##### 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 28, 2008
 OR
 o
    
    TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 For the transition from  to
 Commission file number 001-13222
 STATER BROS. HOLDINGS INC.
  Delaware
    
    33-0350671(State or other jurisdiction of incorporation or 
organization)
    
    (IRS Employer Identification No.)301 S. Tippecanoe Avenue 
San Bernardino, California
    
    92408(Address of principal executive offices)
    
    (Zip Code)
 (909) 733-5000
 
 
 o þ
 o þ
 þ o
 þ 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




---



##### 



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
    
    
    11PART 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
    
    
    25Item 8 Financial Statements and Supplementary Data
    
    
    26Item 9 Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure
    
    
    27Item 9A Controls and Procedures
    
    
    27Item 9B Other Information
    
    
    27PART IIIItem 10 Directors and Executive Officers of the Registrant
    
    
    28Item 11 Executive Compensation
    
    
    30Item 12 Security Ownership of Certain Beneficial Owners and
Management and Related Stockholder Matters
    
    
    39Item 13 Certain Relationships and Related Transactions
    
    
    40Item 14 Principal Accounting Fees and Services
    
    
    40PART IVItem 15 Exhibits and Financial Statement Schedules
    
    
    41Signatures
    
    
    44EX-12.1EX-31.1EX-31.2EX-32.1
  2




---



##### Table of Contents



PART I
 
 Item 1. Business
 General
    Ownership of the Company
  Issuance of Debt and Early Extinguishment of Debt
   3




---



##### Table of Contents



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




---



##### Table of Contents



Item 1. Business (contd.)
 Store Expansion and Remodeling (contd.)
  Sept. 26,
    
    Sept. 25,
    
    Sept. 24,
    
    Sept. 30,
    
    Sept. 28,2004
    
    2005
    
    2006
    
    2007
    
    2008Number of supermarkets:Opened
    
    
    2
    
    
    
    4
    
    
    
    3
    
    
    
    3
    
    
    
    1Closed
    
    
    (1
    )
    
    
    (1
    )
    
    
    (2
    )
    
    
    (1
    )
    
    
    Total at end of year
    
    
    158
    
    
    
    161
    
    
    
    162
    
    
    
    164
    
    
    
    165Minor remodel
    
    
    31
    
    
    
    47
    
    
    
    34
    
    
    
    6
    
    
    
    3Major remodel
    
    
    5
    
    
    
    8
    
    
    
    14
    
    
    
    12
    
    
    
    10
  Corporate Office and Distribution Center
    5




---



##### Table of Contents



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




---



##### Table of Contents



Item 1. Business (contd.)
 Santee Dairies, Inc
   Employees
    Competition
    7




---



##### Table of Contents



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




---



##### Table of Contents



Item 1A. Risk Factors (contd.)
  
 Item 1B. Unresolved Staff Comments
  
 Item 2. Properties
  SquareFeetGrocery goods
    
    
    1,078,000Refrigerated
    
    
    664,000Distribution support
    
    
    419,000Dairy manufacturing and storage
    
    
    185,000Bread
    
    
    40,000Administrative offices
    
    
    209,000Total
    
    
    2,595,000
 9




---



##### Table of Contents



Item 2. Properties (contd.)
  No. of Stores
    
    Total Square FeetUnder
    
    25,000-
    
    30,000-
    
    35,000-
    
    OverCounty
    
    Total
    
    Owned
    
    Leased
    
    25,000
    
    29,999
    
    34,999
    
    40,000
    
    40,000San Bernardino
    
    
    52
    
    
    
    12
    
    
    
    40
    
    
    
    5
    
    
    
    16
    
    
    
    6
    
    
    
    14
    
    
    
    11Riverside
    
    
    46
    
    
    
    11
    
    
    
    35
    
    
    
    9
    
    
    
    13
    
    
    
    4
    
    
    
    5
    
    
    
    15Orange
    
    
    30
    
    
    
    11
    
    
    
    19
    
    
    
    4
    
    
    
    13
    
    
    
    1
    
    
    
    4
    
    
    
    8Los Angeles
    
    
    25
    
    
    
    8
    
    
    
    17
    
    
    
    3
    
    
    
    7
    
    
    
    1
    
    
    
    3
    
    
    
    11San Diego
    
    
    10
    
    
    
    5
    
    
    
    5
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    2
    
    
    
    7Kern
    
    
    2
    
    
    
    
    
    
    
    2
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    1
    
    
    
    Total
    
    
    165
    
    
    
    47
    
    
    
    118
    
    
    
    21
    
    
    
    50
    
    
    
    13
    
    
    
    29
    
    
    
    52
  
 Item 3. Legal Proceedings
    10




---



##### Table of Contents



Item 4. Submission of Matters to a Vote of Security Holders
  
 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
    
    
    
    35,152
     
 Item 6. Selected Financial Data
  Fiscal Year EndedSept. 26, (4)
    
    
    Sept. 25, (4)
    
    
    Sept. 24, (4)
    
    
    Sept. 30, (4)
    
    
    Sept. 28, (4)2004
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2008(In thousands, except per share amounts)Statement of Earnings Data:Sales
    
    $
    3,705,209
    
    
    $
    3,372,844
    
    
    $
    3,508,794
    
    
    $
    3,674,427
    
    
    $
    3,741,254Cost of goods sold
    
    
    2,653,139
    
    
    
    2,468,736
    
    
    
    2,578,435
    
    
    
    2,674,563
    
    
    
    2,743,074Gross profit
    
    
    1,052,070
    
    
    
    904,108
    
    
    
    930,359
    
    
    
    999,864
    
    
    
    998,180Selling, general and administrative
expenses
    
    
    820,329
    
    
    
    772,885
    
    
    
    790,756
    
    
    
    818,863
    
    
    
    829,697Depreciation and amortization
    
    
    33,284
    
    
    
    39,575
    
    
    
    46,642
    
    
    
    48,715
    
    
    
    52,987Total operating expenses
    
    
    853,613
    
    
    
    812,460
    
    
    
    837,398
    
    
    
    867,578
    
    
    
    882,684Operating profit
    
    
    198,457
    
    
    
    91,648
    
    
    
    92,961
    
    
    
    132,286
    
    
    
    115,496Interest and other income
    
    
    855
    
    
    
    5,402
    
    
    
    8,288
    
    
    
    13,927
    
    
    
    8,598Interest expense
    
    
    (53,951
    )
    
    
    (57,142
    )
    
    
    (57,238
    )
    
    
    (59,586
    )
    
    
    (57,464
    )Interest expense related to purchase
of debt
    
    
    (35,647
    )
    
    
    
    
    
    
    
    
    
    
    (3,953
    )
    
    
    Equity in income from unconsolidated
affiliate
    
    
    929
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Income before income taxes
    
    
    110,643
    
    
    
    39,908
    
    
    
    44,011
    
    
    
    82,674
    
    
    
    66,630Income taxes
    
    
    39,202
    
    
    
    13,662
    
    
    
    17,945
    
    
    
    33,279
    
    
    
    26,000Net income
    
    $
    71,441
    
    
    $
    26,246
    
    
    $
    26,066
    
    
    $
    49,395
    
    
    $
    40,630Earnings per average common shares
outstanding
    
    $
    1,865.25
    
    
    $
    685.26
    
    
    $
    697.21
    
    
    $
    1,356.19
    
    
    $
    1,136.03
 11




---



##### Table of Contents



Item 6. Selected Financial Data (contd.)
 Fiscal Year EndedSept. 26,(4)
    
    Sept. 25,(4)
    
    Sept. 24,(4)
    
    Sept. 30,(4)
    
    Sept. 28,(4)2004
    
    2005
    
    2006
    
    2007
    
    2008(In thousands, except per share amounts)Balance Sheet Data (end of fiscal year):Working capital
    
    $
    319,855
    
    
    $
    277,154
    
    
    $
    233,280
    
    
    $
    237,029
    
    
    $
    169,329Total assets
    
    
    1,014,121
    
    
    
    1,055,369
    
    
    
    1,058,092
    
    
    
    1,270,278
    
    
    
    1,276,875Long-term notes
    
    
    700,000
    
    
    
    700,000
    
    
    
    700,000
    
    
    
    810,000
    
    
    
    810,000Long-term capitalized lease obligations
    
    
    9,470
    
    
    
    8,292
    
    
    
    7,294
    
    
    
