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 ~~June 27~~January 2, ~~2009~~ 2010

¨	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number 0-18741

LESLIE’S POOLMART, INC.

(Exact name of registrant as specified in its charter)

Delaware

95-4620298

(State or other jurisdiction of

incorporation or organization)

(I.R.S. Employer

Identification No.)

3925 E. Broadway Road

Phoenix, Arizona 85040

(Address of principal executive offices)

Registrant’s telephone number, including area code: (602) 366-3999

Securities registered pursuant to Section 12(b) of the Act: None

Securities registered pursuant to 12(g) of the Act: None

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 ¨ No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller business reporting company. See definition of “accelerated filer”, “large accelerated filer,” and “smaller business reporting company” in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer ¨ Smaller business reporting company ¨ 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~~

~~The~~Yes ¨ No x ~~number of shares of common stock outstanding as of August 10, 2009 was 100.~~

The number of shares of common stock outstanding as of February 16, 2010 was 100.

LESLIE’S POOLMART, INC.

AND SUBSIDIARIES

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

FORM 10-Q

For the Quarterly Period Ended ~~June~~January 272, ~~2009~~2010

INDEX

		Page
Part I. Financial Information		3
Item 1. Financial Statements		3
Consolidated Balance Sheets as of June 27, 2009 (unaudited) and September 27, 2008		3
Consolidated Balance Sheets as of January 2, 2010 (unaudited) and October 3, 2009		3
Consolidated Statements of Operations for the 13 weeks and 39 weeks ended June 27, 2009 (unaudited) and June 28, 2008 (unaudited)		4
Consolidated Statements of Operations for the 13 weeks ended January 2, 2010 (unaudited) and December 27, 2008 (unaudited)		4
Consolidated Statements of Cash Flows for the 39 weeks ended June 27, 2009 (unaudited) and June 28, 2008 (unaudited)		5
Consolidated Statements of Cash Flows for the 13 weeks ended January 2, 2010 (unaudited) and December 27, 2008 (unaudited)		5
Notes to Consolidated Financial Statements (unaudited)		6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations		87
Item 3. Quantitative and Qualitative Disclosures about Market Risk		1210
Item 4. Controls and Procedures		1211
Part II. Other Information		11
Item 1. Legal Proceedings		1311
Item 1A. Risk Factors		1311
Item 2. Unregistered Sales of Securities and Use of Proceeds		1311
Item 5. Other Information		1311
Item 6. Exhibits		1311
Signatures		1312

PART I—FINANCIAL INFORMATION

Item 1.

Financial Statements

Leslie’s Poolmart, Inc.

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

Consolidated Balance Sheets

(Amounts in thousands, except share information)

	June 27,2009			September 27,2008
	January 2,2010			October 3,2009
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	~~105~~66,~~218~~015		$	4596,~~648~~981
Short term investments		—			19,899
Accounts and other receivables, net		8,527			12,688
Accounts and other receivables, net		17,244			11,796
Inventories, net		73,340			68,934
Inventories, net		97,206			86,584
Deferred tax assets		4,237			4,237
Prepaid expenses and other current assets		46,~~735~~754			26,~~773~~763
Deferred tax assets		4,554			4,554
Total current assets		158,873			189,603
Total current assets		228,957			171,254
Property, plant and equipment, net		48,041			48,711
Property, plant and equipment, net		41,676			42,074
Intangible assets		8,059			8,074
Intangible assets		8,089			8,117
Deferred financing costs, net		3,814			4,092
Deferred financing costs, net		3,776			4,613
Deferred tax assets		7,305			7,305
Deferred tax assets		6,513			6,593
Other assets		470			477
Other assets		357			342
Total assets	$	226,562		$	258,262
Total assets	$	289,368		$	232,993
LIABILITIES AND STOCKHOLDER’S EQUITY (DEFICIT)
LIABILITIES AND STOCKHOLDER’S DEFICIT
Current liabilities:
Accounts payable	$	7125,~~992~~354		$	4231,~~117~~307
Accrued expenses		4330,~~669~~930			3640,~~981~~515
Income taxes payable		122,~~826~~069			78,~~697~~963
Total current liabilities		~~128~~58,~~487~~353			8680,~~795~~785
Senior notes, net		163,198			167,000
Other long term liabilities		5,237			5,581
Other long term liabilities		5,666			7,556
Senior notes, net		163,282			163,243
Total liabilities		~~297~~226,~~351~~872			~~261~~249,~~351~~609
Commitments and contingencies
Stockholder’s deficit:
Stockholder’s equity (deficit):
Common stock, $0.001 par value, authorized 100 shares, issued and outstanding 100 shares at June 27, 2009 and at September 27, 2008		—			—
Common stock, $0.001 par value, authorized 100 shares, issued and outstanding 100 shares at January 2, 2010 and at October 3, 2009		—			—
Capital deficit		(91,~~778~~672	)		(91,~~907~~730	)
Retained earnings		8391,~~795~~362			63100,~~549~~383
Total stockholder’s deficit		(7,983	)		(28,358	)
Total stockholder’s equity (deficit)		(310	)		8,653
Total liabilities and stockholder’s deficit	$	289,368		$	232,993
Total liabilities and stockholder’s equity (deficit)	$	226,562		$	258,262

See accompanying notes to consolidated financial statements.

Leslie’s Poolmart, Inc.

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

Consolidated Statements of Operations (unaudited)

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

(Amounts in thousands)

	13 Weeks Ended						~~39 weeks Ended~~
	June 27,2009			June 28,2008			June 27,2009			June 28,2008
	January 2,2010			December 27,2008
Sales	$	213,765		$	212,929		$	331,036		$	327,891
	(unaudited)			(unaudited)
Cost of merchandise sold and services sold, including warehousing and transportation expenses		98,912			101,195			153,219			156,512
Sales	$	57,308		$	60,263
Gross profit		114,853			111,734			177,817			171,379
Cost of merchandise sold and services sold, including warehousing, transportation expenses and store occupancy costs		42,112			44,734
Selling, general and administrative expenses		52,637			52,041			130,096			126,820
Gross profit		15,196			15,529
Loss on disposition of fixed assets		25			65			215			75
Selling, general and administrative expenses		23,127			23,288
Operating income		62,191			59,628			47,506			44,484
Loss on disposition of fixed assets		47			51
Other expenses/(income):
Operating loss		(7,978	)		(7,810	)
Interest expense		3,485			3,601			10,485			10,872
Other expense (income):
Interest income		(4	)		(213	)		(226	)		(996	)
Interest expense		3,617			3,454
Gain on debt extinguishment		—			—			(359	)		(94	)
Interest income		(16	)		(215	)
Total other expense		3,481			3,388			9,900			9,782
Gain on debt extinguishment		—			(359	)
Earnings before income taxes		58,710			56,240			37,606			34,702
Total other expense, net		3,601			2,880
Income tax expense		22,964			22,651			13,460			14,358
Loss before income taxes		(11,579	)		(10,690	)
Net income	$	35,746		$	33,589		$	24,146		$	20,344
Income tax benefit		(4,558	)		(5,419	)
Net loss	$	(7,021	)	$	(5,271	)

See accompanying notes to consolidated financial statements.

