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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2013
OR
¨
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.
(Exact name of registrant as specified in its charter)
 
Delaware
 
33-0350671
(State or other jurisdiction of
incorporation or organization)
 
(I.R.S. Employer
Identification No.)
 
 
 
301 S. Tippecanoe Avenue San Bernardino, California
 
92408
(Address of principal executive offices)
 
(Zip Code)
 
 
 
Registrant’s telephone number, including area code
 
(909) 733-5000
Not Applicable
(Former name, former address and former fiscal year, if changed since last report.)
 
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  x    No  ¨.
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  x    No  ¨.
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
 
¨
  
Accelerated filer
 
¨
 
 
 
 
 
 
 
Non-accelerated filer
 
x
  
Smaller Reporting Company
 
¨
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes  ¨    No  x.
As of May 13, 2013, there were issued and outstanding
33,179 shares of the registrant’s Class A Common Stock.




STATER BROS. HOLDINGS INC.
March 31, 2013
INDEX

 
 
Page
PART I
 
 
 
 
Item 1.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
PART II
 
 
 
 
Item 1.
 
 
 
Item 1A.
 
 
 
Item 2.
 
 
 
Item 3.
 
 
 
Item 4.
 
 
 
Item 5.
 
 
 
Item 6.
 
 
 

2


PART I - FINANCIAL INFORMATION

Item 1.
FINANCIAL STATEMENTS
STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)
 
 
Sep 30,
2012
 
Mar 31,
2013
 
 
 
(Unaudited)
ASSETS
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
219,800

 
$
236,804

Receivables, net of allowance of $1,323 and $1,323
37,427

 
43,242

Income tax receivable
10,475

 
3,962

Inventories
229,117

 
232,188

Prepaid expenses
17,221

 
18,831

Deferred income taxes, current portion
28,519

 
25,406

Note receivable, current portion
600

 
600

Total current assets
543,159

 
561,033

Property and equipment
 
 
 
Land
109,729

 
108,566

Buildings and improvements
582,282

 
585,458

Store fixtures and equipment
465,576

 
470,349

Property subject to capital leases
11,410

 
11,615

 
1,168,997

 
1,175,988

Less accumulated depreciation and amortization
561,493

 
585,217

 
607,504


590,771

Deferred income taxes, less current portion
41,945

 
46,566

Deferred debt issuance costs, net
8,397

 
7,278

Note receivable, less current portion
1,423

 
1,019

Other assets
5,894

 
5,922

 
57,659

 
60,785

Total assets
$
1,208,322

 
$
1,212,589

 
See accompanying notes to unaudited consolidated financial statements.


3


STATER BROS. HOLDINGS INC.
CONSOLIDATED BALANCE SHEETS (contd.)
(In thousands, except share amounts)

 
Sep 30,
2012
 
Mar 31,
2013
 
 
 
(Unaudited)
LIABILITIES AND STOCKHOLDER’S EQUITY
 
 
 
Current liabilities
 
 
 
Accounts payable
$
147,544

 
$
148,938

Accrued payroll and related expenses
103,918

 
90,942

Accrued interest
18,164

 
18,082

Other accrued liabilities
43,869

 
43,654

Current portion of capital lease obligations
1,242

 
1,160

Current portion of long-term debt
11,419

 
14,500

Total current liabilities
326,156

 
317,276

Long-term debt, less current portion
633,521

 
622,646

Capital lease obligations, less current portion
1,186

 
669

Long-term portion of self-insurance and other reserves
43,796

 
50,603

Long-term portion of deferred benefits
70,118

 
74,977

Accrued pension and other
50,923

 
51,749

Total liabilities
1,125,700

 
1,117,920

Commitments and contingencies

 

Stockholder’s equity
 
 
 
Common Stock, $.01 par value:
 
 
 
Authorized shares - 100,000, issued and outstanding shares - 0 in 2012 and 2013

 

Class A Common Stock, $.01 par value:
 
 
 
Authorized shares - 100,000, issued and outstanding shares - 33,179 in 2012 and 2013

 

Additional paid-in capital
8,437

 
8,437

Accumulated other comprehensive loss
(30,126
)
 
(30,126
)
Retained earnings
104,311

 
116,358

Total stockholder’s equity
82,622

 
94,669

Total liabilities and stockholder’s equity
$
1,208,322

 
$
1,212,589

See accompanying notes to unaudited consolidated financial statements.

4


STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share and share amounts)
 
 
Thirteen Weeks Ended
 
Mar 25,
2012
 
Mar 31,
2013
Sales
$
937,663

 
$
961,896

Cost of goods sold
676,977

 
703,124

Gross profit
260,686

 
258,772

Operating expenses
 
 
 
Selling, general and administrative expenses
209,829

 
215,965

Loss on sale of property and equipment
27

 
6

Depreciation and amortization
11,371

 
11,566

Total operating expenses
221,227

 
227,537

Operating profit
39,459

 
31,235

Interest income
28

 
21

Interest expense
(11,735
)
 
(11,768
)
Income before income taxes
27,752

 
19,488

Income taxes
11,319

 
7,890

Net income and comprehensive income
$
16,433

 
$
11,598

Earnings per average common share outstanding
$
486.70

 
$
349.56

Average common shares outstanding
33,764

 
33,179


See accompanying notes to unaudited consolidated financial statements.


