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

                                    Form 10-Q
        (mark one)
        [ ]   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE 
                         SECURITIES EXCHANGE ACT OF 1934
                                       OR
        [X]   TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR 15(d) OF THE
                         SECURITIES EXCHANGE ACT OF 1934
           
  For the nine week transition period from July 27, 1998 to September 27, 1998

                             Commission File Number:
                             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)
                               115 Stevens Avenue
                            Valhalla, New York 10595
                                 (914) 749-3274
   (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 December 1, 1998:
                                                    Class A:   5,625,838 Shares
                                                    Class B:     564,586 Shares
                                                    Class C:     399,000 Shares
                                                               
<PAGE>


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


Part I - Financial Information



Item  1. Financial Statements (unaudited):
<TABLE>
<CAPTION>
<S>                                                                                            <C> 

                                                                                              Page

        Consolidated Balance Sheets as of September 27, 1998 and July 26, 1998 (audited)        3

        Consolidated Statements of Operations and Comprehensive Income (Loss)
            for the nine weeks ended September 27, 1998 and the thirteen weeks
            ended October 26, 1997                                                              4

        Consolidated Statements of Cash Flows for the nine weeks ended
            September 27, 1998 and the thirteen weeks ended October 26, 1997                    5

        Notes to Consolidated Financial Statements                                              6


Item 2.  Management's Discussion and Analysis of Financial Condition
            and Results of Operations                                                           8


Part II - Other Information


Item 6.  Exhibits and Reports on Form 8-K                                                      14

Signatures                                                                                     16

</TABLE>



<PAGE>

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

<TABLE>
<CAPTION>

                                                                   September 27,      July 26,
                                                                       1998             1998
                                                                   -------------    -------------
                                                                   (unaudited)
ASSETS
Current assets:
<S>                                                                     <C>             <C>     
    Cash and cash equivalents                                           $ 9,630         $ 20,703
    Cash in escrow                                                        5,464            6,819
    Accounts receivable, less allowance for doubtful
      accounts of $2,621 and $3,569, respectively                       116,731          120,112
    Due from affiliates                                                     608            1,313
    Inventories                                                         170,288          168,493
    Deferred income taxes                                                16,920           17,322
    Other current assets                                                 21,613           20,026
                                                                   -------------    -------------
         Total current assets                                           341,254          354,788
Property, plant and equipment, net                                      419,669          430,150
Goodwill, net                                                           100,481           94,865
Deferred income taxes                                                    32,956           32,572
Other assets, net                                                        29,829           31,436
                                                                   -------------    -------------
TOTAL ASSETS                                                          $ 924,189        $ 943,811
                                                                   =============    =============

LIABILITIES AND STOCKHOLDERS' EQUITY Current liabilities:
   Accounts payable                                                    $ 70,703         $ 78,013
   Accrued expenses                                                     106,144          117,426
   Current maturities of long-term debt                                   4,019            3,825
                                                                   -------------    -------------
      Total current liabilities                                         180,866          199,264
Long-term debt                                                          624,903          619,143
Other liabilities                                                        62,729           61,865
Deferred income taxes                                                     5,011            4,771
                                                                   -------------    -------------
      Total liabilities                                                 873,509          885,043
Exchangeable preferred stock                                             31,444           30,680
Minority interest in subsidiary                                           2,472            3,020
Redeemable common stock                                                   2,150            2,139
Stockholders' equity                                                     14,614           22,929
                                                                   -------------    -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY                            $ 924,189        $ 943,811
                                                                   =============    =============
</TABLE>


                See notes to consolidated financial statements.

                                       3

<PAGE>

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

                                                                         Nine Weeks        Thirteen Weeks
                                                                           Ended                Ended
                                                                       September 27,         October 26,
                                                                            1998                1997
                                                                        -------------       --------------
<S>                                                                        <C>                   <C>     
Net sales                                                                  $ 259,080             $ 70,658
Cost of goods sold                                                           235,038               57,519
                                                                        -------------       --------------
     Gross profit                                                             24,042               13,139

Selling, general and administrative expenses                                  20,320                8,413
Other income, net                                                               (511)                   -
                                                                        -------------       --------------
     Income from operations                                                    4,233                4,726
Interest expense (net of interest income 
 of $341 in 1998 and $52 in 1997)                                             14,214                2,936
                                                                        -------------       --------------
     Income (loss) before income taxes, minority interest
        and extraordinary loss                                                (9,981)               1,790
Income taxes (benefit) provision                                              (4,631)                 751
Minority interest in subsidiary's loss                                          (548)                   -
                                                                        -------------       --------------
     Net income (loss)                                                        (4,802)               1,039
Payment-in-kind dividends on exchangeable preferred stock                        764                    -