Leslie’s Poolmart, Inc.

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

Consolidated Statements of Cash Flows (unaudited)

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

(Amounts in thousands)

	39 weeks Ended
	13 Weeks Ended
	June 27,2009			June 28,2008
	January 2,2010			December 27,2008
	(unaudited)			(unaudited)
Operating activities:
Net income	$	24,146		$	20,344
Net loss	$	(7,021	)	$	(5,271	)
Adjustments to reconcile net income to net cash provided by operating activities:
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		93,~~524~~472			93,~~730~~269
Stock compensation		129			54
Stock-based compensation		58			34
Amortization of loan fees and discounts		~~965~~317			~~903~~397
Provision for doubtful accounts		66			29
Allowance for doubtful accounts		23			50
Loss on disposition of assets		~~215~~47			7551
Gain on extinguishment of debt		(359	)		(94	)
Gain on debt extinguishment		—			(359	)
Deferred income taxes		80—			(~~301~~5,859	)
Changes in operating assets and liabilities:
Accounts and other receivables		(54,~~514~~138	)		(4,~~596~~728	)
Inventories		(104,~~622~~406	)		(297,~~076~~041	)
Prepaid expenses and other current assets		~~(1,962~~9	)		(~~1,313~~46	)
Other assets		~~(15~~7	)		(166	)
Accounts payable and accrued expenses		34(15,~~673~~882	)		41(26,~~200~~782	)
Income taxes payable		5(6,~~129~~894	)		6(7,~~047~~697	)
Net cash provided by operating activities		56,455			42,986
Net cash used in operating activities		(26,132	)		(44,532	)
Investing activities:
Sale of short term investments		~~19,899~~—			—9,899
Purchase of property, equipment and intangibles		(92,~~322~~838	)		(91,~~919~~101	)
Proceeds from disposition of property		94			—
Net cash provided by/(used in) investing activities		10,586			(9,919	)
Net cash (used in) provided by investing activities		(2,834	)		8,798
Financing activities:
Revolving commitment borrowing		4,988			—
Payment of dividend		(2,000	)		—
Revolving commitment payments		(4,988	)		—
Repurchase of long-term debt		—			(3,571	)
Payment of dividend		(3,900	)		(7,500	)
Net cash used in financing activities		(2,000	)		(3,571	)
Repurchase of long-term debt		(3,571	)		(1,938	)
Net decrease in cash and cash equivalents		(30,966	)		(39,305	)
Net cash used in financing activities		(7,471	)		(9,438	)
Cash and cash equivalents at beginning of period		96,981			45,648
Net increase in cash and cash equivalents		59,570			23,629
Cash and cash equivalents at end of period	$	66,015		$	6,343
Cash and cash equivalents at beginning of period		45,648			59,781
Cash and cash equivalents at end of period	$	105,218		$	83,410

See accompanying notes to consolidated financial statements.

Leslie’s Poolmart, Inc.

(A Wholly-Owned Subsidiary of Leslie’s Holdings, Inc.)

Notes to Consolidated Financial Statements (unaudited)

(1)

Basis of Presentation

The accompanying unaudited consolidated financial statements have been prepared in conformity with United States generally accepted accounting principles applicable to 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 accounting principles generally accepted in the United States 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 3913-week period ended ~~June~~January 272, ~~2009~~ 2010 are not necessarily indicative of the results that may be expected for the 5352-week year ending October 32, ~~2009~~2010.

The balance sheet at ~~September~~ October 273, ~~2008~~2009 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements.

For further information, refer to the Consolidated Financial Statements and Notes thereto included in Leslie’s Poolmart, Inc.’s Annual Report on Form 10-K for the year ended ~~September~~October 273, ~~2008~~ 2009.

The Company has evaluated subsequent events through the date of issuance, February 16, 2010 and concluded that no subsequent events have occurred that would require recognition in the financial statements or disclosure in the notes to the financial statements other than the dividend described in Note 8.

(2)

Organization and Operation

Leslie’s Poolmart, Inc., which is sometimes referred to as the “Company” or “Leslie’s” in this report, is a specialty retailer of swimming pool supplies and related products. The Company markets its products under the trade name Leslie’s Swimming Pool Supplies through ~~622~~620 stores in 35 states, a nationwide mail order catalog, and web store. The Company also operates five distribution facilities and repackages certain bulk chemical products for retail sale. The Company’s business is highly seasonal as the majority of its sales and all of its operating profits are generated in the third and fourth fiscal quarters.

In February 2007 the Company became a subsidiary of Leslie’s Holdings, Inc. (“Holdings”) pursuant to a tax-free reorganization in which the Company’s shareholders became shareholders of Holdings in the same proportions.

(3)

Stock-based Compensation

The Company may ~~accounts~~grant ~~for~~ stock~~-based~~ ~~compensation~~options infor ~~accordance~~a ~~with~~fixed ~~Statement~~number of ~~Financial~~shares ~~Accounting~~of ~~Standards~~Holdings ~~(“SFAS”)~~to ~~No. 123R~~the ~~“Share-Based~~Company’s ~~Payment”~~employees ~~(“SFAS~~and ~~123R”).~~directors ~~Awards~~with ~~granted~~an ~~are~~exercise ~~valued~~price atequal to the fair market value inof ~~accordance~~the ~~with~~ shares at the ~~provisions~~date of ~~SFAS~~grant. In 2007, the Company adopted the authoritative accounting guidance related to new awards and to awards modified, repurchased or cancelled after September ~~123R~~29, 2007. Awards granted are valued at fair value and recognized on a straight line basis over the service periods of each award. Compensation cost for the unvested portion of awards outstanding is recognized as the requisite service is rendered.

