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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 Twenty-six Weeks Ended March 25, 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 May 1, 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)
                                                              March 25,           September 24,
                                                                 2001                  2000
                                                            -------------        ----------------
<S>                                                         <C>                  <C>

                                     Assets
Current assets:
  Cash and cash equivalents                                   $   9,066             $   6,352
  Cash in escrow                                                    307                   300
  Receivables, less allowances of $4,078 and $3,534,
    respectively                                                152,159               155,684
  Due from affiliates                                             1,087                 1,286
  Inventories                                                   232,013               226,657
  Deferred income taxes                                          23,947                24,347
  Refundable income taxes                                           843                   622
  Spare parts                                                    24,976                24,066
  Other current assets                                            7,295                 6,428
                                                              ----------            ----------
    Total current assets                                        451,693               445,742

Property, plant and equipment, net                              261,380               263,368

Deferred income taxes                                            41,392                37,694
Spare parts                                                       8,603                 8,313
Goodwill, net                                                   107,326               106,108
Other assets                                                     16,799                19,904
                                                              ----------            ----------

    Total assets                                              $ 887,193             $ 881,129
                                                              ==========            ==========

                      Liabilities and Shareholders' Deficit
Current liabilities:
  Accounts payable                                            $  84,262             $  91,068
  Accrued payroll and related costs                              49,779                55,486
  Other current liabilities                                      50,649                56,114
  Current portion of deferred gain on sale of assets             10,275                10,275
  Current portion of long-term debt                              56,518                57,266
                                                              ----------            ----------
    Total current liabilities                                   251,483               270,209

Commitments and contingencies  (See Notes)

Deferred income taxes                                             4,209                 4,209
Long-term debt                                                  470,282               434,967
Deferred gain on sale of assets                                  88,810                93,948
Other liabilities                                                57,848                57,511
                                                              ----------            ----------
    Total liabilities                                           872,632               860,844
                                                              ----------            ----------

Exchangeable preferred stock                                     44,860                41,794
Preferred Stock B, Series 2                                      15,000                15,000
Minority interest in subsidiary                                   3,111                 3,169
Redeemable common stock                                           2,320                 2,286
Shareholders' deficit                                           (50,730)              (41,964)
                                                              ----------            ----------

    Total liabilities and shareholders' deficit               $ 887,193             $ 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      Twenty-six     Twenty-six
                                                     weeks ended    weeks ended    weeks ended    weeks ended
                                                      March 25,      March 26,      March 25,      March 26,
                                                        2001           2000           2001           2000
                                                    -------------  -------------  -------------  ------------
<S>                                                 <C>            <C>            <C>            <C>
Net sales                                             $ 292,793      $ 289,374      $ 619,296      $ 595,194
Cost of sales                                           259,152        247,428        547,156        507,707
                                                      ----------     ----------     ----------     ----------

  Gross profit                                           33,641         41,946         72,140         87,487

Selling, general and administrative expenses             29,767         29,752         59,207         60,561
Other (income) expense, net                              (3,010)        (3,012)        (6,378)        (1,564)
                                                      ----------     ----------     ----------     ----------

  Operating income                                        6,884         15,206         19,311         28,490

Interest expense, net of interest income of $56,
  $180, $91 and $267, respectively                       13,449         17,137         26,828         34,700
                                                      ----------     ----------     ----------     ----------

  Loss before income tax benefit,  minority
    interest and extraordinary loss                      (6,565)        (1,931)        (7,517)        (6,210)

Income tax benefit                                       (2,254)          (466)        (2,492)        (1,850)
Minority interest in subsidiary's (income) loss            (206)           229            (58)           346
                                                      ----------     ----------     ----------     ----------

  Loss before extraordinary loss                         (4,105)        (1,694)        (4,967)        (4,706)

Extraordinary loss on debt extinguishment (net
  of income taxes of ($350))                                  -            525              -            525
                                                      ----------     ----------     ----------     ----------

  Net loss                                               (4,105)        (2,219)        (4,967)        (5,231)

Payment-in-kind dividends on exchangeable
   preferred stock                                        1,567          1,360          3,066          2,677
                                                      ----------     ----------     ----------     ----------

