UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

__________________________________________

FORM 10-Q

__________________________________________

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

For the quarterly period ended ~~March~~June 2726, 2011

£ Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the transition period from to

Commission File Number: 333-116843

__________________________________________

SOLO CUP COMPANY

(Exact name of registrant as specified in its charter)

__________________________________________



Delaware		47-0938234
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

150 South Saunders Road, Suite 150, Lake Forest, Illinois		60045
(Address of principal executive offices)		(Zip Code)

Registrant’s telephone number, including area code: 847/444-5000

__________________________________________

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 S No £

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes £S No £

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer £ Accelerated filer £ Non-accelerated filer S Smaller reporting company £

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes £ No S

The number of shares outstanding of the Registrant’s common stock as of ~~May~~August 109, 2011:

Common Stock, $0.01 par value – 100 shares

Table of Contents

INDEX

		Page
PART I.	Financial Information
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1617
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	2123
Item 4.	Controls and Procedures	2123
PART II.	Other Information
Item 1.	Legal Proceedings	2224
Item 1A.	Risk Factors	2224
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	2224
Item 3.	Defaults upon Senior Securities	2224
Item 4.	(Removed and Reserved)	2224
Item 5.	Other Information	2224
Item 6.	Exhibits	2224

Table of Contents

PART I—FINANCIAL INFORMATION


Item 1.	Financial Statements.

SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share data)

	March 27, 2011			December 26, 2010
	June 26, 2011			December 26, 2010
	(Unaudited)
Assets
Current assets:
Cash and cash equivalents	$	1615,~~360~~092		$	21,511
Accounts receivable - trade, less allowance for doubtful accounts of $1,908 and $1,837	126,382			116,213
Accounts receivable - trade, less allowance for doubtful accounts of $1,077 and $1,837	139,152			116,213
Accounts receivable - other	4,~~672~~394			4,512
Inventories	~~272~~284,~~373~~012			227,589
Deferred income taxes	115,~~256~~435			13,056
Prepaid expenses	46,~~878~~870			6,039
Restricted cash	—			1,940
Other current assets	17,763			17,809
Assets held for sale	14,200			—
Total current assets	453,684			408,669
Other current assets	19,538			17,809
Property, plant and equipment, less accumulated depreciation and amortization of $636,754 and $612,847	410,775			429,113
Total current assets	488,693			408,669
Intangible assets, net	856			910
Property, plant and equipment, less accumulated depreciation and amortization of $604,844 and $612,847	365,586			429,113
Other assets	24,312			25,980
Intangible assets, net	803			910
Total assets	$	889,627		$	864,672
Other assets	24,697			25,980
Total assets	$	879,779		$	864,672
Liabilities and Shareholder’s Deficit
Current liabilities:
Accounts payable	$	8996,~~046~~474		$	63,058
Accrued payroll and related costs	2826,~~993~~543			28,707
Accrued customer allowances	25,~~066~~578			27,172
Current maturities of long-term debt	~~446~~454			430
Accrued interest	2019,~~499~~669			20,000
Other current liabilities	3635,~~734~~899			39,189
Total current liabilities	~~200~~204,~~784~~617			178,556
Long-term debt, net of current maturities	~~664~~688,~~635~~011			637,285
Deferred income taxes	127,~~748~~096			14,876
Pensions and other postretirement benefits	3736,~~963~~901			38,428
Deferred gain on sale-leaseback	4039,~~101~~444			40,758
Other liabilities	42,~~881~~334			42,273
Total liabilities	~~999~~1,~~112~~018,403			952,176
Shareholder’s deficit:
Common stock - Par value $0.01 per share; 1,000 shares authorized; 100 shares issued and outstanding	—			—
Additional paid-in capital	254,895			254,895
Accumulated deficit	(~~356~~385,~~413~~550		)	(331,116		)
Accumulated other comprehensive loss	(7,~~967~~969		)	(11,283		)
Total shareholder’s deficit	(~~109~~138,~~485~~624		)	(87,504		)
Total liabilities and shareholder’s deficit	$	~~889~~879,~~627~~779		$	864,672

