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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q



|x | Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
|- | ---------------------------------------------------------------------------------------

For the thirteen weeks ended July 1, 2007



| ̈ | 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.)
|                                                               | 
|1700 Old Deerfield Road, Highland Park, Illinois               |  | 60035                               
|(Address of principal executive offices)                       |  | (Zip Code)                          

Registrants telephone number, including area code: 847/831-4800

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 is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of accelerated filer and large accelerated filer in Rule 12b-2
of the Exchange Act (Check one).

Large accelerated filer ̈Accelerated filer ̈Non-accelerated filer  x

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

The number of shares outstanding of the Registrants common stock as of August 14, 2007:

Common Stock, $0.01 par value -
100 shares



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1



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PART I - FINANCIAL INFORMATION



|Item 1. | Financial Statements.
|------- | ---------------------

SOLO CUP COMPANY AND
SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)



|                                                                                                     |  |              |           |   |                   |   |           |  
|---------------------------------------------------------------------------------------------------- |  | ------------ | --------- | - | ----------------- | - | --------- | -
|                                                                                                     |  | July 1, 2007 |           |   | December 31, 2006 |  
|                                                                                                     |  | (Unaudited)  |           |   |                   |  
|Assets                                                                                               |  |              |           |   |                   |   |           |  
|Current assets:                                                                                      |  |              |           |   |                   |   |           |  
|Cash and cash equivalents                                                                            |  | $            | 24,390    |   |                   | $ | 26,391    |  
|Accounts receivable:                                                                                 |  |              |           |   |                   |   |           |  
|Trade, less allowance for doubtful accounts of $2,562 and $3,430                                     |  |              | 231,959   |   |                   |   | 227,446   |  
|Other                                                                                                |  |              | 5,603     |   |                   |   | 26,852    |  
|Inventories                                                                                          |  |              | 382,379   |   |                   |   | 390,621   |  
|Spare parts                                                                                          |  |              | 26,130    |   |                   |   | 26,208    |  
|Deferred income taxes                                                                                |  |              | 28,003    |   |                   |   | 34,290    |  
|Prepaid expenses                                                                                     |  |              | 13,153    |   |                   |   | 7,174     |  
|Income taxes receivable                                                                              |  |              | 1,156     |   |                   |   | 1,809     |  
|Assets held for sale                                                                                 |  |              | 9,600     |   |                   |   | 1,102     |  
|Other current assets                                                                                 |  |              | 988       |   |                   |   | 1,838     |  
|                                                                                                     |  |              |           |   |                   |   |           |  
|Total current assets                                                                                 |  |              | 723,361   |   |                   |   | 743,731   |  
|Property, plant and equipment, net                                                                   |  |              | 598,515   |   |                   |   | 709,878   |  
|Spare parts                                                                                          |  |              | 13,404    |   |                   |   | 15,009    |  
|Goodwill                                                                                             |  |              | 21,287    |   |                   |   | 20,792    |  
|Intangible assets, net                                                                               |  |              | 13,811    |   |                   |   | 17,910    |  
|Deferred financing fees, net                                                                         |  |              | 23,193    |   |                   |   | 29,755    |  
|Other assets                                                                                         |  |              | 6,166     |   |                   |   | 6,840     |  
|                                                                                                     |  |              |           |   |                   |   |           |  
|Total assets                                                                                         |  | $            | 1,399,737 |   |                   | $ | 1,543,915 |  
|                                                                                                     |  |              |           |   |                   |   |           |  
|Liabilities and Shareholders Equity                                                                 |  |              |           |   |                   |   |           |  
|Current liabilities:                                                                                 |  |              |           |   |                   |   |           |  
|Accounts payable                                                                                     |  | $            | 130,698   |   |                   | $ | 134,598   |  
|Accrued payroll and related costs                                                                    |  |              | 57,088    |   |                   |   | 54,811    |  
|Accrued customer allowances                                                                          |  |              | 40,139    |   |                   |   | 38,630    |  
|Accrued expenses and other current liabilities                                                       |  |              | 41,542    |   |                   |   | 44,977    |  
|Short-term debt                                                                                      |  |              | 350       |   |                   |   |          |  
|Current maturities of long-term debt                                                                 |  |              | 8,191     |   |                   |   | 8,096     |  
|Income taxes payable                                                                                 |  |              | 1,501     |   |                   |   | 464       |  
|                                                                                                     |  |              |           |   |                   |   |           |  
|Total current liabilities                                                                            |  |              | 279,509   |   |                   |   | 281,576   |  
|Long-term debt, net of current maturities                                                            |  |              | 999,054   |   |                   |   | 1,142,045 |  
|Deferred income taxes                                                                                |  |              | 42,522    |   |                   |   | 54,294    |  
|Pensions and other postretirement benefits                                                           |  |              | 34,195    |   |                   |   | 37,548    |  
|Other liabilities                                                                                    |  |              | 67,311    |   |                   |   | 14,869    |  
|                                                                                                     |  |              |           |   |                   |   |           |  
|Total liabilities                                                                                    |  |              | 1,422,591 |   |                   |   | 1,530,332 |  
|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                                                                           |  |              | 254,995   |   |                   |   | 257,612   |  
|Accumulated deficit                                                                                  |  |              | (281,267  | ) |                   |   | (245,731  | )
|Accumulated other comprehensive income                                                               |  |              | 3,418     |   |                   |   | 1,702     |  
|                                                                                                     |  |              |           |   |                   |   |           |  
|Total shareholders (deficit) equity                                                                 |  |              | (22,854   | ) |                   |   | 13,583    |  
|                                                                                                     |  |              |           |   |                   |   |           |  
|Total liabilities and shareholders (deficit) equity                                                 |  | $            | 1,399,737 |   |                   | $ | 1,543,915 |  
|                                                                                                     |  |              |           |   |                   |   |           |  

See accompanying Notes to Consolidated Financial Statements.



2



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands)



|                                                                       |  |                                 |         |   |                                 |   |          |                                   |  |   |                                   |   |  |   |           |  
|---------------------------------------------------------------------- |  | ------------------------------- | ------- | - | ------------------------------- | - | -------- | --------------------------------- |  | - | --------------------------------- | - |  | - | --------- | -
|                                                                       |  | Thirteenweeks endedJuly 1, 2007 |         |   | Thirteenweeks endedJuly 2, 2006 |   |          | Twenty-sixweeks endedJuly 1, 2007 |  |   | Twenty-sixweeks endedJuly 2, 2006 |  
|Net sales                                                              |  | $                               | 650,236 |   |                                 | $ | 670,297  |                                   |  | $ | 1,204,258                         |   |  | $ | 1,237,533 |  
|Cost of goods sold                                                     |  |                                 | 553,564 |   |                                 |   | 578,309  |                                   |  |   | 1,061,101                         |   |  |   | 1,091,724 |  
|                                                                       |  |                                 |         |   |                                 |   |          |                                   |  |   |                                   |   |  |   |           |  
|Gross profit                                                           |  |                                 | 96,672  |   |                                 |   | 91,988   |                                   |  |   | 143,157                           |   |  |   | 145,809   |  
|Selling, general and administrative expenses                           |  |                                 | 65,875  |   |                                 |   | 73,847   |                                   |  |   | 124,958                           |   |  |   | 140,924   |  
|Impairment of goodwill                                                 |  |                                 |        |   |                                 |   | 228,537  |                                   |  |   |                                  |   |  |   | 228,537   |  
|(Gain) loss on sale of property, plant and equipment                   |  |                                 | (1,528  | ) |                                 |   | 943      |                                   |  |   | (1,389                            | ) |  |   | 1,807     |  
|                                                                       |  |                                 |         |   |                                 |   |          |                                   |  |   |                                   |   |  |   |           |  
|Operating income (loss)                                                |  |                                 | 32,325  |   |                                 |   | (211,339 | )                                 |  |   | 19,588                            |   |  |   | (225,459  | )
|Interest expense, net of interest income of $155, $40, $1,685 and $138 |  |                                 | 27,233  |   |                                 |   | 22,010   |                                   |  |   | 52,929                            |   |  |   | 42,389    |  
|Prepayment penalty                                                     |  |                                 | 1,300   |   |                                 |   |         |                                   |  |   | 1,300                             |   |  |   |          |  
|Loss on debt extinguishment                                            |  |                                 | 3,962   |   |                                 |   |         |                                   |  |   | 3,962                             |   |  |   |          |  
|Foreign currency exchange gain, net                                    |  |                                 | (1,398  | ) |                                 |   | (2,676   | )                                 |  |   | (1,798                            | ) |  |   | (3,710    | )
|Other (income) expense, net                                            |  |                                 | (56     | ) |                                 |   | 376      |                                   |  |   | (95                               | ) |  |   | 503       |  
|                                                                       |  |                                 |         |   |                                 |   |          |                                   |  |   |                                   |   |  |   |           |  
|Income (loss) before income taxes                                      |  |                                 | 1,284   |   |                                 |   | (231,049 | )                                 |  |   | (36,710                           | ) |  |   | (264,641  | )
|Income tax (benefit) provision                                         |  |                                 | (1,916  | ) |                                 |   | 68,315   |                                   |  |   | (1,174                            | ) |  |   | 54,878    |  
|                                                                       |  |                                 |         |   |                                 |   |          |                                   |  |   |                                   |   |  |   |           |  
|Net income (loss)                                                      |  | $                               | 3,200   |   |                                 | $ | (299,364 | )                                 |  | $ | (35,536                           | ) |  | $ | (319,519  | )
|                                                                       |  |                                 |         |   |                                 |   |          |                                   |  |   |                                   |   |  |   |           |  

See accompanying Notes to Consolidated Financial Statements.



3



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDERS EQUITY

(In thousands, except
share amounts)



|                                                                            |  |              |  |                           |   |  |                     |         |   |                                             |   |          |                                    |  |   |       |   |  |   |         |  
|--------------------------------------------------------------------------- |  | ------------ |  | ------------------------- | - |  | ------------------- | ------- | - | ------------------------------------------- | - | -------- | ---------------------------------- |  | - | ----- | - |  | - | ------- | -
|                                                                            |  | Common stock |  | Additionalpaid-in capital |   |  | Accumulated deficit |         |   | Accumulatedothercomprehensive income (loss) |   |          | Totalshareholdersequity (deficit) | 
|                                                                            |  | Shares       |  | Amount                    |   |  |                     |        
|Balance at December 31, 2006                                                |  | 100          |  | $                         |  |  | $                   | 257,612 |   |                                             | $ | (245,731 | )                                  |  | $ | 1,702 |   |  | $ | 13,583  |  
|Net loss (Unaudited)                                                        |  |             |  |                           |  |  |                     |        |   |                                             |   | (35,536  | )                                  |  |   |      |   |  |   | (35,536 | )
|Reversal of compensation expense on Convertible Preferred Units (Unaudited) |  |             |  |                           |  |  |                     | (610    | ) |                                             |   |         |                                    |  |   |      |   |  |   | (610    | )
|Return of capital to parent (Unaudited)                                     |  |             |  |                           |  |  |                     | (2,007  | ) |                                             |   |         |                                    |  |   |      |   |  |   | (2,007  | )
|Foreign currency translation adjustment (Unaudited)                         |  |             |  |                           |  |  |                     |        |   |                                             |   |         |                                    |  |   | 2,276 |   |  |   | 2,276   |  
|Minimum pension liability adjustments (Unaudited)                           |  |             |  |                           |  |  |                     |        |   |                                             |   |         |                                    |  |   | 170   |   |  |   | 170     |  
|Unrealized investment loss, net of tax of $82 (Unaudited)                   |  |             |  |                           |  |  |                     |        |   |                                             |   |         |                                    |  |   | (119  | ) |  |   | (119    | )
|Unrealized loss on cash flow hedge, net of tax of $868 (Unaudited)          |  |             |  |                           |  |  |                     |        |   |                                             |   |         |                                    |  |   | (611  | ) |  |   | (611    | )
|                                                                            |  |              |  |                           |   |  |                     |         |   |                                             |   |          |                                    |  |   |       |   |  |   |         |  
|Balance at July 1, 2007 (Unaudited)                                         |  | 100          |  | $                         |  |  | $                   | 254,995 |   |                                             | $ | (281,267 | )                                  |  | $ | 3,418 |   |  | $ | (22,854 | )
|                                                                            |  |              |  |                           |   |  |                     |         |   |                                             |   |          |                                    |  |   |       |   |  |   |         |  

See accompanying Notes to Consolidated Financial Statements.



