    
    
    
    70,963
    
    
    
    85,155
    
    
    
    99,348200,000
    
    
    
    50,640
    
    
    
    67,520
    
    
    
    84,400
    
    
    
    101,280
    
    
    
    118,160225,000
    
    
    
    58,703
    
    
    
    78,270
    
    
    
    97,838
    
    
    
    117,405
    
    
    
    136,973245,000
    
    
    
    65,153
    
    
    
    86,870
    
    
    
    108,588
    
    
    
    130,305
    
    
    
    152,023
 Employment Agreements
   36




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##### Table of Contents



Item 11.
    
    Executive Compensation (contd.)
 Deferred Compensation Plan
   Board of Directors
    Code of Ethics
  37




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##### Table of Contents



Item 12.
    
    Security Ownership of Certain Beneficial Owners and Management and
 Related Stockholder Matters
  Shares ofClass A
    
    Percentage ofCommon Stock
    
    Class AName and Address of
    
    Beneficially
    
    Common StockBeneficial Owner
    
    Owned
    
    OutstandingLa Cadena(1)
    
    
    34,552
    
    
    
    100
    %Jack H. Brown(1)(2)
    
    
    34,552
    
    
    
    100
    %Phillip J. Smith(2)
    
    
    
    
    
    
    James W. Lee(2)
    
    
    
    
    
    
    Dennis L. McIntyre(2)
    
    
    
    
    
    
    George A. Frahm(2)
    
    
    
    
    
    
    Thomas W. Field, Jr.(2)
    
    
    
    
    
    
    Bruce D. Varner(2)
    
    
    
    
    
    
    Ronald G. Skipper(2)
    
    
    
    
    
    
    All Directors and executive officers
as a group (8 persons)(1)
    
    
    34,552
    
    
    
    100
    %
 
 (1)
    
    The 34,552 outstanding shares of Holdings Class A Common Stock are owned by La Cadena
and may be deemed to be beneficially owned by the partners of La Cadena. The sole equity
partner of La Cadena is The Jack H. Brown Revocable Trust. Mr. Browns Trust has the sole
voting interest and Mr. Brown is the Managing General Partner of La Cadena with the power to
vote the shares of Holdings owned by La Cadena on all matters. The address of La Cadena is
3750 University Avenue, Suite 610, Riverside, California 92501.(2)
    
    The address of Messrs. Brown, Smith, Lee, McIntyre, Frahm, Field, Varner and Skipper is
c/o Stater Bros. at 301 S. Tippecanoe Avenue, San Bernardino, California 92408. Change of Control Arrangements
  38




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##### Table of Contents



Item 13.
    
    Certain Relationships and Related Transactions
    
 Item 14.
    
    Independent Registered Public Accounting Firm Fees and Services
 Audit Fees
  Audit Related Fees
  Tax Fees
  All Other Fees
  39




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PART IV
 
 Item 15.
    
    Exhibits and Financial Statement Schedules
 (a)
    
    Document list
 (1)
    
    Financial StatementsSee Financial Statement Index included in Item 8 of Part II of this Form 10-K.(2)
    
    Financial Statement SchedulesThe Financial Statement Schedules required by Item 15(d) for which provision is
made in the applicable accounting regulations of the Securities and Exchange
Commission, are not required under the related instructions or are inapplicable
and therefore, have been omitted.(3)
    
    ExhibitsExhibits as required by Item 15(c) are as follows:
 EXHIBIT NO.
    
    DESCRIPTION3.1 (1)
    
    Certificate of Incorporation of Stater Bros. Holdings Inc.3.2 (1)
    
    By-Laws of Stater Bros. Holdings Inc.3.3 (1)
    
    Articles of Incorporation of Stater Bros. Markets3.4 (1)
    
    By-Laws of Stater Bros. Markets3.5 (1)
    
    Articles of Incorporation of Stater Bros. Development, Inc.3.6 (1)
    
    By-Laws of Stater Bros. Development, Inc.3.7 (1)
    
    Articles of Incorporation of Santee Dairies, Inc3.8 (1)
    
    By-Laws of Santee Dairies, Inc.3.9 (2)
    
    Articles of Incorporation of Super Rx, Inc.3.10 (2)
    
    By-Laws of Super Rx, Inc.4.1 (1)
    
    Indenture dated as of June 17, 2004 among Stater Bros.
Holdings Inc. as Issuer, Stater Bros. Markets, Stater Bros.
Development, Inc. and Santee Dairies Inc., as Guarantors,
and The Bank of New York, as Trustee4.2 (1)
    
    Specimen Form of Fixed Rate Global Note4.3 (3)
    
    Supplemental Indenture dated as of April 16, 2007 among
Stater Bros. Holdings Inc., Stater Bros. Markets, Santee
Dairies, Inc., Stater Bros. Development, Inc., Super Rx,
Inc. and The Bank of New York Trust Company, N.A. (as
successor in interest to The Bank of New York), as Trustee4.4 (4)
    
    Indenture dated as of April 18, 2007, between Stater Bros.
Holdings Inc., Stater Bros. Markets, Stater Bros.
Development Inc., Super Rx, Inc., Santee Dairies, Inc. and
The Bank of New York Trust Company, N.A.
 40




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##### Table of Contents



Item 15.
    
    Exhibits and Financial Statement Schedules (contd.)
 (a)(3) Exhibits (contd.)
 EXHIBIT NO.
    
