CERTIFIED GROCERS OF CALIFORNIA LTD, POS AM, 1995-02-16

CERTIFIED GROCERS OF CALIFORNIA LTD
POS AM, 1995-02-16
GROCERIES, GENERAL LINE

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<PAGE>

AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 16, 1995

REGISTRATION NO. 33-38152
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

-------------------

POST-EFFECTIVE AMENDMENT NO. 7
TO
FORM S-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933

CERTIFIED GROCERS OF CALIFORNIA, LTD.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)

<TABLE>
<S> <C>
CALIFORNIA 95-0615250
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
</TABLE>

-------------------

2601 SOUTH EASTERN AVENUE
LOS ANGELES, CALIFORNIA 90040
(213) 723-7476
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)

------------------------

ALFRED A. PLAMANN, PRESIDENT
CERTIFIED GROCERS OF CALIFORNIA, LTD.
2601 SOUTH EASTERN AVENUE
LOS ANGELES, CALIFORNIA 90040
(213) 723-7476
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE OF AGENT FOR SERVICE)

------------------------

COPY TO:
NEIL F. YEAGER, ESQ.
BURKE, WILLIAMS & SORENSEN
611 W. SIXTH STREET
25TH FLOOR
LOS ANGELES, CALIFORNIA 90017
(213) 236-0600

-------------------

IF ANY OF THE SECURITIES BEING REGISTERED ON THIS FORM ARE TO BE OFFERED ON
A DELAYED OR CONTINUOUS BASIS PURSUANT TO RULE 415 UNDER THE SECURITIES ACT OF
1933 CHECK THE FOLLOWING BOX: /X/

IF THE REGISTRANT ELECTS TO DELIVER ITS LATEST ANNUAL REPORT TO SECURITIES
HOLDERS, OR A COMPLETE AND LEGIBLE FACSIMILE THEREOF, PURSUANT TO ITEM 11(A)(1)
OF THIS FORM, CHECK THE FOLLOWING BOX: / /

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<PAGE>
CROSS-REFERENCE SHEET

CROSS-REFERENCE BETWEEN ITEMS OF PART I OF POST-EFFECTIVE AMENDMENT NO. 7 TO
FORM S-2 AND PROSPECTUS FILED BY CERTIFIED GROCERS OF CALIFORNIA, LTD., AS PART
OF REGISTRATION STATEMENT COVERING CLASS A SHARES AND CLASS B SHARES.

<TABLE>
<CAPTION>
LOCATION OR CAPTION
ITEM NUMBER AND CAPTION IN PROSPECTUS
---------------------------------------------------- --------------------------------------------------
<S> <C> <C>
1. Forepart of the Registration Statement and Outside
Front Cover Page of Prospectus...................... Cover Page; Outside Front Cover Page of Prospectus
2. Inside Front and Outside Back Cover Pages of
Prospectus.......................................... Inside Front Cover Page of Prospectus; Outside
Back Cover Page of Prospectus
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges........................... Summary of Prospectus; Outside Front Cover Page of
Prospectus; Risk Factors
4. Use of Proceeds..................................... Use of Proceeds
5. Determination of Offering Price..................... Outside Front Cover Page of Prospectus; Offering
of Class A Shares and Class B Shares
6. Dilution............................................ (Not Applicable)
7. Selling Security Holders............................ (Not Applicable)
8. Plan of Distribution................................ Offering of Class A Shares and Class B Shares
9. Description of Securities to Be Registered.......... Description of Capital Stock
10. Interests of Named Experts and Counsel.............. (Not Applicable)
11. Information with Respect to the Registrant.......... Outside Front Cover Page of Prospectus; Risk
Factors; Description of Capital Stock --
Dividend Rights; The Company; Selected Financial
Data; Management's Discussion and Analysis of
Financial Condition and Results of Operations;
Index to Financial Statements
12. Incorporation of Certain Information by Reference... Inside Front Cover Page of Prospectus
13. Disclosure of Commission Position on Indemnification
for Securities Act Liabilities...................... (Not Applicable)
</TABLE>
<PAGE>
PROSPECTUS
CERTIFIED GROCERS OF CALIFORNIA, LTD.

38,900 CLASS A SHARES
182,233 CLASS B SHARES

This Prospectus relates to the issuance of Class A Shares to such persons or
entities who from time to time may be accepted as new member-patrons, and the
issuance of Class B Shares to member-patrons and such persons or entities who
from time to time may be accepted as new member-patrons (see, "OFFERING OF CLASS
A SHARES AND CLASS B SHARES").

Certified Grocers of California, Ltd. ("Certified" or the "Company") does
business primarily on a cooperative basis with its member-patrons and with
certain other patrons and distributes its net earnings on such cooperative
business as patronage dividends to such patrons based in amount on the volume of
such business transacted with them. The Class A Shares offered hereby are
offered only to such persons or entities who from time to time may be accepted
as new member-patrons of Certified. The Class B Shares offered hereby are
offered only to member-patrons and such new member-patrons of Certified. One
hundred Class A Shares will be issued to each such new member-patron. Class B
Shares will be issued to member-patrons and such new member-patrons as a portion
of patronage dividends paid to such members, except that in certain instances
Class B Shares will be paid for by debiting the member's cash deposit account.

BOTH CLASS A SHARES AND CLASS B SHARES ARE SUBJECT TO REPURCHASE OR
REDEMPTION BY CERTIFIED ON TERMINATION OF A PATRON'S STATUS AS A MEMBER-PATRON
AND UNDER CERTAIN OTHER CIRCUMSTANCES. SUCH REPURCHASE OR REDEMPTION IS SUBJECT
TO LEGAL LIMITATIONS, LIMITATIONS OF CERTIFIED'S REDEMPTION POLICY AND CERTAIN
LIMITATIONS UNDER CERTIFIED'S CREDIT AGREEMENTS. EXCEPT FOR TRANSFER TO
CERTIFIED, THE SHARES MAY NOT BE TRANSFERRED WITHOUT THE CONSENT OF CERTIFIED,
WHICH WILL NORMALLY BE WITHHELD. THERE IS NO MARKET FOR CERTIFIED'S SHARES.
---------------------
SEE "RISK FACTORS"
---------------------

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY
OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

<TABLE>
<CAPTION>
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UNDERWRITING
DISCOUNTS
PRICE TO AND PROCEEDS TO
PUBLIC COMMISSIONS ISSUER(1)
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<S> <C> <C> <C>
38,900 Class A Shares............. book value(2) none $ (2)(3)
- ---------------------------------------------------------------------------------------
182,233 Class B Shares............ book value(4) none (4)
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<FN>
(1) As of the date of registration, the expense of issuance and distribution of
the shares registered was estimated to be $52,608.

(2) During the fiscal year ending September 2, 1995, the offering price per
Class A Share will be $163.03. Thereafter, the offering price per share
will be equal to the book value per share of Certified's outstanding shares
as of the end of the fiscal year prior to issuance. The cash proceeds are
estimated based on $163.03 per share.

(3) Based on the assumption that all shares will be sold. There is no assurance
that all will be sold.

(4) The Class B Shares, valued at book value in the same manner as Class A
Shares, will be issued as a part of patronage dividends, except that in
certain instances Class B Shares will be paid for by debiting the member's
cash deposit account. Since it is expected that there will be a reduction
in member deposits, there is not expected to be any significant cash flow
impact on Certified.
</TABLE>

THIS OFFER IS NOT UNDERWRITTEN.

THE DATE OF THIS PROSPECTUS IS FEBRUARY __, 1995

<PAGE>
AVAILABLE INFORMATION

The Company is subject to the informational requirements of the Securities
Act of 1934, and in accordance therewith, files reports, proxy statements and
other information with the Securities and Exchange Commission ("Commission").
Copies of such materials can be obtained from the Public Reference Section of
the Commission, Washington, D.C. 20549 at prescribed rates. In addition, such
material can be inspected and copied at the public reference facilities
maintained by the Commission and located at the Northwestern Atrium Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661, and 7 World Trade
Center, New York, New York 10048.

ADDITIONAL INFORMATION

As permitted by the rules and regulations of the Commission, this Prospectus
omits certain information and exhibits contained in a Registration Statement on
Form S-2 filed by the Company with the Commission. For further information,
reference is made to the Registration Statement including the exhibits filed as
a part thereof. Copies of the Registration Statement and exhibits may be
obtained from the principal office of the Commission in Washington, D.C. upon
payment of the fee prescribed by the rules and regulations of the Commission.

INCORPORATION BY REFERENCE

The following documents filed with the Commission are incorporated by
reference into this Prospectus: (1) Annual Report on Form 10-K for the fiscal
year ended September 3, 1994; (2) Amendment No. 1 to Annual Report on Form
10-K/A for the fiscal year ended September 3, 1994; and (3) Quarterly Report on
Form 10-Q for the quarter ended December 3, 1994.

The Company will provide without charge to each person or shareholder of the
Company to whom a copy of this Prospectus is delivered, upon the written or oral
request of such person or shareholder, a copy of the foregoing Reports
incorporated by reference herein, other than exhibits to such Reports. Requests
should be directed to: Certified Grocers of California, Ltd., 2601 South Eastern
Avenue, Los Angeles, California 90040, Attention: Corporate Secretary, (213)
723-7476.

2
<PAGE>
SUMMARY OF PROSPECTUS

The following is a brief summary of certain matters described in more detail
elsewhere in this Prospectus. This summary is necessarily incomplete and
selective, and it is qualified in its entirety by reference to the more detailed
information contained elsewhere in this Prospectus. Attention is also directed
to "RISK FACTORS."

CERTIFIED AND ITS BUSINESS

Certified, a California corporation organized in 1925, is a wholesale
distributor of groceries and related nonfood items. It does business primarily
on a cooperative basis with independent retail grocers who are shareholders of
Certified and who are referred to as "member-patrons" or "members." It also does
some business on a cooperative basis with independent retail grocers who are not
shareholders and who are referred to as "associate patrons." (Member-patrons or
members and associate patrons are collectively referred to herein as "patrons.")
See, "THE COMPANY."

BASIC FEATURES OF SHARE OFFERING

The Class A Shares of Certified are offered to such persons or entities who
from time to time may be accepted as new member-patrons of Certified. The Class
B Shares of Certified are offered to member-patrons of Certified and such
persons or entities who from time to time may be accepted as new member-patrons
of Certified.

ELIGIBILITY TO HOLD SHARES: Class A Shares of Certified may be owned only
in connection with membership in Certified as a member-patron. Membership in
Certified is limited to persons and entities meeting certain requirements. See,
"OFFERING OF CLASS A SHARES AND CLASS B SHARES -- Eligibility to Hold Shares."

NEW MEMBER-PATRONS REQUIRED TO PURCHASE ONE HUNDRED CLASS A SHARES: Such
persons or entities who from time to time may be accepted as new member-patrons
of Certified will be required to purchase, or subscribe for the purchase of, one
hundred Class A Shares. The price per share during the fiscal year ending
September 2, 1995, will be $163.03 which is the book value per share as of the
close of the preceding fiscal year. Thereafter, the price per share will be
equal to the book value of outstanding shares at the close of the fiscal year
last ended prior to admission to membership. See, "OFFERING OF CLASS A SHARES
AND CLASS B SHARES -- New Member-Patrons Required to Purchase One Hundred Class
A Shares."

ISSUANCE OF CLASS B SHARES TO MEMBER-PATRONS: Each member-patron of
Certified is required to hold Class B Shares having combined Issuance Values (as
defined below) in an amount equal to the LESSER of (a) the amount of the
member-patron's required deposit or (b) twice the member-patron's average weekly
purchases ("Class B Share Requirement"). (Member-patrons are generally required
to maintain subordinated cash deposits with Certified. For a discussion of these
required deposits, see, "THE COMPANY -- Patron Deposits.") 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 last
ended prior to the issuance to the member-patron of such Class B Share
("Issuance Value"). In order to satisfy this requirement, a member-patron is
required to hold Class B Shares having combined Issuance Values in an amount
equal to the member-patron's Class B Share Requirement.

Issuance of Class B Shares to member-patrons in order to comply with this
requirement will be accomplished as follows:

1. Member-patrons, and those persons or entities who from time to time
may be accepted as new member-patrons of Certified, will be issued Class B
Shares as a part of the patronage dividends paid to such member-patrons over
a period of five consecutive fiscal years, beginning with the SECOND fiscal
year following admission as a member-patron, such that, following the
patronage dividend paid for the fifth year, such member-patron would hold
Class B Shares having combined Issuance Values equal to the member-patron's
Class B Share Requirement.

3
<PAGE>
2. As an alternative to the issuance of Class B Shares in the manner
described in paragraph 1 above, upon the request of any member-patron (which
request may only be made in September of any year), Certified may, at its
sole option, issue to such member-patron as a part of the next ensuing
patronage dividend Class B Shares in an amount and having Issuance Values
such that, following such issuance, the member-patron would hold Class B
Shares having combined Issuance Values equal to the member-patron's Class B
Share Requirement. Any such request made by a member-patron is not revocable
without Certified's consent, which consent can be granted or withheld in
Certified's sole discretion.

In connection with the issuance of Class B Shares in the foregoing ways, it
should be noted that Certified pays at least 20% of the patronage dividends in
cash. In addition, with respect to the patronage dividends payable for a fiscal
year, Certified's Board of Directors has authorized a program providing for the
retention of a portion of the patronage dividends payable and the issuance of
interest bearing subordinated patronage dividend certificates evidencing the
indebtedness of Certified respecting the amounts retained. See, "THE COMPANY --
Patronage Dividends." ISSUANCE OF CLASS B SHARES AS A PORTION OF PATRONAGE
DIVIDENDS AS DESCRIBED ABOVE WILL OCCUR ONLY TO THE EXTENT OF THE
MEMBER-PATRON'S PATRONAGE DIVIDEND REMAINING AFTER THE CASH PAYMENT AND ANY
AUTHORIZED RETENTION. If following the issuance of Class B Shares as a part of
the remaining 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 following the
patronage dividend for such fiscal year, 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
debiting the member-patron's cash deposit account in an amount equal to the
Issuance Values of such additional Class B Shares, and the member-patron will be
required to authorize Certified to so debit such account.

Following the issuance of Class B Shares in the foregoing ways, it is
proposed to continue issuing Class B Shares as a part of patronage dividends,
and, to the extent necessary, to issue additional Class B Shares to be paid for
by debiting the member-patron's cash deposit account, so as to establish and
maintain each member-patron's holding of such shares in an amount having
combined Issuance Values equal to the member-patron's Class B Share Requirement.

No member-patron whose membership has terminated during a given fiscal year,
or whose membership has terminated following the close of a given fiscal year
and prior to the payment of patronage dividends for such fiscal year, would
receive Class B Shares as a part of the patronage dividends paid for such fiscal
year.

Patrons are generally required to maintain cash deposits with Certified.
Such deposits serve as security for the patron's contractual obligations to
Certified and are based on the amount of the patron's purchases from certain
divisions of Certified. A portion of these deposits is subordinated to certain
indebtedness of Certified. Presently, as Class B Shares are issued, a credit is
given against each member-patron's required deposit based upon the combined
Issuance Values of such member's Class B Shares. To the extent a member-patron's
deposit exceeds the required amount, Certified will return the excess upon
request. Thus it will be possible for a member to withdraw cash from the deposit
as Class B Shares are issued. See, "OFFERING OF CLASS A SHARES AND CLASS B
SHARES -- Issuance of Class B Shares to Member-Patrons."

4
<PAGE>
DESCRIPTION OF SHARES OFFERED

The rights, preferences, privileges and restrictions of the Class A Shares
and Class B Shares are the same, except as to voting and redemption. NEITHER
CLASS OF SHARES MAY BE TRANSFERRED WITHOUT THE CONSENT OF CERTIFIED, WHICH WILL
NORMALLY BE WITHHELD. See, "DESCRIPTION OF CAPITAL STOCK."

VOTING

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. The Class B Shares have no other
voting rights, except as required by California law. See, "DESCRIPTION OF
CAPITAL STOCK -- Voting rights."

SHARE REDEMPTION

Subject to the limitations of Certified's share redemption policy, to legal
limitations and to limitations under certain credit agreements to which
Certified is a party, Certified will redeem the Class A Shares and Class B
Shares of a terminated member. In addition, and subject to the same limitations,
Certified will upon request redeem those Class B Shares held by a member which
are in excess of the amount required to be held by such member ("Excess Class B
Shares"). Respecting legal limitations, the California Corporations Code
prohibits the redemption of shares by a corporation where the corporation is, or
would thereby be, likely to be unable to meet its liabilities as they mature.
The code also prohibits the redemption of shares unless either the amount of
retained earnings equals or exceeds the amount of the redemption or numerical
ratios of certain assets to certain liabilities meet statutory standards. Under
certain of Certified's credit agreements, redemptions of Class A Shares and
Class B Shares are prohibited during the pendency of a breach or default under
the credit agreements. See, "DESCRIPTION OF CAPITAL STOCK -- Share Redemption."

Under the redemption policy, Class A Shares eligible for redemption will be
redeemed in the order in which memberships terminate, and will be redeemed prior
to the redemption of any Class B Shares which have not yet been redeemed but are
eligible for redemption. The aggregate amount of Class B Shares which Certified
will be obligated to redeem in any fiscal year will be limited to 5% of the sum
of (i) the number of Class B Shares outstanding as of the close of the preceding
fiscal year and (ii) the number of Class B Shares issued as a part of the
patronage dividend for such preceding fiscal year (the "five percent limit"). In
any fiscal year, Certified will redeem, up to the five percent limit, Class B
Shares which were eligible for redemption in a prior year, but which have not
yet been redeemed, provided that if the five percent limit would preclude
redemption of all such shares, then such shares will be redeemed pro rata. In
the event that the five percent limit would permit the redemption of all such
shares and would permit the redemption of other Class B Shares as well, then,
subject to the five percent limit, Certified will redeem other Class B Shares
eligible for redemption in the order in which memberships terminate or shares
are tendered for redemption. The redemption policy provides that the Board of
Directors may, in its discretion, redeem shares without regard to the five
percent limit or other provisions of the redemption policy.

The five percent limit contained in Certified's redemption policy permits
the redemption of 19,414 Class B Shares in fiscal year 1995. At the date of this
Prospectus, that number of Class B Shares have been redeemed in fiscal year
1995. Any further redemption of Class B Shares in excess of the five percent
limit for fiscal year 1995 will be at the discretion of Certified's Board of
Directors and subject to the limitations under the aforementioned credit
agreements. See, "DESCRIPTION OF CAPITAL STOCK -- Share Redemption."