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited, in thousands)

	For the thirteen weeks ended						For the twenty-six weeks ended
	March 27, 2011			March 28, 2010
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Net sales	$	~~371~~435,~~145~~876		$	~~344~~419,~~872~~179		$	807,021		$	764,052
Cost of goods sold	~~340~~398,~~724~~786			~~306~~386,~~588~~584			739,510			693,173
Gross profit	3037,~~421~~090			3832,~~284~~595			67,511			70,879
Selling, general and administrative expenses	35,~~587~~958			3440,~~822~~766			71,546			75,589
Loss on asset disposals	544			963
(Gain) loss on asset disposals	(823		)	1,034			(279		)	1,997
Operating (loss) income	(5,710		)	2,499
Asset impairment	12,343			13,218			12,343			13,218
Interest expense, net of interest income of $34 and $34	17,282			17,100
Operating loss	(10,388		)	(22,423		)	(16,099		)	(19,925		)
Foreign currency exchange loss, net	2,158			1,376
Interest expense, net of interest income of $26, $79, $59 and $113	17,656			17,335			34,936			34,435
Loss before income taxes	(25,150		)	(15,977		)
Foreign currency exchange loss (gain), net	215			(26		)	2,373			1,350
Income tax provision	147			551
Gain from bargain purchase	—			(1,703		)	—			(1,703		)
Net loss	$	(25,297	)	$	(16,528	)
Loss before income taxes	(28,259		)	(38,029		)	(53,408		)	(54,007		)
Income tax provision	879			1,692			1,026			2,242
Net loss	$	(29,138	)	$	(39,721	)	$	(54,434	)	$	(56,249	)

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF SHAREHOLDER’S DEFICIT

(Unaudited, in thousands, except share amounts)

	Common stock			Additionalpaid-in capital		Accumulated deficit			Accumulatedothercomprehensive loss			Totalshareholder’s deficit
	Shares	Amount
December 26, 2010	100	$	—	$	254,895	$	(331,116	)	$	(11,283	)	$	(87,504	)
Net loss	—	—		—		(2554,~~297~~434		)	—			(2554,~~297~~434		)
Foreign currency translation adjustment	—	—		—		—			2,~~910~~522			2,~~910~~522
Pension liability adjustments, net of tax of $186	—	—		—		—			406			406
Pension liability adjustments, net of tax of $364	—	—		—		—			792			792
March 27, 2011	100	$	—	$	254,895	$	(356,413	)	$	(7,967	)	$	(109,485	)
June 26, 2011	100	$	—	$	254,895	$	(385,550	)	$	(7,969	)	$	(138,624	)

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited, in thousands)

