UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

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

For the Quarterly Period Ended March 29, 2008

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, a non-accelerated filer or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer  ¨    Accelerated filer  ¨     Non-accelerated filer  x    Smaller reporting company  ¨

                        (Do not check if a 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 number of shares of the registrant’s Common Stock outstanding at May 2, 2008 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 March 29, 2008

INDEX

		Page
Part I. Financial Information
Item 1.	Financial Statements
	Consolidated Balance Sheets as of March 29, 2008 (unaudited) and September 29, 2007	3
	Consolidated Statements of Operations for the 13 weeks and 26 weeks ended March 29, 2008 (unaudited) and March 31, 2007 (unaudited)	4
	Consolidated Statements of Cash Flows for the 26 weeks ended March 29, 2008 (unaudited) and March 31, 2007 (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	13
Signatures		13

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)

	March 29, 2008			September 29, 2007
	(unaudited)
ASSETS
Current assets:
Cash and cash equivalents	$	13,363		$	59,781
Accounts and other receivables, net		10,864			8,790
Inventories, net		95,873			65,724
Prepaid expenses and other current assets		3,850			2,562
Deferred tax assets		13,851			6,939
Total current assets		137,801			143,796
Property, plant and equipment, net		37,017			37,933
Intangible assets		8,064			8,096
Deferred financing costs, net		5,114			5,653
Deferred tax assets		3,834			3,834
Other assets		323			327
Total assets	$	192,153		$	199,639
LIABILITIES AND STOCKHOLDERS’ DEFICIT
Current liabilities:
Accounts payable	$	61,469		$	29,471
Accrued expenses		30,709			38,385
Income taxes payable		—			9,283
Total current liabilities		92,178			77,139
Other long term liabilities		6,171			6,031
Senior notes, net		167,127			169,080
Total liabilities		265,476			252,250
Commitments and contingencies
Stockholders’ deficit:
Common stock, $0.001 par value, authorized 100 shares, issued and outstanding 100 shares at March 29, 2008 and at September 29, 2007		—			—
Capital deficit		(91,951	)		(91,984	)
Retained earnings		18,628			39,373
Total stockholders’ deficit		(73,323	)		(52,611	)
Total liabilities and stockholders’ deficit	$	192,153		$	199,639

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						26 Weeks Ended
	March 29, 2008			March 31, 2007			March 29, 2008			March 31, 2007
	(unaudited)			(unaudited)			(unaudited)			(unaudited)
Sales	$	56,656		$	57,393		$	114,962		$	110,088
Cost of merchandise sold and services sold, including warehousing and transportation expenses		25,478			27,587			55,317			54,829
Gross profit		31,178			29,806			59,645			55,259
Selling, general and administrative expenses		38,357			36,940			74,779			70,867
Loss on disposition of fixed assets		—			50			10			85
Operating loss		(7,179	)		(7,184	)		(15,144	)		(15,693	)
Other expenses/(income):
Interest expense		3,638			4,417			7,271			9,278
Interest income		(81	)		(60	)		(783	)		(343	)
Gain on debt extinguishment		(94	)		—			(94	)		—
Total other expense		3,463			4,357			6,394			8,935
Loss before income taxes		(10,642	)		(11,541	)		(21,538	)		(24,628	)
Income tax benefit		(4,269	)		(4,440	)		(8,293	)		(10,270	)
Net loss	$	(6,373	)	$	(7,101	)	$	(13,245	)	$	(14,358	)

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)

	26 Weeks Ended
	March 29, 2008			March 31, 2007
	(unaudited)			(unaudited)
Operating activities:
Net loss	$	(13,245	)	$	(14,358	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		6,755			6,144
Stock compensation		33			—
Preferred stock dividend and accretion		—			1,886
Amortization of loan fees and discounts		618			573
Allowance for doubtful accounts		29			167
Loss on disposition of assets		10			85
Gain on extinguishment of debt		(94	)		—
Deferred income taxes		(6,912	)		(7,264	)
Changes in operating assets and liabilities:
Accounts and other receivables		(2,103	)		(688	)
Inventories		(30,149	)		(31,447	)
Prepaid expenses and other current assets		(1,288	)		(780	)
Other assets		4			(23	)
Accounts payable and accrued expenses		24,462			24,246
Income taxes payable		(9,283	)		(11,040	)
Net cash used in operating activities		(31,163	)		(32,499	)
Investing activities:
Purchase of property, equipment and intangibles		(5,817	)		(5,543	)
Proceeds from dispositions of property		—			10
Net cash used in investing activities		(5,817	)		(5,533	)
Financing activities:
Revolving commitment borrowing		—			18,400
Revolving commitment payments		—			(14,400	)
Excess tax benefit from stock-based compensation		—			2,084
Payment of dividend		(7,500	)		—
Repurchase of long-term debt		(1,938	)		—
Net cash used in/provided by financing activities		(9,438	)		6,084
Net decrease in cash and cash equivalents		(46,418	)		(31,948	)
Cash and cash equivalents at beginning of period		59,781			39,004
Cash and cash equivalents at end of period	$	13,363		$	7,056