The redemption of shares may be accomplished by paying to the member or
crediting to the member's account the redemption price. Such payment or credit
will be made within 120 days after such shares have become eligible for
redemption and are otherwise entitled to be redeemed in accordance with legal
limitations and provisions of Certified's redemption policy. In no event will
interest be payable on the redemption price for any delay in paying or crediting
the redemption price.

The redemption price for Class A Shares and Class B Shares on termination of
membership will be an amount equal to the greater of the book value of such
shares as of the close of the fiscal year last ended prior

5
<PAGE>
to the redemption, less all amounts that may be owing to Certified or any of its
subsidiaries by the member, or one cent per share. For redemptions occurring
during the fiscal year ending September 2, 1995 the book value per share is
$163.03.

The redemption price for Excess Class B Shares, other than on termination of
membership, will be an amount equal to the book value of the shares as of the
close of the fiscal year last ended prior to the redemption provided that the
member is in good standing, is current in all obligations to Certified and its
subsidiaries, and there exist no grounds for termination of membership;
otherwise, the redemption price for such shares shall be the same as provided on
the termination of membership. Certified shall have the right to deduct from
such redemption price any amounts owing to Certified or any of its subsidiaries
by the member.

See, "DESCRIPTION OF CAPITAL STOCK -- Share Redemption" and "Use of Book
Value."

USE OF PROCEEDS

Proceeds will be used as working capital and to return a portion of members'
deposits.

SUMMARIZED FINANCIAL INFORMATION

<TABLE>
<CAPTION>
THIRTEEN WEEKS FISCAL YEAR
ENDED ----------------------------------------
DECEMBER 3, SEPTEMBER 3, AUGUST 28, AUGUST 29,
1994 1994 1993 1992
-------------- ------------ ------------ ------------
(THOUSANDS OMITTED)
<S> <C> <C> <C> <C>
INCOME STATEMENT:
Net sales............................................ $ 460,907 $1,873,872 $ 2,007,288 $ 2,377,740
Patronage dividends.................................. 2,220 10,837 12,880 12,977
Net earnings (loss).................................. 39 94 473 (3,648)
-------------- ------------ ------------ ------------
-------------- ------------ ------------ ------------
BALANCE SHEET
(at end of period):
Working capital...................................... $ 113,450 $ 96,842 $ 111,982 $ 137,154
-------------- ------------ ------------ ------------
-------------- ------------ ------------ ------------
Total assets......................................... 421,233 401,096 $ 403,979 $ 449,713
Total liabilities.................................... 350,061 329,790 331,371 375,906
-------------- ------------ ------------ ------------
Shareholders' equity................................. $ 71,172 $ 71,306 $ 72,608 $ 73,807
-------------- ------------ ------------ ------------
-------------- ------------ ------------ ------------
</TABLE>

See, "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS."

6
<PAGE>
RISK FACTORS

CAREFUL CONSIDERATION SHOULD BE GIVEN TO THE FOLLOWING FACTORS CONCERNING
CERTIFIED AND THE SECURITIES OFFERED IN THIS PROSPECTUS:

SHARES NOT TRANSFERABLE

Except to Certified, neither the Class A Shares nor the Class B Shares are
transferable without the consent of Certified, which will not normally be given.
See, "DESCRIPTION OF CAPITAL STOCK -- Non-Transferability."

NO MARKET FOR SHARES

There is no market for Certified's shares.

SHARES HELD AS SECURITY

All shares will be required to be pledged to Certified to secure the
prohibition against their transfer, to secure Certified's redemption rights and
as security for performance of obligations of the member to Certified or its
subsidiaries. See, "DESCRIPTION OF CAPITAL STOCK -- Shares Held as Security."

SHARE REDEMPTION -- LIMITATIONS

On termination of membership, the member's Class A Shares and Class B Shares
will be purchased by Certified only if such purchase is permitted by Certified's
redemption policy and by legal requirements. There is no assurance that
Certified's financial condition will always be such that it will be able to
legally redeem shares tendered for redemption. Assuming that the redemptions
were otherwise permitted by Certified's redemption policy, under current legal
requirements (which include Certified's continuing ability to meet its
liabilities as they mature) Certified would be permitted to redeem shares up to
the amount of Certified's retained earnings immediately prior to the redemption.
At December 3, 1994, Certified's retained earnings were $10,274,000, and on that
date, under current legal requirements, Certified would have been permitted to
redeem shares up to that dollar amount. Even if redemption is permitted by legal
requirements, it is possible under Certified's redemption policy that a member's
Class B Shares will not be fully, or even partially, redeemed in the year in
which they are tendered for redemption. In each fiscal year, the redemption
policy only requires Certified to redeem Class B Shares in an amount up to the
"five percent limit" described in the redemption policy, and any redemption of
Class B Shares in excess of the limit for such fiscal year is at the discretion
of Certified's Board of Directors. In addition, under certain of Certified's
credit agreements, redemptions of Class A Shares and Class B Shares are
prohibited during the pendency of a breach or default under the credit
agreements. As described in the share redemption policy, redemptions may be
effected by payment to the member or credit to the member's account. See,
"DESCRIPTION OF CAPITAL STOCK -- Share Redemption."

The five percent limit only requires Certified to redeem 19,414 Class B
Shares in fiscal year 1995, and at the date of this Prospectus that number of
shares has been redeemed. Thus, any further redemptions of Class B Shares during
fiscal year 1995 will be at the discretion of Certified's Board of Directors and
subject to the limitations under the aforementioned credit agreements. As of
February 10, 1995, 72,259 Class B Shares were tendered and awaiting redemption
in excess of the limit for fiscal year 1995. None of these shares is expected to
be redeemed in fiscal year 1995. Further, the tender for redemption of this
number of shares will cause the five percent limits for fiscal years 1996, 1997
and 1998 to be met, and when combined with additional future tenderings could
cause the five percent limits in subsequent fiscal years to be met, thereby
delaying redemptions in excess of such limits. The redemptions required for
fiscal years 1996 through 1998 approximate $9.2 million to $9.5 million based on
1994 year end book values 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. See, "DESCRIPTION OF CAPITAL STOCK -- Share Redemption --
Limitations on Share Redemption." Since shares will be issued and redeemed at a
price based on book value as of the close of the fiscal year last ended, any
decrease in book value between issuance and redemption would result in a loss to
the member. See, "DESCRIPTION OF CAPITAL STOCK -- Use of Book Value."

7
<PAGE>
VOLUME LOSSES IN RECENT PERIODS

Since fiscal 1991, reductions in consolidated sales volume totalling
approximately $900 million have been experienced. During this period, certain of
Certified's large member patrons either grew to the size where they elected to
establish self-distribution programs or were acquired by chains that had
existing self-distribution programs. Fiscal 1994 sales decreased approximately
$131 million over fiscal 1993. This decline was primarily due to sales volume
lost as a result of the decision of certain large patrons (Hughes Markets, Alpha
Beta, Save Mart Supermarkets, Bel Air Mart, and Raleys) to expand their own
warehousing and distribution operations in fiscal 1994 and the decision of one
patron (Nob Hill) to utilize another source of supply.

There can be no assurance that future sales volume reductions will not
occur, whether by merger or acquisition of patrons or election by patrons to
switch to self-distribution or other supply sources. However, except for patrons
already engaged in self-distribution, Certified is not aware of any
member-patron whose size is sufficient, in Certified's view, to justify the
establishment of a self-distribution program. At this time, including patrons
already engaged in self-distribution, there is no patron whose purchases
represent more than 10% of total sales volume. Also, excluding patrons already
engaged in self-distribution, there is no patron whose purchases represent
greater than 5% of total sales volume. See, "MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS."

INCOME TAX LIABILITY INCIDENTAL TO PATRONAGE DIVIDENDS

A patron will be required to report as gross income, for federal income tax
purposes, the patronage dividends, if any, distributed by Certified to such
patron. Class B Shares distributed to a member-patron as a part of a patronage
dividend must be reported as income at their full stated dollar amount. Class B
Shares distributed as a part of a patronage dividend are also subject to state
income and corporation franchise taxes in California, and may be subject to such
taxes in other states. See, "THE COMPANY -- Tax Matters."

OFFERING OF CLASS A SHARES AND CLASS B SHARES

The Class A Shares of Certified are offered hereby to such persons or
entities who from time to time may be accepted as new member-patrons of
Certified, and the Class B Shares of Certified are offered hereby to
member-patrons of Certified and such persons or entities who from time to time
may be accepted as new member-patrons of Certified. The sale of the shares
offered hereby will be made by Certified through its regular employees who will
not receive any additional remuneration in connection therewith. No sales will
be made through brokers, and there are no underwriters.

ELIGIBILITY TO HOLD 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 comply with the Bylaws and with such rules, regulations and
policies, as may be established from time to time 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. Membership does not obligate Certified to make any sale
of merchandise or services or any extension of credit.

Membership is not transferable either voluntarily or by operation of law.
Membership may be terminated by written resignation of the member or by
Certified on the member's failure to meet any requirement of membership, or on
the member's failure to timely pay or otherwise meet any obligation to Certified
or its subsidiaries or to comply with any requirement established by Certified
for servicing of accounts, or on the member's death or incompetency, or except
as permitted by the Bylaws on any attempted transfer of membership, or on an
insolvency, bankruptcy, arrangement or reorganization proceeding by or against
the member, or on the member's account or any Class A or Class B Shares held by
the member being subjected to any process of law, or on any transfer or
encumbrance or attempted transfer or encumbrance of any such account or share.
Termination of membership does not relieve the patron of obligations incurred
prior to termination.

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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 now intend
to authorize, and this offering does not include, the issuance of Class B Shares
except to member-patrons.

NEW MEMBER-PATRONS REQUIRED TO PURCHASE ONE HUNDRED CLASS A SHARES

Each member-patron of Certified is required to hold 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.

Such persons or entities who from time to time may be accepted as new
member-patrons of Certified will be required to purchase or subscribe for the
purchase of 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. During the fiscal year ending September 2, 1995, the book value, and
hence the price, per share will be deemed to be $163.03. Any subscription will
require a minimum cash down payment of 10% of the purchase price with the
balance payable in not more than 104 equal weekly installments together with an
interest charge of 10% per annum. Certified at its option may, as a condition to
accepting a member, require that in lieu of issuing Class A Shares, such member
purchase said shares from a terminated member at the same price which would have
been payable had the new member purchased said shares from Certified.

No member may hold more than one hundred Class A Shares. It is possible,
however, 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. Such a situation might arise, for example,
where a member-patron owns the stock of another member-patron.

ISSUANCE OF CLASS B SHARES TO MEMBER-PATRONS

1. GENERAL. Following the close of the fiscal year, the net earnings of
Certified from business done on a cooperative basis with member-patrons are
distributed in the form of patronage dividends to such patrons based in amount
on the volume of such business transacted with them. Certified's Bylaws provide
that patronage dividends may be paid in money or in any other form which
constitutes a written notice of allocation under Section 1388 of the Internal
Revenue Code. Said section 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 him by
Certified and the portion thereof, if any, which constitutes a patronage
dividend.

As a portion of the patronage dividend paid to each member-patron, Certified
issues Class B Shares. 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 (a) the amount of the member-patron's required deposit or (b) twice
the member-patron's average weekly purchases ("Class B Share Requirement"). (The
amount of a member-patron's average weekly purchases is determined by Certified
and member-patrons are required to maintain cash deposits with Certified. For a
discussion, see, "THE COMPANY -- Patron Deposits.") Additionally, 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
last ended prior to the issuance to the member-patron of such Class B Share
("Issuance Value"). Thus, for example, a Class B Share issued in fiscal year
1995 will have an Issuance Value equal to the book value of Certified's
outstanding shares as of the close of fiscal year 1994, whereas a Class B Share
issued in fiscal year 1994 will have an Issuance Value equal to the book value
of Certified's outstanding shares as of the close of fiscal year 1993. In order
to satisfy the requirement regarding the holding of Class B Shares, a
member-patron is required to hold Class B Shares having combined Issuance Values
in an amount equal to the member-patron's Class B Share Requirement.

Issuance of Class B Shares to member-patrons in order to comply with this
requirement will be accomplished as described below. In connection with the
issuance of Class B Shares as described below, it should be noted that Certified
pays at least 20% of the patronage dividends in cash. In addition, Certified's
Board of Directors has authorized the retention of a portion of the patronage
dividends payable to patrons

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<PAGE>
and the issuance of interest bearing subordinated patronage dividend
certificates evidencing the indebtedness of Certified respecting the amounts
retained. See "THE COMPANY -- Patronage Dividends." ISSUANCE OF CLASS B SHARES
AS A PORTION OF PATRONAGE DIVIDENDS AS DESCRIBED BELOW WILL OCCUR ONLY TO THE
EXTENT OF THE MEMBER-PATRON'S PATRONAGE DIVIDEND REMAINING AFTER THE CASH
PAYMENT AND ANY AUTHORIZED RETENTION.

2. MANNER OF ISSUANCE OF CLASS B SHARES. Member-patrons, and those persons
or entities who from time to time may be accepted as new member-patrons of
Certified, will be issued Class B Shares. In the manner described below, it is
proposed that each such member-patron would be issued Class B Shares as a part
of the patronage dividends (but after deducting the cash payment and any
authorized retention) 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, such that following the patronage dividend paid
for the fifth year, such member-patron would hold Class B Shares having combined
Issuance Values equal to the amount of the member-patron's Class B Share
Requirement.

It is intended to issue Class B Shares to such member-patrons as a portion
of patronage dividends paid, beginning with the second fiscal year following
admission as a member-patron, as follows:

After payment of the cash portion of the patronage dividend and
deduction of any authorized retention, Class B Shares would be issued in an
amount not exceeding the member-patron's remaining patronage dividend for
any one year so that, subject to the foregoing, after the FIRST patronage
dividend, 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
SECOND patronage dividend, the member-patron will hold Class B Shares having
combined Issuance Values equal to 40% of the member-patron's Class B Share
Requirement; after the THIRD patronage dividend, the member-patron will hold
Class B Shares having combined Issuance Values equal to 60% of the
member-patron's Class B Share Requirement; after the FOURTH patronage
dividend, the member-patron will hold Class B Shares having combined
Issuance Values equal to 80% of the member-patron's Class B Share
Requirement; and, after the FIFTH patronage dividend, the member-patron will
hold Class B Shares having combined Issuance Values equal to the amount of
the member-patron's Class B Share Requirement.

If following the issuance of Class B Shares as a part of the patronage
dividend for any given fiscal year, the member-patron would not hold Class B
Shares having a combined Issuance Value equal to the amount of Class B Shares
required to be held by the member-patron following the patronage dividend for
such fiscal year, 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 debiting the member-
patron's cash deposit account in an amount equal to the issuance values of such
additional Class B Shares, and the member-patron will be required to authorize
Certified to so debit such account.

3. ALTERNATIVE MANNER OF ISSUANCE OF CLASS B SHARES. As an alternative to
the issuance of Class B Shares in the manner described in paragraph 2 above,
upon the request of any member-patron (which request may only be made in
September of any year), Certified may, at its sole option, issue to such member-
patron as a part of the next ensuing patronage dividend, and after payment of
the cash portion of such patronage dividend and deduction of any authorized
retention, Class B Shares in an amount and having Issuance Values not exceeding
the member-patron's remaining patronage dividend such that, following such
issuance, the member-patron would hold Class B Shares having combined Issuance
Values equal to the member-patron's Class B Share Requirement. If following the
issuance of Class B Shares in the foregoing manner, the member-patron would not
hold Class B Shares having combined Issuance Values equal to the member-patron's
Class B Share Requirement, then additional Class B Shares would be issued to the
member-patron in a quantity sufficient to achieve this amount. Issuance of these
additional Class B Shares would be paid for by debiting the member-patron's cash
deposit account in an amount equal to the Issuance Values of such additional
Class B Shares, and the member-patron, in making the above described request,
will be required to authorize Certified to debit such account. Once made, the
member-patron's request would not be revocable by the member-patron without
Certified's consent, which consent can be granted or withheld in Certified's
sole discretion.

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4. OTHER MATTERS RELATING TO ISSUANCE OF CLASS B SHARES. Following the
issuance of Class B Shares in the foregoing ways, Certified proposes to continue
thereafter to issue Class B Shares as a part of patronage dividends (but after
deducting the cash payment and any authorized retention), and, to the extent
necessary, to issue additional Class B Shares to be paid for by debiting the
member-patron's cash deposit account, so as to establish and maintain each
member-patron's holdings of such shares in an amount having combined Issuance
Values equal to the member-patron's Class B Share Requirement.

The holding of Class B Shares having combined Issuance Values equal to the
amount of the member-patron's Class B Share Requirement has been established by
the Board of Directors as the amount of Class B Shares required to be held by
each member-patron. The Board of Directors in its discretion may increase this
amount or may otherwise require that additional Class B Shares be held by each
member-patron, and Certified may issue, at any time from time to time,
additional Class B Shares as a part of patronage dividends. The requirement
regarding the holding of Class B Shares as established by the Board of Directors
is subject to change by the Board of Directors which may, in its discretion, add
to, increase, decrease, limit, eliminate or otherwise change such requirement.

Class B Shares held by a member-patron in excess of what has been
established by the Board of Directors as the Class B Shares required to be held
by each member-patron will be considered "Excess Class B Shares."

Both Class A and Class B Shares are pledged to, and the certificates held
by, Certified to secure the prohibition against transfer, to secure Certified's
right to purchase or redeem such shares and to secure performance of the
patron's obligations to Certified and its subsidiaries.

Patrons are generally required to maintain cash deposits with Certified as
security for the patron's contractual obligations to Certified and to its
subsidiaries. That portion of the deposits which the patron is required to
maintain is subordinated to certain indebtedness of Certified. Upon request by
the patron, deposits in excess of the required amount are returned, provided the
patron is not in default in its obligations to Certified or any of its
subsidiaries. The entire deposit is returned upon termination of membership less
any amounts owing Certified or any of its subsidiaries; provided that, in all
cases, return of the required portion is governed by the subordination
provisions to which it is subject and will be returned only as and to the extent
permitted thereby. For a discussion of deposit requirements, see, "THE COMPANY
- -- Patron Deposits." Inasmuch as the Class B Shares as well as the Class A
Shares will be held as security for the performance of the member-patron's
obligations, in calculating each member-patron's required deposit, credit is
presently given based upon the combined Issuance Values of the Class B Shares
held. Thus, it will be possible for a member-patron to withdraw cash from the
deposit as Class B Shares are issued. Certified's policies regarding deposits,
issuance of Class B Shares and credits against deposits as a result of issuance
of Class B Shares are subject to change by the Board of Directors which may, in
its discretion, add to, increase, decrease, limit, eliminate or otherwise change
such policies.

