<PAGE>   1
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-K


ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934

For the Fiscal Year Ended December 31, 1999    Commission File Number 33-383149

                             SFAC NEW HOLDINGS, INC.
             (Exact name of registrant as specified in its charter)

                Delaware                                      52-2173534
     (State or other jurisdiction of                       (I.R.S. Employer
      incorporation or organization)                      Identification No.)
           520 Lake Cook Road
                Suite 550                                        60015
             Deerfield, IL                                     (Zip Code)
(Address of principal executive offices)

                                 (847) 405-5300
              (Registrant's telephone number, including area code)




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

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

     Indicate by check mark 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 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

     State the aggregate market value of voting stock held by non-affiliates of
the Registrant. No market presently exists for the Registrant's Common Stock.

     Number of shares of common stock outstanding as of March 20, 2000: 319,250
shares.

     Documents incorporated by reference: None.


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                                TABLE OF CONTENTS
                                                                          PAGE
                                                                          ----

                                     PART I

Item 1.      Business                                                        3
Item 2.      Properties                                                      8
Item 3.      Legal Proceedings                                               8
Item 4.      Submission of Matters to a Vote of Security Holders            10

                                     PART II

Item 5.      Market for the Registrant's Common Equity and Related
                Stockholder Matters                                         11
Item 6.      Selected Financial Data                                        11
Item 7.      Management's Discussion and Analysis of Financial
                Condition and Results of Operations                         12
Item 7A.     Quantitative and Qualitative Disclosure about Market Risk      15
Item 8.      Financial Statements and Supplementary Data                    15
Item 9.      Changes In and Disagreements with Accountants on Accounting
             and Financial Disclosure                                       15

                                    PART III

Item 10.     Directors and Executive Officers of the Registrant             16
Item 11.     Executive Compensation                                         19
Item 12.     Security Ownership of Certain Beneficial Owners and Management 26
Item 13.     Certain Relationships and Related Transactions                 29

                                     PART IV

Item 14.     Exhibits, Financial Statement Schedules and Reports
             on Form 8-K                                                    31


                           FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements within the
meaning of the federal securities laws, including, without limitation, Item 3 -
Legal Proceedings and Item 7 - Management's Discussion and Analysis of Financial
Condition and Results of Operations. These forward-looking statements reflect
the Company's expectations and are based on currently available information.
When used in this Report, the words "anticipates," "believes," "expects,"
"intends" and similar expressions as they relate to the Company or its
management are intended to identify such forward-looking statements. Actual
results, performance, achievements or other information may vary materially from
those expressed in, or implied by such forward-looking statements and are
subject to numerous risks and uncertainties. Factors that could cause actual
results to differ materially from those in forward-looking statements include:
general economic conditions; industry conditions, including competition,
consolidation and cost and availability of raw materials; weather; interest
rates; access to capital markets and the timing of and value received in
connection with asset divestitures. No assurances can be given that any of the
events anticipated by the forward-looking statements will transpire or occur, or
if any of them do so, what impact they will have on the results of operations
and financial condition of the Company.



                                       2

<PAGE>   3


                                     PART I

ITEM 1.   BUSINESS

SFAC New Holdings, Inc. ("SFACNH"), a Delaware Corporation, through its
direct wholly owned subsidiary, SFC New Holdings, Inc. ("SFCNH"), is a leading
producer, marketer and distributor of bakery products. The continuing bakery
operations include Mother's Cake & Cookie Co. ("Mother's"), Archway Cookies,
Inc. ("Archway") and Andre-Boudin Bakeries, Inc. ("Boudin"). SFACNH, SFCNH and
their operating subsidiaries Mother's, Archway, and Boudin, are referred to
herein as the "Company".

SFACNH was formed to exchange its debt securities for certain debt securities
issued by Specialty Foods Acquisition Corporation ("SFAC"). Specialty Foods
Corporation ("SFC"), a wholly owned subsidiary of SFAC, contributed its interest
in the operating subsidiaries and other assets to SFC-Sub, Inc. ("SFC-Sub"),
which in turn contributed such operating subsidiaries and other assets to
SFACNH. As a result of the debt exchange and revised corporate structure,
completed June 11, 1999, SFAC remains the ultimate parent company of SFC,
SFC-Sub and SFACNH. SFACNH is the successor company for reporting purposes.


OPERATIONS

The Company operates principally in the bakery products segment in which it
produces, markets and distributes cookies, specialty breads and related products
through a network of approximately than 1,045 direct-store-delivery ("DSD")
routes throughout the United States.

The company's cookie business is operated through two wholly-owned subsidiaries,
Mother's Cake and Cookie Co. and Archway Cookies, Inc. The Company believes its
cookie operations are the third largest in the nation. Mother's, founded in 1914
and based in Oakland, California, is the second largest retail cookie producer
and distributor in the Western United States. Mother's products are marketed
under the Mother's, Bakery Wagon and Marie Lu brand names. Mother's sells its
cookie products primarily to retail grocers and other outlets in 18 western
states through its DSD system. Archway, established in Battle Creek, Michigan in
1936, is the nation's leading producer of specialty cookie varieties. Archway
bakes more than one billion cookies annually, producing more than 60 varieties
of cookies, including Homestyle, holiday and sugar free products under the
Archway brand name. Archway distributes its cookies nationally and in Canada.

Boudin, founded in 1849 and based in San Francisco, is a leading marketer of
premium branded specialty breads and bread-related products. Boudin sells most
of its products through 38 company owned and operated bakery cafes and kiosks in
California and Illinois, as well as three additional licensed cafes at two
California airports. Boudin also distributes some of its products through its
own direct-mail catalog, its Internet website (www.boudinbakery.com) and retail
grocers.


ACQUISITION STRATEGY

In the past two years, the Company has completed eight acquisitions of bakery
companies that complement the Company's businesses, expand its geographic scope
and strengthen its competitive position. The Company's acquisition strategy is
consistent with that of many of the other larger companies in the rapidly
consolidating baking industry. These acquisitions are being driven by the
opportunity to increase sales and market share, and reduce costs through the
combining of manufacturing, distribution and administrative capabilities. The
Company believes that strategic acquisitions completed by its former subsidiary,
Metz Baking Company ("Metz"), significantly contributed to the value realized in
its recently completed sale of Metz, discussed below under "Divestitures."

                                       3



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On January 20, 2000, the Company completed the acquisition of Lew-Mark Baking
Company, Inc. for $23.1 million. Lew-Mark was a licensee of Archway which
manufactured and distributed cookies and related food products in the
Northeastern United States, primarily New York and New Jersey, principally
through its independent distributors. Lew-Mark had fiscal 1999 sales of
approximately $25 million.

During October 1998, the Company acquired Archway for $116 million. The
acquisition of Archway, which together with Mother's created the nation's third
largest cookie business, provided the Company with a strong established brand
name, more diversified product lines and a nationwide presence.


DIVESTITURES

On March 20, 2000, the Company completed the sale of its Metz subsidiary to The
Earthgrains Company for $625 million. Metz is a leading retail bread company
serving the Midwestern United States. The Company expects to report a gain on
the sale of approximately $405 million for the quarter ending March 31, 2000. At
closing, $20 million of the purchase price was paid into an escrow to secure
potential future indemnification obligations arising out of the sale. Depending
on the amount of any potential future indemnification obligations, the escrow
will release $10 million after one year following the closing and the remaining
amount two years after closing.

On April 12, 1999, the Company sold its subsidiary, H&M Food Systems Company,
Inc. ("H&M") for $132 million. H&M is a producer of custom formulated,
pre-cooked meat products that are sold primarily to national restaurant chains
and prepared-food producers. The Company reported a gain on the sale of H&M of
$30 million during 1999. At closing, $5 million of the purchase price was paid
into an escrow to secure potential future indemnity obligations arising out of
the sale for a one-year period.

Both divestitures are reported as discontinued operations in the Company's
financial statements.

                                       4

<PAGE>   5



FINANCING STRUCTURE

During 1999, the Company completed exchange offers that provided investors that
held debt of the predecessor companies, SFAC and SFC, the opportunity to
exchange their debt securities for the debt securities of the two successor
reporting companies, SFACNH and SFCNH. Concurrent with the exchange offers, the
Company amended and restated its Term Loan and Revolving Credit Facilities, and
amended its off-balance sheet Accounts Receivable Facility to extend the
maturity date of these facilities and permit the exchange offers.

As of December 31, 1999 the Company's debt consisted of the following:

          Revolving Credit Facility                    $      97,801
          Term Loan Facility                                 167,343
          11.25% Sr. Notes due 2001                          224,870
          12.125% Sr. Notes due 2002                         149,975
          13.25% Sr. Sub. Notes due 2003                     200,532
          13% Sr. Secured Discount Debentures                334,912
          Other                                                3,461
                                                       -------------
                   Total                               $   1,178,894
                                                       =============


Additionally, as of December 31, 1999, the Company had $37 million outstanding
under its off-balance sheet Accounts Receivable Facility.

Subsequently, on March 20, 2000, the Company completed the sale of its Metz
operating unit for $625 million. The sale of Metz resulted in immediately
available net cash proceeds of approximately $545 million (net of a $20 million
escrow, approximately $40 million to terminate the Accounts Receivable Facility
at closing, and an estimated $20 million for taxes and other expenses associated
with the transaction). Under its existing debt arrangements, the Company is
required to apply 75% of the Metz net proceeds, or approximately $410 million,
to reduce debt. As a result, concurrent with the closing, the Company paid in
full amounts outstanding under the Revolving and Term Loan Facilities totaling
approximately $265 million and terminated these arrangements. Within thirty days
after the closing, the Company is required to commence a tender offer for a
portion (approximately $145 million) of the Company's Senior Notes. The Company
is currently evaluating the cash requirements of its remaining businesses and is
considering using a portion of the residual Metz net cash proceeds (in excess of
the approximately $145 million required tender) to further reduce debt.

SFACNH, SFCNH and each subsidiary of SFCNH is a separate corporate entity. Since
the Company conducts substantially all of its business through its subsidiaries,
the ability of SFACNH and SFCNH to meet their obligations will be dependent on
the earnings and cash flow of its subsidiaries and the ability of its
subsidiaries to pay dividends and to advance funds to it. In addition, the
rights of SFACNH and SFCNH and the rights of such companies' creditors and
securities holders, including the holders of debt securities, to participate in
the assets of any subsidiary upon such subsidiary's liquidation or
recapitalization will be subject to prior claims of such subsidiary's creditors,
except to the extent that such company may itself be a creditor with recognized
claims against any such subsidiary.


                                       5

<PAGE>   6
COMPETITION

The Company's bakery businesses compete in the highly competitive bakery
products industry. Competition is likely to increase due to continued industry
consolidation and overcapacity in certain areas of the country. Competitors
include cookie companies with national distribution (such as Keebler and
Nabisco) and numerous smaller regional and local companies. Many of the
Company's larger competitors have significantly greater financial, marketing and
other resources than the Company, while smaller competitors may have lower fixed
costs and greater operating flexibility. The Company is also more highly
leveraged than most of its competitors, which may place it at a competitive
disadvantage. The Company does not encounter material foreign competition.
Competition is based on a number of factors including price, quality, brand
loyalty, service, freshness, marketing effectiveness and obtaining access to
retail outlets and adequate shelf space.


RAW MATERIALS

The Company is a purchaser of flour, sugar, vegetable oils, and other food
ingredients, as well as plastic, paper and corrugated products for packaging
materials. Although the Company has some long-term contracts, the bulk of such
raw materials is purchased on the open market or pursuant to short-term
agreements. The prices paid for food product raw materials generally reflect
external forces, among which weather conditions and commodity market activities
are the most significant. Although the prices of the principal raw materials
used by the Company can be expected to fluctuate as a result of government
actions and/or market forces (which would directly affect the cost of products
and value of inventories), such materials are generally in adequate supply and
available from numerous sources. Occasionally, and where possible, the Company
makes advance purchases of commodities significant to its business in order to
lock in what is perceived to be favorable pricing and to protect itself from
basic market price fluctuations. The Company's ability to pass through increases
in the costs of commodity ingredients is dependent primarily upon competitive
conditions and pricing methodologies employed in the various geographies in
which the Company conducts its business.


TRADEMARKS, PATENTS AND LICENSES

The Company owns or licenses a number of trademarks and tradenames which
management believes provide significant value to several of the Company's
product lines because of their recognition by customers and consumers. The
Company owns or licenses a number of patents, but such patents and licenses are
not considered material to the conduct of the Company's businesses, and the
Company does not believe that any of its businesses are substantially dependent
on patent protection.


SEASONALITY, WORKING CAPITAL

The Company's business is moderately seasonal with lower sales, operating profit
and cash flows generally occurring in the first quarter of the year. This
seasonality is due primarily to higher cookie sales in the second and third
quarters and the holiday season.

                                       6

<PAGE>   7



CUSTOMERS, SALES AND BACKLOG

The Company has one retail supermarket customer that accounted for 12.8%, 14.1%
and 12.0% of net sales in 1999, 1998 and 1997, respectively. No other customer
accounts for more than 10% of the Company's net sales. In general, the backlog
of orders is not deemed to be significant or material for an understanding of
the Company's businesses.


ENVIRONMENTAL MATTERS

The past and present business operations of the Company and the past and present
ownership and operation of real property by the Company are subject to extensive
and changing federal, state and local environmental laws and regulations
pertaining to the discharge of materials into the environment, the handling and
disposition of wastes (including solid and hazardous wastes) or otherwise
relating to protection of the environment. Compliance with federal, state and
local environmental laws and regulations is not expected to have a material
impact on the Company's capital expenditures, earnings or competitive position.
No assurance can be given, however, that additional environmental issues
relating to presently known matters or identified sites or to other matters or
sites will not require additional, currently unanticipated investigation,
assessment or expenditures.


REGULATION

         PUBLIC HEALTH

The Company is subject to the Federal Food, Drug and Cosmetic Act and
regulations administered by the Food and Drug Administration ("FDA"). These
comprehensive regulatory schemes govern, among other things, the manufacture,
composition, ingredient labeling, packaging and safety of food. For example, the
FDA regulates manufacturing practices for food through its current "good
manufacturing practices" regulations, specifies the called standards of identity
("recipes") for certain foods, including many of the kinds of products marketed
by the Company, and prescribes the format and content of certain information
required to appear on the labels of food products.

The Company's product labeling complies with regulations promulgated by the FDA
pursuant to the Nutrition Labeling and Education Act of 1990. These regulations
require nutritional labeling on all foods that are a meaningful source of
nutrition, including many of the Company's products, and place limitations on
the use of certain terms while requiring the use of other terms.

The operations and the products of the Company's business are also subject to
state and local regulation through such measures as licensing of plants,
enforcement by state health agencies of various state standards and inspection
of facilities.

         FEDERAL TRADE COMMISSION

The Company is subject to certain regulations by the Federal Trade Commission
("FTC"). Advertising of the Company's businesses is subject to regulation by the
FTC pursuant to the Federal Trade Commission Act and the regulations promulgated
thereunder.


                                       7

<PAGE>   8



         EMPLOYEE SAFETY REGULATIONS

The Company is subject to certain health and safety regulations including
regulations issued pursuant to the Occupational Safety and Health Act. These
regulations require the Company to comply with certain manufacturing, health and
safety standards to protect its employees from accidents.

         EMPLOYEES

As of March 20, 2000, the Company employed approximately 2,200 persons.
Approximately 30% of the Company's labor force was covered by collective
bargaining agreements.



ITEM 2.  PROPERTIES

The Company uses various owned and leased plants, warehouses, and other
facilities in its operations. These facilities are located primarily in
California, New York and Ohio. Management believes that the facilities are
properly equipped with machinery suitable for their use. Such facilities and
related equipment are well maintained generally and are adequate for the conduct
of current operations. Management also believes that the Company's facilities
have sufficient capability and capacity to meet the Company's long-term needs.
The following is a summary of significant facilities that were operated by the
Company as of March 20, 2000.

                              NUMBER OF FACILITIES
         ------------------------------------------------------------
                    OWNED           LEASED            TOTAL
                    -----           ------            -----
                      6               56                62

In addition, the Company operates a number of bakery cafes.


ITEM 3.  LEGAL PROCEEDINGS

Cacique
-------

On May 20, 1993, prior to the SFC acquisition from Artal Group S.A., Cacique,
Inc. ("Cacique") commenced proceedings against certain former subsidiaries of
the Company ("Stella") in the California Superior Court, Alameda County relating
to Hispanic-style cheese ("Product") produced by Stella between 1993 and
September 1994 (the "Cacique Case"). In November 1997, Stella was sold to the
Saputo Group ("Saputo"), but the Company has indemnified Saputo with respect to
the liability associated with the Cacique Case. Although SFACNH and SFCNH are
not defendants in the litigation, the Company continues to control the defense.


                                       8

<PAGE>   9



Cacique's complaint asserts causes of action for misappropriation of trade
secrets, trademark interference, inducing breach of contract, interference with
business relations, unfair competition and conspiracy to commit certain of the
causes previously stated. As previously reported, in September 1999, a jury in
the Los Angeles Superior Court returned a verdict of $4.5 million of
compensatory damages against Stella and certain other defendants in the Cacique
Case. In addition, the Court assessed approximately $1.7 million of interest on
the compensatory damages and aggregate punitive damages of approximately $12.5
million against Stella and C. Dean Metropoulos, the former CEO of Stella,
jointly and severally. The Court also awarded approximately $5 million in
attorney's fees and costs to be paid by the Stella defendants. The Company
strongly disagrees with the verdict in this case. Furthermore, the Company
believes, and has been advised by counsel, that numerous reversible errors
occurred at trial. The Company will vigorously pursue all available post-trial
rights and remedies, as well as its right of appeal. While it is impossible to
predict the results on appeal, the Company believes it has several meritorious
grounds of appeal.

As previously disclosed, three additional lawsuits have arisen stemming from the
Cacique matter. First, the Company and the other defendants in the Cacique Case
have filed suit against certain insurance carriers of both the Company and
Stella seeking a declaratory judgment that such insurance carriers are
responsible for certain of the damages in the Cacique Case. Second, following
the verdict in the Cacique Case, Saputo filed suit against the Company seeking
injunctive relief and alleging that the Company is obligated to post a bond on
Saputo's behalf in the Cacique Case equal to 150% of the aggregate verdict while
the Cacique Case is under appeal. The Company disagrees with the allegations in
the Saputo lawsuit and intends to vigorously defend the matter. Third, C. Dean
Metropoulos filed suit against SFC, Stella and certain other defendants
alleging, among other things, that the Company and its agents interfered with
Mr. Metropoulos' right to indemnification from Stella for damages arising out of
the Cacique Case. The Company believes that Mr. Metropoulos' lawsuit is entirely
without merit and intends to vigorously defend against this action.

Bondholder Claim
----------------

In December 1999, one of the holders ("Bondholder") of SFACNH's 11-1/4% Senior
Notes filed a lawsuit (the "Bondholder Suit") relating to the distribution of
net proceeds following the pending Metz Sale. The Bondholder has indicated to
the Company that it is concerned with the priority of distribution of such
proceeds as between the 11-1/4% Senior Notes and the Company's 12-1/8% Senior
Notes, which were exchanged for notes that were originally issued as a
refinancing of a portion of the Company's term debt in 1995. Shortly after being
filed, the Bondholder Suit was withdrawn without prejudice, based on an
agreement between the Bondholder and the Company, pursuant to which the Company
agreed, among other things, that it would negotiate in good faith in order to
resolve the issues raised in the Bondholder Suit and, in any event, that it
would not distribute the proceeds of the Metz Sale to holders of the Company's
Senior Notes without ten days' prior written notice to the Bondholder.


