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                                  UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                              Washington, DC 20549

                                    FORM 10-Q

              [X] Quarterly Report Pursuant to Section 13 or 15(d)
                     of the Securities Exchange Act of 1934

                 For the Thirteen Weeks Ended December 30, 2001

              [] Transition Report Pursuant to Section 13 or 15(d)of the
                         Securities Exchange Act of 1934
              for the transition period from _________ to_________

                        Commission file number 333-50683

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

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

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

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


         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 [   ]


        The number of shares outstanding of the Registrant's common stock
                            as of February 11, 2002:
 SF Holdings Group, Inc. Class A Common Stock, $0.001 par value - 562,583 shares
 SF Holdings Group, Inc. Class B Common Stock, $0.001 par value - 56,459 shares
 SF Holdings Group, Inc. Class C Common Stock, $0.001 par value - 39,900 shares
 SF Holdings Group, Inc. Class D Common Stock, $0.001 par value - No shares

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<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

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


<TABLE>
<CAPTION>
                                                        (Unaudited)
                                                        December 30,     September 30,
                                                            2001             2001
                                                       --------------    -------------
<S>                                                    <C>               <C>

                              Assets
Current assets:
  Cash and cash equivalents                              $    7,418       $   11,869
  Cash in escrow                                              5,241                8
  Receivables, less allowances of $4,263 and $3,395         164,417          167,855
  Due from affiliates                                           349            1,347
  Inventories                                               212,074          225,021
  Deferred income taxes                                      23,900           24,007
  Refundable income taxes                                       665              665
  Spare parts                                                24,188           23,273
  Assets held for sale                                        7,428           10,210
  Other current assets                                        8,678            9,372
                                                         -----------      -----------
    Total current assets                                    454,358          473,627

Property, plant and equipment, net                          266,324          265,795
Deferred income taxes                                        40,507           38,107
Spare parts                                                  11,779           12,077
Goodwill, net                                               117,301          118,307
Other assets                                                 25,279           24,472
                                                         -----------      ----------

    Total assets                                         $  915,548       $  932,385
                                                         ===========      ===========

               Liabilities and Shareholders' Deficit
Current liabilities:
  Accounts payable                                       $   76,655       $   96,072
  Accrued payroll and related costs                          43,148           46,892
  Other current liabilities                                  54,658           49,260
  Current portion of deferred gain on sale of assets         10,275           10,275
  Current portion of long-term debt                          16,447           16,942
                                                         -----------      -----------
    Total current liabilities                               201,183          219,441

Commitments and contingencies  (See Notes)

Deferred income taxes                                         4,252            4,252
Long-term debt                                              548,569          542,575
Deferred gain on sale of assets                              81,104           83,672
Other liabilities                                            59,054           58,628
                                                         -----------      -----------

    Total liabilities                                       894,162          908,568

Minority interest in subsidiaries                             6,593            6,427
Exchangeable preferred stock                                 49,923           48,209
Preferred Stock B, Series 2                                  15,000           15,000
Redeemable common stock                                       2,374            2,356
Shareholders' deficit                                       (52,504)         (48,175)
                                                         -----------      -----------

    Total liabilities and shareholders' deficit          $  915,548       $  932,385
                                                         ===========      ===========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.

                                       2
<PAGE>
                             SF HOLDINGS GROUP, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                          AND OTHER COMPREHENSIVE LOSS
                                   (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                          For the        For the
                                                          Thirteen       Thirteen
                                                         weeks ended    weeks ended
                                                        December 30,   December 24,
                                                            2001           2000
                                                        ------------   ------------
<S>                                                     <C>            <C>

Net sales                                                $  320,875     $  326,503
Cost of sales                                               280,515        288,004
                                                         -----------    -----------

  Gross profit                                               40,360         38,499

Selling, general and administrative expenses                 29,498         29,440
Other income, net                                            (3,123)        (3,368)
                                                         -----------    -----------

  Operating income                                           13,985         12,427

Interest expense, net of interest income of $34
and $35                                                      13,177         13,379
                                                         -----------    -----------

  Income (loss) before income tax expense
  (benefit) and  minority interest                              808           (952)

Income tax expense (benefit)                                    711           (238)
Minority interest in subsidiaries' income                       166            148
                                                         -----------    -----------

  Net loss                                                      (69)          (862)

Payment-in-kind dividends on exchangeable
preferred stock                                               1,714          1,499
                                                         -----------    -----------

  Net loss applicable to common stockholders             $   (1,783)    $   (2,361)
                                                         ===========    ===========

Other comprehensive loss:
  Net loss                                               $      (69)    $     (862)
  Foreign currency translation adjustment                      (139)          (214)
  Minimum pension liability adjustment (net
  of income taxes of ($1,652 )and $9)                        (2,478)            14
                                                         -----------    -----------

  Comprehensive loss                                     $   (2,686)    $   (1,062)
                                                         ===========    ===========
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.

                                       3
<PAGE>
                             SF HOLDINGS GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In thousands)


<TABLE>
<CAPTION>
                                                                   For the Thirteen       For the Thirteen
                                                                      weeks ended            weeks ended
                                                                     December 30,           December 24,
                                                                         2001                   2000
                                                                   ----------------       ----------------
<S>                                                                <C>                    <C>

CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                                             $     (69)             $    (862)
  Adjustments to reconcile net loss to net cash provided by
  operating activities:
    Depreciation and amortization                                          8,767                  8,791
    Amortization of deferred gain                                         (2,568)                (2,568)
    Deferred income tax expense (benefit)                                    711                   (238)
    Gain on sale of assets                                                (2,371)                  (398)
    Interest accreted on debt                                              3,813                  3,370
    Minority interest in subsidiaries' income                                166                    148
  Changes in operating assets and liabilities (net of business
  acquisition):
    Receivables                                                            3,438                  9,615
    Inventories                                                           12,947                  3,102
    Other current assets                                                    (221)                  (263)
    Other assets                                                          (1,301)                   776
    Accounts payable                                                     (19,417)               (10,559)
    Accrued payroll and related costs                                     (3,744)               (10,828)
    Other current liabilities                                              5,398                  2,885
    Other liabilities                                                     (3,704)                (2,065)
    Other, net                                                              (164)                 1,720
                                                                       ----------             ----------
    Net cash provided by operating activities                              1,681                  2,626
                                                                       ----------             ----------

