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 30, 2007

or

¨ 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 documents and reports required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for 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 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. (Check one):

Large accelerated filer  ¨                    Accelerated filer  ¨                    Non-accelerated filer   x

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 number of shares of the registrant’s Common Stock outstanding at August 13, 2007 was 100 shares.

LESLIE’S POOLMART, INC.

AND SUBSIDIARIES

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

FORM 10-Q

For the Quarterly Period Ended June 30, 2007

INDEX

	Page
Part I. Financial Information
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 2007 (unaudited) and September 30, 2006	3
Consolidated Statements of Operations for the 13 weeks and 39 weeks ended June 30, 2007 (unaudited) and July 1, 2006 (unaudited)	4
Consolidated Statements of Cash Flows for the 39 weeks ended June 30, 2007 (unaudited) and July 1, 2006 (unaudited)	5
Notes to Consolidated Financial Statements (unaudited)	6
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	9
Item 3. Quantitative and Qualitative Disclosures about Market Risk	12
Item 4. Controls and Procedures	12
Part II. Other Information
Item 1. Legal Proceedings	13
Item 1A. Risk Factors	13
Item 2. Unregistered Sales of Securities and Use of Proceeds	13
Item 5. Other Information	13
Item 6. Exhibits	14
Signatures	15

2

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 30, 2007			September 30, 2006
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	61,114		$	39,004
Accounts and other receivables, net		13,515			7,315
Inventories		86,400			64,544
Prepaid expenses and other current assets		2,569			2,522
Deferred tax assets		8,201			8,201
Total current assets		171,799			121,586
Property, plant and equipment, net		39,505			38,136
Intangible assets		8,055			8,072
Deferred financing costs, net		5,679			6,168
Deferred tax assets		4,445			4,445
Other assets		340			320
Total assets	$	229,823		$	178,727
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	53,613		$	31,473
Accrued expenses		41,397			35,860
Income taxes payable		13,766			11,040
Total current liabilities		108,776			78,373
Other long term liabilities		6,073			12,632
Redeemable preferred stock, $0.001 par value; authorized 1,000,000 shares, issued and outstanding no shares at June 30, 2007 and 41,000 shares of Series A at September 30, 2006		—			41,000
Senior notes, net		169,045			168,946
Total liabilities		283,894			300,951
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.001 par value, authorized 50,000,000 shares, issued and outstanding 100 shares at June 30, 2007 and 40,045,000 shares at September 30, 2006		—			40
Paid-in deficit		(91,984	)		(144,081	)
Treasury stock, no shares at June 30, 2007 and 90,000 shares at September 30, 2006		—			(332	)
Retained earnings		37,913			22,149
Total stockholders’ deficit		(54,071	)		(122,224	)
Total liabilities and stockholders’ deficit	$	229,823		$	178,727

See accompanying notes to consolidated financial statements.

3

Leslie’s Poolmart, 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 30, 2007			July 1, 2006			June 30, 2007			July 1, 2006
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Sales	$	204,816		$	198,114		$	314,904		$	294,611
Cost of merchandise sold and services sold, including warehousing and transportation expenses		100,282			99,678			155,111			147,948
Gross profit		104,534			98,436			159,793			146,663
Selling, general and administrative expenses		50,216			49,801			121,083			115,381
Operating income		54,318			48,635			38,710			31,282
Other expenses/(income):
Interest expense		3,378			4,970			12,656			15,216
Interest income		(302	)		(66	)		(645	)		(139	)
Other expense		(379	)		(203	)		(294	)		(10	)
Total other expense		2,697			4,701			11,717			15,067
Earnings before income taxes		51,621			43,934			26,993			16,215
Income tax expense		21,499			20,869			11,229			7,702
Net income	$	30,122		$	23,065		$	15,764		$	8,513

See accompanying notes to consolidated financial statements.

4

Leslie’s Poolmart, Inc.