                                       9

<PAGE>   10


Other Litigation
----------------

In addition, the Company is involved in contractual disputes, administrative and
legal proceedings and investigations of various types, arising out of the
ordinary course of business.

Legal Proceedings Summary
-------------------------

Although any litigation, proceeding or investigation has an element of
uncertainty, the Company believes that it will successfully defend against the
actions described above. On that basis, it is unlikely that the ultimate
resolution of these matters will have a material adverse effect on the Company's
financial condition or results of operations. However, the Company does
anticipate that it will incur significant legal expenses as it pursues a
vigorous defense against each of these actions. In addition, the Company will
enter into discussions to settle a particular case, if the Company believes that
it is in the best interest of its stakeholders to do so. While the Company
believes that it will successfully defend against or otherwise resolve these
actions, no assurances can be given as to: (i) the outcome of these or any other
legal proceedings and (ii) the related impact of an unanticipated adverse
outcome of any one or more of these proceedings on the Company's financial
condition, or results of operations.


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

On January 13, 2000, SFAC, the ultimate parent of SFACNH, received the vote of
seventy-seven percent of the voting power of all outstanding stock of SFAC
approving certain employee benefit arrangements with certain executives of the
Company relative to the tax deductibility of such benefit payments under Section
280(G) of the Internal Revenue Code. Approval was obtained by written consent in
lieu of a meeting.



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<PAGE>   11



                                     PART II

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

There is no public market for the common stock, par value $.01 per share
("Common Stock"), of SFACNH of which 90% is held by SFC Sub, the parent company
of SFACNH. As of March 22, 2000, the remaining 10% of the Common Stock was held
of record by 17 persons or entities. This number of holders does not include
beneficial owners for whom Cede & Co. or others may act as nominee. The 10%
interest in the common stock was issued to holders of SFACNH's 13% Senior
Secured Discount Debentures as a part of the consideration for the exchange
offers completed on June 11, 1999. The Company did not receive any proceeds with
respect to the issuance of the Common Stock. The Common Stock was issued
pursuant to an exemption from registration under Section 4(2) of the Securities
Act of 1933, as amended.

SFACNH has never paid any cash dividends on shares of the Common Stock. The
ability of SFACNH to pay dividends is restricted by provisions of its
indentures. Refer to footnote 11 to the accompanying financial statements for
additional discussion of such restrictions.


ITEM 6.  SELECTED FINANCIAL DATA
[ALL FIGURES IN MILLIONS OF DOLLARS]


                                     1999     1998     1997     1996     1995
                                     ----     ----     ----     ----     ----

Net Sales                           $  285   $  206   $  197   $  185   $  185
                                    ======   ======   ======   ======   ======

(Loss) from continuing
   operations(1)(2)                 $ (163)  $ (136)  $ (143)  $ (246)  $ (177)
                                    ======   ======   ======   ======   ======

Income (loss) from
discontinued operations(1)(2)(3)(4) $   64   $   39   $  195   $ (241)  $ (129)
                                    ======   ======   ======   ======   ======

Total Assets                        $  431   $  461   $  436   $  428   $  876
                                    ======   ======   ======   ======   ======

Long-Term Debt                      $1,176   $1,250   $1,134   $1,173   $1,134
                                    ======   ======   ======   ======   ======


(1)      In 1996, the loss from continuing operations included a goodwill
         write-down of $91 million and discontinued operations included a
         goodwill write-down of $265 million.

(2)      In 1995, the loss from continuing operations included a goodwill
         write-down of $74 million and discontinued operations included a
         goodwill write-down of $179 million.

(3)      Includes gains on sale of businesses of $27 million in 1999 and
         $133 million in 1997.

(4)      Interest expense is not allocated to discontinued operations.

                                       11

<PAGE>   12



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

This Annual Report or Form 10-K contains forward-looking statements within the
meaning of the federal securities laws that reflect the Company's expectations
and are based on currently available information. Actual results, performance,
achievements or other information may vary materially from such statements and
are subject to future known and unknown risks and uncertainties and events
including those discussed herein.

The following table sets forth, for the periods indicated, the percentage of net
sales represented by certain items in the Company's statement of operations.

                                                       1999    1998    1997
                                                       ----    ----    ----

Net sales                                              100.0%  100.0%  100.0%
Cost of sales                                           42.1    43.0    44.3
                                                       -----   -----   -----
         Gross profit                                   57.9    57.0    55.7

Operating expenses:
         Selling, distribution, general
           and administrative                           57.0    58.0    59.3
         Amortization of intangible assets               1.0     0.3     0.0
                                                       -----   -----   -----
Total operating expenses                                58.0    58.3    59.3
                                                       -----   -----   -----
         Operating profit (loss)                        (0.1)%  (1.3)%  (3.6)%
                                                       =====   =====   =====


RESULTS OF OPERATIONS

         1999 COMPARED TO 1998

Consolidated net sales from continuing operations increased 38.2% to $284.6
million in 1999 compared to $206.0 million in 1998. This increase was primarily
due to the full year inclusion of the Archway business, expansion of Archway's
sales in Mother's geography, volume growth in Mother's core brands, new product
introductions and pricing.

The Company's gross profit margin improved to 57.9% in 1999 from 57.0% in 1998.
The gross profit margin was favorably impacted by product mix at Mother's and an
improvement in the profit contribution from the Boudin cafes.

Selling, distribution, general and administrative ("SDG&A") expenses increased
$42.7 million or 35.8% in 1999 to $162.1 million, primarily due to the inclusion
of a full year of operating expense from the acquisitions made in 1998 and
higher depreciation expense. However, as a percentage of sales, SDG&A expenses
decreased one percentage point to 57.0% in 1999 due to cost reductions realized
from post-acquisition integration activities. Amortization expense increased to
$2.9 million in 1999 compared to $0.5 million in 1998 due to a full year of
Archway's goodwill amortization in 1999.

Interest expense, net in 1999, increased $16.9 million or 12.8% to $149.1
million from $132.2 million in 1998. The increase resulted from: (i) higher
revolver borrowings in 1999; (ii) increased interest rates and debt issuance
amortization cost attributed to the debt exchange and refinancing; and (iii)
lower interest income in 1999.



                                       12


<PAGE>   13



In 1999, $9.8 million of third-party financing fees were expensed in connection
with the debt exchange and refinancing.

Other expense, net was $3.9 million in 1999 compared to $1.5 million in 1998.
The increase is primarily due to the loss on disposal of property, plant and
equipment in 1999.

As a result of the above factors, net loss from continuing operations increased
to $163.2 million in 1999 compared to $135.5 million in 1998.

The Company reports minimal state income tax and no federal income tax due to
its net operating loss position for tax purposes.

         1998 COMPARED TO 1997

Consolidated net sales from continuing operations increased 4.6% to $206.0
million in 1998 compared to $196.9 million in 1997. The increase in net sales
was attributed to the inclusion of ten weeks of Archway sales in 1998, partially
offset by changes in product mix and lower pricing at Mother's and one less
week of sales in 1998 versus the 53 weeks in 1997.

The Company's gross profit margin increased to 57.0% in 1998 from 55.7% in 1997.
The gross profit margin percentage was favorably impacted by product mix at
Mother's. Offsetting these favorable trends were inflationary increases in
manufacturing costs and higher depreciation expense.

SDG&A expenses increased $2.6 million or 2.2% in 1998 to $119.4 million. SDG&A
increases were attributed to the inclusion of Archway for ten weeks in 1998.
However, as a percentage of sales, 1998 SDG&A expenses decreased 1.3 percentage
points to 58.0 %.

Interest expense, net in 1998, decreased $1.3 million or 1.0% to $132.2 million
from $133.5 million in 1997. The decrease was primarily due to reduced
borrowings under the Revolving Credit Facility throughout the year and interest
earned on cash equivalents, offset by the additional accretion of interest on
SFAC's Senior and Subordinated Debentures.

Other expense, net was $1.5 million in 1998 compared to $2.1 million in 1997.
The reduction is primarily due to lower administrative costs related to the
Company's Accounts Receivable Facility.

As a result of the above factors, net loss from continuing operations decreased
to $135.5 million in 1998 compared to $143.1 million in 1997.

The Company reports minimal state income tax and no federal income tax due to
its net operating loss position for tax purposes.


EARNINGS BEFORE INTEREST, TAXES, DEPRECIATION, AND AMORTIZATION ("EBITDA")

Due to the Company's highly leveraged capital structure, EBITDA is an important
performance measure used by the Company and its stakeholders. The Company
believes that EBITDA provides additional information for determining its ability
to meet future obligations and debt service requirements. However, EBITDA is not
indicative of operating income or cash flow from operations as determined under
generally accepted accounting principles. The EBITDA for the Company's Metz,
Mother's/Archway and Boudin operating units, net of SFCNH's headquarters
expense, was $81.9 million in 1999 and $57.7 million in 1998. Net sales for
these units were $881.5 million in 1999 and $742.3 million in 1998.


                                       13


<PAGE>   14


LIQUIDITY AND CAPITAL RESOURCES

In 1999, net cash used in operating activities totaled $89.0 million, including
cash requirements of $75.6 million related to continuing operations, $8.6
million related to working capital, and $4.8 million for discontinued
operations. The $75.6 million of cash used by continuing operations resulted
from $91.5 million of cash interest expense offset by cash flow from operating
activities. The cash used for working capital purposes related principally to an
increase in accounts receivable due to lower funding from the Company's accounts
receivable facility and an increase in other current assets due to cash
deposited in escrow in connection with the H&M sale.

In 1998, net cash used in operating activities totaled $137.1 million, including
cash requirements of $69.0 million related to continuing operations, $6.3
million related to working capital and $61.8 million for discontinued
businesses. The $69.0 million used by continuing operations was due to $80.7
million of cash interest expense offset by cash flow from operating activities.
The cash used for working capital purposes resulted principally from a decrease
in accrued liabilities associated with acquisition liabilities and restructuring
payments offset by a decrease in accounts receivable. Net cash used in operating
activities in 1997 was $127.2 million. The net cash used in operating activities
in 1997 was primarily attributable to cash interest payments and the cash
requirements of discontinued operations.

Net cash provided by investing activities totaled $114.1 million in 1999 and was
primarily due to the proceeds from the sale of H&M, offset by capital
expenditures. Net cash used by investing activities totaled $147.9 million in
1998. The activity in 1998 was primarily attributable to the use of $117.2
million to acquire businesses and capital expenditures of $19.2 million. In
1997, cash provided by investing activities of $373.0 million was primarily
attributable to the net proceeds from the divestiture of business units.

Net cash used by financing activities totaled $2.3 million in 1999 due to
payments of debt refinancing costs and debt principal offset by increased
revolver borrowings. Net cash provided by financing activities amounted to $56.1
million in 1998, primarily due to additional borrowings under the Company's
Revolving Credit Facility, offset by refinancing costs and scheduled payments on
long-term debt. Net cash used in financing activities amounted to $61.5 million
in 1997 as a reduction of revolving credit borrowings and scheduled payments on
long-term debt were partially offset by an issuance of redeemable preferred
stock

Based upon the above, the net increase (decrease) in cash in 1999, 1998 and 1997
was $22.8 million, $(228.9) million and $184.3 million, respectively.

On March 20, 2000, the Company completed the sale of its Metz operating unit for
$625 million. The sale of Metz results in immediately available net cash
proceeds of approximately $545 million (net of a $20 million escrow,
approximately $40 million to terminate the accounts receivable facility at
closing and an estimated $20 million for taxes and other expenses associated
with the transaction). Under its existing debt arrangements, the Company is
required to apply 75% of the Metz net proceeds, or approximately $410 million,
to reduce debt. As a result, concurrent with the Metz closing, the Company has
paid in full amounts outstanding under the Revolving and Term Loan facilities
totaling approximately $265 million and terminated these arrangements. Within
thirty days after the Metz closing, the Company is required to commence a tender
offer for a portion (approximately $145 million) of the Company's Senior Notes.


                                       14

<PAGE>   15



After the completion of the Metz sale, the Company will use available cash
proceeds to fund operating and investing activities since it has terminated its
Accounts Receivable, Revolving and Term Loan Facilities. After the Metz
transaction, the Company expects to have approximately $100 million of available
cash following payment of transaction-related expenses, cash collateralizing
remaining letters of credit, and payment of the required debt reduction and
related accrued interest, but excluding other cash requirements of its
continuing operations. The Company is currently evaluating such cash
requirements of its existing businesses and is considering using a portion of
the available cash for further debt reduction. Management believes that the
available cash balance should be adequate to fund the Company's 2000 operating
and investing activities. However, there can be no assurance that available
funds will be adequate to meet such needs.


ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

During 1999, a significant portion of the Company's debt issues were fixed rate
obligations and a portion of the Company's floating rate debt was fixed through
an interest rate swap. As of March 20, 2000, the Company repaid all of its
outstanding floating rate indebtedness. As a result, the risk for changes in
interest rates is not material to the Company's operations.

ITEM 8.  FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

See Index to Financial Information on page F-1.


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

None.



                                       15

<PAGE>   16


                                    PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS
---------

Ten individuals serve on the Board of Directors of SFACNH. Set forth below are
the names, ages, other positions and offices held and a brief account of the
business experience for each director. Each member of the Board of Directors
serves until a successor is elected.

NAME                     AGE    OTHER POSITIONS
----                     ---    ---------------

Robert B. Haas           52     Chairman of the Board of SFAC and SFC since June
                                1993, Chairman of the Board of SFACNH and SFCNH
                                since June 1999 and Chairman of the Board of
                                Haas Wheat & Partners Incorporated, a private
                                investment firm since 1992; Chairman of the
                                Board of Haas & Partners Incorporated, a private
                                investment firm, since 1989. Mr. Haas is
                                Chairman of the Board of Playtex Products, Inc.,
                                NBC Acquisition Corp. and Nebraska Book Company,
                                Inc. and a Director of Sybron International
                                Corporation.

Thomas J. Baldwin        41     Director of SFAC and SFC since May 1996;
                                Director of SFACNH and SFCNH since June 1999;
                                Chief Executive Officer of Christmas Corner,
                                Inc. since January 1995 and President of PB
                                Ventures since July 1994. Mr. Baldwin was also
                                Managing Director of Invus Group, Ltd. from 1990
                                through February 1995.

Lawrence S. Benjamin     44     Director of SFAC and SFC since February 1997;
                                Director of SFACNH and SFCNH since June 1999;
                                President and Chief Executive Officer of SFAC
                                and SFC since January 1997; President and Chief
                                Executive Officer of SFACNH and SFCNH since June
                                1999; and President and Chief Executive Officer
                                1994 until December 1997. Mr. Benjamin held
                                various positions from 1986 through August 1994
                                with operating units of Kraft Foods, Inc.,
                                including President of All American Gourmet
                                Company, Vice President of Kraft Frozen Products
                                Group and Vice President and General Manager of
                                the Specialty Ingredients Unit of Kraft.

J. Taylor Crandall       46     Director of SFAC and SFC since August 1993;
                                Director of SFACNH and SFCNH since June 1999;
                                Vice President and Chief Operating Officer of
                                Keystone, Inc. since August 1998; Vice President
                                and Chief Financial Officer of Keystone, Inc.
                                from October 1986 to August 1998; President,
                                Director and sole stockholder of Acadia MGP,
                                Inc. (managing general partner of Acadia FW
                                Partners, L.P., the sole general partner of
                                Acadia, an affiliate of the Company) since March
                                1992. Mr. Crandall also is a Director of Bell &
                                Howell Company, U.S. Oncology, Inc., Sunterra
                                Corp. and Washington Mutual.



                                       16


<PAGE>   17


Jerry M. Meyer           59     Director of SFAC and SFC since June 1996;
                                Director of SFACNH and SFCNH since June 1999.
                                Mr. Meyer has been the Chairman and Chief
                                Executive Officer of Valhalla Holdings, Inc.
                                since August 1998. Mr. Meyer is also a Director
                                of Oreck Corporation, Wall Industries and
                                Nebraska Book Company, Inc.

Andrew J. Nathanson      42     Director of SFAC and SFC since August 1993;
                                Director of SFACNH and SFCNH since June 1999.
                                Managing Director of Donaldson, Lufkin &
                                Jenrette Securities Corporation since January
                                1991. Mr. Nathanson also is a Director of Duane
                                Reade, Inc.

David G. Offensend       46     Director of SFAC and SFC since August 1993;
                                Director of SFACNH and SFCNH since June 1999.
                                Founder of Evercore Partners, LLC since October
                                1995. Mr. Offensend was also Managing Director
                                of Oak Hill Partners, Inc. and its predecessor
                                from April 1990 to September 1995; Vice
                                President and Director of Acadia MGP, Inc. from
                                March 1992 to September 1995; and Vice President
                                of Keystone from March 1992 to September 1995.

Marc C. Particelli       45     Director of SFAC and SFC since November 1997;
                                Director of SFACNH and SFCNH since June 1999.
                                Managing Director of Oak Hill Partners, Inc.
                                since August 1997. Mr. Particelli was Principal
                                of Odyssey Partners L.P. from October 1995 to
                                August 1997 and Senior Vice President of Booz
                                Allen & Hamilton Inc. prior to October 1995.

Anthony P. Scotto        53     Director of SFAC and SFC since August 1993;
                                Director of SFACNH and SFCNH since June 1999.
                                Managing Director of Oak Hill Partners, Inc. and
                                its predecessor since March 1988. Managing
                                Director of Oak Hill Advisors, Inc. since
                                September 1999. Mr. Scotto was also a Consultant
                                to Oak Hill Capital Management, Inc. from
                                November 1998 to September 1999. Mr. Scotto also
                                is a Director of Ivex Packaging Corporation,
                                Holophane Corporation and Grove Worldwide LLC

Douglas D. Wheat         49     Director of SFAC and SFC since June 1993;
                                Director of SFACNH and SFCNH since June 1999.
                                President of Haas Wheat and Partners
                                Incorporated since November 1992; Mr. Wheat was
                                Co-Chairman of Grauer & Wheat, Inc., a private
                                investment firm, from April 1989 to October
                                1992. Mr. Wheat also is a Director of Playtex
                                Products, Inc., NBC Acquisition Corporation, and
                                Nebraska Book Company, Inc.


                                       17


<PAGE>   18



EXECUTIVE OFFICERS
------------------
Set forth below are the names, ages, positions held and a brief account of the
business experience for each executive officer of SFACNH and certain executive
officers of the Company who may be deemed executive officers of SFACNH. No
family relationship exists among the identified executive officers. Executive
officers of SFACNH are elected by and serve at the discretion of the Board of
Directors of SFACNH.

NAME                     AGE    OTHER POSITIONS
----                     ---    ---------------

Lawrence S. Benjamin     44     See Directors.

Robert L. Fishbune       44     Vice President and Chief Financial Officer of
                                SFAC and SFC since May 1996; Vice President and
                                Chief Financial Officer of SFACNH and SFCNH
                                since June 1999. Mr. Fishbune was a Partner at
                                Coopers & Lybrand L.L.P. from 1988 until May
                                1996.

