<PAGE>

================================================================================

                       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 17, 2001

                                       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 001-10811


                               SMART & FINAL INC.
             (Exact name of registrant as specified in its charter)


           Delaware                                   No. 95-4079584
(State or other jurisdiction of              (IRS Employer Identification No.)
 incorporation or organization)


                     600 Citadel Drive
                City of Commerce, California                90040
            (Address of principal executive offices)     (zip code)


Registrant's telephone number, including area code:      (323) 869-7500


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
    -----    -----.

The registrant had 29,386,585 shares of common stock outstanding as of July 25,
2001.

================================================================================
<PAGE>

                               SMART & FINAL INC.
                                     Index

                                     Part I
                             Financial Information

                                                                        Page
Item 1.  Financial Statements
         Unaudited Consolidated Balance Sheets                            2
         Unaudited Consolidated Statements of Income                      3
         Unaudited Consolidated Statements of Cash Flows                  4
         Notes to Unaudited Consolidated Financial Statements             5

Item 2.  Management's Discussion and Analysis of Financial Condition     11
         and Results of Operations

Item 3.  Quantitative and Qualitative Disclosure about Market Risk       17


                                    Part II
                               Other Information


Item 1.  Legal Proceedings                                               19
Item 2.  Changes in Securities and Use of Proceeds                       19
Item 3.  Defaults upon Senior Securities                                 19
Item 4.  Submission of Matters to a Vote of Security Holders             19
Item 5.  Other Information                                               20
Item 6.  Exhibits and Reports on Form 8-K                                20

                                       1
<PAGE>

                              SMART & FINAL INC.
                          CONSOLIDATED BALANCE SHEETS
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                           June 17,               December 31,
ASSETS                                                      2001                     2000
------                                                     -------                ------------
                                                         (Unaudited)
<S>                                                      <C>                        <C>
Current assets:
  Cash & cash equivalents                                  $ 24,991                 $ 23,328
  Trade notes and accounts receivable, less
   allowance for doubtful accounts of $3,478 in
   2001 and $3,182 in 2000                                   72,840                   68,776
  Inventories                                               168,976                  170,276
  Prepaid expenses                                            6,793                    6,426
  Deferred tax asset                                         11,540                   10,890
                                                           --------                  -------
     Total current assets                                   285,140                  279,696
Property, plant and equipment:
  Land                                                       36,669                   36,338
  Buildings and improvements                                 31,029                   29,559
  Leasehold improvements                                    108,206                  104,646
  Fixtures and equipment                                    191,531                  182,678
                                                           --------                  -------
                                                            367,435                  353,221
 Less - Accumulated depreciation and amortization           157,913                  146,904
                                                           --------                  -------
     Net property, plant and equipment                      209,522                  206,317

Assets under capital leases, net of accumulated
 amortization of $8,799 in 2001 and $8,098 in 2000            6,484                    6,877
Goodwill, net of accumulated amortization of $5,857
 in 2001 and $5,203 in 2000                                  52,870                   53,524
Deferred tax asset                                            6,051                    6,051
Other assets                                                 27,239                   29,876
                                                           --------                 --------
     Total assets                                          $587,306                 $582,341
                                                           ========                 ========

LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Current liabilities:
  Current maturities of long-term debt                     $111,345                 $ 91,209
  Accounts payable                                           90,060                  102,858
  Accrued salaries and wages                                 11,892                   15,538
  Other accrued liabilities                                  38,201                   39,688
                                                           --------                 --------
     Total current liabilities                              251,498                  249,293

Long-term liabilities:
  Notes payable, net of current maturities                    5,069                   10,117
  Notes payable to Parent                                    15,965                   15,965
  Obligations under capital leases                            8,763                    9,390
  Other long-term liabilities                                14,557                   12,632
Workers' compensation reserve, postretirement
 and postemployment benefits                                 20,966                   20,079
                                                           --------                 --------
     Total long-term liabilities                             65,320                   68,183

Stockholders' equity:
  Preferred stock, $1 par value (authorized-
  10,000,000 shares; no shares issued)                            -                        -
  Common stock, $0.01 par value
  (authorized-100,000,000 shares; 29,385,085
  shares issued and outstanding in 2001 and
  29,203,114 in 2000)                                           294                      292
  Additional paid-in capital                                206,378                  204,898
  Notes receivable for stock                                   (100)                    (100)
  Accumulated other comprehensive loss                       (2,105)                    (915)
  Retained earnings                                          66,021                   60,690
                                                           --------                 --------
      Total stockholders' equity                            270,488                  264,865
                                                           --------                 --------
        Total liabilities and stockholders' equity         $587,306                 $582,341
                                                           ========                 ========
</TABLE>

 The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       2
<PAGE>

                               SMART & FINAL INC.
                       CONSOLIDATED STATEMENTS OF INCOME
                (dollars in thousands, except per share amounts)

<TABLE>
<CAPTION>
                                                       Twelve  Weeks Ended            Twenty-four Weeks Ended
                                                   ---------------------------      ---------------------------
                                                     June 17,        June 18,        June 17,         June 18,
                                                       2001            2000            2001             2000
                                                   -----------     -----------      -----------     -----------
                                                           (Unaudited)                      (Unaudited)
<S>                                                <C>             <C>              <C>             <C>