                                                                        -------------       --------------
     Net income (loss) applicable to common stock                           $ (5,566)             $ 1,039
                                                                        =============       ==============

Statements of comprehensive income (loss):
     Net income (loss)                                                      $ (4,802)             $ 1,039
     Other comprehensive income, net of income tax:
       Minimum pension liability adjustment                                   (2,393)                   -
       Foreign translation adjustment                                           (345)                   -
                                                                        -------------       --------------
                                                                              (2,738)                   -
                                                                        -------------       --------------
     Total comprehensive income (loss)                                      $ (7,540)             $ 1,039
                                                                        =============       ==============
</TABLE>

                See notes to consolidated financial statements.

                                       4


<PAGE>

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

                                                                       Nine Weeks         Thirteen Weeks
                                                                         Ended                Ended
                                                                      September 27,         October 26,
                                                                          1998                 1997
                                                                      -------------       -------------
<S>                                                                     <C>                  <C>    
Operating activities:                                                                       
 Net income                                                             $ (4,802)            $ 1,039
Adjustments to reconcile net income to net cash 
      used in operating activities:
   Depreciation and amortization                                          14,053               1,491
   Interest capitalized on debt                                            1,779                   -
   Provision for doubtful accounts                                          (301)                 71
   Deferred income taxes                                                  (4,098)                789
   Gain on building and equipment dispositions                              (201)               (157)
   Minority interest in subsidiary's loss                                   (548)                  -
   Changes in assets and liabilities:
      Accounts receivable                                                  3,707              (6,587)
      Due from affiliates                                                    583                 170
      Inventories                                                         (1,795)             (1,937)
      Other current assets                                                (1,195)              3,238
      Accounts payable and accrued expenses                              (15,568)                516
      Income taxes payable (refundable)                                     (373)                 37
      Other                                                               (2,889)                (26)
                                                                    -------------       -------------
    Net cash used in operating activities                                (11,648)             (1,356)
                                                                    -------------       -------------

Investing activities:
 Capital expenditures                                                    (12,138)             (2,021)
 Proceeds from building and equipment dispositions                         7,124                 260
                                                                    -------------       -------------
   Net cash used in investing activities                                  (5,014)             (1,761)
                                                                    -------------       -------------

Financing activities:
 Net increase in revolving credit borrowings                               4,424               8,049
 Repayments of long-term debt                                                (53)               (149)
 Redemption of Fonda's common stock                                            -              (8,352)
 Debt issuance costs                                                        (137)                  -
 Decrease in escrow cash                                                   1,355                   -
                                                                    -------------       -------------
   Net cash provided by (used in) financing activities                     5,589                (452)
                                                                    -------------       -------------
Net decrease in cash                                                     (11,073)             (3,569)
Cash and cash equivalents, beginning of period                            20,703               5,908
                                                                    -------------       -------------
Cash and cash equivalents, end of period                                 $ 9,630             $ 2,339
                                                                    =============       =============

Supplemental cash flow information:
   Cash paid (refunded) during the period for:
    Interest, including $96 capitalized in 1998 and
     $192 in 1997                                                        $23,335             $ 5,959
   Income taxes, net of refunds                                               87                 (71)
</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  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.

         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 periods which ends on the last Sunday in September. The nine week period from
July 27, 1998 to September 27, 1998,  consolidates  the results of operations of
Fonda for all periods presented and of Sweetheart from July 1, 1998 to September
27, 1998.  Such period will be treated as a  transition  period that will not be
part of Fiscal  1998 which  ended on July 26, 1998 or Fiscal 1999 which will end
on September 26, 1999.

         The following  summarized,  pro forma results of operations  assume the
Company's acquisitions in Fiscal 1998 occurred as of the beginning of the period
(in thousands).

