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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

|X| Annual Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934

For the fiscal year ended September 30, 2001

|_|Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
for the transition period from ______ to _____

Commission file number 33-24939

THE FONDA GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware 13-3220732
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

2920 North Main Street, Oshkosh, Wisconsin 54901
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code: 920/235-9330

Securities of the Registrant registered pursuant to Section 12(b)of the Act:None
Securities of the Registrant registered pursuant to Section 12(g)of the Act:None

Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports) and (2) has been subject to such
filing requirements for the past 90 days. Yes X No

Indicate by check mark if disclosure of delinquent filers pursuant to
Item 405 of Regulation S-K is not contained herein and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-K or any
amendment to this Form 10-K. |X|

The aggregate market value of the voting stock of the Registrant held
by non-affiliates of the Registrant as of November 30, 2001. Not Applicable.
There is no market for the Common Stock of the Registrant.

The number of shares outstanding of the Registrant's common stock
as of November 30, 2001:
The Fonda Group, Inc. Common Stock, $0.01 par value - 100 shares

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PART I

Item 1. BUSINESS

General

The Fonda Group, Inc. (the "Company"), a wholly-owned subsidiary of SF
Holdings Group, Inc. ("SF Holdings"), believes it is one of the leading
converters and marketers of a broad line of paperboard and tissue based
disposable foodservice products. In Fiscal 2001, the Company had net sales of
approximately $367.0 million. The Company sells its products under both branded
and private labels to the institutional foodservice customers and consumer
foodservice customers and participates at all major price points. The Company
sells premium white, colored and custom-printed napkins, placemats, tablecovers
and food trays and private label consumer paper plates, bowls and cups. The
brand names for the Company's principal products include Sensations(R), Paper
Art(R), Touch of Color(R) and Hoffmaster(R).

The Company offers a broad range of products, enabling it to offer its
customers "one-stop" shopping for their disposable foodservice product needs.
The Company is principally a converter and marketer of paperboard and tissue
products, the prices of which typically follow the general movement in the costs
of such principal raw materials. The Company believes that it is generally able
to maintain relatively stable margins between its selling prices and its raw
material costs.

The Company sells its converted products to more than 6,000
institutional and consumer foodservice customers primarily located throughout
the United States and has developed and maintained long-term relationships with
many of these customers. Institutional foodservice customers include
restaurants, schools, hospitals and other major institutions. Consumer
foodservice customers include supermarkets, mass merchants, warehouse clubs,
discount chains and other retail stores.

Recent Developments

On August 28, 2001, the Company consumated the purchased of
substantially all of the property, plant and equipment, intangibles and net
working capital of the consumer division of Dopaco, Inc. ("Dopaco") located in
El Cajon, California (the "Dopaco Acquisition"). In addition, pursuant to the
Dopaco Agreement, the Company assumed the liabilities and obligations of Dopaco
arising under purchased contracts and leases. Dopaco's consumer division
manufactures coated and uncoated white and decorated paper plates, bowls and
lunch bags and serves primarily the private label markets of major west coast
based grocery chains. The aggregate purchase price was $21.8 million, subject to
post closing working capital adjustments, which was funded through a bank
financing. The Dopaco acquisition has resulted in goodwill of $9.5 million. As a
result of the potential post closing working capital adjustment, the final
calculation of which the Company expects to be completed within one year,
amounts and allocations of costs recorded may require adjustment based upon
information coming to the attention of the Company that is not currently
available.

Products

The Company's principal products include: (i) disposable paperboard
products, such as white or printed paper plates, cups, and bowls, (ii)
disposable tissue and other specialty products, such as plain or printed
napkins, tablecovers, placemats, and cutlery, and (iii) party goods accessory
products, such as

banners, cello bags, gift sacks, and invitations. The Company believes it holds
one of the top market positions in the commodity private label business.

Tabletop service products include paper plates and bowls which are sold
to both institutional foodservice and consumer foodservice customers. The
Company also manufactures these products for its affiliates, Sweetheart
Holdings, Inc. ("Sweetheart Holdings") and Sweetheart Cup Company Inc.
("Sweetheart Cup") (collectively, "Sweetheart"). White uncoated and coated paper
plates are purchased for everyday use by cost-conscious consumers. Printed and
solid color plates or bowls are considered value-added and are purchased for
everyday use as well as seasonal celebrations. The Company offers a variety of
cup and lid combinations for both hot and cold beverages. The Company's hot and
cold cups are sold to both institutional foodservice and consumer foodservice
customers. The Company purchases all of its hot and cold paper cups from
Sweetheart. The Company sells paper trays, food pails, and nested containers to
institutional foodservice customers for use by restaurants, hotels, and other
foodservice operators.

Tissue products include napkins and table covers and are sold under the
Hoffmaster(R), Linen-Like(R), Sensations(R) and Fonda(R) brand names as well as
private labels. Napkin products range from single-ply white beverage napkins, to
custom printed dinner napkins, to color multi-ply napkins, to fully printed
graphic-intensive napkins for the party goods sector. Table covers are also
offered in a variety of configurations, colors, and sizes. The Company sells
placemats, traycovers, doilies, fluted baking products, portion control cups,
and cutlery to both institutional foodservice and consumer foodservice
customers. The Company also produces a non-skid traycover that serves the needs
of healthcare and airline use.

The Company manufactures and purchases party good products which
include custom designed napkins, plates, cups, table covers, as well as a
variety of accessory items to add to the ensemble. These items are sold in
ensembles or separately to party goods stores, mass merchants, drug stores, and
grocery chains. These items are sold in pre-packed displays as well as open
stock cases.

Marketing

The Company's marketing efforts are focused on (i) providing
value-added products and services, (ii) cross-marketing products, designs or
services between both institutional foodservice and consumer foodservice
customers, (iii) developing new products that enhance the value of the bundle
for the customer, (iv) developing new designs which capitalize on future trends,
color palettes, and imagery and (v) increasing brand awareness through enhanced
packaging and promotion. The Company sells its products through an internal
sales force and independent brokers. The Company sells to more than 6,000
institutional foodservice and consumer foodservice customers located mostly in
the United States.

Sales

Institutional Foodservice Customers. Institutional foodservice
customers include restaurants, hotels, airlines, hospitals, and other non-retail
foodservice institutions. The market is serviced by dedicated territory sales
managers as well as brokers. The sales force works directly with these national
and regional distributors to service the needs of the various customers in the
disposable foodservice industry.

Consumer Foodservice Customers. Supermarkets, mass merchants, drug
stores, warehouse clubs, specialty party, and other retail stores comprise the
Company's consumer foodservice customers. The Company's consumer foodservice
customers are serviced by field sales representatives as well as a network of
national and regional brokers.

Production

The Company's plants generally operate on a five day per week, 24 hours
per day schedule with Saturday scheduled as an overtime day when needed to meet
customer demand. Due to customer demand, the Company's paperboard plant
utilization is historically substantially higher during late spring and summer.
The tissue plants are typically at their highest utilization during the fall
season.

Raw Materials and Suppliers

Raw materials are a significant component of the Company's cost
structure. Principal raw materials for the Company's paperboard and tissue
operations include bleached paperboard, napkin tissue, bond paper and waxed bond
paper obtained from major domestic manufacturers. Other material components
include corrugated boxes, poly bags, wax adhesives, coating and inks.
Paperboard, napkin tissue, bond paper and waxed bond paper are purchased in
"jumbo" rolls that may be slit for in-line printing and processed into final
products. The Company has a number of suppliers for substantially all of its raw
materials and believes current sources of supply for its raw materials are
adequate to meet its requirements.

Competition

The disposable foodservice products industry is highly competitive.
The Company believes that competition is principally based on product quality,
customer service, price and graphics capability. Competitors include large
multinational companies as well as regional and local manufacturers. The
marketplace for these products is fragmented and includes participants that
compete across the full line of products, as well as those that compete with a
limited number of products. Some of the Company's major competitors are
significantly larger than the Company, are vertically integrated and have
greater access to financial and other resources. The Company's primary
competitors include Imperial Bondware (a division of International Paper Co.),
Georgia Pacific Corp., S.C.A., AJM Packaging Corp., Converting Inc., Hallmark
Licensing Inc., American Greeting Corp., Amscan, Inc., Solo Cup Co., Duni Corp.,
and Erving Paper Products Inc.

Customers

The Company markets its products primarily to customers in the United
States. During Fiscal 2001, sales to the Company's five largest customers
represented approximately 21.2% of its gross sales. No one customer accounted
for more than 10% of the Company's gross sales. The loss of one or more large
customer could adversely affect the Company's operating results. The Company
believes it has strong relationships with its major national accounts which have
been developed over many years.

The Company sells to a diversified customer base consisting
primarily of (i) consumer food service customers which include supermarkets,
mass merchants, warehouse clubs and other retail stores, such as The Kroger Co.,
The Stop & Shop Supermarket Co., Topco Associates Inc., The Great Atlantic &
Pacific Tea Company, Inc., Publix Supermarkets Inc., Target Stores ( a division
of Dayton Hudson Corp.), Wal-Mart Stores, Inc., Price-Costco, Inc. and Staples
Inc. and (ii) institutional food service customers which include Sysco Corp.,
Alliant Foodservice Inc., Buzl USA, Inc., ARAMARK Corp., and Sodexho Marriott
Services.

Environmental Matters

The Company and its operations are subject to comprehensive and
frequently changing Federal, state, local and foreign environmental and
occupational health and safety laws and regulations, including laws and
regulations governing emissions of air pollutants, discharge of waste and storm
water, and the disposal of hazardous wastes. The Company is subject to liability
for the investigation and remediation of environmental contamination (including
contamination caused by other parties) at properties that it owns or operates
and at other properties where the Company or its predecessors have arranged for
the disposal of hazardous substances. As a result, the Company is involved from
time to time in administrative and judicial proceedings and inquiries relating
to environmental matters. The Company believes there are currently no pending
investigations at the Company's plants and sites relating to environmental
matters. However, there can be no assurance the Company will not be involved in
any such proceeding in the future and that any amount of future clean up costs
and other environmental liabilities will not have material adverse effect on the
Company's financial condition or results of operations.

The Clean Air Act mandates the phase out of certain refrigerant
compounds, which will require the Company to upgrade or retrofit air
conditioning and chilling systems during the next few years. The Company has
decided to replace units as they become inefficient or unserviceable. The
Company expects to complete the replacement of all such units within the next
five to ten years, at an estimated total cost of less than $0.5 million.

The Company cannot predict what environmental legislation or
regulations will be enacted in the future, how existing or future laws or
regulations will be administered or interpreted or what environmental conditions
may be found to exist at its properties. Enactment of more stringent laws or
regulations or more strict interpretation of existing laws and regulations may
require additional expenditures by the Company, some of which could be material.

Technology and Research

The Company tests new product concepts at its facilities located in
Oshkosh, Wisconsin, Appleton, Wisconsin and St. Albans, Vermont. The Company's
plant management, supervisors and experienced operators are responsible for
plant safety, product quality, process control, improvement of existing
products, development of new products and processes and technical assistance in
adhering to environmental rules and regulations. The Company focuses on
improving upon safety and performance, further automating its manufacturing
operations and developing improved manufacturing processes and product designs.

Employees

At September 30, 2001, the Company employed 1,864 persons, of whom
1,383 were hourly employees. The Company has collective bargaining agreements in
effect at its facilities in Appleton, Wisconsin; Oshkosh, Wisconsin; St. Albans,
Vermont; Indianapolis, Indiana and Williamsburg, Pennsylvania which cover all
production, maintenance and distribution hourly-paid employees at each
respective facility and contain standard provisions relating to, among other
things, management rights, grievance procedures, strikes and lockouts,
seniority, and union rights. The current expiration dates of the Company's
collective bargaining agreements at the Appleton, Oshkosh, St. Albans,
Indianapolis and Williamsburg facilities are March 31, 2006, May 31, 2002,
January 31, 2005, December 1, 2001 and June 11, 2004, respectively. The Company
believes that it will be successful in renegotiating the Indianapolis collective
bargaining agreement, however, there are no assurances. The Company considers
its relationship with its employees to be good.

Item 2. PROPERTIES

The Company has manufacturing and distribution facilities located
throughout the United States. All of the Company's facilities are well
maintained, in good operating condition and suitable for the Company's
operations. The table below provides summary information regarding the
properties owned or leased by the Company.