    DESCRIPTION4.5 (4)
    
    Registration Rights Agreement, dated as of April 18, 2007,
between Stater Bros. Holdings Inc., Stater Bros. Markets,
Stater Bros. Development, Inc., Super Rx, Inc., Santee
Dairies, Inc. and Banc of America Securities LLC4.6 (4)
    
    Restricted 144A Global Note4.7 (4)
    
    Restricted Temporary Regulations S Global Note4.8 (12)
    
    Indenture dated as of November 29, 2010, between Stater
Bros. Holdings Inc., Stater Bros. Markets, Stater Bros.
Development, Inc., Super Rx, Inc and SBM Dairies, Inc. and
the Bank of New York Mellon Trust Company, N.A., the
Trustee.4.9 (12)
    
    Second Supplemental Indenture dated November 26, 2010
between Stater Bros. Holdings Inc. and the Bank of New
York Mellon Trust Company, N.A., Trustee.5.1 (11)
    
    Opinion of Gibson, Dunn & Crutcher LLP10.1 (5)
    
    Amended and restated Sublease Agreement dated June 1,
1983, between Wren Leasing Corp., as Lessor, and Stater
Bros. Markets, as Lessee10.2 (6)
    
    Employment contract dated June 1, 2000 by and between
Stater Bros. Markets and Jack H. Brown10.3 (7)
    
    Employment contract dated June 1, 2000 by and between
Stater Bros. Markets and Phillip J. Smith10.4 (8)
    
    Employment contract dated June 1, 2000 by and between
Stater Bros. Markets and Dennis L. McIntyre10.6 (8)
    
    Employment contract dated August 1, 2002 by and between
Stater Bros. Markets and James W. Lee10.7 (11)
    
    Employment contract dated May 16, 2000 by and between
Stater Bros. Markets and George A. Frahm10.8 (11)
    
    Amendment to employment contract dated July 1, 2000 by and
between Stater Bros. Markets and George A. Frahm10.9 (9)
    
    Owner Participation Agreement, dated as of April 14, 2004
between Stater Bros. Markets and the Inland Valley
Development Agency10.10 (9)
    
    Development Parcel Disposition Agreement, dated as of June
16, 2004 between Stater Bros. Markets and Hillwood/San
Bernardino, LLC10.11 (10)
    
    Amendment No. 1 to Amended and Restated Stater Bros.
Holdings Inc. Phantom Stock Plan dated September 30, 200510.12 (4)
    
    Second Amended and Restated Credit Agreement, dated as of
April 16, 2007, by and among Stater Bros. Markets, Stater
Bros. Holdings Inc., and Bank of America, N.A.10.13 (4)
    
    Second Amended and Restated Business Loan Agreement
(Receivables) dated as of April 16, 2007, by and among
Santee Dairies, Inc., as Borrower, Bank of America, N.A.,
as Lender, and Stater Bros. Markets, as guarantor.10.14 (11)
    
    Subsidiary Guaranty entered into as of April 16, 2007 by
Stater Bros. Holdings Inc., Stater Bros. Development,
Inc., Santee Dairies, Inc. and Super Rx, Inc.10.15 (11)
    
    Amended and Restated Stater Bros. Holdings Inc. Phantom
Stock Plan dated December 18, 2002
 41




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##### Table of Contents



Item 15.
    
    Exhibits and Financial Statement Schedules (contd.)
 (a)(3) Exhibits (contd.)
 EXHIBIT NO.
    
    DESCRIPTION10.16 (11)
    
    Amendment No. 2 to amended and restated Stater Bros.
Holdings Inc. Phantom Stock Plan dated May 15, 200610.17 (12)
    
    Registration Rights Agreement dated as of November 29,
2010, among Stater Bros. Holdings Inc., Stater Bros.
Markets, Stater Bros. Development, Inc., SBM Dairies,
Inc., Super Rx, Inc. and Merrill Lynch, Pierce, Fenner &
Smith Incorporated.10.18 (12)
    
    Fourth Amended and Restated Credit Agreement dated as of
November 29, 2010 by and among Stater Bros. Markets,
Stater Bros. Holdings Inc., Bank of America, N.A., Merrill
Lynch, Pierce, Fenner & Smith Incorporated, Suntrust
Robinson Humphrey, Inc., Suntrust Bank, Rabobank
International, New York Branch.12.1 (13)
    
    Computation of ratio of earnings to fixed charges.14.1 (11)
    
    Copy of Key Personnel Code of Ethics.21.1 (1)
    
    Subsidiaries of Stater Bros. Holdings Inc.21.2 (2)
    
    Subsidiaries of Stater Bros. Markets31.1 (13)
    
    Certification of Principal Executive Officer pursuant to
Section 302 (a) of the Sarbanes-Oxley Act of 2002.31.2 (13)
    
    Certification of Principal Financial Officer pursuant to
Section 302 (a) of the Sarbanes-Oxley Act of 2002.32.1 (13)
    
    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.
 
 (1)
    
    Previously filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement S-4 No.
33-118436 dated August 27, 2004, as amended(2)
    
    Previously filed with the Securities and Exchange
Commission as an exhibit to the Annual report on Form 10-K for the
fiscal year ended September 25, 2005(3)
    
    Previously filed with the Securities and Exchange
Commission as an exhibit to the Current Report on form 8-K dated April
17, 2007(4)
    
    Previously filed with the Securities and Exchange
Commission as an exhibit to the Current Report on Form 8-K dated April
20, 2007(5)
    
    Previously filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement S-4 No. 33-77296
dated July 21, 1994(6)
    
    Previous filed with the Securities and Exchange
Commission as exhibits to Registrants Quarterly report on Form 10-Q
dated June 25, 2000 and filed on August 9, 2000(7)
    
    Previously filed with the Securities and Exchange
Commission as exhibits with the Annual Report on Form 10-K for the
fiscal year ended September 24, 2000(8)
    
    Previously filed with the Securities and Exchange
Commission as exhibits with the Annual Report on Form 10-K for the
fiscal year ended September 29, 2002 42




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##### Table of Contents



Item 15.
    
