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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 December 26, 2010



| ̈ | 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 333-116843





SOLO CUP COMPANY

(Exact name of registrant as specified in its charter)







|                                                               |  |                                     
|-------------------------------------------------------------- |  | ------------------------------------
|Delaware                                                       |  | 47-0938234                          
|(State or other jurisdiction of
incorporation or organization) |  | (I.R.S. Employer Identification No.)



|                                                          |  |           
|--------------------------------------------------------- |  | ----------
|150 South Saunders Road, Suite 150, Lake Forest, Illinois |  | 60045     
|(Address of principal executive offices)                  |  | (Zip Code)

Registrants telephone number, including area code: 847/444-5000





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

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





Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities
Act.    Yes   ̈    No  x

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.    Yes  x    No   ̈

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 whether the registrant has submitted electronically and posted on its
corporate Web site, if any, every Interactive Date File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or such shorter period that the registrant was
required to submit and post such files).    Yes   ̈    No   ̈

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained
herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer,
a non-accelerated filer, or a smaller reporting company. See the definitions of large accelerated filer, accelerated filer and smaller reporting company in Rule 12b-2 of the Exchange Act.

Large accelerated filer   ̈    Accelerated filer   ̈

Non-accelerated
filer  x  (Do not check if a smaller reporting company)    Smaller reporting company   ̈

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act).    Yes   ̈    No  x

As of
March 17, 2011, 100 shares of Common Stock, $0.01 par value, were outstanding. There is no trading market for the common stock of the registrant. No shares of the registrant were held by non-affiliates.









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TABLE OF CONTENTS



|         |  |                                                                                                              |  |  |    | 
|-------- |  | ------------------------------------------------------------------------------------------------------------ |  |  | -- | 
|PART I   |  |                                                                                                              |  |  |    | 
|         |  |                                                                                                             
|Item 1.  |  | Business                                                                                                     |  |  | 1  | 
|         |  |                                                                                                             
|Item 1A. |  | Risk Factors                                                                                                 |  |  | 6  | 
|         |  |                                                                                                             
|Item 1B. |  | Unresolved Staff Comments                                                                                    |  |  | 12 | 
|         |  |                                                                                                             
|Item 2.  |  | Properties                                                                                                   |  |  | 13 | 
|         |  |                                                                                                             
|Item 3.  |  | Legal Proceedings                                                                                            |  |  | 14 | 
|         |  |                                                                                                             
|Item 4.  |  | Removed and Reserved                                                                                         |  |  | 14 | 
|         |  |                                                                                                             
|PART II  |  |                                                                                                              |  |  |    | 
|         |  |                                                                                                             
|Item 5.  |  | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities |  |  | 14 | 
|         |  |                                                                                                             
|Item 6.  |  | Selected Financial Data                                                                                      |  |  | 15 | 
|         |  |                                                                                                             
|Item 7.  |  | Managements Discussion and Analysis of Financial Condition and Results of
Operations                        |  |  | 16 | 
|         |  |                                                                                                             
|Item 7a. |  | Quantitative and Qualitative Disclosures About Market Risk                                                   |  |  | 30 | 
|         |  |                                                                                                             
|Item 8.  |  | Financial Statements and Supplementary Data                                                                  |  |  | 31 | 
|         |  |                                                                                                             
|Item 9.  |  | Changes in and Disagreements with Accountants on Accounting and Financial
Disclosure                         |  |  | 74 | 
|         |  |                                                                                                             
|Item 9A. |  | Controls and Procedures                                                                                      |  |  | 74 | 
|         |  |                                                                                                             
|Item 9B. |  | Other Information                                                                                            |  |  | 74 | 
|         |  |                                                                                                             
|PART III |  |                                                                                                              |  |  |    | 
|         |  |                                                                                                             
|Item 10. |  | Directors, Executive Officers and Corporate Governance                                                       |  |  | 75 | 
|         |  |                                                                                                             
|Item 11. |  | Executive Compensation                                                                                       |  |  | 78 | 
|         |  |                                                                                                             
|Item 12. |  | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder
Matters               |  |  | 86 | 
|         |  |                                                                                                             
|Item 13. |  | Certain Relationships and Related Transactions, and Director Independence                                    |  |  | 88 | 
|         |  |                                                                                                             
|Item 14. |  | Principal Accounting Fees and Services                                                                       |  |  | 90 | 
|         |  |                                                                                                             
|PART IV  |  |                                                                                                              |  |  |    | 
|         |  |                                                                                                             
|Item 15. |  | Exhibits and Financial Statement Schedules                                                                   |  |  | 90 | 



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Part I



|Item 1. | Business.
|------- | ---------

In this
annual report, the terms we, us and our refer to Solo Cup Company, a Delaware corporation, and its direct and indirect subsidiaries.

Overview

We are a leading producer and marketer of
single-use products used to serve food and beverages in the home, quick-service restaurants and other foodservice settings. We distribute our products globally and have served our industry for 75 years. We manufacture and supply a broad portfolio of
single-use products, including cups, lids, take-out and other food containers, plates, bowls, portion cups, cutlery and straws. Our products are available in plastic, paper, foam, post-consumer recycled content and annually renewable materials, and
are marketed primarily under the Solo®, Jack Frost®, Trophy®, Bare by Solo
and Creative Carryouts® brands. We are recognized for our customer service, and our products are known for their
quality, reliability and consistency. We are one of the leading suppliers of branded single-use cups, plates and bowls in the United States. We also provide a line of products to select customers under private label brands.

We currently operate 15 manufacturing facilities and 15 distribution centers, some of which are combined with a manufacturing facility at
a single location, in the United States, Canada, Mexico, Panama and the United Kingdom.

We generated approximately $1.6
billion of net sales for the fiscal year ended December 26, 2010. Financial information about our two business segments  North America and Europe  is disclosed in Note 20 to our consolidated financial statements included in
Item 8 of this annual report.

Background

Solo Cup Company (Solo Delaware) was incorporated in Delaware in January 2004 to be the holding company for Solo Cup Company, an Illinois corporation (Solo Illinois), and its
subsidiaries, and for SF Holdings Group, Inc. and its subsidiaries, including Sweetheart Cup Company Inc. Effective February 22, 2004, Solo Illinois became a wholly owned subsidiary of Solo Delaware, and Solo Delaware acquired 100% of the
outstanding capital stock of SF Holdings. Prior to these transactions, Solo Delaware had no operations other than in connection with its formation and the authorization of the transactions described above.

Solo Illinois was established in 1936. Sweetheart Cup Companys operating history dated back to the founding of a predecessor
company in 1911. In September 2005, Sweetheart Cup Company changed its name to Solo Cup Operating Corporation, and in October 2005, Solo Illinois merged with and into Solo Cup Operating Corporation, with Solo Cup Operating Corporation as the
surviving entity. As a result of these transactions, Solo Delaware is a holding company, the material assets of which are 100% of the capital stock of SF Holdings. SF Holdings owns 100% of the capital stock of Solo Cup Operating Corporation.

Solo Delaware is a wholly owned subsidiary of Solo Cup Investment Corporation, a Delaware corporation. SCC Holding Company
LLC, a Delaware limited liability company, owns 67.26%, Vestar Capital Partners IV, L.P. and certain of its affiliates own 32.71%, and management of Solo Delaware owns the remaining 0.03%, of Solo Cup Investment Corporation as of March 15,
2011.



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LOGO

Our fiscal year is the 52- or 53-week period ending on the last Sunday in December. Our fiscal quarters for
2010 were the thirteen weeks ended March 28, June 27, September 26 and December 26, 2010.

Products

We produce a broad range of plastic, paper and foam single-use products used to serve food and beverages. Our plastic
products include a wide range of cups, lids, take-out and other food containers, plates, bowls, cutlery and portion cups. Our paper products include cups, plates, bowls, portion cups and food containers. Our foam products include cups, plates and
bowls. Our plastic, paper and foam products are offered in a variety of sizes, designs and colors, and at a range of price points. We also offer an Eco-forward product line called Bare by Solo, which includes products made with recycled
plastic or paper, compostable products made with wax, plant-based polylactic acid (PLA) or sugarcane, and products made with other renewable resources.

Customers

We serve two primary customer groups: (1) foodservice
distributors and operators, referred to collectively in this annual report as foodservice customers; and (2) retailers of consumer products, referred to in this annual report as consumer customers.

Foodservice

Approximately 79% of
our net sales for fiscal year 2010 were to foodservice customers, including:



| |  |  | foodservice distributors, including broadline distributors, such as Sysco Corporation, U.S. Foodservice, Inc., Gordon Food Service and Foodservices of
America Inc., and specialty distributors, such as Bunzl plc, Network Services Company and UniPro Foodservice, Inc.; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | foodservice operators, such as Starbucks Corporation, Dunkin Donuts, YUM! Brands, Inc., Panera Bread Company, ARAMARK Corporation and Sodexo.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------



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We believe we have strong relationships with our foodservice customers due to our broad
array of product offerings, longstanding leadership in the industry and demonstrated capability in product quality, innovation, graphics and customer service.

We sell our products to foodservice customers through our regionally organized, in-house direct sales force, national account direct sales force and, to a lesser extent, select broker networks. We also
maintain direct selling relationships with several of our major national accounts for which we provide direct customer service and tailored products for specific customer requirements. Our distributor-customers stocking decisions are based on
demand from foodservice operators. Consequently, our direct and national account sales force maintains a service-oriented supplier relationship with distributors and drives end-market demand from foodservice operators by offering a breadth of
high-quality products. Our sales force also works closely with distributors and their customers to develop unique product offerings and promotional programs.

Consumer

Sales to consumer customers accounted for approximately
21% of our net sales for fiscal year 2010 and are made through various outlets, including:



| |  |  | grocery stores, such as Publix Super Markets, Inc., The Kroger Co. and Albertsons, Inc.;
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | mass merchandisers, such as Target Corporation and Wal-Mart Stores, Inc.;
| | - |  | -------------------------------------------------------------------------



| |  |  | warehouse clubs, such as Costco Wholesale Corporation and BJs Wholesale Club, Inc.;
| | - |  | ------------------------------------------------------------------------------------



| |  |  | value channel stores, such as Dollar General Corporation, Family Dollar Stores Inc., ALDI Inc. and Sav-A-Lot Foods Inc.; and
| | - |  | ----------------------------------------------------------------------------------------------------------------------------



| |  |  | other retail outlets, such as drug and party stores.
| | - |  | ----------------------------------------------------

We sell to a diverse group of consumer customers primarily through regional broker networks. In the case of some of our larger consumer customers, we maintain a direct supplier relationship through our
in-house direct sales force. Our sales and marketing strategy for consumer customers is designed to support our strong brand names and private label product offerings and includes integrated marketing programs that consist of a combination of
in-store, online, television, print and product-placement brand enhancement activities.

Any backlog of orders we may have
with our foodservice or consumer customers is not material.

Seasonality

Historically, we have experienced fluctuations in sales by season. We have higher sales volume in the warmer months and realize the
majority of our net cash flows from operations during the last nine months of the year. Typically, during the first quarter we build inventory to meet demand in the warmer months. Sales for such periods reflect the high seasonal demands of the
summer months when outdoor and away-from-home consumption increases.

Raw Materials

Our principal raw materials are (1) various types of resins for our plastic and foam products and (2) paperboard for our paper
products. The resins that we use include polystyrene, polypropylene, polyethylene terephthalate (PET), and PLA. We purchase resins from large petrochemical and resin producers. Resin prices are influenced by input prices, such as crude oil, natural
gas, benzene, ethylene, propylene and paraxylene, as well as availability of supply and changes in demand.

The principal raw
material used in our paper operations is solid bleached sulfate paperboard. We purchase coated and uncoated paperboard from a variety of large and small manufacturers. Paper prices are driven by global supply and demand as well as input costs for
energy, fiber, chemicals, polyethylene and transportation.

We believe we have good relationships with our major raw material
suppliers. For 2010, our overall supply of raw materials was adequate, and for 2011, we believe it will remain adequate.

Our
raw material costs make up a significant portion of our cost of goods sold. Although we generally enter into one- to three-year supply contracts with a number of our raw material suppliers, we continue to have exposure to changes in raw material
prices. Historically, we have not hedged our exposure to fluctuations in raw material prices.



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Manufacturing

Our manufacturing strategy is to reduce costs through continuous process improvements and innovation, while meeting our customers needs and maintaining our standard for quality. We employ various
technologies and strategies to supply our wide product line, including working with third parties to supply manufacturing capability in instances where expertise or economies of scale are not available in-house. We manufacture and supply a variety
of products in plastic, paper and foam. Our flexibility and proficiency in these technologies enable us to respond quickly to customer needs.

We use the following primary processes to manufacture our products:



| |  |  | Plastic cups, lids, plates and bowls, and foam plates. We use plastic extrusion to convert plastic resin from pellets to a flat extruded sheet.
Using a thermoforming process, we convert the extruded sheet into the final product. We add graphics based on customer specifications and package our products in various quantities depending on customer requirements. We have the capability to
utilize a variety of resins, including polystyrene, polypropylene, PET and PLA.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Paper cups, plates and food containers, and foam cups. We emboss or print graphics on paperboard according to customer requirements and feed the
paperboard through machines that cut, form or fold the material into the final product. We produce our thin-wall foam cups using a process similar to the one we employ for paper cups.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Plastic cutlery and straws. We utilize injection molding machines to manufacture plastic cutlery. We melt plastic pellets and inject the molten
resin into molds. The pieces of cutlery are automatically cooled, trimmed and ejected from the machines. We individually wrap or package the product in bulk. An extrusion process is used to form different sizes of straws based on customer
specifications. We can make our plastic cutlery and straws with polypropylene or polystyrene.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Distribution

Our self-managed distribution centers in North America are located in proximity to major population centers, generally
consolidating the output of our manufacturing operations. We offer a broad range of products from these distribution centers. This strategy provides value to our customers by allowing us to respond to demand more rapidly and allowing our customers
to carry less inventory. Our international subsidiaries operate out of owned or leased warehouses and manage the related distribution and transportation networks.

Competition

We compete in the single-use foodservice products industry.
The industry encompasses a wide variety of products, including single-use cups, lids, plates, bowls, containers, cutlery and straws. These products are manufactured from plastic and paper raw materials, such as coated and uncoated paperboard,
polystyrene, polypropylene and PET, emerging bio-resins such as PLA, and renewable resources such as sugarcane. Our products also compete with metal, glass and other packaging materials, as well as plastic packaging materials made through different
manufacturing processes.

We compete for customers based on brand reputation, quality, cost, service, breadth of product
offering, product differentiation, innovation, marketing programs and value. Our competitors include large multinational companies as well as regional manufacturers. Some of our competitors compete across many of our product lines, while most
compete with only some of our products.

Intellectual Property

We rely on a combination of trade secrets, confidentiality agreements, patents, trademarks, copyrights, licenses, and contractual provisions, as well as various intellectual property and unfair
competition laws to protect our intellectual property and other proprietary rights. We own a number of patents and trademarks, which vary in duration depending upon when the application was filed or granted. We believe that, in the aggregate, the
rights under our patents and trademarks are generally important to our business; however, no single right is material to our business.

Research and Development

Our research and development strategy has three goals: (1) create innovative, value-added products and packaging that target both new
and existing customers; (2) differentiate our products in the marketplace; and (3) explore new products, processes and market opportunities that will enhance our overall market position. We continue to develop, test and sample new and
recycled raw materials for use in our products, including those derived from renewable resources. In 2010, we continued our investment in manufacturing lines for our core product categories, as well as in support of new products developed in
conjunction with our customers.



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International

Our international operations consist of operating subsidiaries in Canada, Mexico, Panama and the United Kingdom, as well as international export sales originating in the United States and at our
international subsidiaries. Approximately 20% of our net sales for fiscal year 2010 were generated outside of the United States. International operations are subject to additional risks inherent in conducting business outside the United States, such
as changes in currency exchange rates, price and currency exchange controls, import restrictions, nationalization and other restrictive governmental actions, and, in some countries, volatile economic, social and political conditions.

Employees

As of
December 26, 2010, we had approximately 6,700 employees worldwide, including approximately 5,500 in the United States. Approximately 5,300, or 79%, of our total employees worldwide were hourly employees, and approximately 1,000, or 19%, of
those hourly employees were covered by collective bargaining agreements. We currently have collective bargaining agreements in effect at our facilities in Cuautitlan, Mexico; Augusta, Georgia; Juan Diaz, Panama; and Scarborough, Ontario, Canada.
These agreements cover all hourly-paid production, maintenance and distribution employees at each of those facilities and contain standard provisions relating to, among other things, management rights, grievance procedures, strikes and lockouts,
seniority and union rights. The current expiration dates of the Cuautitlan, Augusta, Juan Diaz and Scarborough agreements are December 31, 2011, March 31, 2012, June 30, 2013 and May 31, 2015, respectively. Other than
the agreements described above, no employees currently are covered by collective bargaining agreements. We believe that we have good relationships with our employees.

Environmental Regulation

In the normal course of business, we are required
to comply with federal, state, foreign and local environmental and occupational health and safety laws and regulations, including those governing emissions of air pollutants, discharges of waste and storm water, and the handling, use, treatment,
storage and disposal of, or exposure to, hazardous substances. Historical capital and operating expenditures deemed necessary to remain in compliance have not had a material impact on our financial position. We believe that we are in material
compliance with applicable standards and regulations of the various regulatory agencies.

The federal Clean Air Act requires
the phase-out of specified refrigerant compounds. We must upgrade or retrofit the air conditioning and chilling systems we currently use over the next few years. We have decided to replace units as they become inefficient or unserviceable, and we do
not believe that the costs associated with such replacement will be material to our business, financial condition, results of operations or cash flows.

Some of our facilities contain asbestos. We monitor such asbestos on an ongoing basis and maintain and/or remove it as appropriate to prevent the release of friable asbestos. We do not believe the costs
associated with this program will be material to our business, financial condition, results of operations or cash flows.

We
have received a number of requests for information or notifications of potential liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, regarding the investigation or cleanup of environmental
contamination at third-party sites. We have no reason to believe that the final outcome of these matters will have a material adverse effect on our business, financial condition, results of operations or cash flows; however, we can give you no
assurance about the ultimate effect, if any, of such matters on us.

Available Information

Our Internet website is www.solocup.com. We are an electronic filer and make available free of charge on our website our Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to our reports filed or furnished pursuant to Section 15(d) of the Securities Exchange Act of 1934, as soon as reasonably practicable after we
electronically file such materials with, or furnish such materials to, the Securities and Exchange Commission, or SEC. You may read and copy any materials we file with or furnish to the SEC at its Public Reference Room at 100 F Street, NE.,
Washington, DC 20549. Information relating to the operation of the SECs Public Reference Room may be obtained by calling 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains our annual, quarterly and current
reports, and other information that we electronically file with or furnish to the SEC.



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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This annual report on Form 10-K, including without limitation the statements found in Managements Discussion and Analysis of
Financial Condition and Results of Operations in Item 7 below, contain forward-looking statements. The words anticipate, intend, plan, estimate, believe, expect,
predict, potential, project, could, will, should, may, would and similar expressions are intended to identify forward-looking statements, although not
all forward-looking statements contain such identifying words. All statements in this report other than statements of historical fact, including statements regarding our business strategy, future operations, financial position, prospects, plans and
objectives, as well as information concerning industry trends and expected actions of third parties, are forward-looking statements. All forward-looking statements speak only as of the date on which they are made. Such statements reflect our current
assumptions concerning future events and are subject to a number of risks and uncertainties, many of which are outside our control and could cause actual results to differ materially from such statements. These risks and uncertainties include, but
are not limited to, the factors listed in Risk Factors in Item 1A below. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, we do not undertake any
obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statement.



|Item 1A. | Risk Factors.
|-------- | -------------

Set forth
below and elsewhere in this annual report are risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report and in other documents we file or
furnish with the SEC. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also affect our business. Any or all of these risks could have a material adverse effect on our business, financial
condition, results of operations and cash flows.

Our ability to meet our cash requirements and service our debt is affected by many
factors that are outside our control, including the current global recession and restricted credit markets.

Our future
operating performance is dependent on many factors, some of which are beyond our control, including prevailing economic, financial and industry conditions. The sales of our products are primarily dependent on the discretionary income of consumers.
If global economic conditions continue to adversely affect employment rates and consumer discretionary spending, our sales could continue to decline or become increasingly concentrated in lower-margin products, and our business, financial condition,
results of operations or cash flows could be materially adversely affected.

The impact of the global recession and credit
crisis on our suppliers and customers is also unpredictable, outside of our control and may create additional risks for us, both directly and indirectly. The inability of our raw material suppliers to access financing or the insolvency of one or
more of our raw material suppliers, could lead to disruptions in our supply chain, which could adversely affect our sales or increase our costs. Our suppliers may require us to pay cash in advance or obtain letters of credit for their benefit as a
condition to selling us their products and services. A number of restaurant chains and consumer product retailers have sought bankruptcy protection. If one or more of our principal customers filed for bankruptcy, our sales could be adversely
affected and our ability to collect outstanding accounts receivable from any such customer could be limited. Any of these risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations or
cash flows.

Our operating performance is dependent on our continued ability to access funds under our asset-based revolving
credit facility and Canadian credit facility, maintain sales volumes, drive profitable growth, realize cost savings and generate cash from operations. The financial institutions that fund our asset-based revolving and Canadian credit facilities are
also being affected by the volatility in the credit markets. If one or more of those institutions cannot fulfill one of our revolving credit requests, then our operations may be adversely affected. If we cannot borrow under one of our credit
facilities because a lender is unable to fund requested amounts, we do not have a sufficient borrowing base or we otherwise are unable to comply with the terms and conditions under the applicable credit facility, or if we do not meet our cost, sales
or growth initiatives within the time frame we expect, our business, financial condition, results of operations and cash flows could be materially adversely affected.



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A material decline in our cash flows also could cause us to fail to pay interest or
principal when due under our asset-based revolving or Canadian credit facility, the indenture for our senior secured or senior subordinated notes or under our other financing arrangements. A payment default or a default under any of the other
covenants in our debt agreements or other financing arrangements could restrict or terminate our access to borrowings and materially impair our ability to meet our obligations as they come due. If we do not comply with our payment or other covenants
under our debt agreements or other financing arrangements and we do not obtain a waiver or amendment that otherwise addresses that non-compliance, the lenders who participate in our asset-based revolving and Canadian credit facilities may accelerate
payment of all amounts outstanding under the credit facilities, which amounts would immediately become due and payable, together with accrued interest. Such an acceleration would cause a default under the indentures governing our senior secured and
senior subordinated notes, under our lease agreement with iStar SCC Financial Distribution Centers LLC covering six of our facilities and under other arrangements that provide us with access to funding. Our ability to generate sufficient cash flow
to service our debt and meet our other needs, or a default of any of the covenants under our debt agreements, may require us to reduce expenditures that we deem necessary to our business, refinance all or a portion of our debt or obtain additional
financing. We cannot assure you that any refinancing of this kind would be possible or that any additional financing could be obtained on acceptable terms or at all. The inability to refinance existing debt or obtain additional financing could have
a material adverse effect on our business, financial condition, results of operations and cash flows, and on our ability to meet our obligations under our credit facilities, indentures and other financing arrangements as they become due. See
Managements Discussion and Analysis of Financial Condition and Results of Operations  Liquidity and Capital Resources in Item 7 of this annual report.

Our significant level of debt could limit cash flows available for our operations, adversely affect our financial health and prevent us from fulfilling our obligations under our credit facilities,
indentures and other debt agreements.

As of December 26, 2010, we had total debt of $637.7 million, which
included $325.0 million of our 8.5% senior subordinated notes, $295.5 million of our 10.5% senior secured notes (reflecting $300.0 million in aggregate principal amount less $4.5 million of unamortized original issue discount), $10.0 million of
borrowings under our asset-based revolving credit facility, $2.7 million of borrowings under our Canadian credit facility and $4.5 million of capital lease obligations.

Our significant level of debt could have important consequences for our business, including:



| |  |  | requiring that we use a large portion of our cash flows to pay principal and interest on borrowings under our credit facilities, our senior secured and
senior subordinated notes and our other debt, which would reduce the availability of cash to fund working capital, capital expenditures, research and development and other business activities;
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | increasing our vulnerability to general adverse economic and industry conditions;
| | - |  | ---------------------------------------------------------------------------------



| |  |  | limiting our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate;
| | - |  | -----------------------------------------------------------------------------------------------------------------------



| |  |  | restricting us from making strategic acquisitions or exploiting business opportunities;
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | making it more difficult for us to satisfy our obligations under the credit facilities, the senior secured and senior subordinated notes and our other
debt;
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | placing us at a competitive disadvantage relative to competitors that have less debt; and
| | - |  | -----------------------------------------------------------------------------------------



| |  |  | limiting our ability to borrow additional monies in the future to fund working capital, capital expenditures, research and development and other
business activities.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------

We may be able to incur additional debt that could further exacerbate the risks associated with
our substantial leverage.

We may incur additional debt in the future. Although the indentures governing our senior
secured and senior subordinated notes and the terms of our asset-based revolving and Canadian credit facilities contain restrictions on our incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions,
and we could incur significant additional debt. As of December 26, 2010, we had available capacity, subject to borrowing base limitations and other specified terms and conditions, of $177.6 million under our asset-based revolving credit
facility and $14.2 million under our Canadian credit facility, in each case after taking into account outstanding letters of credit. If we incur additional debt, the risks described above under Our significant level of debt could limit cash
flows available for our operations, adversely affect our financial health and prevent us from fulfilling our obligations under our credit facilities, indentures and other debt agreements would intensify.



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Covenant restrictions under our debt agreements may limit our ability to operate our business.

The indentures governing our senior secured and senior subordinated notes, the agreements governing our asset-based
revolving and Canadian credit facilities and the agreements governing our other financing arrangements contain covenants that may restrict our ability to finance future operations or capital needs or to engage in other business activities, which
restrictions include, among other things, limitations on our ability to:



| |  |  | incur additional debt or issue preferred and other specified classes of stock;
| | - |  | ------------------------------------------------------------------------------



| |  |  | create liens;
| | - |  | -------------



| |  |  | pay dividends, make investments or make other restricted payments;
| | - |  | ------------------------------------------------------------------



| |  |  | sell assets;
| | - |  | ------------



| |  |  | consolidate, merge, sell or otherwise dispose of all or substantially all of our assets;
| | - |  | ----------------------------------------------------------------------------------------



| |  |  | enter into transactions with affiliates; and
| | - |  | --------------------------------------------



| |  |  | designate subsidiaries as unrestricted under specified agreements governing our indebtedness.
| | - |  | ---------------------------------------------------------------------------------------------

In addition, if available capacity under our asset-based revolving credit facility falls below a specified level (the greater of
(a) $15,000,000 or (b) 15% of the lesser of our borrowing base or the aggregate amount of commitments under the facility), we will be required to maintain a Fixed Charge Coverage Ratio (as defined in the facility) of 1.1 to 1 for a
trailing twelve-month period.

A breach of any of these covenants would result in a default under the loan agreements
governing our asset-based revolving and Canadian credit facilities and under the indentures governing our senior secured and senior subordinated notes. If an event of default under the loan agreement governing our asset-based revolving or Canadian
credit facility, the indenture governing our senior secured or senior subordinated notes or our other financing arrangements, all amounts outstanding under those agreements and other arrangements could be declared immediately due and payable,
together with accrued interest. If all or a portion of our debt were accelerated, we cannot assure you that we would have access to sufficient funds or other assets to pay amounts due.

Failure to maintain our credit ratings could limit our access to the capital markets, adversely affect the cost and terms upon which we are able to obtain additional financing and negatively impact
our business.

Although we believe existing cash, funds generated by operations and amounts available under our
asset-based revolving and Canadian credit facilities will provide adequate resources to fund our ongoing operating requirements, we may be required to seek additional financing to compete effectively. Any downgrade to our credit ratings could, among
other things, limit our access to the capital markets and adversely affect the cost and terms upon which we are able to obtain additional financing, including any financing from our suppliers, which could negatively affect our business. Our credit
ratings have fluctuated in the past as a result of a number of factors, including company performance and outlook, and conditions in our industry, the general economy and financial markets. We can provide no assurance that we will be able to
maintain our existing credit ratings.

We could be adversely affected by raw material availability and pricing or a shortage of supply
due to supplier financial difficulties, natural disasters or other causes.

Our principal raw materials include
polystyrene, polypropylene, PET and coated and uncoated paperboard. There are currently a limited number of polystyrene suppliers, and periods of short supply may occur if one or more suppliers operations are materially affected by financial
difficulties, natural disasters or other factors. To the extent that our supply of raw materials becomes restricted and we cannot locate or substitute adequate alternative sources, our business, financial condition, results of operations and cash
flows may be materially adversely affected.

In addition, prices for our raw materials fluctuate. In recent years, including
2010, our industry has experienced volatility in raw material and energy pricing. When raw material prices decline, we face increased pressure from our customers to reduce our selling prices for products containing that raw material. When raw
material prices increase, our selling prices have historically also increased, although often with a time lag. A number of factors affect the impact that raw material price changes have on us, including the underlying cause of price changes (e.g.,
natural disasters, weather conditions or general economic conditions), the level of our inventories at the time of price changes, the specific timing and frequency of price changes and the lead and lag time that generally accompany the
implementation of both raw material price changes and subsequent selling price changes. If raw material prices increase and we are unable to pass the price increases on to our customers or there is a significant time lag in any selling price
increases that we are able to implement, our profitability may be adversely affected, which could have a material adverse effect on our business, financial condition, results of operations and cash flows. We have not historically employed hedging
strategies to limit our exposure to fluctuations in raw material prices on any meaningful level.



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Our ability to successfully operate is dependent on the availability of energy and fuel at anticipated
prices.

Sustained increases in global energy prices, particularly for crude oil and electricity, at prices greater
than we have anticipated could have a material adverse impact on our operations if we are unable to pass through such increases to our customers in a timely manner. Increases in crude oil prices particularly impact our transportation and production
costs and the price we pay for some raw materials. Global energy prices are determined by many factors that are beyond our control and unpredictable. Consequently, we cannot predict whether global energy prices will remain at their current levels,
and we cannot predict the impact that these prices will have on our business, financial condition, results of operations or cash flows.

We operate in a highly competitive environment and may not be able to compete successfully.

The single-use foodservice products industry is extremely competitive and highly fragmented. We compete for customers based on brand
reputation, quality, cost, service, breadth of product offering, product differentiation, innovation, marketing programs and value. Some of our competitors compete across many of our product lines, while most compete with only some of our products.
A few of our competitors are integrated in the manufacturing of single-use foodservice products and related raw materials, which reduces their costs for these materials and gives them greater access to the materials in periods of short supply. We
also face competition from foreign competitors who are entering regional U.S. markets in some product categories and are aggressively trying to differentiate their product offerings based on price. Our current or potential competitors may offer
products at a lower price or products and services that are superior to ours. In addition, our competitors may be more effective and efficient in integrating new technologies or emerging raw materials to meet changing consumer demands or legislative
mandates. Our success depends upon successful research, development and engineering efforts to utilize emerging and legislatively mandated raw materials, our ability to expand or modify our manufacturing capacity and the extent to which we are able
to convince customers and consumers to accept our new products. If we fail to successfully innovate, introduce, market, manufacture and differentiate our products from those of our competitors, our ability to maintain or expand our net sales and to
maintain or enhance our industry position or profit margins could be adversely affected. This, in turn, could materially adversely affect our business, financial condition, results of operations or cash flows.

Our products also compete with products that incorporate metal, glass, reusables and other packaging materials. If we are unable to react
timely to changing consumer demands, legislative mandates and competitive conditions that favor those or other competing products, we may experience lower prices, sales volume and gross margins, and a reduced ability to attract and retain customers.

Our operations and products are subject to environmental and governmental regulations that could adversely affect our business,
financial condition, results of operations or cash flows.

Our operations are subject to comprehensive and frequently
changing federal, state, local and foreign environmental and occupational health and safety laws and regulations. These laws and regulations include the federal Food, Drug and Cosmetic Act, which regulates materials that have direct contact with
food, and laws governing the use of specified raw materials in our products, emissions of air pollutants, discharges of waste and storm water, and the handling, use, treatment, storage and disposal of, or exposure to, hazardous substances. We are
presently, and may in the future be, subject to liability for the investigation and remediation of environmental contamination, including contamination caused by other parties, at properties that we own or operate or formerly owned or operated, and
at other properties where we or our predecessors arranged for the disposal of hazardous substances. As a result, we are involved from time to time in administrative and judicial proceedings and inquiries relating to environmental matters. Any
present or future investigations, future clean up costs or remedial efforts relating to environmental matters could entail material costs or otherwise result in material liabilities. Under environmental laws applicable to our operations and our
properties, we are required to obtain various environmental permits granted by federal, state, local and foreign authorities. There are various risks associated with noncompliance with these permits, including cessation of our operations at the
noncompliant facilities and significant fines and penalties.

We 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 affect the use of our products, or what environmental conditions may be found to exist at our facilities or at third-party sites for
which we are liable. Enactment of stricter laws or regulations, stricter interpretation of existing laws and regulations or the requirement to undertake the investigation or remediation of currently unknown environmental contamination at our own or
third-party sites may require us to make additional expenditures, some of which could be material.



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The single-use foodservice products industry is subject to evolving federal, state, local
and foreign legislation and regulations affecting the types of raw materials we may use in our products. Some of the legislation and regulations are designed to reduce solid waste and litter by requiring, among other things, that manufacturers pay
for the disposal of products they create or use raw materials that are recyclable, biodegradable or compostable. Other legislation and regulations are intended to promote health and safety by prohibiting, or requiring the disclosure of, the use of
specified materials. The legislation passed to date has not had a material adverse effect on our operations; however, if we are unable to procure or substitute raw materials that meet the requirements of future environmental legislation or
regulations, our sales may decline in those localities where such laws and regulations have been adopted. Proposed legislation could increase our operating costs as a result of any fees imposed on manufacturers of foodservice products for the
disposal of products that are not recyclable or compostable and could increase the cost of our products by prohibiting the use of traditional raw materials and requiring the use of emerging materials that are more expensive. Proposed legislation and
regulations also could lower demand for products that include, or are associated with, materials that are the focus of health and safety legislation or regulations.

Our international operations expose us to risks related to conducting business in multiple jurisdictions outside the United States.

Our international operations consist of operating subsidiaries in four countries, as well as international export sales originating in the
United States and at our international facilities. The international scope of our operations may lead to volatile financial results and difficulties in managing our business. We generated approximately 20% of our net sales outside the United States
during fiscal year 2010. International sales and operations are subject to a number of risks, including the following:



| |  |  | exchange rate fluctuations and limitations on currency convertibility;
| | - |  | ----------------------------------------------------------------------



| |  |  | import limitations and export control restrictions;
| | - |  | ---------------------------------------------------



| |  |  | social and political turmoil, corruption and civil unrest;
| | - |  | ----------------------------------------------------------



| |  |  | restrictive governmental actions, such as the imposition of trade quotas and restrictions on transfers of funds;
| | - |  | ----------------------------------------------------------------------------------------------------------------



| |  |  | changes in non-U.S. labor laws and regulations affecting our ability to hire, retain or dismiss employees;
| | - |  | ----------------------------------------------------------------------------------------------------------



| |  |  | violations of U.S. or local laws, including the U.S. Foreign Corrupt Practices Act;
| | - |  | -----------------------------------------------------------------------------------



| |  |  | compliance with multiple and potentially conflicting laws and regulations;
| | - |  | --------------------------------------------------------------------------



| |  |  | preference for locally-branded products, and laws and business practices favoring local competition;
| | - |  | ----------------------------------------------------------------------------------------------------



| |  |  | less effective protection of intellectual property;
| | - |  | ---------------------------------------------------



| |  |  | difficulties and costs of staffing, managing and accounting for foreign operations; and
| | - |  | ---------------------------------------------------------------------------------------



| |  |  | unfavorable business conditions or economic instability in any particular country or region.
| | - |  | --------------------------------------------------------------------------------------------

Our exposure to risks associated with currency exchange rate fluctuations results primarily from translation exposure associated with the
preparation of our consolidated financial statements, as well as from transaction exposure associated with generating revenues and incurring expenses in different currencies. While our consolidated financial statements are reported in U.S. dollars,
the financial statements of our foreign subsidiaries are measured using the local currency as the functional currency and translated into U.S. dollars by applying an appropriate exchange rate. As a result, fluctuations in the exchange rate of the
U.S. dollar relative to the local currencies in which our foreign subsidiaries report could cause significant fluctuations in our consolidated results. We record sales and expenses in a variety of currencies. While our expenses with respect to
foreign operations are generally denominated in the same currency as the corresponding sales, we have transaction exposure to the extent our receipts and expenditures are not offsetting in any currency. Moreover, the costs of doing business abroad
may increase as a result of adverse exchange rate fluctuations. In addition, we may lose customers if exchange rate fluctuations, currency devaluation or economic crises increase the local currency price of our products or reduce our customers
ability to purchase our products. If we are unable to manage the operational challenges associated with our international activities, our business, financial condition, results of operations or cash flows could be materially adversely affected.



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##### Table of Contents

In the event of a catastrophic loss of one of our key manufacturing facilities, our business would be
adversely affected.

While we manufacture our products in a number of diversified facilities and maintain insurance
covering our facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of one of our key manufacturing facilities due to accident, weather conditions, natural disaster or otherwise, whether short- or
long-term, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We are
controlled by the stockholders of Solo Cup Investment Corporation, the interests of which may conflict with the interests of holders of our senior secured and senior subordinated notes.

All of our outstanding capital stock is owned by our parent company, Solo Cup Investment Corporation. Holders of SCC Holdings voting
interests control 100% of the outstanding common stock of Solo Cup Investment Corporation, and affiliates of Vestar hold 99.9% of Solo Cup Investment Corporations outstanding convertible participating preferred stock, or SCIC preferred stock,
with the remaining balance of the SCIC preferred stock held by members of our management.

The SCIC preferred stock is
currently convertible at any time, at the option of the holders, into 32.71% of the common stock of Solo Cup Investment Corporation. The SCIC preferred stock is entitled to vote on all matters, voting together with the holders of common stock as a
single class. In December 2006, Vestar, in its capacity as the significant shareholder of SCIC preferred stock, became entitled to appoint a majority of the director positions of Solo Delaware and Solo Cup Investment Corporation pursuant to a
stockholders agreement dated as of February 27, 2004, as amended, among Vestar, Solo Cup Investment Corporation, SCC Holding, Solo Delaware and various other parties. If Vestar receives a bona fide offer from a third party to purchase
(whether by stock purchase, merger or otherwise) at least 80% of Solo Delawares common stock, SCC Holding has agreed at Vestars request to vote in favor of such offer.

The interests of SCC Holding and the holders of SCIC preferred stock, including Vestar, could conflict with the interests of holders of
our senior secured and senior subordinated notes. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of these indirect equity holders might conflict with the interests of a holder of our
notes. Solo Cup Investment Corporations stockholders may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though the
transactions might involve risks to a holder of our senior secured or senior subordinated notes. In addition, SCC Holding and Vestar, or any of their affiliates, may in the future own businesses that directly compete with our business. While we are
subject to specified provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, these provisions do not require us to have independent directors.

The loss of one or more of our principal customers could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We have a number of large customers that account for a significant portion of our net sales. For fiscal year 2010, our five largest
customers represented approximately 30% of our net sales, with no one customer accounting for more than 9% of our net sales. The loss of one or more of our large customers could have a material adverse effect on our business, financial condition,
results of operations or cash flows. In line with industry practice, we generally do not enter into long-term sales agreements with customers.

We may undertake acquisitions or divestitures and consequently face potential integration, management diversion and other risks.

We may make acquisitions or divestitures in the future. Any future acquisitions or divestitures could be of
significant size and may involve U.S. or international parties. To acquire and integrate a separate organization or significant new assets or to divest a portion of our business would divert management attention from other business activities. This
diversion, together with other difficulties we may encounter in integrating an acquired business or selling a portion of our business, could have a material adverse effect on our business, financial condition, results of operations or cash flows. In
connection with future acquisitions, we may assume undisclosed liabilities of the businesses we acquire. These liabilities could materially adversely affect our business, financial condition, results of operations or cash flows.



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We may not be able to adequately protect our intellectual property and other proprietary rights.

We rely on a combination of trade secrets, confidentiality agreements, patents, trademarks, copyrights, licenses, and
contractual provisions, as well as various intellectual property and unfair competition laws to protect our intellectual property and other proprietary rights. Such measures may not provide adequate protection and may not prevent our competitors
from gaining access to our intellectual property and proprietary information or independently developing technologies that are substantially equivalent or superior to our technology, which could harm our competitive position and could have a
material adverse effect on our business, financial condition, results of operations or cash flows. Furthermore, we cannot give you any assurance that any pending patent application or trademark application made by us will result in an issued patent
or registered trademark, or that any issued or registered patents or trademarks will not be challenged, invalidated, circumvented or rendered unenforceable.

Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties related to our intellectual property. Even if
our proprietary rights are enforceable, others may be able to design around our patents or independently develop products and processes equivalent to our proprietary and confidential information. Any litigation or claims brought by or against us,
whether successful or not, could result in substantial costs and diversion of our resources, which could have a material adverse effect on our business, financial condition, results of operations or cash flows. Any intellectual property litigation
or claims against us could result in the loss or compromise of our intellectual property and proprietary rights, subject us to significant liabilities, require us to seek licenses on unfavorable terms, if available at all, prevent us from
manufacturing or selling products or require us to redesign, relabel or, in the case of trademark claims, rename our products, any of which could have a material adverse effect on our business, financial condition, results of operations or cash
flows.

Financial market conditions have had a negative impact on the return of plan assets for our pension plans, which may require
additional funding and negatively impact our cash flows.

Certain U.S., Canadian and European hourly and salaried
employees are covered by our defined benefit pension plans. Between December 31, 1987 and March 31, 2001, the majority of the U.S. plans were frozen to new participants. Our pension expense and required contributions to our pension plan
are directly affected by the value of plan assets, the projected rate of return on plan assets, the actual rate of return on plan assets and the actuarial assumptions we use to measure the defined benefit pension plan obligations. Due to the
significant financial market downturn that started in 2008 and continued into 2009, the funded status of our pension plans has declined and actual asset returns were below the assumed rate of return used to determine pension expense. Our pension
plans were underfunded by approximately $31.3 million and $29.3 million as of December 26, 2010 and December 27, 2009. If plan assets continue to perform below expectations, future pension expense and funding obligations will increase,
which could have a negative impact on our cash flows from operations, decrease borrowing capacity and increase interest expense. Moreover, under the Pension Protection Act of 2006, it is possible that continued losses to asset values may necessitate
accelerated funding of U.S. pension plans in the future to meet minimum federal government requirements.



|Item 1B. | Unresolved Staff Comments.
|-------- | --------------------------

None.



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##### Table of Contents

|Item 2. | Properties.
|------- | -----------

We own,
lease and operate manufacturing and distribution facilities in North America, Panama and the United Kingdom. The table below provides summary information regarding the material manufacturing, distribution and office properties that we currently
utilize. We believe these properties are being used, and are adequate, for their intended purposes and are well-maintained. A number of our owned properties are mortgaged as collateral under the indenture governing our senior secured notes and under
our asset-based revolving credit facility. The table below does not include our manufacturing facilities in Belen, New Mexico and our manufacturing and office facilities in Highland Park, Illinois. We closed the Belen and Highland Park facilities in
2009 and currently are seeking buyers for the facilities. The table below also does not reflect our 118-acre undeveloped land parcel in Chicago, Illinois, which currently is under contract for sale. Finally, the table excludes a leased distribution
facility in Ontario, California and leased office space in Alpharetta, Georgia. We currently sublease our entire space in each of these facilities and accordingly do not utilize the facilities in our operations.



|              |  |                                   |  |                            |  |                                   |  |  |           | 
|------------- |  | --------------------------------- |  | -------------------------- |  | --------------------------------- |  |  | --------- | 
|Facilities    | 
|Location      |  | Function                          |  | Owned/Leased               |  | Size (ApproximateSquare 
Footage) | 
|California    |  | Rialto                            |  | Distribution               |  | Leased                            |  |  | 882,230   | 
|Georgia       |  | Augusta                           |  | Manufacturing              |  | Leased                            |  |  | 364,000   | 
|              |  | Conyers                           |  | Manufacturing              |  | Leased                            |  |  | 367,000   | 
|              |  | Social Circle                     |  | Distribution               |  | Leased                            |  |  | 1,225,716 | 
|              |  | Thomaston                         |  | Manufacturing              |  | Owned                             |  |  | 171,232   | 
|              |  |                                   |  | Distribution               |  | Leased                            |  |  | 166,000   | 
|Idaho         |  | Twin Falls                        |  | Manufacturing              |  | Owned                             |  |  | 130,000   | 
|Illinois      |  | Chicago                           |  | Manufacturing              |  | Leased                            |  |  | 820,000   | 
|              |  | Lake Forest                       |  | Executive Office           |  | Leased                            |  |  | 133,218   | 
|              |  | University Park (2 facilities)    |  | Distribution               |  | Leased                            |  |  | 1,846,025 | 
|              |  | Urbana                            |  | Manufacturing              |  | Leased                            |  |  | 269,000   | 
|Maryland      |  | Federalsburg                      |  | Manufacturing              |  | Leased                            |  |  | 405,000   | 
|              |  |                                   |  | Distribution               |  | Leased                            |  |  | 54,000    | 
|              |  | Hampstead                         |  | Distribution               |  | Leased                            |  |  | 1,034,000 | 
|              |  | Owings Mills (2 facilities)(1)    |  | Manufacturing/Distribution |  | Owned                             |  |  | 1,703,292 | 
|Massachusetts |  | North Andover(1)                  |  | Manufacturing              |  | Leased                            |  |  | 248,500   | 
|Oklahoma      |  | Ada                               |  | Manufacturing              |  | Owned                             |  |  | 267,000   | 
|Texas         |  | Dallas                            |  | Manufacturing/Distribution |  | Leased                            |  |  | 1,220,000 | 
|              |  | Grand Prairie                     |  | Distribution               |  | Leased                            |  |  | 603,354   | 
|Washington    |  | Sumner                            |  | Distribution               |  | Leased                            |  |  | 401,076   | 
|Non-US        |  | Mississauga, Ontario, Canada      |  | Distribution/Office        |  | Leased                            |  |  | 262,087   | 
|              |  | Toronto, Ontario, Canada          |  | Manufacturing/Distribution |  | Owned                             |  |  | 485,825   | 
|              |  | Cuautitlan, Mexico (4
facilities) |  | Manufacturing/Distribution |  | 1 Owned/3 Leased                  |  |  | 98,425    | 
|              |  | Panama (2
facilities)             |  | Manufacturing/Distribution |  | 1 Owned/1 Leased                  |  |  | 359,773   | 
|              |  | United Kingdom (5
facilities)     |  | Manufacturing/Distribution |  | Leased(2)                         |  |  | 287,000   | 



|(1) | In June 2010, we announced our plans to close our manufacturing facilities in Springfield, Missouri; North Andover, Massachusetts; and Owings Mills,
Maryland. We sold our Springfield manufacturing facility in December 2010 and leased it back through August 2011 at which time we expect to have fully decommissioned the facility. We ceased operations at the facility in the first quarter of 2011. We
intend to close our North Andover facility in the second quarter of 2011 and our Owings Mills facility in the third quarter of 2011. We currently are seeking a long-term subtenant for our leased North Andover facility and a buyer for our owned
Owings Mills facility.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | At one of these facilities we own a building on leased land.
|--- | ------------------------------------------------------------



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|Item 3. | Legal Proceedings.
|------- | ------------------

We
are involved in various claims and legal actions arising from time to time in the ordinary course of business. We establish reserves for claims and actions when it is probable that we will incur a loss and such loss is capable of being estimated.
While we cannot predict the outcome of these claims and actions with certainty, we believe that based on our current assessment of the facts and circumstances we are not a party to any pending legal proceeding, the ultimate disposition of which
would have a material adverse effect on our business, financial position, results of operations or cash flows.



|Item 4. | Removed and Reserved.
|------- | ---------------------

Part II



|Item 5. | Market for Registrants Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
|------- | -------------------------------------------------------------------------------------------------------------

There is no public trading market for Solo Delawares common stock. Solo Cup Investment Corporation is the owner of record of all of
the common stock of Solo Delaware. We do not have any equity compensation plans under which Solo Delaware securities may be issued.

Since our formation in January 2004, we have not paid dividends on Solo Delawares common stock and we do not anticipate paying cash dividends in the foreseeable future. In addition, our bank credit
facilities and the indentures governing our senior secured and senior subordinated notes restrict our ability to pay dividends on Solo Delawares common stock.