 Sales                                             $   463,594     $   442,998      $   887,762     $   842,359
 Cost of sales, buying and occupancy                   397,329         382,842          763,444         727,980
                                                   -----------     -----------      -----------     -----------

 Gross margin                                           66,265          60,156          124,318         114,379
 Operating and administrative expenses                  56,539          52,205          110,350         102,218
                                                   -----------     -----------      -----------     -----------
     Income from operations                              9,726           7,951           13,968          12,161

 Interest expense, net                                   2,845           3,237            5,912           6,482
                                                   -----------     -----------      -----------     -----------

 Income before provision for income taxes                6,881           4,714            8,056           5,679
 Provision for income taxes                              2,696           1,616            3,121           1,989
                                                   -----------     -----------      -----------     -----------
     Income from consolidated subsidiaries               4,185           3,098            4,935           3,690

 Equity earnings in unconsolidated subsidiary              276              94              396             138
                                                   -----------     -----------      -----------     -----------

     Net income                                     $    4,461      $    3,192       $    5,331      $    3,828
                                                    ==========      ==========       ==========      ==========

 Earnings  per common share                         $     0.15      $     0.11       $     0.18      $     0.13
                                                    ==========      ==========       ==========      ==========

 Weighted average common shares                     29,316,731      29,192,368       29,266,744      29,177,777
                                                    ==========      ==========       ==========      ==========

 Earnings per common share, assuming dilution       $     0.15      $     0.11       $     0.18      $     0.13
                                                    ==========      ==========       ==========      ==========
 Weighted average common shares
 and common share equivalents                       29,660,429      29,264,238       29,576,444      29,220,452
                                                    ==========      ==========       ==========      ==========
</TABLE>

 The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       3
<PAGE>

                               SMART & FINAL INC.
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                            Twenty-four Weeks
                                                                                  Ended
                                                                         ------------------------
                                                                          June 17,       June 18,
                                                                           2001            2000
                                                                         ------------------------
                                                                                (Unaudited)
<S>                                                                      <C>             <C>
Cash Flows From Operating Activities:
  Net income                                                             $  5,331        $  3,828
  Adjustments to reconcile net income to net
    cash provided by operating activities:
      Gain on disposal of fixed assets                                       (426)            (61)
      Depreciation and amortization                                        15,663          15,474
      Deferred tax provision (benefit)                                       (650)              -
      Amortization of deferred financing costs                                781             873
      Equity earnings in unconsolidated subsidiary                           (396)           (138)
      Decrease (increase) in:
        Trade notes and accounts receivable                                (3,942)          1,008
        Inventories                                                         1,300           3,621
        Prepaid expenses and other                                            173             411
      Increase (decrease) in:
        Accounts payable                                                   (6,831)         (6,115)
        Accrued liabilities                                                (3,646)          3,159
        Other liabilities                                                     597           5,907
                                                                         --------        --------

      Net cash provided by operating activities                             7,954          27,967
                                                                         --------        --------

Cash Flows From Investing Activities:
  Acquisition of property, plant and equipment                            (21,996)         (9,479)
  Proceeds from disposal of property, plant and equipment                     944              77
  Other                                                                      (217)         (1,286)
                                                                         --------        --------

      Net cash used in investing activities                               (21,269)        (10,688)
                                                                         --------        --------

Cash Flows From Financing Activities:
     Proceeds from issuance of common stock                                   821               -
     Payments on bank line of credit                                       (5,000)        (17,500)
     Borrowings on bank line of credit                                     22,500               -
     Payments on notes payable                                             (3,343)         (3,146)
                                                                         --------        --------

      Net cash provided by (used in) financing activities                  14,978         (20,646)
                                                                         --------        --------

Increase (decrease) in cash and cash equivalents                            1,663          (3,367)

Cash and cash equivalents at beginning of  period                          23,328          42,936
                                                                         --------        --------

Cash and cash equivalents at end of period                               $ 24,991        $ 39,569
                                                                         ========        ========
</TABLE>

 The accompanying notes are an integral part of these consolidated financial
                                  statements.

                                       4
<PAGE>

                              SMART & FINAL INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

1.   Basis of Presentation

     Smart & Final Inc. (the "Company") is a Delaware corporation and is a 56.8
percent owned subsidiary of Casino USA, Inc. (the "Parent").  Casino Guichard-
Perrachon, S.A. ("Casino France"), a publicly traded French joint stock limited
liability company, is the principal shareholder of the Parent.  Collectively,
Casino France and its subsidiaries currently own approximately 59.8 percent of
the Company's common stock.

     The consolidated balance sheet as of June 17, 2001 and the consolidated
statements of income and cash flows for the twelve and twenty-four weeks ended
June 17, 2001 and June 18, 2000 are unaudited.  In the opinion of management,
all adjustments necessary for a fair presentation of these financial statements
in conformity with accounting principles generally accepted in the United States
have been included.  Such adjustments consisted of normal recurring items as
well as the accounting change to adopt Statement of Financial Accounting
Standards ("SFAS") No. 133, "Accounting for Derivative Instruments and Hedging
Activities", as amended by SFAS No. 138, "Accounting for Certain Derivative
Instruments and Certain Hedging Activities".  Interim results are not
necessarily indicative of results for a full year.

     These consolidated financial statements should be read in conjunction with
the consolidated financial statements and notes thereto included in the
Company's Form 10-K for the year ended December 31, 2000.