CASH FLOWS FROM INVESTING ACTIVITIES

  Additions to property, plant and equipment                              (7,912)                (3,539)
  Payment for business acquisition                                             -                 (1,950)
  Proceeds from sale of property, plant and equipment                      5,233                    197
                                                                       ----------             ----------
    Net cash used in investing activities                                 (2,679)                (5,292)
                                                                       ----------             ----------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net borrowings under credit  facilities                                  3,307                  6,129
  Payments of other debt                                                  (1,527)                (2,225)
  Increase in cash in escrow                                              (5,998)                    (4)
  Decrease in cash in escrow                                                 765                      -
                                                                       ----------             ----------
    Net cash (used in) provided by financing activities                   (3,453)                 3,900
                                                                       ----------             ----------

NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS                                                               (4,451)                 1,234

CASH AND CASH EQUIVALENTS, beginning of period                            11,869                  6,352
                                                                       ----------             ----------

CASH AND CASH EQUIVALENTS, end of period                               $   7,418              $   7,586
                                                                       ==========             ==========

SUPPLEMENTAL CASH FLOW DISCLOSURES:

    Interest paid                                                      $   3,179              $   4,675
                                                                       ==========             ==========

    Income taxes paid                                                  $     893              $      20
                                                                       ==========             ==========
</TABLE>


          See accompanying Notes to Consolidated Financial Statements.

                                       4
<PAGE>
                             SF HOLDINGS GROUP, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)


(1)  BASIS OF PRESENTATION

         SF Holdings  Group,  Inc. ("SF  Holdings"),  is a holding  company that
conducts its  operations  through its  subsidiaries,  Sweetheart  Holdings  Inc.
("Sweetheart")   and  The  Fonda  Group,  Inc.  ("Fonda")   (collectively,   the
"Company"),  and therefore has no  significant  cash flows  independent  of such
subsidiaries. The instruments governing the indebtedness of Sweetheart and Fonda
contain  numerous  restrictive  covenants  that restrict  Sweetheart and Fonda's
ability to pay dividends or make other  distributions  to SF Holdings or to each
other.  The Company  believes that the combined  operations of its  subsidiaries
makes the Company one of the largest converters and marketers of disposable food
service and food packaging products in North America.

         The information  included in the foregoing interim financial statements
of the Company is  unaudited  but, in the opinion of  management,  includes  all
adjustments (consisting only of normal recurring adjustments and accruals) which
the Company considers necessary for a fair presentation of the operating results
for  these  periods.  Results  for  the  interim  periods  are  not  necessarily
indicative  of  results  for  the  entire  year.  These  condensed  consolidated
financial   statements   should  be  read  in  conjunction  with  the  Company's
consolidated  financial  statements and notes thereto  included in the Company's
annual report on Form 10-K for the fiscal year ended September 30, 2001.


(2)  RECENTLY ISSUED ACCOUNTING STANDARDS

         In  June 2001,  the Financial   Accounting   Standards  Board  ("FASB")
issued two new  pronouncements:  Statement  of  Financial  Accounting  Standards
("SFAS") No. 141,  Business  Combinations  and SFAS No. 142,  Goodwill and Other
Intangible  Assets.  SFAS No. 141 prohibits  the use of the  pooling-of-interest
method for business combinations  initiated after June 30, 2001 and also applies
to all  business  combinations  accounted  for by the  purchase  method that are
completed after June 30, 2001.  There are also transition  provisions that apply
to business combinations  completed before July 1, 2001, that were accounted for
by the purchase  method.  SFAS No. 142 is effective  for fiscal years  beginning
after December 15, 2001 and applies to all goodwill and other intangible  assets
recognized in an entity's  balance  sheet.  The Company has adopted SFAS No. 141
and is  currently  evaluating  the  impact of SFAS No.  142 on its  consolidated
financial statements.

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

                                       5
<PAGE>
(3)   INVENTORIES

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

                                           (Unaudited)
                                           December 30,      September 30,
                                              2001                2001
                                           ------------      -------------

Raw materials and supplies                  $  57,906          $  55,955
Finished products                             144,537            158,297
Work in progress                                9,631             10,769
                                            ---------          ---------
  Total inventories                         $ 212,074          $ 225,021
                                            =========          =========


(4)  RELATED PARTY TRANSACTIONS

         All  of the  affiliates  referenced  below are  directly or  indirectly
under the common ownership of the Company's Chief Executive Officer. The Company
believes that transactions  entered into with related parties were negotiated on
terms which are at least as favorable as it could have obtained  from  unrelated
third parties and were negotiated on an arm's length basis.

         During the thirteen  weeks ending  December 30, 2001,  the Company sold
$1.8  million  of scrap  paper to Fibre  Marketing  Group,  LLC,  a waste  paper
recovery  business  in  which  Fonda  has a 25%  interest  ("Fibre  Marketing").
Included in accounts  receivable  as of December  30, 2001 was $0.9  million due
from Fibre  Marketing.  Other sales,  if any, to affiliates  during the thirteen
weeks ending December 30, 2001 were not significant.

         During the thirteen  weeks ended  December 30,  2001,  Fibre  Marketing
issued to Fonda  and  Sweetheart  promissory  notes  for $0.4  million  and $0.8
million  respectively in exchange for outstanding accounts receivable from Fibre
Marketing,  each  at an  annual  interest  rate of 7.0%  payable  in 36  monthly
installments.  As of  December  30,  2001 $0.4  million is due to Fonda and $0.8
million is due to Sweetheart.

