<PAGE>   1
================================================================================


                       SECURITIES AND EXCHANGE COMMISSION

                             Washington, D.C. 20549



                                    FORM 10-Q

                                QUARTERLY REPORT
                          UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934




           For Quarter Ended                      Commission File Number
           October 12, 1997                             33-88894


                           FOOD 4 LESS HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)


               DELAWARE                                 33-0642810
    (State or other jurisdiction of                   (I.R.S Employer
    incorporation or organization)                 Identification Number)


      1100 West Artesia Boulevard
          Compton, California                             90220
(Address of principal executive offices)                (Zip code)


                                 (310) 884-9000
              (Registrant's telephone number, including area code)


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 [ ]

At November 26, 1997, there were 17,207,882 shares of Common Stock outstanding.
There is no public market for the Common Stock.

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


<PAGE>   2
                           FOOD 4 LESS HOLDINGS, INC.

                                      INDEX
<TABLE>
<CAPTION>
                                                                                      Page
                                                                                      ----
<S>                                                                                   <C>
PART I.    FINANCIAL INFORMATION

Item 1     Financial Statements

           Consolidated balance sheets as of
              February 2, 1997 and October 12, 1997................................     2

           Consolidated statements of operations for the 12 weeks ended
              October 6, 1996 and October 12, 1997.................................     4

           Consolidated statements of operations for the 36 weeks ended
              October 6, 1996 and October 12, 1997.................................     5

           Consolidated statements of cash flows for the 36 weeks ended
              October 6, 1996 and October 12, 1997.................................     6

           Consolidated statements of stockholders' deficit as of
              February 2, 1997 and October 12, 1997................................     8

           Notes to consolidated financial statements..............................     9


Item 2.    Management's Discussion and Analysis of Financial Condition
              and Results of Operations............................................    12


PART II.   OTHER INFORMATION

Item 6.    Exhibits and Reports on Form 8-K........................................    17

           Signatures..............................................................    18
</TABLE>


<PAGE>   3
                          PART I. FINANCIAL INFORMATION

ITEM 1.        FINANCIAL STATEMENTS





                                        1

<PAGE>   4
                           FOOD 4 LESS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
                                 (IN THOUSANDS)


<TABLE>
<CAPTION>
                                                                February 2,   October 12,
                                ASSETS                             1997           1997
                                                                ----------     ----------
                                                                              (unaudited)
<S>                                                             <C>            <C>       
CURRENT ASSETS:
    Cash and cash equivalents                                   $   67,589     $   63,524
    Trade receivables, less allowances of $4,057 and
        $3,630 at February 2, 1997 and October 12, 1997,
        respectively                                                46,560         42,078
    Notes and other receivables                                        531            520
    Inventories                                                    502,095        492,894
    Patronage receivables from suppliers                             4,433          3,532
    Prepaid expenses and other                                      21,925         23,713
                                                                ----------     ----------
        Total current assets                                       643,133        626,261

INVESTMENTS IN AND NOTES RECEIVABLE FROM
SUPPLIER COOPERATIVES:
    Associated Wholesale Grocers                                     7,020          6,797
    Certified Grocers of California and others                       4,945          4,945

PROPERTY AND EQUIPMENT:
    Land                                                           173,803        173,878
    Buildings                                                      188,311        193,947
    Leasehold improvements                                         226,159        257,383
    Fixtures and equipment                                         401,716        448,970
    Construction in progress                                        51,117         37,686
    Leased property under capital leases                           200,199        225,322
    Leasehold interests                                            112,398        110,673
                                                                ----------     ----------
                                                                 1,353,703      1,447,859
    Less:  Accumulated depreciation and amortization               301,477        367,171
                                                                ----------     ----------

        Net property and equipment                               1,052,226      1,080,688

OTHER ASSETS:
    Deferred financing costs, less accumulated amortization
        of $17,615 and $8,605 at February 2, 1997 and
        October 12, 1997,  respectively                             88,889         50,764
    Goodwill, less accumulated amortization of $99,057
        and $123,453 at February 2, 1997 and
        October 12, 1997, respectively                           1,310,956      1,286,560
    Other, net                                                      24,824         20,753
                                                                ----------     ----------

                                                                $3,131,993     $3,076,768
                                                                ==========     ==========
</TABLE>


                 The accompanying notes are an integral part of
                       these consolidated balance sheets.


                                        2

<PAGE>   5
                           FOOD 4 LESS HOLDINGS, INC.
                           CONSOLIDATED BALANCE SHEETS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)

<TABLE>
<CAPTION>
                                                                               February 2,     October 12,
    LIABILITIES AND STOCKHOLDERS' DEFICIT                                         1997             1997
                                                                              -----------      -----------
                                                                                               (unaudited)
<S>                                                                           <C>              <C>        
CURRENT LIABILITIES:
    Accounts payable                                                          $   343,704      $   302,081
    Accrued payroll and related liabilities                                       106,764          110,476
    Accrued interest                                                               31,011           58,247
    Other accrued liabilities                                                     261,582          216,889
    Income taxes payable                                                            1,956            1,929
    Current portion of self-insurance liabilities                                  48,251           48,251
    Current portion of long-term debt                                               4,465            6,409
    Current portion of obligations under capital leases                            28,041           32,047
                                                                              -----------      -----------
        Total current liabilities                                                 825,774          776,329

SENIOR DEBT, net of current portion                                             1,263,142        1,314,024