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 26-week period ended March 29, 2008 are not necessarily indicative of the results that may be expected for the year ending September 27, 2008.

The condensed consolidated balance sheet at September 29, 2007 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 29, 2007.

(2) Organization and Operation

Leslie’s Poolmart, Inc., which is sometimes referred to as the “Company” or “Leslie’s” herein, 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 593 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 wholly-owned subsidiary of Leslie’s Holdings, Inc (“Holdings”) during February 2007, pursuant to a tax-free reorganization in which the Company’s shareholders became shareholders of Holdings in the same proportions (the “2007 Reorganization”). As a result of the 2007 Reorganization, each share of outstanding common stock of the Company was converted into one share of common stock of Holdings, and each share of outstanding 10% senior redeemable exchangeable cumulative preferred stock of the Company was effectively assumed by Holdings and extinguished, with it being accounted for as contributed capital to the Company.

(3) Stock-based Compensation

As the Company is a nonpublic company under the provisions of SFAS No. 123R “Share-Based Payment”, 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 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.

All outstanding options were exercised in February of 2007 after the 2007 Reorganization, 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.

In November of 2007, the board of directors of Holdings approved grants of options to a number of key individuals of the Company. These options to purchase approximately 373,000 shares of Holdings common stock vest over a five year period at a rate of 20% annually on each anniversary of the date of grant. At March 29, 2008, 373,000 options were outstanding and none of the options were vested or exercisable. No options were cancelled or exercised during the 13-week or 26 week periods ended March 29, 2008.

Share-based compensation expense recognized in accordance with SFAS 123R during the 13 and 26 week periods ended March 29, 2008 was less than $0.1 million. As of March 29, 2008, total unrecognized compensation cost related to stock-based options and awards was $0.4 million and the related weighted-average period over which it is expected to be recognized is approximately 4.8 years.

6

Leslie’s Poolmart, Inc.

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

Notes to Consolidated Financial Statements (unaudited)

(3) Stock-based Compensation (continued)

The weighted average fair value of stock option awards granted was $1.05 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 3.44%; an expected life of the options of 5 years; an expected stock price volatility of 47.6% 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 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. This policy requires us to pay our tax liabilities to Holdings in cash, based upon separate return taxable income.

Our income tax returns are audited by federal and state tax authorities. We are currently under examination by the Internal Revenue Service for the 2005 tax year. There are differing interpretations of tax laws and regulations, and as a result, significant disputes may arise with these tax authorities involving issues of the timing and amount of deductions and allocations of income among various tax jurisdictions. While we believe our positions comply with applicable laws, we periodically evaluate exposures associated with our tax filing positions.

(5) Adoption of FIN 48

In June 2006, the Financial Accounting Standards Board (“FASB”) issued FASB Interpretation No. 48, “Accounting for Uncertainty in Income Taxes” (“FIN 48”), an interpretation of Statement of Financial Accounting Standards (“SFAS”) No. 109, “Accounting for Income Taxes” (“SFAS 109”). FIN 48 clarifies the accounting for uncertainty in income taxes recognized in an enterprise’s financial statements in accordance with SFAS 109 by prescribing a minimum recognition threshold and measurement attribute for the financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. FIN 48 also provides guidance on derecognition, classification, interest and penalties, accounting in interim periods, disclosure and transition. The validity of any tax position is a matter of tax law, and generally there is no controversy about recognizing the benefit of a tax position in a company’s financial statements. The tax law is, however, subject to varied interpretations, and whether a tax position will ultimately be sustained may be uncertain. Effective September 30, 2007, we adopted FIN 48.

