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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 Thirty-nine Weeks Ended June 24, 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 July 20, 2001:
 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


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<PAGE>
                         PART I - FINANCIAL INFORMATION

Item 1.  FINANCIAL STATEMENTS

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


<TABLE>
<CAPTION>
                                                              (Unaudited)
                                                                June 24,            September 24,
                                                                  2001                   2000
                                                             -------------        -----------------
<S>                                                          <C>                  <C>

                               Assets
Current assets:
  Cash and cash equivalents                                    $   7,242              $   6,352
  Cash in escrow                                                   1,064                    300
  Receivables, less allowances of $4,156 and $3,534,
    respectively                                                 164,084                155,684
  Due from affiliates                                              1,995                  1,286
  Inventories                                                    223,804                226,657
  Deferred income taxes                                           24,454                 24,347
  Refundable income taxes                                            843                    622
  Spare parts                                                     26,415                 24,066
  Other current assets                                             9,370                  6,428
                                                               ----------             ----------
    Total current assets                                         459,271                445,742

Property, plant and equipment, net                               273,002                263,368

Deferred income taxes                                             37,100                 37,694
Spare parts                                                        8,632                  8,313
Goodwill, net                                                    109,826                106,108
Other assets                                                      17,225                 19,904
                                                               ----------             ----------

    Total assets                                               $ 905,056              $ 881,129
                                                               ==========             ==========

                      Liabilities and Shareholders' Deficit
Current liabilities:
  Accounts payable                                             $  93,941              $  91,068
  Accrued payroll and related costs                               46,383                 55,486
  Other current liabilities                                       56,882                 56,114
  Current portion of deferred gain on sale of assets              10,275                 10,275
  Current portion of long-term debt                               41,782                 57,266
                                                               ----------             ----------
    Total current liabilities                                    249,263                270,209

Commitments and contingencies  (See Notes)

Deferred income taxes                                              4,209                  4,209
Long-term debt                                                   485,280                434,967
Deferred gain on sale of assets                                   86,241                 93,948
Other liabilities                                                 54,997                 57,511
                                                               ----------             ----------
    Total liabilities                                            879,990                860,844
                                                               ----------             ----------

Exchangeable preferred stock                                      46,444                 41,794
Preferred Stock B, Series 2                                       15,000                 15,000
Minority interest in subsidiaries                                  6,105                  3,169
Redeemable common stock                                            2,338                  2,286
Shareholders' deficit                                            (44,821)               (41,964)
                                                               ----------             ----------

    Total liabilities and shareholders' deficit                $ 905,056              $ 881,129
                                                               ==========             ==========
</TABLE>

          See accompanying Notes to Consolidated Financial Statements.

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


<TABLE>
<CAPTION>
                                                          For the             For the             For the             For the
                                                         Thirteen            Thirteen           Thirty-nine         Thirty-nine
                                                        weeks ended         weeks ended         weeks ended         weeks ended
                                                         June 24,            June 25,            June 24,           June 25,
                                                            2001                2000                2001               2000
                                                      ---------------     ---------------     ---------------     --------------
<S>                                                   <C>                 <C>                 <C>                 <C>
Net sales                                                $ 342,072           $ 346,579           $ 961,368           $ 941,773
Cost of sales                                              291,661             291,358             838,817             799,064
                                                         ----------          ----------          ----------          ----------

  Gross profit                                              50,411              55,221             122,551             142,709

Selling, general and administrative expenses                24,939              26,347              84,146              86,908
Restructuring expense                                          407                 500                 407                 500
Other income, net                                           (1,301)               (174)             (7,679)             (1,738)
                                                         ----------          ----------          ----------          ----------

  Operating income                                          26,366              28,548              45,677              57,039

Interest expense, net of interest income of $-,
  $147, $89 and $414, respectively                          13,343              18,713              40,171              53,413
                                                         ----------          ----------          ----------          ----------
  Income before income tax expense,
    minority interest and  extraordinary loss               13,023               9,835               5,506               3,626

Income tax expense                                           5,441               4,255               2,949               2,404

Minority interest in subsidiaries                              931                 837                 873               1,183
                                                         ----------          ----------          ----------          ----------

  Income before extraordinary loss                           6,651               4,743               1,684                  39

Extraordinary loss on debt extinguishment (net
  of income tax benefit of $225 and $575
  respectively)                                                  -                 337                   -                 862
                                                         ----------          ----------          ----------          ----------

  Net income (loss)                                          6,651               4,406               1,684                (823)

Payment-in-kind dividends on exchangeable
  preferred stock                                            1,584               1,390               4,650               4,067
                                                         ----------          ----------          ----------          ----------


  Net income (loss) applicable to
    common stockholders                                   $   5,067           $   3,016           $  (2,966)          $  (4,890)

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

Comprehensive income (loss):
  Net income (loss)                                      $   6,651           $   4,406           $   1,684           $    (823)
  Foreign currency translation adjustment                      524                (148)                  1                (266)
  Minimum pension liability adjustment (net
    of income tax expense (benefit) of $261,
    $(49),  $(247) and $(51), respectively)                    392                 (73)               (370)                (77)
                                                         ----------          ----------          ----------          ----------