2.   Fiscal Years

     The Company's fiscal year ends on the Sunday closest to December 31.  Each
fiscal year consists of twelve-week periods in the first, second and fourth
quarters and a sixteen-week period in the third quarter.

3.   Accounting Change

     Effective January 1, 2001, the Company adopted SFAS No. 133, as amended by
SFAS No. 138, which established accounting and reporting standards for
derivative instruments and hedging activities.   All derivative instruments are
required to be measured at fair values and recognized on the balance sheet.
Changes in fair values of derivative instruments designated as fair value hedges
are recognized in current earnings.  The effective portions of changes in fair
values of derivative instruments designated as cash flow hedges are recorded as
other comprehensive income ("OCI") and are reported on the statement of income
when the hedged forecasted transaction affects earnings or the hedged item
becomes ineffective.   The ineffective portions of cash flow hedges are
recognized in current earnings.

                                       5
<PAGE>

                              SMART & FINAL INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

     The Company uses interest rate collar agreements to minimize the negative
impact of interest rate fluctuations on the Company's cash flows. These
agreements are designated as cash flow hedges and are considered fully
effective.  The adoption of SFAS No. 133 on January 1, 2001 resulted in a
cumulative pretax reduction of $480,000 recorded to OCI, representing cumulative
losses since inception on the fair values of these derivative instruments as of
January 1, 2001.

4.   Derivatives

     As of June 17, 2001, the Company had interest rate collar agreements with
various banks to limit the impact of interest rate fluctuations on revolving
debt.  These agreements hedge principal amounts of up to an aggregate of $100
million.  The agreements limit LIBOR fluctuations to interest rate ranges from
4.70% to 8.00% and expire during various periods from October 2002 to September
2004.  For the first two quarters of 2001, a pretax reduction of $1,263,000 was
recorded to OCI as a result of changes in the fair values of these agreements.
The decrease in fair values of these cash flow hedges during the current
reporting period is attributable to the declining market interest rates. For the
twelve-week and twenty-four-week periods ended June 17, 2001, net derivative
losses reclassified into earnings were $47,000. The Company estimates that $1.1
million of net derivative losses included in OCI will be reclassified into
earnings within the next twelve months.

5.   Stockholders' Equity

     In the fourth quarter of 2000, the Company's board of directors approved a
program for the voluntary exchange (the "Exchange Program") of certain
outstanding options having an exercise price of $14.00 or higher per share for
shares of common stock issued as "Restricted Stock" under the terms of the
Company's Long-Term Equity Compensation Plan.  All options surrendered as a
result of an election under the Exchange Program were canceled and returned to
the respective plan under which the canceled options were first granted.  The
Exchange Program expired on March 9, 2001.  A total of 178,510 shares of
Restricted Stock were issued. The related compensation expense to be recognized
over the vesting periods of one year or three years is $1.6 million.

                                       6
<PAGE>

                              SMART & FINAL INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

6.   Comprehensive Income (Loss)

     Comprehensive income (loss) was computed as follows, amounts in thousands:

<TABLE>
<CAPTION>

                                                                                  Twenty-four
                                                          Twelve Weeks Ended       Weeks Ended
                                                          -------------------  -------------------
                                                           June 17,   June 18,  June 17,   June 18,
                                                             2001       2000     2001       2000
                                                           ------     ------   -------     ------
<S>                                                      <C>        <C>       <C>        <C>
Net income                                                 $4,461      3,192     5,331      3,828
Other comprehensive income (loss):
Cumulative effect of accounting change, net of tax              -          -      (305)         -
Net gain (loss) on derivative instruments, net of tax        (203)         -      (788)         -
Foreign currency translation adjustments                       31        146       (97)       219
                                                           ------     ------   -------     ------
Total other comprehensive income (loss)                      (172)       146    (1,190)       219
                                                           ------     ------   -------     ------
Total comprehensive income                                 $4,289     $3,338   $ 4,141     $4,047
                                                           ======     ======   =======     ======
</TABLE>

     See Note 3 regarding cumulative effect of accounting change resulting from
adoption of SFAS 133 and Note 4 for change in OCI during the reporting period
due to changes in fair values of derivative instruments designated as cash flow
hedges.

     In accordance with generally accepted accounting principles, the functional
currency for the Company's Mexico operations has been the Mexican Peso.  As
such, foreign currency translation gains and losses are included in OCI.

7.   Interest Expense

     Interest expense was incurred primarily on borrowings under the Company's
revolving credit facilities and a loan from its Parent.  The Company paid $5.2
million and $4.7 million in interest in the twenty-four weeks ended June 17,
2001 and June 18, 2000, respectively.

8.   Income Taxes

     The Company and the Parent are parties to a tax sharing arrangement
covering income tax obligations in the state of California.  Under this
arrangement, based upon pre-tax income, the Company made tax sharing payments of
$1,246,000 and $235,000 to the Parent in the twenty-four weeks ended June 17,
2001 and June 18, 2000, respectively.  The Company paid $10,000 and $40,000 of
state income taxes for states other than California in the twenty-four weeks
ended June 17, 2001 and June 18, 2000, respectively.  The Company paid
$2,150,000 and $1,185,000 of federal income taxes in the twenty-four weeks ended
June 17, 2001 and June 18, 2000, respectively.