14



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|Item 6. | Selected Financial Data.
|------- | ------------------------

The following
table sets forth our selected historical consolidated financial data. You should read the information in this table in conjunction with Managements Discussion and Analysis of Financial Condition and Results of Operations included
in Item 7 of this annual report and our consolidated financial statements and related notes included in Item 8 of this annual report.



|                                                                            |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|--------------------------------------------------------------------------- |  | -------------------------- | ------- | - | -------------------------- | - | ------- | -------------------------- |  | - | -------------------------- | - |  | -------------------------- | ------- | - |  | - | ------- | -
|(In millions)                                                               |  | Year EndedDecember 26,2010 |         |   | Year EndedDecember 27,2009 |   |         | Year EndedDecember 28,2008 |  |   | Year EndedDecember 30,2007 |   |  | Year EndedDecember 31,2006 |        
|Statement of Operations Data:                                               |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Net sales                                                                   |  | $                          | 1,582.9 |   |                            | $ | 1,502.6 |                            |  | $ | 1,847.0                    |   |  | $                          | 2,110.1 |   |  | $ | 2,124.0 |  
|Cost of goods sold                                                          |  |                            | 1,439.3 |   |                            |   | 1,296.2 |                            |  |   | 1,599.2                    |   |  |                            | 1,859.7 |   |  |   | 1,921.4 |  
|                                                                            |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Gross profit                                                                |  |                            | 143.6   |   |                            |   | 206.4   |                            |  |   | 247.8                      |   |  |                            | 250.4   |   |  |   | 202.6   |  
|Selling, general and administrative expenses                                |  |                            | 150.4   |   |                            |   | 150.1   |                            |  |   | 159.0                      |   |  |                            | 203.6   |   |  |   | 216.4   |  
|Loss (gain) on asset disposals                                              |  |                            | 3.9     |   |                            |   | 9.0     |                            |  |   | 22.6                       |   |  |                            | (8.5    | ) |  |   | 4.4     |  
|Impairment of goodwill                                                      |  |                            |        |   |                            |   | 17.2    |                            |  |   |                           |   |  |                            |        |   |  |   | 228.5   |  
|Asset impairment                                                            |  |                            | 20.5    |   |                            |   |        |                            |  |   | 0.6                        |   |  |                            |        |   |  |   |        |  
|                                                                            |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Operating (loss) income                                                     |  |                            | (31.2   | ) |                            |   | 30.1    |                            |  |   | 65.6                       |   |  |                            | 55.3    |   |  |   | (246.7  | )
|Interest expense, net                                                       |  |                            | 70.6    |   |                            |   | 63.1    |                            |  |   | 61.6                       |   |  |                            | 79.8    |   |  |   | 75.3    |  
|Prepayment penalty                                                          |  |                            |        |   |                            |   |        |                            |  |   |                           |   |  |                            | 1.3     |   |  |   |        |  
|Loss on debt extinguishment                                                 |  |                            |        |   |                            |   | 2.5     |                            |  |   |                           |   |  |                            | 4.0     |   |  |   |        |  
|Reclassification of unrealized loss on cash flow hedges to interest expense |  |                            |        |   |                            |   | 9.1     |                            |  |   |                           |   |  |                            |        |   |  |   |        |  
|Foreign currency exchange loss (gain), net                                  |  |                            | 2.2     |   |                            |   | (2.6    | )                          |  |   | 14.1                       |   |  |                            | (4.1    | ) |  |   | (6.9    | )
|Gain from bargain purchase                                                  |  |                            | (1.7    | ) |                            |   |        |                            |  |   |                           |   |  |                            |        |   |  |   |        |  
|Other (income) expense, net                                                 |  |                            |        |   |                            |   |        |                            |  |   |                           |   |  |                            | (0.2    | ) |  |   | 0.1     |  
|                                                                            |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Loss from continuing operations before income taxes                         |  |                            | (102.3  | ) |                            |   | (42.0   | )                          |  |   | (10.1                      | ) |  |                            | (25.5   | ) |  |   | (315.2  | )
|Income tax provision (benefit)                                              |  |                            | 1.9     |   |                            |   | (6.3    | )                          |  |   | 2.1                        |   |  |                            | (19.5   | ) |  |   | 56.3    |  
|                                                                            |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Loss from continuing operations                                             |  |                            | (104.2  | ) |                            |   | (35.7   | )                          |  |   | (12.2                      | ) |  |                            | (6.0    | ) |  |   | (371.5  | )
|Loss from discontinued operations, net of income tax provision              |  |                            |        |   |                            |   |        |                            |  |   | (0.7                       | ) |  |                            | (0.1    | ) |  |   | (2.9    | )
|Gain on sale of discontinued operations, net of income tax provision        |  |                            |        |   |                            |   |        |                            |  |   | 0.8                        |   |  |                            | 77.2    |   |  |   |        |  
|                                                                            |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Net (loss) income                                                           |  | $                          | (104.2  | ) |                            | $ | (35.7   | )                          |  | $ | (12.1                      | ) |  | $                          | 71.1    |   |  | $ | (374.4  | )
|                                                                            |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Balance Sheet Data(1)(2):                                                   |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Cash and cash equivalents                                                   |  | $                          | 21.5    |   |                            | $ | 30.0    |                            |  | $ | 57.5                       |   |  | $                          | 33.6    |   |  | $ | 26.4    |  
|Total assets                                                                |  |                            | 864.7   |   |                            |   | 987.4   |                            |  |   | 1,073.8                    |   |  |                            | 1,203.2 |   |  |   | 1,556.1 |  
|Total debt, including current maturities                                    |  |                            | 637.7   |   |                            |   | 636.1   |                            |  |   | 718.2                      |   |  |                            | 759.0   |   |  |   | 1,150.1 |  
|Total shareholders (deficit) equity                                        |  |                            | (87.5   | ) |                            |   | 18.2    |                            |  |   | 31.3                       |   |  |                            | 88.5    |   |  |   | 9.2     |  
|Other Financial Data(2):                                                    |  |                            |         |   |                            |   |         |                            |  |   |                            |   |  |                            |         |   |  |   |         |  
|Net cash provided by (used in) operating activities                         |  | $                          | 43.7    |   |                            | $ | 137.9   |                            |  | $ | 131.9                      |   |  | $                          | 95.6    |   |  | $ | (51.5   | )
|Net cash (used in) provided by investing activities                         |  |                            | (48.4   | ) |                            |   | (65.6   | )                          |  |   | (68.4                      | ) |  |                            | 305.6   |   |  |   | (33.8   | )
|Net cash (used in) provided by financing activities                         |  |                            | (3.9    | ) |                            |   | (101.1  | )                          |  |   | (40.3                      | ) |  |                            | (394.9  | ) |  |   | 99.8    |  
|Capital expenditures                                                        |  |                            | 42.2    |   |                            |   | 71.8    |                            |  |   | 79.7                       |   |  |                            | 49.0    |   |  |   | 60.5    |  



|(1) | Balance Sheet Data is as of the last day of the relevant fiscal year.
|--- | ---------------------------------------------------------------------



|(2) | Balance Sheet Data for our 2006 fiscal year and Other Financial Data for our 2006 and 2007 fiscal years include our continuing and discontinued
operations.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------



15



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##### Table of Contents

|Item 7. | Managements Discussion and Analysis of Financial Condition and Results of Operations.
|------- | --------------------------------------------------------------------------------------

Executive Summary

We are a leading producer and marketer of single-use products used to serve food and beverages in the home, quick-service restaurants, and other foodservice settings. We manufacture and supply a broad
portfolio of single-use products, including cups, lids, take-out and other food containers, plates, bowls, portion cups, cutlery and straws, with products available in plastic, paper, foam, post-consumer recycled content and annually renewable
materials. We serve two primary customer groups, foodservice and consumer. Sales to foodservice customers, including foodservice and specialty distributors, and foodservice operators, accounted for approximately 79% of our net sales in 2010. Sales
to consumer customers, including grocery stores, mass merchandisers, warehouse clubs, value channel stores and other retail outlets, accounted for the remaining 21%.

During 2010, we undertook strategic initiatives designed to grow our business and improve our profitability. These initiatives had a significant effect on our results of operations for our 2010 fiscal
year.

Acquisition of InnoWare Plastic. On March 31, 2010, we acquired a manufacturer
of a comprehensive line of plastic take-out containers. The new product line, which we market under our Creative
Carryouts® brand, further broadens our product offering. Operating results of the acquired business are included
in our results from the March 31, 2010 acquisition date.

While the majority of our 5.3% increase in consolidated net
sales for 2010 was driven by growth in our existing product portfolio, the acquisition also contributed significantly to this improvement. Approximately 40% of our sales volume increase in 2010 was driven by the acquisition. The acquisition also
resulted in an increase in our selling, general and administrative expenses primarily due to costs to close the acquired administrative office, and severance costs related to the consolidation of selling, general and administrative functions, which
we completed during the third quarter of 2010.

Optimization of manufacturing footprint. We believe that our
capital expenditures over the past two years have increased our efficiency and provided the opportunity to be more productive within a smaller manufacturing footprint. Accordingly, on May 6, 2010, our Board of Directors committed to a plan to
close our manufacturing facilities in Owings Mills, Maryland; North Andover, Massachusetts; and Springfield, Missouri. We closed our Springfield facility during the first quarter of 2011 and expect to complete the remaining two closures by the end
of 2011.

Over the life of the plan, we expect to incur costs in the range of $111 to $126 million. Of these costs,
approximately $25 to $29 million are expected to be cash expenditures, including anticipated severance payments and equipment relocation and related costs. The other costs included in the range consist of pension plan curtailment loss, a charge
attributable to lease payments that we will remain obligated to make in periods after the related closure, asset impairment charges, and accelerated depreciation for certain property, plant and equipment that will not be used after the facilities
are closed, as follows (in millions):



|                                       |  |                        |     |  |                                       |   |     |                                    |  |   |    |  |  |   |    | 
|-------------------------------------- |  | ---------------------- | --- |  | ------------------------------------- | - | --- | ---------------------------------- |  | - | -- |  |  | - | -- | 
|                                       |  | Estimated range        |     |  | Incurred to date                      |  
|                                       |  | As ofDecember 26, 2010 |     |  | Thirteen weeks endedDecember 26, 2010 |   |     | Fiscal year endedDecember 26, 2010 | 
|Severance                              |  | $                      | 5   |  |                                       | $ | 7   |                                    |  | $ |   |  |  | $ | 7  | 
|Equipment relocation and related costs |  |                        | 20  |  |                                       |   | 22  |                                    |  |   | 4  |  |  |   | 5  | 
|Pension plan curtailment loss          |  |                        | 1   |  |                                       |   | 2   |                                    |  |   |   |  |  |   | 2  | 
|Accrual of remaining lease payments    |  |                        | 4   |  |                                       |   | 6   |                                    |  |   |   |  |  |   |   | 
|Asset impairment                       |  |                        | 16  |  |                                       |   | 19  |                                    |  |   |   |  |  |   | 17 | 
|Accelerated depreciation               |  |                        | 65  |  |                                       |   | 70  |                                    |  |   | 11 |  |  |   | 40 | 
|                                       |  |                        |     |  |                                       |   |     |                                    |  |   |    |  |  |   |    | 
|Total expected costs                   |  | $                      | 111 |  |                                       | $ | 126 |                                    |  | $ | 15 |  |  | $ | 71 | 
|                                       |  |                        |     |  |                                       |   |     |                                    |  |   |    |  |  |   |    | 

Excluding the asset impairment, all of the amounts incurred to date are reflected in cost of goods sold. The
asset impairment charges of approximately $17 million include $13.2 million related to equipment that we no longer expect to utilize in our operations and $3.4 million to adjust the carrying value of our Springfield property to fair value less costs
to sell.

Plant closure and consolidation costs included in cost of goods sold increased by $42 million to $54 million in 2010
compared to $12 million in 2009. The increase significantly affected our gross profit for 2010, which decreased by $63 million from 2009. Excluding these costs in both years, gross profit as a percentage of net sales was 12.5% for 2010 compared to
14.5% for 2009.

Economic and industry conditions

Our results of operations for the year ended December 26, 2010 also were affected by economic and industry conditions. The economic
downturn has reduced the discretionary income of consumers and negatively affected demand for single-use products used to serve food and beverages. We believe this decline was driven by a variety of external factors such as consumers eating
out less frequently and higher unemployment rates, which contracted the market for our foodservice operators. Lower consumer discretionary spending translated into a smaller consumer market, as did a shift from national brands to private label
products, which are traditionally offered at lower prices. All of these factors have resulted in increased competition and pressure on the price at which our products may be offered. Concurrently, raw material, particularly resins utilized to
manufacture plastic products and paperboard has risen. Resin prices are influenced by other input prices such as crude oil, natural gas, benzene, ethylene, propylene and paraxylene, as well as availability of supply and changes in demand. Paper
prices are driven by global supply and demand as well as input costs for energy, fiber, chemicals, polyethylene and transportation.



16



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##### Table of Contents

As a result of these economic and industry conditions, our average realized sales price
decreased slightly during our 2010 fiscal year compared to the prior year. Competitive pricing decisions, together with increasing raw material costs, contributed to the decline in gross profit.

Results of Operations for Fiscal Years 2010, 2009 and 2008



|                                                                            |  |               |         |   |                           |   |         |      |  |   |               |   |  |               |        |   |   |  |        |   |  |   |        |   |  |  |        |  
|--------------------------------------------------------------------------- |  | ------------- | ------- | - | ------------------------- | - | ------- | ---- |  | - | ------------- | - |  | ------------- | ------ | - | - |  | ------ | - |  | - | ------ | - |  |  | ------ | -
|                                                                            |  |               |         |   |                           |   |         |      |  |   | 2010 vs. 2009 |   |  | 2009 vs. 2008 |       
|                                                                            |  | Fiscal Year** |         |   | Favorable / (Unfavorable) |  
|(In millions)                                                               |  | 2010          |         |   | 2009                      |   |         | 2008 |  |   | $             |   |  | %             |        |   | $ |  |        | % | 
|Net sales                                                                   |  | $             | 1,582.9 |   |                           | $ | 1,502.6 |      |  | $ | 1,847.0       |   |  | $             | 80.3   |   |   |  | 5.3    |   |  | $ | (344.4 | ) |  |  | (18.6  | )
|Cost of goods sold                                                          |  |               | 1,439.3 |   |                           |   | 1,296.2 |      |  |   | 1,599.2       |   |  |               | (143.1 | ) |   |  | (11.0  | ) |  |   | 303.0  |   |  |  | 18.9   |  
|                                                                            |  |               |         |   |                           |   |         |      |  |   |               |   |  |               |        |   |   |  |        |   |  |   |        |   |  |  |        |  
|Gross profit                                                                |  |               | 143.6   |   |                           |   | 206.4   |      |  |   | 247.8         |   |  |               | (62.8  | ) |   |  | (30.4  | ) |  |   | (41.4  | ) |  |  | (16.7  | )
|Selling, general and administrative expenses                                |  |               | 150.4   |   |                           |   | 150.1   |      |  |   | 159.0         |   |  |               | (0.3   | ) |   |  | (0.0   | ) |  |   | 9.0    |   |  |  | 5.7    |  
|Loss on asset disposals                                                     |  |               | 3.9     |   |                           |   | 9.0     |      |  |   | 22.6          |   |  |               | 5.1    |   |   |  | 56.8   |   |  |   | 13.6   |   |  |  | 60.2   |  
|Impairment of goodwill                                                      |  |               |        |   |                           |   | 17.2    |      |  |   |              |   |  |               | 17.2   |   |   |  | 100.0  |   |  |   | (17.2  | ) |  |  | *      |  
|Asset impairment                                                            |  |               | 20.5    |   |                           |   |        |      |  |   | 0.6           |   |  |               | (20.5  | ) |   |  | *      |   |  |   | 0.6    |   |  |  | 100.0  |  
|                                                                            |  |               |         |   |                           |   |         |      |  |   |               |   |  |               |        |   |   |  |        |   |  |   |        |   |  |  |        |  
|Operating (loss) income                                                     |  |               | (31.2   | ) |                           |   | 30.1    |      |  |   | 65.6          |   |  |               | (61.3  | ) |   |  | (203.7 | ) |  |   | (35.5  | ) |  |  | (54.1  | )
|Interest expense, net                                                       |  |               | 70.6    |   |                           |   | 63.1    |      |  |   | 61.6          |   |  |               | (7.5   | ) |   |  | (11.9  | ) |  |   | (1.5   | ) |  |  | (2.4   | )
|Loss on debt extinguishment                                                 |  |               |        |   |                           |   | 2.5     |      |  |   |              |   |  |               | 2.5    |   |   |  | 100.0  |   |  |   | (2.5   | ) |  |  | *      |  
|Reclassification of unrealized loss on cash flow hedges to interest expense |  |               |        |   |                           |   | 9.1     |      |  |   |              |   |  |               | 9.1    |   |   |  | 100.0  |   |  |   | (9.1   | ) |  |  | *      |  
|Foreign currency exchange loss (gain), net                                  |  |               | 2.2     |   |                           |   | (2.6    | )    |  |   | 14.1          |   |  |               | (4.8   | ) |   |  | *      |   |  |   | 16.7   |   |  |  | *      |  
|Gain from bargain purchase                                                  |  |               | (1.7    | ) |                           |   |        |      |  |   |              |   |  |               | 1.7    |   |   |  | *      |   |  |   |       |   |  |  | *      |  
|                                                                            |  |               |         |   |                           |   |         |      |  |   |               |   |  |               |        |   |   |  |        |   |  |   |        |   |  |  |        |  
|Loss from continuing operations before income taxes                         |  |               | (102.3  | ) |                           |   | (42.0   | )    |  |   | (10.1         | ) |  |               | (60.3  | ) |   |  | (143.5 | ) |  |   | (31.9  | ) |  |  | (315.8 | )
|Income tax provision (benefit)                                              |  |               | 1.9     |   |                           |   | (6.3    | )    |  |   | 2.1           |   |  |               | (8.2   | ) |   |  | *      |   |  |   | 8.4    |   |  |  | *      |  
|                                                                            |  |               |         |   |                           |   |         |      |  |   |               |   |  |               |        |   |   |  |        |   |  |   |        |   |  |  |        |  
|Loss from continuing operations                                             |  |               | (104.2  | ) |                           |   | (35.7   | )    |  |   | (12.2         | ) |  |               | (68.5  | ) |   |  | (191.9 | ) |  |   | (23.5  | ) |  |  | (192.3 | )
|Loss from discontinued operations, net of income tax provision of $0        |  |               |        |   |                           |   |        |      |  |   | (0.7          | ) |  |               |       |   |   |  | *      |   |  |   | 0.7    |   |  |  | *      |  
|Gain on sale of discontinued operations, net of income tax provision of $0  |  |               |        |   |                           |   |        |      |  |   | 0.8           |   |  |               |       |   |   |  | *      |   |  |   | (0.8   | ) |  |  | (100.0 | )
|                                                                            |  |               |         |   |                           |   |         |      |  |   |               |   |  |               |        |   |   |  |        |   |  |   |        |   |  |  |        |  
|Net loss                                                                    |  | $             | (104.2  | ) |                           | $ | (35.7   | )    |  | $ | (12.1         | ) |  | $             | (68.5  | ) |   |  | (191.9 | ) |  | $ | (23.6  | ) |  |  | *      |  
|                                                                            |  |               |         |   |                           |   |         |      |  |   |               |   |  |               |        |   |   |  |        |   |  |   |        |   |  |  |        |  



|* | Not meaningful
|- | --------------



|** | Our fiscal year is the 52- or 53-week period ending on the last Sunday in December. Fiscal year 2010 ended on December 26, 2010, fiscal year 2009 ended on
December 27, 2009, and fiscal year 2008 ended on December 28, 2008. Each was a 52-week period.
|-- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Fiscal Year 2010
Compared to Fiscal Year 2009

Net sales

Net sales increased by $80.3 million, or 5.3%, to $1,582.9 million for fiscal year 2010 compared to $1,502.6 million for fiscal year 2009. The increase in net sales reflects a 5.3% increase in sales
volume and a 0.9% increase resulting from foreign currency fluctuations, partially offset by a 0.9% decrease in average realized sales price compared to the prior year. About 60% of the increase in sales volume resulted from growth in our historical
product portfolio and an increase in new product offerings (other than Creative Carryouts) despite continuing difficult economic conditions that resulted in lower industry demand. The remaining increase in sales volume reflects incremental sales
attributable to Creative Carryouts. The decrease in average realized sales price compared to the previous year reflects lower overall pricing driven primarily by the continuing competitive conditions in the marketplace, partially offset by a
favorable shift in our product mix. The year over year impact of lower pricing had less impact on our fourth fiscal quarter, as we began to experience the benefit of price increases that we implemented in the second half of the year.



17



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##### Table of Contents

Gross profit

Gross profit decreased by $62.8 million, or 30.4%, to $143.6 million for fiscal year 2010 from $206.4 million for fiscal year 2009. The decline in gross profit resulted primarily from a decrease of
approximately $59 million in the difference between sales prices and raw material costs for our U.S. operations due to both an increase in raw material costs and a decline in average realized sales price in 2010 compared to 2009. The gross profit
decline also reflects an increase of $42 million in network optimization costs compared to the prior-year period. The current-year period includes accelerated depreciation of approximately $40 million, severance expense of approximately $7 million,
a pension plan curtailment loss of approximately $2 million and costs incurred to transfer equipment from closing manufacturing facilities of approximately $5 million, including ramp-down costs at the closing facilities and start-up costs at the
receiving plants. The prior-year period included $12 million of costs related to plant consolidation, consisting of costs incurred to transfer equipment from closed manufacturing facilities, ramp-down costs and start-up costs.

The decrease in gross profit was partially mitigated by (1) an approximately $18 million benefit from lower operating costs for our
U.S. operations, driven by greater overhead absorption from higher production in the current year and one less manufacturing facility, (2) a $9 million benefit attributable to higher sales volumes in the United States, (3) a $6 million
benefit from a favorable shift in product mix and (4) a $5 million gross profit contribution from our international subsidiaries.

Gross margin, or gross profit as a percentage of net sales, was 9.1% in 2010 versus 13.7% in 2009. The decrease in gross margin was primarily driven by the decrease in the difference between sales prices
and raw material costs and the increase in plant consolidation costs, partially offset by a favorable shift in product mix and lower operating costs as described above.

Selling, general and administrative expenses

Selling, general and
administrative expenses increased slightly to $150.4 million in fiscal year 2010 from $150.1 million in fiscal year 2009. An increase in employee-related costs to normalized levels in 2010 compared to 2009, when we reduced such costs in response to
the uncertain global economy, were mostly offset by reductions in professional fees and lower expenses for advertising and trade fund spending. As a percentage of net sales, selling, general and administrative expenses were 9.5% for fiscal year 2010
versus 10.0% for fiscal year 2009, driven by the increase in sales volume and a continuing focus on the management of selling, general and administrative expenses.

Loss on asset disposals

Loss on asset disposals was $3.9 million for
fiscal year 2010 compared to $9.0 million for fiscal year 2009. The losses in both years reflect the disposal of production equipment in connection with plant closures and consolidation. The 2009 loss also includes adjustments made to record
approximately $5.8 million of equipment retirements that should have been reflected in prior periods. We determined that the adjustments were immaterial to our current- and prior-period consolidated financial statements.

Asset impairment

As a result of our decision in the second fiscal quarter of 2010 to close three manufacturing facilities, we recognized approximately $13.2 million of asset impairment related to equipment that we no
longer expect to utilize in our operations. In addition, during the third fiscal quarter of 2010, we entered into a contract to sell our Springfield, Missouri manufacturing facility and recorded $3.4 million of asset impairment to adjust the
carrying value of the facility to fair value less costs to sell. We completed the sale transaction in December 2010 and recognized a loss of approximately $0.9 million. In the fourth fiscal quarter of 2010, we recorded impairment of approximately
$3.9 million to reduce the carrying amounts of certain real estate to estimated fair value less costs to sell.

Interest
expense, net

Interest expense, net increased by $7.5 million, or 11.9%, to $70.6 million for fiscal year 2010 compared to
$63.1 million for fiscal year 2009. The increase in interest expense was driven primarily by higher average interest rates in 2010 compared to 2009 as a result of our July 2009 refinancing, which included the issuance of our 10.5% senior secured
notes. To a lesser extent, the increase in interest expense was driven by an increase in average outstanding borrowings year over year.

Foreign currency exchange loss (gain), net

We recognized a net foreign
currency exchange loss of $2.2 million for fiscal year 2010 compared to a net gain of $2.6 million for fiscal year 2009. The fluctuation was primarily the exchange rate impact on our United Kingdom subsidiarys financial statements driven by
their U.S. dollar intercompany payable, which resulted in a net loss in 2010 compared to a net gain in 2009. To a lesser extent, the net foreign currency exchange loss for 2010 reflects the net loss on our forward contracts that we use to hedge the
net foreign currency exposure in each our foreign subsidiaries.



18



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##### Table of Contents

Gain from bargain purchase

We recognized a bargain purchase gain of approximately $1.7 million on our March 31, 2010 acquisition, which represents the excess of
the fair value of the assets acquired, net of liabilities assumed, over the acquisition consideration of $24 million.

Income tax provision (benefit)

Income tax provision was $1.9 million for fiscal year 2010 compared to an income tax benefit of $6.3 million for fiscal year 2009. The 2010 income tax provision primarily reflects income tax expense from
foreign jurisdictions with a minimal offsetting domestic income tax benefit resulting from pension activity included in other comprehensive income. In the United States, we are in a net operating loss carryforward position and our deferred
income tax assets are subject to a full valuation allowance; therefore, any loss before income taxes does not generate a corresponding income tax benefit.

The benefit in 2009 includes a $5.1 million adjustment made during the first fiscal quarter of 2009 to correct an error in our previously reported deferred tax liabilities. If the adjustment had been
recorded in the corresponding prior period financial statements, it would have increased (decreased) income tax provision by approximately $0.7 million, $2.4 million and $(8.0) million in fiscal years 2008, 2007 and 2006, respectively, and increased
other comprehensive income by $0.2 million in fiscal year 2008. Excluding the $5.1 million adjustment, the remaining income tax benefit in 2009 of approximately $1.2 million reflects a U.S. tax benefit relating to current year pension activity
included in other comprehensive income and the acceleration of taxable temporary differences associated with the goodwill impairment charge related to our Europe reporting unit, partially offset by income tax provision related to our foreign
entities.

Fiscal Year 2009 Compared to Fiscal Year 2008

Net sales

Net sales decreased by $344.4 million, or 18.6%, to $1,502.6 million for fiscal year 2009 compared to $1,847.0 million for fiscal year
2008. The decrease in net sales reflects a 16.3% decrease in sales volume, a 2.1% decrease resulting from foreign currency fluctuations and a slight decrease in average realized sales price compared to the prior year.

Lower sales volumes resulted from the continued softness in demand across the industry, competition in the marketplace and our strategic
initiatives. Approximately half of the decrease in sales volume reflects our decision to de-emphasize specified product categories, such as straws and stirrers, which are high-volume commodity products, and other strategic decisions made during 2008
and 2007 to improve commercial arrangements and to exit certain unfavorable relationships. The other half of the decrease reflects the continuing global economic recession, which resulted in a significant contraction in the market for our products
and an increasingly competitive marketplace.

The slight decrease in average realized sales price reflects lower pricing
during 2009, as a result of lower raw material costs and consumer demand, which were in part due to the impact of the global economic recession. The impact of lower pricing was partially offset by a favorable shift in our product mix.

Gross profit

Gross profit decreased by $41.4 million, or 16.7%, to $206.4 million for fiscal year 2009 from $247.8 million for fiscal year 2008. Gross profit declined by approximately $80 million as a result of lower
sales and production volume for our U.S. operations, by approximately $14 million due to the results of our international subsidiaries, which decline was partially driven by foreign currency fluctuations, and by $4 million in connection with the
resolution of a contractual dispute during the first quarter of 2009. The decline in gross profit was partially offset by lower operating costs for our U.S. operations of approximately $32 million, driven by the benefit of a consolidated
manufacturing footprint (net of related consolidation costs) and lower distribution costs, and an increase of approximately $25 million in the difference between sales prices and raw material costs for our U.S. operations, mostly realized during the
first half of the year due to the lag in timing between the decline in raw material costs and the subsequent decrease in sales prices.

As noted above, gross profit includes costs related to the consolidation of our production facilities, which were approximately $12 million in 2009 and $15 million in 2008. In both years, these
consolidation costs included equipment transfers, ramp-down costs at the closing facilities and start-up expenses at the receiving plants. In 2008, the consolidation costs also included severance at the closing facilities.

Gross margin, or gross profit as a percentage of net sales, was 13.7% in 2009 versus 13.4% in 2008. The increase in gross margin was
primarily driven by a favorable shift in product mix, and to a lesser extent, an increase in the difference between sales prices and raw material costs.



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Selling, general and administrative expenses

Selling, general and administrative expenses decreased $9.5 million, or 6.0%, to $150.1 million in fiscal year 2009 compared to $159.6
million in fiscal year 2008. The decrease primarily reflects an approximately $11.0 million reduction in employee-related costs resulting from cost-savings measures implemented in December 2008 and continuing through 2009, and a reduction of
approximately $1.5 million in intangible asset amortization expense. The decrease in selling, general and administrative expenses was partially offset by a $1.6 million increase in management advisory fees paid to SCC Holding Company and Vestar. No
fees were incurred in 2008 due to December 2008 amendments to our management agreements. In addition, fiscal year 2008 selling, general and administrative expenses included $3.1 million of earnest money forfeited to us and recognized as a reduction
of expense as a result of the termination of a sale agreement related to vacant real estate located in Chicago, Illinois. As a percentage of net sales, selling, general and administrative expenses were 10.0% for fiscal year 2009 versus 8.6% for
fiscal year 2008.

Impairment of goodwill

We tested goodwill for impairment at least annually, as of the end of October, or sooner if a triggering event that suggested possible impairment of the value of our goodwill occurred. During the third
quarter of 2009, despite increasing sales in the first and second quarters and the implementation of programs intended to reduce costs and gain manufacturing efficiencies, our Europe reporting unit continued to incur declining margins and lower
operating results. These results were in part due to increased competition, a decline in the European economy and higher input costs, such as resin and electricity, which we were unable to pass along through further price increases. We considered
this combination of factors to be evidence of a permanent change in the long-term prospects of our European business. As a result, we became uncertain as to whether our European reporting units estimated fair value was substantially in excess
of its carrying value and determined that there was a risk that the reporting unit would fail step one of the impairment test. Accordingly, we concluded that sufficient indicators existed to perform an interim goodwill impairment analysis of our
Europe reporting unit. Step one of the impairment test was performed as of September 27, 2009. We estimated the fair value of the reporting unit based on the present value of expected future cash flows, assuming a discount rate of 14% and a
terminal value growth rate of 3%, and determined that the fair value was less than the carrying value. We consequently performed step two of the impairment test to calculate the amount of impairment, and concluded that the goodwill of our Europe
reporting unit was fully impaired. Accordingly, we recorded a goodwill impairment charge of approximately $17.2 million for the thirteen weeks ended September 27, 2009. After this charge, there is no remaining goodwill on our consolidated
balance sheet.

Loss on asset disposals

Loss on asset disposals was $9.0 million for fiscal year 2009 compared to $22.6 million for fiscal year 2008. The 2009 loss reflects the disposal of production equipment in connection with plant closures
and consolidation, and includes corrections made during the third and fourth fiscal quarters of 2009 to record approximately $5.8 million of equipment retirements that should have been recorded in prior periods. We determined these adjustments were
immaterial to our current and prior period consolidated financial statements. During 2010, we continued to refine the controls related to our asset disposal process. The loss during the prior-year period primarily reflects the disposal of non-core
assets, including the sale of our dairy packaging machinery and equipment in March 2008.

Interest expense, net

Interest expense, net increased $1.5 million, or 2.4%, to $63.1 million for fiscal year 2009 compared to $61.6 million for
fiscal year 2008. Higher interest expense is primarily attributable to higher average interest rates compared to the prior year period due to our refinancing transaction in July 2009, partially offset by lower outstanding debt, mainly due to
prepayments of the term loan under our first lien credit facility.

Reclassification of unrealized losses on cash flow
hedges to interest expense

We reclassified $9.1 million of unrealized losses on our cash flow hedges to interest expense
in connection with our July 2009 refinancing. See further discussion under Liquidity and Capital Resources below. We had previously accounted for our interest rate swap agreements as cash flow hedges of the variable-rate interest payments on our
first lien term loan borrowings. Due to the repayment of the term loan under the first lien credit facility as part of the refinancing, the hedged forecasted payments of variable-rate interest under our first lien term loan borrowings were no longer
probable of occurring. Accordingly, in June 2009, we discontinued hedge accounting prospectively, and reclassified the cumulative mark-to-market loss of $9.1 million associated with these swaps from accumulated other comprehensive loss to interest
expense.

Loss on debt extinguishment

During 2009, we incurred a loss on debt extinguishment of $2.5 million, which represents the write-off of unamortized deferred financing fees related to our first lien credit facility in connection with
the extinguishment of that facility in July 2009.



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Foreign currency exchange (gain) loss, net

We recognized a foreign currency exchange gain of $2.6 million for fiscal year 2009 compared to a loss of $14.1 million for fiscal year
2008. The loss in 2008 was primarily attributable to unfavorable currency fluctuations affecting our Great Britain pound sterling denominated inter-company debt. During 2008, we amended the inter-company loan agreement to change the maturity from a
date certain, as settlement of the loan is not planned or anticipated in the foreseeable future. From the effective date of the amendment, we have reflected the currency fluctuations related to the inter-company loan as a component of equity, within
accumulated other comprehensive income (loss).

Income tax (benefit) provision

Income tax benefit was $6.3 million for fiscal year 2009 compared to an income tax provision of $2.1 million for fiscal year 2008. The
benefit in 2009 includes a $5.1 million adjustment made during the thirteen weeks ended March 29, 2009 to correct an error in our previously reported deferred tax liabilities. We determined that this adjustment was immaterial to our
current and prior period financial statements. If the adjustment had been recorded in the corresponding prior period financial statements, it would have increased (decreased) income tax provision by approximately $0.7 million, $2.4 million and
$(8.0) million in fiscal years 2008, 2007 and 2006, respectively, and increased other comprehensive income by $0.2 million in fiscal year 2008.

Excluding the $5.1 million adjustment, the remaining income tax benefit of approximately $1.2 million is reflective of a U.S. tax benefit relating to current year pension activity included in other
comprehensive income and the acceleration of taxable temporary differences associated with the goodwill impairment charge related to our Europe reporting unit, partially offset by income tax provision related to our foreign entities. Our fiscal year
2008 provision primarily reflects the income tax provision related to our foreign entities. For our U.S. operations, the tax benefit generated from operating losses was offset by a corresponding increase in the valuation allowance; therefore, we
recorded a minimal net U.S. tax expense, primarily for state income taxes.

Liquidity and Capital Resources

Operating Cash Flows

We rely on cash flows from operations and borrowings under our asset-based revolving credit facilities to finance our working capital requirements. Net cash provided by operating activities for continuing
operations during 2010 was $43.7 million compared to $137.9 million during 2009. The decreased cash flows from operations resulted primarily from less of a reduction in working capital in 2010 compared to 2009 and, to a lesser extent, lower
operating results. During 2010, working capital decreased by $20.8 million, primarily reflecting the net impact of changes in inventory levels during the year. Increased levels in the first half of the year were more than offset by a reduction in
the second half of the year resulting from continuous improvements in inventory management. Partially offsetting the improvement efforts was an increase in the cost of plastic resins and paper, our primary raw materials, which increased our
inventory and negatively affected cash flows in 2010. During 2009, working capital decreased by $95.6 million driven by a significant reduction in inventory levels primarily during the first half of the year in anticipation of a significant decrease
in demand as a result of the global economic recession.

Investing Cash Flows

Net cash used in investing activities for continuing operations during 2010 was $48.4 million compared to $65.6 million during 2009. The
reduction was mostly due to the decrease in restricted cash in 2010 compared to an increase in restricted cash in 2009, described below. Capital expenditures for our continuing operations during 2010, including the cost of the acquisition of
InnoWare Plastic ($23.7 million, net of cash acquired), were $65.8 million compared to $71.8 million during 2009. We funded our capital expenditures in both years, including the acquisition, with cash flows from operations and borrowings under our
U.S. asset-based revolving credit facility.

During 2010, investing cash inflows of $7.7 million consisted mainly of proceeds
from the sale of our Springfield, Missouri manufacturing facility during the fourth quarter. Cash and cash equivalents as of December 26, 2010 includes approximately $7.3 million representing the net proceeds from the sale. The indentures
governing our senior secured and senior subordinated notes generally require us to use these proceeds to purchase or improve assets useful in our business or to purchase a business that is related, complementary or ancillary to our existing
business. During 2009, investing cash inflows of $16.6 million consisted mainly of proceeds from the September 2009 sale of a distribution center, which we closed in the fourth quarter of 2008, and the July 2009 sale of a manufacturing plant, which
we closed in the fourth quarter of 2007.

The $10.4 million increase in restricted cash in 2009 represents collateral that the
counterparty to our interest rate swaps required us to post against the then-current market value of the swaps. Our obligation to post collateral continued through the expiration date of the swaps in February 2011. The amount of collateral that had
to remain on account with the counterparty fluctuated based on changes in the estimated fair value of the swaps. In 2010, the required amount of collateral decreased by $8.5 million, from $10.4 million as of December 27, 2009, to $1.9 million
as of December 26, 2010.



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Financing Cash Flows

Net cash used in financing activities for continuing operations during 2010 was $3.9 million compared to $101.1 million during 2009. The
significant net cash outflows in 2009 resulted primarily from the prepayment of $105.0 million of principal on the term loan under our first lien credit facility that we made from cash on hand and cash flows generated from operations during the
first half of 2009. In addition, the net proceeds we received in July 2009 from the issuance of our 10.5% senior secured notes of approximately $293.8 million ($300 million less $6.2 million of original issue discount) and initial borrowings under
our asset-based revolving credit facility of approximately $28.3 million were used to repay the outstanding borrowings and accrued interest due on our first lien credit facility and debt issuance costs for the senior secured notes and asset-based
revolving credit facility.

The following is a summary of long-term debt as of December 26, 2010 and December 27,
2009 (in thousands):



|                                           |  |                   |         |   |                   |   |         |  
|------------------------------------------ |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                           |  | December 26, 2010 |         |   | December 27, 2009 |  
|Long-term debt:                            |  |                   |         |   |                   |   |         |  
|10.5% Senior Secured Notes due 2013        |  | $                 | 300,000 |   |                   | $ | 300,000 |  
|Unamortized discount                       |  |                   | (4,464  | ) |                   |   | (5,703  | )
|                                           |  |                   |         |   |                   |   |         |  
|10.5% Senior Secured Notes due 2013, net   |  |                   | 295,536 |   |                   |   | 294,297 |  
|8.5% Senior Subordinated Notes due 2014    |  |                   | 325,000 |   |                   |   | 325,000 |  
|Asset-based Revolving Credit Facility      |  |                   | 10,027  |   |                   |   | 15,000  |  
|Canadian Credit Facility  Revolver        |  |                   | 2,669   |   |                   |   |        |  
|Canadian Credit Facility  Term Loan       |  |                   |        |   |                   |   | 404     |  
|Capital lease obligations                  |  |                   | 4,483   |   |                   |   | 1,388   |  
|                                           |  |                   |         |   |                   |   |         |  
|Total long-term debt                       |  |                   | 637,715 |   |                   |   | 636,089 |  
|Less: Current maturities of long-term debt |  |                   | 430     |   |                   |   | 779     |  
|                                           |  |                   |         |   |                   |   |         |  
|Long-term debt, net of current maturities  |  | $                 | 637,285 |   |                   | $ | 635,310 |  
|                                           |  |                   |         |   |                   |   |         |  

Refinancing Transactions

On July 2, 2009, we issued $300.0 million of 10.5% Senior Secured Notes due 2013, which we refer to as the senior secured notes, and entered into a new asset-based revolving credit facility providing
for borrowings of up to $200.0 million, subject to borrowing base limitations and other specified terms and conditions. We used the initial borrowings under our asset-based revolving credit facility of $28.3 million, together with net proceeds of
$293.8 million from the issuance of our senior secured notes to (1) repay the $300.9 million of borrowings outstanding, including accrued interest thereon, under our first lien credit facility, (2) pay $17.3 million of debt issuance costs
relating to the senior secured notes and asset-based revolving credit facility, and (3) provide $3.9 million for operating needs. We deferred the debt issuance costs and are amortizing them through 2013, when the senior secured notes and
borrowings under the asset-based revolving credit facility mature.

In connection with the refinancing transactions, we
reclassified $9.1 million of unrealized losses associated with interest rate swap agreements from accumulated other comprehensive loss to interest expense in July 2009. These interest rate swap agreements had a total notional amount of $150.0
million. Under the agreements, we received a variable amount based on the Eurodollar rate and pay a fixed amount based on an interest rate of 5.3765%. The swap agreements, which became effective on August 28, 2007, expired on February 28,
2011.

We also wrote off the remaining $2.5 million of unamortized debt issuance costs related to the first lien credit
facility in July 2009 as a result of the refinancing.



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Available Capacity

The following is a summary of our committed revolving credit facilities as of December 26, 2010 (in thousands):



|                                         |  |                  |         |  |                    |   |        |                       |  |   |                   |  |  |   |         | 
|---------------------------------------- |  | ---------------- | ------- |  | ------------------ | - | ------ | --------------------- |  | - | ----------------- |  |  | - | ------- | 
|                                         |  | CommitmentAmount |         |  | AmountsOutstanding |   |        | Letters ofCredit 
(1) |  |   | AvailableCapacity | 
|Asset-based revolving credit facility(2) |  | $                | 200,000 |  |                    | $ | 10,027 |                       |  | $ | 12,346            |  |  | $ | 145,368 | 
|Canadian revolving credit facility(3)    |  |                  | 16,898  |  |                    |   | 2,669  |                       |  |   |                  |  |  |   | 11,848  | 
|                                         |  |                  |         |  |                    |   |        |                       |  |   |                   |  |  |   |         | 
|                                         |  | $                | 216,898 |  |                    | $ | 12,696 |                       |  | $ | 12,346            |  |  | $ | 157,216 | 
|                                         |  |                  |         |  |                    |   |        |                       |  |   |                   |  |  |   |         | 



|(1) | Availability under the credit facilities is reduced by letters of credit issued under the facilities.
|--- | -----------------------------------------------------------------------------------------------------



|(2) | The commitment amount for the asset-based revolving credit facility is $200.0 million; however, available capacity is $145.4 million due to the
borrowing base limit of $167.7 million in effect as of December 26, 2010.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | The commitment amount for the Canadian revolving credit facility is CA$17.0 million (approximately $16.9 million); however, available capacity is
CA$11.9 million (approximately $11.8 million) due to the borrowing base limit of CA$14.6 million (approximately $14.5 million) in effect as of December 26, 2010.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

10.5 % Senior Secured Notes

Solo Delaware and Solo Cup Operating Corporation co-issued the senior secured notes under an indenture, dated as of July 2, 2009, among the co-issuers, the subsidiary guarantors identified therein
and U.S. Bank National Association, as trustee.

The senior secured notes mature on November 1, 2013 and bear interest at
a rate of 10.5% per annum. Interest on the senior secured notes is payable semi-annually on May 1 and November 1 of each year. We made our first interest payment on November 1, 2009, and we have made all scheduled interest
payments to date. The senior secured notes were issued at 97.928% of their aggregate principal amount for gross proceeds of $293.8 million, representing a yield to maturity of 11.125%.

Guarantees and security - The obligations of Solo Delaware and Solo Cup Operating Corporation under the senior secured notes are
fully and unconditionally guaranteed, jointly and severally, by the existing guarantors under the indenture (SF Holdings Group, Inc., Solo Manufacturing LLC, P. R. Solo Cup, Inc., Solo Cup Owings Mills Holdings, Lily-Canada Holding
Corporation, Solo Cup (UK) Limited, Insulpak Holdings Limited and Solo Cup Europe Limited and Solo Cup Finance Limited) and will be so guaranteed by any future domestic subsidiaries of Solo Delaware, subject to specified exceptions. The term
domestic subsidiaries, as used in this description, includes, in addition to U.S. subsidiaries, non-U.S. subsidiaries (including the Companys current subsidiaries located in the United Kingdom) other than controlled foreign
corporations (as such term is defined under the Internal Revenue Code of 1986, as amended) and subsidiaries of controlled foreign corporations. The senior secured notes and related guarantees are secured by a senior lien on substantially all of the
assets (other than accounts receivable, specified payment intangibles, inventory, deposit accounts, commodity accounts, securities accounts, lock-boxes, instruments, chattel paper, cash and cash equivalents, general intangibles related to any of the
foregoing, proceeds and products of the foregoing and specified assets related thereto, and specifically excluded assets) of the co-issuers and guarantors and by a junior lien on the accounts receivable and other assets identified above that are not
subject to the senior lien.

Redemption options

At any time prior to May 1, 2011, we may, on one or more than one occasion, redeem some or all of the senior secured notes at a
redemption price equal to 100% of the principal amount of the senior secured notes redeemed, plus a make-whole premium as of, and any accrued and unpaid interest to, the applicable redemption date.

In addition, at any time prior to May 1, 2011, we may redeem up to 35% of the aggregate principal amount of senior secured notes,
using the proceeds of qualifying equity offerings, at a redemption price of 110.5% of the principal amount of the notes redeemed and may, not more than once in any 12-month period, redeem up to 10% of the original aggregate principal amount of the
senior secured notes at a redemption price of 103%, in each case, plus any accrued and unpaid interest to the applicable redemption date.

On or after May 1, 2011, we may redeem all or a part of the senior secured notes at a redemption price equal to a percentage of the principal amount thereof, plus any accrued and unpaid interest, as
follows:



|                                                  |  |                  |         |  
|------------------------------------------------- |  | ---------------- | ------- | -
|Period                                            |  | Redemption price |        
|For the twelve-month period beginning May 1, 2011 |  |                  | 105.250 | %
|May 1, 2012 and thereafter                        |  |                  | 100.000 | %



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Requirements to repurchase - If specified change of control events occur, we must
offer to repurchase the senior secured notes at a repurchase price equal to 101% of the principal amount of the senior secured notes repurchased, plus any accrued and unpaid interest to the applicable repurchase date. If we sell assets under
specified circumstances, we must offer to repurchase the senior secured notes at a repurchase price equal to 100% of the principal amount of the senior secured notes repurchased, plus any accrued and unpaid interest to the applicable repurchase
date.

Covenants - The indenture for our senior secured notes contains covenants that, among other things, restrict the
ability of Solo Delaware, Solo Cup Operating Corporation and their restricted subsidiaries to:



| |  |  | incur additional debt or issue disqualified stock or preferred stock;
| | - |  | ---------------------------------------------------------------------



| |  |  | create liens;
| | - |  | -------------



| |  |  | pay dividends, make investments or make other restricted payments;
| | - |  | ------------------------------------------------------------------



| |  |  | sell assets;
| | - |  | ------------



| |  |  | consolidate, merge, sell or otherwise dispose of all or substantially all of the assets of Solo Delaware and its restricted subsidiaries;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------



| |  |  | enter into transactions with affiliates;
| | - |  | ----------------------------------------



| |  |  | designate subsidiaries as unrestricted; and
| | - |  | -------------------------------------------



| |  |  | undertake other specified business activities.
| | - |  | ----------------------------------------------

These covenants are subject to a number of important limitations and exceptions.

Events of default - The indenture for our senior secured notes provides for customary events of default, including without
limitation, cross defaults to specified other debt of Solo Delaware and its subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding notes will become due and payable immediately
without further action or notice. If any other event of default under the indenture occurs and is continuing, the trustee or holders of at least 25% in principal amount of the then-outstanding senior secured notes may declare all of the senior
secured notes to be due and payable immediately, provided that, if any debt is outstanding under the asset-based revolving credit facility, the acceleration of the senior secured notes will not be effective until the earlier of the acceleration of
debt under the asset-based revolving credit facility or five business days after receipt by the issuers and the administrative agent under the related loan agreement of notice of the acceleration.

Asset-Based Revolving Credit Facility

On July 2, 2009, we entered into a loan agreement with Bank of America, N.A., as administrative agent, co-collateral agent and lender; General Electric Capital Corporation, as co-collateral agent and
lender; and Wells Fargo Foothill, LLC and Goldman Sachs Lending Partners LLC, as lenders, providing for revolving credit financing of up to $200.0 million, including a $40.0 million sub-limit for letters of credit, with a maturity date of
July 2, 2013.

Guarantors - Subject to specified exceptions, newly-created or acquired direct and indirect
domestic subsidiaries of Solo Delaware will be required to become guarantors under the asset-based revolving credit facility. The term domestic subsidiaries, as used in this description, includes, in addition to U.S. subsidiaries,
non-U.S. subsidiaries (including the Companys current subsidiaries located in the United Kingdom) other than controlled foreign corporations (as such term is defined under the Internal Revenue Code of 1986, as amended) and subsidiaries of
controlled foreign corporations.

Borrowing base and availability - Our ability to borrow under the asset-based
revolving credit facility is limited to a borrowing base equal to 85% of eligible accounts receivable plus the lower of (1) 65% of eligible inventory and (2) 85% of the net orderly liquidation value of eligible inventory minus availability
reserves, and is subject to other conditions, limitations and reserve requirements.

Under the asset-based revolving credit
facility, we have the right to increase the aggregate principal amount of the commitments from time to time, in an aggregate amount not to exceed $100.0 million, without the consent of any lender (other than the lenders participating in such
increase), so long as any such increase is at least $25.0 million, subject to borrowing base limitations and other specified terms and conditions.