  Net loss applicable to common stockholders          $  (5,672)     $  (3,579)     $  (8,033)     $  (7,908)
                                                      ==========     ==========     ==========     ==========

Comprehensive loss, net of  tax:
  Net loss                                            $  (4,105)     $  (2,219)     $  (4,967)     $  (5,231)
  Foreign currency translation  adjustment                 (309)            60           (523)            71
  Minimum pension liability adjustment (net
    of income taxes of $(517), $(53),
    $(508) and $(129), respectively)                       (776)           (79)          (762)          (193)
                                                      ----------     ----------     ----------     ----------

    Comprehensive loss                                $  (5,190)     $  (2,238)     $  (6,252)     $  (5,353)
                                                      ==========     ==========     ==========     ==========
</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              For the
                                                                     Twenty-six           Twenty-six
                                                                     weeks ended          weeks ended
                                                                      March 25,            March 26,
                                                                        2001                 2000
                                                                    --------------       -------------
<S>                                                                 <C>                  <C>
CASH FLOWS FROM OPERATING ACTIVITIES

  Net loss                                                            $  (4,967)           $  (5,231)
  Adjustments to reconcile net loss to net cash (used in)
  provided by operating activities:
    Depreciation and amortization                                        17,082               27,666
    Amortization of deferred gain                                        (5,138)                   -
    Interest accreted on debt                                             6,801                5,698
    Deferred income tax benefit                                          (2,492)              (2,215)
    (Gain) loss on sale of assets                                          (406)              (4,082)
    Minority interest in subsidiary                                         (58)                 346
  Changes in operating assets and liabilities
  (net of business acquisition):
    Receivables                                                           4,975                  721
    Due from affiliates                                                     199                  190
    Inventories                                                          (3,113)             (29,934)
    Other current assets                                                 (1,730)                 322
    Accounts payable and accrued expenses                               (21,003)               9,008
    Other, net                                                            3,286                1,631
                                                                      ----------           ----------
      Net cash (used in) provided by operating activities                (6,564)               4,120
                                                                      ----------           ----------

CASH FLOWS FROM INVESTING ACTIVITIES

  Additions to property, plant and equipment                            (12,650)             (14,795)
  Payment for business acquisition                                       (6,654)                   -
  Proceeds from sale of property, plant and equipment                       322                8,517
                                                                      ----------           ----------
      Net cash used in investing activities                             (18,982)              (6,278)
                                                                      ----------           ----------

CASH FLOWS FROM FINANCING ACTIVITIES

  Net borrowings under credit  facilities                                27,262               42,703
  Repayments of other debt                                               (3,995)             (39,094)
  Borrowing for business acquisition                                      5,000                    -
                                                                      ----------           ----------
      Net cash provided by financing activities                          28,267                3,609
                                                                      ----------           ----------

NET INCREASE IN CASH AND CASH EQUIVALENTS                                 2,721                1,451

CASH AND CASH EQUIVALENTS, beginning of period                            6,652                4,180
                                                                      ----------           ----------

CASH AND CASH EQUIVALENTS, end of period                              $   9,373            $   5,631
                                                                      ==========           ==========

SUPPLEMENTAL CASH FLOW DISCLOSURES:

      Interest paid                                                   $  19,729            $  28,438
                                                                      ==========           ==========

      Income taxes paid (refunded)                                    $     254            $  (2,537)
                                                                      ==========           ==========

</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.   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 a significant  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)
                                 March 25,               September 24,
                                   2001                      2000
                               -------------            ---------------

Raw materials and supplies       $  56,572                 $  66,941
Finished products                  164,342                   148,231
Work in progress                    11,099                    11,485
                                 ---------                 ---------
  Total inventories              $ 232,013                 $ 226,657
                                 =========                 =========


                                       5
<PAGE>
(4)  BUSINESS ACQUISITION

         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 Fonda or a part of the accounts payable. The
aggregate  purchase  price for the assets and working  capital was $6.7 million.
The  Springprint  acquisition  has resulted in goodwill of $3.6 million which is
being amortized over 20 years.  The  Springprint  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.


