================================================================================

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

                                    FORM 10-K

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

                  For the fiscal year ended September 29, 2002

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

                         Commission file number 33-91600

                            SWEETHEART HOLDINGS INC.*
             (Exact name of registrant as specified in its charter)

               Delaware                                      06-1281287
(State or other jurisdiction of                           (I.R.S. Employer
incorporation or organization)                           Identification No.)

10100 Reisterstown Road, Owings Mills, Maryland                21117
 (Address of principal executive office)                     (Zip Code)

        Registrant's telephone number, including area code: 410/363-1111

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

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

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

         The aggregate  market value of the voting stock of the Registrant  held
by  non-affiliates  of the  Registrant as of December 9, 2002.  Not  Applicable.

There is no market for the Common Stock of the Registrant.

    The number of shares outstanding of the Registrant's common stock as of
                               December 9, 2002:
Sweetheart Holdings Inc. Class A Common Stock, $0.01 par value- 1,046,000 shares
Sweetheart Holdings Inc. Class B Common Stock, $0.01 par value- 4,393,200 shares

* The  Registrant  is the guarantor of the 12.0% Senior  Subordinated  Notes due
2003  of  Sweetheart  Cup  Company  Inc.,  a  wholly  owned  subsidiary  of  the
Registrant.

================================================================================
<PAGE>
                                     PART I



Item 1.  BUSINESS


General

         Sweetheart  Holdings Inc.  ("Sweetheart  Holdings"),  together with its
wholly owned subsidiary  Sweetheart Cup Company Inc. ("Sweetheart Cup"), and its
subsidiaries,  (the "Company"),  believes it is one of the largest producers and
marketers  of  disposable  foodservice  and  food  packaging  products  in North
America.  In  Fiscal  2002,  the  Company  had net sales of  approximately  $1.3
billion.  The Company sells a broad line of disposable  paper,  plastic and foam
foodservice and food packaging  products,  consisting  primarily of cups,  lids,
plates,  bowls,  napkins  and  containers.  The  Company  markets  its  products
primarily to leading foodservice distributors, national quick service chains and
catering companies,  and retailers.  The Company markets its products under both
private label brands and the Company's well-recognized Sweetheart(R), Trophy(R),
Sensations(R), Hoffmaster(R) and Lily(R) brands.

         In addition,  the Company  designs,  manufactures  and leases container
filling and lidding equipment for use by dairies and other food processors. This
equipment is specifically designed by the Company to fill and seal the Company's
containers in its  customers'  plants.  The Company also sells paper  converting
equipment used primarily in the manufacture of paper cups and food containers.

         With over 90 years of operating history,  the Company has a diversified
customer  base  of over  5,000  customers,  consisting  primarily  of (i)  major
foodservice  distributors,  such as Sysco Corporation and U.S. Foodservice Inc.,
who serve national and regional institutional  foodservice customers, (ii) quick
service chains, such as McDonald's Corporation and Burger King Corporation,  and
convenience  stores,  such as 7 Eleven,  Inc., (iii) national catering services,
such  as  ARAMARK   Corporation  and  Sodexho   Marriott   Services,   and  (iv)
supermarkets,  mass merchants,  warehouse clubs and other retailers, such as The
Great  Atlantic & Pacific Tea Company,  Inc.,  The Kroger Co.,  Target Stores (a
division of Dayton Hudson Corp.),  Wal-Mart Stores, Inc. and Price-Costco,  Inc.
The  Company's  food  packaging  containers  and lids are sold to  national  and
regional  dairy and food companies such as Ben & Jerry's  Homemade,  Inc.,  Blue
Bell Creameries, L.P., Dean Foods Co. and Prairie Farms Dairy, Inc.

         Following  the  terrorist  attacks of September  11, 2001,  the Company
experienced  a decline in sales  prices and  volumes due to a number of factors,
including a significant reduction in business and leisure travel and a reduction
in foodservice and away-from-home dining. In addition to these factors affecting
our sales,  our  implementation  of  certain  consolidation  initiatives  caused
temporary  inefficiencies within our manufacturing  operations,  which increased
our cost structure and reduced our gross margin during recent periods.

         As  a  result  of  these  factors,   together  with  difficult   market
conditions,  the Company has been unable to refinance  its $110 million of 12.0%
senior  subordinated  notes  due 2003 (the  "$110  million  Senior  Subordinated
Notes") on terms  acceptable to the Company.  Unless current  market  conditions
change  significantly,  the Company may not have sufficient capital to refinance
the $110  million  Senior  Subordinated  Notes when they mature on  September 1,
2003.  Moreover,  if the Company is unable to complete  the  exchange  offer and
consent  solicitation  or  refinance,  repay or extend the $110  million  Senior
Subordinated  Notes prior to March 1, 2003, its senior revolving credit facility
with Bank of America,  N.A.,  as agent (the "Senior  Credit  Facility"),  unless
otherwise amended, will become due and payable.

         On  November  21,  2002,  the  Company  filed with the  Securities  and
Exchange Commission a Registration  Statement on Form S-4 relating to a proposed
offer to exchange newly issued $110 million

                                       2
<PAGE>
senior  subordinated  notes  due  2007  for  all  of  the  $110  million  Senior
Subordinated Notes and a consent  solicitation to eliminate and/or amend certain
restrictive  covenants and other  provisions  governing the $110 million  Senior
Subordinated  Notes.  The Company also  intends to solicit  consent to eliminate
and/or amend certain  restrictive  covenants and other provisions  governing the
Company's $120 million of 9 1/2% Senior  Subordinated  Notes due 2007 (the "$120
million  Senior  Subordinated  Notes").  The Company  believes that the exchange
offer and  consent  solicitations  will  provide it with the  necessary  time to
execute its business plan and to further evaluate its strategic alternatives.

         The Company is also  evaluating  various  strategic  options  which may
include a restructuring of its business debt and capital  structure,  including,
among  other  things,  the public  sale or private  placement  of debt or equity
securities,  joint venture  transactions,  sale of assets,  new borrowings,  the
refinancing of the Company's  existing debt agreements,  open market  purchases,
tender  offers or exchange  offers and consent  solicitations  of the  Company's
outstanding  securities.  There can be no assurances that any of these strategic
options will be consummated.

         Pursuant  to an  agreement,  dated as of March  22,  2002 by and  among
Dennis Mehiel, the Company's  Chairman and Chief Executive Officer,  SF Holdings
Group, Inc. ("SF Holdings"),  American  Industrial  Partners Management Company,
Inc.,  American  Industrial  Partners  Capital  Fund L.P.  ("AIP") and the other
stockholders of the Company signatory to that certain  Stockholders'  Agreement,
dated as of March 12, 1998,  (together with AIP and any permitted  transferee of
shares  of Class A common  stock or Class B common  stock of the  Company  ("the
Shares"), the "Original  Stockholders"),  all of the outstanding Shares not held
by SF Holdings (which  consisted of 52% of the voting stock of the Company) were
delivered to SF Holdings and exchanged for 96,000 shares of Class C common stock
of SF Holdings.  As a result,  SF Holdings became the sole  beneficial  owner of
100% of the issued and outstanding capital stock of the Company. In addition and
in connection  therewith,  the Stockholders  Agreement and related stockholders'
right agreement were terminated.

         On March 25,  2002,  pursuant to an Agreement  and Plan of Merger,  The
Fonda Group,  Inc., a company  under common  control,  ("Fonda") was merged (the
"Merger")  with and into  Sweetheart  Cup, with  Sweetheart Cup as the surviving
entity. In connection with the Merger, all of the assets and operations of Fonda
were assigned to, and all  liabilities of Fonda were assumed by,  Sweetheart Cup
by operation of law and all of the outstanding shares of Fonda were cancelled.


Manufacturing and Sales

         The Company has  historically  sold its  Sweetheart  products under the
Sweetheart(R) brands as well as private labels to two principal customer groups,
institutional   foodservice  and  food  packaging  customers.  The  Company  has
historically sold its Fonda products under the Fonda(R) brand and private labels
to  consumer  and  institutional   foodservice   customers.   The  Company  also
manufactures  and distributes  disposable  party goods products  directly to the
specialty  (party)  channel  of the  Company's  consumer  market.  Institutional
foodservice  customers  primarily  purchase  disposable hot and cold drink cups,
lids, food containers,  plates, bowls, cutlery, straws, napkins, placemats, food
trays and  tablecovers.  The Company sells these  products  directly and through
distributors  and  national  accounts.  Consumer  customers  primarily  purchase
disposable  hot  and  cold  drink  cups,  paper  plates,   bowls,   napkins  and
tablecovers.   The  Company   sells  these   consumer   products   primarily  to
supermarkets,  mass  merchants,  warehouse  clubs,  discount  chains  and  other
retailers.  Food  packaging  customers  primarily  directly  purchase  paper and
plastic containers for the dairy and food processing industries.  Food packaging
customers also lease filling and packaging machines designed and manufactured by
the Company that fill and seal the Company's  containers  in their  plants.  The
Company's  specialty  (party)  channel  customers  purchase  disposable  plates,
napkins,  cups,  tablecovers  and a variety  of  accessory  decor  items sold in
ensembles or separately to party goods retailers, mass merchants, drugstores and
supermarkets.  The Company also  manufactures and markets its products in Canada
and Mexico principally to institutional national accounts.

                                       3
<PAGE>
         The  Company  markets to both the  distributor  and  end-use  customer,
tailoring  programs to meet the specific needs of the Company's target customers
and markets.  The Company sells these programs,  which include products,  price,
promotional  and  merchandising  materials,  and  training  and  sales/marketing
coverage, through a direct sales organization. The Company supports this process
by developing innovative new products, materials and processes, while leveraging
the Company's strong brand recognition and national network of manufacturing and
distribution centers. The Company focuses on two major customer groups, national
account quick service restaurants and distributors.


Products

         The Company  manufactures a broad line of disposable  products.  Paper,
foam and  plastic  cups,  lids and  straws  represent  the  largest  part of the
Company's North American operations. The largest single product type within this
category is cups,  which the Company  offers in various sizes (ranging from 3 to
64  ounces)  for both  hot and  cold  beverages.  Brand  names of the  Company's
principal beverage service products include Sweetheart(R),  Lily(R),  Trophy(R),
PreferenceTM,    Jazz(R),   Gallery(R),    Clarity(R),   Lumina(R),   Sherri(R),
ClearLight(R) and GoCupsTM.

         The  Company  also  offers a variety  of other  disposable  foodservice
products,  including paper,  foam, and plastic plates,  paper and plastic bowls,
portion cups, food containers,  food trays,  paper and plastic tubs,  containers
and hinged  foam  containers.  The  Company  believes  it is one of the  largest
manufacturers  of paper tubs for chicken,  popcorn and  take-out  foods in North
America. Munchie(R), Flexstyle(R), Highlights(R), MaximizersTM and Scoop Cup are
some of the Company's carry-out service brands.

         The  Company  sells  paper  plates and bowls to both the  consumer  and
institutional  markets. These products include coated and uncoated white plates,
decorated  plates and bowls and are  offered in a range of sizes.  Uncoated  and
coated paper plates are considered  commodity items and are generally  purchased
by  cost-conscious  consumers for everyday use. Printed and decorated plates and
bowls,  which are  typically  sold in lower count  packages,  are  purchased for
everyday use as well as for parties and seasonal  celebrations such as Halloween
and Christmas.  The Company also sells,  under its  Sensations(R)  brand,  party
packages which include solid color paper plates with coordinating napkins, cups,
cutlery and tablecovers.

         Napkins  are sold  under  the  Company's  Hoffmaster(R),  Fonda(R)  and
Sensations(R)  brands,  as well as under national  distributor  private  labels.
Napkin  products  range from  decorated-colored,  multi-ply  napkins  and simple
custom printed  napkins  featuring an end-user's  name or logo to fully printed,
graphic-intensive  napkins for the  premium  paper  goods  sector.  Tablecovers,
ranging from economy to premium  product  lines,  are sold in various prints and
colors under the  Hoffmaster(R),  Linen-Like(R),  Windsor(R)  and  Sensations(R)
brands. The Company also sells placemats, traycovers, paper doilies, lunch bags,
paper  portion  cups and fluted  products in a variety of shapes and sizes.  The
Company  manufactures  unique  decorated  placemats  in a variety of shapes.  In
addition,  the  Company  uses  a  proprietary  technology  to  produce  non-skid
traycovers  that  serve  the  particular  needs of the  airline  and  healthcare
industries.

         The  Company  also  manufactures  paperboard  and  tissue  party  goods
products under the Company's Paper Art(R), Party Creations(R) ,Touch of Color(R)
and Creative Expressions(R) brand names.

         The Company's other products include Flex-E-FormTM  straight-wall paper
manufacturing technology and Flex-GuardTM, a spiral wound tamper-evident lid. In
addition,  the Company provides foodservice  customers with retail packages sold
through retailers under various Sweetheart(R) and private label brands.

                                       4
<PAGE>
         To enhance product sales, the Company designs,  manufactures and leases
container  filling and lidding equipment to dairies and other food processors to
package food items in the  Company's  containers  at their  plants.  The Company
leases its filling  and lidding  equipment  to  customers  under the trade names
Auto-Pak, Flex-E-Fill(R) and FoodPac(R). The Company manufactures this equipment
in the  Company's  machine shop and  assembly  plants  located in Owings  Mills,
Maryland  and  Kensington,  Connecticut.  Products  packaged  in  the  Company's
machines  include ice cream,  factory-filled  jacketed ice cream cones,  cottage
cheese, yogurt and squeeze-up desserts.

         The Company also sells paper converting equipment used primarily in the
manufacture  of paper  cups and food  containers.  The  Company's  product  line
includes four sizes of cup formers,  insulated  paper cup  machinery,  paper lid
machines,  high speed  blanking  machines,  flat rim machinery and other related
equipment.  The Company also sells spare parts, engineering services and machine
rehabilitation services and stamped sheet metal parts used for protective covers
and assemblies.


Production

         The Company  manufactures its products at 23 plants located  throughout
North America. See "--Properties." The Company's manufacturing processes consist
of  converting  processed  paperboard,  paper,  tissue and resin  into  finished
disposable foodservice products through the use of four principal  technologies:
paper forming, thermoforming, injection molding, and foam extrusion and forming.
The Company provides its customers with a wide variety of printing (flexography,
letter press,  paper  lithography  and plastic dry offset)  options across these
various  technologies.  The Company operates  approximately 300 printing presses
capable of producing  high quality,  customized  graphics to meet its customers'
requirements.  The Company believes that its ability to manufacture a broad line
of products  enables it to provide its customers  with numerous  choices to meet
their  needs.  The  Company's  plants  operate  on a  variety  of  manufacturing
schedules.  Paper operations generally run five days per week, 24 hours per day,
with Saturday  scheduled as an overtime day when needed to meet customer demand.
Plastic  operations  generally run seven days per week, 24 hours per day. Due to
the  seasonality  of customer  demand,  the  Company's  production  is generally
greater during late spring and summer than during fall and winter.

         The  Company  initiated  its  consolidation  program in June 2001 which
included  the  rationalization,  consolidation  and process  improvement  of its
manufacturing  facilities.  The Company believes the  consolidation  program has
improved the efficiency of its manufacturing sites without any adverse impact on
customer service levels.


Raw Materials and Suppliers

         Raw  materials are a critical  part of the  Company's  cost  structure.
Principal  raw  materials  for the  Company's  paper  operations  include  solid
bleached  sulfate  paperboard,  napkin  tissue,  bond paper and waxed bond paper
obtained  directly  from  major  North  American  manufacturers,  along with wax
adhesives,  coating and inks. The Company purchases  paperboard,  napkin tissue,
bond paper and waxed bond paper in "jumbo"  rolls and then  prints and  converts
them into smaller rolls, or blanks, for processing into final products. The main
raw material for the Company's plastic operations is plastic resin (polystyrene,
polypropylene  and high and low density  polyethylene)  purchased  directly from
major petrochemical  companies and other resin suppliers.  The Company processes
and forms resin into cups,  cutlery,  meal service  products,  straws,  lids and
containers.  The  Company  manufactures  foam  products  by melting  polystyrene
plastic  and  adding a  blowing  agent  that is then  passed  through  a die and
extruded  into  sheets of plastic  foam  material.  The foam is then formed into
cups, bowls and plates.

                                       5
<PAGE>
         The Company  purchases a substantial  portion of its  requirements  for
paperboard  and  resin  from  several  suppliers.  The  Company  has a number of
potential  suppliers  for most of its raw  materials  and believes  that current
sources of supply are sufficient to meet the Company's requirements.


Competition

         The  Company  sells  its  products  in extremely  competitive  markets.
Because of the low barriers to entry for new competitors,  competition has been,
and may continue to be,  intense as new entrants try to gain market  share.  The
Company's competitors include large multinational  companies as well as regional
manufacturers.  Some of the  Company's  competitors  have greater  financial and
other resources than the Company.  The marketplace for the Company's products is
fragmented.  The Company has competitors who compete across the full line of its
products,  as well as those  who  compete  against  only  some of the  Company's
products.  A few of the Company's  competitors also produce paper or plastic raw
materials  and have  greater  access  to  financial  and  other  resources.  The
Company's  primary  competitors in the  institutional  and consumer  foodservice
markets include Dart Container Corporation,  Dixie Foodservice Corp. (a division
of Georgia  Pacific  Corp.),  Solo Cup Co.,  International  Paper  Food  Service
Business (a division of International  Paper Co.), AJM Packaging Corp.,  Dopaco,
Inc.  ("Dopaco"),  Genpak LLC and Pactiv  Corporation.  Major competitors in the
food packaging  market  include Landis  Plastics,  Inc.,  Interbake  Foods Inc.,
Polytainer,  Ltd. and Hutamaki, Inc. The Company's competitors in the disposable
tissue  and  other  specialty   products  and  party  goods  accessory  products
categories include Duni Corp.,  Erving Paper Products Inc.,  American Tissue and
Wisconsin Tissue Mills Inc. (a subsidiary of SCA).


Customers

         The  Company  believes  that  it  holds leading market positions in the
institutional  and consumer  foodservice and food packaging  markets for each of
the Company's major product categories.  The Company has a diverse and extensive
customer base of over 5,000 customers located throughout North America,  in both
the institutional and consumer markets. In the institutional market, the Company
sells to many major foodservice  distributors and chain accounts,  such as Sysco
Corporation,  U.S.  Foodservice Inc., Bunzl USA, Inc.,  McDonald's  Corporation,
Burger King Corporation,  ARAMARK Corporation and Sodexho Marriott Services.  In
the consumer market the Company sells to supermarkets, mass merchants, warehouse
clubs  and  other  retail  stores,  such  as The  Kroger  Co.,  The  Stop & Shop
Supermarket  Co.,  Topco  Associates  Inc.,  The Great  Atlantic  & Pacific  Tea
Company,  Inc.,  Publix  Supermarkets  Inc., Target Stores (a division of Dayton
Hudson Corp.),  Wal-Mart Stores, Inc.,  Price-Costco,  Inc. and Staples Inc. The
Company  has  developed  long-term  relationships  with  many  of the  Company's
customers.

         The Company  markets its products  primarily to customers in the United
States.  During Fiscal 2002,  approximately  7.0% of net sales were derived from
sales to  customers in Mexico,  Canada and Latin  America.  During  Fiscal 2002,
sales to the Company's five largest customers represented approximately 26.7% of
net sales  with no one  customer  accounting  for more than 10%.  The  Company's
operating results could be adversely affected if the Company were to lose one or
more of its  large  national  customers.  The  Company  believes  it has  strong
relationships  with its major  national  accounts which have been developed over
many years.


Environmental Matters

         The  Company  and its  operations  are  subject  to  comprehensive  and
frequently  changing  federal,   state,  foreign  and  local  environmental  and
occupational  health  and  safety  laws  and  regulations,  including

                                       6
<PAGE>
laws and regulations  governing emissions of air pollutants,  discharge of waste
and storm water and the disposal of hazardous wastes.  The Company is subject to
liability for the investigation  and remediation of environmental  contamination
(including  contamination caused by other parties) at properties that it owns or
operates  and at other  properties  where the Company or its  predecessors  have
arranged for the disposal of hazardous  substances.  As a result, the Company is
involved  from  time to time in  administrative  and  judicial  proceedings  and
inquiries relating to environmental  matters.  The Company believes that, except
as  noted  below,   there  are  currently  no  material  pending   environmental
investigations  at the  Company's  plants  or  sites.  However,  there can be no
assurance  that the Company will not be involved in any such  proceeding  in the
future  and that any  amount  of future  clean up costs and other  environmental
liabilities  will not be  material.  The Company  spent less than  $200,000  for
environmental  compliance  in Fiscal  2002 and  anticipates  spending  less than
$200,000 for environmental compliance in Fiscal 2003.

         The  Company   cannot   predict  what   environmental   legislation  or
regulations  will be enacted  in the  future,  how  existing  or future  laws or
regulations will be administered or interpreted or what environmental conditions
may be found to exist at the Company's facilities. Enactment of stricter laws or
regulations or a stricter  interpretation  of existing laws and  regulations may
require the Company to make  additional  expenditures  by the  Company,  some of
which could be material.

         The  Clean  Air Act  mandates  the  phase  out of  certain  refrigerant
compounds;  therefore, the Company must upgrade or retrofit air conditioning and
chilling  systems during the next few years.  The Company has decided to replace
units as they  become  inefficient  or  unserviceable.  The  Company  expects to
complete the replacement of all such units within the next five to ten years, at
an estimated total cost of less than $1.3 million.

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

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

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


Technology and Research

         The Company  maintains  facilities for the  development of new products
and product  line  extensions  in Owings  Mills,  Maryland  and  facilities  for
machinery  design  in  Kensington,   Connecticut.   A

                                       7
<PAGE>
staff of engineers and technicians is responsible for product  quality,  process
control,  improvement  of existing  products,  development  of new  products and
processes,  and  technical  assistance  in adhering to  environmental  rules and
regulations.

         During Fiscal 2001, the Company initiated a program to automate certain
of its  manufacturing  operations  which were  completed in Fiscal  2002.  These
initiatives  include the implementation of a robotic transfer and sorting system
for finished goods;  automatic  packaging;  information  systems  upgrades;  and
enhancements to printing processes. Also, the Company initiated new products and
production  capabilities  which will enable its plastics  operations  to address
existing and emerging market opportunities.

         The  Company  tests new  product  concepts  at  facilities  located  in
Oshkosh,  Wisconsin;  Appleton,  Wisconsin and St. Albans, Vermont.  Management,
supervisors and experienced operators are responsible for plant safety,  product
quality, process control,  improvement of existing products,  development of new
products and  processes and  technical  assistance in adhering to  environmental
rules and regulations.

         The Company strives to expand its proprietary manufacturing technology,
further  automate and  streamline  its  manufacturing  operations,  improve upon
safety and performance, and develop improved manufacturing processes, equipment,
and product designs.


Employees

         At September 29, 2002,  the Company  employed  7,777  persons,  of whom
6,416 persons were hourly  employees.  Approximately  92.5% of the employees are
located at facilities in the United States. The Company currently has collective
bargaining  agreements  in  effect at its  facilities  in  Appleton,  Wisconsin;
Augusta,  Georgia;  Indianapolis,  Indiana;  Kensington,  Connecticut;  Oshkosh,
Wisconsin;   St.   Albans,   Vermont;   Springfield,   Missouri;   Williamsburg,
Pennsylvania;   Scarborough,   Ontario,  Canada  and  Cuautitlan,   Mexico.  The
collective   bargaining   agreements  cover  all  production,   maintenance  and
distribution  hourly-paid  employees  at  each  facility  and  contain  standard
provisions  relating  to,  among other  things,  management  rights,  grievance,
procedures,  strikes and lockouts,  seniority and union rights.  As of September
29, 2002,  approximately 33.6% of the Company's hourly employees were covered by
these  collective  bargaining  agreements.  The current  expiration dates of the
Appleton; Augusta; Indianapolis;  Kensington;  Oshkosh; St. Albans; Springfield;
Williamsburg;   Scarborough,   Ontario;  and  Cuautitlan  collective  bargaining
agreements are March 31, 2006, October 30, 2005, December 1, 2007, September 30,
2004, June 2, 2007, January 31, 2005, February 29, 2004, June 11, 2004, November
30,  2003 and  December  31,  2002,  respectively.  The  Company  considers  its
relationship with its employees to be good.


Item 2.  PROPERTIES

         The  Company  operates 41  manufacturing  and  distribution  facilities
located  throughout  North  America.  All of the Company's  facilities  are well
maintained,   in  good  operating  condition  and  suitable  for  the  Company's
operations.   The  table  below  provides  summary  information   regarding  the
properties owned or leased by the Company.

                                       8
<PAGE>
<TABLE>
<CAPTION>
                                                                        Size
                                                      Type of       (Approximate        Owned/
                   Location                         Facility (1)    square feet)        Leased         Lease Expiration
                   --------                         ------------    ------------        ------         ----------------
<S>                                                 <C>             <C>                 <C>            <C>
Appleton, Wisconsin (2 facilities)...............       M/W            271,000           O
                                                        W              132,000           L             May 30, 2003

Augusta, Georgia (2 facilities)..................       M/W            339,000           O
                                                        M/W             75,000           O

Chicago, Illinois (2 facilities).................       M/W            874,000           O
                                                        W              786,000           L             February 28, 2003

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

Cuautitlan, Mexico (3 facilities)................       M               24,000           L             September 3, 2009
                                                        W               26,000           L             September 3, 2009
                                                        W               29,000           L             April 1, 2010

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

El Cajon, California (2 facilities)..............       M/W            101,000           L             June 30, 2011
                                                        W               82,000           L             July 31, 2010

Glens Falls, New York............................       M/W             59,000           O

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

Hampstead, Maryland..............................       W            1,035,000           L             May 30, 2020

Indianapolis, Indiana............................       W              735,000           L             June 30, 2007

Kensington, Connecticut (4 facilities)...........       M/W             96,000           L(2)          May 15, 2010
                                                        M/W            112,000           L(2)          May 15, 2010
                                                        W               30,000           L(2)          May 15, 2010
                                                        W               34,000           L             May  31, 2003

Lafayette, Georgia...............................       M/W            197,000           L(3)          April 30, 2003

Lakeland, Florida................................       M/W             45,000           L             January 31, 2004

North Andover, Massachusetts.....................       M/W            249,000           L             October 31, 2020

North Las Vegas, Nevada (2 facilities)...........       M/W             99,000           L             August 31, 2010
                                                        W               96,000           L(4)          August 31, 2010

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

Oshkosh, Wisconsin...............................       M/W            486,000           O

Owings Mills, Maryland (2 facilities)............       M/W          1,495,000           O
                                                        M/W            258,000           O

St. Albans, Vermont (3 facilities)...............       M              115,000           O
                                                        W              186,000           L             March 31, 2007
                                                        W               28,000           L             August 31, 2003

Scarborough, Ontario, Canada                            M/W            400,000           O
(2 facilities)...................................       W              125,000           L             March 31, 2003

Somerville, Massachusetts........................       M/W            193,000           O(5)

Springfield, Missouri (2 facilities).............       M/W            924,000           O
                                                        W              415,000           L(6)          March 25, 2003

Williamsburg, Pennsylvania (2 facilities)........       M              130,000           L(7)          June 26, 2005
                                                        W                8,000           L             June 26, 2005
</TABLE>

                                       9
<PAGE>
(1)  M-Manufacturing;  W-Warehouse;  M/W-Manufacturing  and  Warehouse  in  same
     facility. (2) Subject to a purchase option which expires May 15, 2005.
(3)  Although  operations  at this facility  ceased as of December 1, 2002,  the
     Company will continue to occupy this facility until April 30, 2003.
(4)  The  Company  is  subleasing  46,485  square  feet  to a third  party  from
     September 1, 2000 until  September 20, 2004.  (5) On February 20, 2001, the
     Company's Board of Directors approved plans for the closure and sale of the
     Somerville,
     Massachusetts  facility.  The Company  has  reclassified  this  facility to
     assets held for sale and is in the process of selling this facility.
(6) The Company is subleasing 127,104 square feet to a third party from November
1, 2001 until March 25, 2003. (7) Subject to capital lease.  (See Note 18 of the
Notes to the Financial Statements)

         The Company leases a warehouse in Augusta,  Georgia which was closed in
the latter  part of Fiscal  1997.  The  Company  is  currently  subleasing  such
property  to a third  party and plans to sublet the  property  through the lease
termination  date of March 31,  2008.  The Company  also leases a  manufacturing
facility from its Chairman and Chief Executive Officer in Jacksonville,  Florida
which was closed in Fiscal  1998.  The  Company  is  currently  subleasing  such
property  to a third  party and plans to sublet the  property  through the lease
termination date of December 31, 2014. See "--Certain  Relationships and Related
Transactions".

