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

                                    Form 10-Q
      (mark one)
           |X| QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
                  For the thirty-nine weeks ended June 27, 1999
                                       OR
              |_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

                        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                             (I.R.S. Employer
incorporation or organization)                            Identification Number)

                               373 Park Ave. South
                               New York, NY 10016
                                 (212) 779-7448
   (Address and telephone number of registrant's principal executive offices)

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

      Indicate the number of shares  outstanding of each of the  registrant's
classes of common stock, as of the latest practicable date.

      Common Stock, $.001 par value, as
      of August 1, 1999:                       Class A:    5,625,838 Shares
                                               Class B:      564,586 Shares
                                               Class C:      399,000 Shares


                                       1
<PAGE>

                             SF HOLDINGS GROUP, INC.
                          QUARTERLY REPORT ON FORM 10-Q
                                TABLE OF CONTENTS

Part I - Financial Information

Item 1. Financial Statements (unaudited):                                 Page

        Consolidated Condensed Balance Sheets as of June 27, 1999
           and July 26, 1998 (audited)                                         3

        Consolidated  Statements of Operations and  Comprehensive
           Income (Loss) for the thirteen and thirty-nine weeks
           ended June 27, 1999 and July 26, 1998                               4

        Consolidated Statements of Cash Flows for the thirty-nine
            weeks ended June 27, 1999 and July 26, 1998                        5

        Notes to Consolidated Financial Statements                             6


Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                          7


Part II - Other Information


Item 6.  Exhibits and Reports on Form 8-K                                     15

Signatures                                                                    15


                                       2
<PAGE>

PART I - FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS


                             SF HOLDINGS GROUP, INC.
                      CONSOLIDATED CONDENSED BALANCE SHEETS
                                 (in thousands)
<TABLE>
<CAPTION>
                                                             June 27,     July 26,
                                                               1999         1998
                                                               ----         ----
                                                            (unaudited)
<S>                                                         <C>          <C>
ASSETS
Current assets:
    Cash and cash equivalents                               $   2,859    $  20,703
    Cash in escrow                                              1,622        6,819
    Accounts receivable, less allowance for doubtful
      accounts of $2,537 and $3,569, respectively             126,874      120,112
    Due from affiliates                                         8,001        1,313
    Inventories                                               172,117      168,493
    Deferred income taxes                                      15,881       17,322
    Other current assets                                       21,886       20,026
                                                            ---------    ---------
         Total current assets                                 349,240      354,788
Property, plant and equipment, net                            405,044      430,150
Goodwill, net                                                  98,982       94,865
Deferred income taxes                                          40,825       32,572
Other assets, net                                              27,559       31,436
                                                            ---------    ---------
TOTAL ASSETS                                                $ 921,650    $ 943,811
                                                            =========    =========

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
   Accounts payable                                         $  80,334    $  78,013
   Accrued expenses                                           107,269      117,426
   Current maturities of long-term debt                         1,525        3,825
                                                            ---------    ---------
      Total current liabilities                               189,128      199,264
Long-term debt                                                625,964      619,143
Other liabilities                                              64,642       61,865
Deferred income taxes                                           5,621        4,771
                                                            ---------    ---------
      Total liabilities                                       885,355      885,043
Exchangeable preferred stock                                   35,030       30,680
Minority interest in subsidiary                                 1,658        3,020
Redeemable common stock                                         2,198        2,139
Stockholders' equity (deficit)                                 (2,591)      22,929
                                                            ---------    ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                  $ 921,650    $ 943,811
                                                            =========    =========
</TABLE>


                                       3
<PAGE>

                             SF HOLDINGS GROUP, INC.
      CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
                                   (unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                     Thirteen Weeks Ended      Thirty-nine Weeks Ended
                                                     --------------------      -----------------------
                                                      June 27,     July 26,     June 27,     July 26,
                                                        1999         1998         1999         1998
                                                      ---------    ---------    ---------    ---------
<S>                                                   <C>          <C>          <C>          <C>
Net sales                                             $ 298,073    $ 301,679    $ 824,326    $ 483,220
Cost of goods sold                                      255,519      268,524      728,256      423,886
                                                      ---------    ---------    ---------    ---------
     Gross profit                                        42,554       33,155       96,070       59,334
Selling, general and
  administrative expenses                                23,250       23,728       72,179       44,968
Other (income) expense, net                                (413)      (4,802)          97      (12,008)
                                                      ---------    ---------    ---------    ---------
     Income from operations                              19,717       14,229       23,794       26,374
Interest expense, net                                    16,525       16,378       49,174       26,368
                                                      ---------    ---------    ---------    ---------
     Income (loss) before income taxes                    3,192       (2,149)     (25,380)           6
 Income taxes provision (benefit)                         1,591          371       (9,227)       1,447
Minority interest in subsidiary's income (loss)             434         (475)        (814)      (1,900)
                                                      ---------    ---------    ---------    ---------
     Net income (loss)                                    1,167       (2,045)     (15,339)         459
Payment-in-kind dividends on
 exchangeable preferred stock                             1,221        1,043        3,586        1,616
                                                      ---------    ---------    ---------    ---------
     Net loss applicable to
       common stock                                   $     (54)   $  (3,088)   $ (18,925)   $  (1,157)
                                                      =========    =========    =========    =========

Statements of comprehensive income (loss):
     Net income (loss)                                $   1,167    $  (2,045)   $ (15,339)   $     459
     Other comprehensive income, net of income tax:
       Minimum pension liability adjustment                 627           --        1,516           --
       Foreign translation adjustment                       323          383          312          476
                                                      ---------    ---------    ---------    ---------
                                                            950          383        1,828          476
                                                      ---------    ---------    ---------    ---------
     Total comprehensive income (loss)                $   2,117    $  (1,662)   $ (13,511)   $     935
                                                      =========    =========    =========    =========
</TABLE>

                 See notes to consolidated financial statements.