 (5) RELATED PARTY TRANSACTIONS

         During  the  twenty-six weeks  ending  March 25, 2001, the Company sold
$3.8 million of scrap paper to Fibre Marketing Group,  LLC ("Fibre  Marketing").
Included in accounts  receivable  as of March 25, 2001 was $1.6 million due from
Fibre Marketing.  Other sales, if any, to affiliates during the twenty-six weeks
ending March 25, 2001 were not significant.

         During  the  twenty-six  weeks  ending March 26, 2000, the Company sold
$3.3 million of scrap paper to Fibre Marketing.  Included in accounts receivable
as of March 26, 2000 was $1.2 million due from Fibre Marketing.  Other sales, if
any, to affiliates  during the  twenty-six  weeks ending March 26, 2000 were not
significant.

         During   the   twenty-six  weeks  ending  March 25, 2001,  the  Company
purchased $3.6 million of corrugated  containers from Box USA Group,  Inc. ("Box
USA"),  formerly known as Four M Corporation and $0.7 million of travel services
from Emerald Lady, Inc. Included in accounts payable,  as of March 25, 2001, was
$0.5 million due to Box USA. Other purchases from affiliates, if any, during the
twenty-six weeks ending March 25, 2001 were not  significant.  During the period
ended March 25,  2001,  the Company paid $1.5 million and $0.6 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   twenty-six   weeks  ending  March 26, 2000,  the  Company
purchased  $5.0 million of corrugated  containers  and services from Box USA and
$0.4 million of travel  services  from Emerald Lady,  Inc.  Included in accounts
payable,  as of March 26, 2000, was $0.6 million due to Box USA. Other purchases
from affiliates,  if any, during the twenty-six weeks ending March 26, 2000 were
not significant.

         Fonda  leases  a building  in Jacksonville, Florida from Dennis Mehiel,
the  Company's  Chief  Executive  Officer,  on terms Fonda  believes are no less
favorable  than  could be  obtained  from  independent  third  parties  and were
negotiated at 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 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 to an unrelated  third party.
Rent expense,  net of sublease income on the portion of the premises  subleased,
was 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.

                                       6
<PAGE>
(6)  SF HOLDINGS STOCK COMPENSATION PLAN

         During the twenty-six  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.  The  options  vest over a period of
three years.

         During the twenty-six  weeks ended March 25, 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 compensation  expense and credited to additional paid-in capital by
the Company.  Amortization  expense  relating to the Company's stock options was
$0.6 million for the twenty-six weeks ended March 25, 2001.


(7)  OTHER (INCOME) EXPENSE

         During the twenty-six weeks ended March 25, 2001, Sweetheart recognized
a $5.1 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  Sweetheart's  Senior
Secured Notes. ("the Sale-Leaseback Transaction")

         During the twenty-six weeks ended March 26, 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  one-time  write-off  of a $1.0  million
unsecured note receivable  issued in connection with the Fiscal 1998 sale of the
bakery business due to the bankruptcy of the borrower.


 (8) 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 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 March 25, 2001,  Sweetheart  has disbursed  $12.3  million in  termination
payments.  The  estimate  of the  total  termination  liability  and  associated
expenses, less payments, exceeds

                                       7
<PAGE>
assets set aside in the Plan by  approximately  $8.0  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 the Company'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.


(9)  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
                                                   March 25, 2001            March 26, 2000
                                                --------------------      --------------------
<S>                                             <C>                       <C>
Net sales:
  Sweetheart                                         $ 219,617                 $ 217,380
  Fonda                                                 79,773                    78,063
  Corporate and  eliminations                           (6,597)                   (6,069)
                                                     ----------                ----------
    Net  Sales                                       $ 292,793                 $ 289,374
                                                     ==========                ==========

Income from operations excluding other income:
  Sweetheart                                         $   2,391                 $   9,671
  Fonda                                                  3,030                     2,629
  Corporate and  eliminations                           (1,547)                     (106)
                                                     ----------                ----------
    Total income from operations                     $   3,874                 $  12,194
                                                     ==========                ==========
</TABLE>

                                       8
<PAGE>

<TABLE>
<CAPTION>
                                                 For the Twenty-six        For the Twenty-six
                                                    weeks ended               weeks ended
                                                   March 25, 2001            March 26, 2000
                                                ----------------------   ----------------------
<S>                                             <C>                      <C>
Net sales:
  Sweetheart                                         $ 453,196                 $ 431,595
  Fonda                                                179,939                   175,635
  Corporate and  eliminations                          (13,839)                  (12,036)
                                                     ----------                ----------
    Net  Sales                                       $ 619,296                 $ 595,194
                                                     ==========                ==========