    Exhibits and Financial Statement Schedules (contd.)
 (a)(3) Exhibits (contd.)
 
 (9)
    
    Incorporated by reference to Exhibit 10.35 to the Quarterly Report
on Form 10-Q for the quarter ended June 27, 2004(10)
    
    Previously filed with the Securities and Exchange
Commission as an exhibit to the Annual Report on Form 10-K for the
fiscal year ended September 25, 2005(11)
    
    Previously filed with the Securities and Exchange
Commission as an exhibit to the Registration Statement S-4 No.
33-0350671 dated July 24, 2007(12)
    
    Previously filed with the Securities and Exchange
Commission as exhibits to the Current Report on Form 8-K dated November
26, 2010(13)
    
    Filed with the Securities and Exchange Commission
as exhibits with the Annual Report on Form 10-K for the fiscal year
ended September 26, 2010 43




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##### Table of Contents



STATER BROS. HOLDINGS INC.
FOR THE FISCAL YEAR ENDED SEPTEMBER 26, 2010
FORM 10-K
 
 SIGNATURES
 Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
 December 15, 2010Date
    
    Stater Bros. Holdings Inc.By:
    /s/            Jack H. BrownJack H. BrownChairman of the Board,
President and Chief
Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been
signed below by the following persons on behalf of the registrant and in the capacities and on the
dates indicated.
 Signature
    
    Title
    
    Date/s/ Jack H. Brown

Jack H. Brown
    
    Chairman of the Board, President and
Chief Executive Officer and Director
(Principal Executive Officer)
    
    December 15, 2010/s/ Thomas W. Field, Jr.

Thomas W. Field, Jr.
    
    Vice Chairman of the Board
and Director
    
    December 15, 2010/s/ Ronald G. Skipper

Ronald G. Skipper
    
    Director
    
    December 15, 2010/s/ Bruce D. Varner

Bruce D. Varner
    
    Secretary and Director
    
    December 15, 2010/s/ Phillip J. Smith

Phillip J. Smith
    
    Executive Vice President and
Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)
    
    December 15, 2010
 44




---



##### 



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Page NumberReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Balance Sheets at September 27, 2009
and September 26, 2010
    
    F-3Fiscal years ended September 28, 2008, September 27, 2009
and September 26, 2010:Consolidated Statements of Income
    
    F-5Consolidated Statements of Cash Flows
    
    F-6Consolidated Statements of Stockholders Equity
    
    F-7Notes to Consolidated Financial Statements
    
    F-8
  F-1




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##### Table of Contents



F-2




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
 Sept. 27,
    
    
    Sept. 26,2009
    
    
    2010ASSETSCurrent assetsCash and cash equivalents
    
    $
    196,914
    
    
    $
    325,005Restricted cash
    
    
    3,121
    
    
    
    3,121Receivables, net of allowance of $759 and $1,219
    
    
    36,671
    
    
    
    35,614Income tax receivables
    
    
    4,049
    
    
    
    Inventories
    
    
    212,856
    
    
    
    203,702Prepaid expenses
    
    
    9,330
    
    
    
    12,678Deferred income taxes
    
    
    20,479
    
    
    
    27,428Assets held for sale
    
    
    83,617
    
    
    
    Current portion of long-term receivable
    
    
    
    
    
    
    16,001Note receivable, current portion
    
    
    300
    
    
    
    Total current assets
    
    
    567,337
    
    
    
    623,549Property and equipmentLand
    
    
    97,430
    
    
    
    97,770Buildings and improvements
    
    
    544,440
    
    
    
    559,500Store fixtures and equipment
    
    
    428,431
    
    
    
    438,306Property subject to capital leases
    
    
    9,983
    
    
    
    9,9831,080,284
    
    
    
    1,105,559Less accumulated depreciation and amortization
    
    
    408,791
    
    
    
    461,495671,493
    
    
    
    644,064Deferred income taxes, long-term
    
    
    36,014
    
    
    
    38,272Deferred debt issuance costs, net
    
    
    11,276
    
    
    
    8,074Note receivable, less current portion
    
    
    493
    
    
    
    Long-term receivable, less current portion
    
    
    18,867
    
    
    
    Other assets
    
    
    9,255
    
    
    
    8,82875,905
    
    
    
    55,174Total assets
    
    $
    1,314,735
    
    
    $
    1,322,787
  F-3




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (contd.)
 Sept. 27,
    
    
    Sept. 26,2009
    
    
    2010LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    153,083
    
    
    $
    135,642Accrued payroll and related expenses
    
    
    76,717
    
    
    
    85,404Accrued interest
    
    
    22,025
    
    
    
    21,845Other accrued liabilities
    
    
    34,189
    
    
    
    40,196Accrued income taxes
    
    
    
    
    
    
    527Liabilities held for sale
    
    
    5,634
    
    
    
    Current portion of capital lease obligations
    
    
    1,336
    
    
    
    1,562Current portion of long-term debt
    
    
    
    
    
    
    132,250Total current liabilities
    
    
    292,984
    
    
    
    417,426Long-term debt, less current portion
    
    
    810,000
    
    
    
    677,750Capital lease obligations, less current portion
    
    
    3,768
    
    
    
    2,206Long-term portion of self-insurance and other reserves
    
    
    36,227
    
    
    
    40,565Long-term deferred benefits
    
    
    77,396
    
    
    
    75,634Other long-term liabilities
    
    
    30,605
    
    
    
    36,073Total liabilities
    
    
    1,250,980
    
    
    
    1,249,654Commitments and contingenciesStockholders equityCommon Stock, $.01 par value:Authorized shares  100,000Issued and outstanding shares  0 in 2009 and 2010
    