         During the  thirteen  weeks  ending  December  30,  2001,  the  Company
purchased  $2.6 million of corrugated  containers  from Box USA  Holdings,  Inc.
("Box USA"), a converter and seller of interior packaging, corrugated sheets and
corrugated  containers which the Company's Chief Executive owns in excess of 10%
of its  outstanding  capital  stock,  and $0.3 million of travel  services  from
Emerald Lady,  Inc.  ("Emerald  Lady"),  a company wholly owned by the Company's
Chief Executive Officer.  Included in accounts payable, as of December 30, 2001,
was $0.5 million due to Box USA. Other purchases from affiliates, if any, during
the thirteen weeks ending December 30, 2001 were not significant.

         Fonda had loan  receivables  from its Chief Executive  Officer totaling
$0.3 million  plus  accrued  interest at 5.06% at December 30, 2001 and December
24, 2000. The loans are payable upon demand.

         During Fiscal 2000,  Sweetheart entered into a lease agreement with D&L
Development,  LLC,  an  entity in which  Sweetheart's  Chief  Executive  Officer
indirectly  owns 47%, to lease a  warehouse  facility  in  Hampstead,  Maryland.
During the thirteen weeks ending December 30, 2001 and the thirteen weeks ending
December 24, 2000,  rental  payments under this lease were $0.9 million and $0.6
million,  respectively.  Annual rental payments under the 20 year lease are $3.7
million  for the  first  10  years  of the  lease  and  $3.8  million  annually,
thereafter.

         During  Fiscal 2000,  Sweetheart  began   leasing  a facility  in North
Andover,  Massachusetts  from D&L  Andover  Property,  LLC,  an  entity in which
Sweetheart's Chief Executive Officer indirectly owns

                                       6
<PAGE>
50%.  During the thirteen weeks ending  December 30, 2001 and the thirteen weeks
ending December 24, 2000, rental payments under this lease were $0.4 million and
$0.2 million,  respectively.  Annual rental payments under the 20 year lease are
$1.5  million  in the  first  year,  which  escalates  at a rate of 2% each year
thereafter.

         Fonda leases a building in  Jacksonville,  Florida  from the  Company's
Chief Executive  Officer.  Annual payments under the lease are $0.2 million plus
annual  increases  based on changes in the Consumer Price Index ("CPI")  through
December 31, 2014. In addition, the Chief Executive Officer can require Fonda to
purchase the facility for $1.5 million, subject to a CPI-based escalation, until
July 31, 2006. In Fiscal 1998,  Fonda terminated its operations at this facility
and is currently  subleasing the entire facility.  Four M Corporation ("Four M")
subleased a portion of this  facility  through  May 1998 and again from  October
1999 through February 2000. Rent expense,  net of sublease income on the portion
of the premises subleased is not significant.

         During the thirteen  weeks ending  December 24, 2000,  the Company sold
$1.6 million of scrap paper to Fibre Marketing.  Included in accounts receivable
as of December 24, 2000 were $1.4 million due from Fibre Marketing. Other sales,
if any, to affiliates  during the thirteen  weeks ending  December 24, 2000 were
not significant.

         During the  thirteen  weeks  ending  December  24,  2000,  the  Company
purchased $1.8 million of corrugated containers from Box USA and $0.2 million of
travel services from Emerald Lady.  Included in accounts payable, as of December
24, 2000, is $0.1 million due to Box USA. Other  purchases from  affiliates,  if
any, during the thirteen weeks ending December 24, 2000 were not significant.


(5)  SF HOLDINGS STOCK OPTION PLAN

         During the  thirteen  weeks  ended March 25, 2001, the  Company adopted
the SF Holdings Group, Inc. Share Incentive Plan ("the Share Incentive Plan") in
which the Company may grant  options to its  employees  to purchase up to 95,995
shares of the Company's  Class D common stock.  The Company has reserved  95,995
shares of Class D common stock for issuance upon exercise of these options.  The
exercise  price of each option is determined by the Company at the date of grant
and an option's maximum term is 10 years.

         During the  thirteen  weeks  ended March 25, 2001, the Company  granted
options to  purchase  shares of its common  stock to  certain  employees  of the
Company.  Certain  officers  of the  Company  were  issued  options  that vested
one-third  immediately with the remaining options vesting over two years,  while
all other  eligible  employees  were issued  options  that vest over a period of
three  years.  The  exercise  prices of the options  granted to the officers and
certain employees were below the fair market value of the Company's common stock
at the date of the grant.  During the vesting  periods,  these discounts of $1.6
million are being amortized as  compensation  expense and credited to additional
paid-in capital by the Company.  Amortization  expense relating to the Company's
stock options was $0.1 million for the thirteen weeks ended December 30, 2001.


(6)  OTHER (INCOME) EXPENSE

         During the thirteen weeks ended December 30, 2001,  Sweetheart realized
$2.6 million due to the  amortization of the deferred gain in conjunction with a
sale-leaseback  transaction.  In Fiscal 2000, Sweetheart sold certain production
equipment  in  connection  with a  sale-leaseback  transaction  ("Sale-Leaseback
Transaction").  Also,  during the thirteen  weeks ended  December 30, 2001,  the
Company  recognized a $2.4 million gain in association with Sweetheart's sale of
a manufacturing facility in

                                       7
<PAGE>
Manchester,  New Hampshire.  These gains were  partially  offset by $1.5 million
reflecting certain costs incurred that are associated with the  rationalization,
consolidation and improvement of Sweetheart's manufacturing facilities.

         During the thirteen weeks ended December 24, 2000,  Sweetheart realized
$2.6 million due to the  amortization  of the deferred gain in conjunction  with
the Sale-Leaseback Transaction.  Additionally,  the Company recognized a gain of
$0.5 million from the sale of a building in Indianapolis, Indiana.