OBLIGATIONS UNDER CAPITAL LEASES                                                  126,336          133,177

SENIOR SUBORDINATED DEBT                                                          671,222          689,379

HOLDINGS DEBENTURES                                                               283,706          311,508

DEFERRED INCOME TAXES                                                              21,074           20,874

SELF-INSURANCE LIABILITIES                                                         91,332           87,758

LEASE VALUATION RESERVE                                                            62,389           56,314

OTHER NON-CURRENT LIABILITIES                                                     106,286          108,416

COMMITMENTS AND CONTINGENCIES

STOCKHOLDERS' DEFICIT:
    Convertible Series A Preferred Stock, $.01 par value, 25,000,000
        shares authorized; 16,683,244 shares issued at February 2,
        1997 and October 12, 1997 (aggregate liquidation value of
        $186.9 million and $196.1 million at February 2, 1997
        and October 12, 1997, respectively)                                       161,831          161,831
    Convertible Series B Preferred Stock, $.01 par value,
        25,000,000 shares authorized; 3,100,000 shares issued
        at February 2, 1997 and October 12, 1997 (aggregate liquidation
        value of $34.7 million and $36.4 million at February 2, 1997
        and October 12, 1997, respectively)                                        31,000           31,000
    Common Stock, $.01 par value, 60,000,000 shares authorized;
        17,207,882 shares issued at February 2, 1997 and October 12, 1997             172              172
    Non-Voting Common Stock, $.01 par value, 25,000,000 shares
        authorized; no shares issued at February 2, 1997 or
        October 12, 1997                                                               --               --
    Additional capital                                                             56,091           54,643
    Notes receivable from stockholders                                               (592)            (584)
    Retained deficit                                                             (564,223)        (666,124)
                                                                              -----------      -----------
                                                                                 (315,721)        (419,062)
    Treasury stock: 421,237 shares of common stock at
        February 2, 1997 and 231,297 shares of common
        stock at October 12, 1997                                                  (3,547)          (1,949)
                                                                              -----------      -----------
    Total stockholders' deficit                                                  (319,268)        (421,011)
                                                                              -----------      -----------

                                                                              $ 3,131,993      $ 3,076,768
                                                                              ===========      ===========
</TABLE>


                 The accompanying notes are an integral part of
                       these consolidated balance sheets.


                                        3

<PAGE>   6
                           FOOD 4 LESS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                         12 Weeks           12 Weeks
                                                           Ended              Ended
                                                         October 6,        October 12,
                                                            1996              1997
                                                        ------------      ------------
<S>                                                     <C>               <C>         
SALES                                                   $  1,221,018      $  1,230,522

COST OF SALES (including purchases from related
    parties of $19,829 and $16,543 for the 12 weeks
    ended October 6, 1996 and the 12 weeks ended
    October 12, 1997, respectively)                          957,086           976,662
                                                        ------------      ------------

GROSS PROFIT                                                 263,932           253,860

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                 211,064           200,867

AMORTIZATION OF GOODWILL                                       8,218             8,132
                                                        ------------      ------------

OPERATING INCOME                                              44,650            44,861

INTEREST EXPENSE:
    Interest expense, excluding amortization
       of deferred financing costs                            62,123            62,253
    Amortization of deferred financing costs                   2,794               916
                                                        ------------      ------------
                                                              64,917            63,169

LOSS BEFORE PROVISION FOR INCOME TAXES
    AND EXTRAORDINARY CHARGES                                (20,267)          (18,308)

PROVISION FOR INCOME TAXES                                        --                --
                                                        ------------      ------------

LOSS BEFORE EXTRAORDINARY CHARGES                            (20,267)          (18,308)

EXTRAORDINARY CHARGES                                             --                --
                                                        ------------      ------------

NET LOSS                                                $    (20,267)     $    (18,308)
                                                        ============      ============

LOSS  PER COMMON SHARE:
   Loss before extraordinary charges                    $      (0.55)     $      (0.50)
   Extraordinary charges                                          --                --
                                                        ------------      ------------
   Net loss                                             $      (0.55)     $      (0.50)
                                                        ============      ============

    Average Number of Common Shares and
    Equivalents Outstanding                               36,569,889        36,759,829
                                                        ============      ============
</TABLE>


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


                                        4

<PAGE>   7
                           FOOD 4 LESS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                           36 Weeks          36 Weeks
                                                            Ended              Ended
                                                          October 6,        October 12,
                                                            1996               1997
                                                        ------------      ------------
<S>                                                     <C>               <C>         
SALES                                                   $  3,695,594      $  3,778,470

COST OF SALES (including purchases from related
    parties of $67,694 and $48,958 for the 36 weeks
    ended October 6, 1996 and the 36 weeks ended
    October 12, 1997, respectively)                        2,941,360         3,000,531
                                                        ------------      ------------

GROSS PROFIT                                                 754,234           777,939

SELLING, GENERAL AND ADMINISTRATIVE EXPENSES                 626,809           615,933

AMORTIZATION OF GOODWILL                                      24,403            24,396
                                                        ------------      ------------

OPERATING INCOME                                             103,022           137,610

INTEREST EXPENSE:
    Interest expense, excluding amortization
       of deferred financing costs                           184,838           187,122
    Amortization of deferred financing costs                   7,862             4,406
                                                        ------------      ------------
                                                             192,700           191,528

LOSS BEFORE PROVISION FOR INCOME TAXES
    AND EXTRAORDINARY CHARGES                                (89,678)          (53,918)

PROVISION FOR INCOME TAXES                                        --                --
                                                        ------------      ------------

LOSS BEFORE EXTRAORDINARY CHARGES                            (89,678)          (53,918)

EXTRAORDINARY CHARGES                                             --            47,983
                                                        ------------      ------------

NET LOSS                                                $    (89,678)     $   (101,901)
                                                        ============      ============

LOSS  PER COMMON SHARE:
   Loss before extraordinary charges                    $      (2.45)     $      (1.47)
   Extraordinary charges                                          --             (1.31)
                                                        ------------      ------------
   Net loss                                             $      (2.45)     $      (2.78)
                                                        ============      ============

    Average Number of Common Shares and
    Equivalents Outstanding                               36,569,889        36,682,949
                                                        ============      ============
</TABLE>