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


Item 3.  LEGAL PROCEEDINGS

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

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

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

                                       10
<PAGE>
Item 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         NONE


                                     PART II


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

         Sweetheart  Cup is a wholly owned  subsidiary of  Sweetheart  Holdings,
which is a  privately  held  corporation.  No equity  securities  of  Sweetheart
Holdings  or  Sweetheart  Cup  are  publicly  traded  or  registered  under  the
Securities  Exchange  Act of 1934,  as amended,  and there is no public  trading
market for the stock.

         Payment of cash dividends is restricted under the instruments governing
the Company's indebtedness. The Company has not paid cash dividends and does not
anticipate paying any cash dividends in the foreseeable future.

         As of December 9, 2002,  there was one holder of  Sweetheart  Holdings'
Class A Common Stock and Sweetheart Holdings' Class B Common Stock.


Item 6.  SELECTED HISTORICAL CONSOLIDATED FINANCIAL DATA

         Set forth below are selected historical  consolidated financial data of
the  Company  at the dates and for the fiscal  years  shown.  In June 2000,  the
Company completed a sale-leaseback transaction,  the proceeds of which were used
to retire certain existing  indebtedness.  Consequently,  operating  results for
Fiscal 2002, 2001 and 2000, as presented in the table below,  are not comparable
to  prior  periods.  The  selected  historical  consolidated  financial  data at
September 29, 2002 and September 30, 2001 and for Fiscal 2002, 2001 and 2000 are
derived from  historical  consolidated  financial  statements of the Company for
such  periods  that have been  audited  by  Deloitte & Touche  LLP,  independent
auditors and are included elsewhere herein. The selected historical consolidated
financial data at September 24, 2000,  September 26, 1999 and September 27, 1998
and for Fiscal 1999 and 1998 is derived from the audited historical consolidated
financial  statements  of the Company for such  periods  which are not  included
herein.

                                       11
<PAGE>
<TABLE>
<CAPTION>
                                                                            Fiscal(1)
                                               --------------------------------------------------------------------
(In thousands)                                     2002          2001          2000          1999        1998 (2)
                                               ------------  ------------  ------------  ------------  ------------
<S>                                            <C>           <C>           <C>           <C>           <C>
Statement of Operations Data  (3):
Net sales                                      $ 1,283,547   $ 1,316,672   $ 1,276,617   $ 1,182,004   $ 1,184,168
Cost of sales                                    1,130,264     1,143,806     1,090,286     1,022,800     1,057,100
                                               ------------  ------------  ------------  ------------  ------------
  Gross profit                                     153,283       172,866       186,331       159,204       127,068
Selling, general and administrative expenses       114,823       113,231       112,559       118,479       122,918
Restructuring charge (credit) (4)                    1,893           504         1,153          (512)          897
Asset impairment expense(5)                            593         2,244             -             -         6,828
Other expense (income), net(6) (7)                   2,102        (9,836)       (4,943)       (1,563)       (2,966)
                                               ------------  ------------  ------------  ------------  ------------
  Operating income (loss)                           33,872        66,723        77,562        42,800          (609)
Interest expense, net                               37,079        38,919        52,608        58,413        58,656
                                               ------------  ------------  ------------  ------------  ------------
  Income (loss) before taxes, minority
    interest, cumulative effect of change in
    accounting principle and extraordinary loss     (3,207)       27,804        24,954       (15,613)      (59,265)
Income tax  (benefit) expense                       (1,283)       11,220        10,096        (5,527)      (23,537)
Minority interest in subsidiary                        145            68             -             -             -
Cumulative effect of change in accounting
  principle(8)                                           -             -             -             -         1,511
Extraordinary loss, net(9)                           1,079             -           313             -             -
                                               ------------  ------------  ------------  ------------  ------------
  Net income (loss)                            $    (3,148)  $    16,516   $    14,545   $   (10,086)  $   (37,239)
                                               ============  ============  ============  ============  ============
Balance Sheet Data (at end of year):
  Cash and cash equivalents                    $     8,035   $    11,616   $     4,828   $     3,589   $    18,572
  Cash in escrow                                         -             8           300             -         5,464
  Working capital (deficiency)                     126,804       249,450       173,299       (96,045)      187,127
  Property, plant and equipment, net               252,491       260,666       254,844       374,666       403,375
  Total assets                                     820,843       855,173       805,273       842,975       878,198
  Total debt (10)                                  437,301       440,820       387,988       527,335       548,245
  Shareholder's equity                              47,237        56,130        45,074        29,946        36,196
</TABLE>

(1)  On  March  25,  2002,  Sweetheart  Cup  and  Fonda  entered  into a  merger
     transaction   that  has  been   accounted  for  in  a  manner   similar  to
     pooling-of-interests   and,   accordingly,   the  consolidated   financials
     statements have been restated for all periods presented.
(2)  Prior to  Fiscal  1999,  Sweetheart's  and  Fonda's  fiscal  year ends were
     September 30 and the last Sunday in July,  respectively.  In October  1998,
     both Sweetheart and Fonda changed their fiscal year ends to the last Sunday
     in September,  effective for Fiscal 1999. The data as of and for the fiscal
     year ended  September  27,  1998  represents  the  consolidated  results of
     Sweetheart and Fonda for their respective year ends.
(3)  The selected historical  consolidated  financial and operating data include
     the  operations  of the  Company  and each of its  acquisitions  since  the
     respective  dates  of such  acquisitions.  See  Note 7 of the  Notes to the
     Consolidated Financial Statements of the Company.
(4)  During Fiscal 2002, the Company established a restructuring reserve of $0.3
     million in conjunction  with the planned closure of its Lafayette,  Georgia
     facility from which 101 primarily  manufacturing  positions were eliminated
     and a  restructuring  reserve of $1.6 million in  conjunction  with planned
     consolidation  initiatives from which 475 primarily manufacturing positions
     were  eliminated.  In Fiscal  2001,  the Company  recorded a  restructuring
     reserve in conjunction with the consolidation of the former  administrative
     offices of Creative  Expressions  Group, Inc. ("CEG"),  an affiliate of the
     Company,  with its Oshkosh  administrative  offices.  In Fiscal  2000,  the
     Company established a restructuring reserve for severance and related costs
     for the elimination of its centralized  machine shop and for the closure of
     its Maspeth,  New York facility.  In Fiscal 1998, the Company established a
     restructuring  reserve  for  severance  and  related  costs for a workforce
     reduction   which  was  adjusted  in  1999  and  for  the  closure  of  its
     Jacksonville,  Florida and  Indianapolis,  Indiana  facilities  and the St.
     Albans, Vermont administrative offices.
(5)  In Fiscal 2002,  2001 and 1998,  the Company  recorded an asset  impairment
     expense  as a result of a review of the  carrying  value of  certain of its
     long-lived assets.
(6)  Other  (income)  expense,  net in Fiscal 2002,  Fiscal 2001 and Fiscal 2000
     includes $10.2 million,  $10.3 million and $2.8 million,  respectively,  of
     amortization  of the deferred  gain in connection  with the  Sale-Leaseback
     Transaction which occurred on June 15, 2000. Other (income) expense, net in
     Fiscal 2002,  also includes (i) a $5.4 million  write-off of the management
     services agreement between Sweetheart  Holdings and SF Holdings,  which had
     been assigned and assumed by Fonda in 1998 (ii) a $2.6 million write-off of
     assets related to business  initiatives which were abandoned  subsequent to
     the  merger of  Sweetheart  Cup and  Fonda,  (iii)  $6.9  million  of costs
     incurred in connection with the rationalization,  consolidation and process
     improvement of the Company's  manufacturing  facilities and (iv) additional
     costs  of  $0.5  million  associated  with  the  Lily-Tulip,   Inc.  Salary
     Retirement Plan

                                       12
<PAGE>
(7)  Fiscal 1998 includes a $15.9 million net gain on the sale of  substantially
     all  of the  fixed  assets  and  certain  related  working  capital  of the
     Company's tissue mill in Gouverneur,  New York and settlement in connection
     with the  termination  by the owner of the  co-generation  facility  of its
     obligation to supply steam to the mill.  This was partially  offset by $1.8
     million  of  asset  write-down  charges  associated  with  the  sale of the
     Company's  Riverside  facility in Fiscal  1998.  Additionally,  the Company
     recognized $3.4 million of expense based on actuarial estimates  associated
     with pending  litigation.  Also, the Company  recognized  certain  charges,
     consisting  primarily of $4.4 million of financial  advisory and legal fees
     associated  with the  Company's  sale to SF  Holdings  and $3.7  million of
     severance  expenses  as a result of the  termination  of  certain  officers
     pursuant to executive separation agreements and retention plans for certain
     key  executive.  These  expenses  were  partially  offset by a gain of $3.3
     million associated with the sale of the Company's bakery operations.
(8)  In Fiscal 1998, the Company  recorded a $1.5 million  expense,  net of $1.0
     million of income tax benefit,  in connection  with the  implementation  of
     EITF 97-13, which requires companies to expense any previously  capitalized
     reengineering costs in connection with software installation.
(9)  In Fiscal 2002 and Fiscal 2000, the Company incurred an extraordinary  loss
     of $1.8 million and $0.5  million,  respectively,  (net of $0.7 million and
     $0.2 million income tax benefit,  respectively)  in the connection with the
     early retirement of debt.
(10) Total debt  includes  short-term  and  long-term  borrowings,  and  current
     maturities of long-term debt.


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

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


General

         The  Company  believes  that  it is one of the  largest  producers  and
marketers  of  disposable  foodservice  and  food  packaging  products  in North
America.  The Company sells a broad line of disposable  paper,  plastic and foam
foodservice  and food  packaging  products at all major price  points under both
branded and private labels to institutional  foodservice,  consumer  foodservice
and food  packaging  customers.  The  Company  markets  its  products  under its
Sweetheart(R),  Lily(R), Trophy(R), Jazz(R),  Preference(TM),  Go Cup(R), Silent
Service(R),   Centerpiece(R),   Basix(R),   Guildware(R),   Simple  Elegance(R),
Sensations(R), Hoffmaster(R), Paper Art(R), and Touch of Color(R) brands.

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

         The  Company  sells  its  products  to  institutional  foodservice  and
consumer  customers,  including large national accounts,  located throughout the
United  States,  Canada and Mexico.  The Company has  developed  and  maintained
long-term relationships with many of its customers.  The Company's institutional
foodservice customers include (i) major foodservice distributors,  (ii) national
accounts,

                                       13
<PAGE>
including quick service  restaurants and catering  services,  and (iii) schools,
hospitals and (iv) other major  institutions.  The Company's  consumer customers
include (i) supermarkets,  (ii) mass merchandisers,  (iii) warehouse clubs, (iv)
party  good  stores  and (v)  other  retailers.  The  Company's  food  packaging
customers include (i) national and regional dairy and (ii) food companies.

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

         On March 25, 2002,  pursuant to an Agreement and Plan of Merger,  Fonda
was merged with and into  Sweetheart  Cup, with  Sweetheart Cup as the surviving
entity. In connection with the Merger, all of the assets and operations of Fonda
were assigned to, and all  liabilities of Fonda were assumed by,  Sweetheart Cup
by operation of law and all of the  outstanding  shares of Fonda were cancelled.
Sweetheart  Cup is a wholly owned  subsidiary of Sweetheart  Holdings which is a
wholly owned subsidiary of SF Holdings.  Sweetheart Holdings and Fonda are under
common  control,  and  therefore,  the  transaction  has been accounted for in a
manner similar to a pooling-of-interests. The accompanying financial information
has been restated for all periods presented.


Critical Accounting Policies and Estimates

         Management's Discussion and Analysis of Financial Condition and Results
of Operations discusses the Company's consolidated  financial statements,  which
have been prepared in accordance with accounting  principles  generally accepted
in the United States of America.  The preparation of these financial  statements
requires  management to make  estimates  and  assumptions  that affect  reported
amounts of assets and  liabilities  and the disclosure of contingent  assets and
liabilities at the date of the financial  statements and the reported amounts of
revenues  and  expenses  during  the  reported  period.  On an  on-going  basis,
management  evaluates its estimates and  judgments,  including  those related to
revenue recognition,  receivables reserves, inventory reserves, goodwill, income
taxes  and  contingencies.  Management  bases  its  estimates  and  judgment  on
historical  experience  and on various  other  factors  that are  believed to be
reasonable  under the  circumstances,  the  results  of which form the basis for
making  judgments about the carrying  values of assets and liabilities  that are
not readily  apparent from other  sources.  Actual results may differ from these
estimates under different assumptions or conditions.

         Revenue  recognition / receivable reserves - Revenue is recognized upon
shipment of product and when  collectability  is reasonably  assured.  Also, the
Company rents filling  equipment to certain of its customers and recognizes this
income over the life of the lease.  The  Company's  sales are  evidenced and the
sales  price  fixed  based upon  either a  purchase  order,  contract  or buying
agreement with the customer. The Company's freight terms are either FOB shipping
point or freight prepaid by the customer.  The customer may also be eligible for
promotional  incentives  or rebates.  The Company at the time of sale  records a
reserve  for  promotional  allowances,  rebates  and  other  discounts  based on
historical experience, which are charged to net sales.

         Raw materials are critical  components of the Company's cost structure.
The prices for these raw  materials  may  fluctuate.  When raw  material  prices
decrease, selling prices have historically decreased. The actual impact from raw
material price changes is affected by a number of factors including the level of
inventories at the time of a price change,  the specific timing and frequency of
price  changes,  and the  lead  and lag  time  that  generally  accompanies  the
implementation  of both raw materials and subsequent  selling price changes.  In
the event that raw material prices decrease over a period of several months, the
Company may suffer margin erosion on the sale of such inventory.

                                       14
<PAGE>
         Inventory reserves - The Company establishes reserves for its inventory
to reflect those conditions when the cost of the inventory is not expected to be
recovered. The Company reviews such circumstances when products are not expected
to be saleable based on standards established by the Company's quality assurance
standards.  The reserve  for these  products is equal to all or a portion of the
cost of the inventory based on the specific facts and circumstances.  We monitor
inventory levels on a regular basis and record changes in inventory  reserves as
part of costs of goods sold.

         Goodwill - Goodwill  represents  the excess of the purchase  price over
the fair value of tangible and  identifiable  intangible net assets acquired and
is amortized on a straight-line  basis over twenty years.  The carrying value of
goodwill  is  reviewed  when  facts  and  circumstances  suggest  that it may be
impaired.  The Company assesses its  recoverability  by determining  whether the
amortization  of the goodwill  balance over its remaining  life can be recovered
through  undiscounted  projected  future cash flows.  Should the review indicate
that goodwill is not recoverable,  the Company's  carrying value of the goodwill
would be reduced by the estimated  shortfall of the cash flows. See "--Impact of
Recently Issued Accounting Standards, SFAS No. 142".

         Income taxes - The Company  applies an asset and liability  approach to
accounting for income taxes.  Deferred tax assets and liabilities are recognized
for the expected future tax  consequences of temporary  differences  between the
financial  statement and tax basis of assets and  liabilities  using enacted tax
rates in effect for the year in which the  differences  are expected to reverse.
The  recoverability  of  deferred  tax assets is  dependent  upon the  Company's
assessment of whether it is more likely than not that sufficient  future taxable
income  will be  generated  in the  relevant  tax  jurisdiction  to utilize  the
deferred  tax asset.  The Company  reviews  its  internal  forecasted  sales and
pre-tax  earnings  estimates to make its  assessment  about the  utilization  of
deferred  tax  assets.  In the event,  the  Company  determines  that the future
taxable  income will not be  sufficient  to utilize the  deferred  tax asset,  a
valuation  allowance  is recorded.  If that  assessment  changes,  a charge or a
benefit would be recorded on the statement of operations.

         Contingencies  - The Company is subject to  litigation  in the ordinary
course of business and also to certain other  contingencies.  See Note 25 to the
consolidated  financial  statements.  The Company  records  legal fees and other
expenses related to litigation and contingencies as incurred.  Additionally, the
Company  assesses,  in  consultation  with its  counsel,  the  need to  record a
liability for litigation and contingencies on a case-by-case basis. Reserves are
recorded when the Company,  in consultation with counsel,  determine that a loss
related to a matter is both probable and reasonably estimable.

         Selling,  general and  administrative  expenses  consist  primarily  of
salaries,  benefits,  promotional and advertising costs,  rent,  depreciation of
equipment and broker fees.


Recent Developments

         On  November  21,  2002,  the  Company  filed with the  Securities  and
Exchange Commission a Registration  Statement on Form S-4 relating to a proposed
offer to exchange newly issued $110 million senior  subordinated  notes due 2007
for all of the $110 million Senior Subordinated Notes and a consent solicitation
to eliminate  and/or amend certain  restrictive  covenants and other  provisions
governing the $110 million Senior  Subordinated  Notes. The Company also intends
to solicit consent to eliminate and/or amend certain  restrictive  covenants and
other  provisions  governing the $120 million  Senior  Subordinated  Notes.  The
Company believes that the exchange offer and consent  solicitations will provide
it with the necessary time to execute its business plan and to further  evaluate
its  strategic  alternatives.  If the Company is unable to complete the exchange
offer and consent  solicitation  or refinance,  repay or extend the $110 million
Senior  Subordinated  Notes prior to March 1, 2003, its Senior Credit  Facility,
unless otherwise amended, will become due and payable.

                                       15
<PAGE>

         The Company is also  evaluating  various  strategic  options  which may
include a restructuring of its business debt and capital  structure,  including,
among  other  things,  the public  sale or private  placement  of debt or equity
securities,  joint venture  transactions,  sale of assets,  new borrowings,  the
refinancing of the Company's  existing debt agreements,  open market  purchases,
tender  offers or exchange  offers and consent  solicitations  of the  Company's
outstanding  securities.  There can be no assurances that any of these strategic
options will be consummated.

         On October 1, 2002, the Company  entered into a loan agreement with the
City of Chicago,  to borrow  $2.0  million.  The loan bears no  interest  and is
payable in equal  installments  of $100,000  commencing  on February 1, 2004 and
every six months thereafter.  As of December 2, 2002, the proceeds from the loan
have not been received by the Company.


Fiscal 2002 Compared to Fiscal 2001

         Net sales  decreased  $33.2  million,  or 2.5%, to $1,283.5  million in
Fiscal  2002  compared  to $1,316.7  million in Fiscal  2001  reflecting  a 2.5%
decrease in average  realized  selling prices  resulting from lower raw material
costs and competitive  pressures while sales volumes  remained  constant.  Sales
volumes  declined  domestically  due to a reduction  in the business and leisure
travel industries and a reduction in foodservice and away-from-home dining which
resulted  from the events of  September  11,  2001 and the fact that Fiscal 2002
consisted of 52 weeks as compared  with 53 weeks for Fiscal 2001.  This decrease
was offset by increased sales volume due to the incremental  sales obtained from
the acquisitions of Global Cup, S.A. De C.V. and its subsidiaries ("Global Cup")
in April 2001 and the  consumer  division  of Dopaco in August  2001.  Net sales
excluding  Global  Cup and the  consumer  division  of  Dopaco  decreased  $72.2
million,  or 5.5%,  to  $1,235.4  million in Fiscal  2002  compared  to $1,307.6
million in Fiscal 2001  reflecting  a 2.5%  decrease in average  realized  sales
price and a 3.2% decrease in sales volume.

         Gross profit  decreased  $19.6 million,  or 11.3%, to $153.3 million in
Fiscal 2002  compared to $172.9  million in Fiscal 2001.  As a percentage of net
sales, gross profit decreased to 11.9% in Fiscal 2002 from 13.1% in Fiscal 2001.
The $19.6 million decline in gross profit was due (i) 66.7% to the manufacturing
inefficiencies  related to the  Company's  consolidation  initiatives  and lower
fixed cost  absorption as Fiscal 2002  consisted of 52 weeks as compared with 53
weeks for  Fiscal  2001,  (ii)  22.2% to the  impact of lower  average  realized
selling  prices and (iii) 11.1% to a decrease  from a mix shift to lower  margin
volumes as a result of the acquisition of the consumer division of Dopaco.

         Selling, general and administrative expenses increased $1.6 million, or
1.4%,  to $114.8  million in Fiscal 2002  compared  to $113.2  million in Fiscal
2001.  This  increase   resulted   primarily  from  $2.2  million  of  increased
promotional and advertising expenses, $1.5 million of increased bad debt expense
due to a  customer  bankruptcy  filing  and $1.0  million  and $1.4  million  of
increased  expenses due to the  acquisitions of both Global Cup and the consumer
division of Dopaco,  respectively.  These increases were partially offset by (i)
lower expenses as a result of Fiscal 2002  consisting of 52 weeks as compared to
53 weeks in Fiscal 2001,  (ii)$3.7  million in reduced salaries and benefits and
(iii)$1.3 million in lower depreciation expense.

         Restructuring charge increased $1.4 million, or 280.0%, to $1.9 million
in Fiscal 2002 compared to $0.5 million in Fiscal 2001.  During Fiscal 2002, the
Company established a restructuring  reserve of $0.3 million in conjunction with
the planned closure of the Company's Lafayette,  Georgia facility from which 101
primarily  manufacturing  positions  were  eliminated.  The plan was approved by
management  on September  24, 2002 and  announced to employees on September  29,
2002.  Severance  payments  of $0.1  million  and $0.2  million of vacated  rent
expense  will be paid in Fiscal 2003.  Also,  during  Fiscal  2002,  the Company
established a restructuring  reserve of $1.6 million in conjunction with planned
consolidation  initiatives from which 475 primarily manufacturing positions were
eliminated.  The plan was approved by  management on June 19, 2002 and announced
to  employees  on June 28,  2002.  A portion of the  severance

                                       16
<PAGE>
payments of $1.6 million were paid in the fourth quarter of Fiscal 2002 with the
remaining payments to be paid in the first three quarters of Fiscal 2003. During
Fiscal 2001, the Company established a restructuring  reserve of $0.5 million in
conjunction with the consolidation of the former  administrative  offices of CEG
in Indianapolis,  Indiana into the Company's  administrative offices in Oshkosh,
Wisconsin.  This  consolidation  included the  elimination of  approximately  40
positions. The plan was approved by management on October 30, 2000 and announced
to  employees  on May 1,  2001.  The  effective  date of the  consolidation  and
elimination  of positions was delayed  until the fourth  quarter of Fiscal 2001.
Severance payments of $0.1 million were paid during the fourth quarter of Fiscal
2001.

         Asset impairment expense was $0.6 million in Fiscal 2002 as a result of
the Company's evaluation of the usefulness of certain equipment no longer in use
in connection with the closure of its Lafayette, Georgia facility.

         Other expense (income),  net changed $11.9 million,  or 121.4%, to $2.1
million of expense in Fiscal 2002  compared to $9.8  million of income in Fiscal
2001.  During  Fiscal  2002,  the  Company  realized  $10.2  million  due to the
amortization  of  the  deferred  gain  in  conjunction   with  the  Fiscal  2000
sale-leaseback  transaction.  Also, during Fiscal 2002, the Company recognized a
$3.0  million  gain  associated  with  the sale of the  Company's  manufacturing
facility in  Manchester,  New  Hampshire.  These gains were offset by (i) a $5.4
million  write-off  of the  management  services  agreement  between  Sweetheart
Holdings and SF Holdings,  which had been assigned and assumed by Fonda in 1998,
(ii) a $2.6 million  write-off of assets related to business  initiatives  which
were  abandoned  subsequent  to the  Merger,  (iii)  $6.9  million  of  costs in
connection with the  rationalization,  consolidation and process  improvement of
the Company's manufacturing facilities and (iv) $0.5 million of additional costs
associated with the termination of the Lily-Tulip,  Inc. Salary Retirement Plan.
In Fiscal 2001, the Company  realized $10.3 million due to the  amortization  of
the deferred  gain in  conjunction  with the  sale-leaseback  transaction.  This
amortization  of the  deferred  gain was  partially  offset by $1.6  million  in
expenses   associated   with  the   relocation  of  the  Company's   Somerville,
Massachusetts, manufacturing facility to North Andover, Massachusetts.

         Operating income decreased $32.8 million,  or 49.2% to $33.9 million in
Fiscal  2002  compared  to $66.7  million  in  Fiscal  2001  due to the  reasons
described above.

         Interest expense, net decreased $1.8 million, or 4.6%, to $37.1 million
in Fiscal  2002  compared  to $38.9  million in Fiscal  2001.  This  decrease is
attributable  to lower  interest  rates on  higher  average  balances  under the
Company's  Senior Credit Facility which was partially  offset by the increase in
interest rate on the $110 million Senior  Subordinated Notes from 10.5% to 12.0%
which was effective March 1, 2002.

         Income tax expense  (benefit)  changed  $12.5  million,  or 111.6% to a
benefit of $1.3 million in Fiscal 2002  compared to an expense of $11.2  million
in Fiscal 2001 as a result of a pre-tax loss. The effective rate for Fiscal 2002
and 2001 was 40%.

         Minority  interest in subsidiary was $0.1 million in Fiscal 2002 and in
Fiscal 2001. This amount represents the 20% ownership of Global Cup's income.

         Extraordinary  loss on debt  extinguishment was $1.1 million net of the
income  tax  benefit  in  Fiscal  2002  resulting  from the  refinancing  of the
Company's Senior Credit Facility.

         Net income decreased $19.6 million,  or 118.8%,  to a $3.1 million loss
in Fiscal  2002  compared  to $16.5  million of income in Fiscal 2001 due to the
reasons described above.

                                       17
<PAGE>
Fiscal 2001 Compared to Fiscal 2000

         Net sales  increased  $40.1  million,  or 3.1%, to $1,316.7  million in
Fiscal  2001  compared  to $1,276.6  million in Fiscal  2000  reflecting  a 3.2%
increase in average realized selling prices and a 0.1% decrease in sales volume.
Realized  selling prices  increased as a result of a shift in product mix. Sales
volumes  decreased due to more competitive  market  conditions and the Company's
decision to reduce sales to certain customers experiencing  deteriorating credit
conditions.   This  decrease  in  sales  volume  was  partially  offset  by  the
incremental sales obtained from the Company's  acquisition of an 80% interest in
Global  Cup in April  2001  and the  acquisition  of  Springprint  Medallion,  a
division of Marcal Paper Mills, Inc. ("Springprint") in September 2000.

         Gross profit  decreased  $13.4  million,  or 7.2%, to $172.9 million in
Fiscal 2001  compared to $186.3  million in Fiscal 2000.  As a percentage of net
sales, gross profit decreased to 13.1% in Fiscal 2001 from 14.6% in Fiscal 2000.
The  decrease in gross profit is  primarily  attributable  to the effects of the
Sale-Leaseback  Transaction whereby, in Fiscal 2000, Sweetheart Cup sold certain
of its  production  equipment  and is  leasing  back  this  equipment  under  an
operating  lease.  Consequently,  cost of sales  increased  due to  higher  rent
expense  which  has  been  partially  offset  by  lower  depreciation   expense.
Specifically,  rent  expense  increased  by $12.0  million net of a reduction in
depreciation.  Additionally,  gross profit declined due to increased  energy and
transportation costs.

