<PAGE>

                      SECURITIES AND EXCHANGE COMMISSION
                            Washington, D.C. 20549
                                   Form 10-Q
(Mark One)
[X]  QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
     SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended                     June 30, 2001
                                  ------------------------------

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

<TABLE>
<S>                                                                    <C>
                              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 incorporation or organization)         (I.R.S. Employer
                                                                       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)
</TABLE>

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 July 31, 2001:

                            Class A Shares                 69,056
                                                 ----------------
                            Class B Shares                414,777
                                                 ----------------
                            Class C Shares                     18
                                                 ----------------
<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,           June 30,
                                                                         2000                  2001
                                                                ------------------------------------------
<S>                                                           <C>                        <C>
ASSETS
Current:
  Cash and cash equivalents                                                  $ 10,355             $ 11,021
  Accounts and notes receivable, net                                          190,654              167,217
  Inventories                                                                 230,259              218,483
  Prepaid expenses                                                              6,493                7,669
  Deferred taxes                                                               14,210               14,210
                                                                ------------------------------------------
                  Total current assets                                        451,971              418,600

Properties, net                                                               123,374              121,897
Investments                                                                    43,585               55,691
Notes receivable                                                               46,780               48,029
Goodwill, net                                                                  55,745               55,563
Other assets, net                                                              44,395               50,236
                                                                ------------------------------------------
  TOTAL ASSETS                                                               $765,850             $750,016
                                                                ==========================================


LIABILITIES AND SHAREHOLDERS' EQUITY

Current:
  Accounts payable                                                           $214,607             $170,245
  Accrued liabilities                                                          77,258               80,239
  Current portion of notes payable                                             10,760               12,336
  Patrons' excess deposits and estimated patronage dividends                   16,428               15,773
                                                                ------------------------------------------
       Total current liabilities                                              319,053              278,593

Notes payable, due after one year                                             259,229              291,927
Long-term liabilities, other                                                   62,114               63,693
Patrons' deposits and certificates:
     Patrons' required deposits                                                21,970               20,507
     Subordinated patronage dividend certificates                               5,926                4,105
Shareholders' equity:
  Class A Shares:   69,029 and 65,838 issued and outstanding
     at June 30, 2001 and September 30, 2000, respectively                     10,899               11,573
  Class B Shares:   414,777 and 420,051 issued and outstanding
     at June 30, 2001 and September 30, 2000, respectively                     74,870               73,531
     Additional paid-in capital                                                18,095               18,095
     Accumulated deficit                                                       (5,572)             (11,251)
     Accumulated other comprehensive loss                                        (734)                (757)
                                                                ------------------------------------------
       Total shareholders' equity                                              97,558               91,191
                                                                ------------------------------------------
  TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY                                 $765,850             $750,016
                                                                ==========================================
</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               THIRTY-NINE WEEKS ENDED
                                                           -----------------------------------------------------------------
                                                           July 1,             June 30,         July 1,            June 30,
                                                             2000                2001             2000               2001
                                                           -----------------------------------------------------------------
<S>                                                        <C>                 <C>             <C>                <C>
Net sales                                                  $738,255            $723,214        $2,299,957         $2,169,190
Costs and expenses:
   Cost of sales                                            651,298             641,236         2,047,226          1,928,820
   Distribution, selling and administrative                  78,720              74,868           230,458            213,437
                                                           -----------------------------------------------------------------
Operating income                                              8,237               7,110            22,273             26,933
Interest expense                                              7,150               6,805            21,658             21,642
                                                           -----------------------------------------------------------------
Earnings before estimated patronage dividends,
   benefit for income taxes and change in accounting
   principle                                                   1,087                 305               615              5,291
Estimated patronage dividends                                (4,364)             (3,431)          (10,922)           (11,001)
                                                           -----------------------------------------------------------------
Loss before benefit for income tax and change in
   accounting principle                                      (3,277)             (3,126)          (10,307)            (5,710)
Provision / (benefit) for income taxes                          281                   -            (1,735)                 -
                                                           -----------------------------------------------------------------
Loss before change in accounting principle                   (3,558)             (3,126)           (8,572)            (5,710)
Cumulative effect of adopting SFAS No. 133, net
   of income taxes                                                -                   -                 -                 31
                                                           -----------------------------------------------------------------
Net loss                                                   $ (3,558)             (3,126)       $   (8,572)            (5,679)
                                                           -----------------------------------------------------------------