As permitted under the provisions of FIN 48 and in accordance with our accounting policy, interest expense and penalties related to income taxes are included in the income tax provision of our consolidated statement of operations. As of the date of adoption, accrued interest relating to unrecognized tax benefits was not significant. As of September 30, 2007, we had unrecognized tax benefits that were not material, most of which would impact the effective tax rate were they to be recognized. It is reasonably possible that the amount of the unrecognized tax benefit with respect to certain of our unrecognized tax positions will increase or decrease during the next 12 months, however, we do not expect any potential change to have a significant effect on our results of operations or our financial position.

As of September 30, 2007, all of the federal income tax returns filed since 2004 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.

7

Leslie’s Poolmart, Inc.

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

Notes to Consolidated Financial Statements (unaudited)

(6) Inventories

Inventories consist of the following:

(Dollar amounts in thousands)	March 29, 2008		September 29, 2007
Raw materials and supplies	$	1,754	$	1,232
Finished goods		94,119		64,492
Total inventories	$	95,873	$	65,724

(7) Subsequent Events

None

(8) Recently Issued Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141 (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 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.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is permitted. The Company must adopt this standard for its 2009 fiscal year. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company must adopt this standard for its 2009 fiscal year. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

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 29, 2007.

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 593 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 March 29, 2008 were $56.7 million compared to $57.4 million for the 13 weeks ended March 31, 2007. The 1.3 % decrease was primarily due to later swimming pool openings given the extended wet and colder winter. During the quarter, the Company opened 20 new stores and closed no stores. Net sales for the 26 weeks ended March 29, 2008 increased 4.4% as compared to the 26 weeks ended March 31, 2007. Comparable store sales for the 13 weeks ended March 29, 2008 decreased 5.9% as compared to the 13 weeks ended March 31, 2007. The comparable store sales decrease was primarily due to unfavorable weather conditions in most of the Company’s markets and delays in the opening of swimming pools.

Comparable store sales for the 26 weeks ended March 29, 2008 increased 0.7% as compared to the 26 weeks ended March 31, 2007. 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 March 29, 2008 was $31.2 million compared to $29.8 million for the 13 weeks ended March 31, 2007. As a percentage of sales, gross profit was 55.0% for the second quarter of fiscal 2008 compared to 51.9% for the second quarter of fiscal 2007. For the 26 weeks ended March 29, 2008, gross profit was $59.6 million compared to $55.3 million for the 26 weeks ended March 31, 2007. As a percentage of sales, gross profit for the 26 weeks was 51.9% for the second quarter of fiscal 2008 compared to 50.2% for the second quarter of fiscal 2007. Gross profit dollars for these periods improved primarily due to an increased level of vendor promotional rebates and lower distribution costs.

Operating and Administrative Expense. Operating and administrative expense for the 13 weeks ended March 29, 2008, was $38.4 million compared to $36.9 million for the 13 weeks ended March 31, 2007. Operating expense dollars increased during the second quarter of 2008 due primarily to increases in occupancy and other related costs associated with the increased store count as compared to the second quarter of 2007. For the 26 weeks ended March 29, 2008, operating expenses were $74.8 million, as compared to $70.9 million in the prior year with the increases primarily related to expenses related to the increased store count.

Operating loss. Operating loss for the 13 weeks ended March 29, 2008 was unchanged, from $7.2 million during the 13 weeks ended March 31, 2007 to $7.2 million for the 13 weeks ended March 29, 2008. The operating loss for the 26 weeks ended March 31, 2007 improved by $0.6 million, from a loss of $15.7 million during the 26 weeks ended March 31, 2007 to an operating loss of $15.1 million for the 26 weeks ended March 29, 2008, due primarily to improved gross margins.

Other Income and Expense. Net interest expense was $3.5 million for the 13 weeks ended March 29, 2008 compared to $4.4 million for the 13 weeks ended March 31, 2007. The decrease in interest expense was due to the decrease in average debt balances in the year to date and the elimination of the dividend on the redeemed preferred stock, which was eliminated in fiscal 2007. For the 26 weeks ended March 29, 2008, the net interest expense was $6.4 million versus $8.9 million in the prior year.

Gain on Debt extinguishment. The gain on debt extinguishment for the 13 weeks ended March 29, 2008 resulted from the redemption discount on $2.0 million aggregate principal amount of outstanding Senior Notes redeemed during the period, net of the write-off of the related deferred loan costs.