         Selling,  general and administrative expense increased $0.6 million, or
0.5%,  to $113.2  million in Fiscal 2001  compared  to $112.6  million in Fiscal
2000. However, as a percentage of net sales, selling, general and administrative
expenses  decreased  to 8.6% in  Fiscal  2001 from  8.8% in  Fiscal  2000.  This
increase resulted from the Company's increase in wages of $2.5 million, increase
in  brokerage  fees of $0.8  million  and $0.7  million of on going  operational
expenses as a result of the Fiscal 2001 Global Cup acquisition.  These increases
were  partially  offset by a $2.3  million  reduction  in bad debt expense and a
reduction in legal fees of $0.7 million from the Company.

         Restructuring  charge decreased $0.7 million,  or 58.3%, to a charge of
$0.5  million in Fiscal 2001  compared to $1.2  million in Fiscal  2000.  During
Fiscal 2001, the Company established a restructuring  reserve of $0.5 million in
conjunction  with the  consolidation  of former  CEG  administrative  offices in
Indianapolis,  Indiana  into the  Company's  administrative  offices in Oshkosh,
Wisconsin. This consolidation included the elimination of 40 positions. The plan
was approved by management on October 30, 2000 and announced to employees on May
1, 2001. The effective date of the  consolidation  and  elimination of positions
was delayed until the fourth quarter of Fiscal 2001.  Severance payments of $0.1
million were paid during the fourth quarter of Fiscal 2001.  During Fiscal 2000,
the Company  established a restructuring  reserve of $0.7 million in conjunction
with the planned elimination of the Company's centralized machine shop operation
from which 53 positions would be eliminated. The plan was completed and approved
by  management  on January 10, 2000 and announced to employees on March 7, 2000.
Severance  payments  of $0.2  million,  were paid in both the  third and  fourth
quarters of Fiscal 2000.  Also,  during the fourth  quarter of Fiscal 2000,  the
Company  reversed $0.2 million of this reserve as a result of 12 employees being
placed into open positions  within the Company.  During Fiscal 2000, the Company
announced that it intended to close its Maspeth,  New York facility in the first
quarter of Fiscal 2001 which resulted in the  elimination  of 130 positions.  In
connection  with such plans in Fiscal 2000, the Company  recognized $0.7 million
of charges for severance and related costs.

         Asset impairment expense was $2.2 million in Fiscal 2001 as a result of
the Company's evaluation of the usefulness of certain equipment no longer in use
in  connection  with the  consolidation  of the  Manchester,  New  Hampshire and
Springfield, Missouri facilities with other existing facilities.

         Other (income) expense, net increased $4.9 million,  or 100.0%, to $9.8
million of income in Fiscal 2001  compared to $4.9 million in Fiscal  2000.  The
Company recognized $10.3 million due to the amortization of the deferred gain in
conjunction with the Sale-Leaseback Transaction.  This gain was partially offset
by  $1.6  million  in  expenses  related  to the  relocation  of  the  Company's
Somerville,

                                       18
<PAGE>
Massachusetts  facility to North Andover,  Massachusetts  and the Company's $0.2
million loss on the sale of a building in St. Albans, Vermont.

         Operating income decreased $10.9 million, or 14.0%, to $66.7 million in
Fiscal  2001  compared  to $77.6  million  in  Fiscal  2000  due to the  reasons
described above.

         Interest  expense,  net decreased  $13.7  million,  or 26.0%,  to $38.9
million in Fiscal 2001 compared to $52.6  million in Fiscal 2000.  This decrease
is attributed to lower interest  rates on higher  outstanding  revolving  credit
balances  and the June 2000  redemption  of the  $190.0  million  9 1/2%  Senior
Secured Notes due 2000.

         Income tax expense  (benefit)  increased $1.1 million,  or 10.9%, to an
expense of $11.2 million in Fiscal 2001 compared to $10.1 million in Fiscal 2000
as a result of higher pre-tax  earnings.  The effective rate for Fiscal 2001 and
2000 was 40%.

         Minority interest in subsidiary was $68,000 in Fiscal 2001. This amount
represents the 20% ownership of Global Cup's income.

         Net income increased $2.0 million, or 13.8%, to $16.5 million income in
Fiscal 2001 compared to $14.5  million  income in Fiscal 2000 due to the reasons
described above.


Liquidity And Capital Resources

         Historically,  the Company has relied on cash flows from operations and
revolving  credit  borrowings to finance its working  capital  requirements  and
capital   expenditures.   In  Fiscal  2002,   the  Company  funded  its  capital
expenditures  from a  combination  of  cash  generated  from  operations,  funds
generated from asset sales and revolving credit borrowings.  The Company expects
to continue this method of funding for its Fiscal 2003 capital expenditures.

         Following  the  terrorist  attacks of September  11, 2001,  the Company
experienced  a decline in sales  prices and  volumes due to a number of factors,
including a significant reduction in business and leisure travel and a reduction
in foodservice and away-from-home dining. In addition to these factors affecting
our sales,  our  implementation  of  certain  consolidation  initiatives  caused
temporary  inefficiencies within our manufacturing  operations,  which increased
our cost structure and reduced our gross margin during recent periods.

         As  a  result  of  these  factors,   together  with  difficult   market
conditions,  the Company has been unable to refinance  the $110  million  Senior
Subordinated  Notes on terms  acceptable to the Company.  Unless  current market
conditions change significantly,  the Company may not have sufficient capital to
refinance  the $110  million  Senior  Subordinated  Notes  when  they  mature on
September 1, 2003.  Moreover,  if the Company is unable to complete the exchange
offer and consent  solicitation  or refinance,  repay or extend the $110 million
Senior  Subordinated  Notes prior to March 1, 2003, its Senior Credit  Facility,
unless otherwise amended, will become due and payable.

         On  November  21,  2002,  the  Company  filed with the  Securities  and
Exchange Commission a Registration  Statement on Form S-4 relating to a proposed
offer to exchange newly issued $110 million senior  subordinated  notes due 2007
for all of the $110 million Senior Subordinated Notes and a consent solicitation
to eliminate  and/or amend certain  restrictive  covenants and other  provisions
governing the $110 million Senior  Subordinated  Notes. The Company also intends
to solicit consent to eliminate and/or amend certain  restrictive  covenants and
other  provisions  governing the $120 million  Senior  Subordinated  Notes.  The
Company believes that the exchange offer and consent  solicitations will provide
it with the necessary time to execute its business plan and to further  evaluate
its strategic alternatives.

                                       19
<PAGE>
         Net cash  provided  by  operating  activities  in Fiscal 2002 was $28.5
million compared to $13.8 million in Fiscal 2001. This increase is primarily due
to a reduction in inventories and decreased  account  receivable  balances which
resulted  from lower raw material  price  levels  combined  with higher  account
payable balances due to longer terms.

         Net cash used in investing  activities in Fiscal 2002 was $16.0 million
compared to $71.7 million in Fiscal 2001.  This decrease is primarily due to the
receipt of net proceeds from the sale of the Manchester,  New Hampshire facility
in Fiscal 2002. During Fiscal 2001, the Company  purchased  substantially all of
the  property,  plant and  equipment,  intangibles  and net  working  capital of
Springprint, Global Cup and the consumer division of Dopaco.

         Net cash used in financing  activities in Fiscal 2002 was $16.1 million
compared to net cash provided by financing activities of $64.7 million in Fiscal
2001.  This change is  primarily  due to the payment of debt  issuance  costs in
Fiscal 2002 in connection with the refinancing of the Company's debt as compared
to Fiscal 2001 which had additional  borrowings under the Senior Credit Facility
for business acquisitions and higher capital spending.

         Working capital decreased $122.7 million to $126.8 million at September
29, 2002 from $249.5 million at September 30, 2001. This decrease  resulted from
current assets decreasing $28.1 million and the current  liabilities  increasing
$94.6 million. These changes resulted primarily from (i) a reduction in accounts
receivables  and  inventories  as a result of lower raw material price level and
(ii) the  reclassification  of the $110 million Senior  Subordinated  Notes from
long-term debt to current debt as such debt matures in September 2003.

         Capital  expenditures  for Fiscal 2002 were $21.2  million  compared to
$31.7 million in Fiscal 2001. Capital expenditures in Fiscal 2002 included $10.0
million  for  new  production  equipment;   $6.3  million  associated  with  the
implementation of the Company's consolidation program; $3.0 million for facility
improvements;  and $1.9  million  primarily  for routine  capital  improvements.
Funding for the Fiscal 2002 capital  expenditures was primarily provided by cash
generated from operations,  the sale of assets and revolving credit  borrowings.
During Fiscal 2003, the Company intends to continue to rely on this  combination
of funding for its capital expenditures.

         On June 10, 2002,  the Company  entered into a loan  agreement with the
Department of Business and Economic  Development,  a principal department of the
State of Maryland,  to borrow $2.0 million (the "Maryland  Loan").  The Maryland
Loan bears  interest at a rate ranging from 3.0% to 8.0% per annum  depending on
certain employment rates at the Company's Owings Mills,  Maryland facility.  The
Maryland Loan is payable in quarterly  installments through March 1, 2007. As of
September 29, 2002,  $1.9 million was  outstanding at an annual interest rate of
3.0%.

         The Company has a Senior Credit Facility with Bank of America, N.A., as
agent.  The  Senior  Credit  Facility  has a  maturity  date of March 25,  2007;
however,  in the event that the Company has not  refinanced,  repaid or extended
the $110 million  Senior  Subordinated  Notes prior to March 1, 2003, the Senior
Credit  Facility will become due on that date. The Senior Credit Facility allows
for a maximum  credit  borrowing  of $235  million  subject  to  borrowing  base
limitations  and  satisfaction of other  conditions of borrowing.  The revolving
borrowings have a maximum of $215 million.  The term loans have a maximum of $25
million and are payable monthly through March 2005.  Borrowings under the Senior
Credit Facility, at the Company's election, bear interest at either (i) a bank's
base rate  revolving  loan reference rate plus 0.5% or (ii) LIBOR plus 2.5%. For
Fiscal 2002,  the weighted  average  annual  interest rate for the Senior Credit
Facility was 4.88%.  The  indebtness of  Sweetheart  Cup under the Senior Credit
Facility is guaranteed by  Sweetheart  Holdings and secured by a first  priority
perfect security interest in accounts receivable, inventory, general intangibles
and certain other assets. The fee for outstanding letters of credit is 2.00% per
annum and there is a  commitment  fee of 0.375%  per annum on the daily  average
unused amount of the  commitments.  As of September 29, 2002,  $31.0 million was

                                       20
<PAGE>
available under the Senior Credit Facility.  As of September 29, 2002, LIBOR was
1.81% and the bank's base rate was 4.75%.

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

         The Company's Canadian subsidiary has a credit agreement (the "Canadian
Credit  Facility")  which provides for a term loan and a credit  facility with a
maximum  credit  borrowing of Cdn $30 million  (approximately  US $19.0 million)
subject to borrowing base  limitations and  satisfaction of other  conditions of
borrowing.  The term borrowings are payable quarterly through May 2004. Both the
revolving credit and term loan borrowings have a final maturity date of June 15,
2004.  The Canadian  Credit  Facility is secured by all existing and  thereafter
acquired real and personal tangible assets of the Company's Canadian  subsidiary
and net  proceeds  on the sale of any of the  foregoing.  Borrowings  under  the
Canadian  Credit Facility bear interest at an index rate plus 1.75% with respect
to the  revolving  credit  facility and an index rate plus 2.00% with respect to
the term loan borrowings.  For Fiscal 2002, the weighted average annual interest
rate for the Canadian  Credit  Facility was 4.41%. As of September 29, 2002, Cdn
$1.3 million  (approximately  US $0.8 million) was available under the revolving
facility and the term loan balance was Cdn $12.3 million  (approximately US $7.8
million) under the Canadian Credit Facility.

         In connection with a sale-leaseback  transaction, on June 15, 2000, the
Company sold certain  production  equipment  located in Owings Mills,  Maryland,
Chicago,  Illinois and Dallas,  Texas to several owner  participants  for a fair
market  value of $212.3  million.  Pursuant  to a lease dated as of June 1, 2000
(the "Lease") between  Sweetheart Cup and State Street Bank and Trust Company of
Connecticut,  National Association ("State Street"), as trustee,  Sweetheart Cup
leases the  production  equipment sold in connection  with the sales  lease-back
transaction  from State Street as owner trustee for several owner  participants,
through  November 9, 2010.  Sweetheart Cup has the option to renew the Lease for
up to four consecutive renewal terms of two years each.  Sweetheart Cup also has
the option to  purchase  such  equipment  for fair  market  value  either at the
conclusion  of the Lease term or November 21, 2006.  The  Company's  obligations
under the Lease are  collateralized by substantially all of the property,  plant
and  equipment  owned by the  Company as of June 15,  2000.  The Lease  contains
various  covenants,  which  prohibit,  or limit,  among other  things,  dividend
payments,  equity  repurchases  or  redemption,  the  incurrence  of  additional
indebtedness  and certain other business  activities.  The Company is accounting
for the  sale-leaseback  transaction  as an  operating  lease,  expensing  $31.5
million  annual rental  payments and removing the property,  plant and equipment
sold from its balance sheet. A deferred gain of $107.0 million was realized from
this sale and will be amortized over 125 months, which is the term of the Lease.

         Sweetheart  Cup is the obligor and  Sweetheart  Holdings the  guarantor
with  respect  to the $110  million  Senior  Subordinated  Notes  which  are due
September 1, 2003.  Interest on the $110 million  Senior  Subordinated  Notes is
payable  semi-annually  in arrears on March 1 and  September 1. The $110 million
Senior  Subordinated Notes began to accrue interest at 12% per annum as of March
1, 2002. The $110 million Senior Subordinated Notes are subject to redemption at
the  option  of the  Company,  in  whole  or in part,  at the  redemption  price
(expressed as percentages of the principal amount), plus accrued interest to the
redemption date, at a call premium of 100%. The $110 million Senior Subordinated
Notes are  subordinated  in right of payment to the prior payment in full of all
of the  Company's  senior debt,

                                       21
<PAGE>
including  borrowings under the Senior Credit Facility,  and are pari passu with
the  $120  million  Senior  Subordinated  Notes  due  2007.  In  addition,   the
obligations under the June 1, 2000 lease between Sweetheart Cup and State Street
Bank and Trust Company of  Connecticut  are secured by a significant  portion of
the Company's  existing property,  plant and equipment.  The $110 million Senior
Subordinated  Notes contain various  covenants which prohibit,  or limit,  among
other  things,  asset  sales,  change  of  control,  dividend  payments,  equity
repurchases  or  redemption,  the  incurrence  of additional  indebtedness,  the
issuance of  disqualified  stock,  certain  transactions  with  affiliates,  the
creation of additional liens and certain other business activities.

         In Fiscal 1997, the Company issued the $120 million Senior Subordinated
Notes with interest payable semi-annually. Payment of the principal and interest
is  subordinate  in  right  to  payment  of all of the  Company's  senior  debt,
including  borrowings under the Senior Credit Facility.  The Company may, at its
election,  redeem the $120 million Senior  Subordinated  Notes at any time after
March 1, 2002 at a redemption price equal to a percentage  (104.750% after March
1,  2002 and  declining  in annual  steps to 100%  after  March 1,  2005) of the
principal  amount  thereof  plus  accrued  interest.  The  $120  million  Senior
Subordinated  Notes provide that upon the  occurrence of a change of control (as
defined  therein),  the  holders  thereof  will have the option to  require  the
redemption  of the notes at a  redemption  price equal to 101% of the  principal
amount thereof plus accrued interest. The $120 million Senior Subordinated Notes
are  subordinated in right of payment to the prior payment in full of all of the
Company's senior debt, including borrowings under the Senior Credit Facility and
are pari passu with the $110 million Senior Subordinated Notes. In addition, the
obligations under the June 1, 2000 lease between Sweetheart Cup and State Street
Bank and Trust Company of  Connecticut  are secured by a significant  portion of
the Company's  existing property,  plant and equipment.  The $120 million Senior
Subordinated  Notes contain various  covenants which prohibit,  or limit,  among
other  things,  asset  sales,  change  of  control,  dividend  payments,  equity
repurchases  or  redemption,  the  incurrence  of additional  indebtedness,  the
issuance  of  disqualified  stock,  certain  transaction  with  affiliates,  the
creation of additional liens and certain other business activities.

         The following  summarizes  the  Company's  contractual  obligations  at
September 29, 2002, and the effect such  obligations are expected to have on its
liquidity and cash flows in future periods (in 000's):

<TABLE>
<CAPTION>
                                           Payments Due In Fiscal
                      -------------------------------------------------------------------
                         2003        2004      2005       2006        2007     Thereafter
                      ----------  ---------  ---------  ---------  ----------  ----------
<S>                   <C>         <C>        <C>        <C>        <C>         <C>
Long-term debt        $  119,735  $  22,483  $   5,589  $     412  $  168,743  $  120,000
Non-cancelable
  operating leases        54,179     50,848     48,283     45,177      43,283     192,537
Capital leases               118        124         97          -           -           -
                      ----------  ---------  ---------  ---------  ----------  ----------
Total obligations     $  174,032  $  73,455  $  53,969  $  45,589  $  212,026  $  312,537
                      ==========  =========  =========  =========  ==========  ==========
</TABLE>

         During  Fiscal 2001,  the Company  experienced  a casualty  loss at its
Somerville,  Massachusetts  facility.  Since January 2001 through  September 29,
2002 the  Company  incurred  $11.6  million  of  expenses  associated  with this
casualty  loss. As of September  29, 2002,  the Company  received  $12.5 million
reimbursement  under the  casualty  and business  interruption  claim.  The $0.9
million of proceeds in excess of the expenses,  represents the net proceeds from
the business  interruption  claim, which were recorded as a reduction to cost of
sales during the fourth quarter of Fiscal 2002. During October 2002, the Company
and its  insurance  provider  have  agreed to a final  settlement  of this claim
whereby  the  Company  will  receive an  additional  $3.8  million  of  business
interruption  proceeds.  This amount will be recorded upon  receipt,  net of any
expenses, which is expected to occur during the first six months of Fiscal 2003.

         The Company is subject to legal proceedings and other claims arising in
the ordinary course of its business. The Company maintains insurance coverage of
types and in amounts  which it believes to be adequate and  believes  that it is
not presently a party to any litigation,  the outcome of which could

                                       22
<PAGE>
reasonably  be  expected  to have a  material  adverse  effect on its  financial
condition or results of operations.

         Management believes that cash generated by operations,  funds generated
from asset sales and amounts  available  under the Company's  credit  facilities
should be sufficient to meet the Company's  expected  operating  needs,  planned
capital   expenditures,   payments  in  conjunction  with  the  Company's  lease
commitments and debt service requirements in the next twelve months.

         Following  the  terrorist  attacks of September  11, 2001,  the Company
experienced  a decline in sales  prices and  volumes due to a number of factors,
including a significant reduction in business and leisure travel and a reduction
in foodservice and away-from-home dining. In addition to these factors affecting
our sales,  our  implementation  of  certain  consolidation  initiatives  caused
temporary  inefficiencies within our manufacturing  operations,  which increased
our cost structure and reduced our gross margin during recent periods.

         As  a  result  of  these  factors,   together  with  difficult   market
conditions,  the Company has been unable to refinance  the $110  million  Senior
Subordinated  Notes on terms  acceptable to the Company.  Unless  current market
conditions change significantly,  the Company may not have sufficient capital to
refinance  the $110  million  Senior  Subordinated  Notes  when  they  mature on
September 1, 2003.  Moreover,  if the Company is unable to complete the exchange
offer and consent  solicitation  or refinance,  repay or extend the $110 million
Senior  Subordinated  Notes prior to March 1, 2003, its Senior Credit  Facility,
unless otherwise amended, will become due and payable.

         On  November  21,  2002,  the  Company  filed with the  Securities  and
Exchange Commission a Registration  Statement on Form S-4 relating to a proposed
offer to exchange newly issued $110 million senior  subordinated  notes due 2007
for all of the $110 million Senior Subordinated Notes and a consent solicitation
to eliminate  and/or amend certain  restrictive  covenants and other  provisions
governing the $110 million Senior  Subordinated  Notes. The Company also intends
to solicit consent to eliminate and/or amend certain  restrictive  covenants and
other  provisions  governing the $120 million  Senior  Subordinated  Notes.  The
Company believes that the exchange offer and consent  solicitations will provide
it with the necessary time to execute its business plan and to further  evaluate
its strategic alternatives.

         The Company is also  evaluating  various  strategic  options  which may
include a restructuring of its business debt and capital  structure,  including,
among  other  things,  the public  sale or private  placement  of debt or equity
securities,  joint venture  transactions,  sale of assets,  new borrowings,  the
refinancing of the Company's  existing debt agreements,  open market  purchases,
tender  offers or exchange  offers and consent  solicitations  of the  Company's
outstanding  securities.  There can be no assurances that any of these strategic
options will be consummated.


Net Operating Loss Carryforwards

         As of September 29, 2002, the Company had  approximately $56 million of
net operating  loss  carryforwards  for federal income tax purposes of which $25
million will expire in 2018 and the  remaining  $31 million will expire in 2022.
Although  future  earnings  cannot  be  predicted  with  certainty,   management
currently believes that realization of the net deferred tax asset is more likely
than not.


Impact of Recently Issued Accounting Standards

         In June 2001, the Financial  Accounting Standards Board ("FASB") issued
two new pronouncements: Statement of Financial Accounting Standards ("SFAS") No.
141,  Business  Combinations  and SFAS No. 142,  Goodwill  and Other  Intangible
Assets.  SFAS No. 141  prohibits the use of the  pooling-of-interest  method for
business  combinations  initiated  after June 30,  2001 and also

                                       23
<PAGE>
applies to all business  combinations  accounted for by the purchase method that
are completed  after June 30, 2001.  There are also  transition  provisions that
apply to business combinations completed before July 1, 2001 that were accounted
for by the purchase method. SFAS No. 142 is effective for fiscal years beginning
after December 15, 2001 and applies to all goodwill and other intangible  assets
recognized  in an entity's  balance  sheet  regardless of when these assets were
originally  recognized.   SFAS  No.  142  requires  that  goodwill  and  certain
intangibles  with  an  indefinite  life  not be  amortized,  but  subject  to an
impairment test on an annual basis.  The Company has adopted SFAS No. 141 during
Fiscal 2001.  The Company has adopted SFAS No. 142 effective  September 30, 2002
and is  currently  evaluating  the  impact of SFAS No.  142 on its  consolidated
financial statements.

         In June  2001,  the FASB  issued  SFAS No.  143,  Accounting  for Asset
Retirement  Obligations.  This  statement  addresses  financial  accounting  and
reporting for obligations  associated with the retirement of tangible long-lived
assets and the associated asset retirement  costs. SFAS No. 143 applies to legal
obligations associated with the retirement of long-lived assets that result from
the  acquisition,  construction,  development and (or) the normal operation of a
long-lived  asset,  except for certain  obligations  of leases.  This  statement
amends SFAS. No. 19, Financial Accounting and Reporting by Oil and Gas Producing
Companies.  SFAS No. 143 is effective for years  beginning  after June 15, 2002.
The  Company  has  adopted  SFAS No. 143  effective  September  30,  2002 and is
currently  evaluating the impact of SFAS No. 143 on its  consolidated  financial
statements.

         In October 2001,  the FASB issued SFAS No. 144,  Impairment or Disposal
of  Long-Lived  Assets.  This  statement  addresses  financial   accounting  and
reporting for the  impairment or disposal of long-lived  assets.  This statement
supersedes SFAS No. 121,  Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to Be  Disposed  Of, and the  accounting  and  reporting
provisions of Accounting  Principals Board Opinion No. 30, Reporting the Results
of Operations-Reporting  the Effects of Disposal of a Segment of a Business, and
Extraordinary,  Unusual and Infrequently Occurring Events and Transactions,  for
the disposal of a segment of a business (as previously defined in that Opinion).
This statement also amends  Accounting  Research  Bulletin No. 51,  Consolidated
Financial  Statements,  to  eliminate  the  exception  to  consolidation  for  a
subsidiary  for  which  control  is  likely  to be  temporary.  SFAS No.  144 is
effective for fiscal years  beginning  after  December 15, 2001. The Company has
adopted SFAS No. 144 effective  September  30, 2002 and is currently  evaluating
the impact of SFAS No. 144 on its consolidated financial statements.

         In April 2002,  the FASB issued SFAS No. 145,  Recission of FASB No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.  This
statement  addresses,  among other items, the classification of gains and losses
from extinguishment of debt. In accordance with the statement,  any gain or loss
on  extinguishment of debt that does not meet the criteria in APB No. 30 will no
longer be classified as an extraordinary  item for all periods  presented.  This
statement  is  effective  for fiscal years  beginning  after May 15,  2002.  The
Company has adopted SFAS No. 145  effective  September 30, 2002 and is currently
evaluating the impact of SFAS No. 145 on its consolidated financial statements.

         In July  2002,  the FASB  issued  SFAS No.  146,  Accounting  for Costs
Associated  with Exit or Disposal  Activities.  SFAS No. 146  replaces  Emerging
Issues Task Force Issue 94-3,  requiring a company to recognize costs associated
with exit or disposal  activities when they are incurred rather than at the date
of a  commitment  to an exit or  disposal  plan.  SFAS No.  146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.


Item 7a. QUANTITATIVE AND QUALITATIVE DISCLOSURE OF MARKET RISK

         The  Company  is  exposed  to  market  risk in the  ordinary  course of
business,  which consists  primarily of interest rate risk  associated  with its
variable rate debt. All borrowing  under the Senior Credit Facility and Canadian
Credit  Facility,  each of which contains a revolving and term credit  facility,

                                       24
<PAGE>
bear interest at a variable rate.  Borrowings  under the Senior Credit Facility,
at the  Company's  election,  bear  interest  at either  (i) a bank's  base rate
revolving  loan  reference  rate plus 0.5% or (ii) LIBOR  plus 2.5%.  Borrowings
under the Canadian  Credit  Facility  bear  interest at an index rate plus 1.75%
with respect to the  revolving  credit  borrowings  and an index rate plus 2.00%
with  respect  to the term  loan  borrowings.  As of  September  29,  2002,  the
outstanding indebtedness under the Senior Credit Facility was $186.1 million and
the Canadian Credit Facility was $15.5 million in U.S. dollars.  As of September
30, 2002,  $31.0 million was available  under the Senior Credit Facility and Cdn
$1.3 million (approximately US $0.8 million) was available under Canadian Credit
Facility.  Based upon these  amounts,  the  annual  net income  would  change by
approximately  $1.2 million for each one percentage point change in the interest
rates  applicable  to the  variable  rate  debt.  The level of the  exposure  to
interest rate  movements may fluctuate  significantly  as a result of changes in
the amount of indebtedness outstanding under the revolving credit facilities.


Item 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

         See the Financial  Statements and Financial Statement Schedule attached
hereto and listed in Item 15 (a)(1) and (a)(2) hereof.


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

         NONE


                                    PART III


Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

         Set forth below are the names,  ages and  positions  of the  directors,
executive  officers and key employees of Sweetheart  Holdings and Sweetheart Cup
as of December 9, 2002.  All directors hold office until the next annual meeting
of  shareholders  and until their  successors  are duly  elected and  qualified.
Officers serve at the discretion of the Board of Directors.