                                                                Thirteen Weeks
                                                                    Ended
                                                               October 26, 1997
                                                            --------------------
    Net sales                                              $      299,475
    Net loss                                               $      (13,633)

2.  INVENTORIES

         Inventories consist of the following (in thousands):

                                             September 27,      July 26,
                                                 1998             1998
                                             -------------    -------------
     Raw materials and supplies                  $ 43,960         $ 43,998
     Work-in-process                                8,883            9,456
     Finished goods                               117,445          115,039
                                             =============    =============
                                                $ 170,288        $ 168,493
                                             =============    =============



3. CONTINGENCIES

         A lawsuit entitled Aldridge v. Lily-Tulip,  Inc. Salary Retirement Plan
Benefits  Committee and Fort Howard Cup Corporation was initially filed in state
court in Georgia in April 1987, and is currently  pending against  Sweetheart in
federal  court.  The  remaining  issue  involved  in the  case is a  claim  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"). In December 1994, the United States Circuit Court of
Appeals for the Eleventh  Circuit (the "Circuit  Court") ruled that the Plan was
terminated on December 31, 1986. Following that decision,  the plaintiffs sought

                                       6

<PAGE>


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  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 judgement 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.  Plaintiffs  have filed a motion in the District  Court
for  attorneys  fees.  No amount has been  specified in such motion.  In October
1998,  plaintiffs  filed a Petition for Writ of  Certiorari in the United States
Supreme Court.

         The Company  believes that it will ultimately  prevail on the remaining
material issues in the Aldridge  litigation.  Due to the complexity  involved in
connection with the claims  asserted in this case, the Company 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
amount  would not have a  material  adverse  effect on the  Company's  financial
position or results of operations.

         A patent  infringement  action  seeking  injunctive  relief and damages
relating to  Sweetheart's  production and sale of certain paper plates  entitled
Fort James Corp. v. Sweetheart Cup Company Inc., was filed in the U.S.  District
Court for the Eastern  District of Wisconsin  on November  21, 1997.  Sweetheart
filed an  answer  to the  complaint  denying  liability  and  asserting  various
defenses and counterclaims.  Discovery  proceedings are in process.  The Company
does not believe  that the  ultimate  liability,  if any,  would have a material
adverse effect on Sweetheart's financial position or results of operations.

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



                                       7
<PAGE>

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

         The  following  discussion  for the  Company  contains  forward-looking
statements which involve risks and  uncertainties.  The Company's actual results
or future  events  could  differ  materially  from  those  anticipated  in these
forward-looking  statements as a result of certain factors,  including,  but not
limited to, raw material costs, labor market conditions,  the highly competitive
nature of the industry, and developments with respect to contingencies.

         In October  1998,  the Company  changed its fiscal year end to the last
Sunday in September.  The following discussion compares the nine week transition
period  ended  September  27,  1998 (the "Nine Week  Transition  Period") to the
thirteen  week quarter ended  October 27, 1997 (the "1998 First  Quarter").  The
Nine Week Transition Period  consolidates the results of operations of Fonda for
all periods presented and of Sweetheart from July 1, 1998 to September 27, 1998.
The Company did not recast the data for the nine week period ended September 28,
1997 because certain review procedures and significant judgmental estimates that
are implemented only on a quarterly basis were not implemented for the nine week
period  ended  September  28, 1997.  As a result of changes in certain  computer
systems,  the Company believes it would be impractical to implement these review
procedures  and make the  judgmental  estimates  to recast  the prior  nine week
period.

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.

         The investment in Sweetheart was  consummated on March 12, 1998 and was
accounted for as a purchase.  The financial information with respect to the 1998
First  Quarter  contained  herein,  does not  reflect  Sweetheart's  results  of
operations;  thus, this financial  information is not necessarily  indicative of
the results of operations  that would have been  achieved had the  investment in
Sweetheart  been  consummated  by the Company at the beginning of such period or
which may be achieved in the future.  In  addition,  the  financial  information
contained  herein does not reflect the  operations of  Sweetheart  under current
management for a significant period of time.

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

         Each of Fonda and Sweetheart's  business is seasonal with a majority of
its net cash flows from operations  realized in the second and third quarters of
the calendar year.  Sales for such periods reflect the high seasonal  demands of
the summer months when outdoor and away-from-home  consumption increases. In the
event that Fonda's and/or Sweetheart's cash flow from operations is insufficient
to  provide  working  capital  necessary  to fund  their  respective  production
requirements, Fonda and/or Sweetheart will need to borrow under their respective
credit  facilities  or seek  other  sources of  capital.  Although  the  Company
believes that funds  available under such credit  facilities  together with cash
generated  from  operations,  will be  adequate  to provide  for each  company's
respective  cash  requirements,  there can be no  assurance  that  such  capital
resources will be sufficient in the future.