4



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SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)



|                                                                                          |  |                                    |          |   |                                    |   |          |  
|----------------------------------------------------------------------------------------- |  | ---------------------------------- | -------- | - | ---------------------------------- | - | -------- | -
|                                                                                          |  | Twenty-six weeks endedJuly 1, 2007 |          |   | Twenty-six weeks endedJuly 2, 2006 |  
|CASH FLOWS FROM OPERATING ACTIVITIES                                                      |  |                                    |          |   |                                    |   |          |  
|Net loss                                                                                  |  | $                                  | (35,536  | ) |                                    | $ | (319,519 | )
|Adjustments to reconcile net loss to net cash provided by (used in) operating activities: |  |                                    |          |   |                                    |   |          |  
|Depreciation and amortization                                                             |  |                                    | 48,417   |   |                                    |   | 50,550   |  
|Deferred finance fee amortization                                                         |  |                                    | 3,000    |   |                                    |   | 2,388    |  
|(Gain) loss on sale of property, plant and equipment                                      |  |                                    | (1,389   | ) |                                    |   | 1,807    |  
|Goodwill impairment                                                                       |  |                                    |         |   |                                    |   | 228,537  |  
|Asset impairment                                                                          |  |                                    | 2,559    |   |                                    |   | 2,540    |  
|Loss on debt extinguishment                                                               |  |                                    | 3,962    |   |                                    |   |         |  
|Postretirement plan curtailment gains                                                     |  |                                    |         |   |                                    |   | (22,067  | )
|Deferred income taxes                                                                     |  |                                    | (4,142   | ) |                                    |   | 52,058   |  
|Foreign currency exchange gain, net                                                       |  |                                    | (1,798   | ) |                                    |   | (3,710   | )
|Changes in operating assets and liabilities:                                              |  |                                    |          |   |                                    |   |          |  
|Accounts receivable                                                                       |  |                                    | 17,628   |   |                                    |   | (41,428  | )
|Inventories                                                                               |  |                                    | 10,089   |   |                                    |   | (15,784  | )
|Prepaid expenses and other current assets                                                 |  |                                    | (4,706   | ) |                                    |   | 7,740    |  
|Other assets                                                                              |  |                                    | 1,108    |   |                                    |   | (254     | )
|Accounts payable                                                                          |  |                                    | (4,239   | ) |                                    |   | (20,062  | )
|Accrued expenses and other current liabilities                                            |  |                                    | 1,235    |   |                                    |   | (607     | )
|Other liabilities                                                                         |  |                                    | (5,161   | ) |                                    |   | (2,103   | )
|Other, net                                                                                |  |                                    | (1,959   | ) |                                    |   | 36       |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|Net cash provided by (used in) operating activities                                       |  |                                    | 29,068   |   |                                    |   | (79,878  | )
|CASH FLOWS FROM INVESTING ACTIVITIES                                                      |  |                                    |          |   |                                    |   |          |  
|Purchase of property, plant and equipment                                                 |  |                                    | (14,907  | ) |                                    |   | (29,564  | )
|Proceeds from sale of property, plant and equipment                                       |  |                                    | 129,464  |   |                                    |   | 2,290    |  
|Decrease in cash in escrow                                                                |  |                                    |         |   |                                    |   | 7,726    |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|Net cash provided by (used in) investing activities                                       |  |                                    | 114,557  |   |                                    |   | (19,548  | )
|CASH FLOWS FROM FINANCING ACTIVITIES                                                      |  |                                    |          |   |                                    |   |          |  
|Net (repayments) borrowings under revolving credit facilities                             |  |                                    | (59,642  | ) |                                    |   | 32,125   |  
|Borrowings under term notes                                                               |  |                                    | 50,000   |   |                                    |   | 80,000   |  
|Repayments of term notes                                                                  |  |                                    | (133,876 | ) |                                    |   | (4,102   | )
|Repayment of capital to parent                                                            |  |                                    | (2,007   | ) |                                    |   |         |  
|Borrowings (repayments) of other debt                                                     |  |                                    | 134      |   |                                    |   | (425     | )
|Debt issuance costs                                                                       |  |                                    | (380     | ) |                                    |   | (3,215   | )
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|Net cash (used in) provided by financing activities                                       |  |                                    | (145,771 | ) |                                    |   | 104,383  |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|Effect of exchange rate changes on cash                                                   |  |                                    | 145      |   |                                    |   | 182      |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS                                      |  |                                    | (2,001   | ) |                                    |   | 5,139    |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|CASH AND CASH EQUIVALENTS, beginning of period                                            |  |                                    | 26,391   |   |                                    |   | 12,087   |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|CASH AND CASH EQUIVALENTS, end of period                                                  |  | $                                  | 24,390   |   |                                    | $ | 17,226   |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|SUPPLEMENTAL CASH FLOW DISCLOSURES:                                                       |  |                                    |          |   |                                    |   |          |  
|Interest paid (including prepayment penalty)                                              |  | $                                  | 57,285   |   |                                    | $ | 38,719   |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  
|Income taxes paid (net of income tax refunds)                                             |  | $                                  | 2,344    |   |                                    | $ | 3,725    |  
|                                                                                          |  |                                    |          |   |                                    |   |          |  

See accompanying Notes to Consolidated Financial Statements.



5



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SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(1) BASIS OF PRESENTATION



As used in these notes, unless the context otherwise requires, the Company shall refer
to Solo Cup Company, a Delaware corporation (Solo Delaware) which is the holding company for Solo Cup Operating Corporation, a Delaware corporation (SCOC). The Company is a wholly owned subsidiary of Solo Cup Investment
Corporation, a Delaware corporation (SCIC). SCC Holding Company LLC, a Delaware limited liability company (SCC Holding) and Vestar Capital Partners (Vestar) own 67.2% and 32.7% of SCIC, respectively. Company
management holds the remaining 0.1% of SCIC.

The information included in the accompanying interim consolidated financial statements of
the Company is unaudited but, in the opinion of management, includes all adjustments (consisting only of normal recurring adjustments and accruals unless otherwise indicated) which the Company considers necessary for a fair presentation of the
financial position, operating results and cash flows for the periods presented. Results for the interim periods are not necessarily indicative of results expected for the entire year. These interim consolidated financial statements should be read in
conjunction with the Companys consolidated financial statements and notes thereto for the fiscal year ended December 31, 2006 included in its 2006 Annual Report on Form 10-K.

These interim consolidated financial statements have been prepared in conformity with U.S. generally accepted accounting principles, using
managements best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet dates and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from these estimates and judgments.

(2) ASSETS HELD FOR SALE

In March 2007, the Company entered into a purchase and sale agreement (the Agreement) with a third party for the sale of
certain property of the Company located in the City of Chicago. Previously, the Company had entered into agreements with the State of Illinois (State) and the City of Chicago (City) relating to the acquisition and development
of the property. Pursuant to these agreements, the State and City provided certain grants to the Company, paid certain costs on behalf of the Company and undertook certain obligations relating to the property. Under these agreements, the Company is
required to fulfill certain obligations relating to development of the property and retention of a certain number of employees. If these obligations were not fulfilled, the Company would be required to repay certain amounts granted or paid by the
City or the State, the net impact of which, the Company believes, would not be material to its business, financial condition, results of operations or cash flows. The Agreement with the third party provides that, upon the closing of the sale, the
obligations of the Company to the State and City will be satisfied or the Company will otherwise be released from such obligations. As of July 1, 2007, assets held for sale includes $9.2 million representing the carrying value of this property.

(3) INVENTORIES

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



|                           |  |              |         |                   |   |        
|-------------------------- |  | ------------ | ------- | ----------------- | - | -------
|                           |  | July 1, 2007 |         | December 31, 2006
|Finished goods             |  | $            | 288,501 |                   | $ | 284,229
|Work in process            |  |              | 16,721  |                   |   | 16,168 
|Raw materials and supplies |  |              | 77,157  |                   |   | 90,224 
|                           |  |              |         |                   |   |        
|Total inventories          |  | $            | 382,379 |                   | $ | 390,621
|                           |  |              |         |                   |   |        



6



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SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



Raw materials and supplies includes an adjustment reflecting an immaterial correction of an error,
which increased the December 31, 2006 balance by approximately $1.5 million with a corresponding increase to accrued expenses and other current liabilities.

(4) PROPERTY, PLANT AND EQUIPMENT, NET

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



|                                               |  |              |           |   |                   |   |           |  
|---------------------------------------------- |  | ------------ | --------- | - | ----------------- | - | --------- | -
|                                               |  | July 1, 2007 |           |   | December 31, 2006 |  
|Land                                           |  | $            | 28,568    |   |                   | $ | 45,502    |  
|Buildings and improvements                     |  |              | 213,479   |   |                   |   | 284,480   |  
|Machinery and equipment                        |  |              | 970,321   |   |                   |   | 940,006   |  
|Construction in progress                       |  |              | 14,318    |   |                   |   | 42,186    |  
|                                               |  |              |           |   |                   |   |           |  
|Total property, plant and equipment            |  |              | 1,226,686 |   |                   |   | 1,312,174 |  
|Less accumulated depreciation and amortization |  |              | (628,171  | ) |                   |   | (602,296  | )
|                                               |  |              |           |   |                   |   |           |  
|Property, plant and equipment, net             |  | $            | 598,515   |   |                   | $ | 709,878   |  
|                                               |  |              |           |   |                   |   |           |  

Depreciation of property, plant and equipment was $22.0 million and $44.3 million for the thirteen
and twenty-six weeks ended July 1, 2007, respectively. Capitalized interest was $0.4 million and $1.0 million for the thirteen and twenty-six weeks ended July 1, 2007, respectively.

Depreciation of property, plant and equipment was $22.5 million and $45.9 million for the thirteen and twenty-six weeks ended July 2, 2006,
respectively. Capitalized interest was $0.4 million and $0.7 million for the thirteen and twenty-six weeks ended July 2, 2006, respectively.

(5)
SALE-LEASEBACK TRANSACTION

In June 2007, the Company entered into a lease agreement in conjunction with the sale of six of its
manufacturing facilities. The sale proceeds of $130.0 million were used to retire the Companys Second Lien Credit Agreement dated March 31, 2006, as amended (the Second Lien). Upon the sale of the six properties, the Company
immediately leased them back pursuant to a 20-year term lease (the Lease). The Lease contains four five-year renewal term options.

Net property, plant and equipment was reduced by the carrying values of the properties sold, which amounted to approximately $72.6 million, of which $65.1 million was buildings and improvements and $7.5 million was land. The resulting
gain of approximately $53.7 million (net of $3.7 million of closing costs) was recorded as a deferred credit in the Companys Consolidated Balance Sheet as of July 1, 2007. The deferred credit is included in other current liabilities
and other long-term liabilities and will be amortized to income on a straight-line basis as an offset to rent expense over the 20-year lease term. The lease is classified as an operating lease in accordance with Statement of Financial
Accounting Standards (SFAS) No. 13, Accounting for Leases.

The Lease is non-cancelable. Annual rent for the six
properties is approximately $11.7 million, payable on a quarterly basis with the first quarterly rent payment due July 2, 2007. The lease provides for a 2% escalation of rent on an annual basis.



7



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(6) INCOME TAXES



On January 1, 2007, the Company adopted the provisions of Financial Accounting Standards Board
(FASB) Interpretation (FIN) No. 48, Accounting for Uncertainty in Income Taxes-an interpretation of FASB Statement No. 109. The adoption of FIN No. 48 did not have a material effect on the Companys
results of operations or financial position. As of the adoption date, the Company had unrecognized tax benefits of approximately $7.6 million, of which approximately $1.5 million, if recognized, would affect the effective tax rate while the
remaining $6.1 million, if recognized, would not affect the effective tax rate due to the existence of a valuation allowance. There have been no material changes in the amount of unrecognized tax benefits since adoption, and the Company anticipates
no significant changes in the next twelve months.

The Company classifies interest and penalties recognized on underpayments of income
taxes as income tax expense. As of the adoption date, the Company had accrued interest expense related to unrecognized tax benefits of approximately $0.2 million.

The Company is subject to U.S. federal income tax, as well as income tax in various states and foreign jurisdictions. The Companys U.S. tax returns remain subject to examination for the year ended
September 27, 1998, as well as the year ended March 25, 2002, and all subsequent periods. The Company does not expect the amounts of unrecognized tax benefits as of January 1, 2007, the date of adoption, to change significantly during
2007.

(7) DEBT

Long-term debt at
July 1, 2007 and December 31, 2006, including amounts payable within one year, is as follows (in thousands):



|                                            |  |              |           |                   |   |          
|------------------------------------------- |  | ------------ | --------- | ----------------- | - | ---------
|                                            |  | July 1, 2007 |           | December 31, 2006
|Long-term debt:                             |  |              |           |                   |   |          
|8.5% Senior Subordinated Notes              |  | $            | 325,000   |                   | $ | 325,000  
|First Lien Facility  Term Loan             |  |              | 628,875   |                   |   | 632,125  
|First Lien Facility  Revolver              |  |              | 39,800    |                   |   | 102,600  
|Second Lien Facility                        |  |              |          |                   |   | 80,000   
|Canadian Credit Facility  Term Loan        |  |              | 8,501     |                   |   | 8,379    
|Canadian Credit Facility  Revolver         |  |              | 3,207     |                   |   |         
|Capital lease obligations                   |  |              | 1,862     |                   |   | 2,037    
|                                            |  |              |           |                   |   |          
|Total long-term debt                        |  |              | 1,007,245 |                   |   | 1,150,141
|Less - Current maturities of long-term debt |  |              | 8,191     |                   |   | 8,096    
|                                            |  |              |           |                   |   |          
|Long-term debt, net of current maturities   |  | $            | 999,054   |                   | $ | 1,142,045
|                                            |  |              |           |                   |   |          

On March 31, 2006, the Company and SCIC entered into a second lien credit agreement which was
subsequently amended by Amendment No. 1 dated October 13, 2006, and Amendment No. 2 dated December 22, 2006 (collectively the Second Lien). The Second Lien provided a secured term loan facility in the amount of $80.0
million (Second Term Loan). The proceeds of the Second Term Loan were used to reduce amounts outstanding under the Companys revolving credit facility under the First Lien. The principal amount was due upon maturity in February
2012.

On January 5, 2007, the Company borrowed an additional $50 million under its Second Lien, which was provided by Amendment
No. 2, and used the proceeds to pay down amounts outstanding under the Companys revolving credit facility under the Company and SCICs credit facility dated February 27, 2004, as amended (the First Lien), as required
by Amendment No. 2.



8



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)



In June 2007, the Company repaid the Second Lien with the proceeds from its sale-leaseback
transaction (Note 5). In connection with the prepayment, the Company incurred $1.3 million of prepayment penalties and a loss on debt extinguishment of approximately $4.0 million representing the write-off of unamortized deferred financing fees.

The Company was in compliance with all covenants under the First Lien during the thirteen weeks ended July 1, 2007.

(8) DERIVATIVES AND HEDGING ACTIVITIES

In June 2007,
the Company entered into three forward-starting receive-variable, pay-fixed interest rate swaps with a total notional amount of $150.0 million. The variable rate of interest received is the Eurodollar rate. The fixed rate of interest paid is
5.3765%. The swap agreements are effective from August 28, 2007 through February 28, 2011. These interest rate swaps are accounted for as cash flow hedges and their fair value was $0 as of July 1, 2007.