                                       4
<PAGE>

                             SF HOLDINGS GROUP, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (unaudited)
                                 (in thousands)

<TABLE>
<CAPTION>
                                                               Thirty-nine Weeks Ended
                                                               ----------------------
                                                                June 27,     July 26,
                                                                  1999       1998
                                                               ---------    ---------
<S>                                                            <C>          <C>
Operating activities:
 Net income (loss)                                             $ (15,339)   $     459
Adjustments  to  reconcile  net  income  (loss)  to net cash
     used in  operating activities:
   Depreciation and amortization                                  42,716       19,155
   Interest capitalized on debt                                    8,188        3,707
   Provision for doubtful accounts                                   305          405
   Deferred income taxes                                          (7,381)      (5,779)
   Net gain on business and equipment dispositions
     and settlement of long-term contracts                          (305)     (16,175)
   Minority interest in subsidiary's loss                           (814)      (1,900)
   Changes in assets and liabilities:
      Accounts receivable                                        (12,029)     (14,101)
      Due from affiliates                                         (8,141)       3,416
      Inventories                                                 (1,833)      14,379
      Other current assets                                          (156)        (441)
      Accounts payable and accrued expenses                       16,619        3,387
      Other                                                        6,270        2,736
                                                               ---------    ---------
    Net cash provided by operating activities                     28,100        9,248
                                                               ---------    ---------

Investing activities:
 Capital expenditures                                            (35,158)     (11,706)
 Proceeds from business and equipment dispositions                 6,171       34,533
 Payments for business acquisitions                                   --     (101,901)
 Other                                                                --        1,931
                                                               ---------    ---------
   Net cash used in investing activities                         (28,987)     (77,143)
                                                               ---------    ---------

Financing activities:
 Net decrease in revolving credit borrowings                      (6,297)      (7,284)
 Proceeds from long-term debt                                         --       84,351
 Repayments of long-term debt                                     (3,429)      (5,851)
 Proceeds from issuance of exchangeable preferred stock               --       15,000
 Redemption of Fonda's common stock                                   --       (1,436)
 Debt issuance costs                                                  --       (3,762)
 Decrease in escrow cash                                           3,842        4,870
 Other                                                                --          371
                                                               ---------    ---------
   Net cash provided by (used in) financing activities            (5,884)      86,259
                                                               ---------    ---------
Net increase (decrease) in cash                                   (6,771)      18,364
Cash and cash equivalents, beginning of period                     9,630        2,339
                                                               ---------    ---------
Cash and cash equivalents, end of period                       $   2,859    $  20,703
                                                               =========    =========

Supplemental cash flow information:
 Cash paid during the period for:
   Interest                                                    $  28,918    $  28,386
   Income taxes, net of refunds                                $   1,715    $   5,062
</TABLE>

                 See notes to consolidated financial statements.


                                       5
<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 principal operating 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  three  largest  converters  and  marketers  of
disposable food service and food packaging products in North America.

      The information included in the foregoing interim  consolidated  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  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 July 26, 1998 and its  transition  report on Form 10-Q for the
nine week period ended September 27, 1998.

      On October 22,  1998,  the Board of  Directors  of SF  Holdings  and Fonda
approved  a change in their  respective  fiscal  year ends from a  fifty-two  or
fifty-three week period which ends on the last Sunday in July to the same number
of weekly  periods  which end on the last  Sunday in  September.  The  nine-week
transition  period  ending  September  27,  1998 was not part of the fiscal year
ended  July 26,  1998 and will not be part of  Fiscal  1999,  which  will end on
September 26, 1999.

2.  CASH IN ESCROW

      Cash  received  by  Sweetheart  as  proceeds  from the sale of  assets  is
restricted to qualified  capital  expenditures  in accordance with the covenants
set forth in  Sweetheart's  debt  instruments,  and is held in  escrow  with the
trustee until utilized.

3.  INVENTORIES

     Inventories consist of the following (in thousands):

                                                June 27,         July 26,
                                                 1999              1998
                                               ----------        ---------
     Raw materials and supplies                 $ 50,644         $ 43,998
     Work-in-process                               8,489            9,456
     Finished goods                              112,984          115,039
                                                ========         ========
                                                $172,117         $168,493
                                                ========         ========
4.  RELATED PARTY TRANSACTIONS

         In December  1998,  Fonda  entered  into an Exclusive  Manufacture  and
Supply  Agreement  (the  "Manufacture  and  Supply   Agreement")  with  Creative
Expressions  Group  ("CEG"),  an affiliate.  Pursuant to such  agreement,  Fonda
manufactures  and supplies  all of CEG's  requirements  for,  among other items,
disposable  paper  plates,  cups,  napkins  and  tablecovers.  Fonda  sells such
manufactured  products to CEG in accordance  with a formula  based on cost.  Net
sales to CEG  during  the  thirty-nine  weeks  ended  June 27,  1999 were  $25.7
million.  Also in December 1998, Fonda purchased  certain  manufacturing  assets
from CEG for $4.9  million and entered  into  operating  leases,  whereby  Fonda
leases to CEG certain  non-manufacturing  assets for annual  lease income of $.1
million.  Independent appraisals were obtained to determine the fairness of both
the  purchase  price and lease  terms.  The Company  believes the terms on which
Fonda  (i)   manufactures   and  supplies   product  for  CEG,  (ii)   purchased


                                       6
<PAGE>

manufacturing assets from CEG, and (iii) leased  non-manufacturing assets to CEG
are at least as  favorable  as those Fonda could have  obtained  from  unrelated
third parties and were negotiated on an arm's length basis.