  Comprehensive income (loss)                            $   7,567           $   4,185           $   1,315           $  (1,166)
                                                         ==========          ==========          ==========          ==========
</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 Thirty-nine       For the Thirty-nine
                                                                   weeks ended               weeks ended
                                                                  June 24, 2001             June 25, 2000
                                                             -----------------------    ----------------------
<S>                                                          <C>                        <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net income (loss)                                                 $  1,684                  $    (823)
  Adjustments to reconcile net income (loss) to net cash
  provided by operating activities:
    Depreciation and amortization                                     25,138                     40,405
    Amortization of deferred gain                                     (7,707)                      (245)
    Interest accreted on debt                                         10,346                      8,831
    Deferred income tax benefit                                        2,949                      1,857
    Gain on sale of assets                                              (427)                    (4,109)
    Minority interest in subsidiaries                                    873                      1,183
  Changes in operating assets and liabilities (net of business
  acquisitions):
    Receivables                                                       (5,346)                   (12,549)
    Due from affiliates                                                 (709)                        (5)
    Inventories                                                        8,359                    (21,938)
    Other current assets                                              (5,786)                     2,499
    Accounts payable and accrued expenses                            (21,601)                     5,518
    Other, net                                                        (2,289)                      (959)
                                                                    ---------                 ----------
      Net cash provided by operating activities                        5,484                     19,665
                                                                    ---------                 ----------

CASH FLOWS FROM INVESTING ACTIVITIES

  Additions to property, plant and equipment                         (21,690)                   (20,745)
  Payments for business acquisitions                                 (18,827)                   (12,411)
  Proceeds from sale of property, plant and equipment                    369                    220,921
                                                                    ---------                 ----------
      Net cash (used in) provided by  investing activities           (40,148)                   187,765
                                                                    ---------                 ----------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net borrowings under credit  facilities                             37,394                     25,602
  Repayments of other debt                                            (5,736)                  (228,733)
  Borrowing for business acquisition                                   5,000                          -
  Redemption of minority interest                                       (340)                         -
  Decrease in restricted cash                                           (764)                         -
                                                                    ---------                 ----------
      Net cash provided by (used in) financing activities             35,554                   (203,131)
                                                                    ---------                 ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                890                      4,299

CASH AND CASH EQUIVALENTS, beginning of period                         6,352                      4,180
                                                                    ---------                 ----------

CASH AND CASH EQUIVALENTS, end of period                            $  7,242                  $   8,479
                                                                    =========                 ==========

SUPPLEMENTAL CASH FLOW DISCLOSURES:

        Interest paid                                               $ 23,202                  $  39,375
                                                                    =========                 ==========

        Income taxes paid                                           $    619                  $   1,209
                                                                    =========                 ==========

SUPPLEMENTAL CASH FLOW DISCLOSURES:

       Note payable associated with business acquisition            $      -                  $   2,914
                                                                    =========                 ==========
</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  are  unaudited  but,  in the  opinion of  management,  include 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 financial  statements
should be read in conjunction with the Company's financial  statements and notes
thereto included in the Company's annual report on Form 10-K for the fiscal year
ended September 24, 2000. Certain prior period amounts have been reclassified to
conform to the current period presentation.


(2)  RECENTLY ISSUED ACCOUNTING STANDARDS

     In June 1998, the Financial  Accounting Standards Board issued Statement of
Financial  Accounting  Standard  ("SFAS")  No. 133,  Accounting  for  Derivative
Instruments and Hedging  Activities as amended by SFAS No. 137 and SFAS No. 138.
SFAS No. 133  establishes  accounting  and reporting  standards  for  derivative
instruments and requires that an entity  recognize all derivatives at fair value
in the  balance  sheet.  The  adoption of SFAS No. 133 did not have an impact on
the consolidated financial statements.

     In December  1999,  the  Securities  and Exchange  Commission  issued Staff
Accounting   Bulletin  ("SAB")  No.  101,   Revenue   Recognition  in  Financial
Statements.  SAB No. 101  establishes  accounting  and  reporting  standards for
revenue  recognition and requires that an entity not recognize  revenue until it
is realized or realizable and earned. The adoption of SAB No.101 did not have an
impact on the consolidated financial statements.


(3)  INVENTORIES

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

                                        (Unaudited)
                                         June 24,             September 24,
                                           2001                   2000
                                     ----------------       -----------------

Raw materials and supplies              $   61,464             $   66,941
Finished products                          150,885                148,231
Work in progress                            11,455                 11,485
                                        ----------             ----------
  Total inventories                     $  223,804             $  226,657
                                        ==========             ==========

                                       5
<PAGE>
(4)  RELATED PARTY TRANSACTIONS

     During the  thirty-nine  weeks ending June 24, 2001,  the Company sold $5.5
million  of scrap  paper to Fibre  Marketing  Group,  LLC  ("Fibre  Marketing").
Included in accounts  receivable  as of June 24, 2001 was $2.5  million due from
Fibre Marketing. Other sales, if any, to affiliates during the thirty-nine weeks
ending June 24, 2001 were not significant.

     During the  thirty-nine  weeks ending June 25, 2000,  the Company sold $5.5
million of scrap paper to Fibre Marketing. Included in accounts receivable as of
June 25, 2000 was $1.0 million due from Fibre Marketing. Other sales, if any, to
affiliates   during  the  thirty-nine  weeks  ending  June  25,  2000  were  not
significant.

     During the  thirty-nine  weeks ending June 24, 2001, the Company  purchased
$5.7 million of  corrugated  containers  from Box USA Group,  Inc.  ("Box USA"),
formerly known as Four M Corporation,  and $0.8 million of travel  services from
Emerald Lady, Inc. Included in accounts  payable,  as of June 24, 2001, was $0.5
million due to Box USA. Other  purchases  from  affiliates,  if any,  during the
thirty-nine  weeks ending June 24, 2001 were not significant.  During the period
ended June 24,  2001,  the Company  paid $1.3 million and $0.9 million of rental
payments to D&L Development,  LLC and D&L Andover Property,  LLC,  respectively.
The Company's Chief Executive Officer has an interest in both entities.

     During the  thirty-nine  weeks ending June 25, 2000, the Company  purchased
$7.4 million of corrugated containers and services from Box USA and $0.7 million
of travel services from Emerald Lady, Inc. Included in accounts  payable,  as of
June 25, 2000, was $0.5 million due to Box USA. Other purchases from affiliates,
if any, during the thirty-nine weeks ending June 25, 2000 were not significant.

