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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 333-50683

SF HOLDINGS GROUP, INC.
(Exact name of registrant as specified in its charter)

Delaware 13-3990796
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)

373 Park Avenue South, New York, New York 10016
(Address of principal executive office) (Zip Code)

Registrant's telephone number, including area code: 212/779-7448

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 December 12, 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 December 12, 2001:
SF Holdings Group, Inc. Class A Common Stock, $0.001 par value - 562,583 shares
SF Holdings Group, Inc. Class B Common Stock, $0.001 par value - 56,459 shares
SF Holdings Group, Inc. Class C Common Stock, $0.001 par value - 39,900 shares
SF Holdings Group, Inc. Class D Common Stock, $0.001 par value - No shares

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PART I

Item 1. BUSINESS

General

SF Holdings Group, Inc. ("SF Holdings" and with its subsidiaries, the
"Company") believes it is one of the largest producers and marketers of
disposable foodservice and food packaging products in North America with net
sales of approximately $1.3 billion in Fiscal 2001. The Company sells a broad
line of disposable paper, plastic and foam foodservice and food packaging
products at all major price points under both branded and private labels to
institutional foodservice and consumer foodservice customers, including large
national accounts. The Company conducts its business through two principal
operating subsidiaries, Sweetheart Holdings Inc. and its subsidiaries
("Sweetheart") and The Fonda Group, Inc. ("Fonda"), and markets its products
under its well recognized Sweetheart(R), Trophy(R), Sensations(R), Hoffmaster(R)
and Lily(R) brands.

The Company's product offerings cover a broad range within the
industry, including (i) paper, plastic and foam foodservice products, primarily
cups, lids, plates, bowls, plastic cutlery and food containers; (ii) tissue and
specialty foodservice products, primarily napkins, table covers and placemats;
and (iii) food packaging products, primarily containers for the dairy and food
processing industries. To enhance product sales, Sweetheart designs,
manufactures and leases container filling and lidding equipment to dairies and
other food processors to package food items in Sweetheart's containers at
customers' plants. Types of products packaged in Sweetheart's machines include
ice cream, factory-filled jacketed ice cream cones, cottage cheese, yogurt and
squeeze-up desserts. Sweetheart also sells paper converting equipment used
primarily in the manufacture of paper cups and food containers. This equipment
is manufactured in Sweetheart's machine shop and assembly plants located in
Owings Mills, Maryland and Kensington, Connecticut.

The Company sells its products to institutional foodservice and
consumer foodservice customers, including large national accounts, located
throughout the United States, Canada and Mexico. The Company has developed and
maintained long-term relationships with many of its customers. The Company's
institutional foodservice customers, serviced by Sweetheart and Fonda, include
(i) major foodservice distributors, (ii) national accounts, including quick
service restaurants and catering services, and (iii) schools, hospitals and
other major institutions. The Company's consumer foodservice customers, serviced
primarily by Fonda, include supermarkets, mass merchandisers, warehouse clubs,
party good stores and other retailers. The Company's food packaging customers,
serviced by Sweetheart, include national and regional dairy and food companies.

On March 12, 1998, the Company purchased 48% of Sweetheart's voting
stock and 100% of its non-voting stock, or 90% of the total outstanding stock,
from Sweetheart's then existing shareholders (the "Sweetheart Investment"). In
connection therewith, the then existing shareholders continued to hold
approximately 52% of the voting stock of Sweetheart of which American Industrial
Partners Capital Fund L.P. ("AIP") holds approximately 27%. In addition, on
March 12, 1998, Fonda became a wholly owned subsidiary of the Company.

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 the Company pursuant to a merger. The transaction was
accounted for in a manner similar to a pooling-of-interests.

Products

Sweetheart
Sweetheart's principle products include disposable hot and cold drink
cups, lids, food containers, plates, bowls, cutlery and straws. Paper, foam and
plastic cups, lids and straws represent the largest part of Sweetheart's North
American disposable foodservice operations. The largest single product type
within this category is cups, which are offered in various sizes (ranging from 3
to 64 ounces) for both hot and cold beverages. Brand names of Sweetheart's
principal beverage service products include: Sweetheart(R), Lily(R), Trophy(R),
Preference(TM), Jazz(R), Gallery(R), Clarity(R), Lumina(R), ClearLight(R), and
Go Cups(TM).

Sweetheart offers a variety of other disposable foodservice products
which include paper, foam, and plastic plates and bowls, portion cups and
cutlery. These products are sold to a broad array of commercial and on-site
foodservice operators.

Sweetheart also offers carry-out service products consisting of paper
and plastic tubs, containers, lids, and hinged foam containers. Sweetheart
believes it is one of the largest manufacturers of paper tubs for chicken,
popcorn and take-out foods in North America. Munchie(R), Flexstyle(R),
Highlights(R), Maximizers(TM), and Scoop Cup are some of Sweetheart's carry-out
service brands.

Other products include Sweetheart's Flex-E-Form(TM) straight-wall paper
manufacturing technology which is a process used to package food products and
Flex-Guard(TM), a paper spiral wound tamper-evident lid. In addition, Sweetheart
provides foodservice customers with retail packages sold through retailers under
various Sweetheart and private label brands.

To enhance product sales, Sweetheart designs, manufactures and leases
container filling and lidding equipment to dairies and other food processors to
package food items in Sweetheart's containers at customers' plants. Sweetheart's
filling and lidding equipment is leased to customers under the trade names
Auto-Pak, Flex-E-Fill(R) and FoodPac(R). Types of products packaged in
Sweetheart's machines include ice cream, factory-filled jacketed ice cream
cones, cottage cheese, yogurt and squeeze-up desserts. Sweetheart also designs
and manufactures cup-making equipment. This equipment is manufactured in
Sweetheart's machine shop and assembly plants located in Owings Mills, Maryland
and Kensington, Connecticut.

Fonda
Fonda'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, brown paper lunch bags and cutlery, and (iii) party goods accessory
products, such as banners, cello bags, gift sacks, and invitations. Fonda
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. 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.
Fonda offers a variety of cup and lid combinations for both hot and cold
beverages. Fonda's hot and cold cups are sold to both institutional foodservice
and consumer foodservice customers. Fonda 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. Fonda sells
placemats, traycovers, doilies, fluted baking products, portion control cups,
brown paper lunch bags and cutlery to both institutional foodservice and
consumer foodservice customers. Fonda also produces a non-skid traycover that
serves the needs of healthcare

and airline use.

Fonda manufactures and purchases party goods 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.

Operations

As part of the Company's ongoing cost reduction and profit improvement
initiatives, the Company began a program to rationalize, consolidate and improve
its manufacturing facilities. The Company believes the consolidation program
will improve the efficiency of Sweetheart's manufacturing sites without any
adverse impact on customer service levels.

Marketing and Sales

Sweetheart's institutional and consumer foodservice products are
primarily sold to national accounts and through distributors to other end-users.
Food packaging customers include national and regional dairies and food
companies. Consumer products are sold to grocery, convenience and club stores.
Sweetheart focuses its marketing efforts on both the distributor and the
end-user customer. Sweetheart tailors programs, consisting of products, price,
promotional and merchandising materials, training and sales/marketing coverage
to effectively meet the specific needs of target customers and markets.
Sweetheart sells these programs through both a direct sales organization and
brokers. Sweetheart supports this process through the development of innovative
new products, materials and processes, while leveraging its strong brand
recognition and national network of manufacturing and distribution centers.

Fonda'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. Fonda sells its products through an internal sales force and
independent brokers. Fonda sells to both institutional foodservice customers
which include restaurants, hotels, airlines, hospitals, and other non-retail
foodservice institutions and consumer foodservice customers which include
supermarkets, mass merchants, drug stores, warehouse clubs, specialty party, and
other retail stores.

Production

The Company's plants operate on a variety of manufacturing schedules.
Paper operations generally run five days per week at 24 hours per day, with
Saturday scheduled as an overtime day when needed to meet customer demand.
Plastic operations generally run seven days per week at 24 hours per day. Due to
customer demand, the Company's overall plant utilization historically is
substantially higher during late spring and summer than during fall and winter
with the tissue plants at their highest utilization during the fall season. See
"Item 2. Properties".

Raw Materials and Suppliers

Raw materials are critical components of the Company's cost structure.
Principal raw materials for the Company's paper and tissue operations include
solid bleached sulfate paperboard, bond paper, wax bond paper and napkin tissue
obtained directly from major North American manufacturers. Other material
components include wax, adhesives, coatings, corrugated boxes, poly bags, and
inks. Paperboard, napkin

tissue, bond paper and waxed bond paper are purchased in "jumbo" rolls and then
printed and converted into smaller rolls or blanks for processing into final
products. The principal raw material for the Company's plastic operations is
plastic resin (polystyrene, polypropylene and high and low density polyethylene)
purchased directly from major petrochemical companies and other resin suppliers.
Resin is processed and formed into cups, cutlery, meal service products, straws,
lids and containers. In addition, the Company manufactures foam products by
melting polystyrene plastic and adding a blowing agent that is then passed
through a die and extruded into sheets of plastic foam material. The foam is
then formed into cups, bowls and plates.

The Company has a number of suppliers for substantially all of its raw
materials and believes that current sources of supply for its raw materials are
adequate to meet its requirements.

Competition

All of the markets in which the Company sells its products are
extremely competitive. Because of the low barriers to entry for new competitors,
the level of competition has been and may continue to be intense as new entrants
attempt to gain market share. The Company's competitors include large
multinational companies as well as regional manufacturers, some of whom have
greater financial and other resources than the Company. The marketplace for the
Company's products is fragmented and includes competitors who compete across the
full line of the Company's products, as well as those who compete against a
limited number of the Company's products. A few of the Company's competitors are
also vertically integrated into the production of paper or plastic raw materials
and have greater access to financial and other resources.

Sweetheart's primary competitors in its institutional and consumer
foodservice customer base include: Dixie Foodservice Corp. (a division of the
Georgia Pacific Corp.), Solo Cup Co., International Paper Food Service Business
(a division of International Paper Co.), Dart Container Corporation, and Pactiv
Corporation. Major competitors in its food packaging customer base include:
Hutamaki, Inc., Landis Plastics Inc., Norse Dairy Systems Inc., and Berry
Plastics, Inc.

Fonda'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, no one customer accounted for more than 10% of the
Company's net sales. During Fiscal 2001, sales to Sweetheart's customers in
Canada and Mexico constituted approximately 7.5% and 0.6% of its net sales,
respectively. During Fiscal 2001, net sales to Sweetheart's five largest
customers represented approximately 32.8% of its total net sales. Of these five
customers, only one customer represents more than 10% of net sales, Perseco NA
Inc., which accounted for 12.1% of net sales. Sweetheart has no written contract
with this customer. Sales are made to Perseco pursuant to a purchase order, the
terms of which are dependent on market conditions. During Fiscal 2001, sales to
Fonda's five largest customers represented approximately 21.2% of its gross
sales. During Fiscal 2001, no one customer accounted for more than 10% of
Fonda's net 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.

Sweetheart sells to a diversified customer base consisting of primarily
of (i) major food service distributors such as Sysco Corporation and Alliant
Foodservice Inc., (ii) quick service chains, such as McDonald's Corporation and
Burger King Corporation, and convenience stores, such as 7 Eleven, Inc., (iii)
national catering services, such as ARAMARK Corporation and Sodexho Marriott
Services. Our food packaging containers and lids are sold to national and
regional dairy and food companies such as Ben &

Jerry's Homemade, Inc., Blue Bell Creameries, L.P., Suiza Foods Corporation and
Prairie Farms Dairy, Inc.

Fonda 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, foreign and local 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 that, except as noted below,
there are currently no material pending investigations at the Company's plants
and sites relating to environmental matters. However, there can be no assurance
that 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 be material. Sweetheart and Fonda spent less than $200,000 and $100,000
for environmental compliance in Fiscal 2001, respectively, and anticipate
spending less than those amounts for environmental compliance in Fiscal 2002.

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. Sweetheart
and Fonda expect to complete the replacement of all such units within the next
five to ten years, at an estimated total cost of less than $0.8 million and $0.5
million, respectively.

Some of the Company's facilities contain asbestos. Although there is no
current legal requirement to remove such asbestos, the Company has an ongoing
monitoring and maintenance program to maintain and/or remove such asbestos as
appropriate to prevent the release of friable asbestos. The Company does not
believe the costs associated with such program will be material to its business
or financial condition.

Certain of the Company's facilities are located in states that have
regulations governing emissions of nitrogen oxide. While the Company believes
that these regulations do not apply to its operations, the Company will continue
to monitor its operations for compliance.

On July 13, 1999, Sweetheart received a letter from the Environmental
Protection Agency ("EPA") identifying Sweetheart, among numerous others, as a
"potential responsible party" under the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended ("CERCLA"), at a site in
Baltimore, Maryland. The EPA letter states that it does not constitute a final
determination by EPA concerning the liability of Sweetheart or any other entity.
Sweetheart responded to the EPA that upon review of its files it had no
information with respect to any dealings with that site. On December 20, 1999,
Sweetheart received an information request letter from the EPA, pursuant to
CERCLA, regarding a Container Recycling Superfund Site in Kansas City, Kansas
and in January 2000 Sweetheart responded to such inquiry. In both instances,
Sweetheart has received no further communication from the EPA. Sweetheart denies
liability and has no reason to believe the final outcomes will have a material
adverse effect on Sweetheart's financial condition or results of operations.
However, no assurance can be given about the ultimate effect on the Company.

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. Enactment of more stringent laws or regulations or a more
strict interpretation of existing laws and regulations may require additional
expenditures by the Company, some of which could be material.

Technology and Research

Sweetheart maintains a facility for the development of new products and
product line extensions in Owings Mills, Maryland and a facility for machinery
design & building in Kensington, Connecticut. Sweetheart maintains a staff of
engineers and technicians who are responsible for product quality, process
control, improvement of existing products, development of new products,
equipment, and processes and technical assistance in adhering to environmental
rules and regulations. Sweetheart continually reviews concepts and ideas to
expand its proprietary manufacturing technology, further automate its
manufacturing operations and develop improved manufacturing processes,
equipment, and products. During Fiscal 2001, Sweetheart initiated a program to
automate certain of its manufacturing operations which Sweetheart expects to be
completed in Fiscal 2002. These initiatives include the implementation of a
robotic transfer and sorting system for finished goods; automatic packaging;
information systems upgrades; and enhancements to printing processes. Sweetheart
believes that these initiatives will further streamline its manufacturing
operations. Also, Sweetheart initiated new products and new production
capabilities which will enable its plastics operations to address existing and
emerging market opportunities.

Fonda tests new product concepts at its facilities located in Oshkosh,
Wisconsin, Appleton, Wisconsin and St. Albans, Vermont. Fonda'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. Fonda 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, Sweetheart employed 6,370 persons, of whom 5,265
persons were hourly employees. Approximately 92.1% of the employees are located
at facilities in the United States. Sweetheart currently has collective
bargaining agreements in effect at its facilities in Springfield, Missouri;
Augusta, Georgia; Kensington, Connecticut; Toronto, Canada and Cuautitlan,
Mexico. The collective bargaining agreements 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. As of
September 30, 2001, approximately 25.5% of Sweetheart's hourly employees were
covered by these collective bargaining agreements. The current expiration dates
of the Springfield, Augusta, Kensington, Toronto and Cuautitlan collective
bargaining agreements are February 24, 2004, October 31, 2002, September 30,
2004, November 30, 2003 and December 31, 2001, respectively.