    
    
    
    
    
    Class A Common Stock, $.01 par value:Authorized shares  100,000Issued and outstanding shares  35,152 in 2009
and 34,552 in 2010
    
    
    
    
    
    
    Additional paid-in capital
    
    
    8,939
    
    
    
    8,786Accumulated other comprehensive loss
    
    
    (16,720
    )
    
    
    (18,926
    )Retained earnings
    
    
    71,536
    
    
    
    83,273Total stockholders equity
    
    
    63,755
    
    
    
    73,133Total liabilities and stockholders equity
    
    $
    1,314,735
    
    
    $
    1,322,787
  F-4




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME
 Fiscal Year EndedSept. 28,
    
    
    Sept. 27,
    
    
    Sept. 26,2008
    
    
    2009
    
    
    2010Sales
    
    $
    3,741,254
    
    
    $
    3,766,040
    
    
    $
    3,606,839Cost of goods sold
    
    
    2,743,074
    
    
    
    2,764,004
    
    
    
    2,636,891Gross profit
    
    
    998,180
    
    
    
    1,002,036
    
    
    
    969,948Operating expenses:Selling, general and administrative expenses
    
    
    829,697
    
    
    
    827,192
    
    
    
    819,698Gain on sale of dairy assets
    
    
    
    
    
    
    
    
    
    
    (9,396
    )Depreciation and amortization
    
    
    52,987
    
    
    
    53,536
    
    
    
    50,822Total operating expenses
    
    
    882,684
    
    
    
    880,728
    
    
    
    861,124Operating profit
    
    
    115,496
    
    
    
    121,308
    
    
    
    108,824Interest income
    
    
    5,735
    
    
    
    471
    
    
    
    366Interest expense
    
    
    (57,464
    )
    
    
    (68,252
    )
    
    
    (68,516
    )Other income, net
    
    
    2,863
    
    
    
    723
    
    
    
    497Income before income taxes
    
    
    66,630
    
    
    
    54,250
    
    
    
    41,171Income taxes
    
    
    26,000
    
    
    
    19,481
    
    
    
    16,587Net income
    
    $
    40,630
    
    
    $
    34,769
    
    
    $
    24,584Earnings per average common shares outstanding
    
    $
    1,136.03
    
    
    $
    989.10
    
    
    $
    708.33Dividends per common share outstanding at end of year
    
    $
    142.24
    
    
    $
    
    
    
    $
    144.71Average common shares outstanding
    
    
    35,765
    
    
    
    35,152
    
    
    
    34,707Common shares outstanding at end of year
    
    
    35,152
    
    
    
    35,152
    
    
    
    34,552
  F-5




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##### Table of Contents



STATER BROS. HOLDINGS INC.  CONSOLIDATED STATEMENTS OF CASH FLOWS
 Fiscal Year EndedSept. 28,
    
    
    Sept. 27,
    
    
    Sept. 26,2008
    
    
    2009
    
    
    2010Operating activities:Net income
    
    $
    40,630
    
    
    $
    34,769
    
    
    $
    24,584Adjustments to reconcile net income to net cash provided by operating activities:Depreciation and amortization
    
    
    66,960
    
    
    
    68,179
    
    
    
    62,090Amortization of debt issuance costs
    
    
    3,193
    
    
    
    3,202
    
    
    
    3,202Deferred income taxes
    
    
    695
    
    
    
    (1,686
    )
    
    
    (9,207
    )Gain on sale of dairy assets
    
    
    
    
    
    
    
    
    
    
    (9,396
    )Gain on disposals of assets
    
    
    (1,918
    )
    
    
    (543
    )
    
    
    (495
    )Changes in operating assets and liabilities:Decrease in restricted cash
    
    
    2,500
    
    
    
    2,500
    
    
    
    (Increase) decrease in receivables
    
    
    1,907
    
    
    
    (6,071
    )
    
    
    1,057(Increase) decrease in income tax receivables
    
    
    (4,727
    )
    
    
    587
    
    
    
    4,049(Increase) decrease in inventories
    
    
    (31,435
    )
    
    
    17,362
    
    
    
    9,154(Increase) decrease in prepaid expenses
    
    
    1,717
    
    
    
    (723
    )
    
    
    (3,348
    )(Increase) decrease in assets held for sale
    
    
    (2,159
    )
    
    
    372
    
    
    
    215(Increase) decrease in other assets
    
    
    10
    
    
    
    (426
    )
    
    
    744Decrease in accounts payable
    
    
    (17,795
    )
    
    
    (1,200
    )
    
    
    (17,441
    )Increase (decrease) in accrued income taxes
    
    
    (4,636
    )
    
    
    
    
    
    
    527Increase (decrease) in liabilities held for sale
    
    
    (2,624
    )
    
    
    (10,252
    )
    
    
    1,014Increase (decrease) in other accrued liabilities
    
    
    1,216
    
    
    
    (3,268
    )
    
    
    14,514Increase in long-term reserves
    
    
    3,932
    
    
    
    19,608
    
    
    
    5,838Net cash provided by operating activities
    
    
    57,466
    
    
    
    122,410
    
    
    
    87,101Financing activities:Dividends paid
    
    
    (5,000
    )
    
    
    
    
    
    
    (5,000
    )Stock redemption
    
    
    (8,240
    )
    
    
    
    
    
    
    (8,000
    )Principal payments on capital lease obligations
    
    
    (990
    )
    
    
    (1,149
    )
    
    
    (1,336
    )Net cash used in financing activities
    
    
    (14,230
    )
    
    
    (1,149
    )
    
    
    (14,336
    )Investing activities:(Increase) decrease in store reimbursement
    
    
    (9,427
    )
    