     The Company leases a building in Jacksonville,  Florida from Dennis Mehiel,
the Company's Chief Executive Officer, on terms the Company believes are no less
favorable  than  could be  obtained  from  independent  third  parties  and were
negotiated on an arm's length basis.  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,  Mr.  Mehiel can require the
Company to  purchase  the  facility  for $1.5  million,  subject to a  CPI-based
escalation,  until July 31, 2006.  In Fiscal 1998,  the Company  terminated  its
operations at this facility and is currently  subleasing the entire  facility to
an unrelated third party. Rent expense, net of sublease income on the portion of
the premises subleased, is not significant.

     All of the above referenced  affiliates,  other than the D&L entities,  are
under the common control of the Company's Chief Executive  Officer or a director
of the Company.


(5)  BUSINESS ACQUISITIONS

     On April 5, 2001,  Sweetheart purchased an 80% interest in Global Cup, S.A.
De  C.V.  and  its  subsidiaries   ("Global  Cup").   Global  Cup  manufactures,
distributes and sells paper cups and lids throughout Mexico and exports to other
Latin American countries. Sweetheart has assumed the liabilities and obligations
of Global Cup arising under contracts or leases that are either assets purchased
by Sweetheart or a part of the accounts  payable.  The aggregate  purchase price
for the assets and  working  capital was $12.2  million  which was paid in cash,
subject  to   post-closing   adjustments.   The  Global  Cup   acquisition   has
preliminarily  resulted in goodwill as of June 24, 2001 of $3.9 million which is
being  amortized  over 20 years.  Amounts and  allocations of costs recorded may
require  adjustment based upon information coming to the attention of Sweetheart
that is not currently available.

                                       6
<PAGE>
     On September 25, 2000, pursuant to an asset purchase agreement dated August
9, 2000 (the "Springprint Agreement"),  Fonda purchased substantially all of the
property,   plant  and  equipment,   intangibles  and  net  working  capital  of
Springprint Medallion,  a division of Marcal Paper Mills, Inc.  ("Springprint").
In  addition,  pursuant  to the  Springprint  Agreement,  Fonda has  assumed the
liabilities  and  obligations of Springprint  arising under  contracts or leases
that are  either  assets  purchased  by the  Company  or a part of the  accounts
payable.  The aggregate  purchase  price for the assets and working  capital was
$6.7 million which was paid in cash. The Springprint acquisition has resulted in
goodwill of $3.2 million which is being amortized over 20 years.

     On May 15, 2000,  Sweetheart  acquired  Sherwood,  a manufacturer  of paper
cups, containers and cup making equipment.  Pursuant to a certain Stock Purchase
Agreement among Sweetheart Cup and the stockholders of Sherwood,  Sweetheart Cup
acquired  all of  the  issued  and  outstanding  capital  stock  (the  "Sherwood
Acquisition") of Sherwood and its  subsidiaries for an aggregate  purchase price
of  $16.8  million  of which  $12.1  million  was  paid in cash.  As part of the
purchase price, Sweetheart Cup issued to the stockholders of Sherwood promissory
notes  due May 2005 in an  aggregate  principal  amount  of $4.7  million  and a
present  value of $2.7  million.  Sweetheart  Cup also  assumed  $9.3 million of
Sherwood debt, which was paid in full on June 15, 2000. The Sherwood Acquisition
has  resulted in goodwill as of June 24, 2001 of $10.7  million,  which is being
amortized over 20 years.

     The above  acquisitions  have been accounted for under the purchase  method
and the results have been included in the consolidated  statements of operations
since the date of acquisition.

(6)  LONG-TERM DEBT OBLIGATIONS

     On June 19, 2001,  Sweetheart's  Canadian subsidiary  refinanced its credit
agreement  (the  "Canadian  Credit  Facility")  which  provides  for a term loan
facility of up to Cdn $15 million and a revolving  credit  facility of up to Cdn
$15 million.  The term loan 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, 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 June 24, 2001,  Cdn $6.6
million  (approximately US $4.4 million) was available under the Canadian Credit
Facility.


(7)  SF HOLDINGS STOCK COMPENSATION PLAN

     During the  thirty-nine  weeks ended June 24, 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.  The  options  vest over a period of
three years.

     During the  thirty-nine  weeks ended June 24,  2001,  the  Company  granted
options to purchase an aggregate of 40,137 shares of its class D common stock to
certain employees.  Certain of the exercise prices of the options were below the
fair market value of the Company's common stock at the date of the grant. During
the three  year  vesting  period,  these  discounts  of $1.6  million  are being
amortized as

                                       7
<PAGE>
compensation  expense and credited to additional paid-in capital by the Company.
Amortization  expense  relating to the Company's  stock options was $0.9 million
for the thirty-nine weeks ended June 24, 2001.


(8)  RESTRUCTURING EXPENSE

     During the  thirty-nine  weeks ended June 24,  2001,  Fonda  established  a
restructuring  reserve of $0.4 million in conjunction with the  consolidation of
the Creative  Expression  Group,  Inc.'s ("CEG") an affiliate of  administrative
offices in Indianapolis, Indiana with Fonda's administrative offices in Oshkosh,
Wisconsin. This closing includes the elimination of approximately 40 positions.

     During the  thirty-nine  weeks ended June 25,  2000,  Fonda  established  a
restructuring  reserve of $0.5 million in  conjunction  with the  November  2000
closing of a manufacturing  facility in Maspeth, New York. This closing included
the elimination of approximately 130 positions.