Patrick J. O'Dea         38     President and Chief Executive Officer of
                                Mother's since April 1997. Mr. O'Dea was Vice
                                President, Retail of Stella from 1995 to March
                                1997. Prior to joining Stella, Mr. O'Dea spent
                                12 years with Procter & Gamble, most recently as
                                Director of Marketing for its Snack Food
                                Business.

David E. Schreibman      32     Vice President, Secretary and General Counsel of
                                SFAC and SFC since May 1999; Vice President and
                                General Counsel - Business Units of SFAC and SFC
                                from October 1998 to April 1999; and Vice
                                President, Secretary and General Counsel of
                                SFACNH and SFCNH since June 1999. Mr. Schreibman
                                was Chief Counsel - Mergers and Acquisitions for
                                the Sara Lee Corporation from October 1995 to
                                October 1998. Prior to October 1995, Mr.
                                Schreibman was in private law practice with
                                Sidley & Austin.

Lawrence J. Strain       47     President of Boudin since January 1999. Vice
                                President of Bakery Operations for Boudin from
                                August 1990 to December 1998. Prior to 1990, Mr.
                                Strain was Vice President and operating partner
                                of Boudin International, Inc.




                                       18


<PAGE>   19


ITEM 11. EXECUTIVE COMPENSATION

SUMMARY COMPENSATION TABLE

The following table shows compensation for the years ended December 31, 1999,
1998 and 1997 of Mr. Benjamin, the President and Chief Executive Officer of
SFACNH and SFCNH ("CEO"), and each of the four most highly compensated executive
officers (excluding the CEO) of the Company (including its operating
subsidiaries). The Company has an annual bonus plan and a long-term incentive
plan pursuant to which executive officers of the Company may participate.

The compensation set forth in this table is repeated in the Summary Compensation
Table listed in SFCNH's Annual Report on Form 10-K for the year-ended December
31, 1999. The CEO and four most highly compensated executive officers of the
Company hold their respective positions for both SFACNH and SFCNH. However,
these officers are not compensated separately by each entity.

<TABLE>
<CAPTION>
                                     ANNUAL Compensation              LONG TERM COMPENSATION
                                     -------------------              ----------------------

                                                                                AWARDS
                                                                                ------
        NAME AND                                           OTHER ANNUAL       SECURITIES            ALL OTHER
   PRINCIPAL POSITION     YEAR   SALARY($)   BONUS ($)    COMPENSATION        UNDERLYING        COMPENSATION ($)
   ------------------     ----   ---------   ---------    -------------   OPTIONS/SARS (#)(3)   ----------------
                                                           ($) (1) (2)    ------------------       (4) (5) (6)
                                                           -----------                             -----------
<S>                       <C>     <C>          <C>            <C>              <C>                  <C>
Lawrence S. Benjamin      1999    655,000      811,000        90,000               -                1,615,000
President and Chief       1998    625,000      703,000        89,000               -                1,170,000
Executive Officer of      1997    560,000      420,000        84,000           1,600,000              684,000

Robert L. Fishbune        1999    394,000      495,000        64,000               -                  727,000
Vice President and Chief  1998    376,000      428,000        62,000               -                  238,000
Financial Officer SFACNH  1997    350,000         -           62,000             100,000              378,000

Henry J. Metz             1999    100,000       88,500       548,000               -                    1,000
Chairman of Metz (7)      1998    338,000      262,500          -                  -                      500
                          1997    334,000      251,000          -                  -                    1,000

Patrick J. O'Dea          1999    349,000      160,125       413,000               -                   31,000
President and Chief       1998    295,000      225,000          -                  -                   30,300
Executive Officer of      1997    260,000      210,000          -                  -                  258,000

Robert B. Aiken           1999    395,000      354,000       440,000               -                   78,000
President and Chief       1998    354,000      285,000        68,000               -                  245,000
Executive Officer of      1997       -          17,000        51,000             100,000              365,000

</TABLE>



(1)      The amounts set forth for Mr. Benjamin include $76,000, $76,000 and
         $71,000 for tax reimbursement payments made in 1999, 1998 and 1997,
         respectively. The amounts for Mr. Fishbune in 1999, 1998 and 1997
         include $51,000, $49,000 and $49,000, respectively, for tax
         reimbursement payments. The amounts for Mr. Aiken in 1999, 1998 and
         1997 include $61,000, $54,000 and $39,000, respectively, for tax
         reimbursement payments.



                                       19


<PAGE>   20



(2)      In 1999, the amounts include payments received under the Company's
         Deferred Bonus Agreements of $548,000, $405,000 and $365,000 for
         Messrs. Metz, O'Dea and Aiken, respectively.

(3)      Options were generally granted to employees of the Company, including
         the named executive officers, pursuant to the 1994 Stock Option Plan,
         which was amended in February, 1995 (the "Stock Option Plan"). Options
         granted are either non-qualified stock options ("NQSOs") or incentive
         stock options ("ISOs"). Options granted generally have a ten-year term.

(4)      The amounts include divestiture awards for the sale of businesses for
         Mr. Benjamin of $1,517,000, $997,500 and $595,000 for 1999, 1998 and
         1997, respectively. The amounts include divestiture awards for the sale
         of businesses for Mr. Fishbune of $663,000, $100,500 and $298, 000 for
         1999, 1998 and 1997, respectively. The amounts include divestiture
         awards for the sale of businesses for Mr. Aiken of $100,500 and $298,
         000 for 1998 and 1997, respectively.

(5)      In 1999, the Company made contributions to retirement accounts
         maintained by Messrs. Benjamin, Fishbune, and Aiken of $91,000, $57,000
         and 70,000, respectively. Messrs. Benjamin, Fishbune and Aiken have
         established such accounts into which they contribute up to 15% of base
         pay (on an after-tax basis) to annuity or money-market funds. The
         Company provides contributions to the employee's retirement account and
         a reimbursement for taxes incurred as a result of such contributions.

(6)      The amounts set forth in 1999 include life insurance premiums of
         $1,000 for Messrs. Benjamin, Fishbune, Aiken, and O'Dea and personal
         financial planning services of $6,000, $6,000 and $7,000 for Messrs.
         Benjamin, Fishbune, and Aiken, respectively. In 1999, Mr. Metz
         received a $1,000 relocation reimbursement. In 1999, Mr. O'Dea
         received a $30,000 relocation allowance.

(7)      As of the March 20, 2000 sale of Metz, Messrs. Metz and Aiken are no
         longer executive officers of the Company.


AGGREGATED OPTIONS/SARS EXERCISED IN LAST FISCAL YEAR AND YEAR-END OPTION/SAR
VALUES

The following table sets forth for the named executive officers aggregated
information concerning the number of shares of Common Stock underlying
unexercised stock options at December 31, 1999 and the value of unexercised,
in-the-money options at that date.



                                       20

<PAGE>   21

<TABLE>
<CAPTION>

                                                NUMBER OF
                                                SECURITIES               VALUE OF
                                                UNDERLYING             UNEXERCISED
                                                UNEXERCISED            IN-THE-MONEY
                                              OPTIONS/SARS AT        OPTIONS/SARS AT
                                            FISCAL YEAR-END (#)    FISCAL YEAR-END ($)
                                               EXERCISABLE/            EXERCISABLE/
             NAME                              UNEXERCISABLE          UNEXERCISABLE
             ----                              -------------          -------------
             <S>                             <C>                           <C>
             Lawrence S. Benjamin            1,175,000/325,000             (1)
             President and Chief
             Executive Officer of
             SFAC, SFC, SFACNH and SFCNH

             Robert L. Fishbune               150,000/50,000                (1)
             Vice President and Chief
             Financial Officer of SFAC,
             SFC, SFACNH and SFCNH

             Henry J. Metz                       185,000/0                  (1)
             Chairman of Metz

             Patrick J. O'Dea                    35,000/0                   (1)
             President and Chief
             Executive Officer of
             Mother's
                                              170,000/300,000               (1)
             Robert B. Aiken
             President and Chief Executive
             Officer of Metz
</TABLE>


(1)      All of the options listed in this table have an exercise price of
         $0.021322 per share of Common Stock. Due to the fact that the Common
         Stock is not publicly traded, it is not currently possible to calculate
         a precise value for the Common Stock. In October 1997, the Board of
         Directors of SFAC realized that certain previously granted stock
         options had exercise prices which exceeded the fair market value of the
         Common Stock. In view of the diminished value, the Board of Directors
         of SFAC determined that adjusting the exercise price of stock options
         previously awarded to existing employees (including the named executive
         officers) was in the best interests of the Company. On October 30,
         1997, the Board of Directors of SFAC repriced the exercise price of
         existing options from $0.726703211 to $0.021322 per share of Common
         Stock, which the Board of Directors of SFAC determined was not below
         the fair market value of the Common Stock.


METZ-MOTHER'S CONSOLIDATED PENSION PLAN FOR NON-UNION EMPLOYEES

The following table indicates the estimated annual benefits payable upon
retirement for the specified compensation and years of service classifications
under the Metz-Mother's Consolidated Pension Plan for Non-Union Employees (the
"Pension Plan"). Within 180 days of closing of the sale of Metz, the Pension
Plan assets relating to Metz active employees will be transferred to a defined
benefit pension plan sponsored by The Earthgrains Company. Messrs. Metz, Aiken
and O'Dea are the only named executive officers participating in the Pension
Plan.



                                       21

<PAGE>   22



PENSION TABLE FOR THE PENSION PLAN

--------------------------------------------------------------------------
     ANNUAL FINAL
       AVERAGE
     COMPENSATION                        YEARS OF SERVICE
     ------------                        -----------------
     =====================================================================
                        15        20         25          30          35
     ---------------------------------------------------------------------
       125,000       $23,619    $32,118    $40,616     $49,114     $49,114
     ---------------------------------------------------------------------
       150,000       $28,963    $39,368    $49,772     $60,176     $60,176
     ---------------------------------------------------------------------
       175,000       $33,321    $45,955    $58,589     $71,223     $71,223
     ---------------------------------------------------------------------
       200,000       $36,602    $51,143    $65,683     $80,223     $80,223
     ---------------------------------------------------------------------
       225,000       $39,884    $56,330    $72,776     $89,223     $89,223
     ---------------------------------------------------------------------
       250,000       $41,306    $58,579    $75,852     $93,125     $93,125
     ---------------------------------------------------------------------
       300,000       $41,306    $58,579    $75,852     $93,125     $93,125
     ---------------------------------------------------------------------
       350,000       $41,306    $58,579    $75,852     $93,125     $93,125
     ---------------------------------------------------------------------
       400,000       $41,306    $58,579    $75,852     $93,125     $93,125
     ---------------------------------------------------------------------
       450,000       $41,306    $58,579    $75,852     $93,125     $93,125
     ---------------------------------------------------------------------
       500,000       $41,306    $58,579    $75,852     $93,125     $93,125
     ---------------------------------------------------------------------

Compensation under the Pension Plan generally refers to total annual cash
compensation (up to $160,000 for 1999, as limited by the Internal Revenue Code
of 1986, as amended (the "Code") section 401(a)(17)), including pre-tax salary
deferrals, but excluding certain specified items such as compensation received
under the Metz Long-Term Incentive Compensation Plan, the Mother's Long-Term
Incentive Compensation Plan, the Metz Annual Bonus Incentive Plan and the
Mother's Annual Bonus Incentive Plan.

The amount of compensation covered under the Plan in 1999 for Messrs. Metz and
O'Dea was $160,000 (as limited by Code section 401(a)(17). As of December 31,
1999, Mr. Metz had approximately 28 years of credited service under the Pension
Plan, Mr. Aiken had approximately one year of credited service under the Pension
Plan, and Mr. O'Dea had approximately two and one-half years of credited service
under the Pension Plan. Benefits are computed on a straight life annuity basis
and are not subject to deduction for Social Security or other offset amounts.




                                       22



<PAGE>   23



CERTAIN EMPLOYMENT ARRANGEMENTS

The following summaries of certain employment agreements and arrangements are
not necessarily complete and are subject to, and are qualified in their entirety
by reference to, the text of the agreements and arrangements, copies of which
are listed as exhibits hereto and have either been filed as exhibits herewith or
incorporated by reference herein.

Employment Agreement with Mr. Benjamin
--------------------------------------

SFAC, SFC and certain subsidiaries of SFAC and SFC (collectively, the
"Employers") entered into an Amended and Restated Executive Employment Agreement
dated as of March 15, 1999 with Mr. Benjamin (the "Benjamin Employment
Agreement") effective January 1, 1999. The Benjamin Employment Agreement
provides for the initial term of employment to end June 30, 2001, which term
will automatically be renewed for additional one-year extension periods unless
the renewal is canceled by the Employers or Mr. Benjamin upon six months prior
notice. In addition, upon termination in certain circumstances, the Employers
will make post-termination salary and bonus payments to such executive (or his
estate). The Benjamin Employment Agreement provides for an initial base salary
of $655,000 and an annual target bonus of 75% of base salary upon attainment of
specified performance targets.

The Benjamin Employment Agreement also provides that Mr. Benjamin may be
entitled to receive, under certain circumstances, payments to offset (at least
in part) certain tax consequences to him as a result of his exercise of stock
options, the receipt of certain payments and/or his termination in connection
with a change of control of SFAC or SFC. These payments are limited in some
circumstances to the tax savings actually realized by the Employers and in other
circumstances by various dollar amounts.

Mr. Benjamin has agreed to be bound by certain confidentiality, non-competition
and non-solicitation restrictions set forth in the Benjamin Employment
Agreement.

Employment Agreement with Mr. Fishbune
--------------------------------------

SFAC, SFC and certain subsidiaries of SFAC and SFC (collectively, the
"Employers") entered into an Amended and Restated Executive Employment Agreement
dated as of March 15, 1999 with Mr. Fishbune (the "Fishbune Employment
Agreement") effective January 1, 1999. The Fishbune Employment Agreement
provides for the initial term of employment to end December 31, 2000, which term
will automatically be renewed for additional one-year extension periods unless
the renewal is canceled by the Employers or Mr. Fishbune upon six months prior
notice. In addition, upon termination in certain circumstances, the Employers
will make post-termination salary and bonus payments to such executive (or his
estate). The Fishbune Employment Agreement provides for an initial base salary
of $400,000 and an annual target bonus of 75% of base salary upon attainment of
specified performance targets.

The Fishbune Employment Agreement also provides that Mr. Fishbune may be
entitled to receive, under certain circumstances, payments to offset (at least
in part) certain tax consequences to him as a result of his exercise of stock
options, the receipt of certain payments and/or his termination in connection
with a change of control of SFAC or SFC. These payments are limited in some
circumstances to the tax savings actually realized by the Employers and in other
circumstances by various dollar amounts.


                                       23

<PAGE>   24



Mr. Fishbune has agreed to be bound by certain confidentiality, non-competition
and non-solicitation restrictions set forth in the Fishbune Employment
Agreement.

Employment Agreement with Mr. O'Dea
-----------------------------------

SFC, Mother's and MCC-DSD Holdings, Inc., a subsidiary of the Company,
(collectively, the "Employers") entered into an Amended and Restated Executive
Employment Agreement with Mr. O'Dea effective July 15, 1997 (the "O'Dea
Employment Agreement"). The O'Dea Employment Agreement provides for the initial
term of employment to end December 31, 2000, subject to earlier termination
under certain enumerated circumstances. In addition, upon termination in certain
circumstances, the Employers will make post-termination salary and bonus
payments to such executive (or his estate). The O'Dea Employment Agreement
provides for an initial base salary of $280,000 and an annual target bonus of
75% of base salary upon attainment by the Company of specified performance
targets.

The O'Dea Employment Agreement also provides that Mr. O'Dea may be entitled to
receive, under certain circumstances, payments to offset (at least in part)
certain tax consequences to him as a result of his exercise of stock options,
the receipt of certain payments and/or his termination in connection with a
change of control of SFAC or SFC. These payments are limited in some
circumstances to the tax savings actually realized by the Employers and in other
circumstances by various dollar amounts.

Mr. O'Dea has agreed to be bound by certain confidentiality, non-competition and
non-solicitation restrictions set forth in the O'Dea Employment Agreement.

Employment Agreement with Mr. Aiken
-----------------------------------

SFAC and SFC (collectively, the "Employers") entered into an Amended and
Restated Executive Employment Agreement dated as of April 1, 1998 with Mr. Aiken
(the "Aiken Employment Agreement") effective January 1, 1998. In connection with
the sale of Metz, the acquirer of Metz has assumed the obligations pursuant to
the Aiken Employment Agreement. The Aiken Employment Agreement provides for the
initial term of employment to end April 30, 2001, subject to earlier termination
in certain circumstances. In addition, upon termination in certain
circumstances, the Employers will make post-termination salary and bonus
payments to such executive (or his estate). The Aiken Employment Agreement
provides for an initial base salary of $380,000 and an annual target bonus of
75% of base salary upon attainment by the Company of specified performance
targets.

The Aiken Employment Agreement also provides that Mr. Aiken may be entitled to
receive, under certain circumstances, payments to offset (at least in part)
certain tax consequences to him. These payments are limited in some
circumstances to the tax savings actually realized by the Employers and in other
circumstances by various dollar amounts.

Mr. Aiken has agreed to be bound by certain confidentiality, non-competition and
non-solicitation restrictions set forth in the Aiken Employment Agreement.

Divestiture Award Agreements
----------------------------

Certain of the executive officers and other key employees of the Company,
including Messrs. Benjamin, Fishbune, Aiken, and Metz have entered into
Divestiture Award Agreements with the Company. Pursuant to these agreements, a
recipient will receive or has received a percentage of the net cash proceeds
received by the Company (after deducting fees and expenses) in the sale of
various operating subsidiaries of the Company. In connection with the sale of
Metz, the acquirer of Metz has


                                       24


<PAGE>   25


agreed to pay the future responsibility for amounts owed to Messrs. Aiken and
Metz under these agreements.

Change in Control Arrangements
------------------------------

Under the Mother's Amended and Restated Supplemental Long-Term Incentive
Compensation Plan, adopted in 1999 (the "Mother's LTIP"), certain management
employees, which include certain named executive officers, are eligible to
receive awards based upon the total value of Mother's. Determination of award
payments under the Mother's LTIP will be made on June 1, 2001 or earlier in the
event of a change in control. The amounts of the awards under the Mother's LTIP
are offset, in certain cases, by amounts payable under certain of the Retention
Bonus Agreements described below.

Certain of the executive officers and other key employees of the Company,
including Messrs. Benjamin, Fishbune, Metz, O'Dea and Aiken entered into
Retention Bonus Agreements with the Company, pursuant to which these employees
are entitled to receive retention bonus payments in amounts equal to their bonus
payments under the Company's annual bonus plans. Payments of amounts vested will
be made on March 31, 2001. However, in the event of a change in control, the
awards that relate to bonuses earned prior to the change in control vest
immediately and will be paid within 90 days. In connection with the sale of
Metz, the acquirer of Metz has agreed to pay the amounts owed to Messrs. Aiken
and Metz under this plan.