At September 30, 2001, Fonda employed 1,864 persons, of whom 1,383 were
hourly employees. Fonda 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 Fonda'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 14, 2001 and June 11, 2004,
respectively. Fonda believes that it will be successful in renegotiating the
Indianapolis collective bargaining agreement, however, there are no assurances
that the renegotiation will be successful. 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 and Canada. 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
-------- -------------- -------------- -------- ------------------

Sweetheart Facilities:
Augusta, Georgia (2 facilities)............. M/W 339,000 O
W 202,500 L March 31, 2023

Chicago, Illinois (2 facilities)............ M/W 902,000 O
W 735,500 L February 28, 2003

Conyers, Georgia (2 facilities)............. M/W 350,000 O
W 555,000 O

Cuautitlan, Mexico (3 facilities)........... M 24,200 L September 3, 2009
W 25,800 L September 3, 2009
W 28,800 L April 1, 2010

Dallas, Texas .............................. M/W 1,304,000 O

Hampstead, Maryland......................... W 1,034,000 L May 30, 2020

Kensington, Connecticut (4 facilities)...... M/W 96,000 L(2) May 15, 2010
M/W 112,000 L(2) May 15, 2010
W 30,000 L(2) May 15, 2010
W 34,100 L(2) June 1, 2002

Lafayette, Georgia.......................... M/W 147,000 L(3) April 30, 2003

Manchester, New Hampshire................... M/W 160,000 O(4)

Ontario, California......................... W 396,000 L May 1, 2014

Owings Mills, Maryland (2 facilities)....... M/W 1,533,000 O
M/W 267,000 O

Scarborough, Ontario, Canada M/W 400,000 O
W 125,000 L March 31, 2003

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

Fonda Facilities:
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(6)

- ----------
(1) M-Manufacturing; W-Warehouse; M/W-Manufacturing and Warehouse in same
facility.
(2) Subject to a purchase option which expires May 15, 2005.
(3) Subject to a purchase option which expires April 30, 2002.
(4) On September 25, 2001, the Company entered into a purchase and sale
agreement pursuant to which it has agreed to sell this facility. The
Company expects to consummate this sale by the end of December 2001.
(5) On February 20, 2001, the Company's Board of Directors approved plans for
the closure and sale of the Somerville, Massachusetts facility. The Company
has reclassified this facility to assets held for sale.
(6) Subject to capital lease. (See Note 19 of the Notes to Consolidated
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

During Fiscal 2001, Sweetheart experienced a casualty loss at its
Somerville, Massachusetts facility. Sweetheart carries business interruption
insurance and has filed a claim with the insurance company. Settlement of the
recovery amount is to be determined.

was denied in January 1999. Sweetheart expects to complete paying out the
termination liability and associated expenses in connection with the Plan
termination by December 31, 2001. As of September 30, 2001, Sweetheart disbursed
$19.6 million in termination payments. The estimate of the total termination
liability and associated expenses, less payments, exceeds the assets set aside
in the Plan by $0.4 million, which amount has been fully reserved by the
Company.

On November 29, 2001, the liquidating trustee of Ace Baking Company,
Limited Partnership, filed a Complaint for Avoidance of Transfers and
Disallowance or Subordination of Claims against Sweetheart in the United States
Bankruptcy Court Eastern District of Wisconsin. The Complaint, among other
things, seeks to avoid a portion of the consideration paid by Ace Baking Company
to Sweetheart, as a fraudulent transfer, in connection with the sale by
Sweetheart of its bakery business to Ace Baking in November 1997. In addition,
the Trustee alleges that certain subsequent payments made by Ace Baking to
Sweetheart in connection with such sale are avoidable preferences. We believe
that the Trustee's claims are without merit and we intend to vigorously defend
this matter. In addition, we have no reason to believe that the final outcome of
this matter will have a material adverse effect on our financial condition or
results of operations. However, we cannot assure you of the ultimate effect on
us, if any, given the early stage of this matter.

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.

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

There is no established public trading market for SF Holdings'
common stock. SF Holdings has never paid cash dividends on its common stock and
does not anticipate paying any cash dividends in the foreseeable future. SF
Holdings' indenture governing the $144.0 million aggregate principal amount at
maturity of 12 3/4% Senior Secured Discount Notes due 2008 (the "Discount
Notes") and the instruments governing the indebtedness of Sweetheart and Fonda
limit the payment of dividends or other distributions to SF Holdings. SF
Holdings currently intends to retain future earnings to fund the development and
growth of its business.

As of December 12, 2001, there were four, one and two holders of SF
Holdings' Class A, Class B and Class C Common Stock, respectively.

Item 6. SELECTED HISTORICAL CONSOLIDATED 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").

During Fiscal 2000 and Fiscal 1997, the Company incurred $0.8 million
and $3.5 million, respectively, of costs related to the early retirement of
debt. These charges are shown as an extraordinary loss (net of $0.6 million and
$2.5 million) of income taxes, respectively, on the Consolidated Statements of
Operations and Other Comprehensive Loss.

Fiscal
------------------------------------------------------------------------------
(In thousands) 2001 2000 1999 TP 1998 (1) 1998 (2) 1997 (3)
------------ ------------ ------------- ------------ ------------ ------------

Operating Data:
Net sales $ 1,316,672 $ 1,276,888 $ 1,182,004 $ 275,652 $ 622,917 $ 317,018
Cost of sales 1,144,802 1,090,799 1,023,135 246,587 528,148 238,287
------------ ----------- ------------- ------------ ------------ ------------
Gross profit 171,870 186,089 158,869 29,065 94,769 78,731
Selling, general and administrative
expenses 114,684 113,320 118,654 23,853 73,188 56,053
Restructuring charge (credit) 504 1,153 (512) - 3,895 -
Asset impairment expense 2,244 - - - - -
Other income, net (9,391) (448) (307) (597) (14,734) (1,608)
------------ ------------ ------------- ------------ ------------ ------------
Operating income 63,829 72,064 41,034 5,809 32,420 24,286
Interest expense, net 53,799 65,312 70,173 15,135 32,999 11,140
------------ ------------ ------------- ------------ ------------ ------------
Income (loss) before taxes,
minority interest and
extraordinary loss 10,030 6,752 (29,139) (9,326) (579) 13,146
Income tax expense (benefit) 5,506 4,114 (9,561) (4,370) 1,245 5,491
Minority interest in subsidiaries 1,196 1,649 (897) (497) (2,085) -
Extraordinary loss, net of tax - 843 - - - 3,495
------------ ------------ ------------- --------- ------------ ------------
Net income (loss) $ 3,328 $ 146 $ (18,681) $ (4,459) $ 261 $ 4,160
============ ============ ============= ============ ============ ============
Balance Sheet Data (at end of
period):
Property, plant and equipment, net $ 265,795 $ 263,368 $ 387,309 $ 423,117 $ 434,815 $ 59,261
Total assets 932,385 881,129 937,210 972,581 988,566 212,546
Long-term debt (4) 542,575 434,967 380,706 673,984 663,611 122,368
Minority interest in subsidiaries 6,427 3,169 1,520 2,417 2,914 -
Exchangeable preferred stock 48,209 41,794 36,291 31,444 30,680 -
Preferred Stock B, Series 2 15,000 15,000 - - - -
Redeemable common stock 2,356 2,286 2,217 2,150 2,139 -
Shareholders' equity (deficit) (48,175) (41,964) (21,367) (299) 7,673 18,166

(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 Fonda at the Mill of its obligation, among
other things, to supply steam to the Mill (the "Steam Contract").
(3) Fonda 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 11 of the Notes to Consolidated Financial Statements

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

Forward-looking statements in this filing, including those in the Notes
to Consolidated 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.

General

SF Holdings was formed in December 1997 as a holding company to
facilitate the Sweetheart Investment. The Company conducts all of its operations
through its principal operating subsidiaries, Sweetheart and Fonda, and
therefore has no significant cash flows or operations independent of such
subsidiaries.

On December 3, 1999, CEG, an affiliate of the Company in the
disposable party goods products business, became an 87% owned subsidiary of the
Company pursuant to a merger. The transaction was accounted for in a manner
similar to a pooling-of-interests.

Sweetheart and Fonda are converters and marketers of disposable paper,
plastic and foam foodservice and food packaging products. The prices for each
subsidiary's raw materials fluctuate. When raw material prices decrease, selling
prices have historically decreased. The actual impact on each company from raw
materials price changes is affected by a number of factors including the level
of inventories at the time of a price change, the specific timing and frequency
of price changes, and the lead and lag time that generally accompanies the
implementation of both raw materials and subsequent selling price changes. In
the event that raw materials prices decrease over a period of several months,
each company may suffer margin erosion on the sale of such inventory.

Each of Fonda and Sweetheart's business is seasonal with a majority of
its net cash flow from operations realized during the last six months of the
fiscal year. Sales for such periods reflect the high seasonal demands of the
summer months when outdoor and away-from-home consumption increases. In the
event that Fonda's and/or Sweetheart's cash flow from operations is insufficient
to provide working capital necessary to fund their respective requirements,
Fonda and/or Sweetheart will need to borrow under their respective credit
facilities or seek other sources of capital. The Company believes that funds
available under such credit facilities together with cash generated from
operations, will be adequate to provide for each company's respective cash
requirements for the next twelve months.

Fiscal 2001 Compared to Fiscal 2000

Net sales increased $40.0 million, or 3.1% to $1.32 billion in Fiscal
2001 compared to $1.28 billion in Fiscal 2000. The following analysis includes
sales from Sweetheart to Fonda and sales from Fonda to Sweetheart which were
eliminated in consolidation.

Sweetheart Results
Net sales increased $28.6 million, or 3.0%, (including intercompany
sales to Fonda of $21.7 million and $16.7 million for Fiscal 2001 and Fiscal
2000, respectively) to $981.3 million in Fiscal 2001 compared to $952.7 million
in Fiscal 2000 reflecting a 0.5% increase in sales volume and a 2.5% increase in
average realized sales price. Realized selling prices increased as a result of a
shift in product mix. Sales volume increased as a result of the incremental
sales obtained from Sweetheart's acquisition of an 80% interest in Global Cup,
S.A. De C.V. and its subsidiaries ("Global Cup") in April 2001. Net sales to
Canadian customers increased $4.6 million, or 6.7%, primarily due to increased
sales volume of existing products to national accounts, while prices remained
flat.

Fonda Results
Net sales increased $15.3 million, or 4.4%, (including intercompany to
Sweetheart of $10.1 million and $11.8 million for Fiscal 2001 and Fiscal 2000,
respectively) 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 Fonda'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 acquisition of
Springprint Medallion, a division of Marcal Paper Mills, Inc. ("Springprint").

Gross profit decreased $14.2 million, or 7.6%, to $171.9 million in
Fiscal 2001 compared to $186.1 million in Fiscal 2000. As a percentage of net
sales, gross profit decreased to 13.1% in Fiscal 2001 from 14.6% in Fiscal 2000.

Sweetheart Results
Gross profit decreased $17.4 million, or 14.6%, to $101.4 million in
Fiscal 2001 compared to $118.8 million in Fiscal 2000. As a percentage of net
sales, gross profit decreased to 10.3% in Fiscal 2001 from 12.5% in Fiscal 2000.
The decrease in gross profit is primarily attributable to the effects of the
Sale-Leaseback Transaction whereby, in Fiscal 2000, Sweetheart sold certain of
its production equipment and is leasing back this equipment under an operating
lease. Consequently, cost of sales increased due to higher rent expense which
has been partially offset by lower depreciation expense. Specifically, rent
expense increased by $12.0 million net of a reduction in depreciation.
Additionally, gross profit declined due to an increase in energy costs of $4.4
million and transportation costs of $4.9 million.

Fonda Results
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 acquisition of Springprint. This increase was partially
offset by higher raw material and energy costs.

Selling, general and administrative expenses increased $1.4 million, or
1.2%, to $114.7 million in Fiscal 2001 compared to $113.3 million in Fiscal
2000. This increase resulted from Sweetheart's increase in wages of $2.5
million, increase in brokerage fees of $0.8 million and $0.7 million of on going
operational expenses as a result of the Fiscal 2001 Global Cup acquisition.
These increases were partially offset by a $2.3 million reduction in bad debt
expense and a reduction in legal fees of $0.7 million from Sweetheart. As a
percentage of net sales, selling, general and administrative expenses decreased
to 8.7% in Fiscal 2001 from 8.9% in Fiscal 2000.

Restructuring charge decreased $0.7 million to a charge of $0.5 million
in Fiscal 2001 compared to a charge of $1.2 million in Fiscal 2000. During
Fiscal 2001, Fonda established a restructuring reserve of $0.5 million in
conjunction with the planned consolidation of Fonda's administrative offices for
the CEG in Indianapolis, Indiana into Fonda'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. During Fiscal 2000, Sweetheart established a restructuring reserve of $0.7
million in conjunction with the planned elimination of Sweetheart's centralized
machine shop operation from which 53 positions would be eliminated. The plan was
completed and approved by management on January 10, 2000 and announced to
employees on March 7, 2000. Severance payments of $0.2 million, were paid in
both the third and fourth quarters of Fiscal 2000. Also, during the fourth
quarter of Fiscal 2000, Sweetheart reversed $0.2 million of this reserve as a
result of 12 employees being placed into open positions within Sweetheart.
During Fiscal 2000, Fonda 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,
Fonda recognized $0.7 million of charges for severance and related costs.

Asset impairment expense was $2.2 million in Fiscal 2001 as a result of
Sweetheart's evaluation of the usefulness of certain equipment in connection
with the proposed consolidation of the Manchester, New Hampshire and
Springfield, Missouri facilities with other existing facilities.

Other income, net increased $9.0 million to $9.4 million in Fiscal 2001
compared to $0.4 million in Fiscal 2000. Sweetheart recognized $10.3 million due
to the amortization of the deferred gain in conjunction with the Sale-Leaseback
Transaction. This gain was partially offset by $1.6 million in expenses related
to the relocation of Sweetheart's Somerville, Massachusetts facility to North
Andover, Massachusetts and Fonda's $0.2 million loss on the sale of a building
in St. Albans, Vermont.

Operating income decreased $8.3 million to $63.8 million in Fiscal 2001
compared to $72.1 million in Fiscal 2000 due to the reasons described above.

Interest expense, net decreased $11.5 million, or 17.6%, to $53.8
million in Fiscal 2001 compared to $65.3 million in Fiscal 2000. This decrease
is attributed to lower interest rates on higher outstanding revolving credit
balances and the June 2000 redemption of the Sweetheart Senior Secured Notes.

Income tax expense increased $1.4 million to $5.5 million in Fiscal
2001 compared to $4.1 million in Fiscal 2000 as a result of higher pre-tax
earnings. The effective rate for Fiscal 2001 was 55% compared to 61% in 2000.
Both the 2001 and the 2000 effective tax rates reflect certain non-deductible
costs relating to the investment in Sweetheart and the related financing.

Minority interest decreased $0.4 million to an expense of $1.2 million
in Fiscal 2001 compared to an expense of $1.6 million in Fiscal 2000 due to
lower profits at the respective subsidiaries and the termination of any CEG's
operating activity.

Net income (loss) increased $3.2 million, or over 3,000%, to $3.3
million income in Fiscal 2001 compared to $0.1 million income in Fiscal 2000 due
to the reasons described above.

Fiscal 2000 Compared to Fiscal 1999

Net sales increased $94.9 million, or 8.0%, to $1.3 billion in Fiscal
2000 compared to $1.2 billion in Fiscal 1999. The following analysis includes
sales from Sweetheart to Fonda and sales from Fonda to Sweetheart which were
eliminated in consolidation.