(9)  OTHER (INCOME) EXPENSE

     During the thirty-nine weeks ended June 24, 2001,  Sweetheart  recognized a
$7.7 million gain from the  amortization of the deferred gain in connection with
a  sale-leaseback  transaction.  In the quarter ended June 25, 2000,  Sweetheart
sold  certain   production   equipment  in  connection  with  a   sale-leaseback
transaction.  Sweetheart is leasing this equipment under an operating lease. The
net  proceeds  from this sale were  partially  used to retire  the  Sweetheart's
Senior  Secured  Notes   ("Sale-Leaseback   Transaction").   Also,   during  the
thirty-nine  weeks ended June 24, 2001,  Sweetheart  recognized  $1.1 million of
expense in  association  with the  relocation of a  manufacturing  facility from
Somerville, Massachusetts to North Andover, Massachusetts.

     During the  thirty-nine  weeks ended June 25, 2000,  Sweetheart  realized a
$4.1 million gain on the sale of a warehouse facility in Owings Mills, Maryland.
This gain was partially  offset by a write-off of a $1.0 million  unsecured note
receivable issued in connection with the Fiscal 1998 sale of the bakery business
due to the bankruptcy of the borrower.


(10) EXTRAORDINARY LOSS

     During the thirty-nine weeks ended June 25, 2000, CEG retired its long-term
debt in conjunction with the CEG Asset Purchase  Agreement.  As a result,  Fonda
charged $915,000 or $549,000 net of income tax benefit, to results of operations
as an  extraordinary  loss. This amount  represented  the  unamortized  deferred
financing fees and other expenses pertaining to such debt.


(11) CONTINGENCIES

     A lawsuit  entitled  Aldridge v.  Lily-Tulip,  Inc. Salary  Retirement Plan
Benefits Committee and Fort Howard Cup Corporation, Civil Action No. CV 187-084,
was  initially  filed in state  court in Georgia in April 1987 and is  currently
pending in federal court. The remaining 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 ("ERISA"). The relief sought by plaintiffs was to have the plan
termination declared  ineffective.  In December 1994, the United States Court of
Appeals for the Eleventh  Circuit (the "Circuit  Court") ruled that the Plan was
lawfully  terminated  on  December  31,  1986.  Following  that  decision,   the
plaintiffs  sought a  rehearing,  which was  denied,  and  subsequently  filed a
petition for a writ of certiorari  with the United States Supreme  Court,  which
was also

                                       8
<PAGE>
denied.  Following  remand,  in March 1996, the United States District Court for
the Southern  District of Georgia (the "District  Court")  entered a judgment in
favor of  Sweetheart.  Following  denial of a motion  for  reconsideration,  the
plaintiffs,  in April 1997,  filed an appeal with the Circuit Court.  On May 21,
1998, the Circuit Court affirmed the judgment entered in favor of Sweetheart. On
June 10, 1998,  the  plaintiffs  petitioned the Circuit Court for a rehearing of
their  appeal  which  petition  was denied on July 29,  1998.  In October  1998,
plaintiffs  filed a petition for writ of certiorari to the United States Supreme
Court,  which was denied in January 1999.  Sweetheart has been in the process of
paying out the termination  liability and associated expenses and as of June 24,
2001,  Sweetheart  has disbursed  $12.6  million in  termination  payments.  The
estimate  of the total  termination  liability  and  associated  expenses,  less
payments,  exceeds assets set aside in the Plan by  approximately  $7.4 million,
which amount has been fully reserved by Sweetheart.

     On April 27, 1999, the plaintiffs  filed a motion in the District Court for
reconsideration of the court's dismissal without appropriate relief and a motion
for attorneys' fees with a request for delay in  determination of entitlement to
such fees.  On June 17, 1999,  the District  Court  deferred  these  motions and
ordered  discovery in connection  therewith.  Discovery  has been  completed and
Sweetheart is awaiting  further action by the plaintiffs.  Due to the complexity
involved in connection with the claims asserted in this case,  Sweetheart cannot
determine  at  present  with any  certainty  the  amount of  damages it would be
required  to pay should the  plaintiffs  prevail;  accordingly,  there can be no
assurance  that  such  amounts  would  not have a  material  adverse  effect  on
Sweetheart's financial position or results of operations.

     The Company is also  involved in a number of legal  proceedings  arising in
the ordinary  course of  business,  none of which is expected to have a material
adverse effect on the Company's  consolidated  financial  position or results of
operations.


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


<TABLE>
<CAPTION>
                                                     For the Thirteen        For the Thirteen
                                                       weeks ended             weeks ended
                                                      June 24, 2001           June 25, 2000
                                                  ----------------------  ---------------------
<S>                                               <C>                     <C>
Net sales:
  Sweetheart                                            $ 263,768               $ 264,605
  Fonda                                                    88,387                  89,702
  Corporate and  eliminations                             (10,083)                 (7,728)
                                                        ----------              ----------
    Net  Sales                                          $ 342,072               $ 346,579
                                                        ==========              ==========

Income from operations excluding other
(income) expense:
  Sweetheart                                            $  18,732               $  24,022
  Fonda                                                     6,623                   4,268
  Corporate and  eliminations                                (290)                     84
                                                        ----------              ----------
    Income from operations                              $  25,065               $  28,374
                                                        ==========              ==========
</TABLE>

                                       9
<PAGE>
<TABLE>
<CAPTION>
                                                  For the Thirty-nine     For the Thirty-nine
                                                       weeks ended             weeks ended
                                                      June 24, 2001           June 25, 2000
                                                ----------------------- -----------------------
<S>                                             <C>                     <C>
Net sales:
  Sweetheart                                            $ 716,964               $ 696,200
  Fonda                                                   268,326                 265,337
  Corporate and  eliminations                             (23,922)                (19,764)
                                                        ----------              ----------
    Net  Sales                                          $ 961,368               $ 941,773
                                                        ==========              ==========

Income from operations excluding other (income) expense:
  Sweetheart                                            $  22,722               $  42,530
  Fonda                                                    16,262                  12,797
  Corporate and  eliminations                                (986)                    (26)
                                                        ----------              ----------
    Income from operations                              $  37,998               $  55,301
                                                        ==========              ==========
</TABLE>


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
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"), is a holding company that conducts
its operations through its subsidiaries, Sweetheart Holdings Inc. ("Sweetheart")
and The Fonda Group, Inc. ("Fonda") (collectively,  the "Company").  The Company
conducts all of its  operations  through its principal  operating  subsidiaries,
Sweetheart and Fonda, and therefore, has no significant cash flows or operations
independent of such subsidiaries.