Compensation of Directors
-------------------------

Employees of SFACNH, SFCNH or their subsidiaries do not receive any additional
compensation for services as a director or on committees of the Board of
Directors of SFACNH, SFCNH or any of their subsidiaries. Directors of SFACNH,
SFCNH or their subsidiaries are reimbursed for reasonable out-of-pocket expenses
incurred in connection with attendance at Board of Directors and committee
meetings and are covered by director's liability insurance. Each of Messrs.
Baldwin and Meyer also receive a director's fee of $20,000 annually.

Compensation Committee Interlocks and Insider Participation In Compensation
Decisions
---------

J. Taylor Crandall, Robert B. Haas, Anthony P. Scotto and Douglas D. Wheat are
all of the members of the compensation committee of the Board of Directors of
each of SFAC, SFC, SFACNH and SFCNH (the "Compensation Committee"). Each of
Messrs. Crandall, Haas, Scotto and Wheat owns a beneficial interest in or is an
executive officer of one or more of the entities that have entered into
financial advisory arrangements with SFACNH as described below.

Messrs. Haas and Wheat are controlling shareholders and are Chairman of the
Board and President, respectively, of Haas Wheat and Partners Incorporated. Haas
Wheat is a party to a financial advisory agreement with SFACNH pursuant to which
Haas Wheat agrees to provide certain financial advisory and other consulting
services to SFACNH in consideration for an annual fee of $700,000. In September
1999, the Board of Directors approved a one-year extension of the agreement
until December 2000.

J. Taylor Crandall is Vice President and Chief Operating Officer of Keystone,
Inc. and is President, Director and sole stockholder of Acadia MGP, Inc., the
managing general partner of Acadia FW Partners, L.P., the sole general partner
of Acadia. Mr. Scotto is a Managing Director of Oak Hill and its predecessor.
Each of Penobscot-MB Partners ("Penobscot"), an affiliate of Acadia, and
Keystone is a party to a financial advisory agreement with SFACNH, pursuant to
which they agree to provide certain financial advisory and other consulting
services to SFACNH in consideration for an annual


                                       25



<PAGE>   26




fee of $200,000 per year in the case of Penobscot and $100,000 per year in the
case of Keystone. In September 1999, the Board of Directors approved a one-year
extension of the agreements until December 2000.


ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

Ninety percent (90%) of the capital stock of SFACNH is held by SFC Sub, Inc.,
the parent company of SFACNH. As of March 17, 2000, the remaining 10% of the
Common Stock was held of record by seventeen (17) persons or entities. The 10%
interest in the common stock was issued to holders of SFACNH's 13% Senior
Secured Discount Debentures as a part of the consideration for the exchange
offers completed on June 11, 1999. The following table sets forth, as of January
26, 2000, certain information regarding the beneficial ownership of voting
securities of SFAC, the ultimate parent of SFACNH, by (i) each person known by
SFACNH to be the beneficial owner of more than 5% of any class of SFAC's voting
securities, (ii) each of the directors and named executive officers of SFACNH,
and (iii) all executive officers and directors of SFACNH.

                                       NUMBER OF SHARES        PERCENTAGE OF
NAME AND ADDRESS OF BENEFICIAL OWNER   OF COMMON STOCK       COMMON STOCK (A)
------------------------------------   ----------------      ----------------
Acadia Partners, L.P. (b)                 27,063,347              40.86%
201 Main Street
Fort Worth, Texas  76102

Keystone, Inc. (c)                         9,358,502              14.13%
201 Main Street
Fort Worth, Texas  76102

Artal Luxembourg S.A. (d)                  5,959,327               9.49%
Aandorenstraat 2
3300 Tienen, Belgium

Robert B. Haas (e)                         5,881,496               9.26%
300 Crescent Court, Suite 1700
Dallas, Texas  75201

UBS Capital LLC (f)                        5,366,913               8.55%
299 Park Avenue
New York, New York  10171

DLJ Merchant Banking Partners, L.P. (g)    3,812,562               6.07%
277 Park Avenue
New York, New York  10172

Thomas J. Baldwin                             --                   --

J. Taylor Crandall (b)                        --                   --

Jerry M. Meyer                                --                   --

Andrew J. Nathanson (g)                       --                   --

David G. Offensend                            --                   --

Marc C. Particelli                            --                   --


                                       26


<PAGE>   27


Anthony P. Scotto (b)                         --                   --

Henry J. Metz (i)                          1,217,750               1.93%

Lawrence S. Benjamin (j)                   1,326,771               2.07%

Douglas D. Wheat (h)                         276,264                --*

Robert L. Fishbune (k)                       150,000                --*

Robert B. Aiken (l)                          214,231                --*

Patrick J. O'Dea (m)                          35,000
                                                                    --*
All directors and executive officers       9,087,281              13.59%
as a group (b)(g)


-------------
*Less than 1%.

(a)      The holdings of all of the stockholders listed in this table may be
         diluted by the exercise of warrants set forth in footnotes (b), (c) and
         (e) below or options which, under employment arrangements and stock
         option plans approved by the Company, may be granted to certain
         employees. The Stock Option Plan makes available to certain operating
         company employees and headquarter employees options to purchase
         5,852,917 shares of Common Stock.

(b)      Acadia's shares of Common Stock include shares owned by
         FWHY-Coinvestments VII Partners, L.P. ("FWHY"), SFC Partners, L.P.
         ("SFCP") and SFC Partners II, L.P. ("SFCII"), parties related to
         Acadia. Acadia's shares of Common Stock also include 3,467,002 shares
         of Common Stock issuable upon the exercise of 8,775 Warrants issued by
         SFAC in favor of Acadia pursuant to a Warrant Agreement dated June 27,
         1997. See "Item 13 - Certain Relationships and Related Transactions."
         The general partner of Acadia is Acadia FW, the managing general
         partner of which is Acadia MGP, a corporation controlled by J. Taylor
         Crandall. In addition, Mr. Crandall controls Group 31, Inc., the
         general partner of each of FWHY, SFCP and SFCII. Therefore, Acadia FW
         and Acadia MGP may be deemed to beneficially own the shares of Common
         Stock held by Acadia, SFCP, SFCII and FWHY. Mr. Scotto is a limited
         partner of SFCII and disclaims beneficial ownership of the shares of
         Common Stock held by SFCII. The address of Acadia FW, Acadia MGP,
         FWHY, SFCP, SFCII and Mr. Crandall is 201 Main Street, Fort Worth,
         Texas 76102.

(c)      Keystone's shares of Common Stock include 3,467,002 shares of Common
         Stock issuable upon the exercise of 8,775 Warrants issued by SFAC in
         favor of Keystone pursuant to a Warrant Agreement dated June 27, 1997.
         See "Item 13-Certain Relationships and Related Transactions." Keystone
         is controlled by Robert M. Bass. As such, Mr. Bass may be deemed to
         beneficially own the shares of Common Stock held by Keystone. The
         address of Mr. Bass and Keystone is 201 Main Street, Fort Worth, Texas
         76102.

(d)      The parent entity of Artal Luxembourg S.A. is Artal Group S.A., a
         Luxembourg company.

(e)      Mr. Haas' shares of Common Stock include 101,011 shares owned by HWP
         Specialty Subsidiary Partners, 25,253 shares owned by HWP Specialty
         Subsidiary Partners II, and 1,000,000 shares owned by the Haas Family
         Long-Term Trust. Mr. Haas' shares of Common


                                       27


<PAGE>   28


         Stock also include 770,445 shares of Common Stock issuable upon the
         exercise of 1,950 Warrants issued by SFAC in favor of Mr. Haas
         pursuant to a Warrant Agreement dated September 19, 1997. See "Item 13
         - Certain Relationships and Related Transactions." The shares owned by
         HWP Specialty Subsidiary Partners and HWP Specialty Subsidiary
         Partners II also are beneficially owned by Mr. Douglas Wheat.

(f)      Union Bank of Switzerland owns indirectly 100% of the capital stock of
         UBS Capital LLC.

(g)      The following entities hold shares of Common Stock: DLJ Merchant
         Banking Partners, L.P. ("DLJMBP"); DLJ International Partners, C.V.
         ("DLJIP"); DLJ Offshore Partners, C.V. ("DLJOP"); DLJ Merchant Banking
         Funds, Inc. ("DLJMBF"); DLJ First ESC L.L.C. ("DLJESC"), an "employee
         securities corporation" (as defined in the Investment Company Act of
         1940) formed to hold securities of employees of DLJMBP, DLJIP, DLJOP
         and DLJESC; and Donaldson, Lufkin & Jenrette Securities Corporation
         (collectively, the "DLJ Entities"). Except for his allocable portion
         of the shares held by DLJESC, Mr. Nathanson disclaims beneficial
         ownership of the shares of Common Stock held by the DLJ Entities.

(h)      Mr. Wheat's shares of Common Stock include 101,011 shares owned by HWP
         Specialty Subsidiary Partners and 25,253 shares owned by HWP Specialty
         Subsidiary Partners II, which also are beneficially owned by Mr. Robert
         B. Haas and 150,000 shares owned by the Wheat Children's Trust FBO Adam
         B. Wheat, the Wheat Children's Trust FBO Mary C. Wheat, the Wheat
         Children's Trust FBO Kyler D. Wheat.

(i)      Mr. Metz's shares of Common Stock include 185,000 shares that Mr. Metz
         has the right to acquire upon the exercise of options.

(j)      Mr. Benjamin's shares of Common Stock include 1,250,000 shares that
         Mr. Benjamin has the right to acquire upon the exercise of options.

(k)      Mr. Fishbune's shares of Common Stock include 150,000 shares that Mr.
         Fishbune has the right to acquire upon the exercise of options.

(l)      Mr. Aiken's shares of Common Stock include 170,000 shares that Mr.
         Aiken has the right to acquire upon the exercise of options.

(m)      Mr. O'Dea's shares of Common Stock include 35,000 shares that Mr.
         O'Dea has the right to acquire upon the exercise of options.


                                       28


<PAGE>   29


ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

STOCKHOLDERS' AGREEMENT

On August 16, 1993, Haas Wheat, Acadia, Keystone, UBS Capital, Artal Luxembourg
S.A. and DLJMBP (in some cases acting through affiliates) (collectively, with
certain of their affiliates, the "Principal Stockholders") entered into a
stockholders' agreement governing the relationships among such stockholders (the
"Stockholders' Agreement") of SFAC, the ultimate parent of SFACNH. Subsequent
transferees of the Common Stock that are affiliates of the Principal
Stockholders or members of management have also agreed to be bound by the
Stockholders' Agreement. The Stockholders' Agreement imposes on the parties
thereto certain restrictions and conditions on the transfer of Common Stock,
subject to certain exceptions. The Stockholders' Agreement provides the parties
with the right to participate in certain sales of Common Stock by other parties.
The parties to the Stockholders' Agreement were granted certain preemptive
rights with respect to issuance of Common Stock by SFAC and the right, in
certain circumstances, to have their Common Stock registered for public sale
under the Securities Act of 1933, as amended. The Stockholders' Agreement also
sets forth provisions relating to corporate governance of SFAC. Pursuant to the
Stockholders' Agreement, Acadia has the right to nominate three Directors,
Keystone has the right to nominate two Directors, Haas Wheat has the right to
nominate two Directors, and UBS Capital, Artal Luxembourg S.A. and DLJMBP each
have the right to nominate one Director. Under certain conditions Acadia and
Keystone can increase the number of Directors they can nominate.


CERTAIN TRANSACTIONS WITH STOCKHOLDERS OF SFAC

Certain of the Principal Stockholders and their affiliates were paid financial
advisory fees by the Company in 1999 pursuant to financial advisory agreements
with the Company. In September 1999, the Board of Directors of SFCNH extended
the terms of the financial advisory agreements between SFCNH and each of Haas
Wheat, Penobscot and Keystone for one year until December 2000. In 1999, SFCNH
paid Haas Wheat an annual fee of $700,000, Penobscot an annual fee of $200,000
and Keystone an annual fee of $100,000. See "Item 11 - Executive Compensation -
Compensation Committee Interlocks and Insider Participation in Compensation
Decisions."

In September 1999, the Company retained Donaldson, Lufkin and Jenrette
Securities Corporation ("DLJ", an affiliate of DLJMBP) to serve as the Company's
financial advisor in connection with its proposed sale of Metz. Upon completion
of the sale of Metz, DLJ received approximately $3,800,000 as compensation for
such financial advisory services.

In January 1999, the Company engaged DLJ to provide investment banking services
in connection with the sale of H&M, which, at that time, was a wholly-owned
subsidiary of SFAC. DLJ received $1,600,000 in connection with the sale of H&M.

In 1999, the Company paid Donaldson, Lufkin & Jenrette Capital Funding ("DLJCF")
$500,000 in connection with the Company's exchange offer and the amendment and
restatement of its Revolving Credit Facility and Term Loan. Also, DLJCF acted as
the Syndication Agent and Collateral Agent under both loan agreements prior to
the termination in connection with the Metz sale.



                                       29

<PAGE>   30


TAX SHARING AGREEMENT

SFAC and its subsidiaries have entered into certain tax sharing agreements that
obligate SFAC's subsidiaries to pay a portion of SFAC's consolidated Federal
income tax liability (including for all purposes, alternative minimum tax
liability). Pursuant to one such agreement, SFC shall pay to SFAC an amount of
money generally equal to the Federal income tax liability of SFC, SFC Sub and
SFACNH (calculated as if such entities were a separate consolidated group that
did not include the subsidiaries of SFACNH). SFCNH has agreed to pay to SFAC an
amount of money generally equal to the Federal income tax liability of SFCNH and
all of its subsidiaries (calculated as if such entities were considered a
separate consolidated group). Moreover, each subsidiary of SFCNH shall pay SFCNH
(directly or indirectly through its parent corporation) an amount of money
generally equal to its share of such separately calculated SFCNH group Federal
income tax liability.



                                       30

<PAGE>   31



                                     PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K

(a)(1)   FINANCIAL STATEMENTS

         Reference is made to the information set forth in Part II, Item 8 of
         this Report, which information is incorporated herein by reference.

         Pro forma financial information reflecting the Company's disposition of
         Metz Baking Company, as required by Item 7 (b) (1) of Form 8-K, is
         included herein.

(a)(2)   FINANCIAL STATEMENT SCHEDULES

         All schedules (other than Schedule I) for which provision is made in
         the applicable accounting regulations of the Securities and Exchange
         Commission have been omitted because they are not required under the
         related instructions, are not applicable, or the information has been
         provided in the consolidated financial statements or the notes thereto.

(b)      REPORTS ON FORM 8-K

         The following Reports on Form 8-K were filed by the Company during the
         fourth quarter of 1999 and the first quarter of 2000:

         (1)      A Current Report on Form 8-K dated November 15, 1999 was filed
                  under Item 5 - Other Events and Item 7 - Exhibits:
                  Announcement of execution of definitive agreement to sell Metz
                  to Earthgrains.

         (2)      A Current Report on Form 8-K dated December 17, 1999 was
                  filed under Item 5 Events: Announcement of a December 17,
                  1999 request from the Department of Justice to the Company
                  and Earthgrains for additional information under the HSR
                  Act. Other Events

         (3)      A Current Report on Form 8-K dated January 5, 2000 was filed
                  under Item 5 - Other Events: Update concerning the Cacique
                  Litigation and Bondholder Matter. Summary Comment by the
                  Company included.

         (4)      A Current Report on Form 8-K dated March 20, 2000 was filed
                  under Items 2 and 7 -Disposition of Assets: Announcement of
                  the closing of the sale of Metz to Earthgrains.


                                       31


<PAGE>   32



(C)      EXHIBITS

         Exhibit
         Number         Description of Document
         ------         -----------------------

         2.1*           Stock Purchase Agreement, dated as of November 15, 1999,
                        between SFC New Holdings, Inc. and The Earthgrains
                        Company.

         3.1            Certificate of Incorporation of SFACNH. (Incorporated by
                        reference to Exhibit 3.1 to SFACNH's Registration
                        Statement on Form S-4 (Registration No. 33-383149))

         3.2            Certificate of Amendment of SFACNH. (Incorporated by
                        reference to Exhibit 3.2 to SFACNH's Registration
                        Statement on Form S-4 (Registration No. 33-383149))

         3.3            Certificate of Amendment of SFACNH. (Incorporated by
                        reference to Exhibit 3.3 to SFACNH's Registration
                        Statement on Form S-4 (Registration No. 33-383149))

         3.4            By-Laws of SFACNH. (Incorporated by reference to Exhibit
                        3.4 to SFACNH's Registration Statement on Form S-4
                        (Registration No. 33-383149))

         3.5            Certificate of Designation of SFACNH (Incorporated by
                        reference to Exhibit 3.5 to SFACNH's Registration
                        Statement on Form S-4 (Registration No. 33-383149))

         4.1            Registration Rights Agreement, dated as of August 16,
                        1993, among SFAC, SFC and the purchasers named therein.
                        (Incorporated by reference to Exhibit 4.3 to SFAC's
                        Registration Statement on Form S-4 (Registration No.
                        33-68958))

         4.2            Registration Rights Agreement, dated as of June 11,
                        1999, among SFACNH and holders of its 13% Senior Secured
                        Discount Debentures due 2009. (Incorporated by reference
                        to Exhibit 4.1 to SFACNH's Registration Statement on
                        Form S-4 (Registration No. 333-83149))

         4.3            Indenture, dated as of June 11, 1999, between SFACNH and
                        United States Trust Company of New York, as trustee,
                        governing the 13% Senior Secured Discount Debentures due
                        2009 issued by SFACNH (Incorporated by reference to
                        Exhibit 4.2 to SFACNH's Registration Statement on Form
                        S-4 (Registration No. 333-83149))

         4.4            Registration Rights Agreement, dated as of June 11,
                        1999, among SFCNH and holders of its 11 1/4% Senior
                        Notes due 2001, its 12 1/8% Senior Notes due 2002 and
                        its 13 1/4% Senior Subordinated Notes due 2003
                        (Incorporated by reference to Exhibit 4.1 to SFCNH's
                        Registration Statement on Form S-4 (Registration No.
                        333-83063))



                                       32


<PAGE>   33



         4.5            Indenture, dated as of June 11, 1999, between SFCNH and
                        United States Trust Company of New York, as trustee,
                        governing the 11 1/4% Senior Notes due 2001 issued by
                        SFCNH (Incorporated by reference to Exhibit 4.2 to
                        SFCNH's Registration Statement on Form S-4 (Registration
                        No. 333-83063))

         4.6            Indenture, dated as of June 11, 1999, between SFCNH and
                        United States Trust Company of New York, as trustee,
                        governing the 12 1/8% Senior Notes due 2002 issued by
                        SFCNH. (Incorporated by reference to Exhibit 4.3 to
                        SFCNH's Registration Statement on Form S-4 (Registration
                        No. 333-83063))

         4.7            Indenture, dated as of June 11, 1999, between SFCNH and
                        U.S. Trust Company of Texas, N.A., as trustee, governing
                        the 131/4% Senior Subordinated Notes due 2003 issued by
                        SFCNH (Incorporated by reference to Exhibit 4.4 to
                        SFCNH's Registration Statement on Form S-4 (Registration
                        No. 333-83063))

         10.1           Stock Purchase Agreement, dated as of August 9, 1993,
                        among the sellers party thereto and SFC. (Incorporated
                        by reference to Exhibit 10.1 to SFAC's Registration
                        Statement on Form S-4 (Registration No. 33-68958))