In ~~May~~November of 2009, the board of directors of Holdings approved grants of options to purchase 15465,~~000~~500 shares of Holdings common stock. These options vest over a five -year period at a rate of 20% annually on each anniversary of the date of grant. At ~~June~~January 272, ~~2009~~2010, 1.3 million ~~834,000~~ options were outstanding and 86234,~~300~~100 of the options were vested or exercisable. No options were exercised ~~and~~or ~~9,000 options were~~ cancelled during the 3913-week period ended ~~June~~January 272, ~~2009~~2010.

Share-based compensation expense recognized ~~in accordance with SFAS 123R~~ during the 13-week ~~and 39-week~~ periods ended ~~June~~January 272, ~~2009~~2010 was approximately $0.05 million ~~and $0~~.1 ~~million.~~ As of ~~June~~January 272, ~~2009~~ 2010, total unrecognized compensation cost related to stock-based options and awards was $01.82 million and the related weighted-average period over which it is expected to be recognized is approximately 34.91 years. The weighted average fair value of stock option awards granted was $1.1517 and the key assumptions used in the Black-Scholes valuation model to calculate the fair value are as follows: a risk free interest rate of 32.0273%; an expected life of the options of 5 years; an expected stock price volatility of 46.71% and an expected dividend yield of 0%. The Black-Scholes option valuation model was developed for use in estimating the fair value of traded options which have no vesting restrictions and are fully transferable. In addition, option valuation models require the input of highly subjective assumptions, including the expected stock price volatility. Because changes in the subjective input assumptions can materially affect the fair value estimate, in management’s opinion, the existing models do not necessarily provide a reliable single measure of the fair value of its employee stock options. The risk-free interest rate is based on the U.S. Treasury security rate in effect as of the date of grant. The expected lives of options are based on historical data of the Company. The Company calculated expected volatility based on historical volatility.

(4)

Taxation of the Company and Holdings

The Company and its subsidiaries ~~will~~are be included in the consolidated Federal income tax return and certain state income tax returns of Holdings. The Company’s financial statements recognize the current and deferred income tax consequences that result from the Company’s activities during the current and preceding periods ~~pursuant to the provisions of SFAS No. 109 “Accounting for Income Taxes” (“SFAS 109”)~~, as if the Company were a separate taxpayer rather than a member of Holding’s consolidated income tax return group. This policy requires us to pay our tax liabilities to Holdings in cash, based upon separate return taxable income.

(5)

Income Taxes

Income tax ~~expense~~benefit was $134.5 6 million and $145.4 million for the 39three-~~week~~month periods ended ~~June~~January 272, ~~2009~~2010 and ~~June~~October 283, ~~2008, respectively~~2009. The Company’s consolidated effective tax rate for the 39three-~~week~~month period ended ~~June~~January 272, ~~2009~~2010 was 3539.84% ~~due to the $1~~.2 ~~million benefit recorded as a result of a reduction in estimated taxes payable based upon information received during this year which indicated the amount would not be payable.~~

The gross amount of unrecognized tax benefits at ~~June~~January 272, ~~2009~~2010 was $0.2 million. The gross amount of unrecognized tax benefits as a result of tax positions taken during prior years ~~decreased~~did bynot ~~$1.2~~change ~~million~~ during the ~~39-weeks~~three months ended ~~June~~January 272, ~~2009~~ 2010. The total amount of the unrecognized tax benefits that, if recognized, would affect the effective rate is $~~14,000~~0.2 million as of ~~June~~January 272, ~~2009~~2010. The Company had approximately $3035,000 and $~~210~~30,000 for payment of accrued interest and penalties at ~~June~~ January 272, ~~2009~~2010 and ~~September~~October 273, ~~2008~~2009, respectively.

As of ~~September~~January 272, ~~2008~~2010, all of the federal income tax returns filed since ~~2006~~2007 are still subject to adjustment upon audit. The Company also files income tax returns in many states, and these returns remain open for adjustments to its federal income tax returns. In addition, certain state income tax returns filed within the past four years are still open for state specific adjustments.

(6)

Inventories

Inventories consist of the following:

(Dollar amounts in thousands)	~~June~~January 272,~~2009~~2010		~~September~~October 273,~~2008~~2009
Raw materials and supplies	$	61,~~894~~327	$	41,~~579~~411
Finished goods		9072,~~312~~013		8267,~~005~~523
Total inventories	$	9773,~~206~~340	$	8668,~~584~~934

(7) ~~Debt~~Recently ~~Retirement~~Issued Accounting Pronouncements

~~During~~In December 2007, the ~~13-week~~FASB ~~period~~issued ~~ended~~guidance ~~December 27,~~relating ~~2008~~to business combinations and requires the acquirer to recognize the assets acquired, the ~~Company~~liabilities ~~purchased~~assumed, and ~~retired~~any ~~$3.9~~noncontrolling ~~million~~interest in the acquiree at the acquisition date, measured at their fair values as of ~~its~~that 7date. ~~3/4 %~~The ~~Senior~~new ~~Notes~~accounting ~~due~~guidance ~~2013~~applies ~~and~~prospectively ~~recognized~~to abusiness ~~gain~~combinations for which the acquisition date is on ~~extinguishment~~or ofafter ~~debt~~the beginning of $the 0first annual reporting period beginning on or after December 15, 2008.4 ~~million~~An entity may not apply it before that date. The Company has adopted this standard for its 2010 fiscal year. The effects of the adoption of this standard will have an impact on all future acquisitions beginning in 2010.

~~(8)~~In ~~Recently~~January ~~Issued~~2010, ~~Accounting~~the ~~Pronouncements~~FASB issued guidance that requires reporting entities to make new disclosures about recurring or nonrecurring fair-value measurements including significant transfers into and out of Level 1 and Level 2 fair value measurements and information on purchases, sales, issuances, and settlements on a gross basis in the reconciliation of Level 3 fair value measurements. The guidance is effective for annual reporting periods beginning after December 15, 2009, except for Level 3 reconciliation disclosures that are effective for annual periods beginning after December 15, 2010. The Company will be required to adopt the guidance for its 2011 fiscal year and we do not expect the adoption of this guidance to have a material impact on our consolidated financial statements.