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##### Table of Contents

Security - We are jointly and severally liable for all obligations under the
asset-based revolving credit facility and under certain hedging arrangements and bank product and cash management services provided by the asset-based revolving credit facility lenders or their affiliates to us, and such obligations will be
guaranteed by the direct and indirect domestic subsidiaries of Solo Delaware that are not borrowers, subject to specified exceptions. These obligations will be secured by:



| |  |  | senior liens on the following assets of the asset-based revolving credit facility borrowers and guarantors, referred to as ABL Collateral: their
accounts receivable, specified payment intangibles, inventory, deposit accounts, commodity accounts, securities accounts, lock-boxes, instruments, chattel paper, cash and cash equivalents, general intangibles related to any of the foregoing and
proceeds and products of the foregoing and certain assets related thereto, subject to specified exceptions; and
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | junior liens on the following assets of the asset-based revolving credit facility borrowers and guarantors, referred to as Notes Collateral, which are
subject to senior liens in favor of holders of the senior secured notes and Solo Cup Operating Corporation: substantially all of their tangible and intangible assets, other than ABL Collateral and specified excluded assets.
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Interest - Interest accrues on outstanding borrowings under the asset-based revolving credit
facility at a rate of either LIBOR (as defined in the asset-based revolving credit facility) plus a margin of 4% per annum, or a specified base rate plus a margin of 3% per annum, at our option. These interest rate margins were subject to
adjustment after July 2, 2010 based on borrowing base availability. Letters of credit issued and outstanding under the asset-based revolving credit facility accrue fees at a per annum rate equal to the LIBOR interest rate margin described above
plus a 0.125% per annum fronting fee to the issuing bank on the face amount thereof, in addition to the issuing banks customary fees and charges in connection with the issuance, amendment, negotiation, payment, processing, transfer and
administration of such letters of credit. An unused line fee of 0.75% per annum accrues on an amount equal to (1) the aggregate lending commitments under the asset-based revolving credit facility less (2) the average daily amount of
the outstanding borrowings plus the face amount of any outstanding letters of credit under the asset-based revolving credit facility.

Covenants - The asset-based revolving credit facility contains customary affirmative and negative covenants, including covenants that restrict the ability of each borrower, each guarantor and each
subsidiary of the foregoing to, among other things:



| |  |  | incur, assume, guarantee or suffer to exist additional debt or liens;
| | - |  | ---------------------------------------------------------------------



| |  |  | make investments or loans or acquire any person or entity;
| | - |  | ----------------------------------------------------------



| |  |  | enter into transactions with affiliates;
| | - |  | ----------------------------------------



| |  |  | enter into certain restrictive agreements;
| | - |  | ------------------------------------------



| |  |  | engage in mergers, acquisitions, consolidations and asset sales;
| | - |  | ----------------------------------------------------------------



| |  |  | prepay, redeem, purchase, defease or otherwise satisfy specified types of debt;
| | - |  | -------------------------------------------------------------------------------



| |  |  | modify the terms of other debt; and
| | - |  | -----------------------------------



| |  |  | declare, pay or make distributions or dividends.
| | - |  | ------------------------------------------------

These covenants are subject to a number of important limitations and exceptions.

In addition, the asset-based revolving credit facility contains a springing covenant that is not currently applicable to us. In the event
our available capacity under the facility drops below a specified threshold (the greater of (a) $15,000,000 or (b) 15% of the lesser of our borrowing base or the aggregate amount of commitments under the facility), all cash receipts would
be controlled by our lenders and used to pay down outstanding borrowings under the facility. In addition, we would be required to maintain a minimum Fixed Charge Coverage Ratio (as defined in the facility) of 1.1 to 1 for a trailing twelve-month
period. The lenders would maintain control over our receipts and the minimum Fixed Charge Coverage Ratio requirement would remain in effect until such time that our available capacity rises to a level that equals or exceeds the above specified
threshold for 45 consecutive days.

Events of default - The loan agreement underlying our asset-based revolving credit
facility contains customary events of default, including, but not limited to, cross defaults to specified other debt of Solo Delaware and its subsidiaries, and specified change of control events. Failure to maintain the minimum Fixed Charge Coverage
Ratio, if applicable in the future as discussed in the immediately preceding paragraph, would also constitute an event of default. If an event of default occurs and is continuing under the loan agreement, the lenders may, among other things,
terminate their commitments and require immediate repayment of all amounts owed by the borrowers and the guarantors under the asset-based revolving credit facility.



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8.5% Senior Subordinated Notes

On February 27, 2004, we issued $325.0 million of 8.5% Senior Subordinated Notes due 2014, which we refer to as the senior
subordinated notes. The senior subordinated notes mature on February 15, 2014 and bear interest at a rate of 8.5% per annum. Interest on the senior subordinated notes is payable semi-annually every February 15 and August 15. We
have made all scheduled interest payments to date. Under the indenture governing the senior subordinated notes, subject to exceptions, we must meet a minimum fixed charge coverage ratio to incur additional debt. We have the option to redeem all or a
portion of the senior subordinated notes at a redemption price equal to a percentage of the principal amount thereof plus accrued interest as follows:





|                                                        |  |                  |         |  
|------------------------------------------------------- |  | ---------------- | ------- | -
|Period                                                  |  | Redemption price |        
|For the twelve-month period beginning February 15, 2011 |  |                  | 101.417 | %
|February 16, 2012 and thereafter                        |  |                  | 100.000 | %

The senior subordinated
notes provide that upon the occurrence of a change in control, as defined, the holders will have an option to require the redemption of the senior subordinated notes at a redemption price equal to 101% of the principal amount thereof plus accrued
interest. The indenture governing the senior subordinated notes contains various covenants which, subject to exception, prohibit, or limit, among other things:



| |  |  | asset sales;
| | - |  | ------------



| |  |  | changes of control;
| | - |  | -------------------



| |  |  | dividend payments;
| | - |  | ------------------



| |  |  | equity repurchases or redemptions;
| | - |  | ----------------------------------



| |  |  | the incurrence of additional debt;
| | - |  | ----------------------------------



| |  |  | the issuance of disqualified stock;
| | - |  | -----------------------------------



| |  |  | certain transactions with affiliates;
| | - |  | -------------------------------------



| |  |  | the creation of additional liens; and
| | - |  | -------------------------------------



| |  |  | certain other business activities.
| | - |  | ----------------------------------

From time to time, and in accordance with any applicable securities laws, Solo Delawares principal shareholders or their affiliates may enter the market to purchase or sell senior subordinated notes
or senior secured notes.

Canadian Revolving Credit Facility

On December 15, 2010, Solo Cup Canada Inc., an indirect wholly owned subsidiary of Solo Delaware, entered into a credit agreement
with GE Canada Finance Holding Company, as a lender and agent for all lenders, providing for asset-based revolving credit financing of up to CA$17.0 million, including a CA$2.0 million sublimit for letters of credit. The Canadian credit facility
expires on December 15, 2013. The Canadian credit agreement amended and replaced in its entirety the Credit Agreement dated as of September 24, 2004, as amended, between Solo Cup Canada (formerly known as Lily Cups Inc.), as borrower, and
GE Canada Finance Holding Company, as agent and lender, and terminated the availability of borrowings thereunder.

Solo Cup
Canada is the sole borrower under the Canadian credit facility. Its obligations under the Canadian credit agreement will be guaranteed by any future subsidiary of Solo Cup Canada, unless the provisions of the Canadian credit agreement specifically
exclude that subsidiary from the requirement to provide a guarantee or the lenders otherwise agree not to require that subsidiary to provide a guarantee.

Solo Cup Canadas ability to borrow under the Canadian credit facility is limited to a borrowing base equal to 85% of eligible accounts receivable plus the lower of (1) 70% of eligible raw
materials and finished goods inventory and (2) 85% of the net orderly liquidation value of eligible raw materials and finished goods inventory plus the lower of (a) 25% of eligible work-in-process inventory and (b) $1,000,000 minus
availability reserves, and is subject to other conditions, limitations and reserve requirements.

The obligations of Solo Cup
Canada and any future subsidiary guarantor under the Canadian credit facility are secured by first priority liens on, subject to specified exclusions, the existing and after-acquired personal property of Solo Cup Canada and any future subsidiary
guarantor.



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Solo Cup Canada may borrow funds under the Canadian credit facility, at its option, in
Canadian or U.S. dollars. Canadian dollar denominated loans bear interest, at Solo Cup Canadas option, at a variable rate equal to: (1) the Canadian Bankers Acceptance Rate (the BA Rate), plus 2.5% per annum; or
(2) the Canadian Prime Rate (being the higher of the (a) Canadian Bank Prime Rate and (b) 1.35% over the 30-day BA Rate), plus 1.25% per annum. U.S. dollar denominated loans bear interest, at Solo Cup Canadas option, at a
variable rate equal to: (1) the U.S. Base Rate, plus 0.75% per annum; or (b) LIBOR, plus 2.5% per annum. As of December 26, 2010, we had approximately CA$2.7 million (approximately $2.7 million) outstanding on the revolving
facility with an effective interest rate of approximately 4.25%.

Contractual obligations

The following table summarizes our contractual obligations as of December 26, 2010, and the effect such obligations are expected to
have on our liquidity and cash flows in future periods (in thousands):



|                                |  |       |           |  |                             |   |         |      |  |   |         |  |  |      |         |  |      |   |         |            |  |   |        |  |  |   |         | 
|------------------------------- |  | ----- | --------- |  | --------------------------- | - | ------- | ---- |  | - | ------- |  |  | ---- | ------- |  | ---- | - | ------- | ---------- |  | - | ------ |  |  | - | ------- | 
|                                |  |       |           |  | Payments due in fiscal year |  
|                                |  | Total |           |  | 2011 (2)                    |   |         | 2012 |  |   | 2013    |  |  | 2014 |         |  | 2015 |   |         | Thereafter | 
|Long-term debt obligations      |  | $     | 637,696   |  |                             | $ |        |      |  | $ |        |  |  | $    | 312,696 |  |      | $ | 325,000 |            |  | $ |       |  |  | $ |        | 
|Capital lease obligations(1)    |  |       | 6,529     |  |                             |   | 763     |      |  |   | 767     |  |  |      | 771     |  |      |   | 697     |            |  |   | 476    |  |  |   | 3,055   | 
|Non-cancelable operating leases |  |       | 519,939   |  |                             |   | 44,804  |      |  |   | 43,041  |  |  |      | 41,444  |  |      |   | 38,933  |            |  |   | 35,057 |  |  |   | 316,660 | 
|Interest payments(3)            |  |       | 207,365   |  |                             |   | 65,387  |      |  |   | 65,387  |  |  |      | 62,778  |  |      |   | 13,813  |            |  |   |       |  |  |   |        | 
|                                |  |       |           |  |                             |   |         |      |  |   |         |  |  |      |         |  |      |   |         |            |  |   |        |  |  |   |         | 
|Total                           |  | $     | 1,371,529 |  |                             | $ | 110,954 |      |  | $ | 109,195 |  |  | $    | 417,689 |  |      | $ | 378,443 |            |  | $ | 35,533 |  |  | $ | 319,715 | 
|                                |  |       |           |  |                             |   |         |      |  |   |         |  |  |      |         |  |      |   |         |            |  |   |        |  |  |   |         | 



|(1) | We had capital lease obligations of approximately $4.5 million as of December 26, 2010. Amounts in the table above also include the interest
obligation attributable to these leases.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | We expect that our contributions in 2011 to our defined benefit plans will be approximately $7 million, which are not included in the contractual
obligations table above.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | In estimating future interest payments for 2011-2015, we used interest rates in effect as of December 26, 2010 and used our average outstanding
borrowings under the asset-based revolving credit facility during 2010 as the estimate of future years average outstanding borrowings.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

The above table excludes the liability for unrecognized tax benefits as these are not contractual obligations by nature. We cannot determine with any degree of reliability the years in which these
liabilities might ultimately settle. The above table also excludes the governmental obligations described below.

Government Obligations

We are subject to agreements with the City of Chicago and the State of Illinois relating to an undeveloped property located in Chicago, Illinois that we acquired in 2001. Pursuant to those agreements, the
City of Chicago paid on our behalf a portion of the 2001 purchase price of the property in the form of cash and the issuance of a note. The State of Illinois also provided a grant to us. Under these agreements, we are required to fulfill specified
obligations relating to the development of the property and retention of a specified number of employees. The amounts potentially repayable under the agreements for failure to comply with the obligations included therein total approximately $16.3
million, of which approximately $3.0 million is interest bearing, and are included in other current liabilities in the accompanying consolidated balance sheets.

We no longer intend to develop the property, and in February 2011, we entered into an agreement to sell the property for $5.0 million in cash and the assumption by the buyer of the government
obligations described above. Our obligation to sell the property is contingent upon our full release from those government obligations. In addition, the transaction is contingent upon certain other governmental incentives and/or
approvals. The sale, which is subject to other customary terms and conditions, is scheduled to close in the third quarter of 2011.



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2011 Outlook

Management believes that cash generated by operations, existing cash and cash equivalents and amounts available under our credit facilities will be sufficient to meet our reasonably foreseeable liquidity
needs, including operating needs, planned capital expenditures, expenses related to announced plant closures, payments in conjunction with our lease commitments and debt service requirements during 2011. We expect that our total 2011 capital
expenditures will be in the range of $35 million to $45 million. In addition, we expect to contribute approximately $7 million to our defined benefit plans.

For 2011, we expect raw material prices to rise in comparison to 2010. Increases in resin prices are expected to occur throughout 2011 and are primarily driven by supply and demand, feedstock
availability, and geopolitical unrest. Paper prices are expected to remain flat compared to the second half of 2010 for the first half of 2011, with the potential to increase in the second half of 2011 depending on supplier backorder levels.

Off-balance sheet arrangements

We issue letters of credit to ensure performance and payment to third parties in accordance with specified terms and conditions. Under our asset-based revolving credit facility, we have the ability to
issue up to $40.0 million in letters of credit. As of December 26, 2010, approximately $12.3 million of standby letters of credit were outstanding. These standby letters of credit are primarily used to support our workers compensation
insurance programs. We are not required to provide cash collateral for letters of credit issued. All issued letters of credit are secured by the asset-based revolving credit facility.

We also have the ability to issue up to CA$2.0 million in letters of credit under our Canadian credit facility. As of December 26,
2010, no letters of credit were outstanding thereunder.

In June 2007, we entered into a lease agreement in conjunction with
the sale of six of our manufacturing facilities. The sale proceeds of $130.0 million were used to retire our term loan under our senior secured second lien credit facility. Upon the sale of the six properties, we immediately leased them back
pursuant to a 20-year term lease. The lease contains four five-year renewal term options and is non-cancelable. Rent for the six properties is payable on a quarterly basis, due on the first day of each calendar quarter, with an annual 2% escalation.
Annual rent expense of $14.2 million is recognized on a straight-line basis over the 20-year term of the lease. Payments during fiscal years 2010 and 2009 were $12.3 million and $9.1 million, respectively. We made the fourth quarterly payment in
2009 of approximately $3.0 million subsequent to December 27, 2009, our fiscal year end, and we made the fourth quarterly payment in 2010 of approximately $3.1 million subsequent to our December 26, 2010 fiscal year end. The fourth
quarterly payment for 2008 was made in our 2008 fiscal year. The lease is classified as an operating lease in accordance with FASB ASC Topic 840, Leases.

Net Operating Loss Carryforwards

As of December 26, 2010, we had
approximately $319.3 million of U.S. federal tax net operating loss carryforwards that expire between 2018 and 2030, of which $17.0 million were subject to the provisions of Internal Revenue Code Section 382. We establish a valuation allowance
for deferred tax assets, including our net operating loss carryforwards, when the amount of expected future taxable income is not likely to support the use of the deduction or credit. During the fiscal year ended December 26, 2010, our
valuation allowance on all tax attributes increased by $36.8 million to $152.6 million primarily related to activity from our U.S. and European operations. The ultimate realization of deferred tax assets is dependent upon the generation of future
taxable income during the periods in which those temporary differences become deductible.

Critical Accounting Estimates

In preparing our consolidated financial statements in conformity with accounting principles generally accepted in the United States, we
make decisions that impact the reported amounts of assets, liabilities, revenues and expenses, and related disclosures. Such decisions include the selection of the appropriate accounting principles to be applied and the assumptions on which to base
accounting estimates. In reaching such decisions, we apply judgments based on our understanding and analysis of the relevant circumstances, current developments and historical experience. Actual amounts could differ from those estimated at the time
the consolidated financial statements are prepared. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of the Board of Directors, and the members of the Audit Committee have
reviewed this disclosure.



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Our significant accounting policies are described in Note 2 to the consolidated financial
statements in Item 8 of this annual report. Some of these significant accounting policies require us to make difficult, subjective or complex judgments or estimates. An accounting estimate is considered to be critical if it meets both of the
following criteria: (1) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made and (2) different estimates reasonably could have been used or changes in the estimate that are
reasonably likely to occur from period to period would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. Our critical accounting estimates include the following:

Accounts receivable valuation. We value accounts receivable, net of an allowance for doubtful accounts. Each quarter,
we estimate our ability to collect outstanding receivables and establish an allowance for doubtful accounts that reflects our best estimate of the amount of probable credit losses in our existing accounts receivable. In doing so, we evaluate the age
of our receivables, past collection history, current financial condition of key customers and economic conditions. Based on this evaluation, we establish a reserve for specific accounts receivable that we believe are uncollectible, as well as an
estimate of uncollectible receivables not specifically known. Our estimate of the allowance for doubtful accounts is a critical accounting estimate because it is highly susceptible to change from period to period. In addition, it requires us to make
judgments about the future financial condition of our customers.

Deterioration in the financial condition of any key customer
or a significant downturn in the economy could have a material negative impact on our ability to collect a portion or all of the accounts receivable. We believe that analysis of historical trends and current knowledge of potential collection
problems provide us with sufficient information to establish a reasonable estimate of an allowance for doubtful accounts; however, since we cannot predict with certainty future changes in the financial stability of our customers, our actual future
losses from uncollectible accounts may differ from our estimates. In the event we determine that a smaller or larger balance of the allowance for doubtful accounts was appropriate, we would record a credit or charge to selling, general and
administrative expenses in the period in which we made such a determination.

Customer discounts and allowances. We
provide allowances for customer incentive programs when the revenue is recognized, based on historical experience and current trends. The customer allowances are determined with significant management judgment and reviewed regularly to determine the
adequacy of the amounts. Changes in economic conditions, markets and customer relationships may require adjustments to these allowances from period to period. In the event that future trends vary significantly from past or expected trends, our
reported net sales may increase or decrease by a material amount.

Certain customer discounts and allowances are earned and
payable to customers if a specified level of sales volume is met. We record such customer discounts and allowances based on the estimated and probable allowances for the period. The amounts are recorded as a reduction of net sales based on the
actual customers sales volume during the period. If actual allowances differ from management estimates, gross profit and operating income could be affected. The most significant allowance reflects our estimates of discounts that certain
foodservice customers are entitled to claim based on their distribution activities.

Vendor incentives. Certain vendor
incentives are earned only if a specified level of annual purchases is achieved. We record such incentives during the interim periods based on the actual results achieved on a year-to-date basis compared to targets or specified levels of purchases.
The amounts are recorded as a reduction of cost of goods sold based on the purchase volume during the interim period. If actual purchase volume differs from management estimates, gross margin and operating income could be affected.

Inventory reserves. We establish reserves for our inventory to reflect those conditions when the cost of the inventory is not
expected to be recovered. We review such circumstances when products are not expected to be saleable based on criteria established by our supply chain organization and estimates based on historical experience. The reserve for these products is equal
to all or a portion of the cost of the inventory based on the specific facts and circumstances. We monitor inventory levels on a regular basis and record changes in inventory reserves as part of cost of goods sold.

Impairment of long-lived assets. We test property for recoverability whenever events or changes in circumstances indicate that its
carrying value may not be recoverable. Such events include, but are not limited to, significant adverse changes in the business climate, the impact of significant customer losses, current period operating or cash flow losses, forecasted continuing
losses, or a current expectation that an asset or asset group will be disposed of before the end of its useful life, for example, as a result of a decision to exit a product line or close a manufacturing facility. Recoverability of property is
evaluated by a comparison of the carrying amount of an asset or asset group to future net undiscounted cash flows expected to be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment
loss recognized is the amount by which the carrying amount of the asset exceeds the estimated fair value. When an impairment loss is recognized for assets to be held and used, the adjusted carrying amount of those assets is depreciated over their
remaining useful lives. Restoration of a previously recognized impairment loss is not allowed. There are inherent uncertainties associated with these judgments and estimates.



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Income taxes. We account for income taxes in accordance with the asset and liability
method under FASB ASC Topic 740, Income Taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement and income tax bases of assets and liabilities
and tax credit and operating loss carryforwards using enacted tax rates expected to apply to taxable income in the years in which the differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a
change in tax rates is recognized in income in the period that includes the enactment date. The recoverability of deferred tax assets is dependent upon our assessment of whether it is more likely than not that sufficient future taxable income will
be generated in the relevant tax jurisdiction to utilize the deferred tax asset. In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence including our past operating
results, the existence of cumulative losses in the most recent fiscal years, and our forecast of future taxable income on a jurisdiction by jurisdiction basis. In determining future taxable income, we review the reversal of temporary differences and
the implementation of feasible and prudent tax planning strategies. In the event we determine that our future taxable income will not be sufficient to utilize our deferred tax assets, we record a valuation allowance. If our determination changes, a
charge or a benefit would be recorded in our statement of operations. We currently do not believe that we will fully realize the benefit of our deferred tax assets in the United States, except for the reversal of deferred tax liabilities, and
therefore we have a full valuation allowance against these deferred tax assets.



|Item 7a. | Quantitative and Qualitative Disclosures About Market Risk.
|-------- | -----------------------------------------------------------

In the ordinary course of business, we are exposed to market risk-sensitive instruments, which consist primarily of our variable interest rate debt.

Interest accrues on outstanding borrowings under our U.S. asset-based revolving credit facility at a rate of either LIBOR (as defined in
the asset-based revolving credit facility) plus a margin of 4% per annum, or a specified base rate plus a margin of 3% per annum, at our option. These interest rate margins are subject to adjustment based on borrowing base availability. As
of December 26, 2010, the asset-based revolving credit facility had an outstanding balance of approximately $10.0 million and carried an effective interest rate of 6.25%.

Solo Cup Canada may borrow funds under the Canadian credit facility, at its option, in Canadian or U.S. dollars. Canadian dollar denominated loans bear interest, at Solo Cup Canadas option, at a
variable rate equal to: (1) the Canadian Bankers Acceptance Rate (the BA Rate), plus 2.5% per annum; or (2) the Canadian Prime Rate (being the higher of the (a) Canadian Bank Prime Rate and (b) 1.35% over the
30-day BA Rate), plus 1.25% per annum. U.S. dollar denominated loans bear interest, at Solo Cup Canadas option, at a variable rate equal to: (1) the U.S. Base Rate, plus 0.75% per annum; or (b) LIBOR, plus 5% per
annum. As of December 26, 2010, the Canadian credit facility had an outstanding balance of CA$2.7 million (approximately $2.7 million) and carried an effective interest rate of 4.25%.

As of December 26, 2010, we had three forward-starting receive-variable, pay-fixed interest rate swap agreements with a total
notional amount of $150.0 million that were entered into in August 2007 to hedge a portion of our exposure to interest rate risk related to our variable interest rate borrowings under our first lien credit facility. The variable rate of interest
received was the Eurodollar rate. The fixed rate of interest paid was 5.3765%. The swap agreements were effective from August 28, 2007 to their expiration on February 28, 2011. Prior to our July 2009 refinancing transactions, the interest
rate swaps were designated and qualified as highly-effective cash flow hedges. As long as these interest rate swaps were designated as cash flow hedges, the mark-to-market changes on these swaps had been reported as a component of accumulated other
comprehensive loss. As a result of our July 2009 refinancing, the hedged forecasted payments of variable-rate interest on the first lien credit facility borrowings were no longer probable of occurring. Accordingly, we discontinued hedge accounting
prospectively, and, as a result, the cumulative mark-to-market loss of $9.1 million associated with these swaps was reclassified from accumulated other comprehensive loss to interest expense in June 2009. In periods subsequent to June 2009 through
the expiration of these interest rate swaps, we were exposed to variations in the fair value of the swaps as three-month LIBOR fluctuated.

Based upon the information above, our annual pre-tax income would increase by approximately $1.4 million for each one-percentage point increase in the interest rates applicable to our variable rate debt
and interest rate swap agreements. At the end of 2010, three-month LIBOR was less than one percent; therefore, the maximum decrease in our annual pre-tax income based on a decrease in interest rates applicable to our variable rate debt and interest
rate swap agreements would be approximately $0.4 million. The level of our exposure to interest rate movements may fluctuate significantly as a result of changes in the amount of debt outstanding under our credit facilities.



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|Item 8. | Financial Statements and Supplementary Data.
|------- | --------------------------------------------

Report of Independent Registered Public Accounting Firm

The Board of Directors and
Shareholder

Solo Cup Company:

We
have audited the accompanying consolidated balance sheets of Solo Cup Company and subsidiaries (the Company) as of December 26, 2010 and December 27, 2009, and the related consolidated statements of operations, shareholders (deficit)
equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 26, 2010. 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 the
standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the
overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the
consolidated financial statements referred to above present fairly, in all material respects, the financial position of Solo Cup Company and subsidiaries as of December 26, 2010 and December 27, 2009, and the results of their operations
and their cash flows for each of the years in the three-year period ended December 26, 2010, in conformity with U.S. generally accepted accounting principles.

/s/ KPMG LLP

Chicago, Illinois

March 17, 2011



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)



|                                                                                                       |  |                   |          |   |                   |   |          |  
|------------------------------------------------------------------------------------------------------ |  | ----------------- | -------- | - | ----------------- | - | -------- | -
|                                                                                                       |  | December 26, 2010 |          |   | December 27, 2009 |  
|Assets                                                                                                 |  |                   |          |   |                   |   |          |  
|Current assets:                                                                                        |  |                   |          |   |                   |   |          |  
|Cash and cash equivalents                                                                              |  | $                 | 21,511   |   |                   | $ | 30,006   |  
|Accounts receivable:                                                                                   |  |                   |          |   |                   |   |          |  
|Trade, less allowance for doubtful accounts of $1,837 and $1,114                                       |  |                   | 116,213  |   |                   |   | 117,203  |  
|Other                                                                                                  |  |                   | 4,512    |   |                   |   | 7,662    |  
|Inventories                                                                                            |  |                   | 227,589  |   |                   |   | 232,582  |  
|Deferred income taxes                                                                                  |  |                   | 13,056   |   |                   |   | 19,131   |  
|Prepaid expenses                                                                                       |  |                   | 6,039    |   |                   |   | 6,193    |  
|Restricted cash                                                                                        |  |                   | 1,940    |   |                   |   |         |  
|Assets held for sale                                                                                   |  |                   |         |   |                   |   | 2,825    |  
|Other current assets                                                                                   |  |                   | 17,809   |   |                   |   | 20,799   |  
|                                                                                                       |  |                   |          |   |                   |   |          |  
|Total current assets                                                                                   |  |                   | 408,669  |   |                   |   | 436,401  |  
|Property, plant and equipment, less accumulated depreciation and amortization of $612,847 and $527,050 |  |                   | 429,113  |   |                   |   | 508,964  |  
|Intangible assets, net                                                                                 |  |                   | 910      |   |                   |   |         |  
|Restricted cash                                                                                        |  |                   |         |   |                   |   | 10,410   |  
|Other assets                                                                                           |  |                   | 25,980   |   |                   |   | 31,643   |  
|                                                                                                       |  |                   |          |   |                   |   |          |  
|Total assets                                                                                           |  | $                 | 864,672  |   |                   | $ | 987,418  |  
|                                                                                                       |  |                   |          |   |                   |   |          |  
|Liabilities and Shareholders Equity                                                                   |  |                   |          |   |                   |   |          |  
|Current liabilities:                                                                                   |  |                   |          |   |                   |   |          |  
|Accounts payable                                                                                       |  | $                 | 63,058   |   |                   | $ | 81,990   |  
|Accrued payroll and related costs                                                                      |  |                   | 28,707   |   |                   |   | 25,785   |  
|Accrued customer allowances                                                                            |  |                   | 27,172   |   |                   |   | 29,810   |  
|Current maturities of long-term debt                                                                   |  |                   | 430      |   |                   |   | 779      |  
|Accrued interest                                                                                       |  |                   | 20,000   |   |                   |   | 19,499   |  
|Other current liabilities                                                                              |  |                   | 39,189   |   |                   |   | 27,608   |  
|                                                                                                       |  |                   |          |   |                   |   |          |  
|Total current liabilities                                                                              |  |                   | 178,556  |   |                   |   | 185,471  |  
|Long-term debt, net of current maturities                                                              |  |                   | 637,285  |   |                   |   | 635,310  |  
|Deferred income taxes                                                                                  |  |                   | 14,876   |   |                   |   | 22,672   |  
|Pensions and other postretirement benefits                                                             |  |                   | 38,428   |   |                   |   | 36,011   |  
|Deferred gain on sale-leaseback                                                                        |  |                   | 40,758   |   |                   |   | 43,540   |  
|Other liabilities                                                                                      |  |                   | 42,273   |   |                   |   | 46,201   |  
|                                                                                                       |  |                   |          |   |                   |   |          |  
|Total liabilities                                                                                      |  |                   | 952,176  |   |                   |   | 969,205  |  
|Shareholders (deficit) equity:                                                                        |  |                   |          |   |                   |   |          |  
|Common stock  Par value $0.01 per share; 1,000 shares authorized; 100 shares issued and outstanding   |  |                   |         |   |                   |   |         |  
|Additional paid-in capital                                                                             |  |                   | 254,895  |   |                   |   | 254,995  |  
|Accumulated deficit                                                                                    |  |                   | (331,116 | ) |                   |   | (226,903 | )
|Accumulated other comprehensive loss                                                                   |  |                   | (11,283  | ) |                   |   | (9,879   | )
|                                                                                                       |  |                   |          |   |                   |   |          |  
|Total shareholders (deficit) equity                                                                   |  |                   | (87,504  | ) |                   |   | 18,213   |  
|                                                                                                       |  |                   |          |   |                   |   |          |  
|Total liabilities and shareholders (deficit) equity                                                   |  | $                 | 864,672  |   |                   | $ | 987,418  |  
|                                                                                                       |  |                   |          |   |                   |   |          |  

See accompanying notes to consolidated financial statements.



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands)



|                                                                            |  |                            |           |   |                            |   |           |                            |  |   |           |  
|--------------------------------------------------------------------------- |  | -------------------------- | --------- | - | -------------------------- | - | --------- | -------------------------- |  | - | --------- | -
|                                                                            |  | Year endedDecember 26,2010 |           |   | Year endedDecember 27,2009 |   |           | Year endedDecember 28,2008 | 
|Net sales                                                                   |  | $                          | 1,582,861 |   |                            | $ | 1,502,552 |                            |  | $ | 1,847,034 |  
|Cost of goods sold                                                          |  |                            | 1,439,312 |   |                            |   | 1,296,132 |                            |  |   | 1,599,270 |  
|                                                                            |  |                            |           |   |                            |   |           |                            |  |   |           |  
|Gross profit                                                                |  |                            | 143,549   |   |                            |   | 206,420   |                            |  |   | 247,764   |  
|Selling, general and administrative expenses                                |  |                            | 150,339   |   |                            |   | 150,139   |                            |  |   | 159,051   |  
|Loss on asset disposals                                                     |  |                            | 3,879     |   |                            |   | 8,969     |                            |  |   | 22,560    |  
|Impairment of goodwill                                                      |  |                            |          |   |                            |   | 17,210    |                            |  |   |          |  
|Asset impairment                                                            |  |                            | 20,536    |   |                            |   |          |                            |  |   | 555       |  
|                                                                            |  |                            |           |   |                            |   |           |                            |  |   |           |  
|Operating (loss) income                                                     |  |                            | (31,205   | ) |                            |   | 30,102    |                            |  |   | 65,598    |  
|Interest expense, net of interest income of $211, $535 and $1,101           |  |                            | 70,616    |   |                            |   | 63,096    |                            |  |   | 61,624    |  
|Loss on debt extinguishment                                                 |  |                            |          |   |                            |   | 2,520     |                            |  |   |          |  
|Reclassification of unrealized loss on cash flow hedges to interest expense |  |                            |          |   |                            |   | 9,108     |                            |  |   |          |  
|Foreign currency exchange loss (gain), net                                  |  |                            | 2,221     |   |                            |   | (2,577    | )                          |  |   | 14,107    |  
|Gain from bargain purchase                                                  |  |                            | (1,733    | ) |                            |   |          |                            |  |   |          |  
|                                                                            |  |                            |           |   |                            |   |           |                            |  |   |           |  
|Loss from continuing operations before income taxes                         |  |                            | (102,309  | ) |                            |   | (42,045   | )                          |  |   | (10,133   | )
|Income tax provision (benefit)                                              |  |                            | 1,904     |   |                            |   | (6,389    | )                          |  |   | 2,067     |  
|                                                                            |  |                            |           |   |                            |   |           |                            |  |   |           |  
|Loss from continuing operations                                             |  |                            | (104,213  | ) |                            |   | (35,656   | )                          |  |   | (12,200   | )
|Loss from discontinued operations, net of income tax provision of $0        |  |                            |          |   |                            |   |          |                            |  |   | (628      | )
|Gain on sale of discontinued operations, net of income tax provision of $0  |  |                            |          |   |                            |   |          |                            |  |   | 777       |  
|                                                                            |  |                            |           |   |                            |   |           |                            |  |   |           |  
|Net loss                                                                    |  | $                          | (104,213  | ) |                            | $ | (35,656   | )                          |  | $ | (12,051   | )
|                                                                            |  |                            |           |   |                            |   |           |                            |  |   |           |  

See accompanying notes to consolidated financial statements.



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS (DEFICIT) EQUITY AND COMPREHENSIVE INCOME (LOSS)

(In thousands, except share amounts)



|                                                                                                                                              |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  |   |         |  
|--------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------ | --- |  | ------------------------ | - | - | ------------------ |  | - | ------------------------------------------ |  |  | --------------------------------- | -------- | - | -------------------------- | - | ------- | - |  | - | ------- | - |  | - | ------- | -
|                                                                                                                                              |  | Common stock |     |  | Additionalpaid-incapital |   |   | Accumulateddeficit |  |   | Accumulatedothercomprehensiveincome (loss) |  |  | Totalshareholdersequity(deficit) |          |   | Comprehensiveincome (loss) |  
|                                                                                                                                              |  | Shares       |     |  | Amount                   |   |   |                    |  |   |                                           
|December 30, 2007                                                                                                                             |  |              | 100 |  |                          | $ |  |                    |  | $ | 254,995                                    |  |  | $                                 | (179,039 | ) |                            | $ | 12,571  |   |  | $ | 88,527  |   |  |   |         |  
|Net loss                                                                                                                                      |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   | (12,051  | ) |                            |   |        |   |  |   | (12,051 | ) |  | $ | (12,051 | )
|Adjustment to retained earnings resulting from adoption of the measurement date provisions of new pension accounting rules, net
of tax of $45 |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   | (157     | ) |                            |   |        |   |  |   | (157    | ) |  |   |         |  
|Pension liability adjustments, net of tax of $1,021                                                                                           |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | (25,397 | ) |  |   | (25,397 | ) |  |   | (25,397 | )
|Unrealized investment loss, net of tax of $0                                                                                                  |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | (13     | ) |  |   | (13     | ) |  |   | (13     | )
|Recognition of realized gain on cash flow hedge, net of tax of $153                                                                           |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | (108    | ) |  |   | (108    | ) |  |   | (108    | )
|Unrealized loss on cash flow hedge, net of tax of $0                                                                                          |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | (8,275  | ) |  |   | (8,275  | ) |  |   | (8,275  | )
|Reclassification of realized loss on cash flow hedges, net of tax of $0                                                                       |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | 4,238   |   |  |   | 4,238   |   |  |   | 4,238   |  
|Foreign currency translation adjustment                                                                                                       |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | (15,472 | ) |  |   | (15,472 | ) |  |   | (15,472 | )
|                                                                                                                                              |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  |   |         |  
|Total comprehensive loss                                                                                                                      |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  | $ | (57,078 | )
|                                                                                                                                              |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  |   |         |  
|December 28, 2008                                                                                                                             |  |              | 100 |  |                          | $ |  |                    |  | $ | 254,995                                    |  |  | $                                 | (191,247 | ) |                            | $ | (32,456 | ) |  | $ | 31,292  |   |  |   |         |  
|Net loss                                                                                                                                      |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   | (35,656  | ) |                            |   |        |   |  |   | (35,656 | ) |  | $ | (35,656 | )
|Foreign currency translation adjustment                                                                                                       |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | 10,435  |   |  |   | 10,435  |   |  |   | 10,435  |  
|Pension liability adjustments, net of tax of $1,050                                                                                           |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | 1,174   |   |  |   | 1,174   |   |  |   | 1,174   |  
|Unrealized investment loss, net of tax of $0                                                                                                  |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | 12      |   |  |   | 12      |   |  |   | 12      |  
|Recognition of realized gain on cash flow hedge, net of tax of $(215)                                                                         |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | (150    | ) |  |   | (150    | ) |  |   | (150    | )
|Unrealized loss on cash flow hedges, net of tax of $0                                                                                         |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | (1,514  | ) |  |   | (1,514  | ) |  |   | (1,514  | )
|Reclassification of realized loss on cash flow hedges to interest expense, net of tax of $0                                                   |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | 3,512   |   |  |   | 3,512   |   |  |   | 3,512   |  
|Reclassification of unrealized loss on cash flow hedges to interest expense upon termination of hedge accounting, net of tax of
$0            |  |              |    |  |                          |   |  |                    |  |   |                                           |  |  |                                   |         |   |                            |   | 9,108   |   |  |   | 9,108   |   |  |   | 9,108   |  
|                                                                                                                                              |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  |   |         |  
|Total comprehensive loss                                                                                                                      |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  | $ | (13,079 | )
|                                                                                                                                              |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  |   |         |  
|December 27, 2009                                                                                                                             |  |              | 100 |  |                          | $ |  |                    |  | $ | 254,995                                    |  |  | $                                 | (226,903 | ) |                            | $ | (9,879  | ) |  | $ | 18,213  |   |  |   |         |  
|                                                                                                                                              |  |              |     |  |                          |   |   |                    |  |   |                                            |  |  |                                   |          |   |                            |   |         |   |  |   |         |   |  |   |         |  

(Continued)

See accompanying notes to consolidated financial statements.





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##### Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF SHAREHOLDERS (DEFICIT) EQUITY AND COMPREHENSIVE INCOME (LOSS), CONTINUED

(In thousands, except share amounts)



|                                                          |  |              |     |  |                          |   |   |                    |  |   |                                            |   |  |                                   |          |   |                            |   |         |   |  |   |          |   |  |   |          |  
|--------------------------------------------------------- |  | ------------ | --- |  | ------------------------ | - | - | ------------------ |  | - | ------------------------------------------ | - |  | --------------------------------- | -------- | - | -------------------------- | - | ------- | - |  | - | -------- | - |  | - | -------- | -
|                                                          |  | Common stock |     |  | Additionalpaid-incapital |   |   | Accumulateddeficit |  |   | Accumulatedothercomprehensiveincome (loss) |   |  | Totalshareholdersequity(deficit) |          |   | Comprehensiveincome (loss) |  
|                                                          |  | Shares       |     |  | Amount                   |   |   |                    |  |   |                                           
|December 27, 2009                                         |  |              | 100 |  |                          | $ |  |                    |  | $ | 254,995                                    |   |  | $                                 | (226,903 | ) |                            | $ | (9,879  | ) |  | $ | 18,213   |   |  |   |          |  
|Net loss                                                  |  |              |    |  |                          |   |  |                    |  |   |                                           |   |  |                                   | (104,213 | ) |                            |   |        |   |  |   | (104,213 | ) |  | $ | (104,213 | )
|Pension liability adjustments, net of tax benefit of $395 |  |              |    |  |                          |   |  |                    |  |   |                                           |   |  |                                   |         |   |                            |   | (3,249  | ) |  |   | (3,249   | ) |  |   | (3,249   | )
|Return of capital to parent                               |  |              |    |  |                          |   |  |                    |  |   | (100                                       | ) |  |                                   |         |   |                            |   |        |   |  |   | (100     | ) |  |   |          |  
|Foreign currency translation adjustment                   |  |              |    |  |                          |   |  |                    |  |   |                                           |   |  |                                   |         |   |                            |   | 1,845   |   |  |   | 1,845    |   |  |   | 1,845    |  
|                                                          |  |              |     |  |                          |   |   |                    |  |   |                                            |   |  |                                   |          |   |                            |   |         |   |  |   |          |   |  |   |          |  
|Total comprehensive loss                                  |  |              |     |  |                          |   |   |                    |  |   |                                            |   |  |                                   |          |   |                            |   |         |   |  |   |          |   |  | $ | (105,617 | )
|                                                          |  |              |     |  |                          |   |   |                    |  |   |                                            |   |  |                                   |          |   |                            |   |         |   |  |   |          |   |  |   |          |  
|December 26, 2010                                         |  |              | 100 |  |                          | $ |  |                    |  | $ | 254,895                                    |   |  | $                                 | (331,116 | ) |                            | $ | (11,283 | ) |  | $ | (87,504  | ) |  |   |          |  
|                                                          |  |              |     |  |                          |   |   |                    |  |   |                                            |   |  |                                   |          |   |                            |   |         |   |  |   |          |   |  |   |          |  

See accompanying notes to consolidated financial statements.



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)



|                                                                                                       |  |                            |          |   |                            |   |         |                            |  |   |         |  
|------------------------------------------------------------------------------------------------------ |  | -------------------------- | -------- | - | -------------------------- | - | ------- | -------------------------- |  | - | ------- | -
|                                                                                                       |  | Year endedDecember 26,2010 |          |   | Year endedDecember 27,2009 |   |         | Year endedDecember 28,2008 | 
|CASH FLOWS FROM OPERATING ACTIVITIES                                                                   |  |                            |          |   |                            |   |         |                            |  |   |         |  
|Net loss                                                                                               |  | $                          | (104,213 | ) |                            | $ | (35,656 | )                          |  | $ | (12,051 | )
|Loss from discontinued operations, net of income tax                                                   |  |                            |         |   |                            |   |        |                            |  |   | 628     |  
|Gain on sale of discontinued operations, net of income tax                                             |  |                            |         |   |                            |   |        |                            |  |   | (777    | )
|                                                                                                       |  |                            |          |   |                            |   |         |                            |  |   |         |  
|Loss from continuing operations                                                                        |  |                            | (104,213 | ) |                            |   | (35,656 | )                          |  |   | (12,200 | )
|Adjustments to reconcile loss from continuing operations to net cash provided by operating activities: |  |                            |          |   |                            |   |         |                            |  |   |         |  
|Depreciation and amortization                                                                          |  |                            | 109,576  |   |                            |   | 70,003  |                            |  |   | 77,726  |  
|Deferred financing fee amortization                                                                    |  |                            | 6,989    |   |                            |   | 6,017   |                            |  |   | 4,535   |  
|Gain from bargain purchase                                                                             |  |                            | (1,733   | ) |                            |   |        |                            |  |   |        |  
|Impairment of goodwill                                                                                 |  |                            |         |   |                            |   | 17,210  |                            |  |   |        |  
|Asset impairment                                                                                       |  |                            | 20,536   |   |                            |   |        |                            |  |   | 555     |  
|Loss on asset disposals                                                                                |  |                            | 3,879    |   |                            |   | 8,969   |                            |  |   | 22,560  |  
|Loss on debt extinguishment                                                                            |  |                            |         |   |                            |   | 2,520   |                            |  |   |        |  
|Pension plan curtailment loss                                                                          |  |                            | 1,475    |   |                            |   |        |                            |  |   |        |  
|Reclassification of unrealized loss on cash flow hedges to interest expense                            |  |                            |         |   |                            |   | 9,108   |                            |  |   |        |  
|Deferred income taxes                                                                                  |  |                            | (911     | ) |                            |   | (8,553  | )                          |  |   | (808    | )
|Foreign currency exchange loss (gain), net                                                             |  |                            | 2,221    |   |                            |   | (2,577  | )                          |  |   | 14,107  |  
|Changes in operating assets and liabilities, net of business acquisition:                              |  |                            |          |   |                            |   |         |                            |  |   |         |  
|Accounts receivable, net                                                                               |  |                            | 5,450    |   |                            |   | 1,245   |                            |  |   | 43,388  |  
|Inventories                                                                                            |  |                            | 12,123   |   |                            |   | 54,523  |                            |  |   | 8,265   |  
|Prepaid expenses and other current assets                                                              |  |                            | (1,415   | ) |                            |   | 5,596   |                            |  |   | 3,968   |  
|Other assets                                                                                           |  |                            | 2,013    |   |                            |   | 1,106   |                            |  |   | 1,911   |  
|Accounts payable                                                                                       |  |                            | (14,086  | ) |                            |   | 23      |                            |  |   | (4,932  | )
|Accrued expenses and other current liabilities                                                         |  |                            | 3,336    |   |                            |   | 493     |                            |  |   | (23,213 | )
|Other liabilities                                                                                      |  |                            | (3,300   | ) |                            |   | 5,600   |                            |  |   | (2,589  | )
|Other, net                                                                                             |  |                            | 1,761    |   |                            |   | 2,310   |                            |  |   | (696    | )
|                                                                                                       |  |                            |          |   |                            |   |         |                            |  |   |         |  
|Net cash provided by operating activities-continuing operations                                        |  |                            | 43,701   |   |                            |   | 137,937 |                            |  |   | 132,577 |  
|Net cash used in operating activities-discontinued operations                                          |  |                            |         |   |                            |   |        |                            |  |   | (638    | )
|                                                                                                       |  |                            |          |   |                            |   |         |                            |  |   |         |  
|Net cash provided by operating activities                                                              |  | $                          | 43,701   |   |                            | $ | 137,937 |                            |  | $ | 131,939 |  
|                                                                                                       |  |                            |          |   |                            |   |         |                            |  |   |         |  

(Continued)

See accompanying notes to consolidated financial statements.



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)

(In thousands)



|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|----------------------------------------------------------- |  | -------------------------- | ------- | - | -------------------------- | - | -------- | -------------------------- |  | - | ------- | -
|                                                            |  | Year endedDecember 26,2010 |         |   | Year endedDecember 27,2009 |   |          | Year endedDecember 28,2008 | 
|Net cash provided by operating activities                   |  | $                          | 43,701  |   |                            | $ | 137,937  |                            |  | $ | 131,939 |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                        |  |                            |         |   |                            |   |          |                            |  |   |         |  
|Proceeds from sale of property, plant and equipment         |  |                            | 7,721   |   |                            |   | 16,610   |                            |  |   | 10,503  |  
|Proceeds from sale of discontinued operations               |  |                            |        |   |                            |   |         |                            |  |   | 850     |  
|Purchases of property, plant and equipment                  |  |                            | (42,155 | ) |                            |   | (71,815  | )                          |  |   | (79,698 | )
|Business acquisition, net of cash acquired                  |  |                            | (23,661 | ) |                            |   |         |                            |  |   |        |  
|Decrease (increase) in restricted cash                      |  |                            | 8,470   |   |                            |   | (10,410  | )                          |  |   |        |  
|Decrease (increase) in cash in escrow                       |  |                            |        |   |                            |   | 50       |                            |  |   | (50     | )
|Proceeds from insurance reimbursement                       |  |                            | 1,201   |   |                            |   |         |                            |  |   |        |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|Net cash used in investing activities-continuing operations |  |                            | (48,424 | ) |                            |   | (65,565  | )                          |  |   | (68,395 | )
|CASH FLOWS FROM FINANCING ACTIVITIES                        |  |                            |         |   |                            |   |          |                            |  |   |         |  
|Net repayments under revolving credit facilities            |  |                            | (2,321  | ) |                            |   | (13,000  | )                          |  |   | (2,100  | )
|Borrowings under the 10.5% Senior Secured Notes             |  |                            |        |   |                            |   | 293,784  |                            |  |   |        |  
|Repayments of term notes                                    |  |                            | (410    | ) |                            |   | (363,204 | )                          |  |   | (38,082 | )
|Repayments of other debt                                    |  |                            | (373    | ) |                            |   | (344     | )                          |  |   | (135    | )
|Return of capital to parent                                 |  |                            | (100    | ) |                            |   |         |                            |  |   |        |  
|Debt issuance costs                                         |  |                            | (743    | ) |                            |   | (18,314  | )                          |  |   |        |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|Net cash used in financing activities-continuing operations |  |                            | (3,947  | ) |                            |   | (101,078 | )                          |  |   | (40,317 | )
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|Effect of exchange rate changes on cash                     |  |                            | 175     |   |                            |   | 1,208    |                            |  |   | 694     |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS        |  |                            | (8,495  | ) |                            |   | (27,498  | )                          |  |   | 23,921  |  
|CASH AND CASH EQUIVALENTS, beginning of period              |  |                            | 30,006  |   |                            |   | 57,504   |                            |  |   | 33,583  |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|CASH AND CASH EQUIVALENTS, end of period                    |  | $                          | 21,511  |   |                            | $ | 30,006   |                            |  | $ | 57,504  |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                         |  |                            |         |   |                            |   |          |                            |  |   |         |  
|Interest paid, net of capitalized interest                  |  | $                          | 70,031  |   |                            | $ | 53,139   |                            |  | $ | 57,877  |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  
|Income (tax refunds) taxes paid, net                        |  | $                          | (88     | ) |                            | $ | 1,912    |                            |  | $ | 6,908   |  
|                                                            |  |                            |         |   |                            |   |          |                            |  |   |         |  

See accompanying notes to consolidated financial statements.