    
    9,914
    
    
    
    (Increase) decrease in note receivable
    
    
    
    
    
    
    (793
    )
    
    
    793Decrease in long-term receivable
    
    
    
    
    
    
    3,361
    
    
    
    1,740Proceeds from sale of dairy assets, net of fees
    
    
    
    
    
    
    
    
    
    
    85,833Purchase of property and equipment
    
    
    (168,886
    )
    
    
    (76,970
    )
    
    
    (33,750
    )Proceeds from sale of property and equipment
    
    
    2,476
    
    
    
    990
    
    
    
    710Net cash provided by (used in) investing activities
    
    
    (175,837
    )
    
    
    (63,498
    )
    
    
    55,326Net increase (decrease) in cash and cash equivalents
    
    
    (132,601
    )
    
    
    57,763
    
    
    
    128,091Cash and cash equivalents at beginning of period
    
    
    271,752
    
    
    
    139,151
    
    
    
    196,914Cash and cash equivalents at end of period
    
    $
    139,151
    
    
    $
    196,914
    
    
    $
    325,005Interest paid
    
    $
    65,707
    
    
    $
    65,723
    
    
    $
    65,510Income taxes paid
    
    $
    39,300
    
    
    $
    19,425
    
    
    $
    19,700
  F-6




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##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
 Accumulated
    
    
    
    
    
    
    
    
    
    
    Comp-Class A
    
    
    Additional
    
    
    Other Comp-
    
    
    
    
    
    
    Total
    
    
    rehensiveCommon
    
    
    Common Stock
    
    
    Paid-in
    
    
    rehensive
    
    
    Retained
    
    
    Stockholders
    
    
    IncomeStock
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Gain (Loss)
    
    
    Earnings
    
    
    Equity
    
    
    (Loss)Balance at September 30, 2007
    
    
    
    
    
    
    35,770
    
    
    $
    
    
    
    $
    9,096
    
    
    $
    (9,037
    )
    
    $
    9,220
    
    
    $
    9,279Net income for 52 weeks ended
September 28, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,630
    
    
    
    40,630
    
    
    $
    40,630Minimum
pension liability adjustment
(net of tax of $2,638)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,837
    
    
    
    
    
    
    
    3,837
    
    
    
    3,837Dividend paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,000
    )
    
    
    (5,000
    )
    
    
    Stock redemption
    
    
    
    
    
    
    (618
    )
    
    
    
    
    
    
    (157
    )
    
    
    
    
    
    
    (8,083
    )
    
    
    (8,240
    )
    
    
    Balance at September 28, 2008
    
    
    
    
    
    
    35,152
    
    
    
    
    
    
    
    8,939
    
    
    
    (5,200
    )
    
    
    36,767
    
    
    
    40,506
    
    
    $
    44,467Net income for 52 weeks ended
September 27, 2009
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    34,769
    
    
    
    34,769
    
    
    $
    34,769Minimum pension
liability adjustment
(net of tax of $7,922)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (11,520
    )
    
    
    
    
    
    
    (11,520
    )
    
    
    (11,520
    )Balance at September 27, 2009
    
    
    
    
    
    
    35,152
    
    
    
    
    
    
    
    8,939
    
    
    
    (16,720
    )
    
    
    71,536
    
    
    
    63,755
    
    
    $
    23,249Net income for 52 weeks ended
September 26, 2010
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    24,584
    
    
    
    24,584
    
    
    $
    24,584Minimum pension
liability adjustment
(net of tax of $1,517)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,206
    )
    
    
    
    
    
    
    (2,206
    )
    
    
    (2,206
    )Dividend paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,000
    )
    
    
    (5,000
    )
    
    
    Stock Redemption
    
    
    
    
    
    
    (600
    )
    
    
    
    
    
    
    (153
    )
    
    
    
    
    
    
    (7,847
    )
    
    
    (8,000
    )
    
    
    Balance at September 26, 2010
    
    
    
    
    
    
    34,552
    
    
    $
    
    
    
    $
    8,786
    
    
    $
    (18,926
    )
    
    $
    83,273
    
    
    $
    73,133
    
    
    $
    22,378
  F-7




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 26, 2010
 Note 1  The Company and Summary of Significant Accounting Policies
 Description of Business
  Ownership of the Company
  Principles of Consolidation and Subsequent Events
  Reclassifications
  Use of Estimates
  Fiscal Year
  Cash and Cash Equivalents
  Restricted Cash
  Inventories
  F-8




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 1  The Company and Summary of Significant Accounting Policies (contd.)
 Receivables
  Long-Lived Assets
  Property and Equipment
   Range
    
    Most PrevalentBuildings and improvements
    
    5 - 40 Years
    
    20 YearsStore furniture and equipment
    
    3 - 10 Years
    
    8 YearsProperty subject to capital leases
    
    Life of Lease
    
    20 Years
 Deferred Debt Issuance Costs
  Deferred Compensation Plan
  Self-Insurance Reserves
  Income Taxes
  F-9




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 1  The Company and Summary of Significant Accounting Policies (contd.)
 Revenue Recognition
  Cost of Goods Sold
  Selling, General and Administrative Expenses
   Vendor Rebates and Allowances
  Advertising
  F-10




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 1  The Company and Summary of Significant Accounting Policies (contd.)
 Advertising Allowances
  Leases
  Note 2  New Debt Issuance and Early Extinguishment of Debt
 Issuance of New Notes
   Issuance of New Credit Facility
   F-11




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 2  New Debt Issuance and Early Extinguishment of Debt (contd.)
 Issuance of New Credit Facility (contdl)
      Early Extinguishment of Debt
     F-12