      In December 1998, Fonda purchased certain paper plate manufacturing assets
from  Sweetheart for $2.4 million.  In February 1999,  Fonda entered into a five
year  operating  lease with  Sweetheart,  whereby Fonda leases certain paper cup
manufacturing  assets to  Sweetheart  with a net book value of $1.3  million for
annual lease  income of $.2 million.  Independent  appraisals  were  obtained to
determine the fairness of both the purchase  price and lease terms.  The Company
believes the terms on which Fonda purchased manufacturing assets from Sweetheart
and leases manufacturing assets to Sweetheart are at least as favorable as those
it could have obtained from  unrelated  third parties and were  negotiated on an
arm's  length  basis.  The  purchase  of assets  by Fonda  from  Sweetheart  was
eliminated in consolidation.

5.  CONTINGENCIES

      On January 11, 1999,  the United States  Supreme Court denied  Plaintiff's
petition for Writ of  Certiorari in the matter of Aldridge v.  Lily-Tulip,  Inc.
Salary Retirement Benefits Committee and Fort Howard Cup Corporation.  The court
decided  that  Lily-Tulip  Salary  Retirement  Plan (the  "Plan")  was  lawfully
terminated.  Sweetheart  is in the  process of  determining  the amount of total
payouts  for which the Plan is liable.  The  estimate  of the total  termination
liability  exceeds  assets set aside in the Plan by  approximately  $17 million,
which amount has been fully reserved by the Company.  Sweetheart expects to fund
such payments  within the next three months.  On April 27, 1999,  the Plaintiffs
filed a motion in the United States  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 of such fees. On June
17, 1999, the court deferred these motions,  and ordered discovery in connection
therewith. Discovery is expected to be completed by the end of October 1999. See
Item 2 - Management  Discussion and Analysis of Financial  Condition and Results
of Operations - Liquidity and Capital Resources.

      A  patent  infringement  action  seeking  injunctive  relief  and  damages
relating to  Sweetheart's  production and sale of certain paper plates  entitled
Fort James  Corporation v.  Sweetheart Cup Company Inc., was filed in the United
States  District  Court for the Eastern  District of  Wisconsin  on November 21,
1997.  On May 17, 1999,  Sweetheart  filed a motion for summary  judgment on all
claims. In the opinion of management,  the ultimate liability,  if any, will not
have a material adverse affect on the Company's financial position or results of
operations.

      On July 13,  1999,  Sweetheart  received a letter  from the  Environmental
Protection Agency (the "EPA") identifying Sweetheart,  among numerous others, as
a "potential responsible party" under the Comprehensive  Environmental Response,
Compensation  and  Liability  Act of 1980,  as amended,  at a site in Baltimore,
Maryland.  The Company has no reason to believe  that the final  outcome of this
matter will have a material adverse effect on the Company's  financial condition
or results of operations.  However, no assurance can be given about its ultimate
effect on the Company, if any, given the early stage of this investigation.

ITEM 2. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
        OF OPERATIONS

      The  following   discussion  for  the  Company  contains   forward-looking
statements as defined by the Private  Securities  Litigation Reform Act of 1995.
These forward-looking  statements are based on management's current expectations
and involve a number of known and  unknown  risks and  uncertainties  that could
cause the actual  results,  performance  or  achievements  of the  Company to be
materially different from those anticipated in these forward-looking statements.
Such  risks and  uncertainties  include,  but are not  limited  to,  the  highly
competitive  nature of the  industry,  raw material  costs and  fluctuations  in
demand for the Company's  products due in part to general  economic and business
conditions.


                                       7
<PAGE>

General

      SF Holdings  Group,  Inc. ("SF  Holdings")  conducts all of its operations
through  its  principal   operating   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.
Debt instruments of Fonda and Sweetheart  restrict each subsidiary's  ability to
pay dividends or make other distributions to SF Holdings or each other.

      As a result of the change in Fonda's  fiscal  year from the  fifty-two  or
fifty-three week period which ends on the last Sunday in July to the same number
of weekly  periods  which end on the last  Sunday in  September,  the  quarterly
comparisons  for Fonda are between the  thirteen  and  thirty-nine  week periods
ended June 27, 1999 (the "1999 Fonda  Thirteen  Week Period" and the "1999 Fonda
Thirty-nine  Week Period") and the same number of weekly periods ended April 26,
1998 (the "1998 Fonda Thirteen Week Period" and the "1998 Fonda Thirty-nine Week
Period").

      In Fonda's  thirty-nine week comparison,  sales in the four week period in
October  (which is included in the 1999 Fonda  Thirty-nine  Week  Period)  would
expect to be higher,  primarily in seasonal and party goods products,  than such
sales in the four week  period  in July  (which is  included  in the 1998  Fonda
Thirty-nine  Week Period).  In the thirteen  week  comparison,  the  seasonality
effect is reduced as sales in the four week  period in April  (which is included
in the 1999 Fonda Thirteen Week Period)  historically  have not been  materially
different  than those in the four week  period in July (which is included in the
1998 Fonda Thirteen Week Period).

      The  investment in Sweetheart  was  consummated  on March 12, 1998 and was
accounted for as a purchase. As a result, the financial information with respect
to the 1998 thirteen week and thirty-nine week periods contained herein reflects
Sweetheart's results of operations for period April 1, 1998 to June 30, 1998 and
March12, 1998 to June 30, 1998, respectively.

      Sweetheart  and Fonda are  converters  and marketers of disposable  paper,
plastic and foam food  service  and food  packaging  products.  The price of the
Company's  primary raw  materials,  including SBS  paperboard and plastic resin,
historically fluctuates. These fluctuations are generally passed on to customers
through price increases or reductions.  However,  in the short term, the Company
is at risk of margin  erosion.  The severity of such margin  erosion  depends on
various factors  including  inventory levels at the time of a price change,  the
timing  and  frequency  of such  price  changes,  and the lead and lag time that
generally  accompanies the  implementation  of both raw materials and subsequent
selling price changes.