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


                                        5

<PAGE>   8
                           FOOD 4 LESS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                            36 Weeks          36 Weeks
                                                              Ended             Ended
                                                            October 6,       October 12,
                                                               1996             1997
                                                           -----------      -----------
<S>                                                        <C>              <C>        
CASH PROVIDED BY OPERATING ACTIVITIES:
    Cash received from customers                           $ 3,695,594      $ 3,778,470
    Cash paid to suppliers and employees                    (3,443,282)      (3,592,757)
    Interest paid                                             (128,831)        (132,452)
    Income taxes paid                                               --              (27)
    Interest received                                            1,610              322
    Other, net                                                    (276)          (8,861)
                                                           -----------      -----------

NET CASH PROVIDED BY OPERATING ACTIVITIES                      124,815           44,695

CASH USED BY INVESTING ACTIVITIES:
    Proceeds from sale of property and equipment                23,680           25,736
    Payment for purchase of property and equipment             (74,328)        (111,154)
    Payment of acquisition costs, net of cash acquired          (5,573)          (6,823)
    Other, net                                                  (2,530)          (1,959)
                                                           -----------      -----------

NET CASH USED BY INVESTING ACTIVITIES                          (58,751)         (94,200)

CASH PROVIDED (USED) BY FINANCING ACTIVITIES:
    Proceeds from the issuance of long-term debt                94,625          721,961
    Payments of long-term debt                                 (58,284)        (688,432)
    Payments of capital lease obligations                      (18,730)         (20,344)
    Increase (decrease)  in revolving loan, net                (79,400)          37,500
    Sale of treasury stock                                          --              150
    Deferred financing costs and other                          (5,236)          (5,395)
                                                           -----------      -----------

NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES               (67,025)          45,440
                                                           -----------      -----------

NET DECREASE  IN CASH AND CASH EQUIVALENTS                        (961)          (4,065)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD                67,983           67,589
                                                           -----------      -----------

CASH AND CASH EQUIVALENTS AT END OF PERIOD                 $    67,022      $    63,524
                                                           ===========      ===========
</TABLE>


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


                                        6

<PAGE>   9
                           FOOD 4 LESS HOLDINGS, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
                                   (UNAUDITED)


<TABLE>
<CAPTION>
                                                                36 Weeks        36 Weeks
                                                                  Ended          Ended
                                                                October 6,     October 12,
                                                                   1996           1997
                                                                ---------      ---------
<S>                                                             <C>            <C>       
RECONCILIATION OF NET LOSS TO NET CASH
    PROVIDED BY OPERATING ACTIVITIES:
        Net loss                                                $ (89,678)     $(101,901)
        Adjustments to reconcile net loss to net cash
           provided (used) by operating activities:
           Depreciation and amortization                          119,487        121,047
           Non-cash extraordinary charges                              --         39,122
           Non-cash interest expense                               24,293         27,802
           Amortization of debt discount                              103            322
           Amortization of debt premium                                --           (368)
           Loss (gain) on sale of assets                              276            (10)
           Change in assets and liabilities, net of effects
           from acquisition of business:
           Accounts and notes receivable                            1,858          5,394
           Inventories                                             19,864          9,201
           Prepaid expenses and other                                (906)        (9,482)
           Accounts payable and accrued liabilities                44,285        (42,630)
           Self-insurance liabilities                               5,233         (3,575)
           Deferred income taxes                                       --           (200)
           Income taxes payable                                        --            (27)
                                                                ---------      ---------
           Total adjustments                                      214,493        146,794
                                                                ---------      ---------

NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES                $ 124,815      $  44,695
                                                                =========      =========


SUPPLEMENTAL SCHEDULE OF NON-CASH
   FINANCING ACTIVITIES:
    Fixed assets acquired through the issuance of
        capital leases                                          $  23,912      $  36,084
                                                                =========      =========

    Retirement of capital leases                                $      --      $   4,893
                                                                =========      =========
</TABLE>


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


                                        7

<PAGE>   10
                           FOOD 4 LESS HOLDINGS, INC.
                CONSOLIDATED STATEMENTS OF STOCKHOLDERS' DEFICIT
                      (IN THOUSANDS, EXCEPT SHARE AMOUNTS)



<TABLE>
<CAPTION>
                                     Preferred Stock            Preferred Stock
                                         Series A                   Series B                 Common Stock            
                                ------------------------     ----------------------     ------------------------     
                                  Number                      Number                      Number                     
                                    of                          of                         of                        
                                  Shares         Amount       Shares        Amount        Shares        Amount       
                                  ------         ------       ------        ------        ------        ------       
<S>                             <C>           <C>            <C>          <C>           <C>           <C>            
BALANCES AT FEBRUARY 2, 1997    16,683,244    $  161,831     3,100,000    $   31,000    17,207,882    $      172     

   Payments on
     Stockholder's Notes                --            --            --            --            --            --     

   Sale of Treasury Stock               --            --            --            --            --            --     

   Net loss (unaudited)                 --            --            --            --            --            --     
                                ----------    ----------     ---------    ----------   -----------    ----------

BALANCES AT OCTOBER 12, 1997
     (UNAUDITED)                16,683,244    $  161,831     3,100,000    $   31,000    17,207,882    $      172     
                                ==========    ==========     =========    ==========   ===========    ==========
</TABLE>


<TABLE>
<CAPTION>
                              
                                       Treasury Stock
                                   -----------------------
                                   Number                       Stock-                                       Total
                                     of                         holders'      Additional     Retained     Stockholders'
                                   Shares         Amount         Notes          Capital       Deficit        Deficit
                                   ------         ------         -----          -------       -------        -------
<S>                               <C>          <C>            <C>            <C>            <C>            <C>        
BALANCES AT FEBRUARY 2, 1997      (421,237)    $   (3,547)    $     (592)    $   56,091     $ (564,223)    $ (319,268)

   Payments on
     Stockholder's Notes                --             --              8             --             --              8