~~In December 2007, the Financial Accounting Standards Board~~ (~~“FASB~~8) ~~issued~~Subsequent SFAS No. 141 (revised), “Business Combinations” (“SFAS 141R”). SFAS 141R relates to business combinations and requires the acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. This Statement applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The Company must adopt this standard for its 2010 fiscal year. Events

InOn ~~September~~January ~~2006~~27, ~~FASB issued SFAS No. 157, “Fair Value Measurements” (“SFAS 157”). SFAS 157 defines fair value, establishes a framework~~ ~~for measuring fair value in GAAP and expands disclosures about fair value measurements. SFAS 157 is generally effective for years beginning after December 15~~2010, ~~2007. SFAS 157 was effective for~~ the Company’s onboard ~~September 28, 2008; however, in February 2008, the FASB issued FASB Staff Position (“FSP”) No. SFAS 157-2 (“FSP 157-2”), which delayed the effective date~~ of ~~SFAS~~directors ~~157~~declared ~~for non-financial assets and non-financial liabilities, except for items that are recognized or disclosed at fair value in the financial statements on~~ a ~~recurring~~cash ~~basis,~~dividend ~~for~~of ~~one year~~$18.5 ~~The~~million ~~adoption~~on ~~of SFAS 157 effective September 28, 2008 with respect to~~ the Company’s ~~financial~~common ~~assets~~stock, ~~and~~par ~~liabilities~~value ~~did not have a material impact on its consolidated financial statements~~$0.001 ~~The~~per ~~Company intends to adopt the provisions of SFAS 157 with respect to its non-financial assets and non-financial liabilities effective October 4~~share, ~~2009 pursuant~~ to ~~the requirements of FSP 157-2, and is in the process of determining the related impact on the Company~~Leslie’s ~~consolidated~~Holdings, ~~financial statements~~Inc. ~~Therefore~~, weas ~~have~~its ~~adopted~~sole ~~the~~common ~~provisions~~stockholder of ~~SFAS~~record ~~157~~on ~~with~~that ~~respect~~date, toin ~~our~~an aggregate ~~financial assets and liabilities only~~amount. AsThe ~~defined in~~cash ~~SFAS~~dividend ~~157,~~was ~~fair value is the price that would be received to sell an asset or~~ paid toon ~~transfer~~February 1, a2010. ~~liability in~~

an orderly transaction between market participants at the measurement date. The standard also establishes a fair value hierarchy that ranks the quality and reliability of the information used to determine fair values. Financial assets and liabilities carried at fair value are classified and disclosed in one of the following three categories:

Level 1: Fair values determined by quoted prices in active markets for identical assets or liabilities that the Company has the ability to access.

Level 2: Fair values utilize inputs other than quoted prices that are observable for the asset or liability, and may include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability.

Level 3: Unobservable inputs that are not corroborated by market data and may reflect the reporting entity’s own assumptions market participants would use in pricing the asset or liability.

As of June 27, 2009, there are no assets or liabilities, subject to SFAS 157, which are carried at fair value.

In February 2007, FASB issued SFAS No. 159, “Fair Value Option for Financial Assets and Financial Liabilities — including an amendment of FASB Statement No. 115” (“SFAS 159”), which permits entities to choose to measure many financial instruments and certain other items at fair value. If elected, SFAS 159 is effective for the Company beginning September 28, 2008. Under SFAS 159, a company may elect to use fair value to measure eligible items at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Eligible items include, but are not limited to, accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees, issued debt and firm commitments. The Company elected not to measure any additional financial instruments or other items at fair value as of September 28, 2008 in accordance with SFAS 159.

In May 2009, FASB issued SFAS No. 165, “Subsequent Events” (“SFAS 165”). SFAS 165 establishes general standards of accounting for and disclosure of events that occur after the balance sheet date but before financial statements are issued or are available to be issued. The Company adopted SFAS 165 in the third quarter. This pronouncement did not have a material impact on the Company’s consolidated financial statements.

In June 2009, FASB issued SFAS No. 168, The FASB Accounting Standards Codification™ and the Hierarchy of Generally Accepted Accounting Principles — a replacement of FASB Statement No. 162 (SFAS 168). SFAS 168 provides for the FASB Accounting Standards Codification™ (the “Codification”) to become the single official source of authoritative, nongovernmental U.S. generally accepted accounting principles (GAAP). The Codification did not change GAAP but reorganizes the literature. SFAS 168 is effective for interim and annual periods ending after September 15, 2009.

(9) Subsequent Events

The Company has completed an evaluation of all subsequent events through August 10, 2009, which is the issuance date of these consolidated financial statements. On July 29, 2009, the Company’s board of directors declared a cash dividend of $5.5 million on the Company’s common stock, par value $0.001 per share, to Leslie’s Holdings, Inc., as its sole common stockholder of record on that date, in an aggregate amount. The cash dividend was paid on August 3, 2009.

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The Private Securities Litigation Reform Act of 1995 provides a “safe harbor” for forward-looking statements. Certain information included in this document (as well as information included in oral statements or other written statements made or to be made by the Company) contains 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 anticipated results in the future and, accordingly, such results may differ from those expressed in any forward-looking statements made by or on behalf of the Company. These risks and uncertainties include, but are not limited to, those relating to domestic economic conditions, activities of competitors, seasonal effects, changes in federal or state tax laws and of the administration of such laws and the general condition of the economy.

~~This~~7 discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with its unaudited consolidated financial statements and disclosures included elsewhere in this report and Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of the Company’s Annual Report on Form 10-K for the year ended September 27, 2008.

This discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with its unaudited consolidated financial statements and disclosures included elsewhere in this report and Management’s Discussion and Analysis of Financial Condition and Results of Operations included as part of the Company’s Annual Report on Form 10-K for the year ended October 3, 2009.

General

Leslie’s Poolmart, Inc. (the “Company” or “Leslie’s”) is the leading specialty retailer of swimming pool supplies and related products in the United States. The Company markets its products through ~~622~~620 Company-owned stores in 35 states; a nationwide mail order catalog; and the Internet. Leslie’s is vertically integrated, operating a chemical repackaging facility in Ontario, California and a specialty chemical repackaging facility in Hebron, Kentucky. The Company supplies its retail stores from distribution facilities located in Ontario, California; Dallas, Texas; Swedesboro, New Jersey; Hebron, Kentucky; and Orlando, Florida.

The Company was incorporated as a Delaware corporation in 1997 and became a wholly-owned subsidiary of Leslie’s Holdings Inc. in February 2007 through a reorganization. The Company’s principal executive offices are located at 3925 E. Broadway Road, Suite 100, Phoenix, Arizona 85040, and the telephone number at that address is (602) 366-3999. Leslie’s corporate website address is www.lesliespool.com.