Size
Type of (Approximate Owned/
Location Facility (1) square feet) Leased Lease Expiration
-------- ------------ ------------ ------ ----------------

Appleton, Wisconsin ....................... M/W 267,700 O
El Cajon, California....................... M/W 100,000 L June 30, 2011
W 80,000 L July 31, 2010

Glens Falls, New York...................... M/W 59,100 O

Goshen, Indiana............................ M/W 63,000 O

Indianapolis, Indiana...................... W 450,000 L April 30, 2003
W 275,000 L June 30, 2002

Lakeland, Florida.......................... M/W 45,000 L January 31, 2003

Oshkosh, Wisconsin......................... M/W 484,000 O

St. Albans, Vermont (2 facilities)......... M 124,900 O
W 182,000 L June 26, 2005

Williamsburg, Pennsylvania................. M/W 146,000 L(2)

(1) M-Manufacturing; W-Warehouse; M/W-Manufacturing and Warehouse in same
facility.
(2) Subject to capital lease. (See Note 14 of the Notes to the Financial
Statements)

The Company also occupies several retail and storage facilities located
throughout Indiana and Pennsylvania in connection with its party goods consumer
business. These facilities are comprised of outlet stores and local storage
facilities maintained for marketing purposes.

Item 3. LEGAL PROCEEDINGS

The Company is subject to legal proceedings and other claims arising
in the ordinary course of business. The Company maintains insurance coverage of
types and in amounts that it believes to be adequate. The Company believes that
it is not presently a party to any litigation, the outcome of which could
reasonably be expected to have a material adverse effect on its financial
condition or results of operations.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

NONE.

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED
STOCKHOLDER MATTERS

The Company is a wholly owned subsidiary of SF Holdings. There is no
established public trading market for the Company's common stock. The Company
has never paid any cash dividends on its common stock and does not anticipate
paying any cash dividends in the foreseeable future. The Company's current
credit facility and indenture governing the $120 million of 9-1/2% Senior
Subordinated Notes due 2007 (the "Notes") limit the payment of dividends. The
Company currently intends to retain future earnings to fund the development and
growth of its business.

Item 6. SELECTED FINANCIAL DATA

Set forth below are selected historical financial data of the Company
at the dates and for the fiscal years shown. The selected historical financial
data at September 30, 2001 and September 24, 2000 and for Fiscal 2001, 2000 and
1999 is derived from historical financial statements of the Company for such
periods that have been audited by Deloitte & Touche LLP, independent auditors
and are included elsewhere herein. The selected historical financial data at
September 26, 1999, September 27, 1998, July 26, 1998 and July 27, 1997 and for
the TP 1998 and Fiscal 1998 and 1997 is derived from the audited historical
financial statements of the Company for such periods. (See "Item 7. Management's
Discussion and Analysis of Financial Condition and Results of Operations").

Fiscal
----------------------------------------------------------------------
(In thousands) 2001 2000 1999 TP 1998 (1) 1998 (2) 1997
---------- ---------- ---------- ------------- ---------- ----------

Operating Data:
Net sales $366,969 $351,699 $329,259 $59,251 $340,666 $317,018
Cost of sales 295,480 284,252 269,813 47,675 269,394 238,287
--------- --------- --------- -------- --------- ---------
Gross profit 71,489 67,447 59,446 11,576 71,272 78,731
Selling, general and administrative expenses 47,288 47,707 51,073 9,134 54,100 56,053
Restructuring expense 504 650 - - 1,828 -
Other income, net (669) (255) (606) (351) (15,366) (1,608)
--------- --------- --------- -------- --------- ---------
Operating income 24,366 19,345 8,979 2,793 30,710 24,286
Interest expense, net 15,400 15,783 16,742 2,717 15,701 11,140
--------- --------- --------- -------- --------- ---------
Income (loss) before income taxes
expense (benefit) and
extraordinary loss 8,966 3,562 (7,763) 76 15,009 13,146
Income tax expense (benefit) 3,685 1,558 (2,388) 23 6,174 5,491
Extraordinary loss (3) - - - - - 3,495
--------- --------- --------- -------- --------- ---------

Net income (loss) $ 5,281 $ 2,004 $ (5,375) $ 53 $ 8,835 $ 4,160
========= ========= ========= ======== ========= =========
Balance Sheet Data (at end of period):
Property, plant and equipment, net $ 54,249 $ 49,280 $ 51,922 $48,127 $ 48,151 $ 59,261
Total assets 258,873 230,376 210,172 211,507 213,047 212,546
Long-term debt (4) 181,702 120,453 132,892 121,735 121,767 122,368
Shareholders' equity 20,068 14,892 11,970 17,266 17,213 18,166

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(1) The 1998 Transition Period ("TP 1998") is the nine weeks ending
September 27, 1998.
(2) Fiscal 1998 includes a $15.9 million gain on the sale of substantially all
of the fixed assets and certain related working capital (the "Mill
Disposition") of its tissue mill in Gouverneur, New York (the "Mill") and
settlement in connection with the termination by the owner of the
co-generation facility formerly hosted by the Company at the Mill of its
obligation, among other things, to supply steam to the Mill (the "Steam
Contract").

(3) The Company incurred a $3.5 million extraordinary loss (net of a $2.5
million income tax benefit) in connection with the early retirement of
debt consisting of the write-off of unamortized debt issuance costs,
elimination of unamortized debt discount and prepayment penalties.
(4) See Note 9 of the Notes to the Financial Statements.

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

Forward-looking statements in this filing, including those in the
Notes to The Financial Statements, are made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are subject to risks and uncertainties and actual
results could differ materially. Such risks and uncertainties include, but are
not limited to, general economic and business conditions, competitive market
pricing, increases in raw material costs, energy costs and other manufacturing
costs, fluctuations in demand for the Company's products, potential equipment
malfunctions and pending litigation.

The Company, a wholly-owned subsidiary of SF Holdings is a converter
and marketer of disposable paper foodservice products. On December 3, 1999,
Creative Expressions Group, Inc. ("CEG"), an affiliate of the Company in the
disposable party goods products business, became an 87% owned subsidiary of SF
Holdings pursuant to a merger. On December 6, 1999, pursuant to an asset
purchase agreement entered into on November 21, 1999 (the "CEG Asset Purchase
Agreement"), the Company purchased the intangible assets of CEG, including
domestic and foreign trademarks, patents, copyrights, and customer lists for $16
million. In addition, pursuant to the CEG Asset Purchase Agreement the Company
subsequently purchased certain inventory and acquired other CEG assets for cash
and in exchange for outstanding trade payables owed to the Company by CEG. As a
result of this transaction, the Company markets, manufactures and distributes
disposable party goods products directly to the specialty (party) channel of the
Company's consumer market. The companies are under common control, and
therefore, the transaction has been accounted for in a manner similar to
pooling-of-interests. CEG's net assets and liabilities that were not acquired by
the Company pursuant to the CEG Asset Purchase Agreement were acquired by SF
Holdings and have been classified as "Due to/from SF Holdings".

General

The Company believes it is one of the leading converters and marketers
of a broad line of paperboard and tissue based disposable foodservice products.
The Company sells its products under both branded and private labels to the
institutional foodservice customers and consumer foodservice customers and
participates at all major price points. The Company sells premium white, colored
and custom-printed napkins, placemats, tablecovers and food trays and private
label consumer paper plates, bowls and cups. The brand names for the Company's
principal products include Sensations(R), Paper Art(R), Touch of Color(R) and
Hoffmaster(R).

The Company sells its converted products to more than 6,000
institutional and consumer foodservice customers primarily located throughout
the United States and has developed and maintained

long-term relationships with many of these customers. Institutional foodservice
customers include restaurants, schools, hospitals and other major institutions.
Consumer foodservice customers include supermarkets, mass merchants, warehouse
clubs, discount chains and other retail stores.

Fiscal 2001 Compared to Fiscal 2000

Net sales increased $15.3 million, or 4.4%, to $367.0 million in Fiscal
2001, compared to $351.7 million in Fiscal 2000, reflecting an 7.8% increase in
average realized sales price partially offset by a 3.4% decrease in sales
volume. Net sales to consumer foodservice customers decreased 1.7%, resulting
from a decrease in sales volume of 11.8% partially offset by a 10.1% increase in
average realized sales price. Net sales to consumer foodservice customers was
negatively impacted by more competitive market conditions and the Company's
decision to reduce sales to certain customers experiencing deteriorating credit
conditions, offset partially by a more favorable product mix. Net sales to
institutional foodservice customers increased 13.7%, resulting from a 16.0%
increase in sales volume and a 2.3% decrease in average realized sales price.
This increase in institutional foodservice sales volume is primarily attributed
to the Springprint acquisition.

Gross profit increased $4.1 million, or 6.1%, to $71.5 million in
Fiscal 2001, compared to $67.4 million in Fiscal 2000. As a percentage of net
sales, gross profit increased from 19.2% in Fiscal 2000 to 19.5% in Fiscal 2001.
Gross profit in Fiscal 2001 was positively effected by increased selling prices
due in part from the Springprint acquisition. This increase was partially offset
by higher raw material and energy costs.

Selling, general and administrative expenses decreased $0.4 million, or
0.8%, to $47.3 million in Fiscal 2001 from $47.7 million in Fiscal 2000. The
decrease resulted from lower wages and benefit expenses.

Restructuring expense of $0.5 million in Fiscal 2001 was recorded in
conjunction with the planned consolidation of the Company's administrative
offices for the Creative Expressions Group in Indianapolis, Indiana into the
Company's administrative offices in Oshkosh, Wisconsin. The plan was approved by
management on October 30, 2000 and announced to employees on May 1, 2001. The
effective date of the consolidation and elimination of positions was delayed
until the fourth quarter of Fiscal 2001. Severance payments of $0.1 million were
paid during the fourth quarter of Fiscal 2001. As of September 30, 2001, the
remaining reserve of $0.4 million is included within the "other current
liabilities" on the balance sheet and will be used during Fiscal 2002.

Other income, net increased $0.4 million, or 133.3%, to income of $0.7
million in Fiscal 2001 from $0.3 million in Fiscal 2000. This resulted from a
$0.2 million increase in management fees received from Sweetheart (See "Item 13.
Certain Relationships and Related Transactions") and a $0.2 million loss on the
sale of a building in St. Albans, Vermont.

Operating income increased $5.1 million, or 26.4%, to $24.4 million in
Fiscal 2001 from $19.3 million in Fiscal 2000 due to the reasons discussed
above.

Interest expense, net of interest income decreased $0.4 million, or
2.5%, to $15.4 million in Fiscal 2001 compared to $15.8 million in Fiscal 2000.
In Fiscal 2001, the Company realized lower interest expense due primarily to
lower average interest rates on higher average outstanding balances.

Income tax expense increased $2.1 million, or 131.3%, to an expense of
$3.7 million in Fiscal 2001 compared to an expense of $1.6 million in Fiscal
2000 as a result of higher pre-tax earnings. The

effective rate for Fiscal 2001 was 41.1% and for Fiscal 2000 was 43.7% due to
the acquisition of the CEG assets and related adjustments.

Net income increased $3.3 million, or 165%, to $5.3 million in Fiscal
2001 compared to $2.0 million in Fiscal 2000 due to the reasons stated above.

Fiscal 2000 Compared to Fiscal 1999

Net sales increased $22.4 million, or 6.8%, to $351.7 million in Fiscal
2000, compared to $329.3 million in Fiscal 1999, reflecting an 11.6% increase in
average realized sales price partially offset by a 4.8% decrease in sales
volume. Net sales to consumer foodservice customers increased 5.6%, resulting
from a 14.0% increase in average realized sales price, partially offset by a
decrease in sales volume of 8.4%. Selling prices were positively affected by
increases in raw material costs that were passed through to customers as well as
more competitive market conditions. Net sales to institutional foodservice
customers increased 8.8%, resulting from a 3.6% increase in average realized
sales price and a 5.2% increase in sales volume. The increased sales volume to
institutional foodservice customers was primarily due to an increase in sales of
value-added converted tissue products and certain commodity paperboard products.
The increase in average selling prices primarily resulted from a more favorable
sales mix.

Gross profit increased $8.0 million, or 13.5%, to $67.4 million in
Fiscal 2000, compared to $59.4 million in Fiscal 1999. As a percentage of net
sales, gross profit increased from 18.0% in Fiscal 1999 to 19.2% in Fiscal 2000.
Gross profit in Fiscal 2000 was positively affected by margin enhancement in
value-added tissue products as well as cost reductions through manufacturing
efficiencies.