     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 Sweetheart and Fonda'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
Sweetheart's and/or Fonda's cash flow from operations is insufficient to provide
working  capital  necessary to fund their  respective  requirements,  Sweetheart
and/or Fonda will need to borrow under their  respective  credit  facilities  or
seek other sources of capital. Sweetheart and Fonda believe that

                                       10
<PAGE>
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 April 5, 2001,  Sweetheart purchased an 80% interest in Global Cup, S.A.
De  C.V.  and  its  subsidiaries   ("Global  Cup").   Global  Cup  manufactures,
distributes and sells paper cups and lids throughout Mexico and exports to other
Latin American countries. Sweetheart has assumed the liabilities and obligations
of Global Cup arising under contracts or leases that are either assets purchased
by Sweetheart or a part of the accounts  payable.  The aggregate  purchase price
for the assets and  working  capital was $12.2  million  which was paid in cash,
subject  to   post-closing   adjustments.   The  Global  Cup   acquisition   has
preliminarily  resulted in goodwill as of June 24, 2001 of $3.9 million which is
being  amortized  over 20 years.  Amounts and  allocations of costs recorded may
require  adjustment based upon information coming to the attention of Sweetheart
that is not currently available.

     The Global Cup acquisition has been accounted for under the purchase method
and the results have been included in the consolidated  statements of operations
since the date of acquisition.


Thirteen Weeks Ended June 24, 2001 Compared to Thirteen Weeks Ended
June 25, 2000 (Unaudited)

     Net sales  decreased  $4.5  million,  or 1.3%,  to $342.1  million  for the
thirteen  weeks ended June 24, 2001 compared to $346.6  million for the thirteen
weeks ended June 25, 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  $0.8  million,  or 0.3%,  to $263.8  million  for the
thirteen  weeks ended June 24, 2001 compared to $264.6  million for the thirteen
weeks ended June 25, 2000, reflecting a 0.6% increase in sales volume and a 0.9%
decrease  in average  realized  price.  Net sales to  institutional  foodservice
customers decreased 0.6%,  reflecting a 0.4% increase in sales volume and a 1.0%
decrease in average realized sales price. The volume increase  resulted from the
incremental  sales obtained from the Global Cup  acquisition and the sales price
decrease resulted from competitive  market pressures which were partially offset
by a shift in product mix. Net sales to food packaging  customers increased 2.4%
reflecting  a 2.6%  increase  in sales  volume  and a 0.2%  decrease  in average
realized sales price.

Fonda results:
     Net  sales  decreased  $1.3  million,  or 1.4%,  to $88.4  million  for the
thirteen  weeks ending June 24, 2001  compared to $89.7 million for the thirteen
weeks ending June 25, 2000, reflecting a 2.7% increase in average realized sales
price partially offset by a 4.1% decrease in sales volume. Net sales to consumer
foodservice  customers decreased 7.9%, resulting from a 0.8% increase in average
realized  sales  price and an  decrease  in sales  volume of 8.7%.  Net sales to
consumer  foodservice  customers  was  negatively  impacted by more  competitive
market  conditions  and Fonda's  decision to reduce  sales to certain  customers
experiencing   deteriorating  credit  conditions.  Net  sales  to  institutional
foodservice  customers increased 8.4%, resulting from a 0.5% increase in average
realized  sales price and a 7.9%  increase  in sales  volume.  This  increase in
institutional  foodservice  customers  volumes is  primarily  attributed  to the
Springprint acquisition.

     Gross profit  decreased  $4.8  million,  or 8.7%,  to $50.4 million for the
thirteen  weeks ended June 24, 2001  compared to $55.2  million for the thirteen
weeks ended June 25, 2000. As a percentage of net

                                       11
<PAGE>
sales,  gross profit  decreased  to 14.7% for the thirteen  weeks ended June 24,
2001 from 15.9% for the thirteen weeks ended June 25, 2000.

Sweetheart results:
     Gross profit  decreased  $4.8 million,  or 12.5%,  to $33.6 million for the
thirteen  weeks ended June 24, 2001  compared to $38.4  million for the thirteen
weeks ended June 25, 2000. As a percentage of net sales,  gross profit decreased
to 12.7% for the thirteen  weeks ended June 24, 2001 from 14.5% for the thirteen
weeks  ended  June  25,  2000.   The  decrease  in  gross  profit  is  primarily
attributable  to the  effects of a  sale-leaseback  transaction.  In the quarter
ended June 25, 2000,  Sweetheart sold certain production equipment in connection
with a sale-leaseback transaction. Sweetheart is leasing this equipment under an
operating lease ("Sale-Leaseback Transaction").  The net proceeds from this sale
were  partially  used  to  retire   Sweetheart's   Senior  Secured  Notes.  This
refinancing  enabled  Sweetheart  to use a  portion  of its net  operating  loss
carryforward and obtain more favorable  financing.  Consequently,  cost of sales
has  increased  due to higher rent expense  which has been  partially  offset by
lower  depreciation  expense and  historically  higher interest expense has been
lowered.  Specifically,  rent expense  associated with this transaction was $4.0
million greater than the reduction in depreciation.  Additionally,  gross profit
declined due to an increase in energy  costs of $1.0 million and  transportation
costs of $1.9 million.