	Thirteen weeks ended
	Twenty-six weeks ended
	March 27, 2011			March 28, 2010
	June 26, 2011			June 27, 2010
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(2554,~~297~~434	)	$	(1656,~~528~~249	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2650,~~235~~567			1746,~~007~~670
Deferred financing fee amortization	13,~~809~~645			13,~~720~~442
Loss on asset disposals	544			963
(Gain) loss on asset disposals	(279		)	1,997
Deferred income taxes	116			(257		)
Gain from bargain purchase	—			(1,703		)
Foreign currency exchange loss, net	2,158			1,376
Asset impairment	12,343			13,218
Changes in operating assets and liabilities:
Deferred income taxes	(126		)	(143		)
Accounts receivable, net	(9,090		)	4,585
Foreign currency exchange loss, net	2,373			1,350
Inventories	(43,382		)	(56,526		)
Changes in operating assets and liabilities, net of business acquisition:
Prepaid expenses and other current assets	1,753			1,324
Accounts receivable, net	(20,899		)	(8,367		)
Other assets	(339		)	832
Inventories	(55,316		)	(70,397		)
Accounts payable	25,414			18,540
Prepaid expenses and other current assets	(139		)	(1,610		)
Accrued expenses and other current liabilities	(6,422		)	896
Other assets	(2,154		)	783
Other liabilities	(1,226		)	37
Accounts payable	33,730			8,851
Other, net	448			655
Accrued expenses and other current liabilities	(10,806		)	4,456
Net cash used in operating activities	(27,279		)	(25,376		)
Other liabilities	(3,611		)	(351		)
Other, net	1,103			1,339
Net cash used in operating activities	(44,003		)	(56,714		)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment	1,~~089~~238			21114
Purchases of property, plant and equipment	(713,~~219~~980		)	(2031,~~032~~357		)
Decrease in restricted cash	1,940			2,170
Business acquisition, net of cash acquired	—			(23,661		)
Net cash used in investing activities	(4,190		)	(17,841		)
Decrease in restricted cash	1,940			4,270
Other	(1,500		)	—
Net cash used in investing activities	(12,302		)	(50,634		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving credit facilities	2650,~~989~~212			42100,~~300~~200
Repayments of term notes	—			(~~348~~410		)
Repayments of other debt	(~~110~~225		)	(64164		)
Return of capital to parent	—			(100		)
Debt issuance costs	—			(~~480~~530		)
Net cash provided by financing activities	2649,~~879~~987			4198,~~308~~996
Effect of exchange rate changes on cash	(~~561~~101		)	~~328~~362
NET DECREASE IN CASH AND CASH EQUIVALENTS	(56,~~151~~419		)	(17,~~581~~990		)
CASH AND CASH EQUIVALENTS, beginning of period	21,511			30,006
CASH AND CASH EQUIVALENTS, end of period	$	1615,~~360~~092		$	2822,~~425~~016
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Interest paid, net of capitalized interest	$	1632,~~322~~961		$	1533,~~595~~546
Income taxes paid (tax refunds), net	$	~~737~~2,353		$	(~~1,958~~884	)

See accompanying Notes to Consolidated Financial Statements.

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(1) BASIS OF PRESENTATION

Organization. Solo Cup Company, a Delaware corporation (“Solo Delaware”), is a holding company, the material assets of which are 100% of the capital stock of SF Holdings Group, Inc. SF Holdings owns 100% of the capital stock of Solo Cup Operating Corporation, which, in turn, owns various direct and indirect subsidiaries. In these financial statements, the terms “we,” “us” and “our” refer to Solo Delaware and its direct and indirect subsidiaries.

Solo Delaware is a wholly owned subsidiary of Solo Cup Investment Corporation, a Delaware corporation. SCC Holding Company LLC owns 67.26%, Vestar Capital Partners IV, L.P. and certain of its affiliates own 32.71% and management of Solo Delaware owns the remaining 0.03% of Solo Cup Investment Corporation.

Principles of consolidation. These interim condensed consolidated financial statements include the accounts of Solo Delaware and its subsidiaries. All material intercompany accounts, transactions and profits are eliminated in consolidation. The information included in these interim condensed consolidated financial statements is unaudited but, in our opinion, includes all adjustments (consisting only of normal recurring adjustments and accruals unless otherwise indicated) that we consider necessary for a fair presentation of the financial position, operating results and cash flows for the periods presented. Results for the interim periods are not necessarily indicative of results expected for the entire year. These interim condensed consolidated financial statements should be read in conjunction with our consolidated financial statements and notes thereto for the fiscal year ended December 26, 2010, included in our 2010 Annual Report on Form 10-K, which we filed with the Securities and Exchange Commission on March 17, 2011.

Estimates. We have prepared these interim condensed consolidated financial statements in conformity with U.S. generally accepted accounting principles, using our best estimates and judgments where appropriate. These estimates and judgments affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the balance sheet dates and the reported amounts of revenues and expenses during the reporting periods. Actual results could differ materially from these estimates and judgments.