DESCRIPTION OF CAPITAL STOCK

The capital structure of Certified consists of three classes of shares,
Class A Shares, Class B Shares, and Class C Shares. The rights, preferences,
privileges and restrictions of the Class A Shares and the Class B Shares are the
same, except with respect to voting and redemption. The Class C Shares are held,
one share each, by the directors of Certified.

DIVIDEND RIGHTS

It is the policy of Certified not to pay cash dividends on its stock.

VOTING RIGHTS

The holders of Class A Shares are entitled to elect 12 directors. The
holders of Class B Shares are entitled to elect 3 directors, and otherwise have
no voting rights except as may be required by California law.

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<PAGE>
California law extends to non-voting shares the right to vote upon certain
matters such as amendments to the Articles of Incorporation which would affect
the rights of non-voting shares and certain reorganizations in which other
securities are to be issued in exchange for the non-voting shares. In addition,
California law extends voting rights on certain matters, such as voluntary
dissolution, to those shares having voting power which is defined as the power
to vote for directors. The percentage of voting power of a class of shares is
based on the percentage of the directors it may elect. Thus, in those situations
involving such voting power, the Class A Shares would have 80% of the voting
power, and the Class B Shares would have 20% of the voting power.

In the election of directors, the Class A Shares may be voted cumulatively
for the 12 directors to be elected by the Class A shareholders, that is, each
holder of Class A Shares may give one candidate a number of votes equal to the
number of directors to be elected by the holders of Class A Shares multiplied by
the number of his Class A Shares or he may distribute such votes among as many
candidates as he sees fit. Similarly, the Class B Shares may be voted
cumulatively for the 3 directors to be elected by the holders of Class B Shares.

Since the Class A shareholders are only entitled to elect 12 of the
directors, a greater number of votes is required under cumulative voting in
order to elect a single director than would be required in order to elect a
single director if such shareholders were entitled to vote their shares
cumulatively for the election of all of the directors. Likewise, since the Class
B shareholders are only entitled to elect 3 of the directors, a greater number
of votes is required under cumulative voting in order to elect a single director
than would be required in order to elect a single director if such shareholders
were entitled to vote their shares cumulatively for the election of all of the
directors.

A director must be either an employee of Certified, a member-patron, or a
member of a partnership or an employee of a corporation which is a
member-patron.

Except as required by California law, the Class C Shares have no voting
rights.

LIQUIDATION RIGHTS

In the event of any liquidation or winding up of the affairs of Certified,
whether voluntary or involuntary, the net assets of Certified would be
distributed among the holders of Class A Shares and the holders of Class B
Shares proportionately in accordance with their share holdings. The Class C
Shares would share in liquidation only to the extent of $10 per share.

NON-TRANSFERABILITY

Other than for transfer to Certified, neither the Class A Shares nor the
Class B Shares may be transferred or assigned without the consent of Certified
which will normally be withheld, except where the transfer of the shares is in
connection with the transfer of a member-patron's business to an existing or new
member-patron for continuation of such business.

SHARES HELD AS SECURITY

The certificates for Class A Shares and Class B Shares will not be delivered
to members but will be pledged to and held by Certified to secure the
prohibition against transfer, to secure Certified's right to repurchase or
redeem such shares and to secure performance by the member of all obligations to
Certified or any of its subsidiaries. The Secretary of Certified is authorized,
and is given a power of attorney, on behalf of each member to surrender the
shares for repurchase or redemption. Certificates for shares will bear a legend
stating that Certified is entitled to offset against any payments which might
otherwise be due for shares being repurchased or redeemed all amounts owed by
the member to Certified or any of its subsidiaries.

SHARE REDEMPTION

Both Class A Shares and Class B Shares are subject to repurchase or
redemption by Certified. As used herein, unless the context otherwise requires,
the terms "redeem" and "redemption" include repurchase. Certified will redeem
the shares of outgoing members on termination of membership in accordance with
and subject to limitations of the share redemption policy described below, which
is set forth in the Bylaws, and

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<PAGE>
subject to legal limitations and to certain limitations under Certified's credit
agreements. Provided that the redemption price equals or exceeds $1,000,
Certified will also upon request redeem the excess Class B Shares of a member
who owns Class B Shares in excess of that which is required to be held by such
member ("Excess Class B Shares"). Any such redemption of Excess Class B Shares
will be governed by the same rules that govern the redemption of shares upon
termination of membership. As described below in the share redemption policy,
redemptions may be effected by payment to the member or credit to the member's
account.

The redemption price for Class A Shares and Class B Shares being redeemed on
termination of membership shall be an amount which is equal to the greater of
the book value of said shares as of the close of the fiscal year last ended
prior to the redemption, less all amounts that may be owing by the member to
Certified or any of its subsidiaries, or one cent per share. During the fiscal
year ending September 2, 1995 the book value per share is $163.03.

On the redemption of Excess Class B Shares, other than upon termination of
membership, the redemption price for such shares shall be an amount which is
equal to the book value of said shares as of the close of the fiscal year last
ended prior to the redemption provided that the member is in good standing, is
current in all obligations to Certified and its subsidiaries and there exist no
grounds for termination of membership; otherwise the redemption price for such
shares shall be the same as provided on the termination of membership. Such
redemption may be effected by paying to the member or crediting to the member's
account the redemption price, with Certified having the right to deduct any
amounts owing to Certified or any of its subsidiaries.

The redemption of shares is subject to the following:

1. Corporate Law Requirements.

Redemption is subject to the restrictions imposed by the Corporations
Code of the State of California and to other applicable legal restrictions.
Section 501 of the Corporations Code prohibits any distribution which would
be likely to result in a corporation being unable to meet its liabilities as
they mature. In addition, Section 500 of the Corporations Code prohibits any
distribution to shareholders for the purchase or redemption of shares unless
(a) the amount of retained earnings immediately prior thereto equals or
exceeds the amount of the proposed distribution or (b) immediately after
such distribution the assets of the corporation, with certain exceptions,
are at least equal to one and one-quarter times its liabilities and its
current assets are at least equal to its current liabilities or under some
circumstances equal to one and one-quarter times its current liabilities. To
the extent that retained earnings do not exceed the amount of any proposed
distribution, Certified will have to satisfy the asset-liability ratio test
in order to make a distribution in redemption of shares. As of December 3,
1994, Certified's retained earnings were $10,274,000. As of that date,
Certified did not satisfy the asset-liability ratio test.

2. Redemption Policy.

Subject to the Board of Directors' determination that Certified is able
to meet the foregoing legal requirements, shares will be redeemed in
accordance with the following:

(a) Class A Shares eligible for redemption by reason of termination
of membership will be redeemed in the order in which memberships
terminate, and will be redeemed prior to the redemption of any Class B
Shares which have not yet been redeemed but are eligible for redemption
either by reason of termination of membership or as Excess Class B Shares
tendered for redemption. All determinations by Certified of the order in
which memberships terminate or shares are tendered shall be conclusive.

(b) The aggregate amount of Class B Shares which Certified will be
obligated to redeem in any fiscal year will be limited to 5% of the sum
of (i) the number of Class B Shares outstanding as of the close of the
preceding fiscal year and (ii) the number of Class B Shares issued as a
part of the patronage dividend for such preceding fiscal year (the "five
percent limit").

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<PAGE>
(c) In any fiscal year, Certified will redeem, up to the five percent
limit, Class B Shares which were eligible for redemption in a prior year,
either by reason of termination of membership in a prior year or which
were Excess Class B Shares tendered for redemption in a prior year, but
which have not yet been redeemed, provided that if the five percent limit
would preclude redemption of all such shares, then such shares will be
redeemed pro rata. In the event that the five percent limit would permit
the redemption of all such shares and would permit the redemption of
other Class B Shares as well, then, subject to the five percent limit,
Certified will redeem other Class B Shares eligible for redemption by
reason of termination of membership or which are Excess Class B Shares
tendered for redemption, in the order in which memberships terminate or
shares are tendered for redemption. All determinations by Certified of
the order in which memberships terminate or shares are tendered shall be
conclusive.

(d) The redemption of shares may be accomplished by paying to the
member or crediting to the member's account the redemption price. In
making such payment or credit for the redemption of shares, Certified
shall have the right to deduct any amounts owing by the member to
Certified or any of its subsidiaries. Such payment or credit for the
redemption of shares will be made within 120 days after such shares have
become eligible for redemption, either by reason of termination of
membership or tender in the case of Excess Class B Shares, and are
otherwise entitled to be redeemed in accordance with legal limitations
and as provided in paragraphs (a), (b) and (c) above. In no event will
interest be payable on the redemption price for any delay in paying or
crediting the redemption price.

(e) Without regard to each year's five percent limit or any other
provision of paragraphs (a), (b) or (c) above, Certified's Board of
Directors will have the absolute discretion to redeem Class A or Class B
Shares of any outgoing member or to redeem Excess Class B Shares,
regardless of when the membership terminated or the Class B Shares were
tendered. The Board of Directors will also have the right to elect to
redeem Excess Class B Shares even though such redemption has not been
requested.

(f) The Board of Directors will have the absolute discretion, without
regard to any provision of the redemption policy, to authorize Certified
to agree with any shareholder to purchase Class B Shares held by such
shareholder and to make such purchase and payment for such shares in such
manner as may be agreed upon, subject only to corporate law requirements.

3. Limitations on Share Redemption.

As set out above, Certified's ability to make payment for the redemption
of Class A and Class B Shares is subject to limitations imposed by the
California Corporations Code. Under the Code, Certified would be prohibited
from making payment for the redemption of such shares if at the time it was,
or as a result of the payment would be, likely to be unable to meet its
liabilities as they mature. Certified would also be prohibited from making
such payment unless either retained earnings were sufficient to cover the
payment or numerical ratios of certain assets to certain liabilities met
statutory standards. Losses could so impact Certified's balance sheet and
solvency that California law could prohibit Certified from making payment
for the redemption of Class A and Class B Shares. In such event, the member
could be precluded from liquidating his investment in Class A and Class B
Shares for an indefinite period of time.

As stated above, in any fiscal year Certified is not obligated to redeem
Class B Shares in excess of the five percent limit. In any fiscal year, once
Certified has redeemed Class B Shares up to the five percent limit,
Certified has no further obligation to redeem Class B Shares in such fiscal
year. Thus, even if legal requirements for such redemptions are met in a
given fiscal year, it is possible, because of the five percent limit, that
Certified will not redeem all Class B Shares tendered for redemption in such
year. The aggregate number of Class B Shares which Certified is obligated to
redeem in fiscal year 1995 by reason of the five percent limit is 19,414,
and that number of Class B Shares has been redeemed. As of February 10,
1995, 72,259 Class B Shares were tendered for redemption in excess of the
limit for fiscal year 1995 and are not expected to be redeemed in fiscal
year 1995. Further, the tender for redemption of

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<PAGE>

this number of shares will cause the five percent limits for fiscal years
1996, 1997 and 1998 to be met, and when combined with additional future
tenderings could cause the five percent limits in subsequent fiscal years to
be met, thereby delaying redemptions in excess of such limits. The
redemptions required for fiscal years 1996 through 1998 approximate $9.2
million to $9.5 million based on 1994 year end book values 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.

Certified is a party to certain credit agreements under which
redemptions of Class A and Class B Shares are prohibited during the pendency
of a breach or default under the credit agreements. Accordingly, even if
legal requirements for redemption of Class A and Class B Shares were met,
and even if Certified's Board of Directors was prepared to exercise its
discretion to permit redemptions of Class B Shares in excess of the five
percent (5%) limit, no such redemptions would be permitted under these
credit agreements were Certified to be in breach or default thereunder.

Concerning tax considerations with respect to redemption of the shares, see,
"THE COMPANY -- Tax Matters."

USE OF BOOK VALUE

Shares will be issued at a price equal to the book value of shares
outstanding as of the close of the fiscal year last ended. Shares will be
redeemed for a redemption price based on the book value of outstanding shares as
of the close of the fiscal year prior to such redemption. During the fiscal year
ending September 2, 1995 the book value per share is $163.03.

Book value per share means the excess of the assets over the liabilities of
Certified as determined in accordance with generally accepted accounting
principles as set forth on Certified's audited financial statements, divided by
the total number of shares then outstanding. Book value reflects the historical
cost of Certified's assets and of accumulated book depreciation. It does not
necessarily reflect what the assets could be sold for or the dollar amount that
would be required to replace them.

If the book value per share increases between the time of issuance and
redemption in a later year, the member would benefit from such appreciation.
However, the member would suffer a loss if the book value had declined during
such period. Book value could decline if Certified sustained net losses on a
consolidated basis.

Because the price at which the shares are issued and redeemed is adjusted
only once each year, some dilution is probable in each transaction. If a new
member purchases Class A Shares late in a particular fiscal year, the price paid
for the shares will be based on the book value for the shares of up to twelve
months earlier; this amount is likely to be more or less than the book value per
share as of the purchase date. If the book value has increased, the new member's
purchase will dilute the book value of the shares of existing members.
Conversely, if the book value has decreased, the new member will suffer
immediate dilution and the existing members will receive a benefit. Similarly,
the shares of a member whose membership has terminated will be redeemed at a
price based on their book value as of the end of the fiscal year last ended
prior to the redemption date. If the book value had increased during the partial
year ending with the redemption date, the terminated member would realize no
benefit from that year's appreciation which would be realized by the remaining
members. However, if the book value had decreased during the partial year ending
with the redemption date, the redemption price for the shares would exceed the
actual book value as of the date of redemption, and remaining members would
incur the loss.

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USE OF PROCEEDS

Proceeds from the sale of Class A Shares to new member-patrons will be added
to Certified's working capital. Such proceeds are not expected to be a
significant source of working capital for Certified.

Cash retained by Certified by virtue of the issuance of Class B Shares as
part of patronage dividends paid to member-patrons will be used to provide for
the return annually of such members' deposits in an amount equal to the Issuance
Values of such shares. See, "OFFERING OF CLASS A SHARES AND CLASS B SHARES --
Issuance of Class B Shares to Member-Patrons -- Other Matters Relating to
Issuance of Class B Shares."

THE COMPANY

GENERAL DESCRIPTION OF BUSINESS

The Company, a California corporation organized in 1925, is a wholesale
grocery distributor which does business primarily on a cooperative basis with
its member-patrons. It also does some business on a cooperative basis with its
associate patrons. Pursuant to the Company's Bylaws, the net earnings of the
Company on business done on a cooperative basis are distributed as patronage
dividends to member-patrons and associate patrons based in amount on the volume
of such business transacted with the patron. The Bylaws provide that patronage
dividends may be paid in money or in any other form which constitutes a written
notice of allocation under Section 1388 of the Internal Revenue Code. For the
fiscal year ended September 3, 1994, declared patronage dividends totaled
$10,837,000.

The Company also does business on a nonpatronage basis (that is, no
patronage dividends are distributed) with other customers and in some instances
with member-patrons and associate patrons. The Company'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 to 400 dry grocery
cases weekly and have combined average weekly purchases of less than $5,000. At
September 3, 1994, the Company had 491 member-patrons operating a total of 2,372
retail food stores and 285 associate patrons operating a total of 635 retail
food stores.

The shares of the Company are owned entirely by its member-patrons. Each
member-patron is required to hold 100 Class A Shares, and no member-patron may
hold more than 100 Class A Shares. Member-patrons are also required to hold
Class B Shares in an amount, based on Issuance Values, equal to the lesser of
(a) the amount of the member-patron's required deposit, or (b) twice the
member-patron's average weekly purchases. Member-patrons and associate patrons
are generally required to maintain subordinated cash deposits with the Company.
For a discussion of these required deposits, see "THE COMPANY -- Patron
Deposits."

The Company 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, and Golden Creme
labels. Grocers Specialty Company, a subsidiary, carries a product line
consisting of specialty-type items, such as ethnic and fancy foods, and also
carries a general product line. General merchandise products are primarily sold
by another subsidiary, Grocers General Merchandise Company.

16
<PAGE>
Consolidated sales by product line, including drop shipments (which are
sales directly from suppliers), for the fiscal year ended September 3, 1994, are
as follows (dollar amounts in thousands):

<TABLE>
<S> <C>
Dry Grocery............................................. $1,035,213
General Merchandise..................................... 222,574
Delicatessen............................................ 180,159
Frozen Food............................................. 142,852
Meat.................................................... 138,082
Dairy................................................... 71,024
Other................................................... 30,108
Ice Cream............................................... 22,071
Bakery.................................................. 13,037
Drop Shipment........................................... 12,447
Beans and Rice.......................................... 6,305
----------
Total............................................... $1,873,872
----------
----------
</TABLE>

The majority of the Company's warehouse facilities, and its two
manufacturing plants (dairy and bakery), are located in the Los Angeles
Metropolitan Area. In addition, the Company has two warehouses in Stockton,
California and one warehouse in Fresno, California.

In addition to supplying a wide variety of grocery and nonfood items, the
Company and its subsidiaries also provide patrons with a variety of other
support services, including advertising programs, insurance services, store site
selection and site evaluation services, store design and layout, front end
layout and support, store equipment and inventory financing, store remodeling
support services, data processing, and in store counseling services.

CERTAIN DEVELOPMENTS

On December 6, 1994, the Company completed a sale leaseback transaction with
Trinet Corporate Realty Trust, Inc. ("Trinet"), an unaffiliated third party,
wherein it sold approximately 5.5 acres of real property in the City of
Commerce, together with all buildings, structures and improvements located on
such real property, including an office building containing approximately
100,000 square feet and a cafeteria building containing approximately 8,000
square feet. The total sales price for the property was $11,500,000 in cash.
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.

PATRONAGE DIVIDENDS

As required by its Bylaws, the Company distributes patronage dividends based
upon its net earnings from patronage business during the fiscal year. Such
earnings are distributed to each patron in proportion to the dollar volume of
purchases from each division of the Company by the patron. The Company's Bylaws
provide that patronage dividends may be distributed in money or in any other
form which constitutes a written notice of allocation under Section 1388 of the
Internal Revenue Code. Said section 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
him by the Company and the portion thereof, if any, which constitutes a
patronage dividend. Patronage dividends are distributed annually, usually in
December, except for dividends on dairy products which are distributed after the
close of each fiscal quarter.

