<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                           --------------------------
 
                                   FORM 10-K
 
          ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)              (Mark One)
      OF THE SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)             /X/
            FOR THE FISCAL YEAR ENDED AUGUST 31, 1996
        TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D)
    OF THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)            / /
      FOR THE TRANSACTION PERIOD FROM                   TO
                 COMMISSION FILE NUMBER 0-10815
 
                           --------------------------
 
                     CERTIFIED GROCERS OF CALIFORNIA, LTD.
             (Exact name of registrant as specified in its charter)
 
               CALIFORNIA                               95-0615250
    (State or other jurisdiction of        (I.R.S. Employer Identification No.)
     incorporation or organization)
 
  2601 S. EASTERN AVENUE, LOS ANGELES                     90040
(Address of principal executive offices)                (Zip Code)
 
       Registrant's telephone number, including area code: (213) 723-7476
                           --------------------------
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:
 
          TITLE OF EACH CLASS                     NAME OF EACH EXCHANGE
 
                                     NONE.
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
 
                                 CLASS A SHARES
                                (Title of Class)
 
                                 CLASS B SHARES
                                (Title of Class)
                           --------------------------
 
    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 ____.
 
    Indicate  by check mark if disclosure  of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's  knowledge, in definitive  proxy or information  statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. /X/
 
    State  the aggregate market value of the voting stock held by non-affiliates
of the registrant. The aggregate market value shall be computed by reference  to
the  price at which  the stock was sold,  other average bid  and asked prices of
such stock, as of a specified date within  60 days prior to the date of  Filing.
(See definition of affiliate in Rule 405, 17 CFR 230.405).
 
    The  Company's shares are not publicly  traded and therefore market value is
not readily ascertainable.
 
                   (APPLICABLE ONLY TO CORPORATE REGISTRANTS)
 
    Indicate the  number  of shares  outstanding  of each  of  the  registrant's
classes of common stock, as of the latest practicable date.
 
<TABLE>
<S>       <C>
Class A       49,100 shares as of November 1, 1996
Class B      383,815 shares as of November 1, 1996
Class C           15 shares as of November 1, 1996
</TABLE>
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    List  hereunder the following documents if incorporated by reference and the
part of the Form 10-K (e.g., Part I,  Part II, etc.) into which the document  is
incorporated:  (1)  Any annual  report  to security  holders;  (2) Any  proxy or
information statement; and (3) Any prospectus  filed pursuant to Rule 424(b)  or
(c)  under the Securities  Act of 1933.  The listed documents  should be clearly
described for identification purposes (e.g.,  annual report to security  holders
for fiscal year ended December 24, 1980).
 
                                     None.
 
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<PAGE>
                               TABLE OF CONTENTS
 
                                     PART I
 
<TABLE>
<CAPTION>
ITEM                                                       PAGE
---------------------------------------------------------  ----
<S>    <C>                                                 <C>
 1.    Business..........................................    3
 2.    Properties........................................   18
 3.    Legal Proceedings.................................   18
 4.    Submission of Matters to a Vote of Security
        Holders..........................................   18
 
                            PART II
 
 5.    Market for Registrant's Common Equity and Related
        Shareholder Matters..............................   18
 6.    Selected Financial Data...........................   19
 7.    Management's Discussion and Analysis of Financial
        Condition and Results of Operations..............   19
 8.    Financial Statements and Supplementary Data.......   23
 9.    Changes in and Disagreements with Accountants on
        Accounting and Financial Disclosure..............   51
 
                           PART III
 
10.    Directors and Executive Officers of the
        Registrant.......................................   52
11.    Executive Compensation............................   54
12.    Security Ownership of Certain Beneficial Owners
        and Management...................................   58
13.    Certain Relationships and Related Transactions....   60
 
                            PART IV
 
14.    Exhibits, Financial Statement Schedules, and
        Reports on Form 8-K..............................   62
 
Signatures...............................................   67
</TABLE>
 
                                       2
<PAGE>
                                     PART I
 
    Certified  Grocers of California, Ltd. and its consolidated subsidiaries are
hereinafter referred to as "Certified" or the "Company."
 
ITEM 1.  BUSINESS
 
    EXCEPT  FOR  THE  HISTORICAL  INFORMATION  CONTAINED  HEREIN,  THE   MATTERS
DISCUSSED  IN  THIS REPORT  ON FORM  10-K  ARE FORWARD-LOOKING  STATEMENTS WHICH
INVOLVE  RISKS  AND  UNCERTAINTIES,  INCLUDING  BUT  NOT  LIMITED  TO  ECONOMIC,
COMPETITIVE,  GOVERNMENTAL  AND  TECHNOLOGICAL FACTORS  AFFECTING  THE COMPANY'S
OPERATIONS, MARKETS, PRODUCTS, SERVICES AND PRICES, AND OTHER FACTORS  DISCUSSED
IN THE COMPANY'S FILINGS WITH SECURITIES AND EXCHANGE COMMISSION.
 
GENERAL
 
    Certified,  a California corporation  organized in 1922  and incorporated in
1925, is a  wholesale grocery  distributor which  does business  primarily on  a
cooperative  basis  with those  patrons who  qualify and  have been  accepted as
"member-patrons." Certified is owned by its member-patrons, which are  primarily
independent grocers, and is operated and taxed on a cooperative basis. Certified
also  does some business  on a cooperative  basis with some  patrons who are not
member-patrons and  who are  referred  to as  "associate patrons."  Pursuant  to
Certified's  Bylaws,  the  net  earnings  of Certified  on  business  done  on a
cooperative basis are distributed as  patronage dividends to member-patrons  and
associate  patrons  based on  the volume  of such  business transacted  with the
patron. For the fiscal year ended August 31, 1996, declared patronage  dividends
totalled $13,200,000.
 
    Certified  also does business  on a nonpatronage  basis with other customers
and in some  instances with  member-patrons and  associate patrons.  Certified's
subsidiaries  do business on a nonpatronage basis with member-patrons, associate
patrons and other customers.
 
    Patrons engaged in the retail grocery business who purchase 350 or more  dry
grocery  cases weekly (approximately  $5,000), or whose  combined average weekly
purchases (excluding  cigarettes) are  $5,000 or  more, are  required to  become
member-patrons.  Associate patrons  generally purchase  200 or  more dry grocery
cases weekly and have combined average weekly purchases of less than $5,000.  At
August  31, 1996,  Certified had 491  member-patrons operating a  total of 2,361
retail food stores  and 265 associate  patrons operating a  total of 624  retail
food stores.
 
    The  following table shows the number of patrons and stores operated by such
patrons at the end of each of the respective fiscal years:
 
<TABLE>
<CAPTION>
                                                                                  FISCAL YEAR
                                                                        -------------------------------
                                                                          1996       1995       1994
                                                                        ---------  ---------  ---------
<S>                                                                     <C>        <C>        <C>
Number of patrons:
  Member-patrons......................................................        491        503        491
  Associate patrons...................................................        265        304        285
                                                                        ---------  ---------  ---------
                                                                              756        807        776
                                                                        ---------  ---------  ---------
                                                                        ---------  ---------  ---------
Stores operated:
  Member-patrons......................................................      2,361      2,320      2,372
  Associate patrons...................................................        624        725        635
                                                                        ---------  ---------  ---------
                                                                            2,985      3,045      3,007
                                                                        ---------  ---------  ---------
                                                                        ---------  ---------  ---------
</TABLE>
 
                                       3
<PAGE>
STRATEGY
 
    During fiscal 1995, Certified developed  a strategic initiative designed  to
"re-invent"  the  Company  and fundamentally  change  the way  it  conducted its
business.  This  initiative  is  called  "C(3)"  --  Certified's  Commitment  to
Customers.  At the heart of  the C(3) plan is  a new corporate mission statement
that serves as a guide for Certified's progress well into the next century:
 
    TO BE  THE MOST  COST EFFECTIVE,  QUALITY-DRIVEN COMPANY  THAT  PROVIDES
    WORLD-CLASS  SERVICES  AND  COMPLETE  PRODUCT  SELECTION  BY  CREATING A
    PARTNERSHIP WITH RETAILERS AND STRATEGIC ALLIANCES WITH SUPPLIERS.
 
    During the past  year, Certified  has worked  hard to  develop and  maintain
partnerships  with  the  various  business segments  that  are  critical  to the
continuing success  of Certified  and  its members,  such as  member  retailers,
vendors,  consumers and  employees. Certified, its  vendors and  its members are
working to form a "virtual chain," an organization that rivals chain  operations
in  terms  of operating  efficiencies,  commitment to  technology,  transfer and
exchange of information and delivery of world-class services.
 
    Certified  is  developing   effective  partnerships   by  establishing   and
maintaining  an  effective working  relationship with  each business  segment, a
relationship that provides mutual benefits for both parties over both the  short
and  long-term. The Company is trying new  ideas, making new commitments and, in
many cases, doing things quite  differently from the way  they were done in  the
past.
 
    In  fiscal  1996, Certified  made significant  progress in  a number  of key
functional areas of the Company, gains that were due largely to new partnerships
forged with customers, suppliers and employees. These partnerships, along with a
number of other programs and strategic  initiatives now underway, have not  only
improved  the Company's financial position, they  have restored its seven decade
reputation as an  innovative, aggressively  growing force  within the  wholesale
grocery industry.
 
    While  12 months is  too short a  period to constitute  a long-term business
trend, the Company is encouraged by the early success of its ongoing partnership
program and  has committed  additional resources  toward expanding  the  overall
effort into the current fiscal year and beyond.
 
  AN INNOVATIVE PARTNER
 
    An  effective way to establish and  maintain a successful partnership with a
key business segment is to come up  with an innovative idea and help  facilitate
its  implementation.  During  fiscal  1996,  Certified  developed  a  number  of
innovative ideas and then  worked closely with members  and customers to  launch
them successfully.
 
    Early  in the year,  Certified subsidiary Grocers  Equipment Company ("GEC")
unveiled a banner store  program designed to  introduce modern technologies  and
merchandising   strategies   to   older   stores   by   converting   them   into
state-of-the-art retail  operations with  new layouts  and interior  decor.  The
first  two formats  in the  program --  conventional (Apple  Market) and limited
assortment (Total Value) -- emerged from the design phase to full-fledged  pilot
programs and are now in the process of being implemented Company-wide.
 
  APPLE MARKETS
 
    The Apple Market program was designed to increase store traffic by upgrading
the design and format of older retail stores from the inside-out. Although Apple
Markets  are independently owned and operated, they  have the look and feel of a
chain store because each  one carries the  same name and  logo, offers the  same
quality  products, uses a consistent merchandising approach and employs the same
design and decor package throughout the store.
 
    Certified also  provides  each  store  with a  host  of  advertising  tools,
marketing and promotional programs and plenty of in-store merchandising support,
such  as produce and meat specialists who assist with operations, merchandising,
scheduling and training.
 
                                       4
<PAGE>
    In early tests of the Apple  Market concept, shoppers reacted positively  to
the  format, giving the stores high marks  for a clean, upscale look, a pleasant
shopping atmosphere and a  consistent, well thought-out  store design. This  has
prompted  an  initial surge  of interest  from Certified  members who  desire to
convert their stores to the Apple Market format.
 
    The first Apple Markets  opened for business in  Southern California in  the
fall  of  1996,  while  three  Apple  Markets  are  currently  open  in Northern
California. Certified anticipates  a roll-out  of approximately  20 such  stores
during fiscal 1997.
 
  TOTAL VALUE
 
    In  addition to the Apple Market  program, Certified began testing a limited
assortment format,  Total  Value, during  1996.  This particular  format,  which
consists  primarily of  private label  items, has  been extremely  successful in
other areas of the country. Certified's efforts in 1996 focused on developing  a
limited  assortment  store to  meet the  specific  needs of  Certified's diverse
customer base, and initial tests revealed positive results.
 
  IMPACT PRICING
 
    In 1996, Certified inaugurated its  new partnership with retailers with  the
introduction  of a customer-centered  impact-based pricing program. Impact-based
pricing is a new approach for Certified, and one that makes sense for a  company
committed to forging partnerships with its customers. The new pricing program is
based  on the  premise that customers  who order efficiently  contribute to, and
should benefit from,  Certified's cost efficiencies.  Impact-based pricing is  a
volume  incentive pricing program that  recognizes the benefits and efficiencies
of order size and calculates fees  primarily at the category level. This  allows
lower  fees to be  charged for price  sensitive categories, as  well as specific
high volume and high value items.
 
    Certified is committed to the success of impact-based pricing as a  mutually
beneficial way to satisfy the varying needs of both wholesaler and customer. For
that  reason, in conjunction with the  launch of impact-based pricing, Certified
representatives met with retailers  on an individual basis  to explain both  how
the  program works --  and how they could  make the program  work best for them.
Initial results  showed the  program  is working  effectively, as  evidenced  by
significant changes in many retailers' ordering patterns.
 
  EMPLOYEES
 
    Certified  is  also  using  innovative  ideas  to  establish  a progressive,
long-term partnership with its  employees, a business segment  that plays a  key
role in the future success of the company.
 
    For  example,  in February  1996,  Certified President  and  Chief Executive
Officer, Alfred A. Plamann, invited the Company's 2,400 employees to join him in
creating  a  partnership  to   form  a  "new"   Certified  during  a   satellite
teleconference  that  was transmitted  to the  Company's Commerce,  Stockton and
Fresno warehouses. During the meeting, Mr. Plamann made it clear that the  "new"
Certified is a company that embraces change -- and that employees of the Company
are the drivers of that change.
 
    Another  innovative  idea,  launched  a  few  months  ago,  brought together
employees from the Company's warehouses and the purchasing department to discuss
how their  functions are  interrelated and  could be  made more  efficient  with
better  communication.  The program,  however,  wasn't limited  to  meetings and
cursory discussions. Employees  from purchasing and  operations "switched  jobs"
for  a day to  gain hands-on experience  and a firsthand  perspective of what it
takes to get the right products to  customers on a daily basis. The net  result?
Enhanced  distribution efficiencies,  better and  smarter purchases,  and better
served customers.
 
  A PARTNER IN TECHNOLOGY
 
    Because  keeping  abreast  of  technology  is  crucial  in  an  increasingly
competitive marketplace, one of Certified's primary goals during fiscal 1996 was
to  make technology more  accessible to independent retailers  -- and to upgrade
its own  information  systems.  To  accomplish  this,  the  Company  focused  on
developing two technology-based partnerships -- an external partnership designed
to  facilitate  technology enhancement  with  member retailers  and  an internal
partnership designed to facilitate  the implementation of new,  state-of-the-art
information systems throughout the Company.
 
                                       5
<PAGE>
    On  the external side, Certified made an all-new interactive ordering system
available to customers  to help  them maximize  their efficiencies.  Certified's
interactive  ordering system enables retailers to access the warehouse inventory
electronically to determine what's available and what's out-of-stock,  calculate
the  efficiency of  their order  by cube  size and  then electronically transmit
their order  by  simply pressing  a  button.  The system  shows  average  weekly
purchases,  as well as  base cost, which helps  customers maximize load building
and make the most of impact-based pricing.
 
    Early results of the partnership program are showing a significant  positive
impact. In some instances, retailers have consistently been able to reduce their
ordering  time by half.  Other retailers report  that the system  is saving them
money because it  enables them  to capitalize  on discounts  and construct  more
efficient  orders.  The  program  also  is  benefiting  Certified  because  more
efficient orders  are resulting  in consolidation  of smaller  orders and  fewer
deliveries, all of which result in lower handling and transportation costs.
 
    Internally, Certified worked hard to create a partnership with employees and
outside  vendors that enabled the Company  to make the first substantial changes
in the Company's information system in more than two decades. Among the  results
achieved by the Company are a complete restructuring of the Information Services
department  to create a  focus on virtual chain  technology, the installation of
new general ledger, payroll and human  resources systems, and the conversion  of
the Company's host-based database system to one that is infinitely more flexible
and capable of linking directly with Certified's retailers.
 
  A PARTNER IN CUSTOMER SERVICE
 
    Certified's mission statement clearly identifies "world-class services" as a
cornerstone  of the "new" Certified. Consequently, the only realistic method for
achieving this superlative was to create  and develop an all-new system  devoted
exclusively  to  serving  the  informational needs  of  Certified's  members and
customers.
 
    One of the  most exciting achievements  for Certified in  this area was  the
implementation  of the Single Point of  Contact ("SPOC") customer service center
-- a comprehensive and reliable  communications system designed specifically  to
answer  customer questions.  Priority number  one was  quick response  time, and
throughout the year, a  cross-functional team of  Certified employees worked  on
designing  a system that would yield a wide range of information in a very short
period of time.
 
    The result is that customers now have just one number to call for  virtually
any  information request. Trained SPOC  representatives have information on-hand
to immediately answer inquiries on such topics as invoices, delivery status, how
to become a new customer, company capabilities and new product information.  For
questions  falling outside the range of  expertise of the SPOC representative, a
"network" of  trained  personnel throughout  the  Company work  to  quickly  and
efficiently  obtain  the requested  information.  To ensure  quality  control, a
computerized tracking  system  was  installed  to  follow  inquiries  and  their
responses.
 
    In  short,  the system  was  designed to  make it  as  easy as  possible for
customers to receive information from Certified  -- a critical first step for  a
Company  that  is  staking its  future  on  its ability  to  provide world-class
services to its customers in a virtual chain environment.
 
    Exceptional service, however, isn't just limited to activities involving the
SPOC center. To better serve retail customers when orders are delivered to their
stores, Certified recently initiated a new program whereby Company truck drivers
distribute Customer Feedback Forms to retailers when orders are delivered.
 
    The forms ask retailers for input on  the condition of the load, how it  was
stacked  on the pallet,  if any damage occurred  en route, and  if the order was
accurately picked. Once collected, the  information is immediately presented  to
appropriate  contacts at the warehouse so problems can be resolved as quickly as
possible.
 
    Early results from the program show that retailers appreciate the  Company's
efforts  to  improve the  quality  of its  shipping  operation and  that Company
employees -- drivers  and warehouse  personnel --  are welcoming  the chance  to
participate in an effort to improve the Company's overall rates of efficiency.
 
                                       6
<PAGE>
    Along  the  same  lines,  Certified's bakery  division  recently  launched a
full-service merchandising program  to better  serve retailers at  the point  of
delivery.  Now, representatives from Certified's bakery not only deliver quality
bread  products,  they   also  stock   shelves,  rotate   product  and   provide
merchandising support.
 
    Customer  input  is important  to Certified  and  essential to  serving them
effectively. Last year, Certified  recruited an advisory  group of retailers  to
help  develop a new  marketing guide for  members and customers  in Northern and
Southern California. By  asking retailers  what they would  like to  see in  the
guide, Certified was able to best accommodate their needs. The result was a "new
and  improved" marketing guide with news  retailers can use, such as promotional
information, category analysis, and trends.
 
    Providing an  array of  business growth  opportunities to  customers is  yet
another  way Certified is able to effectively serve the needs of its membership.
For example, Certified created a tremendous growth opportunity for members  when
it  purchased 9 Petrini's  supermarkets from Bay Area  Foods, Inc. By re-selling
these supermarkets  to existing  members,  and other  retailers who  became  new
Certified  members, Certified helped achieve a major part of Certified's goal to
help retailers grow. Along with the Petrini's stores, these purchasing retailers
brought some 18 new stores to Certified.
 
  AN EFFICIENT, GROWING PARTNER
 
    A good partnership is one that is forward-moving and committed to maximizing
the capabilities  of the  parties involved  for  the benefit  of all.  In  1996,
Certified  successfully  stepped  up  its  efforts  to  expand  productivity and
efficiency in various areas.
 
    In Certified's Manufacturing Division,  the dairy was  able to increase  its
production  to nearly 100 percent of capacity with the addition of a $45 million
customer, Ross Swiss  Dairies. Producing  approximately one  million gallons  of
milk  a week, Certified's dairy is now one  of the largest -- and most efficient
-- in the state.
 
    Certified's bakery has recently  added a significant  amount of business  to
its  day-to-day operations, as  well. This fall,  Certified's bakery announced a
partnership with St. Louis-based Earthgrains-TM-  to produce and distribute  the
company's  line  of  premium  bread  products.  This  addition  to  the bakery's
production will significantly enhance its overall efficiency.
 
    Yet another area involves  the expansion of  Certified's Meat Division  into
Northern  California. As fiscal 1997 commenced, the first deliveries of meat and
service deli  products  to customers  in  the North  were  made from  the  newly
established   Meat  Division,  Certified's  Southern  California  Meat  Division
expanded its presence into Mexico, and currently supplies approximately  120,000
pounds of poultry per week to customers there.
 
    In  a  continuing  effort  to  reduce  costs  and  inefficiencies  from  its
distribution  system,  Certified  in  fiscal  1996  restructured  its  warehouse
operations to emphasize speed, quality and simplicity. However, this is just one
piece  of a  much larger puzzle.  Distributing high-quality  grocery products to
consumers quickly and  accurately requires a  synergy between all  links in  the
virtual chain, beginning with Certified's vendors.
 
    Forging  new alliances with  vendors was a main  objective at Certified last
year, and as a team they worked together to create new and innovative  programs.
With  a common goal in mind --  moving grocery products through the warehouse as
quickly and  efficiently  as possible,  Certified  increased its  focus  on  ECR
(Efficient  Consumer Response)  and other  emerging industry  practices that are
streamlining the distribution business and making it far more efficient.
 
  SUMMARY
 
    At the heart of  Certified's mission is partnership  -- working together  to
achieve  a common goal.  In the past  year, partnerships played  a vital role at
Certified  Grocers.  Working  with   retailers,  fostering  employer/   employee
relationships  within the  Company and teaming  with vendors  all contributed to
Certified's significant achievements in fiscal 1996.
 
    As a team dedicated to serving the needs of today's consumers, Certified and
independent retailers developed new  programs and implemented new  technologies.
Employees within Certified participated in
 
                                       7
<PAGE>
cross-functional  group training programs to gain  a better understanding of how
the jobs they do affect the Company  as a whole. Lastly, fiscal 1996 marked  the
beginning  of a new commitment by Certified  and its vendors to work together to
build programs that provide consumers with the best products at the best  price,
every day.
 
    During  fiscal 1997, Certified will continue  to target growth as its number
one objective and will continue to use the partnership concept as a means toward
that end.
 
PRODUCT LINES
 
    The following table summarizes the Company's sales by product line, for each
of the respective three fiscal years indicated below:
 
<TABLE>
<CAPTION>
                                                                        FISCAL YEAR
                                                          ----------------------------------------
                                                              1996          1995          1994
                                                          ------------  ------------  ------------
                                                                    (THOUSANDS OMITTED)
<S>                                                       <C>           <C>           <C>
Dry Grocery (includes specialty products)...............  $  1,100,753  $  1,030,024  $  1,035,213
Delicatessen............................................       207,931       178,582       180,159
Meat....................................................       175,312       145,997       138,082
General Merchandise.....................................       159,714       209,943       222,574
Frozen Food.............................................       123,725       113,208       142,852
Dairy...................................................        90,066        66,399        71,024
Ice Cream...............................................        20,109        20,879        22,071
Bakery..................................................        19,120        15,839        13,037
Drop Shipment...........................................        11,410        12,662        12,447
Beans and Rice..........................................         5,759         4,527         6,305
Other...................................................        35,020        24,744        30,108
                                                          ------------  ------------  ------------
    Total...............................................  $  1,948,919  $  1,822,804  $  1,873,872
                                                          ------------  ------------  ------------
                                                          ------------  ------------  ------------
</TABLE>
 
    The Company,  with headquarters  in Los  Angeles, distributes  product  from
facilities  in Southern and Northern California.  Certified sells a full line of
branded grocery and nonfood items  supplied by unrelated manufacturers and  also
sells  merchandise  under its  own  private labels,  including  the Springfield,
Gingham, Special  Value, La  Corona,  and Golden  Creme labels.  Certified  also
operates its own bakery and dairy facilities. Grocers Specialty Company ("GSC"),
a subsidiary, carries a product line consisting of specialty-type items, such as
ethnic  and  gourmet foods,  and also  carries  a general  product line  sold to
non-member retailers. General merchandise  items including housewares,  hardware
and  health and beauty  care products are primarily  sold by another subsidiary,
Grocers General Merchandise Company ("GM").
 
WHOLESALE DISTRIBUTION
 
    Certified's cooperative wholesale business represented approximately 82%  of
fiscal  1996 sales. The wholesale business includes a broad range of branded and
private label products in dry grocery, frozen, delicatessen, boxed meat, service
deli, ice cream, bakery and dairy.
 
    The Company also  conducted certain  food and  related nonfood  distribution
operations  through GSC and  GM, which collectively  accounted for approximately
14% of fiscal 1996 sales.  GSC operates out of  a combination of mechanized  and
conventional  warehouses in  Commerce, California.  GM distributes  its products
from  a  highly  automated  general  merchandise  facility  located  in  Fresno,
California.
 
    The  Fresno facility is operated by a joint venture known as Golden Alliance
Distribution ("GAD"). GAD was formed in 1992 and  is owned 50% by GM and 50%  by
Food  4 Less GM, Inc. ("F4LGM"). Fixed costs of operating GAD are shared equally
by each partner, while variable costs are  shared based on a formula that  takes
into  consideration each partner's  volume. The basic term  of the joint venture
expires in 2002,  but may  be terminated  earlier pursuant  to other  provisions
outlined in the joint venture agreement.
 
    During  1995,  the  parent  of  F4LGM  merged  with  Ralphs  Grocery Company
("Ralphs"). Since the completion of the merger in June 1995, Ralphs has  reduced
its  weekly purchases from the Fresno  warehouse by approximately 80%. Certified
is currently  in discussions  with Ralphs  regarding their  long-term plans  for
 
                                       8
<PAGE>
utilizing  the Fresno facility.  The resolution of  these discussions may impact
the Company's operations in the Fresno  facility and may have an adverse  effect
on the future profitability of GM if Certified is unable to replace this volume.
 
    During  the year,  the Company sold  its common stock  ownership in Hawaiian
Grocery Stores, Ltd. ("HGS"). HGS is a distributor of a variety of dry  grocery,
frozen  and  delicatessen  products in  the  Hawaiian islands.  Pursuant  to the
transaction, the Company retained a  preferred stock ownership interest in  HGS,
as well as supply and joint purchasing arrangements.
 
    The  Company  distributes  its  various product  lines  from  four warehouse
complexes and two  manufacturing plants (dairy  and bakery) located  in the  Los
Angeles  metropolitan  area,  a  dry  and  refrigerated  warehouse  in Stockton,
California, and one mechanized warehouse in Fresno, California.
 
    The Company is not dependent upon any single source of supply in any of  its
businesses.  Management believes  that alternative  suppliers are  available for
substantially all of its products  and that the loss  of any one supplier  would
not have a material adverse effect on the Company's business.
 
MARKETING AND DISTRIBUTION OF PRODUCTS
 
    The  Company currently markets and distributes in six principal geographical
areas: Southern  California,  Northern  California,  Arizona,  Southern  Nevada,
Hawaii  and various  foreign countries in  the South Pacific  and elsewhere. The
competitive climate in  each of these  regions is individually  unique and as  a
result,  the Company offers a diversified  selection of products and services to
better  enable  the  customer  to  meet  its  consumers  needs  and  maintain  a
competitive edge.
 
    As a cooperative organization, the Company principally markets its goods and
services  to the membership through bi-weekly  order books, weekly buying guides
and price  bulletins. Buying  guides list  current promotional  items and  other
product   related  information.   The  price  bulletins   show  promotional  and
advertising allowances available from the various manufacturers and suppliers.
 
    The  Company,  through  its  Sales  and  Service  department,  assists   its
membership  with many special service needs.  A sales and service representative
presents to the customer the available services that the Company offers.
 
    The Company offers  multiple methods  for customers to  place their  orders.
During  fiscal 1996, the  Company developed an  interactive ordering system that
enables customers to identify errors, warehouse out-of-stocks and percentage  of
trailer  capacity prior to transmitting an order.  This system is expected to be
available to  all  members during  fiscal  1997.  The Company  also  offers  its
customers   the  option  of  submitting  orders  electronically  with  an  order
transmitting  device,  or  by  telephoning  the  order  to  a  customer  service
representative.
 
    The  Company offers  a service program  in its ice  cream, bakery, specialty
food and general merchandise businesses. Customers utilizing the service program
account for 52% of ice cream sales, 5% of bakery sales, 25% of specialty  sales,
and  12%  of  its general  merchandise  sales  for 1996.  In  aggregate, service
programs account for 3% of the  Company's total 1996 sales. The service  program
consists  of a  Company service  representative visiting  a participating store,
checking stock quantities,  refacing shelf  stock and  ordering a  replenishment
shipment.   When  necessary,  service   personnel  will  perform   a  reset  and
remerchandising of a store's products  to increase store-level sales. The  above
services  are  provided  at  an additional  charge  depending  on  service level
agreements.
 
SERVICES AVAILABLE TO MEMBERS
 
    The Company  provides a  variety of  services to  its members  to help  them
maintain  a  competitive  position  within  the  retail  grocery  industry.  The
Company's services to members include:
 
    PRICING SERVICES.  Subscribing members  provide the Company with either  the
retail price or the percentage profit margin they wish to maintain on each item,
and  such figures are shown on each invoice and on each case of goods delivered.
The patron may update this pricing  structure weekly in accordance with  changes
in wholesale costs and competitive activity in its particular market area.
 
                                       9
<PAGE>
    ORDERING  ASSISTANCE.  The Company provides various programs to increase the
speed and  efficiency of  the order  transmittal process.  It offers  electronic
units  which retailers can  use to transmit  orders electronically by telephone.
GEC offers a  menu of  retail technology options  for selection  by members.  To
eliminate  order errors and minimize freight and service charges the Company has
introduced "InterActive  Ordering." The  system  utilizes a  multifunctional  FM
hand-held  scanner that transmits  to a Windows  95-TM- PC in  the store that is
linked to  the  Company's  mainframe  computer and  allows  for  electonic  data
interchange of timely, valuable information.
 