(2) PLANT CLOSURES AND ASSETS HELD FOR SALE

On May 6, 2010, our Board of Directors committed to a plan designed to further optimize our manufacturing footprint. Pursuant to the plan, we closed our manufacturing facility in Springfield, Missouri in March 2011 and ~~we intend to close~~ our manufacturing ~~facilities~~facility in North Andover, Massachusetts in May 2011, and we intend to close our manufacturing facility in Owings Mills, Maryland byin the ~~end~~third quarter of 2011. We expect to incur costs over the life of the plan in the range of $~~115~~119 to $124 million, of which approximately $27 to $29 million (identified in the table below as severance and equipment relocation and related costs) will require cash expenditures. Approximately $23.4 million of severance has been paid through ~~March~~June 2726, 2011, including $12.89 million during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011. Approximately $1016.96 million of equipment relocation and related costs, which are expensed as incurred, have been paid to date, including $511.52 million during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011.

The total expected costs also include a future charge attributable to lease payments for our North Andover facility that we will remain obligated to make in periods after we exit the facility, asset impairment charges, and accelerated depreciation for certain property, plant and equipment that will not be used after the facilities are closed. The following table summarizes the estimated range of total plan costs and those incurred (expensed) to date (in millions):

	Estimated range				Incurred (expensed)
	As of				Year ended		~~Thirteen~~Twenty-six weeks ended		Life to date
	March 27, 2011				December 26, 2010		March 27, 2011		March 27, 2011
	June 26, 2011				December 26, 2010		June 26, 2011		June 26, 2011
Severance	$	7	$	7	$	7	$	—	$	7
Equipment relocation and related costs	20		22		5		611		1116
Pension plan curtailment loss	2		2		2		—		2
Accrual of remaining lease payments	4		6		—		—		—
Asset impairment	1729		1729		17		—12		1729
Accelerated depreciation	6557		7058		40		917		4957
Total costs	$	~~115~~119	$	124	$	71	$	1540	$	86111

Equipment relocation and related costs and accelerated depreciation are included in cost of goods sold on our accompanying consolidated statement of operations. As of ~~March~~June 2726, 2011, accrued severance of approximately $54 million is ~~included in other current liabilities in our Consolidated Balance Sheet.~~

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

included in other current liabilities in our Consolidated Balance Sheet.

In May 2011, we entered into an agreement to sell our Owings Mills, Maryland manufacturing facility for $15.0 million and to lease back the property for a period of seven months from the closing date. The closing, which is expected to occur during the third quarter of 2011, is subject to satisfactory completion of due diligence by the purchaser and other customary conditions.

We classify assets as held for sale when they meet the criteria set forth in FASB ASC Topic 360, Property, Plant, and Equipment. Based on the execution of the purchase and sale agreement during our second fiscal quarter, this facility met the criteria and we reclassified this property from held and used to held for sale. Accordingly, we recorded an impairment of approximately $12.3 million to adjust the carrying value of this property to fair value less estimated costs to sell during the thirteen weeks ended June 26, 2011.

(3) INVENTORIES

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

	March 27, 2011		December 26, 2010
	June 26, 2011		December 26, 2010
Finished goods	$	~~206~~219,~~671~~311	$	166,042
Work in process	1213,~~683~~822		12,307
Raw materials and supplies	5350,~~019~~879		49,240
Total inventories	$	~~272~~284,~~373~~012	$	227,589

(4) DEBT

Long-term debt as of ~~March~~June 2726, 2011 and December 26, 2010, including amounts payable within one year, was as follows (in thousands):

	March 27, 2011			December 26, 2010
	June 26, 2011			December 26, 2010
Long-term debt:
10.5% Senior Secured Notes due 2013	$	300,000		$	300,000
10.5% Senior Secured Notes due November 2013	$	300,000		$	300,000
Unamortized discount	(43,~~130~~786		)	(4,464		)
10.5% Senior Secured Notes due 2013, net	295,870			295,536
10.5% Senior Secured Notes due November 2013, net	296,214			295,536
8.5% Senior Subordinated Notes due 2014	325,000			325,000
8.5% Senior Subordinated Notes due February 2014	325,000			325,000
Asset-based Revolving Credit Facility	3858,~~435~~790			10,027
Canadian Revolving Credit Facility	14,~~329~~122			2,669
Capital lease obligations	4,~~447~~339			4,483
Total long-term debt	~~665~~688,~~081~~465			637,715
Less: Current maturities of long-term debt	~~446~~454			430
Long-term debt, net of current maturities	$	~~664~~688,~~635~~011		$	637,285