5



STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(In thousands, except per share and share amounts)

 
Twenty-Six Weeks Ended
 
Mar 25,
2012
 
Mar 31,
2013
Sales
$
1,898,387

 
$
1,930,640

Cost of goods sold
1,378,020

 
1,421,139

Gross profit
520,367

 
509,501

Operating expenses

 

Selling, general and administrative expenses
431,700

 
436,044

Gain on sale of property and equipment
(612
)
 
(1,927
)
Depreciation and amortization
22,783

 
23,249

Total operating expenses
453,871

 
457,366

Operating profit
66,496

 
52,135

Interest income
64

 
44

Interest expense
(23,684
)
 
(23,577
)
Income before income taxes
42,876

 
28,602

Income taxes
17,433

 
11,555

Net income and comprehensive income
$
25,443

 
$
17,047

Earnings per average common share outstanding
$
752.73

 
$
513.79

Average common shares outstanding
33,801

 
33,179


See accompanying notes to unaudited consolidated financial statements.



6


STATER BROS. HOLDINGS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
 
 
Twenty-Six Weeks Ended
 
Mar 25,
2012
 
Mar 31,
2013
Operating activities:
 
 
 
Net income
$
25,443

 
$
17,047

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 
Depreciation and amortization
28,192

 
28,951

Amortization of debt issuance costs
1,131

 
1,119

Increase in deferred income taxes
(2,061
)
 
(1,508
)
Gain on disposals of assets
(612
)
 
(1,927
)
Changes in operating assets and liabilities:
 
 
 
Decrease in restricted cash
3,121

 

Increase in receivables
(3,166
)
 
(5,815
)
Decrease in income tax receivables

 
6,513

Increase in inventories
(652
)
 
(3,071
)
Increase in prepaid expenses
(711
)
 
(1,610
)
Increase in other assets
(8
)
 
(28
)
Increase (decrease) in accounts payable
(818
)
 
1,394

Decrease in income taxes payable
(5,540
)
 

Increase (decrease) in other accrued liabilities
2,895

 
(13,273
)
Increase (decrease) in long-term liabilities
(761
)
 
12,492

Net cash provided by operating activities
46,453

 
40,284

Investing activities:
 
 
 
Collections on note receivable
431

 
404

Purchase of property and equipment
(21,761
)
 
(13,500
)
Proceeds from sale of property and equipment
1,040

 
3,209

Net cash used in investing activities
(20,290
)
 
(9,887
)
Financing Activities:
 
 
 
Proceeds from capital lease financing
724

 

Principal payments on long-term debt
(32,810
)
 
(7,794
)
Principal payments on capital lease obligations
(173
)
 
(599
)
Stock redemption
(8,770
)
 

Dividends paid
(5,000
)
 
(5,000
)
Net cash used in financing activities
(46,029
)
 
(13,393
)
Net increase (decrease) in cash and cash equivalents
(19,866
)
 
17,004

Cash and cash equivalents at beginning of period
235,784

 
219,800

Cash and cash equivalents at end of period
$
215,918

 
$
236,804

Interest paid
$
22,981

 
$
22,557

Income taxes paid
$
25,050

 
$
6,550


See accompanying notes to unaudited consolidated financial statements.

7

STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2013



Note 1 – Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America ("GAAP") for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by GAAP for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the twenty-six weeks ended March 31, 2013 are not necessarily indicative of the results that may be experienced for the fiscal year ending September 29, 2013.
The consolidated balance sheet at September 30, 2012 has been derived from the audited consolidated financial statements at that date, but does not include all of the information and footnotes required by GAAP for complete financial statements.
For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s report on Form 10-K for the fiscal year ended September 30, 2012.

Note 2 – Principles of Consolidation
The unaudited consolidated financial statements include the accounts of the Company and its wholly-owned subsidiaries, Stater Bros. Markets (“Markets”) and Stater Bros. Development, Inc. (“Development”), and Markets’ wholly-owned subsidiaries, Super Rx, Inc. (“Super Rx”) and SBM Dairies, Inc. (“Dairies”). All significant inter-company transactions have been eliminated in consolidation.

Note 3 – Reclassifications
Certain amounts in prior periods have been reclassified to conform to current period financial statement presentation. For the thirteen and twenty-six weeks ended March 25, 2012, the Company reclassified approximately $(27) thousand and $0.6 million, respectively, from Other income (expense), net to Gain (loss) on sale of property and equipment in the Consolidated Statements of Income and Comprehensive Income. For the twenty-six weeks ended March 25, 2012 the Company reclassified approximately $0.7 million from Accounts payable to Other accrued liabilities in the Statements of Consolidated Cash Flows.

Note 4 – Use of Estimates
The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes. Actual results could differ from those estimates.

Note 5 – Income Taxes
The Company establishes deferred tax liabilities for anticipated tax timing differences where payment of tax is anticipated. Such amounts represent a reasonable provision for taxes ultimately expected to be paid, and the amounts may be adjusted over time as additional information becomes known.
The Company does not have any material tax positions that did not meet a “more-likely-than-not” recognition threshold. As such, the Company has not recorded any liabilities for uncertain tax positions. During the twenty-six weeks ended March 31, 2013, there were no material changes to the amount of uncertain tax positions.
The Company recognizes interest and penalties related to income tax deficiencies or assessments by taxing authorities for any underpayment of income taxes separately from income tax expenses as either interest expense or other operating expenses.
For federal tax purposes, the Company is subject to review of its fiscal 2009 through fiscal 2012 tax returns. For state tax purposes, the Company is subject to review of its fiscal 2010 through fiscal 2012 tax returns.


