<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   Form 10-Q

(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 3 OR 15(d) OF THE SECURITIES EXCHANGE
     ACT OF 1934.

For the quarterly period ended  December 30, 2000
                               ------------------

                                      AND
[_]  TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
     EXCHANGE ACT OF 1934.

                       Commission file number   0-10815
--------------------------------------------------------------------------------

                         Unified Western Grocers, Inc.
--------------------------------------------------------------------------------
            (Exact name of registrant as specified in its charter)

           California                                     95-0615250
--------------------------------------------------------------------------------
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                            Identification No.)

5200 Sheila Street, Commerce, CA                          90040
--------------------------------------------------------------------------------
(Address of principal executive offices)                  (Zip Code)

Registrant's telephone number, including area code  (323) 264-5200
                                                  ----------------

________________________________________________________________________________
  (Former Name, Former Address and Former Fiscal Year, if Changed Since Last
                                    Report)

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 ____
                                          -----


               APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
                  PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.  Yes   _____  No ____


                     APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date. Outstanding Shares on or about
January 27, 2001:

                          Class A Shares      66,608
                          Class B Shares     414,777
                          Class C Shares          24

                                       1
<PAGE>

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements
----------------------------

                UNIFIED WESTERN GROCERS, INC. AND SUBSIDIARIES
                     CONSOLIDATED CONDENSED BALANCE SHEETS
                                  (UNAUDITED)
                            (dollars in thousands)

<TABLE>
<CAPTION>

                                                                       September 30,      December 30,
                                                                           2000              2000
                                                                      ---------------------------------
<S>                                                                   <C>                 <C>
ASSETS

Current:
    Cash and cash equivalents                                         $  10,355             $ 11,772
    Accounts and notes receivable, net                                  190,654              173,928
    Inventories                                                         230,259              223,134
    Prepaid expenses                                                      6,493                6,325
    Deferred taxes                                                       14,210               14,210
                                                                       -----------------------------
          Total current assets                                          451,971              429,369

Properties, net                                                         123,374              124,129
Investments                                                              43,585               54,443
Notes receivable                                                         46,780               50,727
Goodwill, net                                                            55,745               55,385
Other assets, net                                                        44,395               45,353
                                                                      ------------------------------
      TOTAL ASSETS                                                    $ 765,850             $759,406
                                                                      ==============================


LIABILITIES AND SHAREHOLDERS' EQUITY

Current:
    Accounts payable                                                  $ 214,607             $185,195
    Accrued liabilities                                                  77,258               76,406
    Current portion of notes payable                                     10,760               11,962
    Patrons' excess deposits and estimated patronage dividends           16,428               16,566
                                                                       -----------------------------
          Total current liabilities                                     319,053              290,129

Notes payable, due after one year                                       259,229              285,745
Long-term liabilities, other                                             62,114               61,827
Patrons' deposits and certificates:
     Patrons' required deposits                                          21,970               20,471
     Subordinated patronage dividend certificates                         5,926                4,064
Shareholders' equity:
     Class A Shares                                                      10,899               11,156
     Class B Shares                                                      74,870               74,368
     Additional paid in capital                                          18,095               18,095
     Accumulated deficit                                                 (5,572)              (6,480)
     Accumulated other comprehensive (loss) earnings                       (734)                  31
                                                                       -----------------------------
          Total shareholders' equity                                     97,558               97,170
                                                                       -----------------------------
    TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                         $765,850             $759,406
                                                                       =============================
</TABLE>

       The accompanying notes are an integral part of these statements.