Seasonality and Quarterly Fluctuations

The Company’s business exhibits substantial seasonality, which the Company believes is typical of the swimming pool supply industry. In general, sales and net income are highest during the quarters that end in June and September which represent the peak months of swimming pool use. Sales are substantially lower during the quarters that end in December and March when the Company typically incurs net losses. The principal external factor affecting the Company’s business is weather. Hot weather and the higher frequency of pool usage in such weather create a need for more pool chemicals and supplies. Unseasonably early or late warming trends can increase or decrease the length of the pool season. In addition, unseasonably cool weather and/or extraordinary amounts of rainfall in the peak season will tend to decrease swimming pool use. The likelihood that unusual weather patterns will severely impact the Company’s results is lessened by the geographical diversification of the Company’s store locations.

The Company also expects that its quarterly results of operations will fluctuate depending on the timing and amount of revenue contributed by new stores and, to a lesser degree, the timing of costs associated with the opening of new stores. The Company attempts to open its new stores primarily in the quarter ending March in order to position itself for the following peak season.

Results of Operations

Net Sales. Net sales for the 13 weeks ended ~~June~~January 272, ~~2009~~2010 were $~~213~~57.83 million compared to $~~212~~60.93 million for the 13 weeks ended ~~June~~December 2827, 2008. The 0.4.9% ~~increase~~ decrease was due primarily to anthe ~~increase~~shift in ~~store~~fiscal ~~count,~~weeks ~~with~~reported ~~622~~in ~~stores~~the inquarter, ~~fiscal~~because ~~2009~~of ~~versus~~the ~~604~~53rd ~~stores~~week in fiscal ~~2008~~2009. During the quarter, the Company opened 6no new stores. ~~Net sales for the 39 weeks ended June 27, 2009 increased 1.0% as compared to the 39 weeks ended June 28, 2008. Sales for the quarter~~ and ~~year~~closed totwo ~~date were effected by cooler than normal weather resulting in a later than normal swimming season, and a slightly lower average sales per store~~stores.

Comparable store sales for the 13 weeks ended ~~June~~January 272, ~~2009~~2010 ~~decreased~~increased 1.3.4% as compared to the 13 weeks ended ~~June~~December 2827, 2008,. ~~while~~Comparable ~~comparable~~ store sales ~~for the~~were 39calculated ~~weeks~~using ~~ended~~comparable ~~June 27,~~calendar ~~2009~~weeks ~~decreased~~in ~~0.8%~~both as2010 ~~compared~~and to2009. ~~the~~The 39calendar weeks ~~ended~~used ~~June 28,~~to ~~2008.~~calculate ~~The~~comparable ~~Company~~store ~~considers~~sales adid ~~store~~not toalign bewith ~~comparable~~the infiscal ~~the~~quarters ~~first~~in ~~full~~2010 ~~month~~and ~~after~~2009 itbecause ~~has~~of ~~completed~~the 5253rd ~~weeks~~week ofin ~~sales~~fiscal 2009. ~~Closed~~Accordingly, changes ~~stores~~in ~~become non-~~comparable ~~during~~store ~~their~~sales ~~last~~may ~~partial~~not ~~month~~be ofconsistent ~~operation.~~with ~~Stores~~changes ~~that~~in ~~are~~net ~~relocated~~sales ~~are~~reported ~~considered~~for ~~comparable~~the ~~stores~~fiscal atquarter. ~~the~~The ~~time~~comparable ~~the~~store ~~relocation~~sales isincrease ~~completed.~~was ~~Comparable~~primarily ~~store~~due ~~sales~~to isfavorable ~~not~~weather aconditions ~~recognized~~and ~~measure~~successful ofproduct ~~financial~~promotions ~~performance~~during ~~under~~the ~~accounting~~quarter ~~principles~~in ~~generally~~California, ~~accepted~~Arizona, inFlorida and the northeast regions of the United States ~~(“GAAP”)~~. ~~Comparable~~The ~~store~~Company ~~sales~~considers isa ~~not~~store ~~calculated~~to be comparable in the ~~same~~first ~~manner~~full bymonth ~~all~~after ~~companies~~it ~~and~~has ~~accordingly~~completed is52 ~~not~~weeks ~~necessarily~~of sales. Closed stores become non-comparable toduring ~~similarly~~their last ~~entitled~~partial ~~measures~~month of ~~other companies~~operation. ~~and~~Stores ~~may~~that ~~not~~are berelocated anare ~~appropriate~~considered ~~measure~~comparable ~~for~~stores ~~performance~~at ~~relative~~the totime ~~other~~the ~~companies~~relocation is completed.

~~Gross~~Comparable ~~Profit.~~store ~~Gross~~sales ~~profit~~is ~~for~~not ~~the~~a 13recognized ~~weeks~~measure ~~ended June 27,~~of ~~2009~~financial ~~was~~performance ~~$114.9~~under ~~million~~accounting ~~compared~~principles togenerally ~~$111.7~~accepted ~~million~~in ~~for~~ the 13United ~~weeks~~States ~~ended June 28, 2008~~(“GAAP”). AsComparable astore ~~percentage of~~ sales, ~~gross~~is ~~profit~~not ~~was~~calculated ~~53.7% for the third quarter of fiscal 2009 compared to 52.5% for the third quarter of fiscal 2008. Gross profit dollars improved primarily due to the increase~~ in ~~sales as a result of increased store count. For~~ the 39same ~~weeks~~manner ~~ended~~by ~~June 27,~~all ~~2009, gross profit was $177.8 million compared to $171.4 million for the 39 weeks ended June 28,~~companies ~~2008.~~and Asaccordingly ais ~~percentage~~not ofnecessarily ~~sales,~~comparable ~~gross profit for the 39 weeks was 53.7% for the third quarter of fiscal 2009 compared~~ to ~~52.3%~~similarly ~~for~~entitled ~~the~~measures ~~third quarter~~ of ~~fiscal~~other ~~2008.~~companies ~~The~~and ~~increase~~may innot ~~gross~~be ~~margin is primarily attributable to~~ an ~~increase~~appropriate inmeasure ~~vendor promotional~~for ~~allowances~~performance ~~earned,~~relative ~~lower distribution expenses, and a shift in sales mix~~ to ~~products~~other ~~in higher margin categories~~companies.