Sweetheart Results
Net sales increased $88.9 million, or 10.3%, (including intercompany
sales to Fonda of $16.7 million and $6.8 million for Fiscal 2000 and Fiscal
1999, respectively) to $952.7 million in Fiscal 2000 compared to $863.8 million
in Fiscal 1999 reflecting a 7.1% increase in sales volume and a 2.9% increase in
average sales prices to domestic customers. During Fiscal 2000, Sweetheart
experienced an increase in sales volume of those products with higher average
selling prices. The increase in average realized sales price reflects a
successful effort by Sweetheart to raise prices to institutional foodservice
customers and to sell a mix of units with higher average selling prices. Sales
volumes to institutional foodservice customers increased 6.4% primarily as a
result of Sweetheart's focus on revenue growth with key customers. Sales volumes
to food packaging customers increased 0.5% while average realized sales price
increased 1.3%, primarily as a result of increased pricing resulting from raw
material cost increases. Net sales to Canadian customers increased $8.4 million,
or 14.1%, primarily due to increased sales volume of existing products to
national accounts and the introduction of several new products.

Fonda Results
Net sales increased $22.7 million, or 6.9%, (including intercompany to
Sweetheart of $11.8 million and $4.3 million for Fiscal 2000 and Fiscal 1999,
respectively) to $352.0 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 $27.2 million, or 17.1%, to $186.1 million in
Fiscal 2000 compared to $158.9 million in Fiscal 1999. As a percentage of net
sales, gross profit increased to 14.6% in Fiscal 2000 from 13.4% in Fiscal 1999.

Sweetheart Results
Gross profit increased $18.8 million, or 18.8%, to $118.8 million in
Fiscal 2000 compared to $100.0 million in Fiscal 1999. As a percentage of net
sales, gross profit increased to 12.5% in Fiscal 2000 from 11.6% in Fiscal 1999.
This improvement is attributable to a shift in sales towards a more profitable
product mix in combination with increased sales volume, improved manufacturing
efficiencies and higher average selling prices, partially offset by increased
raw material costs.

Fonda Results
Gross profit increased $8.3 million, or 14.0%, to $67.7 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 $5.4 million, or
4.5%, to $113.3 million in Fiscal 2000 compared to $118.7 million in Fiscal
1999. As a percentage of net sales, selling, general and administrative expenses
decreased to 8.9% in Fiscal 2000 from 10.0% in Fiscal 1999. This decrease is due
primarily to lower spending in the areas of legal and outside consulting
services for Sweetheart. In Fiscal 1999 results of operations reflected an
increased bad debt write-off associated with bankruptcy filings by two of the
Fonda's top 25 customers. This decrease was supplemented by savings in Fiscal
2000 resulting from the consolidation of the CEG business.

Restructuring charge (credit) increased to a charge of $1.2 million in
Fiscal 2000 compared to a credit of $0.5 million in Fiscal 1999. During Fiscal
2000, Sweetheart established a $0.5 million restructuring reserve in conjunction
with the planned elimination of Sweetheart's centralized machine shop, primarily
for severance and related costs in connection with workforce reductions. Fonda
incurred a restructuring expense of $0.7 million in Fiscal 2000 in connection
with the November 2000 closing of the Maspeth, New York facility which will
result in the elimination of 130 positions by 2001.

Other (income) expense, net was $0.4 million of income in Fiscal 2000
compared to $0.3 million of income in Fiscal 1999. In Fiscal 2000, a $2.8
million gain was recognized due to the amortization of the deferred gain in
conjunction with the Sale-Leaseback Transaction, coupled with a $0.7 million
gain on the sale of a warehouse facility in Owings Mills, Maryland. These gains
were partially offset by a $0.7 million management fee to American Industrial
Partners Capital Fund, L.P. ("AIP"), a shareholder of Sweetheart, a $1.4 million
expense accrual in connection with the Aldridge liability, a one-time write-off
of a $1.0 million unsecured note receivable issued in connection with the Fiscal
1998 sale of the bakery business due to the bankruptcy of the borrower, and a
$0.2 million loss was incurred as a result of the sale of a building in St.
Albans, Vermont and various pieces of machinery and equipment.

Operating income increased $31.1 million to $72.1 million in Fiscal
2000 compared to $41.0 million in Fiscal 1999 due to the reasons described
above.

Interest expense, net decreased $4.9 million, or 7.0%, to $65.3 million
in Fiscal 2000 compared to $70.2 million in Fiscal 1999. This decrease is
attributable to lower interest rates on lower outstanding balances under the
Company's revolving credit facilities and the June 2000 redemption of the
Sweetheart Senior Secured Notes.

Income tax expense (benefit) increased $13.7 million to an expense of
$4.1 million in Fiscal 2000 compared to a benefit of $9.6 million in Fiscal
1999. The effective rate for Fiscal 2000 was 61% compared to 33% in 1999. Both
the 2000 and the 1999 effective tax rates reflect certain non-deductible costs
relating to the investment in Sweetheart, the related financing and the
proportionate results of both Fonda and Sweetheart.

Minority interest increased $2.5 million to an expense of $1.6 million
in Fiscal 2000 compared to a credit of $0.9 million in Fiscal 1999 due to
increased earning from Sweetheart and CEG.

Extraordinary loss on the early extinguishment of debt was $0.8 million
net of the income tax benefit in Fiscal 2000 resulting from the redemption of
Sweetheart's Senior Secured Notes and CEG's long term debt. ( See Note 23 in the
"Notes to Consolidated Financial Statements").

Net income (loss) increased $18.8 million, or 100.5%, to $0.1 million
income in Fiscal 2000 compared to $18.7 million loss in Fiscal 1999 due to the
reasons described above.

Liquidity And Capital Resources

Historically, the Company has relied on cash flow from operations and
revolving credit borrowings to finance its working capital requirements and
capital expenditures. In Fiscal 2001, the Company funded its capital
expenditures from the combination of 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 in Fiscal 2001 was $12.1
million compared to net cash provided by operating activities of $9.4 million in
Fiscal 2000. The increase in operating cash flow in Fiscal 2001 is primarily a
result of increased net income and the Company's improved management of its
receivables and inventory levels.

Net cash used in investing activities in Fiscal 2001 was $72.2 million
compared to net cash provided by investing activities of $183.8 million in
Fiscal 2000. This decrease is due primarily to the receipt of proceeds from the
Sale-Leaseback Transaction on June 15, 2000 whereby Sweetheart Cup Company Inc.
("Sweetheart Cup") and Sweetheart Holdings Inc. ("Sweetheart Holdings") sold
certain production equipment located in Owings Mills, Maryland, Chicago,
Illinois and Dallas, Texas to several owner participants for a fair market value
of $212.3 million. The decrease is partially offset by business acquisitions for
an aggregate purchase price of $40.7 million in Fiscal 2001.

Net cash provided by financing activities in Fiscal 2001 was $65.7
million compared to net cash used in financing activities of $191.0 million in
Fiscal 2000. Net cash provided in Fiscal 2001 primarily consisted of borrowings
under the credit facilities. This decrease is primarily due to the redemption of
Sweetheart's $190.0 million principal amount of the Senior Secured Notes in
Fiscal 2000. The net proceeds generated from the Sale-Leaseback Transaction were
used in part to redeem these notes, repay debt in connection with the
acquisition of Sherwood Industries, Inc. ("Sherwood") and its subsidiaries and
repay a portion of the outstanding balance under Sweetheart's U.S. Credit
Facility.

Working capital increased $79.2 million to $254.2 million at September
30, 2001 from $175.0 million at September 24, 2000. These changes resulted
primarily from reduced payroll expenses, the settlement of Sweetheart's Aldridge
litigation liability and the refinancing of Fonda's Credit Facility.

Capital expenditures for Fiscal 2001 were $31.7 million compared to
$25.3 million in Fiscal 2000. Capital expenditures in Fiscal 2001 included $11.5
million for new production equipment, $14.4 million for facility improvements
and $0.8 million for management information systems, with the remaining
consisting primarily of routine capital improvements. Funding for Fiscal 2001
capital expenditures was primarily provided by cash generated from operations.

On August 28, 2001, Fonda consummated the purchase 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, Fonda
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 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 Fonda expects to be completed within one year, amounts and allocations of
costs recorded may require adjustment based upon information coming to the
attention of Fonda that is not

currently available.

On April 5, 2001, Sweetheart purchased an 80% interest in Global Cup.
Global Cup manufactures, distributes and sells paper cups and lids throughout
Mexico and exports to other Latin American countries. Sweetheart assumed the
liabilities and obligations of Global Cup arising under contracts or leases that
are either assets purchased by Sweetheart or a part of the accounts payable. The
aggregate purchase price for the assets and working capital was $12.2 million
which was paid in cash, subject to a post-closing working capital adjustment.
The Global Cup acquisition has resulted in goodwill of $3.9 million. As a result
of the potential post closing working capital adjustment, the final calculation
of which Sweetheart expects to be completed within one year, amounts and
allocations of costs recorded may require adjustment based upon information
coming to the attention of Sweetheart that is not currently available.

On September 25, 2000, pursuant to an asset purchase agreement dated
August 9, 2000 (the "Springprint Agreement"), Fonda purchased substantially all
of the property, plant and equipment, intangibles and net working capital of
Springprint. In addition, pursuant to the Springprint Agreement, Fonda has
assumed the liabilities and obligations of Springprint arising under contracts
or leases that are either assets purchased by Fonda 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.

In connection with a sale-leaseback transaction, on June 15, 2000,
Sweetheart Cup and Sweetheart Holdings sold certain production equipment located
in Owings Mills, Maryland, Chicago, Illinois and Dallas, Texas to several owner
participants for a fair market value of $212.3 million. The proceeds from this
sale were used in part to redeem the Senior Secured Notes, repay debt in
connection with the acquisition of Sherwood and repay a portion of the
outstanding balance under the U.S. Credit Facility.

Pursuant to a lease dated as of June 1, 2000 (the "Lease") between
Sweetheart Cup and State Street Bank and Trust Company of Connecticut, National
Association ("State Street"), as trustee, Sweetheart Cup leases the production
equipment sold in connection with the sales lease-back transaction from State
Street as owner trustee for several owner participants, through November 9,
2010. Sweetheart Cup has the option to renew the Lease for up to four
consecutive renewal terms of two years each. Sweetheart Cup also has the option
to purchase such equipment for fair market value either at the conclusion of the
Lease term or November 21, 2006. Sweetheart's obligations under the Lease are
collateralized by substantially all of Sweetheart's property, plant and
equipment owned as of June 15, 2000. The Lease contains various covenants, which
prohibit, or limit, among other things, dividend payments, equity repurchases or
redemption, the incurrence of additional indebtedness and certain other business
activities.

Sweetheart is accounting for the sale-leaseback transaction as an
operating lease, expensing the $32.0 million annualized rental payments and
removing the property, plant and equipment sold from its balance sheet. A
deferred gain of $107.0 million was realized from this sale and will be
amortized over 125 months, which is the term of the Lease. The taxable gain in
the amount of $147.8 million has allowed Sweetheart to utilize a substantial
portion of its net operating loss carry-forward. See "--Net Operating Loss
Carryforwards".

Sweetheart has a revolving credit facility as amended (the "U.S. Credit
Facility") that, subject to borrowing base limitations, allows for a maximum
revolving credit borrowing of $145 million through June 15, 2005 and a term loan
of $25 million that requires equal monthly principal payments of $0.4 million
through June 2005. Both the term loan and the revolving credit facility have an
accelerated maturity date of July 1, 2003 if Sweetheart's Senior Subordinated
Notes due September 1, 2003 are not refinanced before June 1, 2003. Borrowings
under the revolving credit facility bear interest, at Sweetheart's election, at
a rate

equal to (i) LIBOR plus 2.00% or (ii) a bank's base rate plus 0.25%, plus
certain other fees. Borrowings under the term loan bear interest, at
Sweetheart's election, at a rate equal to (i) LIBOR plus 2.50% or (ii) a bank's
base rate plus 0.50%, plus certain other fees. In Fiscal 2001, the weighted
average annual interest rate for the U.S. Credit Facility was 7.58%. The credit
facility is collateralized by Sweetheart's inventories and receivables with the
term loan portion of the credit facility further collateralized by certain
production equipment. As of September 30, 2001, $31.6 million was available
under the revolving credit facility and the term loan balance was $12.9 million.
The fee for outstanding letters of credit is 2.00% per annum and there is a
commitment fee of 0.375% per annum on the daily average unused amount of the
commitments. As of September 30, 2001, LIBOR was 2.64% and the bank's base rate
was 6.00%.

On August 28, 2001, Fonda 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 Fonda'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 Fonda. 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
Fonda. 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.

On June 19, 2001, Sweetheart's Canadian subsidiary refinanced its
credit agreement (the "Canadian Credit Facility") which provides for a term loan
facility of Cdn $15 million (approximately US $9.5 million) and a revolving
credit facility of up to Cdn $15 million (approximately US $9.5 million). The
term borrowings are payable quarterly through May 2004. Both the revolving
credit and term loan borrowings have a final maturity date of June 15, 2004. The
Canadian Credit Facility is secured by all existing and thereafter acquired real
and personal tangible assets of Lily and net proceeds on the sale of any of the
foregoing. Borrowings under the Canadian Credit Facility bear interest at an
index rate plus 1.75% with respect to the revolving credit facility and an index
rate plus 2.00% with respect to the term loan borrowings. As of September 30,
2001, Cdn $1.0 million (approximately US $0.6 million) was available under the
revolving facility and the term loan balance was Cdn $14.5 million
(approximately US $9.2 million) under the Canadian Credit Facility.

In 1993, Sweetheart Cup issued $110 million of 10-1/2% Senior
Subordinated Notes due 2003 ("Senior Subordinate Notes") with interest payable
semi-annual. The Senior Subordinated Notes are subject to redemption at the
option of Sweetheart, in whole or in part, at the redemption price equal to 100%
of the outstanding principal amount, plus accrued interest to the redemption
date. The Senior Subordinated Notes are subordinate in right of payment to the
prior payment in full of all borrowings under Sweetheart's U.S. Credit Facility,
all obligations under the Lease, and all other indebtedness not otherwise
prohibited. The Senior Subordinated Notes contain various covenants which
prohibit, or limit, among other things, asset sales, change of control, dividend
payments, equity repurchases or redemption, the incurrence of additional
indebtedness, the issuance of disqualified stock, certain transactions with
affiliates, the creation of additional liens and certain other business
activities.

In Fiscal 1997, Fonda issued $120 million of 9-1/2% Senior Subordinated
Notes due 2007 (the "Fonda Notes") with interest payable semi-annually. Payment
of the principal and interest is subordinate in right to payment of Fonda's
Credit Facility. Fonda may, at its election, redeem the Fonda Notes at any time
after March 1, 2002 at a redemption price equal to a percentage (104.750% after
March 1, 2002 and declining annually to 100% after March 1, 2005) of the
principal amount thereof plus accrued interest. The Fonda 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 Fonda
Notes at a redemption price equal to 101% of the principal amount thereof plus
accrued interest.

On March 12, 1998, the Company issued units consisting of $144 million
aggregate principal amount at maturity of 12 3/4% Senior Secured Discount Notes
due 2008 (the "Discount Notes") and 28,800 shares of Class C Common Stock for
net proceeds of $77.5 million. Until March 15, 2003, accrued interest on the
Discount Notes will not be paid but will accrete semi-annually, thereby
increasing the carrying value of the Discount Notes. The fair value of such
Class C Common Stock ($2.4 million) at the date of issuance was recorded as
common stock and paid-in capital with a corresponding reduction in the carrying
value of the Discount Notes. The resulting discount, as well as $4.5 million of
financing fees included in other assets, is being amortized as additional
interest expense over the term of the Discount Notes.