    6,285
    
    
    
    5,124Other long-term liabilities
    
    
    83,112
    
    
    
    83,799
    
    
    
    80,316
    
    
    
    113,131
    
    
    
    113,125Common stockholders equity (deficit)
    
    
    (39,641
    )
    
    
    (13,395
    )
    
    
    (11,079
    )
    
    
    9,279
    
    
    
    40,506Dividends paid per share, Class A
common stock
    
    $
    1,174.90
    
    
    $
    
    
    
    $
    135.52
    
    
    $
    139.78
    
    
    $
    142.24Cash Flow Data:Cash provided by operating activities
    
    
    138,726
    
    
    
    78,253
    
    
    
    89,473
    
    
    
    173,194
    
    
    
    58,660Cash provided by (used in)
financing activities
    
    
    119,481
    
    
    
    (1,235
    )
    
    
    (24,884
    )
    
    
    81,750
    
    
    
    (14,247
    )Cash used in investing activities
    
    
    (67,412
    )
    
    
    (115,568
    )
    
    
    (129,441
    )
    
    
    (176,427
    )
    
    
    (176,533
    )Other Operating and Financial Data:Sales increases (decreases):Total sales
    
    
    34.6
    %
    
    
    (9.0
    )%
    
    
    4.0
    %
    
    
    4.7
    %
    
    
    1.8
    %Like stores sales (comparable
52-weeks)(1)
    
    
    30.3
    %
    
    
    (12.1
    )%
    
    
    1.5
    %
    
    
    1.7
    %
    
    
    2.5
    %Operating profit
    
    $
    198,457
    
    
    $
    91,648
    
    
    $
    92,961
    
    
    $
    132,286
    
    
    $
    115,496Ratio of earnings to fixed charges(2)
    
    
    1.97x
    
    
    
    1.47x
    
    
    
    1.47x
    
    
    
    1.77x
    
    
    
    1.61xGross profit as a percentage of sales
    
    
    28.40
    %
    
    
    26.81
    %
    
    
    26.52
    %
    
    
    27.21
    %
    
    
    26.68
    %Selling, general and administrative
expenses as a percentage of sales
    
    
    22.14
    %
    
    
    22.92
    %
    
    
    22.54
    %
    
    
    22.29
    %
    
    
    22.18
    %Store Data:(3)Number of stores (at end of fiscal year)
    
    
    158
    
    
    
    161
    
    
    
    162
    
    
    
    164
    
    
    
    165Average sales per store (000s)
    
    $
    23,014
    
    
    $
    20,404
    
    
    $
    20,937
    
    
    $
    21,860
    
    
    $
    21,961Average store size:Total square feet
    
    
    33,206
    
    
    
    33,474
    
    
    
    33,778
    
    
    
    34,028
    
    
    
    34,178Selling square feet
    
    
    23,746
    
    
    
    23,872
    
    
    
    24,028
    
    
    
    24,165
    
    
    
    24,237Total square feet (at end of
fiscal year) (000s)
    
    
    5,267
    
    
    
    5,415
    
    
    
    5,491
    
    
    
    5,599
    
    
    
    5,644Total selling square feet (at end of
fiscal year) (000s)
    
    
    3,764
    
    
    
    3,860
    
    
    
    3,904
    
    
    
    3,972
    
    
    
    4,001Sales per average square foot
    
    $
    693
    
    
    $
    610
    
    
    $
    620
    
    
    $
    642
    
    
    $
    643Sales per average selling square foot
    
    $
    969
    
    
    $
    855
    
    
    $
    871
    
    
    $
    905
    
    
    $
    906
 
 (1)
    
    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. (footnotes continued on following page)
 12




---



##### Table of Contents



Item 6. Selected Financial Data (contd.)
 
 (2)
    
    For the purpose of determining the ratio of earnings to fixed charges, earnings consist
of income before income taxes and amortization of previously capitalized interest. Fixed
charges consist of interest expense whether expensed or capitalized, amortization of debt
issuance costs, and such portion of rental expense as can be deemed by management to be
representative of the interest factor in the particular case. For fiscal 2004, included in
earnings and fixed charges is our 50% share of fixed charges and earnings of Santee through
February 6, 2004. Santee has been consolidated into our consolidated results since that
date.(3)
    
    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.(4)
    
    Fiscal years 2004, 2005, 2006 and 2008 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




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Employee Benefit Plans (contd.)
   Long-Lived Assets
   Income Taxes
  Goodwill
  14




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Critical Accounting Policies (contd.)
 Facility Closing Costs
  Advertising Allowances
   Gift Cards and Certificates
  Significant Accounting Policies
  15




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Ownership of the Company
  Executive Overview
   rd
    16




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Results of Operations
 Sales and Cost of Sales (in thousands)
 Fiscal Year Ended
    
    Change2007 to
    
    2008 toSept. 24,
    
    Sept. 30,
    
    Sept. 28,
    
    2006
    
    20072006
    
    2007
    
    2008
    
    Dollar
    
    %
    
    Dollar
    
    %Sales
    
    $
    3,508,794
    
    
    $
    3,674,427
    
    
    $
    3,741,254
    
    
    $
    165,633
    
    
    
    4.72
    %
    
    $
    66,827
    
    
    
    1.82
    %Gross Profit
    
    $
    930,359
    
    
    $
    999,864
    
    
    $
    998,180
    
    
    $
    69,505
    
    
    
    7.47
    %
    
    $
    (1,684
    )
    
    
    (0.17
    )%as a % of sales
    
    
    26.52
    %
    
    
    27.21
    %
    
    
    26.68
    %
 Sales
 rd
 Like Store Sales
     Santee Sales
  17




---



##### Table of Contents



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. 24,
    
    Sept. 30,
    
    Sept. 28,
    
    2007 to
    
    2008 to2006
    
    2007
    
    2008
    

    2006
    
    2007Dollar
    
    %
    
    Dollar
    
    %Operating Expenses:Selling, general and
administrative expenses
    
    $
    790,756
    
    
    $
    818,863
    
    
    $
    829,697
    
    
    $
    28,107
    
    
    
    3.55
    %
    
    $
    10,834
    
    
    
    1.32
    %as a % of sales
    
    
    22.54
    %
    
    
    22.28
    %
    
    
    22.17
    %Depreciation and amortization
    
    $
    46,642
    
    
    $
    48,715
    
    
    $
    52,987
    
    
    $
    2,073
    
    
    
    4.44
    %
    
    $
    4,272
    
    
    
    8.77
    %as a % of sales
    
    
    1.33
    %
    
    
    1.33
    %
    
    
    1.42
    %Operating profit
    
    $
    92,961
    
    
    $
    132,286
    
    
    $
    115,496
    
    
    $
    39,325
    
    
    
    42.30
    %
    
    $
    (16,790
    )
    
    
    (12.69
    )%as a % of sales
    
    
    2.65
    %
    
    
    3.60
    %
    
    
    3.09
    %
 Selling, General and Administrative Expenses
    18




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Results of Operations (contd.)
 Depreciation and Amortization
  Interest Income
  Interest Expense
  Interest Expense Related to Purchase of Debt
  Income Before Income Taxes
  Income Taxes
  Net Income
  19




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial
Condition and Results of Operations (contd.)
 Liquidity and Capital Resources
      20




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations (contd.)
 Liquidity and Capital Resources (contd.)
  Expected Capital Expenditures Fiscal 2009
 New distribution center
    
    $
    11,501New store construction, less reimbursements
    
    
    9,000Store remodels
    
    
    20,470MIS equipment and software
    
    
    6,299Store equipment
    
    
    19,762Transportation equipment
    
    
    2,861Production equipment
    
    
    1,500Distribution equipment
    
    
    762Office equipment and other
    
    
    809$
    72,964
  Credit Facilities
 Markets Credit Facility
     21




---



##### Table of Contents



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




---



##### 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 2012Principal
    
    $
    525,000
    
    
    $
    
    
    
    $
    
    
    
    $
    525,000
    
    
    $
    Interest
    
    
    170,625
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    42,656
    
    
    
    695,625
    
    
    
    42,656
    
    
    
    85,313
    
    
    
    567,656
    
    
    
    7.75% Senior Notes due 2015Principal
    
    
    285,000
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    285,000Interest
    
    
    154,613
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    44,175
    
    
    
    44,175439,613
    
    
    
    22,088
    
    
    