Consolidated Statements of Cash Flows (unaudited)

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

(Amounts in thousands)

	39 Weeks Ended
	June 30, 2007			July 1, 2006
	(unaudited)			(unaudited)
Operating activities:
Net income	$	15,764		$	8,513
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		9,392			8,976
Preferred stock dividend and accretion		1,886			3,373
Amortization of loan fees and discounts		588			826
Allowance for doubtful accounts		167			149
Gain on disposition of assets		(294	)		(10	)
Deferred income taxes		—			731
Changes in operating assets and liabilities:
Accounts and other receivables		(6,367	)		1,354
Inventories		(21,856	)		(22,601	)
Prepaid expenses and other current assets		(47	)		(1,581	)
Other assets		(20	)		149
Accounts payable and accrued expenses		28,537			42,806
Income taxes payable		2,726			4,191
Net cash provided by operating activities		30,476			46,876
Investing activities:
Purchase of property, equipment and intangibles		(10,938	)		(8,402	)
Proceeds from dispositions of property		488			229
Net cash used in investing activities		(10,450	)		(8,173	)
Financing activities:
Net line of credit borrowings		—			(7,104	)
Excess tax benefits from stock-based compensation		2,084			—
Proceeds from issuance of common and treasury stock, net of fees		—			200
Purchase of treasury stock		—			(229	)
Net cash provided by/(used in) financing activities		2,084			(7,133	)
Net increase in cash and cash equivalents		22,110			31,570
Cash and cash equivalents at beginning of period		39,004			2,172
Cash and cash equivalents at end of period	$	61,114		$	33,742

See accompanying notes to consolidated financial statements.

5

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 13-week and 39-week periods ended June 30, 2007 are not necessarily indicative of the results that may be expected for the year ending September 29, 2007.

The balance sheet at September 30, 2006 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 30, 2006.

(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 577 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.

The Company became a subsidiary of Leslie’s Holdings, Inc (“Holdings”) during February 2007, in conjunction with a tax-free reorganization to the Company’s stockholders. As a result of the reorganization, each share of outstanding common stock of the Company was exchanged for one share of common stock of Holdings, and each share of outstanding 10% senior redeemable exchangeable cumulative preferred stock of the Company was exchanged for one share of 10% senior redeemable exchangeable cumulative preferred stock of Holdings with the same rights, privileges, and preferences, including as to liquidation. The exchange of the 10% senior redeemable exchangeable cumulative preferred stock of the Company for similar stock of Holdings was accounted for as contributed capital to the Company, given that the assumption of the obligation by Holdings without recourse to the Company had the effect of extinguishing the rights of the preferred stockholders and the resulting obligation.

(3) Stock-based Compensation

Effective October 1, 2006, the Company adopted SFAS No. 123 (revised 2004), “Share-Based Payment” (“SFAS No. 123R”), which replaces SFAS 123, “Accounting for Stock-Based Compensation” and supersedes APB Opinion No. 25, “Accounting for Stock Issued to Employees”. SFAS 123R requires all share-based payments, including grants of employee stock options and nonvested shares, to be recognized in the financial statements based on their fair values at date of grant. Under SFAS No. 123R, companies are required to measure the cost of services received in exchange for stock options and similar awards based on the grant-date fair value of the award and to recognize this cost in the income statement over the period during which an award recipient is required to provide service in exchange for the award. The pro forma disclosures previously permitted under SFAS No. 123 are no longer an alternative to financial statement recognition.

As the Company is a nonpublic company under the provisions of SFAS No. 123R, we were required to adopt SFAS No. 123R using the prospective method which requires the Company to apply the provisions of SFAS No. 123R prospectively to new awards and to awards modified, repurchased or cancelled after September 30, 2006. Awards granted after September 30, 2006 (of which there have been none to date) are valued at fair value in accordance with the provisions of SFAS No. 123R 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.

6

Leslie’s Poolmart, Inc.