8

STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2013


Note 6 – Retirement Plans
The Company has a Noncontributory Defined Benefit Pension Plan (the “Plan”) covering substantially all non-union employees. The Plan provides for benefits based on an employee’s compensation during the eligibility period while employed with the Company. The Company’s funding policy for the Plan is to contribute annually at a rate that is intended to provide sufficient assets to meet future benefit payment requirements. The Plan’s investments are recorded at fair value and include cash, which earns interest, governmental securities and corporate bonds and securities.
The following table provides the components of net periodic pension expense:
 
 
Thirteen Weeks Ended

Twenty-Six Weeks Ended
 
Mar 25,
2012
 
Mar 31,
2013
 
Mar 25,
2012
 
Mar 31,
2013
 
(in thousands)
Expected return on assets
$
(1,023
)
 
$
(1,176
)
 
$
(2,047
)
 
$
(2,352
)
Service cost
976

 
1,229

 
1,951

 
2,458

Interest cost
1,091

 
1,115

 
2,183

 
2,229

Amortization of prior service cost
1

 
1

 
2

 
2

Amortization of recognized losses
529

 
725

 
1,057

 
1,451

Net pension expense
$
1,574

 
$
1,894

 
$
3,146

 
$
3,788

Actuarial assumptions used to determine net pension expense were:
 
 
 
 
 
 
 
Discount rate
4.50
%
 
3.70
%
 
4.50
%
 
3.70
%
Rate of increase in compensation levels
3.00
%
 
3.00
%
 
3.00
%
 
3.00
%
Expected long-term rate of return on assets
6.50
%
 
6.00
%
 
6.50
%
 
6.00
%

The Company contributed approximately $1.6 million to the Plan in the twenty-six weeks ended March 31, 2013 and the Company expects to contribute $5.9 million during the remainder of fiscal 2013.

Note 7 – Credit Facility
On November 29, 2010, the Company and Markets entered into a $245.0 million senior secured credit facility (the “Credit Facility”) with Bank of America, N.A., as administrative agent and a lender. Lenders under the Credit Facility consist of a consortium of banks. The Credit Facility consists of a four-year $145.0 million term loan (the “Term Loan”) and a $100.0 million revolving credit facility (the “Revolving Credit Facility”). The Credit Facility replaced the Company’s existing $100.0 million credit facility. The Credit Facility is secured by substantially all of the Company’s personal property excluding certain intangible assets consisting of trademarks and shares of capital stock. The Credit Facility is guaranteed by the Company, its direct subsidiary Development and by its indirect subsidiaries Super Rx and Dairies.
The Term Loan bears interest at the Eurodollar Rate plus 2.50% or the Base Rate plus 1.50% (as defined in the Credit Facility) and the interest under the Term Loan is payable quarterly in arrears and includes mandatory quarterly principal payments of 5.0%, of the original outstanding balance, in each of the first two years of the agreement and 10.0%, of the original outstanding balance, in each of the years three and four of the agreement. The Term Loan also includes additional mandatory principal payments on the Term Loan based on a percentage of “excess cash flow” as defined in the Credit Facility. The Term Loan is due November 29, 2014 with any remaining outstanding principal amounts under the Term Loan due as of that date. The security held under the Credit Facility is held until the Term Loan is paid in full.
During the twenty-six weeks ended March 31, 2013, the Company made principal payments on the term loan of approximately $7.8 million which consisted of a contractual quarterly principal payment of $7.3 million and an excess cash payment of $0.5 million.
As of March 31, 2013, the interest rates on the Term Loan are based on the Eurodollar Rate and consisted of a ninety day rate of approximately 2.811% on approximately $7.2 million of outstanding principal amount and a twelve month rate of approximately 3.344% on approximately $89.9 million of outstanding principal amount.


9

STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2013


Note 7 – Credit Facility (contd.)
Subject to certain restrictions, the entire amount of the Revolving Credit Facility may be used for loans, letters of credit or a combination thereof. Borrowing under the Revolving Credit Facility are secured and will be used for working capital, certain capital expenditures and other general corporate purposes. Letters of credit issued under the Revolving Credit Facility are expected to be used for workers’ compensation insurance obligations and may be used for new store construction and certain other corporate purposes. The availability of the loans and letters of credit are subject to certain borrowing restrictions.
Loans under the Revolving Credit Facility bear interest at a rate based upon either (i) the “Base Rate” (defined as the higher of (a) the federal funds rate plus 0.50% and (b) the Bank of America “prime rate”), plus 1.50%, or (ii) the “Eurodollar Rate” (defined as the British Bankers Association LIBOR Rate adjusted for the maximum reserve requirement for Eurocurrency funding), plus 2.50%. For Eurodollar Rate loans, the Company will be entitled to select interest periods of one, two, three, six, nine or twelve months, subject to availability.
The Credit Facility requires the Company and Markets to meet certain financial tests, including minimum net worth and the maintenance of minimum earnings levels. The Credit Facility contains covenants which, among other things, limit the ability of the Company and its subsidiaries to (i) incur indebtedness, grant liens and guarantee obligations, (ii) enter into mergers, consolidations, liquidations and dissolutions, asset sales, investments, leases and transactions with affiliates, (iii) make restricted payments and (iv) make certain amendments to the Indentures governing the $255.0 million 7.375% Senior Notes due November 15, 2018 (“7.375% Senior Notes”) and the $285.0 million 7.75% Senior Notes due April 15, 2015 (“7.75% Senior Notes”) (“Notes Indentures”). Markets and the Company’s other direct and indirect subsidiaries are not limited in their ability to transfer assets in the form of loans, advances or cash dividends to the Company.
As of March 31, 2013, the Company and Markets were in compliance with all restrictive financial covenants under the Credit Facility.
As of March 31, 2013, the Company had $59.9 million of outstanding letters of credit and had $40.1 million available under the Credit Facility.
The Company had no borrowings outstanding under the Revolving Credit Facility as of March 31, 2013 and the Company did not incur any borrowings under the Revolving Credit Facility during the twenty-six weeks ended March 31, 2013.