(7)  CONTINGENCIES

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

         A lawsuit entitled Aldridge v. Lily-Tulip,  Inc. Salary Retirement Plan
Benefits Committee and Fort Howard Cup Corporation, Civil Action No. CV 187-084,
was filed in state  court in Georgia in April 1987 and later  removed to federal
court. The Plaintiffs claimed,  among other things,  that Sweetheart  wrongfully
terminated the Lily Tulip, Inc. Salary Retirement Plan (the "Plan") in violation
of the Employee  Retirement Income Security Act of 1974, as amended.  The relief
sought by Plaintiffs was to have the Plan termination declared ineffective.  The
United States Court of Appeals for the Eleventh  Circuit (the  "Circuit  Court")
ruled that the Plan was lawfully  terminated on December 31, 1986,  and judgment
was entered  dismissing  the case in March 1996.  The Circuit Court affirmed the
judgment entered in favor of Sweetheart. Plaintiffs filed a petition for writ of
certiorari to the United States Supreme Court, which was denied in January 1999.
Sweetheart  expects  to  complete  paying  out  the  termination  liability  and
associated expenses in connection with the Plan termination by June 30, 2002. As
of  December  30,  2001,  Sweetheart  disbursed  $19.6  million  in  termination
payments.  The  estimate  of the  total  termination  liability  and  associated
expenses,  less  payments,  exceeds  the  assets  set  aside in the Plan by $0.1
million, which amount has been fully reserved by Sweetheart.

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

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


(8)  BUSINESS SEGMENTS

         The Company is a holding company and its reportable segments consist of
the  operations of its two  significant  operating  subsidiaries  Sweetheart and
Fonda. Sweetheart primarily manufactures and sells disposable paper, plastic and
foam  foodservice  and food  packaging  products to customers  in  institutional
markets.   Fonda  primarily   manufactures   and  sells   disposable  paper  and
tissue-based foodservice products to

                                       8
<PAGE>
customers in institutional  and consumer  markets.  Data for such segments and a
reconciliations  to  consolidated  amounts are  presented in the table below (in
thousands):

                                        For the Thirteen   For the Thirteen
                                           weeks ended        weeks ended
                                        December 30, 2001  December, 24 2000
                                        -----------------  -----------------
Net sales:
  Sweetheart                                $ 228,016          $ 233,579
  Fonda                                       100,788            100,166
  Corporate and  eliminations                  (7,929)            (7,242)
                                            ----------         ----------
    Net  Sales                              $ 320,875          $ 326,503
                                            ==========         ==========

Income from operations excluding other
(income) expense:
  Sweetheart                                $   3,779          $   2,398
  Fonda                                         7,014              6,609
  Corporate and  eliminations                      69                 52
                                            ----------         ----------
    Income from operations                  $  10,862          $   9,059
                                            ==========         ==========


(9)   SUBSEQUENT EVENTS

         On  January  25,  2002,  Newcup,  LLC,   a  newly  formed  unaffiliated
investment entity ("Newcup"),  purchased $103,201,000 (approximately 71%) of the
aggregate  principal amount outstanding of the 12 3/4% Senior Discount Notes due
2008 (the "Discount Notes") of SF Holdings. Newcup's investments will be limited
to the ownership of the Discount Notes. Newcup has consented to an amendment of,
and SF Holdings has amended effective January 25, 2002, the Indenture  governing
the Discount Notes to eliminate  substantially all of the restrictive  covenants
and to release all of the collateral  securing the Discount Notes. SF Holdings's
Certificate of  Incorporation  has also been amended to conform the terms of the
SF  Holding's  Exchangeable  Preferred  Stock  to  the  amendments  made  to the
Indenture.  Newcup and SF  Holdings  have also  agreed to reduce  the  aggregate
principal  amount of the Discount  Notes held by Newcup,  to reduce the interest
rate thereon and to defer the first date on which interest must be paid in cash.
Newcup issued $54 million of notes (the "Newcup Notes") to another  unaffiliated
investment  entity (the "Newcup Note Holder") and used the net proceeds  thereof
to acquire the Discount  Notes and, on January 26, 2002,  SF Holdings  agreed to
guarantee  the  obligations  of Newcup under the Newcup  Notes in the  aggregate
amount of $54 million, which guarantee is secured by all of the collateral which
formerly  secured  the  Discount  Notes.  Newcup  will pay SF Holdings an annual
guarantee fee of 2%, which amount will be deducted from the principal  amount of
the Discount Notes at the end of each year. In addition,  SF Holdings has issued
to the Newcup Note Holder a warrant to purchase  76,082  shares of SF  Holdings'
Class C Common Stock for $0.01 per share.  In the event that Newcup is unable to
pay cash interest on the Newcup Notes as required thereunder,  which in no event
would be earlier  than March 31,  2004,  the Newcup Note  Holder  would have the
right to put a portion of  Newcup's  obligations  to the Newcup  Note  Holder in
exchange for 49% of the  collateral.  The remaining  obligations of Newcup under
the Newcup Notes would continue to be secured by SF Holding's guarantee together
with the remaining collateral.


Item 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATION

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

                                       9
<PAGE>
malfunctions  and  pending  litigation.  For  additional  information,  see  the
Company's annual report on Form 10-K for the most recent fiscal year.


General

         SF Holdings Group, Inc. ("SF Holdings") was formed in December 1997. SF
Holdings  conducts all of its operations  through its  subsidiaries,  Sweetheart
Holdings Inc. ("Sweetheart") and The Fonda Group, Inc. ("Fonda")  (collectively,
the  "Company"),  and  therefore  has no  significant  cash flows or  operations
independent of such subsidiaries.