    POINT  OF  SALE  COMPUTER SERVICES.    The Company  provides  retailers with
assistance and computer services in connection  with the use of scanners at  the
checkout counter.
 
    VELOCITY  REPORTS.   The Company  provides detailed  summaries of  all items
ordered by the retailer from the  Company, together with historical pricing  and
profit margin data.
 
    STORE  DEVELOPMENT.  The  Company assists members  in equipment procurement,
store engineering  and  site development  activities.  For a  fee,  the  Company
provides  plot  plans, floor  plans,  and other  drawings  for new  or remodeled
stores, construction cost estimates and  design consultation. In addition,  many
types  of store  fixtures and  equipment can be  obtained at  a price reflecting
volume purchase discounts earned by the Company.
 
    FINANCE PROGRAMS.  The Company  assists qualified members in remodeling  and
expanding  existing retail locations and developing  new retail outlets, as well
as assisting in the financing of inventory and equipment needs.
 
    RETAIL COUNSELING.   The Company  provides members  with experienced  retail
counselors,  knowledgeable in all phases of retail grocery operations, to assist
patrons in planning their sales and  profit growth. The counselors work  closely
with  owner/managers to solve problems  and identify opportunities for improving
operations. They also advise patrons of  current trends and developments in  the
retail grocery industry.
 
    RETAIL  ADVERTISING.   The  Company assists  in the  formation of  retail ad
groups consisting of several members within a given area. Each group is provided
with an  ad group  coordinator  who assists  in preparing  advertising  layouts,
assures  that advertising dollars are identified  and collected from vendors and
other sources, and serves as liaison between the ad group and suppliers.
 
    INSURANCE SERVICES.    The  Company's insurance  programs  are  serviced  by
Grocers and Merchants Insurance Services, Inc. ("GMIS"). GMIS, which is licensed
as  an insurance  agency, acts  as agent  or broker  for unrelated underwriters,
which are  the issuers  of  the insurance  policies.  Certain of  the  insurance
companies  reinsure portions of insured  risks pursuant to reinsurance contracts
with Springfield Insurance  Company, Limited  ("Springfield-Bermuda"), which  is
incorporated  and licensed  in Bermuda,  or Springfield  Insurance Company, Inc.
("Springfield-California"), which is  incorporated and  licensed in  California.
Both  insurance companies  are wholly  owned subsidiaries  of the  Company. GMIS
provides an insurance program for  members, employees of members, and  employees
of  the Company.  Under the  commercial store  package, coverage  includes fire,
store liability, automobile, fidelity,  theft, bonds, workers' compensation  and
business  interruption.  Insurance offered  by  the life  and  health department
includes individual  and  group  health plans,  life  insurance,  mutual  funds,
disability  income and estate planning. The personal insurance department offers
homeowners, automobile, motorcycle, motorhome, boat and aircraft coverages.
 
    SITE IDENTIFICATION AND ANALYSIS.  The Company assists its retailers who are
growth oriented in identifying potential  new store locations. Once the  Company
or a retailer has identified a particular site as having potential for new store
development, the Company can commission an independent site feasibility analysis
of the location, which includes a study of the demographics of the general area,
the  market competitors located in the  primary and secondary trading areas, and
what volume a new store should expect in the location being considered.
 
    DATA  PROCESSING.    The  Company  provides  data  processing  services  and
customized  software programs for its customers  using a direct computer link to
many   of    its    customers'   stores.    The    Company   can    provide    a
 
                                       10
<PAGE>
retailer with a product and price file for virtually every product, with pricing
by the appropriate zone in which a retailer is located. Retailers can also order
all  inventory directly from the Company using their store-to-warehouse computer
link and an order entry system.
 
TRUCKING OPERATIONS
 
    The Company's  trucking fleet  is used  in the  transportation of  food  and
related items from suppliers to the Company and in the delivery of such items to
its customers. These operations are conducted principally in California, Arizona
and  Nevada. The Company's vehicle fleet consists of approximately 290 tractors,
745 trailers, and 13 pickup vans. Approximately 55% of the fleet is owned by the
Company; the balance is leased. Such leases generally have initial terms of 8 to
10 years and provide  for renewal or  purchase options at  fair market value  at
expiration of the lease.
 
SUPPORT BUSINESSES
 
    The  Company's subsidiary  retail support  businesses collectively accounted
for approximately 2%  of the  Company's total sales  in fiscal  1996, 1995,  and
1994.  Principal  retail  support  operations  include  Grocers  Capital Company
("GCC"), which provides financing for inventory purchases, equipment  purchases,
store  remodeling and new store acquisitions, and GEC, which provides additional
support in store planning and development services, retail pricing  comparisons,
scanning support and also sells and leases equipment to the Company's customers.
The  Company also  provides insurance  brokerage services  for retailers through
GMIS  and   underwrites  selected   insurance   risks  through   two   insurance
subsidiaries.
 
RETAIL BUSINESSES
 
    During  the year, the Company introduced  a banner store program designed to
convert older  stores into  state-of-the-art retail  operations. The  first  two
formats  in the  program -- conventional  (Apple Market)  and limited assortment
(Total Value) emerged from the  design phase to a pilot  program and are now  in
the   process  of  being  introduced  to  the  marketplace.  Apple  Markets  are
independently owned and operated; however, they  have the look of a chain  store
because each store carries the same name, logo, and design layout throughout the
stores.  The  limited  assortment  format, Total  Value,  consists  primarily of
private label items  and some branded  products sold at  attractive prices  with
limited  service. This  format has  been extremely  successful when  employed by
wholesalers in other  areas of the  country. Other formats  to meet the  diverse
needs of independent retailers are also in the development stage.
 
COMPETITION
 
    The  food industry  is characterized by  intense competition  and low profit
margins. In order to compete effectively,  the Company must provide its  patrons
with  the  capability to  meet  rapidly fluctuating  competitive  market prices,
provide a wide range of perishable  and nonperishable products, make prompt  and
efficient  deliveries, and  provide the  services which  are required  by modern
market operations.  The  Company  competes with  local,  regional  and  national
grocery  wholesalers and with a number of major manufacturers which market their
products directly  to retailers.  The Company's  success is  dependent upon  its
ability  to supply food  and nonfood products  and services to  its patrons in a
cost-effective manner and upon the  ability of its independent retail  customers
to compete with the large chain store operations.
 
CUSTOMERS
 
    The  Company's members consist primarily of independent retail grocery store
operators ranging in  size from  single store  operators to  multiple store  and
chain  store  operators.  The typical  member  in Southern  California  serves a
high-density urban  population and  the  Company's typical  Northern  California
member  serves a  less densely  populated area.  A typical  member-patron retail
grocery store consists of approximately 20,000 square feet.
 
    The Company's ten largest customers  accounted for approximately 34% of  net
sales  in fiscal  1996 and  33% of  net sales  in fiscal  1995 and  fiscal 1994.
Management believes there is no single customer whose loss would have a material
adverse effect on the Company's business.
 
                                       11
<PAGE>
STOCK OWNERSHIP
 
CLASS A SHARES
 
    Class A Shares  are issued  to and  may be  held only  by member-patrons  of
Certified.  In order to qualify for and  retain membership as a member-patron, a
person or other entity (1) must patronize Certified in such amounts and  manner,
and  otherwise must comply with the Bylaws  and with such rules, regulations and
policies, as  may  be established  by  Certified;  (2) must  have  and  maintain
acceptable  financial standing;  (3) must  make application  in such  form as is
prescribed; and (4) must be accepted as a member after approval by the Board  of
Directors.
 
    Each  member-patron of  Certified is  required to  hold exactly  one hundred
Class A Shares. The price  for such shares will be  the book value per share  of
the outstanding shares at the close of the fiscal year ended prior to acceptance
as a member-patron.
 
CLASS B SHARES
 
    The  Board of Directors  may approve the  issuance of Class  B Shares to any
person and for any purpose. However, the  Board of Directors does not intend  to
authorize the issuance of Class B Shares except to member-patrons.
 
    With  the  exception  of  new members  (see  below),  each  member-patron is
required to hold  Class B  Shares having  combined Issuance  Values (as  defined
below)  in  an  amount  equal  to the  lesser  of  the  member-patron's required
subordinated cash deposit (see Item 1.  BUSINESS -- "Patron Deposits") or  twice
the  member-patron's average weekly purchases ("Class B Share Requirement"). For
purposes of this  requirement, each  Class B Share  held by  a member-patron  is
valued  at the book value  of Certified's outstanding shares  as of the close of
the fiscal year ended  prior to the  issuance of such  Class B Share  ("Issuance
Value").
 
    Class  B Shares are  generally issued to  new member-patrons as  part of the
patronage dividends (see Item 1. BUSINESS -- "Patronage Dividends") paid to such
member-patron over a period of five consecutive fiscal years, beginning with the
second fiscal year following admission as a member-patron. The Class B  issuance
formula provides that the member-patron will hold Class B Shares having Issuance
Values  equal to 20% of the member-patron's  Class B Share Requirement after the
first patronage dividend, 40% of the Class B share Requirement after the  second
patronage  dividend, and  so on  until the  member-patron reaches  100% of their
Class B Share Requirement after the fifth patronage dividend.
 
    If following  the  issuance of  Class  B Shares  as  part of  the  patronage
dividend  for any given  fiscal year, the  member-patron would not  hold Class B
Shares having combined  Issuance Values equal  to the amount  of Class B  Shares
required  to be held by the member-patron,  then additional Class B Shares would
be issued to the member-patron in a quantity sufficient to achieve the  required
amount.  Issuance  of these  additional  Class B  Shares  would be  paid  for by
charging the member-patron's  cash deposit  account in  an amount  equal to  the
Issuance Values of such additional Class B Shares.
 
    During the fiscal year ending August 30, 1997, the book value of Certified's
Class A and Class B Shares, and hence the price, per share is $167.94.
 
CLASS C SHARES
 
    Class  C Shares  are held  one share  each by  the members  of the  Board of
Directors. Each Board Member purchases one Class C Share for $10. Class C Shares
are non-voting shares and would share in  liquidation only to the extent of  $10
per share.
 
PATRONAGE DIVIDENDS
 
    Certified  distributes patronage dividends based  upon its net earnings from
patronage business during the fiscal year. The divisional patronage amounts  are
approved  by the  Board of  Directors. Certified's  net earnings  from patronage
business are distributed to  each patron in proportion  to the dollar volume  of
patronage  purchases from  each division of  Certified by  the patron. Patronage
dividends are  distributed  after the  close  of  the fiscal  year,  except  for
dividends on dairy products which are distributed after the close of each fiscal
quarter.
 
                                       12
<PAGE>
    The  following table shows the patronage  dividend experience of the Company
during the past three fiscal years.
 
<TABLE>
<CAPTION>
                                                                          FISCAL YEAR
                                                                -------------------------------
                                                                  1996       1995       1994
                                                                ---------  ---------  ---------
                                                                      (THOUSANDS OMITTED)
<S>                                                             <C>        <C>        <C>
Dairy.........................................................  $   8,100  $   7,701  $   8,088
Dry Grocery...................................................      2,940      2,610      1,554
Delicatessen..................................................        940        480        500
Frozen Food...................................................        660        350        351
Beans and Rice................................................        390        320        250
Ice Cream.....................................................        170        110         94
                                                                ---------  ---------  ---------
        Total (1).............................................  $  13,200  $  11,571  $  10,837
                                                                ---------  ---------  ---------
                                                                ---------  ---------  ---------
<FN>
------------------------
(1)  Certified expects  to continue  to distribute  patronage dividends  in  the
     future,  although  there  can  be  no  assurance  of  the  amounts  of such
     dividends.
</TABLE>
 
    Certified's bylaws provide  that patronage dividends  may be distributed  in
cash or in any other form which constitutes a written notice of allocation under
Section  1388  of  the Internal  Revenue  Code.  Section 1388  defines  the term
"written notice  of  allocation"  to  mean any  capital  stock,  revolving  fund
certificate,  retain certificate, certificate of indebtedness, letter of advice,
or other written  notice, which  discloses to  the recipient  the stated  dollar
amount  allocated to the recipient by Certified and the portion thereof, if any,
which constitutes a patronage dividend.
 
    Patronage dividends  are  currently paid  out  in the  following  order  and
manner:  first,  member-patrons  receive  20%  in  cash;  second, member-patrons
receive the required amount of  Class B Shares (see  Item 1. BUSINESS --  "Stock
Ownership");  third, the  remainder is  credited to  the member-patron's deposit
account (see Item 1. BUSINESS -- "Patron Deposits").
 
    In addition, Certified issued  subordinated patronage dividend  certificates
("Patronage  Certificates") evidencing the  retention of a  portion of patronage
dividends for  fiscal years  1993,  1994 and  1995.  The amounts  retained  were
deducted  from each member-patron's patronage dividend  prior to the issuance of
Class B Shares to such member-patron.
 
    Patronage Certificates are unsecured  general obligations of Certified,  are
subordinated to certain other indebtedness of Certified, and are nontransferable
without  the consent  of Certified.  The Patronage  Certificates are  subject to
redemption, at any time in whole and from time to time in part, without premium,
at the option of Certified, and are subject  to being set off, at the option  of
Certified, against all or any portion of the amounts owing to the Company by the
holder.
 
    The  Board of Directors determined  that in fiscal 1993,  1994 and 1995, the
portion of the  patronage dividend  retained and  evidenced by  the issuance  of
Patronage  Certificates was 20% of the fourth quarter fiscal 1993 dairy division
patronage dividend, 20% of  the fiscal 1994  dairy division patronage  dividends
and  20% of the first and second quarter fiscal 1995 patronage dividends for the
dairy division. The Patronage Certificates were 40% of the fiscal 1993, 1994 and
1995 patronage dividends for non-dairy products. The Patronage Certificates have
a seven year term,  and bear interest  payable annually on  December 15 in  each
year.
 
    The  following  table represents  a  summary of  the  Patronage Certificates
issued and their respective terms in fiscal 1993, 1994 and 1995.
 
<TABLE>
<CAPTION>
                                AGGREGATE    ANNUAL
            FISCAL              PRINCIPAL   INTEREST    MATURITY
             YEAR                 AMOUNT      RATE        DATE
------------------------------  ----------  ---------   --------
<S>                             <C>         <C>         <C>
1993..........................  $2,018,000      7%      12/15/00
1994..........................  $2,426,000      8%      12/15/01
1995..........................  $2,117,000      7%      12/15/02
</TABLE>
 
                                       13
<PAGE>
    During fiscal 1996, the Company  set off approximately $12,000 in  Patronage
Certificates against a portion of amounts owed to the Company by the holders.
 
    For  the third and fourth quarters of fiscal 1995, the Company suspended the
retention of any of  the dairy division patronage  dividends due to  competitive
market  conditions. During fiscal  1996 the retention  program was suspended for
all divisions, including the  dairy. While the  Company suspended the  retention
program for fiscal 1996, the retention program has not been discontinued.
 
ALLOWANCES
 
    The  Company provides allowances to patrons based on the quantity and manner
in which goods are ordered. In addition, the Company makes available to  patrons
advertising and promotional allowances of suppliers and manufacturers.
 
    PROMOTIONS  AND REBATES.   The Company's weekly  purchasing guide sets forth
advertising allowances and conditions of  performance made available by  various
suppliers  and  manufacturers.  The  allowances  are  either  funded  during the
promotional period as a reduction in price or after the promotion. The patron is
required to submit proof of performance based on the specific conditions of each
allowance program.
 
    REFLECTED ALLOWANCES.   Manufacturer and  supplier allowances  which do  not
require specific performance are passed to patrons in the form of a reduction in
product price.
 
    PRICE  RESERVATION.  The Company offers the ability for customers to reserve
price reductions on various products that a manufacturer or supplier has  placed
on deal. The customer notifies the Company of the quantities to be reserved, and
the  Company continues  to ship  to the  customer at  the lower  price after the
temporary price reduction  has been removed.  For this, the  customer must  make
additional  deposits  to the  Company  and pays  a  storage cost  for  the cases
reserved.
 
    ANNUAL VOLUME DISCOUNT.  Annual volume  discounts are given to accounts  who
meet certain purchasing levels.
 
    PALLET  INCENTIVE.  The  Company has a  pallet incentive program  in the dry
grocery, frozen food  and delicatessen  divisions. This program  is designed  to
recognize  distribution efficiencies  for the  Company in  selecting full pallet
quantities of product.
 
TERMS OF SALE
 
    The Company renders to its cooperative members weekly statements of account.
Statements include deliveries through and  including the date of the  statement.
Members  have seven days from  date of the statement to  pay, and those not paid
within seven days are  considered delinquent. Since members  have seven days  in
which  to mail payment,  and since additional deliveries  occur during this time
which are billed  on a subsequent  statement, the Company  may have  receivables
outstanding at any given time which average approximately two weeks' sales.
 
ADDITIONAL CHARGES
 
    The Company currently makes several charges in addition to the listed prices
for merchandise.
 
    SERVICE  FEES.   Dry grocery,  frozen food  and delicatessen  divisions have
moved to  a new  C(3) Impact-Based  Pricing program.  This program  is a  volume
incentive pricing program that recognizes the benefits and efficiencies of order
size. Impact-based pricing calculates fees primarily at the category level. This
allows  lower fees  to be  charged for  price sensitive  categories, as  well as
specific high  volume and  high value  items. There  are two  C(3)  Impact-Based
Pricing  programs for which a  store can qualify: They  are 1) the Co-op Program
and 2) the Partnership Program. The Co-op Program includes pricing brackets  for
purchases  of grocery, frozen food,  and delicatessen. Savings opportunities can
be realized as  a store increases  average order  size and moves  into a  better
pricing  bracket. The  Partnership Program is  available to  retailers that meet
requirements relating to items such as  member status, order size, and  division
purchase  requirements. In  fiscal 1997,  the Company  plans to  expand its C(3)
Impact-Based Pricing program to other areas of the Company as the next phase  of
management's re-invention process.
 
                                       14
<PAGE>
    TRANSPORTATION  CHARGES.   The  Company  charges its  customers  for product
delivery based on published schedules. Such schedules charge delivery fees on  a
variable  basis  depending  primarily  upon  the  distance  from  the  Company's
supplying warehouse and the amount of capacity or cube used by the load.
 
PATRON DEPOSITS
 
    The Company requires  that its cooperative  patrons maintain a  subordinated
cash  deposit equal to the greater of  twice the amount of each patron's average
weekly purchases or twice the amount of the patron's average purchases, if  such
purchases  are not on a regular basis.  Required deposits are determined twice a
year, at the end of the Company's second and fourth fiscal quarters, based  upon
a  review of  the patron's purchases  from certain of  the cooperative divisions
during the preceding two quarters.
 
    Member-patrons meeting certain  qualifications established by  the Board  of
Directors  may elect to maintain  a reduced required deposit  of $500,000 or one
and one-quarter weeks' average purchases,  whichever is greater. Presently,  two
of  the Company's largest  member-patrons have elected  to maintain such reduced
deposits. With the consent of the Company,  which may be granted or withheld  in
the  Company's sole  discretion, a  qualified member-patron  who has  elected to
maintain this reduced  deposit may  later have the  deposit increased  up to  an
amount equal to twice the amount of its average weekly purchases. Following such
increase,  the member-patron will  not be permitted to  reduce the deposit (even
though otherwise eligible  to maintain a  reduced deposit) for  a period of  two
years  without the  Company's consent. Further,  in all cases,  reduction of the
deposit will be governed by the subordination provisions to which it is subject.
The Company  charges interest  to those  member-patrons who  maintain a  reduced
deposit.  Interest is presently charged at the prime rate established by Bankers
Trust Company, subject to periodic review and change by the Board of  Directors.
Interest  is charged on the difference between  the balance that would have been
maintained based on two weeks' purchases and the balance actually maintained.
 
    Under the Company's Deposit Fund  Loan Program, member-patrons whose  credit
has  been approved by the Company may finance  all or a portion of their deposit
requirement. Payments under this program are billed to the member-patron on  the
weekly  statement from the  Company. Subject to  credit approval, member-patrons
may also deposit an  amount equal to  one and one-half  of the patron's  average
weekly  purchases  or  one  and  one-half  of  the  patron's  average purchases,
whichever is greater, and  pay the balance  of the deposit over  a period of  26
weeks, at no interest, by payments on the weekly statement from the Company.
 
    Member-patrons holding Class B Shares are presently given credit against the
above  described cash deposit requirement based  upon the respective book values
of such shares as of  the fiscal years last ended  prior to their issuance.  The
Company  pays no  interest on  the required deposits.  Interest is  paid on cash
deposits which are in excess of patrons' required deposits.
 
    In addition,  patrons who  participate in  the Company's  price  reservation
program  are required to  maintain a noninterest-bearing  deposit based upon the
value of their  inventory included in  this program. Under  the Company's  price
reservation  program,  patrons are  permitted  to submit  price  reservations in
advance for  their dry  grocery, frozen,  delicatessen and  general  merchandise
purchases. For the patron to get the benefit of the price reservation, an actual
order must be placed. The price which the patron will be charged is the price in
effect at the time of the reservation.
 
    The  required deposits of patrons are contractually subordinated and subject
to the prior payment in full of certain senior indebtedness of the Company. As a
condition  of  becoming  a  patron,  each  patron  is  required  to  execute   a
subordination agreement providing for the subordination of the patron's required
deposits.  Generally, the subordination is  such that no payment  can be made by
the Company with respect  to the required  deposits in the  event of an  uncured
default  by the Company with respect to  senior indebtedness, or in the event of
dissolution, liquidation,  insolvency or  other similar  proceedings, until  all
senior indebtedness has been paid in full.
 
                                       15
<PAGE>
    Upon request, the Company will return to patrons the amount of cash deposits
which  are in  excess of the  required deposits,  provided the patron  is not in
default of its obligations to the Company. On termination of membership, patrons
are entitled to a return of deposits, less all amounts that may be owing by  the
patron  to the  Company. In all  cases, however,  return of that  portion of the
patron's cash deposits which consists of  required deposits will be governed  by
the applicable subordination provisions.
 
TAX MATTERS
 
    The Company is a corporation operating primarily on a cooperative basis. The
Company  is subject to federal and state income and franchise taxes and must pay
other taxes applicable to corporations, such as sales, excise, real and personal
property taxes.
 
    As a corporation operating on a cooperative basis, the Company is subject to
Subchapter T of the Internal Revenue Code ("Subchapter T"). Under Subchapter  T,
the  Company pays patronage  dividends to patrons pertaining  to its fiscal year
within 8 1/2 months of  the close of such fiscal  year. To qualify as  patronage
dividends, payments are made on the basis of the value of the business done with
or  for patrons, under a pre-existing obligation  to make such payment, and with
reference to the net earnings from  business done with or for the  cooperative's
patrons.  Patronage dividends are paid in cash or written notices of allocation.
A written notice of allocation is distributed to the patron and provides  notice
of  the amount allocated  to the patron  by the Company  and the portion thereof
which constitutes a patronage dividend.
 
    Under Subchapter T,  the Company may  deduct, in the  fiscal year for  which
they  are paid,  the amount  of patronage dividends  paid in  cash and qualified
notices of allocation. A written notice  of allocation will be qualified if  the
Company  pays at  least 20% of  the patronage  dividend in cash,  and the patron
consents to take the stated dollar amount  of the written notice into income  in
the  year in  which it  is received.  The Company  deducts for  tax purposes the
entire amount of  its patronage dividends  by paying  at least 20%  in cash  and
issuing qualified notices of allocation for the remainder.
 
    The   Company  intends  to  continue  to  make  patronage  distributions  to
member-patrons comprised of cash and qualified notices of allocation  (including
its  Class B Shares). At least 20% of  patronage dividends will be paid in cash.
The Company will notify  patrons of the stated  dollar amount allocated to  them
and  the portion thereof which is a  patronage dividend. Patrons are required to
consent to include in their gross income, in the year received, all cash as well
as the stated dollar amount of all qualified notices of allocation including the
Patronage Certificates and the book value  of the Class B Shares distributed  to
them as patronage dividends.
 
    Patronage  Certificates  and  Class  B Shares  distributed  as  part  of the
patronage dividend are also  subject to state  income and corporation  franchise
taxes in California and may be subject to such taxes in other states.
 
    The Company is subject to federal income tax and California franchise tax on
net  earnings  of business  with  or for  patrons  which is  not  distributed as
deductible patronage dividends  and on  net earnings  derived from  nonpatronage
business.  The Company files consolidated returns with its subsidiaries, none of
which is a cooperative and each of which is therefore subject to tax.
 
    To the extent that Class  B Shares are received  by the patron as  patronage
dividends under Subchapter T, the Internal Revenue Service ("IRS") has held that
if such Class B Shares are redeemed in full or in part or are otherwise disposed
of, there will be included in the computation of the gross income of the patron,
as  ordinary income, in the year of  redemption or other disposition, the excess
of the amount realized  on the redemption or  other disposition over the  amount
previously  included in the computation of  gross income. However, since Class B
Shares may be issued other than as a part of patronage dividends, it is possible
that the IRS could take the position that the proceeds from a partial redemption
of Class B Shares should be taxed  as a dividend. PATRONS ARE STRONGLY URGED  TO
CONSULT  WITH THEIR TAX ADVISORS FOR FURTHER CLARIFICATION OF THIS ISSUE AND FOR
THE IMPACT THE POSITION OF THE IRS MAY  HAVE ON THEIR OWN FEDERAL AND STATE  TAX
RETURNS.
 
    The  Company's subsidiaries do not pay patronage dividends and are not taxed
in accordance with Subchapter T.
 
                                       16
<PAGE>
EMPLOYEES
 
    The Company  employs approximately  2,400 employees,  of whom  approximately
1,220  are members of one of several unions, the largest being the International
Brotherhood of Teamsters  ("IBT"). The IBT  contracts cover approximately  1,140
employees   and  have  various  expiration  dates.  The  Stockton  and  Southern
California  warehouse   workers'  and   truck  drivers'   IBT  contract   covers
approximately  960 employees and expires on September 13, 1998. The IBT contract
which covers  approximately  145  Fresno warehouse  workers  and  truck  drivers
expires  on  February  3,  1999.  The  contract  which  covers  approximately 40
mechanical maintenance workers expires on  March 29, 1999. The Company  believes
its labor relations to be good.
 
ENERGY MATTERS
 
    The  Company's operations are  dependent upon the  continued availability of
electric power, diesel fuel, and gasoline. The Company's trucking operations are
extensive. Diesel  fuel  storage  capacity represents  approximately  two  weeks
average  usage. A shortage  of diesel fuel and  gasoline could materially affect
deliveries  of  merchandise  and  the   activities  of  the  Company's   service
representatives and, thus, adversely affect the Company's sales.
 
                                       17
<PAGE>
ITEM 2.  PROPERTIES
 
FACILITIES
 
    The   Company's   corporate   offices,   warehouses,   retail   stores,  and
manufacturing facilities as of August 31, 1996 are summarized as follows:
 
<TABLE>
<CAPTION>
                                                                          APPROXIMATE
                                                                        SQUARE FOOTAGE
                                                                     ---------------------
DESCRIPTION                                                            OWNED      LEASED
-------------------------------------------------------------------  ----------  ---------
<S>                                                                  <C>         <C>
Corporate offices..................................................     162,000    117,000
Dry grocery........................................................   1,994,000    851,000
General merchandise................................................                323,000
Frozen foods, delicatessen and meat................................     473,000
Bakery.............................................................      91,000
Dairy and ice cream................................................     119,000
Retail stores (pilot program)......................................                 59,100
</TABLE>
 
    The majority of  the Company's  dry grocery, frozen  foods and  delicatessen
warehouse  facilities are  located in  Southern California.  The Company  owns a
643,000 square foot dry grocery warehouse and a 149,000 square foot refrigerated
warehouse in Stockton, California  and leases 323,000  square feet of  warehouse
space in Fresno, California.
 
ITEM 3.  LEGAL PROCEEDINGS
 
    The  Company is a defendant in a  number of cases currently in litigation or
potential claims encountered in  the normal course of  business which are  being
vigorously  defended. In  the opinion  of management,  the resolutions  of these
matters will  not have  a material  adverse effect  on the  Company's  financial
position or results of operations.
 
    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.  Cleanup of  this site  consists of  five
phases: site control and monitoring; management and leachate treatment; landfill
gas  control and landfill  cover; final remedy and  ground water treatment; and,
thirty-year post cleanup  site control and  monitoring. As of  August 1996,  the
Company's  share of cleanup  costs for the first  three phases was approximately
$379,000 as previously established in July 1994. This amount was paid in October
1996. While the Company's share of the  cost for the last two phases of  cleanup
has  not yet  been established,  based upon  overall estimates  of the  range of
potential cost, the Company believes  that its share of  the total cost for  all
five  phases  of cleanup  will  not exceed  the  amounts which  the  Company has
reserved. As of August 31, 1996,  the total reserve established with respect  to
environmental liabilities is $1.6 million. The Company is pursuing recovery of a
portion of its reserve from its insurance carriers.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    None.
 
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
       SHAREHOLDER MATTERS
 
    There  is no  market for the  Company's Class  A Shares, Class  B Shares, or
Class C Shares. As of November 1,  1996, the Company's Class A Shares were  held
of  record  by 491  shareholders,  Class B  Shares were  held  of record  by 528
shareholders, and the Company's  Class C Shares were  held of record, one  share
each,  by the 15 directors of the Company. In the past, the Company has not paid
cash dividends on its stock, and it has no intention to do so in the future.
 