   Sale of Treasury Stock          189,940          1,598             --         (1,448)            --            150

   Net loss (unaudited)                 --             --             --             --       (101,901)      (101,901)
                                  --------     ----------     ----------     ----------     ----------     ----------

BALANCES AT OCTOBER 12, 1997
     (UNAUDITED)                  (231,297)    $   (1,949)    $     (584)    $   54,643     $ (666,124)    $ (421,011)
                                  =========    ==========     ==========     ==========     ==========     ==========
</TABLE>


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


                                        8

<PAGE>   11
                           FOOD 4 LESS HOLDINGS, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                OCTOBER 12, 1997
                                   (UNAUDITED)


1.      ORGANIZATION AND ACQUISITION

               Food 4 Less Holdings, Inc. ("Holdings" or, together with its
        subsidiaries, the "Company"), a Delaware corporation, owns all of the
        outstanding capital stock of Ralphs Grocery Company, a Delaware
        corporation ("Ralphs"). Ralphs is a retail supermarket company with a
        total of 406 stores which are located in Southern California (342),
        Northern California (27) and certain areas of the Midwest (37). The
        Company is the largest supermarket operator in Southern California. The
        Company operates the second largest conventional supermarket chain in
        the region under the "Ralphs" name and the largest warehouse supermarket
        chain in the region under the "Food 4 Less" name.

2.      SIGNIFICANT ACCOUNTING POLICIES

        Basis of Presentation

               The accompanying consolidated balance sheet and statement of
        stockholder's deficit of the Company as of October 12, 1997 and the
        consolidated statements of operations and cash flows for the interim
        periods ended October 6, 1996 and October 12, 1997 are unaudited, but
        include all adjustments (consisting of only normal recurring accruals)
        which the Company considers necessary for a fair presentation of its
        consolidated financial position, results of operations and cash flows
        for these periods. These interim financial statements do not include all
        disclosures required by generally accepted accounting principles and,
        therefore, should be read in conjunction with the audited financial
        statements and notes thereto included in the Company's Annual Report on
        Form 10-K for the fiscal year ended February 2, 1997. The results of
        operations for the interim periods are not necessarily indicative of the
        results for a full fiscal year.

        Inventories

               Inventories, which consist primarily of grocery products, are
        stated at the lower of cost or market. Cost has been principally
        determined using the last-in, first-out ("LIFO") method. If inventories
        had been valued using the first-in, first-out ("FIFO") method,
        inventories would have been higher by $24.3 million and $26.6 million at
        February 2, 1997 and October 12, 1997, respectively, and gross profit
        and operating income would have been greater by $3.7 million and $2.2
        million for the 36 weeks ended October 6, 1996 and October 12, 1997,
        respectively.

        Income Taxes

               The Company provides for income taxes in interim periods based on
        the estimated effective income tax rate for the complete fiscal year.
        Deferred taxes result from the future tax consequences associated with
        temporary differences between the amount of assets and liabilities
        recorded for tax and financial accounting purposes. A valuation
        allowance for deferred tax assets is recorded to the extent the Company
        cannot determine, in accordance with the provisions of Statement of
        Financial Accounting Standards No. 109, "Accounting for Income Taxes,"
        that the ultimate realization of net deferred tax assets is more likely
        than not.

               For the period ended October 12, 1997, the estimated effective
        income tax rate is less than the U.S. statutory rate primarily due to a
        100% valuation allowance provided against the additional deferred tax
        assets that arose from the current operating loss.


                                        9

<PAGE>   12
        Loss Per Common Share

               Loss per common share is computed based on the weighted average
        number of shares outstanding during the applicable period. Fully diluted
        loss per share has been omitted as it is anti-dilutive for all periods
        presented.

        Reclassifications

               Certain prior period amounts in the consolidated financial
        statements have been reclassified to conform to the October 12, 1997
        presentation.

        New Accounting Standards

               In February 1997, Statement of Financial Accounting Standards No.
         128, "Earnings per Share," ("SFAS No. 128") was issued. SFAS No. 128 is
         effective for earnings per share calculations for periods ending after
         December 15, 1997. The new method of calculating earnings per share
         will have no effect on the Company's historical earnings per share.

               In June 1997, Statement of Financial Accounting Standards No.
         130, "Reporting Comprehensive Income," ("SFAS No. 130") was issued.
         Adoption of this statement will not have a material effect on
         historical results of operations.

3.      RESTRUCTURING CHARGE

               During the 36 weeks ended October 12, 1997, the Company utilized
        $2.8 million and $2.9 million of the remaining restructuring reserve
        related to the fiscal 1995 $75.2 and $47.9 million restructuring
        charges, respectively. The amounts utilized primarily include
        write-downs of property and equipment ($1.6 million) and payments for
        lease obligations ($3.6 million). At October 12, 1997 approximately
        $19.6 million of the restructuring accrual related to the $75.2 million
        charge and $14.1 million of the restructuring accrual related to the
        $47.9 million charge remained accrued on the Company's balance sheet
        consisting primarily of provisions for lease obligations. As of February
        2, 1997 the Company has completed a majority of the restructuring
        actions, although certain lease obligations will continue through 2010.

4.      DEBT

               During the first quarter of fiscal 1997, Ralphs issued $155
        million principal amount of 11% Senior Subordinated Notes due 2005 (the
        "1997 11% Senior Subordinated Notes"), with terms substantially
        identical to Ralphs' existing 11% Senior Subordinated Notes, at a price
        of 105.5% of their principal amount, resulting in gross proceeds of
        $163.5 million. The proceeds were used to redeem all of Ralphs' $145
        million principal amount of 13.75% Senior Subordinated Notes at a price
        of 106.1% of their principal amount and to pay the related accrued
        interest through the redemption date, which was April 28, 1997. The
        remaining proceeds were used to pay fees and expenses associated with
        the issuance of the 1997 11% Senior Subordinated Notes.