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

Notes to Consolidated Financial Statements (unaudited)

As of the reorganization, all contractual rights and obligations relating to the Leslie’s 2005 Stock Option Plan and related Option Agreements and Notices of Option Grants were adopted by Holdings and deemed to apply to Holdings common stock. During the second quarter of 2007, Holdings’ Board of Directors accelerated the vesting of all outstanding stock options to purchase shares of common stock of Holdings. The fair value of the awards immediately before the modification of the vesting was the same value as the fair value after the modification took effect. Accordingly, no compensation expense was recorded under SFAS No. 123R for 2007. All of the options were exercised in February of 2007 after the transfer to Holdings which gave rise to a tax benefit of approximately $2.1 million attributed to the Company. Given that the tax benefit meets the realization criteria of SFAS 123(R), the benefit has been recorded as a credit to equity since the entire benefit exceeded the recorded expense of zero. The Company did not otherwise grant or modify any share-based compensation during the 39 weeks ended June 30, 2007. As of June 30, 2007 the Company has no outstanding equity awards to its employees either directly or through grants by Holdings that would be attributable to the Company’s employees and thereby accounted for as an expense of the Company.

(4) Taxation of the Company and Holdings

The Company and its subsidiaries will 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 109, as if the Company were a separate taxpayer rather than a member of Holding’s consolidated income tax return group.

(5) Inventories

Inventories consist of the following:

Amounts in thousands	June 30, 2007		September 30 2006
Raw materials and supplies	$	1,358	$	1,116
Finished goods		85,042		63,428
Total Inventories	$	86,400	$	64,544

(6) Subsequent Events

On July 16, 2007, the Company’s board of directors declared a cash dividend of $14.9 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 1, 2007.

7

(7) Recently Issued Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 is an interpretation of FASB Statement No. 109 “Accounting for Income Taxes” and must be adopted by the Company no later than September 30, 2007. FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting, and disclosing in the financial statements uncertain tax positions that the company has taken or expects to take in its tax returns. The Company has not evaluated the impact of adopting FIN 48.

In September 2006, the SEC released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides interpretive guidance on the SEC’s views regarding the process of quantifying materiality of financial statement misstatements. SAB 108 is effective for fiscal years ending after November 15, 2006, with early application for the first interim period ending after November 15, 2006. The Company does not believe that the application of SAB 108 will have a material effect on our results of operations or financial position.

In May 2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, Accounting Changes and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements” (“FAS 154”). FAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. FAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. The provisions of FAS 154 are effective for accounting changes and corrections of errors made in fiscal periods beginning after December 15, 2005. The adoption of the provisions of FAS 154 is not expected to have a material impact on the Company’s financial position or results of operations.

8

Leslie’s Poolmart, Inc.

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

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 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 30, 2006.

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 577 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.

9

Leslie’s Poolmart, Inc.

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

Results of Operations

Net Sales. Net sales for the 13 weeks ended June 30, 2007 were $204.8 million compared to $198.1 million for the 13 weeks ended July 1, 2006. The 3.4% increase was due to improved comparable store sales coupled with an increase in store count, with 577 stores in fiscal 2007 versus 537 stores in fiscal 2006. During the quarter, the Company opened 18 new stores. Net sales for the 39 weeks ended June 30, 2007 increased 6.9% as compared to the 39 weeks ended July 1, 2006.

Comparable store sales for the 13 weeks ended June 30, 2007 increased .5% as compared to the 13 weeks ended July 1, 2006, while comparable store sales for the 39 weeks ended June 30, 2007 increased 3.2% as compared to the 39 weeks ended July 1, 2006. The Company considers a store to be comparable in the first full month after it has completed 52 weeks of sales. Closed stores become non-comparable during their last partial month of operation. Stores that are relocated are considered comparable stores at the time the relocation is completed. Comparable store sales is not a recognized measure of financial performance under accounting principles generally accepted in the United States (“GAAP”). Comparable store sales 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.