The Company distributes at least 20% of the patronage dividends in cash and
distributes Class B Shares as a portion of the patronage dividends distributed
to its member-patrons. In addition, under a patronage dividend retention program
authorized by the Company's Board of Directors, the Company retains a portion of
the patronage dividends to be distributed for a fiscal year and issues patronage
certificates

17
<PAGE>
("Patronage Certificates") evidencing its indebtedness respecting the retained
amounts. However, as to any particular patron, if such retained amount would be
less than a specified minimum (presently $500), then no retention occurs and a
Patronage Certificate is not issued. The program provides for the issuance of
Patronage Certificates to patrons on an annual basis in a portion and at an
interest rate to be determined annually by the Board of Directors. Patronage
Certificates for each year are unsecured general obligations of the Company, are
subordinated to certain other indebtedness of the Company, and are
nontransferable without the consent of the Company. 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 the Company, and are subject to being set off,
at the option of the Company, against all or any portion of the amounts owing to
the Company and its subsidiaries by the holder. Interest on the Patronage
Certificates is payable annually. Subject to the payment of at least 20% of the
patronage dividend in cash, the portion of the patronage dividend retained is
deducted from each patron's patronage dividend prior to the issuance of Class B
Shares as a portion of such dividend.

For fiscal year 1994, the portion of the patronage dividend retained and
evidenced by the issuance of Patronage Certificates was 20% of the dividend for
dairy products and 40% of the dividend for non-dairy products. Patronage
Certificates issued for fiscal year 1994 have a seven year term, maturing on
December 15, 2001, and carry an 8% annual interest rate, payable in cash.

The Company expects to continue to distribute patronage dividends in the
future, although there can be no assurance of the amounts of such dividends.

PATRON DEPOSITS

It is the general policy of the Company to require that its cooperative
patrons maintain a subordinated cash deposit equal to twice the amount of each
patron's average weekly purchases or twice the amount of the patron's average
purchases, whichever is greater. 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, four
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 its 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 its 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's Loan Committee may finance all or a portion
of their deposit requirement. Payments under this program are billed to the
member-patron on its weekly statement from the Company. Subject to credit
approval, 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 its 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 combined Issuance Values
of such shares. The Company pays no interest on the required deposits of
patrons. Interest is paid on the above described cash deposits which are in
excess of patrons' required deposits.

18
<PAGE>
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 the inventory participation in this program. Under the Company's price
reservation program, patrons are permitted to submit price reservations in
advance for their dry grocery, frozen and delicatessen 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.

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.

The Company's policies regarding deposits, issuance of Class B Shares and
credits against deposits as a result of issuance of Class B Shares are subject
to change by the Board of Directors which may, in its discretion, add to,
increase, decrease, limit, eliminate or otherwise change such policies.

TAX MATTERS

The Company is a corporation operating 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 money, 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 make patronage distributions to member-patrons
comprised of money 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 member-patrons of the stated dollar amount of the book value of
Class B Shares allocated to them and the portion thereof which is a patronage
dividend. Member-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 book value of the Class B
Shares distributed to them as patronage dividends. Accordingly, the Company will
distribute the Class B Shares as a portion of a patronage dividend for which it
will receive a deduction.

19
<PAGE>
Class B Shares distributed as a 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 (Treasury Regulations
Section 1.61-5(b)). However, since it is proposed to issue Class B Shares 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.

SELECTED FINANCIAL DATA

<TABLE>
<CAPTION>
THIRTEEN WEEKS
ENDED FISCAL YEAR
DECEMBER 3, --------------------------------------------------------------------
1994 1994 1993 1992 1991 1990
-------------- ------------ ------------ ------------ ------------ ------------
(THOUSANDS OMITTED)

<S> <C> <C> <C> <C> <C> <C>
Net sales.................. $ 460,907 $ 1,873,872 $ 2,007,288 $ 2,377,740 $ 2,767,996 $ 2,696,233
Patronage dividends ....... 2,220 10,837 12,880 12,977 19,979 30,641
Net earnings (loss)........ 39 94 473 (3,648) (4,682) 2,332
Total assets............... 421,233 401,096 403,979 449,713 469,010 485,038
Long-term notes payable ... 164,342 149,673 158,585 178,702 159,898 152,424
</TABLE>

20
<PAGE>

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FOR THE THREE FISCAL YEARS ENDED SEPTEMBER 3, 1994

OVERVIEW

Fiscal 1994 was characterized by significant restructuring of Certified's
leadership, business processes and operational cost structures. During fiscal
1994, Alfred Plamann was elected President and Chief Executive Officer of
Certified. Utilizing his perspective gained from experiences as the Company's
Chief Financial Officer, Mr. Plamann led the Company toward a significant
restructuring of Company operations and business processes to more precisely
meet the changing environment in which Certified operates and more closely align
the Company with its customers. As part of this restructuring, the Company
developed a new delivery system which relies on sophisticated computer assisted
routing of Company deliveries to maximize efficiencies and more precisely meet
customer demands. Similarly, the Company streamlined the operations of its
specialty products subsidiary, Grocers Specialty Company, by combining its
warehousing and distribution functions with the Company's highly efficient
grocery division.

During the year, the Company reduced other costs and eliminated unnecessary
business processes. Headcount decreased from approximately 2,900 to 2,600 or 10%
and formal programs reduced workplace accidents and helped hold down medical
costs. Net earnings in fiscal 1994 decreased primarily because of a $1.6 million
expense associated with the facility relocation discussed above, postretirement
expenses of $2.5 million, volume losses, and lease related charges, offset by
improved earnings in the insurance subsidiaries and the $2.5 million cumulative
effect of adopting Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109").

The management actions discussed above were taken in response to the
difficult business environment in California. The Company's customers,
independent grocery retailers, have been challenged by this environment as well
as increased competition from aggresive major chains. The overall reaction has
been a squeeze on prices necessary to attract customers at the retail level.
This reaction has been transferred to Certified in terms of its customers'
demands that products be delivered at very low cost.

More specifically, Certified has been adversely impacted by the volatile
nature of this grocery environment due to mergers of its customers into chain
businesses and other customers developing alternative distribution patterns to
attempt to obtain product at lower costs. While some of the sales losses are a
result of the evolutionary development of a maturing customer base, Company
management believes the newly enacted cost controls will enable Certified to
continue to be the low cost provider of products and services required by the
independent grocer. Such cost structure should eliminate further erosion of the
sales as experienced over the past few years.

In fiscal 1991 and 1992, the Company experienced a number of factors which
negatively impacted volume and profitability. In 1991, the Company began to
experience a reduction in purchases by certain large retailers who commenced
self-distribution programs or were acquired by chains already engaged in self-
distribution. In addition, in both 1991 and 1992, a deterioration in economic
conditions and changing vendor promotional practices reduced opportunities to
profit from forward buying. The relocation in 1991 of Grocers General
Merchandise Company ("GM") to Fresno, California resulted in a $4.4 million net
loss to that subsidiary for that year, while increases in workers' compensation
insurance reserves were a major contributor to subsidiary losses in 1992.

While volume losses continued to impact the Company in fiscal 1993 and 1994,
management has taken a number of steps in fiscal 1994 designed to restructure
the Company's operations to reflect the changes in its business as discussed
above. In addition, fiscal 1993 included such changes as fee and price increases
in both Certified's cooperative business and in the businesses conducted by its
subsidiaries, disposition of certain unprofitable operations, and formation of a
joint venture to utilize excess warehouse capacity. As a result, fiscal 1993 net
earnings, as compared to fiscal 1992, increased $4.1 million on a sales decline
of $370.5 million.

21
<PAGE>
In addition to improvements in its operations, the Company adopted during
fiscal 1993 a patronage dividend retention program to enable the Company to
strengthen its capitalization. Prior to fiscal 1993, the Company distributed to
its patrons, in cash, all of its net earnings from patronage sources after
patrons' required deposits and required stockholding. In fiscal 1993, the
Company's Board of Directors authorized a program to issue patronage dividend
certificates in lieu of a portion of cash distributions. The Company intends
this program to be long-term, with the amount and interest rate of such
certificates to be reviewed each year. Certificates for each year will be
unsecured general obligations of the Company and will be subordinated to certain
other indebtedness of the Company. The Board of Directors determined that, in
fiscal 1993, 20% of the fourth quarter patronage dividend from dairy products
and 40% of the fiscal year's patronage dividend from non-dairy products would be
distributed in seven-year patronage dividend certificates bearing interest at 7%
per annum. The Board of Directors approved the patronage dividend retention
program for fiscal year 1994. The retention will be 20% of the quarterly dairy
patronage dividends and 40% of the fiscal year's dividend for non-dairy products
and will have a maturity date of December 15, 2001 and carry an 8% annual
interest rate, payable in cash. The Company expects to continue to distribute
patronage dividends in the future, although there can be no assurance of the
amounts of such dividends.

As a result of differences arising in recording certain items for financial
statement and tax purposes on the Company's nonpatronage activities, the Company
has recognized net benefits related to these deferred tax assets of $5.6
million. Based on sufficient projected earnings and tax planning strategies, the
Company expects to realize tax benefits associated with these differences. The
Company has also established a valuation reserve of $1.4 million for the
likelihood that a portion of the tax assets will not be realized.

The Company, together with others, has been designated as a potentially
responsible party ("PRP") by the Environmental Protection Agency ("EPA") with
respect to the clean up of hazardous waste at Operating Industries, Inc.
Superfund Site ("OII Site") in Monterey Park, California. The Company has been
identified as disposing hazardous waste at the OII site during a period in the
1970's and early 1980's as was common and acceptable practice at that time. 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
government laws. Clean up of this site will occur in five phases and could
entail estimated total clean up costs of $650 million to $800 million. However,
the Company's share of clean up costs for the first three phases has been
established at approximately $380,000. While the Company's share of the cost for
the remaining two phases has not yet been established, based upon overall
estimates of the range of potential cost, the Company believes that its share
for those phases will not exceed approximately $1.1 million. An initial reserve
of $0.4 million was established in fiscal 1993 and an additional reserve of $1.1
million added for fiscal 1994, providing an accumulated reserve for
environmental liabilities of $1.5 million as of September 3, 1994. Because of
the uncertainties associated with environmental assessment and remediation
activities, the Company's 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 consolidated statement of earnings.

The Company, subsequent to its year-end, completed a sale leaseback
transaction with Trinet Corporate Realty Trust, Inc. ("Trinet"), an unaffiliated
third party, wherein it sold approximately 5.5 acres of real property in the
City of Commerce, together with all buildings, structures and improvements
located on such real property, including an office building containing
approximately 100,000 square feet and a cafeteria building containing
approximately 8,000 square feet. The total sales price for the property was
$11,500,000 in cash. 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.

In an effort to assist existing customers to better compete in the
marketplace and develop new formats that fit the ever changing retail
environment, the Company, where appropriate, takes an equity position rather
than debt with certain member-patrons. In September 1992, the Company invested
approximately

22
<PAGE>
$1.5 million in common and preferred stock of Major Market Inc. ("MMI"). The
Company is finalizing a divestiture agreement with MMI whereby MMI will
repurchase the Company's stock for a consideration aggregating $2.7 million and
the Company will realize a $603,000 pre-tax gain. After completion of the
transaction, the Company will retain a minority ownership interest of 20%.

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
--------------------------------------
SEPTEMBER 3, AUGUST 28, AUGUST 29,
1994 1993 1992
------------ ---------- ----------
<S> <C> <C> <C>
Net sales...................................................................... 100.0% 100.0% 100.0%
Cost of sales.................................................................. 90.6 90.8 91.9
Distribution, selling and administrative....................................... 8.0 7.7 7.0
Operating income............................................................... 1.4 1.5 1.1
Interest expense............................................................... 0.8 0.8 0.7
Other expense, net............................................................. 0.1 0.0 0.0
Earnings before patronage dividends and provision (benefit) for income taxes... 0.5 0.7 0.4
Patronage dividends............................................................ 0.6 0.7 0.6
Cumulative effect of accounting change......................................... 0.1 -- --
Net earnings (loss)............................................................ 0.0 0.0 (0.2)
</TABLE>

FISCAL YEAR ENDED SEPTEMBER 3, 1994 ("FISCAL 1994") COMPARED TO FISCAL YEAR
ENDED AUGUST 28, 1993 ("FISCAL 1993")

NET SALES. Net sales decreased $133 million (6.6%) to slightly less than
$1.9 billion in fiscal 1994. This is a result of the previously noted decision
of certain large patrons to expand their own warehousing and distribution
operations. After adjusting for the anticipated patron self-distribution volume
loss, the Company obtained an additional $31 million of new business from new
members, and expanded its existing customers' sales volume.

COST OF SALES. Cost of sales decreased $124.7 million (6.8%) to $1.7
billion in fiscal 1994 as compared to fiscal 1993. The majority of this decrease
is in response to the lower sales volume as discussed above; however, additional
reduction in cost of sales is reflective of management's efforts to eliminate
unprofitable business and maximize vendor related deal programs.

DISTRIBUTION, SELLING AND ADMINISTRATIVE. Distribution, selling and
administrative expenses were $149.3 million or 8.0% of net sales in fiscal 1994,
as compared to $153.6 million or 7.7% of net sales in fiscal 1993. The decrease
in total expenses was primarily due to the reduction of payroll costs
(approximately $5.2 million offset by an incremental increase of $2.5 million in
accrued postretirement benefits for a net payroll decrease of $2.7 million) and
the implementation of other cost reduction efforts.

OPERATING INCOME. Operating income decreased to $25.6 million for fiscal
1994 as compared to $30 million for fiscal 1993. As a percentage of net sales,
operating income for fiscal 1994 was consistent with fiscal 1993 but lower in
total dollars as a result of lower sales volume discussed above.

INTEREST. Interest expense decreased by $0.4 million, to $15.4 million in
fiscal 1994 from $15.8 million in fiscal 1993, as a result of reduced working
capital requirements related to the volume changes.

OTHER EXPENSE, NET. During fiscal 1994, the Company adopted a formal plan
to relocate its Grocers Specialty Company ("GSC") warehouse operations in
Corona, California to the Company's corporate warehouse facilities in Los
Angeles, California. It is anticipated that the warehouse relocation will result
in more effective utilization of Company assets, transportation and warehousing
efficiencies, and enhanced service to GSC customers and members of the
cooperative. In connection with this consolidation plan, the

23
<PAGE>
Company recorded a $1.6 million charge. The charge primarily consists of
warehouse and inventory relocation costs as well as reprogramming costs of
certain financial and operating systems. The warehouse relocation was completed
during October 1994.

CUMULATIVE EFFECT OF ACCOUNTING CHANGE. The Company adopted SFAS No. 109,
effective August 29, 1993. The adoption of this new accounting method resulted
in a positive $2.5 million impact for fiscal 1994.

NET EARNINGS. Net earnings in fiscal 1994 decreased primarily because of a
$1.6 million expense associated with the facility relocation discussed above,
postretirement expenses of $2.5 million, volume losses, and lease related
charges, offset by improved earnings in the insurance subsidiaries and the $2.5
million cumulative effect of adopting SFAS No. 109.

FISCAL YEAR ENDED AUGUST 28, 1993 ("FISCAL 1993") COMPARED TO FISCAL YEAR ENDED
AUGUST 29, 1992 ("FISCAL 1992")

NET SALES. Net sales decreased 15.6% to $2 billion in fiscal 1993 primarily
as a result of the loss of certain large member-patrons. Certain member-patrons
were acquired by other larger retailers operating their own distribution
facilities, while certain other large member-patrons either acquired or expanded
their own warehousing and distribution operations. In addition, the lingering
effects of the 1992 Los Angeles civil unrest and the stagnant California economy
contributed to lower sales. Although some further loss of sales volume from
these factors occurred in fiscal 1994, management is aggressively attempting to
replace lost sales volume by adding new customers and expanding the volume of
sales to existing customers.

COST OF SALES. Cost of sales as a percentage of sales decreased from 91.9%
in the 1992 period to 90.8% in the 1993 period. This decrease is primarily due
to fee and price increases for fiscal 1993 of lower volume discounts.

DISTRIBUTION, SELLING AND ADMINISTRATIVE. Distribution, selling and
administrative expenses were $153.7 million or 7.7% of net sales in fiscal 1993,
as compared to $166.7 million or 7.0% of net sales in fiscal 1992. While cost
reductions did not keep pace with volume reductions primarily because of the
relationship of fixed and semifixed costs on lower sales, the decrease in total
expense was primarily due to the reduction of payroll costs (approximately $14.2
million) and the implementation of cost reduction efforts, offset, in part, by
increased workers' compensation, property tax and insurance expenses.

OPERATING INCOME. Operating income increased to $30 million for fiscal
1993, compared to $26.4 million for fiscal 1992. The increase in operating
income was primarily the result of fee and price increases coupled with the cost
reduction program.

INTEREST. Interest expense decreased by $1.5 million, to $15.8 million in
fiscal 1993 from $17.3 million in fiscal 1992, as a result of reduced working
capital requirements related to the volume changes coupled with lower prevailing
interest rates.

NET EARNINGS. Net earnings for fiscal 1993 were $473,000 as compared to a
net loss of $3.6 million in fiscal 1992. Fee and price increases, significant
cost and expense reductions, and the absence in the 1993 period of start-up and
restructuring costs incurred in fiscal 1992 in the subsidiary operations were
the primary reasons for the earnings improvement.

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 $18.5 million for fiscal 1994 as compared to $38.2 million for fiscal
1993. 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 September 1994, working capital was $96.8
million and the current ratio was 1.6 to 1, down from 1.74 to 1 at the fiscal
1993 year end. Working capital varies throughout the year primarily as a result
of seasonal inventory requirements.

Capital expenditures totalled $5.9 million in fiscal 1994 and $8.9 million
in fiscal 1993.

24
<PAGE>
secured, committed line of credit. The new credit agreement, which matures March
17, 1997, is collateralized by accounts receivable, inventory, and certain other
assets of Certified Grocers of California, Ltd. and two of its principal
subsidiaries, excluding equipment, real property and the assets of Grocers
Capital Company ("GCC"). The agreement provides for Eurodollar basis or prime
basis borrowings at the Company's option. As of September 3, 1994, the Company's
outstanding borrowings, including obligations under capital leases of
approximately $7.8 million, amounted to $152.6 million, of which $149.7 million
was classified as noncurrent.