In September 2006, the Company entered into three interest rate cap agreements with a total notional amount of $245.0 million. Under these agreements the
Company receives variable interest rate payments when the 3-month LIBOR rises above 6.0%. These agreements are in effect through September 14, 2007. In October 2006, the Company entered into an interest rate cap agreement with a notional amount
of $20.0 million. Under this agreement, the Company receives variable interest rate payments when the 3-month LIBOR rises above 6.0%. This agreement is in effect through October 12, 2007.

In March 2004, June 2005 and March 2006, the Company entered into receive-variable, pay-fixed interest rate swaps with a total notional amount of
$300.0 million. In September 2006, the Company terminated these agreements prior to their stated expirations. Through the termination date, these interest rate swap agreements were accounted for as cash flow hedges and their fair values were
included in other current assets and other assets in the Companys Consolidated Balance Sheets. Included in accumulated other comprehensive income is a deferred gain on the qualified hedged transactions of $0.8 million and $2.2 million as of
July 1, 2007 and December 31, 2006, respectively. The deferred gain is being amortized into interest expense over the remaining term of the underlying debt.



9



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(9) PENSIONS AND OTHER POSTRETIREMENT BENEFITS



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



|                                   |  |                                   |        |   |                                   |   |        |                                   |  |   |                                   |   |  |   |         |  
|---------------------------------- |  | --------------------------------- | ------ | - | --------------------------------- | - | ------ | --------------------------------- |  | - | --------------------------------- | - |  | - | ------- | -
|                                   |  | Pension Benefits                  |        |   | Other Postretirement Benefits     |  
|                                   |  | Thirteenweeks endedJuly 1, 2007   |        |   | Thirteenweeks endedJuly 2, 2006   |   |        | Thirteenweeks endedJuly 1, 2007   |  |   | Thirteenweeks endedJuly 2, 2006   |  
|Service cost                       |  | $                                 | 490    |   |                                   | $ | 541    |                                   |  | $ | 142                               |   |  | $ | 185     |  
|Interest cost                      |  |                                   | 1,658  |   |                                   |   | 1,780  |                                   |  |   | 339                               |   |  |   | 478     |  
|Expected return on plan assets     |  |                                   | (1,924 | ) |                                   |   | (1,926 | )                                 |  |   |                                  |   |  |   |        |  
|Amortization of prior service cost |  |                                   | 51     |   |                                   |   |       |                                   |  |   | (63                               | ) |  |   | (1,032  | )
|Amortization of net loss           |  |                                   |       |   |                                   |   | 17     |                                   |  |   | 112                               |   |  |   | 207     |  
|                                   |  |                                   |        |   |                                   |   |        |                                   |  |   |                                   |   |  |   |         |  
|                                   |  |                                   | 275    |   |                                   |   | 412    |                                   |  |   | 530                               |   |  |   | (162    | )
|Settlement                         |  |                                   | (617   | ) |                                   |   |       |                                   |  |   |                                  |   |  |   |        |  
|Curtailment gains                  |  |                                   |       |   |                                   |   |       |                                   |  |   |                                  |   |  |   | (22,067 | )
|                                   |  |                                   |        |   |                                   |   |        |                                   |  |   |                                   |   |  |   |         |  
|Net periodic benefit (income) cost |  | $                                 | (342   | ) |                                   | $ | 412    |                                   |  | $ | 530                               |   |  | $ | (22,229 | )
|                                   |  |                                   |        |   |                                   |   |        |                                   |  |   |                                   |   |  |   |         |  
|                                   |  |                                  
|                                   |  | Pension Benefits                  |        |   | Other Postretirement Benefits     |  
|                                   |  | Twenty-sixweeks endedJuly 1, 2007 |        |   | Twenty-sixweeks endedJuly 2, 2006 |   |        | Twenty-sixweeks endedJuly 1, 2007 |  |   | Twenty-sixweeks endedJuly 2, 2006 |  
|Service cost                       |  | $                                 | 1,051  |   |                                   | $ | 970    |                                   |  | $ | 282                               |   |  | $ | 383     |  
|Interest cost                      |  |                                   | 3,403  |   |                                   |   | 2,951  |                                   |  |   | 677                               |   |  |   | 973     |  
|Expected return on plan assets     |  |                                   | (3,864 | ) |                                   |   | (3,264 | )                                 |  |   |                                  |   |  |   |        |  
|Amortization of prior service cost |  |                                   | 102    |   |                                   |   |       |                                   |  |   | (125                              | ) |  |   | (2,064  | )
|Amortization of net loss           |  |                                   | 4      |   |                                   |   | 35     |                                   |  |   | 225                               |   |  |   | 414     |  
|                                   |  |                                   |        |   |                                   |   |        |                                   |  |   |                                   |   |  |   |         |  
|                                   |  |                                   | 696    |   |                                   |   | 692    |                                   |  |   | 1,059                             |   |  |   | (294    | )
|Settlement                         |  |                                   | (617   | ) |                                   |   |       |                                   |  |   |                                  |   |  |   |        |  
|Curtailment gains                  |  |                                   |       |   |                                   |   |       |                                   |  |   |                                  |   |  |   | (22,067 | )
|                                   |  |                                   |        |   |                                   |   |        |                                   |  |   |                                   |   |  |   |         |  
|Net periodic benefit cost (income) |  | $                                 | 79     |   |                                   | $ | 692    |                                   |  | $ | 1,059                             |   |  | $ | (22,361 | )
|                                   |  |                                   |        |   |                                   |   |        |                                   |  |   |                                   |   |  |   |         |  

In April 2007, one of the Company-sponsored pension plans was merged into a multi-employer pension
plan which resulted in a settlement gain of $0.6 million.

During the twenty-six weeks ended July 1, 2007, approximately $6.0 million
of contributions had been made by the Company to its pension and other postretirement benefit plans. The Company presently anticipates contributing an additional $6.0 million to fund its pension and other postretirement benefit plans in 2007 for a
total of approximately $12.0 million.

During the thirteen and twenty-six weeks ended July 2, 2006, the Company recognized $22.1
million in curtailment gains as a result of a significant reduction in postretirement benefits for certain active plan participants. Curtailment gains are included in cost of goods sold in the Companys Consolidated Statements of Operations.



10



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(10) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)



Comprehensive income (loss) consisted of the following (in thousands):



|                                                               |  |                                 |       |   |                                 |   |          |                                   |  |   |                                   |   |  |   |          |  
|-------------------------------------------------------------- |  | ------------------------------- | ----- | - | ------------------------------- | - | -------- | --------------------------------- |  | - | --------------------------------- | - |  | - | -------- | -
|                                                               |  | Thirteenweeks endedJuly 1, 2007 |       |   | Thirteenweeks endedJuly 2, 2006 |   |          | Twenty-sixweeks endedJuly 1, 2007 |  |   | Twenty-sixweeks endedJuly 2, 2006 |  
|Net income (loss)                                              |  | $                               | 3,200 |   |                                 | $ | (299,364 | )                                 |  | $ | (35,536                           | ) |  | $ | (319,519 | )
|Foreign currency translation adjustment                        |  |                                 | 1,593 |   |                                 |   | 1,767    |                                   |  |   | 2,276                             |   |  |   | 2,283    |  
|Minimum pension liability adjustments                          |  |                                 | 170   |   |                                 |   |         |                                   |  |   | 170                               |   |  |   |         |  
|Unrealized investment (loss) gain, net of income taxes         |  |                                 | (75   | ) |                                 |   | 105      |                                   |  |   | (119                              | ) |  |   | 148      |  
|Unrealized (loss) gain on cash flow hedge, net of income taxes |  |                                 | (27   | ) |                                 |   | 521      |                                   |  |   | (611                              | ) |  |   | 678      |  
|                                                               |  |                                 |       |   |                                 |   |          |                                   |  |   |                                   |   |  |   |          |  
|Comprehensive income (loss)                                    |  | $                               | 4,861 |   |                                 | $ | (296,971 | )                                 |  | $ | (33,820                           | ) |  | $ | (316,410 | )
|                                                               |  |                                 |       |   |                                 |   |          |                                   |  |   |                                   |   |  |   |          |  

Accumulated other comprehensive income (loss) consisted of the following (in thousands):



|                                                           |  |              |        |   |                   |   |        |  
|---------------------------------------------------------- |  | ------------ | ------ | - | ----------------- | - | ------ | -
|                                                           |  | July 1, 2007 |        |   | December 31, 2006 |  
|Foreign currency translation adjustments                   |  | $            | 7,463  |   |                   | $ | 5,187  |  
|Minimum pension liability adjustments, net of income taxes |  |              | (5,160 | ) |                   |   | (5,330 | )
|Unrealized investment gain, net of income taxes            |  |              | 801    |   |                   |   | 920    |  
|Unrealized gain on cash flow hedge, net of income taxes    |  |              | 314    |   |                   |   | 925    |  
|                                                           |  |              |        |   |                   |   |        |  
|Accumulated other comprehensive income                     |  | $            | 3,418  |   |                   | $ | 1,702  |  
|                                                           |  |              |        |   |                   |   |        |  

(11) SHARE-BASED PAYMENT

SCIC, the Companys parent, has a management investment and incentive compensation plan for certain key employees of the Company. Under this plan, SCIC has reserved 1,450,000 shares of SCIC common stock, and
5,000 shares of convertible participating preferred stock (CPPS) for issuance. The accounting impact of this plan is recorded in the consolidated financial statements of the Company as the plan relates to employees of the Company.

During the second quarter of 2004, SCIC issued 3,283 Convertible Preferred Units (CPUs) to certain Company employees in
settlement of $3.3 million of deferred compensation liabilities. The fair value of the CPUs granted by SCIC was linked to the fair market value of one share of CPPS. For CPUs, compensation expense is recognized periodically based on changes in the
fair value of the CPU relative to the grant-date fair value of the CPU. During 2006 and 2005, as the result of employees separating from the Company, 109 and 1,267 of CPUs were settled, respectively. During the twenty-six weeks ended July 1,
2007, as a result of an employees separation from the Company, the remaining 1,907 of CPUs were settled and the Company reversed compensation expense of $0.6 million and reduced additional paid-in capital by approximately $1.9 million.

At December 31, 2006, 293,585 time-based options and 195,723 performance-based options were outstanding. During the thirteen weeks
ended April 1, 2007, the Companys Board of Directors cancelled all outstanding options. No options had been exercised at the time of cancellation.



11



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(12) RELATED PARTY TRANSACTIONS



In the first quarter of 2004, the Company and SCIC entered into a management agreement with SCC
Holding providing for, among other things, the payment by SCIC of an annual advisory fee of $2.5 million to SCC Holding. Pursuant to this management agreement, the Company incurred $0.6 million of advisory fees during the thirteen weeks ended
July 1, 2007 and July 2, 2006, respectively, and $1.2 million of advisory fees during the twenty-six weeks ended July 1, 2007 and July 2, 2006.

In 2004, SCIC also entered into a management agreement with Vestar pursuant to which SCIC would pay Vestar an $0.8 million annual advisory fee, plus reimbursement of its expenses. The Company incurred $0.2 million of
advisory fees during the thirteen weeks ended July 1, 2007 and July 2, 2006, and $0.4 million of advisory fees during the twenty-six weeks ended July 1, 2007 and July 2, 2006. Vestar also is party to a registration rights
agreement with SCIC and SCC Holding. In addition, Vestar and SCC Holding entered into a stockholders agreement relating to, among other things, their ownership of voting stock of SCIC.

In December 2006, the Companys First Lien and Second Lien were amended to, among other things, provide that beginning in 2007, SCC Holding and
Vestar may not receive payment for management services unless the Company meets certain financial covenants contained in the First Lien and Second Lien. The Company is accruing for any such management fees that are earned but not paid pursuant to
the foregoing.

On August 4, 1999, the Company extended an interest-free loan in the amount of $1.7 million to Ronald Whaley, the
then President and Chief Operating Officer of the Company pursuant to his previous employment agreement. The employment agreement provided for the loan to be repaid from the net proceeds of Mr. Whaleys annual bonuses through the term of
the agreement, which had an expiration date of August 3, 2009. To the extent that Mr. Whaleys annual bonus fell below the amounts corresponding to the annual prorated portion of the initial principal amount of the loan, the
employment agreement provided that the loan would be forgiven as if a bonus in the amount of that annual prorated portion had been paid. As of December 31, 2006, the outstanding principal amount of the loan was $639,000 and was fully reserved.
Mr. Whaleys employment agreement was terminated effective April 17, 2006. On February 9, 2007, Mr. Whaley entered into an agreement with SCOC and SCIC which sets forth severance paid to Mr. Whaley and a mutual release.
Under this agreement, the interest-free loan was extinguished.



12



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(13) SEGMENTS



The Company manages and evaluates its operations in three reportable segments: North America, Europe
and Asia-Pacific. All of these segments produce a broad array of disposable food service products, which are available in paper, plastic and foam. The operating segments are managed separately based on the products and requirements of the different
markets. North America includes all U.S. entities, Canada, Mexico, Corporate and Puerto Rico; Europe includes all U.K. entities; Asia-Pacific includes all Japanese entities and Australia; and Other includes Panama.