Selling, general and administrative expenses decreased $3.4 million or
6.7%, to $47.7 million in Fiscal 2000 from $51.1 million in Fiscal 1999. In
Fiscal 1999 results of operations reflected an increased bad debt write-off
associated with bankruptcy filings by two of the Company's top 25 customers.
This decrease was supplemented by savings in Fiscal 2000 resulting from the
consolidation of the CEG business.

Restructuring expense of $0.7 million in Fiscal 2000 was recorded in
connection with the November 2000 closing of the Maspeth, New York facility
which resulted in the elimination of 130 positions.

Other (income) expense, net decreased $0.3 million in Fiscal 2000 to
income of $0.3 million, compared to income of $0.6 million in Fiscal 1999. This
is the result of a $0.1 million loss from the sale of a building in St. Albans,
Vermont and $0.1 million loss from the disposal of various machinery and
equipment.

Operating income increased $10.3 million to $19.3 million in Fiscal
2000 from $9.0 million in Fiscal 1999 due to the reasons discussed above.

Interest expense, net of interest income decreased $0.9 million, or
5.4%, to $15.8 million in Fiscal 2000 compared to $16.7 million in Fiscal 1999.
In Fiscal 2000, the Company realized lower interest expense due primarily to
lower average interest rates and lower average outstanding balances.

Income tax expense (benefit) increased $4.0 million to an expense of
$1.6 million in Fiscal 2000 compared to a benefit of $2.4 million in Fiscal
1999. The effective rate for Fiscal 2000 was 43.8% and for Fiscal 1999 was 30.8%
due to the acquisition of CEG and related adjustments.

Net income (loss) increased $7.4 million, to income of $2.0 million for
Fiscal 2000 compared to a loss of $5.4 million for Fiscal 1999, due to the
reasons stated above.

Liquidity and Capital Resources

Historically, the Company has relied on cash flows from operations and
borrowings to finance its working capital requirements, capital expenditures and
acquisitions. In Fiscal 2001, the Company funded its capital expenditures using
cash generated from operations and additional borrowings. The Company expects to
continue this method of funding for its Fiscal 2002 capital expenditures.

Net cash provided by operating activities increased $5.0 million to
$10.7 million in Fiscal 2001, compared to $5.7 million in Fiscal 2000. This is
primarily due to increased net income and a reduction in inventories.

Net cash used in investing activities in Fiscal 2001 was $33.0 million
compared to $33.3 million in Fiscal 2000. In Fiscal 2001, investing activities
primarily consisted of $28.5 million used to acquire new businesses and $5.2
million in capital expenditures. In Fiscal 2000, investing activities primarily
consisted of $30.4 million resulting from the acquisition of the CEG assets and
$3.4 million in capital expenditures.

Net cash provided by financing activities in Fiscal 2001 was $22.9
million compared to $28.4 million in Fiscal 2000. This decrease is primarily due
to lower additional borrowings under the Credit Facility.

Working capital increased $46.4 million to $89.8 million at September
30, 2001 from $43.4 million at September 24, 2000. This increase resulted from
current assets increasing $9.4 million and current liabilities decreasing $37.0
million primarily as a result of refinancing the Credit Facility.

Capital expenditures in Fiscal 2001 were $5.2 million compared to $3.4
million in Fiscal 2000. Capital expenditures in Fiscal 2001 included $4.1
million for new equipment and $1.1 million for routine capital improvements.

On August 28, 2001, the Company refinanced its credit facility to
provide for a revolving credit facility, subject to borrowing base limitations
of up to $65 million through August 26, 2004, and a term loan in an amount of
$15 million that requires equal monthly principal payments of $0.3 million
through August 2004 with the balance due on August 26, 2004 (the "Credit
Facility"). The Credit Facility is collateralized by all of the Company's
receivables, inventories, and equipment, certain general intangibles and other
property, and the proceeds on the sale of receivables and inventories.
Borrowings under the revolving credit facility bear interest at the bank's prime
rate plus 0.50% or at LIBOR plus 2.50% at the election of the Company.
Borrowings under the term loan bear interest at the bank's prime rate plus 0.75%
or at LIBOR plus 2.75% at the election of the Company. As of September 30, 2001,
the bank's prime rate was 6.00%, and the LIBOR rate was 2.64%. In Fiscal 2001,
the weighted average interest rate for the Credit Facility was 7.70%. At
September 30, 2001, $49.6 million was outstanding and $15.4 million was the
maximum remaining advance available based upon eligible collateral.

In Fiscal 1997, the Company issued $120 million of 9-1/2% Series A
Senior Subordinated Notes due 2007 (the "Notes") with interest payable
semi-annually. Payment of the principal and interest is subordinate in right to
payment of the Credit Facility. The Company may, at its election, redeem the
Notes at any time after March 1, 2002 at a redemption price equal to a
percentage (104.750% after March 1, 2002 and declining in annual steps to 100%
after March 1, 2005) of the principal amount thereof plus accrued interest. The
Notes provide that upon the occurrence of a change of control (as

defined therein), the holders thereof will have the option to require the
redemption of the Notes at a redemption price equal to 101% of the principal
amount thereof plus accrued interest.

Pursuant to the terms of the instruments governing the indebtedness of
the Company, the Company is subject to certain affirmative and negative
covenants customarily contained in agreements of this type, including, without
limitations covenants that restrict, subject to specified exceptions (i)
mergers, consolidations, asset sales or changes in capital structure, (ii)
creation or acquisition of subsidiaries, (iii) purchase or redemption of capital
stock or declaration or payment of dividends or distributions on such capital
stock, (iv) incurrence of additional indebtedness, (v) investment activities,
(vi) granting or incurrence of liens to secure other indebtedness, (vii)
prepayment or modification of the terms of subordinated indebtedness, and (viii)
engaging in transactions with affiliates. In addition, such debt instruments
restrict the Company's ability to pay dividends or make other distributions to
SF Holdings. The Credit Facility also requires that certain financial covenants
are satisfied.

The Company believes that cash generated by operations, combined with
amounts available under the revolving credit facility, will be sufficient to
meet the Company's working capital and capital expenditure requirements in the
next twelve months.

Impact of Recently Issued Accounting Standards

In June 2001, the Financial Accounting Standards Board ("FASB") issued
two new pronouncements: Statement of Financial Accounting Standard ("SFAS") No.
141, Business Combinations and SFAS No. 142, Goodwill and Other Intangible
Assets. SFAS No. 141 prohibits the use of the pooling-of-interest method for
business combinations initiated after June 30, 2001 and also applies to all
business combinations accounted for by the purchase method that are completed
after June 30, 2001. There are also transition provisions that apply to business
combinations completed before July 1, 2001, that were accounted for by the
purchase method. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001 and applies to all goodwill and other intangible assets
recognized in an entity's balance sheet. The Company has adopted SFAS No. 141
and is currently evaluating the impact of SFAS No. 142 on its financial
statements.

In October 2001, the FASB issued pronouncement SFAS No. 144 Impairment
or Disposal of Long-Lived Assets. This Statement addresses financial accounting
and reporting for the impairment or disposal of long-lived assets. This
Statement supersedes FASB Statement No. 121, Accounting for the Impairment of
Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, and the
accounting and reporting provisions of Accounting Principals Board Opinion
("APB") No. 30, Reporting the Results of Operations-Reporting the Effects of
Disposal of a Segment of a Business, and Extraordinary, Unusual and Infrequently
Occurring Events and Transactions, for the disposal of a segment of a business
(as previously defined in that Opinion). This Statement also amends Accounting
Research Bulletin No. 51, Consolidated Financial Statements, to eliminate the
exception to consolidation for a subsidiary for which control is likely to be
temporary. The Company is currently evaluating the impact of SFAS No. 144 on its
financial statements.

In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities as amended by SFAS No. 137 and SFAS No. 138.
SFAS No. 133 establishes accounting and reporting standards for derivative
instruments and requires that an entity recognize all derivatives at fair value
in the balance sheet. The Company adopted SFAS No. 133 effective September 25,
2000. The adoption of SFAS No. 133 did not have an impact on the financial
statements.

Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

The Company is exposed to market risk in the ordinary course of
business, which consists primarily of interest rate risk associated with its
variable rate debt. Borrowings under the revolving credit facility bear interest
at the bank's prime rate plus 0.50% or at LIBOR. Borrowings under the term loan
bear interest at the bank's prime rate plus 0.75% or at LIBOR plus 2.75% at the
election of the Company. At September 30, 2001, $49.6 million was outstanding
and $15.4 million was the maximum remaining advance available based upon
eligible collateral. Based upon these amounts, the annual net income would
change by approximately $0.4 million for each one percentage point change in the
interest rates applicable to the Company's variable debt. The level of the
exposure to interest rate movements may fluctuate significantly as a result of
changes in the amount of indebtedness outstanding under the revolving credit
facilities.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See the Financial Statements and Schedule attached hereto and listed in
Item 14 (a)(1) and (a)(2) hereof.

Item 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE

NONE.

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

Set forth below are the names, ages and positions of the directors,
executive officers and key employees of the Company as of November 30, 2001. All
directors hold office until the next annual meeting of shareholders and until
their successors are duly elected and qualified. Officers serve at the
discretion of the Board of Directors.

Name Age Position
Dennis Mehiel 59 Chairman and Chief Executive Officer

Robert Korzenski 47 President and Chief Operating Officer

Thomas Uleau 57 Executive Vice President and Director

Hans H. Heinsen 48 Senior Vice President - Finance,
Chief Financial Officer and Treasurer

John Lewchenko 50 Vice President

Bryan Hollenbach 39 Vice President

Jon McLain 57 Vice President and General Manager

Harvey L Freidman 59 Secretary and General Counsel

Alfred D. DelBello 65 Vice Chairman

Gail Blanke 53 Director

John A. Catsimatidis 53 Director

Chris Mehiel 62 Director

Edith Mehiel 56 Director

Jerome T. Muldowney 56 Director

Alan D. Scheinkman 51 Director

G. William Seawright 60 Director

Lowell P. Weicker, Jr. 70 Director

Mr. Dennis Mehiel has been Chairman of the Board and Chief Executive
Officer of the Company since it was purchased in 1988 and is also Chairman and
Chief Executive Officer of CEG. He has been Chairman of the Board and Chief
Executive Officer of Sweetheart since March 1998. Mr. Mehiel is also Chairman
and Chief Executive Officer of SF Holdings and its subsidiaries. Since July
2000, he has been a director of Box USA Holdings, Inc. ("Box USA"), formerly
Four M Corporation ("Four M"), a converter and seller of interior packaging,
corrugated sheets and corrugated containers which he co-founded. From 1966 until
July 2000, he was Chairman of Four M, and since 1977 (except during a leave of
absence from April 1994 through July 1995) he was the Chief Executive Officer of
Four M. Mr. Mehiel is also currently Chief Executive Officer and a director of
Mannkraft Corporation (formerly, Box USA of New Jersey Inc.), a manufacturer of
corrugated containers.

Mr. Korzenski has been President and Chief Operating Officer of the
Company since March 1998. Prior to that, he had been Senior Vice President of
the Company since January 1997 and President of the Hoffmaster division since
its acquisition by the Company in March 1995. From October 1988 to March 1995,
he served as Vice President of Operations and Vice President of Sales of Scott
Institutional, a division of Scott Paper Company ("Scott"). Prior to that, he
was Director of National Sales at Thompson Industries.

Mr. Uleau has been Executive Vice President of the Company since March
1998 and he has been a Director of the Company since 1988. Prior to that, he had
been President of the Company since January 1997 and Chief Operating Officer
since 1994. Mr. Uleau was Executive Vice President of the Company from 1994 to
1996 and from 1988 to 1989. He has also been Executive Vice President and a
director of Sweetheart since March 1, 2001. From March 1998 to March 1, 2001, he
served as President, Chief Operating Officer and a director of Sweetheart. Mr.
Uleau also has been Vice Chairman and Senior Vice President of SF Holdings since
March 1, 2001 and prior thereto he served as President, Chief Operating Officer
and a director of SF Holdings. He has been Executive Vice President of CEG since
1996.

He is also currently a director of CEG. He served as Executive Vice President
and Chief Financial Officer of Four M from 1989 through 1993 and as its Chief
Operating Officer in 1994.