                                       25
<PAGE>
       Name           Age                       Position
--------------------  ---   ----------------------------------------------------
Dennis Mehiel         60    Chairman and Chief Executive Officer

Thomas Uleau          58    Chief Operating Officer and Vice Chairman

Hans H. Heinsen       49    Senior Vice President - Finance and
                            Chief Financial Officer

Michael T. Hastings   55    President - Sweetheart Brand

Robert M. Korzenski   48    President - Hoffmaster Brand

Dennis Dorian Mehiel  34    President - Fonda Brand

Harvey L. Friedman    60    Senior Vice President, General Counsel and Secretary

Ingrid Santiago       50    Senior Vice President - Materials Management

Thomas Pasqualini     45    Senior Vice President - Manufacturing and Logistics

Gail Blanke           54    Director

John A. Catsimatidis  53    Director

Alfred B. DelBello    68    Director

Chris Mehiel          63    Director

Edith V. Mehiel       56    Director

Alan D. Scheinkman    52    Director

G. William Seawright  61    Director


         Dennis  Mehiel  has  been  Chairman  and  Chief  Executive  Officer  of
Sweetheart  Holdings and  Sweetheart  Cup since March 1998.  Mr. Mehiel has been
Chairman and Chief Executive  Officer of SF Holdings since February 1998 and has
been Chairman and Chief Executive  Officer of Fonda since 1988. Since July 2000,
he has been a director of Box USA Holdings,  Inc.  ("Box USA")  (formerly Four M
Corporation, a converter and seller of interior packaging, corrugated sheets and
corrugated  containers  which Mr. Mehiel  cofounded ("Four M")). From 1966 until
July 2000, he was Chairman of Four M. From 1977 until July 2000 (except during a
leave of  absence  from  April  1994  through  July 1995) he served as the Chief
Executive  Officer of Four M. Mr. Mehiel is also Chief  Executive  Officer and a
director of Mannkraft  Corporation  (formerly  Box USA of New Jersey,  Inc.),  a
manufacturer of corrugated containers,  and Chairman and Chief Executive Officer
of CEG.

         Thomas  Uleau has been Chief  Operating  Officer  and Vice  Chairman of
Sweetheart Holdings and Sweetheart Cup since May 2002. Prior thereto,  Mr. Uleau
was  Executive  Vice  President  and  a  director  of  Sweetheart  Holdings  and
Sweetheart  Cup since  March 1,  2001 and prior  thereto  was  President,  Chief
Operating  Officer and a director since March 1998. Mr. Uleau also has been Vice
Chairman and Senior Vice  President of SF Holdings since March 1, 2001 and prior
thereto  was also  President,  Chief  Operating  Officer  and a  director  of SF
Holdings. He has been Executive Vice President of Fonda since March 1998 and has
been a  director  of Fonda  since  1988.  He has also  served  in a  variety  of
executive  officer  positions at Fonda since 1989.  He has been  Executive  Vice
President  of CEG since 1996 and is  currently a director of CEG.  Prior to July
2000 he was a director of Box USA (formerly Four M). He served as Executive Vice
President  and Chief  Financial  Officer of Four M from 1989 through 1993 and as
its Chief Operating Officer in 1994.

         Hans H.  Heinsen  has been  Senior  Vice  President - Finance and Chief
Financial  Officer of Sweetheart  Holdings and  Sweetheart Cup since March 1998.
Mr. Heinsen also has been Senior Vice  President,  Chief  Financial  Officer and
Treasurer  of SF  Holdings  since  February  1998,  Senior  Vice  President  and
Treasurer of Fonda since February 1997,  Chief Financial  Officer of Fonda since
June 1996 and Chief  Financial  Officer  of CEG since  November  1998.  Prior to
joining  Fonda,  Mr.  Heinsen  spent

                                       26
<PAGE>
21 years in a variety of corporate  finance  positions with The Chase  Manhattan
Bank, N.A.

         Michael T.  Hastings  has been  President  of the  Sweetheart  Brand of
Sweetheart  Holdings and  Sweetheart Cup since March 2002.  Prior  thereto,  Mr.
Hastings was President of Sweetheart Holdings and Sweetheart Cup from March 2001
to March  2002,  and  prior  thereto  he was  Senior  Vice  President-Sales  and
Marketing for  Sweetheart  Holdings and  Sweetheart Cup from March 1998 to March
2002.  Mr.  Hastings was also Senior Vice  President of Fonda from March 1998 to
March 2002. Mr.  Hastings was Senior Vice President of SF Holdings from December
2001  until  May 2002.  Prior to  joining  Sweetheart,  Mr.  Hastings  served as
President  of the Fonda  Division  of Fonda,  which he joined in May 1995.  From
December 1990 to April 1995, Mr.  Hastings served as Vice President of Sales and
Marketing and as a member of the Board of Directors of Anchor Packaging Company,
a manufacturer of institutional films and thermoformed plastic packaging.  Prior
to joining Anchor Packaging Company, Mr. Hastings was employed for over 25 years
in a variety of positions in the paper and plastic industries,  including sales,
marketing  and plant  operations  management at Scott Paper Company and Thompson
Industries.

         Robert M.  Korzenski  has been  President  of the  Hoffmaster  Brand of
Sweetheart  Holdings and Sweetheart Cup since March 2002. Mr. Korzenski has been
Senior Vice  President  of SF Holdings  from  December  2001 to May 2002 and was
President  and Chief  Operating  Officer of Fonda from March 1998 to March 2002.
Prior to that,  he was Senior Vice  President  of Fonda since  January  1997 and
President of the  Hoffmaster  division  since its  acquisition by Fonda in March
1995. Mr. Korzenski served as Senior Vice President of SF Holdings from December
2001  until  May  2002.  From  October  1988 to March  1995,  he  served as Vice
President of Operations  and Vice President of Sales of Scott  Institutional,  a
division  of Scott Paper  Company.  Prior to that,  he was  director of National
Sales at Thompson Industries.

         Dennis Dorian Mehiel,  the son of Dennis Mehiel,  has been President of
the Fonda Brand of Sweetheart  Holdings and  Sweetheart  Cup since May 2002. Mr.
Mehiel  has also  been  President  and  Chief  Operating  Officer  of  Mannkraft
Corporation (formerly Box USA of New Jersey, Inc.), a manufacturer of corrugated
containers,  since June 2000,  and a member of Frontage  Road  Realty,  LLC, the
parent  of  Mannkraft  Corporation  since  January  2002.  Mr.  Mehiel  was Vice
President-  Operations  of Fonda from August  2001 until May 2002.  From 1996 to
July 2000, he served in various management positions with Four M.

         Harvey L. Friedman has been Senior Vice President,  General Counsel and
Secretary of  Sweetheart  Holdings and  Sweetheart  Cup since March 2001. He has
been General Counsel and Secretary of SF Holdings since February 1998. He served
as  Secretary  and  General  Counsel  of Fonda from May 1996 until the Merger in
March  2002.  He was also a director  of Fonda from 1985 to  January  1997.  Mr.
Friedman is also Secretary and General  Counsel of CEG, is a director of CEG and
Box USA  (formerly  Four M) and is a  director  and  Senior  Vice  President  of
Mannkraft  Corporation (formerly Box USA of New Jersey, Inc.). He was formerly a
partner of Kramer Levin Naftalis & Frankel LLP, a New York City law firm.

         Ingrid  Santiago has been Senior Vice President - Materials  Management
of Sweetheart Holdings and Sweetheart Cup since May 2002. She was Vice President
of Sweetheart  Cup from March 1998 to May 2002.  She was also Vice  President of
Materials  Management for Fonda from 1996 until May 2002 and also served as Vice
President of Materials Management for Four M for over 10 years until July 2000.

         Thomas  Pasqualini has been Senior Vice President -  Manufacturing  and
Logistics of Sweetheart  Holdings and  Sweetheart  Cup since August 2000. He has
also  been  Vice  President  of  Logistics  and  Distribution  and  director  of
Distribution  for the past five years and has held several other  positions with
the Company since 1981.

                                       27
<PAGE>
         Gail Blanke has been a director of Sweetheart  Holdings and  Sweetheart
Cup since May 2002.  Ms.  Blanke also served as a director of Fonda from January
1997 to March 2002.  She also has been a director of SF Holdings  since February
1998.  She has been  President  and Chief  Executive  Officer  of Gail  Blanke's
Lifedesigns,  LLC since March 1995.  Lifedesigns  was founded in March 1995 as a
division of Avon  Products,  Inc.  ("Avon")  and was spun off from Avon in March
1997. Prior thereto, she held the position of Corporate Senior Vice President of
Avon since August 1991.  She also held a number of management  positions at CBS,
Inc.,  including  the position of Manager of Player  Promotion  for the New York
Yankees.  Ms. Blanke will be serving her second consecutive term as President of
the New York Women's Forum.

         John A.  Catsimatidis  has been a director of  Sweetheart  Holdings and
Sweetheart  Cup since May 2002.  Mr.  Catsimatidis  also served as a director of
Fonda  from  January  1997 to March  2002.  He also has  been a  director  of SF
Holdings since February 1998. He has been Chairman and Chief  Executive  Officer
of the Red Apple Group,  Inc., a company with diversified  holdings that include
oil refining,  supermarkets,  real estate, aviation and newspapers,  since 1969.
Mr.  Catsimatidis  serves as a director of Sloan's  Supermarket,  Inc. and New's
Communications,  Inc.  He also  serves  on the  board  of  trustees  of New York
Hospital,  St. Vincent Home for Children,  New York University  Business School,
Athens  College,   Independent  Refiners  Coalition  and  New  York  State  Food
Merchant's Association.

         Alfred B.  DelBello  has been a director  of  Sweetheart  Holdings  and
Sweetheart  Cup since May 2002.  Mr.  DelBello  also served as Vice  Chairman of
Fonda from January 1997 to March 2002 and a director of Fonda from 1990 to March
2002. He also has been Vice Chairman of SF Holdings since  February 1993.  Since
July 1995, Mr. DelBello has been a partner in the law firm of DelBello Donnellan
Weingarten Tartaglia Wise & Wiederkehr, LLP, a White Plains, New York firm. From
September  1992 to July 1995 he was a partner in the law firm of Worby  DelBello
Donnellan  &  Weingarten.  Prior  thereto,  he had been  President  of  DelBello
Associates,  a consulting  firm,  since 1985. Mr.  DelBello served as Lieutenant
Governor of New York State from 1983 to 1985.

         Chris  Mehiel,  the  brother of Dennis  Mehiel,  has been a director of
Sweetheart  Holdings and Sweetheart Cup since May 2002. Chris Mehiel also served
as a  director  of Fonda from  January  1997 to March  2002.  He also has been a
director of SF Holdings  since February 1998. Mr. Mehiel was a cofounder of Four
M. He was Executive Vice President,  Chief  Operating  Officer and a director of
Four M from  September 1995 to July 2000 and Chief  Financial  Officer of Four M
from August 1997 to July 2000. Since July 2000, he has been an executive officer
of the managing member of Fibre Marketing  Group, LLC ("Fibre  Marketing"),  the
successor of Marketing  Group,  Inc., a waste paper  recovery  business which he
cofounded,  and was President from 1994 to January 1996.  From 1993 to 1994, Mr.
Mehiel served as President and Chief Operating Officer of Mannkraft  Corporation
(formerly  Box USA of New Jersey,  Inc.),  formerly Box USA of New Jersey.  From
1982 to 1992, Mr. Mehiel served as the President and Chief Operating  Officer of
Specialty Industries, Inc., a waste paper processing and container manufacturing
company.

         Edith V. Mehiel, the former spouse of Dennis Mehiel, is a director. She
has been a private  investor for the previous five years and has been a director
of SF  Holdings  since March 2001 and was a director of Fonda from March 2001 to
March 2002.

         Alan  D.  Scheinkman  has  served  a  director  of  Sweetheart  Cup and
Sweetheart  Holdings since April 2000. Mr.  Scheinkman has been a director of SF
Holdings  since  April 2000 and was a director of Fonda from April 2000 to March
2002. Since October 2002, Mr. Scheinkman has been a member of DelBello Donnellan
Weingarten  Tartaglia  Wise & Wiederkehr,  LLP, a White  Plains,  New York firm.
Previously,  he was a member of the law firm of  Epstein,  Becker and Green P.C.
From  January  1998 to December  2000,  he was County  Attorney  of  Westchester
County,  New York,  counsel to the County  Executive  and Board of  Legislators.
Prior thereto, Mr. Scheinkman was in private practice with Scheinkman, Fredman &
Kosan LLP. Mr.  Scheinkman was also Associate  Minority  Counsel to the New

                                       28
<PAGE>
York State  Senate.  Mr.  Scheinkman  also serves as a director of NCO Portfolio
Management, Inc.

         G. William  Seawright  has been a director of  Sweetheart  Holdings and
Sweetheart Cup since May 2002. Mr.  Seawright also served as a director of Fonda
from  January  1997 to March  2002.  He also has been a director  of SF Holdings
since  February  1998.  He has been  President  and Chief  Executive  Officer of
Stanhome Inc., a  manufacturer  and  distributor  of giftware and  collectibles,
since 1993.  Prior  thereto,  he was  President and Chief  Executive  Officer of
Paddington,  Inc., an importer of distilled  spirits,  since 1990.  From 1986 to
1990, he was President of Heublein International, Inc.


Compensation of Directors

         The  Company's   directors  who  are  not  employees   receive   annual
compensation of (i) $12,000,  (ii) $1,000 for each Board meeting  attended,  and
(iii) $1,000 for each committee  meeting  attended which is not held on the date
of a  board  meeting.  Our  directors  who  are  employees  do not  receive  any
compensation  or fees for  service on the Board of  Directors  or any  committee
thereof.


Item 11. EXECUTIVE COMPENSATION

            The  following   table  sets  forth   information   concerning   the
compensation,  for  Fiscal  Years  2002,  2001 and 2000 of the  chief  executive
officer and the four most  highly  compensated  officers  and key  employees  of
Sweetheart  Holdings and  Sweetheart  Cup  (collectively,  the "named  executive
officers").  The Company has concluded that the aggregate  amount of perquisites
and other personal benefits paid to each of the named executive officers did not
exceed the lesser of (i) 10% of such officer's  total annual salary and bonus or
(ii) $50,000. Thus, such amounts are not reflected in the following table.



                                       29
<PAGE>
<TABLE>
<CAPTION>
                                      Summary Compensation Table

                                          Annual Compensation
---------------------------------  --------------------------------  ---------------------------
                                                                                     All Other
       Name and Principal                                Bonus ($)                 Compensation
            Position               Fiscal   Salary ($)     (1)         SARs (2)       ($) (3)
---------------------------------  ------  -----------  -----------  -----------  --------------
<S>                                <C>     <C>          <C>          <C>          <C>
Dennis Mehiel
   Chairman  and Chief  Executive   2002     722,212      170,000            -      551,135 (4)
   Officer                          2001     735,570      340,000            -      396,725 (5)
                                    2000     648,657      600,000            -      352,618 (6)

Thomas Uleau
   Chief  Operating  Officer  and   2002     423,366      100,000            -       15,588
   Vice Chairman                    2001     433,173      116,411            -       12,724
                                    2000     420,129      500,000      126,516       18,201 (7)

Hans H. Heinsen
   Senior   Vice    President   -   2002     281,848       70,000            -       19,915
   Finance  and  Chief  Financial   2001     255,428      176,411            -       17,534
   Officer                          2000     251,102      235,000       40,178        8,065

Michael Hastings
   President - Sweetheart Brand     2002     298,846            -            -       24,244
                                    2001     266,602      100,000            -       11,232
                                    2000     245,512      235,000      126,516       23,182 (8)

Robert Korzenski
   President - Fonda Brand          2002     277,269       90,000            -        8,494
                                    2001     244,543      140,000            -       11,480
                                    2000     239,578      235,000      126,516       20,998 (9)

Harvey L. Friedman
   Senior     Vice     President,   2002     283,904       55,000            -          841
   General Counsel and Secretary    2001     287,850      115,000            -            -
                                    2000     195,700      200,000            -            -
</TABLE>

(1)  Amounts shown were paid based upon the Company's performance.
(2)  The SAR Plan was terminated on September 14, 2000,  effective as of October
     1, 1999.  No SARs were  issued  during  Fiscal  2000.  All vested SARs were
     redeemed on September 20, 2000.
(3)  Reflects matching  contributions under 401(k) plans,  long-term  disability
     and life insurance  premiums  paid.  (4) Reflects  $4,192 of life insurance
     premiums and $546,943 for personal  expenses.  (5) Reflects  $2,580 of life
     insurance  premiums,  $378,124  for  personal  expenses,  $16,021  interest
     forgiveness.  (6) Reflects $1,507 of life insurance premiums,  $299,474 for
     personal  expenses,  $51,637  interest  forgiveness.  (7) Included in other
     compensation is $5,282 paid for relocation expenses.
(8)  Included in other compensation is $14,119 paid for relocation expenses.
(9)  Included in other compensation is $11,726 paid for relocation expenses.

         At September 29, 2002 and  September  30, 2001,  the Company has a loan
receivable  from its  Chief  Executive  Officer  of $0.3  million  plus  accrued
interest at 5.06%. During Fiscal 2001 and 2000, the

                                       30
<PAGE>
Company forgave  $16,021 and $51,637,  respectively, of interest associated with
loans to its Chief  Executive  Officer.  At September 29, 2002 and September 30,
2001, the Company has a loan receivable from its Chief Operating Officer of $0.1
million and $0.2  million,  respectively,  plus accrued  interest at 5.39%.  The
loans are payable upon demand.


Stock Options

         The Company's Chief Executive Officer hold 71,515 currently exercisable
options to purchase Class A Common Stock of SF Holdings.

         During Fiscal 2001,  SF Holdings  adopted the SF Holdings  Group,  Inc.
Share Incentive Plan in which SF Holdings may grant options to its employees and
to the  Company's  employees up to 95,995  shares of SF Holdings  Class D Common
Stock.

         During Fiscal 2001, SF Holdings  granted  options to purchase shares of
its common stock to certain  employees  of the Company.  The options vest over a
period of three years.  Certain of the exercise prices of the options were below
the fair market  value of SF  Holdings'  common  stock at the date of the grant.
During the vesting  period,  these discounts of $0.3 million are being amortized
as  compensation  expense and  credited  to  additional  paid-in  capital by the
Company.  Amortization  expense  relating to SF Holdings' stock options was $0.1
million and $0.2 million for Fiscal 2002 and Fiscal 2001, respectively.

         The weighted  average fair value of the SF Holdings stock options,  was
$0.4  million  in  Fiscal  2001  estimated  on  the  date  of  grant  using  the
Black-Scholes   options-pricing   model  with  the  following   weighted-average
assumptions:  dividend  yield of zero,  risk-free  interest  rate of 2.75%,  and
expected life of option grants of 3 years.  The effects of applying SFAS No. 123
in this pro forma disclosure are not indicative of future pro forma effects.


Employee Benefit Plans

         The Company  sponsors  various defined benefit  post-retirement  health
care plans that cover substantially all full-time employees.  The plans, in most
cases,  pay stated  percentages  of most medical  expenses  incurred by retirees
after  subtracting  payments by Medicare or other  providers  and after a stated
deductible has been met.  Participants  generally become eligible after reaching
age 60 with ten years of service.  The majority of such plans are  contributory,
with  retiree  contributions  adjusted  annually.  The Company does not fund the
plans.

         The  Company  provides  certain  union  and  non-union  employees  with
retirement and disability  income benefits under defined pension plans.  Pension
costs  are  based  upon  the  actuarially  normal  costs  plus  interest  on and
amortization  of the  unfunded  liabilities.  The  benefit for  participants  in
certain of the Company's non-union pension plans are frozen. In Fiscal 1999, the
assets and  obligations  of a pension plan for a number of the  Company's  union
employees were transferred to a multi-employer  pension plan resulting in a $0.2
million to income.  The  Company's  policy has been to fund annually the minimum
contributions required by applicable regulations.  In Fiscal 2001, all assets of
a discontinued  pension plan were  distributed in full  settlement of the plan's
obligations.  A credit to income of $30,000 was  recognized  as a result of this
settlement.  During Fiscal 2001,  the valuation date for the plan assets and the
contributions  was changed from September to June and resulted in no significant
effect.

         A  majority of the  Company's  employees  ("Participants")  are covered
under a 401(k) defined contribution plan. Effective January 1, 2000, the Company
provides  a  matching  contribution  of 100% on

                                       31
<PAGE>
the first 2% of a participant's salary and 50% on the next 4% of a participant's
salary. The Company's match is currently limited to participant contributions up
to 6% of the participant's salaries. In addition, the Company is allowed to make
discretionary contributions. Certain employees are covered under defined benefit
plans. On December 31, 2001 the Fonda defined  contribution plan was merged with
and into the Sweetheart  401(k) plan. Costs charged against  operations for this
defined  contribution plan were $6.4 million,  $6.8 million and $6.3 million for
Fiscal 2002, Fiscal 2001, and Fiscal 2000 respectively.

         The Company  also  participates  in  multi-employer  pension and 401(k)
saving plans for certain of its union  employees.  Contributions to these plans,
at a defined rate per hour worked were $1.4 million in Fiscal 2002, $1.0 million
in Fiscal 2001 and $1.8 million in Fiscal 2000.


Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

         All of the  Company's  common  stock is held of record by SF  Holdings.
Therefore,  the  following  table as of  December  9,  2002 sets  forth  certain
information  regarding  the  beneficial  ownership  of the  common  stock  of SF
Holdings with respect to (i) holders  having  beneficial  ownership of more than
five percent of the common stock,  (ii) each of our  directors,  (iii) the Named
Officers and (iv) all of our directors and executive officers as a group. Unless
otherwise indicated below, the Company's directors and executive officers do not
beneficially own any common stock of SF Holdings.

<TABLE>
<CAPTION>
                                                                                            Number               Percent
Name of Beneficial Owner                                                                   of Shares            Ownership
------------------------                                                                  ----------            ---------
<S>                                                                                       <C>                   <C>
Dennis Mehiel...................................................................          701,463(1)               62.3%
373 Park Avenue South
New York, NY 10016

Thomas Uleau....................................................................           18,033(2)                1.6%
10100 Reisterstown Road
Owings Mills, MD 21117

Hans H. Heinsen.................................................................            5,000(3)                *
373 Park Avenue South
New York, NY 10016

Michael T. Hastings.............................................................            5,000(3)                *
10100 Reisterstown Road
Owings Mills, MD 21117

Robert M. Korzenski.............................................................            5,000(3)                *
2920 North Main Street
Oshkosh, WI 54901

Harvey L. Friedman..............................................................           14,535(4)                1.3%
115 Stevens Avenue
Valhalla, NY 10595

Gail Blanke(5)..................................................................              166(3)                *
John A. Catsimatidis(5).........................................................              166(3)                *
Chris Mehiel (5)................................................................                0                   *
Edith Mehiel (5)................................................................                0                   *
Alfred B. DelBello(5)...........................................................              166(3)                *
Alan D. Scheinkman(5)...........................................................              166(3)                *
G. William Seawright(5).........................................................              166(3)                *
Directors and executive officers as a group (13 persons)........................          749,861(6)               66.6%
</TABLE>


                                       32
<PAGE>
---------
*        Less than one (1) percent.

(1)      Includes  378,385 shares of SF Holdings  Class A common stock,  116,647
         shares of SF Holdings  Class A common stock that would be issuable upon
         conversion  of SF  Holdings  Class B Series 2 preferred  stock,  71,515
         shares underlying  options to purchase SF Holdings Class A common stock
         which are  currently  exercisable,  778 shares of SF  Holdings  Class C
         common stock,  and 134,138  shares of SF Holdings  Class A common stock
         which Mr.  Mehiel  has the  power to vote  pursuant  to a voting  trust
         agreement with Edith Mehiel.
(2)      Includes 3,498 Shares of SF Holdings Class A common stock that would be
         issuable  upon  conversion  of SF  Holdings  Class B Series 2 preferred
         stock and 5,000 shares underlying options to purchase SF Holdings Class
         D common stock which are currently exercisable.
(3)      Represents  shares  underlying  options to purchase SF Holdings Class D
         common stock which are currently exercisable.  (4) Includes shares held
         in  trust  for  the  benefit  of Mr.  Friedman's  children.  Beneficial
         ownership of these shares is
         disclaimed  by Mr.  Friedman.  Includes  shares  underlying  options to
         purchase  SF  Holdings   Class  D  Common  stock  which  are  currently
         exercisable.
(5)      Business address is c/o Sweetheart Cup Company Inc., 373 Park    Avenue
         South, New York, NY 10016.
(6)      Includes an aggregate of 20,830 shares  underlying  options to purchase
         SF Holdings  Class D common stock which are currently exercisable.


Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


Transactions with Affiliates

         All of the  affiliates  (other than Fibre  Marketing,  a waste recovery
business in which the Company has a 25% interest and Mehiel Enterprises, Inc., a
company owned by a director,  Chris Mehiel, of the Company,  has a 75% interest)
referenced  below are directly or indirectly  under the common  ownership of the
Company's  Chairman and Chief  Executive  Officer,  Dennis  Mehiel.  The Company
believes that the transactions entered into with related parties were negotiated
on terms  which  are at least  as  favorable  as it  could  have  obtained  from
unrelated third parties and were negotiated on an arm's length basis.

         Pursuant to a Management Services Agreement, as amended, SF Holdings is
entitled to receive from the Company an aggregate  annual fee of $1.85  million,
payable semi-annually,  and is reimbursed for out-of-pocket expenses.  Under the
agreement,  SF Holdings has the right, subject to the direction of the Company's
Board of Directors, to manage the Company's day to day operations.

         At September 29, 2002 and  September  30, 2001,  the Company has a loan
receivable  from its  Chief  Executive  Officer  of $0.3  million  plus  accrued
interest at 5.06%. During Fiscal 2001 and 2000, the Company forgave  $16,021 and
$51,637,  respectively, of interest associated with loans to its Chief Executive
Officer.  At September 29, 2002 and  September 30, 2001,  the Company has a loan
receivable  from its Chief  Operating  Officer of $0.1 million and $0.2 million,
respectively, plus accrued interest at 5.39%. The loans are payable upon demand.

         During Fiscal 2002, the Company  purchased  $11.8 million of corrugated
containers  from Box USA,  a company  in which  the  Company's  Chief  Executive
Officer owns in excess of 10% of its outstanding capital stock, and $1.1 million
of travel  services  from  Emerald  Lady,  Inc,  a company  wholly  owned by the
Company's Chief Executive Officer ("Emerald Lady"). Included in accounts payable
as of September 29, 2002 is $1.0 million due to Box USA.  Other  purchases  from
affiliates during Fiscal 2002 were not significant.

          On November 1, 2001,  Fibre Marketing  issued  promissory notes to the
Company for $1.2 million in the aggregate,  in exchange for outstanding accounts
receivable from Fibre  Marketing,  at an

                                       33
<PAGE>
annual interest rate of 7.0% payable in 36 monthly installments. As of September
29, 2002, $0.9 million is due to the Company.

        During  Fiscal  2002,  the Company sold $8.9 million of scrap paper and
plastic to Fibre Marketing.  Included in accounts receivable as of September 29,
2002 is $1.3 million due from Fibre Marketing.  Other sales to affiliates during
Fiscal 2002 were not significant.

         During Fiscal 2001,  the Company  purchased  $7.6 million of corrugated
containers  from Box USA and $1.0 million of travel  services from Emerald Lady.
Included in accounts payable as of September 30, 2001 is $0.6 million due to Box
USA. Other purchases from affiliates during Fiscal 2001 were not significant.

         During  Fiscal  2001,  the Company sold $7.7 million of scrap paper and
plastic to Fibre Marketing.  Included in accounts receivable as of September 30,
2001 is $2.0 million due from Fibre Marketing.  Other sales to affiliates during
Fiscal 2001 were not significant.