The accounting policies of the operating segments are the same as those described in Note 2 to the consolidated financial statements in the
Companys 2006 Annual Report on Form 10-K. Segment operating results are measured based on operating income (loss). Intersegment net sales are accounted for on an arms length pricing basis.



|                                    |  |              |           |   |        |   |              |  |   |        |   |               |   |       |              |   |           |       |  |   |         |   |  |   |           |  
|----------------------------------- |  | ------------ | --------- | - | ------ | - | ------------ |  | - | ------ | - | ------------- | - | ----- | ------------ | - | --------- | ----- |  | - | ------- | - |  | - | --------- | -
|(in thousands)                      |  | NorthAmerica |           |   | Europe |   | Asia-Pacific |  |   | Other  |   | TotalSegments |   |       | Eliminations |   |           | Total | 
|Thirteen weeks ended July 1, 2007   |  |              |           |   |        |   |              |  |   |        |   |               |   |       |              |   |           |       |  |   |         |   |  |   |           |  
|Net sales to external customers     |  | $            | 617,340   |   |        | $ | 25,397       |  | $ | 10,284 |   |               | $ | 2,964 |              | $ | 655,985   |       |  | $ | (5,749  | ) |  | $ | 650,236   |  
|Intersegment net sales              |  |              | 5,688     |   |        |   |             |  |   | 61     |   |               |   |      |              |   | 5,749     |       |  |   | (5,749  | ) |  |   |          |  
|Operating income                    |  |              | 29,841    |   |        |   | 1,364        |  |   | 1,057  |   |               |   | 41    |              |   | 32,303    |       |  |   | 22      |   |  |   | 32,325    |  
|Twenty-six weeks ended July 1, 2007 |  |              |           |   |        |   |              |  |   |        |   |               |   |       |              |   |           |       |  |   |         |   |  |   |           |  
|Net sales to external customers     |  | $            | 1,140,173 |   |        | $ | 48,317       |  | $ | 19,237 |   |               | $ | 6,374 |              | $ | 1,214,101 |       |  | $ | (9,843  | ) |  | $ | 1,204,258 |  
|Intersegment net sales              |  |              | 9,758     |   |        |   |             |  |   | 85     |   |               |   |      |              |   | 9,843     |       |  |   | (9,843  | ) |  |   |          |  
|Operating income                    |  |              | 15,747    |   |        |   | 1,904        |  |   | 1,688  |   |               |   | 230   |              |   | 19,569    |       |  |   | 19      |   |  |   | 19,588    |  
|Thirteen weeks ended July 2, 2006   |  |              |           |   |        |   |              |  |   |        |   |               |   |       |              |   |           |       |  |   |         |   |  |   |           |  
|Net sales to external customers     |  | $            | 628,289   |   |        | $ | 23,540       |  | $ | 21,949 |   |               | $ | 2,877 |              | $ | 676,655   |       |  | $ | (6,358  | ) |  | $ | 670,297   |  
|Intersegment net sales              |  |              | 6,325     |   |        |   |             |  |   | 33     |   |               |   |      |              |   | 6,358     |       |  |   | (6,358  | ) |  |   |          |  
|Operating (loss) income             |  |              | (213,581  | ) |        |   | 1,039        |  |   | 1,041  |   |               |   | 84    |              |   | (211,417  | )     |  |   | 78      |   |  |   | (211,339  | )
|Twenty-six weeks ended July 2, 2006 |  |              |           |   |        |   |              |  |   |        |   |               |   |       |              |   |           |       |  |   |         |   |  |   |           |  
|Net sales to external customers     |  | $            | 1,156,519 |   |        | $ | 42,815       |  | $ | 42,631 |   |               | $ | 5,993 |              | $ | 1,247,958 |       |  | $ | (10,425 | ) |  | $ | 1,237,533 |  
|Intersegment net sales              |  |              | 10,364    |   |        |   |             |  |   | 61     |   |               |   |      |              |   | 10,425    |       |  |   | (10,425 | ) |  |   |          |  
|Operating (loss) income             |  |              | (226,546  | ) |        |   | 1,030        |  |   | (156   | ) |               |   | 364   |              |   | (225,308  | )     |  |   | (151    | ) |  |   | (225,459  | )
|At July 1, 2007                     |  |              |           |   |        |   |              |  |   |        |   |               |   |       |              |   |           |       |  |   |         |   |  |   |           |  
|Total assets                        |  | $            | 1,321,278 |   |        | $ | 55,046       |  | $ | 39,792 |   |               | $ | 9,736 |              | $ | 1,425,852 |       |  | $ | (26,115 | ) |  | $ | 1,399,737 |  
|At December 31, 2006                |  |              |           |   |        |   |              |  |   |        |   |               |   |       |              |   |           |       |  |   |         |   |  |   |           |  
|Total assets                        |  | $            | 1,460,408 |   |        | $ | 72,838       |  | $ | 46,098 |   |               | $ | 9,527 |              | $ | 1,588,871 |       |  | $ | (44,956 | ) |  | $ | 1,543,915 |  

(Continued)



13



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(13) SEGMENTS (Continued)



|                                                                       |  |                                  |         |   |                                  |   |          |                                    |  |   |                                    |   |  |   |          |  
|---------------------------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | -------- | ---------------------------------- |  | - | ---------------------------------- | - |  | - | -------- | -
|(in thousands)                                                         |  | Thirteen weeksended July 1, 2007 |         |   | Thirteen weeksended July 2, 2006 |   |          | Twenty-six weeksended July 1, 2007 |  |   | Twenty-six weeksended July 2, 2006 |  
|Operating income:                                                      |  |                                  |         |   |                                  |   |          |                                    |  |   |                                    |   |  |   |          |  
|Total segment operating income                                         |  | $                                | 32,303  |   |                                  | $ | (211,417 | )                                  |  | $ | 19,569                             |   |  | $ | (225,308 | )
|Elimination of intersegment operating income                           |  |                                  | 22      |   |                                  |   | 78       |                                    |  |   | 19                                 |   |  |   | (151     | )
|Interest expense, net of interest income of $155, $40, $1,685 and $138 |  |                                  | (27,233 | ) |                                  |   | (22,010  | )                                  |  |   | (52,929                            | ) |  |   | (42,389  | )
|Prepayment penalty                                                     |  |                                  | (1,300  | ) |                                  |   |         |                                    |  |   | (1,300                             | ) |  |   |         |  
|Loss on debt extinguishment                                            |  |                                  | (3,962  | ) |                                  |   |         |                                    |  |   | (3,962                             | ) |  |   |         |  
|Foreign currency exchange gain, net                                    |  |                                  | 1,398   |   |                                  |   | 2,676    |                                    |  |   | 1,798                              |   |  |   | 3,710    |  
|Other income (expense), net                                            |  |                                  | 56      |   |                                  |   | (376     | )                                  |  |   | 95                                 |   |  |   | (503     | )
|                                                                       |  |                                  |         |   |                                  |   |          |                                    |  |   |                                    |   |  |   |          |  
|Total consolidated income (loss) before income taxes                   |  | $                                | 1,284   |   |                                  | $ | (231,049 | )                                  |  | $ | (36,710                            | ) |  | $ | (264,641 | )
|                                                                       |  |                                  |         |   |                                  |   |          |                                    |  |   |                                    |   |  |   |          |  



14



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(14) GUARANTOR NOTE



On February 27, 2004, with an effective date of February 22, 2004, the Company acquired SF
Holdings. The Company partially funded this acquisition through the issuance of the 8.5% Senior Subordinated Notes. The 8.5% Senior Subordinated Notes are fully and unconditionally guaranteed, on a joint and several basis, by certain of the
Companys subsidiaries. The consolidated guarantors include: Solo Cup Company (Solo Delaware), P.R. Solo Cup, Inc., SF Holdings Group, Inc., Solo Cup Operating Corporation (formerly known as Sweetheart Cup Company Inc.), Lily-Canada
Holding Corporation, Solo Cup (UK) Limited, Insulpak Holdings Limited and Solo Cup Europe Limited. The following financial information presents the guarantors and non-guarantors of the 8.5% Senior Subordinated Notes, in accordance with Rule 3-10 of
Regulation S-X.

The Statements of Operations for the thirteen weeks and twenty-six weeks ended July 2, 2006 include an adjustment
between Solo Delaware and Other Guarantors reflecting an immaterial correction of an error during these periods which related to deferred income taxes. For the thirteen weeks ended July 2, 2006, the income tax benefit for Solo Delaware was
increased by $0.6 million and the income tax provision for Other Guarantors was increased by $0.6 million. For the twenty-six weeks ended July 2, 2006, the income tax benefit for Solo Delaware was increased by $0.5 million and the income tax
provision for Other Guarantors was increased by $0.5 million. There was no impact to the consolidated income tax provision (benefit) or the Statement of Cash Flows during the periods effected.

(Continued)



15



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(14) GUARANTOR NOTE (Continued)



|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|---------------------------------------------------- |  | ---------------------------------------------------------------- | ------- | - | --------------- | - | --------- | -------------- |  | ------------ | ------- |  | ------------ | -------- | - |  | - | --------- | -
|                                                     |  | Condensed Consolidated Balance Sheet July 1, 2007 (In thousands) |        
|                                                     |  | SoloDelaware                                                     |         |   | OtherGuarantors |   |           | Non-Guarantors |  | Eliminations |         |  | Consolidated |         
|Assets                                               |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Current assets:                                      |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Cash and cash equivalents                            |  | $                                                                | 1,948   |   |                 | $ | 4,049     |                |  | $            | 18,393  |  | $            |         |   |  | $ | 24,390    |  
|Accounts receivable:                                 |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Trade                                                |  |                                                                  |        |   |                 |   | 198,002   |                |  |              | 33,957  |  |              |         |   |  |   | 231,959   |  
|Other                                                |  |                                                                  | 119,028 |   |                 |   | 18,324    |                |  |              | 537     |  |              | (132,286 | ) |  |   | 5,603     |  
|Inventories                                          |  |                                                                  |        |   |                 |   | 354,719   |                |  |              | 29,293  |  |              | (1,633   | ) |  |   | 382,379   |  
|Deferred income taxes                                |  |                                                                  | 95      |   |                 |   | 25,721    |                |  |              | 1,742   |  |              | 445      |   |  |   | 28,003    |  
|Prepaid expenses and other current assets            |  |                                                                  | 104     |   |                 |   | 43,740    |                |  |              | 7,183   |  |              |         |   |  |   | 51,027    |  
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Total current assets                                 |  |                                                                  | 121,175 |   |                 |   | 644,555   |                |  |              | 91,105  |  |              | (133,474 | ) |  |   | 723,361   |  
|Property, plant and equipment, net                   |  |                                                                  |        |   |                 |   | 548,408   |                |  |              | 50,107  |  |              |         |   |  |   | 598,515   |  
|Goodwill and intangible assets, net                  |  |                                                                  |        |   |                 |   | 34,841    |                |  |              | 257     |  |              |         |   |  |   | 35,098    |  
|Other assets                                         |  |                                                                  | 80,358  |   |                 |   | 9,366     |                |  |              | 3,317   |  |              | (50,278  | ) |  |   | 42,763    |  
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Total assets                                         |  | $                                                                | 201,533 |   |                 | $ | 1,237,170 |                |  | $            | 144,786 |  | $            | (183,752 | ) |  | $ | 1,399,737 |  
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Liabilities and Shareholders Equity                 |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Current liabilities:                                 |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Accounts payable                                     |  | $                                                                |        |   |                 | $ | 237,526   |                |  | $            | 25,446  |  | $            | (132,274 | ) |  | $ | 130,698   |  
|Accrued expenses and other current liabilities       |  |                                                                  | 18,891  |   |                 |   | 108,981   |                |  |              | 12,398  |  |              |         |   |  |   | 140,270   |  
|Short-term debt                                      |  |                                                                  |        |   |                 |   | 350       |                |  |              |        |  |              |         |   |  |   | 350       |  
|Current maturities of long-term debt                 |  |                                                                  | 6,500   |   |                 |   | 275       |                |  |              | 1,416   |  |              |         |   |  |   | 8,191     |  
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Total current liabilities                            |  |                                                                  | 25,391  |   |                 |   | 347,132   |                |  |              | 39,260  |  |              | (132,274 | ) |  |   | 279,509   |  
|Long-term debt, net of current maturities            |  |                                                                  | 144,501 |   |                 |   | 844,204   |                |  |              | 10,349  |  |              |         |   |  |   | 999,054   |  
|Deferred income taxes                                |  |                                                                  | 95      |   |                 |   | 38,234    |                |  |              | 4,193   |  |              |         |   |  |   | 42,522    |  
|Other liabilities                                    |  |                                                                  |        |   |                 |   | 82,916    |                |  |              | 18,590  |  |              |         |   |  |   | 101,506   |  
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Total liabilities                                    |  |                                                                  | 169,987 |   |                 |   | 1,312,486 |                |  |              | 72,392  |  |              | (132,274 | ) |  |   | 1,422,591 |  
|Shareholders equity (deficit):                      |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Common stock                                         |  |                                                                  |        |   |                 |   |          |                |  |              | 2,114   |  |              | (2,114   | ) |  |   |          |  
|Additional paid-in capital                           |  |                                                                  | 45,875  |   |                 |   | 209,120   |                |  |              | 39,168  |  |              | (39,168  | ) |  |   | 254,995   |  
|(Accumulated deficit) retained earnings              |  |                                                                  | (14,642 | ) |                 |   | (281,936  | )              |  |              | 25,507  |  |              | (10,196  | ) |  |   | (281,267  | )
|Accumulated other comprehensive income (loss)        |  |                                                                  | 313     |   |                 |   | (2,500    | )              |  |              | 5,605   |  |              |         |   |  |   | 3,418     |  
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Total shareholders equity (deficit)                 |  |                                                                  | 31,546  |   |                 |   | (75,316   | )              |  |              | 72,394  |  |              | (51,478  | ) |  |   | (22,854   | )
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  
|Total liabilities and shareholders equity (deficit) |  | $                                                                | 201,533 |   |                 | $ | 1,237,170 |                |  | $            | 144,786 |  | $            | (183,752 | ) |  | $ | 1,399,737 |  
|                                                     |  |                                                                  |         |   |                 |   |           |                |  |              |         |  |              |          |   |  |   |           |  

(Continued)