Gross Profit. Gross profit for the 13 weeks ended June 30, 2007 was $104.5 million compared to $98.4 million for the 13 weeks ended July 1, 2006. As a percentage of sales, gross profit was 51.0% for the third quarter of fiscal 2007 compared to 49.7% for the third quarter of fiscal 2006. Gross profit dollars improved primarily due to the increase in sales and increased store count. For the 39 weeks ended June 30, 2007, gross profit was $159.8 million compared to $146.7 million for the 39 weeks ended July 1, 2006. As a percentage of sales, gross profit for the 39 weeks was 50.7% for the third quarter of fiscal 2007 compared to 49.8% for the third quarter of fiscal 2006.

Operating and Administrative Expense. Operating and administrative expenses for the 13 weeks ended June 30, 2007, were $50.2 million compared to $49.8 million for the 13 weeks ended July 1, 2006. For the 39 weeks ended June 30, 2007, operating expenses were $121.1 million, as compared to $115.4 million in the prior year. Operating expense dollars increased during 2007 due primarily to increases in occupancy and other related costs associated with the increased store count as compared to the same periods of fiscal 2006.

Operating income. Operating income for the 13 weeks ended June 30, 2007 improved by $5.7 million, from $48.6 million during the 13 weeks ended July 1, 2006 to $54.3 million for the 13 weeks ended June 30, 2007. 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 30, 2007 improved by $7.4 million, from $31.3 million during the 39 weeks ended July 1, 2006 to an operating income of $38.7 million for the 39 weeks ended June 30, 2007.

Other Income and Expense. Net interest expense was $3.1 million for the 13 weeks ended June 30, 2007 compared to $4.9 million for the 13 weeks ended July 1, 2006. The decrease in interest expense was due to the decrease in average debt balances in the year to date and the elimination of interest on the Company’s preferred stock which was assumed by Holdings. For the 39 weeks ended June 30, 2007, the net interest expense was $12.0 million versus $15.1 million in the prior year.

Income Taxes. The Company’s income tax expense for the 13 weeks ended June 30, 2007 was $21.5 million, or an effective rate of 41.6%, as compared to a $20.9 million provision, or an effective rate of 47.5% for the 13 weeks ended July 1, 2006. The effective rate of the income tax expense was higher in third quarter 2006 due to nondeductibility of certain elements of the Company’s interest expense that were present during fiscal 2006 but were eliminated during February 2007. For the 39 weeks ended June 30, 2007, the income tax expense was $11.2 million, or an effective rate of 41.6 % versus $7.7 million, or an effective rate of 47.5 % in the prior year.

Adjusted EBITDA. The Adjusted EBITDA for the 13 weeks ended June 30, 2007 was $57.6 million compared to an Adjusted EBITDA of $52.0 million for the 13 weeks ended July 1, 2006. For the 39 weeks ended June 30, 2007, Adjusted EBITDA was $48.4 million compared to an Adjusted EBITDA of $40.3 million for the 39 weeks ended July 1, 2006. The improvement in Adjusted EBITDA was primarily due to the increases in sales and related gross profit achieved during the quarter.

10

Leslie’s Poolmart, Inc.

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

Adjusted EBITDA is determined as follows (1):

	13 Weeks Ended						39 Weeks Ended
Amounts in thousands	June 30, 2007			July 1, 2006			June 30, 2007			July 1, 2006
Net income as reported	$	30,122		$	23,065		$	15,764		$	8,513
Depreciation		3,248			3,364			9,392			8,976
Interest expense, net		3,076			4,904			12,011			15,077
Gain on disposition of assets		(379	)		(203	)		(294	)		(10	)
Income tax expense		21,499			20,869			11,229			7,702
Unusual charges		5			—			310			—
Adjusted EBITDA	$	57,571		$	51,999		$	48,412		$	40,258

(1) Adjusted EBITDA is 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 39 weeks between October 1, 2006 and June 30, 2007, total current assets increased by $50.2 million. Inventories increased by $21.9 million during the period as the Company opened a new store and accelerated its purchases of certain products for the upcoming peak-selling season to take advantage of available discounting. The remaining increases were in the Company’s cash accounts that increased $22.1 million, principally due to higher net income.