Note 8 – Senior Notes and Subsidiary Guarantee
As of March 31, 2013, the Company had $285.0 million outstanding of the 7.75% Senior Notes and $255.0 million outstanding of the 7.375% Senior Notes, collectively (the “Notes”).
The Notes are guaranteed by the Company’s subsidiaries Markets and Development and the Company’s indirect subsidiaries Super Rx and Dairies (each a “subsidiary guarantor”, and collectively, the “subsidiary guarantors”). Condensed consolidating financial information with respect to the subsidiary guarantors is not provided because the Company has no independent assets or operations, the subsidiary guarantees are full and unconditional and joint and several and there are no subsidiaries of the Company other than the subsidiary guarantors.

Note 9 – Litigation Matters
In the ordinary course of business, the Company is party to various legal actions which it believes are incidental to the operation of its business and the business of its subsidiaries. The Company records an appropriate provision when the occurrence of loss is probable and can be reasonably estimated. The Company believes that the outcome of such legal proceedings to which it is currently a party will not have a material adverse effect upon its consolidated financial statements.
In May of 2011, Markets was served with an action filed in the Superior Court of the State of California for the County of Riverside (“Harold F. Lunsford et al. v. Stater Bros. Markets”) seeking individual and potential class action damages including associated penalties for Markets’ alleged failure to provide meal periods, rest periods or compensation in lieu thereof and alleged failure to pay certain wages for terminated employees. On January 26, 2012, following a mediation, this case was settled which settlement was approved by the court. The full settlement amount was recorded in the Company’s consolidated financial statements for fiscal 2012 and the full amount was paid in fiscal 2013.


10

STATER BROS. HOLDINGS INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
March 31, 2013


Note 10 – Note Receivable
During the construction of the Company’s corporate offices and distribution center, the Company paid for certain construction costs at the Company’s Support Services building which were the responsibility of the Inland Valley Development Agency (the “IVDA”). These costs, which included the construction of an exterior wall of the building and asbestos removal, were needed before the building was habitable. The Company agreed to expend the funds on behalf of the IVDA with the understanding that the IVDA would reimburse these funds after the completion of construction. During fiscal 2011, Markets and the IVDA agreed on the reimbursement amount and the IVDA executed a note for the reimbursement. The note bears an interest rate of 4.0% per annum and has a maturity date of April 2015 and includes quarterly principal and interest payments.

Note 11 – Dividends and Stock Redemption
On December 23, 2011, the Company paid a $5.0 million dividend to La Cadena Investments (“La Cadena”), the sole shareholder of the Company. On December 24, 2012, the Company declared a $5.0 million dividend to La Cadena which was paid on December 27, 2012.
On March 16, 2012, the Company redeemed 658 shares of its class A Common Stock for approximately $8.8 million. The redemption was for shares held by the Trust which La Cadena had distributed to the Trust prior to the redemption of the shares.
As of March 31, 2013, the Company had the ability and right to make restricted payments, including dividends, of $19.1 million.

Note 12 - Fair Value of Financial Instruments
The following methods and assumptions were used to estimate the fair value of each class of financial instruments for which it is practicable to estimate that value:
Cash and Cash Equivalents
The carrying amount approximates fair value because of the short-term maturity of these instruments.
Receivables
The carrying amount approximates fair value because of the short-term maturity of these instruments.
Note Receivable
Although market quotes for the fair value of the Company’s note receivable are not readily available, the Company believes the stated value approximates fair value.
Long-Term Debt
The fair value of the 7.75% Senior Notes and the 7.375% Senior Notes are determined based on observable inputs that are corroborated by market data (Level 2 as defined by ASC Topic 820, “Fair Value Measurements and Disclosures”). Although market quotes for the fair value of the Company’s Term Loan are not readily available, the Company believes its stated value approximates fair value.
As of March 31, 2013, the estimated fair value of the Company’s Long-Term Debt was $660.7 million.

Note 13 - Recently Issued Accounting Pronouncements
ASU No. 2013-02, Comprehensive Income (Topic 220): Reporting of Amounts Reclassified Out of Accumulated Other Comprehensive Income (”ASU 2013-02”), was issued in February 2013. This ASU does not change the current requirements for reporting net income or other comprehensive income in financial statements. However, ASU 2013-02 requires an entity to present information about significant items reclassified out of accumulated other comprehensive income by component either (1) on the face of the statement where net income is presented or (2) as a separate disclosure in the notes to the financial statements. ASU No. 2013-12 is effective for fiscal years, and interim periods within those years beginning after December 15, 2012. Early adoption is permitted. The Company will adopt ASU No. 2013-02 commencing in the first quarter of fiscal 2014. The adoption of ASU No. 2013-02 is not expected to have an impact on the condensed consolidated financial statements.

11

STATER BROS. HOLDINGS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


PART I - FINANCIAL INFORMATION (contd.)
Item 2.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
CRITICAL ACCOUNTING POLICIES
We have chosen accounting policies that we believe are appropriate to report accurately and fairly our operating results and financial position, and we apply those accounting policies in a consistent manner. Our critical accounting policies are summarized in our report on Form 10-K for the year ended September 30, 2012.
Our discussion and analysis of financial condition and results of operations are based upon our unaudited consolidated financial statements prepared in accordance with generally accepted accounting principles in the United States of America (“GAAP”). The preparation of the financial statements requires the use of estimates and judgments on the part of management. We base our estimates on our historical experience combined with management’s understanding of current facts and circumstances.

SIGNIFICANT ACCOUNTING POLICIES
There are certain accounting policies that we have adopted that may differ from policies of other companies within our industry and other companies as a whole. Such differences in the treatment of these policies may be important to the readers of our report on Form 10-Q and our unaudited consolidated financial statements contained herein. For further information regarding our accounting policies, refer to the significant accounting policies included in the notes to the unaudited consolidated financial statements contained herein and in our report on Form 10-K for the year ended September 30, 2012.