Certified distributes at least 20% of the patronage dividends in cash and
distributes Class B Shares as a portion of the patronage dividends distributed
to its member-patrons. In addition, under a patronage dividend retention program
authorized by Certified's Board of Directors, Certified retains a portion of the
patronage dividends to be distributed for a fiscal year and issues patronage
certificates ("Patronage Certificates") evidencing its indebtedness respecting
the retained amounts. The program provides for the issuance of Patronage
Certificates to patrons on an annual basis in a portion and at an interest rate
to be determined annually by the Board of Directors. Patronage Certificates for
each year 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.
Subject to the payment of at least 20% of the patronage dividend in cash, the
portion of the patronage dividend retained is deducted from each patron's
patronage dividend prior to the issuance of Class B Shares as a portion of such
dividend.

For fiscal 1993, the portion of the patronage dividend retained and
evidenced by the issuance of Patronage Certificates was 20% of the fourth
quarter dividend for dairy products and 40% of the fiscal year's dividend for
non-dairy products. However, as to any particular patron, if such amount was
less than $500, then no retention occurred and a Patronage Certificate was not
issued. Patronage Certificates issued for fiscal year 1993 have a seven year
term, maturing on December 15, 2000, and carry a 7% annual interest rate,
payable in cash. The Board of Directors approved the patronage dividend
retention program for fiscal year 1994. The retention will be 20% of the
quarterly dairy patronage dividends and 40% of the fiscal year's dividend for
non-dairy products and will have a maturity date of December 15, 2001 and carry
an 8% annual interest rate, payable in cash. 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
year to 5% of the number of Class B Shares deemed outstanding at the end of the
preceding fiscal year. In fiscal 1994, this limitation restricted the Company's
redemption of shares to 19,716 shares for $3,223,960. In fiscal 1995, the 5%
limitation will restrict the Company's redemption of shares to 19,414 shares for
$3,165,064. Due to the loss of a number of significant member-patrons, the
number of shares tendered for redemption at September 3, 1994 totalled 90,815
(or approximately $14.8 million, using fiscal 1994 year end book values), which
exceeds the amount that can be redeemed in fiscal 1995. Consequently, the
Company will be required to make redemptions in fiscal 1996, 1997 and 1998, with
such redemptions approximating $9.2 million to $9.5 million based on 1994 year
end book values 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.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

POSTEMPLOYMENT BENEFITS

The FASB issued Statement of Financial Accounting Standards No. 112
"Employers'Accounting for Postemployment Benefits", which is effective for
fiscal years beginning after December 15, 1993. Accordingly, the Company will
conform 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

25
<PAGE>
(provided by an employer to former or inactive employees after termination of
employment but before retirement). Management estimates the effect on its
results of operations in fiscal 1995 will approximate $1.5 million which it will
accrue in that year as a non-cash expense.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
AS OF DECEMBER 3, 1994, AND FOR THE THIRTEEN WEEKS
THEN ENDED AND THE COMPARABLE THIRTEEN WEEKS OF 1993

RESULTS OF OPERATIONS

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

<TABLE>
<CAPTION>
FOR THE 13 WEEKS ENDED
--------------------------
DECEMBER 3, NOVEMBER 27,
1994 1993
----------- ------------
<S> <C> <C>
Net sales............................................................. 100% 100%
Cost of sales......................................................... 91.2 91.1
Distribution, selling and administrative.............................. 7.5 7.3
Operating income...................................................... 1.3 1.6
Interest expense...................................................... 0.8 0.8
Estimated patronage dividends......................................... 0.5 0.8
Earnings after dividend and before income taxes....................... 0.0 0.0
Cumulative effect of accounting change................................ 0.5
Net earnings.......................................................... 0.0 0.5
</TABLE>

NET SALES. Net sales decreased 2.7% to $460.9 million in the 1995 period as
compared to the 1994 period. This decrease was due to the effects of the loss of
certain customers and member-patrons. In addition, certain other large
member-patrons either acquired or expanded their own warehousing and
distribution operations. However, the decrease in sales as a result of these
occurrences was partially offset by improved sales growth in the Northern and
Southern California grocery divisions. The Company is attempting to increase
sales volume by adding new customers and expanding the volume of sales to
existing customers.

COST OF SALES. Cost of sales as a percentage of sales has remained
consistent with the comparable prior thirteen-week period (91.1% in the 1994
period and 91.2% in the 1995 period).

DISTRIBUTION, SELLING AND ADMINISTRATIVE. Distribution, selling and
administrative expenses were $34.6 million or 7.5% of net sales in the 1995
period, compared to $34.4 million or 7.3% of net sales in the 1994 period. The
increase in these expenses as a percentage to sales was primarily the result of
lower sales volume as discussed above.

OPERATING INCOME. Operating income totalled $6 million for the 1995 period,
compared to $7.8 million for the 1994 period. The decrease in operating income
was primarily the result of lower sales volume as discussed above.

INTEREST. Interest expense in the 1995 period has remained consistent in
dollars and as a percentage of sales with the comparable 1994 period.

CUMULATIVE EFFECT OF ACCOUNTING CHANGE. In the first quarter of fiscal
1994, the Company adopted Statement of Financial Accounting Standards No. 109,
"Accounting for Income Taxes" ("SFAS No. 109"). The adoption of this new
accounting method resulted in a positive $2.5 million impact on net earnings in
the 1994 period.

NET EARNINGS (LOSS). Net earnings for the 1995 period were $39,000 compared
to net earnings of $2.6 million for the 1994 period. The adoption of SFAS No.
112 had a $373,000 impact on net earnings in the 1995 period; however, the
decrease in net earnings was primarily due to the cumulative effect of adopting
SFAS

26
<PAGE>

No. 109 in the 1994 period. In addition, Grocers Specialty Company experienced
lower earnings compared to the 1994 period due to the loss of a significant
customer. Other subsidiaries had improved earnings in the first quarter of
fiscal 1995.

LIQUIDITY AND CAPITAL RESOURCES

The Company relies primarily upon cash flow from operations, patron
deposits, Patronage Certificates, shareholdings and borrowings under the
Company's credit lines, to finance operations. Net cash utilized by operating
activities totalled $12.5 million for the first 13 weeks of fiscal 1995 (the
"1995 period"), as compared to $16.8 million for the first 13 weeks of fiscal
1994 (the "1994 period"). Net cash utilized for the 1995 period and the 1994
period is due primarily to increased accounts and notes receivable in the
cooperative and insurance operations. This reflects seasonal member volume
increases in the cooperative as well as increased premium receivables in the
insurance operations due to annual workers' compensation and general liability
policy renewals. 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 December 3, 1994, working
capital was $113.5 million, as compared to $96.8 million at September 3, 1994,
and the Company's current ratio was 1.7 to 1, up from 1.6 to 1 at the fiscal
1994 year end. Working capital varies throughout the year primarily as a result
of seasonal inventory requirements.

Capital expenditures totalled $3.9 million in the first 13 weeks of fiscal
1995. The 1995 expenditures include purchases of warehouse, maintenance, and
computer equipment.

On December 6, 1994, the Company completed a sale leaseback transaction with
Trinet Corporate Realty Trust, Inc. ("Trinet"), an unaffiliated third party,
wherein it sold approximately 5.5 acres of real property in the City of Commerce
together with all buildings, structures and improvements located on such real
property, including an office building containing approximately 100,000 square
feet and a cafeteria building containing approximately 8,000 square feet. The
total sales price for the property was $11.5 million. 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 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 the first quarter of
fiscal 1995, the Company had $160 million in committed lines of credit, of which
$67.4 million was not utilized. A $135 million committed line of credit with a
maturity date of March 17, 1997, is collateralized by accounts receivable,
inventory, and certain other assets of Certified Grocers of California, Ltd.,
and two of its principal subsidiaries, excluding equipment, real property and
the assets of Grocers Capital Company ("GCC"). The agreement provides for
Eurodollar basis or prime basis borrowings at the Company's option. As of
December 3, 1994, the Company's outstanding borrowings, including obligations
under capital leases of approximately $7.7 million, amounted to $167.4 million,
of which $164.3 million was classified as noncurrent.

Certified distributes at least 20% of the patronage dividends in cash and
distributes Class B Shares as a portion of the patronage dividends distributed
to its member-patrons. In addition, under a patronage dividend retention program
authorized by Certified's Board of Directors, Certified retains a portion of the
patronage dividends to be distributed for a fiscal year and issues Patronage
Certificates evidencing its indebtedness respecting the retained amounts. The
program provides for the issuance of Patronage Certificates to patrons on an
annual basis in a portion and at an interest rate to be determined annually by
the Board of Directors. Patronage Certificates for each year 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.

27
<PAGE>

Subject to the payment of at least 20% of the patronage dividend in cash,
the portion of the patronage dividend retained is deducted from each patron's
patronage dividend prior to the issuance of Class B Shares as a portion of such
dividend.

For fiscal year 1993, the portion of the patronage dividend retained and
evidenced by the issuance of Patronage Certificates was 20% of the fourth
quarter dividend for dairy products and 40% of the fiscal year's dividend for
non- dairy products. However, as to any particular patron, if such amount was
less than $500, then no retention occurred and a Patronage Certificate was not
issued. Patronage Certificates issued for fiscal year 1993 have a seven year
term, maturing on December 15, 2000, and carry a 7% annual interest rate,
payable in cash. The Board of Directors approved the patronage dividend
retention program for fiscal year 1994. The retention for 1994 was 20% of the
quarterly dairy patronage dividends and 40% of the fiscal year's dividend for
non-dairy products and will have a maturity date of December 15, 2001 and carry
an 8% annual interest rate, payable in cash. 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
year to 5% of the number of Class B Shares deemed outstanding at the end of the
preceding fiscal year. In fiscal 1995, this limitation restricts the Company's
redemption of shares to 19,414 shares for $3,165,064. Due to the loss of a
number of significant member-patrons in past fiscal years, the number of shares
tendered for redemption at January 23, 1995, totalled 72,259 (or approximately
$11.8 million using fiscal 1994 year end book values), which exceeds the amount
that can be redeemed in fiscal 1995. Consequently, the Company will be required
to make redemptions in fiscal 1996, 1997, and 1998, with such redemptions
approximating $9.2 million to $9.5 million based on 1994 year end book values
and estimated share issuances for those years. Shares are redeemed at 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.

LEGAL MATTERS

Burke, Williams and Sorensen, Los Angeles, California has passed upon legal
matters in connection with the offering of securities made hereby.

EXPERTS

The consolidated balance sheets of the Company and subsidiaries as of
September 3, 1994 and August 28, 1993, and the related consolidated statements
of earnings, shareholders' equity, and cash flows for each of the three fiscal
years in the period ended September 3, 1994, included in this Prospectus, and
included in the Annual Report on Form 10-K of the Company and Amendment No. 1
thereto on
Form 10-K/A, incorporated by reference into this Prospectus, have been included
herein in reliance on the report of Coopers & Lybrand L.L.P., independent
accountants, given on the authority of said firm as experts in accounting and
auditing.

28
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Consolidated Financial Statements:
Report of Independent Accountants........................................................................ 30
Consolidated Balance Sheets as of September 3, 1994 and August 28, 1993.................................. 31
Consolidated Statements of Earnings for Fiscal Years Ended September 3, 1994, August 28, 1993, and August
29, 1992............................................................................................... 32
Consolidated Statements of Shareholders' Equity for Fiscal Years Ended September 3, 1994, August 28,
1993, and August 29, 1992.............................................................................. 33
Consolidated Statements of Cash Flows for Fiscal Years Ended September 3, 1994, August 28, 1993, and
August 29, 1992........................................................................................ 34
Notes to Consolidated Financial Statements............................................................... 35
Unaudited Consolidated Condensed Financial Statements:
Consolidated Condensed Balance Sheet as of December 3, 1994.............................................. 52
Consolidated Condensed Statements of Earnings for the Thirteen Weeks Ended December 3, 1994 and November
27, 1993............................................................................................... 53
Consolidated Condensed Statements of Cash Flows for the Thirteen Weeks Ended December 3, 1994 and
November 27, 1993...................................................................................... 54
Notes to Unaudited Consolidated Condensed Financial Statements........................................... 55
</TABLE>

29
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS

The Board of Directors
Certified Grocers of California, Ltd.

We have audited the consolidated balance sheets of Certified Grocers of
California, Ltd. and subsidiaries as of September 3, 1994 and August 28, 1993,
and the related consolidated statements of earnings, shareholders' equity, and
cash flows for each of the three fiscal years in the period ended September 3,
1994. 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 3, 1994
and August 28, 1993, and the results of their operations and their cash flows
for each of the three fiscal years in the period ended September 3, 1994, in
conformity with generally accepted accounting principles.

As discussed in Note 7 to the consolidated financial statements, the Company
changed its method of accounting for income taxes in 1994. In addition, as
discussed in Note 11 to the financial statements, the Company changed its method
of accounting for postretirement benefits other than pensions.

COOPERS & LYBRAND L.L.P.

Los Angeles, California
November 30, 1994

30
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(THOUSANDS OMITTED)
SEPTEMBER 3, 1994 AND AUGUST 28, 1993

ASSETS
<TABLE>
<CAPTION>
1994 1993
---------- ----------
<S> <C> <C>
Current
Cash and cash equivalents............................................................ $ 7,702 $ 11,411
Accounts and notes receivable........................................................ 96,545 99,973
Inventories.......................................................................... 146,869 148,480
Prepaid expenses..................................................................... 3,810 3,980
---------- ----------
Total current assets........................................................... 254,926 263,844
Properties............................................................................. 86,683 91,884
Investments............................................................................ 20,274 12,604
Notes receivable....................................................................... 23,335 26,055
Other assets........................................................................... 15,878 9,592
---------- ----------
TOTAL ASSETS................................................................. $ 401,096 $ 403,979
---------- ----------
---------- ----------

LIABILITIES AND SHAREHOLDERS' EQUITY
<S> <C> <C>

Current
Accounts payable..................................................................... $ 82,137 $ 84,878
Accrued liabilities.................................................................. 61,428 49,106
Notes payable........................................................................ 2,978 3,132
Patrons' excess deposits and declared patronage dividends............................ 11,541 14,746
---------- ----------
Total current liabilities...................................................... 158,084 151,862
Notes payable, due after one year...................................................... 149,673 158,585
Commitments and contingencies
Patrons' deposits and certificates:
Patrons' required deposits........................................................... 17,589 18,901
Subordinated patronage dividend certificates......................................... 4,444 2,023
Shareholders' equity
Class A Shares....................................................................... 4,704 4,285
Class B Shares ...................................................................... 56,593 57,238
Retained earnings ................................................................... 10,313 11,085
Net unrealized loss on investments................................................... (304)
---------- ----------
Total shareholders' equity..................................................... 71,306 72,608
---------- ----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY................................... $ 401,096 $ 403,979
---------- ----------
---------- ----------
</TABLE>

The accompanying notes are an integral part of these statements.

31
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(THOUSANDS OMITTED)
FOR FISCAL YEARS ENDED SEPTEMBER 3, 1994, AUGUST 28, 1993, AND AUGUST 29, 1992

<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
(53 WEEKS) (52 WEEKS) (52 WEEKS)
<S> <C> <C> <C>
Net sales......................................................... $ 1,873,872 $ 2,007,288 $ 2,377,740
Costs and expenses
Cost of sales................................................... 1,698,930 1,823,592 2,184,700
Distribution, selling and administrative........................ 149,303 153,656 166,657
------------ ------------ ------------
Operating income.................................................. 25,639 30,040 26,383
Interest expense.................................................. (15,405) (15,784) (17,253)
Other expense, net................................................ (1,600) (373) (595)
------------ ------------ ------------
Earnings before patronage dividends, provision (benefit) for
income taxes and cumulative effect of accounting change......... 8,634 13,883 8,535
Declared patronage dividends...................................... (10,837) (12,880) (12,977)
------------ ------------ ------------
Earnings (loss) before income tax provision (benefit) and
cumulative effect of accounting change.......................... (2,203) 1,003 (4,442)
Provision (benefit) for income taxes.............................. 203 530 (794)
------------ ------------ ------------
Earnings (loss) before cumulative effect of accounting change..... (2,406) 473 (3,648)
Cumulative effect of accounting change............................ 2,500
------------ ------------ ------------
Net earnings (loss)............................................... $ 94 $ 473 $ (3,648)
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

The accompanying notes are an integral part of these statements.

32
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(DOLLAR AMOUNTS IN THOUSANDS)
FOR FISCAL YEARS ENDED SEPTEMBER 3, 1994, AUGUST 28, 1993, AND AUGUST 29, 1992

<TABLE>
<CAPTION>
NET
CLASS A CLASS B UNREALIZED
-------------------- -------------------- RETAINED LOSS ON
SHARES AMOUNT SHARES AMOUNT EARNINGS INVESTMENTS
--------- --------- --------- --------- --------- -------------
<S> <C> <C> <C> <C> <C> <C>
Balance, August 31, 1991...................... 59,700 $ 5,096 400,764 $ 57,304 $ 16,249 $
Class A Shares issued....................... 200 34
Class A Shares redeemed..................... (6,200) (619) (440)
Class B Shares issued....................... 19,987 3,253
Class B Shares redeemed..................... (20,038) (2,748) (674)
Net loss.................................... (3,648)
--------- --------- --------- --------- ---------
Balance, August 29, 1992...................... 53,700 4,511 400,713 57,809 11,487
Class A Shares issued....................... 1,900 309
Class A Shares redeemed..................... (5,900) (535) (424)
Class B Shares issued....................... 13,649 2,232
Class B Shares redeemed..................... (20,036) (2,803) (451)
Net earnings................................ 473
--------- --------- --------- --------- ---------
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 investments.......... (304)
--------- --------- --------- --------- --------- -------------
Balance, September 3, 1994.................... 49,100 $ 4,704 388,286 $ 56,593 $ 10,313 $ (304)
--------- --------- --------- --------- --------- -------------
--------- --------- --------- --------- --------- -------------
</TABLE>

The accompanying notes are an integral part of these statements.