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

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

         During  Fiscal  2001,  the  Company  began  leasing a facility in North
Andover,  Massachusetts  from D&L Andover Property,  LLC, an entity in which the
Company's  Chief Executive  Officer  indirectly owns 50%. During Fiscal 2002 and
Fiscal  2001,  rental  payments  under  this lease  were $1.5  million  and $1.4
million,  respectively.  Annual rental payments under the 20-year lease are $1.5
million in the first year, escalating at a rate of 2% each year thereafter.

         During Fiscal 2000, the Company entered into a lease agreement with D&L
Development,  LLC,  an entity in which the  Company's  Chief  Executive  Officer
indirectly  owns 47%, to lease a  warehouse  facility  in  Hampstead,  Maryland.
During  Fiscal 2002,  Fiscal 2001 and Fiscal 2000,  rental  payments  under this
lease were $3.7  million,  $3.6 million and $0.7 million,  respectively.  Annual
rental  payments under the 20-year lease are $3.7 million for the first 10 years
of the lease and $3.8 million annually, thereafter.

        During Fiscal 1998, the Company purchased a 38.2% ownership  interest in
Fibre  Marketing from a director of the Company for $0.2 million.  During Fiscal
2000,  the  Company  sold  a  13.2%  interest  in  Fibre   Marketing  to  Mehiel
Enterprises,  Inc. for $0.1 million, retaining a 25% ownership interest in Fibre
Marketing.  On July 17, 2000, Box USA  transferred  50% of its interest in Fibre
Marketing  to Mehiel  Enterprises,  Inc.  Mehiel  Enterprises,  Inc.  owns a 75%
interest in Fibre Marketing.  The Company accounts for its ownership interest in
Fibre Marketing using the equity method.  During Fiscal 2002, 2001 and 2000, the
Company  recorded a loss of $204,000,  a loss of $67,000 and income of $241,000,
respectively.

         The  Company  leases  a  building  in  Jacksonville,  Florida  from the
Company's  Chief  Executive  Officer.  Annual  payments under the lease are $0.2
million  plus  annual  increases  based on changes in the  Consumer  Price Index
("CPI") through December 31, 2014. In addition,  the Chief Executive Officer can
require the Company to purchase  the  facility  for $1.5  million,  subject to a
CPI-based  escalation,  until  July  31,  2006.  In  Fiscal  1998,  the  Company
terminated  its  operations  at this  facility and is currently

                                       34
<PAGE>
subleasing  the entire  facility.  Rent expense,  net of sublease  income on the
portion of the  premises  subleased  was $0.1  million,  $0.2  million  and $0.2
million during Fiscal 2002, Fiscal 2001 and Fiscal 2000, respectively.


Item 14. CONTROLS AND PROCEDURES

         The Company  maintains  disclosure  controls  and  procedures  that are
designed to ensure that information required to be disclosed in our Exchange Act
reports are recorded, processed, summarized and reported within the time periods
specified in the Securities and Exchange  Commission's rules and forms, and that
such  information is accumulated and  communicated to our management,  including
our Chief Executive  Officer and Chief  Financial  Officer,  as appropriate,  to
allow  timely  decisions  regarding  required  disclosure  based  closely on the
definition  of  "disclosure  controls  and  procedures"  in Rule  13a-14(c).  In
designing and  evaluating  the disclosure  controls and  procedures,  management
recognized  that any controls and  procedures,  no matter how well  designed and
operated, can provide only reasonable assurance of achieving the desired control
objectives,  and management  necessarily  was required to apply its judgement in
evaluating the cost-benefit relationship of possible controls and procedures.

         Within  90  days  prior to the date of this report, the Company carried
out an  evaluation,  under the  supervision  and with the  participation  of our
management,  including  our Chief  Executive  Officer  and our  Chief  Financial
Officer,  of the  effectiveness  of the design and  operation  of the  Company's
disclosure controls and procedures.  Based on the foregoing, the Company's Chief
Executive  Officer and Chief  Financial  Officer  concluded  that our disclosure
controls and procedures were effective.

         There have been no significant  changes in our internal  controls or in
other factors that could  significantly  affect the internal controls subsequent
to the date the Company  completed  its  evaluation,  including  any  corrective
actions with regard to significant deficiencies and material weaknesses.


                                    PART IV


Item 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K

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

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

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

     3.  Exhibits

         3.1      Certificate  of  Incorporation  of  Sweetheart  Holdings  Inc.
                  (incorporated   by    reference    from  Exhibit  3.1  of  the
                  Company's  report  on  Form  10-K dated December 22, 1993 (the
                  "1993 10-K")).
         3.3      Certificate  of  Amendment  to  the  Restated   Certificate of
                  Incorporation  of Sweetheart   Holdings  Inc.  dated March 11,
                  1998  (incorporated  by  reference  from  Exhibit  3.3  of the
                  Company's report on Form 10-Q dated May 15, 1998).
         3.4      Amended and Restated By-Laws of Sweetheart Holdings Inc. dated
                  March 12, 1998  (incorporated by reference from Exhibit 3.4 of
                  the Company's report on Form 10-Q dated May 15, 1998).
         3.5      Certification  of  Restated   Certificate of  Incorporation of
                  Sweetheart    Cup    Company    Inc.  date


                                       35
<PAGE>

                  August  30,  1993 (incorporated  by  reference  to Exhibit 3.4
                  of Sweetheart Cup Company Inc.'s  report  on  Form  S-4  filed
                  November 21, 2002).
         3.6      Certification  of  Amendment to the  Restated  Certificate  of
                  Incorporation  of  Sweetheart  Cup Company Inc. date March 11,
                  1998  (incorporated  by reference to Exhibit 3.5 of Sweetheart
                  Cup  Company  Inc.'s  report  on Form S-4 filed  November  21,
                  2002).
         3.7      Amended and Restated  By-Laws of Sweetheart Cup Company,  Inc.
                  dated March 12, 1998 (incorporated by reference to Exhibit 3.6
                  of  Sweetheart  Cup  Company  Inc.'s  report on Form S-4 filed
                  November 21, 2002).
         4.2      Indenture, dated as of August 30, 1993, between Sweetheart Cup
                  Company Inc., Sweetheart Holdings Inc. and U.S. Trust  Company
                  of Texas,  N.A.,  as  Trustee   (the  "Sweetheart  Indenture")
                  (incorporated  by  reference  to Exhibit  4.2 of    Sweetheart
                   Holdings Inc.'s report on Form 8-k filed October 21, 1993).
         4.3      First  Supplemental   Indenture,  dated as of August 30, 1993,
                  between Sweetheart Cup Company Inc., Sweetheart Holdings  Inc.
                  and U.S.   Trust   Company  of Texas, N.A., as Trustee to  the
                  Sweetheart Indenture.(incorporated by reference to Exhibit 4.2
                  of   Sweetheart   Cu p Company Inc.'s report on Form S-4 filed
                  November 21, 2002).
         4.4      Second Supplemental  Indenture,   dated as of  March 22, 2002,
                  between Sweetheart Cup Company Inc.,  Sweetheart Holdings Inc.
                  and  The   Bank of New   York, as   Trustee  to the Sweetheart
                  Indenture  (incorporated    by   reference  to  Exhibit 4.1 of
                  Sweetheart   Holding Inc.'s r eport on Form 8-K dated April 9,
                  2002).
         4.5      Indenture,  dated as of February 27,  1997,  between The Fonda
                  Group,  Inc.  and the  Trustee in  respect of $120  million in
                  aggregate principal amount of 9 1/2% Senior Subordinated Notes
                  due 2007 (the "Fonda  Indenture")(incorporated by reference to
                  Exhibit  4.1  filed  as a  part  of  The  Fonda  Group  Inc.'s
                  Registration  Statement  on Form  S-4,  as  amended  (File No.
                  333-24939).
         4.6      First  Supplemental  Indenture,  dated as of March  25,  2002,
                  between Sweetheart Cup Company Inc., as successor to The Fonda
                  Group,   Inc.,   and  the  Trustee  to  the  Fonda   Indenture
                  (incorporated  by  reference  to  Exhibit  4.3  of  Sweetheart
                  Holdings Inc.'s report on Form 8-K dated April 9, 2002).
         10.13    Asset  Sale  Agreement  dated as of  October  6, 1993  between
                  Sweetheart  Holdings  Inc.  and  Sweetheart  Cup Company  Inc.
                  (incorporated  by reference from Exhibit 10.1 of the Company's
                  report on Form 10-Q dated February 11, 1994).
         10.14    Bill of Sale,  Assignment and Assumption Agreement dated as of
                  October  6,  1993  between   Sweetheart   Holdings   Inc.  and
                  Sweetheart  Cup Company Inc.  (incorporated  by reference from
                  Exhibit  10.2  of the  Company's  report  on Form  10-Q  dated
                  February 11, 1994).
         10.15    Wraparound Note dated as of October 6, 1993 made by Sweetheart
                  Holdings Inc. to Sweetheart Cup Company Inc.  (incorporated by
                  reference  from Exhibit 10.3 of the  Company's  report on Form
                  10-Q dated February 11, 1994).
         10.16    Asset  Distribution  Agreement  dated as of  October  6,  1993
                  between  Sweetheart  Holdings Inc. and  Sweetheart Cup Company
                  Inc.  (incorporated  by  reference  from  Exhibit  10.4 of the
                  Company's report on Form 10-Q dated February 11, 1994).
         10.21    Sweetheart  Holdings Inc. Management  Incentive  Plan dated as
                  of January 27, 1995  (incorporated  by reference from  Exhibit
                  10.1 of the   Company's  report on Form 10-Q dated February 9,
                  1995).
         10.47    Second Restated  Management Services Agreement dated March 12,
                  1998 (incorporated by   reference   from Exhibit 10.47 of  the
                  Company's report on Form 10-Q dated May 15, 1998).
         10.48    Amendment No. 1 to the Second  Restated  Management   Services
                  Agreement   dated   March 12, 1998  (incorporated by reference
                  from Exhibit 10.48 of the Company's report on Form 10-Q  dated
                  May 15, 1998).
         10.51    Credit  Agreement  dated as of June 15, 1998 between Lily Cups
                  Inc. as Borrower and General  Electric  Capital Canada Inc. as
                  Lender  (incorporated  by reference from Exhibit 10.51 of  the
                  Company's  report on Form 10-Q dated August 14, 1998).

                                       36
<PAGE>
         10.52    Security Agreement  made as of June 15, 1998 between Lily Cups
                  Inc. as Grantor and  General  Electric  Capital Canada Inc. as
                  Lender (incorporated by  reference  from Exhibit 10.52 of  the
                  Company's report on Form 10-Q dated August 14, 1998).
         10.58    Intercreditor  Agreement  dated as of June 15, 2000 among Bank
                  of America,  N.A., as Agent,  and State Street,  solely in its
                  capacity  as  Owner  Trustee  and  Lessor   (incorporated   by
                  reference  from Exhibit 10.58 of the Company's  report on Form
                  10-Q dated June 25, 2000).
         10.59    Lease Agreement dated as of June 1, 2000 between State Street,
                  solely  in its  capacity  as Owner  Trustee  and  Lessor,  and
                  Sweetheart  Cup, as Lessee  (incorporated  by  reference  from
                  Exhibit 10. 59 of the Company's report on Form 10-Q dated June
                  25, 2000).
         10.60    Lease  Supplement  dated  as of June  1,  2000  between  State
                  Street,  solely in its  capacity as Owner  Trustee and Lessor,
                  and Sweetheart Cup, as  Lessee(incorporated  by reference from
                  Exhibit 10.60 of the Company's  report on Form 10-Q dated June
                  25, 2000).
         10.61    Participation  Agreement  dated  as  of  June  1,  2000  among
                  Sweetheart Cup, as Lessee,  the Company,  as Guarantor,  State
                  Street,  solely in its capacity as Owner Trustee,  and several
                  Owner  Participants  (incorporated  by reference  from Exhibit
                  10.61 of the  Company's  report  on Form 10-Q  dated  June 25,
                  2000).
         10.62    Definitions and  Rules  of  Usage  dated  as of June  1,  2000
                  executed  in  conjunction with  the  Participation   Agreement
                  (incorporated by reference from Exhibit 10.62 of the Company's
                  report on Form 10-Q dated June 25, 2000).
         10.63    Third Amendment to Credit  Agreement dated as of June 19, 2001
                  between  Lily Cups,  Inc.  as Borrower  and  General  Electric
                  Capital  Canada Inc. as Lender  (incorporated  by reference to
                  Exhibit  10.63 of  Sweetheart  Holdings  Inc.'s report on Form
                  10-K/A dated December 20, 2001).
         10.64    Fourth  Amendment To Credit  Agreement, dated as of August 15,
                  2001,  between  Lily Cups Inc.  and General  Electric  Capital
                  Canada Inc.  (incorporated  by reference to Exhibit  10.65  of
                  Sweetheart   Holdings   Inc.'s  report  on  Form  10-K/A dated
                  December 20, 2001).
         10.65    Third Amended and Restated Loan and Security  Agreement  dated
                  as of March 25, 2002 among the  financial  institutions  named
                  herein as the lenders and Bank of America,  N.A. as the  agent
                  and Sweetheart Cup Company, Inc. Company Inc., as the borrower
                  and Sweetheart Holdings Inc.,as the parent and Bank of America
                  Securities    LLC., as   sole   arranger and sole book manager
                  (incorporated  by reference to   Exhibit 10.66 of   Sweetheart
                  Holdings  Inc.'s report on Form 10-Q dated April 30,2002).
         10.66    Loan Agreement,  dated June 10, 2002,  between  Sweetheart Cup
                  Company,  Inc.  and the  Department  of Business  and Economic
                  Development,  a principal  department of the State of Maryland
                  (incorporated  by  reference  to Exhibit  10.67 of  Sweetheart
                  Holdings Inc.'s report on Form 10-Q dated August 6, 2002).
         10.67    Assignment  and  Assumption  Agreement,  dated as of March 25,
                  2002,  by and between SF Holdings  Group,  Inc.  and The Fonda
                  Group,  Inc.  (incorporated  by reference to Exhibit  10.18 of
                  Sweetheart  Cup  Company  Inc.'s  report  on  Form  S-4  filed
                  November 21, 2002).
         21.1     Subsidiaries   of th  e Company  (incorporated by reference to
                  Exhibit 21.1 of    Sweetheart    Cup Company  Inc.'s report on
                  Form S-4 filed November 21, 2002).
         99.1     Certification Pursuant to 18 U.S.C. Section 1350,  as  Adopted
                  Pursuant to  Section  906 of     the   Sarbanes-Oxley  Act  of
                  2002 - Chief Executive Officer
         99.2     Certification Pursuant to 18 U.S.C. Section 1350, as   Adopted
                  Pursuant to Section 906 of     the     Sarbanes-Oxley  Act  of
                  2002 - Chief Financial Officer

(b)  Current Reports on Form 8-K

         A report on Form 8-K was filed on February  14, 2002 under Item 5, Item
           7 and Item 9.
         A report   on   Form   8-K was   filed on March 6,2002 under Item 5 and
           Item 7.
         A  report on Form  8-K was  filed on April 9, 2002 under Item 1, Item 5
           and Item 7.

                                       37
<PAGE>
                   INDEX TO CONSOLIDATED FINANCIAL STATEMENTS



                                                                            Page

Independent Auditors' Report                                                 39


Consolidated Balance Sheets as of September 29, 2002
     and September 30, 2001                                                  40


Consolidated Statements of Operations and
     Other Comprehensive Income (Loss)for
     Fiscal Years 2002, 2001 and 2000                                        41


Consolidated Statements of Cash Flows for
     Fiscal Years 2002, 2001, and 2000                                       42


Consolidated Statements of Shareholder's Equity for
     Fiscal Years 2002, 2001, and 2000                                       43


Notes to Consolidated Financial Statements                                   44

                                       38
<PAGE>
INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
Sweetheart Holdings Inc.


         We  have  audited  the  accompanying  consolidated  balance  sheets  of
Sweetheart  Holdings Inc. and  subsidiaries  (the "Company") as of September 29,
2002  and  September  30,  2001,  and the  related  consolidated  statements  of
operations and other comprehensive  income (loss), cash flows, and shareholder's
equity for each of the three  fiscal  years in the period  ended  September  29,
2002. These  consolidated  financial  statements are the  responsibility  of the
Company's  management.  Our  responsibility  is to  express  an opinion on these
consolidated financial statements based on our audits.

         We conducted our audits in accordance with auditing standards generally
accepted in the United States of America.  These standards  require that we plan
and perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement.  An audit includes examining, on a
test basis,  evidence  supporting  the amounts and  disclosures in the financial
statements.  An audit also includes assessing the accounting principles used and
significant  estimates  made by  management,  as well as evaluating  the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.

         In our opinion, such consolidated  financial statements present fairly,
in all material respects,  the financial position of the Company as of September
29, 2002 and September 30, 2001,  and the results of its operations and its cash
flows for each of the three fiscal years in the period ended  September 29, 2002
in conformity with accounting principles generally accepted in the United States
of America.





/s/ DELOITTE & TOUCHE LLP
Baltimore, Maryland
December 2, 2002

                                       39
<PAGE>
                    SWEETHEART HOLDINGS INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (In thousands, except share data)

<TABLE>
<CAPTION>
                                                                               September 29,      September 30,
                                                                                   2002              2001
                                                                             -----------------  -----------------
<S>                                                                          <C>                <C>
                                 Assets
Current assets:
  Cash and cash equivalents                                                     $   8,035          $  11,616
  Cash in escrow                                                                        -                  8
  Receivables, less allowances of $3,741 and $3,395                               152,541            170,122
  Inventories                                                                     219,427            225,021
  Deferred income taxes                                                            20,841             24,185
  Assets held for sale                                                              5,275              7,368
  Other current assets                                                             35,736             31,568
                                                                                ----------         ----------
    Total current assets                                                          441,855            469,888

Property, plant and equipment, net                                                252,491            260,666
Deferred income taxes                                                              29,879             26,015
Spare parts                                                                        13,428             12,077
Goodwill, net                                                                      41,232             43,593
Due from SF Holdings                                                               17,962             17,898
Other assets                                                                       23,996             25,036
                                                                                ----------         ----------

    Total assets                                                                $ 820,843          $ 855,173
                                                                                ==========         ==========

                  Liabilities and Shareholder's Equity
Current liabilities:
  Accounts payable                                                              $ 102,986          $  96,072
  Accrued payroll and related costs                                                38,009             46,892
  Other current liabilities                                                        44,000             50,257
  Current portion of deferred gain on sale of assets                               10,203             10,275
  Current portion of long-term debt                                               119,853             16,942
                                                                                ----------         ----------
    Total current liabilities                                                     315,051            220,438

Commitments and contingencies  (See Notes)

Long-term debt                                                                    317,448            423,878
Deferred gain on sale of assets                                                    72,883             83,672
Other liabilities                                                                  65,948             68,925
                                                                                ----------         ----------

    Total liabilities                                                             771,330            796,913
                                                                                ----------         ----------

Minority interest in subsidiary                                                     2,276              2,130
                                                                                ----------         ----------

Shareholder's equity:
  Class A Common Stock - Par value $.01 per share; 1,100,000 shares
    authorized; 1,046,000 shares issued and outstanding                                10                 10
  Class B Common Stock - Par value $.01 per share; 4,600,000 shares
    authorized; 4,393,200 shares issued and outstanding                                44                 44
  Additional paid-in capital                                                      101,173            101,257
  Accumulated deficit                                                             (40,577)           (37,429)
  Accumulated other comprehensive loss                                            (13,413)            (7,752)
                                                                                ----------         ----------

    Total shareholder's equity                                                     47,237             56,130
                                                                                ----------         ----------

    Total liabilities and shareholder's equity                                  $ 820,843          $ 855,173
                                                                                ==========         ==========
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.


                                       40
<PAGE>
                    SWEETHEART HOLDINGS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      AND OTHER COMPREHENSIVE INCOME (LOSS)
                                 (In thousands)

<TABLE>
<CAPTION>
                                                                                Fiscal
                                                         ----------------------------------------------------
                                                               2002              2001             2000
                                                         ----------------  ----------------  ----------------
<S>                                                      <C>               <C>               <C>
Net sales                                                  $ 1,283,547       $ 1,316,672       $ 1,276,617
Cost of sales                                                1,130,264         1,143,806         1,090,286
                                                           ------------      ------------      ------------

  Gross profit                                                 153,283           172,866           186,331

Selling, general and administrative expenses                   114,823           113,231           112,559
Restructuring charge                                             1,893               504             1,153
Asset impairment expense                                           593             2,244                 -
Other expense (income), net                                      2,102            (9,836)           (4,943)
                                                           ------------      ------------      ------------

  Operating income                                              33,872            66,723            77,562

Interest expense, net of interest income of
  $211, $100 and $1,346                                         37,079            38,919            52,608
                                                           ------------      ------------      ------------

  Income (loss)  before  income tax,  minority
  interest and extraordinary loss                               (3,207)           27,804            24,954

Income tax (benefit) expense                                    (1,283)           11,220            10,096
Minority interest in subsidiary                                    145                68                 -
                                                           ------------      ------------      ------------

  Income (loss) before extraordinary loss                       (2,069)           16,516            14,858

Extraordinary  loss  on debt  extinguishment  (net of
    income tax benefit of $719 and $209)                         1,079                 -               313
                                                           ------------      ------------      ------------

  Net income (loss)                                        $    (3,148)      $    16,516       $    14,545
                                                           ============      ============      ============

Other comprehensive income (loss):

  Net income (loss)                                        $    (3,148)      $    16,516       $    14,545
  Foreign currency translation adjustment                         (912)             (393)             (122)
  Minimum pension liability adjustment (net
    of income tax of $(2,971), $(3,489) and
    $470)                                                       (4,749)           (5,234)              705
                                                           ------------      ------------      ------------

  Comprehensive income (loss)                              $    (8,809)      $    10,889       $    15,128
                                                           ============      ============      ============
</TABLE>



          See accompanying Notes to Consolidated Financial Statements.

                                       41
<PAGE>

                    SWEETHEART HOLDINGS INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (In thousands)
<TABLE>
<CAPTION>
                                                                                Fiscal
                                                         ----------------------------------------------------
                                                              2002              2001              2000
                                                         ----------------  ----------------  ----------------
<S>                                                      <C>               <C>               <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net income (loss)                                        $    (3,148)      $    16,516       $    14,545

  Adjustments to reconcile net income (loss) to net cash
  provided  by operating activities:
    Depreciation and amortization                               34,498            32,003            47,605
    Amortization of deferred gain                              (10,239)          (10,276)           (2,813)
    Asset impairment expense                                       593             2,244                 -
    Deferred income tax expense                                  1,785             8,263             4,789
    Loss (gain) on sale of assets                               (3,069)              143            (4,237)
    Write-off of assets                                          7,996                 -                 -
  Changes in operating assets and liabilities (net of
    business acquisitions):
    Receivables                                                 17,581            (7,279)          (24,550)
    Inventories                                                  5,594            11,147           (31,145)
    Other current assets                                        (4,168)           (2,958)             (181)
    Other assets                                                   444            (3,703)            2,519
    Accounts payable                                             6,914           (12,241)            6,422
    Accrued payroll and related costs                           (8,883)           (8,861)              136
    Other current liabilities                                   (6,550)            1,445             8,550
    Other liabilities                                          (10,617)          (12,690)          (20,027)
    Other, net                                                    (262)               21               339
                                                           ------------      ------------      ------------
      Net cash provided by operating activities                 28,469            13,774             1,952
                                                           ------------      ------------      ------------

CASH FLOWS FROM INVESTING ACTIVITIES

  Additions to property, plant and equipment                   (21,206)          (31,701)          (26,915)
  Payments for business acquisitions                                 -           (40,665)          (12,411)
  Due to/from SF Holdings                                          (64)              543           (30,449)
  Proceeds from sale of property, plant and equipment            5,284               120           221,474
                                                           ------------      ------------      ------------
      Net cash  (used in) provided by investing activities     (15,986)          (71,703)          151,699
                                                           ------------      ------------      ------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net borrowings under credit  facilities                      200,254            66,427            38,957
  Repayments under credit facilities                          (196,144)                -                 -
  Repayments of other debt                                      (9,633)             (715)         (190,565)
  Borrowings                                                     2,000                 -                 -
  Redemption of stock appreciation rights                            -                 -              (504)
  Debt issuance costs                                          (12,549)           (1,287)                -
  Increase in cash escrow                                       (4,589)              (17)         (206,318)
  Decrease in cash escrow                                        4,597               309           206,018
                                                           ------------      ------------      ------------
      Net cash (used in) provided by financing activities      (16,064)           64,717          (152,412)
                                                           ------------      ------------      ------------

NET (DECREASE) INCREASE IN CASH AND CASH
  EQUIVALENTS                                                   (3,581)            6,788             1,239
CASH AND CASH EQUIVALENTS, beginning of year                    11,616             4,828             3,589
                                                           ------------      ------------      ------------
CASH AND CASH EQUIVALENTS, end of year                     $     8,035       $    11,616       $     4,828
                                                           ============      ============      ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:

      Interest paid                                        $    34,426       $    37,070       $    52,147
                                                           ============      ============      ============

      Income taxes paid                                    $       880       $     2,484       $     3,673
                                                           ============      ============      ============

SUPPLEMENTAL NON-CASH FINANCING ACTIVITY:

      Note payable associated with business acquisition    $         -       $         -       $     2,914
                                                           ============      ============      ============
</TABLE>
          See accompanying Notes to Consolidated Financial Statements.

                                       42
<PAGE>
                    SWEETHEART HOLDINGS INC. AND SUBSIDIARIES
                 CONSOLIDATED STATEMENTS OF SHAREHOLDER'S EQUITY
                                 (In thousands)



<TABLE>
<CAPTION>
                                                                                  Accumulated
                                                                                  Other Comp-
                                   Class A   Class B   Additional                  rehensive        Total
                                   Common    Common     Paid-In     Accumulated     Income      Shareholder's
                                    Stock     Stock     Capital       Deficit       (Loss)          Equity
                                  --------- --------- ------------ ------------- ------------- ---------------
<S>                               <C>       <C>       <C>          <C>           <C>           <C>
Balance, September 27, 1999        $    10   $    44   $  101,090   $  (68,490)   $   (2,708)     $  29,946

Net income                               -         -            -       14,545             -         14,545
Minimum pension liability
  adjustment                             -         -            -            -           705            705
Translation adjustment                   -         -            -            -          (122)          (122)
                                   --------  --------  -----------  -----------   -----------     ----------

Balance, September 24, 2000             10        44      101,090      (53,945)       (2,125)        45,074

Net income                               -         -            -       16,516             -         16,516
Equity based compensation                -         -          167            -             -            167
Minimum    pension     liability
  adjustment                             -         -            -            -        (5,234)        (5,234)
Translation adjustment                   -         -            -            -          (393)          (393)
                                   --------  --------  -----------  -----------   -----------     ----------

Balance, September 30, 2001             10        44      101,257      (37,429)       (7,752)        56,130

Net loss                                 -         -            -       (3,148)            -         (3,148)
Elimination of gain on
  equipment purchased from
  related party                          -         -         (183)           -             -           (183)
Equity based compensation                -         -           99            -             -             99
Minimum    pension     liability
  adjustment                             -         -            -            -        (4,749)        (4,749)
Translation adjustment                   -         -            -            -          (912)          (912)
                                   --------  --------  -----------  -----------   -----------     ----------

Balance, September 29, 2002        $    10   $    44   $  101,173   $  (40,577)   $  (13,413)     $  47,237
                                   ========  ========  ===========  ===========   ===========     ==========
</TABLE>





          See accompanying Notes to Consolidated Financial Statements.