Mr. Heinsen has been Senior Vice President and Treasurer of the Company
since February 1997 and Chief Financial Officer of the Company since June 1996.
He has also been Chief Financial Officer of CEG since November 1998. Mr. Heinsen
also has been Chief Financial Officer and Senior Vice President of Finance of
Sweetheart since March 1998 and Senior Vice President, Chief Financial Officer
and Treasurer of SF Holdings since February 1998. Prior to joining the Company,
Mr. Heinsen spent 21 years in a variety of corporate finance positions with The
Chase Manhattan Bank, N.A.

Mr. Lewchenko has been Vice President of Institutional Sales since
February 1996. He was employed by the Scott Foodservice Division of Scott prior
to its acquisition in March 1995. Previously with Scott and until his promotion
by the Company, he had been National Sales Manager since 1995 and a Regional
Sales Manager since 1990.

Mr. Hollenbach has been Vice President of Operations since December
1998 and a Director of Operations since 1996. He was employed by the Chesapeake
Consumer Products Company prior to its acquisition in December 1995 as Director
of Operations and Finance since 1994 and in other management positions since
1989.

Mr. McLain has been Vice President and General Manager since December
1999. He acted in the same capacity for CEG since November 1998. From August
1998 until November 1998 he was Vice President of Sales and Marketing for CEG.
Prior to joining CEG, he served as Vice President and General Manager of Erving
Paper Products from February 1997 until July of 1998. Mr. Mclain had previously
held numerous management positions including sales, marketing, plant operations,
and retail product supply management for James River Corporation.

Mr. Friedman has been Secretary and General Counsel of the Company
since May 1996. He was a director of the Company from 1985 to January 1997. Mr.
Friedman is also Secretary and General Counsel of CEG, SF Holdings, Sweetheart
and Mannkraft Corporation and is a director of CEG. He was formerly a partner of
Kramer Levin Naftalis & Frankel LLP, a New York City law firm.

Mr. DelBello has served as Vice Chairman of the Company since January
1997 and a Director of the Company since 1990. He also has been Vice Chairman of
SF Holdings since February 1998. Since July 1995, Mr. DelBello has been a
partner in the law firm of DelBello, Donnellan & Weingarten & Tartaglia, LLP.
From September 1992 to July 1995 he was a partner in the law firm of Worby
DelBello Donnellan & Weingarten. Prior thereto, he had been President of
DelBello Associates, a consulting firm, since 1985. Mr. DelBello served as
Lieutenant Governor of New York State from 1983 to 1985.

Ms. Blanke has served as a Director of the Company since January
1997. She also has been a director of SF Holdings since February 1998. She has
been President and Chief Executive Officer of Gail Blanke's Lifedesigns, LLC
since March 1995. Lifedesigns was founded in March 1995 as a division of Avon
Products, Inc. ("Avon") and was spun off from Avon in March 1997. Prior thereto,
she held the position of Corporate Senior Vice President of Avon since August
1991. She also held a number of management positions at CBS, Inc., including the
position of Manager of Player Promotion for the New York Yankees. Ms. Blanke
will be serving her second consecutive term as President of the New York Women's
Forum.

Mr. Catsimatidis has served as a Director of the Company since
January 1997. He also has been a director of SF Holdings since February 1998. He
has been Chairman and Chief Executive Officer of the Red Apple Group, Inc., a
company with diversified holdings that include oil refining, supermarkets, real
estate, aviation and newspapers, since 1969. Mr. Catsimatidis serves as a
director of Sloan's

Supermarket, Inc. and News Communications, Inc. He also serves on the board of
trustees of New York Hospital, St. Vincent Home for Children, New York
University Business School, Athens College, Independent Refiners Coalition and
New York State Food Merchants Association.

Mr. Chris Mehiel, the brother of Dennis Mehiel, has been a Director of
the Company since January 1997. He also has been a director of SF Holdings since
February 1998. Mr. Mehiel is a co-founder of Four M and has been Executive Vice
President, Chief Operating Officer and a director of Four M since September 1995
and Chief Financial Officer from August 1997 until July 2000. He is an executive
officer of the managing member of Fibre Marketing Group, LLC, the successor to
Fibre Marketing Group, Inc., a waste paper recovery business in which Fonda has
a 25% interest ("Fibre Marketing") a waste paper recovery business which he
co-founded, and was President from 1994 to January 1996. From 1993 to 1994, Mr.
Mehiel served as President and Chief Operating Officer of Mannkraft Corporation.
From 1982 to 1992, Mr. Mehiel served as the President and Chief Operating
Officer of Specialty Industries, Inc., a waste paper processing and container
manufacturing company.

Ms. Edith Mehiel, the former spouse of Dennis Mehiel, has been a
Director of the Company since March 1, 2001.

Mr. Muldowney has served as a Director of the Company since 1990. He
also has been a director of SF Holdings since February 1998. Since January 1996,
Mr. Muldowney has been a Managing Director of AIG Global Investment Corp. and
since March 1995 he has been a Senior Vice President of AIG Domestic Life
Companies ("AIG Life"). Prior thereto, he had been a Vice President of AIG Life
since 1982. In addition, from 1986 to 1996, he served as President of AIG
Investment Advisors, Inc. He is currently a director of AIG Life and AIG Equity
Sales Corp.

Mr. Scheinkman has been a Director of the Company since April 2000.
Since January 2001, Mr. Scheinkman has been a member of the law firm of Epstein
Becker and Green P.C. From January 1998 to December 2000, he was County Attorney
of Westchester County, New York, Counsel to the County Executive and Board of
Legislators. Prior thereto, Mr. Scheinkman was in private practice with
Scheinkman, Fredman & Kosan LLP. Mr. Scheinkman was also Associate Minority
Counsel to the New York Senate. He also serves as a director of NCO Portfolio
Management, Inc.

Mr. Seawright has served as a Director of the Company since January
1997. He also has been a director of SF Holdings since February 1998. He has
been President and Chief Executive Officer of Stanhome Inc., a manufacturer and
distributor of giftware and collectibles, since 1993. Prior thereto, he was
President and Chief Executive Officer of Paddington, Inc., an importer of
distilled spirits, since 1990. From 1986 to 1990, he was President of Heublein
International, Inc.

Mr. Weicker, Jr. has served as a Director of the Company since
January 1997. He also has been a director of SF Holdings since February 1998.
Mr. Weicker served as Governor of the State of Connecticut from January 1991
through January 1995. From 1968 to 1989, Mr. Weicker served in the U.S.
Congress. In 1992, Mr. Weicker earned the Profiles in Courage Award from the
John F. Kennedy Library Foundation. He currently serves as a director of
Compuware Corporation, World Wrestling Federation Entertainment, Inc., HPSC,
Inc. and UST, Inc.

Director Compensation

Directors of Fonda who are not employees receive annual compensation of
(i) $12,000, (ii) $1,000 for each Board meeting attended, and (iii) $1,000 for
each committee meeting attended which is not held on the date of a board
meeting. Prior to Fiscal 2001, Directors also received 100 stock appreciation
rights ("SARs") as part of their compensation. The Company's SAR program was

terminated on September 14, 2000 and all SARs have been redeemed (See Note 11 of
the Notes to The Financial Statements). Directors who are employees do not
receive any compensation or fees for service on the Board of Directors or any
committee thereof.

Item 11. EXECUTIVE COMPENSATION

The following table sets forth the compensation earned, whether
paid or deferred, to the Company's Chief Executive Officer and its other four
most highly compensated executive officers (collectively, the "Named Officers")
for Fiscal 2001, Fiscal 2000, Fiscal 1999 for services rendered in all
capacities to the Company during such periods. The Company has concluded that
the aggregate amount of perquisites and other personal benefits paid to each of
the named executive officers did not exceed the lesser of (i) 10% of such
officer's total annual salary and bonus or (ii) $50,000. Thus, such amounts are
not reflected in the following table.

Summary Compensation Table

Annual Compensation
- ----------------------------------------- ------------------------------------------ ---------------------------
All Other
Name and Principal Salary Bonus SARs Compensation
Position Fiscal ($) ($) (#)(1) ($)(2)
- ----------------------------------------- ---------- ----------- ----------- ----------- --------------

Dennis Mehiel
Chairman and Chief Executive 2001 175,000 200,000 - -
Officer 2000 175,000 200,000 - -
1999 175,000 75,000 - -

Thomas Uleau
Executive Vice President and 2001 50,000 30,000 - -
Director 2000 50,000 - 126,516 -
1999 50,000 - - -

Harvey L Freidman
Secretary and General Counsel 2001 136,800 80,000 - -
2000 136,800 100,000 - -
1999 136,800 25,000 - -

Hans Heinsen
Senior Vice President - Finance, 2001 110,140 70,000 - 17,534
Chief Financial Officer and Treasurer 2000 110,140 - 40,178 8,065
1999 110,140 - - 13,547

Robert Korzenski
President and Chief Operating 2001 244,543 140,000 - 11,480
Officer 2000 239,578 235,000 126,516 20,998 (3)
1999 204,616 75,000 - 31,332 (4)

(1) The SAR Plan was terminated on September 14, 2000, effective as of October
1, 1999. No SARs were issued during Fiscal 2000 or 1999. All vested SARs
were redeemed on September 20, 2000. See "--Stock Appreciation Rights".
(2) Reflects matching contributions by the Company under the Company's
401(k) Plans, long-term disability and life insurance premiums paid
by the Company.
(3) Included in other compensation is $11,726 paid for relocation by the
Company.
(4) Included in other compensation is $17,565 paid for relocation by the
Company.

Stock Appreciation Rights

On September 14, 2000 the Company terminated the SAR plan effective as
of October 1, 1999. In total, 10,140 SARs were redeemed at their October 1, 1999
value from Named Officers at a total cost of $293,210. All unvested SARs held by
Named Officers not redeemed by the Company were forfeited.

SARs Outstanding at Value of Outstanding
Name SARs Redeemed (#) Value Realized ($) FY end SARs
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------

Thomas Uleau 3,900 126,516 - -

Hans Heinsen 2,340 40,178 - -

Robert Korzenski 3,900 126,516 - -

SF Holdings Stock Option Plan

During Fiscal 2001, SF Holdings granted options to purchase shares of
its common stock to certain employees of the Company. The options vest over a
period of three years. Certain of the exercise prices of the options were below
the fair market value of SF Holding's common stock at the date of the grant.
During the vesting period, these discounts of $0.1 million are being amortized
as compensation expense and credited to additional paid-in capital by the
Company. Amortization expense relating to SF Holding's stock options was $0.1
million for Fiscal 2001.

Employee Benefit Plans

The Company provides certain union and non-union employees with
retirement and disability income benefits under defined benefit pension plans.
The Company's policy has been to fund annually the minimum contributions
required by applicable regulations.

On January 1, 1997, the Company adopted a defined contribution benefit
plan. All non-union employees and certain union employees are covered under the
Company's 401(k) savings and investment plans. Employee contributions are
matched to varying amounts according to the plan as it relates to a particular
facility and in addition, at the discretion of the Company. The Company also
participates in multi-employer pension plans for certain of its union employees.
See Note 16 of the Notes to The Financial Statements.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The Company is a wholly-owned subsidiary of SF Holdings which owns 100
shares of common stock of the Company. SF Holdings address is 373 Park Avenue
South, New York, New York 10016. The following table sets forth certain
information as of November 30, 2001, with respect to the shares of common stock
of SF Holdings beneficially owned by each person or group that is known by the
Company to be a beneficial owner of more than 5% of the outstanding common stock
of SF Holdings, the directors and named executive officers of the Company, and
all directors and named executive officers of the Company, as a group.

Percent
Name of Beneficial Owner Number of Shares Ownership
------------------------------------- -------------------- --------------

Dennis Mehiel
373 Park Avenue South
New York, NY 10016 716,037 (1) 71.8%

Thomas Uleau
10100 Reisterstown Road
Owings Mills, Maryland 21117 16,366 (2) 1.6%

Directors and executive officers as a
Group (5 persons) 751,937 (3) 75.4%

(1) Includes 15,352 shares of Class A common stock of SF Holdings that would be
issuable upon conversion of Class B Series 1 Preferred Stock held by CEG,
116,647 shares of Class A common stock of SF Holdings that would be
issuable upon conversion of Class B Series 2 Preferred Stock, 71,515 shares
underlying options to purchase Class A common stock of SF Holdings, which
are presently exercisable, and 134,138 shares which Mr. Mehiel has the
power to vote pursuant to a voting trust agreement.
(2) Includes 3,498 shares of Class A Common Stock of SF Holdings that would be
issuable upon conversion of Class B Series 2 Preferred Stock and 3,333
shares underlying options to purchase Class D Common Stock of SF Holdings,
which are presently exercisable.
(3) Includes an aggregate of 13,332 shares underlying options to purchase Class
D Common Stock or SF Holdings which are presently exercisable.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

All of the affiliates referenced below are directly or indirectly under
the common ownership of the Company's Chief Executive Officer. The Company
believes that transactions entered into with related parties were negotiated on
terms which are at least as favorable as it could have obtained from unrelated
third parties and were negotiated on an arm's length basis.