Also on March 12, 1998, the Company issued units consisting of $30
million of 13 3/4% Exchangeable Preferred Stock due March 13, 2009 (the
"Exchangeable Preferred") and 11,100 shares of Class C Common Stock. Until March
12, 2003, cumulative dividends on the Exchangeable Preferred are paid quarterly,
at the Company's option, subject to certain restrictions, either in cash or by
the issuance of additional shares of Exchangeable Preferred. Thereafter,
dividends will be payable in cash, subject to certain exceptions. The fair value
of such Class C Common Stock ($0.9 million) at the date of issuance was recorded
as common stock and paid-in capital with a corresponding reduction in the
carrying value of the Exchangeable Preferred. The resulting discount is being
amortized as additional preferred stock dividends over the term of the
Exchangeable Preferred. The Exchangeable Preferred is exchangeable at the
Company's option into 13 3/4% subordinated notes due March 15, 2009.

As of December 12, 2001, all cumulative dividends on the Exchangeable
Preferred have been paid by the issuance of additional shares of Exchangeable
Preferred. The value of the Exchangeable Preferred, was $48.2 million and $41.8
million as of September 30, 2001 and September 24, 2000, respectively. The
Exchangeable Preferred is not entitled to any vote, except as required in the
Company's certificate of incorporation and by law.

On March 12, 1998, the Company authorized 100,000 shares of Preferred
Stock Class B, $.001 par value. On March 12, 1998, 15,000 shares of Class B
Series 1 preferred stock, $.001 par value, were issued to CEG in consideration
for a $15 million investment. On December 3, 1999, 15,000 shares of Class B
Series 2 preferred stock were issued in connection with the merger with CEG in
consideration for 87% of shares of CEG's common stock with a liquidation value
of $15 million.

The Class B Series 1 and Series 2 preferred stock are not entitled to
receive dividends. The holder of Class B Series 1 preferred stock is not
entitled to any vote, except as otherwise provided by law. The holders of Class
B Series 2 preferred stock are entitled to one vote for each share held in all
matters voted on by the shareholders. Each series of preferred stock is
convertible, at any time, into 133,494 shares of Class A Common Stock and is
required to be redeemed on March 13, 2010, provided funds are legally available
for such purposes.

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.

A lawsuit entitled Aldridge v. Lily-Tulip, Inc. Salary Retirement Plan
Benefits Committee and Fort Howard Cup Corporation, Civil Action No. CV 187-084,
was filed in state court in Georgia in April 1987 and later removed to federal
court. The Plaintiffs claimed, among other things, that Sweetheart wrongfully
terminated the Lily Tulip, Inc. Salary Retirement Plan (the "Plan") in violation
of the Employee Retirement Income Security Act of 1974, as amended. The relief
sought by Plaintiffs was to have the Plan termination declared ineffective. The
United States Court of Appeals for the Eleventh Circuit (the "Circuit Court")
ruled that the Plan was lawfully terminated on December 31, 1986, and judgment
was entered dismissing the case in March 1996. The Circuit Court affirmed the
judgment entered in favor of Sweetheart. Plaintiffs filed a petition for writ of
certiorari to the United States Supreme Court, which was denied in January 1999.
Sweetheart expects to complete paying out the termination liability and
associated expenses in connection with the Plan termination by December 31,
2001. As of September 30, 2001, Sweetheart had disbursed $19.6 million in
termination payments. The estimate of the total termination liability and
associated expenses, less payments, exceeds the assets set aside in the Plan by
$0.4 million, which amount has been fully reserved by Sweetheart.

The Company believes that cash generated by each of Fonda's and
Sweetheart's operations, combined with amounts available under its respective
credit facilities in addition to funds generated by asset sales should be
sufficient to fund each of Fonda's and Sweetheart's respective capital
expenditures needs, debt service requirements, payments in conjunction with
lease commitments and working capital needs, including Sweetheart's termination
liabilities under the Plan in the next twelve months.

The Company is contemplating various strategic options which may
include a restructuring of its business debt and capital structure, including,
among other things, the public sale or private placement of debt or equity
securities of the Company or its subsidiaries, joint venture transactions, new
borrowings, the

refinancing of the Company's existing debt agreements, open market purchases,
tender offers or exchange offers of the Company's outstanding securities. There
can be no assurances that any of these strategic options will be consummated.

Net Operating Loss Carryforwards

As of September 30, 2001, Sweetheart had approximately $28 million of
net operating loss ("NOL") carryforwards for federal income tax purposes, which
expire in 2018. Although Sweetheart expects that sufficient taxable income will
be generated in the future to realize these NOLs, there can be no assurance that
future taxable income will be generated to utilize such NOLs.

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 consolidated
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
consolidated 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 consolidated
financial statements.

Item 7a QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

Sweetheart is exposed to market risk in the ordinary course of
business, which consists primarily of interest rate risk associated with our
variable rate debt. All borrowing under the US Credit Facility and Canadian
Credit Facility, each of which contains a revolving and term credit facility,
bear interest at a variable rate. Borrowings under the revolving credit facility
bear interest, at Sweetheart's election, at a rate equal (i) LIBOR plus 2.00% or
(ii) a bank's base rate plus 0.25%, plus certain fees. Borrowings under the term
loan bear interest, at Sweetheart's election, at a rate equal to (i) LIBOR plus
2.50% or (ii) a bank's base rate plus 0.50%, plus certain other fees. Borrowings
under the Canadian Credit Facility bear interest at an index rate plus 1.75%
with respect to the revolving credit borrowings and an index rate

plus 2.00% with respect to the term loan borrowings. As of September 30, 2001,
the outstanding indebtedness under the US Credit Facility was $126.2 million and
the Canadian Credit Facility was $16.6 million in US dollars. Based upon these
amounts, the annual net income would change by approximately $0.9 million for
each one percentage point change in the interest rates applicable to our
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.

Fonda 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
Fonda. 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 Fonda'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 SF Holdings as of December 12, 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

Thomas Uleau 57 Vice Chairman and Senior Vice President

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

Harvey L. Friedman 59 Secretary and General Counsel

Michael Hastings 54 Senior Vice President

Robert Korzenski 47 Senior Vice President

Alfred B. DelBello 65 Director

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. Mehiel has been Chairman of the Board and Chief Executive Officer
of the Company since December 1998. He has served as Chairman and Chief
Executive Officer of Sweetheart Holdings and Sweetheart Cup since March 1998.
Mr. Mehiel is also Chairman and Chief Executive Officer of Fonda and Creative
Expressions Group ("CEG"). 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. Uleau has been Vice Chairman and Senior Vice President of the
Company since March 1, 2001. Prior thereto he was President, Chief Operating
Officer and a Director of the Company since February 1998. He is also Executive
Vice President and a director of Sweetheart Holdings and Sweetheart Cup since
March 1, 2001 and prior thereto he served as President, Chief Operating Officer
and a director of Sweetheart Holdings and Sweetheart Cup since March 1998. Mr.
Uleau has also served as Executive Vice President of Fonda since March 1998 and
a director of Fonda since 1988. He has also served in a variety of executive
officer positions at Fonda since 1988. He served as Executive Vice President and
Chief Financial Officer of Four M from 1989 through 1993 and its Chief Operating
Officer in 1994. He has been Executive Vice President of CEG since 1996 and as a
director of CEG.

Mr. Heinsen has been Senior Vice President, Chief Financial Officer and
Treasurer of the Company

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

Mr. Friedman has been Secretary and General Counsel of the Company
since February 1998 and Secretary and General Counsel of Fonda since May 1996.
He also served as a director of Fonda from 1985 to January 1997. He has been
Secretary and General Counsel of Sweetheart Holdings and Sweetheart Cup since
March 1, 2001. Mr. Friedman is also Secretary and General Counsel of CEG 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. Hastings has been Senior Vice President of the Company since
January 2001. He has been President of Sweetheart Holdings and Sweetheart Cup
since March 1, 2001 and prior thereto was Senior Vice President - Sales and
Marketing for Sweetheart Holdings and Sweetheart Cup since March 1998. Mr.
Hastings was also Senior Vice President of Fonda. Prior to joining the
Sweetheart, Mr. Hastings served as President of the Fonda Division of Fonda,
which he joined in May 1995. From December 1990 to April 1995, Mr. Hastings
served as Vice President of Sales and Marketing and as a director of Anchor
Packaging Company, a manufacturer of institutional films and thermoformed
plastic packaging. Prior to joining Anchor Packaging Company, Mr. Hastings was
employed for over 25 years in a variety of positions in the paper and plastic
industries, including sales, marketing and plant operations management at Scott
Paper Company and Thompson Industries.

Mr. Korzenski has been Senior Vice President of the Company since
January 2001. He has been President and Chief Operating Officer of Fonda since
March 1998. Prior to that, he had been Senior Vice President of Fonda since
January 1997 and President of the Hoffmaster division since its acquisition by
Fonda 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. DelBello has served as a director of the Company since February
1998, Vice Chairman of Fonda since January 1997 and a director of Fonda since
1990. 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 February 1998
and as a director of Fonda since January 1997. 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
February 1998 and as a director of Fonda since January 1997. 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 February 1998 and a Director of Fonda since January 1997. Mr.
Mehiel is a co-founder of Four M and was Executive Vice President, Chief
Operating Officer and a director of Four M from September 1995 until July 2000
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., ("Fibre Marketing") a waste paper recovery business
which he co-founded, and of which he was President from 1994 to January 1996.
Fonda owns a 25% interest in Fibre Marketing. 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 February
1998 and as a director of Fonda since 1990. 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 is 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 February
1998 and as a director of Fonda since January 1997. 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 February
1998 and as a director of Fonda since January 1997. 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. Weickel
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 United States Tobacco,
Inc.

Compensation of Directors

Directors of the Company who are not employees of SF Holdings or
directors of Fonda or Sweetheart 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. Directors who
are employees of the Company or directors of Fonda or Sweetheart 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, 2000 and 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 Officer 2001 735,576 340,000 - 412,540 (3)
2000 946,280 600,000 - 1,507
1999 524,650 415,000 - 1,743

Thomas Uleau
Vice Chairman and Senior Vice 2001 433,173 116,411 - 12,724
President 2000 420,129 500,000 126,516 18,201
1999 348,654 445,000 - 78,037

Harvey Friedman
Secretary and General Counsel 2001 287,850 115,000 - -
2000 195,700 200,000 - -
1999 136,800 25,000 - -

Michael Hastings
Senior Vice President 2001 266,602 100,000 - 11,232
2000 245,512 235,000 126,516 23,182
1999 199,231 255,000 - 49,722

Hans H. Heinsen
Senior Vice President, Chief 2001 255,428 176,411 - 17,534
Financial Officer and Treasurer 2000 251,102 235,000 40,178 8,065
1999 235,140 217,000 - 13,547

Robert Korzenski
Senior Vice President 2001 244,543 140,000 - 11,480
2000 239,578 235,000 126,516 20,998 (4)
1999 204,616 75,000 - 31,332 (5)

(1) The Fonda SAR Plan was terminated on September 14, 2000, effective as of
October 1, 1999. No SARs were issued during Fiscal 2000 or Fiscal 1999.
All vested SARs were redeemed on September 20, 2000. See "--Stock
Appreciation Rights".
(2) Reflects matching contributions under 401(k) Plans, long-term disability
and life insurance premiums paid (See "Employee Benefit Plans").
(3) Reflects $2,580 of life insurance premiums and $409,960 for personal
expenses paid by Sweetheart.
(4) Included in other compensation is $11,726 paid for relocation by Fonda.
(5) Included in other compensation is $17,565 paid for relocation by Fonda.

Stock Option Plan

Pursuant to the Sweetheart Investment, Dennis Mehiel currently holds
71,515 currently exercisable options to purchase Class A Common Stock of SF
Holdings.

During Fiscal 2001, the Company adopted the SF Holdings Group, Inc.
Share Incentive Plan in which the Company may grant options to its employees to
purchase up to 95,995 shares of the Company's Class D Common Stock. The Company
has reserved 95,995 shares of Class D Common Stock for issuance upon exercise of
these options. The exercise price of each option is determined by the Company at
the date of grant and an option's maximum term is 10 years.

During Fiscal 2001, the Company granted options to purchase shares of
its common stock to certain employees of the Company. Certain officers of the
Company were issued options that vested one-third immediately with the remaining
options vesting over two years, while all other eligible employees were issued
options that vest over a period of three years. The exercise prices of the
options granted to the officers and certain employees were below the fair market
value of the Company's common stock at the date of the grant. During the vesting
periods, these discounts of $1.6 million are being amortized as compensation
expense and credited to additional paid-in capital by the Company. Amortization
expense relating to stock options was $1.2 million for Fiscal 2001.

In Fiscal 2001, the weighted average fair value of the stock
options, issued to the officers was $1.4 million 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
5.75%, and expected live of option grants of two years. The weighted average
fair value of the stock options, issued to all other eligible employees was $0.5
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 three years.

The following table summarizes information about grants of stock
options that have been made during Fiscal 2001 to each of the officers:

Option Grants in Fiscal 2001
- ------------------------------------------------------------------------------------------------------
Individual Grants
-----------------------------
Number of
Securities Percent of Total Grant
Underlying Options Granted Exercise Market Date
Options to Employees in Price per Price at Present
Granted Fiscal 2001 Share Grant Date Expiration Date Value
- ---------------- ----------- ---------------- ---------- ---------- ----------------- ----------

Thomas Uleau 5,000 12.7% $ 93.75 $ 141.14 February 5, 2011 $57.44

Harvey Friedman 5,000 12.7% $ 93.75 $ 141.14 February 5, 2011 $57.44

Michael Hastings 5,000 12.7% $ 93.75 $ 141.14 February 5, 2011 $57.44

Hans H. Heinsen 5,000 12.7% $ 93.75 $ 141.14 February 5, 2011 $57.44

Robert Korzenski 5,000 12.7% $ 93.75 $ 141.14 February 5, 2011 $57.44

Stock Appreciation Rights

On September 14, 2000 Fonda 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 Fonda 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 - -

Employee Benefit Plans

A majority of Sweetheart's employees ("Participants") are covered under
a 401(k) defined contribution plan. Effective January 1, 2000, Sweetheart
provides a matching contribution of 100% on the first 2% of a participant's
salary and 50% on the next 4% of a participant's salary. Sweetheart's match is
currently limited to participant contributions up to 6% of participant salaries.
In addition, Sweetheart is allowed to make discretionary contributions. Certain
Company employees are covered under defined benefit plans. Benefits under these
plans are generally based on fixed amounts for each year of service.

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

On January 1, 1997, Fonda adopted a defined contribution benefit plan.
All non-union employees and certain union employees are covered under Fonda'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 Fonda. Fonda also participates in
multi-employer pension plans for certain of its union employees.

The executive officers of SF Holdings are not covered under any of the
Sweetheart or Fonda defined benefit plans. Rather, such persons are covered
under defined contribution plans only.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The following table sets forth certain information as of December 12,
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 officers of the Company, and all directors and officers of the
Company, as a group.

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

Dennis Mehiel
373 Park Avenue South
New York City, 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 (6 persons) 755,270 (3) 75.8%

(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 of 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 $7.7 million of scrap paper to
Fibre Marketing, a waste paper recovery business in which Fonda has a 25%
interest and which the Chief Executive Officer co-founded, and was President
from 1994 to January 1996. Included in accounts receivable as of September 30,
2001 is $2.0 million due from Fibre Marketing. Other sales to affiliates during
Fiscal 2001 were not significant.

During Fiscal 2001, the Company purchased $7.6 million of corrugated
containers from Box USA and $1.0 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 $0.6 million
due to Box USA. Other purchases from affiliates during Fiscal 2001 were not
significant.