Other comprehensive earnings (loss), net of
income taxes:
     Cumulative effect of adopting SFAS No. 133                   -                   -                 -              1,143
     Fair value adjustment interest rate collar
       agreement                                                  -                (810)                -             (1,585)
     Unrealized holding gains (loss)                             40                (267)              (74)               419
                                                           -----------------------------------------------------------------
Other comprehensive loss                                         40              (1,077)              (74)               (23)
                                                           -----------------------------------------------------------------
Comprehensive loss                                         $ (3,518)           $ (4,203)       $   (8,646)            (5,702)
                                                           =================================================================
</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)
                            (dollars in thousands)

<TABLE>
<CAPTION>
                                                                     THIRTY-NINE WEEKS ENDED
                                                                  ------------------------------
                                                                   July 1,              June 30,
                                                                    2000                  2001
                                                                  ------------------------------
<S>                                                               <C>                   <C>
Cash flows from operating activities:
Net loss                                                          $ (8,572)             $ (5,679)
   Adjustments to reconcile net loss to net
     cash provided by operating activities:
     Depreciation and amortization                                  21,886                18,446
     Gain on disposal of properties                                    (27)                 (134)
     Changes in operating assets and liabilities:
        Accounts and notes receivable, net                          12,448                23,409
        Inventories                                                  8,782                12,576
        Prepaid expenses                                             4,710                (1,176)
        Notes receivable                                            (8,872)               (1,249)
        Accounts payable                                            17,386               (46,696)
        Accrued liabilities                                         (9,935)                2,981
        Patrons' excess deposits and estimated
           patronage dividends                                       1,297                   366
        Long-term liabilities, other                                 2,942                 1,579
                                                                  ------------------------------
Net cash provided by operating activities                           42,045                 4,423
                                                                  ------------------------------

Cash flows from investing activities:
   Purchase of properties                                          (19,173)              (18,139)
   Proceeds from sales of properties                                   908                 7,401
   Increase in other assets                                         (6,671)              (10,153)
   Investment in securities, net                                    (1,608)              (12,129)
   Proceeds from sale of notes receivable                            2,511                     -
                                                                  ------------------------------
Net cash utilized by investing activities                          (24,033)              (33,020)
                                                                  ------------------------------

Cash flows from financing activities:
   Additions to long-term notes payable                                 10                39,800
   Reduction of long-term notes payable                            (24,010)                    -
   Additions to short-term notes payable                               105                 2,125
   Reduction of short-term notes payable                            (7,232)               (9,074)
   Redemption of patronage dividend certificates                         -                (1,862)
   Increase (decrease) in members' required deposits                 9,942                (2,484)
   Repurchase of shares from members                                  (983)                    -
   Issuance of shares to members                                       633                   758
                                                                  ------------------------------
Net cash (utilized) provided by financing activities               (21,535)               29,263
                                                                  ------------------------------

Net (decrease) increase in cash and cash equivalents                (3,523)                  666
Cash and cash equivalents at beginning of year                      17,057                10,355
                                                                  ------------------------------
Cash and cash equivalents at end of period                        $ 13,534              $ 11,021
                                                                  ==============================

Supplemental disclosure of cash flow information:
Cash paid during the period for:
   Interest                                                       $ 19,417              $ 20,434
   Income taxes                                                          -                    78

Supplemental disclosure of non-cash item:
  Issuance of subordinated redemption notes to
  repurchase Class B Shares from members                                 -              $  1,423
</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,
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                                        (90,000)
                                                            -------------------
     Balance at June 30, 2001                                   $4,444,000
                                                            ===================


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 93.5%
of its net sales and operating profits are derived from the wholesale
distribution of food and food-related products to supermarket operators.
Additionally, approximately 78.9% 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                Thirty-nine  Weeks Ended
                                                    July 1,              June 30,           July 1,           June 30,
                                                    2000                   2001              2000               2001
                                             ---------------------------------------------------------------------------
<S>                                            <C>             <C>                    <C>               <C>
Net sales
  Wholesale distribution                            $726,081               $699,199        $2,229,033         $2,101,106
  All other                                           64,545                 47,259           188,982            145,731
  Intersegment elimination                           (52,371)               (23,244)         (118,058)           (77,647)
                                             ---------------------------------------------------------------------------
Total net sales                                     $738,255               $723,214        $2,299,957         $2,169,190
                                             ---------------------------------------------------------------------------

Operating income (loss)
  Wholesale distribution                            $ 11,051               $  9,091        $   32,612         $   31,323
  All other                                           (2,814)                (1,981)          (10,339)            (4,390)
                                             ---------------------------------------------------------------------------
Total operating income                              $  8,237               $  7,110        $   22,273         $   26,933
                                             ---------------------------------------------------------------------------