OWNERSHIP OF THE COMPANY
La Cadena Investments (“La Cadena”), a California general partnership whose sole voting partner is the Jack H. Brown Revocable Trust (the “Trust”), holds all of our issued and outstanding capital stock. Mr. Jack H. Brown, the Chairman of the Board, President and Chief Executive Officer of the Company, as Trustee of the Trust, is the Managing General Partner of La Cadena with the power to vote the shares of our capital stock held by La Cadena on all matters, including with respect to the election of our Board of Directors, and any other matters requiring shareholder approval.

AVAILABLE INFORMATION
We file quarterly and annual reports electronically with the Securities and Exchange Commission (“SEC”) under forms 10-Q and 10-K and we file current reports on form 8-K and amendments to these reports. The SEC maintains an internet site that contains reports, proxy and information statements and other information regarding issuers that file electronically with the SEC. These electronic files can be found at the SEC’s website at http://www.sec.gov. The public may read and copy any of our reports filed with the SEC at the SEC’s Public Reference Room at 100 F Street, NE., Washington, DC 20549. The public may obtain information on the Public Reference Room by calling the SEC at 1-800-732-0330.

EXECUTIVE OVERVIEW
We are the largest privately owned supermarket chain in Southern California. Our revenues are generated primarily from retail sales through our supermarkets. Our success is a result of our marketing strategy of offering everyday low prices while providing our customers with friendly and outstanding service on each of their visits to our stores which has been a seventy-seven year Stater Bros.’ tradition.
During these tough economic times, our strategy is to retain customer counts by providing our customers with value and exceptional service on their visits to our stores. In order to retain and grow customers in this current economic environment, we have not passed on all cost of inflation to our customers. This strategy combined with continued and increasing competitive pressures has caused our gross profit margins to be reduced. We believe it is better to sacrifice short-term margins in order to retain our customers so that when our local economy does turn around we will still have them as customers.
Our marketing area of Southern California has seen job losses and business closures which has put and will continue to put pressure on our gross margin as we endeavor to retain our customer base. We anticipate continued competitive pressures from “big box” format competitors including Walmart, Costco, Target and Winco and from our traditional grocery format competitors Vons, Albertsons and Ralphs and from independent supermarket operators.


12

STATER BROS. HOLDINGS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS
Sales and Gross Profit
 
Thirteen Weeks Ended
 
Change
 
March 25,
2012
 
March 31,
2013
 
2013 to 2012
(in thousands)
 
 
Dollar
 
%
Sales
$
937,663

 
$
961,896

 
$
24,233

 
2.58
 %
Gross Profit
$
260,686

 
$
258,772

 
$
(1,914
)
 
(0.73
)%
as a % of sales
27.80
%
 
26.90
%
 

 

 
Twenty-Six Weeks Ended
 
Change
 
March 25,
2012
 
March 31,
2013
 
2013 to 2012
(in thousands)
 
 
Dollar
 
%
Sales
$
1,898,387

 
$
1,930,640

 
$
32,253

 
1.70
 %
Gross Profit
$
520,367

 
$
509,501

 
$
(10,866
)
 
(2.09
)%
as a % of sales
27.41
%

26.39
%
 
 
 
 
Sales
Our sales increased $24.2 million and $32.3 million for our thirteen and twenty-six week periods ended March 31, 2013, respectively, compared to the same periods ended March 25, 2012. Sales in the current year periods were effected by the Easter holiday that fell in the second quarter in the current year and in the third quarter of the prior year. We estimate that the Easter holiday increased net sales in the current year's periods by approximately $11.3 million. Without the effect of the Easter holiday sales, we estimate that our sales would have increased $12.9 million and $20.9 million, respectively, in the thirteen and twenty-six week periods of fiscal 2013 compared to the same periods of the prior year.
Like Store Sales
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 periods, we only include the current year’s weekly sales that correspond to the weeks the stores were opened in the previous year. For stores that have been closed, we only include the prior year’s weekly sales that correspond to the weeks the stores were opened in the current year. For replacement stores, we include sales for the entire year for both the replaced and replacement store in our like store sales calculation.
Like store sales are affected by various factors including, but not limited to, inflation and deflation, promotional discounting, customer traffic, buying trends, pricing pressures from competitors and competitive openings and closings.
Our like store sales, excluding the affect of the Easter holiday, for second quarter of fiscal 2013 increased $12.9 million or 1.38% over the same period of the prior year. Like stores sales for the twenty-six weeks ended March 31, 2013 increased $20.9 million or 1.10% over the twenty-six weeks ended March 25, 2012.
Gross Profit
Gross profit margin, as a percentage of sales, in the second quarter of fiscal 2013 decreased 90 basis points to 26.90% from 27.80% in the second quarter of fiscal 2012. Year-to-date gross profit margin, as a percentage of sales, for fiscal 2013 was 26.39% a decrease of 102 basis points from prior year's year-to-date gross profit margin of 27.41%. The decrease in gross profit margins for the thirteen and twenty-six week periods of fiscal 2013 follows a trend begun in the third quarter of fiscal 2012 of reduced gross margin percentages. Due to competitive pressures and our desire to retain customers, we have elected not to fully pass the effect of cost inflation we have experienced to our customers. We anticipate that the current economic conditions and competitive pressures will limit our ability to pass on price increases which will continue to put pressure on our gross margins for the foreseeable future.