Operating and Administrative Expense. Operating and administrative expenses for the 13 weeks ended June 27, 2009, were $52.6 million compared to $52.0 million for the 13 weeks ended June 28, 2008. For the 39 weeks ended June 27, 2009, operating expenses were $130.1 million, as compared to $126.8 million in the prior year. Operating expense dollars increased during 2009 due primarily to increases in occupancy and other related costs associated with the increased store count as compared to the same periods of fiscal 2008.

Operating income. Operating income for the 13 weeks ended June 27, 2009 improved by $2.5 million, from $59.7 million during the 13 weeks ended June 28, 2008 to $62.2 million for the 13 weeks ended June 27, 2009. Operating results improved due to the increases in sales and related gross profit achieved during the quarter. The operating income for the 39 weeks ended June 27, 2009 improved by $3.0 million, from $44.5 million during the 39 weeks ended June 28, 2008 to an operating income of $47.5 million for the 39 weeks ended June 27, 2009. The improvement in operating income was primarily due to the increases in sales and expanded gross profit margins.

Other Income and Expense. Net interest expense was $3.5 million for the 13 weeks ended June 27, 2009 compared to $3.4 million for the 13 weeks ended June 28, 2008. For the 39 weeks ended June 27, 2009, the net interest expense was $10.3 million versus $9.9 million in the prior year. The increases in net interest expense for the 13 and 39 week periods was due to decreased interest income partially offset by a decrease in average debt balances.

~~Income~~Gross ~~Taxes~~Profit. ~~The~~Gross ~~Company’s~~profit ~~income tax expense~~ for the 13 weeks ended ~~June~~January 272, ~~2009~~2010 was $2315.02 million~~, or~~ ~~an effective rate of 39.1%, as~~ compared to a $2215.75 million ~~provision, or an effective rate of 40.3%~~ for the 13 weeks ended ~~June~~December 2827, 2008. ~~For~~As ~~the~~a 39percentage ~~weeks~~of ~~ended June 27~~sales, ~~2009,~~gross ~~the~~profit ~~income tax expense~~ was ~~$13~~26.5% ~~million,~~for orthe anfirst ~~effective rate~~quarter of ~~35.8 %~~fiscal ~~versus~~2010 ~~$14.4~~compared ~~million,~~to ~~or an effective rate of 41~~25.4 8% infor the ~~prior~~first ~~year~~quarter of fiscal 2009. The decrease in ~~the~~gross ~~effective~~margin ~~rate~~dollars is primarily ~~attributed~~attributable to the ~~$1.2~~decrease ~~million~~in ~~benefit~~sales, ~~for~~while athe ~~reduction~~increase in ~~estimated~~gross ~~taxes~~profit ~~payable~~as ~~based~~a ~~upon~~percentage ~~information~~to ~~received during~~sales ~~the~~was ~~year~~driven ~~which~~by ~~indicated~~efficiencies ~~that~~and ~~the~~lower ~~amount~~expenses ~~would~~in ~~not~~warehouse beand ~~payable~~transportation.

~~Adjusted~~Selling, ~~EBITDA.~~general ~~The~~and ~~Adjusted~~administrative ~~EBITDA~~expenses. ~~for the 13 weeks ended June 27~~Selling, ~~2009~~ ~~was~~general ~~$65.4~~and ~~million~~administrative ~~compared~~expense ~~to an Adjusted EBITDA of $62.7 million~~ for the 13 weeks ended ~~June~~January 282, ~~2008. For the 39 weeks ended June 27~~2010, ~~2009, Adjusted EBITDA~~ was $5723.4 1 million compared to ~~an Adjusted EBITDA of~~ $5423.3 million for the 39 13 weeks ended ~~June~~December 2827, 2008. ~~The~~Selling, ~~improvement~~general inand ~~Adjusted~~administrative ~~EBITDA~~expenses ~~was~~dollars ~~primarily~~decreased ~~due~~during to the ~~increases~~first inquarter ~~sales~~of ~~and~~2010 ~~related~~due ~~gross~~primarily ~~profit~~to ~~achieved~~the ~~during~~decrease ~~the~~in ~~quarter~~sales.

Operating loss. Operating loss for the 13 weeks ended January 2, 2010 increased by $0.2 million, from $7.8 million during the 13 weeks ended December 27, 2008 to $8.0 million for the 13 weeks ended January 2, 2010. The increased operating loss was primarily due to the decreases in sales and related gross profit experienced during the quarter.

Other Income and Expense. Net interest expense was $3.6 million for the 13 weeks ended January 2, 2010 compared to $3.2 million for the 13 weeks ended December 27, 2008. The increase in net interest expense was due to the reduction in interest income earned on short-term investments and cash. Additionally, other income and expense includes a $0.4 million gain on debt extinguishment related to the purchase and retirement of $3.9 million of the Company’s 7³/4% Senior Notes due 2013 during the 13 weeks ended December 27, 2008.

Income Taxes. The Company’s income tax benefit for the 13 weeks ended January 2, 2010 was $4.6 million, or an effective rate of 39.4%, as compared to a $5.4 million benefit, or an effective rate of 50.7% for the 13 weeks ended December 27, 2008. The decrease in effective rate is attributed to the $1.2 million benefit for a reduction in estimated taxes payable based upon information received during the first quarter of 2009 which indicated the amount would not be payable.

Adjusted EBITDA. The Adjusted EBITDA loss for the 13 weeks ended January 2, 2010 was $4.4 million compared to an Adjusted EBITDA loss of $4.5 million for the 13 weeks ended December 27, 2008. The improvement in Adjusted EBITDA for the fiscal quarter was primarily due to the decrease in selling, general and administrative expense offset by the shortfall in gross profit dollars.