During Fiscal 2001, the Company sold $9.9 million of paper plates and
$0.2 million of equipment rental to Sweetheart and $4.6 million of scrap paper
to Fibre Marketing. Included in accounts receivable as of September 30, 2001 are
$0.9 million due from Sweetheart and $0.8 million due from Fibre Marketing.
Other sales to affiliates, if any, during Fiscal 2001 were not significant.

During Fiscal 2001, the Company purchased $21.7 million of cups from
Sweetheart, $0.5 million of corrugated containers from Box USA a company in
which the Company's Chief Executive Officer, owns in excess of 10% of its
outstanding capital stock and $0.5 million of travel services from Emerald Lady,
Inc. ("Emerald Lady"), a company wholly owned by the Company's Chief Executive
Officer. Included in accounts payable, as of September 30 2001, is $1.8 million
due to Sweetheart. Other purchases from affiliates, if any, during Fiscal 2001
were not significant.

At September 30, 2001, the Company had loans receivable from its Chief
Executive Officer totaling $0.3 million plus accrued interest at 5.06%. At
September 24, 2000, the Company had loans receivable from its Chief Executive
Officer totaling $0.3 million plus accrued interest at 10%. During Fiscal 1999,
the Company had a $0.2 million loan receivable with another executive officer
plus accrued interest at 5.39% which was paid in full in June 1999. The loans
are payable upon demand.

During Fiscal 2000, the Company sold $11.1 million of paper plates,
$0.2 million of equipment rental and $0.5 million of other services to
Sweetheart and $6.8 million of scrap paper to Fibre Marketing. Included in
accounts receivable as of September 24, 2000 are $2.2 million due from
Sweetheart and $1.1 million due from Fibre Marketing. Other sales to affiliates,
if any, during Fiscal 2000 were not significant.

During Fiscal 2000, the Company purchased $15.9 million of paper cups
from Sweetheart, $1.7 million of corrugated containers from Box USA and $0.5
million of travel services from Emerald Lady. Included in accounts payable, as
of September 24, 2000, is $1.6 million due to Sweetheart. Other purchases from
affiliates, if any, during Fiscal 2000 were not significant.

During Fiscal 2000, the Company sold certain paper cup machines to
Sweetheart at a fair market value of $1.3 million. The gain on the sale of
equipment resulted in a credit to equity of $1.0 million. Independent appraisals
were obtained to determine the fairness of the purchase price.

On December 6, 1999, pursuant to the CEG Asset Purchase Agreement, the
Company purchased the intangible assets of CEG, including domestic and foreign
trademarks, patents, copyrights and customer lists. In addition, pursuant to the
CEG Asset Purchase Agreement, the Company purchased certain inventory of CEG.
The aggregate purchase price for the intangible assets and the inventory is $41
million ($16 million for the intangible assets and $25 million for the
inventory), payable in cash, the cancellation of certain notes and warrants and
the assumption of certain liabilities. Pursuant to the agreement, the Company
also acquired other CEG assets in exchange for outstanding trade payables owed
to the Company by CEG. In connection with the CEG Asset Purchase Agreement, the
Company canceled previous agreements with CEG including all licensing and
manufacturing arrangements and a certain Promissory Note dated February 27,
1997. Independent appraisals were obtained to determine the fairness of the
purchase price for such assets.

During Fiscal 1999, the Company sold $4.3 million of paper plates and
$0.2 million of equipment rental to Sweetheart and $3.9 million of scrap paper
to Fibre Marketing. Included in accounts receivable as of September 26, 1999 are
$1.3 million due from Sweetheart and $1.0 million due from Fibre Marketing.
Other sales to affiliates, if any, during Fiscal 1999 were not significant.

During Fiscal 1999, the Company purchased $6.8 million of cups from
Sweetheart, $1.8 million of corrugated containers from Box USA and $0.5 million
of travel services from Emerald Lady. Included in accounts payable, as of
September 26, 1999, is $0.6 million due to Sweetheart. Other purchases from
affiliates, if any, during Fiscal 1999 were not significant.

During Fiscal 1999, the Company purchased certain paper plate
manufacturing assets from Sweetheart for $2.4 million. Also in Fiscal 1999, the
Company entered into a five year operating lease with Sweetheart, whereby the
Company leases certain paper cup manufacturing assets to Sweetheart with a net
book value of $1.3 million for annual lease income of $0.2 million. Independent
appraisals were obtained to determine the fairness of both the purchase price
and lease terms.

The Company leases a building in Jacksonville, Florida from the
Company's Chief Executive Officer. Annual payments under the lease are $0.2
million plus annual increases based on changes in the Consumer Price Index
("CPI") through December 31, 2014. In addition, the Chief Executive Officer can
require the Company to purchase the facility for $1.5 million, subject to a
CPI-based escalation, until July 31, 2006. In Fiscal 1998, the Company
terminated it operations at this facility and is currently subleasing the entire
facility. Four M Corporation ("Four M") subleased a portion of this facility
through May 1998 and again from October 1999 through February 2000. Rent
expense, net of sublease income on the portion of the premises subleased to Four
M during Fiscal 2001 was less than $0.2 million, Fiscal 2000 and was less than
$0.2, and was $0.1 million in Fiscal 1999.

During Fiscal 1998, the Company entered into an agreement with SF
Holdings whereby the Company acquired for $7.0 million substantially all of SF
Holding's rights under a Management Services Agreement dated August 31, 1993, as
amended, and pursuant to which the Company has the right, subject to the
direction of the board of directors of Sweetheart, to manage Sweetheart's
day-to-day operations. In consideration of the Company's performance of
services, the Company is entitled to receive management fees from Sweetheart of
$0.7 million, $0.9 million and $1.1 million in the first, second and third
years, respectively, and $1.6 million per year for the remaining term of the
Management Services Agreement. The $7.0 million payment is included in other
assets and is being amortized over the term of such agreement. Management fee
income, net of amortization was $0.7 million in Fiscal 2001 and $0.5 million in
Fiscal Years 2000 and 1999.

The Company had a 38.2% ownership in Fibre Marketing, a waste paper
recovery business. The Company granted Sweetheart the right to acquire 50% of
the Company's interest in Fibre Marketing for $0.1 million. During Fiscal 2000,
the Company sold a 13.2% interest in Fibre Marketing to Mehiel Enterprises, Inc.
for $0.1 million. The Company retains a 25% ownership interest in Fibre
Marketing. The Company accounts for its ownership interest using the equity
method. During Fiscal 2001, 2000 and 1999 the Company recorded a loss of
$67,000, income of $241,000, and a loss of $43,000, respectively.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE, AND REPORTS ON FORM 8-K

(a) The following documents are filed as a part of this report:

1. The financial statements listed in the "Index to The Financial
Statements."

2. The financial statement schedule listed in the "Index to Financial
Statement Schedule."

3. Exhibits

Exhibits 3.1 through 10.5 are incorporated herein by reference to the
exhibit with the corresponding number filed as part of the Company's
Registration Statement on Form S-4, as amended (File No. 333-24939). Exhibits
10.7 through 10.8 are incorporated herein by reference to the exhibit with the
corresponding number filed as part of the Company's Form 10-Q for the quarterly
period ended April 26, 1998. Exhibit 10.10 is incorporated herein by reference
to the exhibit with the corresponding number filed as part of the Company's Form
8-K filed on December 27, 1999. Exhibits 10.11 and 10.12 are filed herein.

3.1 Certificate of Incorporation of the Company.
3.2 Amended and Restated By-laws of the Company.
4.1 Indenture, dated as of February 27, 1997, between the Company
and the Bank of New York.
4.2 Form of 9 1/2% Series A and Series B Senior Subordinated Notes,
dated as of February 27, 1997(incorporated by reference to
Exhibit 4. 1).
4.3 Registration Rights Agreement dated as of February 27, 1997,
among the Company, Bear Steams & Co. Inc. and Dillon, Read & Co.
Inc. (the "Initial Purchasers").

10.1 Second Amended and Restated Revolving Credit and Security
Agreement- dated as of February 27, 1997, among the Company, the
financial institutions party thereto and IBJ Schroder Bank &
Trust Company, as agent
10.2 Stock Purchase Agreement dated as of October 13, 1995, between
the Company and Chesapeake Corporation.
10.3 Asset Purchase Agreement dated as of October 13, 1995, between
the Company and Alfred Bleyer & Co., Inc.
10.4 Asset Purchase Agreement dated as of March 22, 1996, among
James River Paper Company, Inc.("James River"), the Company
and Newco (the "James River Agreement").
10.5 First Amendment to the James River Agreement dated as of
May 6, 1996, among James River, the Company and Newco.
10.6 Indenture of Lease between Dennis Mehiel and the Company dated
as of January 1, 1995.
10.7 Assignment and Assumption Agreement dated as of March 12, 1998
between the Company and SF Holdings.
10.8 Tax Sharing Agreement, dated as of March 12, 1998 between SF
Holdings and the Company.
10.10 Asset Purchase Agreement dated as of December 6, 1999 between
CEG and the Company.
10.11 Amendment No. 4 to the Second Amended and Restated Revolving
Credit and Security Agreement dated as of January 12, 2000,
among the Company, the financial institutions party
thereto and IBJ Whitehall Business Credit Corporation as
successor to IBJ Schroder Bank & Trust Company, as agent.
10.12 Amendment No. 5 to the Second Amended and Restated Revolving
Credit and Security Agreement dated as of February 28, 2000,
among the Company, the financial institutions party thereto and
IBJ Whitehall Business Credit Corporation as successor to IBJ
Schroder Bank & Trust Company, as agent.
10.13* Amendment No. 4 and Restated Revolving Credit, Term Loan and
Security Agreement dated as of August 28, 2001, among the
Company, the financial institutions party thereto and IBJ
Whitehall Business Credit Corporation, as agent.
27.1* Financial Data Schedule.

* filed herein.

(b) Current Reports on Form 8-K

A report on Form 8-K was filed on September 17, 2001 under Item 9.

A report on Form 8-K was filed on September 19, 2001 under Item 9.

INDEX TO THE FINANCIAL STATEMENTS

Page

Independent Auditors' Report 24

Balance Sheets as of September 30, 2001 and September 24, 2000 25

Statements of Operations and Other Comprehensive Income (Loss)
for Fiscal Years 2001, 2000 and 1999 26

Statements of Cash Flows for Fiscal Years 2001, 2000 and 1999 27

Statements of Shareholders' Equity for Fiscal Years 2001, 2000 and 1999 28

Notes to the Financial Statements 29

INDEPENDENT AUDITORS' REPORT

Board of Directors
The Fonda Group, Inc.

We have audited the accompanying balance sheets of The Fonda Group,
Inc. (the "Company") as of September 30, 2001 and September 24, 2000, and the
related statements of operations and other comprehensive income (loss),
shareholders' equity and cash flows for each of the three fiscal years in the
period ended September 30, 2001. 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 auditing standards generally
accepted in the United States of America. These 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, such financial statements present fairly, in all
material respects, the financial position of the Company as of September 30,
2001 and September 24, 2000, and the results of its operations and its cash
flows for each of the three fiscal years in the period ended September 30, 2001
in conformity with accounting principles generally accepted in the United States
of America.