Income from operations excluding other income:
  Sweetheart                                         $   5,588                 $  18,508
  Fonda                                                  9,639                     8,529
  Corporate and  eliminations                           (2,294)                     (111)
                                                     ----------                ----------
    Total income from operations                     $  12,933                 $  26,926
                                                     ==========                ==========
</TABLE>


(10) SUBSEQUENT EVENT

         On April 5, 2001, Sweetheart  purchased  an 80% interest in Global Cup,
S.A. De C.V.  and its  subsidiaries  ("Global  Cup"),  Mexican  companies  which
manufacture,  distribute  and sell  paper  cups and lids  throughout  Mexico and
export to other Latin American countries. The aggregate purchase price was $12.0
million, subject to post-closing  adjustments.  This acquisition is not included
within the  consolidated  financial  statements and its impact is expected to be
minimal to the Company's current financial results.

         As  of  March  30,  2001,  Creative  Expression  Group, Inc. ("CEG"), a
subsidiary of the Company,  repurchased 12% of its issued and outstanding common
stock from certain shareholders for an aggregate purchase price of approximately
$0.3  million,  subject  to  adjustment.  As a result of such  repurchases,  the
Company owns 88.1% of the issued and outstanding common stock of CEG.


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

                                       9
<PAGE>
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
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"),  Mexican  companies  which
manufacture,  distribute  and sell  paper  cups and lids  throughout  Mexico and
export to other Latin American countries. The aggregate purchase price was $12.0
million, subject to post-closing  adjustments.  This acquisition is not included
within the  consolidated  financial  statements and its impact is expected to be
minimal to the Company's current financial results.

         As  of  March  30, 2001,  Creative  Expression  Group,  Inc. ("CEG"), a
subsidiary of the Company,  repurchased 12% of its issued and outstanding common
stock from certain shareholders for an aggregate purchase price of approximately
$0.3  million,  subject  to  adjustment.  As a result of such  repurchases,  the
Company owns 88.1% of the issued and outstanding common stock of CEG.


Thirteen  Weeks  Ended March 25, 2001 Compared to Thirteen Weeks Ended March 26,
2000 (Unaudited)

         Net sales  increased  $3.4 million,  or 1.2%, to $292.8 million for the
thirteen  weeks ended March 25, 2001 compared to $289.4 million for the thirteen
weeks  ended  March  26,  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 $2.2 million, or 1.0%, (including sales
to Fonda of $3.9  million for the  thirteen  weeks ended March 25, 2001 and $3.1
million for the thirteen  weeks ended March 26, 2000) to $219.6  million for the
thirteen  weeks ended March 25, 2001 compared to $217.4 million for the thirteen
weeks ended March 26,  2000,  reflecting  a 0.7%  decrease in sales volume and a
1.7%  increase  in average  realized  sales  price.  Net sales to  institutional
foodservice customers increased 3.8%, reflecting a 1.2% decrease in sales volume
and a 5.0% increase in average  realized  sales price.  More  specifically,  the
decrease in sales volume  reflects a shift from high volume lower price products
towards  lower  volume  products  with higher  sales  prices.  Net sales to food
packaging  customers  decreased 2.8%  reflecting a 4.1% decrease in sales volume
and a 1.3% increase in average realized sales price.  This decrease is primarily
due to industry  consolidation  and competition  which resulted in a decrease in
demand from large food packaging customers.
Fonda results - Net sales increased $1.7 million,  or 2.2%,  (including sales to
Sweetheart of $2.5 million for the thirteen  weeks ended March 25, 2001 and $3.3
million for the thirteen  weeks ended March 26,  2000) to $79.8  million for the
thirteen weeks ending March 25, 2001, compared to $78.1 million for the thirteen
weeks ending March 26, 2000,  reflecting  an 8.4%  increase in average  realized
sales price  partially  offset by a 6.2% decrease in sales volume.  Net sales to
consumer  foodservice  customers increased 5.0%, resulting from a 10.6% increase
in average realized sales price,  partially offset by a decrease in sales volume
of 5.6%. Net sales to institutional foodservice customers decreased 1.3%,