      Each of Fonda and  Sweetheart's  business  is  seasonal  as away from home
consumption of disposable products increases in the late spring and summer. This
results  in  disproportionately  higher net income in the last six months of the
fiscal  year  as cost  absorption  improves  from a more  profitable  sales  and
production mix.

      In connection with the License  Agreement,  as described below,  Fonda and
Creative  Expressions  Group  ("CEG"),  an affiliate,  entered into an Exclusive
Manufacture and Supply  Agreement in December 1998 (the  "Manufacture and Supply
Agreement"  and  together  with the  License  Agreement  the "CEG  Agreements").
Pursuant  to the  Manufacture  and  Supply  Agreement,  Fonda  manufactures  and
supplies all of CEG's  requirements  for,  among other items,  disposable  paper
plates, cups, napkins and tablecovers. Fonda sells such manufactured products to
CEG in accordance  with a formula  based on cost, as defined in such  agreement.
The Company  believes  that such  agreement  will enable  Fonda to increase  the
utilization of its manufacturing  capacity.  Pursuant to the License  Agreement,
CEG has the right, among other things, to distribute certain products previously
distributed by Fonda and in exchange therefor, Fonda receives a royalty of 5% of
CEG's cash flow as  determined in  accordance  with a formula  specified in such
agreement.

Recent Developments

      Fonda  is  engaged  in  an  extensive  program  to  improve  manufacturing
efficiencies and upgrade production  capabilities,  which includes,  among other
things,  the full  implementation  of the Manufacture  and Supply  Agreement and
further  consolidation of its  manufacturing  operations (the "Fonda  Efficiency
Initiatives").  This  program  has and will  continue  to result in  incremental
expenses  arising  from  start-up,  training and other  related  expenses and is
expected  to be  substantially  complete  by  the  end of the  fiscal  year.  In
connection with the Fonda  Efficiency  Initiatives,  (i) in December 1998, Fonda
purchased  certain paper plate  manufacturing  assets from  Sweetheart  for $2.4
million and (ii) in February


                                       8
<PAGE>

1999,  Fonda entered into a five year operating  lease whereby it leases certain
paper cup manufacturing assets to Sweetheart.

Results of Operations

<TABLE>
<CAPTION>
                                       Thirteen Weeks Ended                 Thirty-nine Weeks Ended
                                  --------------------------------    ------------------------------------
                                   June 27, 1999    July 26, 1998       June 27, 1999      July 26, 1998
                                  ---------------   --------------    -----------------   ----------------
                                             % of             % of                % of                % of
                                             Net              Net                 Net                 Net
                                  Amount    Sales   Amount   Sales    Amount      Sales   Amount     Sales
                                  ------    -----   ------   -----    ------      -----   ------     -----
                                                             (Dollars in millions)
<S>                              <C>       <C>     <C>       <C>      <C>       <C>      <C>       <C>
Net sales                        $298.1    100.0 % $301.7    100.0 %  $824.3    100.0 %  $483.2    100.0 %
Cost of goods sold                255.5      85.7   268.5      89.0    728.3      88.3    423.9      87.7
                                 ------    ------  ------    ------   ------    ------   ------    ------
Gross profit                       42.6      14.3    33.2      11.0     96.1      11.7     59.3      12.3
Selling, general and
  administrative expenses          23.3       7.8    23.7       7.9     72.2       8.8     45.0       9.3
Other income, net                  (0.4)     (0.1)   (4.8)     (1.6)     0.1       0.0    (12.0)     (2.5)
                                 ------    ------  ------    ------   ------    ------   ------    ------
Income from operations             19.7       6.6    14.2       4.7     23.8       2.9     26.4       5.5
Interest expense, net              16.5       5.5    16.4       5.4     49.2       6.0     26.4       5.5
                                 ------    ------  ------    ------   ------    ------   ------    ------
Income (loss) before taxes          3.2       1.1    (2.1)     (0.7)   (25.4)     (3.1)     0.0       0.0
Income tax provision (benefit)      1.6       0.5     0.4       0.1     (9.2)     (1.1)     1.4       0.3
Minority interest                   0.4       0.1    (0.5)     (0.2)    (0.8)     (0.1)    (1.9)     (0.4)
                                 ------    ------  ------    ------   ------    ------   ------    ------

Net income (loss)                $  1.2     0.4 %  $ (2.0)     (0.7)% $(15.3)     (1.9)% $  0.5     0.1 %
                                 ======    ======  ======    ======   ======    ======   ======    ======
</TABLE>

Thirteen  Weeks  Ended June 27, 1999  Compared to Thirteen  Weeks Ended July 26,
1998

      Net sales  decreased $3.6 million,  or 1.2%, to $298.1 million in the 1999
thirteen week period. The following analysis includes $2.8 million of sales from
Sweetheart  to Fonda and $1.7  million of sales from Fonda to  Sweetheart  which
were eliminated in consolidation.

      Sweetheart   results-   Net  sales   increased   $.5  million   (including
intercompany sales to Fonda).  Domestic net sales decreased by $1.1 million,  or
0.5%,  reflecting  a 0.7%  decrease in domestic  sales volume which is partially
offset by a 0.2%  increase in realized  domestic  sales  price.  The increase in
average  realized sales price reflects price increases in selected product lines
which was  partially  offset by a shift in sales mix to lower  priced  products.
Foodservice  sales volume  increased 1.2% primarily as a result of  Sweetheart's
focus on  revenue  growth  with  key  customers.  Food  packaging  sales  volume
decreased 12.7%,  primarily resulting from decreases in demand by large accounts
in the food  packaging  customer base due to market  conditions.  Canadian sales
increased 9.9% from the prior comparable period due primarily to increased sales
volume from the introduction of new products.