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

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

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


Recent Developments

         On January 25, 2002, Newcup,LLC, a newly formed unaffiliated investment
entity ("Newcup"),  purchased $103,201,000  (approximately 71%) of the aggregate
principal amount  outstanding of the 12 3/4% Senior Discount Notes due 2008 (the
"Discount  Notes") of SF Holdings.  Newcup's  investments will be limited to the
ownership of the Discount Notes. Newcup has consented to an amendment of, and SF
Holdings has amended  effective  January 25, 2002,  the Indenture  governing the
Discount Notes to eliminate  substantially all of the restrictive  covenants and
to release all of the  collateral  securing the Discount  Notes.  SF  Holdings's
Certificate of  Incorporation  has also been amended to conform the terms of the
SF  Holding's  Exchangeable  Preferred  Stock  to  the  amendments  made  to the
Indenture.  Newcup and SF  Holdings  have also  agreed to reduce  the  aggregate
principal  amount of the Discount  Notes held by Newcup,  to reduce the interest
rate thereon and to defer the first date on which interest must be paid in cash.
Newcup issued $54 million of notes (the "Newcup Notes") to another  unaffiliated
investment  entity (the "Newcup Note Holder") and used the net proceeds  thereof
to acquire the Discount  Notes and, on January 26, 2002,  SF Holdings  agreed to
guarantee  the  obligations  of Newcup under the Newcup  Notes in the  aggregate
amount of $54 million, which guarantee is secured by all of the collateral which
formerly  secured  the  Discount  Notes.  Newcup  will pay SF Holdings an annual
guarantee fee of 2%, which amount will be deducted from the principal  amount of
the Discount Notes at the end of each year. In addition,  SF Holdings has issued
to

                                       10
<PAGE>
the Newcup Note Holder a warrant to purchase 76,082 shares of SF Holdings' Class
C Common  Stock for $0.01 per share.  In the event that  Newcup is unable to pay
cash  interest  on the Newcup  Notes as required  thereunder,  which in no event
would be earlier  than March 31,  2004,  the Newcup Note  Holder  would have the
right to put a portion of  Newcup's  obligations  to the Newcup  Note  Holder in
exchange for 49% of the  collateral.  The remaining  obligations of Newcup under
the Newcup Notes would continue to be secured by SF Holding's guarantee together
with the remaining collateral.


Thirteen  Weeks  Ended  December  30,  2001  Compared  to  Thirteen  Weeks Ended
December 24, 2000

         Net sales  decreased $5.6 million,  or 1.7%, to $320.9 million for  the
thirteen  weeks  ended  December  30, 2001  compared  to $326.5  million for the
thirteen weeks ended December 24, 2000.  The following  analysis  includes sales
from  Sweetheart  to Fonda  and  sales  from  Fonda  to  Sweetheart  which  were
eliminated in consolidation.

Sweetheart results:
         Net sales  decreased $5.6 million,  or 2.4%, to $228.0 million for  the
thirteen  weeks  ended  December  30, 2001  compared  to $233.6  million for the
thirteen  weeks ended  December  24, 2000,  reflecting a 0.1%  increase in sales
volume and a 2.5%  decrease  in average  realized  sales  price.  Sales  volumes
increased  as a result  of the  incremental  sales  obtained  from  Sweetheart's
acquisition of an 80% interest in Global Cup, S.A. De C.V. and its  subsidiaries
("Global Cup") in April 2001.  Average  realized prices decreased as a result of
decreased raw material costs and competitive pressures.

Fonda results:
         Net sales  increased  $0.6 million,  or 0.6%, to $100.8 million for the
thirteen  weeks ending  December 30,  2001,  compared to $100.2  million for the
thirteen weeks ending  December 24, 2000,  reflecting a 6.4% increase in average
realized sales price  partially  offset by a 5.8% decrease in sales volume.  The
decrease in sales volume  resulted  from  declining  sales of lower priced items
which were  affected by the  general  economic  slow down in the leisure  travel
industry.  As a  consequence,  the remaining  product mix shifted to those items
with higher average selling prices.

         Gross profit increased $1.9 million,  or 4.9%, to $40.4 million for the
thirteen  weeks  ended  December  30,  2001  compared  to $38.5  million for the
thirteen  weeks ended  December 24, 2000.  As a percentage  of net sales,  gross
profit  increased to 12.6% for the thirteen  weeks ended  December 30, 2001 from
11.8% for the thirteen weeks ended December 24, 2000.

Sweetheart results:
         Gross profit increased $0.7 million,  or 3.6%, to $20.4 million for the
thirteen  weeks  ended  December  30,  2001  compared  to $19.7  million for the
thirteen  weeks ended  December 24, 2000.  As a percentage  of net sales,  gross
profit  increased  to 9.0% for the thirteen  weeks ended  December 30, 2001 from
8.4%  for  the  thirteen   weeks  ended  December  24,  2000.  The  increase  is
attributable to lower raw material, transportation and utility expenses.

Fonda results:
         Gross profit increased $0.9 million,  or 4.7%, to $19.9 million for the
thirteen  weeks  ending  December 30,  2001,  compared to $19.0  million for the
thirteen  weeks ending  December 24, 2000. As a percentage  of net sales,  gross
profit  increased from 19.0% for the thirteen weeks ending  December 24, 2000 to
19.7% for the  thirteen  weeks ending  December  30, 2001.  Gross profit for the
thirteen  weeks ending  December 30, 2001 was  positively  affected by increased
selling prices due to an improved product mix.

         Selling, general and administrative expenses increased $0.1 million, or
0.3%, to $29.5 million for the thirteen  weeks ended  December 30, 2001 compared
to $29.4 million for the thirteen weeks ended

                                       11
<PAGE>
December  24, 2000.  This  increase is  primarily  attributed  to an increase in
Fonda's  bad debt  expense  and an  increase  in Fonda's  goodwill  amortization
expense from Fiscal 2001 business  acquisitions.  These increases were partially
offset by a decrease in Sweetheart's lower variable compensation expenses.

         Other income, net decreased $0.3 million,  or 8.8%, to $3.1 million for
the  thirteen  weeks ended  December  30, 2001  compared to $3.4 million for the
thirteen weeks ended December 24, 2000.  This decrease is attributable to a $1.5
million expense incurred in association with the rationalization,  consolidation
and improvement of the Company's manufacturing facilities offset by $2.0 million
in increased gains from the sale of assets.

         Operating income increased $1.6 million, or 12.9%, to $14.0 million for
the thirteen  weeks ended  December 30, 2001  compared to $12.4  million for the
thirteen weeks ended December 24, 2000, due to the reasons stated above.

         Interest expense, net decreased $0.2 million, or 1.5%, to $13.2 million
for the thirteen weeks ended December 30, 2001 compared to $13.4 million for the
thirteen weeks ended December 24, 2000.  This decrease is  attributable to lower
interest  rates on higher  balances for  Sweetheart  and lower interest rates on
lower balances for Fonda.