                                       7
<PAGE>

                              SMART & FINAL INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

9.   Earnings per Common Share

     Earnings per common share is based on the weighted average number of common
shares outstanding.  Earnings per common share, assuming dilution includes the
weighted average number of common stock equivalents outstanding related to
employee stock options and other stock agreements.

10.  Segment Reporting

     The Company has two reportable segments: Stores and Foodservice.  The
stores segment provides food and related items in bulk sizes and quantities
through non-membership grocery warehouse stores.  The foodservice distribution
segment provides delivery of food, restaurant equipment and supplies to mainly
restaurant customers and Smart & Final stores.  Corporate Expense is comprised
primarily of the Company's corporate expenses incidental to the activities of
the reportable segments and rental income from Smart & Final stores.  The
Company's reportable segments are strategic business units that offer different
products and services.  They are managed separately because each segment
requires different technology and marketing strategies.

     The Company does not allocate interest, income taxes or nonrecurring gains
and losses to the reportable segments.  These costs are included in Corporate
Expense below.  The Company evaluates performance based on profit or loss from
operations before income taxes not including nonrecurring gains and losses.

     The revenues, profit or loss and other information of each segment are as
follows, amounts in thousands:

     For the twelve weeks ended June 17, 2001:

                                                     Corporate
                              Stores   Foodservice    Expense     Total
                             --------  ------------  ----------  --------
 Revenues from external
  customers                  $365,891      $97,703     $     -   $463,594
 Intercompany real estate
  charge (income)               3,644          119      (3,763)         -
 Interest income                    -            -         142        142
 Interest expense                   -            -       2,987      2,987
 Pre-tax income (loss)         10,325         (597)     (2,847)     6,881


                                       8
<PAGE>

                              SMART & FINAL INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

     For the twelve weeks ended June 18, 2000:
<TABLE>
<CAPTION>

                                                                          Corporate
                                                   Stores   Foodservice    Expense     Total
                                                  --------  ------------  ----------  --------
<S>                                               <C>       <C>           <C>         <C>
 Revenues from external
  customers                                       $348,069     $ 94,929     $     -   $442,998
 Intercompany real estate
  charge (income)                                    3,180            -      (3,180)         -
 Interest income                                         -            -         301        301
 Interest expense                                        -            -       3,538      3,538
 Pre-tax income (loss)                               8,210         (907)     (2,589)     4,714

     For the twenty-four weeks ended June 17, 2001:

                                                                          Corporate
                                                   Stores   Foodservice    Expense     Total
                                                  --------  -----------   ---------   --------
 Revenues from external
  customers                                       $690,464     $197,298     $     -   $887,762
 Intercompany real estate
  charge (income)                                    6,855          119      (6,974)         -
 Interest income                                         -            -         267        267
 Interest expense                                        -            -       6,179      6,179
 Pre-tax income (loss)                              17,263       (2,927)     (6,280)     8,056

     For the twenty-four weeks ended June 18, 2000:

                                                                          Corporate
                                                   Stores   Foodservice    Expense     Total
                                                  --------  -----------   ---------   --------
 Revenues from external
  customers                                       $651,539     $190,820     $     -   $842,359
 Intercompany real estate
  charge (income)                                    6,347            -      (6,347)         -
 Interest income                                         -            -         694        694
 Interest expense                                        -            -       7,176      7,176
 Pre-tax income (loss)                              14,018         (699)     (7,640)     5,679
</TABLE>

     The basis for allocating distribution expense to stores was changed in
2001, reducing Foodservice pre-tax income and increasing Stores pre-tax income
by $300,000 and $600,000 for the twelve weeks and twenty-four weeks ended June
17, 2001, respectively.

                                       9
<PAGE>

                              SMART & FINAL INC.
             NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
                                  (Continued)

11.  Legal Actions

     The Company has been named as a defendant in various legal actions arising
in the normal conduct of its business.  In the opinion of management, after
consultation with counsel, none of these actions are expected to result in
significant liability to the Company.

12.  Recent Accounting Pronouncements

     In July 2001, the Financial Accounting Standards Board issued SFAS No. 141,
"Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible
Assets".  SFAS No. 141 requires that all business combinations be accounted for
under the purchase method.  The statement further requires separate recognition
of intangible assets that meet one of two criteria.  The statement applies to
all business combinations initiated after June 30, 2001.

     SFAS No. 142 requires that an intangible asset that is acquired shall be
initially recognized and measured based on its fair value. The statement also
provides that goodwill should not be amortized, but shall be tested for
impairment annually, or more frequently if circumstances indicate potential
impairment, through a comparison of fair value to its carrying amount.  Existing
goodwill will continue to be amortized through the remainder of fiscal 2001 at
which time amortization will cease and the Company will perform a transitional
goodwill impairment test.  SFAS No. 142 is effective for fiscal periods
beginning after December 15, 2001.  The Company is currently evaluating the
impact of the new accounting standards on existing goodwill and other intangible
assets.  While the ultimate impact of the new accounting standards has yet to be
determined, goodwill amortization expense for the twenty-four weeks ended June
17, 2001 was $0.7 million.

                                       10
<PAGE>

Item 2.    MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
           RESULTS OF OPERATIONS

     Management's discussion and analysis should be read in conjunction with the
accompanying consolidated financial statements and notes thereto and the
Company's Form 10-K for the year ended December 31, 2000.