                                       10
<PAGE>
resulting from a 6.0% increase in average realized sales price, partially offset
by a 7.3%  decrease  in  sales  volume.  Selling  prices  to both  consumer  and
institutional  customers were  positively  affected by increases in raw material
costs that were passed through to customers as well as more  competitive  market
conditions.  These favorable price increases were offset by lower volumes due to
competitive  market  conditions and Fonda's  decision to reduce sales to certain
consumer customers experiencing deteriorating credit conditions;  however, these
lower volumes were partially  offset by additional  volume from the  Springprint
acquisition.

         Gross profit decreased $8.3 million, or 19.8%, to $33.6 million for the
thirteen  weeks ended March 25, 2001  compared to $41.9 million for the thirteen
weeks ended March 26, 2000. As a percentage of net sales, gross profit decreased
to 11.5% for the thirteen weeks ended March 25, 2001 from 14.5% for the thirteen
weeks ended March 26, 2000.
Sweetheart  results - Gross profit  decreased $8.3 million,  or 29.3%,  to $20.0
million for the thirteen  weeks ended March 25, 2001  compared to $28.3  million
for the thirteen weeks ended March 26, 2000. As a percentage of net sales, gross
profit  decreased to 9.1% for the thirteen weeks ended March 25, 2001 from 13.0%
for the  thirteen  weeks ended March 26,  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 and is leasing this equipment under
an operating  lease ("the  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.  In  addition,  Sweetheart's  historically  higher
interest  expense has decreased.  Specifically,  rent expense  increased by $4.0
million net of a reduction in depreciation.  Additionally, gross profit declined
due to an increase in energy costs of $1.8 million and an increase in additional
warehousing   costs  of  $0.9  million  related  to  Sweetheart's  Mid  Atlantic
Distribution Center.
Fonda results - Gross profit  increased $0.1 million,  or 0.7%, to $14.0 million
for the thirteen weeks ending March 25, 2001,  compared to $13.9 million for the
thirteen weeks ending March 26, 2000. As a percentage of net sales, gross profit
decreased  from 17.8% for the thirteen  weeks ending March 26, 2000 to 17.5% for
the thirteen  weeks ending March 25, 2001.  Gross profit for the thirteen  weeks
ending March 25, 2001 was positively  affected by increased selling prices which
were partially offset by higher raw material and energy costs.

         Selling,  general  and  administrative expenses were unchanged at $29.8
million for the thirteen  weeks ending March 25, 2001 and for the thirteen weeks
ending March 26, 2000.

         Other  (income)  expense,  net was  unchanged at $3.0 million of income
for the thirteen  weeks ending March 25, 2001 and for the thirteen  weeks ending
March 26, 2000.

         Operating income decreased $8.3 million, or 54.6%, to $6.9 million  for
the  thirteen  weeks  ended March 25,  2001  compared  to $15.2  million for the
thirteen weeks ended March 26, 2000, due to the reasons stated above.

         Interest  expense,  net  decreased  $3.7  million,  or 21.6%,  to $13.4
million for the thirteen  weeks ended March 25, 2001  compared to $17.1  million
for the thirteen weeks ended March 26, 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  loss  increased  $1.9 million,  or 86.4%,  to $4.1 million for the
thirteen  weeks ended March 25, 2001  compared to $2.2  million for the thirteen
weeks ended March 26, 2000, due to the reasons stated above.

                                       11
<PAGE>


Twenty-six  Weeks  Ended  March  25,  2001  Compared  to  Twenty-six Weeks Ended
March 26, 2000 (Unaudited)