         10.2           Amendment No. 1, dated as of August 16, 1993, to the
                        Stock Purchase Agreement among the sellers party thereto
                        and SFC. (Incorporated by reference to Exhibit 10.2 to
                        SFAC's Registration Statement on Form S-4 (Registration
                        No. 33-68958))

         10.3           Purchase Agreement, dated as of August 16, 1993, among
                        SFAC, SFC and the purchasers named therein.
                        (Incorporated by reference to Exhibit 10.4 to SFAC's
                        Registration Statement on Form S-4 (Registration No.
                        33-68958))

         10.4           Securities Purchase Agreement, dated as of August 16,
                        1993, among SFAC and the purchasers named therein.
                        (Incorporated by reference to Exhibit 10.5 to SFAC's
                        Registration Statement on Form S-4 (Registration No.
                        33-68958))

         10.5           Amendment No. 1 to Securities Purchase Agreement, dated
                        as of December 20, 1993, among SFAC and the purchasers
                        named therein. (Incorporated by reference to Exhibit
                        10.6 to SFAC's Registration Statement on Form 10-K for
                        the year ended December 31, 1993)

         10.6           Stockholders Agreement, dated as of August 16, 1993,
                        among SFAC and certain of its stockholders.
                        (Incorporated by reference to Exhibit 10.7 to SFAC's
                        Registration Statement on Form S-4 (Registration No.
                        33-68958))

         10.7           Amendment No. 1, dated as of December 20, 1993, to
                        Stockholders Agreement among SFAC and certain of its
                        stockholders. (Incorporated by reference to Exhibit 10.9
                        to SFAC's Registration Statement on Form 10-K for the
                        year ended December 31, 1993)

         10.8           Stockholders Agreement, dated as of August 16, 1993,
                        among SFAC and its stockholders. (Incorporated by
                        reference to Exhibit 10.8 to SFAC's Registration
                        Statement on Form S-4 (Registration No. 33-68958))


                                       33


<PAGE>   34



         10.9           Amendment No. 1 to the Stockholders Agreement, dated as
                        of August 19, 1994, among SFAC and its stockholders.
                        (Incorporated by reference to Exhibit 10.51 to SFAC's
                        Registration Statement on Form 10-Q for the Quarter
                        ended September 30, 1994)

         10.10          Financial Advisory Agreement, dated as of August 16,
                        1993, among SFAC, SFC and Penobscot. (Incorporated by
                        reference to Exhibit 10.10 to SFAC's Registration
                        Statement on Form S-4 (Registration No. 33-68758))

         10.11          Financial Advisory Agreement, dated as of August 16,
                        1993, among SFAC, SFC and Keystone. (Incorporated by
                        reference to Exhibit 10.11 to the SFAC's Registration
                        Statement on Form S-4 (Registration No. 33-68958))

         10.12          Financial Advisory Agreement, dated as of August 16,
                        1993, among SFAC, SFC and Haas Wheat. (Incorporated by
                        reference to Exhibit 10.12 to SFAC's Registration
                        Statement on Form S-4 (Registration No. 33-68958))

         10.13          Corporate Services Agreement, dated as of June 30, 1994,
                        between SFAC and SFC. (Incorporated by reference to
                        Exhibit 10.14 to SFC's Registration Statement on Form
                        10-K for the year ended December 31, 1994)

         10.14          Equity Investment Agreement, dated as of May 13, 1997,
                        by and among SFAC, Acadia, Keystone and Haas Wheat.
                        (Incorporated by reference to Exhibit 10.93 to SFAC's
                        Registration Statement on Form 10-Q for the Quarter
                        ended June 30, 1997)

         10.15          Amended and Restated Executive Employment Agreement,
                        dated as of March 15, 1999, among SFAC, SFC and Lawrence
                        S. Benjamin. (Incorporated by reference to Exhibit 10.50
                        to SFAC's Registration Statement on Form 10-K for the
                        year ended December 31, 1998)

         10.16          Executive Securities Purchase Agreement, dated as of
                        December 15, 1994, among Lawrence S. Benjamin, SFAC and
                        SFC. (Incorporated by reference to Exhibit 10.58 to
                        SFAC's Registration Statement on Form 10-K for the year
                        ended December 30, 1995)

         10.17          Stock Purchase Agreement, dated as of June 15, 1995,
                        between Lawrence S. Benjamin and SFAC. (Incorporated by
                        reference to Exhibit 10.59 to SFAC's Registration
                        Statement on Form 10-K for the year ended December 30,
                        1995)

         10.18          Securities Purchase Agreement, dated as of August 1,
                        1995, between Lawrence S. Benjamin and SFAC.
                        (Incorporated by reference to Exhibit 10.60 to SFAC's
                        Registration Statement on Form 10-K for the year ended
                        December 30, 1995)

         10.19          Amendment to Securities Purchase Agreement, dated as of
                        January 2, 1996, between Lawrence S. Benjamin and SFAC.
                        (Incorporated by reference to Exhibit 10.61 to SFAC's
                        Registration Statement on Form 10-K for the year ended
                        December 30, 1995)


                                       34


<PAGE>   35


         10.20          Amended and Restated Executive Employment Agreement,
                        dated as of March 15, 1999, among SFAC, SFC and Robert
                        L. Fishbune. (Incorporated by reference to Exhibit 10.50
                        to SFAC's Registration Statement on Form 10-K for the
                        year ended December 31, 1998)

         10.21          Executive Employment Agreement, dated as of July 15,
                        1997, among SFC, Mother's, MCC-DSD Holdings, Inc. and
                        Patrick J. O'Dea. (Incorporated by reference to Exhibit
                        10.51 to SFAC's Registration Statement on Form 10-K for
                        the year ended December 31, 1998)

         10.22          Stock Purchase Agreement dated as of June 15, 1995,
                        between Henry J. Metz and SFAC. (Incorporated by
                        reference to Exhibit 10.46 to SFC's Registration
                        Statement on Form S-4 (Registration No. 33-94836))

         10.23          Form of Executive Securities Purchase Agreement among
                        certain named executive officers, respectively, and the
                        Principal Stockholders, SFAC and SFC (with schedule
                        showing differing material terms for each such officer's
                        agreement). (Incorporated by reference to Exhibit 10.40
                        SFAC's Registration Statement on Form 10-K for the year
                        ended December 31, 1993)

         10.24          Mother's Cake & Cookie Co. Amended and Restated
                        Supplemental Long Term Incentive Compensation Plan
                        (Incorporated by reference to Exhibit 10.55 to SFAC's
                        Registration Statement on Form 10-K for the year ended
                        December 31, 1998)

         10.25          Stock Option Agreement, dated as of October 27, 1997,
                        between SFAC and Lawrence S. Benjamin. (Incorporated by
                        reference to Exhibit 10.52 to SFAC's Registration
                        Statement on Form 10-K for the year ended December 31,
                        1997)

         10.26          Retention Bonus Agreement, dated March 15, 1999, between
                        SFC and Lawrence S. Benjamin. (Incorporated by reference
                        to Exhibit 10.59 to SFAC's Registration Statement on
                        Form 10-K for the year ended December 31, 1998)

         10.27          Participation Award Agreement, dated as of March 15,
                        1999, between Mother's and Lawrence S. Benjamin
                        (Incorporated by reference to Exhibit 10.60 to SFAC's
                        Registration Statement on Form 10-K for the year ended
                        December 31, 1998)

         10.28          Retention Bonus Agreement, dated March 15, 1999, between
                        SFC and Robert L. Fishbune. (Incorporated by reference
                        to Exhibit 10.62 to SFAC's Registration Statement on
                        Form 10-K for the year ended December 31, 1998)

         10.29          Deferred Bonus Agreement, dated June 16, 1998, between
                        Boudin and Larry Strain. (Incorporated by reference to
                        Exhibit 10.63 to SFAC's Registration Statement on Form
                        10-K for the year ended December 31, 1998)


                                       35

<PAGE>   36



         10.30          Retention Bonus Agreement, dated March 15, 1999, between
                        Mother's and Patrick J. O'Dea. (Incorporated by
                        reference to Exhibit 10.66 to SFAC's Registration
                        Statement on Form 10-K for the year ended December 31,
                        1998)

         10.31          Divestiture Award Agreement, dated March 15, 1999,
                        between Mother's and Robert L. Fishbune. (Incorporated
                        by reference to Exhibit 10.78 to SFAC's Registration
                        Statement on Form 10-K for the year ended December 31,
                        1998)

         10.32          Divestiture Award Agreement, dated March 15, 1999,
                        between Boudin and Robert L. Fishbune. (Incorporated by
                        reference to Exhibit 10.79 to SFAC's Registration
                        Statement on Form 10-K for the year ended December 31,
                        1998)

         10.33          Amended and Restated SFAC 1994 Stock Option Plan.
                        (Incorporated by reference to Exhibit 10.39 to SFAC's
                        Registration Statement on Form 10-K for the year ended
                        December 31, 1994)

         10.34          Amended and Restated Metz Baking Company Pension Plan
                        for Non-Union Employees. (Incorporated by reference to
                        Exhibit 10.52 to SFAC's Registration Statement on Form
                        10-K for the year ended December 31, 1994)

         10.35          Amended and Restated Mother's Cake & Cookie Co.
                        Retirement Plan. (Incorporated by reference to Exhibit
                        10.51 to SFAC's Registration Statement on Form 10-K for
                        the year ended December 31, 1994)

         10.36          Coordination Document for the Metz-Mother's Cake &
                        Cookie Co. Consolidated Pension Plan (Incorporated by
                        reference to Exhibit 10.87 to SFAC's Registration
                        Statement on Form 10-K for the year ended December 31,
                        1998)

         10.37          Stock Purchase Agreement, dated as of November 26, 1996,
                        between SFC and B Companies Acquisition Corporation.
                        (Incorporated by reference to Exhibit 10.80 to SFAC's
                        Registration Statement on Form 10-K for the year ended
                        December 31, 1996)

         10.38          Stock Purchase Agreement, dated as of November 7, 1997,
                        by and among SFC, Saputo Group Inc. and Saputo
                        Acquisition, Inc. (Incorporated by reference to Exhibit
                        10.94 to SFAC's Registration Statement on Form 8-K dated
                        as of December 22, 1997)

         10.39          Stock Purchase Agreement, dated as of October 13, 1998,
                        by and among SFC, Archway and the Archway Shareholders.
                        (Incorporated by reference to Exhibit 10.83 SFAC's
                        Registration Statement on Form 8-K dated as of October
                        26, 1998)

         10.40          Stock Purchase Agreement, dated as of March 9, 1999,
                        between SFC and IBP, Inc. (Incorporated by reference to
                        Exhibit 10.86 of SFC's Report on From 10-Q for the
                        Quarter ended March 31, 1999)


                                       36


<PAGE>   37


         10.41*         Form of 2000 Specialty Foods Corporation Annual
                        Bonus Plan

         10.42*         Form of 2000 Specialty Foods Corporation Subsidiary
                        Annual Bonus Plan

         10.43*         Key Employee Retention Plan

         10.44          First Amended and Restated SFC Group Tax Sharing
                        Agreement, dated as of June 11, 1999, among SFAC, SFCNH
                        and certain subsidiaries of SFCNH (Incorporated by
                        reference to Exhibit 10.2 to SFCNH's Registration
                        Statement on Form S-4 (Registration No. 333-83063)).

         10.45          First Amended and Restated SFAC Tax Sharing Agreement,
                        dated as of June 11, 1999, among SFAC and SFCNH
                        (Incorporated by reference to Exhibit 10.4 to SFCNH's
                        Registration Statement on Form S-4 (Registration No.
                        333-83063))

         10.46          SFAC and SFC Group Tax Sharing Agreement, dated as of
                        June 11, 1999, between SFAC, SFC, SFC Sub and SFACNH,
                        (Incorporated by reference to Exhibit 10.5 to SFACNH's
                        Registration Statement on Form S-4 (Registration No.
                        333-83149))

         10.47          Assignment and Assumption Agreement, dated as of June
                        11, 1999, between SFC and SFCNH (Incorporated by
                        reference to Exhibit 10.5 to SFCNH's Registration
                        Statement on Form S-4 (Registration No.33-83063))

         10.48          Executive Employment Agreement, dated as of May 1, 1999,
                        by and among SFAC, SFC, Metz, Mother's, Archway, Boudin
                        and David E. Schreibman (Incorporated by reference to
                        Exhibit 10.87 to SFC's Registration Statement on Form
                        10-Q for the Quarter ended March 31, 1999)

         10.49          Amended and Restated Retention Bonus Agreement, dated as
                        of May 1, 1999, by and between SFC and David E.
                        Schreibman. (Incorporated by reference to Exhibit 10.88
                        to SFC's Registration Statement on Form 10-Q for the
                        Quarter ended March 31, 1999)

         10.50          Amended and Restated Divestiture Award Agreement, dated
                        as of May 1, 1999, by and between Metz and David E.
                        Schreibman. (Incorporated by reference to Exhibit 10.89
                        to SFC's Registration Statement on Form 10-Q for the
                        Quarter ended March 31, 1999)

         10.51          Amended and Restated Divestiture Award Agreement, dated
                        as of May 1, 1999, by and between Mother's and David E.
                        Schreibman. (Incorporated by reference to Exhibit 10.90
                        to SFC's Registration Statement on Form 10-Q for the
                        Quarter ended March 31, 1999)

         10.52          Amended and Restated Divestiture Award Agreement, dated
                        as of May 1, 1999, by and between Boudin and David E.
                        Schreibman. (Incorporated by reference to Exhibit 10.91
                        to SFC's Registration Statement on Form 10-Q for the
                        Quarter ended March 31, 1999)


                                       37


<PAGE>   38


         10.53          Participation Award Agreement, dated as of May 1, 1999,
                        between Mother's and Patrick J. O'Dea. (Incorporated by
                        reference to Exhibit 10.92 to SFC's Registration
                        Statement on Form 10-Q for the Quarter ended March 31,
                        1999)

         10.54          Stockholders Agreement, dated as of June 11, 1999, by
                        and between SFACNH and holders of the 13% Senior Secured
                        Discount Debentures due 2009 issued by SFACNH
                        (Incorporated by reference to Exhibit 10.72 to SFACNH's
                        Registration Statement on Form S-4 (Registration No.
                        333-83149))

         21.1*          Subsidiaries of SFAC

         27*            Financial Data Schedule


* Filed herewith.



                                       38

<PAGE>   39




                                   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.

                                      SFAC NEW HOLDINGS, INC.



                                    By:   /s/ LAWRENCE S. BENJAMIN
                                          ------------------------
                                              Lawrence S. Benjamin
                                              President and Chief Executive
                                              Officer

                                      March 29, 2000


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

SIGNATURE AND TITLE                     CAPACITY                     DATE
-------------------                     --------                     ----

/s/ LAWRENCE S. BENJAMIN    Principal Executive Officer and     March 29, 2000
------------------------               Director
Lawrence S. Benjamin
President and Chief Executive Officer

/s/ ROBERT L. FISHBUNE    Principal Financial and Accounting    March 29, 2000
------------------------               Officer
Robert L. Fishbune
Vice President and Chief
Financial Officer



                                       39

<PAGE>   40





SIGNATURE AND TITLE                   CAPACITY                      DATE
-------------------                   --------                      ----

/s/ ROBERT B. HAAS       Chairman of the Board of Directors    March 29, 2000
-----------------------
Robert B. Haas


/s/ THOMAS J.BALDWIN                  Director                 March 29, 2000
-----------------------
Thomas J. Baldwin


/s/ J. TAYLOR CRANDALL                Director                 March 29, 2000
-----------------------
J. Taylor Crandall


/s/ JERRY M. MEYER                    Director                 March 29, 2000
-----------------------
Jerry M. Meyer


/s/ ANDREW J. NATHANSON               Director                 March 29, 2000
-----------------------
Andrew J. Nathanson


/s/ DAVID G. OFFENSEND                Director                 March 29, 2000
-----------------------
David G. Offensend


/s/ MARC C. PARTICELLI                Director                 March 29, 2000
-----------------------
Marc C. Particelli


/s/ ANTHONY P. SCOTTO                 Director                 March 29, 2000
-----------------------
Anthony P. Scotto


/s/ DOUGLAS D. WHEAT                  Director                 March 29, 2000
-----------------------
Douglas D. Wheat



                                   40

<PAGE>   41


                         INDEX TO FINANCIAL INFORMATION


                                                                       Page
                                                                       ----
Audited Financial Information:

     Independent Auditors' Report                                      F-2
     Consolidated Balance Sheets -
         December 31, 1999 and 1998                                    F-3
     Consolidated Statements of Operations -
         Years ended December 31, 1999, 1998, and 1997                 F-4
     Consolidated Statements of Changes in Stockholders' Equity -
         Years ended December 31, 1999, 1998, and 1997                 F-5
     Consolidated Statements of Cash Flows -
         Years ended December 31, 1999, 1998, and 1997                 F-6
     Notes to Financial Statements                                  F-7 to F-23

                                                     Schedule
                                                     --------

     Financial Statement Schedule:

       Condensed Financial Information of Registrant     I        F-24 to F-26


Pro Forma Financial Information - Metz Divestiture                     F-27


All other financial statement schedules are omitted as not applicable or because
the required information is presented in the consolidated financial statements
or related notes.


                                      F-1


<PAGE>   42






                          INDEPENDENT AUDITORS' REPORT



The Board of Directors
SFAC New Holdings, Inc.:

We have audited the accompanying consolidated balance sheets of SFAC New
Holdings, Inc. and Subsidiaries as of December 31, 1999 and of Specialty Foods
Acquisition Corporation and Subsidiaries as of December 31, 1998 (collectively,
"the Company") and the related consolidated statements of operations, changes in
stockholders' equity, and cash flows of the Company for each of the years in the
three-year period ended December 31, 1999. In connection with our audits of the
financial statements, we also have audited the related financial statement
schedule. These consolidated financial statements and financial statement
schedule are the responsibility of the Company's management. Our responsibility
is to express an opinion on these consolidated financial statements and
financial statement schedule based on our audits.

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

In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of the Company as of
December 31, 1999 and 1998 and the results of their operations and their cash
flows for each of the years in the three-year period ended December 31, 1999 in
conformity with generally accepted accounting principles. Also in our opinion,
the related 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.



                                                KPMG LLP



Chicago, Illinois
March 20, 2000



                                      F-2

<PAGE>   43


                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                        (IN THOUSANDS, EXCEPT SHARE DATA)


                                                         December 31,
                                              --------------------------------
                                                   1999               1998
                                                   ----               ----
                                 ASSETS         (Successor)      (Predecessor)
Current assets:
     Cash and cash equivalents                $       28,545     $       5,715
     Accounts receivable, net                         15,826             9,988
     Inventories                                      10,895            12,178
     Net assets of discontinued operations           169,980           216,784
     Other current assets                              8,680             4,292
                                              --------------     -------------
                  Total current assets               233,926           248,957

Property, plant, and equipment, net                   67,248            72,127
Intangible assets, net                                96,954            96,696
Other noncurrent assets                               33,310            43,496
                                              --------------     -------------
                  Total assets                $      431,438     $     461,276
                                              ==============     =============

                  LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:
     Current maturities of long-term debt     $        2,867     $       3,439
     Accounts payable                                 12,999            12,861
     Accrued expenses                                 44,700            41,098
                                              --------------     -------------
                  Total current liabilities           60,566            57,398

Long-term debt                                     1,176,027         1,250,198
Due to Specialty Foods Acquisition Corporation         7,507                 -
Other noncurrent liabilities                          22,615            22,808
                                              --------------     -------------
                  Total liabilities                1,266,715         1,330,404
                                              --------------     -------------

Redeemable preferred stock                                 -            19,500

Stockholders' equity:
     Common stock: no par value; 319,250
       shares authorized and issued                        -               646
     Additional paid-in capital                      194,620            42,750
     Accumulated deficit                          (1,029,897)         (930,659)
     Cost of common shares in treasury                     -            (1,365)
                                              --------------     -------------
                  Total stockholders' equity        (835,277)         (888,628)
                                              --------------     -------------

                  Total liabilities and
                    stockholders' equity      $      431,438     $     461,276
                                              ==============     =============

See accompanying notes to consolidated financial statements.