                                       2
<PAGE>

                UNIFIED WESTERN GROCERS, INC. AND SUBSIDIARIES
                CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
                                  (UNAUDITED)
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                      THIRTEEN WEEKS ENDED
                                                                               -------------------------------
                                                                                   January 1,     December 30,
                                                                                      2000           2000
                                                                               -------------------------------
<S>                                                                            <C>                <C>
Net sales                                                                       $   819,415           $740,572

Costs and expenses:
   Cost of sales                                                                    735,649            659,349
   Distribution, selling and administrative                                          77,611             70,049
                                                                               -------------------------------
Operating income                                                                      6,155             11,174

Interest expense                                                                      7,205              7,473
                                                                               -------------------------------
(Loss) earnings before estimated patronage dividends,
 benefit for income taxes and change in
 accounting principle                                                                (1,050)             3,701

Estimated patronage dividends                                                        (2,728)            (4,640)
                                                                               -------------------------------

Loss before benefit for income tax and change in accounting principle                (3,778)              (939)
Benefit for income taxes                                                               (948)                 -
                                                                                ------------------------------

Loss before change in accounting principle                                           (2,830)              (939)
Cumulative effect of adopting SFAS No. 133, net of income taxes                           -                 31
                                                                               -------------------------------

Net loss                                                                             (2,830)              (908)
                                                                               -------------------------------
Other comprehensive (loss) earnings, net of income taxes:
     Cumulative effect of adopting SFAS No. 133                                           -              1,143
     Unrealized holding (loss) gains                                                    (59)               532
     Fair value adjustment interest rate collar agreement                                 -               (910)
                                                                               -------------------------------
Other comprehensive (loss) income                                                       (59)               765
                                                                               -------------------------------
Comprehensive loss                                                              $    (2,889)          $   (143)
                                                                                ==============================
</TABLE>

       The accompanying notes are an integral part of these statements.

                                       3
<PAGE>

                UNIFIED WESTERN GROCERS, INC. AND SUBISIDIARIES
          CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
           THIRTEEN WEEKS ENDED JANUARY 1, 2000 AND DECEMBER 30, 2000
                             (dollars in thousands)

<TABLE>
<CAPTION>
                                                                                 THIRTEEN WEEKS ENDED
                                                                    --------------------------------------
                                                                            January 1,       December 30,
                                                                               2000             2000
                                                                    --------------------------------------
Cash flows from operating activities:
<S>                                                                 <C>                         <C>
Net loss                                                                   $ (2,830)             $   (908)
   Adjustments to reconcile net loss to net
      cash utilized by operating activities:
     Depreciation and amortization                                            7,458                 6,161
     Loss (gain) on disposal of properties                                      105                   (81)
     Changes in operating assets and liabilities:
        Accounts and notes receivable, net                                   11,891                16,726
        Inventories                                                           9,582                 7,125
        Prepaid expenses                                                       (537)                  168
        Notes receivable                                                         55                (3,947)
        Accounts payable                                                    (23,503)              (29,412)
        Accrued liabilities                                                  (4,953)                 (852)
        Patrons' excess deposits and estimated
           patronage dividends                                                1,004                   138
        Long-term liabilities, other                                          1,443                  (287)
                                                                    -------------------------------------
Net cash utilized by operating activities                                      (285)               (5,169)
                                                                    -------------------------------------


Cash flows from investing activities:
   Purchase of properties                                                    (8,642)               (6,109)
   Proceeds from sales of properties                                             82                   990
   Increase in other assets                                                  (3,834)               (2,314)
   Investment in securities, net                                                 86               (10,093)
                                                                    -------------------------------------
Net cash utilized by investing activities                                   (12,308)              (17,526)
                                                                    -------------------------------------

Cash flows from financing activities:
   Additions to long-term notes payable                                      37,700                28,500
   Reduction of long-term notes payable                                        (363)                    -
   Additions to short-term notes payable                                          -                 2,825
   Reduction of short-term notes payable                                     (2,352)               (4,193)
   Redemption of patronage dividend certificates                                  -                (1,862)
   Increase (decrease) in members' required deposits                          1,375                (1,499)
   Repurchase of shares from members                                           (493)                    -
   Issuance of shares to members                                                 38                   341
                                                                    -------------------------------------
Net cash provided by financing activities                                    35,905                24,112
                                                                    -------------------------------------

Net increase in cash and cash equivalents                                    23,312                 1,417
Cash and cash equivalents at beginning of year                               17,057                10,355
                                                                    -------------------------------------
Cash and cash equivalents at end of period                                 $ 40,369              $ 11,772
                                                                    =====================================

Supplemental disclosure of cash flow information:
Cash paid during the period for:
   Interest                                                                $  4,112              $  7,555
   Income taxes                                                                   -                    64

Supplemental disclosure of non-cash item:
  Issuance of subordinated redemption notes to repurchase
   Class B Shares from members                                                    -              $    586
 </TABLE>

       The accompanying notes are an integral part of these statements.