    44,175
    
    
    
    44,175
    
    
    
    329,175Capital lease obligations (1)Principal
    
    
    6,286
    
    
    
    1,162
    
    
    
    2,912
    
    
    
    1,912
    
    
    
    300Interest
    
    
    2,695
    
    
    
    947
    
    
    
    1,292
    
    
    
    440
    
    
    
    168,981
    
    
    
    2,109
    
    
    
    4,204
    
    
    
    2,352
    
    
    
    316Operating leases (1)
    
    
    322,576
    
    
    
    34,327
    
    
    
    62,439
    
    
    
    50,209
    
    
    
    175,601Total contractual cash obligations
    
    $
    1,466,795
    
    
    $
    101,180
    
    
    $
    196,131
    
    
    $
    664,392
    
    
    $
    505,092Other Commercial Commitments(in thousands)Less than
    
    
    
    
    
    
    
    
    
    
    AfterTotal
    
    
    1 Year
    
    
    1-3 Years
    
    
    4-5 Years
    
    
    5 YearsStandby letters of credit (2)
    
    $
    49,774
    
    
    $
    49,774
    
    
    $
    
    
    
    $
    
    
    
    $
    Total other commercial commitments
    
    $
    49,774
    
    
    $
    49,774
    
    
    $
    
    
    
    $
    
    
    
    $
    
 
 (1)
    
    We lease the majority of our retail stores, offices, warehouses and distribution center.
Certain of our operating leases provide for minimum annual payments that change over the
primary term of the lease. For purposes of contractual cash obligations shown here,
contractual step increases or decreases are shown in the period they are due. Certain
leases provide for additional rents based on sales. Primary lease terms range from 3 to 55
years and substantially all leases provide for renewal options.(2)
    
    Standby letters of credit are committed as security for workers compensation.
Outstanding letters of credit expire between December 2008 and October 2009. 23




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations (contd.)
 Recent Accounting Pronouncements
     .
  24




---



##### Table of Contents



Item 7. Managements Discussion and Analysis of Financial Condition and Results of Operations (contd.)
 Recent Accounting Pronouncements (contd.)
 The Hierarchy of Generally Accepted Accounting
Principles. The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles
 Cautionary Statement
  
 Item 7A. Quantitative and Qualitative Disclosure about Market Risk
  Expected Year of Maturity
 Fair2009
    
    2010
    
    2011
    
    2012
    
    2013
    
    Thereafter
    
    ValueLong-term debt and
capital lease obligations
    
    $
    1,162
    
    
    $
    1,350
    
    
    $
    1,566
    
    
    $
    526,107
    
    
    $
    799
    
    
    $
    285,300
    
    
    $
    788,686Average interest rate
    
    
    8.08
    %
    
    
    8.04
    %
    
    
    8.03
    %
    
    
    8.04
    %
    
    
    7.68
    %
    
    
    7.74
    %
 25




---



##### Table of Contents



Item 8. Financial Statements and Supplementary Data
 REPORT OF MANAGEMENT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
      /s/ Jack H. Brown

Jack H. Brown
    
    /s/ Phillip J. Smith

Phillip J. SmithChairman of the Board, President,
    
    Executive Vice President,and Chief Executive Officer
    
    and Chief Financial Officer(Principal Executive Officer)
    
    (Principal Financial Officer)December 19, 2008
    
    December 19, 2008
  INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Page NumberReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at September 30, 2007
and September 28, 2008
    
    
    F-3Fiscal years ended September 24, 2006, September 30, 2007 and
September 28, 2008:Consolidated Statements of Income
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Consolidated Statements of Stockholders Equity (Deficit)
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 26




---



##### Table of Contents



Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
  
 Item 9A. Controls and Procedures
 DISCLOSURE AND CONTROL PROCEDURES
  CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING
  MANAGEMENTS REPORT ON INTERNAL CONTOL OVER FINANCIAL REPORTING
  
 Item 9B. Other Information
  27




---



##### Table of Contents



PART III
 
 Item 10. Directors and Executive Officers of the Registrant
  Name
    
    Age
    
    PositionJack H. Brown
    
    
    70
    
    
    Chairman of the Board, President
and Chief Executive OfficerPhillip J. Smith
    
    
    61
    
    
    Executive Vice President and Chief Financial OfficerJames W. Lee
    
    
    57
    
    
    President and Chief Operating Officer of MarketsDennis L. McIntyre
    
    
    48
    
    
    Executive Vice President of Marketing of MarketsGeorge A. Frahm
    
    
    55
    
    
    Executive Vice President of Retail Operations and
Administration of MarketsBruce D. Varner
    
    
    72
    
    
    Director and SecretaryThomas W. Field, Jr.
    
    
    75
    
    
    Vice Chairman of the Board of DirectorsRonald G. Skipper
    
    
    68
    
    
    Director
 Background of Directors and Executive Officers
 Jack H. Brown
 Phillip J. Smith
 James W. Lee
 28




---



##### 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
  29




---



##### Table of Contents



Item 10. Directors and Executive Officers of the Registrant (contd.)
 Director Compensation For fiscal Year 2008
 Director
    
    Meeting
    
    TotalName
    
    Fees
    
    Fees
    
    $Thomas W. Field, Jr.
    
    $
    50,000
    
    
    $
    4,000
    
    
    $
    54,000Bruce D. Varner
    
    $
    50,000
    
    
    $
    4,000
    
    
    $
    54,000Ronald G. Skipper
    
    $
    50,000
    
    
    $
    3,500
    
    
    $
    53,500
 
 (1)
    
    Directors of Holdings are paid an annual fee of $50,000 and $500 for each board meeting
attended.  
 Item 11. Executive Compensation
 Compensation Discussion and Analysis
     30




---



##### Table of Contents



Item 11. Executive Compensation (contd.)
 Compensation Discussion and Analysis (contd.)
 Salary
  Bonus
  Deferred Compensation
 st .
 Retirement Benefits
  31




---



##### Table of Contents



Item 11. Executive Compensation (contd.)
 Compensation Discussion and Analysis (contd.)
 Other Benefits
  Employment and Severance Agreements
  Deductibility of Compensation
  COMPENSATION COMMITTEE REPORT
  COMPENSATION COMMITTEE OF THE BOARD OF DIRECTORS
 32




---



##### Table of Contents



Item 11. Executive Compensation (contd.)
  Change inPensionValue andNon-qual.Def. Comp
    
    All OtherSalary
    
    Bonus
    
    Earnings
    
    Compensation
    
    TotalName & Principal Position
    
    Year
    
    $
    
    $ (1)
    
    $ (2)
    
    $ (3)
    
    $Jack H. Brown
Chairman, President and
    
    2008
    
    $
    1,847,233
    
    
    $
    
    
    
    $
    (108,506
    )
    
    $
    51,000
    
    
    $
    1,789,727Chief Executive Officer
    
    2007
    
    $
    1,651,058
    
    
    $
    2,900,000
    
    
    $
    (45,249
    )
    
    $
    51,500
    
    
    $
    4,557,309Phillip J. Smith
Executive Vice President and
    
    2008
    
    $
    346,160
    
    
    $
    
    
    
    $
    977,318
    
    
    $
    
    
    
    $
    1,323,478Chief Financial Officer
    
    2007
    
    $
    310,714
    
    
    $
    145,000
    
    
    $
    618,540
    
    
    $
    
    
    
    $
    1,074,254James W. Lee
President and Chief Operating Officer
    
    2008
    
    $
    400,169
    
    
    $
    
    
    
    $
    672,738
    
    
    $
    
    
    
    $
    1,072,907of Markets
    
    2007
    
    $
    373,365
    
    
    $
    150,000
    
    
    $
    750,667
    
    
    $
    250,000
    
    
    $
    1,524,032Dennis L. McIntyre
Executive Vice President of
    
    2008
    
    $
    347,529
    
    
    $
    
    
    
    $
    480,960
    
    
    $
    
    
    
    $
    828,489Marketing of Markets
    
    2007
    
    $
    313,708
    
    
    $
    115,000
    
    
    $
    496,649
    
    
    $
    250,000
    
    
    $
    1,175,357George A. Frahm
Executive Vice President of Retail
    
    2008
    
    $
    292,283
    
    
    $
    
    
    
    $
    384,169
    
    
    $
    
    
    