               During the first quarter of fiscal 1997, the Company also amended
        and restated its existing credit facility ("Old Credit Facility") to
        lower interest margins and allow more flexibility with respect to
        application of proceeds from certain assets sales and capital
        expenditures. The amended and restated credit facility (the "New Credit
        Facility") consists of a $200.0 million Term Loan A Facility and a
        $350.0 million Term Loan B Facility (together, the "Term Loans") and a
        $325.0 million Revolving Credit Facility ("Revolving Facility") under
        which working capital loans may be made and commercial or standby
        letters of credit in the maximum of $150.0 million may be issued.

               Borrowings under the New Credit Facility bear interest at the
        bank's Base Rate (as defined) plus a margin ranging from 0.25 percent to
        1.75 percent or the Eurodollar Rate (as


                                       10

<PAGE>   13
        defined) plus a margin ranging from 1.25 percent to 2.75 percent. At
        October 12, 1997, $548.3 million was outstanding under the Term Loans,
        $136.9 was outstanding under the Revolving Facility, and $75.5 million
        of standby Letters of Credit had been issued on behalf of the Company.
        At October 12, 1997, the weighted average interest rates on the Term
        Loans and on the Revolving Facility were 7.82 percent and 7.83 percent,
        respectively. Quarterly principal installments on the Term Loans
        continue to 2004, with principal amounts due as follows: $2.6 million in
        fiscal 1997, $3.5 million in fiscal 1998, $25.5 million in fiscal 1999,
        $62.6 million in fiscal 2000, $87.5 million in fiscal 2001 and $368.3
        million thereafter.

               As a result of the refinancings described above, the Company
        recorded extraordinary charges in the first quarter of fiscal 1997 of
        approximately $48.0 million, consisting of the call premium on the
        13.75% Senior Subordinated Notes and the write-off of deferred financing
        costs associated with the Old Credit Facility and the 13.75% Senior
        Subordinated Notes.

5.      RELATED PARTY TRANSACTIONS

               During the 12 weeks ended October 12, 1997 and October 6, 1996,
        the Company purchased $16.5 million and $19.8 million, respectively, in
        inventory from Certified Grocers. During the 36 weeks ended October 12,
        1997 and October 6, 1996, the Company purchased $49.0 million and $67.7
        million, respectively, in inventory from Certified Grocers.

6.      SUBSEQUENT EVENT

               On November 6, 1997, the Company, Fred Meyer, Inc., a Delaware
        corporation ("Fred Meyer"), and FFL Acquisition Corp., a Delaware
        corporation and wholly owned subsidiary of Fred Meyer ("Acquisition"),
        entered into an Agreement and Plan of Merger (the "Merger Agreement").
        Pursuant to the terms of the Merger Agreement, Acquisition would merge
        with and into the Company (the "Merger"), subject to certain conditions
        being satisfied or waived. Pursuant to the Merger Agreement, the
        stockholders of the Company would receive an aggregate of the greater of
        (i) 22.5 million shares of Fred Meyer Common Stock or (ii) the lesser of
        (A) the number of shares of Fred Meyer Common Stock equal to $600
        million divided by the average closing price of the Fred Meyer Common
        Stock on the New York Stock Exchange for 15 out of the 35 trading days
        ending on the second trading day preceding the effective date of the
        Merger or (B) 24 million shares of Fred Meyer Common Stock; provided,
        however, that such aggregate number of shares of Fred Meyer Common Stock
        will be reduced (i) to the extent necessary to terminate or otherwise
        satisfy the Company's obligations under existing stock options and
        warrants and (ii) upon the occurrence of certain other events, in each
        case, as specified in the Merger Agreement. In addition, Fred Meyer
        would assume or refinance the debt of the Company. Conditions to the
        consummation of the Merger include the receipt of regulatory approvals
        and approval by the stockholders of Fred Meyer and the Company. Certain
        shareholders of the Company holding approximately 64.3% of the aggregate
        voting power of the Company have entered into agreements to vote their
        Company shares in favor of the Merger.


                                       11

<PAGE>   14
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

RECENT EVENTS

        On November 6, 1997, Food 4 Less Holdings, Inc., (the "Company"), Fred
Meyer, Inc., ("Fred Meyer"), and FFL Acquisition Corp., a wholly owned
subsidiary of Fred Meyer ("Acquisition"), entered into an Agreement and Plan of
Merger (the "Merger Agreement"). Pursuant to the terms of the Merger Agreement,
Acquisition would merge with and into the Company (the "Merger"), subject to
certain conditions being satisfied or waived. Pursuant to the Merger Agreement,
the stockholders of the Company would receive an aggregate of the greater of (i)
22.5 million shares of Fred Meyer Common Stock or (ii) the lesser of (A) the
number of shares of Fred Meyer Common Stock equal to $600 million divided by the
average closing price of the Fred Meyer Common Stock on the New York Stock
Exchange for 15 out of the 35 trading days ending on the second trading day
preceding the effective date of the Merger or (B) 24 million shares of Fred
Meyer Common Stock; provided, however, that such aggregate number of shares of
Fred Meyer Common Stock will be reduced (i) to the extent necessary to terminate
or otherwise satisfy the Company's obligations under existing stock options and
warrants and (ii) upon the occurrence of certain other events, in each case, as
specified in the Merger Agreement. In addition, Fred Meyer will assume or
refinance the debt of the Company. Conditions to the consummation of the Merger
include the receipt of regulatory approvals and approval by the stockholders of
Fred Meyer and the Company. Certain shareholders of the Company holding
approximately 64.3% of the aggregate voting power of the Company have entered
into agreements to vote their Company shares in favor of the Merger.
Concurrently with the execution of the Merger Agreement, Fred Meyer executed an
agreement and plan of merger with Quality Food Centers, Inc. ("QFC") pursuant to
which QFC will become a wholly-owned subsidiary of Fred Meyer. QFC operates
retail supermarkets in the State of Washington and in Southern California. The
Merger is an independent transaction and is not conditioned on the consummation
of Fred Meyer's merger with QFC.