                                       8
<PAGE>

         Results of Operations

<TABLE>
<CAPTION>

                                                                Nine weeks ended            Thirteen weeks ended
                                                                 September 27,                   October 26,
                                                                    1998                            1997
                                                            -------------------------     -------------------------
                                                                         % of Net                        % of Net
                                                              Amount       Sales             Amount        Sales
                                                            ------------ ------------     -----------  ------------
                                                                             (Dollars in millions)
<S>                                                    <C>             <C>           <C>             <C>    

Net sales                                                   $     259.1        100.0 %    $     70.7         100.0 %
Cost of goods sold                                                235.0         90.7            57.5          81.4
                                                            ------------ ------------     -----------  ------------
   Gross profit                                                    24.0          9.3            13.1          18.6
Selling, general and
   administrative expenses                                         20.3          7.8             8.4          11.9
Other income, net                                                  (0.5)        (0.2)              -             -
                                                            ------------ ------------     -----------  ------------
   Income from operations                                           4.2          1.6             4.7           6.7
Interest expense, net                                              14.2          5.5             2.9           4.2
                                                            ------------ ------------     -----------  ------------
   Income before taxes                                            (10.0)        (3.9)            1.8           2.5
Income tax (benefit) provision                                     (4.6)        (1.8)            0.8           1.1
Minority interest in subsidiary's loss                             (0.5)        (0.2)              -             -
                                                            ------------ ------------     -----------  ------------
   Net income                                               $      (4.8)        (1.9)%    $      1.0           1.5 %
                                                            ============ ============     ===========  ============

</TABLE>


Nine Weeks Ended September 27, 1998 Compared to Thirteen Weeks Ended October 26,
1997

         Net  sales  were  $259.1  million  in the Nine Week  Transition  Period
(including  $216.4 million as a result of the  consolidation  of Sweetheart) and
$70.7  million in the 1998 First  Quarter.  Net sales  decreased  $3.4  million,
excluding the effects of  consolidating  Sweetheart,  from $46.1 million for the
comparable  nine week period ended  September  28, 1997 to $42.7 million for the
Nine Week Transition  Period. The 1997 nine week period included $3.0 million of
net sales of tissue mill products relating to operations that were sold in March
1998.  For  the  comparable   nine  week  periods,   excluding  the  effects  of
consolidating  Sweetheart,  sales volume in the Company's converting  operations
increased 2.7% in the consumer  market and decreased  9.4% in the  institutional
market.  Average  selling  prices  decreased  4.7% in the  consumer  market  and
increased 13.3% in the institutional  market. The reduction in selling prices in
the consumer  market  primarily  reflects  lower  pricing of certain party goods
products  sold to  Creative  Expressions  Group  ("CEG"),  an  affiliate  of the
Company.  Under the terms of the License  Agreement  entered into in March 1998,
has the right to CEG sell,  market,  distribute  and  manufacture  certain party
goods  previously  manufactured  and  distributed  by the Company  under various
brands. In connection  therewith,  the Company receives a royalty of 5% of CEG's
cash  flow  as  determined  in  accordance  with a  formula  specified  in  such
agreement.  CEG has  notified  the Company of its  intention  to focus solely on
selling,  marketing and distributing and will outsource all of its manufacturing
requirements. The Company has historically manufactured party goods products for
CEG and it  expects to  continue  to do so in the  future.  During the Nine Week
Transition  Period, the reduction in sales revenues of such party goods products
sold to CEG  exceeded  royalty  income  by  approximately  $.7  million.  In the
institutional  market, the reduction in sales volume and offsetting  increase in
selling  prices was primarily due to a change in sales mix,  whereby the Company
emphasized  the  sale of value  added  converted  tissue  products  rather  than
commodity products.

         Gross  profit  was $24.0  million  in the Nine Week  Transition  Period
(including  $17.5 million as a result of the  consolidation  of Sweetheart)  and
$13.1 million in the 1998 First  Quarter.  As a percentage  of net sales,  gross
profit  decreased  from 18.6% in the 1998 First Quarter to 9.3% in the Nine Week
Transition  Period  primarily due to lower margins at Sweetheart and to a lesser
extent the gross margin impact resulting from reduced selling prices of consumer
products in connection with the License  Agreement,  which were not sufficiently
offset by royalty revenues. The Company believes the reductions in net sales and
gross profit in connection with the License  Agreement,  reflect  transition and
timing  issues which are expected to be  recovered in future  periods,  however,
there can be no assurance that such will occur.