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 3  Debt
  Fiscal Year EndedSept. 27,
    
    
    Sept. 26,2009
    
    
    2010(In thousands)8.125% Senior Notes due 2012
    
    $
    525,000
    
    
    $
    525,0007.75% Senior Notes due 2015
    
    
    285,000
    
    
    
    285,000810,000
    
    
    
    810,000Less current portion of
long-term debt
    
    
    
    
    
    
    132,250Long-term debt, less
current portion
    
    $
    810,000
    
    
    $
    677,750
      F-13




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 4  Credit Facilities
       F-14




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 5  Leases
    OperatingLeases
    
    
    NoncancelableCapital
    
    
    Minimum
    
    
    SubleaseLeases
    
    
    Payments
    
    
    Income(In thousands)2011
    
    $
    2,095
    
    
    $
    38,568
    
    
    $
    5,2422012
    
    
    1,403
    
    
    
    35,528
    
    
    
    4,1512013
    
    
    943
    
    
    
    33,103
    
    
    
    3,7242014
    
    
    316
    
    
    
    27,065
    
    
    
    2,8782015
    
    
    
    
    
    
    25,209
    
    
    
    2,506Thereafter
    
    
    
    
    
    
    190,753
    
    
    
    18,795Total minimum lease payments
    
    
    4,757
    
    
    $
    350,226
    
    
    $
    37,296Less amounts representing interest
    
    
    989Present value of minimum lease
payments
    
    
    3,768Less current portion
    
    
    1,562Long-term portion
    
    $
    2,206
 F-15




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 5  Leases (contd.)
  Fiscal Year EndedSept. 28, 2008
    
    
    Sept. 27, 2009
    
    
    Sept. 26, 2010(In thousands)Minimum rentals
    
    $
    33,454
    
    
    $
    30,326
    
    
    $
    29,087Rentals based on sales
    
    $
    15,020
    
    
    $
    16,210
    
    
    $
    16,221Sublease income
    
    $
    2,235
    
    
    $
    4,919
    
    
    $
    5,586
  Note 6  Income Taxes
  Sept. 28, 2008
    
    
    Sept. 27, 2009
    
    
    Sept. 26, 2010(in thousands)CurrentFederal
    
    $
    23,756
    
    
    $
    16,302
    
    
    $
    18,816State
    
    
    6,095
    
    
    
    3,710
    
    
    
    5,46029,851
    
    
    
    20,012
    
    
    
    24,276DeferredFederal
    
    
    (2,826
    )
    
    
    (152
    )
    
    
    (5,827
    )State
    
    
    (1,025
    )
    
    
    (379
    )
    
    
    (1,862
    )(3,851
    )
    
    
    (531
    )
    
    
    (7,689
    )Income tax expense
    
    $
    26,000
    
    
    $
    19,481
    
    
    $
    16,587A reconciliation of the provision for income taxes to amounts computed at the federal statutory
rate is as follows:Sept. 28, 2008
    
    
    Sept. 27, 2009
    
    
    Sept. 26, 2010Federal statutory income tax rate
    
    
    35.0
    %
    
    
    35.0
    %
    
    
    35.0
    %State franchise tax rate, net of federal
income tax benefit
    
    
    5.8
    
    
    
    5.8
    
    
    
    5.8Tax credits
    
    
    (2.3
    )
    
    
    (2.2
    )
    
    
    (1.2
    )Other
    
    
    0.5
    
    
    
    (2.7
    )
    
    
    0.7Effective tax rate
    
    
    39.0
    %
    
    
    35.9
    %
    
    
    40.3
    %
 F-16




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 6  Income Taxes (contd.)
  Sept. 27, 2009
    
    
    Sept. 26, 2010(In thousands)Deferred income tax assets:Self-insurance reserves
    
    $
    25,252
    
    
    $
    27,756Deferred compensation
    
    
    31,504
    
    
    
    34,209Payroll liabilities
    
    
    20,447
    
    
    
    24,123State franchise tax
    
    
    1,377
    
    
    
    1,860Inventories
    
    
    2,217
    
    
    
    2,033Income deferred for book purposes
    
    
    2,602
    
    
    
    2,074Tax credits and operating loss carry forwards
    
    
    2,561
    
    
    
    180Other, net
    
    
    1,708
    
    
    
    1,881Total deferred income tax assets
    
    
    87,668
    
    
    
    94,116Deferred income tax liabilities:Property and equipment
    
    
    (28,920
    )
    
    
    (26,133
    )Other assets
    
    
    (2,255
    )
    
    
    (2,283
    )Total deferred income tax liabilities
    
    
    (31,175
    )
    
    
    (28,416
    )Net deferred income tax assets
    
    $
    56,493
    
    
    $
    65,700
     F-17




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 7  Retirement Plans
 Pension and Medical Plans
    Pension Plan
    
    
    Medical PlanSept. 28,
    
    
    Sept. 27,
    
    
    Sept. 26,
    
    
    Sept. 28,
    
    
    Sept. 27,
    
    
    Sept. 26,2008
    
    
    2009
    
    
    2010
    
    
    2008
    
    
    2009
    
    
    2010(in thousands)Prior service cost
    
    $
    2
    
    
    $
    2
    
    
    $
    2
    
    
    $
    (78
    )
    
    $
    (78
    )
    
    $
    (78
    )Net actuarial gain/(loss)
    
    
    (6,269
    )
    
    
    19,258
    
    
    
    3,653
    
    
    $
    (130
    )
    
    $
    260
    
    
    $
    143Total recognized in accumulated other
comprehensive gain/(loss), before tax
    
    $
    (6,267
    )
    
    $
    19,260
    
    
    $
    3,655
    
    
    $
    (208
    )
    