                                       4
<PAGE>

                 UNIFIED WESTERN GROCERS, INC. AND SUBSIDIARIES
              NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

1.   The consolidated condensed financial statements include the accounts of
Unified Western Grocers, Inc. and all of its subsidiaries (the "Company" or
"Unified"). Intercompany transactions and accounts with subsidiaries have been
eliminated. The interim financial statements included herein have been prepared
by the Company without audit, pursuant to the rules and regulations promulgated
by the Securities and Exchange Commission (the "Commission"). Certain
information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been omitted pursuant to Commission rules and regulations; nevertheless,
management believes that the disclosures are adequate to make the information
presented not misleading. These condensed financial statements should be read in
conjunction with the audited financial statements and notes thereto included in
the Company's latest annual report filed on Form 10-K. The results of operations
for the interim periods are not necessarily indicative of the results for the
full year.

     The accompanying consolidated condensed financial statements reflect all
adjustments which are, in the opinion of management, both of a normal recurring
nature and necessary for a fair statement of the results of the interim periods
presented. Certain reclassifications have been made to prior period financial
statements to present them on a basis comparable with the current period's
presentation.

2.   On September 27, 1999, the shareholders of Unified and United Grocers, Inc.
("United") each approved the provisions of a merger agreement (the "Merger").
The Merger became effective on September 29, 1999 and was accounted for as a
purchase pursuant to Accounting Principles Board Opinion No. 16, "Business
Combinations."

     As a result of the Merger, Unified now serves a broader geographic region.
The Company serves independent supermarket operators in California, Oregon,
western Washington, western Idaho, Nevada, Arizona, Hawaii, and various
countries in the South Pacific and elsewhere as a wholesale grocery cooperative.
In addition to offering a complete line of food and general merchandise
products, Unified also provides finance, insurance, store design and real estate
services to its patrons.

     In connection with the Merger, the Company established a reserve for the
closure of various facilities. Periodic charges against the reserve represent
lease costs for non-subleased facilities and rental income shortfalls for
subleased facilities. The amount of this reserve and current period charges
against the reserve are presented below.

                Balance at September 30, 2000      $ 4,534,000
                Charges to the reserve                (194,000)
                                                   -----------
                Balance at December 30, 2000       $ 4,340,000
                                                   ===========

3.   The Company has identified one reportable segment - Wholesale Distribution.
The Company is a grocery wholesaler cooperative serving independent supermarket
operators. As a cooperative, the Company is owned by member-patron shareholders
that are independent supermarket operators and remits a patronage dividend to
its shareholders based on earnings from the wholesale activities with its
owners. The Company's principal business activities are to provide food and
food-related products to member and non-member supermarket operators. Over 95%
of its net sales and operating profits are derived from the wholesale
distribution of food and food-related products to supermarket operators.
Additionally, approximately 80% of the Company's assets are related to the
wholesale distribution of food and food-related products to supermarket
operators.

     All other activities of the Company are included in the caption "All
Other", and include the aggregation of retail sales, finance, insurance, and
other services provided to independent supermarket operators.  None of these
services individually meet the quantitative thresholds of a reportable segment.

                                       5
<PAGE>

     Information about the Company's operations by segment is as follows (in
thousands):

<TABLE>
<CAPTION>
                                                                       Thirteen Weeks Ended
                                                               ----------------------------------
                                                                    January 1,      December 30,
                                                                       2000            2000
                                                               ----------------------------------
<S>                                                             <C>                 <C>
Net sales
  Wholesale distribution                                        $   785,518            $  717,920
  All other                                                          69,656                51,583
  Intersegment elimination                                          (35,759)              (28,931)
                                                               ----------------------------------
Total net sales                                                 $   819,415            $  740,572
                                                               ----------------------------------

Operating income
  Wholesale distribution                                        $    10,352            $   12,340
  All other                                                          (4,197)               (1,166)
                                                               ----------------------------------
Total operating income                                          $     6,155            $   11,174
                                                               ----------------------------------