                                       9
<PAGE>

         Selling,  general and administrative expenses were $20.3 million in the
Nine  Week  Transition  Period  (including  $14.7  million  as a  result  of the
consolidation  of Sweetheart)  and $8.4 million in the 1998 First Quarter.  As a
percentage of net sales, selling,  general and administrative expenses decreased
from 11.9% in the 1998 First Quarter to 7.8% in the Nine Week Transition Period.
The  percentage  reduction  was  primarily  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  by the  reduction  in
selling,  marketing and distribution costs at Fonda due to the License Agreement
and partially  offset by the sale of Fonda's tissue mill  operations,  for which
selling, general and administrative costs were low relative to net sales.

         Income from  operations  was $4.2  million in the Nine Week  Transition
Period and $4.7 million in the 1998 First  Quarter due to the reasons  discussed
above. As a percentage of net sales, income from operations  decreased from 6.7%
in the 1998 First Quarter to 1.6% in the Nine Week Transition Period.

         Interest expense,  net of interest income was $14.2 million in the Nine
Week Transition Period (including $12.5 million as a result of the consolidation
of Sweetheart and financing thereof) and $2.9 million in the 1998 First Quarter.
For Fonda, outstanding debt levels and interest rates were comparable in the two
periods.

         The  effective tax rate was 46.4% in the Nine Week  Transition  Period,
which  reflects  certain  non-deductible  costs  relating to the  investment  in
Sweetheart and the related  financing,  and 42% in the 1998 First Quarter.  As a
result of the above and the addback of  minority  interest  representing  10% of
Sweetheart's  historical  loss,  the net loss was $4.8  million in the Nine Week
Transition  Period  compared  to net  income of $1.0  million  in the 1998 First
Quarter.

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
recently begun to fund a majority of its capital  expenditures  from the sale of
assets.

         Net cash  used in  operating  activities  in the Nine  Week  Transition
Period was $11.6 million  (including $4 million relating to the consolidation of
Sweetheart)  compared to $1.4 million in the 1998 First  Quarter.  Excluding the
effects of consolidating Sweetheart,  the increase in cash used is primarily due
to the  reduction  in net  income  and the  receipt  of $2.9  million  from  the
settlement of a lawsuit in the 1998 First Quarter.

         Capital  expenditures  in the Nine Week  Transition  Period  were $12.1
million  including $4.2 million at Sweetheart  for new cup making  equipment and
$.6  million  for  management  information  systems.  The  remainder  of capital
expenditures  in the  Nine  Week  Transition  Period  was  for  routine  capital
improvements.  The $2 million of capital  expenditures in the 1998 First Quarter
included $1.4 million related to the installation of the second paper machine at
the Company's former tissue mill, which was sold in March 1998.

         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 until 2003
when  interest on the  Discount  Notes (as defined  below) and  dividends on the
Exchangeable Preferred (as defined below) become payable in cash.

         On  March  12,  1998,  the  Company  issued  $144.0  million  aggregate
principal  amount at maturity of 12 3/4% Senior Secured  Discount Notes due 2008
(the "Discount  Notes").  Until March 15, 2003, accrued interest on the Discount
Notes will not be paid but will accrete  semi-annually,  thereby  increasing the
value of the Discount  Notes.  Also on March 12, 1998,  the Company issued $30.0
million  of 13 3/4%  Exchangeable  Preferred  Stock due 2009 (the  "Exchangeable
Preferred").  Until March 15, 2003  cumulative  dividends may be paid quarterly,
either  in  cash  or by  the  issuance  of  additional  shares  of  Exchangeable
Preferred,  at the Company's  option.  Thereafter,  dividends will be payable in
cash. The Exchangeable Preferred is exchangeable at the Company's option into 13
3/4% subordinated notes due March 15, 2009. As of December 1, 1998, dividends on
the Exchangeable  Preferred have been paid by the issuance of additional  shares
of Exchangeable Preferred.



                                       10
<PAGE>


         The principal amount of the Fonda Notes is payable on February 28, 2007
and interest is payable  semi-annually  in arrears.  Fonda may, at its election,
redeem the Fonda  Notes at any time after  March 1, 2002 at a  redemption  price
equal to a  percentage  (104.750%  after March 1, 2002 and  declining  in annual
steps to 100% after March 1, 2005) of the principal  amount thereof plus accrued
interest.  The  Fonda  Notes  provide  that upon the  occurrence  of a Change of
Control  (as  defined  therein),  the  holders  thereof  will have the option to
require the redemption of the Fonda Notes at a redemption price equal to 101% of
the principal amount thereof plus accrued interest.