    $
    676,452Operations and Administration of
Markets
    
    2007
    
    $
    256,482
    
    
    $
    85,000
    
    
    $
    427,273
    
    
    $
    
    
    
    $
    768,755
 
 (1)
    
    Annual performance bonuses to be paid to the named executive officers for fiscal 2008 had
neither been calculated nor awarded as of December 19, 2008 the latest practical date.(2)
    
    The amount shown represents the change in pension value and change in nonqualified deferred
compensation during fiscal 2008 and fiscal 2007, 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 2008 of $51,000
and fiscal 2007 of $51,500. Amounts shown for Mr. Lee and Mr. McIntyre represent a one-time
withdrawal from their deferred compensation plan account. 33




---



##### 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
    
    27
    
    $
    1,267,458
    
    
    $
    Phillip J. Smith
Executive Vice President and
    
    Pension Plan forChief Financial Officer
    
    Salaried Employees
    
    22
    
    $
    414,214
    
    
    $
    James W. Lee
President and Chief Operating
    
    Pension Plan forOfficer of Markets
    
    Salaried Employees
    
    6
    
    $
    104,358
    
    
    $
    Dennis L. McIntyre
Executive Vice President of
    
    Pension Plan forMarketing of Markets
    
    Salaried Employees
    
    31
    
    $
    127,863
    
    
    $
    George A. Frahm
Executive Vice President of Retail
    
    Pension Plan forOperations and Administration of Markets
    
    Salaried Employees
    
    32
    
    $
    232,272
    
    
    $
    
 34




---



##### Table of Contents



Item 11. Executive Compensation (contd.)
  AggregateExecutive
    
    Registrant
    
    Aggregate
    
    Withdrawals
    
    AggregateContributions in
    
    Contributions in
    
    Earnings in Last
    
    /Distributions ($)
    
    Balance at LastName
    
    Last FY ($)
    
    Last FY ($) (1)
    
    FY ($)
    
    (2)
    
    FYE ($) (3)Jack H. Brown
Chairman, President and
Chief Executive Officer
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Phillip J. Smith
Executive Vice President and
Chief Financial Officer
    
    $
    
    
    
    $
    980,524
    
    
    $
    
    
    
    $
    300,000
    
    
    $
    4,222,392James W. Lee
President and Chief Operating
Officer of Markets
    
    $
    
    
    
    $
    660,362
    
    
    $
    
    
    
    $
    250,000
    
    
    $
    3,129,537Dennis L. McIntyre
Executive Vice President
of Marketing of Markets
    
    $
    
    
    
    $
    500,286
    
    
    $
    
    
    
    $
    300,000
    
    
    $
    2,757,920George A. Frahm
Executive Vice President of Retail
Operations and Administration of
Markets
    
    $
    
    
    
    $
    400,219
    
    
    $
    
    
    
    $
    150,000
    
    
    $
    1,902,976
 
 (1)
    
    The amounts represent our contribution in fiscal 2008 to the named executive
officers deferred compensation. This includes 20% vesting for units awarded to Mr. Lee,
Mr. Smith, Mr. McIntyre and Mr. Frahm that have not fully vested and appreciation of 80%
of the stated value for all existing units.(2)
    
    These amounts represent 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 28, 2008. This balance represents the vested portion of all units
plus appreciation, less any withdrawals. 35




---



##### Table of Contents



Item 11. Executive Compensation (contd.)
 POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
  TERMINATION
    
    
    CHANGE IN CONTROLDeferred
    
    Health &Severance Pay
    
    
    Salary & Bonus
    
    Compensation
    
    Welfare(1)
    
    
    (2)
    
    (3)
    
    (4)
    
    TotalName & Principal Position
    
    $
    
    
    $
    
    $
    
    $
    
    $Jack H. Brown
Chairman, President andChief Executive Officer
    
    $
    426,285
    
    
    
    $
    23,460,309
    
    
    $
    
    
    
    $
    74,276
    
    
    $
    23,534,585Phillip J. SmithExecutive Vice President andChief
Financial Officer
    
    $
    79,883
    
    
    
    $
    1,567,815
    
    
    $
    4,542,392
    
    
    $
    44,565
    
    
    $
    6,154,772James W. LeePresident and Chief OperatingOfficer of Markets
    
    $
    92,347
    
    
    
    $
    1,796,234
    
    
    $
    3,297,537
    
    
    $
    44,565
    
    
    $
    5,138,336Dennis L. McIntyreExecutive Vice President ofMarketing of Markets
    
    $
    80,199
    
    
    
    $
    1,497,871
    
    
    $
    2,837,920
    
    
    $
    44,565
    
    
    $
    4,380,356George A. FrahmExecutive Vice President of RetailOperations and Administration of
Markets
    
    $
    67,450
    
    
    
    $
    1,240,532
    
    
    $
    2,010,976
    
    
    $
    44,565
    
    
    $
    3,296,073
 
 (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 & Frahm.(2)
    
    Per 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 Fram
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 28, 2008.(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. 36




---



##### 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
    
    
    
    10,958
    
    
    
    14,610
    
    
    
    18,263
    
    
    
    21,915
    
    
    
    25,568100,000
    
    
    
    19,020
    
    
    
    25,360
    
    
    
    31,700
    
    
    
    38,040
    
    
    
    44,380125,000
    
    
    
    27,083
    
    
    
    36,110
    
    
    
    45,138
    
    
    
    54,165
    
    
    
    63,193150,000
    
    
    
    35,145
    
    
    
    46,860
    
    
    
    58,575
    
    
    
    70,290
    
    
    
    82,005175,000
    
    
    
    43,208
    
    
    
    57,610
    
    
    
    72,013
    
    
    
    86,415
    
    
    
    100,818200,000
    
    
    
    51,270
    
    
    
    68,360
    
    
    
    85,450
    
    
    
    102,540
    
    
    
    119,630225,000
    
    
    
    59,333
    
    
    
    79,110
    
    
    
    98,888
    
    
    
    118,665
    
    
    
    138,443
 Employment
Agreements
   37




---



##### Table of Contents



Item 11. Executive Compensation (contd.)
 Deferred Compensation Plan
   Board of Directors
    Code of Ethics
  38




---



##### Table of Contents



Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
  Class A
    
    Percentage ofCommon Stock
    
    Class AName and Address of
    
    Beneficially
    
    Common StockBeneficial Owner
    
    Owned
    
    OutstandingLa Cadena(1)
    
    
    35,152
    
    
    
    100
    %Jack H. Brown(1)(2)
    
    
    35,152
    
    
    
    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)
    
    
    35,152
    
    
    
    100
    %
 
 (1)
    
    The 35,152 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
  39




---



##### Table of Contents



Item 13. Certain Relationships and Related Transactions
    
 Item 14. Principal Accounting Fees and Services
 Audit Fees
  Audit Related Fees
  Tax Fees
  All Other Fees
  40




---



##### Table of Contents








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.
 41




---



##### Table of Contents



Item 15. Exhibits and Financial Statement Schedules (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 Note5.1
    
    
    
    (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
 42




---



##### Table of Contents



Item 15. Exhibits and Financial Statement Schedules (contd.)
  exhibit no.
    
    
    
    
    
    description10.16
    
    
    
    (11
    )
    
    Amendment No. 2 to amended and restated
Stater Bros. Holdings Inc. Phantom Stock Plan dated May 15, 200612.1
    
    
    
    (12
    )
    
    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
    
    
    
    (12
    )
    
    Certification of Principal Executive Officer
pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.31.2
    
    
    
    (12
    )
    
    Certification of Principal Financial Officer
pursuant to Section 302 (a) of the Sarbanes-Oxley Act of 2002.32.1
    
    
    
    (12
    )
    
    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(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)
    
    Filed with the Securities and Exchange Commission
as exhibits with the Annual Report on Form 10-K for the fiscal year
ended September 28, 2008 43




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
FOR THE FISCAL YEAR ENDED SEPTEMBER 28, 2008
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 19, 2008              Date
    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 19, 2008/s/ Thomas W. Field, Jr.

Thomas W. Field, Jr.
    