13

STATER BROS. HOLDINGS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS (contd.)
Operating Expenses and Operating Profit
 
Thirteen Weeks Ended
 
Change
 
March 25,
2012
 
March 31,
2013
 
2013 to 2012
(in thousands)
 
 
Dollar
 
%
Operating Expenses:
 
 
 
 
 
 
 
Selling, general and administrative expenses
$
209,829

 
$
215,965

 
$
6,136

 
2.92
 %
as a % of sales
22.38
%
 
22.45
%
 
 
 
 
Loss on sale of property and equipment
$
27

 
$
6

 
$
(21
)
 
(77.78
)%
as a % of sales
%
 
%
 
 
 
 
Depreciation and amortization
$
11,371

 
$
11,566

 
$
195

 
1.71
 %
as a % of sales
1.21
%
 
1.20
%
 
 
 
 
Operating profit
$
39,459

 
$
31,235

 
$
(8,224
)
 
(20.84
)%
as a % of sales
4.21
%
 
3.25
%
 
 
 
 

 
 
Twenty-Six Weeks Ended
 
Change
 
March 25,
2012
 
March 31,
2013
 
2013 to 2012
(in thousands)
 
 
Dollar
 
%
Operating Expenses:
 
 
 
 
 
 
 
Selling, general and administrative expenses
$
431,700

 
$
436,044

 
$
4,344

 
1.01
 %
as a % of sales
22.74
 %
 
22.59
 %
 
 
 
 
Gain on sale of property and equipment
$
(612
)
 
$
(1,927
)
 
$
(1,315
)
 
214.87
 %
as a % of sales
(0.03
)%
 
(0.10
)%
 
 
 
 
Depreciation and amortization
$
22,783

 
$
23,249

 
$
466

 
2.05
 %
as a % of sales
1.20
 %
 
1.20
 %
 
 
 
 
Operating profit
$
66,496

 
$
52,135

 
$
(14,361
)
 
(21.60
)%
as a % of sales
3.50
 %
 
2.70
 %
 
 
 
 

Selling, General and Administrative Expenses
Selling, general and administrative expenses, as a percentage of sales, were 22.45% for the thirteen weeks ended March 31, 2013 and were 22.38% for the thirteen weeks ended March 25, 2012. Selling, general and administrative expenses, as a percentage of sales, were 22.59% for the twenty-six weeks ended March 31, 2013 compared to 22.74% for the year-to-date period of the prior year.
Gain on Sale of Property and Equipment
In fiscal 2013, we had a pre-tax gain of approximately $1.9 million from the sale of an old store site. In fiscal 2012, we had a pre-tax net gain from the sale of property and equipment of approximately $0.6 million.

14

STATER BROS. HOLDINGS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


RESULTS OF OPERATIONS (contd.)
Depreciation and Amortization
Depreciation and amortization expense in the second quarter of fiscal 2013 was $11.6 million compared to $11.4 million for the second quarter of fiscal 2012. Depreciation and amortization for the twenty-six weeks of fiscal 2013 and fiscal 2012 was $23.2 million and $22.8 million, respectively. Included in cost of goods sold is depreciation and amortization related to our warehouse and distribution activities. The amount included in cost of goods sold in the second quarters of fiscal 2013 and fiscal 2012 was $2.9 million and $2.7 million, respectively, and for the twenty-six weeks of fiscal 2013 and fiscal 2012 was $5.7 million and $5.4 million, respectively.
Interest Income
Interest income was $21 thousand and $28 thousand for the second quarters of fiscal 2013 and fiscal 2012, respectively. Interest income for the twenty-six weeks ended March 31, 2013 and March 25, 2012 was $44 thousand and $64 thousand, respectively.
Interest Expense
Interest expense was $11.8 million for the second quarter of fiscal 2013 and $11.7 million in the second quarter of fiscal 2012. For the twenty-six week periods ended March 31, 2013 and March 25, 2012, interest expense was $23.6 million and $23.7 million, respectively. Included as a reduction in interest expense was capitalized interest related to construction of new stores of $17 thousand and $144 thousand for the second quarters of fiscal 2013 and fiscal 2012, respectively, and $17 thousand and $241 thousand for the twenty-six weeks ended March 31, 2013 and March 25, 2012, respectively.
Income Before Income Taxes
Income before income taxes amounted to $19.5 million and $27.8 million in the second quarters of fiscal 2013 and fiscal 2012, respectively, and was $28.6 million and $42.9 million for the twenty-six week periods of fiscal 2013 and fiscal 2012, respectively.
Income Taxes
Income taxes amounted to $7.9 million and $11.3 million in the second quarters of fiscal 2013 and fiscal 2012, respectively, and amount to $11.6 million and $17.4 million for the twenty-six week periods of fiscal 2013 and fiscal 2012, respectively.
Net Income
Net income for the second quarter of fiscal 2013 amounted to $11.6 million compared to $16.4 million in the second quarter of fiscal 2012. Net income for the twenty-six weeks ended March 31, 2013 and March 25, 2012 was $17.0 million and $25.4 million, respectively.

LIQUIDITY AND CAPITAL RESOURCES
We historically fund our daily cash flow requirements through funds provided by operations. We have the ability to borrow under our short-term revolving credit facility. Our credit facility expires in November 2014 and includes a revolving credit facility for working capital and letters of credit of $100.0 million. The letters of credit are maintained pursuant to our workers’ compensation and general liability self-insurance requirements.
As of March 31, 2013, we had approximately $59.9 million of outstanding letters of credit and we had approximately $40.1 million available under the revolving credit facility.
We had no short-term borrowings outstanding under our revolving credit facility as of March 31, 2013. We did not incur any short-term borrowings under our revolving credit facility in the twenty-six weeks of fiscal 2013.