Interest expense                                                $     7,205            $    7,473
Estimated patronage dividends                                         2,728                 4,640
                                                               ----------------------------------
Loss before benefit for income taxes                            $    (3,778)           $     (939)
                                                               ----------------------------------

Depreciation and amortization
  Wholesale distribution                                        $     6,861            $    5,615
  All other                                                             597                   546
                                                               ----------------------------------
Total depreciation and amortization                             $     7,458            $    6,161
                                                               ----------------------------------

Capital expenditures
  Wholesale distribution                                        $    3,222             $    5,922
  All other                                                          5,420                    187
                                                               ----------------------------------
Total capital expenditures                                      $    8,642             $    6,109
                                                               ----------------------------------

Identifiable assets
  Wholesale distribution                                        $   613,999            $  607,209
  All other                                                         143,435               152,197
                                                               ----------------------------------
Total identifiable assets                                       $   757,434            $  759,406
                                                               ----------------------------------
</TABLE>

4.  The Jerome Lemelson Foundation (the "Foundation"), which asserts ownership
of certain patents relating to bar code technology, issued a demand that the
Company enter into a license agreement with respect to certain patented
technology which the Company is claimed to use and which allegedly infringes
upon patents issued to Jerome Lemelson, which patents, upon the death of Jerome
Lemelson, were assigned to the Foundation. The Company has been advised that the
Foundation has filed an action against the Company and others asserting patent
infringement and seeking damages in unspecified amounts. The Foundation
continues to seek a negotiated settlement of its claim. Due to the early stage
of the proceeding, the Company is unable to assess the merits of the lawsuit or
to determine its potential liability, if any. The Company intends to vigorously
defend the action.

     The United States Environmental Protection Agency ("EPA") notified the
Company in 1993 that, together with others, it was a potentially responsible
party ("PRP") for the disposal of hazardous substances at a landfill site
located in Monterey Park, California. In 1999, the EPA notified the Company
that, together with others, it was a PRP for the disposal of hazardous
substances at a landfill site located in Patterson, California. The Company
believes that its share of cost for the remaining phases of cleanup for these
sites will not exceed the amounts which the Company has reserved.

5.   The Financial Accounting Standards Board issued Statement of Financial
Accounting Standards ("SFAS") No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes accounting and reporting standards
for derivative instruments, including certain derivative

                                       6
<PAGE>

instruments embedded in other contracts, and for hedging activities. The
statement requires that the Company recognize all derivatives as either assets
or liabilities in the balance sheet and measure those instruments at fair value.
As amended, this statement is effective for all fiscal quarters of fiscal years
beginning after June 15, 2000.

     Unified makes limited use of hedge agreements, primarily to manage the risk
associated with interest rates of its debt agreement.  Additionally, Unified has
invested in convertible bonds.  The convertible feature of the bonds constitutes
an embedded derivative, as defined by SFAS No. 133.

     The Company entered into a five-year interest rate collar agreement during
February 1999 in relation to certain borrowings on its variable rate revolving
credit facility. Under the provisions of SFAS No. 133, the fair value of the
collar must be reflected in the Company's financial statements. On October 1,
2000 the Company recognized the fair value of the collar, which totaled
$1,195,000, as a cumulative effect of adopting SFAS No. 133 in other
comprehensive (loss) earnings. Additionally, SFAS No.133 requires that the fair
value of the collar be adjusted on a quarterly basis with the change in fair
value being recorded as an adjustment to other comprehensive (loss) earnings.
Due to changes in interest rates during first quarter 2001, the fair market
value of the collar was $285,000 at December 30, 2000; accordingly, the Company
recorded a charge against the fair value of the collar of $910,000.