    Vice Chairman of the Board and
Director
    
    December 19, 2008/s/ Ronald G. Skipper

Ronald G. Skipper
    
    Director
    
    December 19, 2008/s/ Bruce D. Varner

Bruce D. Varner
    
    Secretary and Director
    
    December 19, 2008/s/ Phillip J. Smith

Phillip J. Smith
    
    Executive Vice President
and Chief
Financial Officer
(Principal Financial Officer)
    
    December 19, 2008
 44




---



##### Table of Contents



INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 Page NumberReport of Independent Registered Public Accounting Firm
    
    
    F-2Consolidated Balance Sheets at September 30, 2007
and September 28, 2008
    
    
    F-3Fiscal years ended September 24, 2006, September 30, 2007
and September 28, 2008:Consolidated Statements of Income
    
    
    F-5Consolidated Statements of Cash Flows
    
    
    F-6Consolidated Statements of Stockholders Equity (Deficit)
    
    
    F-7Notes to Consolidated Financial Statements
    
    
    F-8
 F-1




---



##### Table of Contents



/s/ Ernst &Young LLP 
 F-2




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED BALANCE SHEETS
  Sept. 30,
    
    
    Sept. 28,2007
    
    
    2008ASSETSCurrent assetsCash and cash equivalents
    
    $
    277,062
    
    
    $
    144,942Restricted cash
    
    
    8,121
    
    
    
    5,621Receivables, net of allowance of $1,006 and $2,671
    
    
    46,391
    
    
    
    52,357Income tax receivables
    
    
    
    
    
    
    4,636Inventories
    
    
    202,073
    
    
    
    233,719Prepaid expenses
    
    
    11,026
    
    
    
    9,311Deferred income taxes
    
    
    23,939
    
    
    
    26,863Total current assets
    
    
    568,612
    
    
    
    477,449Property and equipmentLand
    
    
    112,029
    
    
    
    111,899Buildings and improvements
    
    
    479,808
    
    
    
    572,496Store fixtures and equipment
    
    
    403,052
    
    
    
    448,178Property subject to capital leases
    
    
    24,747
    
    
    
    10,0611,019,636
    
    
    
    1,142,634Less accumulated depreciation and amortization
    
    
    389,992
    
    
    
    410,308629,644
    
    
    
    732,326Deferred income taxes, long-term
    
    
    22,889
    
    
    
    21,178Deferred debt issurance costs, net
    
    
    17,671
    
    
    
    14,478Long-term receivable
    
    
    22,228
    
    
    
    22,228Goodwill
    
    
    2,894
    
    
    
    2,894Other assets
    
    
    6,340
    
    
    
    6,32272,022
    
    
    
    67,100Total assets
    
    $
    1,270,278
    
    
    $
    1,276,875
  F-3




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (contd.)
 Sept. 30,
    
    
    Sept. 28,2007
    
    
    2008LIABILITIES AND STOCKHOLDERS EQUITYCurrent liabilitiesAccounts payable
    
    $
    187,978
    
    
    $
    167,647Accrued payroll and related expenses
    
    
    60,761
    
    
    
    62,223Other accrued liabilities
    
    
    77,109
    
    
    
    77,088Accrued income taxes
    
    
    4,727
    
    
    
    Current portion of capital lease obligations
    
    
    1,008
    
    
    
    1,162Total current liabilities
    
    
    331,583
    
    
    
    308,120Long-term debt
    
    
    810,000
    
    
    
    810,000Capital lease obligations, less current portion
    
    
    6,285
    
    
    
    5,124Long-term portion of self-insurance and other reserves
    
    
    36,307
    
    
    
    35,164Long-term deferred benefits
    
    
    57,388
    
    
    
    66,340Other long-term liabilities
    
    
    19,436
    
    
    
    11,621Total liabilities
    
    
    1,260,999
    
    
    
    1,236,369Commitments and contingenciesStockholders equityCommon Stock, $.01 par value:Authorized shares - 100,000Issued and outstanding shares - 0 in 2007 and 2008
    
    
    
    
    
    
    Class A Common Stock, $.01 par value:Authorized shares - 100,000Issued and outstanding shares - 35,770 in 2007
and 35,152 in 2008
    
    
    
    
    
    
    Additional paid-in capital
    
    
    9,096
    
    
    
    8,939Accumulated other comprehensive loss
    
    
    (9,037
    )
    
    
    (5,200
    )Retained earnings
    
    
    9,220
    
    
    
    36,767Total stockholders equity
    
    
    9,279
    
    
    
    40,506Total liabilities and stockholders equity
    
    $
    1,270,278
    
    
    $
    1,276,875
  F-4




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF INCOME
  Fiscal Year EndedSept. 24,
    
    
    Sept. 30,
    
    
    Sept. 28,2006
    
    
    2007
    
    
    2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Sales
    
    $
    3,508,794
    
    
    $
    3,674,427
    
    
    $
    3,741,254Cost of goods sold
    
    
    2,578,435
    
    
    
    2,674,563
    
    
    
    2,743,074Gross profit
    
    
    930,359
    
    
    
    999,864
    
    
    
    998,180Operating expenses:Selling, general and administrative expenses
    
    
    790,756
    
    
    
    818,863
    
    
    
    829,697Depreciation and amortization
    
    
    46,642
    
    
    
    48,715
    
    
    
    52,987Total operating expenses
    
    
    837,398
    
    
    
    867,578
    
    
    
    882,684Operating profit
    
    
    92,961
    
    
    
    132,286
    
    
    
    115,496Interest income
    
    
    10,284
    
    
    
    14,151
    
    
    
    5,735Interest expense
    
    
    (57,238
    )
    
    
    (59,586
    )
    
    
    (57,464
    )Interest expense related to purchase of debt
    
    
    
    
    
    
    (3,953
    )
    
    
    Other income (expenses), net
    
    
    (1,996
    )
    
    
    (224
    )
    
    
    2,863Income before income taxes
    
    
    44,011
    
    
    
    82,674
    
    
    
    66,630Income taxes
    
    
    17,945
    
    
    
    33,279
    
    
    
    26,000Net income
    
    $
    26,066
    
    
    $
    49,395
    
    
    $
    40,630Earnings per average common shares outstanding
    
    $
    697.21
    
    
    $
    1,356.19
    
    
    $
    1,136.03Dividends per common share outstanding at end of year
    
    $
    135.52
    
    
    $
    139.78
    
    
    $
    142.24Average common shares outstanding
    
    
    37,386
    
    
    
    36,422
    
    
    
    35,765Common shares outstanding at end of year
    
    
    36,895
    
    
    
    35,770
    
    
    
    35,152
  F-5




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF CASH FLOWS
  Fiscal Year EndedSept. 24,
    
    
    Sept. 30,
    
    
    Sept. 28,2006
    
    
    2007
    
    
    2008(52 weeks)
    
    
    (53 weeks)
    
    
    (52 weeks)Operating activities:Net income
    
    $
    26,066
    
    
    $
    49,395
    
    
    $
    40,630Adjustments to reconcile net income to net cash provided
by operating activities:Depreciation and amortization
    
    
    58,570
    
    
    
    60,395
    
    
    
    66,960Amortization of debt issuance costs
    
    
    3,038
    
    
    
    5,496
    
    
    
    3,193Premium paid on purchase of debt
    
    
    
    
    
    
    (1,750
    )
    
    
    Deferred income taxes
    
    
    (2,693
    )
    
    
    (16,374
    )
    
    
    (1,213
    )(Gain) loss on disposals of assets
    
    
    2,176
    
    
    
    403
    
    
    
    (2,522
    )Changes in operating assets and liabilities:Decrease in restricted cash
    
    
    4,879
    
    
    
    16,000
    
    
    
    2,500(Increase) decrease in receivables
    
    
    7,589
    
    
    
    (11,226
    )
    
    
    3,461(Increase) decrease in income tax receivables
    
    
    (1,413
    )
    
    
    3,863
    
    
    
    (4,727
    )Increase in inventories
    
    
    (10,729
    )
    
    
    (6,042
    )
    
    
    (31,646
    )(Increase) decrease in prepaid expenses
    
    
    116
    
    
    
    (3,937
    )
    
    
    1,701(Increase) decrease in other assets
    
    
    92
    
    
    
    (33
    )
    
    
    18Increase (decrease) in accounts payable
    
    
    11,529
    
    
    
    32,151
    
    
    
    (20,331
    )Increase (decrease) in accrued income taxes
    
    
    
    
    
    
    4,727
    
    
    
    (4,636
    )Increase (decrease) in other accrued liabilities
    
    
    (6,264
    )
    
    
    14,843
    
    
    
    1,441Increase (decrease) in long-term reserves
    
    
    (3,483
    )
    