Interest expense                                       7,150                  6,805            21,658             21,642
Estimated patronage dividends                          4,364                  3,431            10,922             11,001
                                             ---------------------------------------------------------------------------
Loss before benefit for income taxes                $ (3,277)              $ (3,126)       $  (10,307)        $   (5,710)
                                             ---------------------------------------------------------------------------

Depreciation and amortization
  Wholesale distribution                            $  7,170               $  5,729        $   20,596         $   16,845
  All other                                              108                    580             1,290              1,601
                                             ---------------------------------------------------------------------------
Total depreciation and amortization                 $  7,278               $  6,309        $   21,886         $   18,446
                                             ---------------------------------------------------------------------------

Capital expenditures
  Wholesale distribution                            $  5,022               $  5,713        $   14,703         $   14,978
  All other                                              845                  2,367             4,470              3,161
                                             ---------------------------------------------------------------------------
Total capital expenditures                          $  5,867               $  8,080        $   19,173         $   18,139
                                             ---------------------------------------------------------------------------

Identifiable assets
  Wholesale distribution                            $633,687               $592,074        $  633,687         $  592,074
  All other                                          100,852                157,942           100,852            157,942
                                             ---------------------------------------------------------------------------
Total identifiable assets                           $734,539               $750,016        $  734,539         $  750,016
                                             ---------------------------------------------------------------------------
</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.

                                       6
<PAGE>

5.   The Financial Accounting Standards Board ("FASB") 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 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 a decline in interest rates, the Company recorded a negative
fair value  of $390,000 at June 30, 2001; accordingly, the Company recorded a
charge against the fair value of the collar of $1,585,000 during the first
thirty-nine weeks of the fiscal year.  For the thirteen week period ended June
30, 2001, the Company recorded a charge against the fair value of the collar of
$810,000.

     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 (loss) earnings 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 consolidated
condensed statements of operations a cumulative credit  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 derivatives 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 have been recorded in the consolidated
condensed statements of operations. For the thirteen and thirty-nine week period
ended June 30, 2001, the Company recorded a credit of $118,000 and a charge of
$462,000, respectively, in the Consolidated Condensed Statement of Operations
due to changes in the fair value of these convertible bonds.

     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.  Management believes 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 has determined
the effect on the Company's financial statements to be immaterial.

                                       7
<PAGE>

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

        SFAS No. 142 requires that an intangible asset that is acquired shall be
initially recognized and measured based on its fair value. The statement also
provides that goodwill should not be amortized, but shall be tested for
impairment annually, or more frequently if circumstances indicate potential
impairment, through a comparison of fair value to its carrying amount.  Existing
goodwill will continue to be amortized through the remainder of fiscal 2002 at
which time amortization will cease and the Company will perform a transitional
goodwill impairment test.  SFAS No. 142 is effective for fiscal periods
beginning after December 15, 2001.   The Company will implement the
pronouncement beginning in the first quarter of fiscal year 2003.  The Company
is currently evaluating the impact of the new accounting standards on existing
goodwill and other intangible assets.  While the ultimate impact of the new
accounting standards has yet to be determined, goodwill amortization expense for
the thirteen and thirty-nine weeks ended June 30, 2001 was $0.4 million and $1.1
million, respectively.


6.      Prior to the third quarter ending June 30, 2001, the Company acquired a
grocery retail operation consisting of three stores for $2.3 million.  The
purchase consisted of $0.8 million in inventory, $0.6 million in equipment and
$0.9 million in goodwill.  Pro-forma disclosures are not included since the
transaction is not considered significant to the Company's overall operations.
Although the purchase agreement was signed prior to June 30, 2001, actual
payment did not occur until the fourth quarter.  As a result, an accrual was
recorded for the transaction and related assets but its effect was excluded from
the Company's Consolidated Condensed Statements of Cash Flows at June 30, 2001.

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 provided by operating activities totaled $4.4 million for
the first thirty-nine weeks of fiscal 2001 (the "2001 period"), as compared to
net cash provided by operating activities of $42.0 million for the first thirty-
nine weeks of fiscal 2000 (the "2000 period"). The decrease in net cash provided
for the 2001 period as compared to the 2000 period is primarily due to a
decrease in accounts payable resulting from the finalization of integration
activities associated with the Company's accounts payable processing. Cash
utilization during the 2001 period was partially offset by an increase in cash
from accounts receivable and inventories resulting from management's controls
over these areas in response to reduced sales volume during the period. The
commencement of integration activity along with an emphasis on cash management
in the 2000 period resulted in higher accounts payable.  The 2000 period also
experienced an increase in cash due to management's efforts to reduce accounts
receivable and a reduction in inventories associated with the consolidation of
warehousing facilities in northern California.  At June 30, 2001, working
capital $140.0 million, as compared to $132.9 million at September 30, 2000,
and the Company's current ratio was 1.5 to 1 at June 30, 2001 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 $1.9
million.