33
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(THOUSANDS OMITTED)
FOR FISCAL YEARS ENDED SEPTEMBER 3, 1994, AUGUST 28, 1993, AND AUGUST 29, 1992

<TABLE>
<CAPTION>
1994 1993 1992
----------- ----------- -----------
(53 WEEKS) (52 WEEKS) (52 WEEKS)
<S> <C> <C> <C>
Cash flows from operating activities:
Net earnings (loss)..................................................... $ 94 $ 473 $ (3,648)
----------- ----------- -----------
Adjustments to reconcile net earnings (loss) to net cash provided by
operating activities:
Cumulative effect of accounting change.............................. (2,500)
Facility relocation................................................. 520
Depreciation and amortization....................................... 10,680 11,890 11,581
(Gain) loss on disposal of properties............................... (445) 3 51
Accrued postretirement benefit costs................................ 2,509
Accrued environmental liabilities................................... 1,100 400
Accrued sublease liability.......................................... 1,228
Decrease (increase) in assets:
Accounts and notes receivable..................................... 3,428 26,454 (2,611)
Inventories....................................................... 1,611 20,480 23,065
Prepaid expenses.................................................. 170 180 1,386
Notes receivable.................................................. 2,720 (1,277) (2,488)
Increase (decrease) in liabilities:
Accounts payable.................................................. (2,741) (13,940) (19,531)
Accrued liabilities............................................... 3,015 (6,458) 8,265
Patrons' excess deposits and declared patronage dividends......... (3,205) (9,040)
----------- ----------- -----------
Total adjustments .................................................... 18,090 37,732 10,678
----------- ----------- -----------
Net cash provided by operating activities............................... 18,184 38,205 7,030
----------- ----------- -----------
Cash flows from investing activities:
Purchase of properties................................................ (5,921) (8,858) (9,369)
Proceeds from sales of properties..................................... 1,295 1,836 1,408
(Increase) decrease in other assets................................... (244) 43 (99)
Investment in preferred stocks, net................................... (2,552) (4,000)
Investment in long-term bonds, net.................................... (3,102) (2,312) (1,730)
Investment in common stocks........................................... (2,320)
Purchase of intangible assets......................................... (1,540)
----------- ----------- -----------
Net cash utilized by investing activities............................... (12,844) (10,831) (13,790)
----------- ----------- -----------
Cash flows from financing activities:
Additions to long-term notes payable.................................. 331 83,364
Reduction of long-term notes payable.................................. (5,934) (17,360) (61,445)
Additions to short-term notes payable................................. 38
Reduction of short-term notes payable................................. (3,132) (3,905) (15,846)
Decrease in members' required deposits................................ (1,312) (5,664) (222)
Issuance of subordinated patronage dividend certificates.............. 2,421 2,023
Repurchase of shares from members..................................... (4,303) (4,213) (4,481)
Issuance of shares to members......................................... 3,211 2,541 3,287
----------- ----------- -----------
Net cash (utilized) provided by financing activities.................... (9,049) (26,209) 4,657
----------- ----------- -----------
Net (decrease) increase in cash and cash equivalents.................... (3,709) 1,165 (2,103)
Cash and cash equivalents at beginning of year ......................... 11,411 10,246 12,349
----------- ----------- -----------
Cash and cash equivalents at end of year................................ $ 7,702 $ 11,411 $ 10,246
----------- ----------- -----------
----------- ----------- -----------
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest.............................................................. $ 15,232 $ 15,499 $ 17,722
Income taxes ......................................................... 70 1,155 129
----------- ----------- -----------
$ 15,302 $ 16,654 $ 17,851
----------- ----------- -----------
----------- ----------- -----------
</TABLE>

The accompanying notes are an integral part of these statements.

34
<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 all of 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 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. In accordance with the
Company's various member services, certain directors (or their firms) receive
benefits for which all members are eligible.

The Company's fiscal year ends on the Saturday nearest to August 31.

RECLASSIFICATIONS:

Certain reclassifications have been made to prior years' financial
statements to present them on a basis comparable with the current period'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.

CONCENTRATION OF CREDIT RISK:

The Company is required by Statement of Financial Accounting Standards No.
105, "Disclosure of Information about Financial Instruments with
Off-Balance-Sheet Risk and Financial Instruments with Concentrations of Credit
Risk" ("SFAS No. 105"), to disclose significant concentrations of credit risk.
Financial instruments which potentially expose the Company to concentrations of
credit risk, as defined by SFAS No. 105, 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.

FAIR VALUE OF FINANCIAL INSTRUMENTS:

Statement of Financial Accounting Standards No. 107, Disclosures about Fair
Value of Financial Instruments ("SFAS No. 107"), requires disclosure of fair
value information about most financial instruments, both on and off the balance
sheet, if it is practicable to estimate. SFAS No. 107 excludes certain financial
instruments, such as certain insurance contracts, and all non-financial
instruments from its disclosure requirements. A financial instrument is defined
as a contractual obligation that ultimately ends with the delivery of cash or an
ownership interest in an entity. Disclosures regarding the fair value of
financial instruments have been derived using external market sources, estimates
using present value or other valuation techniques.

35
<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 September 3, 1994 and August 28, 1993, of the Company's financial
instruments reportable pursuant to SFAS No. 107:

<TABLE>
<CAPTION>
1994 1993
------------------------------ ------------------------------
ESTIMATED ESTIMATED
CARRYING VALUE FAIR VALUE CARRYING VALUE FAIR VALUE
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
Assets:
Cash and cash equivalents.......... $ 7,702,000 $ 7,702,000 $ 11,411,000 $ 11,411,000
Investments........................ 20,274,000 20,274,000 12,604,000 12,903,000
Notes receivable................... 23,335,000 23,335,000 26,055,000 26,055,000
Liabilities:
Notes payable and Notes payable,
due after one year................ $ 152,651,000 $ 148,637,000 $ 161,717,000 $ 155,628,000
Patrons' excess deposits and
declared patronage dividends...... 11,541,000 11,541,000 14,746,000 14,746,000
Patrons' required deposits......... 17,589,000 17,589,000 18,901,000 18,901,000
Subordinated patronage dividend
certificates...................... 4,444,000 4,444,000 2,023,000 2,023,000
</TABLE>

The methods and assumptions used to estimate the fair values of the
Company's financial instruments at September 3, 1994 and August 28, 1993 were
based on estimates of market conditions and risks existing at that time. These
values merely represent an approximation of possible value and may never
actually be realized.

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.

NOTES PAYABLE AND NOTES PAYABLE DUE AFTER ONE YEAR

The fair values for Notes payable and Notes payable, due after one
year are based primarily on rates currently available to the Company for
debt with similar terms and remaining maturities.

PATRONS' EXCESS DEPOSITS AND DECLARED PATRONAGE DIVIDENDS, PATRONS' REQUIRED
DEPOSITS, AND SUBORDINATED PATRONAGE DIVIDEND CERTIFICATES

The carrying amount approximates fair value due primarily to the
limitations imposed on deposit fund redemptions as provided in the
subordinating provisions to which they are subject.

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 approximate 40 years for buildings and 10 years
for equipment. 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.

36
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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. The incremental effect on the Company's results of operations for fiscal
1994 is approximately $2.5 million which has been accrued as a non-cash expense.
Management is considering benefit plan changes that will reduce the impact of
SFAS No. 106. Alternatives under consideration include plan redesign for such
items as cost sharing, modification of eligibility requirements, and limitation
of benefit payouts.

POSTEMPLOYMENT BENEFITS:

The FASB issued Statement No. 112 "Employers' Accounting for Postemployment
Benefits", which is effective for fiscal years beginning after December 15,
1993. Accordingly, the Company will conform 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). Management estimates the effect on its results of operations
in fiscal 1995 will approximate $1.5 million which it will accrue in that year
as a noncash expense.

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" ("SFAS No. 109"),
which requires the use of the liability method of accounting for deferred income
taxes; prior periods have not been restated. The cumulative effect of this
change in accounting principle increased the Company's net earnings by $2.5
million.

INVESTMENTS:

Effective September 3, 1994 the Company adopted Statement of Financial
Accounting Standards No. 115, "Accounting for Certain Investments in Debt and
Equity Securities" ("SFAS No. 115"); prior periods have not been restated. The
cumulative effect of such adoption amounted to an unrealized loss of $304,000,
net of deferred tax, and has been reported separately in the Consolidated
Statements of Shareholders' Equity. There was no effect on the Consolidated
Statements of Earnings. The gross amount of $461,000 reflects a non-cash
investing activity. Investment income is recorded when earned. The market value
of investments was supplied by Bank of America. These market values are
considered fair value.

Prior to the implementation of SFAS No. 115, investments in fixed maturities
which might, under certain circumstances, be sold prior to their dates of
maturity were classified as investments "held for sale" and such portfolio was
recorded at the lower of cost or market value. Unrealized losses, net of
deferred taxes, on such investments, if any, were recorded as a charge directly
to shareholders' equity. In addition, the

37
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
Company identified certain investments in fixed maturities held for trading
purposes. Such investments were recorded at market value and unrealized gains or
losses on such investments, net of deferred taxes, were credited or charged
directly to shareholders' equity.

The cost of securities sold is determined by the "identified certificate"
method.

2. PROPERTIES:

Properties at September 3, 1994, and August 28, 1993 stated at cost, are
comprised of:

<TABLE>
<CAPTION>
1994 1993
-------------- --------------
<S> <C> <C>
Land................................................................ $ 11,488,000 $ 11,488,000
Buildings and leasehold improvements................................ 71,854,000 70,928,000
Equipment........................................................... 64,637,000 63,388,000
Equipment under capital leases...................................... 10,345,000 11,547,000
-------------- --------------
158,324,000 157,351,000
Less, accumulated depreciation and
amortization...................................................... 71,641,000 65,467,000
-------------- --------------
$ 86,683,000 $ 91,884,000
-------------- --------------
-------------- --------------
</TABLE>

3. INVESTMENTS:

The amortized cost and fair values of investments available-for-sale were as
follows:

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
SEPTEMBER 3, 1994 COSTS GAINS LOSSES VALUE
- ------------------------------------------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Fixed Maturities:
U.S. Treasury securities and obligations of
U.S. government corporations and agencies..... $ 10,102,000 $ 10,000 $ 415,000 $ 9,697,000
Corporate securities........................... 306,000 8,000 298,000
Mortgage backed securities..................... 1,455,000 1,000 49,000 1,407,000
------------- ----------- ----------- -------------
Sub-total.................................... 11,863,000 11,000 472,000 11,402,000
Redeemable preferred stock....................... 6,552,000 6,552,000
Equity securities................................ 2,320,000 2,320,000
------------- ----------- ----------- -------------
$ 20,735,000 $ 11,000 $ 472,000 $ 20,274,000
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

38
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

<TABLE>
<CAPTION>
GROSS GROSS
AMORTIZED UNREALIZED UNREALIZED FAIR
AUGUST 28, 1993 COST GAINS LOSSES VALUE
- ------------------------------------------------- ------------- ----------- ----------- -------------
<S> <C> <C> <C> <C>
Fixed Maturities:
U.S. Treasury securities and obligations of
U.S. government corporations and agencies..... $ 7,530,000 $ 251,000 $ 7,781,000
Corporate securities........................... 597,000 14,000 611,000
Mortgage backed securities..................... 477,000 34,000 511,000
------------- ----------- ----------- -------------
Sub-total.................................... 8,604,000 299,000 8,903,000
Redeemable preferred stock....................... 4,000,000 4,000,000
------------- ----------- ----------- -------------
$ 12,604,000 $ 299,000 $ $ 12,903,000
------------- ----------- ----------- -------------
------------- ----------- ----------- -------------
</TABLE>

Fixed maturity investments as of September 3, 1994 are due as follows:

<TABLE>
<CAPTION>
AMORTIZED FAIR
SEPTEMBER 3, 1994 COST VALUE
- ----------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Fixed Maturities Available for Sale:
Due in one year or less.......................................................... $ 852,000 $ 828,000
Due after one year through five years............................................ 7,292,000 7,042,000
Due after five years through ten years........................................... 2,790,000 2,632,000
Due after ten years.............................................................. 929,000 900,000
------------- -------------
$ 11,863,000 $ 11,402,000
------------- -------------
------------- -------------
</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.

Investment income is summarized as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------------ ------------ ------------
<S> <C> <C> <C>
Fixed Maturities........................................................ $ 1,094,000 $ 1,267,000 $ 1,406,000
Preferred Stock......................................................... 461,000 311,000
Cash and cash equivalents............................................... 95,000 122,000 59,000
------------ ------------ ------------
1,630,000 1,700,000 1,465,000
Less: investment expenses............................................... (110,000) (64,000) (69,000)
------------ ------------ ------------
Net investment income............................................... $ 1,520,000 $ 1,636,000 $ 1,396,000
------------ ------------ ------------
------------ ------------ ------------
</TABLE>

Investments carried at $20,150,000 and $17,940,000 at September 3, 1994 and
August 28, 1993, respectively, (market value $20,150,000 and $18,592,000
respectively) are on deposit with regulatory authorities in compliance with
insurance company regulations.

39
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

4. NOTES PAYABLE:

Notes payable at September 3, 1994 and August 28, 1993 are summarized as
follows:

<TABLE>
<CAPTION>
1994 1993
-------------- --------------
<S> <C> <C>
Notes payable to banks under revolving credit agreements, expiring
March 17, 1997, interest rate at prime (7.75% and 6.0% at
September 3, 1994 and August 28, 1993, respectively) plus 1/2% or
Eurodollar (4.81% and 3.37% at September 3, 1994 and August 28,
1993, respectively) plus 1 1/2%................................... $ 59,352,000 $ 64,022,000
Note payable to banks under revolving credit agreements, expiring
March 17, 1997, interest rate at prime (7.75% at September 3,
1994) plus 1/2% or Eurodollar (4.81% at September 3, 1994) plus
1 1/2%............................................................ 18,000,000
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................................................. 35,000,000 35,000,000
Senior note payable to a life insurance company, unsecured, 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.................................................... 17,250,000 18,000,000
Note payable to bank under revolving credit agreement, refinanced on
April 25, 1994 interest rate at prime (6% at August 28, 1993) plus
1/2% or LIBOR (3.37% at August 28, 1993) plus 1 1/2%.............. 19,000,000
Notes payable, collateralized by land and warehouses, payable
monthly, approximately $60,000 plus interest at 9.88%, due
February 1, 2006.................................................. 15,211,000 15,889,000
Obligations under capital leases.................................... 7,838,000 9,806,000
-------------- --------------
152,651,000 161,717,000
Less, portion due within one year................................... (2,978,000) (3,132,000)
-------------- --------------
$ 149,673,000 $ 158,585,000
-------------- --------------
-------------- --------------
</TABLE>

Maturities of long-term debt as of September 3, 1994 are:

<TABLE>
<S> <C>
1995................................................................. $ 2,978,000
1996................................................................. 29,577,000
1997................................................................. 70,811,000
1998................................................................. 11,337,000
1999................................................................. 11,353,000
Beyond 1999.......................................................... 26,595,000
------------
$152,651,000
------------
------------
</TABLE>

Weighted average interest rates on short-term borrowings for fiscal year
ends 1994, 1993, and 1992 approximated 9.71%, 9.14%, and 7.29%, respectively.
Weighted average interest rates during each fiscal year, calculated on a
quarterly basis, approximated respective year end average rates. The average
amounts of short-term borrowings outstanding during fiscal years 1994, 1993, and
1992 were $3,147,000, $3,206,000, and $42,192,000, respectively. Short-term
borrowings amounted to as much as $3,158,000 in 1994, $3,616,000 in 1993, and
$118,141,000 in 1992.

40
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company has credit 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 year
1994, the Company had $160 million in committed lines of credit, of which $82.6
million was not utilized. The unused portion of these credit lines are subject
to annual commitment fees of 0.375%.

Overall borrowings are limited by various financial covenants pertaining to
working capital, debt-to-equity relationships, tangible net worth, earnings, and
similar provisions. In addition, on the required portion of member deposits, 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.

A credit agreement of $135 million is collateralized by accounts receivable,
inventory and certain other assets, excluding equipment and real property. The
maturity date is March 17, 1997, 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.

A credit agreement for $25 million is collateralized by Grocers Capital
Company's ("GCC") eligible receivables. The maturity date is March 17, 1997, but
is subject to extension by the mutual consent of the Company and the banks. 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 $2,978,000, $3,088,000 and
$3,115,000 in fiscal 1994, 1993 and 1992, respectively.

The fair values of the Company's notes payable, excluding obligations under
capital leases, approximated $141 million at September 3, 1994. Rates currently
available to the Company for debt with similar terms and remaining maturities
are used to estimate the fair values of notes payable.

5. 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 33 retail supermarkets.
The majority of these locations are subleased to various member-patrons of the
Company. The operating leases and subleases are noncancellable, renewable,
include purchase options in certain instances, and require payment of 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 $30.9 million to $32.9 million. The Company's
security respecting these lease guarantees is discussed in Note 1 under
"Concentration of Credit Risk."

Total rent expense was $22,707,000, $23,326,000, and $22,082,000 in 1994,
1993, and 1992 respectively. Sublease rental income was $4,713,000, $4,657,000,
and $2,554,000 in 1994, 1993, and 1992 respectively.

41
<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 September 3, 1994, are
summarized as follows:

<TABLE>
<CAPTION>
CAPITAL
LEASES OPERATING LEASES
------------- ----------------
<S> <C> <C>
1995............................................................... $ 2,062,000 $ 18,636,000
1996............................................................... 1,772,000 16,510,000
1997............................................................... 1,119,000 13,679,000
1998............................................................... 982,000 9,168,000
1999............................................................... 852,000 6,289,000
Beyond 1999........................................................ 1,192,000 22,226,000
------------- ----------------
Total minimum lease payments..................................... 7,979,000 $ 86,508,000
----------------
----------------
Less, amount representing interest................................. (141,000)
-------------
Present value of net minimum lease payments........................ 7,838,000
Less, current portion.............................................. (1,479,000)
-------------
Total long-term portion.......................................... $ 6,359,000
-------------
-------------
</TABLE>

Minimum sublease rentals (exclusive of real estate taxes, insurance and
other expenses payable under the terms of the leases) as of September 3, 1994,
are summarized as follows:

<TABLE>
<CAPTION>
OPERATING
LEASES
-------------
<S> <C>
1995..................................................................................... $ 4,645,000
1996..................................................................................... 4,548,000
1997..................................................................................... 4,439,000
1998..................................................................................... 2,309,000
1999..................................................................................... 1,719,000
Beyond 1999.............................................................................. 11,474,000
-------------
$ 29,134,000
-------------
-------------
</TABLE>

6. ACCRUED LIABILITIES:

The Company's insurance subsidiary maintains restricted certificates of
deposit and marketable securities from which the ceding companies can draw to
settle claims or certain other balances due ($9,827,000 and $8,732,000 at
September 3, 1994 and August 28, 1993, respectively). Accordingly, the loss
reserves and balances payable to the ceding companies which pertain to the
restricted certificates of deposit, marketable investments, and related
reinsurance balances receivable from the ceding companies have been offset in
the Company's consolidated balance sheets.