Fonda results:
     Gross profit  increased  $0.1  million,  or 0.6%,  to $17.1 million for the
thirteen  weeks ending June 24, 2001  compared to $17.0 million for the thirteen
weeks ending June 25, 2000. As a percentage of net sales, gross profit increased
from 18.9% for the thirteen weeks ending June 25, 2000 to 19.4% for the thirteen
weeks ending June 24, 2001.  Gross profit for the thirteen weeks ending June 24,
2001 was positively  affected by increased selling prices,  which were partially
offset by higher raw material and energy costs.

     Selling,  general and administrative  expenses  decreased $1.4 million,  or
5.3%,  to $24.9  million for the thirteen  weeks ended June 24, 2001 compared to
$26.3 million for the thirteen  weeks ended June 25, 2000  primarily as a result
of a decrease in the workforce resulting from the CEG consolidation at Fonda.

     Other (income) expense,  net increased $1.1 million,  or 550%, to income of
$1.3  million for the thirteen  weeks ended June 24, 2001  compared to income of
$0.2 million for the thirteen  weeks ended June 25, 2000.  This change  resulted
from the amortization of the deferred gain in connection with the Sale-Leaseback
Transaction  of $2.6 million for the thirteen weeks ended June 24, 2001 compared
to $0.3 million for the thirteen  weeks ended June 25, 2000 for  Sweetheart.  In
addition,  Sweetheart  incurred  $0.4  million  in  costs  associated  with  the
relocation  of  the   Somerville   manufacturing   facility  to  North  Andover,
Massachusetts.

     Restructuring  expense decreased $0.1 million, or  20%, to $0.4 million for
the thirteen weeks ended June 24, 2001 compared to $0.5 million for the thirteen
weeks ended June 25,  2000.  In the thirteen  weeks ending June 24, 2001,  Fonda
recorded a $0.4 million reserve in conjunction with the consolidation of the CEG
administrative  office.  In the  thirteen  weeks  ended  June  25,  2000,  Fonda
established  a  restructuring  reserve of $0.5 million in  conjunction  with the
closing of a manufacturing facility in Maspeth, New York.

     Operating income decreased $2.1 million,  or 7.4%, to $26.4 million for the
thirteen  weeks ended June 24, 2001  compared to $28.5  million for the thirteen
weeks ended June 25, 2000, due to the reasons stated above.

     Interest  expense,  net decreased $5.4 million,  or 28.9%, to $13.3 million
for the  thirteen  weeks ended June 24, 2001  compared to $18.7  million for the
thirteen  weeks ended June 25,  2000.  This  decrease is  attributable  to lower
interest rates under both Sweetheart's and Fonda's  respective  revolving credit
facilities and the June 2000 redemption of Sweetheart's Senior Secured Notes, as
a result of the Sale-Leaseback Transaction.

                                       12
<PAGE>

     Net income (loss) increased $2.3 million, or 52.3%, to $6.7 million for the
thirteen  weeks ended June 24, 2001  compared to income of $4.4  million for the
thirteen weeks ended June 25, 2000, due to the reasons stated above.


Thirty-nine Weeks Ended June 24, 2001 Compared to Thirty-nine Weeks Ended
June 25, 2000 (Unaudited)

     Net sales  increased  $19.6  million,  or 2.1%,  to $961.4  million for the
thirty-nine  weeks  ended  June 24,  2001  compared  to $941.8  million  for the
thirty-nine  weeks ended June 25, 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  increased  $20.8  million,  or 3.0%,  to $717.0  million for the
thirty-nine  weeks  ended  June 24,  2001  compared  to $696.2  million  for the
thirty-nine  weeks  ended June 25,  2000,  reflecting  a 1.8%  increase in sales
volume  and a 1.2%  increase  in  average  realized  sales  price.  Net sales to
institutional  foodservice  customers increased 3.3%, reflecting a 2.1% increase
in sales volume and a 1.2% increase in average  realized sales price. The volume
increase  resulted  from the  incremental  sales  obtained  from the  Global Cup
acquisition.  Selling prices were positively impacted by a shift in product mix.
Net sales to packaging customers did not change significantly.

Fonda results:
     Net sales  increased  $3.0  million,  or 1.1%,  to $268.3  million  for the
thirty-nine  weeks  ending  June 24,  2001  compared  to $265.3  million for the
thirty-nine  weeks ending June 25, 2000,  reflecting a 5.7%  increase in average
realized sales price  partially  offset by a 4.6% decrease in sales volume.  Net
sales to consumer  foodservice  customers decreased 7.2%,  resulting from a 4.4%
increase in average  realized sales price,  offset by a decrease in sales volume
of 11.6%. Net sales to consumer foodservice customers was negatively impacted by
more  competitive  market  conditions  and Fonda's  decision to reduce  sales to
certain customers experiencing deteriorating credit conditions, offset partially
by a  more  favorable  product  mix.  Net  sales  to  institutional  foodservice
customers  increased  14.4%,  resulting from a 0.4% increase in average realized
sales price,  combined with a 14.0%  increase in sales volume.  This increase in
institutional  foodservice  customers  volumes is  primarily  attributed  to the
Springprint acquisition.

     Gross profit  decreased $20.1 million,  or 14.1%, to $122.6 million for the
thirty-nine  weeks  ended  June 24,  2001  compared  to $142.7  million  for the
thirty-nine  weeks ended June 25,  2000.  As a  percentage  of net sales,  gross
profit  decreased  to 12.8% for the  thirty-nine  weeks ended June 24, 2001 from
15.2% for the thirty-nine weeks ended June 25, 2000.