  Capital expenditures totaled $18.1 million in the first thirty-nine weeks of
fiscal 2001.  The fiscal 2001 expenditures were primarily attributable to the
purchase of previously leased warehousing and store equipment.

                                       8
<PAGE>

  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 $75 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 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 June 30, 2001, the Company had net deferred tax assets totaling $22.6
million, of which $16.1 million related to net operating loss carryforwards that
expire in various years through 2020.   The Company has established a valuation
allowance of $8.0 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 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

                                       9
<PAGE>

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 and Company-owned retail stores, including
stores acquired from Albertson's for resale to members or others, the Company's
retained earnings have been eliminated 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                 For the Thirty-nine Weeks
                                                        Ended                                   Ended
                                             -------------------------------------------------------------------------
                                               July 1,            June 30,           July 1,           June 30,
                                                2000              2001                2000               2001
                                             -------------------------------------------------------------------------
<S>                                          <C>                <C>                <C>                 <C>
Net sales                                      100.0%              100.0%            100.0%             100.0%
Cost of sales                                   88.2                88.7              89.0               88.9
Distribution, selling and administrative        10.7                10.4              10.0                9.9
Operating income                                 1.1                 0.9               1.0                1.2
Interest expense                                 1.0                 0.9               1.0                1.0
Earnings before estimated patronage,
dividends, benefit for income taxes and
change in accounting principle                   0.1                 0.0               0.0                0.2
Estimated patronage dividends                   (0.6)               (0.4)             (0.5)              (0.5)
Loss before benefit for income taxes and
change in accounting principle                  (0.5)               (0.4)             (0.5)              (0.3)
Provision / (benefit) for income taxes           0.0                 0.0              (0.1)               0.0
Loss before change in accounting
principle                                       (0.5)               (0.4)             (0.4)              (0.3)
Cumulative effect of adopting SFAS
No. 133                                          0.0                 0.0               0.0               0.0
Net loss                                        (0.5)               (0.4)             (0.4)              (0.3)
</TABLE>


Thirteen Week Period

Net sales
     Net sales totaled $723.2 million for the 2001 period as compared to $738.3
million in the 2000 period. The sales decrease of $15.1 million represents a
2.0% decrease over the 2000 period. The overall decrease in sales is primarily
related to the following:


 .    In the fiscal 2000 period, the Company had $13.3 million of low or no
     margin bill-through activity associated with the former United operations.
     The Company subsequently eliminated processing this activity as part of its
     overall profit improvement and Merger integration activities.

                                       10
<PAGE>

 .    The Company's owned retail locations had lower volume for the 2001 period
     as compared to the 2000 period by $9.5 million. The reduction is primarily
     due to the closure of three Albertson's divestiture stores ("Divestiture
     Stores"), and an overall volume decline in the remaining store locations
     due to competitive pressures.

 .    The Company experienced a reduction in distribution volume of $10.2 million
     due to certain chain store supplemental business primarily in northern
     California that transitioned to self-distribution and store closures of
     independent supermarket owners primarily in the Pacific Northwest.

 .    Offsetting the declining factors, the Company's membership has added 14 new
     stores during the period, generating $17.9 million in additional wholesale
     volume.


Cost of sales
     In the 2001 period cost of sales was $641.2 million (88.7% of net sales)
compared to $651.3  million (88.2% of net sales) in the 2000 period.  On a
percentage basis, cost of sales was higher by 0.5% in the 2001 period as
compared to the 2000 period due to lower wholesale margins and lower retail
sales that generally have higher margins.

Distribution, selling and administrative
     Distribution, selling and administrative expenses were $74.9 million (10.4%
of net sales) in the 2001 period, as compared to $78.7 million (10.7% of net
sales) in the 2000 period. The reduction of expenses is due to several factors.
Certain distribution costs are variable and fluctuate as volume increases or
decreases. The closure of three Company owned retail locations resulted in an
expense reduction of $1.6 million. Additionally, the Company was successful in
realizing cost reductions from the Merger with United through the integration of
marketing, administration and information services activities approximating $1.7
million.

Interest
     Interest expense was $6.8 million (0.9% of net sales) in the 2001 period as
compared to $7.2 million (1.0% of net sales) in the 2000 period.  The Company's
effective borrowing rates for the 2001 and 2000 periods were 7.5% and 8.5%
respectively.  The effect of the decrease in interest rates offset the Company's
higher borrowing levels.