42
<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) attributable to
continuing operations are summarized as follows:

<TABLE>
<CAPTION>
1994 1993 1992
-------------- ----------- -----------
<S> <C> <C> <C>
Federal:
Current tax expense............................ $ 2,049,000 $ 396,000 $
Utilization of net operating loss
carryforwards................................. (800,000)
Deferred tax (benefit) expense................. (1,156,000) 58,000 (705,000)
-------------- ----------- -----------
93,000 454,000 (705,000)
-------------- ----------- -----------
State:
Current tax expense............................ 377,000 57,000
Deferred tax benefit........................... (267,000) 19,000 (89,000)
-------------- ----------- -----------
110,000 76,000 (89,000)
-------------- ----------- -----------
$ 203,000 $ 530,000 ($ 794,000)
-------------- ----------- -----------
-------------- ----------- -----------
</TABLE>

The Company's income taxes currently payable in 1994 and 1993 are in part
due to alternative minimum tax.

Deferred income taxes for temporary differences associated with the
patronage earnings have not been recorded because the Company allocates its
patronage income on an annual basis to its members. Under federal and state
income tax regulations applicable to cooperative organizations, patronage
dividends are deductible in computing taxable income.

43
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The effects of nonpatronage temporary differences and other items that give
rise to deferred tax assets and deferred tax liabilities are presented below:

<TABLE>
<CAPTION>
SEPTEMBER 3, AUGUST 29,
1994 1993
------------- -------------

<S> <C> <C>
Deferred tax assets:
Accounts receivable................................................... $ 895,000 $ 794,000
Accrued vacation/incentives........................................... 299,000 275,000
Postretirement benefits other than pension............................ 505,000
Insurance reserves.................................................... 1,789,000 1,606,000
Closed store reserves................................................. 632,000 515,000
Lease reserve......................................................... 528,000
Other................................................................. 638,000 134,000
Net operating loss carryforwards...................................... 571,000 973,000
Alternative minimum tax credits....................................... 1,948,000 1,342,000
Tax credits........................................................... 277,000 241,000
------------- -------------
Total gross deferred tax assets..................................... 8,082,000 5,880,000
Less valuation allowance.............................................. (1,400,000) (1,000,000)
------------- -------------
Net deferred tax assets............................................. $ 6,682,000 $ 4,880,000
------------- -------------
------------- -------------
Deferred tax liabilities:
Property, plant and equipment......................................... $ 2,029,000 $ 1,787,000
Deferred state taxes.................................................. 273,000
Other................................................................. 195,000 320,000
------------- -------------
Total gross deferred tax liabilities................................ $ 2,497,000 $ 2,107,000
------------- -------------
------------- -------------
</TABLE>

Net deferred tax assets are included in Other assets and total gross deferred
tax liabilities are included in Accrued liabilities on the Company's
Consolidated Balance Sheet as of September 3, 1994. The net change in valuation
allowance for deferred tax assets was an increase of $400,000 due to the
uncertainty of the realization of the benefit of loss carryforwards and certain
tax credits.

The reconciliation of the statutory federal income tax rate and the
Company's effective tax rate is summarized as follows:

<TABLE>
<CAPTION>
1994 1993 1992
------- ------- -------
<S> <C> <C> <C>
Federal income tax (benefit) rate........................... (34.0)% 34.0% (34.0)%
State income taxes, net of federal income tax benefit....... 3.4 8.8 (2.0)
Loss on insurance subsidiary not recognized for federal
taxes...................................................... 6.7 16.1
Alternative minimum tax..................................... 17.5
Increase in valuation reserve............................... 17.8
Other, net.................................................. 4.9 3.3 2.0
------- ------- -------
Effective tax rate (benefit)................................ 9.6% 52.8% (17.9)%
------- ------- -------
------- ------- -------
</TABLE>

At September 3, 1994, the Company has alternative minimum tax credit
carryforwards of approximately $1.9 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 (the "Board") authorized
a patronage dividend retention program to be effective commencing with the
dividends payable for fiscal 1993, whereby Certified

44
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
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. 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.

For fiscal 1993, the portion of the patronage dividend retained and
evidenced by the issuance of patronage certificates was 20% of the fourth
quarter dividend for dairy products and 40% of the fiscal year's dividend for
non-dairy products. However, as to any particular patron, if such amount was
less than $500, then no retention occurred and a Patronage Certificate was not
issued. The initial series issued for fiscal 1993 was for a seven year term,
maturing on December 15, 2000, and carried a 7% annual interest rate, payable in
cash. The Board of Directors approved the patronage dividend program for fiscal
year 1994. The retention will be 20% of the quarterly dairy patronage dividends
and 40% of the fiscal year's dividend for non-dairy products and will have a
maturity date of December 15, 2001 and carry an 8% annual interest rate, payable
in cash. The Company expects to continue to distribute patronage dividends in
the future, although there can be no assurance of the amounts of such dividends.

9. CAPITAL SHARES:

The Company requires that member-patrons hold Class B Shares in an amount
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"). Additionally, 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 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 greater of 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, or one cent per share. All shares are pledged to the
Company to secure the Company's redemption rights and as collateral for any debt
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 1995 will allow for redemption
of 19,414 shares. Of the 20,942 shares tendered in fiscal year 1991, 48,644
shares tendered in fiscal year 1992, 36,998 shares tendered in fiscal year 1993,
40,824 shares tendered in fiscal year 1994 and 3,197 tendered in fiscal year
1995 and presently approved for redemption, 20,038 shares were redeemed in
fiscal year 1992, 20,036 shares were redeemed in fiscal year 1993, 19,716 shares
were redeemed in fiscal year 1994 and 19,414 shares will be redeemed in fiscal
year 1995 due to the 5% limit having been reached. Because the 5% limit for
fiscal year 1995 has been met, the remaining 71,401 shares (or approximately
$11.6 million, using fiscal 1994 year end book values) not redeemed in fiscal
year 1995 as well as the redemption of any additional Class B Shares tendered
during fiscal 1995 will require the prior approval of the Company's Board of
Directors. At present, such approval is not expected to be given. Accordingly,
since

45
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

the Company's fiscal 1995 5% share redemption limitation has been met, future
redemptions for the 1995 fiscal year will be postponed. The total of Class B
Shares tendered and awaiting redemption has caused the 5% limit for fiscal 1995,
and will cause the limits for fiscal 1996 through 1998 to be met, thereby
delaying the redemption of Class B Shares in excess of such limit. The
redemptions required for fiscal years 1996 through 1998 approximate $9.2 million
to $9.5 million based on 1994 year end book values 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 49,700 were
outstanding at September 3, 1994 and August 28, 1993, respectively. There are
2,000,000 authorized Class B Shares, of which 388,286 and 394,326 were
outstanding at September 3, 1994 and August 28, 1993, respectively. Once
redeemed, such shares are not available for reissuance to member-patrons.

Each member-patron of the Company is required to hold one hundred Class A
Shares. 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 19 authorized Class C Shares of which 17 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.

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.

46
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The funded status of the plan and the amounts recognized in the balance
sheet are:

<TABLE>
<CAPTION>
1994 1993 1992
------------- ------------- -------------
<S> <C> <C> <C>
Actuarial present value of benefit obligations:
Accumulated benefit obligations, including vested
benefits........................................................ $ 24,518,828 $ 22,025,105 $ 21,322,403
Effect of assumed future increase in compensation
levels.......................................................... 10,380,043 10,025,238 10,327,360
------------- ------------- -------------
Projected benefit obligation for services rendered to
date............................................................ 34,898,871 32,050,343 31,649,763
------------- ------------- -------------
Plan assets at fair value........................................... 31,537,760 31,184,804 29,059,148
------------- ------------- -------------
Plan assets in deficiency of projected benefit obligations.......... 3,361,111 865,539 2,590,615
Unrecognized net gain............................................... (6,091,920) (3,544,459) (5,464,059)
Unrecognized transition asset....................................... 2,147,998 2,457,063 2,766,127
Unrecognized prior service cost..................................... 380,517 (99,259) (109,151)
------------- ------------- -------------
Prepaid pension costs at June 1..................................... (202,294) (321,116) (216,468)
------------- ------------- -------------
Fourth quarter contribution......................................... (320,645) (381,592) (236,516)
Fourth quarter net periodic pension cost............................ 228,948 337,730 263,455
------------- ------------- -------------
Prepaid pension cost at fiscal year end............................. $ (293,991) $ (364,978) $ (189,529)
------------- ------------- -------------
------------- ------------- -------------
Net pension cost included the following components:
Service cost -- benefits earned during the period................. $ 1,398,109 $ 1,384,636 $ 1,447,135
Interest cost on projected benefit obligation..................... 2,649,854 2,424,520 2,405,245
Actual return on plan assets...................................... (2,660,602) (2,627,861) (2,419,035)
Net amortization and deferral..................................... (83,873) (265,502) (82,426)
------------- ------------- -------------
Net periodic pension cost......................................... $ 1,303,488 $ 915,793 $ 1,350,919
------------- ------------- -------------
------------- ------------- -------------
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 $24,029,411,
$21,441,766, and $20,751,462 in 1994, 1993, and 1992, respectively.

The Company also made contributions of $4,820,000, $5,155,000, and
$5,433,000 in 1994, 1993, and 1992, 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 ("SSP"), 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 $2,200,000,
$2,200,000, and $2,300,000 in 1994, 1993, and 1992 respectively.

Also, the Company has an Employee Savings Plan ("ESP"), which is a defined
contribution plan, subject to the provisions of the Employee Retirement Income
Security Act of 1974, for all union and

47
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
nonunion employees hired prior 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. 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 1994, 1993
and 1992.

11. POSTRETIREMENT BENEFIT PLAN OTHER THAN PENSIONS:

The Company sponsors four postretirement benefit plans that cover both
nonunion and union employees. Nonunion employees are eligible for a plan
providing medical benefits and a plan providing life insurance benefits. Both
nonunion and union 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>
1994
--------------
<S> <C>
Accumulated postretirement benefit obligation:
Retirees.............................................................................. $ 11,496,106
Fully eligible active plan participants............................................... 4,621,853
Other active plan participants........................................................ 9,116,878
--------------
Accumulated postretirement benefit obligation........................................... 25,234,837
Unrecognized transition obligation...................................................... (21,347,603)
Unrecognized prior service cost.........................................................
Unrecognized net loss................................................................... (2,013,501)
--------------
Accrued postretirement benefit cost at June 1........................................... 1,873,733
Fourth quarter contributions............................................................ (293,640)
Fourth quarter net periodic postretirement benefit cost................................. 928,508
--------------
Accrued postretirement benefit cost..................................................... $ 2,508,601
--------------
--------------
Net periodic postretirement benefit cost included the following components:

<CAPTION>
1994
--------------
<S> <C>
Service cost -- benefits attributed to service during the period....................... $ 653,927
Interest cost on accumulated postretirement benefit obligation........................ 1,915,446
Amortization of transition obligation over 20 years................................... 1,123,558
Net amortization and deferral......................................................... 21,097
--------------
Net periodic postretirement benefit cost.............................................. $ 3,714,028
--------------
--------------
</TABLE>

For measurement purposes, a 10 percent annual rate of increase in the per
capita cost of covered health care benefits was assumed for fiscal year 1995;
the rate was assumed to decrease gradually to 6 percent in fiscal 2003 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 1 percentage point in each year would
increase the accumulated postretirement benefit obligation as of September 3,
1994 by $3,522,273 and the aggregate benefit for the year then ended by
$464,431.

The weighted-average discount rate used in determining the accumulated
postretirement benefit obligation was 8 percent.

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 $1.3 million in fiscal year 1994.

48
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Prior to the adoption of SFAS No. 106, the Company recognized the cost of
providing those benefits under the insurance agreement by expensing the claims
and administrative fees when paid, which for active and retired employees
totalled $5,890,000 in 1993, and $6,660,000 in 1992. The portion of the cost of
providing those benefits for 164 retirees in fiscal 1993 and 166 retirees in
fiscal 1992 was approximately $1.2 million and $0.9 million in fiscal years 1993
and 1992, respectively.

12. CONTINGENCIES:

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 clean up
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. The initial liability
was based on estimated cleanup costs of $2 per gallon on approximately 200,000
gallons disposed at the site. In July 1994, the EPA reassessed the Company's
allocation as approximately $380,000, pertaining to its portion of the cost of
cleanup of the first three phases of the five-phase cleanup process.

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. These two phases, with estimated cost to the Company of
approximately $1.1 million, are fully reserved in the financial statements. As
of September 3, 1994, the total reserve established in respect to environmental
liabilities is $1.5 million. The Company is pursuing recovery of a portion of
this amount from its insurance carriers. However, due to the uncertainty of
success, no recovery amount has been recognized.

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 consolidated statement of earnings.

13. 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.
Management believes all such related party transactions are on terms no more
favorable than those which would be available to other similarly sized member-
patrons.

During fiscal year 1993, the Company leased certain market premises located
in Sacramento, California, and in turn subleased the premises to SavMax Foods,
Inc. ("SavMax"), of which director Michael A. Webb is the President and a
Shareholder. The sublease to SavMax provides for a term of twenty years, without
options to extend, although SavMax has the option to acquire the Company's
interest under its lease on the condition that the Company is released from all
further liability thereunder. The premises consist of approximately 50,000
square feet and annual base rent under the sublease is at the following per
square foot

49
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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. In addition, the Company receives monthly an additional amount equal
to 5% of the base monthly rent. Upon default by SavMax, the Company has the
right to retake possession of the premises under the sublease. In the event of a
default by SavMax under the sublease, the Company's remaining liability under
its lease would approximate $10.0 million, assuming the leased premises and
other support provided to the Company by way of offset rights proved to be of no
value to the Company.

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
$10.0 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, the Company's contingent liability under its
guarantees would approximate $11.4 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 guaranteed the payment by Cala Co. of certain promissory
notes related to an acquisition of Bell Markets, Inc. The promissory notes
mature in June 1996 and total $8 million; however, the Company's guaranty
obligation is limited to $4 million. In addition, and in connection with the
acquisition, the Company has 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 the event the
Company is called upon to perform on this guaranty, the Company has the right to
receive an assignment of the lease relating to the locations. Accordingly,
assuming the leased premises and other support provided to the Company by way of
offset rights and the reimbursement and indemnification agreement proved to be
of no value to the Company, the Company would be contingently liable under its
lease guarantee for approximately $4.7 million. Concurrently, a 5-year agreement
to purchase a substantial portion of merchandise requirements from the Company
was obtained from Bell Markets, Inc.

The Company has 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.

50
<PAGE>
CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company has guarantees remaining on various member-patron leases during
the period of fiscal 1995 through fiscal 1998. 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 $1.9 million.

In July 1993, the Company entered into an agreement to lease the produce
warehouse to Joe Notrica, Inc., of which director Morrie Notrica is the
President and a shareholder. The lease period is for five years, July 21, 1993
through July 31, 1998, 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.

During fiscal year 1992, Grocers Capital Company ("GCC"), a subsidiary,
acquired 40,000 shares of preferred stock of SavMax. The purchase price was $100
per share. In fiscal 1994, GCC, acquired an additional 25,000 shares of
preferred stock of SavMax, at a price of $100 per share. 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. Webb and another member of his immediate family, 10% of the common
stock of SavMax for a price of $2.3 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.

Grocers General Merchandise Company, ("GM"), a subsidiary of the Company,
and Food 4 Less GM, Inc. ("F4LGM"), a subsidiary of Food 4 Less Supermarkets,
Inc., 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.

One of the Company's largest customers, Alpha Beta (which is wholly-owned by
Food 4 Less Supermarkets, Inc.) together with its affiliated companies,
accounted for a combined total of approximately 9.7% of fiscal 1994 sales.
Another customer, Hughes Markets, Inc. (of which director Roger K. Hughes is
Chairman of the Board) accounted for approximately 3.8% of fiscal 1994 sales.

14. SUBSEQUENT EVENT

The Company, subsequent to its year-end, completed a sale leaseback
transaction with Trinet Corporate Realty Trust, Inc. ("Trinet"), an unaffiliated
third party, wherein it sold approximately 5.5 acres of real property in the
City of Commerce, together with all buildings, structures and improvements
located on such real property, including an office building containing
approximately 100,000 square feet and a cafeteria building containing
approximately 8,000 square feet. 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. Any gain or loss
recognized on the transaction is not expected to be material to the financial
statements and will be amortized over the life of the lease.