Income Taxes. The Company’s income tax benefit for the 13 weeks ended March 29, 2008 was $4.3 million, or an effective rate of 40.1%, as compared to a $4.4 million benefit, or an effective rate of 38.5% for the 13 weeks ended March 31, 2007. For the 26 weeks ended March 29, 2008, the income tax benefit was $8.3 million, or an effective rate of 38.5% versus $10.3 million, or an effective rate of 41.7% in the prior year.

Adjusted EBITDA. The Adjusted EBITDA loss for the 13 weeks ended March 29, 2008 was $3.7 million compared to an Adjusted EBITDA loss of $3.8 million for the 13 weeks ended March 31, 2007. For the 26 weeks ended March 29, 2008, Adjusted EBITDA loss was $8.3 million compared to an Adjusted EBITDA loss of $9.2 million for the 26 weeks ended March 31, 2007, or an improvement of $0.8 million. The improvement in Adjusted EBITDA was primarily due to the expanded gross profit achieved during the period, which more than offset higher occupancy and other expenses related to the additional store count.

10

Leslie’s Poolmart, Inc.

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

Results of Operations (continued)

Adjusted EBITDA is determined as follows (1):

	13 Weeks Ended						26 Weeks Ended
Amounts in thousands	March 29, 2008			March 31, 2007			March 29, 2008			March 31, 2007
Net loss as reported	$	(6,373	)	$	(7,101	)	$	(13,245	)	$	(14,358	)
Depreciation		3,497			3,099			6,755			6,144
Interest expense, net		3,557			4,357			6,488			8,935
Gain on disposition of assets		—			50			10			85
Income tax benefit		(4,269	)		(4,440	)		(8,293	)		(10,270	)
Unusual operating charges (included in sales, general and administrative expense)		20			246			33			305
Gain on debt extinguishment		(94	)		—			(94	)		—
Adjusted EBITDA	$	(3,662	)	$	(3,789	)	$	(8,346	)	$	(9,159	)

(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 26 weeks between September 30, 2007 and March 29, 2008, total current assets decreased by $6.0 million, primarily due to the reduction in cash offset by the increase in inventories. Inventories increased by $30.1 million during the period as the Company accelerated its purchases of certain products for the upcoming peak-selling season to take advantage of available discounting. During the same period, current liabilities increased by $15.0 million due primarily to the increase in accounts payable of $32.0 million during the period, due to the increase in inventory.

Liquidity and Capital Resources.

Net cash used in operating activities was $31.2 million for the 26 weeks ended March 29, 2008 compared to net cash used in operating activities of $32.5 million for the same 26 week period in the prior year.

Capital expenditures for the 26 weeks ended March 29, 2008 were $5.8 million. The Company expects to incur capital expenditures between $17.0 and $18.5 million in fiscal 2008, primarily for the purpose of opening new stores. It is anticipated that the balance of 2008 capital expenditures will be funded out of cash provided by operations with some possible temporary borrowings from its credit facility. Cash used in financing activities for the 26 weeks ended March 29, 2008 was $9.4 million compared to $6.1 million cash provided by 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.

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Leslie’s Poolmart, Inc.

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

Recently Issued Accounting Pronouncements

In December 2007, the Financial Accounting Standards Board (“FASB”) issued SFAS No. 141 (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 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.

In February 2007, the FASB issued SFAS No. 159, “The Fair Value Option for Financial Assets and Liabilities”. SFAS No. 159 permits entities to choose to measure many financial instruments and certain other items at fair value. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. Early adoption is permitted. The Company must adopt this standard for its 2009 fiscal year. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

In September 2006, the FASB issued SFAS No. 157, “Fair Value Measurements.” This Statement defines fair value, establishes a framework for measuring fair value in generally accepted accounting principles, and expands disclosures about fair value measurements. This Statement applies under other accounting pronouncements that require or permit fair value measurements, the FASB having previously concluded in those accounting pronouncements that fair value is the relevant measurement attribute. Accordingly, this Statement does not require any new fair value measurements. This Statement is effective for financial statements issued for fiscal years beginning after November 15, 2007, and interim periods within those fiscal years. The Company must adopt this standard for its 2009 fiscal year. The Company is currently evaluating the impact that adopting this standard will have on its consolidated financial statements.

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 29, 2007. 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 March 29, 2008, 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 29, 2008 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.

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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 29, 2007.

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 H. Hayward
	Lawrence H. Hayward
	Chief Executive Officer
Date: May 12, 2008
	/s/ Steven L. Ortega
	Steven L. Ortega
	Chief Financial Officer
Date: May 12, 2008

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