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SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(1) | Nature, Formation and Organization of Business
|--- | ----------------------------------------------

Solo Cup Company, a Delaware corporation (Solo Delaware), was incorporated in Delaware in January 2004 to be the holding company for Solo Cup Company, an Illinois corporation (Solo
Illinois), and its subsidiaries, and for SF Holdings Group, Inc. and its subsidiaries, including Sweetheart Cup Company Inc. Effective February 22, 2004, Solo Illinois became a wholly owned subsidiary of Solo Delaware, and Solo Delaware
acquired 100% of the outstanding capital stock of SF Holdings.

Solo Illinois was established in 1936. Sweetheart Cup
Companys operating history dated back to the founding of a predecessor company in 1911. In September 2005, Sweetheart Cup Company changed its name to Solo Cup Operating Corporation, and in October 2005, Solo Illinois merged with and into Solo
Cup Operating Corporation, with Solo Cup Operating Corporation as the surviving entity. As a result of these transactions, Solo Delaware is a holding company, the material assets of which are 100% of the capital stock of SF Holdings. SF Holdings
owns 100% of the capital stock of Solo Cup Operating Corporation, which, in turn, owns various direct and indirect subsidiaries. In these financial statements, the terms we, us and our refer to Solo Delaware and
its direct and indirect subsidiaries.

Solo Delaware is a wholly owned subsidiary of Solo Cup Investment Corporation. As of
December 26, 2010, SCC Holding Company LLC owns 67.26%, Vestar Capital Partners IV, L.P. and certain of its affiliates own 32.71% and management of Solo Delaware owns the remaining 0.03% of Solo Cup Investment Corporation.

We are a leading producer and marketer of single-use products used to serve food and beverages. We distribute our products globally and
have served our industry for 75 years. We manufacture and supply a broad portfolio of single-use products, including cups, lids, take-out and other food containers, plates, bowls, portion cups, cutlery and straws, with products available in plastic,
paper, foam, post-consumer recycled content and annually renewable materials. We operate manufacturing facilities and distribution centers in the United States, Canada, Mexico, Panama and the United Kingdom.



|(2) | Summary of Significant Accounting Policies
|--- | ------------------------------------------

Consolidation

The consolidated financial statements include the
accounts of Solo Delaware and its subsidiaries. As of December 26, 2010 and December 27, 2009, Solo Delaware wholly owned all of its subsidiaries directly or indirectly. All significant intercompany balances and transactions have been
eliminated in consolidation.

Assets and liabilities of foreign subsidiaries are translated at current exchange rates with the
related translation adjustments reported in shareholders equity as a component of accumulated other comprehensive income (loss). Income and expense accounts and cash flows are translated at the average exchange rate during the period.
Components of shareholders equity are translated at historical exchange rates. Resulting translation gains and losses are recorded in comprehensive income (loss). Gains or losses resulting from foreign currency transactions are recorded in the
Consolidated Statements of Operations.

Use of Estimates

The preparation of the consolidated financial statements requires us to make a number of estimates and assumptions relating to the
reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the period. Financial statement
elements subject to significant estimation include, but are not limited to: the realizable value of accounts receivable, inventories, spare parts and deferred tax assets; the carrying value of property, plant, and equipment, intangible and other
assets; the measurement of assets and obligations related to employee benefit plans and our long term incentive plan; the determination of the fair value of derivative instruments and debt; and provisions for discounts and allowances provided to
customers. Actual results may differ from those estimates.

Cash and Cash Equivalents

Cash equivalents consist of highly liquid securities with original maturities of thirty days or less. As of December 26, 2010, cash
and cash equivalents includes approximately $7.3 million representing net proceeds of the December 2010 sale of our Springfield, Missouri manufacturing facility. The indentures governing our senior secured and senior subordinated notes generally
require us to use these proceeds to purchase or improve assets useful in our business or to purchase a business that is related, complementary or ancillary to our existing business.



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Accounts Receivable

Accounts receivable are stated net of allowances for doubtful accounts and discounts and deductions, and do not bear interest. The
allowance for doubtful accounts is our best estimate of the amount of probable credit losses in our existing accounts receivable. We determine the allowance based on a specific analysis of collectability and historical write-off experience. Account
balances are charged against the allowance after all reasonable means of collection have been exhausted and the potential for recovery is considered remote.

Some customer discounts and allowances are earned by, and payable to, customers only if they meet specified levels of sales volume. We record such customer discounts and allowances based on the estimated
and probable allowances for the period. The amounts are recorded as a reduction of net sales based on the customers actual sales volumes for the period. The most significant allowance reflects our estimates of discounts that some foodservice
customers are entitled to claim based on their distribution activities. Customer accounts and allowances for which a right of offset exists are presented net within accounts receivable. If no right of offset exists, the amounts are included in
accrued customer allowances.

Inventories

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

Vendor Incentives

We are entitled to certain vendor incentives only if we make a specified level of annual purchases. We record such incentives based on the actual purchases made on a year-to-date basis compared to targets
or specified levels of purchases. The amounts are recorded as a reduction of cost of goods sold and inventory based on the volume purchased during the period.

Property, Plant and Equipment

Property, plant and equipment are
stated at cost. Plant and equipment held under capital leases are stated at the present value of minimum lease payments. Depreciation on property, plant and equipment is calculated using the straight-line method over the estimated useful lives of
the assets. Amortization of assets held under capital leases is included within depreciation expense. Buildings are depreciated over 30 to 50 years, depending upon the construction of the building. Leasehold improvements are amortized over the lives
of the corresponding leases. Machinery and equipment are depreciated over three to 10 years. Capitalized software is depreciated over three to five years.

The estimated useful life for building and improvements and machinery and equipment held under capital leases is the lesser of the lease term or the assets estimated useful life. Costs for repairs
and maintenance are expensed as incurred. Gains and losses on sales of property, plant and equipment are recorded as a component of operating income.

We capitalize interest costs, when appropriate, as a component of construction in progress.

Spare Parts

We capitalize the spare parts that we purchase and
expense them as the parts are used. The carrying value of capitalized spare parts is stated net of an allowance for excess and obsolete parts, and is included in other current assets and other assets in our Consolidated Balance Sheets.



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Goodwill and Other Intangible Assets

Goodwill represents the excess of costs over the fair value of net assets of businesses acquired. Goodwill and intangible assets acquired
in a purchase business combination and determined to have an indefinite useful life are not amortized. In accordance with the provisions of the Financial Accounting Standards Board (FASB) Accounting Standards Codification
(ASC) Topic 350, Intangibles  Goodwill and Other, we test goodwill and other intangible assets with indefinite lives for impairment at least annually, at the end of October, or sooner if a triggering event that suggests
possible impairment of the values of these assets occurs. Impairment testing for these assets involves a two-step process. In the first step, the fair value of the reporting unit holding the assets is compared to its carrying amount. If the carrying
amount of the reporting unit exceeds its fair value, the second step of the impairment test is performed to measure the amount of the impairment loss, if any. In the second step, the fair market value of the reporting unit is allocated to all of its
assets and liabilities including intangible assets with indefinite lives. The excess, if any, of the fair market value of the reporting unit over the sum of the fair market values allocated to identified assets and liabilities is the calculated
value of goodwill to be compared to its carrying value (Note 8).

Deferred Financing Fees

Deferred financing fees include costs incurred to obtain financing from lenders. We capitalize debt issuance costs as deferred financing
fees and amortize the fees over the term of the related debt using the effective interest rate method for term debt and on a straight-line basis for revolving credit facilities.

Pre-production Design and Development Costs

We expense design and development costs related to products to be sold under long-term supply arrangements as those costs are incurred, with the exception of costs for molds, dies and other tools that we
will own or have non-cancelable rights to use in producing the products under long-term supply arrangements. We capitalize and depreciate those costs as equipment.

Impairment of Long-lived Assets

We review long-lived assets, such
as property, plant, and equipment and purchased intangibles subject to amortization, for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. We measure the recoverability of an
asset to be held and used by comparing the carrying amount of that asset to the estimated undiscounted future cash flows expected to be generated by the asset. If the carrying amount of an asset exceeds its estimated future cash flows, we recognize
an impairment charge in the amount by which the carrying amount of the asset exceeds the fair value of the asset. We present assets to be disposed of separately in our Consolidated Balance Sheets and report them at the lower of the carrying amount
or fair value less costs to sell. Such assets are no longer depreciated (Note 5).

Deferred Rent

Some of our operating leases include rent escalation clauses that provide for scheduled changes in base rentals over their terms, tenant
improvement allowances funded by landlord incentives or rent holidays that provide for rental payments commencing at a date other than the date of initial occupancy. For these leases, we recognize the total rental amounts due, net of tenant
improvement allowances, over the lease terms as rental expense on a straight-line basis. The difference between the rent due under the stated periods of the lease compared to that of the straight-line basis is recorded as deferred rent. Deferred
rent of $28.8 million and $24.9 million is included in other liabilities (non-current) in our Consolidated Balance Sheets as of December 26, 2010 and December 27, 2009, respectively.

Income Taxes

We account for income taxes in accordance with the asset and liability method described in FASB ASC Topic 740,Income Taxes. Deferred income tax assets and liabilities are recognized for the future
tax consequences attributed to differences between the financial statement and income tax bases of assets and liabilities, and tax credit and operating loss carryforwards. These items are recorded using enacted tax rates expected to apply to taxable
income in the years in which the differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period in which the rate change is enacted.

A valuation allowance is established whenever we believe that it is more likely than not that deferred tax assets may not be
realizable (Note 9).



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Derivative Instruments and Hedging Activities

We record all derivative instruments on our Consolidated Balance Sheets at their respective fair values.

We historically have used interest rate derivative contracts, including interest rate swaps or caps, to manage exposure relating to the
variability in interest payments on our outstanding debt. At the inception of a derivative contract, we designate the derivative as part of a cash flow hedge or a fair value hedging relationship, depending on the nature of the risk being hedged and
whether or not the derivative contract qualifies as a highly-effective hedge of the underlying hedged item. Changes in the fair value of derivative contracts are recorded in earnings or deferred in accumulated other comprehensive income (loss),
depending on whether a derivative is effective as a hedge and on the type of hedging transaction.

Derivatives are classified
in our Consolidated Balance Sheets in other assets or other liabilities, as applicable, and are classified as current or non-current based on the scheduled maturity of the instrument.

Revenue Recognition

We recognize all of our revenue through the sale of manufactured or sourced products and record sales when the sales price is fixed or determinable, products are shipped, title and risk of loss has passed
to the customer, and collection is reasonably assured.

We record specified costs that relate to promotional programs and
incentive cash rebates as a reduction of sales.

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs amounted to $4.0 million, $2.5 million and $3.2
million for the years ended December 26, 2010, December 27, 2009 and December 28, 2008, respectively.

Advertising Costs

Advertising production costs are expensed as incurred, while advertising media costs are expensed in the period in which the related advertising first takes place. Advertising costs amounted to $7.2
million, $7.7 million and $5.0 million for the years ended December 26, 2010, December 27, 2009 and December 28, 2008, respectively.

Fair Value Measurements

We use a fair value hierarchy that
prioritizes the inputs to techniques used to measure fair value into three broad levels. The level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is
significant to the fair value measurement in its entirety. These levels include:

Level 1 fair values are valuations based on
quoted market prices in active markets for identical assets or liabilities that the entity has the ability to access.

Level 2
fair values are those valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of
the assets or liabilities.

Level 3 fair values are valuations based on inputs that are supported by little or no market
activity and that are significant to the fair value of the assets or liabilities.

We have applied fair value measurements for
either accounting or disclosure purposes, as applicable, to our assets and liabilities, as follows: assets held for sale (Note 5), goodwill (Note 8), 10.5% senior secured notes and 8.5% senior subordinated notes (Note 10), interest rate swap
agreements (Note 12), pension plan assets (Note 13), long term incentive plan (Note 16) and an accounting guarantee (Note 17).



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Recently Adopted Accounting Standards

Financial Accounting Standards Board Accounting Standards Codification

The FASB issued Statement of Financial Accounting Standards No. 168, The FASB Accounting Standards Codification and the Hierarchy
of Generally Accepted Accounting Principles  a replacement of FASB Statement No. 162 in July 2009. Pursuant to the statement, the FASB ASC officially became the single source of authoritative nongovernmental U.S. generally accepted
accounting principles (GAAP), superseding existing FASB, American Institute of Certified Public Accountants, Emerging Issues Task Force and related accounting literature. After July 1, 2009, the FASB ASC is the sole level of
authoritative GAAP. All other accounting literature is considered non-authoritative. The FASB ASC reorganizes the thousands of GAAP pronouncements into approximately 90 accounting topics and displays them using a consistent structure. Also included
in the FASB ASC is relevant SEC guidance organized using the same topical structure in separate sections. The statement is effective for interim and annual periods ending after September 15, 2009. In accordance with this Statement, all
references to authoritative accounting literature within our financial statement disclosures are references to the FASB ASC.

FASB ASC Topic 820, Fair Value Measurements

On December 28, 2009, the first day of our 2010 fiscal year, we adopted new accounting guidance that is included in FASB ASC Topic 820, Fair Value Measurements and Disclosures. Historically,
we were required to disclose only the amounts of transfers into or out of Level 3 in the fair value hierarchy (Note 12). This new guidance requires us also to disclose the amount of significant transfers into or out of Level 1 and Level 2 in the
fair value hierarchy (Note 12) and the reasons for these transfers. In addition, the guidance clarifies certain existing disclosure requirements. The adoption of these changes had no impact on our consolidated financial statements or disclosures for
the fiscal year ended December 26, 2010.

In September 2009, the FASB issued Accounting Standards Update 2009-12,
Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent), to provide guidance on measuring the fair value of investments in entities that calculate net asset value. The update amends FASB ASC Topic 820,
Fair Value Measurements and Disclosures. The amendment permits, as a practical expedient, a reporting entity to measure the fair value of an investment, which is within the scope of the standard, on the basis of net asset value per share of
the investment (or its equivalent). The amendment also requires disclosures by major category of investment about the attributes of investments, such as the nature of any restrictions on the investors ability to redeem its investments at the
measurement date, any unfunded commitments and the investment strategies of the investees. The guidance in this update is effective for interim and annual periods ending after December 15, 2009. We adopted the new standard beginning with our
December 27, 2009 financial statements. The impact of adoption, which solely related to certain investments within our defined benefit pension plan assets, was not material.



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|(3) | Business Combination
|--- | --------------------

On March 31, 2010, we acquired all of the outstanding capital stock of InnoWare Plastic Holding Company, Inc., a manufacturer and marketer of a comprehensive line of plastic take-out containers, to
further broaden our product offering. Acquisition consideration was $24 million in cash. We operate a manufacturing facility and warehouse for the acquired product line in Thomaston, Georgia. We market the acquired product line under our Creative
Carryouts® brand. The following table summarizes our allocation of consideration paid to the fair value of the
assets acquired and liabilities assumed as of the acquisition date (in thousands):



|                                                                           |  |   |        |  
|-------------------------------------------------------------------------- |  | - | ------ | -
|Purchase price                                                             |  | $ | 24,000 |  
|Recognized amounts of identifiable assets acquired and liabilities assumed |  |   |        |  
|Cash                                                                       |  |   | 339    |  
|Accounts receivable                                                        |  |   | 2,507  |  
|Inventory                                                                  |  |   | 6,600  |  
|Other current assets                                                       |  |   | 929    |  
|Property, plant, and equipment                                             |  |   | 21,730 |  
|Identifiable intangible assets                                             |  |   | 1,140  |  
|Other assets                                                               |  |   | 88     |  
|Current liabilities                                                        |  |   | (3,905 | )
|Capital lease obligation                                                   |  |   | (3,589 | )
|Other liabilities                                                          |  |   | (106   | )
|                                                                           |  |   |        |  
|Total identifiable net assets                                              |  |   | 25,733 |  
|                                                                           |  |   |        |  
|Bargain purchase gain recognized                                           |  | $ | (1,733 | )
|                                                                           |  |   |        |  

In accordance with the accounting guidance related to business combinations, any excess of fair value of
acquired net assets over the acquisition consideration results in a bargain purchase gain that must be recognized in earnings on the acquisition date. We recognized a gain from bargain purchase of approximately $1.7 million during the year
ended December 26, 2010, which we disclose as a separate item in our 2010 Consolidated Statement of Operations.

Operating results for the product line are included in our 2010 Consolidated Statement of Operations from the date of acquisition,
March 31, 2010. Pro forma results are not presented, as the acquisition is not material to our consolidated results.



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|(4) | Plant Closures
|--- | --------------

On
May 6, 2010, our Board of Directors committed to a plan designed to further optimize our manufacturing footprint. Under the plan, we intend to close our manufacturing facilities in Owings Mills, Maryland; North Andover, Massachusetts; and
Springfield, Missouri by the end of 2011. We expect to incur costs over the life of the plan in the range of $111 to $126 million, of which approximately $25 to $29 million (identified in the table below as severance and equipment relocation
and related costs) will require future cash expenditures, the majority of which are expected to be made in our 2011 fiscal year. Equipment relocation and related costs are expensed as incurred and approximately $5 million of these expenditures were
incurred in the year ended December 26, 2010.

The total expected costs include severance payments, equipment relocation
and related costs, a charge attributable to lease payments for our North Andover facility that we will remain obligated to make in periods after we exit the facility, asset impairment charges, and accelerated depreciation for certain property, plant
and equipment that will not be used after the facilities are closed. The following table summarizes the estimated costs that we expect to incur over the life of the plan as well as the amounts incurred during the fiscal year ended
December 26, 2010 (in millions):



|                                        |  |                                                       |     |  |                                                       |   |     |  |  |   |    | 
|--------------------------------------- |  | ----------------------------------------------------- | --- |  | ----------------------------------------------------- | - | --- |  |  | - | -- | 
|                                        |  | Estimated rangeof total costs as ofDecember 26, 
2010 |     |  | Incurred duringthe fiscal year endedDecember 26, 2010 |  
|Severance                               |  | $                                                     | 5   |  |                                                       | $ | 7   |  |  | $ | 7  | 
|Equipment relocation and related costs  |  |                                                       | 20  |  |                                                       |   | 22  |  |  |   | 5  | 
|Pension plan curtailment loss (Note 13) |  |                                                       | 1   |  |                                                       |   | 2   |  |  |   | 2  | 
|Accrual of remaining lease payments     |  |                                                       | 4   |  |                                                       |   | 6   |  |  |   |   | 
|Asset impairment                        |  |                                                       | 16  |  |                                                       |   | 19  |  |  |   | 17 | 
|Accelerated depreciation                |  |                                                       | 65  |  |                                                       |   | 70  |  |  |   | 40 | 
|                                        |  |                                                       |     |  |                                                       |   |     |  |  |   |    | 
|Total expected costs                    |  | $                                                     | 111 |  |                                                       | $ | 126 |  |  | $ | 71 | 
|                                        |  |                                                       |     |  |                                                       |   |     |  |  |   |    | 

In our Consolidated Statements of Operations, severance costs, equipment relocation and related costs, the
curtailment loss and accelerated depreciation are included in cost of goods sold. As of December 26, 2010, accrued severance of approximately $7 million is included in other current liabilities in our Consolidated Balance Sheet. Payments for
severance of approximately $0.5 million have been made through December 26, 2010.



|(5) | Assets Held for Sale
|--- | --------------------

On
July 30, 2010, we entered into a purchase and sale agreement to sell our Springfield, Missouri manufacturing facility for approximately $7.9 million and to lease back the property for a period of up to one year from the closing date. We
classify assets as held for sale when they meet the criteria set forth in FASB ASC Topic 360, Property, Plant, and Equipment. Based on the execution of the purchase and sale agreement in our third fiscal quarter of 2010, our manufacturing
facility in Springfield, Missouri met the criteria and we reclassified this property from held and used to held for sale. Accordingly, we recorded an impairment of approximately $3.4 million to adjust the carrying value of this property in the
thirteen weeks ended September 26, 2010 to fair value less costs to sell. In December 2010, we completed the sale of the facility, and as a result, we have no assets classified as held for sale on our December 26, 2010 Consolidated Balance
Sheet.

As of December 27, 2009, assets held for sale consist of a manufacturing facility in Belen, New Mexico that was
closed and subsequently reclassified to assets held for sale during the first quarter of 2009. The facilitys carrying value has not been adjusted as its estimated fair value less costs to sell exceeds carrying value. During our second fiscal
quarter of 2010, the property no longer met the criteria to be classified as held for sale because we no longer believed it was probable that we would sell the property within twelve months of that date. As a result, we reclassified the land and
building to property, plant and equipment on our 2010 Consolidated Balance Sheet and adjusted the carrying value to reflect the depreciation expense that would have been recognized had the asset been continuously classified as held and used.

The fair values of the properties were determined using the market approach, which includes an analysis of sales prices for
similar properties in similar locations. These are considered Level 2 inputs in the fair value hierarchy described in FASB ASC Topic 820, Fair Value Measurements and Disclosures.



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|(6) | Inventories
|--- | -----------

Inventories
consist of the following (in thousands):



|                           |  |                  |         |  |                  |   |         | 
|-------------------------- |  | ---------------- | ------- |  | ---------------- | - | ------- | 
|                           |  | December 26,2010 |         |  | December 27,2009 |  
|Finished goods             |  | $                | 166,042 |  |                  | $ | 164,628 | 
|Work in process            |  |                  | 12,307  |  |                  |   | 12,218  | 
|Raw materials and supplies |  |                  | 49,240  |  |                  |   | 55,736  | 
|                           |  |                  |         |  |                  |   |         | 
|Total inventories          |  | $                | 227,589 |  |                  | $ | 232,582 | 
|                           |  |                  |         |  |                  |   |         | 



|(7) | Property, Plant and Equipment
|--- | -----------------------------

Property, plant and equipment consists of the following (in thousands):



|                                         |  |                  |           |   |                  |   |           |  
|---------------------------------------- |  | ---------------- | --------- | - | ---------------- | - | --------- | -
|                                         |  | December 26,2010 |           |   | December 27,2009 |  
|Land                                     |  | $                | 39,231    |   |                  | $ | 41,718    |  
|Buildings and improvements               |  |                  | 168,326   |   |                  |   | 163,122   |  
|Machinery and equipment                  |  |                  | 816,857   |   |                  |   | 762,322   |  
|Construction in progress                 |  |                  | 17,546    |   |                  |   | 68,852    |  
|                                         |  |                  |           |   |                  |   |           |  
|Total property, plant and equipment      |  |                  | 1,041,960 |   |                  |   | 1,036,014 |  
|Less - accumulated depreciation          |  |                  | (612,847  | ) |                  |   | (527,050  | )
|                                         |  |                  |           |   |                  |   |           |  
|Total property, plant and equipment, net |  | $                | 429,113   |   |                  | $ | 508,964   |  
|                                         |  |                  |           |   |                  |   |           |  

Depreciation and amortization of property, plant and equipment for the years ended December 26, 2010,
December 27, 2009, and December 28, 2008, was $109.3 million, $70.0 million and $76.2 million, respectively. Depreciation expense in 2010 includes approximately $39.8 million of accelerated depreciation resulting from our decision in
May 2010 to close three manufacturing facilities (Note 4). We capitalized approximately $2.2 million, $2.9 million and $2.7 million of interest related to construction in progress for the years ended December 26, 2010, December 27,
2009, and December 28, 2008, respectively.

The loss on asset disposals of $3.9 million and $9.0 million in our
Consolidated Statement of Operations for the years ended December 26, 2010 and December 27, 2009, respectively, reflect the disposal of production equipment retired as a result of plant closures and consolidation. In addition, the loss for
the year ended December 27, 2009 includes adjustments made during the third and fourth fiscal quarters of 2009 to record the retirement of approximately $5.8 million of equipment that should have been recorded in prior periods. We determined
these adjustments were not material to our then-current- and prior- period consolidated financial statements.

The loss on
asset disposals of $22.6 million in our Consolidated Statement of Operations for the year ended December 28, 2008 primarily reflects losses on the disposal of non-core assets, including the March 2008 sale of our dairy packaging machinery and
equipment, as well as outdated production equipment retired as a result of plant closures and consolidation.



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|(8) | Goodwill and Intangible Assets
|--- | ------------------------------

Intangible assets

Amortizable intangible assets established as part of
fair value accounting for our March 31, 2010 acquisition (Note 3) consisted of a brand name, a trade name, a patent and customer relationships. The intangible assets have a weighted-average useful life of approximately five years. The table
below summarizes the intangible assets by major category (in thousands):



|                                     |  |                      |       |  |                         |   |     | 
|------------------------------------ |  | -------------------- | ----- |  | ----------------------- | - | --- | 
|                                     |  | December 26, 2010    |      
|                                     |  | Gross CarryingAmount |       |  | AccumulatedAmortization |  
|Brand name, trade name and patent    |  | $                    | 920   |  |                         | $ | 197 | 
|Customer relationships               |  |                      | 220   |  |                         |   | 33  | 
|                                     |  |                      |       |  |                         |   |     | 
|Total identifiable intangible assets |  | $                    | 1,140 |  |                         | $ | 230 | 
|                                     |  |                      |       |  |                         |   |     | 

Amortization expense related to amortizable intangible assets was $0.2 million and $1.5 million during the
years ended December 26, 2010 and December 28, 2008, respectively. Our amortizable intangible assets established as part of fair value accounting for our February 2004 acquisition of SF Holdings were fully amortized as of December 28,
2008; therefore, no amortization expense was recognized during the year ended December 27, 2009.

Impairment of
goodwill

The changes in the carrying value of goodwill formerly included in our Europe reporting unit were as follows (in
thousands):



|                             |  |        |         |  
|---------------------------- |  | ------ | ------- | -
|                             |  | Europe |        
|Balance at December 28, 2008 |  | $      | 15,459  |  
|Translation adjustment       |  |        | 1,751   |  
|Impairment of goodwill       |  |        | (17,210 | )
|                             |  |        |         |  
|Balance at December 27, 2009 |  | $      |        |  
|                             |  |        |         |  

In the above table, the carrying value of goodwill is presented net of accumulated impairment losses of $37.5
million as of December 27, 2009 and $20.3 million as of December 28, 2008.

We tested goodwill for impairment at
least annually, as of the end of October, or sooner if a triggering event that suggested possible impairment of the value of the goodwill occurred. During the third quarter of 2009, despite increasing sales in the first and second quarters and the
implementation of programs intended to reduce costs and gain manufacturing efficiencies, our Europe reporting unit continued to incur declining margins and lower operating results. These results were in part due to increased competition, a decline
in the European economy and higher input costs, such as resins and electricity, which were unable to be passed along through further price increases. We considered this combination of factors evidence of a permanent change in the long-term prospects
of our European business. As a result, we determined that it was at risk of failing step one of the impairment test such that the reporting units estimated fair value would not be in excess of its carrying value and concluded that there were
sufficient indicators to perform an interim goodwill impairment analysis of our Europe reporting unit. Step one of the impairment test was performed as of September 27, 2009. Fair value was estimated using a discounted cash flow valuation
model. The key assumptions used in the model included the discount rate, terminal growth rate, and cash flow projections. These key assumptions represent significant unobservable inputs, which are considered Level 3 inputs as defined by FASB ASC
Topic 820, Fair Value Measurements and Disclosures. The discount rate was set by using the Weighted Average Cost of Capital methodology, which considers market and industry data. The 14% discount rate utilized in the test was indicative of
the return an investor would expect to receive for investing in such a business. The determination of projected cash flows was based on the business strategic plans and long-range planning forecasts and represented our best estimates based on
current and forecasted market conditions. The profit margin assumptions were projected based on the then current cost structure and anticipated net cost increases and/or reductions. The terminal business value was determined using a common
methodology of capturing the present value of perpetual cash flow estimates beyond the last projected period assuming a constant weighted-average cost of capital and terminal growth rate of 3%. Step one of the impairment test resulted in an
estimated fair value less than carrying value. Consequently, step two was performed to calculate the amount of impairment, which concluded that the goodwill was fully impaired. As a result, we recorded a goodwill impairment charge of approximately
$17.2 million during the thirteen weeks ended September 27, 2009. After this charge, there is no remaining goodwill on our Consolidated Balance Sheet.



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For the third quarter of 2009, an impairment analysis of long-lived assets, excluding
goodwill, was performed in conjunction with the interim goodwill impairment test for our Europe reporting unit. An impairment loss would be recognized if the carrying amount of these long-lived assets was not recoverable and exceeded its estimated
fair value. The undiscounted future cash flows expected to result from the use and eventual disposition of these assets substantially exceeded their carrying value; therefore, we concluded that the assets were not impaired.



|(9) | Income Taxes
|--- | ------------

Sources of
the loss from continuing operations before income taxes and the components of income tax provision (benefit) are as follows (in thousands):



|                                                     |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|---------------------------------------------------- |  | --------------------------------- | -------- | - | --------------------------------- | - | ------- | --------------------------------- |  | - | ------- | -
|                                                     |  | For the yearendedDecember 26,2010 |          |   | For the yearendedDecember 27,2009 |   |         | For the yearendedDecember 28,2008 | 
|Loss from continuing operations before income taxes: |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|United States                                        |  | $                                 | (105,481 | ) |                                   | $ | (26,049 | )                                 |  | $ | (16,803 | )
|Foreign                                              |  |                                   | 3,172    |   |                                   |   | (15,996 | )                                 |  |   | 6,670   |  
|                                                     |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|Total                                                |  | $                                 | (102,309 | ) |                                   | $ | (42,045 | )                                 |  | $ | (10,133 | )
|                                                     |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|Income tax provision (benefit):                      |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|Current:                                             |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|U.S. federal                                         |  | $                                 |         |   |                                   | $ |        |                                   |  | $ |        |  
|State                                                |  |                                   | 371      |   |                                   |   | 182     |                                   |  |   | 276     |  
|Foreign                                              |  |                                   | 2,444    |   |                                   |   | 1,982   |                                   |  |   | 2,599   |  
|                                                     |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|Total current                                        |  | $                                 | 2,815    |   |                                   | $ | 2,164   |                                   |  | $ | 2,875   |  
|Deferred:                                            |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|U.S. federal                                         |  | $                                 | (1,003   | ) |                                   | $ | (8,265  | )                                 |  | $ | 99      |  
|State                                                |  |                                   | 301      |   |                                   |   |        |                                   |  |   |        |  
|Foreign                                              |  |                                   | (209     | ) |                                   |   | (288    | )                                 |  |   | (907    | )
|                                                     |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|Total deferred                                       |  | $                                 | (911     | ) |                                   | $ | (8,553  | )                                 |  | $ | (808    | )
|                                                     |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  
|Total income tax provision (benefit)                 |  | $                                 | 1,904    |   |                                   | $ | (6,389  | )                                 |  | $ | 2,067   |  
|                                                     |  |                                   |          |   |                                   |   |         |                                   |  |   |         |  

The following reconciles the expected U.S. federal statutory income tax benefit based on loss from continuing
operations before income taxes with our income tax provision (benefit) (in thousands):



|                                          |  |                                   |         |   |                                   |   |         |                                   |  |   |        |  
|----------------------------------------- |  | --------------------------------- | ------- | - | --------------------------------- | - | ------- | --------------------------------- |  | - | ------ | -
|                                          |  | For the yearendedDecember 26,2010 |         |   | For the yearendedDecember 27,2009 |   |         | For the yearendedDecember 28,2008 | 
|Income tax benefit at U.S. statutory rate |  | $                                 | (35,808 | ) |                                   | $ | (14,715 | )                                 |  | $ | (3,494 | )
|Foreign rate differential                 |  |                                   | 364     |   |                                   |   | (324    | )                                 |  |   | (176   | )
|State taxes, net of federal benefit       |  |                                   | 372     |   |                                   |   | 151     |                                   |  |   | (215   | )
|Impairment of goodwill                    |  |                                   |        |   |                                   |   | 3,904   |                                   |  |   |       |  
|Change in valuation allowance             |  |                                   | 36,853  |   |                                   |   | 9,267   |                                   |  |   | 14,758 |  
|Other                                     |  |                                   | 123     |   |                                   |   | (4,672  | )                                 |  |   | (8,806 | )
|                                          |  |                                   |         |   |                                   |   |         |                                   |  |   |        |  
|Income tax provision (benefit)            |  | $                                 | 1,904   |   |                                   | $ | (6,389  | )                                 |  | $ | 2,067  |  
|                                          |  |                                   |         |   |                                   |   |         |                                   |  |   |        |  

During the first quarter of fiscal year 2009, we recorded an adjustment to correct an error in our previously
reported deferred tax liabilities. The adjustment increased our income tax benefit and decreased our deferred tax liabilities (noncurrent) by $5.1 million. We determined that this adjustment was immaterial to our then-current- and prior-period
financial statements. If the adjustment had been recorded to the corresponding prior period financial statements, it would have increased (decreased) income tax provision by approximately $0.7 million, $2.4 million and $(8.0) million in fiscal years
2008, 2007 and 2006, respectively, and increased other comprehensive income by $0.2 million in 2008. The $5.1 million benefit is included in Other in the above reconciliation.



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Our deferred tax assets and liabilities are as follows (in thousands):



|                                           |  |                   |          |   |                   |   |          |  
|------------------------------------------ |  | ----------------- | -------- | - | ----------------- | - | -------- | -
|                                           |  | December 26, 2010 |          |   | December 27, 2009 |  
|Deferred tax assets attributable to:       |  |                   |          |   |                   |   |          |  
|Net operating loss and other carryforwards |  | $                 | 119,994  |   |                   | $ | 99,731   |  
|Pensions and other postretirement benefits |  |                   | 14,629   |   |                   |   | 14,576   |  
|Inventory                                  |  |                   | 15,314   |   |                   |   | 16,221   |  
|Employee benefit accruals                  |  |                   | 10,423   |   |                   |   | 7,547    |  
|Accounts receivable                        |  |                   | 10,861   |   |                   |   | 12,016   |  
|Accrued customer allowances                |  |                   |         |   |                   |   | 626      |  
|Intangible assets                          |  |                   | 9,053    |   |                   |   | 12,155   |  
|Sale-leaseback                             |  |                   | 16,545   |   |                   |   | 17,547   |  
|Unrealized losses                          |  |                   | 1,438    |   |                   |   | 290      |  
|Other accruals                             |  |                   | 16,486   |   |                   |   | 17,555   |  
|                                           |  |                   |          |   |                   |   |          |  
|Gross deferred tax assets                  |  |                   | 214,743  |   |                   |   | 198,264  |  
|Valuation allowance                        |  |                   | (152,675 | ) |                   |   | (115,822 | )
|                                           |  |                   |          |   |                   |   |          |  
|Net deferred tax assets                    |  |                   | 62,068   |   |                   |   | 82,442   |  
|Deferred tax liabilities attributable to:  |  |                   |          |   |                   |   |          |  
|Property, plant and equipment              |  |                   | 63,888   |   |                   |   | 85,983   |  
|Unrealized gains                           |  |                   |         |   |                   |   |         |  
|                                           |  |                   |          |   |                   |   |          |  
|Gross deferred tax liabilities             |  |                   | 63,888   |   |                   |   | 85,983   |  
|                                           |  |                   |          |   |                   |   |          |  
|Net deferred tax liabilities               |  | $                 | (1,820   | ) |                   | $ | (3,541   | )
|                                           |  |                   |          |   |                   |   |          |  

As of December 26, 2010, we had approximately $319.3 million of U.S. federal tax net operating loss
carryforwards that expire between 2018 and 2030, of which $17.0 million were subject to the provisions of Internal Revenue Code Section 382. We establish a valuation allowance for deferred tax assets when the amount of expected future taxable
income is not likely to support the use of the deduction or credit. In assessing the realizability of deferred tax assets, we consider whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The
ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible. We consider the scheduled reversal of deferred tax liabilities,
projected future taxable income, and tax planning strategies in making this assessment.

Based upon the level of historical
pre-tax losses and projections for future taxable income over the periods in which the deferred tax assets are deductible, we concluded during 2006 that it was more likely than not that we would not fully realize the benefits of our deductible
differences. Accordingly, we recorded an income tax provision of $119.6 million during 2006 to establish a valuation allowance for our net deferred tax assets, including federal and state net operating loss carryforwards and other deferred tax
assets. During the year ended December 26, 2010, we increased our U.S. valuation allowance by $36.2 million.

In 2009, we
assessed the realizability of the deferred tax assets of our European operations and concluded that it was more likely than not that we would not fully realize the benefits of our existing deferred tax assets and established a valuation allowance in
the amount of $1.6 million. During the year ended December 26, 2010 we increased the valuation allowance related to our European operations by $0.7 million, of which all related to activity from continuing operations.

It is our intention to permanently reinvest undistributed earnings in our foreign subsidiaries with the exception of $24.6 million of
Canadian earnings, $19.7 million of which was deemed to be distributed to the United States in 2010. We have not made a provision for future income taxes for the remaining undistributed earnings of certain foreign subsidiaries, as we consider these
earnings to be indefinitely reinvested in these operations. As of December 26, 2010, such aggregated earnings for which taxes have not been provided were $52.6 million.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



We recognize interest and penalties related to unrecognized tax benefits as income tax
expense. As of December 26, 2010, we had accrued approximately $0.2 million for interest and penalties.

Solo Delaware and
its subsidiaries file income tax returns with federal and various states and provinces in the United States, Canada, Mexico, Panama, and the United Kingdom. Our U.S. tax returns remain subject to examination for the year ended December 31, 2004
and all subsequent periods. Our Canadian federal tax returns remain subject to examination for the fiscal year ended December 31, 2004 and all subsequent periods. Our United Kingdom returns remain subject to examination for the year ended
December 31, 2003 and all subsequent periods.

A reconciliation of the beginning and ending amount of unrecognized tax
benefits is as follows:



|                                                             |  |                                   |        |   |                                   |   |        |  
|------------------------------------------------------------ |  | --------------------------------- | ------ | - | --------------------------------- | - | ------ | -
|                                                             |  | For the yearendedDecember 26,2010 |        |   | For the yearendedDecember 27,2009 |  
|Balance at the beginning of the year                         |  | $                                 | 8,442  |   |                                   | $ | 8,137  |  
|Additions related to tax positions taken in the current year |  |                                   | 2,781  |   |                                   |   | 607    |  
|Additions related to tax position taken in previous years    |  |                                   | 442    |   |                                   |   | 1,329  |  
|Reduction in tax position taken in previous years            |  |                                   | (108   | ) |                                   |   | (1,631 | )
|                                                             |  |                                   |        |   |                                   |   |        |  
|Balance at the end of the year                               |  | $                                 | 11,557 |   |                                   | $ | 8,442  |  
|                                                             |  |                                   |        |   |                                   |   |        |  

As of December 26, 2010, the unrecognized tax benefits are $11.6 million, of which only $1.5 million
would affect our annual effective tax rate, if recognized, because of valuation allowances in certain jurisdictions. We are unaware of any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will
significantly increase or decrease within the next twelve months.



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|(10) | Debt
|---- | ----

A summary of
long-term debt is as follows (in thousands):



|                                           |  |                  |         |   |                  |   |         |  
|------------------------------------------ |  | ---------------- | ------- | - | ---------------- | - | ------- | -
|                                           |  | December 26,2010 |         |   | December 27,2009 |  
|Long-term debt:                            |  |                  |         |   |                  |   |         |  
|10.5% Senior Secured Notes due 2013        |  | $                | 300,000 |   |                  | $ | 300,000 |  
|Unamortized discount                       |  |                  | (4,464  | ) |                  |   | (5,703  | )
|                                           |  |                  |         |   |                  |   |         |  
|10.5% Senior Secured Notes due 2013, net   |  |                  | 295,536 |   |                  |   | 294,297 |  
|8.5% Senior Subordinated Notes due 2014    |  |                  | 325,000 |   |                  |   | 325,000 |  
|Asset-based Revolving Credit Facility      |  |                  | 10,027  |   |                  |   | 15,000  |  
|Canadian Credit Facility  Revolver        |  |                  | 2,669   |   |                  |   |        |  
|Canadian Credit Facility  Term Loan       |  |                  |        |   |                  |   | 404     |  
|Capital lease obligations                  |  |                  | 4,483   |   |                  |   | 1,388   |  
|                                           |  |                  |         |   |                  |   |         |  
|Total long-term debt                       |  |                  | 637,715 |   |                  |   | 636,089 |  
|Less: Current maturities of long-term debt |  |                  | 430     |   |                  |   | 779     |  
|                                           |  |                  |         |   |                  |   |         |  
|Long-term debt, net of current maturities  |  | $                | 637,285 |   |                  | $ | 635,310 |  
|                                           |  |                  |         |   |                  |   |         |  

Scheduled maturities of long-term debt at December 26, 2010, excluding capital lease obligations (Note
11), are as follows (in thousands):



|     |  |   |         | 
|---- |  | - | ------- | 
|2013 |  | $ | 312,696 | 
|2014 |  |   | 325,000 | 
|     |  |   |         | 
|     |  | $ | 637,696 | 
|     |  |   |         | 

On July 2, 2009, Solo Delaware and Solo Cup Operating Corporation issued $300.0 million of 10.5% Senior
Secured Notes due 2013, and we entered into a new asset-based revolving credit facility providing for borrowings of up to $200.0 million, subject to borrowing base limitations and other specified terms and conditions. We used the initial borrowings
under our asset-based revolving credit facility of $28.3 million, together with net proceeds of $293.8 million from the issuance of our senior secured notes, to (1) repay the $300.9 million of borrowings outstanding, including accrued interest
thereon, under the first lien credit facility, (2) pay $17.3 million of debt issuance costs relating to the senior secured notes and the asset-based revolving credit facility, and (3) provide $3.9 million for operating needs. We deferred
the debt issuance costs and are amortizing them through 2013, when the senior secured notes and borrowings under the asset-based revolving credit facility mature. As of December 26, 2010, unamortized debt issuance costs related to the
refinancing of $12.8 million are included in other assets on our Consolidated Balance Sheet.

In connection with these
refinancing transactions, we reclassified $9.1 million of unrealized losses associated with interest rate swap agreements from accumulated other comprehensive loss to interest expense during the thirteen weeks ended June 28, 2009. See further
description in Note 12. In addition, the unamortized balance of debt issuance costs related to the first lien credit facility of $2.5 million was written off in July 2009 as a result of the refinancing.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



10.5% Senior Secured Notes

Solo Delaware and Solo Cup Operating Corporation co-issued the senior secured notes under an indenture, dated as of July 2, 2009,
among the co-issuers, the initial guarantors identified therein and U.S. Bank National Association, as trustee. The senior secured notes mature on November 1, 2013 and bear interest at a rate of 10.5% per annum. Interest on the senior
secured notes is payable semi-annually on May 1 and November 1 of each year. We made our first interest payment on November 1, 2009 and have made all scheduled interest payments to date. The senior secured notes were issued at 97.928%
of their aggregate principal amount for gross proceeds of $293.8 million, representing a yield to maturity of 11.125%.

The
obligations of Solo Delaware and Solo Cup Operating Corporation under the senior secured notes are fully and unconditionally guaranteed, jointly and severally, by the existing guarantors under the indenture (SF Holdings Group, Inc., Solo
Manufacturing LLC, P.R. Solo Cup, Inc., Solo Cup Owings Mills Holdings, Lily-Canada Holding Corporation, Solo Cup (UK) Limited, Insulpak Holdings Limited, Solo Cup Europe Limited and Solo Cup Finance Limited). The senior secured notes and related
guarantees are secured by a senior lien on substantially all of the assets (other than accounts receivable, specified payment intangibles, inventory, deposit accounts, commodity accounts, securities accounts, lock-boxes, instruments, chattel paper,
cash and cash equivalents, general intangibles related to any of the foregoing, proceeds and products of the foregoing and specified assets related thereto, and specifically excluded assets) of the co-issuers and guarantors and by a junior lien on
the accounts receivable and other assets identified above that are not subject to the senior lien.

At any time prior to
May 1, 2011, we may, on one or more than one occasion, redeem some or all of the senior secured notes at a redemption price equal to 100% of the principal amount of the senior secured notes redeemed, plus a make-whole premium as of,
and any accrued and unpaid interest to, the applicable redemption date. In addition, at any time prior to May 1, 2011, we also may redeem up to 35% of the aggregate principal amount of senior secured notes, using the proceeds of qualifying
equity offerings, at a redemption price of 110.5% of the principal amount of the notes redeemed, and may, not more than once in any 12-month period, redeem up to 10% of the original aggregate principal amount of the senior secured notes at a
redemption price of 103%, in each case, plus any accrued and unpaid interest to the applicable redemption date.

On or after
May 1, 2011, we may redeem all or a part of the senior secured notes at a redemption price equal to a percentage of the principal amount thereof, plus any accrued and unpaid interest. If redeemed during the 12-month period beginning May 1,
2011, the redemption price would be 105.25%. If redeemed on May 1, 2012 or thereafter, the redemption price would be 100%.

If specified change of control events occur, we must offer to repurchase the senior secured notes at a repurchase price equal to 101% of
the principal amount of the senior secured notes repurchased, plus any accrued and unpaid interest to the applicable repurchase date. If we sell assets under specified circumstances, we must offer to repurchase the senior secured notes at a
repurchase price equal to 100% of the principal amount of the senior secured notes repurchased, plus any accrued and unpaid interest to the applicable repurchase date.

The indenture contains covenants that, among other things, restrict the ability of Solo Delaware and its restricted subsidiaries to incur additional debt or issue disqualified stock or preferred stock;
create liens; pay dividends, make investments or make other restricted payments; sell assets; consolidate, merge, sell or otherwise dispose of all or substantially all of the assets of Solo Delaware and its restricted subsidiaries; enter into
transactions with affiliates; and designate subsidiaries as unrestricted. These covenants are subject to a number of important limitations and exceptions.

Asset-Based Revolving Credit Facility

The asset-based revolving credit
facility provides for revolving credit financing of up to $200.0 million, including a $40.0 million sub-limit for letters of credit, and has a maturity date of July 2, 2013.

Our ability to borrow under the asset-based revolving credit facility is limited to a borrowing base equal to 85% of eligible accounts
receivable plus the lower of (1) 65% of eligible inventory and (2) 85% of the net orderly liquidation value of eligible inventory, minus availability reserves, and is subject to other conditions, limitations and reserve requirements. As of
December 26, 2010, we had available capacity of $145.4 million under our asset-based revolving credit facility after taking into account borrowing base limitations and outstanding letters of credit.

Under the asset-based revolving credit facility, we have the right to increase the aggregate principal amount of the commitments from time
to time, in an aggregate amount not to exceed $100.0 million, without the consent of any lender (other than the lenders participating in such increase), so long as any such increase is at least $25.0 million, subject to borrowing base limitations
and other specified terms and conditions.



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Interest accrues on outstanding borrowings under the asset-based revolving credit
facility at a rate of either LIBOR (as defined in the asset-based revolving credit facility) plus a margin of 4% per annum or a specified base rate plus a margin of 3% per annum, at our option. These interest rate margins are subject to
adjustment based on borrowing base availability. As of December 26, 2010, outstanding borrowings under the asset-based revolving credit facility bore interest at an effective rate of 6.25%.

8.5% Senior Subordinated Notes

On February 27, 2004, Solo Delaware issued $325.0 million of 8.5% Senior Subordinated Notes due 2014 under an indenture among the issuer, the initial guarantors identified therein and U.S. Bank
National Association, as trustee. The senior subordinated notes mature on February 15, 2014 and bear interest at a rate of 8.5% per annum. Interest on the senior subordinated notes is payable semi-annually on February 15 and
August 15 of every year. We have made all scheduled interest payments to date.

The obligations of Solo Delaware under the
senior subordinated notes are fully and unconditionally guaranteed, jointly and severally, by the existing guarantors under the indenture (SF Holdings Group, Inc., Solo Manufacturing LLC, P.R. Solo Cup, Inc., Solo Cup Owings Mills Holdings,
Lily-Canada Holding Corporation, Solo Cup (UK) Limited, Insulpak Holdings Limited, Solo Cup Europe Limited and Solo Cup Finance Limited).

The senior subordinated notes were not redeemable before February 15, 2009. Starting on that date, we have the option to redeem all or a portion of the senior subordinated notes at a redemption price
equal to a percentage of the principal amount thereof plus accrued interest. If redeemed during the 12-month period from February 15, 2010, the applicable percentage is 102.833%; from February 15, 2011, the applicable percentage is
101.417%; and from February 15, 2012 and thereafter, the applicable percentage is 100% of the principal amount to be redeemed. The senior subordinated notes provide that upon the occurrence of a change of control, as defined, the holders
thereof will have an option to require the redemption of the notes at a redemption price equal to 101% of the principal amount thereof, plus accrued interest. The indenture governing the senior subordinated notes contains various covenants which,
subject to specified exceptions, prohibit, or limit, among other things, asset sales, changes of control, dividend payments, equity repurchases or redemptions, the incurrence of additional debt, the issuance of disqualified stock, specified
transactions with affiliates, the creation of additional liens and specified other business activities.

Canadian Credit
Facility

On December 15, 2010, Solo Cup Canada Inc. (Solo Canada), an indirect wholly owned subsidiary of
Solo Cup Company, entered into a credit agreement (the Canadian Credit Agreement) with GE Canada Finance Holding Company (GE Capital), as a lender and agent for all lenders, providing for an asset-based revolving credit
financing of up to CA$17.0 million, including a CA$2.0 million sublimit for letters of credit. The Canadian credit facility expires on December 15, 2013. The Canadian Credit Agreement amends and replaces in its entirety the Credit Agreement
dated as of September 24, 2004, as amended, between Solo Canada (formerly known as Lily Cups Inc.), as borrower, and GE Capital, as agent and lender, and terminates the availability of borrowings thereunder.