16



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(14) GUARANTOR NOTE (Continued)



|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|---------------------------------------------------- |  | ------------------------------------------------------------------------------------- | ------ | - | --------------- | - | -------- | -------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | -------- | -
|                                                     |  | Consolidated Statement of Operations Thirteen weeks ended July 1, 2007 (In thousands) |       
|                                                     |  | SoloDelaware                                                                          |        |   | OtherGuarantors |   |          | Non-Guarantors |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                            |  | $                                                                                     |       |   |                 | $ | 612,746  |                |  | $ | 64,453       |   |  | $            | (26,963 | ) |  | $ | 650,236  |  
|Cost of goods sold                                   |  |                                                                                       |       |   |                 |   | 524,809  |                |  |   | 55,612       |   |  |              | (26,857 | ) |  |   | 553,564  |  
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|Gross profit                                         |  |                                                                                       |       |   |                 |   | 87,937   |                |  |   | 8,841        |   |  |              | (106    | ) |  |   | 96,672   |  
|Selling, general and administrative expenses         |  |                                                                                       | 37     |   |                 |   | 61,790   |                |  |   | 4,110        |   |  |              | (62     | ) |  |   | 65,875   |  
|(Gain) loss on sale of property, plant and equipment |  |                                                                                       |       |   |                 |   | (1,540   | )              |  |   | 12           |   |  |              |        |   |  |   | (1,528   | )
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|Operating (loss) income                              |  |                                                                                       | (37    | ) |                 |   | 27,687   |                |  |   | 4,719        |   |  |              | (44     | ) |  |   | 32,325   |  
|Interest expense, net                                |  |                                                                                       | 353    |   |                 |   | 26,657   |                |  |   | 223          |   |  |              |        |   |  |   | 27,233   |  
|Prepayment penalty                                   |  |                                                                                       | 1,300  |   |                 |   |         |                |  |   |             |   |  |              |        |   |  |   | 1,300    |  
|Loss on debt extinguishment                          |  |                                                                                       | 3,962  |   |                 |   |         |                |  |   |             |   |  |              |        |   |  |   | 3,962    |  
|Foreign currency exchange gain, net                  |  |                                                                                       |       |   |                 |   | (836     | )              |  |   | (562         | ) |  |              |        |   |  |   | (1,398   | )
|Other expense (income), net                          |  |                                                                                       |       |   |                 |   | 4        |                |  |   | (60          | ) |  |              |        |   |  |   | (56      | )
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|(Loss) income before income taxes                    |  |                                                                                       | (5,652 | ) |                 |   | 1,862    |                |  |   | 5,118        |   |  |              | (44     | ) |  |   | 1,284    |  
|Income tax provision (benefit)                       |  |                                                                                       | 14     |   |                 |   | (3,512   | )              |  |   | 1,582        |   |  |              |        |   |  |   | (1,916   | )
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|Net (loss) income                                    |  | $                                                                                     | (5,666 | ) |                 | $ | 5,374    |                |  | $ | 3,536        |   |  | $            | (44     | ) |  | $ | 3,200    |  
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|                                                     | 
|                                                     |  | Consolidated Statement of Operations Thirteen weeks ended July 2, 2006 (In
thousands) |       
|                                                     |  | SoloDelaware                                                                          |        |   | OtherGuarantors |   |          | Non-Guarantors |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                            |  | $                                                                                     |       |   |                 | $ | 616,836  |                |  | $ | 75,856       |   |  | $            | (22,395 | ) |  | $ | 670,297  |  
|Cost of goods sold                                   |  |                                                                                       |       |   |                 |   | 537,332  |                |  |   | 63,501       |   |  |              | (22,524 | ) |  |   | 578,309  |  
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|Gross profit                                         |  |                                                                                       |       |   |                 |   | 79,504   |                |  |   | 12,355       |   |  |              | 129     |   |  |   | 91,988   |  
|Selling, general and administrative expenses         |  |                                                                                       | 98     |   |                 |   | 68,144   |                |  |   | 5,638        |   |  |              | (33     | ) |  |   | 73,847   |  
|Impairment of goodwill                               |  |                                                                                       |       |   |                 |   | 228,537  |                |  |   |             |   |  |              |        |   |  |   | 228,537  |  
|Loss on sale of property, plant and equipment        |  |                                                                                       |       |   |                 |   | 941      |                |  |   | 2            |   |  |              |        |   |  |   | 943      |  
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|Operating (loss) income                              |  |                                                                                       | (98    | ) |                 |   | (218,118 | )              |  |   | 6,715        |   |  |              | 162     |   |  |   | (211,339 | )
|Interest expense, net                                |  |                                                                                       | 3,323  |   |                 |   | 18,266   |                |  |   | 421          |   |  |              |        |   |  |   | 22,010   |  
|Foreign currency exchange (gain) loss, net           |  |                                                                                       |       |   |                 |   | (2,986   | )              |  |   | 310          |   |  |              |        |   |  |   | (2,676   | )
|Other expense (income), net                          |  |                                                                                       |       |   |                 |   | 423      |                |  |   | (47          | ) |  |              |        |   |  |   | 376      |  
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|(Loss) income before income taxes                    |  |                                                                                       | (3,421 | ) |                 |   | (233,821 | )              |  |   | 6,031        |   |  |              | 162     |   |  |   | (231,049 | )
|Income tax (benefit) provision                       |  |                                                                                       | (1,928 | ) |                 |   | 68,109   |                |  |   | 2,134        |   |  |              |        |   |  |   | 68,315   |  
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  
|Net (loss) income                                    |  | $                                                                                     | (1,493 | ) |                 | $ | (301,930 | )              |  | $ | 3,897        |   |  | $            | 162     |   |  | $ | (299,364 | )
|                                                     |  |                                                                                       |        |   |                 |   |          |                |  |   |              |   |  |              |         |   |  |   |          |  

(Continued)



17



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(14) GUARANTOR NOTE (Continued)



|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|--------------------------------------------- |  | --------------------------------------------------------------------------------------- | ------ | - | --------------- | - | --------- | -------------- |  | - | ------------ | - |  | ------------ | ------- | - |  | - | --------- | -
|                                              |  | Consolidated Statement of Operations Twenty-six weeks ended July 1, 2007 (In thousands) |       
|                                              |  | SoloDelaware                                                                            |        |   | OtherGuarantors |   |           | Non-Guarantors |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                     |  | $                                                                                       |       |   |                 | $ | 1,133,592 |                |  | $ | 119,163      |   |  | $            | (48,497 | ) |  | $ | 1,204,258 |  
|Cost of goods sold                            |  |                                                                                         |       |   |                 |   | 1,006,283 |                |  |   | 102,740      |   |  |              | (47,922 | ) |  |   | 1,061,101 |  
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|Gross profit                                  |  |                                                                                         |       |   |                 |   | 127,309   |                |  |   | 16,423       |   |  |              | (575    | ) |  |   | 143,157   |  
|Selling, general and administrative expenses  |  |                                                                                         | (541   | ) |                 |   | 117,140   |                |  |   | 8,445        |   |  |              | (86     | ) |  |   | 124,958   |  
|Loss on sale of property, plant and equipment |  |                                                                                         |       |   |                 |   | (1,215    | )              |  |   | (174         | ) |  |              |        |   |  |   | (1,389    | )
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|Operating income (loss)                       |  |                                                                                         | 541    |   |                 |   | 11,384    |                |  |   | 8,152        |   |  |              | (489    | ) |  |   | 19,588    |  
|Interest (income) expense, net                |  |                                                                                         | (491   | ) |                 |   | 52,938    |                |  |   | 482          |   |  |              |        |   |  |   | 52,929    |  
|Prepayment penalty                            |  |                                                                                         | 1,300  |   |                 |   |          |                |  |   |             |   |  |              |        |   |  |   | 1,300     |  
|Loss on debt extinguishment                   |  |                                                                                         | 3,962  |   |                 |   |          |                |  |   |             |   |  |              |        |   |  |   | 3,962     |  
|Foreign currency exchange gain, net           |  |                                                                                         |       |   |                 |   | (1,131    | )              |  |   | (667         | ) |  |              |        |   |  |   | (1,798    | )
|Other expense (income), net                   |  |                                                                                         |       |   |                 |   | 4         |                |  |   | (99          | ) |  |              |        |   |  |   | (95       | )
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|(Loss) income before income taxes             |  |                                                                                         | (4,230 | ) |                 |   | (40,427   | )              |  |   | 8,436        |   |  |              | (489    | ) |  |   | (36,710   | )
|Income tax (benefit) provision                |  |                                                                                         | (295   | ) |                 |   | (3,704    | )              |  |   | 2,825        |   |  |              |        |   |  |   | (1,174    | )
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|Net (loss) income                             |  | $                                                                                       | (3,935 | ) |                 | $ | (36,723   | )              |  | $ | 5,611        |   |  | $            | (489    | ) |  | $ | (35,536   | )
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|                                              | 
|                                              |  | Consolidated Statement of Operations Twenty-six weeks ended July 2, 2006 (In thousands) |       
|                                              |  | SoloDelaware                                                                            |        |   | OtherGuarantors |   |           | Non-Guarantors |  |   | Eliminations |   |  | Consolidated |        
|Net sales                                     |  | $                                                                                       |       |   |                 | $ | 1,140,536 |                |  | $ | 139,448      |   |  | $            | (42,451 | ) |  | $ | 1,237,533 |  
|Cost of goods sold                            |  |                                                                                         |       |   |                 |   | 1,014,913 |                |  |   | 119,087      |   |  |              | (42,276 | ) |  |   | 1,091,724 |  
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|Gross profit                                  |  |                                                                                         |       |   |                 |   | 125,623   |                |  |   | 20,361       |   |  |              | (175    | ) |  |   | 145,809   |  
|Selling, general and administrative expenses  |  |                                                                                         | 295    |   |                 |   | 129,878   |                |  |   | 10,804       |   |  |              | (53     | ) |  |   | 140,924   |  
|Impairment of goodwill                        |  |                                                                                         |       |   |                 |   | 228,537   |                |  |   |             |   |  |              |        |   |  |   | 228,537   |  
|Loss on sale of property, plant and equipment |  |                                                                                         |       |   |                 |   | 1,664     |                |  |   | 143          |   |  |              |        |   |  |   | 1,807     |  
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|Operating (loss) income                       |  |                                                                                         | (295   | ) |                 |   | (234,456  | )              |  |   | 9,414        |   |  |              | (122    | ) |  |   | (225,459  | )
|Interest expense, net                         |  |                                                                                         | 5,690  |   |                 |   | 35,782    |                |  |   | 917          |   |  |              |        |   |  |   | 42,389    |  
|Foreign currency exchange gain, net           |  |                                                                                         |       |   |                 |   | (3,683    | )              |  |   | (27          | ) |  |              |        |   |  |   | (3,710    | )
|Other expense (income), net                   |  |                                                                                         |       |   |                 |   | 547       |                |  |   | (44          | ) |  |              |        |   |  |   | 503       |  
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|(Loss) income before income taxes             |  |                                                                                         | (5,985 | ) |                 |   | (267,102  | )              |  |   | 8,568        |   |  |              | (122    | ) |  |   | (264,641  | )
|Income tax (benefit) provision                |  |                                                                                         | (2,816 | ) |                 |   | 54,370    |                |  |   | 3,324        |   |  |              |        |   |  |   | 54,878    |  
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  
|Net (loss) income                             |  | $                                                                                       | (3,169 | ) |                 | $ | (321,472  | )              |  | $ | 5,244        |   |  | $            | (122    | ) |  | $ | (319,519  | )
|                                              |  |                                                                                         |        |   |                 |   |           |                |  |   |              |   |  |              |         |   |  |   |           |  

(Continued)



18



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(14) GUARANTOR NOTE (Continued)



|                                                              |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- | -------- | - | --------------- | - | -------- | -------------- |  | - | ------------ | - |  | - | -------- | -
|                                                              |  | Condensed Consolidated Statement of Cash
Flows Twenty-six weeks ended July 1, 2007 (In thousands) |         
|                                                              |  | SoloDelaware                                                                                      |          |   | OtherGuarantors |   |          | Non-Guarantors |  |   | Consolidated |  
|CASH FLOWS FROM OPERATING ACTIVITIES                          |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|Net cash provided by operating activities                     |  | $                                                                                                 | 149,154  |   |                 | $ | (121,198 | )              |  | $ | 1,112        |   |  | $ | 29,068   |  
|CASH FLOWS FROM INVESTING ACTIVITIES                          |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|Purchase of property, plant and equipment                     |  |                                                                                                   |         |   |                 |   | (14,188  | )              |  |   | (719         | ) |  |   | (14,907  | )
|Proceeds from sale of property, plant and equipment           |  |                                                                                                   |         |   |                 |   | 128,422  |                |  |   | 1,042        |   |  |   | 129,464  |  
|                                                              |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|Net cash provided by investing activities                     |  |                                                                                                   |         |   |                 |   | 114,234  |                |  |   | 323          |   |  |   | 114,557  |  
|CASH FLOWS FROM FINANCING ACTIVITIES                          |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|Net (repayments) borrowings under revolving credit facilities |  |                                                                                                   | (62,800  | ) |                 |   |         |                |  |   | 3,158        |   |  |   | (59,642  | )
|Borrowings under the term notes                               |  |                                                                                                   | 50,000   |   |                 |   |         |                |  |   |             |   |  |   | 50,000   |  
|Repayments of the term notes                                  |  |                                                                                                   | (133,250 | ) |                 |   |         |                |  |   | (626         | ) |  |   | (133,876 | )
|Borrowings (repayments) of other debt                         |  |                                                                                                   |         |   |                 |   | 178      |                |  |   | (44          | ) |  |   | 134      |  
|Repayment of capital to parent                                |  |                                                                                                   | (2,007   | ) |                 |   |         |                |  |   |             |   |  |   | (2,007   | )
|Debt issuance costs                                           |  |                                                                                                   | (380     | ) |                 |   |         |                |  |   |             |   |  |   | (380     | )
|                                                              |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|Net cash (used in) provided by financing activities           |  |                                                                                                   | (148,437 | ) |                 |   | 178      |                |  |   | 2,488        |   |  |   | (145,771 | )
|Effect of exchange rate changes on cash                       |  |                                                                                                   |         |   |                 |   | 20       |                |  |   | 125          |   |  |   | 145      |  
|                                                              |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS          |  |                                                                                                   | 717      |   |                 |   | (6,766   | )              |  |   | 4,048        |   |  |   | (2,001   | )
|Cash and cash equivalents, beginning of period                |  |                                                                                                   | 1,231    |   |                 |   | 10,815   |                |  |   | 14,345       |   |  |   | 26,391   |  
|                                                              |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  
|Cash and cash equivalents, end of period                      |  | $                                                                                                 | 1,948    |   |                 | $ | 4,049    |                |  | $ | 18,393       |   |  | $ | 24,390   |  
|                                                              |  |                                                                                                   |          |   |                 |   |          |                |  |   |              |   |  |   |          |  