(5) FAIR VALUE OF FINANCIAL INSTRUMENTS

Our financial instruments consist primarily of cash equivalents, accounts receivable, accounts payable, derivative financial instruments and debt, including obligations under capital leases. The carrying values of financial instruments other than derivative financial instruments and fixed-rate debt approximated their fair values as of ~~March~~June 2726, 2011 and December 26, 2010 due to their short-term maturities or market rates of interest. Derivative financial instruments were recorded at fair value (Note 6). As of ~~March~~June 2726, 2011 and December 26, 2010, the fair value of our floating-rate debt, consisting of our asset-based revolving credit facility and the revolving loan under our Canadian credit facility, approximated carrying value due to our ability to borrow at comparable terms in the open market.

Our 10.5% Senior Secured Notes due 2013, issued on July 2, 2009 (Note 4), had a carrying value of $~~295~~296.92 million and an estimated fair value of $~~316~~314.83 million as of ~~March~~June 2726, 2011, and a carrying value of $295.5 million and an estimated fair value of $319.5 million as of December 26, 2010. Our 8.5% Senior Subordinated Notes due 2014 (Note 4) had a carrying value of $325.0 million and an estimated fair value of $~~292~~295.58 million and $295.1 million as of ~~March~~June 2726, 2011 and December 26, 2010, respectively. The fair ~~value~~values of the senior secured notes and ~~the~~ senior subordinated notes ~~was~~were determined based on the last trade price of the ~~respective~~ debt prior to close of trading on ~~March~~June 2524, 2011 and December 23, 2010, the last business day of each respective fiscal period. The estimated fair values were determined using Level 1 inputs in the fair value hierarchy, as defined ~~in the Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures.~~

(continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

~~(5)~~in ~~FAIR~~the ~~VALUE~~Financial OFAccounting ~~FINANCIAL~~Standards ~~INSTRUMENTS~~Board (~~CONTINUED~~FASB) Accounting Standards Codification (ASC) Topic 820, Fair Value Measurements and Disclosures.

The fair value hierarchy consists of three levels:


•	Level 1 fair values are valuations that the entity has the ability to access and that are based on quoted market prices in active markets for identical assets or liabilities;


•	Level 2 fair values are valuations based on quoted prices for similar assets or liabilities, quoted prices in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities; and


•	Level 3 fair values are valuations based on inputs that are supported by little or no market activity, and that are significant to the fair value of the assets or liabilities.

On a recurring basis prior to their expiration date, we measured our interest rate swap agreements (Note 6) at fair value using an income approach and Level 2 inputs in the fair value hierarchy. The income approach consists of a discounted cash flow model that takes into account the present value of future cash flows under the terms of the contracts incorporating observable market inputs as of the reporting date such as prevailing interest rates. Both the counterparty’s credit risk and our credit risk were considered in the fair value determination.

(6) DERIVATIVE INSTRUMENTS

As of December 26, 2010, we had three outstanding receive-variable (three-month LIBOR), pay-fixed interest rate swap agreements with an aggregate notional amount of $150 million that were originally entered into to hedge a portion of our exposure to interest rate risk related to term loan borrowings under our former variable-rate first lien facility. The effective date of the interest rate swaps was August 28, 2007 and the expiration date was February 28, 2011. The interest rate swaps were initially designated and qualified as highly-effective cash flow hedges. As of June 28, 2009, these swaps no longer qualified for hedge accounting because we extinguished our first lien credit facility as part of our July 2009 refinancing transactions.