Summary

     Smart & Final Inc. (the "Company") reported net income of $4.5 million, or
$0.15 per diluted share, for the twelve weeks ended June 17, 2001, compared to
net income of $3.2 million, or $0.11 per diluted share, for the twelve weeks
ended June 18, 2000.  For the twenty-four weeks ended June 17, 2001, the Company
reported net income of $5.3 million, or $0.18 per diluted share, compared to net
income of $3.8 million, or $0.13 per diluted share, in the twenty-four weeks
ended June 18, 2000.

     Operating earnings increased 22.3%, or $1.8 million, from last year's same
quarter to $9.7 million in the twelve weeks ended June 17, 2001.  Stores
reported an increase in its operating earnings and Foodservice reported a
decrease in its operating loss for the quarter as compared to last year's same
quarter.  Operating earnings increased 14.9%, or $1.8 million, to $14.0 million
in the twenty-four weeks ended June 17, 2001.  When compared to the same period
of last year, for the first half of 2001, store operating results increased $3.3
million despite a $2.6 million year-to-year increase in marketing expense and
foodservice operating results declined $2.2 million primarily due to
restructuring costs in the northern California unit.

     Interest expense, net decreased $0.6 million in the first half of 2001
compared to the first half of 2000 as a result of lower average outstanding debt
and rate reductions caused by the Company's improved financial ratios and
declining market rates.

                                       11
<PAGE>

Results of Operations

     The following table shows, for the periods indicated, certain condensed
consolidated income statement data, expressed as a percentage of sales.
Totals may not aggregate due to rounding.
<TABLE>
<CAPTION>

                                               Twelve Weeks Ended     Twenty-four Weeks Ended
                                              --------------------   -------------------------
                                              June 17,   June 18,      June 17,     June 18,
                                                2001       2000          2001         2000
                                               -----      -----         -----        -----
<S>                                           <C>        <C>           <C>           <C>
Sales:
 Store                                          78.9%      78.6%         77.8%        77.3%
 Foodservice distribution sales                 21.1       21.4          22.2         22.7
                                               -----      -----         -----        -----
 Sales, consolidated total                     100.0      100.0         100.0        100.0
Cost of sales, buying and occupancy             85.7       86.4          86.0         86.4
                                               -----      -----         -----        -----
Gross margin                                    14.3       13.6          14.0         13.6
Operating and administrative expenses           12.2       11.8          12.4         12.1
                                               -----      -----         -----        -----
  Income from operations                         2.1        1.8           1.6          1.4
Interest expense, net                            0.6        0.7           0.7          0.8
                                               -----      -----         -----        -----
Income before provision for income taxes         1.5        1.1           0.9          0.7
Provision for income taxes                       0.6        0.4           0.4          0.2
                                               -----      -----         -----        -----
Income from consolidated subsidiaries            0.9        0.7           0.6          0.4
Equity earnings in unconsolidated
 subsidiary                                      0.1          -             -            -
                                               -----      -----         -----        -----
Net income                                       1.0%       0.7%          0.6%         0.5%
                                               =====      =====         =====        =====
</TABLE>

     The following table sets forth pre-tax profit or loss, in millions, for
each of the Company's various reportable segments:
<TABLE>
<CAPTION>

                                           Twelve Weeks Ended     Twenty-four Weeks Ended
                                          --------------------   -------------------------
                                           June 17,   June 18,      June 17,     June 18,
                                             2001       2000          2001         2000
                                            -----      -----         -----        -----
<S>                                      <C>        <C>        <C>           <C>
Stores                                      $10.4      $ 8.2         $17.3        $14.0
Foodservice                                  (0.6)      (0.9)         (2.9)        (0.7)
                                            -----      -----         -----        -----
 Segment totals                               9.8        7.3          14.4         13.3
Interest and other corporate expenses         2.9        2.6           6.3          7.6
                                            -----      -----         -----        -----
Consolidated pre-tax income                 $ 6.9      $ 4.7         $ 8.1        $ 5.7
                                            =====      =====         =====        =====
</TABLE>

     The basis for allocating distribution expense to stores was changed in
2001, reducing Foodservice pre-tax income and increasing Stores pre-tax income
by $0.3 million and $0.6 million for the twelve-week and twenty-four-week
periods ended June 17, 2001, respectively.

     Stores segment improved as a result of strong sales and margin rates.
Foodservice segment reported a loss due to costs related to restructuring
northern California distribution operations; however, despite the restructuring
costs, the loss decreased by $0.3 million in the second quarter from prior
year's same quarter.  The year-to-year improvement in the second quarter at the
Foodservice segment is the result of sales increases and continued effort in
cost reductions.

                                       12
<PAGE>

Background

     During the first half of 2001, the Company opened five new stores and
relocated one store.  Additional new store growth is planned for the remainder
of fiscal 2001.
<TABLE>
<CAPTION>

                                                        Twenty-four
                                Twelve Weeks Ended      Weeks Ended         Year Ended
                                ------------------   ------------------    -------------
                                June 17,  June 18,   June 17,   June 18,    December 31,
                                  2001      2000      2001        2000          2000
                                --------  --------   --------   -------     ------------
<S>                              <C>       <C>       <C>         <C>        <C>
USA:
Beginning store count              218       212       214         212          212
Stores opened:
 New stores                          1         1         5           1            2
 Relocations                         -         -         1           1            1
Stores relocated or closed           -         -        (1)         (1)          (1)
                                  ----      ----      ----        ----          ---
Ending store count                 219       213       219         213          214
                                  ----      ----      ----        ----          ---

MEXICO:
Beginning store count                7         6         7           6            6
New stores opened                    -         -         -           -            1
                                  ----      ----      ----        ----          ---
Ending store count                   7         6         7           6            7
                                  ----      ----      ----        ----          ---

Grand Total                        226       219       226         219          221
                                  ====      ====      ====        ====          ===
</TABLE>
     Mexico operations are not consolidated and are reported on the equity basis
of accounting.