                                       43
<PAGE>
                    SWEETHEART HOLDINGS INC. AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS


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

         On March 25,  2002,  pursuant to an Agreement  and Plan of Merger,  The
Fonda Group,  Inc.  ("Fonda") was merged (the "Merger") with and into Sweetheart
Cup, with Sweetheart Cup as the surviving entity. In connection with the Merger,
all of the assets and operations of Fonda were assigned to, and all  liabilities
of Fonda were  assumed by,  Sweetheart  Cup by  operation  of law and all of the
outstanding  shares of Fonda  were  cancelled.  Sweetheart  Cup,  the  surviving
entity,  is a wholly owned  subsidiary of Sweetheart  Holdings which is a wholly
owned  subsidiary  of SF  Holdings  Group,  Inc.  ("SF  Holdings").  Pre-merger,
Sweetheart  Holdings and Fonda were under common  control,  and  therefore,  the
transaction    has   been   accounted   for   in   a   manner   similar   to   a
pooling-of-interests.  The accompanying consolidated financial statements of the
Company have been restated for all periods presented.

         The Company  believes it is one of the largest  producers and marketers
of disposable  foodservice  and food  packaging  products in North  America.  In
Fiscal  2002,  2001 and 2000,  the Company had net sales of  approximately  $1.3
billion,  respectively.  The  Company  sells a broad line of  disposable  paper,
plastic  and foam  foodservice  and food  packaging  products at all major price
points  under both  branded and  private  labels to  institutional  foodservice,
consumer and food packaging  customers.  The Company  markets its products under
its well recognized: Sweetheart(R), Lily(R), Trophy(R), Jazz(R), Preference(TM),
Go Cup(R), Silent Service(R),  Centerpiece(R),  Basix(R),  Guildware(R),  Simple
Elegance(R),  Sensations(R),  Hoffmaster(R), Paper Art(R), and Touch of Color(R)
brands.  In addition,  the Company  designs,  manufactures  and leases container
filling  equipment for use by dairies and other food processors.  This equipment
is  specifically  designed  by the  Company  to  fill  and  seal  containers  in
customers' plants.  During Fiscal 2002, 2001 and 2000, no one customer accounted
for more than 10% of the Company's net sales.


1.  SIGNIFICANT ACCOUNTING POLICIES

         Business  Segments - The Company  operates within one business  segment
and accordingly does not report multiple business segments.  Included within net
sales for Fiscal  2002,  2001 and 2000 is $1.4  million,  $1.6  million and $1.9
million of lease revenue,  respectively.  Further identification of net sales by
product and service or group of similar products and services is not available.

         Fiscal  year end - The  Company's  fiscal year end is the 52 or 53 week
period ending on the last Sunday in September. Fiscal 2002 is the 52 week period
ended September 29, 2002.  Fiscal 2001 is the 53 week period ended September 30,
2001. Fiscal 2000 is the 52 week period ended September 24, 2000.

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

         The accounts of the Company's Mexican  subsidiary,  Global Cup, S.A. De
C.V. and its  subsidiaries  ("Global Cup"),  are  consolidated as of and for the
period  ended  August  25,  2002  due to the time  needed  to  consolidate  this
subsidiary. No events occurred related to this subsidiary in September 2002 that
materially affected the Company's  consolidated financial position or results of
operations.

         Cash, including Cash Equivalents,  Restricted Cash and Cash in Escrow -
The Company considers all highly liquid investments with an original maturity of
three months or less to be cash

                                       44
<PAGE>
equivalents.  Cash overdrafts are  reclassified to accounts  payable and accrued
payroll and related costs.  Cash received as proceeds from the sale of assets is
restricted  to  qualified  capital  expenditures  under  the  terms  of a  lease
agreement and is held in escrow with the trustee until utilized (See Note 10).

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

         Property,  Plant and  Equipment  -  Property,  plant and  equipment  is
recorded  at cost,  less  accumulated  depreciation,  or fair  market  value for
business  acquisitions and is depreciated on the  straight-line  method over the
estimated useful lives of the assets, with the exception of some property, plant
and equipment  acquired  prior to January 1, 1991,  which is  depreciated on the
declining balance method.

         The asset lives of buildings  and  improvements  range between 2 and 50
years  and  have an  average  useful  life of 21.7  years.  The  asset  lives of
machinery and equipment  range between 5 and 13 years and have an average useful
life of 11.9 years.

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

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

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

         Goodwill - Goodwill  represents  the excess of the purchase  price over
the fair value of tangible and  identifiable  intangible net assets acquired and
is amortized on a straight-line  basis over twenty years.  The carrying value of
goodwill  is  reviewed  when  facts  and  circumstances  suggest  that it may be
impaired.  The Company assesses its  recoverability  by determining  whether the
amortization  of the goodwill  balance over its remaining  life can be recovered
through  undiscounted  projected  future cash flows.  Should the review indicate
that goodwill is not recoverable,  the Company's  carrying value of the goodwill
would be reduced by the estimated  shortfall of the cash flows. See "--Impact of
Recently Issued Accounting Standards, SFAS No. 142".

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

         Income  Taxes  -  Deferred  income  taxes  are  provided  to  recognize
temporary differences between the financial reporting basis and the tax basis of
the Company's assets and liabilities.

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

         At September  29, 2002 and  September  30, 2001,  $0.2 million and $0.3
million,  respectively,  of  unamortized  catalog  costs were  included in other
current  assets.  Advertising  expense  was $0.3  million in

                                       45
<PAGE>
Fiscal 2002, $0.2 million in Fiscal 2001 and in Fiscal 2000. Catalog expense was
$0.7  million in Fiscal  2002,  $0.4  million in Fiscal 2001 and $0.6 million in
Fiscal 2000.

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

         As of  September  29,  2002 and  September  30,  2001,  the Company had
$47,000 and $0.5 million in minimum  license  guarantees and advance  royalties,
net of reserves, respectively.  Future minimum royalty payments are $0.6 million
in 2003 and $0.1 million thereafter.

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

         Debt issuance costs - Costs  associated  with  obtaining  financing are
capitalized  and are included in other assets.  These costs are being  amortized
over the terms of the respective financing.

         Impact of Recently  Issued  Accounting  Standards  - In June 2001,  the
Financial  Accounting  Standards Board ("FASB")  issued two new  pronouncements:
Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  141,  Business
Combinations and SFAS No. 142,  Goodwill and Other Intangible  Assets.  SFAS No.
141   prohibits  the  use  of  the   pooling-of-interest   method  for  business
combinations  initiated  after June 30,  2001 and also  applies to all  business
combinations  accounted for by the purchase method that are completed after June
30,  2001.  There  are  also  transition   provisions  that  apply  to  business
combinations  completed  before  July 1,  2001 that  were  accounted  for by the
purchase  method.  SFAS No. 142 is effective  for fiscal years  beginning  after
December  15,  2001 and  applies to all  goodwill  and other  intangible  assets
recognized  in an entity's  balance  sheet  regardless of when these assets were
originally  recognized.   SFAS  No.  142  requires  that  goodwill  and  certain
intangibles  with  an  indefinite  life  not be  amortized,  but  subject  to an
impairment test on an annual basis.  The Company has adopted SFAS No. 141 during
Fiscal 2001.  The Company has adopted SFAS No. 142 effective  September 30, 2002
and is  currently  evaluating  the  impact of SFAS No.  142 on its  consolidated
financial statements.

         In June  2001,  the FASB  issued  SFAS No.  143,  Accounting  for Asset
Retirement  Obligations.  This  statement  addresses  financial  accounting  and
reporting for obligations  associated with the retirement of tangible long-lived
assets and the associated asset retirement  costs. SFAS No. 143 applies to legal
obligations associated with the retirement of long-lived assets that result from
the  acquisition,  construction,  development and (or) the normal operation of a
long-lived  asset,  except for certain  obligations  of leases.  This  statement
amends SFAS. No. 19, Financial Accounting and Reporting by Oil and Gas Producing
Companies.  SFAS No. 143 is effective for years  beginning  after June 15, 2002.
The  Company  has  adopted  SFAS No. 143  effective  September  30,  2002 and is
currently  evaluating the impact of SFAS No. 143 on its  consolidated  financial
statements.

         In October 2001,  the FASB issued SFAS No. 144,  Impairment or Disposal
of  Long-Lived  Assets.  This  statement  addresses  financial   accounting  and
reporting for the  impairment or disposal of long-lived  assets.  This statement
supersedes SFAS No. 121,  Accounting for the Impairment of Long-Lived Assets and
for  Long-Lived  Assets to Be  Disposed  Of, and the  accounting  and  reporting
provisions of Accounting  Principals Board Opinion No. 30, Reporting the Results
of Operations-Reporting  the Effects of Disposal

                                       46
<PAGE>
of  a  Segment  of a  Business,  and  Extraordinary,  Unusual  and  Infrequently
Occurring Events and  Transactions,  for the disposal of a segment of a business
(as previously  defined in that Opinion).  This statement also amends Accounting
Research Bulletin No. 51, Consolidated  Financial  Statements,  to eliminate the
exception to  consolidation  for a subsidiary  for which control is likely to be
temporary.  SFAS No. 144 is effective for fiscal years  beginning after December
15, 2001. The Company has adopted SFAS No. 144 effective  September 30, 2002 and
is currently evaluating the impact of SFAS No. 144 on its consolidated financial
statements.

         In April 2002,  the FASB issued SFAS No. 145,  Recission of FASB No. 4,
44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.  This
statement  addresses,  among other items, the classification of gains and losses
from extinguishment of debt. In accordance with the statement,  any gain or loss
on  extinguishment of debt that does not meet the criteria in APB No. 30 will no
longer be classified as an extraordinary  item for all periods  presented.  This
statement  is  effective  for fiscal years  beginning  after May 15,  2002.  The
Company has adopted SFAS No. 145  effective  September 30, 2002 and is currently
evaluating the impact of SFAS No. 145 on its consolidated financial statements.

         In July  2002,  the FASB  issued  SFAS No.  146,  Accounting  for Costs
Associated  with Exit or Disposal  Activities.  SFAS No. 146  replaces  Emerging
Issues Task Force Issue 94-3,  requiring a company to recognize costs associated
with exit or disposal  activities when they are incurred rather than at the date
of a  commitment  to an exit or  disposal  plan.  SFAS No.  146 is to be applied
prospectively to exit or disposal activities initiated after December 31, 2002.

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


2.  INVENTORIES

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

                              September 29,    September 30,
                                   2002            2001
                             ---------------  ---------------

Raw materials and supplies     $  57,305        $  55,955
Finished  products               150,925          158,297
Work in progress                  11,197           10,769
                               ---------        ---------
  Total inventories            $ 219,427        $ 225,021
                               =========        =========


                                       47
<PAGE>
3.  INCOME TAXES

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

                                                 Fiscal
                                   ----------------------------------
                                      2002        2001        2000
                                   ----------  ----------  ----------
Current:
  Federal                           $ (3,068)   $  2,471    $  3,891
  State                                    -         486       1,146
  Foreign                                  -           -         270
                                    ---------   ---------   ---------
    Total current                     (3,068)      2,957       5,307
                                    ---------   ---------   ---------
Deferred:
  Federal                              2,221       7,745       4,536
  State                                 (121)        947         253
  Foreign                               (315)       (429)
                                    ---------   ---------   ---------
    Total deferred                     1,785       8,263       4,789
                                    ---------   ---------   ---------

Total income tax (benefit) expense  $ (1,283)   $ 11,220    $ 10,096
                                    =========   =========   =========

         The effective tax rate varied from the U.S. Federal tax rate of 35% for
Fiscal 2002, 2001 and 2000 as a result of the following:

                                                 Fiscal
                                   ----------------------------------
                                      2002        2001        2000
                                   ----------  ----------  ----------

U.S. Federal tax rate                  35%         35%         35%
State income taxes, net of
  U.S. Federal tax impact               4           4           4
Permanent difference, meals and
  entertainment                         1           1           1
                                      ----        ----        ----
       Effective tax rate              40%         40%         40%
                                      ====        ====        ====


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

                                       48
<PAGE>
<TABLE>
<CAPTION>
                                                          September 29,    September 30,
                                                              2002             2001
                                                         ---------------  ---------------
<S>                                                      <C>              <C>
Assets:
  Post-retirement health and pension benefits              $  19,755        $  23,985
  Employee benefits                                            7,651            7,602
  Net operating loss carryforwards                            20,700            9,980
  Deferred gain on sale-leaseback transaction                 33,670           37,766
  Alternative minimum tax credit carryforward                    354            3,329
  Deferred rent                                                2,867            1,606
  Inventory adjustments                                        3,600            7,964
  Allowance for doubtful accounts and related reserves         6,628            1,957
  Charitable contributions carryforwards                         184              184
  Other                                                        5,020            4,433
                                                           ----------       ----------
                                                             100,429           98,806
Liabilities:
     Depreciation                                            (49,709)         (48,606)
                                                           ----------       ----------

Net deferred tax assets                                    $  50,720        $  50,200
                                                           ==========       ==========
</TABLE>

         As of September 29, 2002, the Company had  approximately $56 million of
net operating  loss  carryforwards  for federal income tax purposes of which $25
million will expire in 2018 and the  remaining  $31 million will expire in 2022.
Although  future  earnings  cannot  be  predicted  with  certainty,   management
currently believes that realization of the net deferred tax asset is more likely
than not.

         No provision has been made for U.S.  federal  deferred  income taxes on
approximately  $11  million of  accumulated  and  undistributed  earnings of the
Foreign  subsidiaries at September 29, 2002 since it is the present intention of
management  to  reinvest  the  undistributed   earnings  in  foreign  operations
indefinitely.  In addition, the determination of the amount of unrecognized U.S.
federal  deferred  income tax liability for unremitted  earnings  related to the
investments in the Foreign subsidiaries is not practicable.


4.  ASSETS HELD FOR SALE

         On August 3, 2001, the Company's Board of Directors  approved plans for
the closure and sale of its Manchester,  New Hampshire  facility.  This facility
was consolidated  into the North Andover,  Massachusetts  facility.  The Company
consummated  the  sale in  Fiscal  2002  which  resulted  in a net  gain of $3.0
million.

         On February 20, 2001, the Company's  Board of Directors  approved plans
for  the  closure  and  sale of the  Somerville,  Massachusetts  facility.  This
facility was consolidated into the North Andover,  Massachusetts facility and is
not being used in operations as of September 29, 2002.  The Company  anticipates
the sale of the facility  within the next twelve months and has classified it as
available for sale on the consolidated balance sheet.

                                       49
<PAGE>
5.  OTHER CURRENT ASSETS

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

                                  September 29,    September 30,
                                      2002             2001
                                 --------------   --------------

    Spare parts                    $  22,652        $  23,273
    Vendor receivables                 4,343            3,141
    Income taxes receivable            3,068                -
    Prepaid expenses                   5,673            5,154
                                   ---------        ---------

      Total other current assets   $  35,736        $  31,568
                                   =========        =========


6.  PROPERTY, PLANT AND EQUIPMENT, NET

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

                                        September 29,    September 30,
                                            2002             2001
                                       ---------------  ---------------

Land                                     $  14,571        $  14,630
Buildings and improvements                 117,772          108,571
Machinery and equipment                    328,529          311,713
Construction in progress                     8,043           16,587
                                         ---------        ---------

  Total property, plant and equipment      468,915          451,501

Less - accumulated depreciation            216,424          190,835
                                         ---------        ---------

  Property, plant and equipment, net     $ 252,491        $ 260,666
                                         =========        =========


         Depreciation of property,  plant and equipment was $27.6 million, $27.8
million  and $43.0  million  in Fiscal  2002,  2001 and 2000,  respectively.  In
addition,  property,  plant and equipment includes buildings under capital lease
at a cost of $2.4  million and a net book value of $1.4 million and $1.5 million
at September 29, 2002 and September 30, 2001, respectively.


7.  ACQUISITIONS

         On  August  28,  2001,   the  Company   consummated   the  purchase  of
substantially  all of the property,  plant and  equipment,  intangibles  and net
working capital of the consumer division of Dopaco,  Inc.  ("Dopaco") located in
El Cajon,  California (the "Dopaco Acquisition").  In addition,  pursuant to the
Dopaco  Agreement,  the Company  assumed the  liabilities and obligations of the
consumer  division of Dopaco arising under purchased  contracts and leases.  The
consumer division of Dopaco manufactures coated and uncoated white and decorated
paper  plates,  bowls and lunch  bags and serves  primarily  the  private  label
markets of major west coast based grocery chains.  The aggregate  purchase price
was  $21.8  million  which  was  funded  through a bank  financing.  The  Dopaco
Acquisition  resulted in goodwill of $9.1 million which is fully tax  deductible
and  intangible  assets of $3.2 million with a weighted  average  useful life of
approximately  4.4 years.  These  intangible  assets  consisted of a non-compete
agreement of $2.2 million with an estimated  useful life of 5 years,  employment
contracts  of $0.8  million  with  estimated  useful  lives of 3 years and other
assets of $0.2 million with estimated useful lives of 11 months.

                                       50
<PAGE>
         On April 5, 2001, the Company  purchased an 80% interest in Global Cup.
Global Cup  manufactures,  distributes  and sells paper cups and lids throughout
Mexico and exports to other Latin  American  countries.  The Company has assumed
the  liabilities and obligations of Global Cup arising under contracts or leases
that are  either  assets  purchased  by the  Company  or a part of the  accounts
payable.  The aggregate  purchase  price for the assets and working  capital was
$12.2 million which was paid in cash. The Global Cup acquisition has resulted in
goodwill of $3.9 million.

         The above  acquisitions  have  been  accounted  for under the  purchase
method and their  results have been included in the  consolidated  statements of
operations since the respective dates of acquisition.  Goodwill amortization was
$2.0  million in Fiscal  2002,  $1.9  million in Fiscal 2001 and $1.2 million in
Fiscal  2000.  Accumulated  amortization  was $8.1  million and $6.1  million at
September 29, 2002 and September 30, 2001, respectively.  The inclusion of these
acquisitions  within  the  consolidated  financial  statements  presented  had a
minimal impact on the Company's pro forma results.


8.  OTHER ASSETS

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

                                        September 29,    September 30,
                                            2002             2001
                                       ---------------  ---------------

Debt issuance costs, net of
  accumulated amortization               $  14,664        $   6,744
SF Holdings management agreement                 -            5,201
Intangible assets                            2,812            3,111
Investment                                       -            2,221
Intangible pension asset
  (See Note 23)                              1,813            2,737
Deposits                                     1,307            2,432
Other                                        3,400            2,590
                                         ---------        ---------

  Total other assets                     $  23,996        $  25,036
                                         =========        =========

         Amortization of debt issuance costs was $3.3 million,  $1.7 million and
$2.6 million for Fiscal 2002,  2001 and 2000,  respectively,  and is included in
interest expense.


9.  OTHER CURRENT LIABILITIES

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

                                        September 29,    September 30,
                                            2002             2001
                                       ---------------  ---------------

Sales allowances                         $  17,583        $  21,641
Restructuring charges                          816              365
Taxes, other than income taxes               3,220            5,136
Litigation, claims and assessments
  (See Note 25)                              1,642            1,426
Deferred rent payable                        7,708            8,169
Interest payable                             2,801            3,337
Freight payable                              2,175            1,481
Other                                        8,055            8,702
                                         ---------        ---------
  Total other current liabilities        $  44,000        $  50,257
                                         =========        =========


                                       51
<PAGE>
10. DEFERRED GAIN ON SALE OF ASSETS

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

         Annual  rental  expense  under the Lease  will be  approximately  $31.5
million.  The  Sweetheart  Cup may renew the Lease at its  option for up to four
consecutive  renewal terms of two years.  The rent for each renewal term will be
determined at 105% of the fair market rental value of the  production  equipment
at the date of renewal.  The Lease does not contain  bargain  lease terms and no
penalties or other  disincentives  if the Sweetheart Cup elects not to renew the
Lease.  If at the end of the  lease  term,  the  Sweetheart  Cup  elects  not to
exercise its option to renew the Lease or purchase the equipment, the Sweetheart
Cup is  obligated to return the  equipment  to the lessor in good working  order
with all manuals,  and to de-install the  equipment,  crate it and deliver it to
the nearest railhead.


11. LONG-TERM OBLIGATIONS

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

                                        September 29,    September 30,
                                            2002             2001
                                       ---------------  ---------------

Senior Credit Facility                   $ 186,117        $ 190,584
Canadian Credit Facility                    15,452           16,630
$110 million Senior Subordinated Notes     110,000          110,000
$120 million Senior Subordinated Notes     120,000          120,000
Sherwood Industries Notes                    3,498            3,153
Maryland Loan                                1,895                -
Other                                          339              453
                                         ---------        ---------
  Total debt                               437,301          440,820

Less - Current portion of long-term debt   119,853           16,942
                                         ---------        ---------
     Total long-term debt                $ 317,448        $ 423,878
                                         =========        =========

         The aggregate annual maturities of long-term debt at September 29, 2002
are as follows (in thousands):

                  Fiscal 2003            $ 119,853
                  Fiscal 2004               22,607
                  Fiscal 2005                5,686
                  Fiscal 2006                  412
                  Fiscal 2007              168,743
                  Fiscal 2008              120,000
                                         ---------

                                         $ 437,301
                                         =========

                                       52
<PAGE>
         Senior Credit Facility - On March 25, 2002, the Company  refinanced its
existing  Senior  Credit  Facility  with Bank of  America,  N.A.,  as agent (the
"Senior  Credit  Facility").  (see Note 22).  The Senior  Credit  Facility has a
maturity date of March 25, 2007;  however, in the event that the Company has not
refinanced,  repaid or extended its $110 million Senior Subordinated Notes prior
to March 1, 2003,  the Senior Credit  Facility will become due on that date. The
Senior Credit  Facility  allows for a maximum  credit  borrowing of $235 million
subject to borrowing base  limitations and  satisfaction of other  conditions of
borrowing.  The revolving  borrowings  have a maximum of $215 million.  The term
loans have a maximum of $25 million and are payable  monthly through March 2005.
Borrowings under the Senior Credit  Facility,  at the Company's  election,  bear
interest at either (i) a bank's base rate  revolving  loan  reference  rate plus
0.5% or (ii) LIBOR plus 2.5%.  For Fiscal  2002,  the  weighted  average  annual
interest  rate for the Senior  Credit  Facility  was 4.88%.  The  indebtness  of
Sweetheart  Cup under the Senior  Credit  Facility is  guaranteed  by Sweetheart
Holdings and secured by a first priority perfect  security  interest in accounts
receivable, inventory, general intangibles and certain other assets. The fee for
outstanding  letters of credit is 2.00% per annum and there is a commitment  fee
of 0.375% per annum on the daily average unused amount of the commitments. As of
September  29,  2002,  $31.0  million  was  available  under the  Senior  Credit
Facility. As of September 29, 2002, LIBOR was 1.81% and the bank's base rate was
4.75%.

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

         Canadian  Credit  Facility - The Company's  Canadian  subsidiary  has a
credit agreement (the "Canadian Credit Facility") which provides for a term loan
and a  credit  facility  with a  maximum  credit  borrowing  of Cdn $30  million
(approximately  US $19.0  million)  subject to borrowing  base  limitations  and
satisfaction of other  conditions of borrowing.  The term borrowings are payable
quarterly  through May 2004. Both the revolving  credit and term loan borrowings
have a final  maturity date of June 15, 2004.  The Canadian  Credit  Facility is
secured by all  existing and  thereafter  acquired  real and  personal  tangible
assets of the Company's Canadian  subsidiary and net proceeds on the sale of any
of the foregoing. Borrowings under the Canadian Credit Facility bear interest at
an index rate plus 1.75% with respect to the  revolving  credit  facility and an
index rate plus 2.00% with respect to the term loan borrowings. For Fiscal 2002,
the weighted  average annual  interest rate for the Canadian Credit Facility was
4.41%.  As of  September  29,  2002,  Cdn $1.3  million  (approximately  US $0.8
million) was available  under the  revolving  facility and the term loan balance
was Cdn $12.3 million  (approximately US $7.8 million) under the Canadian Credit
Facility.

         $110 million Senior Subordinated Notes - On March 25, 2002, the Company
entered  into a  supplemental  indenture  to  the  Indenture  (the  "Indenture")
governing  its $110 million 10 1/2% senior  subordinated  notes due September 1,
2003 (the "$110 million Senior  Subordinated  Notes") to amend the definition of
"Change of Control" in the Indenture to substitute Dennis Mehiel,  the Company's
Chairman  and  Chief  Executive  Officer,  for  AIP and to  make  certain  other
conforming  changes.  The  Company  offered  to pay  $5.00  for each  $1,000  in
principal  amount of the $110 Senior  Subordinated  Notes (the "Consent Fee") to
holders of the $110 Senior  Subordinated Notes who had properly  furnished,  and
not revoked,  their  consent on or prior to the  expiration  date of the consent
solicitation  (the "Consent  Solicitation").  As a result of the consummation of
the Consent  Solicitation,  the $110 Senior  Subordinated  Notes began to accrue
interest at 12% per annum as of March 1, 2002.

                                       53
<PAGE>
         Sweetheart  Cup is the obligor and  Sweetheart  Holdings the  guarantor
with respect to $110 million  Senior  Subordinated  Notes.  Interest on the $110
million Senior Subordinated Notes is payable semi-annually in arrears on March 1
and  September  1. The $110  million  Senior  Subordinated  Notes are subject to
redemption at the option of the Company,  in whole or in part, at the redemption
price (expressed as percentages of the principal amount),  plus accrued interest
to the  redemption  date,  at a call premium of 100%.  The $110  million  Senior
Subordinated  Notes are subordinated in right of payment to the prior payment in
full of all of the Company's senior debt,  including borrowings under the Senior
Credit  Facility,  and are pari passu with the $120 million Senior  Subordinated
Notes due 2007 (the "$120 million Senior Subordinated Notes"). In addition,  the
obligations under the June 1, 2000 lease between Sweetheart Cup and State Street
Bank and Trust Company of  Connecticut  are secured by a significant  portion of
the Company's  existing property,  plant and equipment.  The $110 million Senior
Subordinated  Notes contain various  covenants which prohibit,  or limit,  among
other  things,  asset  sales,  change  of  control,  dividend  payments,  equity
repurchases  or  redemption,  the  incurrence  of additional  indebtedness,  the
issuance of  disqualified  stock,  certain  transactions  with  affiliates,  the
creation of additional liens and certain other business activities.

         $120 million  Senior  Subordinated  Notes - In Fiscal 1997, the Company
issued  the  $120  million  Senior  Subordinated  Notes  with  interest  payable
semi-annually.  Payment of the principal and interest is subordinate in right to
payment of all of the  Company's  senior debt,  including  borrowings  under the
Senior  Credit  Facility.  The  Company  may, at its  election,  redeem the $120
million  Senior  Subordinated  Notes  at any  time  after  March  1,  2002  at a
redemption  price  equal to a  percentage  (104.750%  after  March  1,  2002 and
declining in annual steps to 100% after March 1, 2005) of the  principal  amount
thereof  plus  accrued  interest.  The $120 million  Senior  Subordinated  Notes
provide that upon the  occurrence  of a change of control (as defined  therein),
the holders  thereof will have the option to require the redemption of the notes
at a redemption price equal to 101% of the principal amount thereof plus accrued
interest.  The $120 million Senior  Subordinated Notes are subordinated in right
of payment to the prior  payment in full of all of the  Company's  senior  debt,
including  borrowings  under the Senior Credit  Facility and are pari passu with
the $110 million Senior Subordinated  Notes. In addition,  the obligations under
the June 1, 2000 lease  between  Sweetheart  Cup and State Street Bank and Trust
Company of  Connecticut  are secured by a  significant  portion of the Company's
existing  property,  plant and equipment.  The $120 million Senior  Subordinated
Notes contain various  covenants which prohibit,  or limit,  among other things,
asset  sales,  change of  control,  dividend  payments,  equity  repurchases  or
redemption,   the  incurrence  of  additional  indebtedness,   the  issuance  of
disqualified  stock,  certain  transaction  with  affiliates,  the  creation  of
additional liens and certain other business activities.