                                       18
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA
 
<TABLE>
<CAPTION>
                                                          FISCAL YEAR
                                     -----------------------------------------------------
                                       1996       1995       1994       1993       1992
                                     ---------  ---------  ---------  ---------  ---------
                                        (52        (52        (53        (52        (52
                                      WEEKS)     WEEKS)     WEEKS)     WEEKS)     WEEKS)
                                                      (THOUSANDS OMITTED)
<S>                                  <C>        <C>        <C>        <C>        <C>
 
Net sales..........................  $1,948,919 $1,822,804 $1,873,872 $2,007,288 $2,377,740
Declared patronage dividends.......     13,200     11,571     10,837     12,880     12,977
Net earnings (loss)................      1,517        769         94        473     (3,648)
Total assets.......................    373,360    398,603    398,569    403,979    449,713
Long-term notes payable............     75,617    129,686    149,673    158,585    178,702
Book value per share...............     167.94     165.86     163.03     163.52     162.42
</TABLE>
 
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS
 
    The following discussion of the Company's financial condition and results of
operations should be read in conjunction with the Financial Statements and notes
thereto included under Item 8 in this Form 10-K.
 
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>
                                                                     FISCAL YEAR ENDED
                                                         ------------------------------------------
                                                         AUGUST 31,    SEPTEMBER 2,   SEPTEMBER 3,
                                                            1996           1995           1994
                                                         -----------   ------------   -------------
<S>                                                      <C>           <C>            <C>
Net sales..............................................    100.0%         100.0%         100.0%
Cost of sales..........................................     90.8           90.7           90.6
Distribution, selling and administrative...............      7.7            7.8            8.0
Operating income.......................................      1.5            1.5            1.4
Interest expense.......................................      0.7            0.8            0.8
Other income (expense), net............................      0.0            0.0           (0.1)
Earnings before patronage dividends, provision for
 income taxes and cumulative effect of accounting
 change................................................      0.8            0.7            0.5
Declared patronage dividends...........................      0.7            0.7            0.6
Cumulative effect of accounting change.................                                    0.1
Net earnings...........................................      0.1            0.0            0.0
</TABLE>
 
FISCAL YEAR ENDED AUGUST 31, 1996 ("FISCAL 1996") COMPARED TO FISCAL YEAR ENDED
SEPTEMBER 2, 1995 ("FISCAL 1995")
 
    NET  SALES.  Sales increased  $126.1 million or 6.9%  over fiscal 1995. This
increase is a result of $134.8 million of additional large customer volume added
during fiscal  1995  and 1996,  and  $47.6 million  of  increased sales  to  the
existing  membership.  These improvements  in  sales volume  were  achieved even
though the Company experienced lower volume in its general merchandise  division
of  approximately  $56.3  million,  resulting  from  the  reduction  in  general
merchandise and health and beauty care purchases by F4LGM.
 
    COST OF SALES.   Cost  of sales  for fiscal  1996 totaled  $1.8 billion,  an
increase  of $116.7 million or 7.1% over fiscal 1995. The increase is related to
the additional sales discussed  above and as a  percentage of sales is  slightly
higher  than the  fiscal 1995 averages.  This increase is  reflective of pricing
efficiencies passed on to the Company's membership as a result of the additional
volume.
 
    DISTRIBUTION,  SELLING  AND  ADMINISTRATIVE.    Distribution,  selling   and
administrative expenses were $149.1 million or 7.7% of net sales in fiscal 1996,
as  compared to $141.9 million or 7.8% of net sales in fiscal 1995. The level of
expenses for fiscal 1996 is  relatively consistent with fiscal 1995,  reflecting
only  the required  marginal increase  in costs  associated with  the additional
volume.
 
                                       19
<PAGE>
    OPERATING INCOME.   As  a result  of the  Company's continued  cost  control
measures  and the benefits of additional volume, operating income increased over
fiscal 1995 by  8.5%. Operating  income totaled  $29.5 million  for fiscal  1996
compared to $27.2 million for fiscal 1995.
 
    INTEREST.   Interest expense totaled $14.4 million for fiscal 1996, which is
approximately $0.9  million or  5.6% lower  than fiscal  1995. The  decrease  is
primarily  associated  with lower  borrowing requirements  due to  the Company's
improved cash flow management.
 
    OTHER INCOME  (EXPENSE), NET.   In  the third  quarter of  fiscal 1996,  the
Company sold 100% of its common stock ownership in Hawaiian Grocery Stores, Ltd.
("HGS"),  a wholly-owned  subsidiary, for $2.4  million. The sale  resulted in a
pretax gain of $366,000. Pursuant to  this transaction, the Company retained  an
ownership  interest in HGS represented by 1,000 shares of preferred stock with a
total book  value of  $1  million. The  Company and  HGS  intend to  continue  a
business  relationship  in  the  future  through  supply  and  joint  purchasing
arrangements. Fiscal 1995 reflects a $511,000 gain on the sale of the  Company's
investment  in  preferred and  common  stock of  Major  Market, Inc.  ("MMI") as
discussed below.
 
    NET EARNINGS.  Net earnings for fiscal 1996 increased to $1,517,000.  Fiscal
1996 earnings represent a 97% increase over fiscal 1995 earnings of $769,000 and
1,514%  increase over  fiscal 1994  earnings of  $94,000. The  earnings increase
reflects the benefits generated from the Company's subsidiaries, whose  earnings
are retained by the Company.
 
    FISCAL YEAR ENDED SEPTEMBER 2, 1995 COMPARED TO FISCAL YEAR ENDED SEPTEMBER
    3, 1994 ("FISCAL 1994")
 
    NET  SALES.   Fiscal  1994  included 53  weeks  of sales  while  fiscal 1995
included 52 weeks of sales. Taking this difference into consideration, net sales
during fiscal 1995 remained relatively  consistent with net sales during  fiscal
1994. During 1995, the Company added two significant customers which contributed
approximately  $64 million  in net  sales, spread  among most  sales categories.
These sales gains were offset by the loss of a significant frozen food  customer
during 1994 and a reduction in transportation service fees.
 
    COST  OF SALES.  Cost of sales  decreased $45 million (2.7%) to $1.7 billion
in fiscal 1995 as  compared to fiscal  1994. Cost of sales,  as a percentage  of
sales,  has remained consistent with fiscal 1994.  The decrease in cost of sales
results primarily from the decreased sales discussed above.
 
    DISTRIBUTION,  SELLING  AND  ADMINISTRATIVE.    Distribution,  selling   and
administrative expenses were $141.9 million or 7.8% of net sales in fiscal 1995,
as  compared to $149.3 million or 8.0% of net sales in fiscal 1994. The decrease
in total expense was  primarily due to  the reduction of  payroll costs and  the
implementation of other programs in the Company's distribution and manufacturing
facilities  to increase efficiency.  Partially offsetting the  benefits of these
cost reduction programs was a one time charge of $1.6 million resulting from the
adoption of  Statement of  Financial Accounting  Standards No.  112  "Employers'
Accounting for Postemployment Benefits" ("SFAS No. 112").
 
    OPERATING INCOME.  Operating income increased 6.1% in fiscal 1995, totalling
$27.2  million. This compares to $25.6 million for fiscal 1994. This increase is
a direct  result  of  the  reduction in  distribution  and  manufacturing  costs
described above.
 
    OTHER INCOME (EXPENSE), NET.  In fiscal 1993, GCC acquired an 81% investment
in  MMI  for $1.6  million. The  investment was  previously consolidated  in the
Company's financial statements. In fiscal 1995, GCC sold its preferred stock and
282,600 shares of common stock to MMI.  GCC received proceeds of $120,000 and  a
note  receivable for approximately $2.6 million. GCC now holds approximately 20%
of MMI's outstanding  common shares and  accounts for the  investment using  the
cost  method. GCC  does not  have significant influence  or control  of MMI. GCC
recorded a pretax gain of $511,000 on the sale of this investment.
 
    INTEREST.  Interest  expense of $15.3  million in fiscal  1995 has  remained
relatively consistent with fiscal 1994.
 
                                       20
<PAGE>
    NET   EARNINGS.    Net  earnings  increased  to  $769,000  in  fiscal  1995,
representing a 718% increase from fiscal 1994 net earnings of $94,000. Excluding
the impact of adopting SFAS No. 109 in the 1994 period, and SFAS No. 112 in  the
1995  period, the  Company experienced an  improvement in  after-tax earnings of
approximately $4.8 million for fiscal 1995 as compared to fiscal 1994.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    The  Company  relies  upon  cash  flow  from  operations,  patron  deposits,
Patronage  Certificates, shareholdings and borrowings under the Company's credit
lines, to  finance  operations.  Net cash  provided  from  operating  activities
totalled  $38.3 million for fiscal 1996, $9.1 million for fiscal 1995, and $18.2
million for  fiscal 1994.  The Company's  cost and  expense reductions,  revised
marketing   programs,  and  the  dividend  retention  program  provide  adequate
operating cash flow to conduct the Company's business operations. At August  31,
1996,  working capital was $63.1 million, and  the current ratio was 1.3 and 1.7
at  fiscal  year  end  1996  and  1995,  respectively.  Working  capital  varies
throughout the year primarily as a result of seasonal inventory requirements.
 
    Capital  expenditures totalled $13.3 million in fiscal 1996 and $9.4 million
in fiscal 1995 and $5.9 million in fiscal 1994.
 
    The Company has  agreements with  certain banks that  provide for  committed
lines  of credit. These credit lines  are available for general working capital,
acquisitions, and  maturing long-term  debt.  At the  end  of fiscal  1996,  the
Company had a $135 million committed line of credit, of which $107.3 million was
not  utilized. The $135 million secured,  committed line of credit matures March
17, 1999.  The  credit  agreement  is  collateralized  by  accounts  receivable,
inventory,  and certain  other assets  of the Company  and two  of its principal
subsidiaries, excluding  equipment, real  property and  the assets  of GCC.  The
agreement  provides  for  Eurodollar  basis or  prime  basis  borrowings  at the
Company's option. As of August  31, 1996, the Company's outstanding  borrowings,
including  obligations  under  capital  leases  of  approximately  $3.7 million,
amounted to $87.1 million, of which $75.6 million was classified as noncurrent.
 
    On August 30 ,1996, a $25 million credit agreement was paid off in full  and
terminated  by the Company.  Funds for the  payoff were provided  through a loan
purchase agreement with  a bank. The  loan purchase agreement  maturity date  is
August  29, 2001, but is subject to extension by mutual agreement of the Company
and the bank for an additional one year on each anniversary date of the  initial
purchase  date. Total loan purchases under the  agreement are limited to a total
aggregate principal outstanding of $50 million.
 
    On September 20, 1996, the Company  entered into a credit agreement for  $10
million.  This  line is  available for  funding loans.  The credit  agreement is
collateralized by GCC's member loan receivables. The maturity date is  September
20,  2001, but  is subject  to an  annual extension  of one  year by  the mutual
consent of the Company and the bank.  The agreement provides for prime basis  or
Eurodollar basis borrowings at the Company's option.
 
    In fiscal 1995, the Company completed a sale leaseback transaction involving
an  office building used to house the Company's support personnel. Proceeds from
the transaction  were  $11.5 million.  Concurrent  with  the sale  of  the  real
property, the Company entered into a twenty year lease of the property, with two
ten year extension options.
 
    Patronage  dividends  are  currently paid  out  in the  following  order and
manner: first,  member-patrons  receive  20%  in  cash;  second,  member-patrons
receive  the required amount of  Class B Shares (see  Item 1. BUSINESS -- "Stock
Ownership"); third, the  remainder is  credited to  the member-patron's  deposit
account (see Item 1. BUSINESS -- "Patron Deposits").
 
    In  addition, Certified issued  subordinated patronage dividend certificates
("Patronage Certificates") evidencing  the retention of  a portion of  patronage
dividends  for  fiscal years  1993,  1994 and  1995.  The amounts  retained were
deducted from each member-patron's patronage  dividend prior to the issuance  of
Class B Shares to such member-patron.
 
    Patronage  Certificates are unsecured general  obligations of Certified, are
subordinated to certain other indebtedness of Certified, and are nontransferable
without the consent of the Company. The Patronage
 
                                       21
<PAGE>
Certificates are subject to redemption,  at any time in  whole and from time  to
time  in part, without premium,  at the option of  Certified, and are subject to
being set off, at  the option of  Certified, against all or  any portion of  the
amounts owing to the Company by the holder.
 
    The  Board of Directors determined  that in fiscal 1993,  1994 and 1995, the
portion of the  patronage dividend  retained and  evidenced by  the issuance  of
Patronage  Certificates was 20% of the fourth quarter fiscal 1993 dairy division
dividend, 20% of the fiscal 1994 dairy  division dividends and 20% of the  first
and  second quarter fiscal 1995 dividends  for the dairy division. The Patronage
Certificates were 40% of the fiscal 1993, 1994 and 1995 dividends for  non-dairy
products.  The Patronage Certificates have a  seven year term, and bear interest
payable annually on December 15 in each year.
 
    The following  table  represents a  summary  of the  Patronage  Certificates
issued and their respective terms in fiscal 1993, 1994 and 1995.
 
<TABLE>
<CAPTION>
                                AGGREGATE    ANNUAL
            FISCAL              PRINCIPAL   INTEREST    MATURITY
             YEAR                 AMOUNT      RATE        DATE
------------------------------  ----------  ---------   --------
<S>                             <C>         <C>         <C>
1993..........................  $2,018,000      7%      12/15/00
1994..........................  $2,426,000      8%      12/15/01
1995..........................  $2,117,000      7%      12/15/02
</TABLE>
 
    During  fiscal 1996, the Company set  off approximately $12,000 in Patronage
Certificates against a portion of amounts owed to the Company by the holders.
 
    For the third and fourth quarters of fiscal 1995, the Company suspended  the
retention  of any of  the dairy division patronage  dividends due to competitive
market conditions. During fiscal  1996 the retention  program was suspended  for
all  divisions, including the  dairy. While the  Company suspended the retention
program for fiscal 1996,  the retention program has  not been discontinued.  The
Company  expects to  continue to distribute  patronage dividends  in the future,
although there can be no assurance of the amounts of such dividends.
 
    Patrons are generally  required to maintain  subordinated deposits with  the
Company  and  member-patrons  purchase  shares of  stock  of  the  Company. Upon
termination of patron status, the withdrawing patron will be entitled to recover
deposits in  excess  of its  obligations  to the  Company  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.  The Company's  current redemption
policy limits the Class B Shares that the Company 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. In  fiscal 1996, this  limitation restricted  the
Company's  redemption of shares to 19,238 shares for $3,190,815. In fiscal 1997,
the 5% limitation  will restrict the  Company's redemption of  shares to  19,191
shares  for $3,222,937. The number of  shares tendered for redemption at October
31, 1996 totalled 77,481 (or approximately $13.0 million, using fiscal 1996 year
end book value), which exceeds the amount  that can be redeemed in fiscal  1997.
Consequently,  the Company will be required  to make redemptions in fiscal 1998,
1999 and 2000, with  such redemptions approximating $9.8  million based on  1996
year  end  book  value  and  estimated  share  issuances  for  those  years. The
redemption price for shares is based upon their book value as of the end of  the
year  preceding redemption. Cash  flow to fund redemption  of shares is provided
from operations, patron deposits, Patronage Certificates, current  shareholdings
and borrowings under the Company's credit lines.
 
                                       22
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
 
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Certified Grocers of California, Ltd.
 
    We  have  audited the  consolidated balance  sheet  of Certified  Grocers of
California, Ltd.  and  subsidiaries as  of  August  31, 1996,  and  the  related
consolidated  statements of earnings,  shareholders' equity, and  cash flows for
the fiscal year then ended. These financial statements are the responsibility of
the Company's management. Our responsibility is  to express an opinion on  these
financial statements based on our audit.
 
    We  conducted  our  audit  in accordance  with  generally  accepted auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well as evaluating the overall financial statement  presentation.
We believe that our audit provides a reasonable basis for our opinion.
 
    In  our  opinion, the  consolidated financial  statements referred  to above
present fairly, in all material respects, the consolidated financial position of
Certified Grocers of California, Ltd. and subsidiaries as of August 31, 1996 and
the results of their operations  and their cash flows  for the fiscal year  then
ended in conformity with generally accepted accounting principles.
 
DELOITTE & TOUCHE LLP
 
Los Angeles, California
October 31, 1996
 
                                       23
<PAGE>
                          INDEPENDENT AUDITORS' REPORT
 
The Board of Directors
Certified Grocers of California, Ltd.
 
    We  have  audited the  consolidated balance  sheet  of Certified  Grocers of
California, Ltd.  and subsidiaries  as  of September  2,  1995 and  the  related
consolidated  statements of earnings,  shareholders' equity, and  cash flows for
each of  the two  fiscal years  in the  period ended  September 2,  1995.  These
financial  statements are  the responsibility  of the  Company's management. Our
responsibility is to express an opinion  on these financial statements based  on
our audits.
 
    We  conducted  our audits  in  accordance with  generally  accepted auditing
standards. Those standards require that we plan and perform the audit to  obtain
reasonable assurance about whether the financial statements are free of material
misstatement.  An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also  includes
assessing  the  accounting principles  used  and significant  estimates  made by
management, as well as evaluating the overall financial statement  presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In  our  opinion, the  consolidated financial  statements referred  to above
present fairly, in all material respects, the consolidated financial position of
Certified Grocers of California, Ltd. and  subsidiaries as of September 2,  1995
and  the results of  their operations and their  cash flows for  each of the two
fiscal years in the period ended September 2, 1995, in conformity with generally
accepted accounting principles.
 
    As discussed in Note 1 to the consolidated financial statements, the Company
changed its method of  accounting for income  taxes and postretirement  benefits
other than pensions in 1994 and postemployment benefits in 1995.
 
                                          COOPERS AND LYBRAND L.L.P.
 
Los Angeles, California
November 27, 1995
 
                                       24
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
                          CONSOLIDATED BALANCE SHEETS
                             (DOLLARS IN THOUSANDS)
                     AUGUST 31, 1996 AND SEPTEMBER 2, 1995
 
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                            1996        1995
                                                                                         ----------  ----------
<S>                                                                                      <C>         <C>
Current:
  Cash and cash equivalents............................................................  $    6,451  $    7,329
  Accounts and notes receivable, net...................................................      98,424     104,249
  Inventories..........................................................................     136,303     149,432
  Prepaid expenses.....................................................................       4,625       4,789
  Deferred taxes.......................................................................       5,356       2,850
                                                                                         ----------  ----------
        Total current assets...........................................................     251,159     268,649
Properties, net........................................................................      73,571      71,816
Investments............................................................................      27,541      22,051
Notes receivable.......................................................................       8,309      25,622
Other assets...........................................................................      12,780      10,465
                                                                                         ----------  ----------
          TOTAL ASSETS.................................................................  $  373,360  $  398,603
                                                                                         ----------  ----------
                                                                                         ----------  ----------
 
                                     LIABILITIES AND SHAREHOLDERS' EQUITY
 
Current:
  Accounts payable.....................................................................  $   98,468  $   86,159
  Accrued liabilities..................................................................      62,986      51,018
  Current portion of notes payable.....................................................      11,440      11,573
  Patrons' excess deposits and declared patronage dividends............................      15,157      12,214
                                                                                         ----------  ----------
        Total current liabilities......................................................     188,051     160,964
Notes payable, due after one year......................................................      75,617     129,686
Long-term liabilities..................................................................      14,913      12,210
Commitments and contingencies -- See Notes 12 and 15
Patrons' deposits and certificates:
  Patrons' required deposits...........................................................      15,524      17,022
  Subordinated patronage dividend certificates.........................................       6,549       6,561
Shareholders' equity
  Class A Shares.......................................................................       5,305       5,292
  Class B Shares ......................................................................      56,504      56,266
  Retained earnings ...................................................................      11,436      10,488
  Net unrealized gain (loss) on appreciation (depreciation) of investments.............        (284)        114
  Minimum pension liability adjustment.................................................        (255)
                                                                                         ----------  ----------
        Total shareholders' equity.....................................................      72,706      72,160
                                                                                         ----------  ----------
          TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY...................................  $  373,360  $  398,603
                                                                                         ----------  ----------
                                                                                         ----------  ----------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       25
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF EARNINGS
                             (DOLLARS IN THOUSANDS)
FOR FISCAL YEARS ENDED AUGUST 31, 1996, SEPTEMBER 2, 1995, AND SEPTEMBER 3, 1994
 
<TABLE>
<CAPTION>
                                                                        1996          1995          1994
                                                                    ------------  ------------  ------------
<S>                                                                 <C>           <C>           <C>
Net sales.........................................................  $  1,948,919  $  1,822,804  $  1,873,872
Costs and expenses:
  Cost of sales...................................................     1,770,339     1,653,660     1,698,930
  Distribution, selling and administrative........................       149,078       141,947       149,303
                                                                    ------------  ------------  ------------
Operating income..................................................        29,502        27,197        25,639
Interest expense..................................................       (14,406)      (15,260)      (15,405)
Other income (expense), net.......................................           366           509        (1,600)
                                                                    ------------  ------------  ------------
Earnings before patronage dividends, provision for income taxes
  and cumulative effect of accounting change......................        15,462        12,446         8,634
Declared patronage dividends......................................       (13,200)      (11,571)      (10,837)
                                                                    ------------  ------------  ------------
Earnings (loss) before income tax provision and cumulative effect
  of accounting change............................................         2,262           875        (2,203)
Provision for income taxes........................................           745           106           203
                                                                    ------------  ------------  ------------
Earnings (loss) before cumulative effect of accounting change.....         1,517           769        (2,406)
Cumulative effect of accounting change............................                                     2,500
                                                                    ------------  ------------  ------------
Net earnings......................................................  $      1,517  $        769  $         94
                                                                    ------------  ------------  ------------
                                                                    ------------  ------------  ------------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       26
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
                CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
                             (DOLLARS IN THOUSANDS)
FOR FISCAL YEARS ENDED AUGUST 31, 1996, SEPTEMBER 2, 1995, AND SEPTEMBER 3, 1994
 
<TABLE>
<CAPTION>
                                                                                                      NET UNREALIZED
                                                                                                      GAIN (LOSS) ON      MINIMUM
                                                     CLASS A               CLASS B                     APPRECIATION       PENSION
                                               --------------------  --------------------  RETAINED   (DEPRECIATION)     LIABILITY
                                                SHARES     AMOUNT     SHARES     AMOUNT    EARNINGS   OF INVESTMENTS    ADJUSTMENT
                                               ---------  ---------  ---------  ---------  ---------  ---------------  -------------
<S>                                            <C>        <C>        <C>        <C>        <C>        <C>              <C>
Balance, August 28, 1993.....................     49,700  $   4,285    394,326  $  57,238  $  11,085
  Class A Shares issued......................      6,000        981
  Class A Shares redeemed....................     (6,600)      (562)                            (517)
  Class B Shares issued......................                           13,676      2,230
  Class B Shares redeemed....................                          (19,716)    (2,875)      (349)
  Net earnings...............................                                                     94
  Net unrealized loss on depreciation of
   investments (net of deferred tax benefit
   of $157)..................................                                                            $    (304)
                                               ---------  ---------  ---------  ---------  ---------         -----
Balance, September 3, 1994...................     49,100      4,704    388,286     56,593     10,313          (304)
  Class A Shares issued......................      7,800      1,271
  Class A Shares redeemed....................     (6,600)      (683)                            (393)
  Class B Shares issued......................                           15,895      2,637
  Class B Shares redeemed....................                          (19,414)    (2,964)      (201)
  Net earnings...............................                                                    769
  Net unrealized gain on appreciation of
   investments (net of deferred tax of
   $216).....................................                                                                  418
                                               ---------  ---------  ---------  ---------  ---------         -----
Balance, September 2, 1995...................     50,300      5,292    384,767     56,266     10,488           114
                                               ---------  ---------  ---------  ---------  ---------         -----
  Class A Shares issued......................      4,800        796
  Class A Shares redeemed....................     (6,000)      (783)                            (212)
  Class B Shares issued......................                           18,286      3,072
  Class B Shares redeemed....................                          (19,238)    (2,834)      (357)
  Net earnings...............................                                                  1,517
  Net unrealized loss on depreciation of
   investments (net of deferred tax benefit
   of $205)..................................                                                                 (398)
  Minimum pension liability adjustment (net
   of tax of $195)...........................                                                                            $    (255)
                                               ---------  ---------  ---------  ---------  ---------         -----           -----
Balance, August 31, 1996.....................     49,100  $   5,305    383,815  $  56,504  $  11,436     $    (284)      $    (255)
                                               ---------  ---------  ---------  ---------  ---------         -----           -----
                                               ---------  ---------  ---------  ---------  ---------         -----           -----
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       27
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
                     CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (DOLLARS IN THOUSANDS)
FOR FISCAL YEARS ENDED AUGUST 31, 1996, SEPTEMBER 2, 1995, AND SEPTEMBER 3, 1994
 
<TABLE>
<CAPTION>
                                                                                   1996       1995       1994
                                                                                 ---------  ---------  ---------
<S>                                                                              <C>        <C>        <C>
Cash flows from operating activities:
Net earnings...................................................................  $   1,517  $     769  $      94
  Adjustments to reconcile net earnings to net cash provided by operating
    activities:
    Gain on sale of investments in affiliates..................................       (366)      (511)
    Cumulative effect of accounting change.....................................                           (2,500)
    Depreciation and amortization..............................................     10,022      9,982     10,680
    Deferred taxes.............................................................     (3,819)      (273)
    (Gain) loss on disposal of properties......................................       (158)       366       (445)
    Accrued benefit costs......................................................      2,595      5,616      2,940
    Accrued environmental liabilities..........................................                   110      1,100
    Accrued sublease liability.................................................       (167)      (230)     1,228
    Facility relocation........................................................                              520
    Decrease (increase) in assets:
      Accounts and notes receivable............................................      1,892     (7,757)     3,428
      Inventories..............................................................      6,893     (3,976)     1,611
      Prepaid expenses.........................................................        131     (1,041)       170
      Notes receivable.........................................................    (10,547)       293      2,720
    Increase (decrease) in liabilities:
      Accounts payable.........................................................     14,905      4,825     (2,741)
      Accrued liabilities......................................................     12,449        218      2,584
      Patrons' excess deposits and declared patronage dividends................      2,943        673     (3,205)
                                                                                 ---------  ---------  ---------
Net cash provided by operating activities......................................     38,290      9,064     18,184
                                                                                 ---------  ---------  ---------
Cash flows from investing activities:
  Purchase of properties.......................................................    (13,350)    (9,363)    (5,921)
  Proceeds from sales of properties............................................      1,846     12,489      1,295
  Decrease in other assets.....................................................     (1,703)    (1,793)      (244)
  Investment in securities, net................................................     (4,888)    (1,316)    (7,974)
  Proceeds from sale of notes receivable.......................................     27,860
  Sales of investments in affiliates, net of cash disposed*....................      1,785       (479)
                                                                                 ---------  ---------  ---------
Net cash provided (utilized) by investing activities...........................     11,550       (462)   (12,844)
                                                                                 ---------  ---------  ---------
Cash flows from financing activities:
  Reduction of long-term notes payable.........................................    (37,329)    (7,534)    (5,934)
  Reduction of short-term notes payable........................................    (11,573)    (2,658)    (3,132)
  Decrease in members' required deposits.......................................     (1,498)      (567)    (1,312)
  Issuance of subordinated patronage dividend certificates.....................                 2,117      2,421
  Repurchase of shares from members............................................     (4,186)    (4,224)    (4,303)
  Issuance of shares to members................................................      3,868      3,891      3,211
                                                                                 ---------  ---------  ---------
Net cash utilized by financing activities......................................    (50,718)    (8,975)    (9,049)
                                                                                 ---------  ---------  ---------
Net decrease in cash and cash equivalents......................................       (878)      (373)    (3,709)
Cash and cash equivalents at beginning of year ................................      7,329      7,702     11,411
                                                                                 ---------  ---------  ---------
Cash and cash equivalents at end of year.......................................  $   6,451  $   7,329  $   7,702
                                                                                 ---------  ---------  ---------
                                                                                 ---------  ---------  ---------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
  Interest.....................................................................  $  14,929  $  15,006  $  15,232
  Income taxes ................................................................        980      2,388         70
                                                                                 ---------  ---------  ---------
                                                                                 $  15,909  $  17,394  $  15,302
                                                                                 ---------  ---------  ---------
                                                                                 ---------  ---------  ---------
*Sales of investments in affiliates, net of cash disposed:
  Working capital, other than cash.............................................  $   7,188  $    (980)
  Property, plant and equipment................................................        460      1,596
  Note receivable..............................................................                (2,580)
  Investment in preferred stock................................................     (1,000)
  Other assets.................................................................         71      1,857
  Proceeds in excess of net assets of affiliates sold, net.....................        366        511
  Long-term debt...............................................................     (5,300)      (883)
                                                                                 ---------  ---------
    Net cash effect from sales of investments in affiliates....................  $   1,785  $    (479)
                                                                                 ---------  ---------
                                                                                 ---------  ---------
</TABLE>
 
        The accompanying notes are an integral part of these statements.
 
                                       28
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
 
1.  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
  PRINCIPLES OF CONSOLIDATION:
 
    The  consolidated  financial statements  include  the accounts  of Certified
Grocers of California, Ltd. and its subsidiaries ("Certified" or the "Company").
Intercompany transactions and accounts with subsidiaries have been eliminated.
 
  NATURE OF BUSINESS:
 
    The  Company  is  a  cooperative  organization  engaged  primarily  in   the
distribution  of food  products and  related nonfood  items primarily  to retail
establishments owned by  shareholders of  the Company.  All establishments  with
which  directors are affiliated, as members  of the Company, purchase groceries,
related products and store equipment from the Company in the ordinary course  of
business at prices and on terms available to members generally.
 