     Management continually assesses each store's profitability on a pre-tax
profit basis after allocation of all corporate expenses.  Stores not meeting
strategic management objectives for profitability, market penetration, and/or
other measures are evaluated for closure or relocation.  Generally, stores
opened in mature markets are expected to achieve profitability within 18 months
of operations.  However, there can be no assurance that the Company will be able
to open new stores in a timely manner; hire, train and integrate employees;
continue locating and obtaining favorable store sites; or adapt distribution,
management information and other operating systems sufficiently to grow in a
successful and profitable manner.

     Each of the Company's fiscal years consists of twelve-week periods in the
first, second and fourth quarters of the fiscal year and a sixteen-week period
in the third quarter.

                                       13
<PAGE>

Comparison of Twelve Weeks Ended June 17, 2001 with Twelve Weeks Ended June 18,
2000.

     Sales.  Second quarter 2001 sales were $463.6 million, up 4.6% from $443.0
million in the second quarter of 2000.

     Store sales increased 5.1%, from $348.1 million in second quarter 2000 to
$365.9 million in second quarter 2001.  Comparable store sales for the second
quarter of 2001 increased 4.0% over the prior year's same quarter.  Average
comparable transaction size also increased, by 1.1%, to $38.64 in the second
quarter of 2001.

     Foodservice distribution sales increased 2.9%, from $94.9 million in the
second quarter of 2000 to $97.7 million in the current year's second quarter.
Florida foodservice sales increased 15.7% while northern California foodservice
sales declined 10.3% in part as a result of the restructuring program now in
progress.

     Gross Margin.  Gross margin improved 10.2%, from $60.2 million in the
second quarter of 2000 to $66.3 million in the current year quarter.  As a
percentage of sales, gross margin improved from 13.6% in the prior year's second
quarter to 14.3% in second quarter 2001.  The primary factors of the increase in
gross margin rates were lower purchase costs due to the continuing effort in
national procurement and corporate brand expansion programs, better store
assortment mix and reduced distribution costs resulting from improved efficiency
at the Commerce distribution center and cost reductions at Florida foodservice.
These improvements were partially offset by a change in sales mix at Florida
foodservice that generated lower margins and by costs incurred at northern
California foodservice related to re-racking the facility and restructuring the
operation.

     Operating and Administrative Expenses.  Operating and administrative
expenses for the second quarter of 2001 were $56.5 million, up $4.3 million, or
8.3%, over the second quarter of 2000.  These expenses, as a percentage of
sales, increased from 11.8% in the second quarter of 2000 to 12.2% in the second
quarter of 2001.  Expenses increased due to restructuring costs incurred in
northern California foodservice operations, increased utility costs and
marketing expense increases.  These increases were partially offset by a $1.0
million retroactive medical insurance and other benefit charge recorded in the
prior year's second quarter.

     Interest expense, net.  Interest expense, net decreased from $3.2 million
recorded in second quarter 2000 to $2.8 million in the second quarter of 2001
due to rate reductions as a result of the Company's improved financial ratios
and declining market rates.

Comparison of Twenty-Four Weeks Ended June 17, 2001 with Twenty-Four Weeks Ended
June 18, 2000.

     Sales.   Sales in the first half of 2001 were $887.8 million, up 5.4% from
the comparable 2000 period.

                                       14
<PAGE>

     Store sales increased 6.0%, from $651.5 million to $690.5 million in the
first half of 2001.  Comparable store sales increased 5.1% in the first half of
2001 over the prior year period.  Average comparable transaction size also
increased 2.1% to $38.33 in the first half of 2001.

     Foodservice distribution sales increased 3.4%, from $190.8 in the first
half of 2000 to $197.3 million in the first half of 2001.  Florida foodservice
sales increased 15.6% but northern California foodservice sales declined 10.1%
in part as a result of the restructuring program now in progress.

     Gross Margin.  Gross margin improved 8.7% from $114.4 million in the first
half of 2000 to $124.3 million in the 2001 twenty-four-week period.  As a
percentage of sales, gross margin increased from 13.6% of sales for the first
half of 2000 to 14.0% in the comparable 2001 period.  The primary factors in the
improvement of gross margin rates were lower purchase costs due to the new
national procurement program and expanded corporate brands, better store
assortment mix and reduced distribution costs due to the improved efficiency at
the new Commerce distribution center and cost reductions at Florida foodservice.
These improvements were partially offset by costs incurred at northern
California foodservice related to the restructuring.