         Net sales increased  $24.1 million,  or 4.0%, to $619.3 million for the
twenty-six  weeks  ended  March 25,  2001  compared  to $595.2  million  for the
twenty-six  weeks ended March 26, 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  $21.6 million,  or 5.0%,  (including
sales to Fonda of $8.7 million for the twenty-six weeks ended March 25, 2001 and
$6.6 million for the  twenty-six  weeks ended March 26, 2000) to $453.2  million
for the twenty-six weeks ended March 25, 2001 compared to $431.6 million for the
twenty-six  weeks  ended March 26,  2000,  reflecting  a 2.2%  increase in sales
volume  and a 2.8%  increase  in  average  realized  sales  price.  Net sales to
institutional  foodservice  customers increased 6.5%, reflecting a 3.1% increase
in sales volume and a 3.4% increase in average  realized sales price.  Net sales
to food packaging customers decreased 1.5%,  reflecting a 2.7% decrease in sales
volume and a 1.2%  increase in average  realized  sales price.  This decrease is
primarily due to industry  consolidation  and  competition  which  resulted in a
decrease in demand from large food packaging customers.
Fonda results - Net sales increased $4.3 million,  or 2.4%,  (including sales to
Sweetheart  of $5.0  million for the  twenty-six  weeks ended March 25, 2001 and
$5.9 million for the  twenty-six  weeks ended March 26, 2000) to $179.9  million
for the twenty-six  weeks ending March 25, 2001,  compared to $175.6 million for
the  twenty-six  weeks  ending March 26,  2000,  reflecting  a 9.6%  increase in
average  realized  sales  price  partially  offset by a 7.2%  decrease  in sales
volume. Net sales to consumer  foodservice  customers increased 0.9%,  resulting
from a 7.2%  increase in average  realized  sales price,  partially  offset by a
decrease  in sales  volume  of 6.3%.  Net  sales  to  institutional  foodservice
customers  increased 4.6%,  resulting from a 13.5% increase in average  realized
sales price, partially offset by a 8.9% decrease in sales volume. Selling prices
to both  consumer  and  institutional  customers  were  positively  affected  by
increases in raw material costs that were passed through to customers as well as
more competitive market conditions.  These favorable price increases were offset
by lower volumes due to competitive  market  conditions and Fonda's  decision to
reduce sales to certain consumer  customers  experiencing  deteriorating  credit
conditions;  however,  these lower volumes were  partially  offset by additional
volumes from the Springprint acquisition.

         Gross  profit  decreased  $15.4 million, or 17.6%, to $72.1 million for
the  twenty-six  weeks ended March 25,  2001  compared to $87.5  million for the
twenty-six  weeks ended March 26,  2000.  As a  percentage  of net sales,  gross
profit  decreased  to 11.6% for the  twenty-six  weeks ended March 25, 2001 from
14.7% for the twenty-six weeks ended March 26, 2000.
Sweetheart  results - Gross profit  decreased $15.5 million,  or 28.1%, to $39.7
million for the twenty-six  weeks ended March 25, 2001 compared to $55.2 million
for the  twenty-six  weeks ended March 26, 2000.  As a percentage  of net sales,
gross  profit  decreased to 8.8% for the  twenty-six  weeks ended March 25, 2001
from 12.8% for the twenty-six  weeks ended March 26, 2000. The decrease in gross
profit is  primarily  attributable  to higher rent expense due to the effects of
the Sale-Leaseback  Transaction.  In the quarter ended June 25, 2000, Sweetheart
sold  certain  production   equipment  in  connection  with  the  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  increased  as a result  of  higher  rent  expense  which has been
partially  offset  by lower  depreciation  expense.  In  addition,  Sweetheart's
historically higher interest expense has decreased.  Specifically,  rent expense
increased  by $8.0  million net of a reduction  in  depreciation.  Additionally,
gross  profit  declined  due to an  increase  in energy  costs of $4.4  million,
additional  warehousing  costs  of $1.9  million  related  to  Sweetheart's  Mid
Atlantic Distribution Center and increased freight costs of $0.7 million.
Fonda results - Gross profit  increased $0.3 million,  or 0.9%, to $33.1 million
for the  twenty-six  weeks ending March 25, 2001,  compared to $32.8 million for
the twenty-six weeks ending March 26, 2000. As a percentage of net sales,  gross
profit  decreased from 18.7% for the  twenty-six  weeks ending March 26, 2000 to
18.4% for the  twenty-six  weeks  ending  March 25,  2001.  Gross profit for the
twenty-six  weeks  ending  March 25, 2001 was  positively  affected by increased
selling  prices  which were  partially  offset by higher raw material and energy
costs.