RESULTS OF OPERATIONS (UNAUDITED)

        The following table sets forth the selected unaudited operating results
of the Company for the 12 and 36 weeks ended October 6, 1996 and October 12,
1997, respectively:

<TABLE>
<CAPTION>
                                           12 Weeks Ended                                 36 Weeks Ended
                            ---------------------------------------------   ---------------------------------------------
                                October 6, 1996         October 12, 1997       October 6, 1996        October 12, 1997
                            ---------------------   ---------------------   --------------------    ---------------------
                                                                 (dollars in millions)
                                                                       (unaudited)
<S>                         <C>            <C>      <C>            <C>      <C>            <C>      <C>            <C>   
Sales                       $  1,221.0     100.0%   $  1,230.5     100.0%   $  3,695.6     100.0%   $  3,778.5     100.0%
Gross profit                     263.9      21.6         253.9      20.6         754.2      20.4         777.9      20.6
Selling, general
   and administrative
   expenses                      211.1      17.3         200.9      16.3         626.8      17.0         615.9      16.3
Amortization of goodwill           8.2       0.7           8.1       0.7          24.4       0.7          24.4       0.6
Operating income                  44.7       3.7          44.9       3.6         103.0       2.8         137.6       3.6
Interest expense                  64.9       5.3          63.2       5.1         192.7       5.2         191.5       5.1
Provision for
   income taxes                   --        --            --        --            --        --            --        --
Loss before
   extraordinary charges         (20.3)     (1.7)        (18.3)     (1.5)        (89.7)     (2.4)        (53.9)     (1.4)
Extraordinary
   charges                        --        --            --        --            --        --            48.0       1.3
Net loss                    $    (20.3)     (1.7)%  $    (18.3)     (1.5)%  $    (89.7)     (2.4)%  $   (101.9)     (2.7)%
</TABLE>

        Sales. Sales for the 12 weeks ended October 12, 1997 increased $9.5
million to $1,230.5 million from $1,221.0 million for the 12 weeks ended October
6, 1996 and increased $82.9 million to $3,778.5 million in the 36 weeks ended
October 12, 1997 from $3,695.6 million in the 36 weeks ended October 6, 1996.
The increases in sales were primarily attributable to 0.4 percent and 2.2
percent increases in comparable store sales for the 12 and 36 week periods ended
October 12, 1997, respectively, and the continued success of new store openings,
partially offset by store


                                       12

<PAGE>   15
closings and the recent deflationary environment. Since the beginning of fiscal
1996, 32 stores have been opened and 35 stores have been closed and a total of
58 stores have been remodeled. The third quarter of fiscal 1997 represents the
sixth consecutive quarter that the Company has achieved positive comparable
store sales. The increases in comparable store sales reflect consumers'
favorable response to the Company's "First in Southern California" marketing
program, which focuses on the Company's lower price program in conjunction with
its premier offering of quality, selection and customer service, as well as its
continuing remodeling program.

        During the third quarter, the Company completed the development of the
first phase of its "Ralphs Club Card" program and launched the marketing program
shortly after the quarter ended. The "Ralphs Club Card" program is a frequent
shopper program designed to increase customer shopping frequency and transaction
size and to provide valuable information about consumer shopping habits. The
Company estimates that it will incur one-time costs of approximately $10 million
to develop and launch the program, $2 million of which was incurred in the third
quarter.

        Gross Profit. Gross profit decreased as a percentage of sales from 21.6
percent in the 12 weeks ended October 6, 1996 to 20.6 percent in the 12 weeks
ended October 12, 1997 and increased as a percentage of sales from 20.4 percent
in the 36 weeks ended October 6, 1996 to 20.6 percent in the 36 weeks ended
October 12, 1997. The decrease in gross profit margin in the 12 weeks ended
October 12, 1997 is primarily attributable to competitive promotional activity
and higher advertising costs as the Company prepares to launch the Ralphs Club
Card. The increase in gross profit margin in the 36 weeks ended October 12, 1997
reflects a reduction in warehousing and distribution costs as a result of the
consolidation of the Company's distribution operations, as well as a reduction
in the cost of goods sold as the benefits of product procurement programs
instituted by the Company are realized, partially offset by the factors
discussed above.

        Selling, General and Administrative Expenses. Selling, general and
administrative expenses ("SG&A") were $211.1 million and $200.9 million for the
12 weeks ended October 6, 1996 and October 12, 1997, respectively, and were
$626.8 million and $615.9 million for the 36 weeks ended October 6, 1996 and
October 12, 1997, respectively. SG&A decreased as a percentage of sales from
17.3 percent to 16.3 percent for the 12 weeks ended October 6, 1996 and October
12, 1997, respectively, and decreased as a percentage of sales from 17.0 percent
to 16.3 percent for the 36 weeks ended October 6, 1996 and October 12, 1997,
respectively. The reduction in SG&A as a percentage of sales reflects the
continued results of tighter expense and labor controls at the store level and
continued administrative cost reductions, partially offset by start-up costs
associated with the launch of the "Ralphs Club Card" program in Southern
California. Additionally, the Company participates in multi-employer health and
welfare plans for its store employees who are members of the United Food and
Commercial Workers Union ("UFCW") and recognized pension suspension credits of
$11.5 million and $11.8 million in the 36 weeks ended October 6, 1996 and the 36
weeks ended October 12, 1997, respectively.

        Operating Income. Primarily as a result of the factors discussed above,
the Company's operating income increased slightly from $44.7 million in the 12
weeks ended October 6, 1996 to $44.9 million in the 12 weeks ended October 12,
1997 and increased from $103.0 million in the 36 weeks ended October 6, 1996 to
$137.6 million in the 36 weeks ended October 12, 1997.