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

         Maryland  Loan - On June 10,  2002,  the  Company  entered  into a loan
agreement with the Department of Business and Economic Development,  a principal
department  of the State of  Maryland,  to borrow $2.0  million  (the  "Maryland
Loan"). The Maryland Loan bears interest at a rate ranging from 3.0% to 8.0% per
annum  depending on certain  employment  rates at the  Company's  Owings  Mills,
Maryland  facility.  The  Maryland  Loan is  payable in  quarterly  installments
through March 1, 2007. As of September 29, 2002, $1.9 million was outstanding at
an annual interest rate of 3.0%.


12. DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS

         The  carrying  amounts of  financial  instruments  included  in current
assets and current liabilities approximate their estimated fair value because of
the relatively  short maturities of these  instruments.  All

                                       54
<PAGE>
borrowing under the Senior Credit Facility and the Canadian Credit Facility have
variable  interest rates that fluctuate along with current market conditions and
thus the carrying value approximates their fair value.

         The fair  value of the  $110  million  Senior  Subordinated  Notes  are
estimated to be $13.2  million  lower than the carrying  value at September  29,
2002 and $2.2 million lower than the carrying value at September 30, 2001, based
upon independent third party information.

         The fair  value of the  $120  million  Senior  Subordinated  Notes  are
estimated to be $30 million lower than the carrying  value at September 29, 2002
and $3.6 million lower than the carrying value at September 30, 2001, based upon
independent third party information.


13. OTHER  LIABILITIES

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

                                        September 29,    September 30,
                                            2002             2001
                                       ---------------  ---------------

Post-retirement health care benefits
  (See Note 23)                          $  49,321        $  56,968
Pensions (See Note 23)                      14,426            9,652
Other                                        2,201            2,305
                                         ---------        ---------

  Total other liabilities                $  65,948        $  68,925
                                         =========        =========


14. MINORITY INTEREST IN SUBSIDIARY

         Minority interest  represents 20% of the total common stock interest in
Global Cup, not owned by the Company.


15. SHAREHOLDER'S EQUITY

         Pursuant  to an  agreement,  dated as of March  22,  2002 by and  among
Dennis Mehiel, the Company's Chairman and Chief Executive Officer,  SF Holdings,
American  Industrial  Partners  Management  Company,  Inc.,  American Industrial
Partners  Capital Fund L.P.  ("AIP") and the other  stockholders  of  Sweetheart
Holdings signatory to that certain  Stockholders'  Agreement,  dated as of March
12, 1998,  (together with AIP and any permitted  transferee of shares of Class A
common stock or Class B common stock of Sweetheart Holdings ("the Shares"),  the
"Original Stockholders"),  all of the outstanding Shares not held by SF Holdings
(which  consisted  of 52% of the  voting  stock  of  Sweetheart  Holdings)  were
delivered to SF Holdings and exchanged for 96,000 shares of Class C common stock
of SF Holdings.  As a result,  SF Holdings became the sole  beneficial  owner of
100% of the issued and  outstanding  capital  stock of Sweetheart  Holdings.  In
addition and in connection  therewith,  the  Stockholders  Agreement and related
stockholders' right agreement were terminated.

         The Class A and Class B Common Stock have the same powers,  preferences
and rights,  except that the Class B Common Stock has no voting rights.  Class A
and Class B Common  Stock share the profits and losses  generated by the Company
on a pro-rata basis.  Each  outstanding  Class A Common Share is entitled to one
vote on any matter  submitted to a vote of  shareholders  and has no  cumulative
voting  rights.  Subject  to  Delaware  law  and  limitations  in  certain  debt
instruments  ($110  million  Senior  Subordinated  Notes,  $120  million  Senior
Subordinated  Notes,  and borrowings under the Senior Credit  Facility),  common
shareholders  are entitled to receive  such  dividends as may be declared by the
Company's  Board of Directors out of funds  legally  available  thereof.  In the
event  of a  liquidation,

                                       55
<PAGE>
dissolution or winding up of the Company,  common  shareholders  are entitled to
share ratably in all assets  remaining after payment or provision for payment of
debts or other liabilities of the Company.


16. SF HOLDINGS STOCK OPTION PLAN

         During Fiscal 2001, SF Holdings  granted  options to purchase shares of
its common stock to certain  employees  of the Company.  The options vest over a
period of three years.  Certain of the exercise prices of the options were below
the fair market  value of SF  Holdings'  common  stock at the date of the grant.
During the vesting  period,  these discounts of $0.3 million are being amortized
as  compensation  expense and  credited  to  additional  paid-in  capital by the
Company.  Amortization  expense  relating to SF Holdings' stock options was $0.1
million and $0.2 million for Fiscal 2002 and Fiscal 2001, respectively.

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

                                        SF Holdings   Weighted Average
                                       Stock Options   Exercised Price
                                       -------------  ----------------
Outstanding, September 25, 2000                -          $       -
  Granted                                 13,635             118.30
  Forfeited                                 (700)            117.38
                                         --------         ---------
Outstanding, September 30, 2001           12,935             118.35
  Forfeited                               (1,119)            117.38
                                         --------         ---------
Outstanding, September 29, 2002           11,816          $  118.44
                                         ========         =========
Exercisable, September 30, 2001                -
                                         ========
Exercisable, September 29, 2002            3,938
                                         ========

         The following  table  summarizes  information  about SF Holdings  stock
options granted to employees of the Company, outstanding at September 29, 2002:

<TABLE>
<CAPTION>
                                    Options Outstanding                    Options Exercisable
                    --------------------------------------------------  -------------------------
                                         Weighted                                      Weighted
                         Number           Average         Weighted          Number      Average
 Range of Exercise   Outstanding as   Remaining Life      Average        Exercisable   Exercise
       Prices         of 09/29/02         (Years)      Exercise Price   as of 9/29/02    Price
------------------- ---------------- ---------------- ---------------- -------------- -----------
<S>                 <C>              <C>              <C>              <C>            <C>
    $  93.75              5,659             8.0          $  93.75           1,886       $  93.75
      141.14              6,157             8.0            141.14           2,052         141.14
                         ------             ---          --------           -----

                         11,816             8.0          $ 118.44           3,938       $ 118.44
                         ======             ===          ========           =====       ========
</TABLE>

         The  Company  applies  APB  No.  25  and  related   interpretations  in
accounting  for SF Holdings  stock options  granted to employees of the Company.
Had  compensation  costs for SF Holdings stock options been determined  based on
fair value at the option grant dates,  in accordance with the provisions of SFAS
No. 123, the  Company's  net income (loss) for Fiscal 2002 and Fiscal 2001 would
have changed to the pro forma amount indicated below (in thousands):

Net income (loss):                        Fiscal            Fiscal
                                           2002              2001
                                         ---------        ---------
  As reported                            $ (3,148)        $  16,516
  Pro forma                              $ (3,169)        $  16,480


         The weighted  average fair value of the SF Holdings stock options,  was
$0.4  million  in  Fiscal  2001

                                       56
<PAGE>
estimated  on the date of grant using the  Black-Scholes  options-pricing  model
with  the  following  weighted-average  assumptions:  dividend  yield  of  zero,
risk-free interest rate of 2.75%, and expected life of option grants of 3 years.
The  effects  of  applying  SFAS No.  123 in this pro forma  disclosure  are not
indicative of future pro forma effects.


17. RELATED-PARTY TRANSACTIONS

         All of the affiliates  (other than Fibre Marketing  Group,  LLC ("Fibre
Marketing"),  the successor of Marketing Group,  Inc., a waste recovery business
in which the Company has a 25% interest and Mehiel Enterprises,  Inc., a company
owned  by a  director,  Chris  Mehiel,  of  the  Company,  has a  75%  interest)
referenced  below are directly or indirectly  under the common  ownership of the
Company's  Chairman and Chief  Executive  Officer,  Dennis  Mehiel.  The Company
believes that the transactions entered into with related parties were negotiated
on terms  which  are at least  as  favorable  as it  could  have  obtained  from
unrelated third parties and were negotiated on an arm's length basis.

         Pursuant to a Management Services Agreement, as amended, SF Holdings is
entitled to receive from the Company an aggregate  annual fee of $1.85  million,
payable semi-annually,  and is reimbursed for out-of-pocket expenses.  Under the
agreement,  SF Holdings has the right, subject to the direction of the Company's
Board of Directors, to manage the Company's day to day operations.

         At September 29, 2002 and  September  30, 2001,  the Company has a loan
receivable  from its  Chief  Executive  Officer  of $0.3  million  plus  accrued
interest at 5.06%. During Fiscal 2001 and 2000, the Company foregav  $16,021 and
$51,637 of interest, respectively,  associated with loans to its Chief Executive
Officer.  At September 29, 2002 and  September 30, 2001,  the Company has a loan
receivable  from its Chief  Operating  Officer of $0.1 million and $0.2 million,
respectively, plus accrued interest at 5.39%. The loans are payable upon demand.

         During Fiscal 2002, the Company  purchased  $11.8 million of corrugated
containers  from Box USA,  a company  in which  the  Company's  Chief  Executive
Officer owns in excess of 10% of its outstanding capital stock, and $1.1 million
of travel  services  from  Emerald  Lady,  Inc,  a company  wholly  owned by the
Company's Chief Executive Officer ("Emerald Lady"). Included in accounts payable
as of September 29, 2002 is $1.0 million due to Box USA.  Other  purchases  from
affiliates during Fiscal 2002 were not significant.

         On  November 1, 2001,  Fibre Marketing  issued  promissory notes to the
Company for $1.2 million in the aggregate,  in exchange for outstanding accounts
receivable from Fibre  Marketing,  at an annual interest rate of 7.0% payable in
36 monthly  installments.  As of September 29, 2002,  $0.9 million is due to the
Company.

         During  Fiscal  2002,  the Company sold $8.9 million of scrap paper and
plastic to Fibre Marketing.  Included in accounts receivable as of September 29,
2002 is $1.3 million due from Fibre Marketing.  Other sales to affiliates during
Fiscal 2002 were not significant.

         During Fiscal 2001,  the Company  purchased  $7.6 million of corrugated
containers  from Box USA and $1.0 million of travel  services from Emerald Lady.
Included in accounts payable as of September 30, 2001 is $0.6 million due to Box
USA. Other purchases from affiliates during Fiscal 2001 were not significant.

         During  Fiscal  2001,  the Company sold $7.7 million of scrap paper and
plastic to Fibre Marketing.  Included in accounts receivable as of September 30,
2001 is $2.0 million due from Fibre Marketing.  Other sales to affiliates during
Fiscal 2001 were not significant.

                                       57
<PAGE>
         During Fiscal 2000,  the Company  purchased  $9.7 million of corrugated
containers  and $0.2 million of services from Box USA and $0.9 million of travel
services from Emerald Lady.  Included in accounts  payable,  as of September 24,
2000 is $0.1 million due to Box USA.  Other  purchases  from  affiliates  during
Fiscal 2000, were not significant.

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

         During  Fiscal  2001,  the  Company  began  leasing a facility in North
Andover,  Massachusetts  from D&L Andover Property,  LLC, an entity in which the
Company's  Chief Executive  Officer  indirectly owns 50%. During Fiscal 2002 and
Fiscal  2001,  rental  payments  under  this lease  were $1.5  million  and $1.4
million,  respectively.  Annual rental payments under the 20-year lease are $1.5
million in the first year, escalating at a rate of 2% each year thereafter.

         During Fiscal 2000, the Company entered into a lease agreement with D&L
Development,  LLC,  an entity in which the  Company's  Chief  Executive  Officer
indirectly  owns 47%, to lease a  warehouse  facility  in  Hampstead,  Maryland.
During  Fiscal 2002,  Fiscal 2001 and Fiscal 2000,  rental  payments  under this
lease were $3.7  million,  $3.6 million and $0.7 million,  respectively.  Annual
rental  payments under the 20-year lease are $3.7 million for the first 10 years
of the lease and $3.8 million annually, thereafter.

         During Fiscal 1998, the Company purchased a 38.2% ownership interest in
Fibre  Marketing from a director of the Company for $0.2 million.  During Fiscal
2000,  the  Company  sold  a  13.2%  interest  in  Fibre   Marketing  to  Mehiel
Enterprises,  Inc. for $0.1 million, retaining a 25% ownership interest in Fibre
Marketing.  On July 17, 2000, Box USA  transferred  50% of its interest in Fibre
Marketing  to Mehiel  Enterprises,  Inc.  Mehiel  Enterprises,  Inc.  owns a 75%
interest in Fibre Marketing.  The Company accounts for its ownership interest in
Fibre Marketing using the equity method.  During Fiscal 2002, 2001 and 2000, the
Company  recorded a loss of $204,000,  a loss of $67,000 and income of $241,000,
respectively.

         The  Company  leases  a  building  in  Jacksonville,  Florida  from the
Company's  Chief  Executive  Officer.  Annual  payments under the lease are $0.2
million  plus  annual  increases  based on changes in the  Consumer  Price Index
("CPI") through December 31, 2014. In addition,  the Chief Executive Officer can
require the Company to purchase  the  facility  for $1.5  million,  subject to a
CPI-based  escalation,  until  July  31,  2006.  In  Fiscal  1998,  the  Company
terminated  its  operations  at this  facility and is currently  subleasing  the
entire  facility.  Rent  expense,  net of sublease  income on the portion of the
premises subleased was $0.1 million, $0.2 million and $0.2 million during Fiscal
2002, Fiscal 2001 and Fiscal 2000, respectively.


18. LEASE COMMITMENTS

         The Company  leases  certain  transportation  vehicles,  warehouse  and
office  facilities  and  machinery  and  equipment  under  both  cancelable  and
non-cancelable  operating leases,  most of which expire within ten years and may
be renewed by the Company.  The full amount of lease rental payments are charged
to expense  using the  straight  line  method  over the term of the lease.  Rent
expense  under such  arrangements  was $61.3  million,  $60.7  million and $34.8
million  for Fiscal  Years 2002,  2001 and 2000,  respectively.  Future  minimum
rental commitments under non-cancelable  operating leases in effect at September
29, 2002 are as follows (in thousands):

                                       58
<PAGE>
                  Fiscal 2003            $   54,179
                  Fiscal 2004                50,848
                  Fiscal 2005                48,283
                  Fiscal 2006                45,177
                  Fiscal 2007                43,283
                  Thereafter                192,537
                                         ----------

                                         $  434,307
                                         ==========

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

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

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

         The Company leases a warehouse  facility in Williamsburg,  Pennsylvania
which is being  accounted for as a capital  lease.  The term of this lease is 15
years,  expiring in fiscal 2005. The initial cost of the lease was $2.2 million.
The future minimum lease  payments are $0.1 million in Fiscal 2003,  Fiscal 2004
and Fiscal 2005.  The present value of the future minimum lease payments is $0.2
million.


19. RESTRUCTURING CHARGE

         During the quarter ended September 29, 2002, the Company  established a
restructuring reserve of $0.3 million in conjunction with the planned closure of
the Company's Lafayette, Georgia facility from which 101 primarily manufacturing
positions were eliminated.  The plan was approved by management on September 24,
2002 and  announced to employees on September  29, 2002.  Severance  payments of
$0.1 million and $0.2 million of vacated  building  rent expense will be paid in
Fiscal 2003.  The $0.3 million  reserve has been included in the "Other  current
liabilities" on the consolidated balance sheet as of September 29, 2002.

         During the  quarter  ended June 30,  2002,  the Company  established  a
restructuring  reserve of $1.6 million in conjunction with planned consolidation
initiatives  from which 475 primarily  manufacturing  positions were eliminated.
The plan was approved by  management on June 19, 2002 and announced to employees
on June 28, 2002.  During the fourth  quarter of Fiscal  2002,  the Company paid
$1.0  million in severance  payments.  The  remaining  $0.6 million of severance
payments  will be paid in the first  three  quarters  of Fiscal  2003.  The $0.6
million  reserve has been  included in the "Other  current  liabilities"  on the
consolidated balance sheet as of September 29, 2002.

                                       59
<PAGE>
         During the  quarter  ended June 24,  2001,  the Company  established  a
restructuring   reserve  of  $0.5  million  in  conjunction   with  the  planned
consolidation  of the  former  administrative  offices  of CEG in  Indianapolis,
Indiana into the Company's  administrative offices in Oshkosh,  Wisconsin.  This
consolidation  included the elimination of approximately 40 positions.  The plan
was approved by management on October 30, 2000 and announced to employees on May
1, 2001. The effective date of the  consolidation  and  elimination of positions
was delayed until the fourth quarter of Fiscal 2001.  Severance payments of $0.1
million were paid during the fourth  quarter of Fiscal 2001. As of September 30,
2001, the remaining reserve of $0.4 million is included within the other current
liabilities  on the  consolidated  balance sheet and was utilized  during Fiscal
2002.

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

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


20. ASSET IMPAIRMENT EXPENSE

         During the quarter ended September 29, 2002, the Company approved plans
to close its Lafayette, Georgia facility. As a result, the Company evaluated the
usefulness of certain  equipment no longer in use at this facility and wrote-off
the remaining book value of $0.6 million to operations.

         During the quarter ended September 30, 2001, the Company approved plans
to  consolidate  its  Manchester,   New  Hampshire  and  Springfield,   Missouri
operations into other existing  facilities  throughout the Company. As a result,
the Company  evaluated the  usefulness of certain  equipment no longer in use at
these  facilities  and  wrote-off  the  remaining  book value of $2.2 million to
operations.


21. OTHER INCOME, NET

         During  Fiscal  2002,  the Company  realized  $10.2  million due to the
amortization  of  the  deferred  gain  in  conjunction   with  the  Fiscal  2000
sale-leaseback  transaction.  Also, during Fiscal 2002, the Company recognized a
$3.0  million  gain  associated  with  the sale of the  Company's  manufacturing
facility in  Manchester,  New  Hampshire.  These gains were offset by (i) a $5.4
million  write-off  of the  management  services  agreement  between  Sweetheart
Holdings and SF Holdings,  which had been assigned and assumed by Fonda in 1998,
(ii) a $2.6 million  write-off of assets related to business  initiatives  which
were  abandoned  subsequent  to the  Merger,  (iii)  $6.9  million  of  costs in
connection with the

                                       60
<PAGE>
rationalization,   consolidation  and  process   improvement  of  the  Company's
manufacturing facilities and (iv) $0.5 million of additional costs of associated
with the termination of the Lily-Tulip, Inc. Salary Retirement Plan.

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

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


22. EXTRAORDINARY LOSS

         During  Fiscal  2002,  in  conjunction  with  the  refinancing  of  the
Company's  Senior Credit  Facility,  the Company  charged $1.8 million,  or $1.1
million net of income tax benefit,  to results of operations as an extraordinary
item,  which amount  represents  the  unamortized  deferred  financing  fees and
redemption fees pertaining to such debt.

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


23. EMPLOYEE BENEFIT AND POST-RETIREMENT HEALTH CARE PLANS

         The Company  sponsors  various defined benefit  post-retirement  health
care plans that cover substantially all full-time employees.  The plans, in most
cases,  pay stated  percentages  of most medical  expenses  incurred by retirees
after  subtracting  payments by Medicare or other  providers  and after a stated
deductible has been met.  Participants  generally become eligible after reaching
age 60 with ten years of service.  The majority of such plans are  contributory,
with  retiree  contributions  adjusted  annually.  The Company does not fund the
plans.

         The  Company  provides  certain  union  and  non-union  employees  with
retirement and disability  income benefits under defined pension plans.  Pension
costs  are  based  upon  the  actuarially  normal  costs  plus  interest  on and
amortization  of the  unfunded  liabilities.  The  benefit for  participants  in
certain of the Company's non-union pension plans are frozen. In Fiscal 1999, the
assets and  obligations  of a pension plan for a number of the  Company's  union
employees were transferred to a multi-employer  pension plan resulting in a $0.2
million to income.  The  Company's  policy has been to fund annually the minimum
contributions required by applicable regulations.  In Fiscal 2001, all assets of
a discontinued  pension plan were  distributed in full  settlement of the plan's
obligations.  A credit to income of $30,000 was  recognized  as a result of this
settlement.  During Fiscal 2001,  the valuation date for the plan assets and the
contributions  was changed from September to June and resulted in no significant
effect.

         A  majority of the  Company's  employees  ("Participants")  are covered
under a 401(k) defined contribution plan. Effective January 1, 2000, the Company
provides  a  matching  contribution  of 100% on the first 2% of a  participant's
salary and 50% on the next 4% of a participant's  salary. The Company's

                                       61
<PAGE>
match  is  currently  limited  to  participant  contributions  up to  6% of  the
participant's   salaries.   In   addition,   the  Company  is  allowed  to  make
discretionary contributions. Certain employees are covered under defined benefit
plans. On December 31, 2001 the Fonda defined  contribution plan was merged with
and into the Sweetheart  401(k) plan. Costs charged against  operations for this
defined  contribution plan were $6.4 million,  $6.8 million and $6.3 million for
Fiscal 2002, Fiscal 2001, and Fiscal 2000 respectively.

         The Company  also  participates  in a  multi-employer  pension plan for
certain of its union  employees.  Contributions  to this plan, at a defined rate
per hour worked were $1.4  million in Fiscal  2002,  $1.0 million in Fiscal 2001
and $1.8 million in Fiscal 2000.

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


                                                        Fiscal
                                        -------------------------------------
                                           2002          2001        2000
                                        -----------  -----------  -----------
Pension Benefits
 Service cost                             $ 1,277      $ 1,449      $   971
 Interest cost                              5,403        5,122        4,481
 Return on plan assets                     (6,081)      (5,988)      (4,819)
 Net amortization and deferrals               175         (111)         228
 Amortization of transitional obligation     (172)        (174)           -
 Additional amounts recognized                635           66           73
 Curtailment charge                           734            -            -
                                          --------     --------     --------
   Net periodic pension cost              $ 1,971      $   364      $   934
                                          ========     ========     ========

Other Benefits
 Service cost                             $   826      $   818      $   874
 Interest cost                              2,770        3,220        3,212
 Net amortization and deferrals              (799)        (799)        (799)
 Amortization of transitional obligation       39           40            -
 Net actuarial costs                       (1,368)      (1,051)        (838)
                                          --------     --------     --------
   Net periodic benefit cost              $ 1,468      $ 2,228      $ 2,449
                                          ========     ========     ========


         The Company incurred a $0.7 million  curtailment  charge in Fiscal 2002
due to a reduction in workforce at the Springfield facility.

                                       62
<PAGE>
         The following table sets forth the change in benefit obligation for the
Company's benefit plans (in thousands):

<TABLE>
<CAPTION>
                                                       Pension Benefits                   Other Benefits
                                                --------------------------------  ---------------------------------
                                                 September 29,    September 30,    September 29,     September 30,
                                                     2002             2001              2002             2001
                                                ---------------  ---------------  ---------------  ----------------
<S>                                             <C>              <C>              <C>              <C>
Change in benefit obligation:
 Benefit obligation at beginning of period        $  75,940        $  67,881        $  43,938         $  42,222
 Service cost                                         1,277            1,278              822               632
 Interest cost                                        5,403            4,061            2,762             2,446
 Amendments                                               -            1,211                -                 -
 Actuarial (gain) or loss                               795            4,871              (82)            1,885
 Participant contributions to the plan                  188              151                -                 -
 Benefits paid                                       (4,585)          (3,506)          (9,132)           (3,247)
 Other                                                    1              (7)                -                 -
                                                  ----------       ----------       ----------        ----------
   Benefit obligation at end of period            $  79,019        $  75,940        $  38,308         $  43,938
                                                  ==========       ==========       ==========        ==========

Change in plan assets:
 Fair value of plan assets at beginning of
   period                                         $  61,572        $  63,878        $       -         $       -
 Actual return on plan assets                        (1,398)          (1,363)               -                 -
 Employer contributions to plan                       4,737            2,402            9,132             2,854
 Participant contributions to plan                      188              151                -               393
 Benefits paid                                       (4,585)          (3,505)          (9,132)           (3,247)
 Other                                                    1                9                -                 -
                                                  ----------       ----------       ----------        ----------
   Fair value of plan assets at end of period     $  60,515        $  61,572        $       -         $       -
                                                  ==========       ==========       ==========        ==========


Funded status                                     $ (18,504)       $ (14,368)       $ (38,308)        $ (43,938)
Unrecognized prior service cost                       1,836            2,737           (4,805)           (5,604)
Unrecognized transition obligation                   (1,716)          (1,888)               -               469
Unrecognized (gain) loss                             18,499           10,872          (11,450)          (12,736)
                                                  ----------       ----------       ----------        ----------
   Net amount recognized                          $     115        $  (2,647)       $ (54,563)        $ (61,809)
                                                  ==========       ==========       ==========        ==========
</TABLE>

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

                                                       Pension Benefits
                                               ---------------------------------
                                                 September 29,    September 30,
                                                     2002             2001
                                               ---------------- ----------------
Accrued benefit liability                         $ (19,514)       $ (15,285)
Intangible asset                                      1,813            2,737
Deferred income taxes                                 7,126            3,960
Accrued other comprehensive loss                     10,690            5,941
                                                  ----------       ----------

 Net amount recognized                            $     115        $  (2,647)
                                                  ==========       ==========



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

                                                     Fiscal
                              --------------------------------------------------
                                    2002              2001             2000
                              ----------------- ---------------  ---------------
Pension Benefits
Discount rate                       7.25%             7.38%      7.75% to  8.00%
Rate of return on plan assets 8.00% to 10.00%   8.00% to 10.00%  8.00% to 10.00%
Other Benefits
Discount rate                 7.00% to  8.00%   7.38% to  8.00%        8.00%

                                       63
<PAGE>
         For measurement  purposes,  a 5% annual rate of increase in health care
benefits was assumed for 2002.  The rate is assumed to remain at 5% for 2003 and
thereafter.

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

                                      One Percentage     One Percentage
                                      Point Increase     Point Decrease
                                      --------------     --------------
Effect on accumulated post-
     retirement benefit obligation       $ 2,284            $ (1,972)
Effect on net periodic post-
     retirement benefit cost                $233               $(210)


24. ACCUMULATED OTHER COMPREHENSIVE LOSS

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

                                      September 29,      September 30,
                                          2002               2001
                                      -------------      -------------

Foreign currency translation
     adjustment                        $  (2,723)         $  (1,811)
Minimum pension liability
     adjustment                          (10,690)            (5,941)
                                       ----------         ----------

Accumulated other comprehensive loss   $ (13,413)         $  (7,752)
                                       ==========         ==========


25. CONTINGENCIES

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

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

                                       64
<PAGE>
results of  operations.  However,  no assurance  can be given about the ultimate
effect on the Company, if any.