    The  Company's fiscal year ends on the Saturday nearest to August 31. Fiscal
years 1996 and 1995 included 52 weeks, while fiscal year 1994 included 53 weeks.
 
  RECLASSIFICATIONS:
 
    Certain  reclassifications  have  been   made  to  prior  years'   financial
statements  to  present  them on  a  basis  comparable with  the  current year's
presentation.
 
  CASH EQUIVALENTS:
 
    The Company  considers  all  highly liquid  investments  purchased  with  an
original maturity of three months or less to be cash equivalents.
 
  INVENTORIES:
 
    Inventories are valued at the lower of cost (first-in, first-out) or market.
 
  DEPRECIATION:
 
    Depreciation  is computed using the  straight-line method over the estimated
useful lives of the  assets which are  40 years for buildings  and 10 years  for
equipment.  Leasehold improvements are amortized based  on the estimated life of
the asset  or the  life of  the lease,  whichever is  shorter. Expenditures  for
replacements  or  major improvements  are  capitalized; expenditures  for normal
maintenance and repairs  are charged  to operations  as incurred.  Upon sale  or
retirement of properties, the cost and accumulated depreciation are removed from
the accounts, and any gain or loss is included in operations.
 
  POSTRETIREMENT BENEFITS:
 
    Effective  August 29, 1993,  the Company implemented  Statement of Financial
Accounting Standards No. 106, "Employers' Accounting for Postretirement Benefits
Other Than Pensions" ("SFAS No. 106"). This statement requires that the cost  of
these  benefits,  which are  primarily for  health care  and life  insurance, be
recognized in the financial statements throughout the employees' active  working
careers.  The Company's previous practice  was to expense these  costs on a cash
basis,  principally  after  retirement.  The  transition  obligation  is   being
amortized  on a straight-line basis over twenty  years as allowed under SFAS No.
106.
 
  POSTEMPLOYMENT BENEFITS:
 
    The Financial Accounting Standards Board  ("FASB") issued Statement No.  112
"Employers  Accounting  for  Postemployment Benefits",  which  is  effective for
fiscal years  beginning  after  December  15,  1993.  Accordingly,  the  Company
conformed  to the new  requirements in fiscal 1995.  The new accounting standard
requires an accrual rather  than a pay-as-you-go  basis of recognizing  expenses
for  postemployment  benefits (provided  by an  employer  to former  or inactive
employees after termination of employment but before retirement).
 
                                       29
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
  ENVIRONMENTAL COSTS:
 
    The Company expenses, on a  current basis, certain recurring costs  incurred
in  complying  with  environmental  regulations  and  remediating  environmental
pollution. The  Company also  reserves for  certain non-recurring  future  costs
required  to remediate environmental  pollution for which  the Company is liable
whenever, by diligent legal and technical investigation, the scope or extent  of
pollution  has been determined, the Company's  contribution to the pollution has
been  ascertained,  remedial  measures  have  been  specifically  identified  as
practical   and  viable,  and   the  cost  of   remediation  and  the  Company's
proportionate share can be reasonably estimated.
 
  INCOME TAXES:
 
    Effective August  29,  1993,  the Company  adopted  Statement  of  Financial
Accounting  Standards  No. 109,  "Accounting for  Income Taxes".  The cumulative
effect of this  change in  accounting principle increased  the Company's  fiscal
1994  net earnings by $2.5 million. Accordingly, the Company provides for income
taxes using the asset and liability method under which deferred income taxes are
recognized for  the  estimated  future tax  effects  attributable  to  temporary
differences  and carryforwards that result from events that have been recognized
either in the financial statements  or in the income  tax returns but not  both.
The  measurement of  current and deferred  income tax liabilities  and assets is
based on provisions of enacted tax laws. Valuation allowances are recognized  if
based  on the weight of available evidence, it is more likely than not that some
portion of the deferred tax assets will not be realized.
 
  INVESTMENTS:
 
    The Company  adopted the  provisions of  Statement of  Financial  Accounting
Standards  No.  115,  "Accounting for  Certain  Investments in  Debt  and Equity
Securities" ("SFAS  No.  115"),  on  September  3,  1994.  Investments  in  debt
securities  and  equity securities  with  readily determinable  fair  values are
classified into categories based on the Company's intent. Investments  available
for  sale  are carried  at estimated  fair value.  Unrealized holding  gains and
losses are  excluded from  earnings and  reported,  net of  income taxes,  as  a
separate  component of shareholders'  equity until realized.  For all investment
securities, unrealized losses that  are other than  temporary are recognized  in
net   income.  Realized  gains  and  losses   are  determined  on  the  specific
identification method and are reflected in net earnings.
 
    In accordance with SFAS 115, prior period financial statements have not been
restated to reflect the change in accounting principle. The cumulative effect as
of September 3,  1994 of  adopting SFAS  115 decreases  shareholders' equity  by
$304,000. There was no effect on net income.
 
    The  cost of  securities sold is  determined by  the specific identification
method.
 
  USE OF ESTIMATES:
 
    The preparation of  the financial  statements in  conformity with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions that affect  the amounts  reported in the  financial statements  and
accompanying notes. Actual results could differ from those estimates.
 
  IMPAIRMENT OF LONG-LIVED ASSETS:
 
    The  FASB  issued  Statement  of  Financial  Accounting  Standards  No.  121
"Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to
Be Disposed Of", which  is effective for fiscal  years beginning after  December
15,  1995.  Accordingly, the  Company will  conform to  the new  requirements in
fiscal 1997. The  Statement establishes  guidelines to be  used when  evaluating
long-lived assets, identifiable intangibles, and related goodwill that an entity
plans  to  continue  to use  in  operations  for impairment  and  prescribes the
accounting when such assets  are determined to be  impaired. The Statement  also
provides  guidance on the accounting for similar  assets that a company plans to
dispose of,  except for  those assets  of a  discontinued operation.  Management
estimates  that  the adoption  of this  pronouncement will  not have  a material
effect  on  the  Company's  consolidated  financial  position  and  results   of
operations.
 
                                       30
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
  TRANSFERS AND SERVICING OF FINANCIAL ASSETS:
 
    The  FASB  issued  Statement  of  Financial  Accounting  Standards  No.  125
"Accounting for Transfers and Servicing of Financial Assets and  Extinguishments
of  Liabilities", which is  effective for transfers and  servicing of assets and
liabilities occurring  after  December  31, 1996.  The  Statement  provides  for
standards  that are  based on  consistent application  of a financial-components
approach that  focuses on  control. Under  that approach,  after a  transfer  of
financial  assets, an  entity recognizes the  financial and  servicing assets it
controls and the liabilities it has incurred, derecognizes financial assets when
control has been  surrendered, and derecognizes  liabilities when  extinguished.
This  Statement provides  consistent standards  for distinguishing  transfers of
financial assets  that are  sales from  transfers that  are secured  borrowings.
Accordingly,  the Company  will conform to  the new  requirements for applicable
transactions occurring after December 31, 1996.
 
2.  PROPERTIES:
 
    Properties at August  31, 1996, and  September 2, 1995  stated at cost,  are
comprised of:
 
<TABLE>
<CAPTION>
                                                                                  1996        1995
                                                                               ----------  ----------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                                            <C>         <C>
Land.........................................................................  $    8,812  $    8,856
Buildings and leasehold improvements.........................................      64,269      64,321
Equipment....................................................................      74,839      65,849
Equipment under capital leases...............................................       7,779       9,259
                                                                               ----------  ----------
                                                                                  155,699     148,285
Less accumulated depreciation and
  amortization...............................................................      82,128      76,469
                                                                               ----------  ----------
                                                                               $   73,571  $   71,816
                                                                               ----------  ----------
                                                                               ----------  ----------
</TABLE>
 
3.  INVESTMENTS:
 
    The  amortized  cost  and  fair  values  of  investments available-for-sale,
including equity securities, were as follows:
 
<TABLE>
<CAPTION>
                                                                            GROSS          GROSS
                                                            AMORTIZED    UNREALIZED     UNREALIZED      FAIR
AUGUST 31, 1996                                               COST          GAINS         LOSSES        VALUE
---------------------------------------------------------  -----------  -------------  -------------  ---------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                        <C>          <C>            <C>            <C>
Fixed Maturities:
  U.S. Treasury securities and obligations of U.S.
   government corporations and agencies..................   $  10,219     $      21      $     350    $   9,890
  Corporate securities...................................       3,008            32            110        2,930
  Mortgage backed securities.............................       1,052                           35        1,017
                                                           -----------          ---          -----    ---------
    Sub-total............................................      14,279            53            495       13,837
Redeemable preferred stock...............................       7,739            22             10        7,751
Equity securities........................................       5,953                                     5,953
                                                           -----------          ---          -----    ---------
                                                            $  27,971     $      75      $     505    $  27,541
                                                           -----------          ---          -----    ---------
                                                           -----------          ---          -----    ---------
</TABLE>
 
                                       31
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
<TABLE>
<CAPTION>
                                                                            GROSS          GROSS
                                                            AMORTIZED    UNREALIZED     UNREALIZED      FAIR
SEPTEMBER 2, 1995                                             COSTS         GAINS         LOSSES        VALUE
---------------------------------------------------------  -----------  -------------  -------------  ---------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                        <C>          <C>            <C>            <C>
Fixed Maturities:
  U.S. Treasury securities and obligations of U.S.
   government corporations and agencies..................   $   9,941     $     138      $      83    $   9,996
  Corporate securities...................................       1,765            57             14        1,808
  Mortgage backed securities.............................         933            19              1          951
                                                           -----------        -----            ---    ---------
    Sub-total............................................      12,639           214             98       12,755
Redeemable preferred stock...............................       6,696            58              1        6,753
Equity securities........................................       2,543                                     2,543
                                                           -----------        -----            ---    ---------
                                                            $  21,878     $     272      $      99    $  22,051
                                                           -----------        -----            ---    ---------
                                                           -----------        -----            ---    ---------
</TABLE>
 
    Fixed maturity investments are due as follows:
 
<TABLE>
<CAPTION>
                                                                                   AMORTIZED      FAIR
AUGUST 31, 1996                                                                      COST         VALUE
--------------------------------------------------------------------------------  -----------  -----------
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                                               <C>          <C>
Fixed Maturities Available for Sale:
  Due in one year or less.......................................................   $  --        $  --
  Due after one year through five years.........................................       6,109        6,006
  Due after five years through ten years........................................       5,173        5,004
  Due after ten years...........................................................       2,997        2,827
                                                                                  -----------  -----------
                                                                                   $  14,279    $  13,837
                                                                                  -----------  -----------
                                                                                  -----------  -----------
</TABLE>
 
<TABLE>
<CAPTION>
                                                                                   AMORTIZED      FAIR
SEPTEMBER 2, 1995                                                                    COST         VALUE
--------------------------------------------------------------------------------  -----------  -----------
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                                               <C>          <C>
Fixed Maturities Available for Sale:
  Due in one year or less.......................................................   $     300    $     304
  Due after one year through five years.........................................       4,420        4,438
  Due after five years through ten years........................................       4,475        4,481
  Due after ten years...........................................................       3,444        3,532
                                                                                  -----------  -----------
                                                                                   $  12,639    $  12,755
                                                                                  -----------  -----------
                                                                                  -----------  -----------
</TABLE>
 
    Expected  maturities  will  differ   from  contractual  maturities   because
borrowers  may have the right to call or prepay obligations with or without call
or prepayment penalties. Mortgage-backed  securities are shown  as being due  at
their average expected maturity dates.
 
                                       32
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    Investment income is summarized as follows:
 
<TABLE>
<CAPTION>
                                                                                    1996       1995       1994
                                                                                  ---------  ---------  ---------
                                                                                      (DOLLARS IN THOUSANDS)
<S>                                                                               <C>        <C>        <C>
Fixed maturities................................................................  $   1,834  $   1,469  $   1,094
Preferred stock.................................................................        350        563        461
Equity securities...............................................................        132
Cash and cash equivalents.......................................................        197        171         95
                                                                                  ---------  ---------  ---------
                                                                                      2,513      2,203      1,650
Less investment expenses........................................................         95         85        110
                                                                                  ---------  ---------  ---------
    Net investment income.......................................................  $   2,418  $   2,118  $   1,540
                                                                                  ---------  ---------  ---------
                                                                                  ---------  ---------  ---------
</TABLE>
 
    Investments  carried at fair values of $11,586,000 and $11,272,000 at August
31, 1996 and  September 2,  1995 respectively,  are on  deposit with  regulatory
authorities  in compliance with insurance company regulations. Equity securities
which do not have readily determinable  fair values are accounted for using  the
cost method.
 
4.  ACCRUED LIABILITIES:
 
    Accrued  liabilities at August 31, 1996 and September 2, 1995 are summarized
as follows:
 
<TABLE>
<CAPTION>
                                                                                   1996       1995
                                                                                 ---------  ---------
                                                                                     (DOLLARS IN
                                                                                      THOUSANDS)
<S>                                                                              <C>        <C>
Accrued promotional & other liabilities........................................  $  12,686  $   6,777
Insurance loss reserves & other liabilities....................................     15,492     11,261
Accrued income & other taxes payable...........................................      9,641      5,395
Accrued wages & related taxes..................................................      9,021      8,985
Other accrued liabilities......................................................     16,146     18,600
                                                                                 ---------  ---------
                                                                                 $  62,986  $  51,018
                                                                                 ---------  ---------
                                                                                 ---------  ---------
</TABLE>
 
                                       33
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
5.  NOTES PAYABLE:
 
    Notes payable at  August 31, 1996  and September 2,  1995 are summarized  as
follows:
 
<TABLE>
<CAPTION>
                                                                                  1996        1995
                                                                               ----------  ----------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                                            <C>         <C>
Notes payable to banks under revolving credit agreements, expiring March 17,
  1999, interest rate at prime (8.25% and 8.75% at August 31, 1996 and
  September 2, 1995, respectively) plus 1/2% or Eurodollar (5.88% at August
  31, 1996 and September 2, 1995) plus 1 1/2%................................  $   27,682  $   53,439
Subordinated note payable to a life insurance company, due April 1, 1999,
  interest rate of 10.8%, $8,750,000 due April 1 each year beginning in
  1996.......................................................................      26,250      35,000
Senior note payable to a life insurance company, collateralized through an
  inter-creditor agreement with banks under the revolving credit agreement of
  $135 million, due January 15, 2005, interest rate of 9.55%, $62,500 due
  monthly each year beginning in 1992 through 2000 and then $220,833 monthly
  until maturity.............................................................      15,750      16,500
Notes payable, collateralized by land and warehouses, payable monthly,
  approximately $60,000 plus interest at 9.88%, due February 1, 2006.........      13,636      14,462
Note payable to banks under revolving credit agreements, terminated August
  30, 1996, interest rate at prime (8.75% at September 2, 1995) plus 1/2% or
  Eurodollar (5.88% at September 2, 1995) plus 1 1/2%........................      --          15,500
Obligations under capital leases.............................................       3,739       6,358
                                                                               ----------  ----------
                                                                                   87,057     141,259
Less portion due within one year.............................................     (11,440)    (11,573)
                                                                               ----------  ----------
                                                                               $   75,617  $  129,686
                                                                               ----------  ----------
                                                                               ----------  ----------
</TABLE>
 
    Maturities of long-term debt as of August 31, 1996 are:
 
<TABLE>
<CAPTION>
                                                                       (DOLLARS IN
                                                                        THOUSANDS)
<S>                                                                    <C>
1997.................................................................  $ 11,440
1998.................................................................    11,343
1999.................................................................    39,035
2000.................................................................     4,039
2001.................................................................     4,334
Beyond 2001..........................................................    16,866
                                                                       ------------
                                                                       $ 87,057
                                                                       ------------
                                                                       ------------
</TABLE>
 
    During  fiscal  1996,  the  Company maintained  two  credit  agreements with
certain banks that  provide for committed  lines of credit  for general  working
capital,  acquisitions, and maturing long-term debt.  At the end of fiscal 1996,
the Company had a $135 million committed line of credit, of which $107.3 million
was not utilized. The unused  portion of this credit  line is subject to  annual
commitment fees of 0.375%.
 
    The  credit  agreement contains  various  financial covenants  pertaining to
working capital,  debt-to-equity  ratios,  tangible  net  worth,  earnings,  and
similar   provisions.   In  addition,   on  the   required  portion   of  member
 
                                       34
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
deposits and redemption of Class A and Class B Shares, no payment may be made if
there exists a  default with  respect to  any senior  indebtedness, as  defined,
until  such default has been  cured or waived or  until such senior indebtedness
has been paid in full.
 
    The $135 million credit agreement is collateralized by accounts  receivable,
inventory  and certain  other assets  of the  Company and  two of  its principal
subsidiaries, excluding  equipment, real  property and  the assets  of GCC.  The
maturity  date is  March 17,  1999, but  is subject  to extension  by the mutual
consent of the  Company and  the banks.  The agreement  provides for  Eurodollar
basis or prime basis borrowings at the Company's option.
 
    On  August 30, 1996, a $25 million credit agreement was paid off in full and
terminated by  Grocers  Capital  Company  ("GCC"). Funds  for  the  payoff  were
provided  through  a loan  purchase  agreement with  a  bank. The  loan purchase
agreement maturity  date is  August 29,  2001, but  is subject  to extension  by
mutual  agreement of the Company and the bank for an additional one year on each
anniversary date of the  initial purchase date. Total  loan purchases under  the
agreement are limited to a total aggregate principal outstanding of $50 million.
 
    On  September 20, 1996, the Company entered  into a credit agreement for $10
million. This credit line is available  for funding loans. The credit  agreement
is  collateralized  by  GCC's  member loan  receivables.  The  maturity  date is
September 20, 2001, but  is subject to  an annual extension of  one year by  the
mutual  consent of the  Company and the  bank. The agreement  provides for prime
basis or Eurodollar basis borrowings at the Company's option.
 
    As a result of maturing long-term debt (a non-cash financing activity),  the
Company  reclassified from long to short-term debt $11,440,000, $11,570,000, and
$2,978,000 in fiscal 1996, 1995, and 1994, respectively.
 
6.  LEASES:
 
    The Company has entered into both  operating and capital leases for  certain
warehouse,  transportation and  data processing computer  equipment. The Company
has also entered into operating leases for approximately 40 retail supermarkets.
The majority of these locations are  subleased to various member-patrons of  the
Company.  The  operating  leases  and  subleases  are  noncancelable, renewable,
include purchase  options in  certain  instances, and  require payment  of  real
estate   taxes,  insurance  and   maintenance.  In  addition,   the  Company  is
contingently liable with respect to lease guarantees for certain member-patrons.
The total commitment  for such  lease guarantees approximates  $38.2 million  to
$40.2  million.  The Company's  security  respecting these  lease  guarantees is
discussed in Note 13 under "Concentration of Credit Risk."
 
    Total rent expense  was $20,539,000, $21,051,000,  and $22,707,000 in  1996,
1995, and 1994, respectively. Sublease rental income was $6,214,000, $5,308,000,
and $4,713,000 in 1996, 1995, and 1994, respectively.
 
                                       35
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    Minimum  rentals  (exclusive  of  real estate  taxes,  insurance,  and other
expenses payable  under the  terms of  the leases)  as of  August 31,  1996  are
summarized as follows:
 
<TABLE>
<CAPTION>
                                                                     CAPITAL LEASES   OPERATING LEASES
                                                                     ---------------  ----------------
                                                                          (DOLLARS IN THOUSANDS)
<S>                                                                  <C>              <C>
1997...............................................................     $   1,255       $     20,743
1998...............................................................           999             18,045
1999...............................................................           852             14,391
2000...............................................................           852             12,791
2001...............................................................           340             10,979
Beyond 2001........................................................        --                 84,030
                                                                           ------           --------
  Total minimum lease payments.....................................         4,298       $    160,979
                                                                                            --------
                                                                                            --------
Less amount representing interest..................................          (559)
                                                                           ------
Present value of net minimum lease payments........................         3,739
Less current portion...............................................        (1,028)
                                                                           ------
  Total long-term portion..........................................     $   2,711
                                                                           ------
                                                                           ------
</TABLE>
 
    Minimum  sublease  rentals (exclusive  of real  estate taxes,  insurance and
other expenses payable under the terms of the leases) as of August 31, 1996  are
summarized as follows:
 
<TABLE>
<CAPTION>
                                                                                      OPERATING LEASES
                                                                                    --------------------
                                                                                        (DOLLARS IN
                                                                                         THOUSANDS)
<S>                                                                                 <C>
1997..............................................................................       $    6,929
1998..............................................................................            7,333
1999..............................................................................            6,850
2000..............................................................................            6,368
2001..............................................................................            6,260
Beyond 2001.......................................................................           53,343
                                                                                            -------
                                                                                         $   87,083
                                                                                            -------
                                                                                            -------
</TABLE>
 
    In  fiscal 1995,  the Company  completed a  sale leaseback  transaction with
Trinet Corporate Realty Trust, Inc. ("Trinet"), an unaffiliated third party. The
total sales price for the property was $11,500,000. Concurrent with the sale  of
the  real property, the Company  and Trinet entered into  a twenty year lease of
the property,  with  two ten  year  extension  options. The  monthly  rental  is
approximately  $108,000 and is subject to CPI adjustment commencing on the first
day of the sixth,  eleventh and sixteenth years.  However, such CPI  adjustments
shall  not exceed four percent per annum  on a cumulative basis during each five
year period. The gain on this transaction was $1.2 million of which $55,000  and
$41,000 of the deferred gain was recognized during fiscal 1996 and 1995.
 
                                       36
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
7.  INCOME TAXES:
 
    The significant components of income tax expense (benefit) are summarized as
follows:
 
<TABLE>
<CAPTION>
                                                                1996       1995       1994
                                                              ---------  ---------  ---------
                                                                  (DOLLARS IN THOUSANDS)
<S>                                                           <C>        <C>        <C>
Federal:
  Current...................................................  $   3,641  $     290  $   2,049
  Utilization of net operating loss carryforwards...........                             (800)
  Deferred..................................................     (2,849)       (72)    (1,156)
                                                              ---------  ---------  ---------
                                                                    792        218         93
                                                              ---------  ---------  ---------
State:
  Current...................................................        923        114        377
  Deferred..................................................       (970)      (226)      (267)
                                                              ---------  ---------  ---------
                                                                    (47)      (112)       110
                                                              ---------  ---------  ---------
                                                              $     745  $     106  $     203
                                                              ---------  ---------  ---------
                                                              ---------  ---------  ---------
</TABLE>
 
    The  Company's income taxes currently  payable in 1995 and  1994 are in part
due to alternative minimum tax.
 
    The effects  of temporary  differences and  other items  that give  rise  to
deferred tax assets and deferred tax liabilities are presented below:
 
<TABLE>
<CAPTION>
                                                                              AUGUST 31,   SEPTEMBER 2,
                                                                                 1996          1995
                                                                              -----------  ------------
                                                                               (DOLLARS IN THOUSANDS)
<S>                                                                           <C>          <C>
Deferred tax assets:
  Accounts receivable.......................................................   $   5,058    $    2,223
  Accrued vacation/incentives...............................................         692           808
  Closed store reserves.....................................................         886           562
  Lease reserve.............................................................         382           483
  Deferred income...........................................................         559           597
  Insurance reserves........................................................       1,794         1,736
  Postretirement/postemployment benefits other than pensions................       5,676         4,366
  Alternative minimum tax credits...........................................       1,199         1,810
  Tax credits...............................................................         110           110
  Net operating loss carryforwards..........................................          12            93
  Other.....................................................................       1,418         1,362
                                                                              -----------  ------------
    Total gross deferred tax assets.........................................      17,786        14,150
  Less valuation allowance..................................................      (1,400)       (1,400)
                                                                              -----------  ------------
    Deferred tax assets.....................................................   $  16,386    $   12,750
                                                                              -----------  ------------
                                                                              -----------  ------------
Deferred tax liabilities:
  Property, plant and equipment.............................................   $   5,226    $    4,561
  Capitalized software......................................................       1,587         1,380
  Intangible assets.........................................................         676         1,878
  Deferred state taxes......................................................         679           349
  Other.....................................................................         199           341
                                                                              -----------  ------------
    Total gross deferred tax liabilities....................................   $   8,367    $    8,509
                                                                              -----------  ------------
                                                                              -----------  ------------
    Net deferred tax asset..................................................   $   8,019    $    4,241
                                                                              -----------  ------------
                                                                              -----------  ------------
</TABLE>
 
                                       37
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    Net deferred tax assets of $5,356 and $2,850 are included in deferred taxes,
current  and $2,663  and $1,346  in other  assets on  the Company's Consolidated
Balance Sheets as of August 31, 1996 and September 2, 1995, respectively.
 
    A valuation allowance  is provided to  reduce the deferred  tax assets to  a
level  which, more likely than  not, will be realized.  The remaining balance of
the net deferred tax assets should be realized through future operating results,
the reversal of taxable temporary differences, and tax planning strategies.
 
    The provision for income taxes at the Company's effective tax rate  differed
from the provision for income taxes at the statutory rate as follows:
 
<TABLE>
<CAPTION>
                                                              1996     1995     1994
                                                              -----   -------   -----
                                                              (DOLLARS IN THOUSANDS)
<S>                                                           <C>     <C>       <C>
Federal income tax expense (benefit) at the statutory
 rate.......................................................  $ 769   $   297   $(749)
State income taxes, net of federal income tax benefit.......    139       (75)     73
Insurance subsidiary not recognized for state taxes.........   (123)
Dividend received deduction.................................    (64)     (128)   (105)
Alternative minimum tax.....................................                      385
Increase in valuation allowance.............................                      392
Other, net..................................................     24        12     207
                                                              -----   -------   -----
Provision for income taxes..................................  $ 745   $   106   $ 203
                                                              -----   -------   -----
                                                              -----   -------   -----
</TABLE>
 
    At  August  31,  1996,  the  Company  has  alternative  minimum  tax  credit
carryforwards of approximately $1.2 million  available to offset future  regular
income taxes payable to the extent such regular taxes exceed alternative minimum
taxes payable.
 
8.  SUBORDINATED PATRONAGE DIVIDEND CERTIFICATES:
 
    In  December 1992, the  Company's Board of  Directors authorized a patronage
dividend retention program to be effective commencing with the dividends payable
for fiscal 1993, whereby, subject to annual Board approval, Certified retains  a
portion  of  the  patronage  dividends and  issues  Patronage  Certificates (the
"Certificates") evidencing its indebtedness respecting the retained amounts.  In
addition,  the program provides for the  issuance of the Certificates to patrons
on an  annual basis  in a  portion  and at  an interest  rate to  be  determined
annually by the Board of Directors. However, as to any particular patron, if the
amount  of the retention is less than a specified minimum (presently $500), then
no retention occurs and a Certificate is not issued. Certificates for each  year
are  unsecured  general obligations  of Certified,  are subordinated  to certain
other Certified indebtedness,  and are  nontransferable without  the consent  of
Certified.  The certificates are subject to redemption, at any time in whole and
from time to time in part, without premium, at the option of Certified.
 
    The Board of Directors  determined that in fiscal  1993, 1994 and 1995,  the
portion  of the  patronage dividend  retained and  evidenced by  the issuance of
Patronage Certificates was 20% of the fourth quarter fiscal 1993 dairy  division
dividend,  20% of the fiscal 1994 dairy  division dividends and 20% of the first
and second quarter fiscal 1995 dividends  for the dairy division. The  Patronage
Certificates  were 40% of the fiscal 1993, 1994 and 1995 dividends for non-dairy
products. The Patronage Certificates have a  seven year term, and bear  interest
payable annually on December 15 in each year.
 
                                       38
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    The  following table  represents a  summary of  the Certificates  issued and
their respective terms in fiscal 1993, 1994 and 1995.
 
<TABLE>
<CAPTION>
                                AGGREGATE    ANNUAL
            FISCAL              PRINCIPAL   INTEREST    MATURITY
             YEAR                 AMOUNT      RATE        DATE
------------------------------  ----------  ---------   --------
<S>                             <C>         <C>         <C>
1993..........................  $2,018,000      7%      12/15/00
1994..........................  $2,426,000      8%      12/15/01
1995..........................  $2,117,000      7%      12/15/02
</TABLE>
 
    During fiscal 1996, the Company  set off approximately $12,000 in  Patronage
Certificates  against a portion of  amounts owed to the  Company by the holders.
The Company expects to continue to distribute patronage dividends in the future,
although there can be no assurance of the amounts of such dividends.
 
    For the third and fourth quarters of fiscal 1995, the Company suspended  the
retention  of any of the dairy  division partronage dividends due to competitive
market conditions. During fiscal  1996 the retention  program was suspended  for
all  divisions, including the  dairy. While the  Company suspended the retention
program for fiscal 1996, the retention program has not been discontinued.
 
9.  CAPITAL SHARES:
 
    The Company requires that each member-patron  hold 100 Class A shares.  Each
member-patron  must also  hold Class  B Shares  having combined  issuance values
equal to the  lesser of the  amount of the  member-patron's required deposit  or
twice   the  member-patron's  average  weekly  purchases  (the  "Class  B  Share
requirement"). For this purpose, each Class B Share held by a member-patron  has
an  issuance value equal to the book  value of Certified's outstanding shares as
of the close of the fiscal year last ended prior to the issuance of such Class B
Share.
 
    After payment of  at least 20%  of the  patronage dividend in  cash and  the
issuance  of the Patronage Certificates, Class B  Shares are issued as a portion
of each  member-patron's patronage  dividend  and, to  the extent  necessary  to
fulfill  the  member-patron's  Class  B  Share  requirement,  by  crediting  the
member-patron's cash deposit account for the issuance values of such shares.
 