        Loss Before Extraordinary Charges. Primarily as a result of the factors
discussed above, the Company's loss before extraordinary charges decreased from
$20.3 million in the 12 weeks ended October 6, 1996 to $18.3 million in the 12
weeks ended October 12, 1997 and decreased from $89.7 million in the 36 weeks
ended October 6, 1996 to $53.9 million in the 36 weeks ended October 12, 1997.

        Extraordinary Charges. Extraordinary charges of $48.0 million were
recorded during the 12 weeks ended April 27, 1997. These charges relate to the
call premium on the 13.75% Senior Subordinated Notes and the write-off of
deferred financing costs associated with the Old Credit Facility and the 13.75%
Senior Subordinated Notes.


                                       13

<PAGE>   16
LIQUIDITY AND CAPITAL RESOURCES

        Cash flow from operations, amounts available under the Company's $325.0
million revolving facility ("Revolving Facility") and lease financing are the
Company's principal sources of liquidity. The Company believes that these
sources will be adequate to meet its anticipated capital expenditure, working
capital and debt service requirements for the remainder of fiscal 1997.

        At October 12, 1997, borrowings of $136.9 million under the Revolving
Facility and $75.5 million of standby letters of credit were outstanding. The
level of borrowings under the Company's Revolving Facility is dependent upon
cash flows from operations, the timing of disbursements, seasonal requirements
and capital expenditure activity. The Company is required to reduce loans
outstanding under the Revolving Facility to $110.0 million for a period of not
less than 30 consecutive days during the twelve consecutive month-period ended
on the last day of fiscal 1997. The Company complied with this requirement in
the second quarter of fiscal 1997. At November 14, 1997, the Company had $127.7
million available for borrowing under the Revolving Facility.

        During the 36-week period ending October 12, 1997, cash provided by
operating activities was approximately $44.7 million compared to $124.8 million
in the 36-week period ending October 6, 1996. The decline in cash from operating
activities in the 36-week period ending October 12, 1997 is primarily due to the
timing of payments of accounts payable and accrued liabilities and prepaid
expenses. These reductions in cash were partially offset by an improvement in
operating income of approximately $34.6 million. The improvement in operating
income can primarily be attributed to strong comparable store sales, a reduction
in warehousing and distribution costs resulting from the consolidation of the
Company's distribution operations, and a reduction in cost of goods sold as the
benefits of product procurement programs are realized. The Company's principal
use of cash in its operating activities is inventory purchases. The Company's
high inventory turnover rate generally allows it to finance a substantial
portion of its inventory through trade payables, thereby reducing its short-term
borrowing needs.

        Cash used by investing activities was $94.2 million for the 36-week
period ending October 12, 1997. Investing activities consisted primarily of
capital expenditures of $111.2 million to build 16 new stores (6 of which had
been completed at October 12, 1997) and the remodeling of 61 stores (38 of which
had been completed at October 12, 1997). The Company currently anticipates that
its aggregate capital expenditures for fiscal 1997 will be approximately $140.0
million (net of expected capital leases) and will include ten new stores and 45
remodels. Consistent with past practices, the Company intends to finance these
capital expenditures primarily with cash provided by operations, borrowings
under the Revolving Facility and through leasing transactions. At November 14,
1997, the Company had approximately $6.0 million of unused equipment leasing
facilities. No assurance can be given that sources of financing for capital
expenditures will be available or sufficient to finance its anticipated capital
expenditure requirements; however, management believes the capital expenditure
program has substantial flexibility and is subject to revision based on various
factors, including changes in business conditions and cash flow requirements.
Management believes that if the Company were to substantially reduce or postpone
these programs, there would be no substantial impact on short-term operating
profitability. However, management also believes that the construction of new
stores is an important component of its future operating strategy. Consequently,
management believes that if these programs were substantially reduced, future
operating results, and ultimately its cash flow, would be adversely affected.

        The capital expenditures discussed above do not include any costs
associated with the Merger or any other potential acquisitions which the Company
could make to expand within its existing markets or to enter other markets. The
Company has grown through acquisitions in the past and from time to time engages
in discussions with potential sellers of individual stores, groups of stores or
other retail supermarket chains.

        The Company continues to monitor and evaluate the performance of
individual stores as well as operating markets in relation to its overall
business objectives. As a result of this evaluation,


                                       14

<PAGE>   17
alternative strategies may be considered by the Company which could result in
the disposition of certain assets.

        Cash provided by financing activities was $45.4 million for the 36-week
period ending October 12, 1997, resulting primarily from refinancing activities.
Refinancing activities consisted of the issuance of the 1997 11% Senior
Subordinated Notes to refinance the Company's 13.75% Senior Subordinated Notes
and the refinancing and amendment of the Old Credit Facility. In total,
financing activities consisted primarily of proceeds of $722.0 million from the
issuance of long-term debt and net borrowings of $37.5 million under the
Revolving Facility, partially offset by principal payments of long-term debt of
$688.4 million and capital lease payments of $20.3 million.

        During the first quarter of fiscal 1997, Ralphs issued the 1997 11%
Senior Subordinated Notes with terms substantially identical to Ralphs' existing
11% Senior Subordinated Notes at a price of 105.5% of their principal amount,
resulting in gross proceeds of $163.5 million. The proceeds were used to redeem
all of Ralphs' $145 million principal amount of 13.75% Senior Subordinated Notes
at a price of 106.1% of their principal amount and to pay the related accrued
interest through the redemption date, which was April 28, 1997. The remaining
proceeds were used to pay fees and expenses associated with the issuance of the
1997 11% Senior Subordinated Notes.