         Income tax expense (benefit) increased $0.9  million, or 450.0%,  to an
expense of $0.7 million for the thirteen  weeks ended December 30, 2001 compared
to a benefit of $0.2 million for the thirteen weeks ended December 24, 2000. The
effective  rate for the thirteen  weeks ended December 30, 2001 was 88% compared
to 25% for the thirteen  weeks ended  December 24, 2000.  For the thirteen weeks
ended  December 30, 2001 and for the thirteen weeks ended December 24, 2000, the
effective  tax  rates  reflect  certain  non-deductible  costs  relating  to the
investment in Sweetheart, the related financing and the proportionate results of
both Fonda and Sweetheart.

         Minority  interest  in  subsidiaries'  income  increased $0.1  million,
or 100%,  to $0.2 million in million for the thirteen  weeks ended  December 30,
2001 compared to $0.1 million for the thirteen weeks ended December 24, 2000 due
primarily to increased earning from Sweetheart.

         Net loss  decreased  $0.8  million,  or 88.9%,  to $0.1 million for the
thirteen weeks ended December 30, 2001 compared to $0.9 million for the thirteen
weeks ended December 24, 2000, due to the reasons stated above.


Liquidity And Capital Resources

         Historically,  the Company  has relied on cash flow from operations and
revolving  credit  borrowings to finance its working  capital  requirements  and
capital expenditures. In the thirteen weeks ended December 30, 2001, the Company
funded its  capital  expenditures  from a  combination  of cash  generated  from
operations,  borrowings  from the revolving  credit facility and funds generated
from asset sales. The Company expects to continue this method of funding for its
Fiscal 2002 capital expenditures.

         Net cash  provided by operating  activities in the thirteen weeks ended
December  30, 2001 was $1.7  million  compared to $2.6  million in the  thirteen
weeks ended  December  24,  2000.  The  decrease in  operating  cash flow in the
thirteen  weeks ended  December 30, 2001 is primarily a resulted from a decrease
in accounts payable and accrued payroll related expenses offset by a decrease in
inventories.

         Net cash used in  investing  activities  in the  thirteen  weeks  ended
December  30, 2001 was $2.7  million  compared to $5.3  million in the  thirteen
weeks ended December 24, 2000. This decrease in the use of cash is primarily due
to proceeds from the sale of the Manchester,  New Hampshire  facility,  which is
partially offset by increased capital expenditures.

                                       12
<PAGE>
         Net cash used in  financing  activities  in the  thirteen  weeks  ended
December  30, 2001 was $3.5 million  compared to net cash  provided by financing
activities of $3.9 million in the thirteen weeks ended  December 24, 2000.  This
decrease  in cash  provided  from  financing  is  primarily a result of proceeds
received from the sale of the Manchester,  New Hampshire  facility being held in
the cash escrow account and lower borrowings under the credit facilities.

         Working  capital  decreased  $1.0 million to $253.2 million at December
30, 2001 from $254.2 million at September 30, 2001. This decrease  resulted from
current assets decreasing $19.3 million, primarily due to lower inventories, and
current  liabilities  decreasing  $18.3  million,  primarily  due to lower trade
payables.

         Capital  expenditures  for the thirteen  weeks ended  December 30, 2001
were $7.9 million compared to $3.5 million for the thirteen weeks ended December
24, 2000.  Capital  expenditures  in the thirteen  weeks ended December 30, 2001
included $3.4 million for new production equipment, $1.6 million associated with
the  implementation  of  Sweetheart's  program to  rationalize,  consolidate and
improve its manufacturing  facilities,  $1.9 million for facility  improvements,
with the remaining consisting primarily of routine capital improvements.

         Sweetheart has a revolving credit facility (the "U.S. Credit Facility")
that,  subject to borrowing  base  limitations,  allows for a maximum  revolving
credit  borrowing of $145  million  through June 15, 2005 and a term loan of $25
million that requires equal monthly  principal  payments of $0.4 million through
June  2005.  Both  the term  loan  and the  revolving  credit  facility  have an
accelerated  maturity date of July 1, 2003 if Sweetheart's  Senior  Subordinated
Notes due September 1, 2003 are not refinanced  before June 1, 2003.  Borrowings
under the revolving credit facility bear interest, at Sweetheart's  election, at
a rate equal to (i) LIBOR plus 2.00% or (ii) a bank's base rate plus 0.25%, plus
certain  other  fees.   Borrowings  under  the  term  loan  bear  interest,   at
Sweetheart's  election, at a rate equal to (i) LIBOR plus 2.50% or (ii) a bank's
base rate plus 0.50%,  plus certain other fees.  During the thirteen weeks ended
December 30, 2001, the weighted average annual interest rate for the U.S. Credit
Facility  was 5.17%.  The credit  facility  is  collateralized  by  Sweetheart's
inventories  and  receivables  with the term loan portion of the credit facility
further collateralized by certain production equipment. As of December 30, 2001,
$13.2 million was available  under the  revolving  credit  facility and the term
loan balance was $11.7  million.  The fee for  outstanding  letters of credit is
2.00% per annum and there is a  commitment  fee of 0.375% per annum on the daily
average  unused amount of the  commitments.  As of December 30, 2001,  LIBOR was
2.44% and the bank's base rate was 4.75%.

         Fonda's  credit  facility  provides  for a revolving  credit  facility,
subject to borrowing base  limitations  of up to $65 million  through August 26,
2004,  and a term loan in an amount of $15 million that  requires  equal monthly
principal  payments of $0.3 million  through August 2004 with the balance due on
August 26, 2004 (the "Credit  Facility").  The Credit Facility is collateralized
by all of Fonda's  receivables,  inventories,  and  equipment,  certain  general
intangibles and other property,  and the proceeds on the sale of receivables and
inventories. Borrowings under the revolving credit facility bear interest at the
bank's  prime rate plus 0.50% or at LIBOR plus 2.50% at the  election  of Fonda.
Borrowings under the term loan bear interest at the bank's prime rate plus 0.75%
or at LIBOR plus 2.75% at the election of Fonda.  As of December  30, 2001,  the
bank's prime rate was 4.75%, and the LIBOR rate was 2.44%. In the thirteen weeks
ending  December 30, 2001,  the weighted  average  interest  rate for the Credit
Facility was 5.02%.  At December 30, 2001,  $41.0  million was  outstanding  and
$24.0 million was the maximum  remaining  advance  available based upon eligible
collateral.