Solo Canadas ability to borrow under the Canadian credit facility is limited to a borrowing base equal to 85% of eligible accounts
receivable; plus the lower of (a) 70% of eligible raw materials and finished goods inventory and (b) 85% of the net orderly liquidation value of eligible raw materials and finished goods inventory; plus the lower of (a) 25% of
eligible work-in-process inventory and (b) $1,000,000; less availability reserves, and is subject to other conditions, limitations and reserve requirements. As of December 26, 2010, we had available capacity of $11.8 million under our
Canadian credit facility after taking into account borrowing base limitations and outstanding letters of credit.

Solo Canada
may borrow funds under the Canadian credit facility, at its option, in Canadian or U.S. dollars. Canadian dollar denominated loans bear interest, at Solo Canadas option, at a variable rate equal to: (1) the Canadian Bankers Acceptance
Rate (the BA Rate), plus 2.5% per annum; or (2) the Canadian Prime Rate (being the higher of the (a) Canadian Bank Prime Rate and (b) 1.35% over the 30-day BA Rate), plus 1.25% per annum. U.S. dollar denominated
loans bear interest, at Solo Canadas option, at a variable rate equal to: (1) the U.S. Base Rate, plus 0.75% per annum; or (b) LIBOR, plus 2.5% per annum.

As of December 26, 2010, the Canadian ABL facility had an outstanding balance of CA$2.7 million (approximately $2.7 million) and
carried an effective interest rate of 4.25%.



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|(11) | Leases
|---- | ------

The gross amount
of machinery and equipment held under capital leases, and related accumulated amortization, were as follows (in thousands):



|                              |  |                   |        |   |                   |   |       |  
|----------------------------- |  | ----------------- | ------ | - | ----------------- | - | ----- | -
|                              |  | December 26, 2010 |        |   | December 27, 2009 |  
|Machinery and equipment       |  | $                 | 5,202  |   |                   | $ | 1,673 |  
|Less accumulated amortization |  |                   | (1,009 | ) |                   |   | (781  | )
|                              |  |                   |        |   |                   |   |       |  
|                              |  | $                 | 4,193  |   |                   | $ | 892   |  
|                              |  |                   |        |   |                   |   |       |  

Capital lease obligations were $4.5 million and $1.4 million as of December 26, 2010 and
December 27, 2009, respectively. As of December 26, 2010, capital lease obligations consisted of various machines and one warehouse with leases expiring between 2011 and 2022. Amortization expense was $0.3 million, $0.4 million, and $0.2
million for the years ended December 26, 2010, December 26, 2009, and December 28, 2008, respectively.

We
also have several non-cancelable operating leases that expire over the next 17 years and provide for renewal terms. These include property leases with escalation clauses averaging 0.3% to 4.0% annually, as well as leases of machinery, office
equipment and vehicles.

In June 2007, we entered into a lease agreement in conjunction with the sale of six of our
manufacturing facilities. The sole proceeds of $130.0 million were used to retire the second lien credit facility. Upon the sale of the six properties, we immediately leased them back pursuant to a 20-year term lease. The lease contains four
five-year renewal term options and is non-cancelable. Rent is payable on a quarterly basis, due on the first day of each calendar quarter, with an annual 2% escalation. Annual rent expense of $14.2 million is recognized on a straight-line basis over
the 20-year term of the lease. Payments during fiscal years 2010 and 2009 were $12.3 million and $9.1 million, respectively. The fourth quarterly payment for 2008 was paid at the end of 2008, prior to the beginning of the 2009 fiscal year; however,
the fourth quarterly payment in 2009 (approximately $3.0 million) was paid subsequent to the 2009 fiscal year end of December 27, 2009, and the fourth quarterly payment in 2010 was paid subsequent to the 2010 fiscal year end of
December 26, 2010. As a result, only three payments were made in fiscal year 2009 versus four payments in fiscal year 2010.

Net property, plant and equipment was reduced in 2007 by the carrying values of the six properties sold, which amounted to approximately
$73.0 million, of which $65.5 million was buildings and improvements, and $7.5 million was land. The resulting gain of approximately $53.2 million (net of $3.7 million of closing costs) was recorded as a deferred credit in our Consolidated Balance
Sheet. The remaining deferred credit is being amortized to income on a straight-line basis as an offset to rent expense over the 20-year lease term. As of December 26, 2010, the remaining deferred credit was $43.4 million, of which $2.6 million
was included in other current liabilities. As of December 27, 2009, the remaining deferred credit was $46.2 million, of which $2.6 million was included in other current liabilities.

As of December 26, 2010, future minimum lease payments for capital leases and non-cancelable operating leases having an initial or
remaining noncancelable lease term in excess of one year, were as follows (in thousands):



|                                                    |  |               |        |   |                 |   |         | 
|--------------------------------------------------- |  | ------------- | ------ | - | --------------- | - | ------- | 
|                                                    |  | CapitalLeases |        |   | OperatingLeases |  
|For the fiscal year:                                |  |               |        |   |                 |   |         | 
|2011                                                |  | $             | 763    |   |                 | $ | 44,804  | 
|2012                                                |  |               | 767    |   |                 |   | 43,041  | 
|2013                                                |  |               | 771    |   |                 |   | 41,444  | 
|2014                                                |  |               | 697    |   |                 |   | 38,933  | 
|2015                                                |  |               | 476    |   |                 |   | 35,057  | 
|Thereafter                                          |  |               | 3,055  |   |                 |   | 316,660 | 
|                                                    |  |               |        |   |                 |   |         | 
|Total minimum lease payments                        |  |               | 6,529  |   |                 | $ | 519,939 | 
|                                                    |  |               |        |   |                 |   |         | 
|Less amounts representing interest                  |  |               | (2,046 | ) |                 |   |         | 
|                                                    |  |               |        |   |                 |   |         | 
|Present value of minimum payments on capital leases |  | $             | 4,483  |   |                 |   |         | 
|                                                    |  |               |        |   |                 |   |         | 

Future minimum rental payments to be received under noncancelable subleases as of December 26,
2010 totaled approximately $1.9 million. Total rental expense for operating leases, including rentals on month-to-month leases, was $53.3 million, $50.6 million and $51.5 million for the years ended December 26, 2010, December 27,
2009 and December 28, 2008, respectively.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(12) | Fair Value of Financial Instruments
|---- | -----------------------------------

Fair Value Measurements

Our financial instruments consist primarily of
cash equivalents, accounts receivable, accounts payable, derivative financial instruments and debt, including obligations under capital leases. The carrying values of financial instruments other than fixed-rate debt approximated their fair values as
of December 26, 2010 and December 27, 2009 due to their short-term maturities or market rates of interest. The fair value of our floating-rate debt as of December 26, 2010 and December 27, 2009 approximated carrying value due to
our ability to borrow at comparable terms in the open market. The fair value of investments held within our defined benefit pension plan trusts is further described in Note 13.

Our 8.5% Senior Subordinated Notes (Note 10) had a carrying value of $325.0 million and an estimated fair value of $295.1 million and $320.9 million as of December 26, 2010 and December 27,
2009, respectively. The fair value of these notes was determined based on the price of the last trade of the debt on December 23, 2010 and December 24, 2009, the last business day of each respective fiscal year. These estimated fair values
were determined using Level 1 inputs of the fair value hierarchy, as defined in FASB ASC Topic 820, Fair Value Measurements and Disclosures.

Our 10.5% Senior Secured Notes, issued on July 2, 2009 (Note 10), had a carrying value of $295.5 million and $294.3 million as of December 26, 2010 and December 27, 2009, respectively, with
an estimated fair value of $319.5 million and $312.0 million, respectively. The fair value of the senior secured notes as of December 26, 2010 was determined based on the last trade price of the debt prior to close of trading on
December 23, 2010, the last business day of our 2010 fiscal year. The fair value as of December 27, 2009 was determined based on the average of the bid price (low) and ask price (high) as of December 24, 2009, the last business day of
our 2009 fiscal year. These estimated fair values were determined using Level 1 inputs of the fair value hierarchy, as defined in FASB ASC Topic 820.

The fair value hierarchy consists of three levels:



| |  |  | Level 1 fair values are valuations based on quoted market prices in active markets for identical assets or liabilities that the entity has the ability
to access;
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 2 fair values are those valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or
other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities; and
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Level 3 fair values are valuations based on inputs that are supported by little or no market activity and that are significant to the fair value of the
assets or liabilities.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Our interest rate swap agreements, described below, are measured at fair value on a
recurring basis using Level 2 inputs in the fair value hierarchy. We used an income approach to value the interest rate swaps. The income approach consists of a discounted cash flow model that takes into account the present value of future cash
flows under the terms of the contracts incorporating observable market inputs as of the reporting date such as prevailing interest rates. Both the counterparty credit risk and our credit risk were considered in the fair value determination.

Interest Rate Swap Agreements

As of December 26, 2010, we had outstanding interest rate swap agreements with a notional amount of $150 million that were originally entered into in August 2007 to hedge a portion of our exposure to
interest rate risk under our variable-rate first lien facility term loan borrowings. The interest rate swaps were designated and qualified as highly effective cash flow hedges. As of June 28, 2009, these swaps no longer qualified for hedge
accounting because of the impending extinguishment of our first lien credit facility in conjunction with our July 2009 refinancing transactions, as further described in Note 10. As a result of the refinancing transactions, the counterparty to the
interest rate swaps required us to post a specified amount of collateral against the current market value of the swaps. Our obligation to post collateral continued through the expiration date of the swaps in February 2011. The $1.9 million balance
of such collateral as of December 26, 2010 is included in restricted cash on our Consolidated Balance Sheet. The amount of collateral that must remain on account with the counterparty fluctuated based on changes in the estimated fair value of
the swaps.



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When the interest rate swaps had been designated as cash flow hedges, the mark-to-market
changes on the swaps had been reported as a component of accumulated other comprehensive income (loss) in accordance with FASB ASC Topic 815, Derivatives. As a result of the refinancing, the hedged forecasted payments of variable-rate
interest under the first lien borrowings were no longer probable of occurring. Accordingly, we discontinued hedge accounting prospectively, and, as a result, the cumulative mark-to-market loss of $9.1 million associated with these swaps was
reclassified from accumulated other comprehensive loss to interest expense in June 2009. Because the swaps no longer qualified for hedge accounting, the mark-to-market loss of $2.8 million for the twenty-six weeks ended December 27, 2009 and
the mark-to-market gain of $6.9 million for our 2010 fiscal year were recognized as interest expense (income).

The location
and amount of all gains or losses recognized in income on the interest rate swaps, including the reclassification from accumulated other comprehensive loss to interest expense are as follows (in millions):



|                       |  |                                                                             |  |                                                        |     |  |                   |   |     |                   |  |   |     | 
|---------------------- |  | --------------------------------------------------------------------------- |  | ------------------------------------------------------ | --- |  | ----------------- | - | --- | ----------------- |  | - | --- | 
|                       |  |                                                                             |  | Amount of Loss (Gain) Recognized during the Year Ended |    
|Derivative Instruments |  | Location in Consolidated Statements of Operations                           |  | December 26, 2010                                      |     |  | December 27, 2009 |   |     | December 28, 2008 | 
|Interest rate swaps    |  | Interest expense (income), net                                              |  | $                                                      | 0.8 |  |                   | $ | 6.3 |                   |  | $ | 4.1 | 
|                       |  |                                                                             |  |                                                       
|Interest rate swaps    |  | Reclassification of unrealized loss on cash flow hedges to interest expense |  |                                                        |    |  |                   |   | 9.1 |                   |  |   |    | 

The reclassification
adjustment from accumulated other comprehensive loss for losses realized in net earnings, net of tax, was $3.5 million and $4.2 million for the years ended December 27, 2009 and December 28, 2008, respectively.

The three receive-variable (Eurodollar), pay-fixed interest rate swap agreements had a total notional amount of $150 million and expired
on February 28, 2011. The fixed rate paid was 5.3765%. They are reported at fair value of $1.4 million as of December 26, 2010 within current liabilities and $8.3 million as of December 27, 2009 within non-current liabilities.

As of December 26, 2010 and December 27, 2009, we had no outstanding derivatives designated as part of a cash flow
or fair value hedging relationship and no hedges of the foreign currency exposure of a net investment in a foreign operation.



|(13) | Pensions and Other Postretirement Benefits
|---- | ------------------------------------------

We sponsor defined benefit pension plans and a postretirement health care plan for certain U.S. employees. These plans provide certain union and non-union employees with retirement and disability income
benefits. Pension costs are based upon the actuarially determined normal costs, plus interest on and amortization of the unfunded liabilities. These plans are frozen to new participants and the benefits for the majority of the participants in the
pension plans are frozen. Our policy has been to fund annually the minimum contributions required by applicable regulations. Plan assets for the U.S. pension plans are held in retirement trust funds with investments primarily in common stock,
corporate bonds and government securities. The postretirement health care plan covers a small group of retirees. The plan, in most cases, pays 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. The plan is contributory, with retiree contributions adjusted annually.

We also sponsor defined benefit pension plans and a postretirement health care plan that covers all Solo Cup Canada employees who meet certain length of service requirements. These plans provide certain
union and non-union employees with retirement and disability income benefits. Our funding policy is to contribute amounts necessary to satisfy the amounts required by local laws and regulations. Plan assets for the Solo Cup Canada pension plans are
held in retirement trust funds with investments primarily in common stock, corporate bonds and government securities.

We also
sponsor a noncontributory defined benefit pension plan that covers all Solo Cup Europe Limited employees who meet certain length of service requirements. Plan benefits are based on participants compensation during their final year of service.
Our funding policy is to contribute amounts necessary to satisfy the amounts required by local laws and regulations. Plan assets for the Solo Cup Europe Limited pension plan are held in retirement trust funds with investments primarily in common
stock, corporate bonds and government securities.



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



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



|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|----------------------------------------------------------- |  | ------------------ | ------- | - | ----------------------------- | - | ------- | ---------------- |  | - | ---------------- | - |  | - | ------ | -
|                                                            |  | Pension Benefits   |         |   | Other Postretirement Benefits |  
|                                                            |  | For the year ended |        
|                                                            |  | December 26,2010   |         |   | December 27,2009              |   |         | December 26,2010 |  |   | December 27,2009 |  
|Change in benefit obligation:                               |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Benefit obligation at beginning of year                     |  | $                  | 122,910 |   |                               | $ | 103,457 |                  |  | $ | 7,922            |   |  | $ | 11,934 |  
|Service cost                                                |  |                    | 1,384   |   |                               |   | 925     |                  |  |   | 56               |   |  |   | 35     |  
|Interest cost                                               |  |                    | 7,044   |   |                               |   | 7,065   |                  |  |   | 374              |   |  |   | 773    |  
|Curtailment loss                                            |  |                    | 577     |   |                               |   |        |                  |  |   |                 |   |  |   |       |  
|Actuarial losses (gains)                                    |  |                    | 8,967   |   |                               |   | 13,392  |                  |  |   | 568              |   |  |   | (4,243 | )
|Foreign currency exchange rate changes                      |  |                    | 821     |   |                               |   | 4,767   |                  |  |   | 81               |   |  |   | 182    |  
|Plan participant contributions                              |  |                    | 170     |   |                               |   | 163     |                  |  |   | 415              |   |  |   | 566    |  
|Benefits paid                                               |  |                    | (7,469  | ) |                               |   | (6,859  | )                |  |   | (1,294           | ) |  |   | (1,325 | )
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Benefit obligation at end of year                           |  | $                  | 134,404 |   |                               | $ | 122,910 |                  |  | $ | 8,122            |   |  | $ | 7,922  |  
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Change in plan assets:                                      |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Fair value of plan assets at beginning of year              |  | $                  | 93,567  |   |                               | $ | 77,311  |                  |  | $ |                 |   |  | $ |       |  
|Actual return on plan assets                                |  |                    | 9,764   |   |                               |   | 15,060  |                  |  |   |                 |   |  |   |       |  
|Foreign currency exchange rate changes                      |  |                    | 835     |   |                               |   | 4,506   |                  |  |   |                 |   |  |   |       |  
|Employer contributions                                      |  |                    | 6,231   |   |                               |   | 3,386   |                  |  |   | 879              |   |  |   | 759    |  
|Plan participant contributions                              |  |                    | 170     |   |                               |   | 163     |                  |  |   | 415              |   |  |   | 566    |  
|Benefits paid                                               |  |                    | (7,469  | ) |                               |   | (6,859  | )                |  |   | (1,294           | ) |  |   | (1,325 | )
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Fair value of plan assets at end of year                    |  | $                  | 103,098 |   |                               | $ | 93,567  |                  |  | $ |                 |   |  | $ |       |  
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Funded Status - Benefit Obligation in Excess of Plan Assets |  | $                  | (31,306 | ) |                               | $ | (29,343 | )                |  | $ | (8,122           | ) |  | $ | (7,922 | )
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|                                                            |  |                   
|                                                            |  | Pension Benefits   |         |   | Other Postretirement Benefits |  
|                                                            |  | December 26,2010   |         |   | December 27,2009              |   |         | December 26,2010 |  |   | December 27,2009 |  
|Noncurrent assets                                           |  | $                  |        |   |                               | $ | 42      |                  |  | $ |                 |   |  | $ |       |  
|Current liabilities                                         |  |                    | (449    | ) |                               |   | (457    | )                |  |   | (806             | ) |  |   | (1,125 | )
|Noncurrent liabilities                                      |  |                    | (30,857 | ) |                               |   | (28,928 | )                |  |   | (7,316           | ) |  |   | (6,797 | )
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Net amount recognized at end of year                        |  | $                  | (31,306 | ) |                               | $ | (29,343 | )                |  | $ | (8,122           | ) |  | $ | (7,922 | )
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Prior service (cost) credit                                 |  | $                  |        |   |                               | $ | (1,017  | )                |  | $ | 4,742            |   |  | $ | 5,176  |  
|Net actuarial loss                                          |  |                    | (32,441 | ) |                               |   | (28,742 | )                |  |   | (1,884           | ) |  |   | (1,356 | )
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  
|Accumulated other comprehensive (loss) income               |  | $                  | (32,441 | ) |                               | $ | (29,759 | )                |  | $ | 2,858            |   |  | $ | 3,820  |  
|                                                            |  |                    |         |   |                               |   |         |                  |  |   |                  |   |  |   |        |  



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



The estimated amount that will be amortized from accumulated other comprehensive income
(loss) into net periodic benefit cost (income) in 2011 is as follows (in thousands):



|                                     |  |                  |       |  |                              |   |      |  
|------------------------------------ |  | ---------------- | ----- |  | ---------------------------- | - | ---- | -
|                                     |  | Pension Benefits |       |  | Other PostretirementBenefits |  
|Amortization of actuarial losses     |  | $                | 2,651 |  |                              | $ | 77   |  
|Amortization of prior service credit |  |                  |      |  |                              |   | (435 | )
|                                     |  |                  |       |  |                              |   |      |  
|Total loss (income)                  |  | $                | 2,651 |  |                              | $ | (358 | )
|                                     |  |                  |       |  |                              |   |      |  

The accumulated benefit obligation for all defined benefit pension plans was approximately $131.7 million and
$118.6 million as of December 26, 2010 and December 27, 2009, respectively. The following table presents aggregated information for individual pension plans with an accumulated benefit obligation in excess of plan assets as of
December 26, 2010 and December 27, 2009, (in thousands):



|                               |  |                  |         |  |                  |   |        | 
|------------------------------ |  | ---------------- | ------- |  | ---------------- | - | ------ | 
|                               |  | December 26,2010 |         |  | December 27,2009 |  
|Projected benefit obligation   |  | $                | 103,053 |  |                  | $ | 97,136 | 
|Accumulated benefit obligation |  |                  | 103,053 |  |                  |   | 97,136 | 
|Fair value of plan assets      |  |                  | 73,441  |  |                  |   | 68,324 | 

Net periodic benefit
cost for our pension and other postretirement benefit plans consists of the following (in thousands):



|                                     |  |                    |        |   |                   |   |        |                   |  |   |        |  
|------------------------------------ |  | ------------------ | ------ | - | ----------------- | - | ------ | ----------------- |  | - | ------ | -
|                                     |  | For the year ended |       
|                                     |  | December 26, 2010  |        |   | December 27, 2009 |   |        | December 28, 2008 | 
|Pension Benefits                     |  |                    |        |   |                   |   |        |                   |  |   |        |  
|Service cost                         |  | $                  | 1,384  |   |                   | $ | 925    |                   |  | $ | 1,105  |  
|Interest cost                        |  |                    | 7,044  |   |                   |   | 7,065  |                   |  |   | 7,154  |  
|Expected return on plan assets       |  |                    | (7,105 | ) |                   |   | (5,864 | )                 |  |   | (8,756 | )
|Amortization of prior service cost   |  |                    | 119    |   |                   |   | 204    |                   |  |   | 205    |  
|Amortization of net loss             |  |                    | 2,643  |   |                   |   | 2,201  |                   |  |   | 2      |  
|                                     |  |                    |        |   |                   |   |        |                   |  |   |        |  
|                                     |  |                    | 4,085  |   |                   |   | 4,531  |                   |  |   | (290   | )
|Curtailment loss(1)                  |  |                    | 1,475  |   |                   |   |       |                   |  |   |       |  
|                                     |  |                    |        |   |                   |   |        |                   |  |   |        |  
|Net periodic benefit cost (income)   |  | $                  | 5,560  |   |                   | $ | 4,531  |                   |  | $ | (290   | )
|                                     |  |                    |        |   |                   |   |        |                   |  |   |        |  
|Other Postretirement Benefits        |  |                    |        |   |                   |   |        |                   |  |   |        |  
|Service cost                         |  | $                  | 56     |   |                   | $ | 35     |                   |  | $ | 55     |  
|Interest cost                        |  |                    | 374    |   |                   |   | 773    |                   |  |   | 682    |  
|Amortization of prior service credit |  |                    | (435   | ) |                   |   | (435   | )                 |  |   | (435   | )
|Amortization of net loss             |  |                    | 52     |   |                   |   | 343    |                   |  |   | 308    |  
|                                     |  |                    |        |   |                   |   |        |                   |  |   |        |  
|Net periodic benefit cost            |  | $                  | 47     |   |                   | $ | 716    |                   |  | $ | 610    |  
|                                     |  |                    |        |   |                   |   |        |                   |  |   |        |  



|(1) | Pursuant to FASB ASC Topic 715, Compensation  Retirement Benefits, we recorded a curtailment loss of approximately $1.5 million during the thirteen weeks
ended September 26, 2010, as a result of the anticipated closure of our manufacturing facility in Springfield, Missouri (Note 4) which significantly reduced the expected years of future service of active employees at this facility who
participate in one of our U.S. defined benefit pension plans.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Key assumptions - The following weighted-average assumptions were used to
determine the benefit obligation at fiscal year-end and the net periodic benefit cost for each fiscal year:



|                                                             |  |                  |      |   |                               |  |      |      |  |  |      |   |  |  |      |  
|------------------------------------------------------------ |  | ---------------- | ---- | - | ----------------------------- |  | ---- | ---- |  |  | ---- | - |  |  | ---- | -
|                                                             |  | Pension Benefits |      |   | Other Postretirement Benefits | 
|                                                             |  | 2010             |      |   | 2009                          |  |      | 2010 |  |  | 2009 |  
|To determine benefit obligation at fiscal year-end:          |  |                  |      |   |                               |  |      |      |  |  |      |   |  |  |      |  
|Discount rate:                                               |  |                  |      |   |                               |  |      |      |  |  |      |   |  |  |      |  
|North America                                                |  |                  | 5.38 | % |                               |  | 5.94 | %    |  |  | 4.72 | % |  |  | 5.04 | %
|Europe                                                       |  |                  | 5.25 | % |                               |  | 5.65 | %    |  |  |     |   |  |  |     |  
|Expected long-term rate of return on plan assets:            |  |                  |      |   |                               |  |      |      |  |  |      |   |  |  |      |  
|North America                                                |  |                  | 7.59 | % |                               |  | 7.61 | %    |  |  |     |   |  |  |     |  
|Europe                                                       |  |                  | 7.30 | % |                               |  | 7.70 | %    |  |  |     |   |  |  |     |  
|                                                             |  |                  |      |  
|To determine net periodic benefit cost for each fiscal year: |  |                  |      |   |                               |  |      |      |  |  |      |   |  |  |      |  
|Discount rate:                                               |  |                  |      |   |                               |  |      |      |  |  |      |   |  |  |      |  
|North America                                                |  |                  | 5.94 | % |                               |  | 7.00 | %    |  |  | 5.04 | % |  |  | 6.94 | %
|Europe                                                       |  |                  | 5.65 | % |                               |  | 6.00 | %    |  |  |     |   |  |  |     |  
|Expected long-term rate of return on plan assets:            |  |                  |      |   |                               |  |      |      |  |  |      |   |  |  |      |  
|North America                                                |  |                  | 7.61 | % |                               |  | 7.60 | %    |  |  |     |   |  |  |     |  
|Europe                                                       |  |                  | 7.70 | % |                               |  | 7.40 | %    |  |  |     |   |  |  |     |  

We generally estimate
the discount rate for our pension and other postretirement benefit obligations based on a hypothetical investment in a portfolio of high-quality bonds that approximate the estimated cash flows of the pension and other postretirement benefit
obligations. We believe this approach permits a matching of future cash outflows related to benefit payments with future cash inflows associated with bond coupons and maturities.

One of the pension plans for Solo Cup Canada is pay-related. The rate of compensation increase used to determine the benefit obligation as
of December 26, 2010 and December 27, 2009, and the net periodic benefit cost for the plan for the fiscal years then ended was 3.50%. The discount rate is based on rates at which the pension benefit obligation could effectively be settled
on a present value basis. To determine the weighted average discount rate, we review long-term, high-quality corporate bonds at our measurement date and use a model that matches the projected benefit payments for our plans to coupons and maturities
from high-quality bonds.

The expected long-term rate of return on plan assets takes into consideration historical and expected
long-term returns based upon the weighted-average allocation of equities, fixed income and other asset components comprising the plans assets at the plans measurement dates.

For measurement purposes, the assumed health care cost trend rates were as follows:



|                                                        |  |  |             |  
|------------------------------------------------------- |  |  | ----------- | -
|Health care cost trend rate assumed for 2010            |  |  | 7.5%  8.5% |  
|Rate to which the cost trend rate is assumed to decline |  |  | 5.0         | %
|Year that the rate reaches the ultimate trend rate      |  |  | 2015  2017 |  

Assumed health care
cost trend rates have a significant effect on the amounts reported for the health care plans. A one-percentage-point change in assumed health care cost trend rates would have the following effects (in thousands):



|                                             |  |                             |     |  |                             |   |      |  
|-------------------------------------------- |  | --------------------------- | --- |  | --------------------------- | - | ---- | -
|                                             |  | 1-Percentage-Point Increase |     |  | 1-Percentage-Point Decrease |  
|Effect on total of service and interest cost |  | $                           | 20  |  |                             | $ | (17  | )
|Effect on postretirement benefit obligation  |  |                             | 208 |  |                             |   | (180 | )



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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



Plan Assets - The weighted-average asset allocation of our pension plan assets,
by category, were as follows:



|                  |  |                   |       |   |                   |  |       |  
|----------------- |  | ----------------- | ----- | - | ----------------- |  | ----- | -
|                  |  | Plan Assets at    |      
|                  |  | December 26, 2010 |       |   | December 27, 2009 | 
|Asset Category    |  |                   |       |   |                   |  |       |  
|Equity securities |  |                   | 64.7  | % |                   |  | 64.1  | %
|Debt securities   |  |                   | 32.4  |   |                   |  | 32.8  |  
|Real estate       |  |                   | 1.5   |   |                   |  | 1.5   |  
|Other             |  |                   | 1.4   |   |                   |  | 1.6   |  
|                  |  |                   |       |   |                   |  |       |  
|Total             |  |                   | 100.0 | % |                   |  | 100.0 | %
|                  |  |                   |       |   |                   |  |       |  

The pension plans assets are invested with the objective of being able to meet current and future
benefit payments needs, while maximizing total investment returns within the constraints of a prudent level of portfolio risk and diversification. The assets of each plan are diversified across asset classes to achieve an optimal balance between
risk and return, and between income and growth of assets through capital appreciation.

Several external investment managers
manage the assets of the pension plans and may invest in both fixed-income and equity investments. Fixed income investments may include cash and short-term instruments, U.S. government securities, corporate bonds, mortgages and other fixed income
investments. Equity investments may include various types of stock, such as large-, mid-, and small-cap stocks, and foreign equities. Each investment manager is allowed to exercise investment discretion, subject to limitations, if any, established
by our retirement committee for the pension plans. The retirement committee periodically reviews the performance of the investment managers and asset allocation. For the U.S. plans, Mercer Global Investments is the Manager of Investment Managers and
provides expert advice and recommendations to help the retirement committee fulfill its fiduciary responsibilities in furtherance of each plans goals and objectives.

Fair value measurements for the pension plans assets at December 26, 2010 are summarized below (in thousands):



|                                    |  |                                                             |       |  |                                            |   |         |                                         |  |   |       |  |  |   |         | 
|----------------------------------- |  | ----------------------------------------------------------- | ----- |  | ------------------------------------------ | - | ------- | --------------------------------------- |  | - | ----- |  |  | - | ------- | 
|                                    |  | Quoted Pricesin Active Marketsfor Identical Inputs(Level
1) |       |  | SignificantOther ObservableInputs(Level 2) |   |         | SignificantUnobservableInputs(Level
 3) |  |   | Total | 
|Plan net assets:                    |  |                                                             |       |  |                                            |   |         |                                         |  |   |       |  |  |   |         | 
|Cash and cash equivalents           |  | $                                                           | 1,412 |  |                                            | $ |        |                                         |  | $ |      |  |  | $ | 1,412   | 
|Common collective funds(1)          |  |                                                             |       |  |                                            |   |         |                                         |  |   |       |  |  |   |         | 
|Equity securities                   |  |                                                             |      |  |                                            |   | 33,573  |                                         |  |   |      |  |  |   | 33,573  | 
|Fixed-income securities             |  |                                                             |      |  |                                            |   | 18,938  |                                         |  |   |      |  |  |   | 18,938  | 
|Pooled pension funds(2)             |  |                                                             |       |  |                                            |   |         |                                         |  |   |       |  |  |   |         | 
|Equity securities                   |  |                                                             |      |  |                                            |   | 18,540  |                                         |  |   |      |  |  |   | 18,540  | 
|Fixed-income securities             |  |                                                             |      |  |                                            |   | 10,855  |                                         |  |   |      |  |  |   | 10,855  | 
|Pooled pension fund(3)              |  |                                                             |      |  |                                            |   | 19,780  |                                         |  |   |      |  |  |   | 19,780  | 
|                                    |  |                                                             |       |  |                                            |   |         |                                         |  |   |       |  |  |   |         | 
|Total plan net assets at fair value |  | $                                                           | 1,412 |  |                                            | $ | 101,686 |                                         |  | $ |      |  |  | $ | 103,098 | 
|                                    |  |                                                             |       |  |                                            |   |         |                                         |  |   |       |  |  |   |         | 



|(1) | These common collective funds are held in the trusts for our U.S. pension plans. These funds are comprised of shares or units in commingled funds that
are not publicly traded. The underlying assets in these funds (equity securities and fixed income securities) are publicly traded and price quotes for the assets held by these funds are readily available. The values of these funds are not publicly
quoted and must trade through a broker. The fair values included in the above table were provided by the fund administrator who values these funds using the net asset value, or NAV, per fund share, which is based on the value of the underlying
securities.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | These pooled
pension funds are held in the trusts for our Canadian pension plans. The funds are similar to the U.S. common collective funds and are priced using the same inputs.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | This pooled
pension fund is held in the trust for our European pension plan. This fund is comprised of shares or units in a commingled fund that is not publicly traded. The fair value included in the above table was provided by the fund administrator who values
this fund using the net asset value, or NAV, per fund share, which is based on the value of the underlying securities.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Contributions - We expect to contribute approximately $6 million to our pension
plans and approximately $1 million to our other postretirement benefit plans in 2011.

Estimated future benefit payments
- The following benefit payments, which reflect expected future service, as appropriate, are expected to be paid (in thousands):



|                |  |                  |        |  |                               |   |       | 
|--------------- |  | ---------------- | ------ |  | ----------------------------- | - | ----- | 
|                |  | Pension Benefits |        |  | Other Postretirement Benefits |  
|2011            |  | $                | 8,242  |  |                               | $ | 806   | 
|2012            |  |                  | 8,383  |  |                               |   | 820   | 
|2013            |  |                  | 8,405  |  |                               |   | 837   | 
|2014            |  |                  | 8,444  |  |                               |   | 761   | 
|2015            |  |                  | 8,536  |  |                               |   | 730   | 
|Years 20162020 |  |                  | 43,617 |  |                               |   | 2,356 | 

Defined
contribution plans - Our U.S. defined contribution benefit plan, the Solo Cup Company Profit Sharing Plus Plan, covers substantially all U.S. employees of Solo Cup Operating Corporation and qualifies under Section 401(k) of the Internal
Revenue Code. The plan allows employees to contribute up to 75% of their qualified gross wages as defined in the plan. Prior to January 1, 2009, we provided a matching contribution equal to 75% of the first 2%, and 50% of the next 4%, of each
employees eligible compensation contributed to the plan. For certain union employees, we provide a matching contribution equal to 100% of the first 2%, and 50% of the next 4%, of each employees eligible compensation contributed to the
plan. In addition, we may make additional profit-sharing contributions at the sole discretion of our Board of Directors. Charges for employer contributions to the plan were nominal for the years ended December 26, 2010 and December 27,
2009, because we temporarily eliminated employer-match contributions for our employees during 2009 and reinstated the employer contributions in 2010; however, the 2010 contributions were funded out of plan forfeitures. For the year ended
December 28, 2008, charges for employer contributions to the plan were approximately $5.6 million and are recorded in cost of goods sold and selling, general and administrative expenses in the accompanying Consolidated Statement of Operations.

We also have defined contribution plans for Solo Cup Canada and Solo Cup Europe Limited employees. Charges for employer
contributions to these plans were approximately $0.5 million in each of the years ended December 26, 2010, December 27, 2009 and December 28, 2008, and are recorded in cost of goods sold and selling, general and administrative
expenses in the accompanying Consolidated Statements of Operations.



|(14) | Shareholders Equity
|---- | --------------------

On February 27, 2004, Solo Delaware received net proceeds of $229.6 million from the issuance of 100 shares of Common Stock to Solo
Cup Investment Corporation and the retirement of all outstanding shares of Solo Illinois Class A and Class B common stock. To fund this purchase of Solo Delaware common stock, Solo Cup Investment Corporation issued $240.0 million of
convertible participating preferred stock (CPPS) to Vestar. The CPPS pays cash dividends at a rate of 10.0% per annum on an amount equal to the sum of the original purchase price of the CPPS plus all accrued and unpaid dividends.
Dividends accumulate to the extent not paid, whether or not earned or declared. As of December 26, 2010, accrued and unpaid dividends were approximately $228.2 million.

Solo Cup Investment Corporation is required to redeem the CPPS for an amount in cash equal to its original purchase price, plus all accrued and unpaid dividends, on the eleventh anniversary of its
issuance. Prior to that time, the CPPS is subject to specified accelerated redemption clauses. Solo Cup Investment Corporation, at its option and election, or its designee, may redeem in whole or in part the outstanding shares of CPPS or other
securities it has issued on or after the third anniversary through the seventh anniversary of its issuance. The CPPS may be converted into common shares of Solo Cup Investment Corporation at any time, subject to specified limitations, at the option
of the holders of the CPPS. Mandatory conversion occurs upon the closing of an initial public offering. We provide no guarantees with respect to these obligations of Solo Cup Investment Corporation.



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|(15) | Accumulated Other Comprehensive Income (Loss)
|---- | ---------------------------------------------

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



|                                                                       |  |                   |         |   |                   |   |         |  
|---------------------------------------------------------------------- |  | ----------------- | ------- | - | ----------------- | - | ------- | -
|                                                                       |  | December 26, 2010 |         |   | December 27, 2009 |  
|Foreign currency translation adjustments                               |  | $                 | 13,085  |   |                   | $ | 11,240  |  
|Pension liability adjustments, net of tax benefit of $5,215 and $4,820 |  |                   | (24,368 | ) |                   |   | (21,119 | )
|                                                                       |  |                   |         |   |                   |   |         |  
|Accumulated other comprehensive loss                                   |  | $                 | (11,283 | ) |                   | $ | (9,879  | )
|                                                                       |  |                   |         |   |                   |   |         |  



|(16) | Share-Based Payments
|---- | --------------------

Long Term Incentive Plan

On October 1, 2007, the Board of Directors of Solo Delaware approved a Long Term Incentive Plan (the Plan). The purpose of the Plan is to provide long-term incentives to select key
management employees of Solo Delaware and its affiliates. Awards under the Plan provide the opportunity to receive a cash bonus payment upon the occurrence of any sale, redemption, transfer or other disposition by Vestar of all or a portion of its
equity interest in Solo Cup Investment Corporation for cash or marketable securities (a Liquidity Event). The aggregate award amount under the Plan (the LTIP Award Pool) will be determined based on a sliding percentage of the
equity value of Solo Cup Investment Corporation (the Equity Value), as determined by the Solo Delaware Board, in accordance with the existing stockholder agreement of Solo Cup Investment Corporation, upon the occurrence of the earlier of
a Liquidity Event or the Plan Termination Date (October 1, 2014), which is the seventh anniversary of the Plans effective date. Awards may also be allocated if Vestar sells, redeems, transfers or otherwise disposes of less than 100% of its
equity interest in Solo Cup Investment Corporation for cash or marketable securities (a Partial Liquidity Event).

If there has not been a Liquidity Event prior to the Plan Termination Date, the Board of Solo Delaware will determine the Equity Value of
Solo Cup Investment Corporation (as defined in the Plan) as of such date and will establish the LTIP Award Pool based on a sliding percentage of such valuation. The entire LTIP Award Pool will be distributed to the participants upon the occurrence
of a Liquidity Event or the Plan Termination Date.

The following table reflects the percentage of the LTIP Award Pool granted
by the Board to individual participants and forfeited by individual participants during the years ended December 27, 2009 and December 26, 2010:



|                                                               |  |  |    |  
|-------------------------------------------------------------- |  |  | -- | -
|Percentage of LTIP Award Pool outstanding at December 28, 2008 |  |  | 65 | %
|2009 Grants                                                    |  |  | 8  | %
|2009 Forfeitures                                               |  |  | 4  | %
|                                                               |  |  |    |  
|Percentage of LTIP Award Pool outstanding at December 27, 2009 |  |  | 69 | %
|2010 Grants                                                    |  |  | 12 | %
|2010 Forfeitures                                               |  |  | 16 | %
|                                                               |  |  |    |  
|Percentage of LTIP Award Pool outstanding at December 26, 2010 |  |  | 65 | %
|                                                               |  |  |    |  

As of December 26, 2010, 65% of the LTIP Award Pool was outstanding. The percentage outstanding
determines the allocation of the total LTIP Award Pool amongst the recipients and does not impact the total LTIP Award Pool. Expense is recorded over the participants service periods representing the period between a participants grant
date and the Plan Termination Date. As additional grants are made to existing or new participants, compensation expense will be recorded over the respective future service period. Accordingly, the expense recorded in future periods will be affected
by future participant grants and forfeitures.



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Based on our valuations of the Plan as of December 26, 2010, December 27,
2009, and December 28, 2008, we recorded a reduction of compensation expense of approximately $0.1 million in 2010, compensation expense of $0.4 million in 2009 and compensation expense of $1.3 million in 2008. Compensation expense of $11.7
million is expected to be recognized over the remaining service period of 3.75 years. We measure the LTIP Award Pools fair value on a quarterly basis with a corresponding adjustment to compensation expense over the remaining service period.

The estimated fair value of the LTIP Award Pool is derived based on a lattice (binomial) forecast model with the primary input
being the estimated business enterprise value for us, which is determined based on the estimated discounted cash flows of the business and through a comparison to market values of peer companies. The inputs used to calculate the estimated business
enterprise value represent significant unobservable inputs, which are considered Level 3 inputs as defined by FASB ASC Topic 820, Fair Value Measurements and Disclosures. The LTIP Award is derived from the binomial model forecasts based on
the probabilities of obtaining the forecasted future business enterprise values. FASB ASC Topic 718, CompensationStock Compensation requires that the fair value of the LTIP Award Pool be determined assuming a full payout at the Plan
Termination Date with no consideration of a Liquidity Event. As the LTIP Award Pool is based on our business enterprise value, the fair value of the equity was calculated by the lattice model utilizing a Black-Scholes Option Model.

The key assumptions used in the Black-Scholes Option Model include:



| | i) | the fair value of the underlying asset set equal to the estimated business enterprise value,
| | -- | --------------------------------------------------------------------------------------------



| | ii) | the strike price equal to the face value of the debt plus accrued interest,
| | --- | ---------------------------------------------------------------------------



| | iii) | volatility of 47.0%, 42.5% and 53.0% in 2010, 2009 and 2008, respectively, which was based on historic and implied forward volatilities for selected publicly-traded
companies and calibrated such that the value derived by the model for the public debt was equivalent to the market trading price for the public debt on the valuation date,
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv) | forward one-year risk free rates ranging from 0.30% to 3.09% in 2010, 0.43% to 4.62% in 2009, and 0.38% to 2.38% in 2008, based on the market yields of government bonds
with terms corresponding to the remaining term of the Plan at the respective node in the lattice model (ranging from 1 to 4 years for 2010; 1 to 5 years for 2009; 1 to 6 years for 2008), and
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | v) | a dividend yield of 0% for 2010, 2009 and 2008 based on the assumption that dividends would not be paid.
| | -- | --------------------------------------------------------------------------------------------------------

The recorded expense reflects managements estimate of forfeitures, which is based on managements turnover expectations related
to the Plan participants and historical forfeiture rates. The assumed annual forfeiture rate applied in 2010, 2009 and 2008 was approximately 16%, 16% and 8%, respectively.



|(17) | Related-party Transactions
|---- | --------------------------

Advisory fees - SCC Holding

In 2004, Solo Delaware and Solo Cup Investment Corporation entered into a management agreement with SCC Holding providing for, among other items, the payment by Solo Cup Investment Corporation of an
annual advisory fee of $2.5 million to SCC Holding. On December 19, 2008, Solo Delaware and Solo Cup Investment Corporation entered into a first amendment to this management agreement. The first amendment provided that SCC Holding would not
receive any fees under the management agreement for the fiscal year ended December 28, 2008; therefore, we incurred no expense during our 2008 fiscal year related to this agreement. On June 30, 2009, Solo Delaware and Solo Cup Investment
Corporation entered into a second amendment to the management agreement with SCC Holding. The second amendment provides that the annual advisory fee would be $0.8 million beginning with the 2009 fee. Pursuant to the agreement, we incurred $0.8
million of advisory fees to SCC Holding during each of the years ended December 26, 2010 and December 27, 2009.

Advisory fees - Vestar

In 2004, Solo Delaware and Solo Cup Investment Corporation also entered into a management agreement with Vestar pursuant to which Solo Cup Investment Corporation agreed to pay Vestar an annual advisory
fee of $0.8 million, plus reimbursement of its expenses. On December 19, 2008, Solo Delaware, Solo Cup Investment Corporation and Vestar entered into an amendment to this management agreement. The amendment provided that Vestar would not
receive any advisory fees under its management agreement for the fiscal year ended December 28, 2008; therefore, we incurred no expense for advisory fees during our 2008 fiscal year related to this agreement. Pursuant to the agreement, we
incurred $0.8 million of advisory fees during each of the years ended December 26, 2010 and December 27, 2009, and incurred out-of-pocket expenses of approximately $66 thousand, $0.2 million and $0.2 million, in 2010, 2009 and 2008,
respectively.



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Accounting guarantee

In February 2009, we entered into an agreement by which we leased to Sun Products Corporation a warehouse located in Havre de Grace,
Maryland, which we closed in December 2008. One or more Vestar entities have an equity interest in Sun Products. The lease is for a term of seven years and includes two 5-year renewal options. During September 2009, we sold the Havre de Grace
property and simultaneously assigned the lease to the new owner. One of the contractual terms of the purchase agreement with the new owner requires us to lease the property from the new owner for years 8-15 beginning in 2016 in the event the tenant
does not renew the lease. We recorded a liability equal to the estimated fair value of this guarantee of approximately $1.2 million in accordance with FASB ASC Topic 460, Guaranteesand Topic 820, Fair Value Measurements and
Disclosures, and, due to our continuing involvement in the property, deferred the gain on the sale. The inputs used in the fair value calculation represent significant unobservable inputs, which are considered Level 3 inputs as defined by Topic
820.



|(18) | Commitments and Contingencies
|---- | -----------------------------

We are involved in various claims and legal actions arising from time to time in the ordinary course of business. We believe that the ultimate disposition of these matters would not have a material
adverse effect on our business, consolidated financial position, results of operations or liquidity.



|(19) | Government Obligations
|---- | ----------------------

We are subject to agreements with the City of Chicago and the State of Illinois relating to an undeveloped property located in Chicago,
Illinois that we acquired in 2001. Pursuant to those agreements, the City of Chicago paid on our behalf a portion of the 2001 purchase price of the property in the form of cash and the issuance of a note. The State of Illinois also provided a grant
to us. Under these agreements, we are required to fulfill specified obligations relating to the development of the property and retention of a specified number of employees. The amounts potentially repayable under the agreements for failure to
comply with the obligations included therein total approximately $16.3 million, of which approximately $3.0 million is interest bearing, and are included in other current liabilities in the accompanying consolidated balance sheets. As of
December 26, 2010 and December 27, 2009, accrued interest includes $3.2 million and $2.8 million, respectively, of interest related to the obligations.

As of December 26, 2010 and December 27, 2009, the property did not meet the criteria to be classified as held for sale in accordance with FASB ASC Topic 360, Property, Plant and Equipmentbecause we did not believe it was probable of a completed sale within twelve months of the respective financial statement date. Therefore, the carrying value of this property is included in property, plant and equipment on our Consolidated
Balance Sheets as of December 26, 2010 and December 27, 2009. We no longer intend to develop the property, and in February 2011, we entered into a purchase and sale agreement to sell this property (Note 24).

In March 2007, we had entered into a purchase and sale agreement with a third party for the sale of this property. The agreement with the
third party terminated in December 2008, and as a result of the termination, we were entitled to retain earnest money from the third party of approximately $3.1 million. Accordingly, we recognized $3.1 million of income as a reduction of selling,
general and administrative expenses in our Consolidated Statement of Operations for the year ended December 28, 2008.



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|(20) | Segments
|---- | --------

We manage and
evaluate our operations in two reportable segments: North America and Europe. Both of these segments manufacture and supply a broad portfolio of single-use products used to serve food and beverages, that are available in plastic, paper, and foam,
post-consumer recycled content and annually renewable materials. The operating segments are managed separately based on the products and requirements of the different markets. North America includes all of our entities established in the United
States, Canada, Mexico and Puerto Rico, and our corporate function. Europe includes all U.K. entities. Other includes Australia and Panama. We dissolved our sole Australian entity in May 2009.

The accounting policies of the operating segments are the same as those described in Note 2. Segment operating results are measured based
on operating income (loss). Intersegment net sales are accounted for on an arms-length pricing basis.