      Fonda  results- Net sales  increased $.4 million  (including  intercompany
sales to  Sweetheart).  Net  sales  of  party  goods  products  decreased  3.0%,
primarily due to the CEG Agreements.  Such agreements  resulted in a significant
increase in volume  which was more than  offset by a  significant  reduction  in
selling  prices.  The lower selling prices reflect cost savings from the License
Agreement  as well as savings  that Fonda is beginning to realize and expects to
realize more fully in future periods upon full implementation of the Manufacture
and Supply  Agreement.  Excluding  such party goods  products,  net sales in the
consumer market  decreased  3.1%,  resulting from an increase in sales volume of
5.2%,  which was more than offset by a 7.9% decrease in average  selling prices.
Selling  prices in this market were  adversely  affected  by  reductions  in raw
material costs that were passed through to customers as well as more competitive
market  conditions.  In the  institutional  market,  net sales  increased  3.2%,
resulting from an increase in sales volume of 8.1%,  which was partially  offset
by a 4.5% decrease in average selling prices.  The increased sales volume in the
institutional  market was  primarily  due to an increase in sales of value added
converted  tissue  products  and  certain  commodity  paperboard  products.  The
reduction in selling  prices was due to the same  conditions  experienced in the
consumer market.

      Gross profit  increased  $9.4 million,  or 28.3%,  to $42.6 million in the
1999 thirteen week period. As a percentage of net sales,  gross profit increased
from 11% in the 1998 thirteen week period to 14.3% in the 1999 period  primarily
due to improved Sweetheart earnings.

      Sweetheart  results- Gross profit  increased $13.3 million to 14.3% of net
sales for the thirteen  weeks ended June 27, 1999 from 8.7% for the three months
ended June 30, 1998.  This  improvement is attributable to a shift in


                                       9
<PAGE>

sales  to a more  profitable  product  mix and the  cost  reduction  initiatives
implemented  by  Sweetheart in the latter part of the 1998 fiscal year which has
resulted in improved manufacturing efficiencies.

      Fonda results- Gross profit decreased $3.4 million from 19.0% of net sales
in the 1998 Fonda  Thirteen Week Period to 13.5% in the 1999 Fonda Thirteen Week
Period.  Gross  margins in the 1999 Fonda  Thirteen  Week Period were  adversely
affected  by  reduced  selling  prices  of  party  goods  products  sold to CEG,
described above,  margin erosion in commodity  paperboard  products,  as well as
excess costs incurred in implementing the Efficiency Initiatives.  Gross margins
are  expected  to  improve in future  periods  upon full  implementation  of the
Efficiency  Initiatives,  and as a result of recent  price  increases in various
product lines,  however,  there can be no assurance that such  improvements will
occur.

      Selling,  general and  administrative  expenses  decreased  $.5 million to
$23.3 million in the 1999 thirteen week period due to a $1.5 million decrease at
Fonda which was partially offset by a $1.0 million increase at Sweetheart.  As a
percentage of net sales, selling,  general and administrative expenses decreased
from 7.9% in the 1998 thirteen week period to 7.8% in the 1999 period. The Fonda
decrease  was  primarily  caused by the  reduction  of  selling,  marketing  and
distribution  costs due to the License  Agreement,  as well as the closure of an
administrative  office.  The increase at  Sweetheart  was primarily due to legal
expenses  associated  with pending  litigation,  and increased costs for medical
insurance and promotions .

      Other income, net in the 1998 thirteen week period includes a $6.6 million
pre-tax  gain  primarily  due to the July 1998  settlement  of a steam  contract
related to Fonda's  tissue mill  operations.  The gain was  partially  offset by
closure cost accruals  relating to Fonda's  decision to close an  administrative
office.

      Income from operations increased $5.5 million to $19.7 million in the 1999
thirteen week period as a result of the above.

      Interest  expense,  net of interest income  increased $.1 million to $16.5
million in the 1999 thirteen week period.  A $.5 million increase in interest on
the Senior Secured  Discount Notes and a $.2 million increase at Fonda due to an
increase  in  outstanding   debt,  were  partially  offset  by  a  reduction  at
Sweetheart.  The improvement at Sweetheart was due to lower outstanding debt and
lower interest rates.

      The income tax provision was $1.6 million in the 1999 thirteen week period
and $.4 million in the 1998 thirteen week period. Both the 1999 and 1998 periods
reflect  certain  non-deductible  costs relating to the investment in Sweetheart
and  the  related  financing.  The  effective  tax  rate  is  affected  by  such
non-deductible  costs as well as the  proportionate  results  of both  Fonda and
Sweetheart.

      Minority interest,  representing 10% of Sweetheart's  historical income or
loss,  increased  $.9  million  to a cost  of $.4  million  due to  Sweetheart's
improved results. As a result of the above, net income increased $3.2 million to
$1.2 million in the 1999 thirteen week period compared to a net loss in the 1998
thirteen week period.

Thirty-nine  Weeks Ended June 27, 1999 Compared to Thirty-nine  Weeks Ended July
26, 1998

      Net  sales  increased  $341.1  million  to  $824.3  million  in  the  1999
thirty-nine  week period due to the  consolidation  of Sweetheart in March 1998,
which was partially offset by a $4.5 million decrease in net sales at Fonda. The
following  analysis  includes $4.0 million of sales from Sweetheart to Fonda and
$1.6  million of sales  from  Fonda to  Sweetheart,  which  were  eliminated  in
consolidation.

      Sweetheart  results-  Net  sales  increased  $351.2  million,   (including
intercompany sales to Fonda) primarily due to the effect of the consolidation of
Sweetheart.  In addition,  since April 1, 1999,  domestic net sales decreased by
$1.1 million,  or 0.5%.  This reflected a 0.7% decrease in domestic sales volume
which was partially offset by a 0.2% increase in realized  domestic sales price.
The  increase  in average  realized  sales price  reflects  price  increases  in
selected  product  lines which was  partially  offset by a shift in sales mix to
lower priced  products.  Foodservice  sales volume increased 1.2% primarily as a
result  of  Sweetheart's  focus  on  revenue  growth  with key  customers.  Food
packaging sales volume  decreased 12.7%,  primarily  resulting from decreases in
demand  by large  accounts  in the food  packaging  customer  base due to market
conditions.  Canadian sales increased 9.9% from the prior comparable  period due
primarily to increased sales volume from the introduction of new products.