(Continued)



19



---

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(Unaudited)

(14) GUARANTOR NOTE (Continued)



|                                                              |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------- | -------- | - | --------------- | - | ------- | -------------- |  | - | ------------ | - |  | - | ------- | -
|                                                              |  | Condensed Consolidated Statement of Cash
Flows Twenty-six weeks ended July 2, 2006 (In thousands) |         
|                                                              |  | SoloDelaware                                                                                      |          |   | OtherGuarantors |   |         | Non-Guarantors |  |   | Consolidated |  
|CASH FLOWS FROM OPERATING ACTIVITIES                          |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|Net cash (used in) provided by operating activities           |  | $                                                                                                 | (113,950 | ) |                 | $ | 27,160  |                |  | $ | 6,912        |   |  | $ | (79,878 | )
|CASH FLOWS FROM INVESTING ACTIVITIES                          |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|Purchase of property, plant and equipment                     |  |                                                                                                   |         |   |                 |   | (28,171 | )              |  |   | (1,393       | ) |  |   | (29,564 | )
|Proceeds from sale of property, plant and equipment           |  |                                                                                                   |         |   |                 |   | 2,290   |                |  |   |             |   |  |   | 2,290   |  
|Decrease in cash in escrow                                    |  |                                                                                                   | 7,726    |   |                 |   |        |                |  |   |             |   |  |   | 7,726   |  
|                                                              |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|Net cash provided by (used in) investing activities           |  |                                                                                                   | 7,726    |   |                 |   | (25,881 | )              |  |   | (1,393       | ) |  |   | (19,548 | )
|CASH FLOWS FROM FINANCING ACTIVITIES                          |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|Net borrowings (repayments) under revolving credit facilities |  |                                                                                                   | 32,700   |   |                 |   |        |                |  |   | (575         | ) |  |   | 32,125  |  
|Borrowings under the term notes                               |  |                                                                                                   | 80,000   |   |                 |   |        |                |  |   |             |   |  |   | 80,000  |  
|Repayments of the term notes                                  |  |                                                                                                   | (3,250   | ) |                 |   |        |                |  |   | (852         | ) |  |   | (4,102  | )
|Repayments of other debt                                      |  |                                                                                                   |         |   |                 |   |        |                |  |   | (425         | ) |  |   | (425    | )
|Debt issuance costs                                           |  |                                                                                                   | (3,193   | ) |                 |   |        |                |  |   | (22          | ) |  |   | (3,215  | )
|                                                              |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|Net cash provided by (used in) financing activities           |  |                                                                                                   | 106,257  |   |                 |   |        |                |  |   | (1,874       | ) |  |   | 104,383 |  
|Effect of exchange rate changes on cash                       |  |                                                                                                   |         |   |                 |   | 129     |                |  |   | 53           |   |  |   | 182     |  
|                                                              |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|NET INCREASE IN CASH AND CASH EQUIVALENTS                     |  |                                                                                                   | 33       |   |                 |   | 1,408   |                |  |   | 3,698        |   |  |   | 5,139   |  
|Cash and cash equivalents, beginning of period                |  |                                                                                                   | 422      |   |                 |   | 6,616   |                |  |   | 5,049        |   |  |   | 12,087  |  
|                                                              |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  
|Cash and cash equivalents, end of period                      |  | $                                                                                                 | 455      |   |                 | $ | 8,024   |                |  | $ | 8,747        |   |  | $ | 17,226  |  
|                                                              |  |                                                                                                   |          |   |                 |   |         |                |  |   |              |   |  |   |         |  



20



---

|Item 2. | Managements Discussion and Analysis of Financial Condition and Results of Operation.
|------- | -------------------------------------------------------------------------------------

The following discussion should be read in conjunction with the consolidated financial statements and notes thereto appearing elsewhere in this report,
as well as consolidated financial statements and notes thereto and related management discussion and analysis of financial condition and results of operations included in our 2006 Annual Report on Form 10-K.

General

We are a leading global producer and marketer of disposable foodservice products and have served our industry for over 70 years. We manufacture one of the broadest product lines of cups, lids, food containers, plates,
bowls, portion cups, stirrers, straws, cutlery, napkins, placemats, tablecovers and food packaging containers in the industry, with products available in plastic, paper and foam. Our products are known for their quality, reliability and consistency.
Our products are marketed primarily under the Solo® and Sweetheart® brands, as well as Jack Frost®, Trophy®, Hoffmaster®, Sensations®
and Creative Expressions®. We are one of the leading suppliers of branded disposable cups and plastic plates and bowls to consumer customers in the United States. We also provide a line of
products to our customers under private label. We currently operate manufacturing facilities and distribution centers in North America, Japan, the United Kingdom and Panama, and we sell our products worldwide.

Thirteen Weeks Ended July 1, 2007 Compared to the Thirteen Weeks Ended July 2, 2006



|                                                     |  |                                  |         |   |                                  |   |          |                           |  |   |         |   |  |       |   
|---------------------------------------------------- |  | -------------------------------- | ------- | - | -------------------------------- | - | -------- | ------------------------- |  | - | ------- | - |  | ----- | --
|(in thousands)                                       |  | Thirteen weeksended July 1, 2007 |         |   | Thirteen weeksended July 2, 2006 |   |          | Favorable / (Unfavorable) | 
|                                                     |  |                                  | $       |   |                                  | % |         
|Net sales                                            |  | $                                | 650,236 |   |                                  | $ | 670,297  |                           |  | $ | (20,061 | ) |  | (3.0  | )%
|Cost of goods sold                                   |  |                                  | 553,564 |   |                                  |   | 578,309  |                           |  |   | 24,745  |   |  | 4.3   |   
|                                                     |  |                                  |         |   |                                  |   |          |                           |  |   |         |   |  |       |   
|Gross profit                                         |  |                                  | 96,672  |   |                                  |   | 91,988   |                           |  |   | 4,684   |   |  | 5.1   |   
|Selling, general and administrative expenses         |  |                                  | 65,875  |   |                                  |   | 73,847   |                           |  |   | 7,972   |   |  | 10.8  |   
|Goodwill impairment                                  |  |                                  |        |   |                                  |   | 228,537  |                           |  |   | 228,537 |   |  | *     |   
|(Gain) loss on sale of property, plant and equipment |  |                                  | (1,528  | ) |                                  |   | 943      |                           |  |   | 2,471   |   |  | *     |   
|                                                     |  |                                  |         |   |                                  |   |          |                           |  |   |         |   |  |       |   
|Operating income (loss)                              |  |                                  | 32,325  |   |                                  |   | (211,339 | )                         |  |   | 243,664 |   |  | 115.3 |   
|Interest expense, net                                |  |                                  | 27,233  |   |                                  |   | 22,010   |                           |  |   | (5,223  | ) |  | (23.7 | ) 
|Prepayment penalty                                   |  |                                  | 1,300   |   |                                  |   |         |                           |  |   | (1,300  | ) |  | *     |   
|Loss on debt extinguishment                          |  |                                  | 3,962   |   |                                  |   |         |                           |  |   | (3,962  | ) |  | *     |   
|Foreign currency exchange (gain) loss, net           |  |                                  | (1,398  | ) |                                  |   | (2,676   | )                         |  |   | (1,278  | ) |  | (47.8 | ) 
|Other (income) expense, net                          |  |                                  | (56     | ) |                                  |   | 376      |                           |  |   | 432     |   |  | 114.9 |   
|                                                     |  |                                  |         |   |                                  |   |          |                           |  |   |         |   |  |       |   
|Income (loss) before income taxes                    |  |                                  | 1,284   |   |                                  |   | (231,049 | )                         |  |   | 232,333 |   |  | 100.6 |   
|Income tax provision (benefit)                       |  |                                  | (1,916  | ) |                                  |   | 68,315   |                           |  |   | 70,231  |   |  | 102.8 |   
|                                                     |  |                                  |         |   |                                  |   |          |                           |  |   |         |   |  |       |   
|Net income (loss)                                    |  | $                                | 3,200   |   |                                  | $ | (299,364 | )                         |  | $ | 302,564 |   |  | 101.1 | % 
|                                                     |  |                                  |         |   |                                  |   |          |                           |  |   |         |   |  |       |   



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

Net sales decreased $20.1 million, or
3.0%, for the thirteen weeks ended July 1, 2007 compared to the prior year period. The decrease in net sales reflects a 5.2% decrease in sales volume partially offset by a 2.2% increase in average realized sales price as compared to the
thirteen weeks ended July 2, 2006. Lower sales volume is a result of the sale of certain assets in our Asia-Pacific business segment in December 2006, which represents approximately $11 million of the decline. In addition, the decrease in sales
volume is a reflection of our strategic initiatives across product categories as well as competitive pressure. The increase in average realized sales price primarily reflects a shift in product mix.



21



---

For the thirteen weeks ended July 1, 2007, gross profit increased $4.7 million compared to the prior
year period. As a percentage of net sales, gross profit was 14.9% in the second quarter of 2007 versus 13.7% in the second quarter of 2006. The increase in gross profit reflects an increase in average realized sales price, lower costs for freight
and distribution reflecting the benefit of our new information systems, partially offset by the impact of higher raw material costs. Cost improvements realized from the implementation of our performance improvement plan, reflecting greater
manufacturing efficiencies, were partially offset by the related professional fees.

Gross profit for the second quarter of 2006 included a
charge of $9.8 million for a reserve for spare parts and inventory obsolescence due to changes in estimate related to the valuation of these assets. These decreases in gross profit were offset by $22.1 million of curtailment gains related to
negotiated changes in postretirement benefits for certain active employees. Excluding these amounts, our gross profit percentage would have been 11.9% for the thirteen weeks ended July 2, 2006.

Selling, general and administrative expenses decreased $8.0 million for the thirteen weeks ended July 1, 2007 compared to the thirteen weeks ended
July 2, 2006. The improvement reflects severance costs of $7.3 million in the prior year period related to a reduction-in-force and the departure of certain senior executives. Selling, general and administrative expense in 2007 includes an
increase in performance-based compensation expense due to improved operating results during the period. This increase was more than offset by reduced administrative costs attributable to cost savings initiatives implemented during 2007 as part of
our performance improvement program. These cost savings were partially offset by professional fees related to this program. As a percentage of net sales, selling, general and administrative expenses were 10.1% in the second quarter of 2007 versus
11.0% in the second quarter of 2006.

For the thirteen weeks ended July 1, 2007, prepayment penalties were $1.3 million and the loss
on debt extinguishment was $4.0 million. The prepayment penalty was the result of our early extinguishment of the Second Lien. The loss on debt extinguishment represents the write off of unamortized deferred financing fees resulting from the
extinguishment of the Second Lien.

For the thirteen weeks ended July 1, 2007, interest expense, net increased $5.2 million compared
to the prior year period. This increase is primarily attributable to the borrowings under our Second Lien in addition to higher interest rates compared to the prior year period.

The income tax benefit of $1.9 million for the thirteen weeks ended July 1, 2007 represents the partial reversal of our valuation allowance, related
to deferred tax assets, resulting from the sale and leaseback of six properties during the period partially offset by an income tax provision primarily related to our foreign jurisdictions. During the thirteen weeks ended July 2, 2006, the
income tax provision of $68.3 million included a $105.0 million income tax charge to establish a valuation allowance for certain deferred tax assets partially offset by the tax benefit generated from domestic operations.



22



---

Twenty-Six Weeks Ended July 1, 2007 Compared to the Twenty-Six Weeks Ended July 2, 2006



|                                                     |  |                                    |           |   |                                     |   |           |                           |  |   |         |   |  |       |   
|---------------------------------------------------- |  | ---------------------------------- | --------- | - | ----------------------------------- | - | --------- | ------------------------- |  | - | ------- | - |  | ----- | --
|(in thousands)                                       |  | Twenty-six weeksended July 1, 2007 |           |   | Twenty-six weeks ended July 2, 2006 |   |           | Favorable / (Unfavorable) | 
|                                                     |  |                                    | $         |   |                                     | % |          
|Net sales                                            |  | $                                  | 1,204,258 |   |                                     | $ | 1,237,533 |                           |  | $ | (33,275 | ) |  | (2.7  | )%
|Cost of goods sold                                   |  |                                    | 1,061,101 |   |                                     |   | 1,091,724 |                           |  |   | 30,623  |   |  | 2.8   |   
|                                                     |  |                                    |           |   |                                     |   |           |                           |  |   |         |   |  |       |   
|Gross profit                                         |  |                                    | 143,157   |   |                                     |   | 145,809   |                           |  |   | (2,652  | ) |  | (1.8  | ) 
|Selling, general and administrative expenses         |  |                                    | 124,958   |   |                                     |   | 140,924   |                           |  |   | 15,966  |   |  | 11.3  |   
|Impairment of goodwill                               |  |                                    |          |   |                                     |   | 228,537   |                           |  |   | 228,537 |   |  | *     |   
|(Gain) loss on sale of property, plant and equipment |  |                                    | (1,389    | ) |                                     |   | 1,807     |                           |  |   | 3,196   |   |  | *     |   
|                                                     |  |                                    |           |   |                                     |   |           |                           |  |   |         |   |  |       |   
|Operating income (loss)                              |  |                                    | 19,588    |   |                                     |   | (225,459  | )                         |  |   | 245,047 |   |  | 108.7 |   
|Interest expense, net                                |  |                                    | 52,929    |   |                                     |   | 42,389    |                           |  |   | (10,540 | ) |  | (24.9 | ) 
|Prepayment penalty                                   |  |                                    | 1,300     |   |                                     |   |          |                           |  |   | (1,300  | ) |  | *     |   
|Loss on debt extinguishment                          |  |                                    | 3,962     |   |                                     |   |          |                           |  |   | (3,962  | ) |  | *     |   
|Foreign currency exchange gain, net                  |  |                                    | (1,798    | ) |                                     |   | (3,710    | )                         |  |   | (1,912  | ) |  | (51.5 | ) 
|Other (income) expense, net                          |  |                                    | (95       | ) |                                     |   | 503       |                           |  |   | 598     |   |  | *     |   
|                                                     |  |                                    |           |   |                                     |   |           |                           |  |   |         |   |  |       |   
|Loss before income taxes                             |  |                                    | (36,710   | ) |                                     |   | (264,641  | )                         |  |   | 227,931 |   |  | 86.1  |   
|Income tax provision (benefit)                       |  |                                    | (1,174    | ) |                                     |   | 54,878    |                           |  |   | 56,052  |   |  | 102.1 |   
|                                                     |  |                                    |           |   |                                     |   |           |                           |  |   |         |   |  |       |   
|Net loss                                             |  | $                                  | (35,536   | ) |                                     | $ | (319,519  | )                         |  | $ | 283,983 |   |  | 88.9  | % 
|                                                     |  |                                    |           |   |                                     |   |           |                           |  |   |         |   |  |       |   



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

Net sales decreased $33.3 million, or
2.7%, for the twenty-six weeks ended July 1, 2007 compared to the prior year period. The decrease in net sales reflected a 4.8% decrease in sales volume partially offset by a 2.1% increase in average realized sales price as compared to the
twenty-six weeks ended July 2, 2006. The decrease in sales volume is primarily a result of lower sales volumes due to the sale of certain assets in our Asia-Pacific business segment in December 2006, which represents approximately $21 million
of the decline. In addition, the decrease in sales volume is also a reflection of our strategic initiatives across product categories as well as competitive pressure. The increase in average realized sales price primarily reflects a shift in product
mix.