    The Company's Insurance operation holds investments in various marketable
securities and high-grade convertible bonds. Prior to the adoption of SFAS No.
133, the Company classified its convertible bonds as available for sale in its
financial statements. Changes in the fair value of the bonds were recorded in
the accumulated other comprehensive income component of shareholders' equity in
the Company's consolidated condensed balance sheet. With the adoption of SFAS
No. 133, these bonds were reclassified as trading securities. As a result of
adopting SFAS No. 133 and changing the classification of convertible bonds to
trading securities, the Company recognized in its first quarter 2001
consolidated condensed statements of operations a cumulative charge of $52,000
to other comprehensive (loss) earnings. The cumulative adjustment includes
$31,000, which represents the recording of the fair value of the embedded
derivative at October 1, 2000 as prescribed by SFAS No. 133. The remaining
$21,000 represents the realization of the previously unrealized holding gains on
the convertible bonds due to the reclassification of the convertible bonds from
available for sale to trading securities. This amount had been previously
recorded as a component of other comprehensive (loss) earnings. Subsequent
changes in the fair value of these convertible bonds will be recorded in the
consolidated condensed statements of operations.

     In December 1999, the Securities and Exchange Commission issued Staff
Accounting Bulletin No. 101 ("SAB No.101") which summarizes certain of the
staff's views in applying generally accepted accounting principles to revenue
recognition in financial statements. The effective date of SAB No.101 for the
Company is the quarter ending September 29, 2001.  The application of SAB No.101
will not have a material impact on the Company's financial position or its
results of operations.

     SFAS No. 140, "Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities," provides accounting and reporting standards
for transfers and servicing of financial assets and extinguishments of
liabilities based on consistent application of a financial components approach
that focuses on control. This statement is effective for transfers and servicing
of financial assets and extinguishments of liabilities occurring after March 31,
2001 and is to be applied prospectively. Management is in the process of
determining the effect on the Company's financial statements.

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

Liquidity and Capital Resources

     The Company relies upon cash flow from operations, patron deposits,
shareholdings, and borrowings under the Company's credit lines, to finance
operations. Net cash utilized by operating activities totaled $5.2 million for
the first thirteen weeks of fiscal 2001 (the "2001 period"), as compared to net
cash utilized by operating activities of $0.3 million for the first thirteen
weeks of fiscal 2000 (the

                                       7
<PAGE>

"2000 period"). Net cash utilized for the 2001 period is primarily due to
decreased accounts payable offset by reductions in accounts receivable and
inventories in the distribution operations. The Company typically experiences
these seasonal fluctuations surrounding the holiday period ending in December.
The 2000 period was less dramatically impacted due to Merger related activities
and the Y2K preparedness build up. At December 30, 2000, working capital was
$139.2 million, as compared to $132.9 million at September 30, 2000, and the
Company's current ratio was 1.5 to 1 at December 30, 2000 and 1.4 to 1 at
September 30, 2000.

     The Company issued Patronage Certificates for fiscal years 1993, 1994 and
1995. The outstanding Patronage Certificates have a seven-year term and bear
interest payable on December 15 of each year. In December 2000, the Company
redeemed the Patronage Certificates issued in 1993 for approximately $1.8
million.

     Capital expenditures totaled $6.1 million in the first thirteen weeks of
fiscal 2001. The fiscal 2001 expenditures were primarily attributable to the
purchase of previously leased warehousing and store equipment.

     Unified has a five-year, $200 million revolving credit facility which
expires October 1, 2004, secured by accounts receivable and inventories.
Borrowings bear interest at either LIBOR plus an applicable margin based on a
funded debt to operating cash flow ratio or the higher of the lender's base rate
or 0.50% above the lender's federal funds borrowing rate. The revolving credit
facility permits advances up to 85% of eligible accounts receivable and 65% of
eligible inventories.

     Unified also has notes outstanding to certain insurance companies and
pension funds which are comprised of $77.2 million of 7.72% senior notes due
April 2008, and $40 million of 8.71% senior notes due October 2009, both of
which are secured by property, plant and equipment.

     The credit agreements contain customary representations, warranties,
covenants and default provisions for these types of financing.