/s/ DELOITTE & TOUCHE LLP
Baltimore, Maryland
November 19, 2001

THE FONDA GROUP, INC.
BALANCE SHEETS
(In thousands, except share data)

September 30, September 24,
2001 2000
----------------- -----------------

Assets
Current assets:
Cash and cash equivalents $ 2,023 $ 1,413
Receivables, less allowances of $950 and $1,459 58,886 50,927
Inventories 62,944 63,145
Deferred income taxes 6,918 8,044
Spare parts 2,699 2,523
Other current assets 8,110 6,086
---------- ----------
Total current assets 141,580 132,138

Property, plant and equipment, net 54,249 49,280
Goodwill, net 29,790 18,373
Due from SF Holdings 17,898 18,441
Other assets 15,356 12,144
---------- ----------

Total assets $ 258,873 $ 230,376
========== ==========

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable $ 14,455 $ 15,679
Accrued payroll and related costs 12,745 12,302
Other current liabilities 21,478 19,370
Current portion of long-term debt 3,113 41,425
---------- ----------
Total current liabilities 51,791 88,776

Commitments and contingencies (See Notes)

Deferred income taxes 4,334 5,043
Long-term debt 181,702 120,453
Other liabilities 978 1,212
---------- ----------

Total liabilities 238,805 215,484
---------- ----------

Shareholders' equity:
Common stock - Par value $.01 per share; 1,000
shares authorized; 100 shares issued and outstanding - -
Additional paid-in capital 1,083 1,022
Retained earnings 19,176 13,895
Accumulated other comprehensive loss (191) (25)
---------- ----------

Total shareholders' equity 20,068 14,892
---------- ----------

Total liabilities and shareholders' equity $ 258,873 $ 230,376
========== ==========

See accompanying Notes to the Financial Statements.

THE FONDA GROUP, INC.
STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE INCOME (LOSS)
(In thousands)

Fiscal
-------------------------------------
2001 2000 1999
----------- ----------- -----------

Net sales $ 366,969 $ 351,699 $ 329,259
Cost of sales 295,480 284,252 269,813
---------- ---------- ----------

Gross profit 71,489 67,447 59,446

Selling, general and administrative expenses 47,288 47,707 51,073
Restructuring expense 504 650 -
Other income, net (669) (255) (606)
---------- ---------- ----- ----

Operating income 24,366 19,345 8,979

Interest expense, net of interest income
of $30,$275 and $498 15,400 15,783 16,742
---------- ---------- ----------

Income (loss) before income tax
expense (benefit) 8,966 3,562 (7,763)

Income tax expense (benefit) 3,685 1,558 (2,388)
---------- ---------- ----------

Net income (loss) $ 5,281 $ 2,004 $ (5,375)
========== ========== ==========

Other comprehensive income (loss):

Net income (loss) $ 5,281 $ 2,004 $ (5,375)
Minimum pension liability adjustment
(net of income tax expense (benefit) of
($111), ($69) and $53) (166) (104) 79
---------- ---------- ----------

Comprehensive income (loss) $ 5,115 $ 1,900 $ (5,296)
========== ========== ==========

See accompanying Notes to the Financial Statements.

THE FONDA GROUP, INC.
STATEMENTS OF CASH FLOWS
(In thousands)

Fiscal
------------------------------------
2001 2000 1999
---------- ----------- -----------

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income (loss) $ 5,281 $ 2,004 $ (5,375)
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Depreciation and amortization 8,350 7,374 6,598
Deferred income tax expense (benefit) 1,072 192 (1,826)
Loss (gain) on sale of assets 36 202 (72)
Changes in operating assets and liabilities (net of
business acquisitions):
Receivables (3,826) (3,218) 954
Inventories 6,025 (3,020) (3,930)
Accounts payable (1,820) 5,885 2,942
Redemption of stock appreciation rights - (504) -
Other, net (4,420) (3,233) 4,008
--------- --------- ---------
Net cash provided by operating activities 10,698 5,682 3,299
--------- --------- ---------

CASH FLOWS FROM INVESTING ACTIVITIES

Additions to property, plant and equipment (5,213) (3,441) (12,379)
Payments for business acquisitions (28,467) - -
Due to/from SF Holdings 543 (30,449) (10,722)
Proceeds from sale of property, plant and equipment 112 562 762
--------- --------- ---------
Net cash used in investing activities (33,025) (33,328) (22,339)
--------- --------- ---------

CASH FLOWS FROM FINANCING ACTIVITIES

Net borrowings under credit facilities 23,652 29,000 11,710
Repayments of other debt (715) (565) (576)
--------- --------- ---------
Net cash provided by financing activities 22,937 28,435 11,134
--------- --------- ---------

NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 610 789 (7,906)

--------- --------- ---------
CASH AND CASH EQUIVALENTS, beginning of year 1,413 624 8,530
--------- --------- ---------
CASH AND CASH EQUIVALENTS, end of year $ 2,023 $ 1,413 $ 624
========= ========= =========

SUPPLEMENTAL CASH FLOW DISCLOSURES:

Interest paid $ 15,138 $ 15,099 $ 15,949
========= ========= =========

Income taxes paid $ 2,053 $ 701 $ 2,528
========= ========= =========

See accompanying Notes to the Financial Statements.

THE FONDA GROUP, INC.
STATEMENTS OF SHAREHOLDERS' EQUITY
(In thousands)

Accumulated
Additional Other Total
Common Paid-In Retained Comprehensive Shareholders'
Stock Capital Earnings Income (Loss) Equity
---------- -------------- ------------ ------------------ -----------------

Balance, September 28, 1998 $ - $ - $ 17,266 $ - $ 17,266

Net loss - - (5,375) - (5,375)
Minimum pension liability
adjustment - - - 79 79
------ ------- --------- ------- ---------

Balance, September 26, 1999 - - 11,891 79 11,970

Net income - - 2,004 - 2,004
Elimination of gain on
equipment sold to related
party - 1,022 - - 1,022
Minimum pension liability
adjustment - - - (104) (104)
------ ------- --------- ------- ---------

Balance, September 24, 2000 - 1,022 13,895 (25) 14,892

Net income - - 5,281 - 5,281
Equity based compensation - 61 - - 61
Minimum pension liability
adjustment - - - (166) (166)
------ ------- --------- ------- ---------

Balance, September 30, 2001 $ - $ 1,083 $ 19,176 $ (191) $ 20,068
====== ======= ========= ======= =========

See accompanying Notes to The Financial Statements.

THE FONDA GROUP, INC.
NOTES TO THE FINANCIAL STATEMENTS

On March 12, 1998, all of the outstanding shares of The Fonda Group,
Inc. (the "Company") were converted into shares of SF Holdings Group, Inc. ("SF
Holdings"), a Delaware corporation principally owned by the majority stockholder
of the Company, pursuant to a merger whereby the stockholders of the Company
became stockholders of SF Holdings and the Company became a wholly-owned
subsidiary of SF Holdings (the "Merger"). The Company is one of the leading
converters and marketers of a broad line of paperboard and tissue based
disposable foodservice products.

1. SIGNIFICANT ACCOUNTING POLICIES

Business Segments - The Company operates within one business segment
and accordingly does not report multiple business segments. Identification of
net sales by product and service or group of similar products and services is
not available.

Fiscal Year End - The Company's fiscal year is the 52 or 53 week period
ending on the last Sunday in September. Fiscal 2001 is the 53 week period ended
September 30, 2001. Fiscal 2000 is the 52 week period ended September 24, 2000.
Fiscal 1999 is the 52 week period ended September 26, 1999.

Cash, including Cash Equivalents - The Company considers all highly
liquid investments with an original maturity of three months or less to be cash
equivalents. Cash overdrafts are reclassified to accounts payable and accrued
payroll and related costs.

Inventories - Inventories are stated at the lower of cost or market,
using the first-in first-out method.

Property, Plant and Equipment - Property, plant and equipment is
recorded at cost, less accumulated depreciation or fair market value for
business acquisitions. Depreciation is computed by use of the straight-line
method over the estimated useful lives of the assets.

The asset lives of buildings range between 10 and 40 years. The asset
lives of machinery and equipment range between 2 and 12 years and the asset
lives of leasehold improvements range between 5 and 15 years.

Costs related to construction in progress are accumulated as incurred
and transferred to property, plant and equipment when put into service, at which
time, the asset is depreciated over its useful life.

Revenue Recognition - Revenue is recognized upon shipment of product
and when collectability is reasonably assured. The Company's sales are evidenced
and the sales price fixed based upon either a purchase order, contract or buying
agreement with the customer. The Company's freight terms are either FOB shipping
point or freight prepaid by the customer. The customer may also be eligible for
promotional incentives or rebates. The Company at the time of sale records a
reserve for promotional allowances, rebates and other discounts based on
historical experience, which are charged to net sales.

Shipping and Handling Costs - Amounts billed to customers in sales
transactions related to shipping and handling, if any, are included in net
sales. Shipping and handling costs incurred by the Company are included in cost
of sales.

Goodwill - Goodwill represents the excess of the purchase price over
the fair value of tangible and identifiable intangible net assets acquired and
is amortized on a straight-line basis over twenty years. The carrying value of
goodwill is reviewed when facts and circumstances suggest that it may be
impaired. The Company assesses its recoverability by determining whether the
amortization of the goodwill balance over its remaining life can be recovered
through undiscounted projected future cash flows. Should the review

indicate that goodwill is not recoverable, the Company's carrying value of the
goodwill would be reduced by the estimated shortfall of the cash flows.

Income Taxes - Deferred income taxes are provided to recognize
temporary differences between the financial reporting basis and the tax basis of
the Company's assets and liabilities. SF Holdings and the Company will file a
consolidated federal income tax return and pursuant to a tax sharing agreement,
the Company will pay SF Holdings its allocable share of the consolidated group's
federal income tax liability, which is generally equal to the tax liability the
Company would have paid if it had filed separate tax returns.

Reclassifications - Certain prior year balances have been reclassified
to conform with the current presentation.

Deferred Catalog Cost and Advertising Expense - The Company expenses
the costs of advertising as incurred, except for catalog costs, which are
capitalized and amortized over the expected period of future benefits. Direct
response advertising consists primarily of catalogs that include order forms for
the Company's products. The everyday products catalog costs are expensed over a
period of twelve months, while the spring, fall and holiday season catalog costs
are amortized over periods ranging from four to six months coinciding with
shipments of products.

At September 30, 2001 and September 24, 2000, $0.3 million and $0.2
million, respectively, of unamortized catalog costs were included in other
current assets. Advertising expense was $0.2 million in Fiscal 2001, $0.2
million in Fiscal 2000 and $0.1 million in Fiscal 1999. Catalog expense was $0.4
million in Fiscal 2001, $0.6 million in Fiscal 2000 and $0.7 million in Fiscal
1999.

Advanced Royalties and Minimum License Guarantees - The Company enters
into licensing agreements with third parties for the right to use their designs
and trademarks. Certain agreements require minimum guarantees of royalties, as
well as advance payments. Advance royalty payments are recorded as other current
assets and are charged to expense as royalties are earned. Minimum license
guarantees are recorded as an other asset, with a corresponding payable, when
the agreement is executed and are charged to expense based on actual sales. The
Company charges to expense remaining advance royalties and minimum license
guarantees when management determines that actual related product sales are
significantly less than original estimates.

As of September 30, 2001 and September 24, 2000, the Company had $0.5
million in minimum license guarantees and advance royalties, net of reserves,
respectively. Future minimum royalty payments are $0.4 million in 2002 and $0.1
million thereafter.

Concentration of Credit Risk - Financial instruments, which potentially
subject the Company to credit risk, consist principally of receivables.
Concentration of credit risk with respect to receivables is considered to be
limited due to the Company's customer base and the diversity of its geographic
sales areas. The Company performs ongoing credit evaluations of its customers'
financial condition. The Company maintains a provision for probable credit
losses based upon expected collectability of all receivables.

Impact of Recently Issued Accounting Standards - In June 2001, the
Financial Accounting Standards Board ("FASB") issued two new pronouncements:
Statement of Financial Accounting Standard ("SFAS") No. 141, Business
Combinations and SFAS No. 142, Goodwill and Other Intangible Assets. SFAS No.
141 prohibits the use of the pooling-of-interest method for business
combinations initiated after June 30, 2001 and also applies to all business
combinations accounted for by the purchase method that are completed after June
30, 2001. There are also transition provisions that apply to business
combinations completed before July 1, 2001, that were accounted for by the
purchase method. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001 and applies to all goodwill and other intangible assets
recognized in an entity's balance sheet. The Company has adopted SFAS No. 141
and is currently evaluating the impact of SFAS No. 142 on its financial
statements.

Use of Estimates - The preparation of financial statements in
conformity with accounting principles generally accepted in the U.S. requires
management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of revenues and
expenses during the reporting fiscal years. Actual results could differ from
those estimates.