As a result of the refinancing transactions, the counterparty to the interest rate swaps required us to post a specified amount of collateral against the current market value of the swaps. Our obligation to post collateral continued through the expiration date of the swaps in February 2011. The amount of collateral that remained on account with the counterparty fluctuated based on changes in the estimated fair value of the swaps, including as a result of changes in interest rates. The amount of collateral as of December 26, 2010 of $1.9 million is included in restricted cash on our Consolidated Balance Sheet and classified as current.

When the interest rate swaps were designated as cash flow hedges, we reported the mark-to-market changes on the swaps as a component of accumulated other comprehensive income (loss) in accordance with FASB ASC Topic 815, Derivatives. As a result of the refinancing transactions, the hedged forecasted payments of variable-rate interest on borrowings under the first lien credit facility were no longer probable of occurring. Accordingly, we discontinued hedge accounting prospectively, and, as a result, the cumulative mark-to-market loss of $9.1 million associated with these swaps was reclassified from accumulated other comprehensive loss to interest expense in June 2009. Since the third fiscal quarter of 2009, we have reported the mark-to-market changes on the swaps as a component of interest expense, net. The mark-to-market gains recognized in interest expense during the ~~thirteen~~twenty-six weeks ended ~~March 27~~June 26, 2011 and ~~March 28~~June 27, 2010 were $1.4 million and $13.5 million, respectively. The net gain (loss) recognized in interest expense during the ~~thirteen~~twenty-six weeks ended ~~March 27~~June 26, 2011 and ~~March 28~~June 27, 2010 was $0.1 million and $(0.54) million, respectively. The accounting impact in 2011 was all recognized in the thirteen weeks ended March 27, 2011.

We reported our interest rate swap agreements at fair value on our Consolidated Balance Sheet as current liabilities based on their expiration date of February 28, 2011. As of December 26, 2010, their fair value of $1.4 million was included in other current liabilities.

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(7) PENSION AND OTHER POSTRETIREMENT BENEFITS

Net periodic benefit cost for our pension and other postretirement benefit plans consisted of the following (in thousands):

	For the thirteen weeks ended						For the twenty-six weeks ended
	March 27, 2011			March 28, 2010
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Pension Benefits
Service cost	$	~~357~~363		$	~~343~~350		$	720		$	693
Interest cost	1,~~788~~802			1,~~758~~745			3,590			3,503
Expected return on plan assets	(1,~~808~~824		)	(1,~~773~~755		)	(3,632		)	(3,528		)
Amortization of prior service cost	30			5150			60			102
Amortization of net loss	~~666~~669			~~570~~560			1,335			1,130
Net periodic benefit cost	$	1,~~033~~040		$	~~949~~950		$	2,073		$	1,900
Other Postretirement Benefits
Service cost	$	15		$	14		$	30		$	28
Interest cost	9495			9394			189			187
Amortization of prior service credit	(109		)	(~~108~~109		)	(217		)	(217		)
Amortization of net loss	13			13			25			26
Net periodic benefit cost	$	1314		$	12		$	27		$	24

During the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011, we made approximately $~~1.0~~3 million of contributions to our pension and other postretirement benefit plans. We presently anticipate contributing an additional $~~6.0~~4 million to fund our pension and other postretirement benefit plans in 2011 for a total of approximately $7.0 million.

As a result of the closing of our Springfield, Missouri manufacturing facility in March 2011 (Note 2), we have entered into discussions with the Pension Benefit Guaranty Corporation regarding potential additional funding of the related defined benefit pension plan.

(8) ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)

Comprehensive income (loss) consisted of the following (in thousands):

	For the thirteen weeks ended						For the twenty-six weeks ended
	March 27, 2011			March 28, 2010
	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Net loss	$	(2529,~~297~~138	)	$	(1639,~~528~~721	)	$	(54,434	)	$	(56,249	)
Foreign currency translation adjustments	~~2,910~~(388		)	~~345~~(529		)	2,522			(183		)
Pension liability adjustments, net of tax of $186 and $224	406			302
Pension liability adjustments, net of tax of $178, $137, $364 and $361	386			263			792			565
Comprehensive loss	$	(2129,~~981~~140	)	$	(1539,~~881~~987	)	$	(51,120	)	$	(55,867	)