         Fonda's  revolving  credit  facility,  which matures on March 31, 2000,
provides up to $50 million  borrowing  capacity,  is  collateralized by eligible
accounts  receivable  and  inventories,  certain  general  intangibles  and  the
proceeds on the sale of accounts  receivable  and  inventory.  At September  27,
1998, there was no outstanding balance and $39.3 million was the maximum advance
available based upon eligible collateral. At September 27, 1998, borrowings were
available at the bank's prime rate (8.50%) plus .25% and at LIBOR (approximately
5.40%) plus 2.25%.

         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").  Borrowings  under the
Sweetheart U.S. Credit Facility mature on September 30, 2000 and as of September
27, 1998, $8.8 million is available. Borrowings under the Sweetheart U.S. Credit
Facility bear interest,  at Sweetheart's  election, at a rate equal to (i) LIBOR
plus 2.25%,  or (ii) a bank's base rate plus 1.00%.  The Sweetheart  U.S. Credit
Facility is secured by accounts receivable,  inventory, equipment,  intellectual
property,  general  intangibles  and  the  proceeds  on the  sale  of any of the
foregoing.  On June 15, 1998, a Canadian subsidiary of Sweetheart refinanced its
then  existing term loan and  revolving  credit  facility and entered into a new
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").  Term loan borrowings
under the Sweetheart  Canadian Credit Facility are payable quarterly through May
2001 and  revolving  credit  borrowings  and term loan  borrowings  have a final
maturity  date of June 15,  2001.  As of September  27,  1998,  Cdn $5.4 million
(approximately  $3.6 million) was available under such facility.  The Sweetheart
Canadian  Credit  Facility is secured by all of the existing and after  acquired
real and  personal,  tangible  assets of such  Canadian  subsidiary  and the net
proceeds on the sale of any of the  foregoing.  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.

         The  Sweetheart  Notes  include:  (i) $190.0  million of 9 5/8%  Senior
Secured Notes due September 1, 2000 (the  "Sweetheart  Secured  Notes") and (ii)
$110.0 million of 10 1/2% Senior  Subordinated  Notes due September 1, 2003 (the
"Sweetheart  Subordinated Notes").  Sweetheart may, at its election,  redeem the
Sweetheart Secured Notes at any time at a redemption price equal to a percentage
(currently  103.208% and declining in annual increments to 100% after August 31,
1999) of the principal  amount,  plus accrued interest.  The Sweetheart  Secured
Notes are secured by mortgages on the real property owned by Sweetheart. Payment
of principal and interest on the Sweetheart Subordinated Notes is subordinate to
Senior  Indebtedness  (as defined  therein),  which includes the Sweetheart U.S.
Credit  Facility  and the  Sweetheart  Secured  Notes.  Sweetheart  may,  at its
election,  redeem the Sweetheart  Subordinated Notes at any time at a redemption
price equal to a percentage (103.938% and declining in annual increments to 100%
after August 31, 2001) of the  principal  amount,  plus  accrued  interest.  The
Sweetheart  Notes  provide that upon the  occurrence  of a Change of Control (as
defined  therein) the holders will have the option to require the  redemption of
the  Sweetheart  Notes at a  redemption  price  equal  to 101% of the  principal
amount, plus accrued interest.

         Pursuant to the terms of the instruments  governing the indebtedness of
SF  Holdings,  Fonda  and  Sweetheart,   each  company  is  subject  to  certain
affirmative and negative covenants  customarily  contained in agreements of this
type,  including,  without  limitation,  covenants  that  restrict,  subject  to
specified  exceptions  (i)  mergers,  consolidations,  asset sales or changes in
capital structure, (ii) creation or acquisition of subsidiaries,  (iii) purchase
or  redemption  of capital  stock or  declaration  or payment  of  dividends  or
distributions on such capital stock, (iv) incurrence of additional indebtedness,
(v) investment activities,  (vi) granting or incurrence of liens to secure other
indebtedness,  (vii)  prepayment or  modification  of the terms of  subordinated
indebtedness and (viii) engaging in transactions  with affiliates.  In addition,
such debt  instruments  restrict each  subsidiary's  ability to pay dividends or
make other  distributions  to SF Holdings or each other.  The credit  facilities
also require that each subsidiary satisfy certain financial covenants.