    All shares of a terminated member  will be redeemed by the Company  (subject
to certain legal limitations, provisions of the Company's redemption policy, and
provisions  of certain of  the Company's committed  lines of credit)  at a price
equal to the book value of the shares  as of the close of the fiscal year  ended
prior to the redemption, less all amounts that may be owing by the member to the
Company.  All  shares  are  pledged  to  the  Company  to  secure  the Company's
redemption rights and  as collateral  for all  obligations to  the Company.  The
Company is not obligated in any fiscal year to redeem more than 5% of the sum of
the number of Class B Shares outstanding as of the close of the preceding fiscal
year and the number of Class B Shares issued as a part of the patronage dividend
for the preceding year (the "5% limit"). Thus, shares tendered for redemption in
a  given fiscal year may not necessarily be redeemed in that fiscal year. The 5%
limit for  fiscal  year  1997  will  allow  for  redemption  of  19,191  shares.
Additionally, through October 1996,
 
                                       39
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
 
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
335 shares have been tendered for redemption. The following table summarizes the
Class  B Shares tendered and presently approved for redemption, shares redeemed,
and the remaining number of shares pending redemption:
 
<TABLE>
<CAPTION>
                    FISCAL
                     YEAR                        TENDERED    REDEEMED     REMAINING
                    ------                       ---------  -----------  -----------      BOOK
                                                                                          VALUE
                                                                                      -------------
                                                                                       (DOLLARS IN
                                                                                       THOUSANDS)
<S>                                              <C>        <C>          <C>          <C>
Years prior to 1994............................    118,424      60,094      128,719   $     21,146
1994...........................................     38,130      19,716       76,744         12,512
1995...........................................     23,959      19,414       81,289         13,483
1996...........................................     15,095      19,238       77,146         12,956
</TABLE>
 
Because the 5% limit  for fiscal year  1997 has been  met, the remaining  58,290
shares  (or approximately $9.8  million, using fiscal 1996  year end book value)
not redeemed in fiscal  year 1997 as  well as the  redemption of any  additional
Class  B Shares tendered during  fiscal 1997 will require  the prior approval of
the Company's Board of Directors. At present, such approvals are not expected to
be given.  Accordingly, since  the  Company's fiscal  1997 5%  share  redemption
limitation  has been met,  future redemptions for  the 1997 fiscal  year will be
postponed. The total  of Class  B Shares  tendered and  awaiting redemption  has
caused  the 5% limit for fiscal 1997, and  will cause the limits for fiscal 1998
through 2000 to be  met, thereby delaying  the redemption of  Class B Shares  in
excess  of such  limit. The redemptions  required for fiscal  years 1998 through
2000 approximate $9.8 million  based on 1996 year  end book value and  estimated
share  issuances for  those years.  Cash flow  to fund  redemption of  shares is
provided from  operations,  patron  deposits,  Patronage  Certificates,  current
shareholdings  and borrowings under  the Company's credit  lines. Any additional
large tenderings of Class B Shares  could also potentially cause future year  5%
limitations   to  be  exceeded.  Therefore,  the  Company's  ability  to  redeem
additional shares in excess of the 5% limit without prior approval of the  Board
may also be limited.
 
    There are 500,000 authorized Class A Shares, of which 49,100 and 50,300 were
outstanding  at August 31,  1996 and September 2,  1995, respectively. There are
2,000,000 authorized  Class B  Shares, of  which 383,815  and 384,767  including
18,286 and 15,895 respectively issued after year end, were outstanding at August
31, 1996 and September 2, 1995, respectively. Once redeemed, such shares are not
available for reissuance to member-patrons.
 
    No  member-patron may hold more than one hundred Class A Shares. However, it
is possible that  a member may  have an interest  in another member,  or that  a
person  may have an interest in more than  one member, and thus have an interest
in more than one hundred Class A Shares. The Board of Directors is authorized to
accept member-patrons without the issuance of  Class A Shares when the Board  of
Directors  determines that such action  is justified by reason  of the fact that
the ownership of the patron  is the same, or sufficiently  the same, as that  of
another  member-patron holding  one hundred Class  A Shares. The  price for such
shares will be the book  value per share of outstanding  shares at the close  of
the fiscal year last ended.
 
    There  are also 15  authorized Class C  Shares of which  15 are outstanding.
These shares are valued at $10 per share, and ownership is limited to members of
the Board of Directors with no rights as to dividends or other distributions.
 
    Holders of Class A Shares are entitled to vote such shares cumulatively  for
the  election of 12 of  the directors on the Board  of Directors. Holders of the
Class B Shares are entitled to vote such shares cumulatively for the election of
3 of the directors on the Board  of Directors. Except as required by  California
law, the Class C Shares have no voting rights.
 
                                       40
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
 
10.  BENEFIT PLANS:
 
    The  Company has  a noncontributory,  defined benefit  pension plan covering
substantially all  of  its  nonunion  employees. The  benefits  under  the  plan
generally  are based on the employee's years of service and average earnings for
the three  highest consecutive  calendar years  of compensation  during the  ten
years  immediately preceding retirement. The  Company makes contributions to the
pension plan  in amounts  which are  at  least sufficient  to meet  the  minimum
funding requirements of applicable laws and regulations but no more than amounts
deductible for federal income tax purposes. Benefits under the plan are included
in  a trust providing benefits  through annuity contracts, and  part of the plan
assets are held by a trustee.
 
    The funded status  of the  plan and the  amounts recognized  in the  balance
sheet are:
<TABLE>
<CAPTION>
                                                                                     1996       1995
                                                                                   ---------  ---------
                                                                                       (DOLLARS IN
                                                                                        THOUSANDS)
<S>                                                                                <C>        <C>        <C>
Actuarial present value of benefit obligations:
  Accumulated benefit obligations, including vested
    benefits.....................................................................  $  23,259  $  24,416
  Effect of assumed future increase in compensation
    levels.......................................................................     10,484     10,319
                                                                                   ---------  ---------
  Projected benefit obligation for services rendered to
    date.........................................................................     33,743     34,735
Plan assets at fair value........................................................     33,711     32,593
                                                                                   ---------  ---------
Plan assets in deficiency of projected benefit obligations.......................         32      2,142
Unrecognized net gain............................................................     (3,570)    (6,094)
Unrecognized transition asset....................................................      1,530      1,839
Unrecognized prior service cost..................................................        303        342
                                                                                   ---------  ---------
Prepaid pension costs at June 1..................................................     (1,705)    (1,771)
                                                                                   ---------  ---------
Fourth quarter contribution......................................................     --         --
Fourth quarter net periodic pension cost.........................................        328        326
                                                                                   ---------  ---------
Prepaid pension cost at fiscal year end..........................................  $  (1,377) $  (1,445)
                                                                                   ---------  ---------
 
<CAPTION>
 
                                                                                     1996       1995       1994
                                                                                   ---------  ---------  ---------
                                                                                       (DOLLARS IN THOUSANDS)
<S>                                                                                <C>        <C>        <C>
Net pension cost for the fiscal years ending included the following components:
  Service cost -- benefits earned during the period..............................  $   1,448  $   1,398  $   1,385
  Interest cost on projected benefit obligation..................................      2,709      2,650      2,425
  Actual return on plan assets...................................................     (6,321)    (2,845)    (2,628)
  Net amortization and deferral..................................................      3,476        100       (266)
                                                                                   ---------  ---------  ---------
  Net periodic pension cost......................................................  $   1,312  $   1,303  $     916
                                                                                   ---------  ---------  ---------
Major assumptions:
  Assumed discount rate..........................................................       7.50%      7.50%      7.50%
  Assumed rate of future compensation increases..................................       5.50%      5.50%      5.50%
  Expected rate of return on plan assets.........................................       8.50%      8.50%      8.50%
</TABLE>
 
    The  method used to  compute the vested benefit  obligation is the actuarial
present value of the vested  benefits to which the  employee is entitled if  the
employee  separates immediately. The vested  benefit obligation was $22,927,000,
$24,007,000, and $24,029,000 in 1996, 1995 and 1994, respectively.
 
                                       41
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    The  Company  also  made   contributions  of  $5,713,000,  $5,368,000,   and
$4,820,000  in  1996, 1995,  and 1994,  respectively to  collectively bargained,
multiemployer defined benefit pension plans in accordance with the provisions of
negotiated labor contracts.  Information from the  plans' administrators is  not
available  to  permit  the  Company  to  determine  its  proportionate  share of
termination liability, if any.
 
    The Company has  an Employees' Sheltered  Savings Plan, which  is a  defined
contribution  plan, adopted pursuant  to Section 401(k)  of the Internal Revenue
Code for its nonunion employees. The Company matches each dollar deferred up  to
4%  of  compensation and,  at its  discretion, matches  40% of  amounts deferred
between 4% and 8%. At the end of each fiscal year, the Company also  contributes
an amount equal to 2% of the compensation of those participants employed at that
date.   The  Company  contributed   approximately  $2,100,000,  $2,100,000,  and
$2,200,000, in 1996, 1995, and 1994, respectively.
 
    Also, the Company has an Employee  Savings Plan ("ESP"), which is a  defined
contribution  plan, for all union and nonunion employees hired prior to March 1,
1983. Subsequent to March 1, 1983, the Company's contribution to the ESP in  any
fiscal  year is  based on  net earnings as  a percentage  of total  sales and is
applicable to union employees only. In the event net earnings are less than 1.5%
of total sales, no contribution is required. All corporate (nonunion)  employees
who had a previous balance in the ESP Plan had their balances transferred to the
SSP  Plan effective  first quarter  of fiscal 1992.  No expense  was incurred in
fiscal years 1996, 1995 and 1994.
 
    In September  1994, the  Board of  Directors authorized  a new  supplemental
executive  pension plan  (effective January  4, 1995)  which provides retirement
income to certain officers based on each participant's final salary and years of
service with  the  Company. The  plan,  called the  Company's  Executive  Salary
Protection  Plan  ("ESPP II"),  provides additional  post-termination retirement
income based on each  participant's final salary and  years of service with  the
Company. The funding of this benefit will be facilitated through the purchase of
life  insurance policies, the premiums of which  will be paid by the Company and
participant contributions.
 
    The amounts recognized in the balance sheet are:
 
<TABLE>
<CAPTION>
                                                                                     1996        1995
                                                                                   ---------  -----------
                                                                                   (DOLLARS IN THOUSANDS)
<S>                                                                                <C>        <C>
Actuarial present value of benefit obligations:
  Accumulated benefit obligations, including vested benefits.....................  $   3,807   $   3,026
  Effect of assumed future increase in compensation levels.......................        283         282
                                                                                   ---------  -----------
  Projected benefit obligation for services rendered to date.....................      4,090       3,308
                                                                                   ---------  -----------
Plan assets in deficiency of projected benefit obligation........................      4,090       3,308
Unrecognized net loss............................................................       (868)       (217)
Unrecognized prior service cost..................................................     (1,571)     (1,659)
                                                                                   ---------  -----------
Accrued pension cost as of June 1................................................      1,651       1,432
                                                                                   ---------  -----------
Fourth quarter contributions.....................................................     --             (20)
Fourth quarter net periodic pension cost.........................................        140         130
Additional minimum liability.....................................................      2,016       1,484
                                                                                   ---------  -----------
Accrued pension cost at fiscal year end..........................................  $   3,807   $   3,026
                                                                                   ---------  -----------
</TABLE>
 
    The additional  minimum  liability represents  the  excess of  the  unfunded
Accumulated   Benefit  Obligation  over  previously  accrued  pension  costs.  A
corresponding intangible  asset was  recorded as  an offset  to this  additional
liability  as prescribed. Because the asset recognized may not exceed the amount
of unrecognized  prior  service cost,  the  balance,  net of  tax  benefits,  of
$255,000  is reported as a separate  reduction of shareholders' equity at August
31, 1996.
 
                                       42
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    The components of the net periodic pension cost for the fiscal years  ending
include:
 
<TABLE>
<CAPTION>
                                                                                         1996       1995
                                                                                       ---------  ---------
                                                                                     (DOLLARS IN THOUSANDS)
<S>                                                                                    <C>        <C>
Service cost -- benefits attributed to service during the period.....................  $     194  $     136
Interest cost on projected benefit obligation........................................        257        168
Net amortization and deferral........................................................        110         85
                                                                                       ---------  ---------
Net periodic pension cost............................................................  $     561  $     389
                                                                                       ---------  ---------
Major assumptions:
  Assumed discount rate..............................................................       7.50%      7.50%
  Assumed rate of future compensation increases......................................       4.00%      4.00%
  Expected rate of return on plan assets.............................................       8.50%      8.50%
</TABLE>
 
    The  method used to  compute the vested benefit  obligation is the actuarial
present value of the vested  benefits to which the  employee is entitled if  the
employee separates immediately. The vested benefit obligation was $3,807,000 and
$3,026,000 in 1996 and 1995, respectively.
 
11.  POSTRETIREMENT BENEFIT PLANS OTHER THAN PENSIONS:
 
    The  Company sponsors postretirement benefit  plans that cover both nonunion
and union  employees.  Nonunion employees  are  eligible for  a  plan  providing
medical benefits. A certain group of retired nonunion employees participate in a
plan  providing  life insurance  benefits  for which  currently  active nonunion
employees are no  longer eligible. Most  union and all  nonunion employees  have
separate  plans providing a  lump sum payout  for unused days  in the sick leave
bank. The postretirement health care plan is contributory for nonunion employees
retiring  after  January  1,  1990,  with  the  retiree  contributions  adjusted
annually;  the  life  insurance  plan  and  the  sick  leave  payout  plans  are
noncontributory.
 
    The plans are unfunded. The amounts recognized in the balance sheet are:
 
<TABLE>
<CAPTION>
                                                                         1996        1995        1994
                                                                      ----------  ----------  ----------
                                                                            (DOLLARS IN THOUSANDS)
<S>                                                                   <C>         <C>         <C>
Accumulated postretirement benefit obligation:
  Retirees..........................................................  $   12,159  $   10,335  $   11,496
  Fully eligible active plan participants...........................       3,687       3,783       4,622
  Other active plan participants....................................       8,660       8,927       9,117
                                                                      ----------  ----------  ----------
Accumulated postretirement benefit obligation.......................      24,506      23,045      25,235
Unrecognized transition obligation..................................     (19,101)    (20,224)    (21,348)
Unrecognized net gain (loss)........................................       1,736       1,912      (2,013)
                                                                      ----------  ----------  ----------
Accrued postretirement benefit cost at June 1.......................       7,141       4,733       1,874
Fourth quarter contributions........................................        (369)       (303)       (294)
Fourth quarter net periodic postretirement benefit cost.............         950       1,044         929
                                                                      ----------  ----------  ----------
Accrued postretirement benefit cost.................................  $    7,722  $    5,474  $    2,509
                                                                      ----------  ----------  ----------
                                                                      ----------  ----------  ----------
</TABLE>
 
                                       43
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
<TABLE>
<S>                                                                   <C>         <C>         <C>
The components of the net periodic postretirement benefit cost for
  the fiscal year ending include:
<CAPTION>
                                                                         1996        1995        1994
                                                                      ----------  ----------  ----------
                                                                            (DOLLARS IN THOUSANDS)
<S>                                                                   <C>         <C>         <C>
 Service cost -- benefits attributed to service during the period...  $      796  $      867  $      654
  Interest cost on accumulated postretirement benefit obligation....       1,855       2,052       1,915
  Amortization of transition obligation over 20 years...............       1,124       1,124       1,124
  Net amortization and deferral.....................................          (2)        133          21
                                                                      ----------  ----------  ----------
  Net periodic postretirement benefit cost..........................  $    3,773  $    4,176  $    3,714
                                                                      ----------  ----------  ----------
                                                                      ----------  ----------  ----------
</TABLE>
 
    For measurement purposes, an 8.0% annual rate of increase in the per  capita
cost  of covered health care benefits was assumed for fiscal year 1997; the rate
was assumed to decrease gradually to 5.5% in fiscal 2001 and remain at the level
thereafter. The health care cost trend rate assumption has a significant  effect
on  the amounts reported. To illustrate, increasing the assumed health care cost
trend rates by one percentage point in each year would increase the  accumulated
postretirement  benefit obligation as  of August 31, 1996  by $3,438,000 and the
aggregate benefit cost for the year then ended by $421,000.
 
    The weighted-average  discount  rate  used in  determining  the  accumulated
postretirement benefit obligation was 8%.
 
    The  Company's  union employees  participate  in a  multiemployer  plan that
provides health care  benefits. Amounts charged  to postretirement benefit  cost
and contributed to the plan totaled $1.1 million in fiscal 1996 and $1.3 million
in fiscal years 1995 and 1994.
 
12.  CONTINGENCIES:
 
    LITIGATION.   The Company is  a defendant in a  number of cases currently in
litigation or  potential claims  encountered in  the normal  course of  business
which  are  being  vigorously  defended.  In  the  opinion  of  management,  the
resolutions of these  matters will  not have a  material adverse  effect on  the
Company's financial position, results of operations, or cash flow.
 
    ENVIRONMENTAL  MATTERS.  The Company, together  with others, was notified by
the  Environmental  Protection  Agency  ("EPA")   that  it  was  a   potentially
responsible  party ("PRP") for  the disposal of  hazardous substances during the
1970s and early 1980s at OPERATING  INDUSTRIES, INC. SUPERFUND SITE in  Monterey
Park,  California ("OII Site"). The Company has not disposed of any materials at
the site since and  believes its current disposal  policies to be in  accordance
with  federal, state  and local governmental  laws and regulations.  Clean up of
this site will  occur in five  phases and could  entail estimated total  cleanup
costs of $650 million to $800 million.
 
    The  Company appealed  the initial  findings of the  EPA on  August 16, 1993
concerning the quantity of disposed  waste allocated to the Company.  Management
recorded  an initial liability of  $400,000 for fiscal 1993  for the first three
phases of the five-phase cleanup. The  initial liability was based on  estimated
cleanup  costs of $2 per gallon on approximately 200,000 gallons disposed at the
site. In August  1995, the EPA  finalized the Company's  allocated share of  the
cleanup  cost for the first three phases of the cleanup. The Company's allocated
share of $379,000 was paid in October 1996.
 
    The EPA also informed  the Company of  phases 4 and  5, which include  final
remedy  and ground water treatment, and a  30 year post-cleanup site control and
monitoring. The estimated  costs of these  two phases, together  with the  first
three  phases, are reserved in the financial  statements. As of August 31, 1996,
the total reserve established  in respect to  environmental liabilities is  $1.6
million.  The Company is pursuing recovery of  a portion of this amount from its
insurance carriers.
 
                                       44
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    Because of the  uncertainties associated with  environmental assessment  and
remediation  activities, future  expenses to remediate  the currently identified
site could be  higher than the  accrued liability. Although  it is difficult  to
estimate  the liability of  the Company related  to these environmental matters,
management believes that these matters will not have a materially adverse effect
on the Company's financial position or results of operations.
 
    SALE OF  MEMBER NOTES  RECEIVABLE.   GCC entered  into a  loan purchase  and
servicing  agreement  with a  bank under  which  it sells  certain of  its notes
receivable from members subject to limited recourse provisions. These notes  are
secured  with  collateral  which  usually consists  of  personal  property, real
property and personal guarantees. GCC in  return receives a monthly service  fee
and  guarantee fee. In 1996, the Company  sold member notes to the bank totaling
approximately $27,900,000. At August 31, 1996, the balances of member notes sold
that were outstanding and subject to recourse provisions were $27,900,000.
 
13.  CONCENTRATION OF CREDIT RISK:
 
    Financial instruments which potentially expose the Company to concentrations
of credit risk consist primarily of  trade receivables and lease guarantees  for
certain  member-patrons. These concentrations of credit  risk may be affected by
changes in economic  or other  conditions affecting the  Western United  States,
particularly  California. However, management believes that receivables are well
diversified and the allowances  for doubtful accounts  are sufficient to  absorb
estimated  losses. Obligations of member-patrons to the Company, including lease
guarantees, are  generally supported  by  the Company's  right of  offset,  upon
default,  against the member-patrons' cash deposits, shareholdings and Patronage
Certificates,  as   well   as   personal  guarantees   and   reimbursement   and
indemnification agreements.
 
14.  FAIR VALUE OF FINANCIAL INSTRUMENTS:
 
    The  following methods and assumptions were  used to estimate the fair value
of each class of financial instruments  for which it is practicable to  estimate
that value:
 
    CASH AND CASH EQUIVALENTS
 
        The  carrying  amount  approximates  fair  value  due  to  the short
    maturity of these instruments.
 
    INVESTMENTS AND NOTES RECEIVABLE
 
        The fair  values  for investments  and  notes receivable  are  based
    primarily  on  quoted market  prices for  those or  similar instruments.
    Equity securities which do not have readily determinable fair values are
    accounted for using the cost method.
 
   NOTES PAYABLE, NOTES PAYABLE DUE AFTER ONE YEAR AND SUBORDINATED PATRONAGE
   DIVIDEND CERTIFICATES
       The fair values for notes payable, notes payable due after one  year,
   and  subordinated patronage dividend certificates  are based primarily on
   rates currently available to the Company for debt with similar terms  and
   remaining maturities.
 
                                       45
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
 
    The  following table  presents the  carrying values  and the  estimated fair
values as of August 31, 1996 and  September 2, 1995, of the Company's  financial
instruments reportable pursuant to Statement of Financial
Accounting  Standards  No.  107,  Disclosures  about  Fair  Value  of  Financial
Instruments:
 
<TABLE>
<CAPTION>
                                                                  1996                    1995
                                                         ----------------------  ----------------------
<S>                                                      <C>         <C>         <C>         <C>
                                                          CARRYING   ESTIMATED    CARRYING   ESTIMATED
                                                           VALUE     FAIR VALUE    VALUE     FAIR VALUE
                                                         ----------  ----------  ----------  ----------
                                                                     (DOLLARS IN THOUSANDS)
Assets:
  Cash and cash equivalents............................  $    6,451  $    6,451  $    7,329  $    7,329
  Investments..........................................      27,541      27,541      22,051      22,051
  Notes receivable.....................................       8,309       8,309      25,622      25,622
Liabilities:
  Notes payable and notes payable, due after one
   year................................................  $   87,057  $   85,552  $  141,259  $  139,496
  Subordinated patronage dividend certificates.........       6,549       6,549       6,561       6,561
</TABLE>
 
    The methods  and  assumptions  used  to estimate  the  fair  values  of  the
Company's  financial instruments at  August 31, 1996 and  September 2, 1995 were
based on estimates of market conditions, estimates using present value and risks
existing at that time. These values represent an approximation of possible value
and may never actually be realized.
 
15.  RELATED PARTY TRANSACTIONS:
 
    A number  of companies  with which  directors are  associated have  received
loans  from the Company through its  regular member loan program and/or obtained
lease guarantees or subleases for  certain store locations. In consideration  of
lease  guarantees and subleases, the Company receives  a monthly fee equal to 5%
of  the  monthly   rent  under   the  leases  and   subleases.  Obligations   of
member-patrons  to  the  Company,  including  lease  guarantees,  are  generally
supported  by  the  Company's  right  of  offset,  upon  default,  against   the
member-patrons' cash deposits, shareholdings and Patronage Certificates, as well
as personal guarantees and reimbursement and indemnification agreements.
 
    GCC  guarantees a  portion of a  loan made by  National Consumer Cooperative
Bank ("NCCB")  to K.V.  Mart Co.,  of  which director  Darioush Khaledi  is  the
President and a shareholder, and KV Property Company, of which director Darioush
Khaledi  is a  general partner. The  term of  the loan is  eight years, maturing
January 1, 2002, and  the loan bears  interest at a floating  rate based on  the
commercial  loan base rate of  NCCB. The loan is  collateralized by certain real
and personal  property. The  guarantee by  GCC is  limited to  10% of  the  $2.1
million  principal amount  of the loan.  In consideration of  its guarantee, GCC
receives an annual fee from K.V. Mart Co. equal to 5% of the guarantee amount.
 
    GCC guarantees a portion of a $5,000,000 revolving loan made by NCCB to K.V.
Mart Co. in November 1995. The loan  has an initial maturity of two years,  with
the outstanding balance then converting to a five year term loan. The loan bears
interest  at a floating rate based on the commercial loan rate of NCCB. The loan
is collateralized by  certain real and  personal property of  K.V. Mart Co.  The
guaranty  of GCC is  limited to 10%  of the outstanding  principal amount of the
loan. Since its inception, the highest outstanding principal amount of the  loan
has  been  and is  presently  $785,000. In  consideration  of its  guaranty, GCC
receives an annual fee from K.V. Mart Co. equal to 5% of the guaranty amount.
 
    In April 1996, the Company guaranteed rent and certain other obligations  of
K.V.  Mart Co. for a period of seven years under a lease of store premises under
construction in Lynwood, California.  Annual rent under  the lease is  $408,000.
The  lease term will commence  upon the earlier of the  opening of the store for
business
 
                                       46
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
or 90  days  after occupancy.  The  guarantee  will become  effective  upon  the
commencement  date of the  lease. In consideration of  its guaranty, the Company
will receive an annual fee from K.V. Mart Co. equal to 5% of the annual rent.
 
    In April 1996, the Company guaranteed rent and certain other obligations  of
K.V.  Mart Co. for a period of seven years under a lease of store premises under
construction in  Canoga Park,  California. The  landlord under  the lease  is  a
corporation  in which a family trust established  by Mr. Khaledi has an indirect
interest through certain  partnerships which  in turn  have an  interest in  the
landlord  corporation. Annual rent  under the lease is  $353,976. The lease term
will commence upon the earlier of the  opening of the store for business or  180
days  after occupancy. The guarantee will become effective upon the commencement
date of the lease. In consideration of its guaranty, the Company will receive an
annual fee from K.V. Mart equal to 5% of the annual rent.
 
    The Company proposes  to enter  into a guaranty  of rent  and certain  other
obligations  of K.V. Mart  Co. under a  lease of store  premises in Los Angeles,
California. The guaranty would be in place during the first fifteen years of the
lease term, which is thirty-four years  and eight months. Annual rent under  the
lease  will  be $212,664  during  the first  twenty  months of  the  lease term;
$332,664 during the next thirty-eight months; $382,560, $439,944, and  $505,4544
respectively,  during the three  succeeding sixty month  periods; and thereafter
increasing by  15%  every  sixty months  during  the  balance of  the  term.  In
consideration  of its guaranty, the Company will receive an annual fee from K.V.
Mart Co. equal to 5% of the annual rent.
 
    In December 1995, GCC purchased 10% of the common stock of K.V. Mart Co. for
a purchase price, based upon  appraised values, of approximately $3,000,000.  In
connection  with this purchase,  K.V. Mart Co.,  GCC, Mr. Khaledi  and the other
shareholders of  K.V. Mart  Co. agreed  that GCC  will have  certain  preemptive
rights  to acquire  additional common shares,  rights to have  its common shares
included  proportionately  in  any  transfer  of  common  shares  by  the  other
shareholders,  and  rights  to  have  its  common  shares  included  in  certain
registered public offerings of common stock which  may be made by K.V. Mart  Co.
In  addition, GCC has the option to require the repurchase of its shares for any
reason after  December 2000,  and until  that  time has  the option  to  require
repurchase  upon the occurence of certain specified events, including a material
breach of  the supply  agreement referred  to below,  changes in  management  or
control  and  noncompliance  with  financial ratios.  After  December  1999, the
repurchase price is fair market value as determined by appraisal, and until that
time is  the greater  of  a declining  premium over  fair  market value  or  the
original  purchase price of the shares plus  an agreed annual compounded rate of
return. K.V. Mart Co. has the option to repurchase GCC's shares at any time  and
also  in the event of  a change in control  of GCC or the  Company or a material
breach by  the Company  under the  supply agreement  referred to  below. In  the
absence  of a change in control or a material breach under the supply agreement,
and until December  1999, the  repurchase price is  the greater  of a  declining
premium over fair market value or the original purchase price of the shares plus
an  agreed annual  compounded rate  of return, and  after December  1999 is fair
market value. In the event of a change in control or a material breach under the
supply agreement, and until December 1999, the repurchase price is the lesser of
a declining discount from  fair market value or  the original purchase price  of
the  shares, and after  December 1999 is  fair market value.  In connection with
these transactions, K.V.  Mart Co. entered  into a seven  year supply  agreement
with  the Company whereunder K.V. Mart Co. is required to purchase a substantial
portion of its merchandise requirements from the Company. Fiscal 1996  purchases
totalled  approximately $75,300,000. The supply  agreement is subject to earlier
termination in certain situations.
 
    The Company guarantees annual rent and certain other obligations of  Stump's
Market,  Inc.,  of  which  director  James  R.  Stump  is  the  President  and a
shareholder, as leasee  under a lease  of store premises  located in San  Diego,
California.  Annual rent under the lease is  $26,325, and the lease term expires
in May  1998.  The  Company  also  guarantees  annual  rent  and  certain  other
obligations of Stump's Market, Inc. as lessee under a
 
                                       47
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
lease  of store premises at  a second location in  San Diego, California. Annual
rent under this lease is $36,075, and  the lease term expires in November  1997.
In  consideration of these  guaranties, the Company receives  a fee from Stump's
Market, Inc. equal to 5% of the base monthly rent under these leases.
 
    In June  1989, the  Company guaranteed  the payment  by Cala  Foods, Inc.  a
subsidiary  of  a  member-patron,  of certain  promissory  notes  related  to an
acquisition of Bell  Markets, Inc. Board  member Harley DeLano  is an  executive
officer  of  Cala Foods,  Inc. The  promissory  notes matured  in June  1996 and
totalled $8 million; however, the  Company's guaranty obligation was limited  to
$4  million  and  is  now  expired. In  addition,  and  in  connection  with the
acquisition, the Company guaranteed certain  lease obligations of Bell  Markets,
Inc.  during  a 20-year  period under  a  lease relating  to two  retail grocery
stores. Annual rent under the lease is $327,019.
 