        During the first quarter, the Company also amended and restated its Old
Credit Facility to lower interest margins and allow more flexibility with
respect to application of proceeds from certain asset sales and capital
expenditures. The amended and restated credit facility (the "New Credit
Facility") consists of a $200.0 million Term Loan A Facility and a $350.0
million Term Loan B Facility (together, the "Term Loans") and a $325.0 million
Revolving Credit Facility ("Revolving Facility") under which working capital
loans may be made and commercial or standby letters of credit in the maximum of
$150.0 million may be issued.

        Quarterly principal installments on the Term Loans continue to 2004,
with principal amounts due as follows: $2.6 million in fiscal 1997, $3.5 million
in fiscal 1998, $25.5 million in fiscal 1999, $62.6 million in fiscal 2000,
$87.5 million in fiscal 2001 and $368.3 million thereafter.

        As a result of the refinancings described above, the Company recorded
extraordinary charges in the first quarter of fiscal 1997 of approximately $48.0
million, consisting of the call premium on the 13.75% Senior Subordinated Notes
and write-off of deferred financing costs associated with the Old Credit
Facility and the 13.75% Senior Subordinated Notes.

        Holdings has outstanding $135.7 million accreted value of Discount
Debentures and $175.8 million principal amount of Pay-In-Kind Debentures.
Holdings is a holding company which has no assets other than the capital stock
of Ralphs. Holdings will be required to commence semi-annual cash payments of
interest on the Discount Debentures and the Pay-In-Kind Debentures commencing
December 15, 2000 in the amount of approximately $61 million per annum. Subject
to the limitations contained in its debt instruments, Ralphs intends to make
dividend payments to Holdings in amounts which are sufficient to permit Holdings
to service its cash interest requirements. Ralphs may pay other dividends to
Holdings in connection with certain employee stock repurchases and for routine
administrative expenses.

        The Company is highly leveraged. At October 12, 1997, the Company's
total long-term indebtedness (including current maturities) and stockholders'
deficit were $2.5 billion and $421.0 million, respectively. Based upon current
levels of operations and anticipated cost savings and future growth, the Company
believes that its cash flow from operations, together with available borrowings
under the Revolving Facility and its other sources of liquidity (including lease
financing), will be adequate to meet its anticipated requirements for working
capital, capital expenditures, other long-term liabilities and debt service
payments. There can be no assurance, however, that the Company's business will
continue to generate cash flow at or above current levels or that future cost
savings and growth can be achieved.


                                       15

<PAGE>   18
CAUTIONARY STATEMENT FOR PURPOSES OF "SAFE HARBOR PROVISIONS" OF THE PRIVATE
SECURITIES LITIGATION REFORM ACT OF 1995

        When used in this report, the words "believe," "estimate," "expect,"
"project" and similar expressions, together with other discussion of future
trends or results, are intended to identify forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended (the
"Securities Act") and Section 21E of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"). Such statements are subject to certain risks and
uncertainties, including those discussed below, that could cause actual results
to differ materially from those projected. These forward-looking statements
speak only as of the date hereof. All of these forward-looking statements are
based on estimates and assumptions made by management of the Company which,
although believed to be reasonable, are inherently uncertain and difficult to
predict; therefore, undue reliance should not be placed upon such estimates. The
following important factors, among others, could cause the Company's results of
operations to be adversely affected in future periods: (i) increased competitive
pressures from existing competitors and new entrants, including price-cutting
strategies, store openings and remodels; (ii) loss or retirement of key members
of management or the termination of the Company's Consulting Agreement with
Yucaipa; (iii) inability to negotiate more favorable terms with suppliers; (iv)
increases in interest rates or the Company's cost of borrowing or a default
under any material debt agreements; (v) inability to develop new stores in
advantageous locations or to successfully convert or remodel additional stores;
(vi) prolonged labor disruption; (vii) deterioration in general or regional
economic conditions, particularly in Southern California, the Company's
principal operating region; (viii) adverse state or federal legislation or
regulation that increases the costs of compliance, or adverse findings by a
regulator with respect to existing operations; (ix) loss of customers or sales
weakness; (x) adverse determinations in connection with pending or future
litigation or other material claims against the Company; (xi) inability to
achieve future sales levels or other operating results that support its programs
to reduce costs; (xii) the unavailability of funds for capital expenditures;
(xiii) increases in labor costs; (xiv) inability to control inventory levels;
(xv) operational inefficiencies in distribution or other Company systems and
(xvi) any failure to consummate the Merger on a timely basis. Many of such
factors are beyond the control of the Company. There can be no assurance that
the Company will not incur new or additional unforeseen costs in connection with
the ongoing conduct of its business. Accordingly, any forward-looking statements
included herein do not purport to be predictions of future events or
circumstances and may not be realized. In addition, assumptions relating to
budgeting, marketing, advertising, litigation and other management decisions are
subjective in many respects and thus susceptible to interpretations and periodic
revisions based on actual experience and business developments, the impact of
which may cause the Company to alter its marketing, capital expenditure or other
budgets, which may in turn affect the Company's financial position and results
of operations.


                                       16

<PAGE>   19
                           PART II. OTHER INFORMATION


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

        (a)    Exhibits.

               27.    Financial Data Schedule

        (b)    Reports on Form 8-K

               The Company filed a current report on Form 8-K dated November
               13, 1997 with respect to the acquisition by Fred Meyer, Inc. and
               FFL Acquisition Corp. ("Acquisition") of Food 4 Less Holdings,
               Inc. ("Holdings") pursuant to a merger of Acquisition with and
               into Holdings.


                                       17

<PAGE>   20
                                   SIGNATURES



Pursuant to the requirements of the Securities and Exchange Act of 1934, the
Registrant has duly caused this Quarterly Report to be signed on its behalf by
the undersigned, thereunto duly authorized, in the County of Los Angeles, State
of California.



Dated:   November 26, 1997             FOOD 4 LESS HOLDINGS, INC.



                                            /s/ John T. Standley
                                       -----------------------------------
                                                John T. Standley
                                             Senior Vice President and
                                             Chief Financial Officer



                                       18