         Pursuant to the asset sale covenant  under the indenture  governing the
Fonda Notes,  resulting from the receipt of proceeds from the sale of the tissue
mill,  Fonda is  required  to (i)  reinvest  approximately  $10  million of such
proceeds 




                                       11
<PAGE>

in fixed assets within 270 days of such  disposition or (ii) offer to repurchase
the Fonda Notes to the extent that such  amount has not been  reinvested.  As of
November  30,  1998,  the Company has  reinvested  or has  committed to reinvest
amounts  in  excess  of  $10  million,  primarily  in  napkin  and  plate-making
equipment.

         During  the Nine Week  Transition  Period,  the  Company  did not incur
material costs for compliance with environmental law and regulations.

         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 will
be  sufficient  to fund each of  Fonda's  and  Sweetheart's  respective  capital
expenditures needs, debt service  requirements and working capital needs 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 is in the
process of upgrading its hardware and software systems which run most of Fonda's
data processing and financial reporting software  applications and consolidating
certain of its in-house  developed  computer systems into the upgraded  systems.
The upgraded  systems are expected to be operational  and Year 2000 compliant by
December 1998. All other information  technology systems, that are not currently
Year 2000  compliant,  are also  expected to be compliant by December  1998.  In
addition, Fonda is working with vendors to ensure that its telephone systems and
other embedded  technologies are Year 2000 compliant.  EDI trading partners have
been  contacted,  and other key  business  partners  are in the process of being
contacted, to ensure that key business transactions will be Year 2000 compliant.
Furthermore, in the event Fonda is unable to meet certain key operational dates,
the Company  believes its systems that are already Year 2000 compliant,  as well
as  temporary  solutions  to systems  that are  currently  in place,  and manual
procedures  would allow Fonda to ship product to  customers  and engage in other
critical business functions.

         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  is  scheduled  to complete  the  hardware and
operating  systems  conversion  plans  by  January  1999.  With  respect  to the
application  phase,   Sweetheart  is  compliant  in  its  order  management  and
warehousing systems. Manufacturing and planning systems are in final testing and
are  expected  to be  compliant  by April 1999 and January  1999,  respectively.
Financial, corporate and in-house developed systems are scheduled for compliance
by July  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 by
Year 2000  compliant.  Furthermore,  in the event  Sweetheart  is unable to meet
certain key operational  dates,  Sweetheart  believes its already compliant Year
2000 systems for planning,  order management and warehouse  management which, in
use with manual  systems,  would allow  Sweetheart to ship products to customers
and engage in other critical business functions.

         As of December 1, 1998, Sweetheart and Fonda estimate the total cost of
their   respective   Year  2000  program  at  $2.7  million  and  $3.4  million,
respectively,  of which each has spent $1.2  million as of  September  27, 1998,
including  $.2  million  by Fonda in the Nine  Week  Transition  Period.  Future
expenditures  will be  funded  from  cash  flow  from the  respective  company's
operations  or  borrowings  under each  company's  respective  credit  facility.
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 



                                       12
<PAGE>

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, the Company 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.



                                       13
<PAGE>

PART II - OTHER INFORMATION

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

(a)        Exhibits:
           --------

         Exhibits 2.1 through 10.8 are  incorporated  herein by reference to the
         exhibit with the  corresponding  number filed as part of the  Company's
         Registration  Statement on Form S-4, as amended  (File No.  333-50683).
         Exhibits 10.9 through 10.18 are incorporated herein by reference to the
         exhibit with the  corresponding  number filed as part of the  Company's
         Registration Statement on Form S-4, as amended (File No. 333-51563).

     Exhibit #                                       Description of Exhibit
     ---------                                       ----------------------