    
    25,283
    
    
    
    3,831Net cash provided by operating activities
    
    
    89,473
    
    
    
    173,194
    
    
    
    58,660Financing activities:Proceeds from issuance of long-term debt
    
    
    
    
    
    
    285,000
    
    
    
    Debt issuance costs
    
    
    
    
    
    
    (7,195
    )
    
    
    Dividends paid
    
    
    (5,000
    )
    
    
    (5,000
    )
    
    
    (5,000
    )Stock redemption
    
    
    (18,750
    )
    
    
    (15,000
    )
    
    
    (8,240
    )Principal payment on long-term debt
    
    
    
    
    
    
    (175,000
    )
    
    
    Principal payments on capital lease obligations
    
    
    (1,134
    )
    
    
    (1,055
    )
    
    
    (1,007
    )Net cash provided by (used in) financing activities
    
    
    (24,884
    )
    
    
    81,750
    
    
    
    (14,247
    )Investing activities:Increase (decrease) in short-term investments
    
    
    (26,849
    )
    
    
    26,849
    
    
    
    Incerease (decrease) in store reimbursement
    
    
    (343
    )
    
    
    145
    
    
    
    (9,427
    )Increase in long-term receivable
    
    
    (12,160
    )
    
    
    (10,068
    )
    
    
    Purchase of property and equipment
    
    
    (95,797
    )
    
    
    (193,560
    )
    
    
    (170,629
    )Proceeds from sale of property and equipment
    
    
    5,708
    
    
    
    207
    
    
    
    3,523Net cash used in investing activities
    
    
    (129,441
    )
    
    
    (176,427
    )
    
    
    (176,533
    )Net increase (decrease) in cash and cash equivalents
    
    
    (64,852
    )
    
    
    78,517
    
    
    
    (132,120
    )Cash and cash equivalents at beginning of period
    
    
    263,397
    
    
    
    198,545
    
    
    
    277,062Cash and cash equivalents at end of period
    
    $
    198,545
    
    
    $
    277,062
    
    
    $
    144,942Interest paid
    
    $
    58,563
    
    
    $
    57,587
    
    
    $
    65,707Income taxes paid
    
    $
    22,050
    
    
    $
    34,850
    
    
    $
    39,300
  F-6




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
  Accumulated
    
    
    
    
    
    
    TotalClass A
    
    
    Additional
    
    
    Other Comp-
    
    
    Retained
    
    
    Stockholders
    
    
    Comp-Common
    
    
    Common Stock
    
    
    Paid-in
    
    
    rehensive
    
    
    Earnings
    
    
    Equity
    
    
    rehensiveStock
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Gain (Loss)
    
    
    (Deficit)
    
    
    (Deficit)
    
    
    IncomeBalance at September 25, 2005
    
    
    
    
    
    
    38,301
    
    
    $
    
    
    
    $
    9,740
    
    
    $
    
    
    
    $
    (23,135
    )
    
    $
    (13,395
    )Net income for 52 weeks ended
September 24, 2006
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    26,066
    
    
    
    26,066
    
    
    $
    26,066Dividend paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,000
    )
    
    
    (5,000
    )
    
    
    Stock redemption
    
    
    
    
    
    
    (1,406
    )
    
    
    
    
    
    
    (358
    )
    
    
    
    
    
    
    (18,392
    )
    
    
    (18,750
    )
    
    
    Balance at September 24, 2006
    
    
    
    
    
    
    36,895
    
    
    
    
    
    
    
    9,382
    
    
    
    
    
    
    
    (20,461
    )
    
    
    (11,079
    )
    
    $
    26,066Net income for 53 weeks ended
September 30, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    49,395
    
    
    
    49,395
    
    
    $
    49,395SFAS No. 158 Adjustment(net
of tax of $6,214)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (9,037
    )
    
    
    
    
    
    
    (9,037
    )
    
    
    Dividend paid
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,000
    )
    
    
    (5,000
    )
    
    
    Stock redemption
    
    
    
    
    
    
    (1,125
    )
    
    
    
    
    
    
    (286
    )
    
    
    
    
    
    
    (14,714
    )
    
    
    (15,000
    )
    
    
    Balance at September 30, 2007
    
    
    
    
    
    
    35,770
    
    
    
    
    
    
    
    9,096
    
    
    
    (9,037
    )
    
    
    9,220
    
    
    
    9,279
    
    
    $
    49,395Net income for 52 weeks ended
September 28, 2008
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    40,630
    
    
    
    40,630
    
    
    $
    40,630Other Comprehensive gain
(net of tax of $2,607)
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    3,792
    
    
    
    
    
    
    
    3,792
    
    
    
    3,792Other
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    45
    
    
    
    
    
    
    
    45
    
    
    
    45Dividend 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
    
    
    $
    44,467
  F-7




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 September 28, 2008
 Note 1  The Company and Summary of Significant Accounting Policies
 Description of Business
  Principles of Consolidation
  Reclassifications
  Use of Estimates
  Fiscal Year
  Cash and Cash Equivalents
  Restricted Cash
  Inventories
  Receivables
  Long-Lived Assets
  F-8




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 1  The Company and Summary of Significant Accounting Policies (contd.)
 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
  Revenue Recognition
  F-9




---



##### Table of Contents



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




---



##### 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
  Recent Accounting Pronouncements
    F-11




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 1  The Company and Summary of Significant Accounting Policies (contd.)
 Recent Accounting Pronouncements (contd.)
    The Hierarchy of Generally Accepted Accounting
Principles. The Meaning of Present Fairly in Conformity With Generally Accepted Accounting Principles
 F-12




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 2
 Goodwill
  Note 3  Issuance of New Debt and Early Extinguishment of Debt
   Note 4  Debt
  Fiscal Year EndedSept. 30,
    
    
    Sept. 28,2007
    
    
    2008(In thousands)8.125% Senior Notes due 2012
    
    
    525,000
    
    
    
    525,0007.75% Senior Notes due 2015
    
    
    285,000
    
    
    
    285,000Total long-term debt
    
    $
    810,000
    
    
    $
    810,000
    F-13




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (contd.)
 Note 4
 Debt (contd.)
   Note 5  Credit Facilities
 Markets Credit Facility
      F-14




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 5  Credit Facilities (contd.)
 Santees Revolver
        Note 6  Leases
   F-15




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 6
 Leases (contd.)
  OperatingLeases
    
    
    NoncancelableCapital
    
    
    Minimum
    
    
    SubleaseLeases
    
    
    Payments
    
    
    Income(In thousands)2009
    
    $
    2,109
    
    
    $
    34,327
    
    
    $
    2,8122010
    
    
    2,109
    
    
    
    32,843
    
    
    
    4,2842011
    
    
    2,099
    
    
    
    29,597
    
    
    
    4,1972012
    
    
    1,403
    
    
    
    26,199
    
    
    
    3,2362013
    
    
    943
    
    
    
    24,010
    
    
    
    3,037Thereafter
    
    
    319
    
    
    
    175,600
    
    
    
    23,165Total minimum lease payments
    
    
    8,982
    
    
    $
    322,576
    
    
    $
    40,731Less amounts representing interest
    
    
    2,696Present value of minimum lease payments
    
    
    6,286Less current portion
    
    
    1,162Long-term portion
    
    $
    5,124
  Sept. 24, 2006
    
    Sept. 30, 2007
    
    Sept. 28, 2008(In thousands)Minimum rentals
    
    $
    30,827
    
    
    $
    33,014
    
    
    $
    33,454Rentals based on sales
    
    $
    14,092
    
    
    $
    14,368
    
    
    $
    15,020Sublease income
    
    $
    1,327
    
    
    $
    1,303
    
    
    $
    1,383
  F-16




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (contd.)
 Note 7  Income Taxes
  Sept. 24, 2006
    
    
    Sept. 30, 2007
    
    
    Sept. 28, 2008(in thousands)CurrentFederal
    
    $
    16,092
    
    
    $
    34,141
    
    
    $
    23,756State
    
    
    3,957
    
    
    
    8,876
    
    
    
    6,09520,049
    
    
    
    43,017
    
    
    
    29,851DeferredFederal
    
    
    (1,394
    )
    
    
    (8,209
    )
    
    
    (2,826
    )State
    
    
    (710
    )
    
    
    (1,529
    )
    
    
    (1,025
    )(2,104
    )
    