At September 30, 2001, Fonda has a loan receivable from its Chief
Executive Officer totaling $0.3 million plus accrued interest at 5.06%. At
September 24, 2000, Fonda had a loan receivable from its Chief Executive Officer
totaling $0.3 million plus accrued interest at 10%. During Fiscal 1999, Fonda
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. CEG has advanced the
Chief Executive Officer $1.9 million. The

loans are payable upon demand.

During Fiscal 2000, Sweetheart entered into a lease agreement with D&L
Development, LLC, an entity in which Sweetheart's Chief Executive Officer
indirectly owns 47%, to lease a warehouse facility in Hampstead, Maryland. In
Fiscal 2001 and 2000, rental payments under this lease were $3.6 million and
$0.7 million, respectively. Annual rental payments under the 20 year lease are
$3.7 million for the first 10 years of the lease and $3.8 million annually,
thereafter.

During Fiscal 2000, Sweetheart began leasing a facility in North
Andover, Massachusetts from D&L Andover Property, LLC, an entity in which
Sweetheart's Chief Executive Officer indirectly owns 50%. In Fiscal 2001, rental
payments under this lease were $1.4 million. Annual rental payments under the 20
year lease are $1.5 million in the first year, which escalates at a rate of 2%
each year thereafter.

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

Fonda leases a building in Jacksonville Florida from Fonda'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 Fonda to purchase
the facility for $1.5 million, subject to a CPI-based escalation, until July 31,
2006. In Fiscal 1998, Fonda 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.

During Fiscal 2000, the Company sold $7.6 million of scrap paper to
Fibre Marketing. Included in accounts receivable as of September 24, 2000 is
$1.3 million due from Fibre Marketing. Other sales to affiliates during Fiscal
2000 were not significant.

During Fiscal 2000, the Company purchased $9.7 million of corrugated
containers from Box USA, $0.2 million of other services from Four M and $0.9
million of travel services from Emerald Lady, Inc. Included in accounts payable,
as of September 24, 2000, is $0.1 million due to Box USA. Other purchases from
affiliates during Fiscal 2000 were not significant.

During Fiscal 1999, the Company sold $4.1 million of scrap paper to
Fibre Marketing. Included in accounts receivable as of September 26, 1999 is
$1.1 million due from Fibre Marketing. Other sales to affiliates during Fiscal
1999 were not significant.

During Fiscal 1999, the Company purchased $7.9 million of corrugated
containers from Box USA and $0.9 million of travel services from Emerald Lady,
Inc.. Included in accounts payable, as of September 26, 1999, is $0.5 million
due to Box USA. Other purchases from affiliates during Fiscal 1999 were not
significant.

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, Fonda also
acquired other CEG assets in exchange for outstanding trade payables owed to
Fonda by CEG. In connection with the CEG Asset Purchase Agreement, Fonda
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.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES 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 Consolidated Financial
Statements."

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

Exhibits 2.1 through 10.8 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. 333-50683). Exhibits
10.9 through 10.18 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. 333-51563).

2.1 Investment Agreement, dated as of December 29, 1997, among the
Stockholders of Sweetheart Holdings Inc. ("Sweetheart
Holdings"), Creative Expressions Group, Inc. ("CEG") and SF
Holdings Group, Inc. ("SF Holdings").
3.1 Restated Certificate of Incorporation of the Company.
3.2 By-laws of the Company.
3.3 Amended and Restated Certificate of Incorporation of SF
Holdings Group, Inc.
3.4 Certificate of Designation of Class B Series 2 Preferred Stock
of SF Holdings Group, Inc.
4.1 Indenture, dated as of March 12, 1998, between SF Holdings and
The Bank of New York.
4.2 Form of 12 3/4% Series A and Series B Senior Secured Discount
Notes, dated as of March 12,1998 (incorporated by reference to
Exhibit 4.1).
4.3 Registration Rights Agreement, dated as of March 12, 1998,
among SF Holdings, Bear Stearns & Co. Inc. and SBC Warburg
Dillon Read Inc. (the "Initial Purchasers").
4.4 Registration Rights Agreement, dated as of March 20, 1998,
between the Company, American Industrial Partners Management
Company, Inc. ("AIPM") and Bear, Stearns & Co., Inc.
4.5 Form of Certificate of Exchangeable Preferred Stock.
4.6 Form of Indenture between the Company and The Bank of New York
governing the 13 3/4% Subordinated Notes due March 15, 2009.
4.7 Paragraph A of Article Fourth of the Restated Certificate of
Incorporation of the Company (incorporated by reference to
Exhibit 3.1).
10.1 Stockholders' Rights Agreement, dated as of March 12, 1998,
among SF Holdings and the persons listed on Schedule I thereto.
10.2 Stockholders' Agreement, dated as of March 12, 1998, among
Sweetheart Holdings,

SF Holdings and the Original Stockholders.
10.3 Stockholders Agreement, dated as of March 12, 1998, among SF
Holdings and the Initial Purchasers.
10.4 Pledge Agreement, dated as of March 12, 1998, between SF
Holdings and the Bank of New York.
10.5 Tax Sharing Agreement, dated as of March 12, 1998, among SF
Holdings and The Fonda Group, Inc. ("Fonda").
10.6 Second Restated Management Services Agreement, dated as of
March 12, 1998, among Sweetheart Holdings, Sweetheart Cup
Company Inc. ("Sweetheart Cup"), American Industrial Partners
Management Company, Inc. ("AIPM") and SF Holdings.
10.7 Amendment No. 1 to Second Restated Management Services
Agreement, dated as of March 12, 1998, among Sweetheart
Holdings, Sweetheart Cup, AIPM and SF Holdings.
10.8 Assignment and Assumption Agreement, dated as of March 12,
1998, between SF Holdings and Fonda.
10.9 Stockholders Agreement, dated as of March 20, 1998, between the
Company and Bear, Stearns & Co., Inc.
10.19 Asset Purchase Agreement, dated as of December 6, 1999 between
Creative Expressions Group, Inc. and Fonda.
10.20 Agreement and plan of merger, dated as of December 3, 1999,
amongst SF Holdings, Inc., SF Holdings Acquisition Holdings
Corp. and Creative Expressions Group, Inc..
27.1* Financial Data Schedule.
-------------
* filed herein.

(b) Reports on Form 8-K during fiscal year ended September 30, 2001:

A report on Form 8-K was filed on March 15, 2001 under Item 5.

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page

Independent Auditors' Report 35

Consolidated Balance Sheets as of September 30, 2001
and September 24, 2000 36

Consolidated Statements of Operations and Other Comprehensive Loss
for Fiscal Years 2001, 2000 and 1999 37
Consolidated Statements of Cash Flows
for Fiscal Years 2001, 2000 and 1999 38

Consolidated Statements of Shareholders' Equity
for Fiscal Years 2001, 2000 and 1999 39

Notes to Consolidated Financial Statements 40

INDEPENDENT AUDITORS' REPORT

Board of Directors
SF Holdings Group, Inc.

We have audited the accompanying consolidated balance sheets of SF
Holdings Group, Inc. and subsidiaries (the "Company") as of September 30, 2001
and September 24, 2000, and the related consolidated statements of operations
and other comprehensive loss, shareholders' deficit, and cash flows for each of
the three fiscal years in the period ended September 30, 2001. These
consolidated financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these consolidated
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 consolidated 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 their operations and their
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
December 7, 2001

SF HOLDINGS GROUP, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands)

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

Assets
Current assets:
Cash and cash equivalents $ 11,869 $ 6,352
Cash in escrow 8 300
Receivables, less allowances of $3,395 and $3,534 167,855 155,684
Due from affiliates 1,347 1,286
Inventories 225,021 226,657
Deferred income taxes 24,007 24,347
Refundable income taxes 665 622
Spare parts 23,273 24,066
Assets held for sale 10,210 -
Other current assets 9,372 5,888
----------- -----------
Total current assets 473,627 445,202

Property, plant and equipment, net 265,795 263,368
Deferred income taxes 38,107 37,694
Spare parts 12,077 8,313
Goodwill, net 118,307 106,108
Other assets 24,472 20,444
----------- -----------

Total assets $ 932,385 $ 881,129
=========== ===========

Liabilities and Shareholders' Deficit
Current liabilities:
Accounts payable $ 96,072 $ 91,068
Accrued payroll and related costs 46,892 55,486
Other current liabilities 49,260 56,114
Current portion of deferred gain on sale of assets 10,275 10,275
Current portion of long-term debt 16,942 57,266
----------- -----------
Total current liabilities 219,441 270,209

Commitments and contingencies (See Notes)

Deferred income taxes 4,252 4,209
Long-term debt 542,575 434,967
Deferred gain on sale of assets 83,672 93,948
Other liabilities 58,628 57,511
----------- -----------

Total liabilities 908,568 860,844
----------- -----------

Minority interest in subsidiaries 6,427 3,169
Exchangeable preferred stock 48,209 41,794
Preferred Stock B, Series 2 15,000 15,000
Redeemable common stock 2,356 2,286
Shareholders' deficit (48,175) (41,964)
----------- -----------

Total liabilities and shareholders' deficit $ 932,385 $ 881,129
=========== ===========

See accompanying Notes to Consolidated Financial Statements.

SF HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
AND OTHER COMPREHENSIVE LOSS
(In thousands)

Fiscal

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

Net sales $ 1,316,672 $ 1,276,888 $ 1,182,004
Cost of sales 1,144,802 1,090,799 1,023,135
------------ ------------ ------------

Gross profit 171,870 186,089 158,869

Selling, general and administrative expenses 114,684 113,320 118,654
Restructuring charge (credit) 504 1,153 (512)
Asset impairment expense 2,244 - -
Other income, net (9,391) (448) (307)
------------ ------------ ------------

Operating income 63,829 72,064 41,034

Interest expense, net of interest income of $148,
$1,346 and $620 53,799 65,312 70,173
------------ ------------ ------------

Income (loss) before income tax expense
(benefit), minority interest and
extraordinary loss 10,030 6,752 (29,139)

Income tax expense (benefit) 5,506 4,114 (9,561)
Minority interest in subsidiaries' income (loss) 1,196 1,649 (897)
------------ ------------ ------------

Income (loss) before extraordinary loss 3,328 989 (18,681)

Extraordinary loss on debt extinguishment (net of
income tax benefit of $562) - (843) -
------------ ------------ ------------

Net income (loss) 3,328 146 (18,681)

Payment-in-kind dividends on exchangeable
preferred stock 6,415 5,503 4,847
------------ ------------ ------------

Net loss applicable to common shareholders $ (3,087) $ (5,357) $ (23,528)
============ ============ ============

Other comprehensive loss:

Net income (loss) $ 3,328 $ 146 $ (18,681)
Foreign currency translation adjustment (392) (122) 272
Minimum pension liability adjustment (net of
income tax (benefit) expense of $(2,317), $(33)
and $1,503) (3,476) (49) 2,255
------------ ------------ ------------

Comprehensive loss $ (540) $ (25) $ (16,154)
============ ============ ============

See accompanying Notes to Consolidated Financial Statements.

SF HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

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

CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ 3,328 $ 146 $ (18,681)
Adjustments to reconcile net income (loss) to net
cash provided by operating activities:
Depreciation and amortization 33,524 50,025 56,862
Amortization of deferred gain (10,276) (2,813) -
Asset impairment expense 2,244 - -
Deferred income tax expense (benefit) 2,799 (1,100) (9,118)
Gain on sale of assets (362) (878) (1,150)
Interest accreted on debt 14,208 11,984 11,046
Minority interest in subsidiaries' income (loss) 1,196 1,649 (897)
Changes in operating assets and liabilities (net of
business acquisitions):
Receivables (7,860) (17,508) (794)
Due from affiliates (61) (748) 305
Inventories 10,780 (30,204) (65)
Other current assets (5,218) (4,051) 173
Accounts payable and accrued expenses (26,485) (3,045) 4,297
Other, net (5,718) 5,901 9,531
------------ ------------ ------------
Net cash provided by operating activities 12,099 9,358 51,509
------------ ------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Additions to property, plant and equipment (31,701) (25,269) (37,776)
Payments for business acquisitions (40,665) (12,411) -
Proceeds from sale of property, plant and equipment 120 221,448 7,435
------------ ------------ ------------
Net cash (used in) provided by investing activities (72,246) 183,768 (30,341)
------------ ------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under credit facilities 67,510 38,273 (47,008)
Net (repayments) borrowings of other debt (1,798) (228,927) 14,658
Increase in cash escrow (17) (206,318) (10,821)
Decrease in cash escrow 309 206,018 16,285
Redemption of minority interests (340) - -
------------ ------------ ------------
Net cash provided by (used in) financing activities 65,664 (190,954) (26,886)
------------ ------------ ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 5,517 2,172 (5,718)
CASH AND CASH EQUIVALENTS, beginning of year 6,352 4,180 9,898
------------ ------------ ------------
CASH AND CASH EQUIVALENTS, end of year $ 11,869 $ 6,352 $ 4,180
============ ============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid $ 37,070 $ 53,733 $ 56,103
============ ============ ============
Income taxes paid $ 2,484 $ 3,673 $ 2,608
============ ============ ============
SUPPLEMENTAL NON-CASH INVESTING ACTIVITY:
Note Payable associated with business acquisition $ - $ 2,914 $ -
============ ============ ============

See accompanying Notes to Consolidated Financial Statements.

SF HOLDINGS GROUP, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' DEFICIT
(In thousands)

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

Balance, September 28, 1998 $ 7 $ 3,357 $ (449) $ (3,214) $ (299)

Net loss - - (18,681) - (18,681)
Preferred dividend - - (4,847) - (4,847)
Accretion of redeemable common stock - - (67) - (67)
Minimum pension liability adjustment - - - 2,255 2,255
Translation adjustment - - - 272 272
---- -------- ---------- --------- ----------

Balance, September 26, 1999 7 3,357 (24,044) (687) (21,367)

Issuance Preferred B, Series 2 - (3,357) (11,643) - (15,000)
Net income - - 146 - 146
Preferred dividend - - (5,503) - (5,503)
Accretion of redeemable common stock - - (69) - (69)
Minimum pension liability adjustment - - - (49) (49)
Translation adjustment - - - (122) (122)
---- -------- ---------- --------- ----------

Balance, September 24, 2000 7 - (41,113) (858) (41,964)

Net income - - 3,328 - 3,328
Equity based compensation - 1,154 - - 1,154
Redemption of minority interests - (340) - - (340)
Preferred dividend - - (6,415) - (6,415)
Accretion of redeemable common stock - - (70) - (70)
Minimum pension liability adjustment - - - (3,476) (3,476)
Translation adjustment - - - (392) (392)
---- -------- ---------- --------- ----------

Balance, September 30, 2001 $ 7 $ 814 $ (44,270) $ (4,726) $ (48,175)
==== ======== ========== ========= ==========

See accompanying Notes to Consolidated Financial Statements.

SF HOLDINGS GROUP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

As used in these notes, unless the context otherwise requires, the
"Company" shall refer to SF Holdings Group, Inc. ("SF Holdings") and its
subsidiaries, including Sweetheart Holdings Inc. ("Sweetheart") and The Fonda
Group, Inc. ("Fonda").

The Company is one of the largest producers of plastic and paper
disposable foodservice and food packaging products in North America. In Fiscal
2001, 2000 and 1999, the Company had net sales of approximately $1.3 billion,
$1.3 billion and $1.2 billion, respectively. The Company sells a broad line of
disposable paper, plastic and foam foodservice and food packaging products under
both branded and private labels to institutional foodservice and consumer
foodservice customers, including large national accounts, and participates at
all major price points. The Company conducts its business through two principal
operating subsidiaries, Sweetheart and Fonda and markets its products under its
well recognized Sweetheart(R), Trophy(R), Sensations(R), Hoffmaster(R) and
Lily(R) brands. In addition, Sweetheart designs, manufactures and leases
container filling equipment for use by dairies and other food processors. This
equipment is specifically designed by Sweetheart to fill and seal containers in
customers' plants.