         Sweetheart's  Canadian subsidiary has a credit agreement (the "Canadian
Credit  Facility")  which provides for a term loan facility balance of Cdn $13.9
million  (approximately US $8.7 million) and a revolving credit facility maximum
of up to Cdn $16.1 million (approximately US $10.1 million). The

                                       13
<PAGE>
term  borrowings  are payable  quarterly  through May 2004.  Both the  revolving
credit and term loan borrowings have a final maturity date of June 15, 2004. The
Canadian Credit Facility is secured by all existing and thereafter acquired real
and personal tangible assets of Lily-Tulip, Inc., a subsidiary of Sweetheart Cup
("Lily") and net proceeds on the sale of any of the foregoing.  Borrowings under
the  Canadian  Credit  Facility  bear  interest at an index rate plus 1.75% with
respect  to the  revolving  credit  facility  and an index  rate plus 2.00% with
respect to the term loan  borrowings.  As of December 30, 2001, Cdn $2.7 million
(approximately  US $1.7 million) was available under the revolving  facility and
the term loan  balance was Cdn $13.9  million  (approximately  US $8.7  million)
under the Canadian Credit Facility.

         In  connection with a  sale-leaseback   transaction,  on June 15, 2000,
Sweetheart Cup Company Inc.  ("Sweetheart  Cup"),  and Sweetheart  Holdings Inc.
(Sweetheart  Holdings")  sold  certain  production  equipment  located in Owings
Mills,  Maryland,   Chicago,   Illinois  and  Dallas,  Texas  to  several  owner
participants  for a fair  market  value of $212.3  million.  Pursuant to a lease
dated as of June 1, 2000 (the "Lease")  between  Sweetheart Cup and State Street
Bank and Trust Company of Connecticut, National Association ("State Street"), as
trustee,  Sweetheart Cup leases the production equipment sold in connection with
the  sale-leaseback  transaction  from State Street as owner trustee for several
owner participants,  through November 9, 2010.  Sweetheart Cup has the option to
renew the  Lease for up to four  consecutive  renewal  terms of two years  each.
Sweetheart  Cup also has the option to purchase  such  equipment for fair market
value  either  at the  conclusion  of the  Lease  term  or  November  21,  2006.
Sweetheart's obligations under the Lease are collateralized by substantially all
of  Sweetheart's  property,  plant and equipment  owned as of June 15, 2000. The
Lease contains various covenants,  which prohibit, or limit, among other things,
dividend  payments,   equity  repurchases  or  redemption,   the  incurrence  of
additional  indebtedness  and certain other business  activities.  Sweetheart is
accounting for the sale-leaseback  transaction as an operating lease,  expensing
the $32.0 million annualized rental payments.  A deferred gain of $107.0 million
was realized from this sale and is being amortized over 125 months, which is the
term of the Lease.

         Sweetheart  Cup is the obligor and  Sweetheart  Holdings the  guarantor
with  respect  to  $110  million  of  Senior   Subordinated  Notes.  The  Senior
Subordinated Notes bear interest at 10.50% per annum,  payable  semi-annually in
arrears on March 1 and  September 1 and mature on September 1, 2003.  The Senior
Subordinated  Notes are subject to  redemption at the option of  Sweetheart,  in
whole or in part,  at the  redemption  price  (expressed as  percentages  of the
principal  amount),  plus accrued  interest to the  redemption  date,  at a call
premium  of 100%.  The Senior  Subordinated  Notes are  subordinate  in right of
payment to the prior  payment in full of all  borrowings  under the U.S.  Credit
Facility,  all  obligations  under the  Lease,  and all other  indebtedness  not
otherwise  prohibited.  The Senior  Subordinated Notes contain various covenants
which prohibit,  or limit, among other things,  asset sales,  change of control,
dividend  payments,   equity  repurchases  or  redemption,   the  incurrence  of
additional   indebtedness,   the  issuance  of   disqualified   stock,   certain
transactions with affiliates, the creation of additional liens and certain other
business activities.

         In Fiscal 1997,  Fonda  issued $120  million of 9-1/2%  Series A Senior
Subordinated  Notes due 2007 (the "Notes") with interest payable  semi-annually.
Payment of the principal and interest is  subordinate in right to payment of the
Credit Facility. Fonda may, at its election,  redeem the Notes at any time after
March 1, 2002 at a redemption price equal to a percentage  (104.750% after March
1,  2002 and  declining  in annual  steps to 100%  after  March 1,  2005) of the
principal amount thereof plus accrued interest.  The Notes provide that upon the
occurrence of a change of control (as defined therein), the holders thereof will
have the option to require the  redemption  of the Notes at a  redemption  price
equal to 101% of the principal amount thereof plus accrued interest.

         On March 12, 1998, the Company issued units  consisting of $144 million
aggregate  principal amount at maturity of 12 3/4% Senior Secured Discount Notes
due 2008 (the  "Discount  Notes") and

                                       14
<PAGE>
28,800 shares of Class C Common Stock for net proceeds of $77.5  million.  Until
March 15, 2003, accrued interest on the Discount Notes will not be paid but will
accrete  semi-annually,  thereby  increasing  the carrying value of the Discount
Notes. The fair value of such Class C Common Stock ($2.4 million) at the date of
issuance was recorded as common stock and paid-in  capital with a  corresponding
reduction in the carrying value of the Discount Notes.  The resulting  discount,
as well as $4.5 million of financing  fees  included in other  assets,  is being
amortized as additional interest expense over the term of the Discount Notes.