Accumulated other comprehensive loss consisted of the following (in thousands):

	March 27, 2011			December 26, 2010
	June 26, 2011			December 26, 2010
Foreign currency translation adjustments	$	15,~~995~~607		$	13,085
Pension liability adjustments, net of tax benefit of $5,029 and $5,215	(23,962		)	(24,368		)
Pension liability adjustments, net of tax benefit of $4,851 and $5,215	(23,576		)	(24,368		)
Accumulated other comprehensive loss	$	(7,~~967~~969	)	$	(11,283	)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(9) RELATED PARTY TRANSACTIONS

Advisory fees. In 2004, Solo Delaware and Solo Cup Investment Corporation entered into a management agreement with SCC Holding providing for, among other things, the payment by Solo Cup Investment Corporation of an annual advisory fee of $2.5 million to SCC Holding. On June 30, 2009, during our third fiscal quarter of 2009, Solo Delaware and Solo Cup Investment Corporation amended the management agreement to provide that the annual advisory fee would be $0.8 million, beginning with the 2009 fee. Pursuant to the SCC Holding Agreement, we recorded $0.2 million of advisory fees during each of the thirteen weeks ended ~~March~~June 2726, 2011 and ~~March~~June 2827, 2010 and $0.4 Asmillion of ~~March 27, 2011, prepaid~~ advisory fees ofduring ~~$0.2~~each ~~million~~of ~~were~~the ~~included~~twenty-six inweeks ~~prepaid~~ended ~~expenses~~June 26, on2011 ~~our~~and ~~Consolidated~~June 27, ~~Balance Sheet~~2010.

In 2004, Solo Delaware and Solo Cup Investment Corporation also entered into a management agreement with Vestar pursuant to which Solo Cup Investment Corporation agreed to pay Vestar an annual advisory fee of $0.8 million, plus reimbursement of its expenses. Pursuant to the Vestar Agreement, we recorded $0.2 million of advisory fees during each of the thirteen weeks ended ~~March~~June 2726, 2011 and ~~March~~June 2827, 2010 and $0.4 Asmillion of ~~March 27, 2011, prepaid~~ advisory fees ofduring ~~$0.2~~each ~~million~~of ~~were~~the ~~included~~twenty-six inweeks ~~prepaid~~ended ~~expenses~~June 26, on2011 ~~our~~and ~~Consolidated~~June 27, ~~Balance Sheet~~2010.

(10) SEGMENTS

We manage and evaluate our operations in two reportable segments: North America and Europe. Both of these segments manufacture and supply a broad portfolio of single-use products that are used to serve food and beverages and are available in plastic, paper, foam, post-consumer recycled content and annually renewable materials. We manage our operating segments separately based on the products and requirements of the different markets. North America includes all of our entities established in the United States, Canada, Mexico and Puerto Rico, and our corporate function. Europe includes all U.K. entities. Other includes Panama.

The accounting policies of the operating segments are the same as those described in Note 2 to the consolidated financial statements in our 2010 Annual Report on Form 10-K. Segment operating results are measured based on operating income (loss). We account for intersegment net sales on an arm’s-length pricing basis.