     In December 2000, the Company purchased 80,000 shares of Preferred Stock of
C&K Market, Inc. ("C&K") for $8.0 million. Douglas H. Nidiffer, a nominee for
director of the Company, is a shareholder, director and officer of C&K.  In
connection with the stock purchase transaction, C&K executed a ten-year Supply
Agreement and the shareholders of C&K granted to the Company a put with respect
to the Preferred Stock, exercisable upon occurrence of designated events
including the nonpayment of permitted dividends or mandatory redemption
payments. The Preferred Stock bears a 9.5% cumulative dividend rate, with cash
payment of dividends deferred until November 15, 2002, and then payable only if
permitted by applicable loan agreements.  The Preferred Stock is convertible
into 15% of the common stock of C&K under certain circumstances.

     At December 30, 2000, the Company had net deferred tax assets totaling
$22.6 million, of which $14.6 million related to net operating loss
carryforwards that expire in various years through 2019. The Company has
established a valuation allowance of $6.6 million to reduce the net deferred tax
assets to their net realizable value as the Company may not realize the entire
net operating loss carryforwards before their expiration. The valuation
allowance is primarily related to retail store losses which include stores the
Company has retained as a result of the Albertson's agreement. The remaining
balance of the net deferred tax asset is expected to be realized through future
operating results, reversal of taxable temporary differences, and tax planning
strategies.

     Unified distributes at least 20% of the patronage dividends in cash and
distributes Class B Shares as a portion of the patronage dividends distributed
to its member-patrons. Dairy patronage dividends were paid in cash in the
periods presented. Patrons are generally required to maintain cash subordinated
deposits with Unified and member-patrons may purchase (or acquire as patronage
dividends) Class B Shares to apply against this requirement. In the Merger,
former United members were provided the opportunity to build the minimum
subordinated deposit over time, provided that they agree to assign 80% of
patronage dividends received for this purpose and maintain a supply agreement
with Unified until the minimum deposit condition is satisfied. Upon termination
of patron status, the withdrawing patron will be entitled to recover deposits in
excess of its obligations to Unified if permitted by the applicable
subordination provisions, and a member-patron also will be entitled to

                                       8
<PAGE>

have its shares redeemed, subject to applicable legal requirements, company
policies and credit agreement limitations. With certain exceptions, Unified's
current redemption policy limits the Class B Shares that Unified is obligated to
redeem in any fiscal year to 5% of the number of Class B Shares deemed
outstanding at the end of the preceding fiscal year. For fiscal 2000, this
limitation was exceeded by repurchases of shares in connection with the Merger.
In connection with the Merger, Unified redeemed 71,310 Class B Shares of
discontinued members for a total consideration before set-offs of $13.4 million.
As described in the Form 10-K, Unified is not obligated during fiscal 2001 and
2002 to repurchase Class B Shares of terminated members until after September
27, 2002.

     Redemption of all capital stock is subject to limitations imposed by the
Articles of Incorporation and Bylaws, credit agreements to which the Company is
a party, and restrictions imposed by law on the ability of a company to redeem
its own shares. As a California corporation, the Company is subject to the
provisions of the California General Corporation Law including Section 500 which
limits the ability of the Company to make distributions, including distributions
to repurchase its own shares and any payments on notes issued to repurchase
Unified shares. Section 500 permits such repurchase and note payments only when
retained earnings calculated in accordance with generally accepted accounting
principles ("GAAP") equal or exceed the amount of any proposed distribution or
an alternative asset/liability ratio test is met. Historically through the
operations of its subsidiaries, the Company has maintained sufficient retained
earnings to accomplish its share repurchase program. As a result of expenses
associated with the Merger with United, current operating losses of subsidiaries
acquired from United as well as operating losses of retail stores owned by the
Company, including stores acquired from Albertson's for resale to members or
others, the Company's retained earnings have been depleted such that they are
currently inadequate to permit repurchase of Company shares. The repurchase test
permitted under Section 500 based on the ratio of assets to liabilities
determined under GAAP with certain adjustments cannot currently be met since the
Company relies heavily on borrowings to finance its operations. The Company is
also a party to credit agreements containing financial and other covenants,
which limit the ability of the Company to make purchases of capital stock under
certain circumstances. The Company has established a trust for the purpose of
facilitating the transfer of shares by Unified members obligated or entitled to
sell shares in accordance with the Company's redemption policy to existing
members or new members who are authorized by the Board of Directors to buy
shares in accordance with the Bylaws, during periods when the Company is legally
unable to buy shares or otherwise elects to cause or permit outstanding shares
to be transferred between members. Funds used to purchase shares from selling
members are exclusively sourced from funds provided by buying members.