Adjusted EBITDA is determined as follows (1):

	13 Weeks Ended						~~39 weeks Ended~~
Amounts in thousands	~~June~~January 272,~~2009~~2010			~~June 28,2008~~	December 27,2008		~~June 27,2009~~			~~June 28,2008~~
Net income as reported	$	35,746		$	33,589		$	24,146		$	20,344
Net loss as reported	$	(7,021	)		$	(5,271	)
Depreciation and amortization		3,~~165~~472			~~2,975~~	3,269		~~9,524~~			~~9,730~~
Interest expense, net		3,~~481~~601			~~3,388~~	3,239		~~10,259~~			~~9,876~~
Loss on disposition of assets		2547			65	51		~~215~~			75
Income tax expense		22,964			22,651			13,460			14,358
Unusual item		58				(325	)
Unusual item		48			20			(230	)		(41	)
Income tax benefit		(4,558	)			(5,419	)
Adjusted EBITDA	$	65(4,~~429~~401	)	$	~~62,688~~$	(4,456	$)	~~57,374~~		$	~~54,342~~

(1)

Adjusted EBITDA is defined as earnings before interest (including amortization of debt costs), taxes, depreciation, amortization, loss/(gain) on disposition of fixed assets, and unusual charges. Adjusted EBITDA is not a recognized measure of financial performance under GAAP, but is used by some investors to determine a company’s ability to service or incur indebtedness. Adjusted EBITDA is not calculated in the same manner by all companies and accordingly is not necessarily comparable to similarly entitled measures of other companies and may not be an appropriate measure for performance relative to other companies. Adjusted EBITDA should not be construed as an indicator of a company’s operating performance or liquidity, and should not be considered in isolation from or as a substitute for net income (loss), cash flows from operations or cash flow data all of which are prepared in accordance with GAAP. The Company has presented Adjusted EBITDA solely as supplemental disclosure because the Company believes it allows for a more complete analysis of results of operations and may present a better measure of liquidity for those charges that are not anticipated to be incurred in the future. Adjusted EBITDA is not intended to represent and should not be considered more meaningful than, or as an alternative to, measures of operating performance as determined in accordance with GAAP.

Financial Condition, Liquidity and Capital Resources

Changes in Financial Condition.

During the 13 39 weeks between ~~September~~October 273, ~~2008~~2009 and ~~June~~January 272, ~~2009~~2010, total current assets ~~increased~~decreased by $5730.7 million, primarily due to ~~higher~~lower cash positions related to working capital changes~~, offset by a reduction in short term investments~~. Inventories increased by $10.6 million during the period, reflecting the effects of inventory purchased during the first fiscal quarter of 2009 as the Company accelerated its purchases of certain products for the upcoming peak-selling season and to take advantage of available discounting.

During the same period, current liabilities ~~increased~~decreased by $4122.74 million due largely to the ~~increase~~decrease during the period in ~~accounts~~accrued ~~payable~~expense of $~~29.~~9.6 million, ~~and~~as anwell ~~increase~~as a reduction in ~~accrued~~income ~~expenses~~taxes payable of $6.79 million. ~~The~~Income ~~accounts~~taxes payable ~~increase~~decreased isdue ~~related~~ to the ~~increase~~payment inof ~~inventory~~income ~~purchases~~taxes ~~and~~during the ~~accrued expense increase is related to interest payable on the senior notes and sales tax payable on increased sales~~quarter.

Liquidity and Capital Resources.

Net cash ~~provided~~used by in operating activities was $5626.51 million for the 3913 weeks ended ~~June~~January 272, ~~2009~~2010 compared to net cash ~~provided~~used byin operating activities of $4344.05 million for the same 3913 week period in the prior year,. The difference was primarily due to the ~~higher~~increase in inventory ~~balance~~and atdecrease in accounts payable experienced last year due to the ~~beginning~~ investment purchases of ~~the~~certain ~~year~~inventory.

10Capital expenditures for the 13 weeks ended January 2, 2010 were $2.8 million. The Company expects to incur capital expenditures between $13.0 and $15.0 million in fiscal 2010, primarily for the purpose of opening new stores. It is anticipated that the balance of 2010 capital expenditures will be funded out of cash provided by operations with some possible temporary borrowings from its credit facility.

~~Table~~Cash used in financing activities for the 13 weeks ended January 2, 2010 was $2.0 million compared $3.6 million cash used in financing activities in the prior year. The decrease is primarily related to the dividend payment in fiscal 2010, versus the repurchase of ~~Contents~~long-term debt in 2009.

~~Capital~~The ~~expenditures~~Company ~~for~~believes ~~the~~its 39internally ~~weeks~~generated ~~ended June 27~~funds, ~~2009~~as ~~were~~well ~~$9.3~~as ~~million.~~its ~~The~~borrowing ~~Company~~capacity, ~~expects~~are adequate to ~~incur~~meet ~~capital expenditures~~its ~~between~~working ~~$20.0~~capital ~~and~~needs, ~~$21.0~~maturing ~~million~~obligations inand ~~fiscal~~capital ~~2009~~expenditure requirements, ~~primarily~~including those ~~for~~relating to the ~~purpose~~opening of ~~opening~~ new stores. ~~It is anticipated that the balance of 2009 capital expenditures will be funded out of cash provided by operations.~~

~~Cash~~The ~~used~~Company was in ~~financing~~compliance ~~activities~~with ~~for~~all ~~the~~debt 39covenants ~~weeks~~as ~~ended~~of ~~June~~January 272, ~~2009 was $7~~2010.5 ~~million compared to $ 9.4 million cash used in financing activities in the prior year.~~

The Company believes its internally generated funds, as well as its borrowing capacity, are adequate to meet its working capital needs, maturing obligations and capital expenditure requirements, including those relating to the opening of new stores, for the next twelve months.

The Company was in compliance with all debt covenants as of June 27, 2009.

Recently Issued Accounting Pronouncements

In December 2007, the FASB issued ~~SFAS~~guidance ~~No. 141~~relating ~~(revised), “Business Combinations”. SFAS No. 141 (revised) relates~~ to business combinations and requires the acquirer to recognize the assets acquired, the liabilities assumed, and any noncontrolling interest in the acquiree at the acquisition date, measured at their fair values as of that date. ~~This~~The ~~Statement~~new accounting guidance applies prospectively to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. The Company ~~must~~has ~~adopt~~adopted this standard for its 2010 fiscal year. The effects of the adoption of this standard will have an impact on all future acquisitions beginning in 2010.