1. SIGNIFICANT ACCOUNTING POLICIES

Fiscal year end - The Company's fiscal year end 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.

Principles of Consolidation and Translation - The consolidated
financial statements include the accounts of the Company and its subsidiaries.
Assets and liabilities denominated in foreign currencies are translated at the
rates of exchange in effect at the balance sheet date. Revenues and expenses are
translated at the average of the monthly exchange rates. The cumulative effect
of translation adjustments is deferred and classified as a cumulative
translation adjustment in shareholders' equity and comprehensive income. All
inter-company accounts and transactions have been eliminated.

The accounts of the Company's Mexican subsidiary, Global Cup, are
consolidated as of and for the period ended August 31, 2001 due to the time
needed to consolidate this subsidiary. No events occurred related to this
subsidiary in September 2001 that materially affected the Company's consolidated
financial position or results of operations.

Cash, including Cash Equivalents, Restricted Cash and Cash in Escrow -
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. Cash received as
proceeds from the sale of assets is restricted to qualified capital expenditures
under the terms of a lease agreement and is held in escrow with the trustee
until utilized.

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 and is depreciated on the straight-line method over the
estimated useful lives of the assets, with the exception of property, plant and
equipment acquired prior to January 1, 1991, which is depreciated on the
declining balance method.

The asset lives of buildings and improvements range between 2 and 50
years and have an average useful life of 22 years. The asset lives of machinery
and equipment range between 2 and 13 years and have an average useful life of
12.5 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. Also, the Company rents filling
equipment to certain of its customers and recognizes this income over the life
of the lease. 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.

Environmental Cleanup Costs - The Company expenses environmental
expenditures related to existing conditions resulting from past or current
operations and from which no current or future benefit is discernible. The
Company determines its liability on a site by site basis and records a liability
at the time when it is probable and can be reasonably estimated.

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.

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

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 consolidated
financial statements.

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 consolidated 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.

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
Fonda'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 $0.3 million in Fiscal 2001, $0.2
million in Fiscal 2000 and $0.7 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, Fonda had $0.5 million
in minimum license guarantees and advance royalties, net of reserves. Future
minimum royalty payments are $0.4 million in 2002 and $0.1 million thereafter.

2. INVENTORIES

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

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

Raw materials and supplies $ 55,955 $ 66,941
Finished products 158,297 148,231
Work in progress 10,769 11,485
--------- ---------
Total inventories $ 225,021 $ 226,657
========= =========

3. INCOME TAXES

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

Fiscal
------------------------------
2001 2000 1999
--------- -------- ---------
Current:
Federal $ 2,254 $ 3,749 $ (866)
State 453 1,195 423
Foreign - 270 -
--------- -------- ---------

Total current 2,707 5,214 (443)
--------- -------- ---------

Deferred:
Federal 2,965 (157) (7,515)
State 263 (943) (1,575)
Foreign (429) - (28)
--------- -------- ---------

Total deferred 2,799 (1,100) (9,118)
--------- -------- ---------

Total income tax provision (benefit) $ 5,506 $ 4,114 $ (9,561)
========= ======== =========

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

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

U.S. Federal tax rate 35% 35% 35%
State income taxes, net of
U.S. Federal tax impact 5 5 3
Interest on discount notes 5 6 (1)
Non-deductible amortization 8 12 (3)
Other 2 3 (1)
---- ---- ----
Effective tax rate 55% 61% 33%
==== ==== ====

Deferred income taxes reflect the net tax effects of net operating loss
carryforwards, tax credit carryforwards, and 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:
Deferred rent $ 1,606 $ -
Purchase price allocation for property, plant and equipment - 397
Capitalized inventory costs 1,781 2,167
Allowance for doubtful accounts receivable 1,941 2,747
Employee benefits 3,963 4,053
Inventory and sales related reserves 6,005 7,527
Post-retirement health and pension benefits 23,985 25,451
Deferred gain on sale-leaseback transaction 37,766 41,689
Accreted interest 15,429 10,382
Benefit of tax carryforwards 13,103 16,455
Other 4,078 829
--------- ---------
109,657 111,697
--------- ---------

Liabilities
Depreciation (51,795) (51,157)
Inventory adjustments - (2,708)
--------- ---------
(51,795) (53,865)
--------- ---------

Net deferred tax assets $ 57,862 $ 57,832
========= =========

Sweetheart has net operating loss carryforwards for income tax purposes
of approximately $28 million, which will expire in 2018. Although future
earnings cannot be predicted with certainty, management currently believes that
realization of the net deferred tax asset is more likely than not.

No provision has been made for U.S. federal deferred income taxes on
approximately $12 million of accumulated and undistributed earnings of the
Foreign subsidiaries at September 30, 2001 since it is the present intention of
management to reinvest the undistributed earnings in foreign operations
indefinitely. In addition, the determination of the amount of unrecognized U.S.
federal deferred income tax liability for unremitted earnings related to the
investments in the Foreign subsidiaries is not practicable.

4. ASSETS HELD FOR SALE

On February 20, 2001 and August 3, 2001, Sweetheart's Board of
Directors approved plans for the closure and sale of the Somerville,
Massachusetts facility and the Manchester, New Hampshire facility, respectively.
These facilities are being consolidated into one location in North Andover,
Massachusetts. Sweetheart anticipates the sale of both facilities and has
reclassified the facilities to assets held for sale. On September 25, 2001,
Sweetheart entered into a contract to sell the Manchester, New Hampshire
facility. Sweetheart expects to consummate the sale by the end of December 2001.
The sale is expected to result in a net gain.

5. 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 1,280 1,126
------- -------

Total other current assets $ 9,372 $ 5,888
======= =======

6. PROPERTY, PLANT AND EQUIPMENT, NET

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

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

Land and buildings $ 128,017 $ 136,548
Leasehold improvements 678 1,282
Machinery and equipment 229,617 205,568
Construction in progress 16,587 11,006
--------- ---------

Total property, plant and equipment 374,899 354,404

Less - accumulated depreciation 109,104 91,036
--------- ---------

Property, plant and equipment, net $ 265,795 $ 263,368
========= =========

Depreciation of property, plant and equipment was $27.9 million, $43.2
million and $50.3 million in Fiscal 2001, 2000 and 1999, respectively. 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.

7. ACQUISITIONS

On August 28, 2001, Fonda consummated the purchase 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, Fonda
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 Fonda expects to be completed within one year, amounts and allocations of
costs recorded may require adjustment based upon information coming to the
attention of Fonda that is not currently available.

On April 5, 2001, Sweetheart purchased an 80% interest in Global Cup,
S.A. De C.V. and its subsidiaries ("Global Cup"). Global Cup manufactures,
distributes and sells paper cups and lids throughout Mexico and exports to other
Latin American countries. Sweetheart has assumed the liabilities and obligations
of Global Cup arising under contracts or leases that are either assets purchased
by Sweetheart or a part of the accounts payable. The aggregate purchase price
for the assets and working capital was $12.2 million which was paid in cash,
subject to a post-closing working capital adjustment. The Global Cup acquisition
has resulted in goodwill of $3.9 million. As a result of the potential post
closing working capital adjustment, the final calculation of which Sweetheart
expects to be completed within one year, amounts and allocations of costs
recorded may require adjustment based upon information coming to the attention
of Sweetheart that is not currently available.

On September 25, 2000, pursuant to an asset purchase agreement dated
August 9, 2000 (the "Springprint Agreement"), Fonda 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, Fonda has assumed the
liabilities and obligations of Springprint arising under contracts or leases
that are either assets purchased by Fonda 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.

On May 15, 2000, Sweetheart acquired Sherwood Industries Inc.
("Sherwood"), a manufacturer of paper cups, containers and cup making equipment.
Pursuant to a certain Stock Purchase Agreement among Sweetheart and the
stockholders of Sherwood, Sweetheart acquired all of the issued and outstanding
capital stock (the "Sherwood Acquisition") of Sherwood and its subsidiaries for
an aggregate purchase price of $16.8 million of which $12.1 million was paid in
cash. As part of the purchase price, Sweetheart issued to the stockholders of
Sherwood non-interest bearing promissory notes due May 2005 for $4.7 million and
a present value of $2.7 million (assuming an interest rate of 10.85% per annum).
Sweetheart also assumed $9.3 million of Sherwood debt, which was paid in full on
June 15, 2000. The Sherwood acquisition has resulted in goodwill of $10.7
million.

The above acquisitions have been accounted for under the purchase
method and their results have been included in the consolidated statements of
operations since the respective dates of acquisition. Goodwill amortization was
$1.9 million in Fiscal 2001, $1.2 million in Fiscal 2000 and $1.2 million in
Fiscal 1999. Accumulated amortization was $6.1 million and $4.2 million at
September 30, 2001 and September 24, 2000, respectively. The inclusion of these
acquisitions within the consolidated financial statements presented had a
minimal impact on the Company's pro forma results.

8. OTHER ASSETS

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

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

Debt issuance costs, net of
accumulated amortization $ 9,840 $ 10,786
Intangible pension asset (See Note 24) 2,188 1,902
Deposits 1,461 2,166
Other 10,983 5,590
--------- ---------

Total other assets $ 24,472 $ 20,444
========= =========

Amortization of debt issuance costs was $2.2 million in Fiscal 2001,
$3.7 million in Fiscal 2000 and $3.9 million in Fiscal
1999.

9. OTHER CURRENT LIABILITIES

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

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

Sales allowances $ 21,641 $ 19,054
Litigation, claims and assessments
(See Note 27) 1,426 9,288
Deferred rent payable 8,169 8,631
Taxes, other than income taxes 3,084 3,295
Interest payable 3,337 3,167
Freight 1,481 1,467
Other 10,122 11,212
--------- ---------

Total other current liabilities $ 49,260 $ 56,114
========= =========

10. DEFERRED GAIN ON SALE OF ASSETS

In connection with a sale-leaseback transaction, on June 15, 2000,
Sweetheart Cup Company Inc. ("Sweetheart Cup") and Sweetheart Holdings Inc. sold
certain production equipment located in Owings Mills, Maryland, Chicago,
Illinois and Dallas, Texas for a fair market value of $212.3 million to several
owner participants. Pursuant to a lease dated as of June 1, 2000 ("the Lease")
between Sweetheart Cup and State Street Bank and Trust Company of Connecticut,
National Association ("State Street"), Sweetheart Cup will lease such production
equipment from State Street, as owner trustee for several owner participants,
through November 9, 2010. The associated property, plant and equipment was
removed from the balance sheet and a deferred gain of $107.0 million was
recorded and will be amortized using the straight line method over 125 months
which is the term of the Lease. Annual rental payments under the Lease will be
approximately $31.5 million.

11. LONG-TERM OBLIGATIONS

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

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

Sweetheart U.S. Credit Facility $ 126,222 $ 102,249
Sweetheart Canadian Credit Facility 16,630 10,320
Fonda Revolving Credit Agreement 64,362 40,710
Sweetheart Senior Subordinated Notes 110,000 110,000
Fonda Senior Subordinated Notes 120,000 120,000
Sweetheart Sherwood Industries Notes 3,153 3,541
Fonda Other 453 1,168
SF Holdings Discount Notes 118,697 104,245
--------- ---------
Total debt 559,517 492,233

Less - Current portion of long-term debt 16,942 57,266
--------- ---------
Total long-term debt $ 542,575 $ 434,967
========= =========

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

Fiscal 2002 $ 16,942
Fiscal 2003 119,475
Fiscal 2004 67,872
Fiscal 2005 116,531
Fiscal 2006 -
Thereafter 238,697
---------
$ 559,517
=========

Sweetheart U.S. Credit Facility - Sweetheart has a revolving credit
facility as amended (the "U.S. Credit Facility") that, subject to borrowing base
limitations, allows for a maximum revolving credit borrowing of $145 million
through June 15, 2005 and a term loan of $25 million that requires equal monthly
principal payments of $0.4 million through June 2005. Both the term loan and the
revolving credit facility have an accelerated maturity date of July 1, 2003 if
Sweetheart's Senior Subordinated Notes due September 1, 2003 are not refinanced
before June 1, 2003. Borrowings under the revolving credit facility bear
interest, at Sweetheart's election, at a rate equal to (i) LIBOR plus 2.00% or
(ii) a bank's base rate plus 0.25%, plus certain other fees. Borrowings under
the term loan bear interest, at Sweetheart's election, at a rate equal to (i)
LIBOR plus 2.50% or (ii) a bank's base rate plus 0.50%, plus certain other fees.
In Fiscal 2001, the weighted average annual interest rate for the U.S. Credit
Facility was 7.58%. The U.S. Credit Facility is collateralized by Sweetheart's
inventories and receivables with the term loan portion of the credit facility
further collateralized by certain production equipment. As of September 30,
2001, $31.6 million was available under such facility and the term loan balance
was approximately $12.9 million. The fee for outstanding letters of credit is
2.00% per annum and there is a commitment fee of 0.375% per annum on the daily
average unused amount of the commitments. As of September 30, 2001, LIBOR was
2.64% and the bank's base rate was 6.00%.

The indebtedness of Sweetheart Cup under the U.S. Credit Facility is
guaranteed by Sweetheart

Holdings Inc. and secured by a first priority perfected security interest in
inventory, accounts receivable and all proceeds of the foregoing of Sweetheart
Cup, a first priority security interest, shared with the sale-leaseback owner
participants, in Shared Collateral (as defined in the U.S. Credit Facility to
include primarily all capital stock owned by Sweetheart Holdings Inc. and
Sweetheart Cup and of each of their respective present and future direct
subsidiaries, all inter-company indebtedness payable to Sweetheart Holdings Inc.
or Sweetheart Cup by Sweetheart Holdings Inc., Sweetheart Cup or their
respective present and future subsidiaries, and any proceeds from business
interruption insurance) and a first priority perfected security interest in
certain equipment.

The U.S. Credit Facility contains various covenants that limit, or
restrict, among other things, indebtedness, dividends, leases, capital
expenditures and the use of proceeds from asset sales and certain other business
activities. Additionally, Sweetheart must maintain on a consolidated basis,
certain specified ratios at specified times, including, without limitation,
maintenance of minimum fixed charge coverage ratio. Sweetheart is currently in
compliance with all covenants under the U.S. Credit Facility. The U.S. Credit
Facility provides for partial mandatory prepayments upon the sale of equipment
collateral unless net proceeds are used to purchase replacement collateral and
full repayment upon any change of control (as defined in the Agreement).

Sweetheart Canadian Credit Facility - On June 19, 2001, Sweetheart's
Canadian subsidiary refinanced its credit agreement (the "Canadian Credit
Facility") which provides for a term loan facility of Cdn $15 million
(approximately US $9.5 million) and a revolving credit facility of up to Cdn $15
million (approximately US $9.5 million). The term borrowings are payable
quarterly through May 2004. Both the revolving credit and term loan borrowings
have a final maturity date of June 15, 2004. The Canadian Credit Facility is
secured by all existing and thereafter acquired real and personal tangible
assets of Lily-Tulip, Inc., a subsidiary of Sweetheart Cup. ("Lily") and net
proceeds on the sale of any of the foregoing. Borrowings under the Canadian
Credit Facility bear interest at an index rate plus 1.75% with respect to the
revolving credit facility and an index rate plus 2.00% with respect to the term
loan borrowings. As of September 30, 2001, Cdn $1.0 million (approximately US
$0.6 million) was available under the revolving facility and the term loan
balance was Cdn $14.5 million (approximately US $9.2 million) under the Canadian
Credit Facility.