Results of Operations

     The following table sets forth selected financial data of the Company
expressed as a percentage of net sales for the periods indicated below:

<TABLE>
<CAPTION>
                                                                            For the Thirteen Weeks Ended
                                                                   --------------------------------------------
                                                                       January 1, 2000      December 30, 2000
                                                                   --------------------------------------------
<S>                                                                   <C>                  <C>
Net sales                                                                   100.0%                100.0%
Cost of sales                                                                89.8                  89.0
Distribution, selling and administrative                                      9.5                   9.5
Operating income                                                              0.7                   1.5
Interest expense                                                              0.9                   1.0
(Loss) earnings before estimated patronage dividends,
 benefit for income taxes and change in accounting principle                 (0.2)                  0.5
Estimated patronage dividends                                                (0.3)                 (0.6)
Loss before benefit for income taxes and change in accounting
 principle                                                                   (0.5)                 (0.1)
Benefit for income taxes                                                     (0.1)                 (0.0)
Loss before change in accounting principle                                   (0.4)                 (0.1)
Cumulative effect of adopting SFAS No. 133                                   (0.0)                 (0.0)
Net loss                                                                     (0.4)                 (0.1)
</TABLE>

                                       9
<PAGE>

Thirteen Week Period

Net sales

          Net sales totaled $740.6 million for the 2001 period as compared to
$819.4 million in the 2000 period. The sales decrease of $78.8 million
represents a 9.6% decrease over the 2000 period. The decrease in sales is
primarily related to the following:

 .    The Company experienced a $41.0 million reduction in distribution volume
     due to certain chain store supplemental business that transitioned to self-
     distribution, store closures of independent supermarket owners in the
     Pacific Northwest and strong sales in the 2000 period related to Y2K
     preparedness which were not repeated in the 2001 period. The reduction in
     volume was offset by price increases in the former United operations and in
     Northern California.

 .    The Company's owned retail locations had lower volume for the 2001 period
     as compared to the 2000 period by $22.0 million. The reduction is primarily
     due to the closure of two Albertson's divestiture stores ("Divestiture
     Stores"), and an overall volume decline in the remaining store locations
     due to competitive pressures and strong sales in the 2000 period related to
     Y2K preparedness which were not repeated in the 2001 period.

 .    In the fiscal 2000 period, the Company had $15.8 million of low margin non-
     member activity associated with the former United operations. The Company
     subsequently eliminated this activity as part of its overall profit
     improvement and Merger integration activities.

Cost of sales

          In the 2001 period cost of sales were $659.3 million (89.0% of net
sales) compared to $735.6 million (89.8% of net sales) in the 2000 period. The
decline in overall cost of sales is due to lower sales volume and increased
distribution margins of the former United operations. The 2000 period had margin
shortfalls from the former United operations that were subsequently corrected.
The resulting margin improvement for the 2001 period was partially offset by the
reduction in the Company's retail sales that normally have higher margins than
distribution activity.

Distribution, selling and administrative

          Distribution, selling and administrative expenses were $70.0 million
(9.5% of net sales) in the 2001 period, as compared to $77.6 million (9.5% of
net sales) in the 2000 period. The reduction of expenses is due to several
factors. Certain distribution costs are variable and will fluctuate as volume
fluctuates. Additionally, the Company was successful in realizing cost
reductions from the Merger with United through the elimination of duplicate
facilities in Northern California and the integration of marketing,
administration and information services activities.

Interest

          Interest expense was $7.5 million (1.0% of net sales) in the 2001
period as compared to $7.2 million (0.9% of net sales) in the 2000 period. The
Company's effective borrowing rates for the 2001 and 2000 periods were 8.5% and
8.2% respectively, and the Company's average borrowing levels remained
consistent for the 2001 and 2000 periods.