15

STATER BROS. HOLDINGS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY AND CAPITAL RESOURCES (contd.)
The following table sets forth our contractual cash obligations and commercial commitments as of March 31, 2013.
 
Contractual Cash Obligations
(in thousands)
 
Total
 
Less than
1 Year
 
1-3 Years
 
4-5 Years
 
After
5 Years
Term Loan due November 2014 (1)
 
 
 
 
 
 
 
 
 
Principal
$
97,146

 
$
14,500

 
$
82,646

 
$

 
$

Interest
5,610

 
3,823

 
1,787

 

 

 
102,756

 
18,323

 
84,433

 

 

7.75% Senior Notes due April 2015
 
 
 
 
 
 
 
 
 
Principal
285,000

 

 
285,000

 

 

Interest
55,219

 
22,088

 
33,131

 

 

 
340,219

 
22,088

 
318,131

 

 

7.375% Senior Notes due November 2018
 
 
 
 
 
 
 
 
 
Principal
255,000

 

 

 

 
255,000

Interest
112,838

 
18,806

 
37,613

 
37,613

 
18,806

 
367,838

 
18,806

 
37,613

 
37,613

 
273,806

Capital lease obligations (2)
 
 
 
 
 
 
 
 
 
Principal
1,829

 
1,160

 
667

 
2

 

Interest
162

 
129

 
33

 

 

 
1,991

 
1,289

 
700

 
2

 

Post retirement benefit obligation (3)
5,929

 
5,929

 
N/A

 
N/A

 
N/A

Operating leases (2)
340,033

 
40,099

 
73,709

 
58,731

 
167,494

Total contractual cash obligations
$
1,158,766

 
$
106,534

 
$
514,586

 
$
96,346

 
$
441,300

 
Other Commercial Commitments
(in thousands)
 
Total
 
Less than
1 Year
 
1-3 Years
 
4-5 Years
 
After
5 Years
Standby letters of credit (4)
$
59,858

 
$
59,858

 
$

 
$

 
$

Total other commercial commitments
$
59,858

 
$
59,858

 
$

 
$

 
$

 
(1) 
As of March 31, 2013, interest on our Term Loan is based on the Eurodollar Rate plus 2.500% and consisted of a ninety day rate of 2.811% on approximately $7.2 million and a twelve month rate of 3.344% on approximately $89.9 million. For purposes of contractual cash obligations shown here, we have assumed the ninety day and twelve month interest rates as of March 31, 2013 for the respective assumed short-term and long-term portions of our Term Loan.

(2) 
We lease the majority of our retail stores. We have subleased our former headquarters building and certain former distribution facilities located in Colton, California under an initial fifteen year term for an amount equal to our lease payment. For purposes of contractual cash obligations shown here, minimum lease payments on this lease are shown without sub-lease offsets. 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 three to fifty-five years and substantially all leases provide for renewal options.

(3) 
As of September 30, 2012, we had unfunded pension and other post retirement obligations of $46.3 million under our Retired Benefit Pension Plan and our Early Retiree Medical Reimbursement Plan. Since we cannot determine the specific periods in which the obligations will be funded, the table above reflects no amounts related to these obligations except for the amount of $5.9 million which we expect to contribute to the Plan during the remainder of fiscal 2013.

(4) 
Standby letters of credit are committed as security for workers’ compensation obligations. Outstanding letters of credit expire between September 2013 and February 2014.

16

STATER BROS. HOLDINGS INC.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS


LIQUIDITY AND CAPITAL RESOURCES (contd.)
Working capital amounted to $243.8 million at March 31, 2013 and $217.0 million at September 30, 2012, and our current ratios were 1.77:1 and 1.67:1, respectively. Fluctuations in working capital and current ratios are not unusual in our industry.
Net cash provided by operating activities for the twenty-six weeks ended March 31, 2013 was $40.3 million and $46.5 million for the twenty-six weeks ended March 25, 2012. A significant source of cash from operating activities in the twenty-six weeks of fiscal 2013 and fiscal 2012 was net income before the effect of non-cash depreciation and amortization.
As of March 31, 2013, we had the ability and right to pay a restricted payment, including dividends, of up to $19.1 million.
We believe that operating cash flows and current cash reserves will be sufficient to meet identified operating needs and scheduled capital expenditures for the next twelve months. However, we may elect to fund some capital expenditures through capital leases, operating leases or debt financing. There can be no assurance that such debt and lease financing will be available to us in the future.
Labor Relations
Our collective bargaining agreements with the UFCW were renewed in October 2011 and expire in March 2014. Our collective bargaining agreement with the International Brotherhood of Teamsters was renewed in October 2010 and expires in September 2015. We believe we have good relations with our employees.

CAUTIONARY STATEMENT FOR PURPOSES OF “SAFE HARBOR PROVISIONS” OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information contained in our filings with the Securities and Exchange Commission (as well as information included in oral statements or other written statements made or to be made by us) includes statements that are forward-looking, such as statements relating to plans for future activities. Such forward-looking information involves important risks and uncertainties that could significantly affect results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by us or on our behalf. These risks and uncertainties include, but are not limited to, those relating to domestic economic conditions, seasonal and weather fluctuations, labor unrest, expansion and other activities of competitors, changes in federal or state laws and the administration of such laws and the general condition of the economy.