No individual
customer accounted for greater than 10% of consolidated net sales in fiscal year 2010, 2009 or 2008. It is not practicable for us to report revenues from external customers for each product and service or each group of similar products.



|                                   |  |              |           |   |            |   |         |       |  |   |               |  |  |              |           |   |       |   |         |   |  |   |           |  
|---------------------------------- |  | ------------ | --------- | - | ---------- | - | ------- | ----- |  | - | ------------- |  |  | ------------ | --------- | - | ----- | - | ------- | - |  | - | --------- | -
|(in thousands)                     |  | NorthAmerica |           |   | Europe (1) |   |         | Other |  |   | TotalSegments |  |  | Eliminations |           |   | Total |  
|Year ended December 26, 2010       |  |              |           |   |            |   |         |       |  |   |               |  |  |              |           |   |       |   |         |   |  |   |           |  
|Revenues from external customers   |  | $            | 1,481,634 |   |            | $ | 109,692 |       |  | $ | 12,850        |  |  | $            | 1,604,176 |   |       | $ | (21,315 | ) |  | $ | 1,582,861 |  
|Intersegment net sales             |  |              | 21,315    |   |            |   |        |       |  |   |              |  |  |              | 21,315    |   |       |   | (21,315 | ) |  |   |          |  
|Operating (loss) income            |  |              | (29,458   | ) |            |   | (2,936  | )     |  |   | 1,057         |  |  |              | (31,337   | ) |       |   | 132     |   |  |   | (31,205   | )
|Depreciation and amortization      |  |              | 112,476   |   |            |   | 3,821   |       |  |   | 268           |  |  |              | 116,565   |   |       |   |        |   |  |   | 116,565   |  
|Capital expenditures               |  |              | 40,740    |   |            |   | 1,318   |       |  |   | 126           |  |  |              | 42,184    |   |       |   | (29     | ) |  |   | 42,155    |  
|Property, plant and equipment, net |  |              | 413,863   |   |            |   | 12,905  |       |  |   | 2,345         |  |  |              | 429,113   |   |       |   |        |   |  |   | 429,113   |  
|Total assets at year end           |  |              | 857,455   |   |            |   | 53,409  |       |  |   | 12,368        |  |  |              | 923,232   |   |       |   | (58,560 | ) |  |   | 864,672   |  
|Year ended December 27, 2009       |  |              |           |   |            |   |         |       |  |   |               |  |  |              |           |   |       |   |         |   |  |   |           |  
|Revenues from external customers   |  | $            | 1,382,999 |   |            | $ | 106,252 |       |  | $ | 13,301        |  |  | $            | 1,502,552 |   |       | $ |        |   |  | $ | 1,502,552 |  
|Intersegment net sales             |  |              | 23,575    |   |            |   | 28      |       |  |   |              |  |  |              | 23,603    |   |       |   | (23,603 | ) |  |   |          |  
|Operating income (loss)            |  |              | 50,741    |   |            |   | (21,953 | )     |  |   | 1,416         |  |  |              | 30,204    |   |       |   | (102    | ) |  |   | 30,102    |  
|Depreciation and amortization      |  |              | 71,678    |   |            |   | 4,039   |       |  |   | 303           |  |  |              | 76,020    |   |       |   |        |   |  |   | 76,020    |  
|Capital expenditures               |  |              | 70,286    |   |            |   | 1,419   |       |  |   | 110           |  |  |              | 71,815    |   |       |   |        |   |  |   | 71,815    |  
|Property, plant and equipment, net |  |              | 490,678   |   |            |   | 15,800  |       |  |   | 2,486         |  |  |              | 508,964   |   |       |   |        |   |  |   | 508,964   |  
|Total assets at year end           |  |              | 973,787   |   |            |   | 59,309  |       |  |   | 12,258        |  |  |              | 1,045,354 |   |       |   | (57,936 | ) |  |   | 987,418   |  
|Year ended December 28, 2008       |  |              |           |   |            |   |         |       |  |   |               |  |  |              |           |   |       |   |         |   |  |   |           |  
|Revenues from external customers   |  | $            | 1,723,444 |   |            | $ | 109,383 |       |  | $ | 14,207        |  |  | $            | 1,847,034 |   |       | $ |        |   |  | $ | 1,847,034 |  
|Intersegment net sales             |  |              | 21,540    |   |            |   |        |       |  |   |              |  |  |              | 21,540    |   |       |   | (21,540 | ) |  |   |          |  
|Operating income                   |  |              | 64,298    |   |            |   | 1,002   |       |  |   | 100           |  |  |              | 65,400    |   |       |   | 198     |   |  |   | 65,598    |  
|Depreciation and amortization      |  |              | 77,333    |   |            |   | 4,500   |       |  |   | 428           |  |  |              | 82,261    |   |       |   |        |   |  |   | 82,261    |  
|Capital expenditures               |  |              | 74,557    |   |            |   | 4,610   |       |  |   | 531           |  |  |              | 79,698    |   |       |   |        |   |  |   | 79,698    |  
|Property, plant and equipment, net |  |              | 491,797   |   |            |   | 16,640  |       |  |   | 2,692         |  |  |              | 511,129   |   |       |   |        |   |  |   | 511,129   |  
|Total assets at year end           |  |              | 1,039,505 |   |            |   | 70,200  |       |  |   | 11,081        |  |  |              | 1,120,786 |   |       |   | (46,991 | ) |  |   | 1,073,795 |  



|(1) | The operating loss of the Europe reporting segment for the year ended December 27, 2009, includes a goodwill impairment charge of approximately
$17.2 million (Note 8).
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Net sales by customer group were as follows:



|               |  |                    |           |  |                  |   |           |                  |  |   |           | 
|-------------- |  | ------------------ | --------- |  | ---------------- | - | --------- | ---------------- |  | - | --------- | 
|               |  | For the year ended |          
|(in thousands) |  | December 26,2010   |           |  | December 27,2009 |   |           | December 28,2008 | 
|Foodservice    |  | $                  | 1,255,779 |  |                  | $ | 1,212,539 |                  |  | $ | 1,536,728 | 
|Consumer       |  |                    | 327,082   |  |                  |   | 290,013   |                  |  |   | 310,306   | 
|               |  |                    |           |  |                  |   |           |                  |  |   |           | 
|Net sales      |  | $                  | 1,582,861 |  |                  | $ | 1,502,552 |                  |  | $ | 1,847,034 | 
|               |  |                    |           |  |                  |   |           |                  |  |   |           | 

Geographic information:

Net sales from external customers by customer location are determined based on where our products were delivered. Long-lived assets include property, plant and equipment, net; intangible assets, net; and
certain other non-current assets.



|                                 |  |                    |           |  |                  |   |           |                  |  |   |           | 
|-------------------------------- |  | ------------------ | --------- |  | ---------------- | - | --------- | ---------------- |  | - | --------- | 
|                                 |  | For the year ended |          
|(in thousands)                   |  | December 26,2010   |           |  | December 27,2009 |   |           | December 28,2008 | 
|United States                    |  | $                  | 1,262,687 |  |                  | $ | 1,200,067 |                  |  | $ | 1,511,148 | 
|Other countries                  |  |                    | 320,174   |  |                  |   | 302,485   |                  |  |   | 335,886   | 
|                                 |  |                    |           |  |                  |   |           |                  |  |   |           | 
|Revenues from external customers |  | $                  | 1,582,861 |  |                  | $ | 1,502,552 |                  |  | $ | 1,847,034 | 
|                                 |  |                    |           |  |                  |   |           |                  |  |   |           | 
|                                 |  |                    |          
|(in thousands)                   |  | December 26,2010   |           |  | December 27,2009 |   |           |                  | 
|United States                    |  | $                  | 408,190   |  |                  | $ | 500,040   |                  |  |   |           | 
|Other countries                  |  |                    | 47,545    |  |                  |   | 50,685    |                  |  |   |           | 
|                                 |  |                    |           |  |                  |   |           |                  |  |   |           | 
|Total long-lived assets          |  | $                  | 455,735   |  |                  | $ | 550,725   |                  |  |   |           | 
|                                 |  |                    |           |  |                  |   |           |                  |  |   |           | 

Reconciliation:



|                                                    |  |                    |          |   |                  |   |         |                  |  |   |         |  
|--------------------------------------------------- |  | ------------------ | -------- | - | ---------------- | - | ------- | ---------------- |  | - | ------- | -
|                                                    |  | For the year ended |         
|(in thousands)                                      |  | December 26,2010   |          |   | December 27,2009 |   |         | December 28,2008 | 
|Total segment and other operating (loss) income     |  | $                  | (31,337  | ) |                  | $ | 30,204  |                  |  | $ | 65,400  |  
|Elimination of intersegment operating loss (income) |  |                    | 132      |   |                  |   | (102    | )                |  |   | 198     |  
|Interest expense                                    |  |                    | (70,827  | ) |                  |   | (72,739 | )                |  |   | (62,725 | )
|Interest income                                     |  |                    | 211      |   |                  |   | 535     |                  |  |   | 1,101   |  
|Loss on debt extinguishment                         |  |                    |         |   |                  |   | (2,520  | )                |  |   |        |  
|Foreign currency exchange (loss) gain, net          |  |                    | (2,221   | ) |                  |   | 2,577   |                  |  |   | (14,107 | )
|Gain on bargain purchase                            |  |                    | 1,733    |   |                  |   |        |                  |  |   |        |  
|                                                    |  |                    |          |   |                  |   |         |                  |  |   |         |  
|Loss from continuing operations before income taxes |  | $                  | (102,309 | ) |                  | $ | (42,045 | )                |  | $ | (10,133 | )
|                                                    |  |                    |          |   |                  |   |         |                  |  |   |         |  

|
|



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SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(21) | Valuation and Qualifying Account
|---- | --------------------------------

The valuation and qualifying account is the allowance for doubtful accounts. The changes in this account were as follows (in thousands):



|                                |  |                  |       |  |                             |   |       |                             |  |   |            |   |  |               |      |   |  |   |       | 
|------------------------------- |  | ---------------- | ----- |  | --------------------------- | - | ----- | --------------------------- |  | - | ---------- | - |  | ------------- | ---- | - |  | - | ----- | 
|                                |  | Beginningbalance |       |  | Charged tocosts andexpenses |   |       | Charged 
tootheraccounts(1) |  |   | Deductions |   |  | Endingbalance |     
|Allowance for doubtful accounts |  |                  |       |  |                             |   |       |                             |  |   |            |   |  |               |      |   |  |   |       | 
|2010                            |  | $                | 1,114 |  |                             | $ | 1,061 |                             |  | $ | 106        |   |  | $             | (444 | ) |  | $ | 1,837 | 
|2009                            |  |                  | 1,453 |  |                             |   | 655   |                             |  |   | (44        | ) |  |               | (950 | ) |  |   | 1,114 | 
|2008                            |  |                  | 1,348 |  |                             |   | 584   |                             |  |   | 136        |   |  |               | (615 | ) |  |   | 1,453 | 



|(1) | Charged to other accounts includes recoveries received, reclassifications and cumulative translation adjustments for translation of foreign accounts.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------



|(22) | Quarterly Financial Data (Unaudited)
|---- | ------------------------------------

The following table sets forth certain unaudited financial data for quarterly periods during fiscal years 2010 and 2009.



|                  |  |        |       |   |        |   |       |        |  |   |        |   |  |        |       |   |        |   |       |        |  |   |        |   |  |   |       |  |  |   |       |  
|----------------- |  | ------ | ----- | - | ------ | - | ----- | ------ |  | - | ------ | - |  | ------ | ----- | - | ------ | - | ----- | ------ |  | - | ------ | - |  | - | ----- |  |  | - | ----- | -
|(In millions)     |  | 4Q2010 |       |   | 3Q2010 |   |       | 2Q2010 |  |   | 1Q2010 |   |  | 4Q2009 |       |   | 3Q2009 |   |       | 2Q2009 |  |   | 1Q2009 |  
|Net sales         |  | $      | 409.2 |   |        | $ | 409.6 |        |  | $ | 419.2  |   |  | $      | 344.9 |   |        | $ | 387.1 |        |  | $ | 370.1  |   |  | $ | 395.8 |  |  | $ | 349.6 |  
|Gross profit      |  |        | 45.3  |   |        |   | 27.4  |        |  |   | 32.6   |   |  |        | 38.3  |   |        |   | 50.9  |        |  |   | 53.8   |   |  |   | 64.4  |  |  |   | 37.3  |  
|Net (loss) income |  |        | (17.2 | ) |        |   | (30.7 | )      |  |   | (39.8  | ) |  |        | (16.5 | ) |        |   | (4.5  | )      |  |   | (27.9  | ) |  |   | 6.9   |  |  |   | (10.2 | )



66



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SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(23) | Guarantors
|---- | ----------

On July 2, 2009, Solo Delaware and Solo Cup Operating Corporation (SCOC) co-issued $300.0 million of
10.5% Senior Secured Notes due 2013. The senior secured notes are fully and unconditionally guaranteed, on a joint and several basis, by certain of the Companys subsidiaries. The consolidated guarantors include SF Holdings; Solo Manufacturing
LLC; P.R. Solo Cup, Inc.; Lily-Canada Holding Corporation; Solo Cup Finance Limited; Solo Cup (UK) Limited; Insulpak Holdings Limited; Solo Cup Europe Limited; and Solo Cup Owings Mills Holdings.

Effective February 22, 2004, Solo Delaware acquired SF Holdings. Solo Delaware partially funded the acquisition
through the issuance of its 8.5% Senior Subordinated Notes due 2014. The senior subordinated notes are fully and unconditionally guaranteed, on a joint and several basis, by certain of the Companys subsidiaries. The consolidated guarantors of
the senior subordinated notes are the same as the senior secured notes, except for SCOC, which is a guarantor of the senior subordinated notes, but a co-issuer of the senior secured notes.

The following financial information is presented in accordance with Rule 3-10 of Regulation S-X under the Securities
Exchange Act of 1934. In presenting this financial information, the equity method of accounting has been applied to (1) Solo Delawares investment in SF Holdings, (2) SF Holdings investment in SCOC, and (3) SCOCs
investment in the Other Guarantors and Non-Guarantor subsidiaries. All such subsidiaries meet the requirements to be consolidated under U.S. generally accepted accounting principles. All intercompany balances and transactions have been eliminated.

(Continued)



67



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SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(23) | Guarantors (continued)
|---- | ----------------------



|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|-------------------------------------------------------- |  | ------------------------------------------------------------------- | ------- | - | -------------------------- | - | ------- | -------- |  | - | -------------------- |  |  | -------------- | ------ | - | ------------ | - | ------- | ------------ |  | - | -------- | - |  | - | ------- | -
|                                                         |  | Condensed Consolidated Balance
SheetDecember 26, 2010(In thousands) |        
|                                                         |  | SoloDelaware 
(1)                                                   |         |   | SFHoldings 
(2)(Guarantor) |   |         | SCOC (3) |  |   | OtherGuarantors 
(4) |  |  | Non-Guarantors |        |   | Eliminations |   |         | Consolidated | 
|Assets                                                   |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Current assets:                                          |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Cash and cash equivalents                                |  | $                                                                   |        |   |                            | $ |        |          |  | $ | 7,455                |  |  | $              | 4,896  |   |              | $ | 9,160   |              |  | $ |         |   |  | $ | 21,511  |  
|Accounts receivable  trade                              |  |                                                                     |        |   |                            |   |        |          |  |   | 82,118               |  |  |                | 16,612 |   |              |   | 17,483  |              |  |   |         |   |  |   | 116,213 |  
|Accounts receivable  other                              |  |                                                                     | 2,756   |   |                            |   |        |          |  |   | 15,633               |  |  |                | 2,184  |   |              |   |        |              |  |   | (16,061  | ) |  |   | 4,512   |  
|Inventories                                              |  |                                                                     |        |   |                            |   |        |          |  |   | 189,455              |  |  |                | 15,625 |   |              |   | 24,598  |              |  |   | (2,089   | ) |  |   | 227,589 |  
|Deferred income taxes                                    |  |                                                                     |        |   |                            |   |        |          |  |   | 12,573               |  |  |                |       |   |              |   | 483     |              |  |   |         |   |  |   | 13,056  |  
|Restricted cash                                          |  |                                                                     | 1,940   |   |                            |   |        |          |  |   |                     |  |  |                |       |   |              |   |        |              |  |   |         |   |  |   | 1,940   |  
|Prepaid expenses and other current assets                |  |                                                                     |        |   |                            |   |        |          |  |   | 20,379               |  |  |                | 1,726  |   |              |   | 1,743   |              |  |   |         |   |  |   | 23,848  |  
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Total current assets                                     |  |                                                                     | 4,696   |   |                            |   |        |          |  |   | 327,613              |  |  |                | 41,043 |   |              |   | 53,467  |              |  |   | (18,150  | ) |  |   | 408,669 |  
|Property, plant and equipment, net                       |  |                                                                     |        |   |                            |   |        |          |  |   | 385,381              |  |  |                | 12,905 |   |              |   | 30,827  |              |  |   |         |   |  |   | 429,113 |  
|Intangible assets, net                                   |  |                                                                     |        |   |                            |   |        |          |  |   | 910                  |  |  |                |       |   |              |   |         |              |  |   |         |   |  |   | 910     |  
|Intercompany receivables  non-current                   |  |                                                                     | 178,021 |   |                            |   |        |          |  |   | 6,088                |  |  |                |       |   |              |   |         |              |  |   | (184,109 | ) |  |   |        |  
|Intercompany debt  non-current                          |  |                                                                     | 407,488 |   |                            |   |        |          |  |   | 37,894               |  |  |                |       |   |              |   |         |              |  |   | (445,382 | ) |  |   |        |  
|Investments in subsidiaries                              |  |                                                                     | (51,681 | ) |                            |   | 268,197 |          |  |   | 56,089               |  |  |                |       |   |              |   | 19,488  |              |  |   | (292,093 | ) |  |   |        |  
|Other assets                                             |  |                                                                     | 11,984  |   |                            |   |        |          |  |   | 9,915                |  |  |                | 1,662  |   |              |   | 2,419   |              |  |   |         |   |  |   | 25,980  |  
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Total assets                                             |  | $                                                                   | 550,508 |   |                            | $ | 268,197 |          |  | $ | 823,890              |  |  | $              | 55,610 |   |              | $ | 106,201 |              |  | $ | (939,734 | ) |  | $ | 864,672 |  
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Liabilities and Shareholders (Deficit) Equity           |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Current liabilities:                                     |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Accounts payable                                         |  | $                                                                   |        |   |                            | $ |        |          |  | $ | 46,925               |  |  | $              | 10,861 |   |              | $ | 5,272   |              |  | $ |         |   |  | $ | 63,058  |  
|Intercompany payable                                     |  |                                                                     |        |   |                            |   |        |          |  |   | 5,265                |  |  |                | 4,805  |   |              |   | 5,991   |              |  |   | (16,061  | ) |  |   |        |  
|Accrued expenses and other current liabilities           |  |                                                                     | 17,476  |   |                            |   |        |          |  |   | 89,448               |  |  |                | 1,649  |   |              |   | 6,495   |              |  |   |         |   |  |   | 115,068 |  
|Current maturities of long-term debt                     |  |                                                                     |        |   |                            |   |        |          |  |   | 168                  |  |  |                | 262    |   |              |   |        |              |  |   |         |   |  |   | 430     |  
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Total current liabilities                                |  |                                                                     | 17,476  |   |                            |   |        |          |  |   | 141,806              |  |  |                | 17,577 |   |              |   | 17,758  |              |  |   | (16,061  | ) |  |   | 178,556 |  
|Long-term debt, net of current maturities                |  |                                                                     | 620,536 |   |                            |   |        |          |  |   | 13,330               |  |  |                | 747    |   |              |   | 2,672   |              |  |   |         |   |  |   | 637,285 |  
|Long-term debt, net of current maturities  intercompany |  |                                                                     |        |   |                            |   | 135,768 |          |  |   | 271,720              |  |  |                | 37,893 |   |              |   |        |              |  |   | (445,381 | ) |  |   |        |  
|Deferred income taxes                                    |  |                                                                     |        |   |                            |   |        |          |  |   | 13,132               |  |  |                |       |   |              |   | 1,744   |              |  |   |         |   |  |   | 14,876  |  
|Long-term payable  intercompany                         |  |                                                                     |        |   |                            |   | 184,110 |          |  |   |                     |  |  |                |       |   |              |   |        |              |  |   | (184,110 | ) |  |   |        |  
|Other long-term liabilities                              |  |                                                                     |        |   |                            |   |        |          |  |   | 115,705              |  |  |                | 667    |   |              |   | 5,087   |              |  |   |         |   |  |   | 121,459 |  
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Total liabilities                                        |  |                                                                     | 638,012 |   |                            |   | 319,878 |          |  |   | 555,693              |  |  |                | 56,884 |   |              |   | 27,261  |              |  |   | (645,552 | ) |  |   | 952,176 |  
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Total shareholders (deficit) equity                     |  |                                                                     | (87,504 | ) |                            |   | (51,681 | )        |  |   | 268,197              |  |  |                | (1,274 | ) |              |   | 78,940  |              |  |   | (294,182 | ) |  |   | (87,504 | )
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  
|Total liabilities and shareholders (deficit) equity     |  | $                                                                   | 550,508 |   |                            | $ | 268,197 |          |  | $ | 823,890              |  |  | $              | 55,610 |   |              | $ | 106,201 |              |  | $ | (939,734 | ) |  | $ | 864,672 |  
|                                                         |  |                                                                     |         |   |                            |   |         |          |  |   |                      |  |  |                |        |   |              |   |         |              |  |   |          |   |  |   |         |  

(Continued)



|(1) | Issuer of 8.5% Senior Subordinated Notes; co-issuer of 10.5% Senior Secured Notes
|--- | ---------------------------------------------------------------------------------



|(2) | Guarantor of 8.5% Senior Subordinated Notes and 10.5% Senior Secured Notes
|--- | --------------------------------------------------------------------------



|(3) | Guarantor of 8.5% Senior Subordinated Notes; co-issuer of 10.5% Senior Secured Notes
|--- | ------------------------------------------------------------------------------------



|(4) | Guarantors of 8.5% Senior Subordinated Notes and 10.5% Senior Secured Notes
|--- | ---------------------------------------------------------------------------



68



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SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(23) | Guarantors (continued)
|---- | ----------------------



|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|-------------------------------------------------------- |  | ------------------------------------------------------------------- | ------- |  | --------------------- | - | ------- | ---- |  | - | --------------- |  |  | -------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ---------- | - |  | - | ------- | 
|                                                         |  | Condensed Consolidated Balance
SheetDecember 27, 2009(In thousands) |        
|                                                         |  | SoloDelaware                                                        |         |  | SFHoldings(Guarantor) |   |         | SCOC |  |   | OtherGuarantors |  |  | Non-Guarantors |         |   | Eliminations |   |         | Consolidated | 
|Assets                                                   |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Current assets:                                          |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Cash and cash equivalents                                |  | $                                                                   |        |  |                       | $ |        |      |  | $ | 5               |  |  | $              | 4,517   |   |              | $ | 25,484  |              |  | $ |           |   |  | $ | 30,006  | 
|Accounts receivable  trade                              |  |                                                                     |        |  |                       |   |        |      |  |   | 83,808          |  |  |                | 16,912  |   |              |   | 16,483  |              |  |   |           |   |  |   | 117,203 | 
|Accounts receivable  other                              |  |                                                                     | 2,163   |  |                       |   |        |      |  |   | 42,699          |  |  |                | 2,182   |   |              |   | 23      |              |  |   | (39,405    | ) |  |   | 7,662   | 
|Inventories                                              |  |                                                                     |        |  |                       |   |        |      |  |   | 192,131         |  |  |                | 18,781  |   |              |   | 23,895  |              |  |   | (2,225     | ) |  |   | 232,582 | 
|Deferred income taxes                                    |  |                                                                     |        |  |                       |   |        |      |  |   | 18,696          |  |  |                |        |   |              |   | 435     |              |  |   |           |   |  |   | 19,131  | 
|Prepaid expenses and other current assets                |  |                                                                     |        |  |                       |   |        |      |  |   | 24,776          |  |  |                | 2,533   |   |              |   | 2,508   |              |  |   |           |   |  |   | 29,817  | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Total current assets                                     |  |                                                                     | 2,163   |  |                       |   |        |      |  |   | 362,115         |  |  |                | 44,925  |   |              |   | 68,828  |              |  |   | (41,630    | ) |  |   | 436,401 | 
|Property, plant and equipment, net                       |  |                                                                     |        |  |                       |   |        |      |  |   | 460,800         |  |  |                | 15,799  |   |              |   | 32,365  |              |  |   |           |   |  |   | 508,964 | 
|Intercompany receivables  non-current                   |  |                                                                     | 155,108 |  |                       |   |        |      |  |   | 6,088           |  |  |                |        |   |              |   |         |              |  |   | (161,196   | ) |  |   |        | 
|Intercompany debt  non-current                          |  |                                                                     | 439,708 |  |                       |   |        |      |  |   | 39,175          |  |  |                |        |   |              |   |         |              |  |   | (478,883   | ) |  |   |        | 
|Investments in subsidiaries                              |  |                                                                     | 39,372  |  |                       |   | 336,337 |      |  |   | 53,609          |  |  |                |        |   |              |   |        |              |  |   | (429,318   | ) |  |   |        | 
|Restricted cash                                          |  |                                                                     | 10,410  |  |                       |   |        |      |  |   |                |  |  |                |        |   |              |   |        |              |  |   |           |   |  |   | 10,410  | 
|Other assets                                             |  |                                                                     | 15,441  |  |                       |   |        |      |  |   | 13,387          |  |  |                | 782     |   |              |   | 2,033   |              |  |   |           |   |  |   | 31,643  | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Total assets                                             |  | $                                                                   | 662,202 |  |                       | $ | 336,337 |      |  | $ | 935,174         |  |  | $              | 61,506  |   |              | $ | 103,226 |              |  | $ | (1,111,027 | ) |  | $ | 987,418 | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Liabilities and Shareholders Equity                     |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Current liabilities:                                     |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Accounts payable                                         |  | $                                                                   | 301     |  |                       | $ |        |      |  | $ | 64,294          |  |  | $              | 11,320  |   |              | $ | 6,075   |              |  | $ |           |   |  | $ | 81,990  | 
|Intercompany payable                                     |  |                                                                     |        |  |                       |   |        |      |  |   | 4,343           |  |  |                | 24,348  |   |              |   | 10,714  |              |  |   | (39,405    | ) |  |   |        | 
|Accrued expenses and other current liabilities           |  |                                                                     | 16,105  |  |                       |   |        |      |  |   | 78,847          |  |  |                | 1,570   |   |              |   | 6,180   |              |  |   |           |   |  |   | 102,702 | 
|Current maturities of long-term debt                     |  |                                                                     |        |  |                       |   |        |      |  |   |                |  |  |                | 374     |   |              |   | 405     |              |  |   |           |   |  |   | 779     | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Total current liabilities                                |  |                                                                     | 16,406  |  |                       |   |        |      |  |   | 147,484         |  |  |                | 37,612  |   |              |   | 23,374  |              |  |   | (39,405    | ) |  |   | 185,471 | 
|Long-term debt, net of current maturities                |  |                                                                     | 619,297 |  |                       |   |        |      |  |   | 15,000          |  |  |                | 1,013   |   |              |   |        |              |  |   |           |   |  |   | 635,310 | 
|Long-term debt, net of current maturities  intercompany |  |                                                                     |        |  |                       |   | 135,769 |      |  |   | 303,941         |  |  |                | 39,173  |   |              |   |        |              |  |   | (478,883   | ) |  |   |        | 
|Deferred income taxes                                    |  |                                                                     |        |  |                       |   |        |      |  |   | 20,384          |  |  |                |        |   |              |   | 2,288   |              |  |   |           |   |  |   | 22,672  | 
|Long-term payable  intercompany                         |  |                                                                     |        |  |                       |   | 161,196 |      |  |   |                |  |  |                |        |   |              |   |        |              |  |   | (161,196   | ) |  |   |        | 
|Other long-term liabilities                              |  |                                                                     | 8,286   |  |                       |   |        |      |  |   | 112,028         |  |  |                | 2,317   |   |              |   | 3,121   |              |  |   |           |   |  |   | 125,752 | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Total liabilities                                        |  |                                                                     | 643,989 |  |                       |   | 296,965 |      |  |   | 598,837         |  |  |                | 80,115  |   |              |   | 28,783  |              |  |   | (679,484   | ) |  |   | 969,205 | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Total shareholders equity                               |  |                                                                     | 18,213  |  |                       |   | 39,372  |      |  |   | 336,337         |  |  |                | (18,609 | ) |              |   | 74,443  |              |  |   | (431,543   | ) |  |   | 18,213  | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 
|Total liabilities and shareholders equity               |  | $                                                                   | 662,202 |  |                       | $ | 336,337 |      |  | $ | 935,174         |  |  | $              | 61,506  |   |              | $ | 103,226 |              |  | $ | (1,111,027 | ) |  | $ | 987,418 | 
|                                                         |  |                                                                     |         |  |                       |   |         |      |  |   |                 |  |  |                |         |   |              |   |         |              |  |   |            |   |  |   |         | 

(Continued)



69



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##### Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(23) | Guarantors (continued)
|---- | ----------------------



|                                             |  |                                                                                        |          |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|-------------------------------------------- |  | -------------------------------------------------------------------------------------- | -------- | - | --------------------- | - | ------- | ---- |  | - | --------------- | - |  | -------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | -------- | - |  | - | --------- | -
|                                             |  | Consolidated Statement of
OperationsFor the year ended December 26, 2010(In thousands) |         
|                                             |  | SoloDelaware                                                                           |          |   | SFHoldings(Guarantor) |   |         | SCOC |  |   | OtherGuarantors |   |  | Non-Guarantors |         |   | Eliminations |   |         | Consolidated | 
|Net sales                                    |  | $                                                                                      |         |   |                       | $ |        |      |  | $ | 1,383,917       |   |  | $              | 109,808 |   |              | $ | 193,356 |              |  | $ | (104,220 | ) |  | $ | 1,582,861 |  
|Cost of goods sold                           |  |                                                                                        |         |   |                       |   |        |      |  |   | 1,264,607       |   |  |                | 105,573 |   |              |   | 173,033 |              |  |   | (103,901 | ) |  |   | 1,439,312 |  
|                                             |  |                                                                                        |          |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|Gross profit                                 |  |                                                                                        |         |   |                       |   |        |      |  |   | 119,310         |   |  |                | 4,235   |   |              |   | 20,323  |              |  |   | (319     | ) |  |   | 143,549   |  
|Selling, general and administrative expenses |  |                                                                                        |         |   |                       |   |        |      |  |   | 130,246         |   |  |                | 7,191   |   |              |   | 13,041  |              |  |   | (139     | ) |  |   | 150,339   |  
|Loss (gain) on asset disposals               |  |                                                                                        |         |   |                       |   |        |      |  |   | 3,811           |   |  |                | (24     | ) |              |   | 92      |              |  |   |         |   |  |   | 3,879     |  
|Asset impairment                             |  |                                                                                        |         |   |                       |   |        |      |  |   | 20,536          |   |  |                |        |   |              |   |        |              |  |   |         |   |  |   | 20,536    |  
|                                             |  |                                                                                        |          |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|Operating (loss) income                      |  |                                                                                        |         |   |                       |   |        |      |  |   | (35,283         | ) |  |                | (2,932  | ) |              |   | 7,190   |              |  |   | (180     | ) |  |   | (31,205   | )
|Interest expense, net                        |  |                                                                                        | 14,562   |   |                       |   | 22,915  |      |  |   | 32,536          |   |  |                | 566     |   |              |   | 37      |              |  |   |         |   |  |   | 70,616    |  
|Foreign currency exchange loss (gain), net   |  |                                                                                        |         |   |                       |   |        |      |  |   | 1,743           |   |  |                | 728     |   |              |   | (250    | )            |  |   |         |   |  |   | 2,221     |  
|Equity in loss (earnings) of subsidiaries    |  |                                                                                        | 89,651   |   |                       |   | 66,736  |      |  |   | (763            | ) |  |                |        |   |              |   |        |              |  |   | (155,624 | ) |  |   |          |  
|Gain on bargain purchase                     |  |                                                                                        |         |   |                       |   |        |      |  |   | (1,733          | ) |  |                |        |   |              |   |        |              |  |   |         |   |  |   | (1,733    | )
|                                             |  |                                                                                        |          |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|(Loss) income before income taxes            |  |                                                                                        | (104,213 | ) |                       |   | (89,651 | )    |  |   | (67,066         | ) |  |                | (4,226  | ) |              |   | 7,403   |              |  |   | 155,444  |   |  |   | (102,309  | )
|Income tax (benefit) provision               |  |                                                                                        |         |   |                       |   |        |      |  |   | (330            | ) |  |                | (433    | ) |              |   | 2,667   |              |  |   |         |   |  |   | 1,904     |  
|                                             |  |                                                                                        |          |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|Net (loss) income                            |  | $                                                                                      | (104,213 | ) |                       | $ | (89,651 | )    |  | $ | (66,736         | ) |  | $              | (3,793  | ) |              | $ | 4,736   |              |  | $ | 155,444  |   |  | $ | (104,213  | )
|                                             |  |                                                                                        |          |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  



|                                                                            |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |           |  
|--------------------------------------------------------------------------- |  | -------------------------------------------------------------------------------------- | ------- | - | --------------------- | - | ------- | ---- |  | - | --------------- | - |  | -------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------- | - |  | - | --------- | -
|                                                                            |  | Consolidated Statement of
OperationsFor the year ended December 27, 2009(In thousands) |        
|                                                                            |  | SoloDelaware                                                                           |         |   | SFHoldings(Guarantor) |   |         | SCOC |  |   | OtherGuarantors |   |  | Non-Guarantors |         |   | Eliminations |   |         | Consolidated | 
|Net sales                                                                   |  | $                                                                                      |        |   |                       | $ |        |      |  | $ | 1,317,912       |   |  | $              | 106,394 |   |              | $ | 176,719 |              |  | $ | (98,473 | ) |  | $ | 1,502,552 |  
|Cost of goods sold                                                          |  |                                                                                        |        |   |                       |   |        |      |  |   | 1,129,529       |   |  |                | 103,312 |   |              |   | 161,655 |              |  |   | (98,364 | ) |  |   | 1,296,132 |  
|                                                                            |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |           |  
|Gross profit                                                                |  |                                                                                        |        |   |                       |   |        |      |  |   | 188,383         |   |  |                | 3,082   |   |              |   | 15,064  |              |  |   | (109    | ) |  |   | 206,420   |  
|Selling, general and administrative expenses                                |  |                                                                                        | 15      |   |                       |   |        |      |  |   | 132,764         |   |  |                | 7,814   |   |              |   | 9,662   |              |  |   | (116    | ) |  |   | 150,139   |  
|Loss on asset disposals                                                     |  |                                                                                        |        |   |                       |   |        |      |  |   | 8,508           |   |  |                | 8       |   |              |   | 453     |              |  |   |        |   |  |   | 8,969     |  
|Impairment of goodwill                                                      |  |                                                                                        |        |   |                       |   |        |      |  |   |                |   |  |                | 17,210  |   |              |   |        |              |  |   |        |   |  |   | 17,210    |  
|                                                                            |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |           |  
|Operating (loss) income                                                     |  |                                                                                        | (15     | ) |                       |   |        |      |  |   | 47,111          |   |  |                | (21,950 | ) |              |   | 4,949   |              |  |   | 7       |   |  |   | 30,102    |  
|Interest expense, net                                                       |  |                                                                                        | 9,009   |   |                       |   | 20,872  |      |  |   | 32,095          |   |  |                | 1,070   |   |              |   | 50      |              |  |   |        |   |  |   | 63,096    |  
|Loss on debt extinguishment                                                 |  |                                                                                        | 2,520   |   |                       |   |        |      |  |   |                |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   | 2,520     |  
|Reclassification of unrealized loss on cash flow hedges to interest expense |  |                                                                                        | 9,108   |   |                       |   |        |      |  |   |                |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   | 9,108     |  
|Foreign currency exchange gain, net                                         |  |                                                                                        |        |   |                       |   |        |      |  |   | (282            | ) |  |                | (1,435  | ) |              |   | (860    | )            |  |   |        |   |  |   | (2,577    | )
|Equity in loss (earnings) of subsidiaries                                   |  |                                                                                        | 14,789  |   |                       |   | (6,083  | )    |  |   | 17,513          |   |  |                |        |   |              |   |        |              |  |   | (26,219 | ) |  |   |          |  
|                                                                            |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |           |  
|(Loss) income before income taxes                                           |  |                                                                                        | (35,441 | ) |                       |   | (14,789 | )    |  |   | (2,215          | ) |  |                | (21,585 | ) |              |   | 5,759   |              |  |   | 26,226  |   |  |   | (42,045   | )
|Income tax provision (benefit)                                              |  |                                                                                        | 215     |   |                       |   |        |      |  |   | (8,298          | ) |  |                | 201     |   |              |   | 1,493   |              |  |   |        |   |  |   | (6,389    | )
|                                                                            |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |           |  
|Net (loss) income                                                           |  | $                                                                                      | (35,656 | ) |                       | $ | (14,789 | )    |  | $ | 6,083           |   |  | $              | (21,786 | ) |              | $ | 4,266   |              |  | $ | 26,226  |   |  | $ | (35,656   | )
|                                                                            |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |           |  

(Continued)

During the thirteen weeks ended September 26, 2010, we determined that certain expenses related to intercompany information technology services had not been charged by Solo Cup Operating Corporation
(SCOC) to Solo Cup Canada Inc., a non-guarantor subsidiary, for the fiscal years ended December 31, 2006 and December 30, 2007. We corrected this prior-period error in our September 26, 2010 financial statements as we
deemed the error to be immaterial to our consolidated financial statements in both the originating periods and the then current period. We recorded expenses related to intercompany information technology services of $1.2 million related to 2007
and $1.0 million related to 2006 which reduced SCOCs selling, general and administrative expenses by $2.2 million and increased Non-Guarantors selling, general and administrative expenses by $2.2 million. The correction did not have
a material impact on our consolidated balance sheets or consolidated statements of operations.



70



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##### Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(23) | Guarantors (continued)
|---- | ----------------------



|                                                                   |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|------------------------------------------------------------------ |  | -------------------------------------------------------------------------------------- | ------- | - | --------------------- | - | ------- | ---- |  | - | --------------- | - |  | -------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | -------- | - |  | - | --------- | -
|                                                                   |  | Consolidated Statement of
OperationsFor the year ended December 28, 2008(In thousands) |        
|                                                                   |  | SoloDelaware                                                                           |         |   | SFHoldings(Guarantor) |   |         | SCOC |  |   | OtherGuarantors |   |  | Non-Guarantors |         |   | Eliminations |   |         | Consolidated | 
|Net sales                                                          |  | $                                                                                      |        |   |                       | $ |        |      |  | $ | 1,643,413       |   |  | $              | 109,476 |   |              | $ | 203,298 |              |  | $ | (109,153 | ) |  | $ | 1,847,034 |  
|Cost of goods sold                                                 |  |                                                                                        |        |   |                       |   |        |      |  |   | 1,426,353       |   |  |                | 99,357  |   |              |   | 182,577 |              |  |   | (109,017 | ) |  |   | 1,599,270 |  
|                                                                   |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|Gross profit                                                       |  |                                                                                        |        |   |                       |   |        |      |  |   | 217,060         |   |  |                | 10,119  |   |              |   | 20,721  |              |  |   | (136     | ) |  |   | 247,764   |  
|Selling, general and administrative expenses                       |  |                                                                                        | 17      |   |                       |   |        |      |  |   | 139,724         |   |  |                | 9,112   |   |              |   | 10,848  |              |  |   | (95      | ) |  |   | 159,606   |  
|Loss on asset disposals                                            |  |                                                                                        |        |   |                       |   |        |      |  |   | 22,514          |   |  |                |        |   |              |   | 46      |              |  |   |         |   |  |   | 22,560    |  
|                                                                   |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|Operating (loss) income                                            |  |                                                                                        | (17     | ) |                       |   |        |      |  |   | 54,822          |   |  |                | 1,007   |   |              |   | 9,827   |              |  |   | (41      | ) |  |   | 65,598    |  
|Interest (income) expense, net                                     |  |                                                                                        | (13,700 | ) |                       |   | 19,010  |      |  |   | 53,309          |   |  |                | 3,000   |   |              |   | 5       |              |  |   |         |   |  |   | 61,624    |  
|Foreign currency exchange loss (gain), net                         |  |                                                                                        |        |   |                       |   |        |      |  |   | 13,041          |   |  |                | 2,868   |   |              |   | (1,802  | )            |  |   |         |   |  |   | 14,107    |  
|Equity in loss (earnings) of subsidiaries                          |  |                                                                                        | 25,581  |   |                       |   | 6,571   |      |  |   | (4,592          | ) |  |                |        |   |              |   |        |              |  |   | (27,560  | ) |  |   |          |  
|                                                                   |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|(Loss) income from continuing operations before income taxes       |  |                                                                                        | (11,898 | ) |                       |   | (25,581 | )    |  |   | (6,936          | ) |  |                | (4,861  | ) |              |   | 11,624  |              |  |   | 27,519   |   |  |   | (10,133   | )
|Income tax provision (benefit)                                     |  |                                                                                        | 153     |   |                       |   |        |      |  |   | (216            | ) |  |                | (1,251  | ) |              |   | 3,381   |              |  |   |         |   |  |   | 2,067     |  
|                                                                   |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|(Loss) income from continuing operations                           |  |                                                                                        | (12,051 | ) |                       |   | (25,581 | )    |  |   | (6,720          | ) |  |                | (3,610  | ) |              |   | 8,243   |              |  |   | 27,519   |   |  |   | (12,200   | )
|Loss from discontinued operations, net of income taxes of $0       |  |                                                                                        |        |   |                       |   |        |      |  |   | (628            | ) |  |                |        |   |              |   |        |              |  |   |         |   |  |   | (628      | )
|Gain on sale of discontinued operations, net of income taxes of $0 |  |                                                                                        |        |   |                       |   |        |      |  |   | 777             |   |  |                |        |   |              |   |        |              |  |   |         |   |  |   | 777       |  
|                                                                   |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  
|Net (loss) income                                                  |  | $                                                                                      | (12,051 | ) |                       | $ | (25,581 | )    |  | $ | (6,571          | ) |  | $              | (3,610  | ) |              | $ | 8,243   |              |  | $ | 27,519   |   |  | $ | (12,051   | )
|                                                                   |  |                                                                                        |         |   |                       |   |         |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |          |   |  |   |           |  

(Continued)



71



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##### Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(23) | Guarantors (continued)
|---- | ----------------------



|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ | ------- | - | --------------------- | - | - | ---- |  | - | --------------- | - |  | -------------- | ------- | - | ------------ | - | ------- | ------------ |  | - | ------- | - |  | - | ------- | -
|                                                              |  | Condensed Consolidated Statement of Cash FlowsFor the year ended December 26, 2010(In thousands) |        
|                                                              |  | SoloDelaware                                                                                     |         |   | SFHoldings(Guarantor) |   |   | SCOC |  |   | OtherGuarantors |   |  | Non-Guarantors |         |   | Eliminations |   |         | Consolidated | 
|CASH FLOWS FROM OPERATING ACTIVITIES                          |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Net cash (used in) provided by operating activities           |  | $                                                                                                | (40,218 | ) |                       | $ |  |      |  | $ | 100,231         |   |  | $              | (17,686 | ) |              | $ | 1,758   |              |  | $ | (384    | ) |  | $ | 43,701  |  
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|CASH FLOWS FROM INVESTING ACTIVITIES                          |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Proceeds from sale of property, plant and equipment           |  |                                                                                                  |        |   |                       |   |  |      |  |   | 7,666           |   |  |                | 83      |   |              |   | 1       |              |  |   | (29     | ) |  |   | 7,721   |  
|Purchases of property, plant and equipment                    |  |                                                                                                  |        |   |                       |   |  |      |  |   | (40,520         | ) |  |                | (1,318  | ) |              |   | (346    | )            |  |   | 29      |   |  |   | (42,155 | )
|Investment in subsidiary                                      |  |                                                                                                  |        |   |                       |   |  |      |  |   |                |   |  |                |        |   |              |   | (19,521 | )            |  |   | 19,521  |   |  |   |        |  
|Business acquisition, net of cash acquired                    |  |                                                                                                  |        |   |                       |   |  |      |  |   | (23,661         | ) |  |                |        |   |              |   |        |              |  |   |        |   |  |   | (23,661 | )
|Decrease in restricted cash                                   |  |                                                                                                  | 8,470   |   |                       |   |  |      |  |   |                |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   | 8,470   |  
|Proceeds from insurance reimbursement                         |  |                                                                                                  |        |   |                       |   |  |      |  |   | 1,201           |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   | 1,201   |  
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Net cash provided by (used in) investing activities           |  |                                                                                                  | 8,470   |   |                       |   |  |      |  |   | (55,314         | ) |  |                | (1,235  | ) |              |   | (19,866 | )            |  |   | 19,521  |   |  |   | (48,424 | )
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                          |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Net (repayments) borrowings under revolving credit facilities |  |                                                                                                  |        |   |                       |   |  |      |  |   | (4,973          | ) |  |                |        |   |              |   | 2,652   |              |  |   |        |   |  |   | (2,321  | )
|Repayments of term notes                                      |  |                                                                                                  |        |   |                       |   |  |      |  |   |                |   |  |                |        |   |              |   | (410    | )            |  |   |        |   |  |   | (410    | )
|Proceeds from investment in subsidiary                        |  |                                                                                                  |        |   |                       |   |  |      |  |   |                |   |  |                | 19,521  |   |              |   |        |              |  |   | (19,521 | ) |  |   |        |  
|Collection on (repayment of) intercompany debt                |  |                                                                                                  | 32,221  |   |                       |   |  |      |  |   | (32,221         | ) |  |                |        |   |              |   |        |              |  |   |        |   |  |   |        |  
|Repayments of other debt                                      |  |                                                                                                  |        |   |                       |   |  |      |  |   | (117            | ) |  |                | (256    | ) |              |   |        |              |  |   |        |   |  |   | (373    | )
|Dividends paid                                                |  |                                                                                                  |        |   |                       |   |  |      |  |   |                |   |  |                |        |   |              |   | (384    | )            |  |   | 384     |   |  |   |        |  
|Debt issuance costs                                           |  |                                                                                                  | (373    | ) |                       |   |  |      |  |   | (156            | ) |  |                |        |   |              |   | (214    | )            |  |   |        |   |  |   | (743    | )
|Return of capital to parent                                   |  |                                                                                                  | (100    | ) |                       |   |  |      |  |   |                |   |  |                |        |   |              |   |         |              |  |   |        |   |  |   | (100    | )
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Net cash provided by (used in) financing activities           |  |                                                                                                  | 31,748  |   |                       |   |  |      |  |   | (37,467         | ) |  |                | 19,265  |   |              |   | 1,644   |              |  |   | (19,137 | ) |  |   | (3,947  | )
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Effect of exchange rate changes on cash                       |  |                                                                                                  |        |   |                       |   |  |      |  |   |                |   |  |                | 35      |   |              |   | 140     |              |  |   |        |   |  |   | 175     |  
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents          |  |                                                                                                  |        |   |                       |   |  |      |  |   | 7,450           |   |  |                | 379     |   |              |   | (16,324 | )            |  |   |        |   |  |   | (8,495  | )
|Cash and cash equivalents, beginning of period                |  |                                                                                                  |        |   |                       |   |  |      |  |   | 5               |   |  |                | 4,517   |   |              |   | 25,484  |              |  |   |        |   |  |   | 30,006  |  
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  
|Cash and cash equivalents, end of period                      |  | $                                                                                                |        |   |                       | $ |  |      |  | $ | 7,455           |   |  | $              | 4,896   |   |              | $ | 9,160   |              |  | $ |        |   |  | $ | 21,511  |  
|                                                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |         |   |              |   |         |              |  |   |         |   |  |   |         |  





|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ | -------- | - | --------------------- | - | - | ---- |  | - | --------------- | - |  | -------------- | ------ | - | ------------ | - | ------ | ------------ |  | - | ------ | - |  | - | -------- | -
|                                                              |  | Condensed Consolidated Statement of Cash FlowsFor the year ended December 27, 2009(In thousands) |         
|                                                              |  | SoloDelaware                                                                                     |          |   | SFHoldings(Guarantor) |   |   | SCOC |  |   | OtherGuarantors |   |  | Non-Guarantors |        |   | Eliminations |   |        | Consolidated | 
|CASH FLOWS FROM OPERATING ACTIVITIES                          |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Net cash (used in) provided by operating activities           |  | $                                                                                                | (24,415  | ) |                       | $ |  |      |  | $ | 150,610         |   |  | $              | 1,582  |   |              | $ | 10,160 |              |  | $ |       |   |  | $ | 137,937  |  
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|CASH FLOWS FROM INVESTING ACTIVITIES                          |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Proceeds from sale of property, plant and equipment           |  |                                                                                                  |         |   |                       |   |  |      |  |   | 17,016          |   |  |                | 2      |   |              |   | 22     |              |  |   | (430   | ) |  |   | 16,610   |  
|Purchases of property, plant and equipment                    |  |                                                                                                  |         |   |                       |   |  |      |  |   | (69,655         | ) |  |                | (1,733 | ) |              |   | (857   | )            |  |   | 430    |   |  |   | (71,815  | )
|Investment in subsidiary                                      |  |                                                                                                  |         |   |                       |   |  |      |  |   | (3,000          | ) |  |                |       |   |              |   |       |              |  |   | 3,000  |   |  |   |         |  
|Increase in restricted cash                                   |  |                                                                                                  | (10,410  | ) |                       |   |  |      |  |   |                |   |  |                |       |   |              |   |       |              |  |   |       |   |  |   | (10,410  | )
|Decrease in cash in escrow                                    |  |                                                                                                  |         |   |                       |   |  |      |  |   | 50              |   |  |                |       |   |              |   |       |              |  |   |       |   |  |   | 50       |  
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Net cash used in investing activities                         |  |                                                                                                  | (10,410  | ) |                       |   |  |      |  |   | (55,589         | ) |  |                | (1,731 | ) |              |   | (835   | )            |  |   | 3,000  |   |  |   | (65,565  | )
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|CASH FLOWS FROM FINANCING ACTIVITIES                          |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Net (repayments) borrowings under revolving credit facilities |  |                                                                                                  | (28,000  | ) |                       |   |  |      |  |   | 15,000          |   |  |                |       |   |              |   |       |              |  |   |       |   |  |   | (13,000  | )
|Borrowings under Senior Secured Notes                         |  |                                                                                                  | 293,784  |   |                       |   |  |      |  |   |                |   |  |                |       |   |              |   |       |              |  |   |       |   |  |   |         |  
|Repayments of term notes                                      |  |                                                                                                  | (361,954 | ) |                       |   |  |      |  |   |                |   |  |                |       |   |              |   | (1,250 | )            |  |   |       |   |  |   | (363,204 | )
|Capital contribution from parent                              |  |                                                                                                  |         |   |                       |   |  |      |  |   |                |   |  |                | 3,000  |   |              |   |        |              |  |   | (3,000 | ) |  |   |         |  
|Collection on (repayment of) intercompany debt                |  |                                                                                                  | 100,501  |   |                       |   |  |      |  |   | (101,526        | ) |  |                | 1,025  |   |              |   |       |              |  |   |       |   |  |   |         |  
|Repayments of other debt                                      |  |                                                                                                  |         |   |                       |   |  |      |  |   |                |   |  |                | (344   | ) |              |   |       |              |  |   |       |   |  |   | (344     | )
|Debt issuance costs                                           |  |                                                                                                  | (9,816   | ) |                       |   |  |      |  |   | (8,498          | ) |  |                |       |   |              |   |       |              |  |   |       |   |  |   | (18,314  | )
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Net cash (used in) provided by financing activities           |  |                                                                                                  | (5,485   | ) |                       |   |  |      |  |   | (95,024         | ) |  |                | 3,681  |   |              |   | (1,250 | )            |  |   | (3,000 | ) |  |   | (394,862 | )
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Effect of exchange rate changes on cash                       |  |                                                                                                  |         |   |                       |   |  |      |  |   |                |   |  |                | (34    | ) |              |   | 1,242  |              |  |   |       |   |  |   | 1,208    |  
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Net (decrease) increase in cash and cash equivalents          |  |                                                                                                  | (40,310  | ) |                       |   |  |      |  |   | (3              | ) |  |                | 3,498  |   |              |   | 9,317  |              |  |   |       |   |  |   | (321,282 | )
|Cash and cash equivalents, beginning of period                |  |                                                                                                  | 40,310   |   |                       |   |  |      |  |   | 8               |   |  |                | 1,020  |   |              |   | 16,166 |              |  |   |       |   |  |   | 57,504   |  
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  
|Cash and cash equivalents, end of period                      |  | $                                                                                                |         |   |                       | $ |  |      |  | $ | 5               |   |  | $              | 4,518  |   |              | $ | 25,483 |              |  | $ |       |   |  | $ | (263,778 | )
|                                                              |  |                                                                                                  |          |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |          |  