                                       12
<PAGE>

         Selling,  general and  administrative  expenses decreased $1.4 million,
or 2.3%, to $59.2 million for the twenty-six weeks ended March 25, 2001 compared
to $60.6 million for the twenty-six  weeks ended March 26, 2000.  This change is
attributable  to a bad debt expense of $2.3  million  which was recorded for the
twenty-six weeks ended March 26, 2000 and a reduction in consulting fees of $1.2
million which was offset by an increase in wages of $1.7 million for Sweetheart.
Also, this decrease resulted from a reduction in the Fonda workforce as a result
of the CEG consolidation.

         Other  (income)  expense  increased $4.8 million, or 300%, to income of
$6.4 million for the twenty-six weeks ended March 25, 2001 compared to income of
$1.6 million for the twenty-six weeks ended March 26, 2000. This change resulted
from the  amortization of $5.1 million of the deferred gain in conjunction  with
the Sale-Leaseback  Transaction compared to a gain of $4.1 million from the sale
of a warehouse  facility which was partially  offset by a one-time  write-off of
$1.0 million unsecured note receivable issued in connection with the Fiscal 1998
sale of the bakery business for Sweetheart.

         Operating  income decreased $9.2 million, or 32.3% to $19.3 million for
the  twenty-six  weeks ended March 25,  2001  compared to $28.5  million for the
twenty-six weeks ended March 26, 2000, due to the reasons stated above.

         Interest  expense,  net  decreased  $7.9  million,  or 22.8%,  to $26.8
million for the twenty-six  weeks ended March 25, 2001 compared to $34.7 million
for the twenty-six  weeks ended March 26, 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  loss decreased  $0.2 million, or  3.8%, to $5.0 million  for  the
twenty-six  weeks  ended  March  25,  2001  compared  to  $5.2  million  for the
twenty-six weeks ended March 26, 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.

         Net  cash from operating activities decreased $10.7 million to a use of
$6.6 million in the  twenty-six  weeks ended March 25, 2001 compared to a source
of $4.1 million in the twenty-six  weeks ended March 26, 2000. This is primarily
due to a  reduction  in  accounts  payable  which  resulted  from a decrease  in
inventory purchases.

         Capital expenditures for the twenty-six weeks ended March 25, 2001 were
$12.7 million compared to $14.8 million for the twenty-six weeks ended March 26,
2000. Capital expenditures in the twenty-six weeks ended March 25, 2001 included
$4.9 million for new production equipment,  $6.4 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.

                                       13
<PAGE>
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 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 (the "U.S. 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 March 25, 2001,  $28.7
million was available under such facility.  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.

         Sweetheart's  Canadian subsidiary has a Credit Agreement (the "Canadian
Credit  Facility")  which  provides  for a term loan  facility  of up to Cdn $10
million and a revolving  credit  facility  of up to Cdn $10  million.  Term loan
borrowings under the Canadian Credit Facility are payable  quarterly through May
2001 and revolving credit and term loan borrowings have a final maturity date of
June 15,  2001.  The  Canadian  Credit  Facility is secured by all  existing and
thereafter  acquired real and personal  tangible assets of Lily, a subsidiary of
Sweetheart Cup, and net proceeds on the sale of any of the foregoing. Borrowings
under the Canadian  Credit  Facility  bear  interest at an index rate plus 2.25%
with respect to the  revolving  credit  borrowings  and an index rate plus 2.50%
with respect to the term loan borrowings. As of March 25, 2001, Cdn $1.4 million
(approximately  $0.9 million) was available under the Canadian Credit  Facility.
Sweetheart  intends to refinance this debt prior to its maturity however,  there
can be no assurances  that it will be able to obtain such  refinancing  on terms
and conditions acceptable to Sweetheart.

         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 March 25, 2001,
$40.4  million was  outstanding  and $14.6  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. 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

                                       14
<PAGE>
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 March 25, 2001,  Sweetheart  has disbursed  $12.3  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
$8.0 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 the Company'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 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.


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

                                       15
<PAGE>


                           PART II - OTHER INFORMATION


Item 6.  EXHIBITS AND REPORTS ON FORM 8-K


         (a)  Reports on Form 8-K:

              A report on Form 8-K was filed on March 15, 2001 under  Item 5  to
              announce a change in executive management.

                                       16
<PAGE>
                                   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:  May 1, 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)

                                       17
<PAGE>