Estimated patronage dividends

          Estimated patronage dividends increased $1.9 million to $4.6 million
for the 2001 period as compared to $2.7 million for the 2000 period. Estimated
patronage earnings for fiscal 2001 are comprised of the interim patronage
earnings from the Company's two patronage pools: the cooperative and dairy
divisions. For the 2001 period, the Company had an interim patronage income of
$2.0 million in the cooperative division and patronage income of $2.6 million
from the dairy division. For the 2000 period, the Company had an interim
patronage loss of $0.4 million in the cooperative division and patronage
earnings of $3.1 million from the dairy division.

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<PAGE>

Net (loss)

        Net loss for the 2001 period was $0.9 million compared to a net loss of
$2.8 million for the 2000 period. The losses experienced for the 2001 and 2000
periods are predominately due to store closure costs and operating losses from
the Divestiture Stores. Net losses are generated by the Company's subsidiaries
and nonpatronage activities.

        In the 2001 period, the Company liquidated the Grocers Equipment
Company subsidiary into Unified and the member services previously provided by
that subsidiary are now provided by the Company as a part of its cooperative
division. The Company intends to sell or close unprofitable retail operations
and is evaluating under-performing subsidiary operations.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.
--------------------------------------------------------------------

        Unified has only limited involvement with derivative financial
instruments.

        Unified entered into a five-year interest rate collar agreement in
February 1999 in relation to certain borrowings on its variable rate revolving
credit. The collar agreement was put in place without incurring a fee with
respect to the collar transaction. The hedge agreement is structured such that
Unified pays a variable rate of interest between 6% (cap rate) and 4.94% (floor
rate) based on a notional amount of $50,000,000. The weighted average interest
rate, prior to lender's margin, on borrowings on the revolving credit was 6.74%
at December 30, 2000. The fair market value of the collar agreement at December
30, 2000 was $285,000.

        With the adoption of SFAS No. 133, the Company's investments in
convertible bonds were reclassified from available for sale securities to
trading securities. As a result of changing the classification of the
convertible bonds, the Company is subject to market risk associated with
fluctuations in interest rates and the market value of the embedded conversion
feature.

PART II.  OTHER INFORMATION

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

(a)     Exhibits

10.5      Amendment No. 1999-I to Unified Western Grocers, Inc. Executive Salary
          Protection Plan II, effective as of January 1, 1999.

10.6      Amendment No. 2000-I to Unified Western Grocers, Inc. Executive Salary
          Protection Plan II, effective as of January 1, 2000.

10.47     Preferred Stock Purchase Agreement by and between C & K Market, Inc.
          and Unified Western Grocers, Inc. dated as of December 19, 2000.

10.48     Shareholders Agreement by and among Unified Western Grocers, Inc., C &
          K Market, Inc. and designated shareholders of C & K Market, Inc. dated
          as of December 19, 2000.



(b)     Reports on Form 8-K

        None

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<PAGE>

     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.

Dated:  February 12, 2001


                        Unified Western Grocers, Inc.
                        -----------------------------
                                 (Registrant)


                        By      /s/ Alfred A. Plamann
                           --------------------------
                              Alfred A. Plamann
                                 President and
                            Chief Executive Officer



                        By      /s/ Richard J. Martin
                           --------------------------
                             Richard J. Martin
                           Executive Vice President,
                            Finance & Administration
                          and Chief Financial Officer


                        By      /s/ William O. Cote
                           ------------------------
                             William O. Cote
                           Vice President, Controller

                                       12
<PAGE>

                                 EXHIBIT LIST

10.5      Amendment No. 1999-I to Unified Western Grocers, Inc. Executive Salary
          Protection Plan II, effective as of January 1, 1999.

10.6      Amendment No. 2000-I to Unified Western Grocers, Inc. Executive Salary
          Protection Plan II, effective as of January 1, 2000.

10.47     Preferred Stock Purchase Agreement by and between C & K Market, Inc.
          and Unified Western Grocers, Inc. dated as of December 19, 2000.

10.48     Shareholders Agreement by and among Unified Western Grocers, Inc., C &
          K Market, Inc. and designated shareholders of C & K Market, Inc. dated
          as of December 19, 2000. 10.5 Amendment No. 1999-I to Unified Western
          Grocers, Inc. Executive Salary Protection Plan II, effective as of
          January 1, 1999.

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