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##### Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



|(23) | Guarantors (continued)
|---- | ----------------------



|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|----------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------ | ------- | - | --------------------- | - | - | ---- |  | - | --------------- | - |  | -------------- | ------ | - | ------------ | - | ------ | ------------ |  | - | ------ | - |  | - | ------- | -
|                                                                  |  | Condensed Consolidated Statement of Cash FlowsFor the year ended December 28, 2008(In thousands) |        
|                                                                  |  | SoloDelaware                                                                                     |         |   | SFHoldings(Guarantor) |   |   | SCOC |  |   | OtherGuarantors |   |  | Non-Guarantors |        |   | Eliminations |   |        | Consolidated | 
|CASH FLOWS FROM OPERATING ACTIVITIES                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Net cash provided by operating activities  continuing operations |  | $                                                                                                | 14,315  |   |                       | $ |  |      |  | $ | 114,899         |   |  | $              | 949    |   |              | $ | 2,414  |              |  | $ |       |   |  | $ | 132,577 |  
|Net cash used in operating activities  discontinued operations   |  |                                                                                                  |        |   |                       |   |  |      |  |   | (638            | ) |  |                |       |   |              |   |       |              |  |   |       |   |  |   | (638    | )
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Net cash provided by operating activities                         |  |                                                                                                  | 14,315  |   |                       |   |  |      |  |   | 114,261         |   |  |                | 949    |   |              |   | 2,414  |              |  |   |       |   |  |   | 131,939 |  
|CASH FLOWS FROM INVESTING ACTIVITIES                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Proceeds from sale of property, plant and equipment               |  |                                                                                                  |        |   |                       |   |  |      |  |   | 11,743          |   |  |                |       |   |              |   | 50     |              |  |   | (1,290 | ) |  |   | 10,503  |  
|Proceeds from sale of discontinued operations                     |  |                                                                                                  |        |   |                       |   |  |      |  |   | 850             |   |  |                |       |   |              |   |       |              |  |   |       |   |  |   | 850     |  
|Purchases of property, plant and equipment                        |  |                                                                                                  |        |   |                       |   |  |      |  |   | (72,431         | ) |  |                | (4,610 | ) |              |   | (3,947 | )            |  |   | 1,290  |   |  |   | (79,698 | )
|Increase in cash in escrow                                        |  |                                                                                                  |        |   |                       |   |  |      |  |   | (50             | ) |  |                |       |   |              |   |       |              |  |   |       |   |  |   | (50     | )
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Net cash used in investing activities                             |  |                                                                                                  |        |   |                       |   |  |      |  |   | (59,888         | ) |  |                | (4,610 | ) |              |   | (3,897 | )            |  |   |       |   |  |   | (68,395 | )
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|CASH FLOWS FROM FINANCING ACTIVITIES                              |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Net repayments under revolving credit facilities                  |  |                                                                                                  | (2,100  | ) |                       |   |  |      |  |   |                |   |  |                |       |   |              |   |       |              |  |   |       |   |  |   | (2,100  | )
|Repayments of term notes                                          |  |                                                                                                  | (36,696 | ) |                       |   |  |      |  |   |                |   |  |                |       |   |              |   | (1,386 | )            |  |   |       |   |  |   | (38,082 | )
|Collection on (repayment of) intercompany debt                    |  |                                                                                                  | 54,327  |   |                       |   |  |      |  |   | (54,327         | ) |  |                |       |   |              |   |       |              |  |   |       |   |  |   |        |  
|Repayments of other debt                                          |  |                                                                                                  |        |   |                       |   |  |      |  |   | (50             | ) |  |                | (85    | ) |              |   |       |              |  |   |       |   |  |   | (135    | )
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Net cash provided by (used in) financing activities               |  |                                                                                                  | 15,531  |   |                       |   |  |      |  |   | (54,377         | ) |  |                | (85    | ) |              |   | (1,386 | )            |  |   |       |   |  |   | (40,317 | )
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Effect of exchange rate changes on cash                           |  |                                                                                                  |        |   |                       |   |  |      |  |   |                |   |  |                | (102   | ) |              |   | 796    |              |  |   |       |   |  |   | 694     |  
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Net increase (decrease) in cash and cash equivalents              |  |                                                                                                  | 29,846  |   |                       |   |  |      |  |   | (4              | ) |  |                | (3,848 | ) |              |   | (2,073 | )            |  |   |       |   |  |   | 23,921  |  
|Cash and cash equivalents, beginning of period                    |  |                                                                                                  | 10,464  |   |                       |   |  |      |  |   | 12              |   |  |                | 4,868  |   |              |   | 18,239 |              |  |   |       |   |  |   | 33,583  |  
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  
|Cash and cash equivalents, end of period                          |  | $                                                                                                | 40,310  |   |                       | $ |  |      |  | $ | 8               |   |  | $              | 1,020  |   |              | $ | 16,166 |              |  | $ |       |   |  | $ | 57,504  |  
|                                                                  |  |                                                                                                  |         |   |                       |   |   |      |  |   |                 |   |  |                |        |   |              |   |        |              |  |   |        |   |  |   |         |  



|(24) | Subsequent event
|---- | ----------------

We are
subject to agreements with the City of Chicago and the State of Illinois relating to our 2001 acquisition of undeveloped property located in Chicago, Illinois (Note 19). In February 2011, we entered into an agreement to sell the property for $5.0
million in cash and the assumption by the buyer of the government obligations described in Note 19. Our obligation to sell the property is contingent upon our full release from those government obligations. In addition, the transaction is
contingent upon certain other governmental incentives and/or approvals. The sale, which is subject to other customary terms and conditions, is scheduled to close in the third quarter of 2011.



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|Item 9. | Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
|------- | -------------------------------------------------------------------------------------

Not applicable.



|Item 9A. | Controls and Procedures.
|-------- | ------------------------

Evaluation
of Disclosure Controls and Procedures

Our management, including our chief executive officer (principal executive officer)
and chief financial officer (principal financial and accounting officer), has evaluated the effectiveness of our disclosure controls and procedures (as such term is defined in Rules 13a-15(e) or 15d-15(e) under the Securities Exchange Act of 1934,
as amended) as of the end of the period covered by this report.

Based on such evaluation, our chief executive officer and
chief financial officer concluded that our disclosure controls and procedures were effective as of December 26, 2010.

Management
Report on Internal Control Over Financial Reporting

The following management report shall be deemed furnished
and not filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the Exchange Act).

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our
internal control over financial reporting is designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with United States generally
accepted accounting principles. Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk
that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Under the supervision and with the participation of management, including our chief executive officer (principal executive officer) and chief financial officer (principal financial and accounting
officer), management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal ControlIntegrated Framework issued by the Committee of the Sponsoring Organizations of
the Treadway Commission (COSO).

Based on our assessment using those criteria, management concluded that the Companys
internal control over financial reporting as of December 26, 2010 was effective.

Changes in Disclosure Controls and Procedures

There have been no changes in the Companys internal control over financial reporting (as defined in Rules 13a-15(f)
and 15d-15(f) under the Exchange Act) during the thirteen weeks ended December 26, 2010, that have materially affected, or are reasonably likely to materially affect, the Companys internal control over financial reporting.



|Item 9B. | Other Information.
|-------- | ------------------

None.



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Part III



|Item 10. | Directors, Executive Officers and Corporate Governance.
|-------- | -------------------------------------------------------

The following table sets forth the name, age and current position of Solo Delawares executive officers and directors as of March 15, 2011.



|                         |  |     |    |  |          |                                                                                             
|------------------------ |  | --- | -- |  | -------- | --------------------------------------------------------------------------------------------
|Name                     |  | Age |    |  | Position
|Kevin A. Mundt(1)        |  |     | 57 |  |          | Chairman of the Board, Chairman of the Audit Committee, Member of the Compensation Committee
|Robert L. Hulseman       |  |     | 78 |  |          | Chairman Emeritus of the Board                                                              
|Robert M. Korzenski      |  |     | 56 |  |          | Chief Executive Officer, President and Director                                             
|Robert D. Koney, Jr.     |  |     | 54 |  |          | Executive Vice President and Chief Financial Officer                                        
|George F. Chappelle, Jr. |  |     | 49 |  |          | Executive Vice President and Chief Operating Officer                                        
|Jan Stern Reed           |  |     | 51 |  |          | Executive Vice President  HR, General Counsel and Secretary                                
|Peter J. Mendola         |  |     | 56 |  |          | Senior Vice President  Operations                                                          
|Larinda I. Becker        |  |     | 46 |  |          | Vice President  Foodservice Marketing                                                      
|Kimberly V. Healy        |  |     | 41 |  |          | Vice President  Consumer Products Division                                                 
|Jeffrey W. Lombardo      |  |     | 48 |  |          | Vice President  Foodservice Sales                                                          
|R. James Alexy           |  |     | 70 |  |          | Director                                                                                    
|Jeffrey M. Greene        |  |     | 51 |  |          | Director, Chairman of Compensation Committee                                                
|Neil Harrison            |  |     | 58 |  |          | Director, Member of the Audit Committee                                                     
|James R. Hulseman        |  |     | 57 |  |          | Director                                                                                    
|John D. Hulseman         |  |     | 54 |  |          | Director                                                                                    
|Sheila M. Hulseman       |  |     | 75 |  |          | Director                                                                                    
|Daniel S. OConnell(1)   |  |     | 57 |  |          | Director, Member of the Compensation Committee                                              
|Brian P. OConnor(1)     |  |     | 35 |  |          | Director, Member of the Audit Committee                                                     



|(1) | Each of Messrs Mundt, OConnell and OConnor is an employee and equity owner of Vestar Capital Partners, an affiliate of Solo Delaware, due
to its ownership of 32.71% of the voting stock of Solo Cup Investment Corporation, the parent of Solo Delaware.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Kevin A. Mundt is a director and has served as Chairman of the Board since December 2006. Mr. Mundt is a managing director of Vestar Capital Partners, which he joined in 2004. Previously he
was a Managing Director of Mercer Oliver Wyman, the financial consulting arm of Marsh and McLennan from 1998 to 2003. Prior to that, beginning in 1983, he was one of the founders of Corporate Decisions, Inc., which was acquired by Marsh and
McLennan. Mr. Mundt is also currently a director of MediMedia, Fiorucci, SpA, National Mentor and Sun Products Corporation. He also served as a director of Telephone Data Systems, Inc. (AMEX: TDS) from July 1998 through December 2005.

Robert L. Hulseman is a director and has served as Chairman Emeritus since December 2006. He served as Chairman and
Chief Executive Officer of Solo Delaware from January 2004 until December 2006. Mr. Hulseman served as Chairman and Chief Executive Officer of Solo Illinois from January 1998 to October 2005, and served as a director of Solo Illinois from April
1956 to June 2005. He began his career in the disposable foodservice and food packaging products industry with Solo Illinois in 1950. Mr. Hulseman is also the husband of Sheila M. Hulseman, and the uncle of James R. and John D. Hulseman, all of
which are directors of Solo Delaware.

Robert M. Korzenski is a director and Chief Executive Officer and President of
Solo Delaware, having served as a director and President since April 2006 and as the Chief Executive Officer since August 2006. Prior to that, he served as Executive Vice President  Sales and Marketing of Solo Delaware from February 2005 until
April 2006, and as Senior Vice President  Integration; Hoffmaster-Fonda Brands of Solo Delaware and Solo Illinois from February 2004 to February 2005. Mr. Korzenski served as President of the Hoffmaster brand of Sweetheart from March 2002
until February 2004. Prior to that, Mr. Korzenski served at The Fonda Group, Inc. from March 1995 until March 2002, where he was President and Chief Operating Officer from March 1998 to March 2002.



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Robert D. Koney, Jr. is Chief Financial Officer and Executive Vice President of Solo
Delaware, having served in that capacity since April 2007. Prior to joining the Company, Mr. Koney was Chief Financial Officer and Senior Vice President of Russell Corporation (NYSE: RML), an athletic and sporting goods company, from September
2004 to December 2006. Mr. Koney also served at Goodrich Corporation (NYSE: GR), a global supplier of systems and services to the aerospace and defense markets, from 1986 to 2004, where he was Vice President, Corporate Controller and Principal
Accounting Officer from 1998 to 2004.

George F. Chappelle, Jr. is Chief Operating Officer and Executive Vice President
of Solo Delaware, having served in that capacity since October 2009. Prior to joining Solo Delaware, Mr. Chappelle was Senior Vice President, Chief Supply Chain Officer and Senior Corporate Officer of Sara Lee Corporation (NYSE: SLE), a global
consumer goods company, from June 2005 to February 2008. Prior to his tenure at Sara Lee, Mr. Chappelle served as Vice President, Chief Information Officer and Corporate Officer of H.J. Heinz Company (NYSE: HNZ), a global marketer and producer
of foods, from August 2002 to June 2005. During that time, Mr. Chappelle also served as H.J. Heinz Companys Vice President of Business Transformation from March 2003 to June 2005.

Jan Stern Reed is Executive Vice President  Human Resources, General Counsel and Secretary of Solo Delaware, having served
in that capacity since April 2006. Prior to that, Ms. Reed served as Executive Vice President, General Counsel and Secretary of Solo Delaware from June 2005 to April 2006. From December 2004 to June 2005, she served as Senior Vice President,
General Counsel and Secretary of Solo Delaware. Prior to joining Solo Delaware, Ms. Reed served as Associate General Counsel and Corporate Secretary for Baxter International Inc. (NYSE: BAX), a global developer and manufacturer of products used
in the health care field, from February 1998 to November 2004, and also served as its Chief Governance Officer from March 2003 to November 2004.

Peter J. Mendolais Senior Vice President  Operations of Solo Delaware, having served in that capacity since April 2007. Prior to joining Solo Delaware, Mr. Mendola spent 19 years at
Georgia Pacific/Dixie®, a world-wide manufacturer and marketer of tissue, packaging, paper, pulp and building
products, most recently as Vice President  Paper Operations from 2004 until 2007, and Vice President  Supply Chain and Technical Services from 2001 to 2004.

Larinda I. Beckeris Vice President  Foodservice Marketing, having served in that capacity since May 2010. Prior to joining Solo Delaware, Ms. Becker worked at Diversey, Inc. (formerly
JohnsonDiversey, Inc.), as Vice President  North American Marketing Operations from April 2007 to May 2010. From 1991 to 2007, Ms. Becker worked in a number of marketing, business development and sales roles at Reynolds Food
Packaging, including as Vice President  Marketing.

Kimberly V. Healyis Vice President  Consumer
Products Division, having served in that capacity since January 2010. Prior to that, Ms. Healy served as Vice President, Marketing Consumer from July 2007 to January 2010. Ms. Healy joined the company as a Brand Manager in August 1999, and
from August 2002 to July 2007 served as Director, Marketing  Consumer.

Jeffrey W. Lombardo is Vice President
 Foodservice Sales, having served in that capacity since October 2010. Prior to joining Solo Delaware, Mr. Lombardo served as Group Vice President  Foodservice Sales of H.J. Heinz Company (NYSE: HNZ), a leading global marketer and
producer of foods, from 2007-2009. He previously served as Vice President National Accounts  Foodservice of PepsiCo (NYSE: PEP), a leading global marketer and producer of convenient snacks, foods and beverages, from 2002-2006.

R. James Alexyis a director of Solo Delaware, having served in that capacity since April 2010. Mr. Alexy served as the
Chairman of Network Services Company, a global distributor of disposable plastic, paper and sanitary supply products, from January 2009 until his retirement effective January 1, 2010. He previously served as the Chief Executive Officer and
President of Network Services Company from 1992 through 2008.

Jeffrey M. Greeneis a director of Solo Delaware, having
served in that capacity since September 2010. Mr. Greene has served since October 2005 as the President and Chief Executive Officer of Consolidated Container Company LLC, a developer, manufacturer and marketer of rigid plastic containers for
consumer products and beverage companies.

Neil Harrisonis a director of Solo Delaware, having served in that capacity
since April 2007. Mr. Harrison served as the Chairman, President and Chief Executive Officer of Birds Eye Foods, an international producer of canned, bottled and frozen products, from September 2005 to December 2009. Prior to that time
Mr. Harrison was Chairman, President and Chief Executive Officer of Atkins Nutritionals Inc. from February 2005 to June 2005. Prior to that role, Mr. Harrison was with the H.J. Heinz Company (NYSE: HNZ), where he served as an Executive
Vice President  H. J. Heinz and President and Chief Executive Officer  Heinz North America from 2002 to 2004. From 1999 to 2002, Mr. Harrison was the President and Chief Executive Officer  Heinz Frozen Food Company.

James R. Hulseman is a director of Solo Delaware, having served in that capacity since August 2007. Mr. Hulseman
is currently Vice President  Special Projects of Solo Cup Operating Corporation, the operating subsidiary of Solo Delaware. He previously held the position of Vice President  Global Quality Initiatives from 2002 to 2007 and prior to that
as Vice President  Quality from October 2000. James R. Hulseman is the brother of John D. Hulseman, a director of Solo Delaware. He is also the nephew of Robert L. Hulseman, Chairman Emeritus and Sheila M. Hulseman, director, of Solo Delaware.



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John D. Hulseman is a director of Solo Delaware, having served in that capacity since
August 2007. Mr. Hulseman has held the position of Energy Manager of Solo Cup Operating Corporation since 2006. From 2001 until 2006 he was a Production Manager. John D. Hulseman is the brother of James R. Hulseman, a director of Solo Delaware.
He is also the nephew of Robert L. Hulseman, Chairman Emeritus and Sheila M. Hulseman, director, of Solo Delaware.

Sheila
M. Hulseman is a director of Solo Delaware, having served in that capacity since January 2004. Ms. Hulseman served as a director of Solo Illinois from April 1989 to June 2005. Ms. Hulseman is the wife of Robert L. Hulseman and the aunt
of James R. and John D. Hulseman, each directors of Solo Delaware.

Daniel S. OConnellis a director of Solo
Delaware, having served in that capacity since February 2004. Mr. OConnell is the Chief Executive Officer and founder of Vestar Capital Partners. Prior to founding Vestar Capital Partners in 1998, Mr. OConnell was a Managing
Director and Co-Head of the Management Buyout Group at The First Boston Corporation. Mr. OConnell is currently a director of Sun Products Corporation, Sunrise Medical, Inc., St. John Knits International, Inc. and National Mentor. He also
served as a director of Birds Eye Foods, Inc. from 2002 to 2009, and Radiation Therapy Services, Inc. from 2008 to 2009.

Brian P. OConnor is a Director of Solo Delaware, having served in that capacity since April 2008. In August 2000,
Mr. OConnor joined Vestar and most recently has served as a Principal since January 2009. Prior to that time he served in other capacities including as Vice President from December 2006 to December 2008. Prior to joining Vestar,
Mr. OConnor was a member of the Merchant Banking group at Donaldson, Lufkin & Jenrette from August 1998 to June 2000.

Board Structure and Risk Oversight

Our business and affairs are managed under the direction of our board of directors. We currently have eleven directors. Pursuant to the Stockholders Agreement among Solo Delaware, Solo Cup Investment
Corporation, Vestar, SCC Holding and specified other parties:



| |  |  | Messrs. Mundt, Alexy, Greene, Harrison, OConnell and OConnor serve on Solo Delawares board of directors as designees of Vestar;
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------



| |  |  | Messrs. Korzenski, Robert L. Hulseman, James R. Hulseman and John D. Hulseman, and Ms. Sheila M. Hulseman serve on Solo Delawares board
of directors as designees of SCC Holding; and
| | - |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | Mr. Mundt serves as Chairman of the Board of Solo Delaware as Vestars designee to that position.
| | - |  | -------------------------------------------------------------------------------------------------

There are no other arrangements or understandings between any member of the board of directors or executive officer and any other person pursuant to
which that person was elected or appointed to his or her position.

Our audit committee is responsible for overseeing our risk
management function. While the audit committee has primary responsibility for overseeing risk management, our entire Board of Directors is actively involved in overseeing our risk management. For example, the Board engages in periodic discussions
with our executive management team, including our Chief Executive Officer, Chief Financial Officer, Chief Operating Officer and General Counsel, and with such other company officers as the Board deems appropriate. We believe that the leadership
structure of our Board supports effective risk management oversight.

Board Meetings and Committees

The Board of Directors of Solo Delaware maintains an Audit Committee and a Compensation Committee that assist the Board of
Directors in fulfilling its oversight responsibilities. The Audit Committee reviews Solo Delawares financial reporting process, its system of internal controls, the audit process and the process of monitoring Solo Delawares compliance
with laws and regulations. Mr. Mundt serves as the chair of Solo Delawares Audit Committee, and the Board has designated Mr. Harrison as an audit committee financial expert, as defined by the SEC. None of the Directors is
considered independent under the standards established by the New York Stock Exchange. The Compensation Committee reviews Solo Delawares employee benefit plans and executive compensation. The charters of the Audit and Compensation
Committees are available free of charge at our website, www.solocup.com. In 2010, Solo Delawares Board of Directors held eight meetings, the Audit Committee held four meetings and the Compensation Committee met once. No incumbent
director attended fewer than 75 percent of the total meetings held by the Board of Directors or of the total committee meetings of the Board on which that director served.

Section 16(a) Beneficial Owner Reporting Compliance

Solo Delaware
does not have a class of equity securities registered pursuant to Section 12 of the Securities Exchange Act of 1934, as amended.



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Code of Business Conduct

We have adopted the Solo Cup Company Code of Business Conduct, which applies to all of our directors, officers and employees. We make this code available free of charge on our website,
www.solocup.com, or by request. We intend to disclose certain amendments to the Solo Cup Company Code of Business Conduct, or any waivers of the Solo Cup Company Code of Business Conduct granted to executive officers
and directors, on our website within four business days following the date of any such amendment or waiver.



|Item 11. | Executive Compensation.
|-------- | -----------------------

Compensation
Discussion and Analysis

The following discussion is provided to give an understanding of our compensation policies and
decisions regarding the executive officers identified in the Summary Compensation Table below, who we refer to as our named executive officers. The discussion in this section does not apply to the Hulseman family members who are
identified in Certain Relationships and Related Transactions and Director Independence below, as their compensation is determined by the terms of the Stockholders Agreement and of the Transition Agreement dated December 14, 2006
among Solo Delaware, Vestar and certain of its affiliates, SCC Holding and Solo Cup Investment Corporation.

Compensation Philosophy. The compensation committee of our Board of Directors oversees our executive compensation. The
objectives of our compensation programs are to (1) drive our financial performance through incentives and rewards designed to direct individual performance toward achieving our common goals; (2) align the executive officers and senior
management with the entire employee team; (3) attract and retain executive talent at compensation levels that are market competitive; and (iv) reflect the value of each employees position. Our compensation philosophy is to provide a
competitive total rewards program comprised of four components: compensation; benefits; development; and work environment. The compensation portion of our total rewards program seeks to equitably and consistently recognize and compensate employees
for superior performance. The short-term aspect of our program primarily focuses on competitive compensation consisting of both fixed and variable pay in the form of cash. These incentives are provided in the form of base compensation and an annual
bonus plan. Because we do not have publicly-traded equity securities, we do not have the ability to utilize stock-based incentives as a component of our at-risk compensation; however, we have implemented a long-term incentive plan that is designed
to align the senior management team with our long-term future financial success. Our total rewards approach is also geared towards supporting our overall business objectives by driving and maintaining a performance-driven culture, offering
competitive benefits, encouraging and rewarding individual career development and providing a balance between work and family life.

Process for Determining Executive Compensation. The compensation committee determines annual cash compensation for each executive officer based on a number of factors, including the
executive officers individual performance contributions during the year, any additional roles and responsibilities assumed, the ability of the executive officer to drive favorable change within the organization, our financial performance and
the achievement of personal goals and objectives. Prior to recruiting for any open executive officer position, we analyze the position to determine the specific job criteria, relocation considerations and the median market compensation for that
position. After candidates are identified and selected, the compensation committee and management work together to develop a compensation package that we believe is market competitive and sufficiently rewarding, taking into account the
candidates current compensation, current position and overall experience.

Compensation Components. Our
executive compensation includes a base salary, an annual cash incentive opportunity, traditional benefits and a long-term incentive cash award opportunity. We do not have any formal or informal policy or target for the percentage of compensation
that is allocated between annual and long-term compensation, between cash and non-cash compensation or among the different forms of non-cash compensation. Instead, we determine subjectively on a case-by-case basis  within a range based on job
description and level  the appropriate amount and mix of the various compensation components.

Base Salaries.
Base salaries are used to recognize the experience, skills, knowledge and responsibilities required of all our employees, including our executive officers. Base salaries for each executive officer (other than our CEO), together with other components
of compensation, are evaluated annually for adjustment by our CEO based on an assessment of each executive officers performance utilizing the criteria set forth above under Process for Determining Executive Compensation, as well as
the executives contribution to achieving our goals and objectives, his or her leadership skills, economic market conditions and compensation trends in our industry, after which a recommendation by our CEO is presented to the compensation
committee for ultimate approval by the board of directors. The process and criteria for determining our CEOs compensation is the same as that described above, with the exception that our compensation committee chair takes on the role of
assessing the CEOs performance and recommending adjustments to the compensation committee for ultimate approval by the board of directors.



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Cash Bonuses. In addition to base salaries, our executive officers are eligible to
receive an incentive cash payment based primarily on annual financial performance and, to a lesser degree, annual individual objectives. This variable portion of our cash incentive program provides an opportunity for the executive officer to receive
remuneration in direct proportion to the extent to which we have achieved our strategic, operational and financial goals. The annual bonuses are paid under our management incentive plan, which was established in 2007.

Management Incentive Plan (MIP):

Background: All managers and above are eligible to participate in the MIP. The MIP generally provides the
opportunity for a cash payment to each MIP participant if we attain specified levels of company financial performance and the MIP participant achieves individual performance goals. A targeted cash payment, expressed as a percentage of base salary,
is established for each MIP participant at the beginning of each year. The percentage of the targeted cash payment that is based on company financial performance versus individual participant performance varies for each participant under the MIP,
depending upon the participants position.

Each year, the compensation committee and Solo Delawares
board of directors determine the metric by which company financial performance will be measured, and establish threshold (minimum), target and maximum payout levels for such performance measure. If corporate financial performance measures are
exceeded, participants may receive up to 200% of their targeted cash payment. If the threshold level of company financial performance is not achieved, there is no individual or company performance award payout under the MIP for that year.

2010 Management Incentive Plan: For 2010, the targeted cash payments for the named executive
officers, expressed as a percentage of base salary, were as follows: Messrs Korzenski, Koney and Chappelle, and Ms. Reed  65%; and Mr. Mendola  55%. The compensation committee and board of directors originally established
earnings before interest, taxes, depreciation and amortization, adjusted for certain items, such as non-cash charges and restructuring charges (Adjusted EBITDA), as the metric by which 2010 company financial performance would be measured
under the MIP, and determined threshold (minimum), target and maximum payout levels of Adjusted EBITDA. The threshold (minimum) level was set at 90% of the target level of Adjusted EBITDA.

During the second half of 2010, the compensation committee recommended, and the board of directors approved, an amendment
to the 2010 MIP in order to more directly focus the management team on certain activities that were determined to be critical to the companys success during the fourth quarter of the year. The amended plan added two metrics in addition to
Adjusted EBITDA: net debt reduction and achievement of specified internal initiatives designed to reduce cost and improve profitability. Each measure was equally weighted and individually evaluated, and the total bonus opportunity for all
participants was reduced to between 25% - 75% of each participants original target bonus opportunity. If we failed to attain the threshold amount for a performance measure, no payout would be made under that component.

At their March 2011 meetings, the compensation committee recommended, and the board of directors approved, cash payouts
under the 2010 MIP based on the companys level of achievement of each of the three metrics under the amended plan. The cash incentive awards earned by the named executive officers under the 2010 MIP are shown in the summary
compensation table that follows this Compensation Discussion and Analysis.



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2011 Management Incentive Plan: For our 2011 MIP, the
compensation committee established three financial metrics, weighted as follows: Adjusted EBITDA (50%), net debt (30%) and achievement of a specific set of internal activities designed to reduce cost and improve profitability (20%). In order
for any amounts to be paid under the plan, a threshold level of Adjusted EBITDA must be met. Furthermore, each individual metric has an independent threshold that must be met before any amounts may be paid thereunder. Lastly, there is an individual
performance overlay that allows for an adjustment in final payout amount based on individual performance. At its March 2011 meetings, the compensation committee recommended, and the full board approved, the target bonus award opportunities (as a
percent of salary) and salaries set forth in the table below for those officers who were named executive officers for 2010 and remain executive officers of Solo Delaware as of the date of filing of this annual report.



|              |  |             |         |  |                      |  |    |  
|------------- |  | ----------- | ------- |  | -------------------- |  | -- | -
|Name          |  | 2011 Salary |         |  | 2011 MIP TargetAward | 
|Mr. Korzenski |  | $           | 750,000 |  |                      |  | 75 | %
|Mr. Koney     |  | $           | 425,000 |  |                      |  | 65 | %
|Mr. Chappelle |  | $           | 475,000 |  |                      |  | 65 | %
|Ms. Reed      |  | $           | 465,000 |  |                      |  | 65 | %
|Mr. Mendola   |  | $           | 288,400 |  |                      |  | 55 | %

The remaining terms of the
2011 MIP are as described above under Management Incentive Plan (MIP)  Background.

Stock
Options. We do not offer any stock options.

Benefits and Perquisites. The executive officers participate in
medical, dental, life, disability, vision and insurance benefit plans on the same basis, terms and conditions as all of our other employees. In addition, the named executive officers currently receive substantially the same perquisites as those
available to all employees. Mr. Korzenski and Ms. Reed received whole life insurance policies in 2010.

Long Term
Incentive Plan. See the discussion below under the heading Long Term Incentive Plan. The compensation committee believes that this plan will provide a significant long-term incentive for key senior management team members and
continue to promote our performance-based philosophy.

Retirement Benefits. Executive officers also participate in our
401(k) plan, a tax-qualified retirement savings plan available to all employees, pursuant to which employees are permitted to defer a portion of their income under the 401(k) plan. In 2010, we matched 25% of the first 2% of salary contributed by an
employee to the 401(k) plan on an after-tax basis. We do not maintain any defined benefit plans in which our named executive officers participate. We offer a deferred compensation plan; none of our current named executive officers participated in
this plan during 2008, 2009 or 2010.

Severance Payments. Each of our named executive officers is entitled to receive
severance benefits upon certain qualifying terminations of employment, based upon either an applicable provision in such executives employment agreement or pursuant to the terms of our Severance Policy. These severance arrangements are
intended to retain executives and provide continuity of management in connection with a threatened or actual change in control transaction. Certain terms of the employment agreements and the severance payment made to Mr. Pasqualini are
described below under the caption Executive Employment Agreements.

Compensation Committee Report

The Compensation Committee has reviewed the Compensation Discussion and Analysis and has discussed it with the
Companys management. Based on our review and discussion, we recommend to the board of directors that the Compensation Discussion and Analysis be included in the Companys Annual Report on Form 10-K for the year ended December 26,
2010.

Compensation Committee

Jeffrey M. Greene, Chair

Kevin A. Mundt

Daniel S. OConnell



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Summary Compensation Information for Named Executive Officers

The following tables, narrative and footnotes summarize the compensation earned by Solo Delawares named executive officers for all
services rendered in all capacities to us. The named executive officers include our chief executive officer, chief financial officer and the next three most highly compensated executive officers in 2010 who were serving as such at the end of 2010.
The named executive officers for 2010 also include an executive officer who left Solo Delaware early in 2010, but whose 2010 total compensation (including severance) made him one of the three most highly compensated executive officers (other than
our chief executive officer and chief financial officer) for 2010.

Summary Compensation Table  Fiscal Year 2010



|                                                               |  |      |      |  |           |         |         |          |  |         |                                            |  |  |                                                                      |         |  |                             |   |   |          |  |         |         |  |  |         |           | 
|-------------------------------------------------------------- |  | ---- | ---- |  | --------- | ------- | ------- | -------- |  | ------- | ------------------------------------------ |  |  | -------------------------------------------------------------------- | ------- |  | --------------------------- | - | - | -------- |  | ------- | ------- |  |  | ------- | --------- | 
|Name and Principal Position(1)                                 |  | Year |      |  | Salary($) |         |         | Bonus($) |  |         | Non-EquityIncentive PlanCompensation($)(1) |  |  | Change
inPensionValue andNonqualifiedDeferredCompensationEarnings($) |         |  | All OtherCompensation($)(2) |   |   | Total($) | 
|Robert M. KorzenskiChief Executive Officer and President       |  |      | 2010 |  |           |         | 745,961 |          |  |         |                                           |  |  |                                                                      | 291,395 |  |                             |   |  |          |  |         | 10,226  |  |  |         | 1,047,582 | 
|                                                               |  | 2009 |      |  |           | 735,002 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 8,814   |         |  |  | 743,816 |          
|                                                               |  | 2008 |      |  |           | 735,010 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 16,706  |         |  |  | 751,716 |          
|                                                               |  |      |      |  |           |         |        
|Robert D. Koney, Jr.EVP and Chief Financial Officer            |  |      | 2010 |  |           |         | 425,000 |          |  |         |                                           |  |  |                                                                      | 165,124 |  |                             |   |  |          |  |         | 1,226   |  |  |         | 591,350   | 
|                                                               |  | 2009 |      |  |           | 395,000 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  |        |         |  |  | 395,000 |          
|                                                               |  | 2008 |      |  |           | 382,506 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 9,456   |         |  |  | 391,962 |          
|                                                               |  |      |      |  |           |         |        
|George F. Chappelle, Jr.(3)EVP and Chief Operating Officer     |  |      | 2010 |  |           |         | 468,269 |          |  |         |                                           |  |  |                                                                      | 184,550 |  |                             |   |  |          |  |         | 125,731 |  |  |         | 778,550   | 
|                                                               |  | 2009 |      |  |           | 77,885  |         |          |  | 100,000 | (4)                                        |  |  |                                                                     |         |  |                             |  |   |          |  |        |         |  |  | 177,885 |          
|                                                               |  |      |      |  |           |         |        
|Jan Stern ReedEVP  HR, General Counsel and Secretary          |  |      | 2010 |  |           |         | 460,962 |          |  |         |                                           |  |  |                                                                      | 180,665 |  |                             |   |  |          |  |         | 6,239   |  |  |         | 647,866   | 
|                                                               |  | 2009 |      |  |           | 450,001 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 5,008   |         |  |  | 455,009 |          
|                                                               |  | 2008 |      |  |           | 450,008 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 12,845  |         |  |  | 462,853 |          
|                                                               |  |      |      |  |           |         |        
|Peter J. MendolaSVP  Operations                               |  |      | 2010 |  |           |         | 278,654 |          |  |         |                                           |  |  |                                                                      | 92,051  |  |                             |   |  |          |  |         | 864     |  |  |         | 371,569   | 
|                                                               |  | 2009 |      |  |           | 274,999 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  |        |         |  |  | 274,999 |          
|                                                               |  | 2008 |      |  |           | 261,248 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 118,466 |         |  |  | 328,274 |          
|                                                               |  |      |      |  |           |         |        
|Thomas A. Pasqualini(5)Former EVP  Supply Chain and Logistics |  |      | 2010 |  |           |         | 65,033  |          |  |         |                                           |  |  |                                                                      |        |  |                             |   |  |          |  |         | 619,830 |  |  |         | 684,863   | 
|                                                               |  | 2009 |      |  |           | 410,002 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 38,262  |         |  |  | 448,264 |          
|                                                               |  | 2008 |      |  |           | 410,010 |         |          |  |        |                                            |  |  |                                                                     |         |  |                             |  |   |          |  | 46,747  |         |  |  | 456,757 |          



|(1) | Amounts for 2010
represent annual incentive awards earned under the 2010 Management Incentive Plan, but paid in 2011. No amounts were awarded under the 2008 or 2009 Management Incentive Plan.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Amounts in this
column consist of those items identified in the table All Other Compensation immediately following the Summary Compensation Table.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Mr. Chappelle
joined Solo Delaware in October 2009.
|--- | ---------------------------------------------------



|(4) | Represents amount
paid as a hiring bonus.
|--- | -----------------------------------------



|(5) | Mr. Pasqualini left Solo Delaware in
February 2010.
|--- | ---------------------------------------------------



81



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##### Table of Contents

All Other Compensation



|                                                            |  |      |      |  |                                          |        |         |                      |  |        |                                            |     |  |                                                     |       |     |           |       |       |                                |  |   |         |      |  |         |         | 
|----------------------------------------------------------- |  | ---- | ---- |  | ---------------------------------------- | ------ | ------- | -------------------- |  | ------ | ------------------------------------------ | --- |  | --------------------------------------------------- | ----- | --- | --------- | ----- | ----- | ------------------------------ |  | - | ------- | ---- |  | ------- | ------- | 
|Name                                                        |  | Year |      |  | Perquisites 
andOtherPersonalBenefits($) |        |         | TaxReimbursements($) |  |        | InsurancePremiumsandHealth CareExpenses($) |     |  | CompanyContributionsto Retirementand 401(k)Plans($) |       |     | Severance |       |       | Total All OtherCompensation($) | 
|Robert M. Korzenski,Chief Executive Officer and President   |  |      | 2010 |  |                                          |        |        |                      |  |        | 3,060                                      | (1) |  |                                                     | 5,888 | (2) |           |       | 1,278 |                                |  |   |        |      |  |         | 10,226  | 
|                                                            |  | 2009 |      |  |                                          |       |         |                      |  | 2,926  | (1)                                        |     |  | 5,888                                               | (2)   |     |           |      |       |                                |  |  |         |      |  | 8,814   |        
|                                                            |  | 2008 |      |  |                                          |       |         |                      |  | 2,926  | (1)                                        |     |  | 5,888                                               | (2)   |     |           | 7,892 |       |                                |  |  |         |      |  | 16,706  |        
|                                                            |  |      |      |  |                                          |        |        
|Robert D. Koney, Jr.,EVP and Chief Financial Officer        |  |      | 2010 |  |                                          |        |        |                      |  |        |                                           |     |  |                                                     |      |     |           |       | 1,226 |                                |  |   |        |      |  |         | 1,226   | 
|                                                            |  | 2009 |      |  |                                          |       |         |                      |  |       |                                            |     |  |                                                    |       |     |           |      |       |                                |  |  |         |      |  |        |        
|                                                            |  | 2008 |      |  |                                          |       |         |                      |  |       |                                            |     |  |                                                    |       |     |           | 9,456 |       |                                |  |  |         |      |  | 9,456   |        
|                                                            |  |      |      |  |                                          |        |        
|George F. Chappelle, Jr.,EVP and Chief Operating Officer(3) |  |      | 2010 |  |                                          |        | 125,000 | (4)                  |  |        |                                           |     |  |                                                     |      |     |           |       | 731   |                                |  |   |        |      |  |         | 125,731 | 
|                                                            |  | 2009 |      |  |                                          |       |         |                      |  |       |                                            |     |  |                                                    |       |     |           |      |       |                                |  |  |         |      |  |        |        
|                                                            |  |      |      |  |                                          |        |        
|Jan Stern Reed,EVP  HR, General Counsel & Secretary        |  |      | 2010 |  |                                          |        |        |                      |  |        | 1,475                                      | (1) |  |                                                     | 3,533 | (2) |           |       | 1,231 |                                |  |   |        |      |  |         | 6,239   | 
|                                                            |  | 2009 |      |  |                                          |       |         |                      |  | 1,475  | (1)                                        |     |  | 3,533                                               | (2)   |     |           |      |       |                                |  |  |         |      |  | 5,008   |        
|                                                            |  | 2008 |      |  |                                          |       |         |                      |  | 1,475  | (1)                                        |     |  | 3,533                                               | (2)   |     |           | 7,837 |       |                                |  |  |         |      |  | 12,845  |        
|                                                            |  |      |      |  |                                          |        |        
|Peter J. Mendola,SVP  Operations                           |  |      | 2010 |  |                                          |        |        |                      |  |        |                                           |     |  |                                                     |      |     |           |       | 864   |                                |  |   |        |      |  |         | 864     | 
|                                                            |  | 2009 |      |  |                                          |       |         |                      |  |       |                                            |     |  |                                                    |       |     |           |      |       |                                |  |  |         |      |  |        |        
|                                                            |  | 2008 |      |  |                                          | 75,000 | (5)     |                      |  | 35,883 | (6)                                        |     |  |                                                    |       |     |           | 7,583 |       |                                |  |  |         |      |  | 118,466 |        
|                                                            |  |      |      |  |                                          |        |        
|Thomas A. Pasqualini,EVP  Supply Chain and Logistics(7)    |  |      | 2010 |  |                                          |        |        |                      |  |        | 1,353                                      | (8) |  |                                                     | 3,240 | (9) |           |       | 237   |                                |  |   | 615,000 | (10) |  |         | 619,830 | 
|                                                            |  | 2009 |      |  |                                          |       |         |                      |  | 11,268 | (8)                                        |     |  | 26,994                                              | (9)   |     |           |      |       |                                |  |  |         |      |  | 38,262  |        
|                                                            |  | 2008 |      |  |                                          |       |         |                      |  | 11,483 | (8)                                        |     |  | 27,509                                              | (9)   |     |           | 7,755 |       |                                |  |  |         |      |  | 46,747  |        



|(1) | Amounts represent
tax reimbursements on income imputed to the named executive officers for whole life insurance premiums paid on behalf of the officer by Solo Delaware.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Amounts represent
whole life insurance premiums paid by Solo Delaware on behalf of the named executive officers.
|--- | ----------------------------------------------------------------------------------------------------------------



|(3) | Mr. Chappelle
joined Solo Delaware in October 2009.
|--- | ---------------------------------------------------



|(4) | Represents a
payment to Mr. Chappelle by Solo Delaware to partially reimburse him for certain relocation expenses that he became required to repay in 2010 to his former employer as a result of Mr. Chappelles decision to join Solo Delaware in
October 2009.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(5) | Amount represents a relocation allowance paid to Mr. Mendola.
|--- | -------------------------------------------------------------



|(6) | Amount represents
tax reimbursement on income attributable to Mr. Mendolas relocation allowance.
|--- | -------------------------------------------------------------------------------------------------



|(7) | Mr. Pasqualini left Solo Delaware in
February 2010.
|--- | ---------------------------------------------------



|(8) | Amounts represent
tax reimbursements on income imputed to Mr. Pasqualini for payments made by Solo Delaware on his behalf for a whole life insurance premium or annuity, and certain medical expenses.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(9) | Amounts include
whole life insurance premiums ($11,800 for each of 2009 and 2008) and certain medical expenses ($15,194 for 2009 and $15,709 for 2008) paid by Solo Delaware on behalf of Mr. Pasqualini.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(10) | In connection with
Mr. Pasqualinis separation from Solo Delaware in February 2010, he received severance in the amount of $615,000, payable in installments, over an 18-month period on regular payroll dates. Of that amount, $362,692 was paid in 2010.
|---- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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Long Term Incentive Plan

Our Long Term Incentive Plan (the LTIP or Plan) was adopted in 2007 and amended in March 2010 by our board of directors. We filed a copy of the LTIP with the SEC on March 25,
2010, as Exhibit 10.2 to our Annual Report on Form 10-K for the fiscal year ended December 27, 2009. The following description is qualified in its entirety by reference to the Plan. The purpose of the LTIP is to provide long-term incentives to
selected key management employees of Solo Delaware and its affiliates, including the named executive officers. The principal terms and conditions of the LTIP are as follows:



| |  |  | Awards under the Plan represent the opportunity to receive a cash bonus payment upon the occurrence of any sale, redemption, transfer or other
disposition by Vestar of all or a portion of its equity interest in Solo Cup Investment Corporation for cash or marketable securities (a Liquidity Event). Vestar currently controls Solo Cup Investment Corporations and Solo
Delawares boards of directors and owns 32.71% of Solo Cup Investment Corporations common stock on an as-converted basis.
| | - |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | The aggregate of all awards available under the LTIP (the LTIP Award Pool) will be determined based on a sliding percentage of the equity
value of Solo Cup Investment Corporation, as determined by the Solo Delaware board of directors, in accordance with the existing Stockholders Agreement of Solo Cup Investment Corporation, upon the occurrence of the earlier of a Liquidity Event
or the plan termination date, which is the seventh anniversary of the LTIPs effective date, as follows:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|                     |  |                                     |      |  
|-------------------- |  | ----------------------------------- | ---- | -
|Equity Value of SCIC |  | Percentage Used for LTIP Award Pool |     
|First $240 million   |  |                                     | 2.5  | %
|Next $240 million    |  |                                     | 7.5  | %
|Over $480 million    |  |                                     | 15.0 | %



| |  |  | Individual awards under the LTIP (the Awards) will be determined by the compensation committee in consultation with Solo Delawares
CEO and will represent a percentage interest in the LTIP Award Pool.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If Vestar sells, redeems, transfers or otherwise disposes of less than 100% of its equity interest in Solo Cup Investment Corporation for cash or
marketable securities (a Partial Liquidity Event), the Solo Delaware board of directors will determine the equity value of Solo Cup Investment Corporation as of the date of such a sale and will calculate the LTIP Award Pool by
(1) multiplying such equity value by a ratio corresponding to the percentage of aggregate equity interests held by Vestar that was disposed of in the transaction constituting the Partial Liquidity Event and (2) applying the formula
described above to such reduced equity value of Solo Cup Investment Corporation.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If there are a series of Partial Liquidity Events, the LTIP Award Pool for each such event will take into account the value received in respect of any
prior Partial Liquidity Event(s) in order to reflect the intent of the equity value formula described above and to avoid the duplication of benefits.
| | - |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If there has not been a Liquidity Event prior to the plan termination date, Solo Delawares board of directors will determine the equity value of
Solo Cup Investment Corporation as of such date and will establish the LTIP Award Pool based on such valuation, calculated by using half of each applicable percentage amount shown in the table above.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If a participants employment with Solo Delaware or one of its affiliates is terminated for Cause, as defined in the Plan, or he or she resigns
voluntarily from Solo Delaware or an affiliate prior to a Liquidity Event, or if no Liquidity Event occurs, prior to the plan termination date, the participant will forfeit his or her Award and immediately cease to participate in the Plan.
Notwithstanding the provisions summarized in the previous sentence, in the event a participants employment with Solo Delaware or one of its affiliates is terminated after a Partial Liquidity Event has occurred, then (1) if the termination
was for Cause, the participant will forfeit his or her award and will have no further rights under the LTIP (including for any payment relating to an earlier Partial Liquidity Event); and (2) if the termination was a result of the
participants voluntary resignation, the participants Award relating to the Partial Liquidity Event will be paid in accordance with the LTIP and the Participant will have no further rights to payments of any kind under the LTIP.
| | - |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  |  | If a participants employment with Solo is terminated (1) without Cause or (2) as a result of death or Disability, as defined in the
LTIP, the participant will vest in his or her award based on the number of full years that have elapsed between the date the Award was granted and the termination date, as set forth below:
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



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##### Table of Contents

|                                                                                             |  |                  |     |  
|-------------------------------------------------------------------------------------------- |  | ---------------- | --- | -
|Date of Termination                                                                          |  | PercentageVested |    
|Prior to the 1st anniversary of Grant Date                                                   |  |                  | 0   | %
|On or after the 1st anniversary of Grant Date and prior to the 2nd anniversary of Grant Date |  |                  | 20  | %
|On or after the 2nd anniversary of Grant Date and prior to the 3rd anniversary of Grant Date |  |                  | 40  | %
|On or after the 3rd anniversary of Grant Date and prior to the 4th anniversary of Grant Date |  |                  | 60  | %
|On or after the 4th anniversary of Grant Date and prior to the 5th anniversary of Grant Date |  |                  | 80  | %
|On or after the 5th anniversary of Grant Date                                                |  |                  | 100 | %



| |  |  | Generally, Awards will not be paid until the earlier to occur of (1) a Change in Control, as defined in the Plan, or (2) the plan termination
date. If there is a Partial Liquidity Event or a Liquidity Event that does not result in a Change in Control prior to the date of a Change in Control or the plan termination date, Award payments will be credited to a Solo Delaware bookkeeping
account that will earn interest at a rate equal to that of the 10-year Treasury Note as in effect as of the last day of the previous calendar quarter, plus two percentage points, compounded quarterly.
| | - |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Solo Delawares board of directors granted ten percent of the LTIP Award Pool to Mr. Korzenski, and five percent of the LTIP
Award Pool to each of Ms. Reed and Messrs. Koney, Mendola and Pasqualini in October 2007 and five percent to Mr. Chappelle in October 2009. No subsequent grants have been made to the named executive officers. Mr. Pasqualinis
interest in the LTIP Award Pool was reduced to two percent upon his separation from Solo Delaware in accordance with the vesting provisions described above. Total grants of 65% (including those to the above named executive officers) of the LTIP
Award Pool were outstanding as of December 26, 2010.