In ~~September~~January ~~2006~~2010, the FASB issued ~~SFAS~~guidance ~~No. 157,~~that ~~“Fair~~requires ~~Value~~reporting ~~Measurements”~~entities ~~(“SFAS 157”). SFAS 157~~to ~~defines~~make ~~fair~~new ~~value,~~disclosures ~~establishes~~about arecurring ~~framework~~or ~~for~~nonrecurring ~~measuring~~ fair -value measurements inincluding ~~GAAP~~significant ~~and~~transfers ~~expands~~into ~~disclosures~~and ~~about~~out ~~fair~~of ~~value~~Level ~~measurements.~~1 ~~SFAS 157~~and isLevel ~~generally~~2 ~~effective~~fair ~~for~~value ~~years~~measurements ~~beginning~~and ~~after~~information ~~December 15, 2007. SFAS 157 was effective for the Company~~ on ~~September 28~~purchases, ~~2008; however~~sales, ~~in February 2008~~issuances, ~~the~~and ~~FASB~~settlements ~~issued~~on ~~FASB~~a ~~Staff~~gross ~~Position~~basis ~~(“FSP”)~~in ~~No. SFAS 157-2 (“FSP 157-2”), which delayed~~ the ~~effective~~reconciliation ~~date~~ of ~~SFAS 157~~Level ~~for non-financial~~3 ~~assets and non-financial liabilities, except for items that are recognized or disclosed at~~ fair value inmeasurements. ~~the~~The guidance ~~financial~~is ~~statements~~effective ~~on a recurring basis,~~ for ~~one~~annual ~~year.~~reporting ~~The~~periods ~~adoption~~beginning ofafter ~~SFAS 157~~December ~~effective~~15, ~~September 28~~2009, ~~2008~~except ~~with respect~~for toLevel ~~the~~3 ~~Company’s~~reconciliation ~~financial~~disclosures ~~assets~~that ~~and~~are ~~liabilities~~effective ~~did~~for ~~not~~annual ~~have~~periods abeginning ~~material~~after ~~impact~~December on15, ~~its consolidated financial statements~~2010. The Company ~~intends~~will be required to adopt the guidance ~~provisions~~for ~~of SFAS 157 with respect to~~ its ~~non-financial~~2011 ~~assets~~fiscal year and ~~non-financial~~ ~~liabilities~~we ~~effective~~do ~~October 4,~~not ~~2009~~expect ~~pursuant to~~ the ~~requirements~~adoption of ~~FSP 157-2,~~this ~~and~~guidance isto inhave ~~the~~a ~~process~~material ~~of determining the related~~ impact on ~~the~~our ~~Company’s~~ consolidated financial statements.

In February 2007, FASB issued SFAS No. 159, “Fair Value Option for Financial Assets and Financial Liabilities—including an amendment of FASB Statement No. 115” (“SFAS 159”), which permits entities to choose to measure many financial instruments and certain other items at fair value. If elected, SFAS 159 is effective for the Company beginning September 28, 2008. Under SFAS 159, a company may elect to use fair value to measure eligible items at specified election dates and report unrealized gains and losses on items for which the fair value option has been elected in earnings at each subsequent reporting date. Eligible items include, but are not limited to, accounts and loans receivable, available-for-sale and held-to-maturity securities, equity method investments, accounts payable, guarantees, issued debt and firm commitments. The Company elected not to measure any additional financial instruments or other items at fair value as of September 28, 2008 in accordance with SFAS 159.

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

The Company’s Amended Loan and Security Agreement carries interest rate risk as described in the Notes to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended ~~September~~October 273, ~~2008~~2009. ~~Amounts~~Borrowings ~~borrowed~~ under ~~this~~the Loan Agreement bear interest at ~~either~~the ~~LIBOR~~lender’s ~~plus~~Base ~~1.75%,~~Rate (as defined in the Loan Agreement) or at the ~~Company’s~~Eurodollar ~~choice~~Rate (as defined in the Loan Agreement), in each case plus the ~~lender’s~~applicable ~~reference~~margin rate. ~~Should the~~The ~~lenders’~~applicable ~~base~~margin rate ~~change,~~will be adjusted quarterly based on the Company’s ~~interest~~Leverage ~~expense~~Ratio ~~will~~(as ~~increase~~defined orin ~~decrease~~the ~~accordingly~~Loan Agreement). The applicable margin for the Loan Agreement is initially 2.25% with respect to Base Rate loans and 3.25% with respect to Eurodollar Rate loans. As of ~~June~~January 272, ~~2009~~2010, the Company had no borrowings outstanding under this facility.

Item 4.

Controls and Procedures

Under the supervision and with the participation of the Company’s management, including the Company’s principal executive officer and principal financial officer, the Company conducted an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, as of the end of the period covered by this report (the “Evaluation Date”). Based on this evaluation, the Company’s principal executive officer and principal financial officer concluded as of the Evaluation Date that the Company’s disclosure controls and procedures were effective such that the material information relating to Leslie’s, including the Company’s consolidated subsidiaries, required to be disclosed in the Company’s Securities and Exchange Commission (“SEC”) reports is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and was made known to the Company’s principal executive officer and principal accounting officer during the period when this report was being prepared to allow timely decisions regarding required disclosure.

In addition, there were no changes in the Company’s internal control over financial reporting during the quarter ended ~~June~~January 272, ~~2009~~2010 or in other factors that ~~have~~has materially affected, or ~~are~~is likely to materially affect the Company’s internal control over financial reporting. The Company has not identified any significant deficiencies or material weaknesses in the Company’s internal control over financial reporting, and therefore there were no corrective actions taken.

PART II. OTHER INFORMATION

Item 1.

Legal Proceedings

The Company is routinely involved in legal proceedings involving claims related to the ordinary course of its business. The Company is currently not party to any legal proceedings that it considers to be material.

Item 1A.

Risk Factors

Certain factors exist which may affect Leslie’s business and could cause actual results to differ materially from those expressed in any forward-looking statements. The Company has not experienced any material changes from those risk factors as previously disclosed in the Company’s Annual Report on Form 10-K for the fiscal year ended ~~September~~October 273, ~~2008~~2009.

Item 2.

Unregistered Sales of Securities and Use of Proceeds

None.

Item 5.

Other Information

None.

Item 6.

Exhibits


Exhibit Number		Description

31.1		Certificate of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2		Certificate of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

32.1		Certificate of Chief Executive Officer and Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

LESLIE’S POOLMART, INC.
By:		/s/ ~~LAWRENCE~~Lawrence H. ~~HAYWARD~~Hayward
		Lawrence H. Hayward Chief Executive Officer Date: August 10, 2009
		Lawrence H. Hayward Chief Executive Officer Date: February 16, 2010
By:		/s/ Steven L. Ortega
		Steven L. Ortega Chief Financial Officer Date: February 16, 2010

~~By:~~12 ~~/s/ STEVEN L. ORTEGA Steven L. Ortega Chief Financial Officer Date: August 10, 2009~~

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Filing Compare · LESLIES POOLMART INC