                                      F-3

<PAGE>   44


                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                 (IN THOUSANDS)


                                          Years ended December 31,
                              ----------------------------------------------
                                 1999               1998              1997
                                 ----               ----              ----
                             (Successor)       (Predecessor)     (Predecessor)

Net sales                     $ 284,574          $ 206,003         $ 196,923
Cost of sales                   119,761             88,676            87,204
                              ---------          ---------         ---------
       Gross profit             164,813            117,327           109,719
                              ---------          ---------         ---------

Operating expenses:
      Selling, distribution,
       general and
       administrative
       expenses                 162,103            119,420           116,811
      Amortization of
       intangibles                2,873                544                56
                              ---------          ---------         ---------
                                164,976            119,964           116,867
                              ---------          ---------         ---------
       Operating loss              (163)            (2,637)           (7,148)

Other:
     Interest expense, net      149,134            132,192           133,538
     Third-party financing
       fees                       9,781                  -                 -
     Other expense, net           3,923              1,542             2,087
                              ---------          ---------         ---------
       Loss before
         income taxes          (163,001)          (136,371)         (142,773)

Provision (benefit) for
  income taxes                      203               (833)              301
                              ---------          ---------         ---------

       Loss from continuing
         operations            (163,204)          (135,538)         (143,074)

Discontinued operations:
     Earnings                    37,175             39,896            62,181
     Gain (loss) on disposal     26,791               (601)          133,130
                              ---------          ---------         --------
                                 63,966             39,295           195,311
                              ---------          ---------         ---------
       Income (loss) before
         extraordinary items    (99,238)           (96,243)           52,237

Extraordinary items                   -                  -            (5,714)
                              ---------          ---------         ---------

           Net income (loss)  $ (99,238)         $ (96,243)        $  46,523
                              =========          =========         =========


See accompanying notes to consolidated financial statements.

                                      F-4


<PAGE>   45


                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES
           CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                             Common stock      Additional                      Treasury stock
                                             ------------        paid-in       Accumulated     --------------
                                           Shares     Amount     Capital        deficit       Shares     Amount
                                           ------     ------     -------        -------       ------     ------
<S>                                        <C>       <C>        <C>            <C>             <C>      <C>
Predecessor Company Balance
      at December 31, 1996                 64,648    $   646    $  42,750      $  (880,939)    1,159    $   (846)

Purchase of treasury stock, net                 -          -            -                -       721        (519)
Net income                                      -          -            -           46,523         -           -
                                          -------    -------    ---------      -----------    ------    --------

Predecessor Company Balance
       at December 31, 1997                64,648        646       42,750         (834,416)    1,880      (1,365)

Net loss                                        -          -            -          (96,243)        -           -
                                          -------    -------    ---------      -----------    ------    --------

Predecessor Company Balance
       at December 31, 1998                64,648        646       42,750         (930,659)    1,880      (1,365)

Effects of debt exchange:
  Eliminate Predecessor's Common and                                                          (1,880)
   Treasury Stock                         (64,648)      (646)        (719)               -                 1,365
  Issue Successor's Common Stock              319          -            -                -         -           -
  Financial instruments retained by
    Predecessor                                 -          -            -                -         -           -
    -    11% Sr. Secured Discount
         Debentures                             -          -      141,274                -         -           -
    -    Redeemable Preferred Stock             -          -       19,500                -         -           -
    -    Intercompany receivable                -          -       (7,997)               -         -           -
    -    Other, net                             -          -         (188)               -         -           -
Net loss                                        -          -            -          (99,238)        -           -
                                          -------    -------    ---------      -----------    ------    --------

Successor Company Balance
       at December 31, 1999                   319    $     -    $ 194,620      $(1,029,897)        -    $      -
                                          =======    -------    =========      ===========    ------    --------
</TABLE>


                                       F-5

See accompanying notes to consolidated financial statements.



<PAGE>   46


                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                                      Years ended December 31,
                                                         -------------------------------------------------
                                                            1999                1998              1997
                                                            ----                ----              ----
                                                         (Successor)       (Predecessor)     (Predecessor)
<S>                                                      <C>                <C>                <C>
Cash flows from operating activities:
   Loss from continuing operations                       $  (163,204)       $  (135,538)       $  (143,074)
   Adjustments to reconcile to net cash
   from continuing operating activities:
     Depreciation and amortization                            16,569              7,452              5,551
     Debt issuance cost amortization                          11,217             10,109              6,120
     Accretion of interest                                    46,999             48,601             43,148
     Loss on disposal of property, plant,
       and equipment, net                                      3,039                309                250
       Write-off of refinancing fees                           9,781                  -                  -
     Changes in assets and liabilities, net of
       effects from acquisitions of
        businesses:
         Accounts receivable                                  (5,838)             9,572              8,664
         Inventories                                           1,283                962              1,182
         Prepaid expenses and other assets                    (4,388)              (659)             2,865
         Accounts payable                                        138             (2,722)            (3,724)
         Accrued expenses and other                              266            (13,413)            (5,034)
                                                         -----------        -----------        -----------
      Net cash used by continuing operating activities       (84,138)           (75,327)           (84,052)
      Net cash used by discontinued operations                (4,842)           (61,815)           (43,164)
                                                         -----------        -----------        -----------
Net cash used by operating activities                        (88,980)          (137,142)          (127,216)

Cash flows from investing activities:
   Acquisitions of businesses, net of cash acquired                -           (117,151)                 -
   Net proceeds from divestitures of businesses              117,886                  -            384,096
   Capital expenditures                                       (6,442)           (19,186)           (11,978)
   Cash   restricted  for  the  purchase  of  property,
     plant and equipment                                           -             (7,119)                 -
   Other                                                       2,648             (4,472)               928
                                                         -----------        -----------        -----------
Net cash provided (used) by investing activities             114,092           (147,928)           373,046

Cash flows from financing activities:
   Increase (decrease) in revolving credit                    22,801             75,000            (78,300)
   Payments on long-term debt                                 (3,648)            (5,981)            (3,056)
   Payments of debt issuance costs                           (20,968)           (12,879)                 -
   Issuance of redeemable preferred stock                          -                  -             19,500
   Other                                                        (467)                 -                344
                                                         ------------       -----------        -----------
Net cash provided (used) by financing activities              (2,282)            56,140            (61,512)

Increase (decrease) in cash and cash equivalents              22,830           (228,930)           184,318
Balance - beginning of year                                    5,715            234,645             50,327
                                                         -----------        -----------        -----------
Balance - end of year                                    $    28,545        $     5,715        $   234,645
                                                         ===========        -==========        ===========

</TABLE>

See accompanying notes to consolidated financial statements.


                                      F-6
<PAGE>   47


                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


(1)    COMPANY BACKGROUND

       SFAC New Holdings, Inc. (together with its Subsidiaries, the "Successor
       Company") was formed to exchange debt securities issued by the Company
       for certain debt securities of Specialty Foods Acquisition Corporation
       ("Predecessor Company" or "SFAC"), as described in Note 11. As required
       by the context, the "Company" refers to the Successor Company or the
       Predecessor Company. Specialty Foods Corporation ("SFC"), a direct wholly
       owned subsidiary of the Predecessor Company, contributed its interest in
       the operating subsidiaries and other assets through a wholly-owned
       subsidiary, SFC-Sub, to SFAC New Holdings, Inc. As a result of the debt
       exchange and revised corporate structure, completed on June 11, 1999,
       SFAC New Holdings, Inc. is treated as a successor company for reporting
       purposes.

       The financial statements of the Predecessor Company are not comparable in
       certain respects to those of the Successor Company principally due to the
       11% Senior Subordinated Discount Debentures and the redeemable preferred
       stock of the Predecessor Company. The redeemable preferred stock was not
       exchanged and the 11% Senior Secured Discount Debentures were exchanged
       at SFC-Sub, Inc.

       The Company through its direct, wholly-owned subsidiary, SFC New
       Holdings, Inc., is a leading producer, marketer and distributor of bakery
       products. The continuing operations of the Company consist of the
       following operating companies:

            -     Mother's Cake & Cookie Co. ("Mother's") - Mother's is the
                  second largest retail cookie producer and distributor in the
                  Western United States. Mother's sells its branded cookie
                  products primarily to retail grocers.

            -     Archway Cookies, Inc. ("Archway") - Acquired in 1998, Archway
                  is one of the nation's leading cookie makers, producing more
                  than one billion cookies annually. Archway sells its branded
                  cookie products to supermarkets, restaurants and to retail
                  grocers throughout the U.S. and Canada.

            -     Andre-Boudin Bakeries, Inc. ("Boudin") - Boudin is a leading
                  marketer of premium branded specialty breads and bread-related
                  products. Boudin sells its products to supermarkets,
                  restaurants and through a chain of 38 bakery cafes and kiosks
                  located in California and the greater Chicago area.

       The Company's discontinued operations are described in Note 3.



                                      F-7


<PAGE>   48



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


(2)    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

                  BASIS OF PRESENTATION

       The Company's financial statements are presented on a consolidated basis.
       All significant intercompany accounts and transactions have been
       eliminated. Acquisitions recorded as purchases are included in the
       Consolidated Statement of Operations from the date of acquisition.
       Divestitures reported as discontinued operations have been removed from
       continuing operations and reclassified to discontinued operations in
       accordance with Accounting Principles Board Opinion No. 30.

       The 1999 operating results for the Successor Company consists of: (i) the
       Predecessor Company's operations for the period of January 1, 1999
       through the June 11, 1999 debt exchange and (ii) the post June 11, 1999
       operations of the Successor Company. Prior period financial information
       of the Predecessor Company is based on its historical financial
       information.

                  USE OF ESTIMATES IN THE PREPARATION OF FINANCIAL STATEMENTS

       The preparation of financial statements in conformity with generally
       accepted accounting principles requires management to make estimates and
       assumptions that affect the reported amounts of assets and liabilities
       and related disclosures at the date of the financial statements and the
       reported amounts of revenues and expenses during the reporting period.
       Actual results could differ from those estimates.

                  RECLASSIFICATIONS

       Certain amounts included in the 1998 and 1997 financial statements have
       been reclassified to conform to the manner in which the 1999 financial
       statements have been presented.

                  CASH EQUIVALENTS

       Cash equivalents represent investments in overnight bank deposits and
       commercial paper with an original maturity of less than three months.

                  INVENTORIES

       Inventories are stated at the lower of cost or market. Cost is determined
       principally by the first-in, first-out (FIFO) method.


                                      F-8


<PAGE>   49


         PROPERTY, PLANT, AND EQUIPMENT

       Property, plant, and equipment are stated at cost. Depreciation is
       provided by the straight-line method over the assets' estimated useful
       lives or, in the case of leasehold improvements, over the terms of the
       leases, if shorter, as follows:

                                                     Years
                                                     -----

              Buildings and improvements              7-40
              Machinery and equipment                 3-20
              Office furniture and vehicles           3-10

       Expenditures for maintenance, repairs, and minor replacements are charged
       to current operations. Expenditures for major replacements and betterment
       are capitalized.

       The cost and related accumulated depreciation of property and equipment
       retired or sold is eliminated from the property and equipment accounts at
       the time of retirement or sale, and the resulting gain or loss is
       reported in the Consolidated Statement of Operations.

         INTANGIBLE ASSETS

       Intangible assets, which consist primarily of the excess of cost over
       fair value of net assets acquired, are amortized on a straight-line basis
       over the periods of expected benefit, which range from five to forty
       years. The Company annually evaluates whether events and circumstances
       have occurred that indicate that the remaining estimated useful life of
       intangible assets may warrant revision or that the remaining balance of
       intangible assets may not be recoverable. When factors indicate that
       intangible assets should be evaluated for possible impairment, the
       Company assesses recoverability of intangible assets based on its
       expectations concerning operating cash flows after interest and capital
       expenditures. An impairment is recorded if the discounted value of such
       cash flows is less than the recorded value of the intangible assets. The
       Company utilizes a discount rate which reflects its weighted average cost
       of capital.

         DEFERRED DEBT ISSUANCE COSTS

       Deferred debt issuance costs are being amortized by the straight-line
       method over the terms of the related debt agreements and are classified
       as other noncurrent assets.

         ADVERTISING COSTS

       Advertising costs are expensed as incurred.



                                      F-9


<PAGE>   50




                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


(3)    DISCONTINUED OPERATIONS

       On March 20, 2000, SFC New Holdings, Inc. completed the sale of its
       subsidiary, Metz Baking Company ("Metz"), to the Earthgrains Company for
       $625,000. Accordingly, Metz is reported as a discontinued operation in
       the Consolidated Financial Statements. Metz is a leading retail bread
       company serving the Midwestern United States. Upon closing, $20,000 of
       the purchase price was paid into an escrow to secure potential future
       indemnification obligations of SFC New Holdings, Inc. arising out the
       sale. Depending on the amount of any potential future indemnification
       obligations, the escrow will release $10,000 one year after closing and
       the remaining amount two years after the closing.

       For financial reporting purposes, the Company will report a gain on the
       sale of Metz for the quarter ending March 31, 2000. This gain is
       estimated to approximate $405,000.

       In April 1999, the Company sold its subsidiary, H&M Food Systems Company,
       Inc. ("H&M"), for $132,000. H&M is a producer of custom formulated,
       pre-cooked meat products that are sold primarily to national restaurant
       chains and prepared-food producers.

       In addition, during 1997 the Company divested of:

                  -     Stella Foods, Inc. ("Stella") - One of the largest
                        specialty cheese producers in the United States with
                        distribution to retail grocers, foodservice accounts,
                        and commercial food processors. The sale of Stella was
                        completed in December 1997 for $405,000.

                  -     Gai's Seattle French Baking Company ("Gai's") - A
                        restaurant and institutional bakery operation serving
                        the northwestern United States. The sale of Gai's was
                        completed in February 1997.

                  -     San Francisco French Bread ("SFFB") - A sourdough hearth
                        bread operation located in California. The sale of SFFB
                        was completed in March 1997.

       These divestitures have been reported as discontinued operations in the
       accompanying financial statements in accordance with Accounting
       Principles Board Opinion No. 30. Operating results for these businesses
       during their ownership by SFC, including revenues of $641,956, $717,349,
       and $1,456,606 for 1999, 1998, and 1997, respectively, have been
       reclassified to discontinued operations. No interest expense has been
       allocated to discontinued operations.

       In 1999, the earnings from discontinued operations include the full year
       operating results of Metz and the operating results of H&M through the
       April 1999 closing date. The net gain on disposal of discontinued
       operations for 1999 consists primarily of the gain on the sale of H&M. In
       1998, the earnings from discontinued operations relates to H&M and Metz.
       The net loss on disposal of discontinued operations for 1998 consists of
       revisions to the estimated losses on prior year dispositions. In 1997,
       the earnings from discontinued operations relate to Stella, H&M and Metz.



                                      F-10


<PAGE>   51



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


       The net gain on disposal of discontinued operations for 1997 consisted
       principally of the gain realized on the sale of Stella.

       Net assets of the discontinued operations as of December 31, 1999 related
       to Metz and the net assets of the discontinued operations as of December
       31, 1998 related to Metz and H&M and consisted of the following:

                                                       1999          1998
                                                       ----          ----
       Accounts receivable, net of allowance       $    11,507      $ 12,926
       Inventories                                      15,467        28,011
       Plant and equipment, net                        173,030       216,023
       Other assets                                      3,800         8,128
       Goodwill, net                                    44,712        34,812
       Accounts payable                                (30,658)      (31,645)
       Accrued expenses and other liabilities          (47,878)      (51,471)
                                                   -----------   -----------
                                                   $   169,980   $   216,784
                                                   ===========   ===========


(4)    ACQUISITIONS

       In October 1998, SFC acquired all of the outstanding capital stock of
       Archway, a privately held Michigan corporation, from the previous
       stockholders. The purchase price totaled approximately $116,000.

       The acquisition was accounted for as a purchase and, accordingly, the
       respective purchase price was allocated to the applicable assets and
       liabilities based upon their estimated fair values as of the acquisition
       date. The excess of the purchase price over the fair values of the net
       assets acquired was approximately $92,000 and has been recorded as
       goodwill, which is being amortized on a straight-line basis over 40
       years. The acquisition was funded by a combination of cash and borrowings
       under SFC's existing revolving credit facility. Operating results of
       Archway have been included in the Consolidated Statements of Operations
       since the acquisition date.

       In January 2000, the Company acquired the Lew-Mark Baking Company for
       $23,100. Lew-Mark Baking holds the exclusive license to the Archway brand
       in the states of New York and New Jersey and had 1999 unaudited sales of
       approximately $25,000.


(5)    ACQUISITION LIABILITIES

       In connection with the formation of the Company and subsequent
       acquisitions, estimated liabilities were recorded for the expected cash
       expenditures to consolidate facilities, streamline operations, and settle
       environmental, legal and tax matters. As of December 31, 1999, there are
       $7,959 of remaining acquisition liabilities, of which $4,278 is
       classified as current. Cash expenditures associated with acquisition
       liabilities were $6,133, $2,976, and $1,662 for 1999, 1998, and 1997,
       respectively.




                                      F-11

<PAGE>   52


                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


 (6)   EXTRAORDINARY ITEMS

       In the first quarter of 1998, the Company refinanced its accounts
       receivable, revolver, and term loan financing facilities. Due to this
       early extinguishment of debt, the Company wrote-off deferred debt
       issuance costs related to the previous facilities of $5,714 and recorded
       the write-off as an extraordinary item in 1997.


(7)    ACCOUNTS RECEIVABLE

       Specialty Foods Finance Corporation ("SFFC"), a wholly-owned subsidiary
       of SFC New Holdings, Inc., was established for the purpose of acquiring
       substantially all of the trade accounts receivable generated by the
       operating subsidiaries of SFC New Holdings, Inc. Under the terms of the
       Accounts Receivable Facility ("Facility"), SFFC sells for cash an
       undivided interest in eligible accounts receivable. Under the terms of
       the Facility, the maximum amount of eligible receivables that can be sold
       to the Facility is $50,000. The amount outstanding under the Facility
       varies based upon the level of eligible receivables and advance rate
       factors. As of December 31, 1999, the amount outstanding under the
       Facility was $37,048. The discount on receivables sold is included in
       other expense and totaled $917, $985, and $817 in 1999, 1998, and 1997,
       respectively. Trade accounts receivable are reported net of the allowance
       for doubtful accounts of $656 and $513 in 1999 and 1998, respectively.

       Concurrent with the closing of the sale of Metz in March 2000, the
       Facility was terminated.