    In September 1992, the Company guaranteed  a lease for Mar-Val Food  Stores,
Inc.  (whose  President, Mark  Kidd,  is a  director  of the  Company)  on store
premises in Valley Springs, California. The guarantee is for a period of fifteen
years and is limited to the lessee's obligation to pay base rent of $10,080  per
month,  common area costs, real estate  taxes and insurance. The Company's total
obligation under the guarantee is limited  to $736,800. In consideration of  the
guarantee,  the Company  receives a  monthly fee  from Mar-Val  Food Store, Inc.
equal to 5% of the base monthly rent under the lease.
 
    The Company guarantees annual rent and certain other obligations of  Willard
R. "Bill" MacAloney, the Chairman of the Company's Board of Directors, as lessee
under  a lease of store  premises located in La  Puente, California. Annual rent
under the  lease is  $62,487, and  the lease  term expires  in April  1997.  The
Company  also guarantees  annual rent  and certain  other obligations  of G  & M
Company, Inc., of which Mr. MacAloney is  a shareholder, under a lease of  store
premises  located in Santa Fe Springs, California. The initial term of the lease
expires in October 2007,  but may be  extended for one  option term expiring  in
October 2012. Annual rent under the lease is $100,000, increasing to $110,000 in
November  1997. Thereafter,  annual rent increases  by $15,000  every five years
during the  balance of  the term,  including the  extension term.  However,  the
Company's  guaranty is such that the  Company's obligation thereunder is limited
to a maximum of sixty  monthly payments (which need  not be consecutive) of  the
obligations guaranteed. In consideration of its guarantees, the Company receives
a  monthly fee from  G & M  Company, Inc. equal  to 5% of  the base monthly rent
under each lease.
 
    The Company proposes  to enter  into a lease  of store  premises located  in
Riverside,  California, which it will  in turn sublease to G  & M Company on the
same terms and conditions. The sublease will be for an initial term of 15 years,
but may be extended for three periods of 5 years each and one period of 4  years
and  11 months. Monthly rent  during the initial term  is $22,234, increasing to
$24,457, $26,903, $29,596 and $32,561, respectively, during the extension terms.
Under the sublease,  the Company  will also  receive a monthly  fee from  G &  M
Company equal to 5% of the monthly rent.
 
    The  Company  guarantees  certain  obligations under  a  sublease  of market
premises located in Pasadena, California, and under which Berberian Enterprises,
Inc., of which Director  John Berberian is the  President and a shareholder,  is
the  sublessor.  The guaranty  is of  the  obligations of  the sublessee  to pay
minimum rent, common  area costs,  real estate  taxes and  insurance during  the
first  seven years  of the  term of the  sublease, which  commenced in September
1995. Minimum rent under the sublease is $10,000 per month. In consideration  of
its  guaranty, the Company receives a monthly fee from the sublessee equal to 5%
of the monthly amounts guaranteed.
 
    The Company proposes to lease store locations in Arvin, Delano and  Shafter,
California,  which  it will  in  turn sublease  on the  same  rental terms  to a
corporation to be formed by director Michael A. Provenzano. The Arvin and Delano
subleases will have twenty year terms, while the Shafter lease will have a  term
of  twenty-five years. Annual rent under the Arvin lease will be $165,088 during
the first ten years  and $166,448 during  the balance of  the term. Annual  rent
under   the  Delano  lease   will  be  $183,334  during   the  first  ten  years
 
                                       48
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
and $174,080 during the balance of the term. Annual rent under the Shafter lease
will be $104,997 during the first ten years, $100,890 during the next ten  years
and  $108,457 during the balance  of the term. In  addition, under each of these
subleases, the Company  will receive an  annual fee  equal to 5%  of the  annual
rent.
 
    In  July 1993, the Company entered into an agreement to lease a warehouse to
Joe Notrica,  Inc., of  which director  Morrie Notrica  is the  President and  a
shareholder.  The lease period is  for five years at  a monthly rent of $24,000.
The lease has one five year option and makes provision for inflation adjustments
to monthly rent during the option term.
 
    Grocers General Merchandise  Company, ("GM"), a  subsidiary of the  Company,
and  Food 4 Less  GM, Inc. ("F4LGM"),  an indirect subsidiary  of Ralphs Grocery
Company, are  partners  to a  joint  venture partnership  agreement.  Under  the
agreement,  GM and F4LGM are partners  operating as Golden Alliance Distribution
("GAD"). The partnership was formed for the purpose of providing for the  shared
use of the Company's general merchandise warehouse located in Fresno, California
and  each of the partners has entered into a supply agreement with GAD providing
for the  purchase of  general  merchandise products  from  GAD. The  Company  is
currently   in  discussions  with  Ralphs  regarding   the  future  of  the  GAD
partnership.
 
    The Company  leases  certain  market  premises  located  in  Sacramento  and
Vallejo,  California, and in turn subleases these premises to SavMax Foods, Inc.
("SavMax"). The Sacramento  sublease provides  for a term  of 20  years and  the
Vallejo  sublease provides  for a  term of  10 years.  Neither sublease contains
options to extend, although SavMax has the option under each sublease to acquire
the Company's interest  under its  lease on the  condition that  the Company  is
released  from  all further  liability thereunder.  The  term of  the Sacramento
sublease commenced  in September  of 1994.  The Sacramento  premises consist  of
approximately  50,000 square feet and annual base  rent under the sublease is at
the following per square foot  rates: $8.00 during years  1 and 2; $8.40  during
years  3  through 5;  $8.82 during  years 6  through 10;  $9.26 during  years 11
through 15; and,  $9.72 during  years 16  through 20.  The term  of the  Vallejo
sublease  commenced in September of 1995 and annual base rent under the sublease
is $279,000. In addition,  under each of these  subleases, the Company  receives
monthly an additional amount equal to 5% of the base monthly rent.
 
    The  Company guarantees certain obligations of  SavMax under three leases of
market premises located  in Sacramento,  San Jose and  San Leandro,  California.
Each  of these guarantees relates to the  obligation of SavMax to pay base rent,
common area  maintenance charges,  real estate  taxes and  insurance during  the
initial 20 year terms of these leases. However, the guarantees are such that the
Company's  obligation under each of them is  limited to an amount equal to sixty
monthly payments (which need not be consecutive) of the obligations  guaranteed.
Base  rent is $40,482 per month under the Sacramento lease and $56,756 per month
under the San Jose lease, in each case  subject to a 7 1/2% increase at the  end
of  each five years. Base rent is $42,454 per month under the San Leandro lease,
subject to a 10%  increase at the  end of each five  years. In consideration  of
these  guarantees, the Company receives a monthly fee from SavMax equal to 5% of
the base monthly rent under  these leases. If SavMax  were to default under  the
leases,  the Company's remaining liability under its guarantees would range from
$10.2 million to $11.9 million, assuming  other support provided to the  Company
by  way of  offset rights and  the reimbursement  and indemnification agreements
proved to be of no value to the Company.
 
    The Company guarantees  certain obligations  of SavMax under  two leases  of
market  premises located  in Ceres  and Vacaville,  California. The  leases have
initial terms  expiring  in January  2005  and April  2007,  respectively.  Base
monthly  rent under the Ceres lease  is presently $32,175, increasing to $34,425
in January of  2000. Base monthly  rent under the  Vacaville lease is  presently
$29,167,  increasing  by  $25,000  per  year  in  April  of  1997  and  2002. In
consideration of these guarantees, the Company  will receive a monthly fee  from
SavMax  equal to 5% of the base monthly  rent under these leases. If SavMax were
to default under the leases,
 
                                       49
<PAGE>
             CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
             NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
the Company's contingent liability under  its guarantees would approximate  $9.5
million,  assuming other support provided to the Company by way of offset rights
and the reimbursement and indemnification agreements proved to be of no value to
the Company.
 
    The Company has guarantees remaining  on various other member-patron  leases
during  the period of fiscal 1997 through  fiscal 2013. In the event the support
provided to  the Company  by way  of  offset rights  and the  reimbursement  and
indemnification  agreements  proved to  be  of no  value,  the Company  would be
contingently liable under its guarantees for approximately $11.2 million.
 
    In fiscal 1994, Grocers Capital  Company ("GCC"), a subsidiary, acquired  an
additional  25,000 shares of  preferred stock of SavMax.  The purchase price was
$100 per share.  At the  time, GCC  owned 40,000  shares of  preferred stock  of
SavMax  which  it  acquired in  fiscal  1992. As  part  of the  new  purchase of
preferred stock,  the  annual  cumulative  dividend  on  the  65,000  shares  of
preferred  stock owned by  GCC was increased  from $8.25 per  share to $8.50 per
share, payable quarterly. Mandatory partial redemption of this stock at a  price
of  $100 per share began in 1994 and will continue annually thereafter for eight
years, at which time the stock is  to be completely retired. GCC also  purchased
from Mr. Michael A. Webb, the President and a shareholder of SavMax, and another
member of his immediate family, 10% of the common stock of SavMax for a price of
$2.5  million. In connection with this purchase, Mr. Webb, SavMax and GCC agreed
that GCC  will  have certain  preemptive  rights to  acquire  additional  common
shares,  rights  to  have  its common  shares  included  proportionately  in any
transfer of common  shares by Mr.  Webb, and  rights to have  its common  shares
included  in certain  registered public offerings  of common stock  which may be
made by SavMax. In addition, GCC has  certain rights, at its option, to  require
that  SavMax  repurchase GCC's  shares, and  SavMax has  certain rights,  at its
option, to  repurchase  GCC's shares.  In  connection with  these  transactions,
SavMax  entered into a seven year supply  agreement with the Company (to replace
an existing  supply  agreement) whereunder  SavMax  is required  to  purchase  a
substantial portion of its merchandise requirements from the Company. The supply
agreement is subject to earlier termination in certain situations.
 
    Since  the  Company's  retail  and financial  assistance  programs  are only
available to persons and entities  which are patrons of  the Company, it is  not
possible  to assess whether the foregoing transactions are less favorable to the
Company  than  similar  transactions  with  unrelated  third  parties.  However,
management  believes that each such transaction is on terms no more favorable to
the patron than those which would be available to other similar patrons.
 
16.  STORE PURCHASE TRANSACTION:
 
    On July 17, 1996 Certified and its subsidiary Crown Grocers, Inc.  ("Crown")
entered  into an asset purchase agreement (the "Agreement") with Bay Area Foods,
Inc. ("BAF")  whereby  Certified and  Crown  agreed  to purchase  up  to  twelve
supermarkets  operated by BAF under  the tradename "Petrini's", provided certain
conditions were satisfied with respect to each location. The Agreement  provided
that  Certified and  Crown had  the right to  assign their  respective rights to
purchase any of  the assets  to operating retailers  meeting selected  criteria.
This transaction was completed on September 30, 1996.
 
    Crown  has acquired six  properties which were sold  or assigned directly to
retailers and assumed leases  at three locations. The  total purchase price  for
the  assets acquired by  Crown, Certified and their  assignees was $17.1 million
plus the cost  value of inventory  at each transferred  location. For the  three
stores  where  Crown assumed  the  leases each  facility  is operated  under the
tradename "Apple Market".  The Company intends  to vigorously pursue  a plan  to
sell  these locations to member patrons, and expects to operate the stores until
qualified buyers are identified. BAF was unable to satisfy certain conditions to
close as to  assets relating  to three  of the  sites subject  to the  Agreement
within  the time  frame set forth  in the Agreement.  Accordingly, the Company's
obligations with respect to such assets have terminated.
 
                                       50
<PAGE>
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
 
    Effective April 3, 1996, the Company  dismissed Coopers & Lybrand L.L.P.  as
its principal accountant to audit the financial statements of the Company.
 
    The  reports issued by Coopers &  Lybrand L.L.P. on the financial statements
for the past two  years did not  contain an adverse opinion  or a disclaimer  of
opinion,  and were not qualified or modified  as to uncertainty, audit scope, or
accounting principles.
 
    The decision to change accountants was recommended by the audit committee of
the Company following the solicitation and review of bids from other independent
accountants, including Coopers & Lybrand L.L.P.,  and was approved by the  Board
of Directors on April 3, 1996.
 
    During the two most recent fiscal years and the current fiscal period, there
were  no disagreements  with Coopers &  Lybrand L.L.P. on  matters of accounting
principles or practices,  financial statement disclosure,  or auditing scope  or
procedure.
 
    Effective  April 3, 1996, the  Company engaged Deloitte &  Touche LLP as its
principal accountant to audit the financial statements of the Company.
 
                                       51
<PAGE>
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
BOARD OF DIRECTORS
 
    The Company's Board of Directors is elected annually at the Company's Annual
Meeting  of Shareholders,  presently held in  April of each  year. Each director
must be either an  employee of the  Company, a member-patron, or  a member of  a
partnership  which is a shareholder, or an  employee of a corporation which is a
shareholder. Currently,  all directors  represent  member-patrons. There  is  no
arrangement  or understanding  between any  one of  the directors  and any other
person or persons pursuant to which such director was selected as a director.
 
    The Bylaws  provide that  the Board  of Directors  will appoint  annually  a
committee  consisting of three or more of  its members to nominate the directors
to act  for the  ensuing  year. The  Chairman of  the  Board and  the  Company's
President  are ex-officio  members of  the nominating  committee. The nominating
committee submits its nominations to the Board, and the nominees so selected are
submitted by the Board to the members to be voted upon at the Annual Meeting  of
the Company.
 
    The  names  of  the  present  directors  of  the  Company,  their  principal
occupations, their ages as of December 31,  1996 and the year such director  was
first elected to the Board are set forth in the following table.
 
<TABLE>
<CAPTION>
                                                       YEAR
                                       AGE AT          FIRST
        NAME OF DIRECTOR          DECEMBER 31, 1996   ELECTED                 PRINCIPAL OCCUPATION
--------------------------------  -----------------  ---------  -------------------------------------------------
<S>                               <C>                <C>        <C>
Louis A. Amen                            67            1974     President, Super A Foods, Inc.
John Berberian                           45            1991     President, Berberian Enterprises, Inc.,
                                                                 operating Jons Market
Michael Bonfante                         55            1995     Chairman, President and CEO, Nob Hill General
                                                                 Store, Inc.
Harley J. DeLano                         59            1995     President of Cala Foods, Inc., Division of Ralphs
                                                                 Grocery Co.
Lyle A. Hughes (1)(2)                    59            1987     General Manager, Yucaipa Trading Co., Inc.
Roger K. Hughes (1)                      62            1985     Chairman and Chief Executive Officer, Hughes
                                                                 Markets, Inc.
Darioush Khaledi                         50            1993     Chairman of the Board and Chief Executive
                                                                 Officer, K.V. Mart Co., dba Top Valu Markets and
                                                                 Valu Plus Food Warehouse
Mark Kidd                                46            1992     President, Mar-Val Food Stores, Inc.
Willard R. "Bill" MacAloney              61            1981     President and Chief Executive Officer, Mac Ber,
(Chairman of the Board)                                          Inc. operating Jax Market
Jay McCormack                            46            1993     Owner-Operator, Alamo Market; Co-owner, Glen Avon
                                                                 Market
Morrie Notrica                           67            1988     President and Chief Operating Officer, Joe
                                                                 Notrica, Inc., operating The Original 32nd
                                                                 Street Market
Michael A. Provenzano                    54            1986     President, Pro & Son's, Inc., operating Southland
                                                                 Market since 1993; formerly President, Carlton's
                                                                 Market, Inc.
Allan Scharn (3)                         61            1988     President (retired), Gelson's Markets
James R. Stump                           58            1982     President, Stump's Market, Inc.
</TABLE>
 
                                       52
<PAGE>
<TABLE>
<CAPTION>
                                                       YEAR
                                       AGE AT          FIRST
        NAME OF DIRECTOR          DECEMBER 31, 1996   ELECTED                 PRINCIPAL OCCUPATION
--------------------------------  -----------------  ---------  -------------------------------------------------
<S>                               <C>                <C>        <C>
Kenneth Young                            52            1994     Vice President, Jack Young's Supermarkets; Vice
                                                                 President, Bakersfield Food City, Inc., dba
                                                                 Young's Markets
</TABLE>
 
------------------------
(1) Messrs. Lyle A. Hughes and Roger K. Hughes are unrelated.
 
(2)  Yucaipa Trading Co., Inc. is unrelated to The Yucaipa Companies, which is a
    principal shareholder of Ralphs Grocery Co.
 
(3) Mr. Scharn retired  as President of  Gelson's Markets in  May 1996 but  will
    serve out his term as a director of the Company.
 
OFFICERS
 
    The  Company has ten officers, each selected  by and serving at the pleasure
of the Board  of Directors, except  Alfred A. Plamann  (see "Item 11.  EXECUTIVE
COMPENSATION  -- Executive  Employment and  Termination Agreement").  No officer
owns either directly or indirectly any shares of the Company's Class A or  Class
B  Shares. There are no family  relationships between directors or officers, nor
between any  director and  officer.  There is  no arrangement  or  understanding
between  any one  of the officers  and any  other person pursuant  to which such
officer was selected as an officer.
 
    The following table  sets forth  certain information about  officers of  the
Company.
 
<TABLE>
<CAPTION>
                                 AGE AT DECEMBER 31,                         BUSINESS EXPERIENCE
       OFFICER'S NAME                   1996                                DURING LAST FIVE YEARS
-----------------------------  -----------------------  --------------------------------------------------------------
<S>                            <C>                      <C>
Alfred A. Plamann                            54         Corporate President and Chief Executive Officer since February
                                                         1994;  previously  Senior  Vice  President-Finance  and Chief
                                                         Financial Officer.
Daniel T. Bane                               49         Senior  Vice  President-Finance  &  Administration  and  Chief
                                                         Financial  Officer since February 1996; Senior Vice President
                                                         and Chief  Financial Officer,  July  1994 to  February  1996;
                                                         Chief  Operating  Officer,  Spensley  Horn  Jubas  &  Lubitz,
                                                         December  1993  to  July  1994;  previously  Chief  Financial
                                                         Officer, Standard Brands Paint Company.
Margaret A. Huebner                          46         Vice  President-Human  Resources  and  Labor  Relations  since
                                                         February 1996;  previously  Vice  President  Human  Resources
                                                         NavCom Defense Electronics, Inc.
George D. Gardner                            43         Vice  President  since May  1996;  General Manager  of Grocers
                                                         Specialty Co.,  June  1995  to May  1996;  Vice  President  &
                                                         General  Manager Ingro Mexican Foods,  Inc., May 1993 to June
                                                         1995; previously  Vice President  Sales &  Marketing,  Festin
                                                         Foods, Corp.
Don W. Hawks                                 45         Vice  President-Marketing  and  Procurement  since  June 1995;
                                                         previously Vice President of Procurement and Marketing, Super
                                                         Store Industries.
Corwin J. Karaffa                            42         Vice President-Distribution  since  January  1995;  previously
                                                         Facilities Manager, Proctor and Gamble Distribution Co.
Robert M. Ling, Jr., Esq.                    39         Vice  President,  General Counsel  and Secretary  since August
                                                         1996; Vice  President  and  General Counsel,  April  1996  to
                                                         August  1996; Vice President,  General Counsel and Secretary,
                                                         Megafoods Stores, Inc., 1994  to April 1996; previously  Vice
                                                         President,  General  Counsel  and  Secretary,  Reliable  Drug
                                                         Stores, Inc.
</TABLE>
 
                                       53
<PAGE>
<TABLE>
<CAPTION>
                                 AGE AT DECEMBER 31,                         BUSINESS EXPERIENCE
       OFFICER'S NAME                   1996                                DURING LAST FIVE YEARS
-----------------------------  -----------------------  --------------------------------------------------------------
<S>                            <C>                      <C>
Charles J. Pilliter                          48         Senior Vice President and President-Northern California.
Jack E. Scott II                             46         Vice President and Chief Information Officer since June  1996;
                                                         Chief   Information  Officer,  World  Vision  United  States,
                                                         November  1993  to  May   1996;  previously  Vice   President
                                                         Management   Information   Systems,  Standard   Brands  Paint
                                                         Company.
David A. Woodward                            54         Treasurer   since    August   1996;    previously    Corporate
                                                         Secretary/Treasurer.
</TABLE>
 
ITEM 11.  EXECUTIVE COMPENSATION
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
    During  fiscal  year 1996,  the  Company's Executive  Compensation Committee
consisted of director Darioush Khaledi, Committee Chairman, and directors  Louis
A.  Amen,  Roger  K.  Hughes, Jay  McCormack  and  James R.  Stump,  as  well as
ex-officio member Willard R. "Bill" MacAloney, Chairman of the Board.
 
    As Chairman of the Board,  Mr. MacAloney is an  officer under the Bylaws  of
the  Company,  although  he  is  not  an  employee  and  does  not  receive  any
compensation or expense reimbursement beyond  that to which other directors  are
entitled.  Mr.  McCormack  was  employed  by  the  Company  as  a  senior  sales
representative from November 1975 to May 1986, but has not been employed by  the
Company  since that time.  The Company's President  and Chief Executive Officer,
Alfred A. Plamann, is a  member of the Board of  Directors of K.V. Mart Co.,  of
which  Committee  member and  director Darioush  Khaledi  is Chairman  and Chief
Executive Officer.
 
    The Company  guarantees annual  rent and  certain other  obligations of  Mr.
MacAloney  as  lessee under  a lease  of  store premises  located in  La Puente,
California. Annual rent under the lease  is $62,487, and the lease term  expires
in  April  1997.  The Company  also  guarantees  annual rent  and  certain other
obligations of G &  M Company, Inc.,  of which Mr.  MacAloney is a  shareholder,
under  a lease of  store premises located  in Santa Fe  Springs, California. The
initial term of the lease expires in  October 2007, but may be extended for  one
option  term expiring in October 2012. Annual  rent under the lease is $100,000,
increasing to $110,000 in  November 1997. Thereafter,  annual rent increases  by
$15,000 every five years during the balance of the term, including the extension
term.  However, the  Company's guaranty  is such  that the  Company's obligation
thereunder is limited to  not exceed sixty monthly  payments (which need not  be
consecutive)  of the obligations guaranteed. In consideration of its guarantees,
the Company receives a monthly fee from G  & M Company, Inc. equal to 5% of  the
base monthly rent under each lease.
 
    The  Company proposes  to enter  into a lease  of store  premises located in
Riverside, California, which it will  in turn sublease to G  & M Company on  the
same terms and conditions. The sublease will be for an initial term of 15 years,
but  may be extended for three periods of 5 years each and one period of 4 years
and 11 months. Monthly  rent during the initial  term is $22,234, increasing  to
$24,457,  $26,903, $29,596  and $32,561  during the  extension terms.  Under the
sublease, the Company will also receive a  monthly fee from G & M Company  equal
to 5% of the monthly rent.
 
    GCC  guarantees a  portion of a  loan made by  National Consumer Cooperative
Bank ("NCCB")  to K.V.  Mart Co.,  of  which director  Darioush Khaledi  is  the
President and a shareholder, and KV Property Company, of which director Darioush
Khaledi  is a  general partner. The  term of  the loan is  eight years, maturing
January 1, 2002, and  the loan bears  interest at a floating  rate based on  the
commercial  loan base rate of  NCCB. The loan is  collateralized by certain real
and personal  property. The  guarantee by  GCC is  limited to  10% of  the  $2.1
million  principal amount  of the loan.  In consideration of  its guarantee, GCC
receives an annual  fee from  K.V. Mart  Co. equal  to approximately  5% of  the
guarantee amount.
 
    GCC guarantees a portion of a $5,000,000 revolving loan made by NCCB to K.V.
Mart  Co. in November 1995. The loan has  an initial maturity of two years, with
the outstanding balance then converting to a five year term loan. The loan bears
interest at a  floating rate  based on  the commercial  loan rate  of NCCB.  The
 
                                       54
<PAGE>
loan  is collateralized by certain  real and personal property  of K.V. Mart Co.
The guaranty of GCC is limited to 10% of the outstanding principal amount of the
loan. In consideration  of its guaranty,  GCC receives an  annual fee from  K.V.
Mart Co. equal to 5% of the guaranty amount.
 
    In  April 1996, the Company guaranteed rent and certain other obligations of
K.V. Mart Co. for a period of seven years under a lease of store premises  under
construction  in Lynwood, California.  Annual rent under  the lease is $408,000.
The lease term will commence  upon the earlier of the  opening of the store  for
business  or 90 days  after occupancy. The guarantee  will become effective upon
the commencement  date of  the  lease. In  consideration  of its  guaranty,  the
Company  will receive an annual fee from K.V. Mart Co. equal to 5% of the annual
rent.
 
    In April 1996, the Company guaranteed rent and certain other obligations  of
K.V.  Mart Co. for a period of seven years under a lease of store premises under
construction in  Canoga Park,  California. The  landlord under  the lease  is  a
corporation  in which a family trust established  by Mr. Khaledi has an indirect
interest through certain  partnerships which  in turn  have an  interest in  the
landlord  corporation. Annual rent  under the lease is  $353,976. The lease term
will commence upon the earlier of the  opening of the store for business or  180
days  after occupancy. The guarantee will become effective upon the commencement
date of the lease. In consideration of its guaranty, the Company will receive an
annual fee from K.V. Mart equal to 5% of the annual rent.
 
    The Company proposes  to enter  into a guaranty  of rent  and certain  other
obligations  of K.V. Mart  Co. under a  lease of store  premises in Los Angeles,
California. The guaranty would be in place during the first fifteen years of the
lease term, which is thirty-four years  and eight months. Annual rent under  the
lease  will  be $212,664  during  the first  twenty  months of  the  lease term;
$332,664 during the next thirty-eight months; $382,560, $439,944, and  $505,944,
respectively,  during the three  succeeding sixty month  periods; and thereafter
increasing by  15%  every  sixty months  during  the  balance of  the  term.  In
consideration  of its guaranty, the Company will receive an annual fee from K.V.
Mart Co. equal to 5% of the annual rent.
 
    In December 1995, GCC purchased 10% of the common stock of K.V. Mart Co. for
a purchase price, based upon  appraised values, of approximately $3,000,000.  In
connection  with this purchase,  K.V. Mart Co.,  GCC, Mr. Khaledi  and the other
shareholders of  K.V. Mart  Co. agreed  that GCC  will have  certain  preemptive
rights  to acquire  additional common shares,  rights to have  its common shares
included  proportionately  in  any  transfer  of  common  shares  by  the  other
shareholders,  and  rights  to  have  its  common  shares  included  in  certain
registered public offerings of common stock which  may be made by K.V. Mart  Co.
In  addition, GCC has the option to require the repurchase of its shares for any
reason after  December 2000,  and until  that  time has  the option  to  require
repurchase upon the occurrence of certain specified events, including a material
breach  of  the supply  agreement referred  to below,  changes in  management or
control, and  noncompliance  with financial  ratios.  After December  1999,  the
repurchase price is fair market value as determined by appraisal, and until that
time  is  the greater  of  a declining  premium over  fair  market value  or the
original purchase price of the shares  plus an agreed annual compounded rate  of
return.  K.V. Mart Co. has the option to repurchase GCC's shares at any time and
also in the event  of a change in  control of GCC or  the Company or a  material
breach  by the  Company under  the supply  agreement referred  to below.  In the
absence of a change in control or a material breach under the supply  agreement,
and  until December  1999, the  repurchase price is  the greater  of a declining
premium over fair market value or the original purchase price of the shares plus
an agreed annual  compounded rate  of return, and  after December  1999 is  fair
market value. In the event of a change in control or a material breach under the
supply agreement, and until December 1999, the repurchase price is the lesser of
a  declining discount from fair  market value or the  original purchase price of
the shares, and  after December 1999  is fair market  value. In connection  with
these  transactions, K.V.  Mart Co. entered  into a seven  year supply agreement
with the Company whereunder K.V. Mart Co. is required to purchase a  substantial
portion  of its merchandise requirements from the Company. Fiscal 1996 purchases
totalled approximately $75,300,000. The supply  agreement is subject to  earlier
termination in certain situations.
 
    The  Company guarantees annual rent and certain other obligations of Stump's
Market, Inc.,  of  which  director  James  R.  Stump  is  the  President  and  a
shareholder,   as   leasee   under   a   lease   of   store   premises   located
 
                                       55
<PAGE>
in San Diego, California. Annual rent under the lease is $26,325, and the  lease
term  expires in May 1998.  The Company also guarantees  annual rent and certain
other obligations  of Stump's  Market, Inc.  as lessee  under a  lease of  store
premises  at a second location in San  Diego, California. Annual rent under this
lease is $36,075, and the lease term expires in November 1997. In  consideration
of  these guaranties, the Company receives a fee from Stump's Market, Inc. equal
to 5% of the base monthly rent under these leases.
 
    Since the  Company's  retail  and financial  assistance  programs  are  only
available  to persons and entities  which are patrons of  the Company, it is not
possible to assess whether the foregoing transactions are less favorable to  the
Company  than  similar  transactions  with  unrelated  third  parties.  However,
management believes that each such transaction is on terms no more favorable  to
the patron than those which would be available to other similar patrons.
 