        2.1        Investment  Agreement,  dated as of December 29, 1997,  among
                   the  Stockholders  of Sweetheart  Holdings Inc.  ("Sweetheart
                   Holdings"),  Creative  Expressions Group, Inc. ("CEG") and SF
                   Holdings Group, Inc. ("SF Holdings").
        3.1        Restated Certificate of Incorporation of the Company.
        3.2        By-laws of the Company.
        4.1        Indenture,  dated as of March 12,  1998,  between SF Holdings
                   and The Bank of New York. 
       4.2         Form of 12 3/4% Series A and Series B Senior Secured Discount
                   Notes,  dated as of March 12, 1998 (incorporated by reference
                   to Exhibit 4.1).
        4.3        Registration  Rights  Agreement,  dated as of March 12, 1998,
                   among SF Holdings,  Bear,  Stearns & Co. Inc. and SBC Warburg
                   Dillon Read Inc. (the "Initial Purchasers").
        4.4        Registration  Rights  Agreement,  dated as of March 20, 1998,
                   between the Company,  American Industrial Partners Management
                   Company, Inc. ("AIPM") and Bear, Stearns & Co., Inc.
        4.5        Form of Certificate of Exchangeable Preferred Stock.
        4.6        Form of  Indenture  between  the  Company and The Bank of New
                   York  governing the 133/4%  Subordinated  Notes due March 15,
                   2009.
        4.7        Paragraph A of Article Fourth of the Restated  Certificate of
                   Incorporation  of the Company  (incorporated  by reference to
                   Exhibit 3.1).
       10.1        Stockholders'  Rights Agreement,  dated as of March 12, 1998,
                   among SF  Holdings  and the  persons  listed  on  Schedule  I
                   thereto.
       10.2        Stockholders'  Agreement,  dated as of March 12, 1998,  among
                   Sweetheart   Holdings,   SF   Holdings   and   the   Original
                   Stockholders.
       10.3        Stockholders Agreement,  dated as of March 12, 1998, among SF
                   Holdings and the Initial Purchasers.
       10.4        Pledge  Agreement,  dated as of March 12,  1998,  between  SF
                   Holdings and the Bank of New York. 
       10.5        Tax Sharing  Agreement,  dated as of March 12, 1998, among SF
                   Holdings and The Fonda Group, Inc ("Fonda").
       10.6        Second Restated Management  Services  Agreement,  dated as of
                   March 12, 1998,  among  Sweetheart  Holdings,  Sweetheart Cup
                   Company Inc. ("Sweetheart Cup"), American Industrial Partners
                   Management Company, Inc. ("AIPM") and SF Holdings.
       10.7        Amendment  No.  1  to  Second  Restated  Management  Services
                   Agreement,  dated  as of March  12,  1998,  among  Sweetheart
                   Holdings, Sweetheart Cup, AIPM and SF Holdings.
       10.8        Assignment  and Assumption  Agreement,  dated as of March 12,
                   1998, between SF Holdings and Fonda.
       10.9        Stockholders  Agreement,  dated as of March 20, 1998, between
                   the Company and Bear, Stearns & Co., Inc.
       10.10       Executive  Retention  Pay  Agreement,  dated as of October 1,
                   1997, between Sweetheart Holdings and Daniel M. Carson.
       10.11       Executive  Retention  Pay  Agreement,  dated as of October 1,
                   1997, between Sweetheart Holdings and William H. Haas.
       10.12       Executive  Retention  Pay  Agreement,  dated as of October 1,
                   1997, between Sweetheart Holdings and James R. Mullen.



                                       14
<PAGE>

       10.13       Special Incentive  Agreement between Sweetheart Holdings Inc.
                   and its  subsidiary,  Sweetheart Cup Company Inc. and William
                   H. Haas dated November 18, 1996.
       10.14       Special Incentive  Agreement between Sweetheart Holdings Inc.
                   and its subsidiary, Sweetheart Cup Company Inc. and Daniel M.
                   Carson dated November 18, 1996.
       10.15       Special Incentive  Agreement between Sweetheart Holdings Inc.
                   and its subsidiary,  Sweetheart Cup Company Inc. and James R.
                   Mullen dated November 18, 1996.
       10.16       Employee  Relocation  Agreement between  Sweetheart  Holdings
                   Inc.  and its  subsidiary,  Sweetheart  Cup Company  Inc. and
                   James R. Mullen dated December 19, 1997.
       10.17       Employee  Relocation  Agreement between  Sweetheart  Holdings
                   Inc.  and its  subsidiary,  Sweetheart  Cup Company  Inc. and
                   Daniel M. Carson dated December 19, 1997.
       10.18       Employee  Relocation  Agreement between  Sweetheart  Holdings
                   Inc.  and its  subsidiary,  Sweetheart  Cup Company  Inc. and
                   William H. Haas dated December 19, 1997.
       16.1        Letter regarding change in certifying accountant.
       27.1 *      Financial Data Schedule.


      ----------------
      o  filed herein.

(b)  A report on Form 8-K was filed on  October  30,  1998  under item 8 for the
     change in the  Company's  year-end from the last Sunday in July to the last
     Sunday in September.




                                       15
<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, thereto duly authorized.

      Date:  December 4, 1998

                                      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)




                                       16