2. INVENTORIES

The components of inventories are as follows (in thousands):

September 30, September 24,
2001 2000
----------------- ----------------

Raw materials and supplies $ 17,948 $ 19,723
Finished products 44,384 42,732
Work in progress 612 690
-------- --------
Total inventories $ 62,944 $ 63,145
======== ========

3. INCOME TAXES

The income tax provision (benefit) includes the following components
(in thousands):

Fiscal
---------------------------------
2001 2000 1999
---------- --------- ----------
Current:
Federal $ 2,344 $ 1,026 $ (866)
State 269 340 304
-------- ------- ---------
Total current 2,613 1,366 (562)
-------- ------- ---------

Deferred:
Federal 904 167 (1,453)
State 168 25 (373)
-------- ------- ---------
Total deferred 1,072 192 (1,826)
-------- ------- ---------
Total income tax provision (benefit) $ 3,685 $ 1,558 $ (2,388)
======== ======= =========

The effective tax rate varied from the U.S. Federal tax rate of 35% for
Fiscal 2001, Fiscal 2000 and Fiscal 1999:

Fiscal
----------------------
2001 2000 1999
------ ------ ------

U.S. Federal tax rate 35% 35% 35%
State income taxes, net of
U.S. Federal tax impact 5 6 -
Non-deductible goodwill 1 2 (1)
Meals and entertainment - 1 (1)
Other - - (2)
--- --- ---
Effective tax rate 41% 44% 31%
=== === ===

Deferred income taxes reflect the net tax effects of temporary
differences between the carrying amounts of assets and liabilities for financial
reporting purposes and the amounts used for income tax purposes. The significant
components of the Company's net deferred tax assets and liabilities are as
follows (in thousands):

September 30, September 24,
2001 2000
--------------- ---------------

Assets:
Capitalized inventory costs $ 748 $ 948
Allowance for doubtful accounts receivable and related reserves 1,000 2,105
Accrual for health insurance and other employee benefits 2,317 2,408
Inventory and sales related reserve 3,542 3,005
Pension reserve 434 14
Benefit of tax carryforwards 184 325
Other 273 83
--------- ---------
8,498 8,888
--------- ---------

Liabilities:
Depreciation (5,914) (5,801)
Other - (86)
--------- ---------
(5,914) (5,887)
--------- ---------
Net deferred tax assets $ 2,584 $ 3,001
========= =========

The tax benefit carryforward primarily relates to charitable
contribution carryforwards which will expire in 2005.

4. OTHER CURRENT ASSETS

The components of other current assets are as follows (in thousands):

September 30, September 24,
2001 2000
--------------- ---------------

Vendor receivable $ 3,141 $ 2,637
Prepaid expenses 4,951 2,125
Other 18 1,324
------- -------

Total other current assets $ 8,110 $ 6,086
======= =======

5. PROPERTY, PLANT AND EQUIPMENT

The Company's major classes of property, plant and equipment, net are
as follows (in thousands):

September 30, September 24,
2001 2000
--------------- ---------------

Land and building $ 24,045 $ 22,300
Machinery and equipment 56,473 48,091
Leasehold improvements 678 656
Construction in progress 3,503 3,148
-------- --------

Total property, plant and equipment 84,699 74,195

Less - accumulated depreciation 30,450 24,915
-------- --------

Property, plant and equipment, net $ 54,249 $ 49,280
======== ========

Depreciation expense was $5.8 million in Fiscal 2001, $5.2 million in
Fiscal 2000 and $4.5 million in Fiscal 1999. In addition, property, plant and
equipment includes buildings under capital lease at a cost of $2.4 million and a
net book value of $1.5 million at September 30, 2001 and a cost of $2.2 million
and a net book value of $1.4 million at September 24, 2000.

6. ACQUISITIONS

resulted in goodwill of $9.5 million. As a result of the potential post closing
working capital adjustment, the final calculation of which the Company expects
to be completed within one year, amounts and allocations of costs recorded may
require adjustment based upon information coming to the attention of the Company
that is not currently available.

On September 25, 2000, pursuant to an asset purchase agreement dated
August 9, 2000 (the "Springprint Agreement"), the Company purchased
substantially all of the property, plant and equipment, intangibles and net
working capital of Springprint Medallion, a division of Marcal Paper Mills, Inc.
("Springprint"). In addition, pursuant to the Springprint Agreement, the Company
has assumed the liabilities and obligations of Springprint arising under
contracts or leases that are either assets purchased by the Company or a part of
the accounts payable. The aggregate purchase price for the assets and working
capital was $6.7 million, which was paid in cash. The Springprint acquisition
has resulted in goodwill of $3.2 million.

The above acquisitions have been accounted for under the purchase
method and their results have been included in the statements of operations
since the respective dates of acquisition. Goodwill amortization was $1.3
million in Fiscal 2001, $1.0 million in Fiscal 2000 and $1.2 million in Fiscal
1999. Accumulated amortization was $5.3 million and $4.0 million at September
30, 2001 and September 24, 2000, respectively. The inclusion of these
acquisitions within the financial statements presented had a minimal impact on
the Company's pro forma results.

On December 3, 1999, Creative Expressions Group, Inc. ("CEG"), an
affiliate of the Company in the disposable party goods products business, became
an 87% owned subsidiary of SF Holdings pursuant to a merger (the "CEG Merger").
On December 6, 1999, pursuant to the CEG Asset Purchase Agreement, the Company
purchased the intangible assets of CEG, including domestic and foreign
trademarks, patents, copyrights and customer lists. The Company and CEG are
under common control, and therefore, the transaction has been accounted for in a
manner similar to pooling-of-interests. The financial statements have been
restated for all period presented to include the balance sheet and results of
operations of CEG. CEG's net assets and liabilities that were not acquired by
the Company pursuant to the CEG Asset Purchase Agreement were acquired by SF
Holdings and have been classified as "Due to/from SF Holdings".

7. OTHER ASSETS

The components of other assets are as follows (in thousands):

September 30, September 24,
2001 2000
-------------- ---------------

Management service agreement, net
(Note 13) $ 5,201 $ 5,900
Debt issuance costs, net 3,071 3,226
Other 7,084 3,018
-------- --------

Total other assets $ 15,356 $ 12,144
======== ========

Amortization of debt issuance costs was $0.5 million, $0.6 million and
$0.6 million for Fiscal 2001, 2000 and 1999, respectively and is included in
interest expense.

8. OTHER CURRENT LIABILITIES

The components of other current liabilities are as follows (in
thousands):

September 30, September 24,
2001 2000
--------------- ----------------

Promotional allowances $ 8,573 $ 7,651
Due to other affiliates 1,832 1,676
Freight payable 1,481 1,467
Interest payable 1,203 1,426
Other 8,389 7,150
-------- --------

Total other current liabilities $ 21,478 $ 19,370
======== ========

9. LONG-TERM DEBT

Long-term debt, including amounts payable within one year, is as
follows (in thousands):

September 30, September 24,
2001 2000
---------------- ---------------

Senior Subordinated Notes $ 120,000 $ 120,000
Revolving credit agreement 64,362 40,710
Other 453 1,168
--------- ---------

Total debt 184,815 161,878

Less - Current portion of long-term debt 3,113 41,425
--------- ---------

Total long-term debt $ 181,702 $ 120,453
========= =========

The aggregate annual maturities of long-term debt at September 30, 2001
are as follows (in thousands):

Fiscal 2002 $ 3,113
Fiscal 2003 3,118
Fiscal 2004 58,486
Fiscal 2005 98
Fiscal 2006 -
Thereafter 120,000
---------

$ 184,815
=========

10. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

The carrying amounts of financial instruments included in current
assets and current liabilities approximate their estimated fair value because of
the relatively short maturities of these instruments. Long-term debt
instruments, other than the Company's Senior Subordinated Notes, have variable
interest rates that fluctuate along with current market conditions and thus the
carrying value approximates their fair value.

The fair value of the Company's Senior Subordinated Notes is estimated
to be $3.6 million lower than the carrying value at September 30, 2001 and $20.4
million lower than the carrying value at September 24, 2000 based on independent
third party information.

11. SHAREHOLDERS' EQUITY

On September 14, 2000, the Company terminated the Stock Appreciation
Unit Plan (the "SAR Plan") effective as of October 1, 1999. In total, 24,780
SARs were redeemed at a total cost to the Company of $0.5 million. The SAR Plan
had provided for the granting of up to 200,000 units to key executives of the
Company. A grantee was entitled to the appreciation in a unit's value from the
date of the grant to the date of its redemption. Unit value was based upon a
formula consisting of net income (loss) and book value criteria and grants
vested over a five-year period. The Company granted 26,540 units in Fiscal 1998
and 1997 at an aggregate value on the dates of grant of $1.3 million. There were
no units granted in Fiscal Years 2000 or 1999. No compensation expense was
required to be recorded in Fiscal Years 2000 and 1999. As of September 20, 2000,
all vested units had been redeemed and all unvested units were cancelled.

12. SF HOLDINGS STOCK OPTION PLAN

A summary of SF Holdings stock option transactions involving employees
of the Company are as follows:

SF Holdings Weighted Average
Stock Options Exercised Price
--------------- ------------------
Outstanding, September 25, 2000 $ - $ -
Granted 4,903 118.45
------- --------
Outstanding, September 30, 2001 4,903 $ 118.45
======= ========

The following table summarizes information about SF Holdings stock
options granted to employees of the Company, outstanding at September 30, 2001:

Options Outstanding Options Exercisable
---------------------------------------------------- ---------------------------
Weighted Weighted
Number Average Weighted Number Average
Range of Outstanding as Remaining Life Average Exercisable Exercise
Exercise Prices of 09/30/01 (Years) Exercise Price as of 9/30/01 Price
----------------- ---------------- ---------------- ---------------- --------------- ----------

$ 93.75 2,348 2.1 $ 93.75 - $ -
141.14 2,555 2.1 141.14 - -
----- --- -------- -- ---
4,903 2.1 $ 118.45 - $ -
===== === ======== == ===

The Company applies APB No. 25 and related interpretations in
accounting for SF Holdings stock options granted to employees of the Company.
Had compensation costs for SF Holdings stock options been determined based on
fair value at the option grant dates, in accordance with the provisions of SFAS
No. 123, the Company's net income for Fiscal 2001 would have been reduced to the
pro forma amount indicated below (in thousands):

Net income:
As reported $ 5,281
Pro forma $ 5,266

The weighted average fair value of the SF Holdings stock options, was
$0.2 million in Fiscal 2001 estimated on the date of grant using the
Black-Scholes options-pricing model with the following weighted-average
assumptions: dividend yield of zero, risk-free interest rate of 2.75%, and
expected life of option grants of 3 years. The effects of applying SFAS No. 123
in this pro forma disclosure are not indicative of future pro forma effects.

13. RELATED PARTY TRANSACTIONS

All of the affiliates referenced below are directly or indirectly under
the common ownership of the Company's Chief Executive Officer. The Company
believes that transactions entered into with

related parties were negotiated on terms which are at least as favorable as it
could have obtained from unrelated third parties and were negotiated on an arm's
length basis.

During Fiscal 2001, the Company sold $9.9 million of paper plates and
$0.2 million of equipment rental to the Company's affiliates, Sweetheart
Holdings, Inc. ("Sweetheart Holdings") and Sweetheart Cup Company Inc.
("Sweetheart Cup") (collectively, "Sweetheart") and $4.6 million of scrap to
Fibre Marketing. Included in accounts receivable as of September 30, 2001 are
$0.9 million due from Sweetheart and $0.8 million due from Fibre Marketing.
Other sales to affiliates, if any, during Fiscal 2001 were not significant.

During Fiscal 2001, the Company purchased $21.7 million of cups from
Sweetheart, $0.5 million of corrugated containers from Box USA ("Box USA")
formerly Four M Corporation ("Four M"), a converter and seller of interior
packaging, corrugated sheets and corrugated containers and $0.5 million of
travel services from Emerald Lady, Inc. ("Emerald Lady"), a company wholly owned
by the Company's Chief Executive Officer. Included in accounts payable, as of
September 30 2001, is $1.8 million due to Sweetheart. Other purchases from
affiliates, if any, during Fiscal 2001 were not significant.

During Fiscal 2000, the Company sold $11.1 million of paper plates,
$0.2 million of equipment rental and $0.5 million of other services to
Sweetheart and $6.8 million of scrap to Fibre Marketing. Included in accounts
receivable as of September 24, 2000 are $2.2 million due from Sweetheart and
$1.1 million due from Fibre Marketing. Other sales to affiliates, if any, during
Fiscal 2000 were not significant.

During Fiscal 2000, the Company purchased $15.9 million of paper cups
from Sweetheart, $1.7 million of corrugated containers from Box USA and $0.5
million of travel services from Emerald Lady, Inc. Included in accounts payable,
as of September 24, 2000, is $1.6 million due to Sweetheart. Other purchases
from affiliates, if any, during Fiscal 2000 were not significant.