Director Compensation

Solo Delaware pays annual compensation of $50,000 to each director who is appointed by Vestar but is not employed by Vestar. For 2010,
Messrs. Harrison and Alexy earned $50,000 for their services as directors, and Mr. Greene, who joined the board in the second half of 2010, earned $25,000. Solo Delaware also reimburses all directors for reasonable expenses for attending board
meetings.

Executive Employment Agreements

The agreements described under this heading Executive Employment Agreements and amendments to such agreements are filed as exhibits to this annual report on Form 10-K.

Solo Cup Investment Corporation and Solo Cup Operating Corporation have employment agreements, as amended, with Mr. Korzenski and
Ms. Reed. Mr. Korzenskis agreement commenced on April 14, 2004, and Ms. Reeds agreement commenced on November 30, 2004. The agreements automatically renew for one-year periods unless the executive or we provide
the other with notice of termination at least ninety (90) days prior to its expiration. No notification of termination was provided during the existing terms of the agreements. Accordingly, Mr. Korzenskis and Ms. Reeds
agreements will automatically renew on April 14, 2011 for additional one-year terms that may again be automatically renewed. In addition to base salary, which is reviewed annually and can be increased but not decreased, each executive is
eligible to receive a percentage of annual salary as an annual bonus under the Management Incentive Plan. Upon termination of employment due to death or disability, the employment agreements provide that the executive will be paid all accrued and
unpaid base salary and bonus and a prorated annual bonus for the year in which the termination occurs.

If the executive
terminates his or her employment for good reason or Solo Cup Investment Corporation terminates the executives employment without cause, as such terms are defined in the employment agreements, Solo Cup Investment
Corporation will pay to the executive all accrued and unpaid base salary and bonus, and a severance amount equal to the greater of (A) the amount of base salary that would have been paid over the remainder of the then-current agreement term and
(B) two and one-half times annual base salary, each payable in accordance with the normal payroll practices of Solo Cup Investment Corporation.



84



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Additionally, Solo Cup Investment Corporation will provide the executive with continued
coverage under the welfare benefit programs covering the executive at the time of termination for the above-described severance period or until the executive obtains similar coverage by a new employer.

Upon termination of an employment agreement following a change-in-control, Mr. Korzenski and Ms. Reed are not entitled to any
additional payments or benefits under the employment agreement beyond those described above.

In the event of a termination of
employment not for cause, each of Messrs. Chappelle and Koney is entitled to receive a severance amount equal to his annual base salary.

Solo Cup Investment Corporation and Solo Cup Operating Corporation also entered into an employment agreement, as amended, with Mr. Pasqualini as of April 14, 2004. The agreement contained
similar terms as described above with respect to Mr. Korzenski and Ms. Reed, except that if Mr. Pasqualini terminated his employment for good reason or Solo Cup Investment Corporation terminated his employment without
cause, as such terms are defined in the employment agreement, Solo Cup Investment Corporation was required to pay Mr. Pasqualini all accrued and unpaid base salary and bonus, and a severance amount equal to the greater of
(A) the amount of base salary that would have been paid over the remainder of the then current agreement term and (B) one and one-half times annual base salary, each payable in accordance with the normal payroll practices of Solo Cup
Investment Corporation.

Mr. Pasqualinis employment terminated effective February 1, 2010. In connection
therewith, he received severance in the amount of $615,000, which represents one and one-half times his annual base salary, payable in installments, net of applicable tax withholding, over an 18-month period on regular payroll dates.
Mr. Pasqualini also will continue to receive benefit coverage under our group health, vision and dental plans for such 18-month period or until such earlier time as he receives similar coverage from a new employer. Receipt of such payments and
benefits is subject to the terms of his employment agreement (attached as an exhibit to this annual report) and our Code of Business Conduct, as well as compliance with customary confidentiality and non-disparagement provisions.

Compensation Committee Interlocks and Insider Participation

For the fiscal year ended December 26, 2010, the compensation committee of the board of directors of Solo Delaware determined executive compensation. None of Solo Delawares executive officers
served as a director or member of the compensation committee or other board committee performing equivalent functions of another corporation.



85



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##### Table of Contents

|Item 12. | Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
|-------- | -----------------------------------------------------------------------------------------------

All of Solo Delawares outstanding capital stock is owned by its parent company, Solo Cup Investment Corporation. Solo Delaware does
not maintain any compensation plan under which equity securities of Solo Delaware are authorized for issuance. The following table presents the beneficial ownership of Solo Cup Investment Corporations voting stock as of March 15, 2010 by
(1) Solo Delawares directors and named executive officers, (2) Solo Delawares current directors and executive officers as a group, and (3) other persons that beneficially own in excess of 5% of Solo Cup Investment
Corporations voting stock. As of March 15, 2011, 10,425,100 shares of Solo Cup Investment Corporation common stock, or SCIC common stock, and 240,200 shares of Solo Cup Investment Corporation convertible participating preferred stock, or
SCIC preferred stock, were outstanding.

All persons listed in the table below have sole voting and investment power with
respect to their shares, except as otherwise indicated. In addition, unless otherwise indicated, the address of each beneficial owner listed in the table below is c/o Solo Cup Company, 150 South Saunders Road, Suite 150, Lake Forest, Illinois 60045.
Beneficial ownership is determined in accordance with the rules of the SEC, under which, in general, persons having voting or investment power with respect to a security are deemed to be beneficial owners of that security. Shares of capital stock
issuable pursuant to options or convertible securities, to the extent those options or convertible securities are exercisable or convertible, as applicable, within 60 days as of March 15, 2011, are treated as beneficially owned and outstanding
for the purpose of computing the percentage ownership of the person holding the option or convertible security, but are not treated as outstanding for the purpose of computing the percentage ownership of any other person.



|                                                                         |  |                         |            |     |                                          |  |       |                         |  |  |                                  |  |  |                                       |       |   |  |  |   | 
|------------------------------------------------------------------------ |  | ----------------------- | ---------- | --- | ---------------------------------------- |  | ----- | ----------------------- |  |  | -------------------------------- |  |  | ------------------------------------- | ----- | - |  |  | - | 
|                                                                         |  | Common Stock            |            |     | Convertible ParticipatingPreferred Stock |  |       |                         | 
|Name of Beneficial Owner                                                 |  | SharesBeneficiallyOwned |            |     | Percent of ClassBeneficiallyOwned        |  |       | SharesBeneficiallyOwned |  |  | Percent ofClassBeneficiallyOwned |  |  | Stock OptionsExercisableWithin 60Days |      
|SCC Holding Company LLC(1)                                               |  |                         | 10,425,100 |     |                                          |  | 100.0 | %(2)                    |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|Vestar Capital Partners IV, L.P. and affiliates(3)                       |  |                         | 5,071,200  | (4) |                                          |  | 32.7  | %(4)                    |  |  | 240,000                          |  |  |                                       | 99.9  | % |  |  |  | 
|Robert L. Hulseman(5)                                                    |  |                         | 10,425,100 |     |                                          |  | 100.0 | %(2)                    |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|Robert M. Korzenski                                                      |  |                         | 2,113      | (4) |                                          |  | *     |                         |  |  | 100                              |  |  |                                       | *     |   |  |  |  | 
|Robert D. Koney, Jr.                                                     |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|George F. Chappelle, Jr.                                                 |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|Jan Stern Reed                                                           |  |                         | 2,113      | (4) |                                          |  | *     |                         |  |  | 100                              |  |  |                                       | *     |   |  |  |  | 
|Peter J. Mendola                                                         |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|R. James Alexy                                                           |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|Jeffrey M. Greene                                                        |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|Neil Harrison                                                            |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|Sheila M. Hulseman(6)                                                    |  |                         | 10,425,100 |     |                                          |  | 100.0 | %(2)                    |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|James R. Hulseman(1)                                                     |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|John D. Hulseman(1)                                                      |  |                         |           |     |                                          |  |      |                         |  |  |                                 |  |  |                                       |      |   |  |  |  | 
|Kevin A. Mundt(3)                                                        |  |                         | 5,071,200  | (4) |                                          |  | 32.7  | %(4)                    |  |  | 240,000                          |  |  |                                       | 99.9  | % |  |  |  | 
|Daniel S. OConnell(3)                                                   |  |                         | 5,071,200  | (4) |                                          |  | 32.7  | %(4)                    |  |  | 240,000                          |  |  |                                       | 99.9  | % |  |  |  | 
|Brian P. OConnor(3)                                                     |  |                         | 5,071,200  | (5) |                                          |  | 32.7  | %(5)                    |  |  | 240,000                          |  |  |                                       | 99.9  | % |  |  |  | 
|All directors and executive officers as a group (17 persons)(3)(4)(5)(6) |  |                         | 15,500,526 | (7) |                                          |  | 100.0 | %                       |  |  | 240,200                          |  |  |                                       | 100.0 | % |  |  |  | 



|* | Indicates less than 1% ownership.
|- | ---------------------------------

|(1) | Robert L. Hulseman holds 50% of the voting membership interests of SCC Holding. His brother John F. Hulseman, a former Director of Solo Delaware, holds
the other 50% of the voting membership of SCC Holding. James R. Hulseman and John D. Hulseman, sons of John F. Hulseman and Directors of Solo Delaware, do not hold any voting membership interests in SCC Holding.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | If the issued and outstanding shares of SCIC preferred stock were converted into shares of SCIC common stock, this percentage would decline to
approximately 67.26%.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



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|(3) | Vestar Capital Partners IV, L.P. (Vestar IV) owns 216,071 shares of SCIC preferred stock, Vestar Cup Investment, LLC (Vestar I)
owns 18,929 shares of SCIC preferred stock and Vestar Cup Investment II, LLC (Vestar II) owns 5,000 shares of SCIC preferred stock. Vestar IV is the managing member of both Vestar I and Vestar II. Vestar IV is a Delaware limited
partnership, the general partner of which is Vestar Associates IV, L.P., a Delaware limited partnership. The general partner of Vestar Associates IV, L.P. is Vestar Associates Corporation IV, a Delaware corporation. The board of directors of Vestar
Associates Corporation IV consists solely of Daniel S. OConnell, who also serves as its President and Chief Executive Officer. Mr. Mundt is a managing director of Vestar IV, and Mr. OConnor is Vice President of Vestar IV. In
their roles as directors or officers of these entities, Messrs. Mundt, OConnell and OConnor may be deemed to share beneficial ownership of Vestar IVs shares of SCIC common stock and SCIC preferred stock. Each of Messrs. Mundt and
OConnor disclaims beneficial ownership of those shares except to the extent of his pecuniary interest therein. The address of Vestar IV is 245 Park Avenue, 41st Floor, New York, New York 10167.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(4) | Represents beneficial ownership of shares of SCIC common stock issuable upon conversion of SCIC preferred stock.
|--- | ----------------------------------------------------------------------------------------------------------------



|(5) | Robert L. Hulseman holds 50% of the voting membership interests of SCC Holding and, as a result, may be deemed to beneficially own the shares of SCIC
common stock held by SCC Holding. Mr. Hulseman disclaims beneficial ownership of those shares except to the extent of his pecuniary interest therein.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(6) | Consists of shares beneficially owned by Sheila M. Hulsemans husband, Robert L. Hulseman, which shares may be deemed to be beneficially owned by
Ms. Hulseman. Ms. Hulseman disclaims beneficial ownership of those shares except to the extent of her pecuniary interest therein.
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(7) | Includes 5,075,426 shares of common stock issuable upon conversion of the SCIC preferred stock.
|--- | -----------------------------------------------------------------------------------------------



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##### Table of Contents

|Item 13. | Certain Relationships and Related Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------

Robert L. Hulseman, who is the uncle of James R. and John D. Hulseman, and the husband of Sheila M. Hulseman, is the Chairman Emeritus and a director of Solo Delaware. James R., John D. and Sheila M.
Hulseman are directors of Solo Delaware. Robert L. Hulseman holds 50% of the voting membership interests of SCC Holding, which owns 67.26% of the voting stock of Solo Cup Investment Corporation, the parent of Solo Delaware.

SCC Holdings ownership structure includes ownership interests of 9,867,626 Units of Class A Non-Voting Common Units, 57,474
Class B Voting Common Units, and 500,000 Class A Non-Voting Preferred Units. The Class A Non-Voting Preferred Units, or Preferred Units, require an annual preferred return to each Preferred Unit holder in the amount of $4.30 per Unit. The
Preferred Units also have a preference upon the liquidation of SCC Holding in the amount of $43.00 per Unit. The Class A Non-Voting and Class B Voting Common Units are identical, except that the Class B Voting Common Units are voting Units. The
Class A Non-Voting and Class B Common Units, known collectively as the Common Units, constitute 100% of the total common units in SCC Holding. Robert L. Hulseman, as a result of his ownership of Class B Voting Common Units, has an economic
interest of 0.28954% of SCC Holdings value allocable to the Common Units and 0.27565% of SCC Holdings total value allocable to all Preferred and Common Units.

Each of the ten children of Robert L. Hulseman and Sheila M. Hulseman has an economic interest in SCC Holding, either directly or indirectly as the beneficiary of one or more trusts, of 5% of the
Preferred Units and approximately 5% of the Common Units. Each of James R. Hulseman, John D. Hulseman and four of their siblings has an economic interest in SCC Holding, either directly or indirectly as the beneficiary of one or more trusts, of
3.67% of the Preferred Units and approximately 6.09% of the Common Units.

In connection with Solo Delawares acquisition
of SF Holdings in February 2004, Vestar purchased for cash $240.0 million in SCIC preferred stock. Holders of SCIC preferred stock are entitled to vote on all matters on which the holders of Solo Cup Investment Corporation common stock, or SCIC
common stock, are entitled to vote. Each holder of SCIC preferred stock may vote that number of shares of SCIC common stock into which its SCIC preferred stock is convertible. Subject to specified exceptions, the holders of SCIC preferred stock and
common stock vote together as a single class. As a result of its ownership of SCIC preferred stock, Vestar controls 32.71% of SCICs voting stock.

Also in connection with the SF Holdings acquisition, Vestar and SCC Holding entered into several agreements, including a preferred stock purchase agreement, management agreements, the stockholders
agreement and a registration rights agreement relating to, among other things, ownership of, and registration rights with respect to, voting stock in Solo Cup Investment Corporation.

In connection with our February 2004 acquisition of SF Holdings, Solo Delaware and Solo Cup Investment Corporation entered into two
management agreements: one with SCC Holding and one with Vestar. The Vestar management agreement provides for, among other things, the payment of an $800,000 annual management fee by Solo Cup Investment Corporation to Vestar. The management
agreement with SCC Holding provided for, among other things, the payment of a $2.5 million annual management fee by Solo Cup Investment Corporation to SCC Holding or an affiliate or successor of SCC Holding. The management agreement with SCC Holding
was amended in connection with the July 2009 refinancing transactions, and pursuant to that amendment, the amount of the annual management fee payable to SCC Holding was reduced from $2.5 million to $800,000. In 2010, each of SCC Holding and Vestar
received an annual management fee of $800,000 under its respective management agreement. In addition, pursuant to the terms of the Vestar management agreement, Solo Cup Investment Corporation paid Vestar approximately $133,000 for out-of-pocket
expenses.

The SCC Holding management agreement terminates when SCC Holding ceases to beneficially own at least 10% of the
SCIC common stock, and similarly, the Vestar management agreement terminates when Vestar ceases to beneficially own at least 10% of the SCIC common stock.

In December 2006, in connection with the transition of control of Solo Delawares and Solo Cup Investment Corporations board of directors, Solo Delaware and Solo Cup Investment Corporation
entered into a transition agreement with Vestar and SCC Holding. Among other things, the transition agreement determines the compensation of Solo Family Members, which is defined as any individual who held beneficial interests in units
of SCC Holding on the date of the closing of the acquisition of SF Holdings and any immediate family member thereof.



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Solo Delaware currently employs Robert L. and Sheila M. Hulsemans son, Paul J.
Hulseman, as a Senior Vice President. In this capacity, he received salary and benefits of approximately $268,550 in 2010. Solo Delaware currently employs Robert L. and Sheila M. Hulsemans son, Thomas J. Hulseman, as a Director of
International Marketing. In this capacity, he received salary and benefits of approximately $175,000 in 2010.

Solo Delaware
currently employs Robert L. and Sheila M. Hulsemans son-in-law, Joseph P. Kovach, as a Vice President  Operations. In this capacity, he received salary and benefits of approximately $255,500 in 2010. James R. Hulseman, a director of Solo
Delaware, is also Vice President, Special Projects of the company. As Vice President, he received salary and benefits of approximately $247,950 in 2010. Solo Delaware also employs John D. Hulseman, one of its Directors, as Energy Manager, for which
he received salary and benefits of approximately $47,000 in 2010. Solo Delaware also paid John F. Hulseman $114,000 pursuant to the stockholders agreement and the transition agreement.

In accordance with the transition agreement, the salary that we pay to each Solo Family Member employed by us (other than Robert L.
Hulseman who was paid $295,000 for his role as Chairman Emeritus in 2010) is commensurate with the salaries that we pay to other employees holding similar positions. Aggregate annual amounts paid to all Solo Family Members cannot exceed $1.5
million, excluding any management fees paid to SCC Holding. The Solo Family Members that we employ also receive health and life insurance benefits and reimbursement of personal expenses commensurate with those being provided to our executive
officers. The Solo Family Members are subject to the same employee policies as all of our other employees.

Any Solo Family
Member that may be terminated by us with or without cause would be entitled to severance benefits under the then-existing policy, provided however, that the severance benefits may not be for less than six months. In 2010, Solo Delaware provided
Robert L. Hulseman with an automobile in accordance with the provisions of the transition agreement.

As provided for in the
stockholders agreement and in accordance with the transition agreement, as of December 2006, the size of the board of directors of Solo Delaware and Solo Cup Investment Corporation increased by four members to a total of eleven directors, and
Vestar appointed four additional directors. Following these appointments on December 15, 2006, directors appointed by Vestar constituted a majority of each of Solo Delawares and Solo Cup Investment Corporations boards of directors.
The directors currently appointed by Vestar are R. James Alexy, Jeffrey M. Greene, Neil Harrison, Kevin A. Mundt, Daniel S. OConnell and Brian P. OConnor. Directors appointed by Vestar who are neither employees nor equity owners of
Vestar (Messrs. Alexy, Greene and Harrison) receive annual compensation of $50,000 for director services.

In February 2009,
Solo Cup Operating Corporation entered into an agreement with Sun Products Corporation under which Solo Cup Operating Corporation leased to Sun a warehouse located in Havre de Grace, Maryland that we closed in December 2008. Mr. Mundt, Chairman
of Solo Delawares board of directors, and Mr. OConnell, a director of Solo Delaware, are also directors of Sun Products, and one or more Vestar entities have an equity interest in Sun Products. During September 2009, Solo Cup
Operating Corporation sold the Havre de Grace property and simultaneously assigned the lease to the new owner. One of the contractual terms of the sale agreement requires Solo Cup Operating Corporation to lease the property from the new owner for
years 8-15, beginning in 2016, if Sun does not renew the lease.

The board of directors of Solo Delaware has not yet adopted
formal written policies and procedures regarding related person transactions. Solo Delaware took initial steps to evaluate a number of the related person transactions through its entry into the transition agreement. None of the directors of Solo
Delaware are independent under standards established by the New York Stock Exchange.



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|Item 14. | Principal Accounting Fees and Services.
|-------- | ---------------------------------------

Relationship with Independent Registered Public Accounting Firm

KPMG LLP has served as our independent registered public accounting firm since 2002. Since July 13, 2004, when Solo Delaware became a registrant, the Board of Directors (the Audit Committee beginning
February 2007) has pre-approved all audit and non-audit services provided by KPMG LLP. KPMG LLPs fees for the years ended December 26, 2010 and December 27, 2009 were as follows (in thousands):





|                      |  |                                      |       |  |                                      |   |       | 
|--------------------- |  | ------------------------------------ | ----- |  | ------------------------------------ | - | ----- | 
|                      |  | For the year ended December 26, 2010 |       |  | For the year ended December 27, 2009 |  
|Audit fees(1)         |  | $                                    | 1,482 |  |                                      | $ | 1,630 | 
|Audit-related fees(2) |  |                                      |      |  |                                      |   | 135   | 
|Tax fees(3)           |  |                                      | 30    |  |                                      |   | 34    | 
|Other                 |  |                                      | 4     |  |                                      |   | 2     | 
|                      |  |                                      |       |  |                                      |   |       | 
|Total                 |  | $                                    | 1,516 |  |                                      | $ | 1,801 | 
|                      |  |                                      |       |  |                                      |   |       | 



|(1) | Audit fees consisted of work performed for the audit of financial statements, quarterly financial statement reviews, statutory audits, and filings with
the SEC.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Audit-related fees consisted of all services performed by the independent auditors in relation to our issuance and registration of senior secured
notes.
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------



|(3) | Tax fees consisted of all services performed by the independent auditors tax personnel, except those related to the audit of financial
statements.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------

The Audit Committee reviews all relationships between KPMG LLP and Solo Delaware, including the provision of
non-audit services, which may relate to the auditors independence. The Board of Directors pre-approval is required to retain KPMG LLP for any services and for the fees payable for such services.

Part IV



|Item 15. | Exhibits and Financial Statement Schedules.
|-------- | -------------------------------------------



|(a) | The following documents are filed as part of this Report:
|--- | ---------------------------------------------------------



| | 1. | Financial Statements:
| | -- | ---------------------

See
Item 8, Financial Statements and Supplementary Data, beginning on page 31 of this document.



| | 2. | Financial Statement Schedules:
| | -- | ------------------------------

All schedules are omitted because of the absence of conditions under which they are required or because information called for is shown in
the consolidated financial statements and notes thereto in Item 8.



| | 3. | Exhibits:
| | -- | ---------

See Index of Exhibits
beginning on page 93 of this document.



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SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.



SOLO CUP COMPANYBy:

/s/ Robert M. KorzenskiRobert M. KorzenskiPresident and Chief Executive Officer (Principal Executive Officer and Duly Authorized Officer)


Date:
March 17, 2011

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by
the following persons on behalf of the Registrant in the capacities and on the date indicated.



|    |  |                                                                                                   |  |  |  |                     
|--- |  | ------------------------------------------------------------------------------------------------- |  |  |  | --------------------
|By: |  | /s/ Kevin A. Mundt                                                                                |  |  |  | Date: March 17, 2011
|    |  | Kevin A. Mundt                                                                                    |  |  |  |                     
|    |  | Chairman of the Board                                                                             |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ Robert L. Hulseman                                                                            |  |  |  | Date: March 17, 2011
|    |  | Robert L. Hulseman                                                                                |  |  |  |                     
|    |  | Chairman Emeritus                                                                                 |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ Robert M. Korzenski                                                                           |  |  |  | Date: March 17, 2011
|    |  | Robert M. Korzenski                                                                               |  |  |  |                     
|    |  | Chief Executive Officer, President and Director (Principal Executive Officer)                     |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ Robert D. Koney, Jr.                                                                          |  |  |  | Date: March 17, 2011
|    |  | Robert D. Koney, Jr.                                                                              |  |  |  |                     
|    |  | Executive Vice President and Chief Financial Officer (Principal Financial and Accounting Officer) |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ Brian P. OConnor                                                                             |  |  |  | Date: March 17, 2011
|    |  | Brian P. OConnor                                                                                 |  |  |  |                     
|    |  | Director                                                                                          |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ Neil Harrison                                                                                 |  |  |  | Date: March 17, 2011
|    |  | Neil Harrison                                                                                     |  |  |  |                     
|    |  | Director                                                                                          |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ James R. Hulseman                                                                             |  |  |  | Date: March 17, 2011
|    |  | James R. Hulseman                                                                                 |  |  |  |                     
|    |  | Director                                                                                          |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ John D. Hulseman                                                                              |  |  |  | Date: March 17, 2011
|    |  | John D. Hulseman                                                                                  |  |  |  |                     
|    |  | Director                                                                                          |  |  |  |                     
|    |  |                                                                                                   | 
|By: |  | /s/ Sheila M. Hulseman                                                                            |  |  |  | Date: March 17, 2011
|    |  | Sheila M. Hulseman                                                                                |  |  |  |                     
|    |  | Director                                                                                          |  |  |  |                     



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|    |  |                         |  |  |  |                     
|--- |  | ----------------------- |  |  |  | --------------------
|    |  |                         | 
|By: |  | /s/ R. James Alexy      |  |  |  | Date: March 17, 2011
|    |  | R. James Alexy          |  |  |  |                     
|    |  | Director                |  |  |  |                     
|    |  |                         | 
|By: |  | /s/ Jeffrey M. Greene   |  |  |  | Date: March 17, 2011
|    |  | Jeffrey M. Greene       |  |  |  |                     
|    |  | Director                |  |  |  |                     
|    |  |                         | 
|By: |  | /s/ Daniel S. OConnell |  |  |  | Date: March 17, 2011
|    |  | Daniel S. OConnell     |  |  |  |                     
|    |  | Director                |  |  |  |                     

Supplemental Information to be Furnished With Reports Filed Pursuant to Section 15(d) of the Act by
Registrants Which Have Not Registered Securities Pursuant to Section 12 of the Act:

No annual report or proxy material has been sent
to security holders of Solo Cup Company.



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INDEX OF EXHIBITS FILED WITH OR

INCORPORATED BY REFERENCE INTO

FORM 10-K OF SOLO CUP COMPANY

FOR THE YEAR ENDED DECEMBER 26, 2010



|              |  |                                                                                                                                                                                                                                                         
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                                                                     
|3.1          |  | Amended and Restated Certificate of Incorporation of Solo Cup Company (incorporated by reference to Exhibit 3.1 to the Form S-4 filed by Solo Cup Company on June 24,
2004)                                                                             
|              | 
|3.2          |  | Second Amended and Restated By-laws of Solo Cup Company (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Solo Cup Company on June 24, 2005)                                                                                          
|              | 
|3.3          |  | Amended and Restated Certificate of Incorporation of Solo Cup Operating Corporation (f/k/a Sweetheart Cup Company Inc.) (incorporated by reference to Annex A-1 to Exhibit A to
Exhibit 3.12 to the Form S-4 filed by Solo Cup Company on June 24, 2004)
|              | 
|3.4          |  | Amended and Restated By-laws of Solo Cup Operating Corporation (f/k/a Sweetheart Cup Company Inc.) (incorporated by reference to Exhibit 3.4 to the Form S-4 filed by Solo Cup
Company on December 4, 2009)                                             
|              | 
|3.5          |  | Amended and Restated Certificate of Incorporation of SF Holdings Group, Inc. (incorporated by reference to Exhibit A to Exhibit 3.10 to the Form S-4 filed by Solo Cup Company on
June 24, 2004)                                                        
|              | 
|3.6          |  | Amended and Restated By-laws of SF Holdings Group, Inc. (incorporated by reference to Exhibit 3.6 to the Form S-4 filed by Solo Cup Company on December 4,
2009)                                                                                        
|              | 
|3.7          |  | Certificate of Incorporation of Lily-Canada Holding Corporation (incorporated by reference to Exhibit 3.14 to the Form S-4 filed by Solo Cup Company on June 24,
2004)                                                                                  
|              | 
|3.8          |  | Amended and Restated By-laws of Lily-Canada Holding Corporation (incorporated by reference to Exhibit 3.8 to the Form S-4 filed by Solo Cup Company on December 4,
2009)                                                                                
|              | 
|3.9          |  | Certificate of Formation of Solo Manufacturing LLC (incorporated by reference to Exhibit 3.9 to the Form S-4 filed by Solo Cup Company on December 4, 2009)                                                                                             
|              | 
|3.10         |  | Limited Liability Company Agreement of Solo Manufacturing LLC (incorporated by reference to Exhibit 3.10 to the Form S-4 filed by Solo Cup Company on December 4,
2009)                                                                                 
|              | 
|3.11         |  | Certificate of Trust of Solo Cup Owings Mills Holdings (incorporated by reference to Exhibit 3.11 to the Form S-4 filed by Solo Cup Company on December 4,
2009)                                                                                        
|              | 
|3.12         |  | Trust Agreement, dated as of June 24, 2009 between Solo Cup Operating Corporation and Wilmington Trust Company (incorporated by reference to Exhibit 3.12 to the Form S-4 filed
by Solo Cup Company on December 4, 2009)                                
|              | 
|3.13         |  | Certificate of Incorporation of P. R. SOLO CUP, INC. (incorporated by reference to Exhibit 3.7 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                              
|              | 
|3.14         |  | By-laws of P. R. SOLO CUP, INC. (incorporated by reference to Exhibit 3.8 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                   
|              | 
|3.15         |  | First Amendment to By-laws of P. R. SOLO CUP, INC. (incorporated by reference to Exhibit 3.15 to the Form S-4 filed by Solo Cup Company on December 4, 2009)                                                                                            
|              | 
|3.16         |  | Certificate of Incorporation of Solo Cup (UK) Limited (incorporated by reference to Exhibit 3.22 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                            
|              | 
|3.17         |  | Memorandum of Association and Articles of Association of Solo Cup (UK) Limited (f/k/a Realglass Limited) (incorporated by reference to Exhibit 3.17 to the Form S-4 filed by Solo Cup
Company on December 4, 2009)                                      
|              | 
|3.18         |  | Certificate of Incorporation of Insulpak Holdings Limited (incorporated by reference to Exhibit 3.24 to the Form S-4 filed by Solo Cup Company on June 24,
2004)                                                                                        
|              | 
|3.19         |  | Articles of Association and Memorandum of Association of Insulpak Holdings Limited (incorporated by reference to Exhibit 3.19 to the Form S-4 filed by Solo Cup Company on
December 4, 2009)                                                            



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|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|3.20         |  | Certificate of Incorporation of Solo Cup Europe Limited (incorporated by reference to Exhibit 3.26 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                                                                                                                                                                           
|              | 
|3.21         |  | Memorandum of Association and Articles of Association of Solo Cup Europe Limited (incorporated by reference to Exhibit 3.21 to the Form S-4 filed by Solo Cup Company on
December 4, 2009)                                                                                                                                                                                                                                                                                                                                               
|              | 
|3.22          |  | Articles of Association of Solo Cup Finance Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|              | 
|4.1          |  | Indenture, dated as of February 27, 2004, by and among Solo Cup Company, a Delaware corporation, certain guarantors of Solo Cup Company and U.S. Bank National Association, as
Trustee (incorporated by reference to Exhibit 4.2 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                                             
|              | 
|4.2          |  | Form of 8 1/2% Senior Subordinated Notes (incorporated by reference to Exhibit A to Exhibit 4.2 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                                                                                                                                                                              
|              | 
|4.3          |  | First Supplemental Indenture dated as of June 18, 2004, by and among Solo Cup Company, a Delaware corporation, certain guarantors of Solo Cup Company and U.S. Bank National
Association, as Trustee (incorporated by reference to Exhibit 4.4 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                               
|              | 
|4.4          |  | Second Supplemental Indenture dated as of June 30, 2005, by and among Solo Cup Company, certain guarantors of Solo Cup Company and U.S. Bank National Association, as Trustee
(incorporated by reference to Exhibit 4.13 to the Form 10-Q filed on August 11, 2009)                                                                                                                                                                                                                                                                      
|              | 
|4.5          |  | Third Supplemental Indenture dated as of July 2, 2009, by and among Solo Cup Company, certain guarantors of Solo Cup Company and U.S. Bank National Association, as Trustee
(incorporated by reference to Exhibit 4.14 to the Form 10-Q filed on August 11, 2009)                                                                                                                                                                                                                                                                        
|              | 
|4.6           |  | Fourth Supplemental Indenture dated as of December 17, 2010, by and among Solo Cup Company, certain guarantors of Solo Cup Company and U.S. Bank National Association, as
Trustee                                                                                                                                                                                                                                                                                                                                                        
|              | 
|4.7          |  | Certificate of Designations of Convertible Participating Preferred Stock of Solo Cup Investment Corporation (incorporated by reference to Exhibit 4.5 to the Form S-4 filed by Solo
Cup Company on June 24, 2004)                                                                                                                                                                                                                                                                                                                        
|              | 
|4.8          |  | Certificate of Designations of Redeemable Preferred Stock of Solo Cup Investment Corporation (incorporated by reference to Exhibit 4.6 to the Form S-4 filed by Solo Cup Company on
June 24, 2004)                                                                                                                                                                                                                                                                                                                                       
|              | 
|4.9          |  | Indenture, dated as of July 2, 2009, among Solo Cup Company, Solo Cup Operating Corporation, the guarantors listed on the signature pages thereto and U.S. Bank National
Association, as trustee (incorporated by reference to Exhibit 4.6 to the Form 8-K filed by Solo Cup Company on July 9, 2009)                                                                                                                                                                                                                                    
|              | 
|4.10          |  | First Supplemental Indenture dated as of April 30, 2010, by and among Solo Cup Company and Solo Cup Operating Corporation, as co-issuers, the guarantors listed on the signature
pages thereto and U.S. Bank National Association, as trustee                                                                                                                                                                                                                                                                                            
|              | 
|4.11          |  | Second Supplemental Indenture dated as of December 17, 2010, by and among Solo Cup Company and Solo Cup Operating Corporation, as co-issuers, the guarantors listed on the signature
pages thereto and U.S. Bank National Association, as trustee                                                                                                                                                                                                                                                                                        
|              | 
|4.12         |  | Security Agreement dated as of July 2, 2009 by and among Solo Cup Company, Solo Cup Operating Corporation, the other subsidiaries of Solo Cup Company listed on the signature
pages thereof and U.S. Bank National Association, as collateral trustee (incorporated by reference to Exhibit 4.8 to the Form 8-K filed by Solo Cup Company on July 9, 2009)                                                                                                                                                                               
|              | 
|4.13         |  | Notes Debenture dated July 2, 2009 between U.S. Bank National Association, as collateral trustee, and Solo Cup (UK) Limited, Insulpak Holdings Limited and Solo Cup Europe
Limited as the Chargors (incorporated by reference to Exhibit 4.9 to the Form 8-K filed by Solo Cup Company on July 9, 2009)                                                                                                                                                                                                                                  
|              | 
|4.14         |  | Collateral Trust Agreement, dated as of July 2, 2009, by and among Solo Cup Company, Solo Cup Operating Corporation, the guarantors from time to time party thereto, U.S. Bank
National Association, as trustee, the other secured debt representatives from time to time party thereto, and U.S. Bank National Association, as collateral trustee (incorporated by reference to Exhibit 4.10 to the Form 8-K filed by Solo Cup Company
on July 9, 2009)                                                                                 
|              | 
|4.15         |  | Lien Subordination and Intercreditor Agreement, dated as of July 2, 2009, among Bank of America, N.A., as agent for the ABL Secured Parties referred to therein, U.S. Bank
National Association, as collateral trustee for the Priority Lien Secured Parties and the Subordinated Lien Secured Parties referred to therein, Solo Cup Company, Solo Cup Operating Corporation and the subsidiaries of Solo Cup Company named therein
(incorporated by reference to Exhibit 4.11 to the Form 8-K filed by Solo Cup Company on July 9, 2009)
|              | 
|4.16         |  | Form of 10.5% Senior Secured Notes due 2013 (included in Exhibit A to Exhibit 4.9)                                                                                                                                                                                                                                                                                                                                                                                                                                                       



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|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                         
|------------- |  | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                     
|10.1         |  | The Solo Cup Company Management Incentive Plan (incorporated by reference to Exhibit 10.35 to the Form 10-Q filed by Solo Cup Company on May 15, 2007) *                                                                                                                                                                                                                                                                                
|              | 
|10.2          |  | Solo Cup Company Management Long-Term Incentive Plan dated October 1, 2007, as amended as of March 24, 2010 (incorporated by reference to Exhibit 10.2 to the Form 10-K filed by Solo
Cup Company on March 25, 2010)*                                                                                                                                                                                                                   
|              | 
|10.3         |  | Employment Agreement, dated as of April 14, 2004, among Solo Cup Investment Corporation, Solo Cup Operating Corporation and Robert M. Korzenski (incorporated by reference to Exhibit
10.11 to the Form S-4 filed by Solo Cup Company on June 24, 2004) *                                                                                                                                                                               
|              | 
|10.4         |  | Amendment No. 1, dated as of July 26, 2006, to Employment Agreement dated as of April 14, 2004, by and between Solo Cup Investment Corporation, Solo Cup Operating Corporation and
Robert M. Korzenski (incorporated by reference to Exhibit 10.5 to the Form 10-Q filed by Solo Cup Company on October 16, 2006) *                                                                                                                     
|              | 
|10.5         |  | Amendment No. 2, dated as of October 11, 2006, to Employment Agreement dated as of April 14, 2004, by and between Solo Cup Investment Corporation, Solo Cup Operating Corporation and
Robert M. Korzenski (incorporated by reference to Exhibit 10.8 to the Form 10-Q filed by Solo Cup Company on October 16, 2006) *                                                                                                                  
|              | 
|10.6         |  | Amendment No. 3, dated as of December 12, 2008, to Employment Agreement dated as of April 14, 2004, by and between Solo Cup Investment Corporation, Solo Cup Operating Corporation
(successor by merger to Solo Cup Company, an Illinois corporation) and Robert M. Korzenski (incorporated by reference to Exhibit 99.3 to the Form 8-K filed by Solo Cup Company on December 23, 2008) *                                              
|              | 
|10.7         |  | Employment Agreement, dated as of April 14, 2004, among Solo Cup Investment Corporation, Solo Cup Operating Corporation and Tom Pasqualini (incorporated by reference to Exhibit
10.12 to the Form S-4 filed by Solo Cup Company on June 24, 2004) *                                                                                                                                                                                    
|              | 
|10.8         |  | Amendment No. 1, dated as of July 26, 2006, to Employment Agreement dated as of April 14, 2004, by and between Solo Cup Investment Corporation, Solo Cup Operating Corporation and
Tom Pasqualini (incorporated by reference to Exhibit 10.6 to the Form 10-Q filed by Solo Cup Company on October 16, 2006) *                                                                                                                          
|              | 
|10.9         |  | Amendment No. 2, dated as of December 12, 2008, to Employment Agreement dated as of April 14, 2004, by and between Solo Cup Investment Corporation, a Delaware corporation, Solo Cup
Operating Corporation, a Delaware corporation (successor by merger to Solo Cup Company, an Illinois corporation) and Tom Pasqualini (incorporated by reference to Exhibit 99.4 to the Form 8-K filed by Solo Cup Company on December 23, 2008)
*   
|              | 
|10.10        |  | Employment Agreement, dated as of November 30, 2004, among Solo Cup Investment Corporation, Solo Cup Operating Corporation and Jan Stern Reed (incorporated by reference to Exhibit
99.1 to the Form 8-K filed by Solo Cup Company on December 3, 2004) *                                                                                                                                                                               
|              | 
|10.11        |  | Amendment No. 1, dated as of July 26, 2006, to Employment Agreement dated as of November 30, 2004, by and between Solo Cup Investment Corporation, Solo Cup Operating Corporation and
Jan Stern Reed (incorporated by reference to Exhibit 10.4 to the Form 10-Q filed by Solo Cup Company on October 16, 2006) *                                                                                                                       
|              | 
|10.12        |  | Amendment No. 2, dated as of October 11, 2006, to Employment Agreement dated as of November 30, 2004, by and between Solo Cup Investment Corporation, a Delaware corporation, Solo
Cup Operating Corporation, a Delaware corporation (successor by merger to Solo Cup Company, an Illinois corporation) and Jan Stern Reed (incorporated by reference to Exhibit 10.7 to the Form 10-Q filed by Solo Cup Company on October 16, 2006)
* 
|              | 
|10.13        |  | Amendment No. 3, dated as of December 12, 2008, to Employment Agreement dated as of November 30, 2004, by and between Solo Cup Investment Corporation, a Delaware corporation, Solo
Cup Operating Corporation, a Delaware corporation (successor by merger to Solo Cup Company, an Illinois corporation) and Jan Stern Reed (incorporated by reference to Exhibit 99.5 to the Form 8-K filed by Solo Cup Company on December 23, 2008)
*



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##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|------------- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|10.14        |  | Management Agreement, dated as of February 27, 2004, among Solo Cup Investment Corporation, Solo Cup Company and Vestar Capital Partners (incorporated by reference to Exhibit
10.16 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                                                                                                                                                                                            
|              | 
|10.15        |  | Amendment No. 1, dated as of December 19, 2008, to Management Agreement, dated as of February 27, 2004, among Solo Cup Investment Corporation, Solo Cup Company and Vestar
Capital Partners (incorporated by reference to Exhibit 99.1 to the Form 8-K filed by Solo Cup Company on December 23, 2008)                                                                                                                                                                                                                                                                                                                                      
|              | 
|10.16        |  | Management Agreement, dated as of February 27, 2004, among Solo Cup Investment Corporation, Solo Cup Company and SCC Holding Company LLC (incorporated by reference to Exhibit
10.17 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                                                                                                                                                                                            
|              | 
|10.17        |  | Amendment No. 1, dated as of December 19, 2008, to Management Agreement, dated as of February 27, 2004, among Solo Cup Investment Corporation, Solo Cup Company, a Delaware
corporation, and SCC Holding Company LLC (incorporated by reference to Exhibit 99.2 to the Form 8-K filed by Solo Cup Company on December 23, 2008)                                                                                                                                                                                                                                                                                                             
|              | 
|10.18        |  | Amendment No. 2, dated as of June 30, 2009, to Management Agreement, dated as of February 27, 2004, among Solo Cup Investment Corporation, Solo Cup Company, a Delaware
corporation, and SCC Holding Company LLC (incorporated by reference to Exhibit 99.1 to the Form 8-K filed on July 7, 2009)                                                                                                                                                                                                                                                                                                                                          
|              | 
|10.19        |  | Stockholders Agreement, dated as of February 27, 2004, among Vestar Capital Partners IV, L.P., Vestar Cup Investment, LLC, Vestar Cup Investment II, LLC, SCC Holding
Company LLC, Solo Cup Investment Corporation and Solo Cup Company (Robert M. Korzenski and Thomas Pasqualini became parties to the Stockholders Agreement effective April 14, 2004 and Jan Stern Reed effective November 30, 2004, by
executing a joinder agreement in the form of Exhibit 10.19 to the Form S-4 filed by Solo Cup Company on June 24, 2004) (incorporated by reference to Exhibit 10.18 to the Form S-4 filed by Solo Cup Company on June 24, 2004)
|              | 
|10.20        |  | Amendment No. 1, dated as of June 26, 2008, to Stockholders Agreement, dated as of February 27, 2004, among Vestar Capital Partners IV, L.P., Vestar Cup Investment,
LLC, Vestar Cup Investment II, LLC, SCC Holding Company LLC, Solo Cup Company, Solo Cup Investment Corporation and the parties identified on the signature pages thereto as Management Investors (incorporated by reference to Exhibit 10.32 to the Form
8-K filed by Solo Cup Company on July 2, 2008)                                                                                                                                                               
|              | 
|10.21        |  | Amendment No. 2, dated as of September 14, 2010, to Stockholders Agreement, dated as of February 27, 2004, among Vestar Capital Partners IV, L.P., Vestar Cup Investment, LLC,
Vestar Cup Investment II, LLC, SCC Holding Company LLC, Solo Cup Company, Solo Cup Investment Corporation and the parties identified on the signature pages thereto as Management Investors (incorporated by reference to Exhibit 10.1 to the Form 10-Q
filed by Solo Cup Company on November 9, 2010)                                                                                                                                                      
|              | 
|10.22        |  | Transition Agreement, dated December 14, 2006, among Vestar Capital Partners IV, L.P., Vestar Cup Investment, LLC, Vestar Cup Investment II, LLC, SCC Holding Company LLC, Solo
Cup Investment Corporation and Solo Cup Company (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Solo Cup Company on December 15, 2006)                                                                                                                                                                                                                                                                                                  
|              | 
|10.23        |  | Form of Joinder to Stockholders Agreement (incorporated by reference to Exhibit 10.19 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|              | 
|10.24        |  | Registration Rights Agreement, dated as of February 27, 2004, between Solo Cup Investment Corporation, SCC Holding Company LLC, Vestar Capital Partners IV, L.P., Vestar Cup
Investment, LLC, and Vestar Cup Investment II, LLC (Robert M. Korzenski and Thomas Pasqualini became parties to the Stockholders Agreement effective April 14, 2004 and Jan Stern Reed effective November 30, 2004, by executing a
joinder agreement in the form of Exhibit 10.21to the Form S-4 filed by Solo Cup Company on June 24, 2004) (incorporated by reference to Exhibit 10.20 to the Form S-4 filed by Solo Cup Company on June 24, 2004)          
|              | 
|10.25        |  | Form of Joinder to Registration Rights Agreement (incorporated by reference to Exhibit 10.21 to the Form S-4 filed by Solo Cup Company on June 24, 2004)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|              | 
|10.26        |  | Lease Agreement between iSTAR SCC Distribution Centers LLC, as Landlord and Solo Cup Operating Corporation and SF Holdings Group, Inc. and Solo Cup Company, jointly and severally as
Tenant, dated as of June 27, 2007 (incorporated by reference to Exhibit 10.31 to the Form S-4 filed by Solo Cup Company on December 4, 2009)                                                                                                                                                                                                                                                                                                          



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##### Table of Contents

|              |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|ExhibitNumber |  | Exhibit Description                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|10.27        |  | Loan Agreement, dated as of July 2, 2009, among Solo Cup Company, Solo Cup Operating Corporation, certain subsidiaries of Solo Cup Company from time to time party thereto as
guarantors, the financial institutions from time to time party thereto as lenders, Bank of America, N.A., as a co-collateral agent and as administrative agent for the lenders, and General Electric Capital Corporation, as a co-collateral agent for
the lenders (incorporated by reference to Exhibit 10.37 to the Form 8-K filed on July 9, 2009)
|              | 
|10.28         |  | Guaranty Supplement dated December 17, 2010 of Solo Cup Finance Limited                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|              | 
|10.29        |  | Security Agreement dated July 2, 2009 made by Solo Cup Company, Solo Cup Operating Corporation and the other subsidiaries of Solo Cup Company listed on the signature pages
thereof to Bank of America, N.A., as administrative agent (incorporated by reference to Exhibit 10.38 to the Form 8-K filed by Solo Cup Company on July 9, 2009)                                                                                                                                                                                       
|              | 
|10.30        |  | ABL Debenture dated July 2, 2009 between Bank of America, N.A., as agent, and Solo Cup (UK) Limited, Insulpak Holdings Limited and Solo Cup Europe Limited (incorporated by
reference to Exhibit 10.39 to the Form 8-K filed by Solo Cup Company on July 9, 2009)                                                                                                                                                                                                                                                                  
|              | 
|10.31        |  | Amended and Restated Credit Agreement dated as of December 15, 2010 by and among Solo Cup Canada Inc., as the Borrower, the other persons party thereto that are designated as
Credit Parties, GE Canada Finance Holding Company, for itself, as a Lender and as Agent for all Lenders, and the other financial institutions party thereto, as Lenders (incorporated by reference to Exhibit 10.1 to the Form 8-K filed by Solo Cup
Company on December 20, 2010)                                                                  
|              | 
|10.32        |  | Amended and Restated Guarantee and Security Agreement dated as of December 15, 2010 by Solo Cup Canada Inc., as the Borrower, in favor of GE Canada Finance Holding Company, as
Agent (incorporated by reference to Exhibit 10.2 to the Form 8-K filed by Solo Cup Company on December 20, 2010)                                                                                                                                                                                                                                   
|              | 
|21            |  | List of Subsidiaries of Solo Cup Company, a Delaware corporation                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|              | 
|31.1          |  | Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                                             
|              | 
|31.2          |  | Certification of Principal Financial and Accounting Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                                                              
|              | 
|32.1          |  | Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002                                                                                                                                                                                                                                                                                                                                                                              
|              | 
|32.2          |  | Certification of Principal Financial and Accounting Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of
2002                                                                                                                                                                                                                                                                                                                                                               



| | Previously filed
|- | ----------------

|* | Indicates a management contract or a compensatory plan or agreement.
|- | --------------------------------------------------------------------



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