Estimated patronage dividends
     Estimated patronage dividends decreased $1.0 million to $3.4 million for
the 2001 period as compared to $4.4 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 interim patronage earnings of
$0.7 million from the cooperative division and $2.7 million from the dairy
division. For the 2000 period, the Company had interim patronage earnings of
$1.7 million from the cooperative division and $2.7 million from the dairy
division.

Net loss
     Net loss for the 2001 period was $3.1 million compared to $3.6 million for
the 2000 period. The losses experienced for the 2001 and 2000 periods are
predominately due to the Company's retail operations. Net losses are generated
by the Company's subsidiaries and nonpatronage activities.

Thirty-nine Week Period

Net sales
     Net sales totaled $2.2 billion for the 2001 period as compared to $2.3
billion for the 2000 period. The sales decrease of $130.8 million represents a
5.7% decrease over the 2000 period. The decrease in sales is primarily related
to the following:

 .    The Company experienced a $94.5 million reduction in distribution volume
     due to certain chain store supplemental business located primarily in
     northern California that transitioned to

                                       11
<PAGE>

     self-distribution and store closures of independent supermarket owners
     primarily in the Pacific Northwest.

 .    The Company's owned retail locations had lower volume for the 2001 period
     as compared to the 2000 period by $35.3 million. The reduction is primarily
     due to the closure of three divestiture stores and an overall volume
     decline in the remaining store locations due to competitive pressures.

 .    In the fiscal 2000 period, the Company had $34.3 million of low or no
     margin bill-through activity associated with the former United operations.
     The Company subsequently eliminated processing this activity as part of its
     overall profit improvement, which was implemented in the 2nd quarter of
     fiscal 2000 in conjunction with Merger integration activities.

 .    Offsetting the declining factors, the Company's membership has added 45 new
     stores during the period, generating $33.3 million in additional wholesale
     volume.


Cost of sales
     In the 2001 period, cost of sales were $1.9 billion (88.9% of net sales)
compared to $2.0 billion (89.0% 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 in the 2nd
and 3rd quarters of fiscal year 2000.  Partially offsetting this improvement was
the reduction in Company retail sales that have higher margins than distribution
activities.

Distribution, selling and administrative
     Distribution, selling and administrative expenses were $213.4 million (9.9%
of net sales) in the 2001 period, as compared to $230.5 million (10.0% of net
sales) in the 2000 period. The reduction of expenses is due to several factors.
Certain distribution costs are variable and fluctuate as volume increases or
decreases. The closure of the Company's owned retail locations resulted in an
expense reduction of $5.3 million. Additionally, the Company was successful in
realizing cost reductions of $8.0 million from the Merger with United. The cost
reduction consisted of approximately $1.4 million through the elimination of
duplicate facilities in Northern California and approximately $6.6 million from
the integration of marketing, administration and information services
activities.

Interest
     Interest expense was $21.6 million (1.0% of net sales) in the 2001 period
as compared to $21.7 million (1.0% of net sales) in the 2000 period. The
Company's effective borrowing rates for the 2001 and 2000 periods were 8.0% and
8.3% respectively. The effect of the decrease in interest rates offset the
Company's higher borrowing levels.

Estimated patronage dividends
     Estimated patronage dividends totaled $11.0 million for the 2001 period as
compared to $10.9 million for the 2000 period. The estimated patronage earnings
for fiscal 2001 are comprised of interim patronage earnings from the Company's
two patronage pools: the cooperative and dairy divisions. For the 2001 period,
the Company had interim patronage earnings of $3.1 million from the cooperative
division and $7.9 million from the dairy division. For the 2000 period, the
Company had interim patronage earnings of $2.5 million from the cooperative
division and $8.4 million from the dairy division.

Net loss
     Net loss for the 2001 period was $5.7 million compared to $8.6 million for
the 2000 period. The losses experienced for the 2001 and 2000 periods are
predominately due to the Company's retail operations. 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.

                                       12
<PAGE>

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 and a 90 day LIBOR rate.

     The weighted average interest rate, prior to lender's margin, on borrowings
on the revolving credit was 4.2% at June 30, 2001. The recorded negative fair
market value  of the collar agreement at June 30, 2001 was $390,000.

     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

     10.51 Amendment to Employment Agreement dated as of August, 1999, between
     registrant and Alfred A. Plamann.


(b)  Reports on Form 8-K
     None

                                       13
<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: August 13, 2001

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



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


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


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

                                       14
<PAGE>

                                 EXHIBIT LIST


10.51 Amendment to Employment Agreement dated as of August, 1999, between
registrant and Alfred A. Plamann.

                                       15