     Operating and Administrative Expenses.   Operating and administrative
expenses for the first half of 2001 were $110.4 million, or 12.4% of sales,
compared with $102.2 million, or 12.1% of sales, in the first half of 2000.  The
expense increase was primarily driven by increased store marketing expense,
increased utility costs and northern California foodservice operation
restructuring costs.  The increase was partially offset by the $2.2 million
consulting fees incurred related to improving procurement programs and $1.0
million of retroactive medical insurance and other benefit charges recorded in
the first half of 2000.  No similar consulting fees or retroactive medical
insurance and other benefit charges were recorded in the first half of 2001.

     Interest Expense, net.  Interest expense, net decreased from $6.5 million,
or 0.8% of sales, in the first half of 2000 to $5.9 million, or 0.7% of sales,
in the comparable 2001 period.  This decrease was primarily a result of lower
interest rates and lower average debt outstanding.

Financial Condition

     Cash and cash equivalents were $25.0 million at June 17, 2001, compared to
$23.3 million at December 31, 2000.  Operating activities provided cash of $8.0
million for the twenty-four weeks ended June 17, 2001.  For the first half of
2001, net proceeds from financing activities were $15.0 million and investments
in fixed asset and other additions were $21.3 million.

     During the twenty-four weeks ended June 17, 2001, inventories decreased by
$1.3 million and the related accounts payable decreased by $6.8 million.  Trade
notes and accounts receivable increased $3.9 million primarily due to the
increased sales at Florida foodservice operation.  Other changes in operating
assets and liabilities generally reflect the timing of receipts and
disbursements.

     Stockholders' equity increased by $5.6 million to $270.5 million at June
17, 2001 as a result of the $5.3 million net income for the first half of 2001
plus $1.5 million of stock options

                                       15
<PAGE>

exercised, issuance of restricted stock and other stock agreements and $1.2
million decrease in accumulated OCI. The decrease in accumulated OCI includes
$0.3 million, net of tax cumulative effect of accounting change as a result of
adoption of SFAS 133, $0.8 million, net of tax reduction in fair values of
interest rate collar agreements for the first half of 2001 and $0.1 million
translation adjustment.

Liquidity and Capital Resources

     Historically, the Company's primary source of liquidity has been cash flows
from operations.  In addition, the Company has availability under bank
facilities.  Net cash provided by operating activities was $8.0 million in the
first half of 2001.  At June 17, 2001, the Company had cash of $25.0 million,
compared to $23.3 million at December 31, 2000.  The Company had $130.6 million
of debt, excluding capital leases, at June 17, 2001, compared to $115.7 million
at December 31, 2000, and stockholders' equity of $270.5 million at June 17,
2001.

     The Company had $219.0 million committed under its Senior Secured Credit
Facilities ("Credit Facilities") at June 17, 2001 and December 31, 2000.  At
June 17, 2001, the Company's borrowings under these facilities totaled $189.1
million, compared with $171.6 million at December 31, 2000.  At June 17, 2001,
the Company had available $29.9 million of unused credit under these facilities.

     As of the end of second quarter 2001, the Company was in compliance with
all financial covenants contained in its loan agreements, as amended.

     The Credit Facilities expire in November of 2001.  The Company is currently
restructuring and extending these facilities.  Given the Company's significantly
improved financial position and excellent relationship with its lending group,
the Company expects a successful restructuring process.

     The Company expects to be able to fund future acquisitions and other cash
requirements by a combination of available cash, cash from operations, lease
financing and other borrowings and proceeds from the issuance of equity
securities. The Company believes that its sources of funds are adequate to
provide for working capital, other capital expenditures, and debt service
requirements for the foreseeable future.

                                       16
<PAGE>

Item 3.     Quantitative and Qualitative Disclosure About Market Risk

     The Company is exposed to market risks relating to fluctuations in interest
rates and the exchange rate between the U.S. Dollar and Mexican Peso.  The
Company's objective of financial risk management is to minimize the negative
impact of interest rate fluctuations on the Company's earnings and cash flows.
The Company's exposure to foreign currency risk is limited.  The Company does
not hold or issue financial instruments for trading purposes, nor engage in
other speculative or leveraged transactions.  See Note 3 and Note 4 to the
consolidated financial statements regarding the adoption of SFAS 133, as
amended.

Interest Rate Risk

     Interest rate risk is managed through the use of four interest rate collar
agreements to hedge principal amounts of up to an aggregate of $100 million.
These agreements limit LIBOR fluctuations to interest rate ranges from 4.7% to
8.0% and expire during various periods from October 2002 to September 2004.
These agreements are entered into with major financial institutions thereby
minimizing risk of credit loss.

Foreign Currency Risk

     The Company's exposure to foreign currency risk is limited to the Company's
operations under Smart & Final Mexico and the equity earnings in its Mexico
joint venture.  The Company's other transactions are conducted in U.S. dollars
and are not exposed to fluctuations in foreign currency.  The Company does not
hedge foreign currency and therefore is not exposed to such hedging risk.

Credit Risk

     The Company is exposed to credit risk on accounts receivable.  The Company
provides credit primarily to foodservice distribution customers in the ordinary
course of business and performs ongoing credit evaluations.  Concentrations of
credit risk with respect to trade receivables are limited due to the number of
customers comprising the Company's customer base.  The Company currently
believes its allowance for doubtful accounts is sufficient to cover customer
credit risks.