       The Company has one customer that accounted for 12.8%, 14.1% and 12.0% of
       net sales in 1999, 1998 and 1997, respectively. No other customer
       accounts for more than 10% of the Company's net sales.


(8)    INVENTORIES

       The components of inventories are as follows:

                                                         1999          1998
                                                         ----          ----

            Raw materials and packaging              $    5,275     $    5,382
            Work in progress                                190            264
            Finished goods                                4,158          5,657
            Other                                         1,742          1,779
                                                     ----------     ----------
                                                         11,365         13,082
            Less obsolescence and other allowances         (470)          (904)
                                                     ----------     ----------
                                                     $   10,895     $   12,178
                                                     ==========     ==========


                                      F-12


<PAGE>   53



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


 (9)   PROPERTY, PLANT, AND EQUIPMENT

       The components of property, plant and equipment are as follows:

                                                        1999           1998
                                                        ----           ----

                Land                                 $   1,532      $   1,532
                Buildings and improvements              33,443         36,596
                Machinery and equipment                 54,648         44,972
                Office furniture and vehicles           16,936         12,519
                Construction in progress                 5,076          9,294
                                                     ---------      ---------
                                                       111,635        104,913
                Less accumulated depreciation          (44,387)       (32,786)
                                                     ---------      ---------
                                                     $  67,248      $  72,127
                                                     =========      =========

       Depreciation expense was $13,696, $6,908, and $5,495 in 1999, 1998, and
1997, respectively.


(10)   ACCRUED EXPENSES

       The components of accrued expenses are as follows:

                                                        1999            1998
                                                        ----            ----

                     Accrued payroll                 $   3,768      $   3,875
                     Other taxes payable                   739            981
                     Workers' compensation               2,816          3,030
                     Compensated absences                2,792          2,248
                     Accrued marketing                   1,295          2,192
                     Accrued interest                   23,398         21,869
                     Acquisition liabilities             4,278          2,508
                     Other                               5,614          4,395
                                                       -------      ---------
                                                     $  44,700      $  41,098
                                                     =========      =========



                                      F-13


<PAGE>   54


                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


(11)   LONG-TERM DEBT

       DEBT

       During 1999, the Company completed exchange offers that provided
       investors that held debt of the predecessor companies, Specialty Foods
       Acquisition Corporation and Specialty Foods Corporation, the opportunity
       to exchange their debt securities for the debt securities of SFC-Sub,
       Inc. (the direct parent of SFAC New Holdings, Inc.) and the two successor
       companies, SFAC New Holdings, Inc. and SFC New Holdings, Inc. Concurrent
       with the exchange offers, the Company amended and restated its Term Loan
       and Revolving Credit facilities, and amended its off-balance sheet
       Accounts Receivable facility to extend the maturity date of these
       facilities and permit the exchange offers.

       The following table reconciles the debt reported by the Predecessor
       Company at December 31, 1998 to the debt reported by the Successor
       Company at December 31, 1999.

<TABLE>
<CAPTION>

                                                                              Debt
                                                                           exchanged
                                            Predecessor        Debt           With           Normal         Successor
                                           December 31,         not         SFC-Sub,        Operating      December 31,
                                               1998          exchanged        Inc.          Activity           1999
                                           ----------------------------------------------------------------------------
<S>                                        <C>             <C>             <C>             <C>              <C>
     Revolving Credit Facility             $    75,000     $        -      $        -      $  22,801        $    97,801
     Term Loan Facility                        169,080              -               -         (1,737)           167,343
     Senior Notes due August 2001              225,000           (130)              -              -            224,870
     Senior Notes due October 2002             150,000            (25)              -              -            149,975
     Senior   Subordinated   Notes  due
        August 2003                            200,000           (170)              -            702            200,532
     13%   Senior   Secured    Discount
        Debentures                             295,191              -               -         39,721            334,912
     11% Senior Subordinated Discount
        Debentures, payable to related
        parties                                134,698              -        (141,274)         6,576                  -
     Other                                       4,668                              -         (1,207)             3,461
                                           -----------     ----------      ----------      ---------        -----------
                                                                    -
                                             1,253,637           (325)       (141,274)        66,856          1,178,894
         Less current portion                   (3,439)                             -            572             (2,867)
                                           -----------     ----------      ----------      ---------        -----------
                                                                    -
                                           $ 1,250,198     $     (325)     $ (141,274)     $  67,428        $ 1,176,027
                                           ===========     ==========      ==========      =========        ===========

</TABLE>



                                      F-14


<PAGE>   55


                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


       The Successor Company issued debt replacing the Predecessor Company's
       debt. The differences in the key provisions are noted below.

            -     Senior Notes due August 2001 - The coupon rate was increased
                  from 10 1/4% to 11 1/4%.

            -     Senior Notes due October 2002 - The coupon rate was increased
                  from 11 1/8% to 12 1/8%.

            -     Senior Subordinated Notes due August 2003 - The coupon rate
                  was increased from 11 1/4% to 13 1/4% with 12 1/4% payable in
                  cash and 1% payable in kind.

            -     13% Senior Subordinated Debentures - The cash pay interest
                  date was extended from February 2000 to December 2004, the
                  maturity date was extended from August 2005 to June 2009, and
                  the Company was provided an option to redeem the debentures at
                  prescribed discounts of accreted value.

            -     Term Loan and Revolver - The interest rate increased by 75
                  basis points ("bps") to LIBOR + 450 bps for the Term Loan and
                  LIBOR + 325 bps for the Revolver. The maturity dates of these
                  facilities were extended one year to January 2001.

       The Company has incurred approximately $21,900 in fees and expenses
       related the exchange offers and refinancing. Approximately $12,100 of
       fees have been paid to debtholders and have been classified as a
       long-term asset on the Company's Consolidated Balance Sheet. The
       remaining $9,800 of fees and expenses were paid to third parties and have
       been recorded as a non-operating expense on the Company's Consolidated
       Statement of Operations.

       The 11 1/4% and 12 1/8% Senior Notes and the 13 1/4% Senior Subordinated
       Notes are unsecured. The 13% Senior Secured Discount Debentures are
       secured by a first priority lien on and a security interest in all of the
       outstanding capital stock of SFC New Holdings, Inc. and all intercompany
       notes, if any, owing to SFAC New Holdings, Inc.

       Semi-annual interest payments are required through maturity on the
       11 1/4% Senior Notes and the 13 1/4% Senior Subordinated Notes on
       February 15 and August 15 each year. Semi-annual interest payments are
       required through maturity on the 12 1/8% Senior Notes on April 1 and
       each year.

       The Senior Secured Discount Debentures accrete at an interest rate of 13%
       up to the maturity amount of $587,186 on June 15, 2004. Beginning
       December 15, 2004, semi-annual interest payments are required through the
       maturity date on June 15, 2009.

       The Company has certain limitations regarding sales of assets, loans and
       investments, encumbrances of assets and assumption of additional
       indebtedness. In addition, the indentures governing the Senior Notes and
       the Senior Subordinated Notes contain certain restrictive covenants,
       including, to the detriment of the holders of the Senior Secured Discount
       Debentures, certain covenants that restrict or prohibit (with de minimis
       exceptions) SFC New Holdings, Inc.'s ability to pay dividends or make
       other distributions to SFAC New Holdings, Inc. Specifically, as a result
       of SFC New Holdings, Inc.'s net losses and accumulated deficit, its
       ability to make distributions to SFAC New Holdings, Inc. under the
       indentures of the Senior Notes and the Senior Subordinated Notes has been
       impaired and these indentures will require modification before any such
       distribution to SFAC New Holdings, Inc. can be made.

       Cash paid for interest was $91,474, $80,739, and $84,595 for the years
       ended December 31, 1999, 1998, and 1997, respectively.


                                      F-15



<PAGE>   56


                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


       Aggregate maturities of debt are as follows:

                 2000                                      $     2,867
                 2001                                          488,690
                 2002                                          150,427
                 2003                                          200,797
                 2004                                              261
                 Thereafter                                    335,852
                                                           -----------
                     Total aggregate maturities            $ 1,178,894
                                                           ===========


       On March 20, 2000 the Company completed the sale of its Metz operating
       unit for $625,000. The sale of Metz results in immediately available net
       cash proceeds of approximately $545,000 (net of a $20,000 escrow, an
       approximate $40,000 to terminate at closing the accounts receivable
       facility and an estimated $20,000 for taxes and other expenses associated
       with the transaction). Under its existing debt arrangements, the Company
       is required to apply 75% of the Metz net proceeds, or approximately
       $410,000, to reduce debt. As a result, concurrent with the Metz closing,
       the Company has paid in full amounts outstanding under the Revolving and
       Term Loan facilities totaling approximately $265,000 and terminated these
       arrangements. Within thirty days after the Metz closing, the Company is
       required to commence an asset sale tender offer for a portion
       (approximately $145,000) of the Company's Senior Notes.


(12)   FINANCIAL INSTRUMENTS

                  CONCENTRATION OF CREDIT RISK

       The Company's exposure to credit loss in the event of nonpayment of
       accounts receivable by customers is represented in the net amount of
       those receivables. The Company performs ongoing credit evaluations of its
       customers' financial condition and generally requires no collateral from
       those customers. As of December 31, 1999, the Company does not believe it
       has any significant concentration of credit risk with respect to its
       trade accounts receivable.

                  FAIR VALUE OF FINANCIAL INSTRUMENTS

       The estimated fair value and carrying amount of long term debt including
       current maturities at December 31, 1999 are as follows:
                                                                    Estimated
                                                     Carrying         Fair
                                                      Amounts        Values
                                                     --------       --------
                  Financial liabilities:
                    Long-term debt, including
                       current maturities          $ 1,178,894    $    811,445

The fair value of long-term debt has been determined based on quoted market
prices at December 31, 1999.



                                      F-16



<PAGE>   57



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)

 (13)  LEASE COMMITMENTS

       The Company leases equipment and facilities under various noncancelable
       operating leases. Future minimum lease payments under all noncancelable
       operating leases are as follows:

                 2000                                       $ 5,531
                 2001                                         5,348
                 2002                                         4,656
                 2003                                         3,856
                 2004                                         3,104
                 Thereafter                                   7,693
                                                           --------
                            Total minimum lease payments   $ 30,188
                                                           ========

       Total rental expense for 1999, 1998, and 1997 was $7,584, $7,100, and
       $6,396 respectively.


(14)   INCOME TAXES

       The provision (benefit) for income taxes for 1999, 1998, and 1997 relates
       to state income taxes payable (refundable). An effective tax rate
       reconciliation is not presented since the Company has no federal tax
       currently payable or deferred income tax expense due to its net operating
       loss position.

       The components of net deferred taxes are as follows:

                                                         1999        1998
                                                         ----        ----

       Deferred tax assets related to:
            Accrued expenses and other liabilities  $    69,548  $    60,630
            Net operating losses                         22,789       67,819
            Other                                           498        2,472
                                                    -----------  -----------
                  Total deferred tax assets              92,835      130,921

       Valuation allowance                               86,993      128,906
                                                    -----------  -----------
                  Total net deferred tax assets           5,842        2,015

       Deferred tax liabilities related to:
            Depreciation                                  3,260        2,015
            Amortization                                  2,582            -
                                                    -----------  -----------
                  Total deferred tax liabilities          5,842        2,015
                                                    -----------  -----------
                  Net deferred tax
                     asset (liability)$             $         -  $         -
                                                    ===========  ===========

       At December 31, 1999, the Company has federal net operating loss
       carryforwards of $59,000 including $9,000 of loss carryforwards which are
       subject to limitations that may substantially limit future utilization.
       Also at December 31, 1999, the Company has $51,000 of state net operating
       loss carryforwards. The net operating loss carryforwards exclude
       allocable portions related to discontinued operations. Net operating loss
       carryforwards expire in varying amounts through the year 2019.



                                      F-17



<PAGE>   58


                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


       Cash paid (received) for income taxes was $128, $(614), and $15 for
       1999, 1998, and 1997, respectively.


 (15)  LITIGATION AND OTHER CONTINGENCIES

         LITIGATION

       The Company has indemnified the acquirer of Stella for the liability
       associated with an existing lawsuit. In 1993, Stella was alleged to have
       misappropriated confidential and proprietary trade secrets of a
       competitor and infringed upon the competitor's purported trademark
       ("Cacique Case"). During 1999, a verdict of $4,500 in compensatory
       damages was returned against Stella and certain other defendants. In
       addition, the Court assessed approximately $1,700 of interest on
       compensatory damages, $5,000 of plaintiff attorney fees to be paid by the
       defendants, and $12,500 of aggregate punitive damages jointly and
       severally against Stella and C. Dean Metropoulos, the former CEO of
       Stella. The Company strongly disagrees with the verdict in this case and
       believes that numerous reversible errors occurred at the trial and the
       Company will vigorously pursue all available remedies.

       Recently, three additional lawsuits have arisen stemming from the Cacique
       matter. First, the Company and the other defendants in the Cacique Case
       have filed suit against certain insurance carriers of both the Company
       and Stella seeking declaratory relief that such insurance companies are
       responsible for certain of the damages in the Cacique Case. Second,
       following the verdict in the Cacique Case, Saputo filed suit against the
       Company seeking injunctive relief and alleging that the Company is
       obligated to post a bond on Saputo's behalf in the Cacique Case equal to
       150% of the aggregate verdict while the Cacique Case is under appeal. The
       Company disagrees with the allegations in the Saputo lawsuit and intends
       to vigorously defend the matter. Third, C. Dean Metropoulos filed suit
       against SFC, Stella and certain other defendants alleging, among other
       things, that the Company and its agents interfered with Mr. Metropoulos'
       rights to indemnification from Stella for damages arising out of the
       Cacique Case. The Company believes that Mr. Metropoulos' lawsuit is
       entirely without merit. The Company intends to vigorously defend against
       this action. Although any litigation has an element of uncertainty,
       management believes the ultimate outcome of the Cacique matter will not
       have a material adverse effect on the Company's financial condition or
       results of operations.

       In addition to the Cacique matter, in the normal course of business
       activities, the Company is a party to certain legal proceedings and
       claims. Although the outcome of such matters cannot be determined with
       certainty, it is management's opinion that, after consideration of the
       relevant matters of each case and the accruals recorded, the final
       outcome will not have a material adverse effect on the Company's
       financial position or results of operations.

           OTHER

       Various operating subsidiaries are self-insured or retain a portion of
       losses with the respect to workers' compensation claims. Accordingly, the
       Company provides irrevocable letters of credit or surety bonds which
       total $4,352 at December 31, 1999 to state regulatory agencies or
       insurance companies.



                                      F-18


<PAGE>   59



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


(16)   EMPLOYEE BENEFITS

         PENSION AND OTHER POST-RETIREMENT BENEFITS

       Certain of the operating subsidiaries sponsor single-employer,
       non-contributory, defined benefit pension plans. The operating
       subsidiaries also participate in numerous multi-employer,
       non-contributory, defined benefit pension plans. Substantially all of the
       Company's employees are covered by the defined benefit or multi-employer
       plans. Certain of the subsidiaries also sponsor post-retirement health
       care benefit plans.

       Benefits for employees under the single-employer, defined benefit pension
       plans are based on various factors including length of service and
       average compensation. Contributions are funded to the extent deductible
       for federal income tax purposes.

       The following table provides a reconciliation of the changes in the
       plans' benefit obligations and fair value of assets during the years
       ended December 31, 1999 and December 31, 1998 and a summary of the funded
       status as of December 31, 1999 and December 31, 1998:

<TABLE>
<CAPTION>

                                                                 Pension Plans             Post-retirement Medical
------------------------------------------------------------------------------------------------------------------
                                                              1999              1998             1999      1998
                                                              ----              ----             ----      ----
<S>                                                         <C>              <C>           <C>           <C>
Change in Benefit Obligation
   Benefit obligation at beginning of year                  $  51,412        $  48,403     $    2,585    $   2,271
     Service cost                                               2,077            1,846            119          102
     Interest cost                                              3,536            3,245            168          156
     Participant Contributions                                      -                -             32           29
     Plan amendments                                              985                -              -            -
     Settlement (gain) or loss                                      -                -              -            -
     Benefits paid                                             (3,133)          (2,991)           (97)         (87)
     Actuarial (gain) or loss                                  (6,300)             909           (307)         114
                                                            ---------        ---------     ----------    ---------
   Benefit obligation at end of year                        $  48,577        $  51,412     $    2,500    $   2,585
                                                            =========        =========     ==========    =========

Change in Plan Assets
   Fair value of plan assets at beginning of year           $  54,278        $  50,551     $        -    $       -
                                                                                                    -            -
     Actual return on plan assets                              12,288            5,911              -            -
     Benefits paid                                             (3,133)          (2,991)             -            -
     Other                                                          -              807              -            -
                                                            ---------        ---------     ----------    ---------
   Fair value of plan assets at end of year                 $  63,433        $  54,278     $             $       -
                                                            =========        =========     ==========    =========

</TABLE>



                                      F-19



<PAGE>   60


                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)

<TABLE>
<CAPTION>
                                                   Pension Plans                 Post-retirement Medical
                                            -------------------------------------------------------------
                                               1999             1998              1999             1998
                                               ----             ----              ----             ----
<S>                                         <C>              <C>               <C>              <C>
Summary of Funded Status
    Funded status                           $   14,856       $    2,866        $  (2,500)       $  (2,585)
    Unrecognized transition amount                (166)            (274)               -                -
    Unrecognized prior service cost              1,293              438                -                -
    Unrecognized net (gain) or loss            (20,723)          (9,357)               6              314
                                            ----------       ----------        ---------        ---------
    Accrued benefit cost                    $   (4,740)      $   (6,327)       $  (2,494)       $  (2,271)
                                            ==========       ==========        =========        =========

Amounts Recognized in Consolidated
    Balance Sheets
    Other noncurrent liabilities            $     (843)      $     (336)       $       -        $       -
    Net assets of discontinued operation        (3,897)          (5,991)          (2,494)          (2,271)
                                            ----------       ----------        ---------        ---------
                                            $   (4,740)      $   (6,327)       $  (2,494)       $  (2,271)
                                            ==========       ==========        =========        =========
</TABLE>

       Upon closing of the Metz sale transaction, Earthgrains will assume the
       liability for the portion of the pension plan related to the active Metz
       employees and, accordingly, the fair value of plan assets and the benefit
       obligation at December 31, 1999 would be reduced by $19,206 and $17,456,
       respectively.

       The following table provides the components of net periodic benefit cost
       for the plans for the fiscal years ended December 31, 1999, 1998 and
       1997:


<TABLE>
<CAPTION>
                                                          Pension Plans                 Post-retirement Medical
                                                ------------------------------------------------------------------
                                                 1999         1998         1997       1999       1998        1997
                                                 ----         ----         ----       ----       ----        ----
<S>                                             <C>          <C>          <C>        <C>        <C>         <C>
   Service  cost - benefits  earned  during
   the period                                   $  635       $  603       $ 534      $  119     $  102      $   82

   Interest cost on the benefit obligation         636          630         647         168        156         144

   Expected return on plan assets                 (709)        (773)       (651)          -          -           -

   Net amortization and deferral
       Transition amount                          (108)        (108)       (108)          -          -           -
       Prior service costs                          53           53          53           -          -           -
       (Gain)/loss                                   -          (28)          -           4          -           -
                                                ------       -------      -----      ------     ------      ------

   Net periodic benefit cost                    $  507       $  377       $ 475      $  291     $  258      $  226
                                                ======       ======       =====      ======     ======      ======
</TABLE>



                                      F-20


<PAGE>   61



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)



       Gains and losses in excess of 10% of the benefit obligation are amortized
       over five years for the post-retirement plan. The Company sponsors
       defined benefit health care plans that provide post-retirement medical
       and life benefits to certain full-time employees who meet minimum age and
       service requirements. The plans are contributory, with retiree
       contributions adjusted annually, and contain other cost-sharing features
       such as deductibles and co-insurance. The accounting for these plans
       anticipates future cost-sharing changes to the written plans that are
       consistent with the Company's expressed intent to increase the retiree
       contribution rate annually for the expected general inflation rate for
       the year.