During the same period, current liabilities increased by $30.4 million due primarily to the increase in accounts payable of $22.1 million during the period.

Liquidity and Capital Resources.

Net cash provided by operating activities was $30.5 million for the 39 weeks ended June 30, 2007 compared to $46.9 million for the same 39 week period in the prior year, primarily due to a lower balance for accounts payable.

Capital expenditures for the 39 weeks ended June 30, 2007 were $10.9 million. The Company expects to incur capital expenditures between of approximately $13.5 million in fiscal 2007, primarily for the purpose of opening new stores. It is anticipated that the balance of 2007 capital expenditures will be funded out of cash provided by operations with some possible temporary borrowings from the Company’s revolving credit facility.

The Company had $2.1 million in cash provided by financing activities for the 39 weeks ended June 30, 2007, compared to $7.1 million in cash used in financing activities in the prior year. The increase was due to lower payments against the Company’s revolving credit facility as compared to the prior year.

11

Recently Issued Accounting Pronouncements

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”). FIN 48 is an interpretation of FASB Statement No. 109 “Accounting for Income Taxes” and must be adopted by the Company no later than September 30, 2007. FIN 48 prescribes a comprehensive model for recognizing, measuring, presenting, and disclosing in the financial statements uncertain tax positions that the company has taken or expects to take in its tax returns. The Company has not evaluated the impact of adopting FIN 48.

In September 2006, the SEC released Staff Accounting Bulletin No. 108, “Considering the Effects of Prior Year Misstatements when Quantifying Misstatements in Current Year Financial Statements” (“SAB 108”). SAB 108 provides interpretive guidance on the SEC’s views regarding the process of quantifying materiality of financial statement misstatements. SAB 108 is effective for fiscal years ending after November 15, 2006, with early application for the first interim period ending after November 15, 2006. We do not believe that the application of SAB 108 will have a material effect on our results of operations or financial position.

In May 2005, the FASB issued FASB Statement No. 154, “Accounting Changes and Error Corrections, a replacement of APB Opinion No. 20, Accounting Changes and FASB Statement No. 3, Reporting Accounting Changes in Interim Financial Statements” (“FAS 154”). FAS 154 provides guidance on the accounting for and reporting of accounting changes and error corrections. It establishes, unless impracticable, retrospective application as the required method for reporting a change in accounting principle in the absence of explicit transition requirements specific to the newly adopted accounting principle. FAS 154 also provides guidance for determining whether retrospective application of a change in accounting principle is impracticable and for reporting a change when retrospective application is impracticable. The provisions of FAS 154 are effective for accounting changes and corrections of errors made in fiscal periods beginning after December 15, 2005. The adoption of the provisions of FAS 154 is not expected to have a material impact on the Company’s financial position or results of operations.

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 30, 2006. Amounts borrowed under this Agreement bear interest at either LIBOR plus 1.75%, or at the Company’s choice, the lender’s reference rate. Should the lenders’ base rate change, the Company’s interest expense will increase or decrease accordingly. As of June 30, 2007, 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 March 31, 2007 or in other factors that has materially affected, or 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.

12

Leslie’s Poolmart, Inc.

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

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 30, 2006.

Item 2. Unregistered Sales of Securities and Use of Proceeds

None.

Item 5. Other Information

None.

13

Item 6. Exhibits

Exhibit Number	Description
10.1	Employment Agreement of Michael L. Hatch (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K as filed on June 15, 2007, File No. 000-18741).
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.

14

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 H. Hayward
	Lawrence H. Hayward
	Chief Executive Officer
	Date: August 13, 2007
	/s/ Steven L. Ortega
	Steven L. Ortega
	Chief Financial Officer
	Date: August 13, 2007

15