During Fiscal 1999, the Company sold $4.3 million of paper plates and
$0.2 million of equipment rental to Sweetheart and $3.9 million of scrap paper
to Fibre Marketing. Included in accounts

receivable as of September 26, 1999 are $1.3 million due from Sweetheart and
$1.0 million due from Fibre Marketing. Other sales to affiliates, if any, during
Fiscal 1999 were not significant.

The Company leases a building in Jacksonville Florida from the
Company's Chief Executive Officer. Annual payments under the lease are $0.2
million plus annual increases based on changes in the Consumer Price Index
("CPI") through December 31, 2014. In addition, the Chief Executive Officer can
require the Company to purchase the facility for $1.5 million, subject to a
CPI-based escalation, until July 31, 2006. In Fiscal 1998, the Company
terminated it operations at this facility and is currently subleasing the entire
facility. Four M Corporation ("Four M") subleased a portion of this facility
through May 1998 and again from October 1999 through February 2000. Rent
expense, net of sublease income on the portion of the premises subleased to Four
M during Fiscal 2001 was less than $0.2 million, Fiscal 2000 was less than $0.2,
and through May 1998 was $0.1 million in Fiscal 1999.

The Company had a 38.2% ownership in Fibre Marketing, a waste paper
recovery business. The Company granted Sweetheart the right to acquire 50% of
the Company's interest in Fibre Marketing for $0.1 million. During Fiscal 2000,
the Company sold a 13.2% interest in Fibre Marketing to Mehiel Enterprises, Inc.
for $0.1 million. The Company retains a 25% ownership interest in Fibre
Marketing. The Company accounts for its ownership interest using the equity
method. During Fiscal 2001, 2000 and 1999, the Company recorded a loss of
$67,000, income of $241,000, and a loss of $43,000, respectively.

14. LEASE COMMITMENTS

The Company leases certain facilities and equipment under operating
leases. Future minimum payments under non-cancellable operating leases with
remaining terms of one year or more are $4.1 million in Fiscal 2002, $3.1
million in Fiscal 2003, $2.5 million in Fiscal 2004, $2.3 million in Fiscal
2005, $2.1 million in Fiscal 2006 and $7.3 million thereafter.

Rent expense was $5.9 million in Fiscal 2001, $6.6 million in Fiscal
2000 and $7.4 million in Fiscal 1999.

The Company leases a warehouse facility in Williamsburg, Pennsylvania
which is being accounted for as a capital lease. The term of this lease is 15
years, expiring in Fiscal 2005. The initial cost of the lease was $2.2 million.
The future minimum lease payments are $0.1 million in Fiscal 2002, Fiscal 2003,
Fiscal 2004 and Fiscal 2005. The present value of the future minimum lease
payments is $0.4 million.

15. RESTRUCTURING CHARGE

During the quarter ended June 24, 2001, the Company established a
restructuring reserve of $0.5 million in conjunction with the planned
consolidation of the Company's administrative offices for the Creative
Expressions Group in Indianapolis, Indiana into the Company's administrative
offices in Oshkosh, Wisconsin. This consolidation included the elimination of
approximately 40 positions. The plan was approved by management on October 30,
2000 and announced to employees on May 1, 2001. The effective date of the
consolidation and elimination of positions was delayed until the fourth quarter
of Fiscal 2001. Severance payments of $0.1 million were paid during the fourth
quarter of Fiscal 2001. As of September 30, 2001, the remaining reserve of $0.4
million is included within the "other current liabilities" on the balance sheet
and will be utilized during Fiscal 2002.

During Fiscal 2000, the Company announced that it intended to close
its Maspeth, New York facility in the first quarter of Fiscal 2001 which would
result in the elimination of 130 positions. In connection with such plans in
Fiscal 2000, the Company recognized $0.7 million of charges for severance and
related costs, of which $0.6 million remained unpaid as of September 24, 2000
and was included within the "other current liabilities" on the balance sheet.
Severance payments of $0.1 million, $0.5 million, $0.08 million, and $0.02
million were paid during the quarters ended September 24, 2000, December 24,
2000, March 25, 2001, and June 24, 2001, respectively.

16. EMPLOYEE BENEFIT PLANS

The Company provides certain union and non-union employees with
retirement and disability income benefits under defined benefit pension plans.
Pension costs are based upon the actuarially determined normal costs plus
interest on and amortization of the unfunded liabilities. The benefits for
participants in the non-union pension plans are frozen. In Fiscal 1999, the
assets and obligations of a pension plan for a significant number of the
Company's union employees were transferred to a multi-employer pension plan
resulting in a $0.2 million credit to income. The Company's policy is to
annually fund the minimum contributions required by applicable regulations. In
Fiscal 2001, all assets of the a discontinued pension plan were distributed in
full settlement of the plan's obligations. A credit to income of $30,000 was
recognized as a result of this settlement.

Net periodic cost for the Company's pension and other benefit plans
consists of the following (in thousands):
Fiscal
--------------------------
2001 2000 1999
-------- -------- --------

Pension Benefits
Service cost $ 261 $ 245 $ 381
Interest cost 338 308 514
Return on plan assets (104) (360) (746)
Net amortizations and deferrals (272) 50 291
Additional amounts recognized (26) - -
------ ------ -----
Net periodic pension cost $ 197 $ 243 $ 440
====== ====== ======
Other Benefits
Service cost $ 44 $ 44 $ 44
Interest cost 89 76 76
------ ------ ------

Net periodic benefit cost $ 133 $ 120 $ 120
====== ====== ======

The following table sets forth the change in benefit obligation for the
Company's benefit plans (in thousands):

Pension Benefits Other Benefits
---------------- --------------
September 30, September 24, September 30, September 24,
2001 2000 2001 2000
--------------- --------------- --------------- ---------------

Change in benefit obligation:
Benefit obligation at beginning of period $ 4,507 $ 4,058 $ 396 $ 276
Service cost 260 245 44 44
Interest cost 338 308 89 76
Amendments 848 - - -
Actuarial gain 14 (47) - -
Benefits paid (237) (57) - -
-------- -------- ------- -------
Benefit obligation at end of period $ 5,730 $ 4,507 $ 529 $ 396
======== ======== ======= =======
Change in plan assets:
Fair value of plan assets at beginning of
period $ 4,927 $ 4,034 $ - $ -
Actual return on plan assets 104 360 - -
Employer contributions to plan 30 590 - -
Benefits paid (237) (57) - -
Other (4) - - -
-------- -------- ------- -------
Fair value of plan assets at end of period $ 4,820 $ 4,927 $ - $ -
======== ======== ======= =======

Funded status $ (910) $ 420 $ (529) $ (396)
Unrecognized prior service cost 1,077 250 - -
Unrecognized gain (175) (512) - -
-------- -------- ------- -------
Net asset (liability) recognized $ (8) $ 158 $ (529) $ (396)
======== ======== ======= =======

The following sets forth the amounts recognized in the Balance Sheets
(in thousands):

Pension Benefits
----------------
September 30, September 24,
2001 2000
----------------- -----------------
Funded status $ (910) $ 420
Intangible asset 1,077 184
Other gain (452) (488)
Deferred income taxes 111 17
Accrued other comprehensive loss 166 25
------- -------
Net (liability) asset recognized $ (8) $ 158
======= =======

The assumptions used in computing the preceding information are as
follows:

Fiscal
----------------------------

2001 2000 1999
-------- -------- --------

Pension Benefits
Discount rate 7.38% 7.75% 7.75%
Rate of return on plan assets 8.00% 8.00% 8.00%
Other Benefits
Discount rate 8.00% 8.00% 8.00%

The Company provides 401(k) savings and investment plans for the
benefit of non-union employees. Employee contributions are matched at the
discretion of the Company. The Company has a defined contribution benefit plan
for all non-union employees for which contributions and costs are based on
participant earnings. The costs for these plans were $2.0 million in Fiscal
2001, $1.9 million in Fiscal 2000, and $1.6 million in Fiscal 1999.

The Company also participates in multi-employer pension and 401(k)
saving plans for certain of its union employees. Contributions to these plans,
at a defined rate per hour worked were $1.0 million in Fiscal 2001, $1.8 million
in Fiscal 2000, and $0.9 million in Fiscal 1999.

17. CONTINGENCIES

The Company is subject to legal proceedings and other claims arising in
the ordinary course of its business. The Company maintains insurance coverage of
types and in amounts which it believes to be adequate and believes that it is
not presently a party to any litigation, the outcome of which could reasonably
be expected to have a material adverse effect on its financial condition or
results of operations.

INDEX TO FINANCIAL STATEMENT SCHEDULE

Page

Independent Auditors' Report 44

Schedule II - Valuation and Qualifying Accounts 45

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
The Fonda Group, Inc.

We have audited the financial statements of The Fonda Group, Inc. (the
"Company") as of September 30, 2001 and September 24, 2000, and for each of the
three fiscal years in the period ended September 30, 2001 and have issued our
report thereon dated November 19, 2001; such financial statements and report are
included in this Form 10-K. Our audits also included the financial statement
schedule listed in the accompanying index. This financial statement schedule is
the responsibility of the Company's management. Our responsibility is to express
an opinion based on our audits. In our opinion, such financial statement
schedule, when considered in relation to the basic financial statements taken as
a whole, presents fairly in all material respects, the information set forth
therein.

/s/DELOITTE & TOUCHE LLP
Baltimore, Maryland
November 19, 2001

SCHEDULE II

THE FONDA GROUP, INC.
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

Additions
-----------------------------
Balance at Charged to Charged
beginning of costs and to other Balance at
Classifications period expenses accounts (1) Deductions (2) end of period
- -------------------------------- ------------- -------------- ---------------- ---------------- ---------------

Allowance for Doubtful Accounts:

Fiscal 2001 $ 1,459 $ 1,481 $ (1,088) $ 902 $ 950

Fiscal 2000 2,049 1,696 (397) 1,889 1,459

Fiscal 1999 1,541 3,931 9 3,432 2,049

(1)Includes recoveries on accounts previously written-off and reclassifications.
(2)Accounts written-off.

Balance at Additions
beginning of Charged (credited) to Balance at
Classifications period costs and expenses Deductions (3) end of period
- --------------------- -------------- ----------------------- ---------------- ---------------

Inventory Allowances:

Fiscal 2001 $ 7,369 $ 5,731 $ 7,429 $ 5,671

Fiscal 2000 7,536 6,372 6,539 7,369

Fiscal 1999 6,309 8,249 7,022 7,536

(3) Inventory written-off.

SIGNATURES

Pursuant to the requirements of Section 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereto duly authorized on November 30, 2001.

THE FONDA GROUP, INC.
(Registrant)

By: /s/ DENNIS MEHIEL
-----------------
Dennis Mehiel
Chairman of the Board and CEO

Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed by the following persons in the capacities.

Signature Title(s)
--------- --------
/s/ DENNIS MEHIEL Chairman of the Board and Chief
- ----------------- Executive Officer (Principal Executive Officer)
Dennis Mehiel

/s/ ROBERT KORZENSKI President and Chief Operating Officer
- --------------------
Robert Korzenski

/s/ THOMAS ULEAU Executive Vice President and Director
- ----------------
Thomas Uleau

/s/ HANS H. HEINSEN Senior Vice President - Finance, Chief Financial
- ------------------- Officer and Treasurer (Principal
Hans H. Heinsen Financial and Accounting Officer)

/s/ HARVEY L. FREIDMAN Secretary and General Counsel
- ----------------------
Harvey L. Freidman

/s/ ALFRED B. DELBELLO Vice Chairman
- ----------------------
Alfred B. DelBello

Signature Title(s)
---------- --------

/s/ GAIL BLANKE Director
- ---------------
Gail Blanke

/s/ JOHN A. CATSIMATIDIS Director
- ------------------------
John A. Catsimatidis

/s/ CHRIS MEHIEL Director
- ----------------
Chris Mehiel

/s/ EDITH MEHIEL Director
- ----------------
Edith Mehiel

/s/ JEROME T. MULDOWNEY Director
- -----------------------
Jerome T. Muldowney

/s/ ALAN P. SCHEINKMAN Director
- ----------------------
Alan P. Scheinkman

/s/ G. WILLIAM SEAWRIGHT Director
- ------------------------
G. William Seawright

/s/ LOWELL P. WEICKER, JR. Director
- --------------------------
Lowell P. Weicker, Jr.