      Fonda results- Net sales decreased $4.5 million,  (including  intercompany
sales to  Sweetheart).  The 1998 Fonda  Thirty-nine  Week Period  included  $8.4
million of net sales of tissue mill products  relating to  operations  that were
sold in  March  1998.  Excluding  such  tissue  mill  sales,  net  sales  in the
converting operations increased $4.0


                                       10
<PAGE>

million due  primarily to the effects of  seasonality  on the  thirty-nine  week
comparison.  Net sales of party goods  products  increased 5.4% primarily due to
the CEG Agreements. Such agreements resulted in a significant increase in volume
which was offset by a significant reduction in selling prices. The lower selling
prices  reflect cost savings from the License  Agreement as well as savings that
Fonda is  beginning  to realize  and  expects  to  realize  more fully in future
periods  upon full  implementation  of the  Manufacture  and  Supply  Agreement.
Excluding such party goods products,  net sales in the consumer market decreased
 .8%,  resulting  from an increase in sales  volume of 6.2%,  which was more than
offset by a 6.6%  decrease in average  selling  prices.  Selling  prices in this
market were  adversely  affected by reductions  in raw material  costs that were
passed through to customers as well as more competitive  market  conditions.  In
the institutional  market, net sales increased 3.4%,  resulting from an increase
in sales  volume of 5.7%,  which was  partially  offset  by a 2.1%  decrease  in
average selling prices.  The increased sales volume in the institutional  market
was  primarily  due to an  increase  in sales of value  added  converted  tissue
products and certain  commodity  paperboard  products.  The reduction in selling
prices was due to the same conditions experienced in the consumer market.

      Gross  profit  increased  $36.7  million  to  $96.1  million  in the  1999
thirty-nine  week period.  As a percentage of net sales,  gross profit decreased
from 12.3% in the 1998  thirty-nine  weeks to 11.7% in the 1999 period primarily
due to the effect of lower margins at Sweetheart  compared to Fonda in the first
twenty-six  weeks of the current fiscal year. Such results were partially offset
by improved Sweetheart results in the 1999 thirteen week period.

      Sweetheart  results- Gross profit  increased $43.4 million to 10.6% of net
sales  for the  thirty-nine  weeks  ended  June 27,  1999 from 8.3% for the nine
months ended June 30,  1998.  The  consolidation  of  Sweetheart  resulted in an
increase  in gross  profit  of  $30.1  million.  The  additional  $13.3  million
improvement is attributable to a shift in sales mix to more profitable  products
and the cost reduction initiatives  implemented by Sweetheart in the latter part
of  the  1998  fiscal  year  which  has   resulted  in  improved   manufacturing
efficiencies.

      Fonda results- Gross profit decreased $6.7 million from 17.8% of net sales
in the 1998 Fonda Thirty-nine Week Period to 15.0% in the 1999 Fonda Thirty-nine
Week Period.  The 1998 period  included  $1.2  million from Fonda's  tissue mill
operations.  Gross margins in the 1999  Thirty-nine  Week Period were  adversely
affected by reduced selling prices of consumer products, described above, margin
erosion in commodity  paperboard  products,  as well as excess costs incurred in
implementing the Efficiency  Initiatives.  Gross margins are expected to improve
in future periods upon full implementation of the Efficiency Initiatives, and as
a result of recent price increases in various product lines, however,  there can
be no assurance that such improvements will occur.

      Selling,  general and  administrative  expenses increased $27.7 million to
$48.9 million in the 1999 thirty-nine week period.  An increase of $29.5 million
of such expenses resulted from the consolidation of Sweetheart.  As a percentage
of net sales, selling,  general and administrative  expenses decreased from 9.3%
in the 1998 thirty-nine week period to 8.8% in the 1999 thirty-nine week period.
The decrease as a percentage  of net sales was  partially  due to the effects of
consolidating Sweetheart, for which selling, general and administrative costs as
a percentage of net sales are historically  lower than at Fonda due to economies
of scale.  In addition,  the percentage  reduction was also impacted at Fonda by
the reduction in selling and marketing  costs due to the License  Agreement,  as
well as the closure of an administrative office.

      Other income in the 1998  thirty-nine week period includes a $15.9 million
pre-tax gain from the sale of Fonda's  tissue mill  operations and the July 1998
settlement  of a  steam  contract  related  to such  operations.  The  gain  was
partially  offset by $2.1 million of charges at  Sweetheart  resulting  from the
acquisition.

      Income from  operations  was $23.8  million in the 1999  thirty-nine  week
period and $26.4 million in the 1998  thirty-nine week period as a result of the
above.

      Interest  expense,  net of interest  income was $49.2  million in the 1999
thirty-nine  week period and $26.4 million in the 1998  thirty-nine week period.
The  increase was  primarily  due to the  consolidation  of  Sweetheart  and the
related  financing  thereof.  In  addition  since  April 1, 1999,  a $.5 million
increase  in  interest on the Senior  Secured  Discount  Notes and a $.2 million
increase at Fonda due to an increase in outstanding  debt, were partially offset
by a reduction at  Sweetheart.  The  improvement  at Sweetheart was due to lower
outstanding debt and lower interest rates.

      The income tax benefit was $9.2 million in the 1999  thirteen  week period
and a provision of $1.4 million in the 1998 thirteen week period.  Both the 1999
and 1998 periods reflect certain non-deductible costs relating to the investment
in Sweetheart and the related  financing.  The effective tax rate is affected by
such non-deductible costs as


                                       11
<PAGE>

well as the proportionate  results of both Fonda and Sweetheart.  As a result of
the above and the addback of minority interest  representing 10% of Sweetheart's
historical  loss,  the net loss was $15.3 million in the 1999  thirty-nine  week
period  compared  to net  income of $.5  million  in the 1998  thirty-nine  week
period.