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

         As of December 12, 2001, all cumulative  dividends on the  Exchangeable
Preferred  have been paid by the issuance of additional  shares of  Exchangeable
Preferred.  The value of the Exchangeable Preferred, was $49.9 million and $48.2
million as of December  30,  2001 and  September  30,  2001,  respectively.  The
Exchangeable  Preferred is not  entitled to any vote,  except as required in the
Company's certificate of incorporation and by law.

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

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

         Pursuant to the terms of the instruments  governing the indebtedness of
Sweetheart and Fonda,  Sweetheart  and Fonda are subject to certain  affirmative
and  negative  covenants  customarily  contained  in  agreements  of this  type,
including,  without  limitations  covenants that restrict,  subject to specified
exceptions  (i)  mergers,  consolidations,  asset  sales or  changes  in capital
structure,  (ii) creation or  acquisition  of  subsidiaries,  (iii)  purchase or
redemption  of  capital  stock  or   declaration  or  payment  of  dividends  or
distributions on such capital stock, (iv) incurrence of additional indebtedness,
(v) investment activities,  (vi) granting or incurrence of liens to secure other
indebtedness,  (vii)  prepayment or  modification  of the terms of  subordinated
indebtedness, and (viii) engaging in transactions with affiliates.

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

                                       15
<PAGE>
         A lawsuit entitled Aldridge v. Lily-Tulip,  Inc. Salary Retirement Plan
Benefits Committee and Fort Howard Cup Corporation, Civil Action No. CV 187-084,
was filed in state  court in Georgia in April 1987 and later  removed to federal
court. The Plaintiffs claimed,  among other things,  that Sweetheart  wrongfully
terminated the Lily Tulip, Inc. Salary Retirement Plan (the "Plan") in violation
of the Employee  Retirement Income Security Act of 1974, as amended.  The relief
sought by Plaintiffs was to have the Plan termination declared ineffective.  The
United States Court of Appeals for the Eleventh  Circuit (the  "Circuit  Court")
ruled that the Plan was lawfully  terminated on December 31, 1986,  and judgment
was entered  dismissing  the case in March 1996.  The Circuit Court affirmed the
judgment entered in favor of Sweetheart. Plaintiffs filed a petition for writ of
certiorari to the United States Supreme Court, which was denied in January 1999.
Sweetheart  expects  to  complete  paying  out  the  termination  liability  and
associated expenses in connection with the Plan termination by June 30, 2002. As
of  December  30,  2001,  Sweetheart  disbursed  $19.6  million  in  termination
payments.  The  estimate  of the  total  termination  liability  and  associated
expenses,  less  payments,  exceeds  the  assets  set  aside in the Plan by $0.1
million, which amount has been fully reserved by Sweetheart.

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

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

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


Net Operating Loss Carryforwards

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


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         Sweetheart  is  exposed  to  market  risk  in  the  ordinary  course of
business,  which consists  primarily of interest rate risk  associated  with its
variable rate debt. All borrowing  under the U.S.  Credit  Facility and Canadian
Credit  Facility,  each of which contains a revolving and term credit  facility,
bear interest at a variable rate.  Borrowings  under the U.S. Credit  Facility's
revolving  credit facility bear interest,  at

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Sweetheart's  election,  at a rate  equal (i) LIBOR  plus 2.00% or (ii) a bank's
base rate plus  0.25%,  plus  certain  fees.  Borrowings  under the U.S.  Credit
Facility's term loan bear interest, at Sweetheart's election, at a rate equal to
(i) LIBOR plus 2.50% or (ii) a bank's base rate plus 0.50%,  plus certain  other
fees.  Borrowings  under the Canadian  Credit Facility bear interest at an index
rate plus 1.75% with respect to the  revolving  credit  borrowings  and an index
rate plus 2.00% with  respect to the term loan  borrowings.  As of December  30,
2001, the  outstanding  indebtedness  under the U.S.  Credit Facility was $138.1
million and the Canadian Credit Facility was $15.7 million in U.S.  dollars.  As
of  December  30,  2001,  $13.2  million  was  available  under the U.S.  Credit
Facility.  As of December 30,  2001,  Cdn $2.7  million  (approximately  US $1.7
million) was available under Canadian Credit Facility. Based upon these amounts,
the annual net income  would change by  approximately  $1.5 million for each one
percentage  point change in the interest  rates  applicable to the variable rate
debt.  The level of the  exposure  to  interest  rate  movements  may  fluctuate
significantly  as a result of changes in the amount of indebtedness  outstanding
under the revolving credit facilities.

         Fonda is exposed to market  risk in the  ordinary  course of  business,
which consists primarily of interest rate risk associated with its variable rate
debt. Borrowings under the revolving credit facility bear interest at the bank's
prime rate plus 0.50% or at LIBOR.  Borrowings under the term loan bear interest
at the bank's  prime rate plus 0.75% or at LIBOR plus 2.75% at the  election  of
Fonda. At December 30, 2001, $41.0 million was outstanding and $24.0 million was
the maximum remaining advance  available based upon eligible  collateral.  Based
upon these  amounts,  the annual net income would change by  approximately  $0.3
million for each one percentage point change in the interest rates applicable to
Fonda's variable rate debt. The level of the exposure to interest rate movements
may fluctuate significantly as a result of changes in the amount of indebtedness
outstanding under the revolving credit facilities.



                           PART II - OTHER INFORMATION


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K


         (a)  Exhibits:

              None

         (b)  Reports on Form 8-K:

              No  reports  on  Form  8-K were filed  during the  thirteen  weeks
              ended December 30, 2001.


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                                   SIGNATURES



Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned, its duly authorized officer and principal financial officer.



                                     SF HOLDINGS GROUP, INC.
                                     (registrant)

Date:  February 11, 2002             By:  /s/ Hans H. Heinsen
       -----------------                  -------------------
                                     Hans H. Heinsen
                                     Senior Vice President,
                                     Chief Financial Officer and Treasurer
                                     (Principal Financial and Accounting Officer
                                     and Duly Authorized Officer)

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