    $
    182
    
    
    $
    65
 F-18




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 7  Retirement Plans (contd.)
 Pension and Medical Plans (contd.)
  Pension Plan
    
    
    Medical PlanSept. 27,
    
    
    Sept. 26,
    
    
    Sept. 27,
    
    
    Sept. 26,2009
    
    
    2010
    
    
    2009
    
    
    2010(in thousands)Change in benefit obligation:Beginning balance
    
    $
    52,850
    
    
    $
    76,104
    
    
    $
    1,364
    
    
    $
    1,698Service cost
    
    
    2,294
    
    
    
    3,302
    
    
    
    34
    
    
    
    47Interest cost
    
    
    3,857
    
    
    
    4,002
    
    
    
    98
    
    
    
    91Actuarial loss
    
    
    18,318
    
    
    
    6,551
    
    
    
    260
    
    
    
    157Benefit payments
    
    
    (1,215
    )
    
    
    (1,651
    )
    
    
    (58
    )
    
    
    (65
    )Ending balance
    
    $
    76,104
    
    
    $
    88,308
    
    
    $
    1,698
    
    
    $
    1,928Change in fair value of plan assets:Beginning balance
    
    $
    47,997
    
    
    $
    53,280
    
    
    $
    
    
    
    $
    Actual return on plan assets
    
    
    2,064
    
    
    
    4,964
    
    
    
    
    
    
    
    Employer contributions
    
    
    4,434
    
    
    
    3,160
    
    
    
    58
    
    
    
    65Benefit payments
    
    
    (1,215
    )
    
    
    (1,651
    )
    
    
    (58
    )
    
    
    (65
    )Ending balance
    
    $
    53,280
    
    
    $
    59,753
    
    
    $
    
    
    
    $
    Funded status:Fair value of plan assets
    
    $
    53,280
    
    
    $
    59,753
    
    
    $
    
    
    
    $
    Projected benefit obligation
    
    
    76,104
    
    
    
    88,308
    
    
    
    1,698
    
    
    
    1,928Under funded
    
    $
    (22,824
    )
    
    $
    (28,555
    )
    
    $
    (1,698
    )
    
    $
    (1,928
    )
  F-19




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 7  Retirement Plans (contd.)
 Pension Plan
  Sept. 28,
    
    
    Sept. 27,
    
    
    Sept. 26,2008
    
    
    2009
    
    
    2010(in thousands)Expected return on assets
    
    $
    (3,076
    )
    
    $
    (3,201
    )
    
    $
    (3,463
    )Service cost
    
    
    2,632
    
    
    
    2,294
    
    
    
    3,302Interest cost
    
    
    3,504
    
    
    
    3,857
    
    
    
    4,002Amortization of prior service cost
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )Amortization of recognized losses
    
    
    584
    
    
    
    197
    
    
    
    1,397Net pension expense
    
    $
    3,642
    
    
    $
    3,145
    
    
    $
    5,236Actuarial assumptions used to determine net pension expense were:Discount rate
    
    
    6.25
    %
    
    
    7.50
    %
    
    
    5.50
    %Rate of increase in compensation levels
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %Expected long-term rate of return on
assets
    
    
    6.50
    %
    
    
    6.50
    %
    
    
    6.50
    %Actuarial assumptions used to determine year-end projected benefit obligation were:Weighted-average discount rate
    
    
    7.50
    %
    
    
    5.50
    %
    
    
    5.00
    %Weighted-average rate of compensation increase
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %
   Sept. 27,
    
    
    Sept. 26,2009
    
    
    2010(in thousands)Asset category:Fixed income
    
    $
    37,053
    
    
    $
    41,924Equity
    
    
    14,537
    
    
    
    16,204Cash and accrued income
    
    
    1,690
    
    
    
    1,625Total
    
    $
    53,280
    
    
    $
    59,753
 F-20




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##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 7  Retirement Plans (contd.)
 Pension Plan (contd.)
 As of September 26, 2010Quoted Prices inActive Markets for
    
    
    
    
    
    
    SignificantIdentical
    
    
    Significant Other
    
    
    UnobservableAssets/Liabilities
    
    
    Observable Inputs
    
    
    Inputs(Level 1)
    
    
    (Level 2)
    
    

(Level 3)
    
    
    Total(in thousands)Asset category:Fixed income
    
    $
    11,644
    
    
    $
    30,280
    
    
    $
    
    
    
    $
    41,924Equity:Small cap enhanced core
fund
    
    
    
    
    
    
    
    
    
    
    2,575
    
    
    
    2,575Mid cap enhanced core fund
    
    
    
    
    
    
    
    
    
    
    3,927
    
    
    
    3,927Large cap enhanced core
fund
    
    
    
    
    
    
    
    
    
    
    9,702
    
    
    
    9,702Cash and accrued income
    
    
    1,625
    
    
    
    
    
    
    
    
    
    
    
    1,625$
    13,269
    
    
    $
    30,280
    
    
    $
    16,204
    
    
    $
    59,753
      F-21




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 7  Retirement Plans (contd.)
 Pension Plan (contd.)
   Estimated Future Benefit Payments
  PensionBenefits(in thousands)2011
    
    $
    2,9332012
    
    $
    3,5382013
    
    $
    4,3172014
    
    $
    3,9662015
    
    $
    4,2112016 - 2020
    
    $
    27,908
 Medical Plan
  Sept. 28,
    
    
    Sept. 27,
    
    
    Sept. 26,2008
    
    
    2009
    
    
    2010(in thousands)Service cost
    
    $
    41
    
    
    $
    34
    
    
    $
    47Interest cost
    
    
    88
    
    
    
    98
    
    
    
    91Amortization of prior service cost
    
    
    78
    
    
    