17

STATER BROS. HOLDINGS INC.
MARCH 31, 2013


PART I - FINANCIAL INFORMATION (contd.)
Item 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
We are subject to interest rate risk on our fixed interest rate debt obligations. Our fixed rate debt obligations are comprised of our Term Loan due November 2014, our 7.75% Senior Notes due April 2015, our 7.375% Senior Notes due November 2018 and capital lease obligations. In general, the fair value of fixed rate debt will increase as the market rate of interest decreases and will decrease as the market rate of interest increases. While interest rate changes will impact the market value risk of our Notes, such changes in the market value of our Notes do not affect our earnings or cash flows. Our earnings and our cash flows may be affected to the extent the interest rate on our Term Loan changes at each interest rate renewal period. We have not engaged in any interest rate swap agreements, derivative financial instruments or other type of financial transactions to manage interest rate risk.

Item 4.
CONTROLS AND PROCEDURES
Disclosure Controls and Procedures
Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures as of March 31, 2013. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of March 31, 2013. There were no material changes in our internal control over financial reporting during the thirteen and twenty-six weeks ended March 31, 2013.
Because of the inherent limitation of internal control over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may not be prevented or detected on a timely basis. Also, projections of any evaluation of the effectiveness of the internal control over financial reporting to future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

PART II - OTHER INFORMATION

Item 1.
LEGAL PROCEEDINGS
In the ordinary course of business, we are party to various legal actions which we believe are incidental to the operation of our business and the business of our subsidiaries. We record an appropriate provision when the occurrence of loss is probable and can be reasonably estimated. We believe that the outcome of such legal proceedings to which we are currently a party will not have a material adverse effect upon our consolidated financial statements.
In May of 2011, Markets was served with an action filed in the Superior Court of the State of California for the County of Riverside (“Harold F. Lunsford et al. v. Stater Bros. Markets”) seeking individual and potential class action damages including associated penalties for Markets’ alleged failure to provide meal periods, rest periods or compensation in lieu thereof and alleged failure to pay certain wages for terminated employees. On January 26, 2012, following a mediation, this case was settled which settlement was approved by the court. The full settlement amount was recorded in our consolidated financial statements for fiscal 2012 and the full amount was paid in fiscal 2013.


18

STATER BROS. HOLDINGS INC.
MARCH 31, 2013


Item 1A.
RISK FACTORS
The supermarket industry is highly competitive and generally characterized by narrow profit margins. We compete with various types of retailers, including local, regional and national supermarket retailers, convenience stores, retail drug chains, national general merchandisers and discount retailers, membership clubs, warehouse stores and independent and specialty grocers. Our primary traditional grocery format competitors include Vons, Albertsons, Ralphs, and a number of independent supermarket operators. We also face competition from restaurants and fast food chains as household food expenditures are directed to the purchase of food prepared outside the home.
Our principal competitors include traditional grocery format operators, regional markets, and “big box” format retailers, including Walmart, Target, Costco and Winco. Our competitors compete with us on the basis of location, quality of products, service, price, product variety and store condition. Our competitors maintain market share through high levels of promotional activities and discount pricing, which creates a difficult environment in which to consistently increase year-over-year sales gains. We expect our competitors to continue to apply pricing and other competitive pressures as they expand the number of their stores in our market area and as they continue to take steps to both maintain and grow their customer counts.
We face competitive pressure from existing competitors and from smaller format stores such as convenience stores, drug stores and discount stores that carry traditional grocery format items. Some of our competitors have greater resources than us and are not unionized resulting in lower labor cost. These competitors could use their resources to take measures which could adversely affect our competitive position.
Our marketing area in Southern California continues to be highly competitive and in flux. Our market changes frequently as competitors open and close supermarket locations and introduce new pricing strategies. We anticipate increased competition from “big box” format retailers, our traditional grocery format competitors and other smaller format competitors.
Our performance is affected by inflation and deflation. In recent periods, we have experienced increases in transportation costs and the cost of products we sell in our stores. Our costs fluctuate for increases and decreases in commodities such as fuel, plastic and other product categories. As inflation has increased expenses, we have recovered, to the extent permitted by competition, the increase in expenses by increasing prices over time. However, the economic and competitive environment in Southern California continues to challenge us to become more cost efficient as our ability to recover increases in expenses through price increases is diminished. Our future results of operations will depend upon our ability to adapt to the current economic environment as well as the current competitive conditions.


19

STATER BROS. HOLDINGS INC.
MARCH 31, 2013


Item 2.
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
None

Item 3.
DEFAULTS UPON SENIOR SECURITIES
None

Item 4.
(REMOVED AND RESERVED)

Item 5.
OTHER INFORMATION
None

Item 6.
 
EXHIBITS
 
 
 
(a)
 
Exhibits
 
 
 
31.1
 
Certification of Principal Executive Officer pursuant to Section 302 (a) of the Sarbanes-Oxley Act.
 
 
 
31.2
 
Certification of Principal Financial Officer pursuant to Section 302 (a) of the Sarbanes-Oxley Act.
 
 
 
32.1
 
Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
 
 
 
101.INS
 
-XBRL Instance Document.
 
 
 
101.SCH
 
-XBRL Taxonomy Extension Schema Document.
 
 
 
101.CAL
 
-XBRL Taxonomy Extension Calculation Linkbase Document.
 
 
 
101.DEF
 
-XBRL Taxonomy Extension Definition Linkbase Document.
 
 
 
101.LAB
 
-XBRL Taxonomy Extension Lable Linkbase Document.
 
 
 
101.PRE
 
-XBRL Taxonomy Extension Presentation Linkbase Document.


20


STATER BROS. HOLDINGS INC.
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.
Date:
May 13, 2013
/s/     Jack H. Brown
 
 
Jack H. Brown
Chairman of the Board, President,
and Chief Executive Officer
(Principal Executive Officer)
 
 
 
Date:
May 13, 2013
/s/    David J. Harris
 
 
David J. Harris
Senior Vice President - Finance
and Chief Financial Officer
(Principal Financial Officer)
(Principal Accounting Officer)


21