Sweetheart results:
     Gross profit  decreased  $20.3 million,  or 21.7%, to $73.3 million for the
thirty-nine  weeks  ended  June  24,  2001  compared  to $93.6  million  for the
thirty-nine  weeks ended June 25,  2000.  As a  percentage  of net sales,  gross
profit  decreased  to 10.2% for the  thirty-nine  weeks ended June 24, 2001 from
13.4% for the  thirty-nine  weeks  ended June 25,  2000.  The  decrease in gross
profit  is  partially   attributable  to  the  effects  of  the   Sale-Leaseback
Transaction.  In the thirteen weeks ended June 25, 2000, Sweetheart sold certain
production equipment in connection with a Sale-Leaseback Transaction. Sweetheart
is leasing this equipment under an operating  lease.  The net proceeds from this
sale were partially  used to retire  Sweetheart's  Senior  Secured  Notes.  This
refinancing  enabled  Sweetheart  to use a  portion  of its Net  Operating  Loss
Carryforward and obtain more favorable  financing.  Consequently,  cost of sales
has  increased  due to higher rent expense  which has been  partially  offset by
lower  depreciation  expense and  historically  higher interest expense has been
lowered.  Specifically,  rent  expense  increased  by  $12.0  million  net  of a
reduction  in  depreciation.  Additionally,  gross  profit  declined  due  to an
increase  in  energy  costs of $4.4  million  and  transportation  costs of $4.9
million.

                                       13
<PAGE>
Fonda results:
     Gross profit  increased  $0.4  million,  or 0.8%,  to $50.2 million for the
thirty-nine  weeks  ending  June 24,  2001  compared  to $49.8  million  for the
thirty-nine  weeks ending June 25, 2000.  As a  percentage  of net sales,  gross
profit  decreased from 18.8% for the  thirty-nine  weeks ending June 25, 2000 to
18.7% for the  thirty-nine  weeks  ending June 24,  2001.  Gross  profit for the
thirty-nine  weeks  ending June 24, 2001 was  positively  affected by  increased
selling  prices,  which was  entirely  offset by higher raw  material and energy
costs.

     Selling,  general and administrative  expenses  decreased $2.8 million,  or
3.2%, to $84.1 million for the thirty-nine weeks ended June 24, 2001 compared to
$86.9  million for the  thirty-nine  weeks ended June 25,  2000.  This change is
primarily attributable to a bad debt expense of $2.3 million, which was recorded
by  Sweetheart  for the  thirty-nine  weeks ended June 25,  2000, a reduction in
Sweetheart's consulting fees of $1.2 million and a decrease in Fonda's workforce
resulting from the CEG consolidation and a reduction in selling expenses.

     Other (income) expense, net increased $6.0 million, or 352.9%, to income of
$7.7 million for the thirty-nine weeks ended June 24, 2001 compared to income of
$1.7 million for the thirty-nine weeks ended June 25, 2000. This change resulted
from the  amortization of $7.7 million of the deferred gain in conjunction  with
the  Sale-Leaseback  Transaction for the  thirty-nine  weeks ended June 24, 2001
compared to a gain of $4.1 million from the sale of a warehouse  facility  which
was partially  offset by a write-off of $1.0 million  unsecured note  receivable
issued in  connection  with the Fiscal 1998 sale of the bakery  business for the
thirty-nine weeks ended June 25, 2000.  Additionally,  Sweetheart  incurred $1.1
million in costs associated with the relocation of the Somerville  manufacturing
facility to North Andover, Massachusetts.

     Restructuring  expense decreased $0.1 million, or  20%, to $0.4 million for
the  thirty-nine  weeks  ended June 24, 2001  compared  to $0.5  million for the
thirty-nine  weeks ended June 25, 2000. In the thirty-nine weeks ending June 24,
2001,   Fonda  recorded  a  $0.4  million   reserve  in  conjunction   with  the
consolidation of the CEG  administrative  office. In the thirty-nine weeks ended
June 25, 2000,  Fonda  established  a  restructuring  reserve of $0.5 million in
conjunction with the closing of a manufacturing facility in Maspeth, New York.

     Operating income decreased $11.3 million, or 19.8% to $45.7 million for the
thirty-nine  weeks  ended  June  24,  2001  compared  to $57.0  million  for the
thirty-nine weeks ended June 25, 2000, due to the reasons stated above.

     Interest expense,  net decreased $13.2 million,  or 24.7%, to $40.2 million
for the thirty-nine  weeks ended June 24, 2001 compared to $53.4 million for the
thirty-nine  weeks ended June 25, 2000.  This decrease is  attributable to lower
interest rates under both Sweetheart's and Fonda's  respective  revolving credit
facilities and the June 2000 redemption of Sweetheart's Senior Secured Notes, as
a result of the Sale-Leaseback Transaction.

     Net income  (loss)  increased  $2.5 million,  or 312.5%,  to income of $1.7
million for the thirty-nine weeks ended June 24, 2001 compared to a loss of $0.8
million for the thirty-nine weeks ended June 25, 2000, due to the reasons stated
above.


Liquidity And Capital Resources

     Historically,  the  Company's  subsidiaries  have  relied on cash flow from
operations,  sale of non-core assets and borrowings to finance their  respective
working capital requirements, capital expenditures and acquisitions. The Company
expects to continue this method of funding for its 2001 capital expenditures.

                                       14
<PAGE>
     Net cash from operating  activities decreased $14.2 million to $5.5 million
in the  thirty-nine  weeks ended June 24, 2001  compared to $19.7 million in the
thirty-nine  weeks  ended  June 25,  2000.  The  decrease  is  primarily  due to
increased rent expense  associated  with the  Sale-Leaseback  Transaction  and a
reduction in accounts payable and accrued expenses.