For the twenty-six weeks ended July 1, 2007, gross profit decreased $2.7 million or 1.8% compared to the prior year period. As a
percentage of net sales, gross profit was 11.9% in 2007 versus 11.8% in 2006. The increase in gross profit reflects an increase in average realized sales price, lower costs for freight and distribution reflecting the benefit of our new information
systems, partially offset by the impact of higher raw material costs. Cost improvements realized from the implementation of our performance improvement plan, reflecting greater manufacturing efficiencies, were offset by the related professional
fees.

Gross profit in 2006 included a charge of $9.8 million for a reserve for spare parts and inventory obsolescence due to a change in
estimate related to the valuation of these assets. This decrease in gross profit was offset by $22.1 million of curtailment gains related to negotiated changes in postretirement benefits for certain active employees. Excluding these amounts, our
gross profit percentage would have been 10.8% for the twenty-six weeks ended July 2, 2006.

Selling, general and administrative
expenses decreased $16.0 million for the twenty-six weeks ended July 1, 2007 compared to the twenty-six weeks ended July 2, 2006. The improvement reflects severance costs of $7.3 million in the prior year period related to a
reduction-in-force and the departure of certain senior executives. Selling, general and administrative expense in 2007 also reflects an increase in performance-based compensation expense as well as an increase in professional fees related to our
performance improvement program and our debt reduction initiatives, which were



23



---

more than offset by reduced administrative costs attributable to cost savings initiatives implemented during 2007. As a percentage of net sales, selling,
general and administrative expenses were 10.4% in 2007 versus 11.4% in 2006.

For the twenty-six weeks ended July 1, 2007, interest
expense, net increased $10.5 million compared to the prior year period. This increase is primarily attributable to the borrowings under our Second Lien in addition to higher interest rates compared to the prior year period.

For the twenty-six weeks ended July 1, 2007, prepayment penalties were $1.3 million and the loss on debt extinguishment was $4.0 million. The
prepayment penalty was the result of our early extinguishment of the Second Lien. The loss on debt extinguishment represents the write off of unamortized deferred financing fees resulting from the extinguishment of the Second Lien.

The income tax benefit of $1.2 million for the twenty-six weeks ended July 1, 2007 represents the partial reversal of our valuation allowance,
related to deferred tax assets, resulting from the sale and leaseback of six properties during the period partially offset by an income tax provision primarily related to our foreign jurisdictions. For our domestic operations, the tax benefit
generated from the loss incurred during the period was largely offset by a corresponding increase in the valuation allowance; therefore, a minimal net domestic tax benefit was recognized. During the twenty-six weeks ended July 2, 2006, the
income tax provision of $54.9 million included a $105.0 million income tax charge to establish a valuation allowance for certain deferred tax assets partially offset by the tax benefit generated from domestic operations.

Liquidity and Capital Resources

The Company relies
on cash flows from operations and revolving credit borrowings to finance its working capital requirements and capital expenditures. Net cash provided by operating activities during the twenty-six weeks ended July 1, 2007 was $29.1 million
compared to net cash used in operating activities of $79.9 million during the twenty-six weeks ended July 2, 2006. Working capital decreased $18.3 million to $443.9 million at July 1, 2007 from $462.2 million at December 31, 2006.
During the twenty-six weeks ended July 1, 2007, working capital was positively impacted by a decrease in accounts receivable primarily driven by the receipt of vendor rebate payments. The decrease in working capital also reflects lower
inventory balances offset by a parcel of land which was classified to assets held for sale during the period. The lower inventory reflects the impact of various initiatives designed to reduce inventory levels, including our new order management
system.

Net cash provided by investing activities during the twenty-six weeks ended July 1, 2007 was $114.6 million compared to net
cash used in investing activities of $19.5 million during the twenty-six weeks ended July 2, 2006. The increase was primarily driven by the proceeds from the sale-leaseback transaction of approximately $130.0 million, described below, and lower
capital expenditures.

Capital expenditures during the twenty-six weeks ended July 1, 2007 were $14.9 million compared to $29.6
million during the twenty-six weeks ended July 2, 2006. The decrease in capital spending reflects prior year expenditures for our new order management system. The lower spending in 2007 also reflects a planned shift of capital expenditures to
the third and fourth quarters. Capital expenditures were primarily funded by borrowings under our revolving credit facilities. For the remainder of 2007, the Company intends to rely on cash provided by operations and the revolving credit facilities
for its capital expenditures.

In June 2007, we entered into a lease agreement in conjunction with the sale of six of our manufacturing
facilities. We received proceeds of $130.0 million that were used to retire our Second Lien Credit Agreement dated March 31, 2006, as amended (the Second Lien). Upon the sale of the six properties, we immediately leased them back
pursuant to a 20-year term lease (the Lease). The Lease contains four five-year renewal term options.

The Lease is
non-cancelable. Annual rent for the six properties is approximately $11.7 million, payable on a quarterly basis, with a provision for a 2% annual rent escalation. The Company is responsible for, among other things, operating costs, maintenance,
replacement and repair costs for the properties.

The Lease provides that in the event of a change in control of the Company, Landlord
consent is required if the successor tenant does not meet certain credit criteria. The Lease also contains standard default terms and conditions as



24



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well as certain cross-default provisions if the Company fails to cure a principal or interest payment default under its Credit Agreement dated
February 27, 2004, as amended (the First Lien), or upon the acceleration of the Companys First Lien or the indenture governing its 8.5% Senior Subordinated Notes.

Net cash used in financing activities during the twenty-six weeks ended July 1, 2007 was $145.8 million compared to net cash provided by financing
activities of $104.4 million during the twenty-six weeks ended July 2, 2006. During the twenty-six weeks ended July 1, 2007, the net cash used in financing activities was driven by the repayment of our $130.0 million Second Lien.

Long-term debt

The
following is a summary of our long-term debt at July 1, 2007 (in thousands):



|                                            |  |              |          
|------------------------------------------- |  | ------------ | ---------
|                                            |  | July 1, 2007
|Long-term debt:                             |  |              |          
|8.5% Senior Subordinated Notes(1)           |  | $            | 325,000  
|First Lien Facility  Term Loan             |  |              | 628,875  
|First Lien Facility  Revolver              |  |              | 39,800   
|Canadian Credit Facility  Term Loan        |  |              | 8,501    
|Canadian Credit Facility  Revolver         |  |              | 3,207    
|Capital lease obligations                   |  |              | 1,862    
|                                            |  |              |          
|Total long-term debt                        |  |              | 1,007,245
|Less - Current maturities of long-term debt |  |              | 8,191    
|                                            |  |              |          
|Long-term debt, net of current maturities   |  | $            | 999,054  
|                                            |  |              |          

The following is a summary of our committed revolving credit facilities at July 1, 2007 (in
thousands):



|                          |  |                  |         |                    |   |                      |  |                    |        |  |   |       
|------------------------- |  | ---------------- | ------- | ------------------ | - | -------------------- |  | ------------------ | ------ |  | - | ------
|                          |  | CommitmentAmount |         | AmountsOutstanding |   | Letters ofCredit (2) |  | UnusedCapacity (3)
|First Lien Facility:      |  |                  |         |                    |   |                      |  |                    |        |  |   |       
|Revolving facility        |  | $                | 150,000 |                    | $ | 39,800               |  | $                  | 26,867 |  | $ | 83,333
|Canadian Credit Facility: |  |                  |         |                    |   |                      |  |                    |        |  |   |       
|Revolving facility        |  |                  | 11,755  |                    |   | 3,207                |  |                    |       |  |   | 8,548 
|                          |  |                  |         |                    |   |                      |  |                    |        |  |   |       
|                          |  | $                | 161,755 |                    | $ | 43,007               |  | $                  | 26,867 |  | $ | 91,881
|                          |  |                  |         |                    |   |                      |  |                    |        |  |   |       



|(1) | From time-to-time, and in accordance with any applicable securities laws, the
Companys principal shareholders or their affiliates may enter the market to purchase or sell Notes.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



|(2) | Availability of the credit
facilities is reduced by letters of credit issued under the facilities.
|--- | --------------------------------------------------------------------------------------------------



|(3) | In addition to the unused
capacity under our revolving facilities, the term loan under our Canadian credit facility had additional borrowing availability of CAD $7.4 million (approximately $6.9 million) as of July 1, 2007.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Second Lien Facility

On
March 31, 2006, we entered into a senior secured second lien credit agreement, which was subsequently amended by Amendment No. 1, dated October 13, 2006, and by Amendment No. 2, dated December 22, 2006 (collectively, the
Second Lien). The Second Lien provided a secured term loan facility in the amount of $80.0 million (Second Term Loan). The proceeds of the Second Term Loan were used to reduce amounts outstanding under our revolving credit
facility under the First Lien. The principal amount was due upon maturity in February 2012.

On January 5, 2007, we borrowed an
additional $50.0 million under our Second Lien, which was provided by Amendment No. 2, and used the proceeds to pay down amounts outstanding under the revolving credit facility under our First Lien, as required by Amendment No. 2.

In June 2007, we repaid the Second Lien with the proceeds of our sale-leaseback transaction described above.



25



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First Lien Facility

On February 27, 2004, we entered into credit facilities comprised of a $150.0 million revolving credit facility maturing in 2010 and a $650.0 million term loan facility maturing on February 27, 2011
(collectively, the First Lien). The revolving credit facility is principally used for working capital purposes, and the term loan facility was used to finance our acquisition of SF Holdings and related transactions. The First Lien was
subsequently amended by Amendment No. 1 dated as of March 31, 2005, Amendment No. 2 dated as of October 14, 2005, Amendment No. 3 and waiver dated as of March 27, 2006, Amendment No. 4 and waiver dated as of
October 13, 2006 and Amendment No. 5 dated as of December 22, 2006.

The terms of the First Lien, as amended, provide for
scheduled principal payments of $1.625 million per quarter through November 27, 2010, with a balloon payment of $606.125 million due on February 27, 2011. All mandatory quarterly payments have been made to date.

We were in compliance with all financial covenants under the First Lien during the thirteen weeks ended July 1, 2007.

During the thirteen weeks ended July 1, 2007, the Company was not required to make a mandatory annual prepayment or any prepayments based on excess
cash flow, disposition of assets or extraordinary receipts.

Other Contingencies

We entered into agreements with the State of Illinois (State) and the City of Chicago (City) relating to the acquisition and
development of certain property of the Company located in the City. Pursuant to these agreements, the State and City provided certain grants to us, paid certain costs on our behalf and undertook certain obligations relating to the property. Under
these agreements, we are required to fulfill certain obligations relating to development of the property and retention of a certain number of employees. If these obligations are not fulfilled, we may be required to repay certain amounts granted or
paid by the City or the State, the net impact of which, we believe, would not be material to our business, financial condition, results of operations or cash flows. In the first quarter of 2007, the Company entered into a purchase and sale agreement
to sell the property. The purchase and sale agreement provides that, upon the closing of the sale, the obligations of the Company to the State and City will be satisfied or the Company will otherwise be released from such obligations.

Liquidity Outlook

We have recorded
net losses in each fiscal year since the fiscal year ended December 31, 2003. These losses, adjusted for non-cash operating costs such as depreciation and amortization, have not provided sufficient cash flow to offset our working capital needs.
The First Lien and the indenture governing our 8.5% Senior Subordinated Notes, impose certain restrictions upon our operations in the form of financial covenants and other terms and conditions that could limit our access to additional funding and
impair our ability to meet our obligations as they become due. While we have unutilized capacity under our credit facilities as of July 1, 2007, our ability to utilize this liquidity depends upon continuing compliance with financial covenants.

In order to help ensure continuing compliance with the covenants and provide necessary liquidity to operate our business and implement our
business strategies, our focus in 2007 is on improving operating results and cash flow. Our second quarter operating results show improvements, including positive cash flows from operations reflecting better working capital management.

We have also taken, and continue to take, a number of steps to maximize our near-term liquidity to meet our expected working capital needs, fund our
capital expenditure requirements and fulfill our lease and debt service obligations over the longer term. We repaid our Second Lien during June 2007 with the proceeds from the sale-leaseback transaction described above. We continue to evaluate
opportunities to pay down existing debt through sales of non-strategic assets; however, we will consider non-core asset sales only at prices and upon terms that are consistent with our view of the value of such assets.