EXECUTIVE OFFICER COMPENSATION
 
    The  following table sets forth information respecting the compensation paid
during the  Company's  last  three  fiscal years  to  the  President  and  Chief
Executive  Officer  ("CEO")  and  to certain  other  executive  officers  of the
Company.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
 
                                               ANNUAL COMPENSATION
                                --------------------------------------------------
                                                                        OTHER
                                FISCAL                                 ANNUAL           ALL OTHER
NAME AND PRINCIPAL POSITION      YEAR    SALARY($)(1)   BONUS($)   COMPENSATION($)   COMPENSATION($)
------------------------------  ------   ------------   --------   ---------------   ---------------
<S>                             <C>      <C>            <C>        <C>               <C>
Alfred A. Plamann                1996      352,500       50,000           840            27,895(2)
 President & CEO                 1995      322,150                                       24,290
                                 1994      236,827                        205            31,431
Daniel T. Bane                   1996      215,000       20,000           605            14,446(3)
 Senior Vice President & CFO     1995      200,000                        195             1,231
                                 1994       21,539
Charles J. Pilliter              1996      183,000       15,000           295            14,459(4)
 Senior Vice President           1995      172,000                                       13,174
                                 1994      167,577                        127            20,591
Corwin J. Karaffa                1996      151,000        7,000           150             6,458(5)
 Vice President - Distribution   1995       89,231
Don W. Hawks                     1996      139,500        2,000           203            10,636(6)
 Vice President - Marketing      1995       33,750                                       41,017
 and Procurement
<FN>
------------------------
(1)  It should be noted  that while the table  presents salary information on  a
     fiscal  year basis, salary is determined by  the Company on a calendar year
     basis. Thus,  salary information  with  respect to  any given  fiscal  year
     reflects  salary  attributable  to  portions of  two  calendar  year salary
     periods of the Company.
 
(2)  Consists of  a  $9,135 Company  contribution  to the  Company's  Employees'
     Sheltered  Savings Plan,  a $17,500  Company contribution  to the Company's
     Employees' Excess Benefit Plan and Supplemental Deferred Compensation Plan,
     and $1,260 representing  the economic benefit  associated with the  Company
     paid premium on the Executive Life Plan.
 
(3)  Consists  of  a $9,600  Company  contribution to  the  Company's Employees'
     Sheltered Savings  Plan, a  $4,303 Company  contribution to  the  Company's
     Employees' Excess Benefit Plan and Supplemental Deferred Compensation Plan,
     and $543 representing the economic benefit associated with the Company paid
     premium on the Executive Life Plan.
 
(4)  Consists  of  a $9,300  Company  contribution to  the  Company's Employees'
     Sheltered Savings  Plan, a  $4,717 Company  contribution to  the  Company's
     Employees' Excess Benefit Plan and Supplemental Deferred Compensation Plan,
     and $442 representing the economic benefit associated with the Company paid
     premium on the Executive Life Plan.
</TABLE>
 
                                       56
<PAGE>
 
<TABLE>
<S>  <C>
(5)  Consists  of  a $6,203  Company  contribution to  the  Company's Employees'
     Sheltered  Savings  Plan,  and  $255  representing  the  economic   benefit
     associated with the Company paid premium on the Executive Life Plan.
 
(6)  Consists  of  a $9,572  Company  contribution to  the  Company's Employees'
     Sheltered Savings  Plan,  a  $759 Company  contribution  to  the  Company's
     Employee  Excess Benefit  and Supplemental Deferred  Compensation Plan, and
     $305 representing the  economic benefit  associated with  the Company  paid
     premium on the Executive Life Plan.
</TABLE>
 
    In  September 1994,  the Board  of Directors  authorized a  new supplemental
executive pension plan  (effective January  4, 1995)  which provides  retirement
income  based on each participant's  final salary and years  of service with the
Company. The plan, called the Company's Executive Salary Protection Plan  ("ESPP
II"),  provides  additional  post-termination retirement  income  based  on each
participant's final salary and years of service with the Company. The funding of
this benefit  will  be  facilitated  through  the  purchase  of  life  insurance
policies,  the premiums  of which  will be paid  by the  Company and participant
contributions. The Company also has a defined benefit pension plan covering  its
non-union  and executive employees. Benefits under  the defined benefit plan are
equal to credited service  times the sum  of 95% of earnings  up to the  covered
compensation amount plus 1.45% of earnings in excess of the covered compensation
amount. The covered compensation is based on IRS Tables.
 
    ESPP  II  supersedes and  replaces the  Executive  Salary Protection  Plan I
("ESPP I").  Under  ESPP I,  Certified  purchased life  insurance  policies  for
certain  officers. Upon reaching  age 65 (or upon  termination, if earlier), the
employee was given the cash surrender  value of the policy, plus any  additional
income taxes incurred by the employee as a result of such distribution.
 
    The  following  table sets  forth the  estimated  annual benefits  under the
defined benefit  plan  and the  ESPP  II  plan which  qualifying  officers  with
selected  years of service would receive if  they had retired on August 31, 1996
at the age of 65.
 
                               PENSION PLAN TABLE
 
<TABLE>
<CAPTION>
                                                                     YEARS OF SERVICE
                                          ----------------------------------------------------------------------
REMUNERATION                               5 YEARS     10 YEARS    15 YEARS    20 YEARS    25 YEARS    33 YEARS
----------------------------------------  ----------  ----------  ----------  ----------  ----------  ----------
<S>                                       <C>         <C>         <C>         <C>         <C>         <C>
  $100,000..............................  $   25,984  $   51,968  $   67,952  $   68,936  $   69,920  $   71,495
  125,000...............................      32,506      65,012      85,018      86,274      87,530      89,539
  150,000...............................      39,028      78,056     102,084     103,611     105,139     107,584
  175,000...............................      45,278      90,556     115,057     119,861     121,389     123,834
  200,000...............................      51,528     103,056     115,057     125,242     135,428     140,084
  225,000...............................      57,778     104,871     115,057     125,242     135,428     151,725
  250,000...............................      64,028     104,871     115,057     125,242     135,428     151,725
  300,000...............................      76,528     104,871     115,057     125,242     135,428     151,725
  350,000...............................      89,028     104,871     115,057     125,242     135,428     151,725
  400,000...............................      94,685     104,871     115,057     125,242     135,428     151,725
  450,000...............................      94,685     104,871     115,057     125,242     135,428     151,725
</TABLE>
 
    The Company's ESPP II is designed to provide a retirement benefit up to  65%
of  a participant's  final compensation, based  on a formula  which considers an
executive's final compensation and years of service. Remuneration under ESPP  II
is  based upon an executive's highest annual base wage during the previous three
completed years, which includes  his or her annual  salary as determined by  the
Board  of Directors plus an automobile allowance  with a 4% annual increase. The
benefit is subject to an  offset of the annual  benefit which would be  received
from  the  defined benefit  plan, calculated  as  a single  life annuity  at age
sixty-two (62). To qualify for participation in the benefit, the executive  must
complete  three years of service as an officer elected by the Board of Directors
of the Company. Executives will vest at a rate of 5% per year with all years  of
continuous  service credited.  The ESPP  II annual  benefit upon  retirement for
calendar 1996 shall not exceed $84,800 and  will be paid over a 15-year  certain
benefit. The benefit will increase annually
 
                                       57
<PAGE>
thereafter  at  the rate  of 6%.  Lesser  amounts are  payable if  the executive
retires before age sixty-five (65). The  maximum annual amount payable by  years
of  service is reflected within the table at the compensation level of $450,000.
As of August 31,  1996, credited years  of service for  named officers are:  Mr.
Plamann,  7 years;  Mr. Bane, 2  years; Mr.  Pilliter, 20 years;  Mr. Karaffa, 1
year; and Mr. Hawks, 12 years.
 
EXECUTIVE EMPLOYMENT AND TERMINATION AGREEMENT
 
    The Company is a party to an employment contract with Alfred A. Plamann, the
Company's President and Chief Executive Officer.  The contract has a three  year
term, presently expiring in February 1999, but provides for annual extensions to
the  contract  if there  is mutual  agreement. Under  the contract,  Mr. Plamann
serves as the  Company's President and  Chief Executive Officer  and receives  a
base  salary, currently $365,000, subject to annual review and upward adjustment
at the discretion of the  Board of Directors. Mr.  Plamann is also eligible  for
annual  bonuses at the discretion of the  Board of Directors based upon a review
of his  performance. The  exact formula  for  future bonuses  has not  yet  been
determined  and will be added  as an amendment to the  contract at a later date.
Additionally, Mr. Plamann will receive employee benefits such as life  insurance
and Company pension and retirement contributions.
 
    The  contract is  terminable at  any time  by the  Company, with  or without
cause, and  will  also  terminate  upon  Mr.  Plamann's  resignation,  death  or
disability.  Except where termination  is for cause  or is due  to Mr. Plamann's
resignation, death or disability, the contract provides that Mr. Plamann will be
entitled to receive  his highest base  salary during the  previous three  years,
plus  an annual bonus equal to the average of the most recent three annual bonus
payments, throughout the balance of the term of the agreement. Mr. Plamann would
also continue to receive  employee benefits such as  life insurance and  Company
pension  and retirement contributions throughout the  balance of the term of the
agreement.
 
DIRECTOR COMPENSATION
 
    Each director  receives  a  fee  of $500  for  each  regular  board  meeting
attended,  $200 for each  committee meeting attended and  $200 for attendance at
each board meeting of a subsidiary of the Company on which the director  serves.
Prior  to April 3, 1996, directors received $300 for each regular board meeting,
$100 for each committee meeting, and $100 for each board meeting of a subsidiary
of the  Company.  In addition,  directors  are reimbursed  for  Company  related
expenses.
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
PRINCIPAL SHAREHOLDERS
 
    As  of November 1, 1996,  the only shareholders known  by the Company to own
beneficially more than 5% of the outstanding Class B Shares of the Company  were
Cala  Co., Bay  Area Warehouse  Stores, Inc. and  Ralphs Grocery  Co., 777 South
Harbor  Boulevard,  La  Habra,  California  90631  (28,620  Class  B  Shares  or
approximately  7.45% of the  outstanding Class B  Shares; Cala Co.  and Bay Area
Warehouse Stores Inc. are  wholly-owned by Ralphs Grocery  Co. which is in  turn
wholly-owned  by  The  Yucaipa  Companies,  10000  Santa  Monica  Boulevard, Los
Angeles, California  90067) and  Hughes Markets,  Inc., 14005  Live Oak  Avenue,
Irwindale, California 91706 (26,106 Class B Shares or approximately 6.80% of the
outstanding Class B Shares).
 
    The  following table sets  forth, as of  November 1, 1996,  the name of each
director of the Company,  his position with and  name of the member-patron,  and
the  amount of Class  A Shares and  Class B Shares  of the Company  owned by the
member-patron.
 
<TABLE>
<CAPTION>
                                                                                          SHARES OWNED
                                                                       --------------------------------------------------
                                                                             CLASS A SHARES            CLASS B SHARES
                                                                       --------------------------  ----------------------
                          NAME OF DIRECTOR                                 NO.       % OF TOTAL       NO.     % OF TOTAL
                          AND MEMBER-PATRON                              SHARES      OUTSTANDING    SHARES    OUTSTANDING
---------------------------------------------------------------------  -----------  -------------  ---------  -----------
<S>                                                                    <C>          <C>            <C>        <C>
Louis A. Amen;
  President, Super A Foods, Inc. ....................................         100         0.20%        9,718       2.53%
John Berberian;
  President, Berberian Enterprises, Inc. ............................         100         0.20%        7,615       1.98%
</TABLE>
 
                                       58
<PAGE>
<TABLE>
<CAPTION>
                                                                                          SHARES OWNED
                                                                       --------------------------------------------------
                                                                             CLASS A SHARES            CLASS B SHARES
                                                                       --------------------------  ----------------------
                          NAME OF DIRECTOR                                 NO.       % OF TOTAL       NO.     % OF TOTAL
                          AND MEMBER-PATRON                              SHARES      OUTSTANDING    SHARES    OUTSTANDING
---------------------------------------------------------------------  -----------  -------------  ---------  -----------
<S>                                                                    <C>          <C>            <C>        <C>
Michael Bonfonte;
  Chairman, President & CEO, Nob Hill General Store, Inc.............         100         0.20%       12,465       3.25%
Harley DeLano;
  President of Cala Foods, Inc., Division of Ralphs Grocery
  Company(1).........................................................         100         0.20%       28,620       7.45%
Lyle A. Hughes;
  General Manager, Yucaipa Trading Co., Inc.(2)(3)...................         100         0.20%          103       0.03%
Roger K. Hughes;
  Chairman and Chief Executive Officer,
  Hughes Markets, Inc.(2)............................................         100         0.20%       26,106       6.80%
Darioush Khaledi;
  Chairman of the Board and Chief Executive Officer,
  K.V. Mart Co. .....................................................         100         0.20%       15,967       4.16%
Mark Kidd;
  President, Mar-Val Food Stores, Inc................................         100         0.20%        1,950       0.51%
Willard R. "Bill" MacAloney;
  President and Chief Executive Officer, Mac Ber, Inc. ..............         100         0.20%        2,523       0.66%
Jay McCormack;
  Owner-Operator, Alamo Market(4)....................................         100         0.20%          732       0.19%
Morrie Notrica;
  President and Chief Operating Officer, Joe Notrica, Inc............         100         0.20%        8,945       2.33%
Michael A. Provenzano;
  President, Pro & Sons, Inc. .......................................         100         0.20%          697       0.18%
Allan Scharn;
  President (retired), Gelson's Markets(5)...........................         100         0.20%        7,123       1.85%
James R. Stump;
  President, Stump's Market, Inc.....................................         100         0.20%        1,982       0.52%
Kenneth Young;
  Vice President, Jack Young's Supermarkets(6) ......................         100         0.20%        3,015       0.79%
                                                                            -----        ------    ---------  -----------
                                                                            1,500         3.00%      127,561      33.22%
                                                                            -----        ------    ---------  -----------
                                                                            -----        ------    ---------  -----------
</TABLE>
 
------------------------
(1) These shares are  owned by Ralphs Grocery  Company and its affiliates,  Cala
    Foods, Inc., and Bay Area Warehouse Stores, Inc.
 
(2) Messrs. Lyle A. Hughes and Roger K. Hughes are unrelated.
 
(3)  Mr. Hughes is also  affiliated with Yucaipa Food  Fair, Inc. which owns 546
    Class B Shares (0.14% of the  outstanding class of shares). Yucaipa  Trading
    Co.,  Inc. and Yucaipa  Food Fair Inc.  are not affiliated  with The Yucaipa
    Companies.
 
(4) Mr. McCormack also is  affiliated with Glen Avon  Food, Inc. which owns  100
    Class  A Shares (0.20% of  the outstanding class of  shares) and 361 Class B
    Shares (0.09% of the outstanding class  of shares) and Yucaipa Trading  Co.,
    Inc.  which  owns 100  Class A  Shares  (0.20% of  the outstanding  class of
    shares) and 694 Class B Shares (0.18% of the outstanding class of shares).
 
(5) These  shares  are owned  by  Arden Mayfair,  Inc.,  the parent  company  of
    Gelson's Markets.
 
(6)  Mr. Young also  is affiliated with  Bakersfield Food City  Inc. dba Young's
    Markets which owns  100 Class A  Shares (0.20% of  the outstanding class  of
    shares) and 355 Class B Shares (0.09% of the outstanding class of shares).
 
                                       59
<PAGE>
ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
 
    All  firms with which  directors are affiliated, as  members of the Company,
purchase groceries, related products and store equipment from the Company in the
ordinary course  of  business  at  prices and  on  terms  available  to  members
generally.  As members, firms  with which directors  are affiliated, may receive
benefits for  which all  members are  eligible, including  patronage  dividends,
allowances  and retail support  services. See, "Item 1.  BUSINESS" for a general
description  of  benefits  and  services  available  to  patrons.  One  customer
accounted  for in excess of 5% of the Company's consolidated sales during fiscal
1996. Ralphs Grocery Co. together with its affiliated companies, accounted for a
combined total of approximately 5.5%. No other director of the Company (nor  the
firms  with which such director is affiliated)  accounted for in excess of 5% of
the Company's consolidated sales during fiscal 1996.
 
    In September 1992, the  Company guaranteed the  obligations of Mar-Val  Food
Stores,  Inc., of which director  Mark Kidd is the  President and a shareholder,
under a lease  of market  premises located  in Valley  Springs, California.  The
guarantee  is of the obligations of Mar-Val  Food Stores, Inc. to pay base rent,
common area costs, real  estate taxes and insurance  during the initial  fifteen
year  term of  the lease. Base  rent under the  lease is $10,080  per month. The
Company's total obligation under the guarantee,  however, is limited to the  sum
of  $736,800. In consideration of its  guarantee, the Company receives a monthly
fee from Mar-Val Food Store, Inc. equal to 5% of the base monthly rent under the
lease.
 
    The Company leases  its produce  warehouse to  Joe Notrica,  Inc., of  which
director  Morrie Notrica is the President and  a shareholder. The lease is for a
term of five years expiring  in November 1998 and  contains an option to  extend
for  an additional  five year  period. Monthly rent  during the  initial term is
$24,000. If the  option to extend  is exercised, rent  during the option  period
will  be the lesser of fair rental value  or the monthly rent during the initial
term as adjusted to reflect  the change in the  Customer Price Index during  the
initial term.
 
    Cala  Foods, Inc. (a patron affiliated with Ralphs Grocery Company) acquired
the  stock  of  Bell  Markets,  Inc.  in  June  1989.  In  connection  with  the
acquisition,  the Company guaranteed the lease obligations of Bell Markets, Inc.
during a 20-year  period under  a lease relating  to two  retail grocery  stores
located in San Francisco, California. Annual rent under the lease is $327,019.
 
    Grocers  General Merchandise Company  ("GM"), a subsidiary,  and Food 4 Less
GM, Inc. ("F4LGM"), an  indirect subsidiary of Food  4 Less Supermarkets,  Inc.,
are  parties to a joint venture agreement. Under the agreement, GM and F4LGM are
partners in a joint  venture partnership known  as Golden Alliance  Distribution
("GAD").  The partnership was formed for the purpose of providing for the shared
use  of  the  Company's  general   merchandise  warehouse  located  in   Fresno,
California,  and each of the  partners has entered into  a supply agreement with
GAD providing for  the purchase of  general merchandise products  from GAD.  The
Company  is currently in discussions with Ralphs regarding the future of the GAD
partnership.
 
    The Company  guarantees  certain  obligations under  a  sublease  of  market
premises located in Pasadena, California, and under which Berberian Enterprises,
Inc.,  of which Director John  Berberian is the President  and a shareholder, is
the sublessor.  The guaranty  is of  the  obligations of  the sublessee  to  pay
minimum  rent, common  area costs,  real estate  taxes and  insurance during the
first seven years  of the  term of the  sublease, which  commenced in  September
1995.  Minimum rent under the sublease is $10,000 per month. In consideration of
its guaranty, the Company receives a monthly fee from the sublessee equal to  5%
of the monthly amounts guaranteed.
 
    The  Company proposes to lease store locations in Arvin, Delano and Shafter,
California, which  it will  in  turn sublease  on the  same  rental terms  to  a
corporation to be formed by director Michael A. Provenzano. The Arvin and Delano
subleases  will have twenty year terms, while the Shafter lease will have a term
of twenty-five years. Annual rent under the Arvin lease will be $165,088  during
the  first ten years  and $166,448 during  the balance of  the term. Annual rent
under the Delano lease will be $183,334 during the first ten years and  $174,080
during  the balance  of the term.  Annual rent  under the Shafter  lease will be
$104,997 during the  first ten  years, $100,890 during  the next  ten years  and
$108,457  during  the balance  of the  term.  In addition,  under each  of these
subleases, the Company  will receive an  annual fee  equal to 5%  of the  annual
rent.
 
                                       60
<PAGE>
    Since  the  Company's  retail  and financial  assistance  programs  are only
available to persons and entities  which are patrons of  the Company, it is  not
possible  to assess whether the foregoing transactions are less favorable to the
Company  than  similar  transactions  with  unrelated  third  parties.  However,
management  believes that each such transaction is on terms no more favorable to
the patron than those which would be available to other similar patrons.
 
    On February 1, 1995, GCC  made a loan of $69,000  to Corwin J. Karaffa,  the
Company's Vice President-Distribution. The loan was for the purpose of assisting
Mr. Karraffa in acquiring a home in connection with his becoming employed by the
Company. The loan bears interest at 8% per annum and is secured by a second deed
of  trust on the  home. The loan has  a term of eight  years, with interest only
payable during the first five years.
 
    Certain other  transactions involving  other directors  of the  Company  are
described  in Item 11  under the caption  "Compensation Committee Interlocks and
Insider Participation."
 
                                       61
<PAGE>
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K.
 
    (a) Financial Statements
 
        Reports of Independent Accountants.
 
        Consolidated Balance Sheets as of August 31, 1996 and September 2, 1995.
 
        Consolidated Statements of Earnings for the Fiscal Years Ended August
        31, 1996, September 2, 1995, and September 3, 1994.
 
        Consolidated Statements of Shareholders' Equity for the Fiscal Years
        Ended August 31, 1996, September 2, 1995, and September 3, 1994.
 
        Consolidated Statements of Cash Flows for the Fiscal Years Ended August
        31, 1996, September 2, 1995, and September 3, 1994.
 
    (b) Reports on Form 8-K
 
        Form 8-K filed June 11, 1996.
 
        Form 8-K filed April 10, 1996.
 
    (c) Exhibits
 
   3.1   Articles  of Incorporation of the  Registrant (as amended through June
         21,  1994)  (incorporated   by  reference  to   Exhibit  3.1  to   the
         Registrant's  Annual Report  on Form  10-K for  the fiscal  year ended
         September 3, 1994, File No. 0-10815).
   3.2   Bylaws  of  the  Registrant  (as   amended  through  June  21,   1994)
         (incorporated  by reference to Exhibit 4.2 to Post-Effective Amendment
         No. 6 to Form  S-2 Registration Statement of  the Registrant filed  on
         December 15, 1994, File No. 33-38152).
   4.1   Retail   Grocer  Application  and  Agreement  for  Continuing  Service
         Affiliation With  Certified Grocers  of  California, LTD.  And  Pledge
         Agreement (incorporated by reference to Exhibit 4.7 to Amendment No. 2
         to Form S-1 Registration Statement of the Registrant filed on December
         31, 1981, File No. 2-70069).
   4.2   Retail  Grocer Application And Agreement  For Service Affiliation With
         And The Purchase Of  Shares Of Certified  Grocers Of California,  LTD.
         And  Pledge  Agreement (incorporated  by reference  to Exhibit  4.2 to
         Post-Effective Amendment No. 7 to  Form S-2 Registration Statement  of
         the Registrant filed on December 13, 1989, File No. 33-19284).
   4.3   Agreement  respecting directors' shares  (incorporated by reference to
         Exhibit 4.9 to Amendment No. 2  to Form S-1 Registration Statement  of
         the Registrant filed on December 31, 1981, File No. 2-70069).
   4.4   Subordination  Agreement  (Existing  Member-Patron)  (incorporated  by
         reference to Exhibit 4.4 to Post-Effective Amendment No. 4 to Form S-2
         Registration Statement of the Registrant filed on July 15, 1988,  File
         No. 33-19284).
   4.5   Subordination  Agreement (Existing Associate  Patron) (incorporated by
         reference to Exhibit 4.5 to Post-Effective Amendment No. 4 to Form S-2
         Registration Statement of the Registrant filed on July 15, 1988,  File
         No. 33-19284).
   4.6   Subordination Agreement (New Member-Patron) (incorporated by reference
         to  Exhibit  4.6  to  Post-Effective  Amendment  No.  4  to  Form  S-2
         Registration Statement of the Registrant filed on July 15, 1988,  File
         No. 33-19284).
   4.7   Subordination   Agreement  (New  Associate  Patron)  (incorporated  by
         reference to Exhibit 4.7 to Post-Effective Amendment No. 4 to Form S-2
         Registration Statement of the Registrant filed on July 15, 1988,  File
         No. 33-19284).
 
                                       62
<PAGE>
<TABLE>
<C>      <S>
   4.8   Form  of  Class  A  Share Certificate  (incorporated  by  reference to
         Exhibit 4.5 to Post-Effective Amendment No. 6 to Form S-2 Registration
         Statement of  the Registrant  filed  on December  15, 1994,  File  No.
         33-38152).
   4.9   Form  of  Class  B  Share Certificate  (incorporated  by  reference to
         Exhibit 4.6 to Post-Effective Amendment No. 6 to Form S-2 Registration
         Statement of  the Registrant  filed  on December  15, 1994,  File  No.
         33-38152).
4.10.1   Articles FIFTH and SIXTH of the Registrant's Articles of Incorporation
         (See Exhibit 3.1).
4.10.2   Article  I, Section 5, and Article VII of the Registrant's Bylaws (See
         Exhibit 3.2).
  4.11   Indenture  between  the  Registrant  and  First  Interstate  Bank   of
         California,  as Trustee, relating to $3,000,000 Subordinated Patronage
         Dividend Certificates Due December 15, 2000 (incorporated by reference
         to Exhibit 4.3 to Amendment No.  1 to Form S-2 Registration  Statement
         of the Registrant filed on September 27, 1993, File No. 33-68288).
  4.12   Indenture   between  the  Registrant  and  First  Interstate  Bank  of
         California, as Trustee, relating to $5,000,000 Subordinated  Patronage
         Dividend Certificates due December 15, 2001 (incorporated by reference
         to  Exhibit 4.3 to  Form S-2 Registration  Statement of the Registrant
         filed on October 12, 1994, File No. 33-56005).
  4.13   Indenture  between  the  Registrant  and  First  Interstate  Bank   of
         California,  as Trustee, relating to $3,000,000 Subordinated Patronage
         Dividend Certificates due December 15, 2002 (incorporated by reference
         to Exhibit 4.3 to  Form S-2 Registration  Statement of the  Registrant
         filed on October 13, 1995, File No. 33-63383).
  4.14   $135,000,000 Amended and Restated Loan and Security Agreement dated as
         of  March  17, 1994  between  Certified Grocers  of  California, Ltd.,
         Grocers General Merchandise Company, Grocers Specialty Company, and BT
         Commercial Corporation, as agent, Union  Bank, as co-agent, and  First
         National Bank of Boston as co-agent; and Amendment Number One dated as
         of  November 1, 1994 (incorporated by reference to Exhibit 4.13 to the
         Registrant's Annual  Report on  Form 10-K  for the  fiscal year  ended
         September 3, 1994, File No. 0-10815).
4.14.1   Amendment  Number  Two  to  Amended  and  Restated  Loan  and Security
         Agreement date as of  December 3, 1994,  between Certified Grocers  of
         California,   Ltd.,  Grocers  General   Merchandise  Company,  Grocers
         Specialty Company,  and BT  Commercial  Corporation, as  agent,  Union
         Bank,  as co-agent,  and First  National Bank  of Boston,  as co-agent
         (incorporated by  reference  to  Exhibit 4.14.1  to  the  Registrant's
         Annual  Report on  Form 10-K  for the  fiscal year  ended September 2,
         1995, File No. 0-10815).
4.14.2   Amendment Number  Three  to Amended  and  Restated Loan  and  Security
         Agreement  dated  as of  May 24,  1996,  between Certified  Grocers of
         California,  Ltd.,  Grocers   General  Merchandise  Company,   Grocers
         Specialty  Company,  and BT  Commercial  Corporation, as  agent, Union
         Bank, as co-agent, and First National Bank of Boston, as co-agent.
4.14.3   Amendment Number  Four  to  Amended and  Restated  Loan  and  Security
         Agreement  dated as  of June  27, 1996,  between Certified  Grocers of
         California,  Ltd.,  Grocers   General  Merchandise  Company,   Grocers
         Specialty  Company,  and BT  Commercial  Corporation, as  agent, Union
         Bank, as co-agent, and First National Bank of Boston, as co-agent.
4.14.4   Amendment Number  Five  to  Amended and  Restated  Loan  and  Security
         Agreement dated as of September 30, 1996, between Certified Grocers of
         California,   Ltd.,  Grocers  General   Merchandise  Company,  Grocers
         Specialty Company,  and BT  Commercial  Corporation, as  agent,  Union
         Bank, as co-agent, and First National Bank of Boston, as co-agent.
  4.15   Subordinated  Note Agreement  dated March  27, 1989  between Certified
         Grocers of California, Ltd. and Aetna Life Insurance Company regarding
         $35,000,000 10.80% subordinated  notes due April  1, 1999; and  letter
         amendment dated January 30, 1992 (incorporated by reference to Exhibit
         4.15  to the  Registrant's Annual Report  on Form 10-K  for the fiscal
         year ended  August 28,  1993  filed on  November  26, 1993,  File  No.
         0-10815).
</TABLE>
 