Liquidity and Capital Resources

      Historically,  the  Company's  subsidiaries  have relied on cash flow from
operations  and  borrowings  to  finance  their   respective   working   capital
requirements, capital expenditures and acquisitions. In addition, Sweetheart has
been funding a majority of its capital expenditures from the sale of assets.

      Net cash  provided by operating  activities in the 1999  thirty-nine  week
period was $28.1 million  compared to $9.2 million in the 1998  thirty-nine week
period.  Sweetheart  provided $32.3 million in the 1999 period  compared to $1.8
million in the 1998 period primarily due to the improved operating  performance,
and a reduction in cash expended on  non-recurring  charges realized in the 1998
nine month period.  Fonda used $4.3 million of cash from operating activities in
the 1999 period compared to $8.4 million provided by such activities in the 1998
period.  The  reduction in cash  provided by  operations is primarily due to the
build-up in amounts due from affiliates resulting from the implementation of the
CEG Agreements,  and to a lesser extent,  lower earnings.  In March 1999,  CEG's
second  largest  customer,  representing  over 10% of CEG's net sales during its
1998 fiscal year, filed a Chapter 11 bankruptcy  petition.  Based on information
provided by CEG,  Fonda has no reason to believe that the foregoing  will have a
material  adverse  effect on its results of operations  or financial  condition.
However,  no assurance can be given  regarding the ultimate  effect,  if any, on
Fonda, and it will continue to monitor the adequacy of its affiliate reserve.

      Capital  expenditures  were  $35.2  million,   including  $12.1million  at
Sweetheart for new production equipment,  $5.3 million at Sweetheart relating to
its  Canadian  operations  and $9.7  million at Fonda for  converting  equipment
primarily  associated  with its Efficiency  Initiatives.  See Note 4 of Notes to
Financial  Statements.  The remainder of capital  expenditures was primarily for
routine capital improvements.

      None of SF Holdings,  Fonda or Sweetheart anticipates any material capital
expenditures  in the next twelve  months other than those funded  through  asset
sales and  available  cash from the  respective  subsidiaries.  SF Holdings is a
holding  company and does not  anticipate  any  material  cash needs in the next
twelve months. As of June 27, 1999, dividends on the Exchangeable Preferred have
been paid by the issuance of additional shares of Exchangeable Preferred.

      Fonda's revolving credit facility, as amended,  provides up to $50 million
borrowing  capacity,  is collateralized by accounts  receivable and inventories,
certain general  intangibles and the proceeds on the sale of accounts receivable
and inventory. The maturity date of such facility has been extended to September
1, 2001. At June 27, 1999, there was $7.9 million  outstanding and $35.0 million
was the maximum advance available based upon eligible collateral.

      Sweetheart's   revolving  credit  facility,   as  amended,   provides  for
borrowings  in an amount of up to $135.0  million,  subject  to  borrowing  base
limitations (the "Sweetheart U.S. Credit Facility").  As of June 27, 1999, $27.8
million is available.  Borrowings under the Sweetheart U.S. Credit Facility bear
interest,  at Sweetheart's  election,  at a rate equal to LIBOR plus 2.25%, or a
bank's base rate plus 1.00%. A Canadian subsidiary of Sweetheart has a term loan
and revolving credit facility  agreement which provides for a term loan facility
of up to Cdn $10.0  million and a revolving  credit  facility of up to Cdn $10.0
million (the  "Sweetheart  Canadian Credit Facility and with the Sweetheart U.S.
Credit Facility,  the "Sweetheart Credit Facilities").  As of June 27, 1999, Cdn
$2.2 million  (approximately  $1.5 million) was available  under such  facility.
Borrowings  under the Sweetheart  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.

      Sweetheart's  Senior Secured Notes and its U.S.  Credit Facility mature in
September 2000, and August 2000,  respectively.  Although the Company intends to
refinance  this debt,  there can be no assurance  that it will be able to obtain
such refinancing on acceptable terms and conditions.

      Fonda has  reinvested in equipment,  amounts in excess of $10 million from
the sale of the tissue mill, within the required time period, in accordance with
the asset sale covenant under the indenture governing Fonda's senior debt.


                                       12
<PAGE>

      During  the 1999  thirty-nine  week  period,  the  Company  did not  incur
material costs for compliance with environmental law and regulations.

      In January  1999,  the United  States  Supreme  Court  denied  Plaintiffs'
petition for Writ of  Certiorari in the matter of Aldridge v.  Lily-Tulip,  Inc.
Salary Retirement Plan Benefits  Committee and Fort Howard Cup Corporation.  The
court has decided that the Lily-Tulip  Salary  Retirement  Plan (the "Plan") was
lawfully  terminated.  Sweetheart is in the process of determining the amount of
total  payouts  for  which  the  Plan  is  liable.  The  estimate  of the  total
termination  liability exceeds assets set aside in the Plan by approximately $17
million, which amount has been fully reserved by Sweetheart.  Sweetheart expects
to fund such  payments  within the next three  months.  On April 27,  1999,  the
Plaintiffs   filed  a  motion  in  the   United   States   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  of such fees. On June 17, 1999,  the Court  deferred these motions,
and ordered  discovery  in  connection  therewith.  Discovery  is expected to be
completed by the end of October 1999.  Sweetheart's  operating plan contemplates
that cash  generated  by  operations  and  amounts  available  under its  credit
facilities will be sufficient to make the required  payments under the Plan when
due.  However,  there can be no  assurance  that  Sweetheart  will  achieve  its
operating  plan and have the necessary cash to make these  payments.  Failure by
Sweetheart to make such  payments  could have a material  adverse  effect on the
Company and its financial condition.