    
    (9,738
    )
    
    
    (3,851
    )Income tax expense
    
    $
    17,945
    
    
    $
    33,279
    
    
    $
    26,000
  Sept. 24, 2006
    
    Sept. 30, 2007
    
    Sept. 28, 2008Federal 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
    
    
    (1.4
    )
    
    
    (1.1
    )
    
    
    (2.3
    )Other
    
    
    1.4
    
    
    
    0.6
    
    
    
    0.5Effective tax rate
    
    
    40.8
    %
    
    
    40.3
    %
    
    
    39.0
    %
 F-17




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 7  Income Taxes (contd.)
  Sept. 30, 2007
    
    
    Sept. 28, 2008(In thousands)Deferred income tax assets:Self-insurance reserves
    
    $
    23,709
    
    
    $
    23,486Deferred compensation
    
    
    23,383
    
    
    
    28,488Payroll liabilities
    
    
    17,083
    
    
    
    14,165State franchise tax
    
    
    3,136
    
    
    
    2,282Inventories
    
    
    2,237
    
    
    
    2,211Income deferred for book purposes
    
    
    1,569
    
    
    
    2,230Tax credits and operating loss carry forwards
    
    
    3,960
    
    
    
    3,261Other, net
    
    
    344
    
    
    
    904Total deferred income tax assets
    
    
    75,421
    
    
    
    77,027Deferred income tax liabilities:Property and equipment
    
    
    (24,854
    )
    
    
    (25,096
    )Other assets
    
    
    (2,058
    )
    
    
    (2,209
    )Investment in unconsolidated affiliate
    
    
    (1,681
    )
    
    
    (1,681
    )Total deferred income tax liabilities
    
    
    (28,593
    )
    
    
    (28,986
    )Net deferred income tax assets
    
    $
    46,828
    
    
    $
    48,041
      F-18




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (contd.)
 Note 8  Retirement Plans
 Pension and Medical Plans
    Retirement BenefitsBefore
    
    
    
    
    
    AfterImplementation
    
    Change due to
    
    Implementationof SFAS 158
    
    SFAS 158
    
    of SFAS 158(in thousands)Deferred tax assets
    
    $
    40,614
    
    
    $
    6,214
    
    
    $
    46,828Pre-paid pension
    
    $
    1,904
    
    
    $
    (1,904
    )
    
    $
    Total assets
    
    $
    1,265,968
    
    
    $
    4,310
    
    
    $
    1,270,278Pension liability
    
    $
    
    
    
    $
    12,403
    
    
    $
    12,403Other post retirement liability
    
    $
    496
    
    
    $
    944
    
    
    $
    1,440Total liabilities
    
    $
    1,247,652
    
    
    $
    13,347
    
    
    $
    1,260,999Accumulated other comprehensive loss
    
    $
    
    
    
    $
    (9,037
    )
    
    $
    (9,037
    )Total stockholders equity
    
    $
    18,316
    
    
    $
    (9,037
    )
    
    $
    9,279Total liabilities and stockholders equity
    
    $
    1,265,968
    
    
    $
    4,310
    
    
    $
    1,270,278
  Pension Plan
    
    
    Medical PlanSept. 30,
    
    
    Sept. 28,
    
    
    Sept. 30,
    
    
    Sept. 28,2007
    
    
    2008
    
    
    2007
    
    
    2008(in thousands)Prior service cost
    
    $
    9
    
    
    $
    2
    
    
    $
    736
    
    
    $
    (78
    )Net actuarial (gain) loss
    
    $
    14,298
    
    
    $
    (6,269
    )
    
    $
    208
    
    
    $
    (130
    )Total recognized in accumulated other
comprehensive (gain)/loss, before tax
    
    $
    14,307
    
    
    $
    (6,267
    )
    
    $
    944
    
    
    $
    (208
    )
 F-19




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (contd.)
 Note 8  Retirement Plans (contd.)
 Pension and Medical Plans (contd.)
  Pension Plan
    
    
    Medical PlanSept. 30,
    
    
    Sept. 28,
    
    
    Sept. 30,
    
    
    Sept. 28,2007
    
    
    2008
    
    
    2007
    
    
    2008(in thousands)Change in benefit obligation:Beginning balance
    
    $
    57,378
    
    
    $
    58,273
    
    
    $
    1,211
    
    
    $
    1,440Service cost
    
    
    2,659
    
    
    
    2,632
    
    
    
    43
    
    
    
    41Interest cost
    
    
    3,250
    
    
    
    3,504
    
    
    
    81
    
    
    
    88Actuarial (gain) loss
    
    
    (2,942
    )
    
    
    (1,386
    )
    
    
    164
    
    
    
    (123
    )Benefit payments
    
    
    (2,072
    )
    
    
    (10,173
    )
    
    
    (59
    )
    
    
    (82
    )Ending balance
    
    $
    58,273
    
    
    $
    52,850
    
    
    $
    1,440
    
    
    $
    1,364Change in fair value of plan assets:Beginning balance
    
    $
    38,666
    
    
    $
    45,870
    
    
    $
    
    
    
    $
    Actual
return on plan assets
    
    
    2,440
    
    
    
    (1,413
    )
    
    
    
    
    
    
    Employer contributions
    
    
    6,836
    
    
    
    4,926
    
    
    
    59
    
    
    
    82Benefit payments
    
    
    (2,072
    )
    
    
    (1,386
    )
    
    
    (59
    )
    
    
    (82
    )Ending balance
    
    $
    45,870
    
    
    $
    47,997
    
    
    $
    
    
    
    $
    Funded status:Fair value of plan assets
    
    $
    45,870
    
    
    $
    47,997
    
    
    $
    
    
    
    $
    Projected
benefit obligation
    
    
    58,273
    
    
    
    52,850
    
    
    
    1,440
    
    
    
    1,364Funded status
    
    $
    (12,403
    )
    
    $
    (4,853
    )
    
    $
    (1,440
    )
    
    $
    (1,364
    )
  F-20




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (contd.)
 Note 8  Retirement Plans (contd.)
 Pension Plan
  Sept. 24,
    
    
    Sept. 30,
    
    
    Sept. 28,2006
    
    
    2007
    
    
    2008(in thousands)Expected return on assets
    
    $
    (1,704
    )
    
    $
    (2,652
    )
    
    $
    (3,076
    )Service cost
    
    
    2,715
    
    
    
    2,659
    
    
    
    2,632Interest cost
    
    
    2,970
    
    
    
    3,250
    
    
    
    3,504Amortization of prior service cost
    
    
    (2
    )
    
    
    (2
    )
    
    
    (2
    )Amortization of recognized losses
    
    
    1,070
    
    
    
    892
    
    
    
    584Net pension expense
    
    $
    5,049
    
    
    $
    4,147
    
    
    $
    3,642Actuarial assumptions used to determine net pension expense were:Discount rate
    
    
    5.50
    %
    
    
    5.80
    %
    
    
    6.25
    %Rate of increase in compensation levels
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %Expected long-term rate of return on
assets
    
    
    5.00
    %
    
    
    6.50
    %
    
    
    6.50
    %Actuarial assumptions used to determine year-end projected benefit obligation were:Weighted-average discount rate
    
    
    5.80
    %
    
    
    6.25
    %
    
    
    7.50
    %Weighted-average rate of compensation increase
    
    
    3.00
    %
    
    
    3.00
    %
    
    
    3.00
    %
   Sept. 30,
    
    Sept. 28,Target
    
    2007
    
    2008Asset category:Fixed income
    
    
    65
    %
    
    
    75
    %
    
    
    67
    %Equity
    
    
    35
    %
    
    
    16
    %
    
    
    33
    %Cash and other
    
    
    0
    %
    
    
    9
    %
    
    
    0
    %Total
    
    
    100
    %
    
    
    100
    %
    
    
    100
    %
 F-21




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (contd.)
 Note 8  Retirement Plans (contd.)
 Pension Plan (contd.)
   Estimated Future Benefit Payments
  PensionBenefits(in thousands)2009
    
    $
    1,9842010
    
    $
    2,7062011
    
    $
    2,6262012
    
    $
    2,8312013
    
    $
    3,6372014 - 2018
    
    $
    22,320
 Medical Plan
  Sept. 24,
    
    
    Sept. 30,
    
    
    Sept. 28,2006
    
    
    2007
    
    
    2008(in thousands)Service cost
    
    $
    44
    
    
    $
    43
    
    
    $
    41Interest cost
    
    
    65
    
    
    