       The assumptions used in the measurement of the Company's benefit
       obligations are shown in the following table:

<TABLE>
<CAPTION>

                                                                             Post-retirement
                                                 Pension Plans                    Medical
                                           ------------------------------------------------------
                                             1999            1998           1999            1998
                                             ----            ----           ----            ----
<S>                                        <C>              <C>             <C>             <C>

     Discount rate                          8.00%            6.75%          7.50%           6.50%
     Salary scale                           4.00%            4.00%           N/A             N/A
     Long term rate of return on assets    10.50%           10.00%           N/A             N/A
</TABLE>


       For measurement purposes, a 9.0% annual rate of increase in the per
       capita cost of covered benefits (i.e. health care cost trend rate) was
       assumed for 1999, gradually decreasing to 6.0% by the year 2007 and
       remaining at that level thereafter. A 4.5% annual rate of increase in the
       per capita costs of the dental plan was assumed for all years. Because of
       the cap on employer costs, there would be an insignificant change in
       liabilities due to a one percent change in trend rates.

       Certain of the operating subsidiaries also participate in various
       multi-employer, defined benefit pension plans on behalf of employees
       pursuant to various collective bargaining agreements. Contributions to
       these plans included in continuing operations amounted to approximately
       $2,546, $2,613, and $2,428 for the years ended December 31, 1999, 1998,
       and 1997, respectively.

       The Company has various defined contribution plans which cover
       non-bargaining unit employees meeting eligibility requirements.
       Contributions to these plans were approximately $1,347, $841, and $453
       for the years ended December 31, 1999, 1998, and 1997, respectively.

                  LONG TERM INCENTIVE COMPENSATION PLANS

       The Company has adopted long-term incentive compensation plans for
       several of its businesses which provide for cash awards upon the
       achievement of specified earnings or enterprise values. Amounts related
       to long-term incentive plans are expensed when amounts due participants
       vest. As of December 31, 1999, no amounts have been accrued.



                                      F-21

<PAGE>   62



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)


 (17)    RELATED PARTY TRANSACTIONS

                  CERTAIN TRANSACTIONS WITH STOCKHOLDERS OF AND AFFILIATES
                  OF STOCKHOLDERS OF SFAC

       Certain of SFAC's stockholders and their affiliates previously entered
       into financial advisory arrangements (the "Financial Advisory
       Agreements") with SFAC New Holding, Inc.'s subsidiary, SFC New Holdings,
       Inc. Haas Wheat & Partners ("Haas Wheat"), Penobscot ("Penobscot"), an
       affiliate of Acadia Partners, L.P. ("Acadia"), and Keystone, Inc.
       ("Keystone") each entered into such Financial Advisory Agreements. In
       September 1999, the Board of Directors approved a one-year extension of
       the financial advisory arrangements. Under the terms of the Financial
       Advisory Agreements, SFC New Holdings, Inc. pays Haas Wheat an annual fee
       of $700 ( a portion of which Haas Wheat is obligated by agreement to
       remit to Acadia), Penobscot an annual fee of $200, and Keystone an annual
       fee of $100.

       The Company retained Donaldson, Lufkin, & Jenrette Securities Corporation
       ("DLJ", an affiliate of DLJMBP, which is a stockholder of SFAC), to serve
       as the Company's financial advisor in connection with the divestitures of
       Stella, H&M and Metz. The Company paid DLJ $1,600 for such services in
       1999 related to the H&M sale and $5,400 in 1997 in connection with the
       Stella sale. Upon the closing of the Metz sale, the Company paid DLJ
       $3,800.

       DLJ also serves as the Syndication Agent for the Revolving Credit and
       Term Loan Facility. In 1998, upon the initial syndication of these
       facilities, the Company paid DLJ approximately $5,100. During 1999, as
       part of the exchange offer and the amendment to the Revolving Credit and
       Term Loan Facilities, the Company paid DLJ $500.


(18)     OTHER EXPENSE (INCOME)

         Other expense (income) is comprised of the following:

                                                 1999      1998      1997
                                                 ----      ----      ----


        Loss on disposal of property, plant
             and equipment                      $3,039    $  309    $  250
        Discount on receivables sold               917       985       817
        Other                                      (33)      248     1,020
                                                -------   ------    ------

                                                $3,923    $1,542    $2,087
                                                ======    ======    ======




                                      F-22

<PAGE>   63



                   SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES

                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

                                 (IN THOUSANDS)



(19)   SUPPLEMENTAL SALES DISCLOSURES (UNAUDITED)

       Over 95% of the Mother's/Archway products are distributed through a
       one-step, direct store delivery ("DSD") system comprised of approximate1y
       1,025 routes. Approximately 25% of the routes are Company-owned routes
       while the balance of the routes are operated by independent distributors.
       Products sold through Company-owned routes are generally sold at
       wholesale price. Products sold to independent distributors, however, are
       generally sold at discounts to the wholesale price ranging from 16% to
       21%.

       For comparison purposes, the following table illustrates the Company's
       sales as if its products were sold through a Company-owned DSD system at
       wholesale and including the 1999 pro forma net sales of Lew-Mark acquired
       in January 2000.

                                                             1999
                                                           ---------

             Net sales as reported (excluding Lew-Mark)    $ 284,574
             Lew-Mark pro forma net sales                     25,100
             Independent distributor discount (estimated)     37,946
                                                           ---------
             Pro forma  net sales at wholesale price       $ 347,620
                                                           ---------





                                      F-23

<PAGE>   64





                                                                    Schedule I
                                                                        Page 1

                             SFAC NEW HOLDINGS, INC.

                            CONDENSED BALANCE SHEETS

                                 (IN THOUSANDS)



                                                       December 31,
                                               ----------------------------
                                                  1999              1998
                                                  ----              ----
                                              (Successor)      (Predecessor)

                                   ASSETS

Cash                                        $          -       $          1
Investment in SFC New Holdings, Inc.            (504,111)          (450,974)
Deferred debt issuance costs                       3,746              4,235
Due from SFC                                           -              7,499
Other assets                                           -                  -
                                            ------------       ------------
                  Total assets              $   (500,365)      $   (439,239)
                                            ============       ============

                    LIABILITIES AND STOCKHOLDERS' EQUITY

Senior secured discount debentures          $    334,912       $    295,191
Senior subordinated discount debentures                -            134,698
                                            ------------       ------------
                  Total liabilities              334,912            429,889

Redeemable preferred stock                             -             19,500

Stockholders' equity:
     Common stock                                      -                646
     Additional paid-in capital                  194,620             42,750
     Accumulated deficit                      (1,029,897)          (930,659)
     Cost of common shares in treasury                 -             (1,365)
                                            ------------       ------------
                  Total stockholders' equity    (835,277)          (888,628)
                                            ------------       ------------

                  Total liabilities and
                     stockholders' equity   $   (500,365)      $   (439,239)
                                            ============       ============

The condensed financial statements should be read in conjunction with the
accompanying consolidated financial statements of the Company.




                                      F-24

<PAGE>   65


                                                              Schedule I Cont.
                                                                        Page 2


                             SFAC NEW HOLDINGS, INC.

                       CONDENSED STATEMENTS OF OPERATIONS

                                 (IN THOUSANDS)
<TABLE>
<CAPTION>

                                                                Years Ended December 31,
                                                      -----------------------------------------
                                                            1999        1998            1997
                                                            ----        ----            ----
                                                      (Successor)  (Predecessor)   (Predecessor)
<S>                                                   <C>            <C>             <C>
Equity in earnings (loss) of SFC
   New Holdings, Inc.                                 $  (52,437)    $  (46,166)     $   91,361

Operating expenses                                             -            972             945
                                                      ----------     ----------      ----------

Income (loss) from operations                            (52,437)       (47,138)         90,416
                                                      ----------     ----------      ----------

Nonoperating expense:
     Interest expense                                    (46,298)       (48,601)        (43,148)
     Amortization of deferred debt issuance costs           (488)          (609)           (609)
                                                      ----------     ----------      ----------
                  Total nonoperating expense             (46,786)       (49,210)        (43,757)
                                                      ----------     ----------      ----------

Income (loss) before income taxes                        (99,223)       (96,348)         46,659
     Income taxes                                            (15)           105            (136)
                                                      ----------     ----------      ----------

                  Net income (loss)                   $  (99,238)       (96,243)     $   46,523
                                                      ==========     ==========      ==========

</TABLE>


The condensed financial statements should be read in conjunction with the
accompanying consolidated financial statements of the Company.



                                      F-25



<PAGE>   66

                                                              Schedule I Cont.
                                                              ----------------
                                                                        Page 3


                             SFAC NEW HOLDINGS, INC.

                       CONDENSED STATEMENTS OF CASH FLOWS

                                 (IN THOUSANDS)


<TABLE>
<CAPTION>

                                                                                Years Ended December 31,
                                                                 --------------------------------------------------------
                                                                      1999                 1998                  1997
                                                                      ----                 ----                  ----
                                                                 (Successor)           (Predecessor)         (Predecessor)
<S>                                                              <C>                   <C>                    <C>
Cash flows from operating activities:
     Net income (loss)                                           $   (99,238)          $   (96,243)           $   46,523
     Debt issuance cost amortization                                     488                   609                   609
     Accretion of interest                                            46,298                48,601                43,148
     Equity in earnings of SFC                                        52,437                46,166               (91,361)
     Changes in operating assets and liabilities:
         Other assets                                                      -                     -                     -
                                                                 -----------           -----------            ----------
                          Net cash (used) by
                                    operating activities                 (15)                 (867)               (1,081)

Cash flows from financing activities:
     Dividend from subsidiary                                              -                 1,004                 1,122
     Issuance of preferred stock                                           -                     -                19,500
     Advances from SFC                                                     -                   122               (18,375)
     Other                                                                14                  (259)               (1,166)
                                                                 -----------           -----------            ----------
                          Net cash provided by
                                     financing activities                 14                   867                 1,081

Net decrease in cash and cash equivalents                                 (1)                    -                     -
Cash at beginning of period                                                1                     1                     1
                                                                 -----------           -----------            ----------
Cash at end of period                                            $         -           $         1            $        1
                                                                 ===========           ===========            ==========
</TABLE>


The condensed financial statements should be read in conjunction with the
accompanying consolidated financial statements of the Company.



                                      F-26

<PAGE>   67



                             SFAC NEW HOLDINGS, INC.

               METZ DIVESTITURE - PRO FORMA FINANCIAL INFORMATION


DESCRIPTION OF SALE

On March 20, 2000, SFC New Holdings, Inc., a subsidiary of SFAC New Holdings,
Inc. completed the sale of its subsidiary, Metz Baking Company ("Metz"), to the
Earthgrains Company for $625 million. Accordingly, Metz is reported as a
discontinued operation in the Consolidated Financial Statements. Metz is a
leading retail bread company serving the Midwestern United States. Upon closing,
$20 million of the purchase price was paid into an escrow to secure potential
future indemnification obligations of SFC New Holdings, Inc. arising out the
sale. Depending on the amount of any potential future indemnification
obligations, the escrow will release $10 million one year after closing and the
remaining amount two years after the closing.

The sale of Metz results in immediately available net cash proceeds of
approximately $545 million (net of a $20 million escrow, an approximate $40
million to terminate at closing the accounts receivable facility and an
estimated $20 million for taxes and other expenses associated with the
transaction). Under its existing debt arrangements, the Company is required to
apply 75% of the Metz net proceeds, or approximately $410 million, to reduce
debt. As a result, concurrent with the Metz closing, the Company has paid in
full amounts outstanding under the Revolving Credit and Term Loan facilities
totaling approximately $265 million and has terminated these arrangements.
Within thirty days after the Metz closing, the Company is required to commence
an asset sale tender offer for a portion (approximately $145 million) of the
Company's Senior Notes.

After the completion of the Metz sale, the Company will use available cash
proceeds to fund operating and investing activities since it has terminated its
Accounts Receivable, Revolving and Term Loan Facilities. After the Metz
transaction, the Company expects to have approximately $100 million of available
cash following payment of transaction-related expenses, cash collateralizing
remaining letters of credit, and payment of the required debt reduction and
related accrued interest, but excluding other cash requirements of its
continuing operations. The Company is currently evaluating such cash
requirements of its existing businesses and is considering using a portion of
the available cash for further debt reduction. Management believes that the
available cash balance should be adequate to fund the Company's 2000 operating
and investing activities. However, there can be no assurance that available
funds will be adequate to meet such needs.

INTRODUCTION TO PRO FORMA CONDENSED CONSOLIDATED FINANCIAL INFORMATION

The following pro forma financial statements reflect the estimated impact of the
Metz sale transaction on the Consolidated Balance Sheet and Consolidated
Statement of Operations for the year ended December 31, 1999. For purposes of
reporting the pro forma balance sheet, it is assumed that the business was sold
on December 31, 1999 and the required debt reduction occurred on that date. For
purposes of reporting the pro forma results of operations, it is assumed that
the business was sold on January 1, 1999. The pro forma financial information is
not intended to reflect the actual results of operations or financial position
of the Company which would have resulted if the sale had occurred on the assumed
dates.



                                      F-27

<PAGE>   68



                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      FOR THE YEAR ENDED DECEMBER 31, 1999
                                 (IN THOUSANDS)
<TABLE>
<CAPTION>
                                                   SFAC New                          SFAC New
                                                Holdings, Inc.    Pro Forma       Holdings, Inc.
                                                  Historical     Adjustments        Pro Forma
                                                  ----------     -----------        ---------
<S>                                               <C>             <C>               <C>
Current Assets:
   Cash and cash equivalents                      $   28,545      $ 127,461   (1)   $ 156,006
   Accounts receivable, net                           15,826          9,386   (2)      25,212
   Net assets of discontinued operations             169,980       (169,980)  (3)           -
   Other current assets                               19,575         14,300   (4)      33,875
                                                  ----------      ---------         ---------
          Total current assets                       233,926        (18,833)          215,093

   Noncurrent assets                                 197,512         (1,005)  (5)     196,507
                                                  ----------      ---------         ---------
          Total assets                            $  431,438      $ (19,838)        $ 411,600
                                                  ==========      =========         =========

   Current maturities of long-term debt           $    2,867      $  (1,738)  (7)   $   1,129
   Accounts payable and accrued expenses              57,699         (4,489)  (6)      53,210
                                                  ----------      ---------         ---------
          Total current liabilities                   60,566         (6,227)           54,339

   Long-term debt                                  1,176,027       (407,012)  (7)     769,015
   Other noncurrent liabilities                       30,122              -            30,122
                                                  ----------      ---------         ---------
          Total liabilities                        1,266,715       (413,239)          853,476

Stockholders' equity                                (835,277)       393,401   (8)    (441,876)
                                                  ----------      ---------         ---------

   Total liabilities and stockholders' equity     $  431,438      $ (19,838)        $ 411,600
                                                  ==========      =========         =========
</TABLE>


See accompanying notes to pro forma financial statements.


                                      F-28
<PAGE>   69



                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                      FOR THE YEAR ENDED DECEMBER 31, 1999
                                 (IN THOUSANDS)

<TABLE>
<CAPTION>

                                                      SFAC New                              SFAC New
                                                   Holdings, Inc.   Pro Forma            Holdings, Inc.
                                                     Historical    Adjustments             Pro Forma
<S>                                                  <C>            <C>                   <C>
Net sales                                            $ 284,574      $        -            $   284,574
Cost of sales                                          119,761               -                119,761
                                                     ---------      ----------            -----------
          Gross profit                                 164,813               -                164,813

Operating expenses:
   General and administrative expenses                 162,103               -                162,103
   Amortization of intangibles                           2,873               -                  2,873
                                                     ---------      -----------           -----------
          Total operating expenses                     164,976               -                164,976

Loss from operations                                      (163)              -                   (163)

Other:
   Interest expense, net                               149,134         (46,765)    (9)        102,369
   Third party financing fees                            9,781                -                 9,781
   Other expense, net                                    3,923                -                 3,923
                                                     ---------      -----------           -----------
 Loss before income taxes                             (163,001)          46,765              (116,236)
   Income tax expense                                      203                -                   203
                                                     ---------      -----------           -----------
Loss from continuing operations                       (163,204)          46,765              (116,439)
                                                     ---------      -----------           -----------

Discontinued operations:
   Earnings                                             37,175               -                 37,175
   Gain on disposal                                     26,791          404,406   (10)        431,197
                                                     ---------      -----------           -----------
                                                        63,966          404,406               468,372

Extraordinary item                                           -          (16,540)  (11)        (16,540)
                                                     ---------      -----------           -----------

          Net income (loss)                          $ (99,238)     $   434,631           $   335,393
                                                     =========      ===========           ===========

</TABLE>


See accompanying notes to pro forma financial statements.


                                      F-29


<PAGE>   70


                    SFAC NEW HOLDINGS, INC. AND SUBSIDIARIES
                     NOTES TO PRO FORMA FINANCIAL STATEMENTS
                      FOR THE YEAR ENDED DECEMBER 31, 1999


(1)    Represents sales price net of the funds placed in escrow, the repurchase
       of off-balance sheet accounts receivable from the Accounts Receivable
       Securitization Facility, the cash collateralizing remaining letters of
       credit, the required debt reduction and the payment of estimated expenses
       related to the transaction.

(2)    Represents the amount of accounts receivable from continuing operations
       which was repurchased from the Accounts Receivable Securitization
       Facility that was terminated upon the closing of the sale of Metz.

(3)    Reflects the elimination of assets transferred to and liabilities
       assumed by the buyer.

(4)    Represents the current portion of the escrow account and the cash
       collateralizing letters of credit.

(5)    Elimination of deferred financing fees related to the Revolving Credit
       Facility, Term Loan Facility and a portion of the Senior Notes, net of
       noncurrent portion of escrow.

(6)    Elimination of accrued interest related to the Revolving Credit
       Facility, Term Loan Facility and a portion of the Senior Notes.

(7)    Required payoff of amounts outstanding under the Term Loan and Revolving
       Credit Facilities and a portion of the Company's Senior Notes.

(8)    Represents the gain on the sale less the write-off of deferred fees
       related to the Term Loan Facility, Revolving Credit Facility and a
       portion of the Senior Notes.

(9)    Eliminates interest expense related to the Term Loan Facility, Revolving
       Credit Facility and Senior Notes and the amortization of the related
       deferred financing fees.

(10)   Represents the gain on the sale.

(11)   Represents the write-off of the deferred financing fees related to the
       Term Loan and Revolving Credit Facilities and a portion of the Senior
       Notes.