      The  Company   believes  that  cash  generated  by  each  of  Fonda's  and
Sweetheart's  operations,  combined with amounts  available under its respective
credit facilities as well as funds generated by asset sales by Sweetheart should
be  sufficient  to fund each of  Fonda's  and  Sweetheart's  respective  capital
expenditures  needs,  debt  service  requirements  and  working  capital  needs,
including  Sweetheart's   termination   liabilities  under  the  Plan,  for  the
foreseeable future.

Year 2000

      Many of Sweetheart's and Fonda's computer systems may be unable to process
dates  beyond  December  31,  1999.  This  could  result in system  failures  or
miscalculations  which  could have a material  adverse  effect on the  Company's
business,  financial condition or results of operations.  Each of Sweetheart and
Fonda has  implemented a Year 2000 compliance  program  intended to identify the
programs  and  infrastructures  that could be  effected  by Year 2000 issues and
resolve the problems that were identified on a timely basis.

      Fonda has  completed  the  assessment  phase,  in which it has  identified
potential  Year  2000  issues,  including  those  with  respect  to  information
technology  systems,  technology embedded within equipment Fonda uses as well as
equipment that interfaces  with vendors and other third parties.  Fonda has also
completed the upgrade of its hardware and software systems which run most of its
data  processing  and  financial   reporting   software   applications  and  has
consolidated  certain  of its  in-house  developed  computer  systems  into  the
upgraded  systems.  In  addition,   Fonda  has  upgraded  its  telephone,   data
communication  and network  systems to ensure that they are Year 2000 compliant.
Embedded  logic in  manufacturing  equipment is all being  tested and  upgraded.
Contingency plans are bing developed for equipment that cannot be upgraded.  The
embedded  logic project is expected to be completed by October 1999. EDI trading
partners and other key business  partners have been contacted to ensure that key
business  transactions will be Year 2000 compliant.  As of August 1, 1999, Fonda
has received  detailed  business plans and commitments  from a majority of these
parties  that they are or will be Year  2000  compliant.  Contingency  plans are
being developed to work with trading partners or to replace suppliers who cannot
meet Fonda's compliance deadlines.

      Sweetheart has completed the assessment  phase, in which it has identified
potential Year 2000 issues with respect to information  technology  systems,  as
well as equipment that interfaces with vendors and third parties,  and developed
a  compliance  project  for its  hardware,  operating  systems  and  application
systems. Sweetheart has completed its hardware and operating systems conversion.
With respect to the application phase,  Sweetheart is compliant in its planning,
order management,  manufacturing and warehousing systems.  Financial,  corporate
and in-house  developed  systems are  scheduled  for  compliance by August 1999.
Sweetheart has completed its internal  assessment phase for technology  embedded
within  equipment and is awaiting  responses  from certain  vendors.  Sweetheart
believes a significant portion of its manufacturing equipment is not affected by
Year 2000 issues due to its  operations  use, or was compliant  when  purchased.
Sweetheart  has or is in the process of  contacting  key  vendors  and  business
partners,  to ensure that key business transactions will be Year 2000 compliant.
As of July 27,  1999,  Sweetheart  has  received  detailed  business  plans  and
commitments  from the  majority of these  vendors  that they are or will be Year
2000 compliant.


                                       13
<PAGE>

      The  Company  expects  that  Fonda and  Sweetheart's  respective  business
systems will be Year 2000 compliant, but they may experience isolated incidences
of  non-compliance  and  potential  outages  with  respect  to their  respective
information  technology  infrastructure.  Each of Fonda and  Sweetheart  plan to
allocate  internal  resources  to be ready to take action  should  these  events
occur. Investors are cautioned,  however, that the Company's assessment of their
compliance,  of the costs of  performing  the  program  and the risks  attendant
thereto,  and of the need for any contingency plans may change materially in the
future as each company proceeds further with their compliance programs.

      As of August 1,  1999,  Sweetheart  and Fonda  estimate  the total cost of
their  respective  Year  2000  program  at  $2.7  million  and  $3.2  million,
respectively.  Sweetheart has spent $2.5 million as of June 27, 1999,  including
$1.3  million in the  thirty-nine  weeks  ended June 27,  1999.  Fonda has spent
$2.7  million  as of June  27,  1999,  including  $1.5  million  in the 1999
thirty-nine  weeks.  Expenditures have been, and are expected to be, funded from
cash flows from the respective company's operations,  available cash, borrowings
under each company's respective credit facility, or by lease. However, there can
be no assurance  that  Sweetheart or Fonda will identify all Year 2000 issues in
their computer  systems in advance of their occurrence or that they will be able
to successfully  remedy all problems that are discovered.  Failure by Sweetheart
or Fonda and/or their  significant  vendors and  customers to complete Year 2000
compliance  programs in a timely manner could have a material  adverse effect on
the  Company's  business,  financial  condition  and results of  operations.  In
addition,  the revenue stream and financial  stability of existing customers may
be adversely  impacted by Year 2000 problems which could cause  fluctuations  in
the Company's revenues and operating profitability.

Net Operating Loss Carryforwards

      As of September 27, 1998, Sweetheart had approximately $202 million of net
operating  loss  carryforwards  ("NOLs")  which expire at various  dates through
2018.  Although  the Company  expects  that  sufficient  taxable  income will be
generated in the future to realize these NOLs,  there can be no assurance future
taxable income will be generated to utilize such NOLs.


                                       14
<PAGE>

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)   Exhibits:

      27.1 Financial Data Schedule.

(b) No reports on Form 8-K were filed in the thirteen weeks ended June 27, 1999.

                                   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, thereto duly authorized.

      Date:  August 11, 1999

                                     SF HOLDINGS GROUP, INC.


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


                                       15