    78
    
    
    
    78Amortization of recognized losses
    
    
    7
    
    
    
    
    
    
    
    13Net periodic benefit costs
    
    $
    214
    
    
    $
    210
    
    
    $
    229Actuarial assumptions used to determine net periodic benefit costs were:Discount rate
    
    
    6.25
    %
    
    
    7.50
    %
    
    
    5.50
    %Actuarial assumptions used to determine year-end projected benefit obligation were:Weighted-average discount rate
    
    
    7.50
    %
    
    
    5.50
    %
    
    
    4.50
    %
 F-22




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 7  Retirement Plans (contd.)
 Medical Plan (contd.)
   Estimated Future Benefit Payments
  MedicalBenefits(in thousands)2011
    
    $
    1062012
    
    $
    1222013
    
    $
    1372014
    
    $
    1392015
    
    $
    1292016 - 2020
    
    $
    686
 Profit Sharing Plan
  Multi-Employer Plans
   Sept. 28,
    
    
    Sept. 27,
    
    
    Sept. 26,2008
    
    
    2009
    
    
    2010(in thousands)Multi-Employer Pension Plans
    
    $
    40,508
    
    
    $
    40,294
    
    
    $
    37,567Multi-Employer Health and Welfare
    
    
    71,342
    
    
    
    73,459
    
    
    
    83,437Total Multi-Employer Benefits
    
    $
    111,850
    
    
    $
    113,753
    
    
    $
    121,004
  F-23




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 8  Labor Relations
  Note 9  Fair Value of Financial Instruments
  Cash and Cash Equivalents
  Receivables
  Long-Term Receivable, Current Portion
  Long-Term Debt and Capital Lease Obligations
   As ofSeptember 26, 2010(In thousands)Carrying
    
    
    FairAmount
    
    
    ValueCash and cash equivalents
    
    $
    325,005
    
    
    $
    325,005Receivables
    
    $
    35,614
    
    
    $
    35,614Long-term receivable, current portion
    
    $
    16,001
    
    
    $
    16,001Long-term debt
    
    $
    810,000
    
    
    $
    819,413Capitalized lease obligations
    
    $
    3,768
    
    
    $
    3,768
 F-24




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 10  Litigation Matters
   Note 11  Long-Term Receivable
  F-25




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 12  Deferred Compensation Plan
  Note 13  Related Party Transactions
   Note 14  Stock Redemption
    Note 15  Asset Sale
     F-26




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##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 16  Quarterly Results (unaudited)
  AverageGross
    
    
    Operating
    
    
    Net
    
    
    Shares
    
    
    EarningsSales
    
    
    Profit
    
    
    Profit
    
    
    Income
    
    
    Outstanding
    
    
    Per ShareFiscal 2008 Quarters13 weeks ended 12/30/07
    
    $
    943,030
    
    
    $
    244,429
    
    
    $
    27,203
    
    
    $
    10,751
    
    
    
    35,770
    
    
    $
    300.5613 weeks ended 03/30/08
    
    
    925,361
    
    
    
    256,278
    
    
    
    34,581
    
    
    
    13,531
    
    
    
    35,770
    
    
    
    378.2813 weeks ended 06/29/08
    
    
    932,668
    
    
    
    249,221
    
    
    
    28,372
    
    
    
    9,179
    
    
    
    35,770
    
    
    
    256.6113 weeks ended 09/28/08
    
    
    940,195
    
    
    
    248,252
    
    
    
    25,340
    
    
    
    7,169
    
    
    
    35,750
    
    
    
    200.53$
    3,741,254
    
    
    $
    998,180
    
    
    $
    115,496
    
    
    $
    40,630
    
    
    
    35,765
    
    
    $
    1,136.03Fiscal 2009 Quarters13 weeks ended 12/28/08
    
    $
    959,253
    
    
    $
    246,862
    
    
    $
    22,498
    
    
    $
    3,541
    
    
    
    35,152
    
    
    $
    100.7313 weeks ended 03/29/09
    
    
    930,996
    
    
    
    255,826
    
    
    
    35,962
    
    
    
    11,121
    
    
    
    35,152
    
    
    
    316.3713 weeks ended 06/28/09
    
    
    928,641
    
    
    
    254,216
    
    
    
    37,793
    
    
    
    15,142
    
    
    
    35,152
    
    
    
    430.7613 weeks ended 09/27/09
    
    
    947,150
    
    
    
    245,132
    
    
    
    25,055
    
    
    
    4,965
    
    
    
    35,152
    
    
    
    141.24$
    3,766,040
    
    
    $
    1,002,036
    
    
    $
    121,308
    
    
    $
    34,769
    
    
    
    35,152
    
    
    $
    989.10Fiscal 2010 Quarters13 weeks ended 12/27/09
    
    $
    923,864
    
    
    $
    238,150
    
    
    $
    28,146
    
    
    $
    6,711
    
    
    
    35,152
    
    
    $
    190.9113 weeks ended 03/28/10
    
    
    885,537
    
    
    
    236,445
    
    
    
    27,085
    
    
    
    5,967
    
    
    
    34,572
    
    
    
    172.6013 weeks ended 06/27/10
    
    
    900,044
    
    
    
    245,657
    
    
    
    27,474
    
    
    
    5,982
    
    
    
    34,552
    
    
    
    173.1313 weeks ended 09/26/10
    
    
    897,394
    
    
    
    249,696
    
    
    
    26,119
    
    
    
    5,924
    
    
    
    34,552
    
    
    
    171.45$
    3,606,839
    
    
    $
    969,948
    
    
    $
    108,824
    
    
    $
    24,584
    
    
    
    34,707
    
    
    $
    708.33
 F-27