We continue to make the operational improvements that we believe will provide needed long-term financial flexibility. Other necessary steps include
achieving targeted revenue enhancement and cost savings under our performance improvement program. This program was launched in December 2006 and we have implemented several of its initiatives in 2007.



26



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At July 1, 2007, the Companys outstanding borrowings under our First Lien, the 8.5% Senior
Subordinated Notes and foreign borrowings in the aggregate are approximately $1,007.2 million. Based on its estimates, management believes it will successfully execute one or more of its performance initiatives, such that we expect to stay in
compliance with all of our financial covenants. These initiatives include, but are not limited to, continued operational improvements and certain non-core asset sales. Accordingly, we have classified the outstanding balance of the First Lien on our
consolidated balance sheet based on its stated maturity.

Management believes that cash generated by operations, amounts available under
our credit facilities and funds generated from non-core asset sales should be sufficient to meet our expected operating needs, planned capital expenditures, payments in conjunction with our lease commitments and debt service requirements for the
remainder of 2007. We expect that our total 2007 capital expenditures will be in the range of $40-$50 million and contributions to our defined benefit plans will be approximately $12 million.

For the remainder of 2007, we expect that raw material costs will likely continue to be a source of uncertainty for our industry.

Net Operating Loss Carryforwards

As of July 1,
2007, we had approximately $279.0 million of U.S. federal tax net operating loss carryforwards that expire between 2021 and 2026. Approximately $77.0 million of such carryforwards are subject to the provisions of Internal Revenue Code
Section 382. During 2006, we assessed the realizability of deferred tax assets, including our net operating loss carryforwards, and concluded that it was more likely than not that the Company would not fully realize the benefits of its existing
deferred tax assets and increased our valuation allowance by $118.1 million. To date in 2007, we have further increased the valuation allowance by $12.7 million. 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

The Companys critical accounting estimates are described in its 2006 Annual Report on Form 10-K filed with the Securities and Exchange Commission on
March 30, 2007. There have been no changes to the critical accounting estimates since that filing.



27



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Forward-Looking Statements

This report contains 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, estimated net sales, projected costs,
projected cost savings, projected synergies, 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. They rely on a number of assumptions concerning future events and are subject to a number of risks and uncertainties, many of which are outside our control, that could cause actual results to differ materially from
such statements.

A description of the risk factors associated with our business is contained in Item 1A, Risk Factors, of
our Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 30, 2007 and incorporated herein by reference and in our other filings made from time to time with the Securities and Exchange Commission. These
cautionary statements are to be used as a reference in connection with any forward-looking statements. These risks and uncertainties include, but are not limited to:



| |  | the impact of our significant debt on our financial health and operating flexibility;
|- |  | -------------------------------------------------------------------------------------



| |  | interest rate fluctuations and continuing debt obligations;
|- |  | -----------------------------------------------------------



| |  | risks related to generating sufficient cash from operations and completing certain transactions to satisfy our financial covenants under our debt agreements;
|- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our ability to realize cost savings, synergies or revenue enhancements that we anticipated with the successful completion of the Companys performance
improvement program;
|- |  | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | any material weaknesses in our internal control over financial reporting that are not remedied effectively;
|- |  | -----------------------------------------------------------------------------------------------------------



| |  | the impact of any downgrades in our corporate ratings on the credit terms offered to us by our vendors and the interest rates offered to us if we require additional
capital or financing;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | an increased possibility of legal or regulatory proceedings as a result of our restatement of our consolidated financial statements;
|- |  | ------------------------------------------------------------------------------------------------------------------------------------



| |  | impact of competitive products and pricing and fluctuations in demand for our products;
|- |  | ---------------------------------------------------------------------------------------



| |  | the effect of general economic and competitive business conditions in the disposable food service products industry;
|- |  | --------------------------------------------------------------------------------------------------------------------



| |  | adverse effects on business operations if we are unable to adequately manage, integrate and implement our order management and enterprise resource planning systems;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | further consolidation in the food service and retail industries;
|- |  | ----------------------------------------------------------------



| |  | availability of and increases in raw material, energy and manufacturing costs;
|- |  | ------------------------------------------------------------------------------



| |  | effect of changing federal, state, foreign and local environmental and occupational health and safety laws and regulations and increased regulation of certain raw
materials used in our products;
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | risks related to conducting business in multiple foreign jurisdictions, including foreign currency exchange rate fluctuations;
|- |  | ------------------------------------------------------------------------------------------------------------------------------



| |  | our ability to improve existing products and develop new products;
|- |  | ------------------------------------------------------------------



28



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| |  | loss of key management and personnel;
|- |  | -------------------------------------



| |  | potential conflicts of interest between our note holders and the stockholders of SCIC;
|- |  | --------------------------------------------------------------------------------------



| |  | loss of one or more of our principal customers;
|- |  | -----------------------------------------------



| |  | impact of any prolonged work stoppage;
|- |  | --------------------------------------



| |  | diversion of management attention from other business activities in the event we pursue additional acquisition(s) or undertake divestitures in the future; and
|- |  | --------------------------------------------------------------------------------------------------------------------------------------------------------------



| |  | our ability to enforce our intellectual property and other proprietary rights.
|- |  | ------------------------------------------------------------------------------



|Item 3. | Quantitative and Qualitative Disclosures About Market Risk.
|------- | -----------------------------------------------------------

In the ordinary course of business, the Company is exposed to market risk-sensitive instruments, which consist primarily of interest rate risk associated with its variable rate debt. The First Lien facility and the Canadian credit facility
both include a revolving and term credit facility, which bear interest at a variable rate.

The interest rate on the First Lien facility is
either Eurodollar rate based (1, 2, 3 or 6 months) plus a margin or the banks base rate plus a margin, whichever the Company selects. For the term loan, the margin varies from 2.75% to 3.50% on the Eurodollar rate borrowing and from 1.75% to
2.50% on the base rate borrowings depending on the Companys public debt ratings. At July 1, 2007, the variable rate on term loan borrowings was 8.84% and the interest rate on borrowings under the revolving credit facility was 10.02%.

The Canadian revolving and term loan facilities bear interest at the Canadian prime rate plus 0.25% or the Canadian bankers
acceptance rate plus 1.50%, at the Companys option. As of July 1, 2007, borrowings under the revolving credit facility and the term loan carried effective interest rates of 6.22%.

As of July 1, 2007, we had interest rate cap agreements with a total notional amount of $265.0 million. Under these agreements, the Company receives
variable interest rate payments when the 3-month LIBOR rises above 6.0%. These agreements are in effect through September 14, 2007 for a total notional amount of $245.0 million and October 12, 2007 for a total notional amount of $20.0
million.

In June 2007, the Company entered into three forward-starting receive-variable, pay-fixed interest rate swaps with a total
notional amount of $150.0 million. The variable rate of interest received is the Eurodollar rate. The fixed rate of interest paid is 5.3765%. The swap agreements are effective from August 28, 2007 through February 28, 2011.

As of July 1, 2007, the outstanding indebtedness under the First Lien facility was $668.7 million and $83.3 million was available under the First
Lien facility. As of July 1, 2007, the outstanding indebtedness under the Canadian credit facility was CAD $12.4 million (approximately $11.7 million), CAD $9.1 million (approximately $8.5 million) was available under the revolving credit
facility and the term loan under the Canadian credit facility had additional borrowing availability of CAD $7.4 million (approximately $6.9 million).

Based upon the information above, the Companys annual pre-tax loss would decrease by approximately $6.4 million for each one-percentage point decrease in the interest rates applicable to the variable rate debt.
Additionally, the Companys annual pre-tax loss would increase by approximately $5.5 million for a one-percentage point increase in the interest rates applicable to the variable rate debt, which includes the effect of the interest rate cap
agreements. The level of the exposure to interest rate movements may fluctuate significantly as a result of changes in the amount of indebtedness outstanding under the revolving credit facilities.



29



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|Item 4. | Controls and Procedures.
|------- | ------------------------

Disclosure Controls and Procedures

On October 16, 2006, after conducting a review that revealed a material weakness in our internal control over financial reporting,
we restated certain of our previously issued consolidated financial statements by filing Form 10-K/A for the fiscal year ended January 1, 2006 and Form 10-Q/A for the thirteen weeks ended April 2, 2006. In our Form 10-Q for the thirteen
weeks ended July 2, 2006, also filed on October 16, 2006, certain of our previously issued consolidated financial statements for the thirteen and twenty-six weeks ended July 3, 2005 were restated. Our management, including our chief
executive officer and chief financial 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 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, as of July 1, 2007, as a result of the material weaknesses described below, our disclosure controls and procedures were
not effective.

A material weakness in internal control over financial reporting (as defined in Exchange Act Rule 12b2 and Rule
102 of Regulation SX), is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the registrants annual or interim
financial statements will not be prevented or detected on a timely basis.

In assessing the effectiveness of our disclosure controls and
procedures as of July 1, 2007, management has identified two material weaknesses in the Companys internal control over financial reporting. These material weaknesses had been previously reported in Item 9A of Part II of the
Companys 2006 Annual Report on Form 10-K. During the thirteen weeks ended July 1, 2007, management continued efforts to improve our internal control over financial reporting, in particular to remediate the material weaknesses reported as
of December 31, 2006. Our management believes that these efforts are reasonably likely to constitute a material improvement in the design and effectiveness of our internal control over financial reporting and to remediate the material
weaknesses.

(1) Control Environment. As of July 1, 2007, we did not maintain an effective control environment. The control
environment is the atmosphere in which a companys internal control procedures operate. Management believes that this material weakness continues related to our failure to adequately train our personnel in the application of GAAP commensurate
with our financial reporting requirements as documented in our policies. During the thirteen weeks ended July 1, 2007, we made substantial progress in the publication and implementation of financial policies and began providing the required
training on the application of the new policies on a Company-wide basis. Management has substantially completed the documentation, review and publication of our accounting policies as of July 1, 2007.

(2) Controls over the Spare Parts Inventory Accuracy and Valuation. As of July 1, 2007, we had published policies and procedures designed to
ensure that the accounting records for spare parts inventories were accurately maintained and the accounting for the reserve for obsolete spare parts inventory was consistent among all operating units. However, management believes that this material
weakness continues related to our failure to complete the implementation of the policies and procedures. Management has identified opportunities to improve controls in this area, including standardizing the timing, format and process for conducting
cycle counts over the spare parts inventory, and ensuring the accuracy of the data and system reports that support the reserve calculation. Management continues to expect to fully implement the policies and procedures throughout the rest of the
year.

In light of the material weaknesses in our internal control over financial reporting described above, we performed additional
analysis and other post-closing procedures to ensure our consolidated financial statements are prepared in accordance with GAAP. We implemented certain changes in internal control over financial reporting, as described below, and will continue to
implement remediation efforts, as described above. Accordingly, we believe that the consolidated financial statements included in this Form 10-Q fairly present in all material respects our financial position, results of operations and cash flows for
the periods presented.



30



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Changes in Disclosure Controls and Procedures

Controls over the Review and Reconciliation of Period End Balances. As of April 1, 2007, we did not have effective policies and procedures
fully documented and implemented requiring the accounting management team to formally and timely review and reconcile certain accrued liabilities and valuation reserves as part of the monthly close process. During the second quarter of 2007, we
completed the implementation of our process to identify our key balance sheet accounts, complete the required reconciliations and document that our reviews were taking place in a timely manner. Management conducted and documented the required review
and reconciliation processes over the material balance sheet accounts during the periodic financial close on a formal and consistent basis throughout the quarter.

As a result of these changes in internal control over financial reporting, management believes that the material weakness in internal control over the review and reconciliation of period end balances no longer exists
as of July 1, 2007.

PART II - OTHER INFORMATION



|Item 1. | Legal Proceedings.
|------- | ------------------

We are involved in various
claims and legal actions arising from time to time in the ordinary course of business. While the outcome of these claims and actions cannot be predicted with certainty, management believes that we are not a party to any pending legal proceedings,
the ultimate disposition of which would have a material adverse effect on the Companys business, consolidated financial position, results of operations, or liquidity.



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

We do not believe there have been
any material changes in our risk factors as previously disclosed in our Annual Report on Form 10-K for the year ended December 31, 2006 filed with the Securities and Exchange Commission on March 30, 2007.



|Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds.
|------- | ------------------------------------------------------------

Not applicable.



|Item 3. | Defaults Upon Senior Securities.
|------- | --------------------------------

Not applicable.



|Item 4. | Submission of Matters to a Vote of Security Holders.
|------- | ----------------------------------------------------

Not applicable.



|Item 5. | Other Information.
|------- | ------------------

Not applicable.



|Item 6. | Exhibits.
|------- | ---------



|       |  |                                                                                                                                                                                                                         
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.36 |  | 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.
|       | 
|31.1   |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                     
|       | 
|31.2   |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                     
|       | 
|32.1   |  | Certification of Chief 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 Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                      

---

| | Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



31



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SIGNATURES

Pursuant to the requirements 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 COMPANY
|                      |  |  | 
|Date: August 14, 2007 |  |  |  | By:              |  | /s/ Robert D. Koney, Jr.
|                      |  |  |  |                  |  |                          |  | Robert D. Koney, Jr.                                                    
|                      |  |  |  |                  |  |                          |  | Executive Vice President and Chief Financial Officer                    
|                      |  |  |  |                  |  |                          |  | (Principal Financial and Accounting Officer and Duly Authorized Officer)



32



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INDEX OF EXHIBITS FILED WITH OR

INCORPORATED BY REFERENCE INTO

FORM 10-Q OF SOLO CUP COMPANY

FOR THE THIRTEEN WEEKS ENDED JULY 1, 2007



|       |  |                                                                                                                                                                                                                         
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.36 |  | 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.
|       | 
|31.1   |  | Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                     
|       | 
|31.2   |  | Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                     
|       | 
|32.1   |  | Certification of Chief 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 Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.                                                                      

---

| | Confidential treatment has been requested with respect to certain portions of this exhibit. Omitted portions have been filed separately with the Securities and Exchange Commission.
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



33