    81
    
    
    
    88Amortization of prior service cost
    
    
    78
    
    
    
    78
    
    
    
    78Amortization of recognized losses
    
    
    
    
    
    
    10
    
    
    
    7Net periodic benefit costs
    
    $
    187
    
    
    $
    212
    
    
    $
    214Actuarial assumptions used to determine net periodic benefit costs were:Discount rate
    
    
    5.50
    %
    
    
    5.80
    %
    
    
    6.25
    %Actuarial assumptions used to determine year-end projected benefit obligation were:Weighted-average discount rate
    
    
    5.80
    %
    
    
    6.25
    %
    
    
    7.50
    %
 F-22




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED
FINANCIAL STATEMENTS (contd.)
 Note 8  Retirement Plans (contd.)
 Medical Plan (contd.)
   Estimated Future Benefit Payments
  MedicalBenefits(in thousands)2009
    
    $
    852010
    
    $
    992011
    
    $
    1112012
    
    $
    1232013
    
    $
    1342014-2018
    
    $
    647
 Profit Sharing Plan
  Multi-Employer Plans
   Sept. 24,
    
    
    Sept. 30,
    
    
    Sept. 28,2006
    
    
    2007
    
    
    2008(in thousands)Multi-Employer Pension Plans
    
    $
    38,022
    
    
    $
    38,548
    
    
    $
    40,508Multi-Employer Health and
Welfare
    
    
    92,905
    
    
    
    74,376
    
    
    
    71,342Total Multi-Employer Benefits
    
    $
    130,927
    
    
    $
    112,924
    
    
    $
    111,850
  F-23




---



##### Table of Contents



STATER BROS. HOLDINGS INC.  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 9  Segment Information
  Retail
    
    All Other
    
    Total(in thousands)Fiscal year ended September 24,
2006Sales to external customers
    
    $
    3,410,343
    
    
    $
    98,451
    
    
    $
    3,508,794Intersegment sales
    
    $
    
    
    
    $
    74,885
    
    
    $
    74,885Depreciation and amortization
    
    $
    46,527
    
    
    $
    115
    
    
    $
    46,642Operating profit
    
    $
    91,902
    
    
    $
    1,059
    
    
    $
    92,961Interest income
    
    $
    9,645
    
    
    $
    639
    
    
    $
    10,284Interest expense
    
    $
    (1,376
    )
    
    $
    (55,862
    )
    
    $
    (57,238
    )Income tax expense (benefit)
    
    $
    40,932
    
    
    $
    (22,987
    )
    
    $
    17,945Net income (loss)
    
    $
    57,056
    
    
    $
    (30,990
    )
    
    $
    26,066Total assets
    
    $
    1,415,146
    
    
    $
    (357,054
    )
    
    $
    1,058,092Capital expenditures
    
    $
    94,193
    
    
    $
    1,604
    
    
    $
    95,797
 Retail
    
    All Other
    
    Total(in thousands)Fiscal year ended September 30,
2007Sales to external customers
    
    $
    3,573,075
    
    
    $
    101,352
    
    
    $
    3,674,427Intersegment sales
    
    $
    
    
    
    $
    88,337
    
    
    $
    88,337Depreciation and amortization
    
    $
    48,597
    
    
    $
    118
    
    
    $
    48,715Operating profit (loss)
    
    $
    133,882
    
    
    $
    (1,596
    )
    
    $
    132,286Interest income
    
    $
    10,536
    
    
    $
    3,615
    
    
    $
    14,151Interest expense
    
    $
    (1,237
    )
    
    $
    (62,302
    )
    
    $
    (63,539
    )Income tax expense (benefit)
    
    $
    58,692
    
    
    $
    (25,413
    )
    
    $
    33,279Net income (loss)
    
    $
    84,085
    
    
    $
    (34,690
    )
    
    $
    49,395Total assets
    
    $
    1,588,772
    
    
    $
    (318,494
    )
    
    $
    1,270,278Capital expenditures
    
    $
    191,873
    
    
    $
    1,687
    
    
    $
    193,560
 F-24




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 9  Segment Information (contd.)
 Retail
    
    All Other
    
    Total(in thousands)Fiscal year ended September 28, 2008Sales to external customers
    
    $
    3,636,125
    
    
    $
    105,129
    
    
    $
    3,741,254Intersegment sales
    
    $
    
    
    
    $
    100,745
    
    
    $
    100,745Depreciation and amortization
    
    $
    52,898
    
    
    $
    89
    
    
    $
    52,987Operating profit (loss)
    
    $
    115,499
    
    
    $
    (3
    )
    
    $
    115,496Interest income
    
    $
    3,184
    
    
    $
    2,551
    
    
    $
    5,735Interest expense
    
    $
    (1,103
    )
    
    $
    (56,361
    )
    
    $
    (57,464
    )Income tax expense (benefit)
    
    $
    48,381
    
    
    $
    (22,381
    )
    
    $
    26,000Net income (loss)
    
    $
    71,117
    
    
    $
    (30,487
    )
    
    $
    40,630Total assets
    
    $
    1,659,996
    
    
    $
    (383,121
    )
    
    $
    1,276,875Capital expenditures
    
    $
    168,886
    
    
    $
    1,743
    
    
    $
    170,629
 Note 10  Labor Relations
  Note 11  Fair Value of Financial Instruments
  Cash and Cash Equivalents
  Receivables
  Long-Term Receivable
  F-25




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 11  Fair Value of Financial Instruments (contd.)
 Long-Term Debt and Capital Lease Obligations
   As ofSeptember 28, 2008(In thousands)Carrying
    
    FairAmount
    
    ValueCash and cash equivalents
    
    $
    144,942
    
    
    $
    144,942Receivables
    
    $
    56,993
    
    
    $
    56,993Long-term receivable
    
    $
    22,228
    
    
    $
    22,228Long-term debt
    
    $
    810,000
    
    
    $
    782,400Capitalized lease obligations
    
    $
    6,286
    
    
    $
    6,286
 Note 12  Litigation Matters
    F-26




---



##### Table of Contents



STATER BROS. HOLDINGS INC.
 NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (contd.)
 Note 13  Deferred Compensation Plan
  Note 14  Related Party Transactions
   Note 15  Stock Redemption
    F-27




---



##### 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 2006 Quarters13 weeks ended
12/25/05
    
    $
    867,166
    
    
    $
    226,715
    
    
    $
    17,592
    
    
    $
    3,332
    
    
    
    38,301
    
    
    $
    87.0013 weeks ended
03/26/06
    
    
    863,751
    
    
    
    232,512
    
    
    
    23,442
    
    
    
    6,176
    
    
    
    37,442
    
    
    
    164.9513 weeks ended
06/25/06
    
    
    886,221
    
    
    
    229,700
    
    
    
    24,351
    
    
    
    5,742
    
    
    
    36,895
    
    
    
    155.6313 weeks ended
09/24/06
    
    
    891,656
    
    
    
    241,432
    
    
    
    27,576
    
    
    
    10,816
    
    
    
    36,895
    
    
    
    293.16$
    3,508,794
    
    
    $
    930,359
    
    
    $
    92,961
    
    
    $
    26,066
    
    
    
    37,386
    
    
    $
    697.21Fiscal 2007 Quarters13 weeks ended
12/24/06
    
    $
    904,354
    
    
    $
    241,890
    
    
    $
    28,205
    
    
    $
    9,902
    
    
    
    36,895
    
    
    $
    268.3813 weeks ended
03/25/07
    
    
    866,062
    
    
    
    249,444
    
    
    
    33,674
    
    
    
    13,460
    
    
    
    36,895
    
    
    
    364.8213 weeks ended
06/24/07
    
    
    910,229
    
    
    
    253,787
    
    
    
    41,625
    
    
    
    15,602
    
    
    
    36,178
    
    
    
    431.2614 weeks ended
09/30/07
    
    
    993,782
    
    
    
    254,743
    
    
    
    28,782
    
    
    
    10,431
    
    
    
    35,770
    
    
    
    291.61$
    3,674,427
    
    
    $
    999,864
    
    
    $
    132,286
    
    
    $
    49,395
    
    
    
    36,422
    
    
    $
    1,356.19Fiscal 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
    
    
    $
    1,136.03
 F-28