Forward-Looking Statements

     From time to time Smart & Final may publish forward-looking statements
about anticipated results. The Private Securities Litigation Reform Act of 1995
provides a safe harbor for forward-looking statements.  In order to comply with
the terms of the safe harbor, the Company notes that such forward-looking
statements are based upon internal estimates which are subject to change because
they reflect preliminary information and management assumptions, and that a
variety of factors could cause the Company's actual results and experience to
differ materially from the anticipated results or other expectations expressed
in the Company's forward-looking statements.  The factors which could cause
actual results or outcomes to differ from such expectation include the extent of
the company's success in (i) changing market

                                       17
<PAGE>

conditions (ii) unforeseen costs and expenses (iii) ability to attract new
customers and retain existing customers (iv) gain or losses from sales along
with the uncertainties of achieving planned sales (v) increases in interest
rates of the Company's cost of borrowing and other factors, including unusually
adverse weather conditions, described from time to time in the company's SEC
filing and reports. This report includes "forward-looking statements" including,
without limitation, statements as to the Company's liquidity and availability of
capital resources.

                                       18
<PAGE>

                           PART II - OTHER INFORMATION


Item 1.  Legal Proceedings

         Not applicable.

Item 2.  Changes in Securities and Use of Proceeds

         Not applicable.

Item 3.  Defaults upon Senior Securities

         Not applicable

Item 4.  Submission of Matters to a Vote of Security Holders

            The annual Meeting of Stockholders of the Company was held on May
         23, 2001. At the meeting, stockholders (1) elected four directors of
         the Company; (2) approved an amendment to the Long-Term Equity
         Compensation Plan increasing by 1,130,000 the number of shares
         authorized for grant thereunder and extending the expiration date of
         that plan until December 31, 2010; and (3) ratified the selection of
         Arthur Andersen LLP, independent public accountants, as auditors for
         the Company for the year ending December 30, 2001.

            The four directors elected at the meeting were Pierre B. Bouchut,
         David J. McLaughlin, Thomas G. Plaskett, and Etienne Snollaerts. The
         directors whose term of office as a director continued after the
         meeting are Christian P. Couvreux, Timm F. Crull, James S. Gold,
         Antoine Guichard, Joel-Andre Ornstein and Ross E. Roeder.

            The votes cast for, against, or withheld, as well as the number of
         abstention and broker non-votes for each nominee for office as a
         director were as follows:

<TABLE>
<CAPTION>
                                             VOTES
                                -----------------------------                Broker
                                   For      Against  Withheld  Abstentions  Non-Votes
                                ----------  -------  --------  -----------  ---------
<S>                             <C>         <C>      <C>       <C>          <C>
         Pierre B. Bouchut      27,009,921     -      994,730       -           -
         David J. McLaughlin    27,009,932     -      994,719       -           -
         Thomas G. Plaskett     27,009,572     -      995,079       -           -
         Etienne Snollaerts     27,009,621     -      995,030       -           -
</TABLE>
            The votes cast for, against, or withheld, as well as the number of
         abstentions and broker non-votes for approving the amendment to the
         Long-Term Equity Compensation Plan were as follows:

<TABLE>
<CAPTION>
                                             VOTES
                                -----------------------------                Broker
                                   For       Against  Withheld  Abstentions  Non-Votes
                                ----------   -------  --------  -----------  ---------
<S>                           <C>            <C>          <C>         <C>
         Amendment to the       24,433,012   1,226,688     -      15,476     2,329,475
         Long-Term Equity
         Compensation Plan
</TABLE>

                                       19
<PAGE>

            The votes cast for, against, or withheld, as well as the number of
         abstentions and broker non-votes for ratification of Arthur Andersen
         LLP, as auditors for the Company for the year ending December 30, 2001
         were as follows:
<TABLE>
<CAPTION>
                                              VOTES
                                    -------------------------------                    Broker
                                       For      Against    Withheld    Abstentions   Non-Votes
                                    ----------  -------    --------    -----------   ---------
<S>                                 <C>         <C>        <C>         <C>           <C>


         Ratification of            27,993,301   7,337         -          4,013           -
         Arthur Andersen LLP
         as auditors for the
         Company for the year
         ending December 30, 2001
</TABLE>

Item 5.  Other Information

         Not applicable.

Item 6.  Exhibits and Reports on Form 8-K

         (a)  Exhibits:

              Exhibit Number  Description of Exhibit
              --------------  ----------------------

              10.53  Amendment dated May 11, 2001 to Employment Agreement
                     between the Company and Ross E. Roeder dated May 11, 1999*
              10.54  Amendment dated May 31, 2001 to Employment Agreement and
                     Consulting Agreement between the Company and Martin A.
                     Lynch dated April 1, 1997*

              *Management contracts and compensatory plans, contracts and
              arrangements of the Company.

               _________

          (b)  Reports on Form 8-K
               The Company filed a Current Report on Form 8-K, dated April 5,
               2001, announcing the retirement of Martin A. Lynch, the Executive
               Vice President and Chief Financial Officer of the Company,
               effective at the end of May 2001 and the appointment of Richard
               N. Phegley as the new Chief Financial Officer.

                                       20
<PAGE>

                                   Signatures

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


                              SMART & FINAL INC.

                              By:



Date:  July 26, 2001                  /s/ RICHARD N. PHEGLEY
                                      ----------------------
                                       Richard N. Phegley
                                       Senior Vice President,
                                Chief Financial Officer, and
                              Principal Accounting Officer of the Company

                                       21