Fonda Revolving Credit Agreement - On August 28, 2001, Fonda 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
Fonda'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 Fonda. 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 Fonda. 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.

Sweetheart Senior Subordinated Notes - Sweetheart Cup is the obligor
and Sweetheart Holdings Inc. the guarantor with respect to $110 million of
Senior Subordinated Notes.

The Senior Subordinated Notes bear interest at 10.50% per annum,
payable semi-annually in arrears on March 1 and September 1 and mature on
September 1, 2003. The Senior Subordinated Notes are subject to redemption at
the option of Sweetheart, in whole or in part, at the redemption price
(expressed as

percentages of the principal amount), plus accrued interest to the redemption
date, at a call premium of 100%. The Senior Subordinated Notes are subordinate
in right of payment to the prior payment in full of all borrowings under the
U.S. Credit Facility, all obligations under the Lease, and all other
indebtedness not otherwise prohibited.

The Senior Subordinated Notes contain various covenants which prohibit,
or limit, among other things, asset sales, change of control, dividend payments,
equity repurchases or redemption, the incurrence of additional indebtedness, the
issuance of disqualified stock, certain transactions with affiliates, the
creation of additional liens and certain other business activities.

Fonda Senior Subordinated Notes - In Fiscal 1997, Fonda 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. Fonda 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.

Sweetheart Sherwood Industries Notes - As part of the Sherwood
Acquisition on May 15, 2000, Sweetheart Cup issued to the stockholders of
Sherwood promissory notes due May 2005 in the principal amount of $5.0 million
and a present value of $2.9 million. On March 19, 2001, the principal amount was
reduced by $0.3 million as a result of the working capital adjustment to $4.7
million and present value of $2.7 million.

SF Holdings Discount Notes - On March 12, 1998, the Company issued
units consisting of $144 million aggregate principal amount at maturity of 12
3/4% Senior Secured Discount Notes due 2008 (the "Discount Notes") and 28,800
shares of Class C Common Stock for net proceeds of $77.5 million. Until March
15, 2003, accrued interest on the Discount Notes will not be paid but will
accrete semi-annually, thereby increasing the carrying value of the Discount
Notes. The fair value of such Class C Common Stock ($2.4 million) at the date of
issuance was recorded as common stock and paid-in capital with a corresponding
reduction in the carrying value of the Discount Notes. The resulting discount,
as well as $4.5 million of financing fees included in other assets, is being
amortized as additional interest expense over the term of the Discount Notes.

Pursuant to the terms of the instruments governing the indebtedness of
the Company, Fonda and Sweetheart, each company is subject to certain
affirmative and negative covenants customarily contained in agreements of this
type, including, without limitation, covenants that restrict, subject to
specified exceptions (i) mergers and acquisitions, (ii) capital expenditures,
(iii) dividends, and (iv) additional indebtedness. In addition, such debt
instruments restrict each subsidiary's ability to pay dividends or make other
distributions to SF Holdings. The credit facilities also require that each
subsidiary satisfy certain financial covenants.

12. 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 Secured Discount Notes,
Sweetheart's Senior Subordinated Notes and Fonda'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 following are the fair values of the Company's, Sweetheart's and
Fonda's notes, based on independent third party information.

The fair value of the SF Holdings Notes are estimated to be $73.6
million lower that the carrying value at September 30, 2001 and $59.2 million
lower than the carrying value at September 24, 2000.

The fair value of Sweetheart's Senior Subordinated Notes are estimated
to be $2.2 million lower than the carrying value at September 30, 2001 and $7.7
million lower than the carrying value at September 24, 2000.

The fair value of Fonda'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.

13. OTHER LIABILITIES

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

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

Post-retirement health care benefits
(See Note 24) $ 46,851 $ 47,965
Pensions (See Note 24) 8,716 5,648
Other 3,061 3,898
--------- ---------
Total other liabilities $ 58,628 $ 57,511
========= =========

14. MINORITY INTEREST IN SUBSIDIARIES

Minority interest represents 10%, 11.5% and 20% of the total common
stock interest in Sweetheart, Creative Expressions Group, Inc. ("CEG"), and
Global Cup, respectively, not owned by the Company. The 10% minority interest in
Sweetheart is held by the 52% voting stockholders, based on historical cost as
of March 12, 1998, and as adjusted to reflect such shareholders' interest in
Sweetheart's net income.

15. PREFERRED STOCK

Exchangeable Preferred Stock

On March 12, 1998, the Company issued units consisting of $30 million
of 13 3/4% Exchangeable Preferred Stock due March 13, 2009 (the "Exchangeable
Preferred") and 11,100 shares of Class C Common Stock. Until March 12, 2003,
cumulative dividends on the Exchangeable Preferred are paid quarterly, at the
Company's option, subject to certain restrictions, either in cash or by the
issuance of additional shares of Exchangeable Preferred. Thereafter, dividends
will be payable in cash, subject to certain exceptions. The fair value of such
Class C Common Stock ($0.9 million) at the date of issuance was recorded as
common stock and paid-in capital with a corresponding reduction in the carrying
value of the Exchangeable Preferred. The resulting discount is being amortized
as additional preferred stock dividends over the term of the Exchangeable
Preferred. The Exchangeable Preferred is exchangeable at the Company's option
into

13 3/4% subordinated notes due March 15, 2009.

Preferred Stock Class B

16. SHAREHOLDERS' DEFICIT AND REDEEMABLE COMMON STOCK

Shareholders' deficit is as follows (in thousands, except share data):

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

Common Stock Class A, $.001 par value, 1,400,000 shares
authorized, 562,583 issued and outstanding 6 6
Common Stock Class B, $.001 par value, 200,000 shares authorized,
56,459 issued and outstanding 1 1
Common Stock Class C, $.001 par value, 200,000 shares authorized,
39,900 issued and outstanding - -
Common Stock Class D, $.001 par value, 200,000 shares authorized,
none issued - -
Additional Paid-in Capital 814 -
Deficit (44,270) (41,113)
Minimum pension liability adjustment (3,663) (187)
Translation adjustment (1,063) (671)
---------- ----------

Total shareholders' deficit $ (48,175) $ (41,964)
========== ==========

The rights of holders of Class A, Class B, Class C and Class D Common
Stock are identical except as to voting and conversion rights. The Class A
Common Stock is entitled to one vote per share and has no cumulative voting
rights in the election of directors. The Class B Common Stock is entitled to
one-tenth of a vote per share and shall vote together with the Class A Common
Stock as a single class; provided, however, that the vote of the holders of a
majority of shares of Class B Common Stock shall be required for the amendment
or modification of the Company's certificate of incorporation in any way that
would adversely affect the rights of the Class B Common Stock. The Class C and
Class D Common Stock is not entitled to any vote whatsoever, except to the
extent otherwise provided by law. The Class B Common Stock may, at any time, be
converted into Class A Common Stock at the option of the holder

other than a "Non-Converting Holder (as identified in the certificate of
incorporation), or at the option of any Non-Converting Holder concurrently with
a sale or other transfer of Class B Common Stock to any person, other than a
Non-Converting holder. The Class C Common Stock may, following an underwritten
public offering of common stock or refinancing of the Company's 12 3/4% Senior
Secured Discount Notes due 2008, be converted into Class A Common Stock at the
option of the holder, or at the option of the Company. The Class D Common Stock
may, following an underwritten public offering of common stock, be converted
into Class A Common Stock at the option of the holder, or at the option of the
Company.

All common stockholders are entitled, among other things, (i) to share
ratably in dividends and (ii) in the event of liquidation, distribution or sale
of assets, dissolution or winding-up of the Company, to share ratably in the
distribution of assets legally available therefor.

The Company and a shareholder have a redemption agreement, whereby the
shareholder has the right to require the Company to repurchase all its shares at
the earlier of March 31, 2007 or the date a merger or consolidation of the
Company with another entity in which the Company is not the surviving party. The
aggregate repurchase price for the outstanding shares is $2.8 million discounted
from March 31, 2007 at a rate of 3% per annum. The redemption agreement also
contains redemption rights whereby the Company can require the shareholder to
redeem the shares after March 31, 2000 on the same terms specified above. The
shares are disclosed at the present value of their liquidation value on the
consolidated balance sheets. The annual accretion to liquidation value is being
charged to deficit.

On September 14, 2000, Fonda 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 Fonda of $0.5 million. The SAR Plan had
provided for the granting of up to 200,000 units to key executives of Fonda. 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 and 26,540 units in Fiscal 1998 and in
Fiscal 1997 at an aggregate value of the date 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.

17. STOCK OPTION PLAN

A summary of stock option transactions are as follows:

Weighted Average
Stock Options Exercised Price
------------- ----------------
Outstanding, September 25, 2000 - $ -
Granted 40,135 102.09
Forfeited (700) 117.38
------- --------
Outstanding, September 30, 2001 39,435 $ 101.82
======= ========

The following table summarizes information about stock options
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 25,000 1.1 $ 93.75 8,333 $ 93.75
93.75 7,720 2.1 93.75 - -
141.14 6,715 2.1 141.14 - -
------ --- -------- ----- -------

39,435 1.5 $ 101.82 8,333 $ 93.75
====== === ======== ===== =======

The Company applies APB No. 25 and related interpretations in
accounting for stock options. Had compensation costs for 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 $ 3,328
Pro forma $ 3,167

In Fiscal 2001, the weighted average fair value of the stock options,
issued to the officers was $1.4 million 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 5.75%, and
expected live of option grants of two years. The weighted average fair value of
the stock options, issued to all other eligible employees was $0.5 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 three years. The effects of applying SFAS No. 123 in this pro forma
disclosure are not indicative of future pro forma effects.

18. RELATED-PARTY TRANSACTIONS

During Fiscal 2001, the Company sold $7.7 million of scrap paper to
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") and which the Chief Executive Officer co-founded, and was President
from 1994 to January 1996. Included in accounts receivable as of September 30,
2001 is $2.0 million due from Fibre Marketing. Other sales to affiliates during
Fiscal 2001 were not significant.

During Fiscal 2001, the Company purchased $7.6 million of corrugated
containers from 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 the Chief Executive Officer co-founded and $1.0
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 $0.6 million due to Box USA. Other
purchases from affiliates during Fiscal 2001 were not significant.

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

During Fiscal 2000, the Company sold $7.6 million of scrap paper to
Fibre Marketing. Included in accounts receivable as of September 24, 2000 is
$1.3 million due from Fibre Marketing. Other sales

to affiliates during Fiscal 2000 were not significant.

During Fiscal 2000, the Company purchased $9.7 million of corrugated
containers from Box USA, $0.2 million of other services from Four M and $0.9
million of travel services from Emerald Lady. Included in accounts payable, as
of September 24, 2000, is $0.1 million due to Box USA. Other purchases from
affiliates during Fiscal 2000 were not significant.

During Fiscal 1999, the Company purchased $7.9 million of corrugated
containers from Box USA and $0.9 million of travel services from Emerald Lady.
Included in accounts payable, as of September 26, 1999, is $0.5 million due to
Box USA. Other purchases from affiliates during Fiscal 1999 were not
significant.

On December 6, 1999, pursuant to the CEG Asset Purchase Agreement,
Fonda 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, Fonda 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, Fonda also
acquired other CEG assets in exchange for outstanding trade payables owed to
Fonda by CEG. In connection with the CEG Asset Purchase Agreement, Fonda
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.

19. LEASE COMMITMENTS

The Company leases certain transportation vehicles, warehouse and
office facilities and machinery and equipment under both cancelable and
non-cancelable operating leases, most of which expire within ten years and may
be renewed by the Company. Rent expense under such arrangements was $60.7
million, $34.8 million and $26.1 million for Fiscal Years 2001, 2000 and 1999,
respectively. Future minimum rental commitments under non-cancelable operating
leases in effect at September 30, 2001 are as follows (in thousands):

Fiscal 2002 55,862
Fiscal 2003 52,095
Fiscal 2004 49,251
Fiscal 2005 46,610
Fiscal 2006 44,566
Thereafter 240,461
----------
$ 488,845

Fonda 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.

In connection with a sale-leaseback transaction, on June 15, 2000,
Sweetheart Cup and Sweetheart Holdings Inc. sold certain production equipment
located in Owings Mills, Maryland; Chicago, Illinois; and Dallas, Texas for a
fair market value of $212.3 million to several owner participants.

Pursuant to the Lease dated as of June 1, 2000 between Sweetheart Cup
and State Street, Sweetheart Cup will lease such production equipment from State
Street, as owner trustee for several owner participants through November 9,
2010. Sweetheart Cup may renew the Lease at its option for up to four
consecutive renewal terms of two years each. Sweetheart may also purchase such
equipment for fair market value either at the conclusion of the Lease term or
November 21, 2006, at its option. Sweetheart's obligations in connection with
the Lease are collateralized by substantially all of Sweetheart's property, plan
and equipment owned as of June 15, 2000. This lease contains various covenants,
which prohibit, or limit, among other things dividend payments, equity
repurchases or redemption, the incurrence of additional indebtedness and certain
other business activities.

Sweetheart is accounting for this transaction as an operating lease,
expensing the $31.5 million annual rental payments and removing the property,
plant and equipment sold from its balance sheet. A deferred gain of $107.0
million was realized from this sale and is being amortized over 125 months,
which is the term of the Lease.

20. RESTRUCTURING CHARGE (CREDIT)

During the quarter ended June 24, 2001, Fonda established a
restructuring reserve of $0.5 million in conjunction with the planned
consolidation of the administrative offices of CEG in Indianapolis, Indiana into
Fonda'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 the quarter ended March 26, 2000, Sweetheart established a
restructuring reserve of $0.7 million in conjunction with the planned
elimination of Sweetheart's centralized machine shop operation from which 53
positions would be eliminated. The plan was completed and approved by management
on January 10, 2000 and announced to employees on March 7, 2000. Severance
payments of $0.2 million, were paid in both the third and fourth quarters of
Fiscal 2000. Also, during the fourth quarter of Fiscal 2000, Sweetheart reversed
$0.2 million of this reserve as a result of 12 employees being placed into open
positions within Sweetheart. The balance of this reserve is included within the
"Other current liabilities" on the balance sheet. The balance of this reserve
was $0.7 million at the end of the quarter ended March, 26, 2000; $0.5 million
at the end of the quarter ended June 25, 2000; and $0.1 million at the end of
the fiscal year ended September 24, 2000. Sweetheart utilized the remaining $0.1
million of the restructuring reserve in the first quarter of Fiscal 2001.

During Fiscal 2000, Fonda 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, Fonda 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.

In the quarter ended March 31, 1998, Sweetheart reduced its salaried
workforce by approximately 15% and hourly workforce by less than 5%. In
connection with such plans, Sweetheart recognized $5.1 million of charges for
severance and related costs, of which $1.4 million remained unpaid as of
September 27, 1998 and was included within the "Other current liabilities" on
the balance sheet. Severance payments of $0.6 million, $0.3 million, $0.06
million, and $0.02 million were paid during the quarters ending December 27,
1998, March 28, 1999, June 27, 1999, and September 26, 1999, respectively. Also,
during the quarter ending September 26, 1999, Sweetheart reversed $0.5 million
of this reserve as the plan was completed and fringe and benefit expenses
associated with such severed employees severed were lower than planned.

21. ASSET IMPAIRMENT EXPENSE

In the quarter ended September 30, 2001, Sweetheart approved plans to
consolidate its Manchester, New Hampshire and Springfield, Missouri operations
into other existing facilities throughout Sweetheart. As a result, Sweetheart
evaluated the usefulness of certain equipment at these facilities and wrote-off
the remaining book value of $2.2 million to operations.