     Capital  expenditures  for the  thirty-nine  weeks ended June 24, 2001 were
$21.7 million compared to $20.7 million for the thirty-nine weeks ended June 25,
2000. Capital expenditures in the thirty-nine weeks ended June 24, 2001 included
$7.5 million for new production equipment, $10.5 million on growth and expansion
projects,   with  the  remaining   consisting   primarily  of  routine   capital
improvements.

     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 at a fixed  purchase price of $134.7 million on 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 and removing the
property,  plant and equipment  sold from its balance  sheet. A deferred gain of
$107.0  million  was  realized  from  this sale and will be  amortized  over 125
months, which is the term of the Lease.

     Sweetheart  has a  revolving  credit  facility of $135  million  subject to
borrowing base  limitations  with a maturity of 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.  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 June 24, 2001, $18.7 million was available under such facility
and the  current  balance  of the  term  loan  was  $14.2  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.  On
June 22,  2001,  the Company has  received a  commitment  letter to increase the
revolving  credit  facility  by $10  million,  subject  to the  execution  of an
amendment to the credit agreement.

     Sweetheart's  Canadian  subsidiary  has a credit  agreement  (the "Canadian
Credit  Facility") which was refinanced on June 19, 2001 and provides for a term
loan facility of up to Cdn $15 million and a revolving  credit facility of up to
Cdn $15 million. The term loan borrowings under the Canadian Credit Facility 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,  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 borrowings and an index rate plus

                                       15
<PAGE>
2.00% with respect to the term loan  borrowings.  As of June 24, 2001,  Cdn $6.6
million  (approximately US $4.4 million) was available under the Canadian Credit
Facility.

     Fonda has a $55 million revolving credit facility subject to borrowing base
limitations.   The  credit  facility  is  collateralized  by  eligible  accounts
receivable,  inventories,  and certain general intangibles.  The credit facility
matures on September 30, 2001. Borrowings are available at the bank's prime rate
plus 0.25% or at LIBOR plus 2.25% at the  election of Fonda.  At June 24,  2001,
$29.8  million was  outstanding  and $25.2  million  was the  maximum  remaining
advance  available  based upon eligible  collateral.  Although  Fonda intends to
refinance  this  debt,  there can be no  assurances  that  Fonda will be able to
obtain such refinancing on terms and conditions acceptable to Fonda.

     In addition to the revolving credit facility,  Fonda's credit facility also
includes a term loan of $5 million of which $4.3 million was outstanding at June
24,  2001.  This  amount is payable in equal  monthly  installments  through the
maturity  date of  September  30,  2001.  Borrowings  under  the term  loan bear
interest, at Fonda's election, equal to the bank's prime rate plus 0.5% or LIBOR
plus 2.5%.  The proceeds from this term loan were used to partially  finance the
purchase of Springprint.

     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  initially  filed in state  court in Georgia in April 1987 and is  currently
pending in federal court. The remaining 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 ("ERISA"). The relief sought by plaintiffs was to have the plan
termination declared  ineffective.  In December 1994, the United States Court of
Appeals for the Eleventh  Circuit (the "Circuit  Court") ruled that the Plan was
lawfully  terminated  on  December  31,  1986.  Following  that  decision,   the
plaintiffs  sought a  rehearing,  which was  denied,  and  subsequently  filed a
petition for a writ of certiorari  with the United States Supreme  Court,  which
was also denied.  Following  remand,  in March 1996, the United States  District
Court for the Southern  District of Georgia  (the  "District  Court")  entered a
judgment   in  favor  of   Sweetheart.   Following   denial  of  a  motion   for
reconsideration, the plaintiffs, in April 1997, filed an appeal with the Circuit
Court. On May 21, 1998, the Circuit Court affirmed the judgment entered in favor
of Sweetheart. On June 10, 1998, the plaintiffs petitioned the Circuit Court for
a rehearing  of their appeal  which  petition  was denied on July 29,  1998.  In
October 1998,  plaintiffs  filed a petition for writ of certiorari to the United
States Supreme Court,  which was denied in January 1999.  Sweetheart has been in
the process of paying out the termination  liability and associated expenses and
as of June 24, 2001,  Sweetheart  has  disbursed  $12.6  million in  termination
payments.  The  estimate  of the  total  termination  liability  and  associated
expenses,  less payments,  exceeds assets set aside in the Plan by approximately
$7.4 million, which amount has been fully reserved by Sweetheart.

     On April 27, 1999, the plaintiffs  filed a motion in the District Court for
reconsideration of the court's dismissal without appropriate relief and a motion
for attorneys' fees with a request for delay in  determination of entitlement to
such fees.  On June 17, 1999,  the District  Court  deferred  these  motions and
ordered  discovery in connection  therewith.  Discovery  has been  completed and
Sweetheart is awaiting  further action by the plaintiffs.  Due to the complexity
involved in connection with the claims asserted in this case,  Sweetheart cannot
determine  at  present  with any  certainty  the  amount of  damages it would be
required  to pay should the  plaintiffs  prevail;  accordingly,  there can be no
assurance  that  such  amounts  would  not have a  material  adverse  effect  on
Sweetheart's financial position or results of operations.

     The Company is also  involved in a number of legal  proceedings  arising in
the ordinary  course of  business,  none of which is expected to have a material
adverse effect on the Company's  consolidated  financial  position or results of
operations.

     Management believes that cash generated by each of Sweetheart's and Fonda'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 Sweetheart's and Fonda's respective capital expenditures

                                       16
<PAGE>


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 is contemplating  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 24, 2000,  Sweetheart had  approximately $32 million of net
operating loss ("NOL")  carry-forwards  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 utilized such NOLs.


Item 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

         NONE


                           PART II - OTHER INFORMATION


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K


         (a)  Reports on Form 8-K:

              None

                                       17
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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:  July 20, 2001        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)