                                       63
<PAGE>
<TABLE>
<C>      <S>
4.15.1   Amendment  to Subordinated Note  Agreement dated as  of March 17, 1994
         between Certified Grocers of California, Ltd. and Aetna Life Insurance
         Company  (incorporated  by   reference  to  Exhibit   4.15.1  to   the
         Registrant's  Annual Report  on Form  10-K for  the fiscal  year ended
         September 3, 1994, File No. 0-10815).
  4.16   Note Purchase  Agreement  dated  January 15,  1990  between  Certified
         Grocers  of California,  Ltd. and Massachusetts  Mutual Life Insurance
         Company regarding $20,000,000 9.55% Senior Notes due January 15, 2005;
         and Amendment Dated January 30, 1991, First Amendment dated  September
         4,  1991, and Amendment No. 2  dated October 19, 1993 (incorporated by
         reference to Exhibit 4.16  to the Registrant's  Annual Report on  Form
         10-K  for the fiscal year ended August  28, 1993 filed on November 26,
         1993, File No. 0-10815).
4.16.1   Amendment No. 3 to Note Purchase Agreement dated as of March 17, 1994,
         and Amendment No. 4 to Note  Purchase Agreement dated as of  September
         29,  1994,  each between  Certified  Grocers of  California,  Ltd. and
         Massachusetts Mutual Life Insurance Company (incorporated by reference
         to Exhibit 4.16.1 to the Registrant's  Annual Report on Form 10-K  for
         the fiscal year ended September 3, 1994, File No. 0-10815).
  4.17   $18,700,000  Loan Agreement  dated August  23, 1979  between Certified
         Grocers of California, Ltd., First  Interstate Bank of California,  as
         Trustee, and the other Lenders named therein; Secured Promissory Notes
         dated  August 23,  1979; Deed of  Trust and Assignment  of Rents dated
         August 23, 1979; and, Assignment of Rents and Leases dated August  23,
         1979  (incorporated by reference  to Exhibit 4.17  to the Registrant's
         Annual Report on Form 10-K for  the fiscal year ended August 28,  1993
         filed on November 26, 1993, File No. 0-10815).
  4.18   Loan  Purchase  and  Service Agreement  Dated  as of  August  29, 1996
         between Grocers  Capital  Company and  National  Consumer  Cooperative
         Bank.
  4.19   $10,000,000  Credit Agreement and Security  Agreement each dated as of
         September 20,  1996  between  Grocers  Capital  Company  and  National
         Cooperative Bank as agent.
  10.1   Comprehensive  Amendment to Retirement Plan for Employees of Certified
         Grocers of California, Ltd. (incorporated by reference to Exhibit 10.1
         to Form S-2 Registration Statement of the Registrant filed on  October
         12, 1994, File No. 33-56005).
  10.2   Incentive Compensation Plan (incorporated by reference to Exhibit 10.2
         of  the Form  S-2 Registration  Statement of  the Registrant  filed on
         December 28, 1987, File No. 33-19284).
  10.3   Comprehensive Amendment  to  Certified  Grocers  of  California,  Ltd.
         Employees'  Sheltered  Savings  Plan  (incorporated  by  reference  to
         Exhibit 10.3 to the Form S-2 Registration Statement of the  Registrant
         filed on September 2, 1993, File No. 33-68288).
  10.4   Certified  Grocers  of California,  Ltd., Executive  Salary Protection
         Plan II ("ESPP II"), Master  Plan Document, effective January 4,  1995
         (incorporated  by reference to Exhibit 10.4 to the Registrant's Annual
         Report on Form 10-K for the fiscal year ended September 2, 1995  filed
         on December 1, 1995, File No. 0-10815).
  10.5   Master  Trust  Agreement  For Certified  Grocers  of  California, Ltd.
         Executive Salary  Protection  Plan II,  dated  as of  April  28,  1995
         (incorporated  by reference to Exhibit 10.5 to the Registrant's Annual
         Report on Form 10-K for the fiscal year ended September 2, 1995  filed
         on December 1, 1995, File No. 0-10815).
  10.6   Certified   Grocers  of  California,  Ltd.  Executive  Insurance  Plan
         Split-dollar  Agreement  and  Schedule  of  Executive  Officers  party
         thereto (incorporated by reference to Exhibit 10.6 to the Registrant's
         Annual Report on Form 10-K for the fiscal year ended September 2, 1995
         filed on December 1, 1995, File No. 0-10815).
  10.7   Comprehensive  Amendment  to  Certified  Grocers  of  California, Ltd.
         Employees' Excess Benefit Plan  (incorporated by reference to  Exhibit
         10.6.1  to Form S-2 Registration Statement  of the Registrant filed on
         October 12, 1994, File No. 33-56005).
</TABLE>
 
                                       64
<PAGE>
<TABLE>
<C>      <S>
  10.8   Comprehensive Amendment  to  Certified  Grocers  of  California,  Ltd.
         Employees'  Supplemental Deferred  Compensation Plan  (incorporated by
         reference to Exhibit 10.5.3 to Form S-2 Registration Statement of  the
         Registrant filed on December 10, 1990, File No. 33-38152).
  10.9   Comprehensive  Amendment  to  Certified  Grocers  of  California, Ltd.
         Employee Savings Plan  (incorporated by reference  to Exhibit 10.4  to
         Form  S-2 Registration Statement of  the Registrant filed on September
         2, 1993, File No. 33-68288).
10.9.1   First Amendment  to Certified  Grocers  of California,  Ltd.  Employee
         Savings  Plan (incorporated by reference to Exhibit 10.4.1 to Form S-2
         Registration Statement of  the Registrant filed  on October 12,  1994,
         File No 33-56005).
 10.10   Joint  Venture Agreement of Golden  Alliance Distribution, dated as of
         April 8,  1992, between  Food  4 Less  GM,  Inc. and  Grocers  General
         Merchandise Company (incorporated by reference to Exhibit 10.7 to Form
         S-2  Registration Statement  of the  Registrant filed  on September 2,
         1993. File No. 33-68288.
 10.11   Lease, dated as of  December 23, 1986,  between Cercor Associates  and
         Grocers  Specialty Company (incorporated by  reference to Exhibit 10.8
         to  Form  S-2  Registration  Statement  of  the  Registrant  filed  on
         September 2, 1993. File No. 33-68288).
 10.12   Expansion  Agreement, dated as  of May 1,  1991, and Industrial Lease,
         dated as of May 1, 1991, between Dermody Properties and the Registrant
         (incorporated by reference  to Exhibit 10.9  to Form S-2  Registration
         Statement  of  the Registrant  filed on  September  2, 1993.  File No.
         33-68288).
10.12.1  Lease Amendment, dated June 20,  1991, between Dermody Properties  and
         the  Registrant (incorporated by  reference to Exhibit  10.9.1 to Form
         S-2 Registration Statement  of the  Registrant filed  on September  2,
         1993. File No. 33-68288).
10.12.2  Lease  Amendment, dated  October 18, 1991,  between Dermody Properties
         and the Registrant  (incorporated by  reference to  Exhibit 10.9.2  to
         Form  S-2 Registration Statement of  the Registrant filed on September
         2, 1993. File No. 33-68288).
 10.13   Preferred Stock  Purchase  Agreement  by and  between  Food-4-Less  of
         Modesto,  Inc. and Grocers  Capital Company, dated as  of July 1, 1992
         (incorporated by reference to Exhibit 10.10 to the Registrant's Annual
         Report on Form 10-K for the fiscal year ended August 28, 1993 filed on
         November 26, 1993, File No. 0-10815).
 10.14   Preferred Stock Purchase Agreement by  and between SavMax Foods,  Inc.
         and   Grocers  Capital  Company,   dated  as  of   December  17,  1993
         (incorporated  by  reference  to   Exhibit  10.11  to   Post-Effective
         Amendment  No. 6 to Form S-2  Registration Statement of the Registrant
         filed on December 15, 1994, File No. 33-38152).
 10.15   Common Stock Purchase  Agreement by  and between Michael  A. Webb  and
         Grocers  Capital Company, dated as  of December 17, 1993 (incorporated
         by reference to  Exhibit 10.12  to Post-Effective Amendment  No. 6  to
         Form  S-2 Registration Statement  of the Registrant  filed on December
         15, 1994, File No. 33-38152).
 10.16   Agreement Regarding  Common  Stock by  and  between Michael  A.  Webb,
         SavMax  Foods, Inc. and Grocers Capital  Company, dated as of December
         17, 1993 (incorporated by reference to Exhibit 10.13 to Post-Effective
         Amendment No. 6 to Form  S-2 Registration Statement of the  Registrant
         filed on December 15, 1994, File No. 33-38152).
 10.17   Commercial  Lease-Net dated December 6,  1994 between TriNet Essential
         Facilities XII  and  the  Registrant  (incorporated  by  reference  to
         Exhibit  10.17 to the Registrant's Annual  Report on Form 10-K for the
         fiscal year ended September  2, 1995 filed on  December 1, 1995,  file
         No. 0-10815).
</TABLE>
 
                                       65
<PAGE>
<TABLE>
<C>      <S>
 10.18   Purchase  Agreement dated November 21, 1994 between the Registrant and
         TriNet Corporate  Realty Trust,  Inc.  (incorporated by  reference  to
         Exhibit  10.18 to the Registrant's Annual  Report on Form 10-K for the
         fiscal year ended September  2, 1995 filed on  December 1, 1995,  file
         No. 0-10815).
 10.19   Form  of  Employment  Agreement  between  the  Company  and  Alfred A.
         Plamann.
  22.1   Subsidiaries of the Registrant.
   27.   Financial Data Schedule.
</TABLE>
 
    (d) Financial Statement Schedules
        All  required  schedule  information  is  presented  in  the   financial
        statements  or notes thereto.  Other schedule information  is either not
        applicable or not material.
 
                                       66
<PAGE>
                                   SIGNATURES
 
    Pursuant  to  the requirements  of  Section 13  or  15(d) 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.
 
                                CERTIFIED GROCERS OF CALIFORNIA, LTD.
 
                                By              /s/ ALFRED A. PLAMANN
                                     ------------------------------------------
                                                  Alfred A. Plamann
                                                    PRESIDENT AND
                                               CHIEF EXECUTIVE OFFICER
 
                                By               /s/ DANIEL T. BANE
                                     ------------------------------------------
                                                   Daniel T. Bane
                                         SENIOR VICE PRESIDENT -- FINANCE &
                                                   ADMINISTRATION
                                             AND CHIEF FINANCIAL OFFICER
 
                                By             /s/ RANDALL G. SCOVILLE
                                     ------------------------------------------
                                                 Randall G. Scoville
                                                CORPORATE CONTROLLER
 
Date: October 31, 1996
 
                                       67
<PAGE>
    Pursuant to the requirements  of the Securities Exchange  Act of 1934,  this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the dates indicated.
 
<TABLE>
<CAPTION>
                      SIGNATURE                           TITLE            DATE
------------------------------------------------------  ----------  -------------------
 
<S>                                                     <C>         <C>
               /S/ WILLARD R. MACALONEY
     -------------------------------------------         Director    October 31, 1996
                 Willard R. MacAloney
               (Chairman of the Board)
 
                  /S/ JAY MCCORMACK
     -------------------------------------------         Director    October 31, 1996
                    Jay McCormack
                 (1st Vice Chairman)
 
                 /S/ DARIOUSH KHALEDI
     -------------------------------------------         Director    October 31, 1996
                   Darioush Khaledi
                 (2nd Vice Chairman)
 
                  /S/ LOUIS A. AMEN
     -------------------------------------------         Director    October 31, 1996
                    Louis A. Amen
 
                  /S/ JOHN BERBERIAN
     -------------------------------------------         Director    October 31, 1996
                    John Berberian
 
                 /S/ MICHAEL BONFANTE
     -------------------------------------------         Director    October 31, 1996
                   Michael Bonfante
 
                 /S/ HARLEY J. DELANO
     -------------------------------------------         Director    October 31, 1996
                   Harley J. DeLano
 
                  /S/ LYLE A. HUGHES
     -------------------------------------------         Director    October 31, 1996
                    Lyle A. Hughes
 
                 /S/ ROGER K. HUGHES
     -------------------------------------------         Director    October 31, 1996
                   Roger K. Hughes
 
                    /S/ MARK KIDD
     -------------------------------------------         Director    October 31, 1996
                      Mark Kidd
 
                  /S/ MORRIE NOTRICA
     -------------------------------------------         Director    October 31, 1996
                    Morrie Notrica
 
              /S/ MICHAEL A. PROVENZANO
     -------------------------------------------         Director    October 31, 1996
                Michael A. Provenzano
 
                   /S/ ALLAN SCHARN
     -------------------------------------------         Director    October 31, 1996
                     Allan Scharn
</TABLE>
 
                                       68
<PAGE>
<TABLE>
<CAPTION>
                      SIGNATURE                           TITLE            DATE
------------------------------------------------------  ----------  -------------------
 
<S>                                                     <C>         <C>
                  /S/ JAMES R. STUMP
     -------------------------------------------         Director    October 31, 1996
                    James R. Stump
 
                  /S/ KENNETH YOUNG
     -------------------------------------------         Director    October 31, 1996
                    Kenneth Young
</TABLE>
 
                                       69
<PAGE>
                                 EXHIBIT INDEX
 
<TABLE>
<CAPTION>
EXHIBIT                                                               SEQUENTIAL
NUMBER                           DESCRIPTION                           PAGE NO.
-------   ---------------------------------------------------------   ----------
<C>       <S>                                                         <C>
 
    3.1   Articles  of Incorporation of  the Registrant (as amended
          through June  21,  1994) (incorporated  by  reference  to
          Exhibit  3.1 to  the Registrant's  Annual Report  on Form
          10-K for the  fiscal year ended  September 3, 1994,  File
          No. 0-10815).
    3.2   Bylaws  of the  Registrant (as  amended through  June 21,
          1994)  (incorporated  by  reference  to  Exhibit  4.2  to
          Post-Effective  Amendment No. 6  to Form S-2 Registration
          Statement of the Registrant  filed on December 15,  1994,
          File No. 33-38152).
    4.1   Retail  Grocer Application  and Agreement  for Continuing
          Service Affiliation With Certified Grocers of California,
          LTD. And Pledge Agreement  (incorporated by reference  to
          Exhibit  4.7 to Amendment No.  2 to Form S-1 Registration
          Statement of the Registrant  filed on December 31,  1981,
          File No. 2-70069).
    4.2   Retail  Grocer  Application  And  Agreement  For  Service
          Affiliation With And The Purchase Of Shares Of  Certified
          Grocers   Of  California,   LTD.  And   Pledge  Agreement
          (incorporated   by   reference   to   Exhibit   4.2    to
          Post-Effective  Amendment No. 7  to Form S-2 Registration
          Statement of the Registrant  filed on December 13,  1989,
          File No. 33-19284).
    4.3   Agreement  respecting directors'  shares (incorporated by
          reference to Exhibit 4.9 to  Amendment No. 2 to Form  S-1
          Registration   Statement  of  the   Registrant  filed  on
          December 31, 1981, File No. 2-70069).
    4.4   Subordination Agreement (Existing Member-Patron)
          (incorporated   by   reference   to   Exhibit   4.4    to
          Post-Effective  Amendment No. 4  to Form S-2 Registration
          Statement of the Registrant filed on July 15, 1988,  File
          No. 33-19284).
    4.5   Subordination   Agreement  (Existing   Associate  Patron)
          (incorporated   by   reference   to   Exhibit   4.5    to
          Post-Effective  Amendment No. 4  to Form S-2 Registration
          Statement of the Registrant filed on July 15, 1988,  File
          No. 33-19284).
    4.6   Subordination Agreement (New Member-Patron) (incorporated
          by  reference to Exhibit  4.6 to Post-Effective Amendment
          No.  4  to  Form   S-2  Registration  Statement  of   the
          Registrant filed on July 15, 1988, File No. 33-19284).
    4.7   Subordination    Agreement    (New    Associate   Patron)
          (incorporated   by   reference   to   Exhibit   4.7    to
          Post-Effective  Amendment No. 4  to Form S-2 Registration
          Statement of the Registrant filed on July 15, 1988,  File
          No. 33-19284).
    4.8   Form  of  Class  A  Share  Certificate  (incorporated  by
          reference to Exhibit 4.5 to Post-Effective Amendment  No.
          6  to Form  S-2 Registration Statement  of the Registrant
          filed on December 15, 1994, File No. 33-38152).
    4.9   Form  of  Class  B  Share  Certificate  (incorporated  by
          reference  to Exhibit 4.6 to Post-Effective Amendment No.
          6 to Form  S-2 Registration Statement  of the  Registrant
          filed on December 15, 1994, File No. 33-38152).
 4.10.1   Articles  FIFTH and SIXTH of the Registrant's Articles of
          Incorporation (See Exhibit 3.1).
 4.10.2   Article I, Section 5, and Article VII of the Registrant's
          Bylaws (See Exhibit 3.2).
   4.11   Indenture between  the  Registrant and  First  Interstate
          Bank  of California,  as Trustee,  relating to $3,000,000
          Subordinated Patronage Dividend Certificates Due December
          15, 2000  (incorporated by  reference to  Exhibit 4.3  to
          Amendment No. 1 to Form S-2 Registration Statement of the
          Registrant   filed  on  September   27,  1993,  File  No.
          33-68288).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT                                                               SEQUENTIAL
NUMBER                           DESCRIPTION                           PAGE NO.
-------   ---------------------------------------------------------   ----------
<C>       <S>                                                         <C>
   4.12   Indenture between  the  Registrant and  First  Interstate
          Bank  of California,  as Trustee,  relating to $5,000,000
          Subordinated Patronage Dividend Certificates due December
          15, 2001  (incorporated by  reference to  Exhibit 4.3  to
          Form  S-2 Registration Statement  of the Registrant filed
          on October 12, 1994, File No. 33-56005).
   4.13   Indenture between  the  Registrant and  First  Interstate
          Bank  of California,  as Trustee,  relating to $3,000,000
          Subordinated Patronage Dividend Certificates due December
          15, 2002  (incorporated by  reference to  Exhibit 4.3  to
          Form  S-2 Registration Statement  of the Registrant filed
          on October 13, 1995, File No. 33-63383).
   4.14   $135,000,000  Amended  and  Restated  Loan  and  Security
          Agreement  dated as  of March 17,  1994 between Certified
          Grocers of California, Ltd., Grocers General  Merchandise
          Company,  Grocers  Specialty Company,  and  BT Commercial
          Corporation, as agent, Union Bank, as co-agent, and First
          National Bank of Boston as co-agent; and Amendment Number
          One  dated  as  of  November  1,  1994  (incorporated  by
          reference  to  Exhibit  4.13 to  the  Registrant's Annual
          Report on Form 10-K for  the fiscal year ended  September
          3, 1994, File No. 0-10815).
 4.14.1   Amendment  Number Two  to Amended  and Restated  Loan and
          Security Agreement date as  of December 3, 1994,  between
          Certified  Grocers of  California, Ltd.,  Grocers General
          Merchandise Company,  Grocers Specialty  Company, and  BT
          Commercial   Corporation,  as   agent,  Union   Bank,  as
          co-agent, and First National Bank of Boston, as  co-agent
          (incorporated  by  reference  to  Exhibit  4.14.1  to the
          Registrant's Annual Report  on Form 10-K  for the  fiscal
          year ended September 2, 1995, File No. 0-10815).
 4.14.2   Amendment  Number Three to Amended  and Restated Loan and
          Security Agreement  dated as  of  May 24,  1996,  between
          Certified  Grocers of  California, Ltd.,  Grocers General
          Merchandise Company,  Grocers Specialty  Company, and  BT
          Commercial   Corporation,  as   agent,  Union   Bank,  as
          co-agent, and First National Bank of Boston, as co-agent.
 4.14.3   Amendment Number Four  to Amended and  Restated Loan  and
          Security  Agreement dated  as of  June 27,  1996, between
          Certified Grocers  of California,  Ltd., Grocers  General
          Merchandise  Company, Grocers  Specialty Company,  and BT
          Commercial  Corporation,   as  agent,   Union  Bank,   as
          co-agent, and First National Bank of Boston, as co-agent.
 4.14.4   Amendment  Number Five  to Amended and  Restated Loan and
          Security  Agreement  dated  as  of  September  30,  1996,
          between  Certified Grocers  of California,  Ltd., Grocers
          General Merchandise Company,  Grocers Specialty  Company,
          and  BT Commercial Corporation, as  agent, Union Bank, as
          co-agent, and First National Bank of Boston, as co-agent.
   4.15   Subordinated Note Agreement dated March 27, 1989  between
          Certified  Grocers  of  California, Ltd.  and  Aetna Life
          Insurance   Company    regarding    $35,000,000    10.80%
          subordinated   notes  due  April   1,  1999;  and  letter
          amendment  dated  January   30,  1992  (incorporated   by
          reference  to  Exhibit  4.15 to  the  Registrant's Annual
          Report on Form 10-K for the fiscal year ended August  28,
          1993 filed on November 26, 1993, File No. 0-10815).
 4.15.1   Amendment  to  Subordinated  Note Agreement  dated  as of
          March 17, 1994 between  Certified Grocers of  California,
          Ltd.  and Aetna  Life Insurance  Company (incorporated by
          reference to Exhibit  4.15.1 to  the Registrant's  Annual
          Report  on Form 10-K for  the fiscal year ended September
          3, 1994, File No. 0-10815).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT                                                               SEQUENTIAL
NUMBER                           DESCRIPTION                           PAGE NO.
-------   ---------------------------------------------------------   ----------
<C>       <S>                                                         <C>
   4.16   Note Purchase Agreement  dated January  15, 1990  between
          Certified  Grocers of California,  Ltd. and Massachusetts
          Mutual Life Insurance Company regarding $20,000,000 9.55%
          Senior Notes due  January 15, 2005;  and Amendment  Dated
          January  30,  1991,  First Amendment  dated  September 4,
          1991,  and  Amendment  No.  2  dated  October  19,   1993
          (incorporated   by  reference  to  Exhibit  4.16  to  the
          Registrant's Annual Report  on Form 10-K  for the  fiscal
          year  ended August 28,  1993 filed on  November 26, 1993,
          File No. 0-10815).
 4.16.1   Amendment No. 3  to Note Purchase  Agreement dated as  of
          March  17,  1994, and  Amendment No.  4 to  Note Purchase
          Agreement dated as  of September 29,  1994, each  between
          Certified  Grocers of California,  Ltd. and Massachusetts
          Mutual Life Insurance Company (incorporated by  reference
          to  Exhibit 4.16.1  to the Registrant's  Annual Report on
          Form 10-K for  the fiscal year  ended September 3,  1994,
          File No. 0-10815).
   4.17   $18,700,000  Loan Agreement dated August 23, 1979 between
          Certified Grocers of  California, Ltd., First  Interstate
          Bank  of California,  as Trustee,  and the  other Lenders
          named therein; Secured Promissory Notes dated August  23,
          1979;  Deed of Trust and Assignment of Rents dated August
          23, 1979;  and,  Assignment  of Rents  and  Leases  dated
          August  23,  1979 (incorporated  by reference  to Exhibit
          4.17 to the Registrant's Annual  Report on Form 10-K  for
          the  fiscal year ended August  28, 1993 filed on November
          26, 1993, File No. 0-10815).
   4.18   Loan Purchase and  Service Agreement Dated  as of  August
          29,  1996  between Grocers  Capital Company  and National
          Consumer Cooperative Bank.
   4.19   $10,000,000 Credit Agreement and Security Agreement  each
          dated  as of  September 20, 1996  between Grocers Capital
          Company and National Cooperative Bank as agent.
   10.1   Comprehensive Amendment to Retirement Plan for  Employees
          of Certified Grocers of California, Ltd. (incorporated by
          reference  to  Exhibit  10.1  to  Form  S-2  Registration
          Statement of the  Registrant filed on  October 12,  1994,
          File No. 33-56005).
   10.2   Incentive Compensation Plan (incorporated by reference to
          Exhibit  10.2 of  the Form S-2  Registration Statement of
          the Registrant  filed  on  December 28,  1987,  File  No.
          33-19284).
   10.3   Comprehensive   Amendment   to   Certified   Grocers   of
          California,  Ltd.  Employees'   Sheltered  Savings   Plan
          (incorporated  by reference  to Exhibit 10.3  to the Form
          S-2 Registration  Statement of  the Registrant  filed  on
          September 2, 1993, File No. 33-68288).
   10.4   Certified  Grocers of California,  Ltd., Executive Salary
          Protection Plan  II ("ESPP  II"), Master  Plan  Document,
          effective  January 4, 1995  (incorporated by reference to
          Exhibit 10.4 to  the Registrant's Annual  Report on  Form
          10-K for the fiscal year ended September 2, 1995 filed on
          December 1, 1995, File No. 0-10815).
   10.5   Master   Trust   Agreement  For   Certified   Grocers  of
          California, Ltd.  Executive  Salary Protection  Plan  II,
          dated  as of April 28, 1995 (incorporated by reference to
          Exhibit 10.5 to  the Registrant's Annual  Report on  Form
          10-K for the fiscal year ended September 2, 1995 filed on
          December 1, 1995, File No. 0-10815).
   10.6   Certified Grocers of California, Ltd. Executive Insurance
          Plan  Split-dollar  Agreement and  Schedule  of Executive
          Officers party  thereto  (incorporated  by  reference  to
          Exhibit  10.6 to  the Registrant's Annual  Report on Form
          10-K for the fiscal year ended September 2, 1995 filed on
          December 1, 1995, File No. 0-10815).
   10.7   Comprehensive   Amendment   to   Certified   Grocers   of
          California,   Ltd.   Employees'   Excess   Benefit   Plan
          (incorporated by reference to Exhibit 10.6.1 to Form  S-2
          Registration Statement of the Registrant filed on October
          12, 1994, File No. 33-56005).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT                                                               SEQUENTIAL
NUMBER                           DESCRIPTION                           PAGE NO.
-------   ---------------------------------------------------------   ----------
<C>       <S>                                                         <C>
   10.8   Comprehensive   Amendment   to   Certified   Grocers   of
          California,   Ltd.   Employees'   Supplemental   Deferred
          Compensation  Plan (incorporated by  reference to Exhibit
          10.5.3  to  Form  S-2   Registration  Statement  of   the
          Registrant   filed  on   December  10,   1990,  File  No.
          33-38152).
   10.9   Comprehensive   Amendment   to   Certified   Grocers   of
          California,  Ltd. Employee Savings  Plan (incorporated by
          reference  to  Exhibit  10.4  to  Form  S-2  Registration
          Statement  of the Registrant filed  on September 2, 1993,
          File No. 33-68288).
 10.9.1   First Amendment to Certified Grocers of California,  Ltd.
          Employee  Savings  Plan  (incorporated  by  reference  to
          Exhibit 10.4.1 to Form S-2 Registration Statement of  the
          Registrant filed on October 12, 1994, File No 33-56005).
  10.10   Joint  Venture Agreement of Golden Alliance Distribution,
          dated as of April 8, 1992,  between Food 4 Less GM,  Inc.
          and  Grocers General Merchandise Company (incorporated by
          reference  to  Exhibit  10.7  to  Form  S-2  Registration
          Statement  of the Registrant filed  on September 2, 1993.
          File No. 33-68288.
  10.11   Lease, dated  as of  December  23, 1986,  between  Cercor
          Associates and Grocers Specialty Company (incorporated by
          reference  to  Exhibit  10.8  to  Form  S-2  Registration
          Statement of the Registrant  filed on September 2,  1993.
          File No. 33-68288).
  10.12   Expansion  Agreement,  dated  as  of  May  1,  1991,  and
          Industrial Lease,  dated  as  of  May  1,  1991,  between
          Dermody  Properties and  the Registrant  (incorporated by
          reference  to  Exhibit  10.9  to  Form  S-2  Registration
          Statement  of the Registrant filed  on September 2, 1993.
          File No. 33-68288).
10.12.1   Lease Amendment,  dated June  20, 1991,  between  Dermody
          Properties  and the Registrant (incorporated by reference
          to Exhibit 10.9.1 to  Form S-2 Registration Statement  of
          the  Registrant  filed  on September  2,  1993.  File No.
          33-68288).
10.12.2   Lease Amendment, dated October 18, 1991, between  Dermody
          Properties  and the Registrant (incorporated by reference
          to Exhibit 10.9.2 to  Form S-2 Registration Statement  of
          the  Registrant  filed  on September  2,  1993.  File No.
          33-68288).
  10.13   Preferred  Stock  Purchase   Agreement  by  and   between
          Food-4-Less of Modesto, Inc. and Grocers Capital Company,
          dated  as of July  1, 1992 (incorporated  by reference to
          Exhibit 10.10 to the  Registrant's Annual Report on  Form
          10-K  for the fiscal year ended  August 28, 1993 filed on
          November 26, 1993, File No. 0-10815).
  10.14   Preferred Stock Purchase Agreement by and between  SavMax
          Foods,  Inc.  and Grocers  Capital  Company, dated  as of
          December 17, 1993 (incorporated  by reference to  Exhibit
          10.11  to  Post-Effective  Amendment No.  6  to  Form S-2
          Registration  Statement  of   the  Registrant  filed   on
          December 15, 1994, File No. 33-38152).
  10.15   Common Stock Purchase Agreement by and between Michael A.
          Webb  and Grocers  Capital Company, dated  as of December
          17, 1993 (incorporated by  reference to Exhibit 10.12  to
          Post-Effective  Amendment No. 6  to Form S-2 Registration
          Statement of the Registrant  filed on December 15,  1994,
          File No. 33-38152).
  10.16   Agreement  Regarding Common Stock  by and between Michael
          A. Webb, SavMax Foods, Inc. and Grocers Capital  Company,
          dated  as of December 17, 1993 (incorporated by reference
          to Exhibit  10.13 to  Post-Effective Amendment  No. 6  to
          Form  S-2 Registration Statement  of the Registrant filed
          on December 15, 1994, File No. 33-38152).
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT                                                               SEQUENTIAL
NUMBER                           DESCRIPTION                           PAGE NO.
-------   ---------------------------------------------------------   ----------
<C>       <S>                                                         <C>
  10.17   Commercial  Lease-Net  dated  December  6,  1994  between
          TriNet   Essential  Facilities  XII  and  the  Registrant
          (incorporated  by  reference  to  Exhibit  10.17  to  the
          Registrant's  Annual Report  on Form 10-K  for the fiscal
          year ended September 2, 1995  filed on December 1,  1995,
          file No. 0-10815).
  10.18   Purchase  Agreement dated  November 21,  1994 between the
          Registrant  and  TriNet  Corporate  Realty  Trust,   Inc.
          (incorporated  by  reference  to  Exhibit  10.18  to  the
          Registrant's Annual Report  on Form 10-K  for the  fiscal
          year  ended September 2, 1995  filed on December 1, 1995,
          file No. 0-10815).
  10.19   Form of  Employment  Agreement between  the  Company  and
          Alfred A. Plamann.
   22.1   Subsidiaries of the Registrant.
    27.   Financial Data Schedule.
</TABLE>