51
<PAGE>

CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS (UNAUDITED)
(THOUSANDS OMITTED)

<TABLE>
<CAPTION>
DECEMBER 3, SEPTEMBER 3,
1994 1994
----------- ------------
ASSETS
<S> <C> <C>
Current:
Cash and cash equivalents........................................... $ 8,275 $ 7,702
Accounts and notes receivable....................................... 110,225 96,545
Inventories......................................................... 152,431 146,869
Prepaid expenses.................................................... 5,671 3,810
----------- ------------
Total current assets.............................................. 276,602 254,926
Properties, at cost................................................... 160,260 158,324
Less, accumulated depreciation...................................... (73,834) (71,641)
----------- ------------
86,426 86,683
Investments........................................................... 20,102 20,274
Notes receivable...................................................... 22,531 23,335
Other assets.......................................................... 15,572 15,878
----------- ------------
TOTAL ASSETS...................................................... $421,233 $401,096
----------- ------------
----------- ------------

LIABILITIES AND SHAREHOLDERS' EQUITY
Current:
Accounts payable.................................................... $ 89,435 $ 82,137
Accrued liabilities................................................. 57,115 61,428
Notes payable....................................................... 3,010 2,978
Patrons' excess deposits and estimated patronage dividends.......... 13,592 11,541
----------- ------------
Total current liabilities......................................... 163,152 158,084
Notes payable, due after one year..................................... 164,342 149,673
Commitments and contingencies.........................................
Patrons' required deposits............................................ 18,123 17,589
Subordinated patronage dividend certificates.......................... 4,444 4,444
Shareholders' equity
Class A Shares...................................................... 4,717 4,704
Class B Shares...................................................... 56,593 56,593
Retained earnings................................................... 10,274 10,313
Net unrealized loss on investments.................................. (412) (304)
----------- ------------
Total shareholders' equity........................................ 71,172 71,306
----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY........................ $421,233 $401,096
----------- ------------
----------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

52
<PAGE>

CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (UNAUDITED)
(THOUSANDS OMITTED)

<TABLE>
<CAPTION>
13 WEEKS ENDED
--------------------------
DECEMBER 3, NOVEMBER 27,
1994 1993
----------- ------------
<S> <C> <C>
Net sales............................................................. $460,907 $473,724
----------- ------------
Costs and expenses:
Cost of sales....................................................... 420,301 431,523
Distribution, selling and administrative............................ 34,605 34,397
----------- ------------
Operating income...................................................... 6,001 7,804
Interest expense...................................................... (3,713) (3,789)
----------- ------------
Earnings before estimated patronage dividends, provision for income
taxes and cumulative effect of accounting change..................... 2,288 4,015
Estimated patronage dividends......................................... (2,220) (3,905)
----------- ------------
Earnings before income tax provision and cumulative effect of
accounting change.................................................... 68 110
Provision for income taxes............................................ 29 11
----------- ------------
Earnings before cumulative effect of accounting change................ 39 99
Cumulative effect of accounting change................................ 2,500
----------- ------------
Net earnings.......................................................... $ 39 $ 2,599
----------- ------------
----------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

53
<PAGE>

CERTIFIED GROCERS OF CALIFORNIA, LTD. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
(THOUSANDS OMITTED)

<TABLE>
<CAPTION>
THIRTEEN WEEKS ENDED
--------------------------
DECEMBER 3, NOVEMBER 27,
1994 1993
----------- ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings.......................................................... $ 39 $ 2,599
----------- ------------
Adjustments to reconcile net earnings to net cash utilized by
operating activities:
Cumulative effect of accounting change............................ (2,500)
Depreciation and amortization..................................... 2,712 2,735
Gain on disposal of properties.................................... (30) (35)
Accrued postretirement benefit costs.............................. 749 575
Accrued postemployment benefit costs.............................. 373
Decrease (increase) in assets:
Accounts and notes receivable................................... (13,680) (18,992)
Inventories..................................................... (5,562) (15,197)
Prepaid expenses................................................ (1,861) (774)
Notes receivable................................................ 804 825
Increase (decrease) in liabilities:
Accounts payable.................................................. 7,298 7,571
Accrued liabilities............................................... (5,435) 4,023
Patrons' excess deposits and estimated patronage dividends........ 2,051 2,362
----------- ------------
Total adjustments................................................... (12,581) (19,407)
----------- ------------
Net cash utilized by operating activities............................. (12,542) (16,808)
----------- ------------
Cash flows from investing activities:
Purchase of properties.............................................. (3,869) (1,668)
Proceeds from sales of properties................................... 1,510 252
Decrease in other assets............................................ 240 68
Investment in preferred stocks, net................................. (108)
Investment in long-term bonds, net.................................. 172 (1,161)
----------- ------------
Net cash utilized by investing activities............................. (2,055) (2,509)
----------- ------------
Cash flows from financing activities:
Additions to long-term notes payable................................ 15,653 18,043
Reduction of long-term notes payable................................ (400) (1,000)
Reduction of short-term notes payable............................... (552) (553)
Increase in members' required deposits.............................. 534 1,181
Repurchase of shares from members................................... (179) (82)
Issuance of shares to members....................................... 114 16
----------- ------------
Net cash provided by financing activities............................. 15,170 17,605
----------- ------------
Net increase (decrease) in cash and cash equivalents.................. 573 (1,712)
Cash and cash equivalents at beginning of year........................ 7,702 11,411
----------- ------------
Cash and cash equivalents at end of period............................ $ 8,275 $ 9,699
----------- ------------
----------- ------------
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest............................................................ $ 4,622 $ 4,890
Income taxes........................................................ 250 23
----------- ------------
$ 4,872 $ 4,913
----------- ------------
----------- ------------
</TABLE>

The accompanying notes are an integral part of these statements.

54
<PAGE>

CERTIFIED GROCERS OF CALIFORNIA, LTD., AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED CONDENSED FINANCIAL STATEMENTS

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

2. The consolidated condensed financial statements include the accounts of
Certified Grocers of California, Ltd. and all of its subsidiaries (the
"Company"). Intercompany transactions and accounts with subsidiaries have been
eliminated.

3. The Company adopted Statement of Financial Accounting Standards No. 112,
"Employers' Accounting for Postemployment Benefits" ("SFAS No. 112"), in the
first quarter of 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. The adoption of this new
accounting method had a $373,000 impact on the first quarter 1995 Consolidated
Condensed Statement of Earnings. Management estimates the effect on its results
of operations in fiscal 1995 will approximate $1.5 million.

4. The Company reclassified $584,000 from long-term to short-term debt (a
noncash financing activity) for the 13 weeks ended December 3, 1994, in its
Consolidated Condensed Statements of Cash Flows.

55
<PAGE>
- -------------------------------------------
- -------------------------------------------

NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES, OR ANY OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY
ANY SECURITIES IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS
UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER
SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE
INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE OF
SUCH INFORMATION.

------------------------

TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Summary of Prospectus.......................... 3
Risk Factors................................... 7
Offering of Class A Shares and
Class B Shares................................ 8
Eligibility to Hold Shares................... 8
New Member-Patrons Required to Purchase One
Hundred Class A Shares...................... 9
Issuance of Class B Shares to
Member-Patrons.............................. 9
Description of Capital Stock................... 11
Dividend Rights.............................. 11
Voting Rights................................ 11
Liquidation Rights........................... 12
Non-Transferability.......................... 12
Shares Held As Security...................... 12
Share Redemption............................. 12
Use of Book Value............................ 15
Use of Proceeds................................ 16
The Company.................................... 16
General Description of Business.............. 16
Certain Developments......................... 17
Patronage Dividends.......................... 17
Patron Deposits.............................. 18
Tax Matters.................................. 19
Selected Financial Data........................ 20
Management's Discussion and Analysis of
Financial Condition and Results of Operations
For the Three Fiscal Years Ended September 3,
1994.......................................... 21
Management's Discussion and Analysis of
Financial Condition and Results of Operations
as of December 3, 1994, and for the Thirteen
Weeks Then Ended and the Comparable Thirteen
Weeks of 1993................................. 26
Legal Matters.................................. 28
Experts........................................ 28
Index to Financial Statements.................. 29
Report of Independent Accountants.............. 30
Financial Statements........................... 31
</TABLE>

- -------------------------------------------
- -------------------------------------------
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS

ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

<TABLE>
<S> <C>
Registration Fee Under Securities Act of 1933............................ $ 13,608
Printing, Engraving and Reproduction..................................... 10,000
Expenses of Qualification Under State Blue Sky Laws...................... 6,000
Legal Fees and Expenses.................................................. 15,000
Accounting Fees and Expenses............................................. 5,000
Miscellaneous............................................................ 3,000
---------
Total.................................................................... $ 52,608
---------
---------
</TABLE>

All of the expenses listed above will be borne by the Registrant and, except
for the Registration Fee Under Securities Act of 1933, are estimated.

ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS

Article V of the Company's Bylaws provides that the Company shall, to the
maximum extent permitted by law, have the power to indemnify its directors,
officers, employees and other agents. Section 317 of the California Corporations
Code provides that a corporation has the power to indemnify agents of the
corporation against expenses, judgments, fines, settlements and other amounts
actually and reasonably incurred in connection with any proceeding arising by
reason of the fact that any such person is or was an agent of the corporation.
In addition, the Company and its subsidiaries maintain a policy of directors'
and officers' liability and company reimbursement insurance.

Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Company pursuant to the foregoing provisions, or otherwise, the Company has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Company of expenses incurred or
paid by a director, officer or controlling person of the Company in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Company will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.

ITEM 16. EXHIBITS

<TABLE>
<CAPTION>
EXHIBITS:
<S> <C> <C>
Exhibit 4 Instruments defining the rights of security holders, including
indentures.
4.1 Articles FIFTH and SIXTH of Articles of Incorporation of the Registrant
(as amended through June 21, 1994) (incorporated by reference to Exhibit
4.1 to Post-Effective Amendment No. 6 to Form S-2 Registration Statement
of the Registrant filed on December 15, 1994, File No. 33-38152).
4.2 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).
4.3 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).
</TABLE>

S-1
<PAGE>

<TABLE>
<S> <C> <C>
4.4 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).
4.5 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).
4.6 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).
Exhibit 5 Opinion re legality.
5.1 Opinion of Counsel dated December 7, 1990 (incorporated by reference to
Exhibit 5.1 to Form S-2 Registration Statement of the Registrant filed on
December 10, 1990, File No. 33-38152).
Exhibit 10 Material Contracts.
10.1 Comprehensive Amendment to Retirement Plan for Employees of the
Registrant (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 to
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).
10.4.1 Executive Salary Protection Plan Life Insurance Agreement between the
Registrant and John Andikian, William O. Christy, H. Edward Collins,
Donald W. Dill, Everett W. Dingwell II, David Fitton III, Gerald F.
Friedler, Donald G. Grose, Herman Hensley, Rodney J. Love, Robert H.
Mason, Lawrence J. Picano and Robert P. Walz (incorporated by reference
to Exhibit 10.7 to Post-Effective Amendment No. 2 to the Form S-2
Registration Statement of the Registrant filed on March 1, 1988, File No.
33-19284).
10.4.2 Executive Salary Protection Plan Life Insurance Agreement between the
Registrant and Jerald L. Lauer, Alfred A. Plamann, Paul D. Rohde and
David A. Woodward (incorporated by reference to Exhibit 10.4.2 to Form
S-2 Registration Statement of the Registrant filed on December 10, 1990,
File No. 33-38152).
10.5.1 Comprehensive Amendment to Certified Grocers of California, Ltd.
Employees' Excess Benefit and Supplemental Deferred Compensation Plan
(incorporated by reference to Exhibit 10.8 to Post-Effective Amendment
No. 15 to Form S-1 Registration Statement of the Registrant filed on
December 20, 1988, File No. 2-70069).
10.5.2 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).
10.5.3 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).
</TABLE>

S-2
<PAGE>

<TABLE>
<S> <C> <C>
10.6 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).
10.6.1 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).
10.7 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.
10.8 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).
10.9 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).
10.9.1 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).
10.9.2 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).
10.10 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).
10.11 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).
10.12 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).
10.13 Agreement Regarding Common Stock by and between Michael A. Webb, SavMax
Foods, Inc. and Grocers Capital Company, dated 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).
Exhibit 24 Consents of Experts and Counsel.
24.1 Consent of Company Counsel -- see page F-1.
24.2 Consent of Independent Accountants -- see page F-2.
</TABLE>

ITEM 17. UNDERTAKINGS

The undersigned Registrant hereby undertakes:

(1) To file, during any period in which offers or sales are being made,
a post-effective amendment to this registration statement: (a) to include
any prospectus required by section 10(a)(3) of the Securities Act of 1933,
(b) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in

S-3
<PAGE>
the aggregate, represent a fundamental change in the information set forth
in the registration statement, (c) to include any material information with
respect to the plan of distribution not previously disclosed in the
registration statement or any material change to such information in the
registration statement;

(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed
to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall be deemed to
be the initial bona fide offering thereof; and

(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.

S-4
<PAGE>
SIGNATURES

Pursuant to the requirements of the Securities Act of 1933, the registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-2 and has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized, in the City of Commerce, State of California, on February 15, 1995.

CERTIFIED GROCERS OF CALIFORNIA, LTD.

By /s/ ALFRED A. PLAMANN

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

Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ----------------------------------- ----------------------

<C> <S> <C>
/s/ ALFRED A. PLAMANN President and Chief February 15, 1995
------------------------------------------- Executive Officer
Alfred A. Plamann

/s/ DANIEL T. BANE Senior Vice President, February 15, 1995
------------------------------------------- Chief Financial Officer and
Daniel T. Bane Chief Accounting Officer

/s/ WILLARD R. MACALONEY Director February 15, 1995
-------------------------------------------
Willard R. MacAloney
(Chairman of the Board)

/s/ LOUIS A. AMEN Director February 15, 1995
-------------------------------------------
Louis A. Amen

Director February , 1995
-------------------------------------------
John Berberian

/s/ WILLIAM C. EVANS Director February 15, 1995
-------------------------------------------
William C. Evans
</TABLE>

S-5
<PAGE>

<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------------------ ----------------------------------- ----------------------

<C> <S> <C>
/s/GENE A. FULTON Director February 15, 1995
-------------------------------------------
Gene A. Fulton

/s/LYLE A. HUGHES Director February 15, 1995
-------------------------------------------
Lyle A. Hughes

/s/ROGER K. HUGHES Director February 15, 1995
-------------------------------------------
Roger K. Hughes

/s/DARIOUSH KHALEDI Director February 15, 1995
-------------------------------------------
Darioush Khaledi

/s/MARK KIDD Director February 15, 1995
-------------------------------------------
Mark Kidd

/s/LEONARD R. LEUM Director February 15, 1995
-------------------------------------------
Leonard R. Leum

/s/JAY McCORMACK Director February 15, 1995
-------------------------------------------
Jay McCormack

/s/MORRIE NOTRICA Director February 15, 1995
-------------------------------------------
Morrie Notrica

/s/MICHAEL A. PROVENZANO Director February 15, 1995
-------------------------------------------
Michael A. Provenzano

/s/ALLAN SCHARN Director February 15, 1995
-------------------------------------------
Allan Scharn

/s/JAMES R. STUMP Director February 15, 1995
-------------------------------------------
James R. Stump

/s/MICHAEL A. WEBB Director February 15, 1995
-------------------------------------------
Michael A. Webb

/s/KENNETH YOUNG Director February 15, 1995
-------------------------------------------
Kenneth Young
</TABLE>

S-6
<PAGE>
CONSENT OF COMPANY COUNSEL

We hereby consent to the reference made to us, and to the use of our name,
in this Post-Effective Amendment No. 7 to the Registration Statement on Form
S-2, File No. 33-38152, including the Prospectus filed as a part thereof.

BURKE, WILLIAMS & SORENSEN

Los Angeles, California
February 16, 1995

F-1
<PAGE>
CONSENT OF INDEPENDENT ACCOUNTANTS

We consent to the inclusion in this Post-Effective Amendment No. 7 to the
Registration Statement on Form S-2 (File No. 33-38152) of our report dated
November 30, 1994, and the incorporation by reference of said report appearing
on page 19 of the Annual Report on Form 10-K and Amendment No. 1 thereto on Form
10K/A, on our audits of the consolidated balance sheets of Certified Grocers of
California, Ltd. and subsidiaries as of September 3, 1994 and August 28, 1993,
and the related consolidated statements of earnings, shareholders' equity, and
cash flows for each of the three fiscal years in the period ended September 3,
1994. We also consent to the reference to our Firm under the caption "Experts."

COOPERS & LYBRAND L.L.P.

Los Angeles, California
February 15, 1995

F-2
<PAGE>
INDEX TO EXHIBITS AND SCHEDULES

<TABLE>
<CAPTION>
SEQUENTIAL
NUMBERING
PAGE NO.
----------
<S> <C> <C> <C>
EXHIBITS:
Exhibit 4 Instruments defining the rights of security holders, including indentures.
4.1 Articles FIFTH and SIXTH of Articles of Incorporation of the Registrant (as amended
through June 21, 1994) (incorporated by reference to Exhibit 4.1 to Post-Effective
Amendment No. 6 to Form S-2 Registration Statement of the Registrant filed on
December 15, 1994, File No. 33-38152).
4.2 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).
4.3 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).
4.4 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).
4.5 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).
4.6 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).
Exhibit 5 Opinion re legality.
5.1 Opinion of Counsel dated December 7, 1990 (incorporated by reference to Exhibit 5.1
to Form S-2 Registration Statement of the Registrant filed on December 10, 1990,
File No. 33-38152).
Exhibit 10 Material Contracts.
10.1 Comprehensive Amendment to Retirement Plan for Employees of the Registrant
(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 to 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).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
SEQUENTIAL
NUMBERING
PAGE NO.
----------
<S> <C> <C> <C>
10.4.1 Executive Salary Protection Plan Life Insurance Agreement between the Registrant
and John Andikian, William O. Christy, H. Edward Collins, Donald W. Dill, Everett
W. Dingwell II, David Fitton III, Gerald F. Friedler, Donald G. Grose, Herman
Hensley, Rodney J. Love, Robert H. Mason, Lawrence J. Picano and Robert P. Walz
(incorporated by reference to Exhibit 10.7 to Post-Effective Amendment No. 2 to the
Form S-2 Registration Statement of the Registrant filed on March 1, 1988, File No.
33-19284).
10.4.2 Executive Salary Protection Plan Life Insurance Agreement between the Registrant
and Jerald L. Lauer, Alfred A. Plamann, Paul D. Rohde and David A. Woodward
(incorporated by reference to Exhibit 10.4.2 to Form S-2 Registration Statement of
the Registrant filed on December 10, 1990, File No. 33-38152).
10.5.1 Comprehensive Amendment to Certified Grocers of California, Ltd. Employees' Excess
Benefit and Supplemental Deferred Compensation Plan (incorporated by reference to
Exhibit 10.8 to Post-Effective Amendment No. 15 to Form S-1 Registration Statement
of the Registrant filed on December 20, 1988, File No. 2-70069).
10.5.2 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).
10.5.3 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).
10.6 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).
10.6.1 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).
10.7 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.
10.8 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).
10.9 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).
</TABLE>

<PAGE>

<TABLE>
<CAPTION>
SEQUENTIAL
NUMBERING
PAGE NO.
----------
<S> <C> <C> <C>
10.9.1 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).
10.9.2 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).
10.10 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).
10.11 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).
10.12 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).
10.13 Agreement Regarding Common Stock by and between Michael A. Webb, SavMax Foods, Inc.
and Grocers Capital Company, dated 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).
Exhibit 24 Consents of Experts and Counsel.
24.1 Consent of Company Counsel -- see page F-1.
24.2 Consent of Independent Accountants -- see page F-2.
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