22. OTHER EXPENSE (INCOME)

In Fiscal 2001, Sweetheart realized $10.3 million due to the
amortization of the deferred gain in conjunction with the sale-leaseback
transaction. This amortization of the deferred gain was partially offset by $1.6
million in expenses in associated with the relocation of a manufacturing
facility from Somerville, Massachusetts to North Andover, Massachusetts.

In Fiscal 2000, Sweetheart realized a $4.1 million gain on the sale of
a warehouse facility in Owings Mills, Maryland and $2.8 million due to the
amortization of the deferred gain in conjunction with the sale-leaseback
transaction. The amortization of the deferred gain was partially offset by a
one-time write-off of a $1.0 million unsecured note receivable issued in
connection with the Fiscal 1998 sale of the bakery business due to the
bankruptcy of the borrower. Sweetheart also incurred $1.4 million of expenses
associated with the Aldridge Liability (See Note 27).

In Fiscal 1999, Sweetheart sold certain of its paper plate and paper
cup equipment at a net gain of $0.4 million and consolidated a facility in
Canada resulting in a $0.8 million gain on the sale of duplicate assets.

23. EXTRAORDINARY LOSS

During Fiscal 2000, in conjunction with the redemption of Sweetheart's
Senior Secured Notes and the refinancing of the U.S. Credit Facility, Sweetheart
charged $0.5 million, or $0.3 million net of income tax benefit, to results of
operations as an extraordinary loss, which amount represents the unamortized
deferred financing fees and redemption fees pertaining to such debt.

In conjunction with the CEG Asset Purchase Agreement, CEG retired its
long-term debt. As a result, CEG charged $0.9 million, or $0.5 million net of
income tax benefit, to results of operations as an extraordinary loss. This
amount represented the unamortized deferred financing fees and to other expenses
pertaining to such debt.

24. EMPLOYEE BENEFIT AND POST-RETIREMENT HEALTH CARE PLANS

Sweetheart sponsors various defined benefit post-retirement health care
plans that cover substantially all full-time employees. The plans, in most
cases, pay stated percentages of most medical expenses incurred by retirees
after subtracting payments by Medicare or other providers and after a stated
deductible has been met. Participants generally become eligible after reaching
age 60 with ten years of service. The majority of such plans are contributory,
with retiree contributions adjusted annually. Sweetheart does not fund the
plans. Both Sweetheart and Fonda provide certain union and non-union employees
with retirement and disability income benefits under defined 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 Fonda's non-union pension plans are frozen. In Fiscal 1999, the
assets and obligations of a pension plan for a significant number of Fonda'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 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. During Fiscal 2001, the valuation date for the plan assets and
the contributions was changed from September to June and resulted in no
significant effect.

A majority of the Company's employees ("Participants") are covered
under a 401(k) defined contribution plan. In addition, the Company is allowed to
make discretionary contributions. Costs charged against operations for this
defined contribution plan were $6.8 million, $6.3 million, and $4.8 million for
Fiscal 2001, Fiscal 2000, and Fiscal 1999 respectively. Certain employees are
covered under defined benefit plans. Certain benefits under the plans are
generally based on fixed amounts for each period of service.

Fonda 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.

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 $ 943 $ 971 $ 1,400
Interest cost 4,583 4,481 4,527
Return on plan assets (4,937) (4,819) (4,662)
Net amortizations and deferrals (259) 64 310
Additional amounts recognized (26) - -
-------- -------- --------
Net periodic pension cost $ 304 $ 697 $ 1,575
-------- -------- --------
Other Benefits
Service cost $ 791 $ 874 $ 1,071
Interest cost 3,183 3,212 3,347
Net amortizations and deferrals (383) (383) -
Net actuarial cost (232) - -
-------- -------- --------
Net periodic benefit cost $ 3,359 $ 3,703 $ 4,418
-------- -------- --------

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 $ 59,506 $ 60,932 $ 41,714 $ 42,682
Service cost 771 971 605 874
Interest cost 3,522 4,481 2,409 3,212
Amendments 1,211 - - -
Actuarial (gain) or loss 5,077 (3,208) 1,885 (2,641)
Benefits paid (3,134) (3,671) (3,232) (2,413)
---------- ---------- ---------- ----------
Benefit obligation at end of period $ 66,953 $ 59,505 $ 43,381 $ 41,714
========== ========== ========== ==========

Change in plan assets:
Fair value of plan assets at beginning of
period $ 53,491 $ 48,357 $ - $ -
Actual return on plan assets (268) 3,860 - -
Employer contributions to plan 2,226 4,945 2,839 1,921
Participant contributions to plan - - 392 492
Benefits paid (3,134) (3,671) (3,231) (2,413)
Other (4) - - -
---------- ---------- ---------- ----------
Fair value of plan assets at end of period $ 52,311 $ 53,491 $ - $ -
========== ========== ========== ==========

Funded status $ (14,641) $ (6,014) $ (43,381) $ (41,714)
Unrecognized prior service cost 1,547 372 (2,755) (3,138)
Unrecognized (gain) loss 5,334 (4,040) (5,547) (6,704)
---------- ---------- ---------- ----------

Net liability recognized $ (7,760) $ (9,682) $ (51,683) $ (51,556)
========== ========== ========== ==========

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

Pension Benefits
----------------
September 30, September 24,
2001 2000
------------- -------------
Funded status $ (14,641) $ (6,014)
Intangible asset 1,547 184
Other (gain) loss (770) (4,164)
Deferred income taxes 2,441 125
Accrued other comprehensive (income) loss 3,663 187
---------- ----------
Net liability recognized $ (7,760) $ (9,682)
========== ==========

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

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

Pension Benefits
Discount rate 7.38% 7.75% to 8.00% 7.75%
Rate of return on plan assets 8.00% to 10.00% 8.00% to 10.00% 8.00% to 10.00%
Other Benefits
Discount rate 7.38% to 8.00% 8.00% 7.75% to 8.00%

For measurement purposes, a 6% annual rate of increase in health care
benefits was assumed for

2001. The rate is assumed to decrease gradually to 5% for 2002 and will remain
at that level thereafter.

A one percentage point change in the assumed health care cost trend
rate would have the following effects:

One Percentage One Percentage
Point Increase Point Decrease
---------------- ----------------
Effect on accumulated post-
retirement benefit obligation $2,010 $(1,855)
Effect on net periodic post-
retirement benefit cost $ 286 $ (256)

25. ACCUMULATED OTHER COMPREHENSIVE LOSS

The components of accumulated other comprehensive loss are as follows
(in thousands):

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

Foreign currency translation adjustment $ (1,063) $ (671)
Minimum pension liability adjustment (3,663) (187)
--------- -------
Accumulated other comprehensive loss $ (4,726) $ (858)
========= =======

26. BUSINESS SEGMENTS

The Company is a holding company and its reportable segments consist of
the operations of its two significant operating subsidiaries Sweetheart and
Fonda. Sweetheart primarily manufactures and sells disposable paper, plastic and
foam foodservice and food packaging products to customers in institutional
markets. Fonda primarily manufactures and sells disposable paper and tissue
based foodservice products to customers in institutional consumer markets. Data
for such segments and a reconciliations to consolidated amounts are presented in
the table below (in thousands):

Fiscal
------------------------------------------
2001 2000 1999
------------- ------------ -------------
Net sales:
Sweetheart $ 981,348 $ 952,728 $ 863,781
Fonda 366,969 351,970 329,259
Corporate and elimination (31,645) (27,810) (11,036)
------------ ------------ ------------
Total $ 1,316,672 $ 1,276,888 $ 1,182,004
============ ============ ============

Income from operations, excluding
restructuring, asset impairment
and other income, net:
Sweetheart $ 34,154 $ 53,050 $ 32,165
Fonda 24,166 19,806 8,373
Corporate and elimination (1,134) (87) (323)
------------ ------------ ------------
Total $ 57,186 $ 72,769 $ 40,215
============ ============ ============

Depreciation and amortization:
Sweetheart $ 25,853 $ 42,445 $ 50,508
Fonda 7,651 7,373 6,033
Corporate and elimination 20 207 321
------------ ------------ ------------
Total $ 33,524 $ 50,025 $ 56,862
============ ============ ============

Interest expense, net:
Sweetheart $ 23,519 $ 36,825 $ 41,671
Fonda 15,352 15,783 16,742
Corporate and elimination 14,928 12,704 11,760
------------ ------------ ------------
Total $ 53,799 $ 65,312 $ 70,173
============ ============ ============

Capital expenditures:
Sweetheart $ 26,488 $ 23,474 $ 30,790
Fonda 5,213 2,815 9,371
Corporate and elimination - (1,020) (2,385)
------------ ------------ ------------
Total $ 31,701 $ 25,269 $ 37,776
============ ============ ============

Total assets:
Sweetheart $ 679,760 $ 661,749
Fonda 258,310 229,173
Corporate and elimination (5,685) (9,793)
------------ ------------
Total $ 932,385 $ 881,129
============ ============

Sweetheart has one customer that accounted for more that 10.0% of its
sales in each year. Net sales to such customer were $109.4 million in Fiscal
2001, $100.7 million in Fiscal 2000 and $98.8 million in Fiscal 1999. Fonda has
no customer that accounted for more that 10% of its net sales in Fiscal 2001,
2000 and 1999. All net sales were to customers in the United States, except for
sales to Sweetheart customers in Canada and Mexico which amounted to
approximately 7.5% and 0.6% of its net sales in Fiscal 2001. All assets are
located in the United States except for $38.5 million and $38.9 million in
Canada and $17.6 million in Mexico at September 30, 2001 and at September 24,
2000, respectively.

27. CONTINGENCIES

During Fiscal 2001, Sweetheart experienced a casualty loss at its
Somerville, Massachusetts facility. Sweetheart carries business interruption
insurance and has filed a claim with the insurance

company. Settlement of the recovery amount is to be determined.

A lawsuit entitled Aldridge v. Lily-Tulip, Inc. Salary Retirement Plan
Benefits Committee and Fort Howard Cup Corporation, Civil Action No. CV 187-084,
was filed in state court in Georgia in April 1987 and later removed to federal
court. The Plaintiffs claimed, among other things, that Sweetheart wrongfully
terminated the Lily Tulip, Inc. Salary Retirement Plan (the "Plan") in violation
of the Employee Retirement Income Security Act of 1974, as amended. The relief
sought by Plaintiffs was to have the Plan termination declared ineffective. The
United States Court of Appeals for the Eleventh Circuit (the "Circuit Court")
ruled that the Plan was lawfully terminated on December 31, 1986, and judgment
was entered dismissing the case in March 1996. The Circuit Court affirmed the
judgment entered in favor of Sweetheart. Plaintiffs filed a petition for writ of
certiorari to the United States Supreme Court, which was denied in January 1999.
Sweetheart expects to complete paying out the termination liability and
associated expenses in connection with the Plan termination by December 31,
2001. As of September 30, 2001, Sweetheart disbursed $19.6 million in
termination payments. The estimate of the total termination liability and
associated expenses, less payments, exceeds the assets set aside in the Plan by
$0.4 million, which amount has been fully reserved by Sweetheart.

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.

28. CONDENSED PARENT COMPANY ONLY FINANCIAL STATEMENTS

The condensed financial statements of the parent company only are as
follows (in thousands):

September 30, September 24,
Balance Sheets 2001 2000
--------------- ---------------

Assets
Cash and cash equivalents $ 68 $ 42
Refundable income tax 665 324
Other current assets 100 100
Investments in subsidiaries 116,368 107,025
Deferred finance fees 3,096 3,572
Deferred income taxes 15,813 10,601
---------- ----------
Total Assets $ 136,110 $ 121,664
========== ==========

Liabilities and Stockholders' Deficit
Accrued expenses $ 23 $ 303
Discount notes 118,697 104,245
Exchangeable preferred stock 48,209 41,794
Preferred Stock B, Series 2 15,000 15,000
Redeemable common stock 2,356 2,286
Shareholders' deficit (48,175) (41,964)
---------- ---------
Total Liabilities and Shareholders' Deficit $ 136,110 $ 121,664
========== ==========

Fiscal
----------------------------------
Statements of Operations 2001 2000 1999
---------- ---------- ----------

General and administrative expenses $ (1,068) $ (199) $ (50)
Management fee income 200 197 203
Interest expense, net (14,928) (12,704) (11,760)
--------- --------- ---------
Loss before income taxes and equity in subsidiaries (15,796) (12,706) (11,607)
Income tax benefit 5,740 4,603 4,082
Equity in income (loss) of subsidiaries 13,384 8,249 (11,156)
--------- --------- ---------
Net income (loss) 3,328 146 (18,681)
Payment-in-kind dividends on exchangeable preferred stock (6,227) (5,315) (4,659)
Preferred dividends accretion (188) (188) (188)
--------- --------- ---------
Net loss applicable to common shareholders $ (3,087) $ (5,357) $(23,528)
========= ========= =========

Fiscal
-----------------------------------
Statements of Cash Flows 2001 2000 1999
---------- ---------- -----------

Operating:
Net income (loss) $ 3,328 $ 146 $ (18,681)
Equity in (income) loss of subsidiaries (13,384) (8,249) 11,156
Amortization of deferred finance fees 720 720 714
Interest capitalized on debt 14,208 11,984 11,046
Income taxes receivable (5,553) (4,603) (4,082)
Equity based compensation 987 - -
Decrease in accrued expenses (280) 44 (154)
--------- --------- ----------
Net cash provided by (used in) operating activities 26 42 (1)

Net increase (decrease) in cash 26 42 (1)
Cash at beginning of year 42 - 1
--------- --------- ----------
Cash at end of year $ 68 $ 42 $ -
========= ========= ==========

INDEX TO FINANCIAL STATEMENT SCHEDULES

Page

Independent Auditors' Report 66

Schedule II - Valuation and Qualifying Accounts 67

INDEPENDENT AUDITORS' REPORT

To the Board of Directors of
SF Holdings Group, Inc.

We have audited the consolidated financial statements of SF
Holdings Group, Inc. and subsidiaries (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 December 7,
2001; such consolidated financial statements and report are included in this
Form 10-K. Our audits also included the consolidated financial statement
schedule listed in the accompanying index. This consolidated 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 consolidated
financial statement schedule, when considered in relation to the basic
consolidated financial statements taken as a whole, presents fairly in all
material respects, the information set forth therein.

/s/DELOITTE & TOUCHE LLP
Baltimore, Maryland
December 7, 2001

SCHEDULE II

SF HOLDINGS INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS
(in thousands)

Additions
-----------------------
Balance At Charged To Charged To Balance At
Beginning Of Costs And Other End Of
Classifications Period Expenses Accounts(1) Deductions(2) Period
--------------- ------------ ---------- ----------- ------------- ----------

Allowance for Doubtful Accounts:
Fiscal 2001 $ 3,534 $ 1,927 $ (1,077) $ 989 $ 3,395
Fiscal 2000 6,979 2,038 (3,395) (2,088) 3,534
Fiscal 1999 3,614 7,041 20 (3,696) 6,979

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

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

Inventory Allowances:
Fiscal 2001 $ 18,994 $ 5,731 $ 11,981 $ 12,744
Fiscal 2000 16,110 9,959 7,075 18,994
Fiscal 1999 12,552 12,826 9,268 16,110

(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 December 12, 2001.

SF HOLDINGS 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/ THOMAS ULEAU Executive Vice President and Director
- ----------------
Thomas Uleau

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

/s/ HARVEY L. FRIEDMAN Secretary and General Counsel
- ----------------------
Harvey L. Friedman

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

/s/ W. RICHARD BINGHAM Director
- ----------------------
W. Richard Bingham

/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

Signature Title(s)

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

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

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