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


26. SWEETHEART CUP COMPANY INC.

         All of the  outstanding  stock of Sweetheart Cup is owned by Sweetheart
Holdings  and  thereby  Sweetheart  Holdings is the only  guarantor  of the $110
million  Senior  Subordinated  Notes,  as  amended.  The  guarantee  is full and
unconditional.  The following  financial  information for Sweetheart Cup and its
subsidiaries,  Sweetheart  Holdings and the Company is  presented in  accordance
with Rule 3-10 of Regulation S-K (in thousands):

                                       65
<PAGE>
<TABLE>
<CAPTION>
                                                                Consolidated Balance Sheet
                                                                   September 29, 2002
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart   Holdings      Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>            <C>         <C>          <C>
                      Assets
Current assets:
  Cash and cash equivalents                     $     8,035    $       -   $        -   $     8,035
  Cash in escrow                                          -            -            -             -
  Receivables                                       199,512            -      (46,971)      152,541
  Raw materials inventory                            57,305            -            -        57,305
  Work in progress inventory                         11,197            -            -        11,197
  Finished goods inventory                          150,925            -            -       150,925
  Assets held for sale                                    -        5,275            -         5,275
  Other current assets                               56,577        2,551       (2,551)       56,577
                                                ------------   ----------  -----------  ------------
    Total current assets                            483,551        7,826      (49,522)      441,855

Property, plant and equipment, net                  252,491            -            -       252,491
Deferred income taxes                                41,070      (20,927)       9,736        29,879
Other assets                                         96,618      106,450     (106,450)       96,618
                                                ------------   ----------  -----------  ------------

    Total assets                                $   873,730    $  93,349   $ (146,236)  $   820,843
                                                ============   ==========  ===========  ============

       Liabilities and Shareholder's Equity
Current liabilities:
  Accounts payable                              $   102,986    $       -   $        -   $   102,986
  Other current liabilities                          94,763            -       (2,551)       92,212
  Current portion of long-term debt                 119,853            -            -       119,853
                                                ------------   ----------  -----------  ------------
    Total current liabilities                       317,602            -       (2,551)      315,051

Long-term debt                                      317,448       46,971      (46,971)      317,448
Other liabilities                                   199,781            -      (60,950)      138,831
                                                ------------   ----------  -----------  ------------

    Total liabilities                               834,831       46,971     (110,472)      771,330
                                                ------------   ----------  -----------  ------------

 Minority interest                                    2,276            -            -         2,276
                                                ------------   ----------  -----------  ------------

Shareholder's equity:
  Class A Common Stock                                    -           10            -            10
  Class B Common Stock                                    -           44            -            44
  Additional paid-in capital                        123,678       78,095     (100,600)      101,173
  Accumulated deficit                               (73,642)     (31,771)      64,836       (40,577)
  Accumulated other comprehensive loss              (13,413)           -            -       (13,413)
                                                ------------   ----------  -----------  ------------

    Total shareholder's equity                       36,623       46,378      (35,764)       47,237
                                                ------------   ----------  -----------  ------------
    Total liabilities and shareholder's equity  $   873,730    $  93,349   $ (146,236)  $   820,843
                                                ============   ==========  ===========  ============
</TABLE>


                                 66
<PAGE>
<TABLE>
<CAPTION>
                                                                Consolidated Balance Sheet
                                                                   September 30, 2001
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart   Holdings      Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>          <C>         <C>          <C>
                     Assets
Current assets:
  Cash and cash equivalents                     $    11,616    $       -   $        -   $    11,616
  Cash in escrow                                          8            -            -             8
  Receivables                                       216,688            9      (46,575)      170,122
  Raw materials inventory                            55,955            -            -        55,955
  Work in progress inventory                         10,769            -            -        10,769
  Finished goods inventory                          158,297            -            -       158,297
  Assets held for sale                                    -        7,368            -         7,368
  Other current assets                               55,753            -            -        55,753
                                                ------------   ----------  -----------  ------------
    Total current assets                            509,086        7,377      (46,575)      469,888

Property, plant and equipment, net                  182,117      102,768      (24,219)      260,666
Other assets                                        139,863       21,496      (36,740)      124,619
                                                ------------   ----------  -----------  ------------

    Total assets                                $   831,066    $ 131,641   $ (107,534)  $   855,173
                                                ============   ==========  ===========  ============

      Liabilities and Shareholder's Equity
Current liabilities:
  Accounts payable                              $    89,840    $   6,232   $        -   $    96,072
  Other current liabilities                          93,897       14,769       (1,242)      107,424
  Current portion of long-term debt                  16,942            -            -        16,942
                                                ------------   ----------  -----------  ------------
    Total current liabilities                       200,679       21,001       (1,242)      220,438

Long-term debt                                      423,878       45,333      (45,333)      423,878
Other liabilities                                   177,792            -      (25,195)      152,597
                                                ------------   ----------  -----------  ------------

    Total liabilities                               802,349       66,334      (71,770)      796,913
                                                ------------   ----------  -----------  ------------

Minority interest                                     2,130            -            -         2,130
                                                ------------   ----------  -----------  ------------

Shareholder's equity:
  Class A common stock                                    -           10            -            10
  Class B common stock                                    -           44            -            44
  Additional paid-in capital                        100,767      101,090     (100,600)      101,257
  Accumulated deficit                               (66,428)     (35,837)      64,836       (37,429)
  Accumulated other comprehensive loss               (7,752)           -            -        (7,752)
                                                ------------   ----------  -----------  ------------

    Total shareholder's equity                       26,587       65,307      (35,764)       56,130
                                                ------------   ----------  -----------  ------------

    Total liabilities and shareholder's equity  $   831,066    $ 131,641   $ (107,534)  $   855,173
                                                ============   ==========  ===========  ============
</TABLE>



                                       67
<PAGE>
<TABLE>
<CAPTION>
                                                         Consolidated Statement of Operations
                                                                      Fiscal 2002
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart   Holdings      Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>            <C>         <C>          <C>
Net sales                                       $ 1,283,547    $ 116,485   $ (116,485)  $ 1,283,547
Cost of sales                                     1,141,214      106,760     (117,710)    1,130,264
                                                ------------   ----------  -----------  ------------

    Gross profit                                    142,333        9,725        1,225       153,283

Selling, general and administrative expenses        113,893          930            -       114,823
Restructuring charge                                  1,893            -            -         1,893
Asset impairment expense                                593            -            -           593
Other expense, net                                      877            -        1,225         2,102
                                                ------------   ----------  -----------  ------------

    Operating income                                 25,077        8,795            -        33,872

Interest expense, net                                35,061        2,018            -        37,079
                                                ------------   ----------  -----------  ------------

    Income   (loss)  before  income  tax,
    minority  interest and  extraordinary
    loss                                             (9,984)       6,777            -        (3,207)

Income tax  (benefit) expense                        (3,994)       2,711            -        (1,283)
Minority interest in subsidiary                         145            -            -           145
                                                ------------   ----------  -----------  ------------

    Income  (loss)  before  extraordinary
    loss                                             (6,135)       4,066            -        (2,069)

Extraordinary loss on debt extinguishment             1,079            -            -         1,079
                                                ------------   ----------  -----------  ------------

    Net income  (loss)                            $  (7,214)   $   4,066   $        -   $    (3,148)
                                                ============   ==========  ===========  ============

Other comprehensive income (loss):

    Net income (loss)                             $  (7,214)   $   4,066   $       -    $    (3,148)
    Foreign currency translation
      adjustment                                       (912)           -           -           (912)
    Minimum pension liability
      adjustment   (net  of  income
      taxes of ($2,971))                             (4,749)           -           -         (4,749)
                                                ------------   ----------  -----------  ------------

    Comprehensive income (loss)                 $   (12,875)   $   4,066   $       -    $    (8,809)
                                                ============   ==========  ===========  ============
</TABLE>


                                       68
<PAGE>
<TABLE>
<CAPTION>
                                                         Consolidated Statement of Operations
                                                                      Fiscal 2001
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart   Holdings      Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>            <C>         <C>          <C>
Net sales                                       $ 1,316,672    $ 237,595   $ (237,595)  $ 1,316,672
Cost of sales                                     1,166,458      217,788     (240,440)    1,143,806
                                                ------------   ----------  -----------  ------------

      Gross profit                                  150,214       19,807        2,845       172,866

Selling, general and administrative expenses        111,277        1,954            -       113,231
Restructuring charge                                    504            -            -           504
Asset impairment expense                              2,244            -            -         2,244
Other income, net                                   (12,681)           -        2,845        (9,836)
                                                ------------   ----------  -----------  ------------

      Operating income                               48,870       17,853            -        66,723

Interest expense, net                                34,806        4,113            -        38,919
                                                ------------   ----------  -----------  ------------

      Income    before   income   tax   and
      minority interest                              14,064       13,740            -        27,804

Income tax expense                                    5,724        5,496            -        11,220
Minority interest in subsidiary                          68            -            -            68
                                                ------------   ----------  -----------  ------------

      Net income                                $     8,272    $   8,244   $       -    $    16,516
                                                ============   ==========  ===========  ============

Other comprehensive income:

      Net income                                $     8,272    $   8,244   $        -   $    16,516
      Foreign currency translation
        adjustment                                     (393)           -            -          (393)
      Minimum pension liability
        adjustment  (net  of  income
        taxes of $(3,489))                           (5,234)           -            -        (5,234)
                                                ------------   ----------  -----------  ------------

      Comprehensive income                      $     2,645    $   8,244   $       -    $    10,889
                                                ============   =========   ===========  ============
</TABLE>


                                       69
<PAGE>
<TABLE>
<CAPTION>
                                                             Consolidated Statement of Operations
                                                                          Fiscal 2000
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart    Holdings     Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>            <C>         <C>          <C>
Net sales                                       $ 1,276,617    $ 234,386   $ (234,386)  $ 1,276,617
Cost of sales                                     1,112,617      214,900     (237,231)    1,090,286
                                                ------------   ----------  -----------  ------------

      Gross profit                                  164,000       19,486        2,845       186,331

Selling, general and administrative expenses        110,709        1,850            -       112,559
Restructuring credit                                  1,153            -            -         1,153
Other income, net                                   (24,850)           -       19,907        (4,943)
                                                ------------   ----------  -----------  ------------
      Operating income
                                                     76,988       17,636      (17,062)       77,562

Interest expense, net                                42,901        9,707            -        52,608
                                                ------------   ----------  -----------  ------------

      Income    before   income   tax   and
      extraordinary loss                             34,087        7,929      (17,062)       24,954

Income tax expense                                   13,750        3,171       (6,825)       10,096
                                                ------------   ----------  -----------  ------------

      Income before extraordinary loss               20,337        4,758      (10,237)       14,858

Extraordinary  loss  on  debt   extinguishment
(net of income tax benefit of $209)                     313            -            -           313
                                                ------------   ----------  -----------  ------------

      Net  income                               $    20,024    $   4,758   $  (10,237)  $    14,545
                                                ============   ==========  ===========  ============

Other comprehensive income:

      Net  income                               $    20,024    $   4,758   $  (10,237)  $    14,545
      Foreign currency translation
        adjustment                                     (122)           -            -          (122)
      Minimum pension liability
        adjustment (net of income taxes of
        $470)                                           705            -            -           705
                                                ------------   ----------  -----------  ------------

      Comprehensive  income                     $    20,607    $   4,758   $  (10,237)  $    15,128
                                                ============   ==========  ===========  ============
</TABLE>


                                       70
<PAGE>
<TABLE>
<CAPTION>
                                                         Consolidated Statement of Cash Flows
                                                                     Fiscal 2002
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart   Holdings      Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>            <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES

    Net cash provided by operating activities   $    28,469    $  88,148   $  (88,148)  $    28,469
                                                ------------   ----------  -----------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES

  Additions to property, plant and equipment        (21,206)           -            -       (21,206)
  Due to/from SF Holdings                               (64)           -            -           (64)
  Proceeds from sale of property,
    plant and equipment                               5,284            -            -         5,284
                                                ------------   ----------  -----------  ------------
    Net cash used in investing activities           (15,986)           -            -       (15,986)
                                                ------------   ----------  -----------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net borrowings under credit  facilities           200,254            -            -       200,254
  Repayments under credit  facilities              (196,144)           -            -      (196,144)
  Repayment of  intercompany
    equipment financing                                   -      (88,148)      88,148             -
  Repayment of other debt                            (9,633)           -            -        (9,633)
  Borrowings                                          2,000            -            -         2,000
  Debt issuance costs                               (12,549)           -            -       (12,549)
  Increase in cash escrow                            (4,589)           -            -        (4,589)
  Decrease in cash escrow                             4,597            -            -         4,597
                                                ------------   ----------  -----------  ------------
    Net cash used in financing activities           (16,064)     (88,148)      88,148       (16,064)
                                                ------------   ----------  -----------  ------------

NET DECREASE  IN CASH AND CASH EQUIVALENTS           (3,581)           -            -        (3,581)

CASH AND CASH EQUIVALENTS, beginning of year         11,616            -            -        11,616
                                                ------------   ----------  -----------  ------------

CASH AND CASH EQUIVALENTS, end of year          $     8,035    $       -   $        -   $     8,035
                                                ============   ==========  ===========  ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:

    Interest paid                               $    34,426    $       -   $        -   $    34,426
                                                ============   ==========  ===========  ============

    Income taxes paid                           $       880    $      -    $        -   $       880
                                                ============   ==========  ===========  ============
</TABLE>


                                       71
<PAGE>
<TABLE>
<CAPTION>
                                                         Consolidated Statement of Cash Flows
                                                                     Fiscal 2001
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart   Holdings      Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>            <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES

    Net cash  provided by operating activities  $    13,774    $  17,130   $  (17,130)  $    13,774
                                                ------------   ----------  -----------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES

  Additions to property, plant and equipment        (31,701)           -            -       (31,701)
  Payment for business acquisition                  (40,665)           -            -       (40,665)
  Due to/from SF Holdings                               543            -            -           543
  Proceeds from sale of property,
    plant and equipment                                 120            -            -           120
                                                ------------   ----------  -----------  ------------
    Net cash used in investing activities           (71,703)           -            -       (71,703)
                                                ------------   ----------  -----------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net borrowings under credit  facilities            66,427            -            -        66,427
  Repayment of  intercompany
    equipment financing                                   -      (17,130)      17,130             -
  Repayments of other debt                             (715)           -            -          (715)
  Debt issuance costs                                (1,287)           -            -        (1,287)
  Increase in cash escrow                               (17)           -            -           (17)
  Decrease in cash escrow                               309            -            -           309
                                                ------------   ----------  -----------  ------------
    Net cash provided by (used in)
      financing  activities                          64,717      (17,130)      17,130        64,717
                                                ------------   ----------  -----------  ------------

NET INCREASE  IN CASH AND CASH EQUIVALENTS            6,788            -            -         6,788

CASH AND CASH EQUIVALENTS, beginning of year          4,828            -            -         4,828
                                                ------------   ----------  -----------  ------------

CASH AND CASH EQUIVALENTS, end of year          $    11,616    $       -   $        -   $    11,616
                                                ============   ==========  ===========  ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:

    Interest paid                               $    37,070    $       -   $        -   $    37,070
                                                ============   ==========  ===========  ============

    Income taxes paid                           $     2,484    $       -   $        -   $     2,484
                                                ============   ==========  ===========  ============
</TABLE>


                                       72
<PAGE>
<TABLE>
<CAPTION>
                                                         Consolidated Statement of Cash Flows
                                                                     Fiscal 2000
                                                ----------------------------------------------------
                                                                                         Sweetheart
                                                 Sweetheart    Sweetheart    Holdings     Holdings
                                                    Cup         Holdings   Elimination  Consolidated
                                                ------------   ----------  -----------  ------------
<S>                                             <C>            <C>         <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES

    Net cash provided by operating activities   $     1,952    $ 173,930   $ (173,930)  $     1,952
                                                ------------   ----------  -----------  ------------

CASH FLOWS FROM INVESTING ACTIVITIES

  Additions to property, plant and equipment        (26,915)           -            -       (26,915)
  Payment for business acquisition                  (12,411)           -            -       (12,411)
  Due to/from SF Holdings                           (30,449)           -            -       (30,449)
  Proceeds from sale of property,
     plant and equipment                            221,474            -            -       221,474
                                                ------------   ----------  -----------  ------------
    Net cash provided by investing activities       151,699            -            -       151,699
                                                ------------   ----------  -----------  ------------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net borrowings under credit  facilities            38,957            -            -        38,957
  Repayment of  intercompany
    equipment financing                                   -     (173,930)     173,930             -
  Repayment of other debt                          (190,565)           -            -      (190,565)
  Redemption of stock appreciation rights              (504)           -            -          (504)
  Increase in cash escrow                          (206,318)           -            -      (206,318)
  Decrease in cash escrow                           206,018            -            -       206,018
                                                ------------   ----------  -----------  ------------
    Net cash used in financing activities          (152,412)    (173,930)     173,930      (152,412)
                                                ------------   ----------  -----------  ------------

NET INCREASE  IN CASH AND CASH EQUIVALENTS            1,239            -            -         1,239

CASH AND CASH EQUIVALENTS, beginning of year          3,589            -            -         3,589
                                                ------------   ----------  -----------  ------------

CASH AND CASH EQUIVALENTS, end of year          $     4,828    $       -   $        -   $     4,828
                                                ============   ==========  ===========  ============

SUPPLEMENTAL CASH FLOW DISCLOSURES:

    Interest paid                               $    52,147    $       -   $        -   $    52,147
                                                ============   ==========  ===========  ============

    Income taxes paid                           $     3,673    $       -   $        -   $     3,673
                                                ============   ==========  ===========  ============

SUPPLEMENTAL NON-CASH INVESTING ACTIVITY:

    Note payable associated with
      business acquisition                      $     2,914    $       -   $        -   $     2,914
                                                ============   ==========  ===========  ============
</TABLE>


                                       73
<PAGE>
27. SUBSEQUENT EVENTS

         On October 1, 2002, the Company  entered into a loan agreement with the
City of Chicago,  to borrow  $2.0  million.  The loan bears no  interest  and is
payable in equal  installments  of $100,000  commencing  on February 1, 2004 and
every six months thereafter.  As of December 2, 2002, the proceeds from the loan
have not been received by the Company.

         On  November  21,  2002,  the  Company  filed with the  Securities  and
Exchange Commission a Registration  Statement on Form S-4 relating to a proposed
offer to exchange newly issued $110 million senior  subordinated  notes due 2007
for all of the $110 million Senior Subordinated Notes and a consent solicitation
to eliminate  and/or amend certain  restrictive  covenants and other  provisions
governing the $110 million Senior  Subordinated  Notes. The Company also intends
to solicit consent to eliminate and/or amend certain  restrictive  covenants and
other  provisions  governing the $120 million  Senior  Subordinated  Notes.  The
Company believes that the exchange offer and consent  solicitation  will provide
it with the necessary time to execute its business plan and to further  evaluate
its  strategic  alternatives.  If the Company is unable to complete the exchange
offer and consent  solicitation  or refinance,  repay or extend the $110 million
Senior  Subordinated  Notes prior to March 1, 2003, its Senior Credit  Facility,
unless otherwise amended, will become due and payable.

         The Company is also  evaluating  various  strategic  options  which may
include a restructuring of its business debt and capital  structure,  including,
among  other  things,  the public  sale or private  placement  of debt or equity
securities,  joint venture  transactions,  sale of assets,  new borrowings,  the
refinancing of the Company's  existing debt agreements,  open market  purchases,
tender  offers or exchange  offers and consent  solicitations  of the  Company's
outstanding  securities.  There can be no assurances that any of these strategic
options will be consummated.

         During  Fiscal 2001,  the Company  experienced  a casualty  loss at its
Somerville,  Massachusetts  facility.  Since January 2001 through  September 29,
2002 the  Company  incurred  $11.6  million  of  expenses  associated  with this
casualty  loss. As of September  29, 2002,  the Company  received  $12.5 million
reimbursement  under the  casualty  and business  interruption  claim.  The $0.9
million of proceeds in excess of the expenses,  represents the net proceeds from
the business  interruption  claim, which were recorded as a reduction to cost of
sales during the fourth quarter of Fiscal 2002. During October 2002, the Company
and its  insurance  provider  have  agreed to a final  settlement  of this claim
whereby  the  Company  will  receive an  additional  $3.8  million  of  business
interruption  proceeds.  This amount will be recorded upon  receipt,  net of any
expenses, which is expected to occur during the first six months of Fiscal 2003.

                                       74
<PAGE>
                      INDEX TO FINANCIAL STATEMENT SCHEDULE




                                                                            Page

Independent Auditors' Report                                                  76


Schedule II - Valuation and Qualifying Accounts                               77

                                       75
<PAGE>
INDEPENDENT AUDITORS' REPORT


To the Board of Directors of
Sweetheart Holdings Inc.

         We have audited the  consolidated  financial  statements  of Sweetheart
Holdings  Inc. and  Subsidiaries  (the  "Company")  as of September 29, 2002 and
September  30, 2001,  and for each of the three fiscal years in the period ended
September 29, 2002,  and have issued our report  thereon dated December 2, 2002;
such  consolidated  financial  statements  and report are  included in this Form
10-K. Our audits also included the financial  statement  schedule  listed in the
accompanying  index. This financial  statement schedule is the responsibility of
the Company's  management.  Our responsibility is to express an opinion based on
our audits. In our opinion,  such financial statement schedule,  when considered
in relation to the basic  consolidated  financial  statements  taken as a whole,
presents fairly in all material respects, the information set forth therein.


/s/ DELOITTE & TOUCHE LLP
Baltimore, Maryland
December 2, 2002

                                       76
<PAGE>
                                                                     SCHEDULE II


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


<TABLE>
<CAPTION>
                                                        Additions
                                               -----------------------------
                                   Balance at
                                    beginning   Charged to       Charged                         Balance at
                                       of        costs and      to other                           end of
         Classifications             period      expenses      accounts (1)     Deductions (2)     period
--------------------------------   ----------  ------------  ---------------    --------------   ----------
<S>                                <C>         <C>           <C>                <C>              <C>
Allowance for Doubtful Accounts:
Fiscal 2002                         $ 3,395      $ 3,708       $ (3,308)           $   (54)        $ 3,741
Fiscal 2001                           3,531        1,930         (1,077)              (989)          3,395
Fiscal 2000                           3,954        4,138           (373)            (4,188)          3,531
</TABLE>

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

<TABLE>
<CAPTION>
                                   Balance at
                                    beginning                                                    Balance at
                                       of                Additions                                 end of
         Classifications             period    Charged to costs and expenses    Deductions (3)     period
--------------------------------   ----------  -----------------------------    --------------   ----------
<S>                                <C>         <C>                              <C>              <C>
Inventory Allowances:
Fiscal 2002                         $ 12,744          $  2,506                    $ (4,474)       $ 10,776
Fiscal 2001                           18,994             5,731                     (11,981)         12,744
Fiscal 2000                           16,110             9,959                      (7,075)         18,994
</TABLE>

(3) Inventory written-off.

                                       77
<PAGE>
                                   SIGNATURES

         Pursuant to the  requirements  of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned,  thereunto duly authorized, in the City of Owings
Mills, State of Maryland, on December 9, 2002.

                                            SWEETHEART HOLDINGS INC.
                                            (Registrant)

                                            By: /s/  DENNIS MEHIEL
                                                ------------------
                                            Dennis Mehiel
                                            Chairman and Chief Executive Officer



         Pursuant to the  requirements of the Securities  Exchange Act of  1934,
this report has been signed on December 9, 2002, by the following persons in the
capacities indicated:

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

         /s/ Dennis Mehiel                  Chairman and Chief Executive Officer
         -----------------                  (Principal Executive Officer)
         Dennis Mehiel

         /s/ Thomas Uleau                   Chief Operating Officer and
         ----------------                   Vice Chairman
         Thomas Uleau

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

         /s/ Gail Blanke                    Director
         ---------------
         Gail Blanke

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

         /s/ Alfred B. DelBello             Director
         ----------------------
         Alfred B. DelBello

         /s/ Chris Mehiel                   Director
         ----------------
         Chris Mehiel

         /s/ Edith V. Mehiel                Director
         -------------------
         Edith V. Mehiel

         /s/ Alan D. Scheinckman            Director
         -----------------------
         Alan D. Scheinckman

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

                                       78
<PAGE>
                         SECTION 302 10-K CERTIFICATION


I, Dennis Mehiel, certify that:


1.            I have  reviewed  this  annual  report on Form 10-K of  Sweetheart
              Holdings Inc;

2.            Based on my  knowledge,  this  annual  report does not contain any
              untrue  statement  of a material  fact or omit to state a material
              fact  necessary  to make  the  statements  made,  in  light of the
              circumstances   under  which  such   statements   were  made,  not
              misleading  with  respect  to the period  covered  by this  annual
              report;

3.            Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information  included  in this  annual  report,  fairly
              present in all material respects the financial condition,  results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this annual report;

4.            The registrant's  other  certifying  officer and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
              for the registrant and have:

a)            designed such  disclosure  controls and  procedures to ensure that
              material  information  relating to the  registrant,  including its
              consolidated  subsidiaries,  is made known to us by others  within
              those entities, particularly during the period in which the annual
              report is being prepared;
b)            evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and
c)            presented  in  this  annual  report  our   conclusion   about  the
              effectiveness  of the disclosure  controls and procedures  base on
              our evaluation as of the Evaluation Date;

5.            The registrant's  other  certifying  officer and I have disclosed,
              based on our most recent evaluation,  to the registrant's  auditor
              and the audit  committee of  registrant's  board of directors  (or
              persons performing the equivalent functions):

a)            all  significant  deficiencies  in  the  design  or  operation  of
              internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report  financial data
              and have  identified  for the  registrant's  auditors any material
              weakness in internal controls; and
b)            any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal controls; and

6.            The registrant's  other certifying officer and I have indicated in
              this  annual  report  whether  there were  significant  changes in
              internal  controls or in other  factors  that could  significantly
              affect internal controls subsequent to the date of our most recent
              evaluation,  including  any  corrective  actions  with  regards to
              significant deficiencies and material weakness.




              Date:  December 9, 2002       SWEETHEART HOLDINGS INC.
                     ----------------
                                            (Registrant)

                                            By: /s/  DENNIS MEHIEL
                                            ----------------------
                                            Dennis Mehiel
                                            Chairman and Chief Executive Officer

                                       79
<PAGE>
                         SECTION 302 10-K CERTIFICATION


I, Hans H. Heinsen, certify that:


1.            I have  reviewed  this  annual  report on Form 10-K of  Sweetheart
              Holdings Inc;

2.            Based on my  knowledge,  this  annual  report does not contain any
              untrue  statement  of a material  fact or omit to state a material
              fact  necessary  to make  the  statements  made,  in  light of the
              circumstances   under  which  such   statements   were  made,  not
              misleading  with  respect  to the period  covered  by this  annual
              report;

3.            Based  on  my  knowledge,  the  financial  statements,  and  other
              financial  information  included  in this  annual  report,  fairly
              present in all material respects the financial condition,  results
              of operations and cash flows of the registrant as of, and for, the
              periods presented in this annual report;

4.            The registrant's  other  certifying  officer and I are responsible
              for   establishing   and  maintaining   disclosure   controls  and
              procedures  (as defined in Exchange  Act Rules  13a-14 and 15d-14)
              for the registrant and have:

a)            designed such  disclosure  controls and  procedures to ensure that
              material  information  relating to the  registrant,  including its
              consolidated  subsidiaries,  is made known to us by others  within
              those entities, particularly during the period in which the annual
              report is being prepared;
b)            evaluated  the   effectiveness  of  the  registrant's   disclosure
              controls and  procedures  as of a date within 90 days prior to the
              filing date of this annual report (the "Evaluation Date"); and
c)            presented  in  this  annual  report  our   conclusion   about  the
              effectiveness  of the disclosure  controls and procedures  base on
              our evaluation as of the Evaluation Date;

5.            The registrant's  other  certifying  officer and I have disclosed,
              based on our most recent evaluation,  to the registrant's  auditor
              and the audit  committee of  registrant's  board of directors  (or
              persons performing the equivalent functions):

a)            all  significant  deficiencies  in  the  design  or  operation  of
              internal  controls which could adversely  affect the  registrant's
              ability to record,  process,  summarize and report  financial data
              and have  identified  for the  registrant's  auditors any material
              weakness in internal controls; and
b)            any fraud,  whether or not material,  that involves  management or
              other  employees who have a significant  role in the  registrant's
              internal controls; and

6.            The registrant's  other certifying officer and I have indicated in
              this  annual  report  whether  there were  significant  changes in
              internal  controls or in other  factors  that could  significantly
              affect internal controls subsequent to the date of our most recent
              evaluation,  including  any  corrective  actions  with  regards to
              significant deficiencies and material weakness.




              Date:  December 9, 2002       SWEETHEART HOLDINGS INC.
                     ----------------
                                            (Registrant)

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

                                       80