(in thousands)	North America			Europe			Other		Total Segments			Eliminations			Total
For the thirteen weeks ended March 27, 2011
For the thirteen weeks ended June 26, 2011
Revenues from external customers	$	~~340~~399,~~741~~029		$	2633,~~788~~014		$	3,~~616~~833	$	~~371~~435,~~145~~876		$	—		$	~~371~~435,~~145~~876
Intersegment net sales	710,~~892~~044			—			—		710,~~892~~044			(710,~~892~~044		)	—
Operating (loss) income	(511,~~680~~215		)	~~(356~~347		)	~~351~~408		(510,~~685~~460		)	~~(25~~72		)	(510,~~710~~388		)
For the thirteen weeks ended March 28, 2010
For the thirteen weeks ended June 27, 2010
Revenues from external customers	$	~~316~~387,~~731~~113		$	2528,~~098~~892		$	3,~~043~~174	$	~~344~~419,~~872~~179		$	—		$	~~344~~419,~~872~~179
Intersegment net sales	37,~~671~~549			—			—		37,~~671~~549			(37,~~671~~549		)	—
Operating income (loss)	3,509			(1,405		)	326		2,430			69			2,499
Operating (loss) income	(22,984		)	177			210		(22,597		)	174			(22,423		)
For the twenty-six weeks ended June 26, 2011
Revenues from external customers	$	739,770		$	59,802		$	7,449	$	807,021		$	—		$	807,021
Intersegment net sales	17,936			—			—		17,936			(17,936		)	—
Operating (loss) income	(14,706		)	(9		)	758		(13,957		)	(2,142		)	(16,099		)
For the twenty-six weeks ended June 27, 2010
Revenues from external customers	$	703,845		$	53,990		$	6,217	$	764,052		$	—		$	764,052
Intersegment net sales	11,219			—			—		11,219			(11,219		)	—
Operating (loss) income	(19,475		)	(1,228		)	535		(20,168		)	243			(19,925		)

	For the thirteen weeks ended
(in thousands)	March 27, 2011			March 28, 2010
Operating income (loss):
Total segment and other operating (loss) income	$	(5,685	)	$	2,430
Elimination of intersegment operating (income) loss	(25		)	69
Interest expense	(17,316		)	(17,134		)
Interest income	34			34
Foreign currency exchange loss, net	(2,158		)	(1,376		)
Loss before income taxes	$	(25,150	)	$	(15,977	)

(Continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(10) SEGMENTS (CONTINUED)



	For the thirteen weeks ended						For the twenty-six weeks ended
(in thousands)	June 26, 2011			June 27, 2010			June 26, 2011			June 27, 2010
Operating income (loss):
Total segment and other operating loss	$	(10,460	)	$	(22,597	)	$	(13,957	)	$	(20,168	)
Elimination of intersegment operating loss (income)	72			174			(2,142		)	243
Interest expense	(17,682		)	(17,414		)	(34,995		)	(34,548		)
Interest income	26			79			59			113
Foreign currency exchange (loss) gain, net	(215		)	26			(2,373		)	(1,350		)
Gain from bargain purchase	—			1,703			—			1,703
Loss before income taxes	$	(28,259	)	$	(38,029	)	$	(53,408	)	$	(54,007	)

(11) GUARANTOR NOTE

On July 2, 2009, Solo Delaware and Solo Cup Operating Corporation (“SCOC”) co-issued $300.0 million of 10.5% Senior Secured Notes due 2013. The senior secured notes are fully and unconditionally guaranteed, on a joint and several basis, by certain of our subsidiaries. The consolidated guarantors include SF Holdings; Solo Manufacturing LLC; P.R. Solo Cup, Inc.; Lily-Canada Holding Corporation; Solo Cup Finance Limited; Solo Cup (UK) Limited; Insulpak Holdings Limited; Solo Cup Europe Limited; and Solo Cup Owings Mills Holdings.

Effective February 22, 2004, Solo Delaware acquired SF Holdings. Solo Delaware partially funded the acquisition through the issuance of its 8.5% Senior Subordinated Notes due 2014. The senior subordinated notes are fully and unconditionally guaranteed, on a joint and several basis, by certain of our subsidiaries. The consolidated guarantors of the senior subordinated notes are the same as the senior secured notes, except for SCOC, which is a guarantor of the senior subordinated notes, but a co-issuer of the senior secured notes.

The following financial information is presented in accordance with Rule 3-10 of Regulation S-X under the Securities Exchange Act of 1934. In presenting this financial information, the equity method of accounting has been applied to (1) Solo Delaware's investment in SF Holdings, (2) SF Holdings' investment in SCOC, and (3) SCOC's investment in the Other Guarantors and Non-Guarantor subsidiaries. All such subsidiaries meet the requirements to be consolidated under U.S. generally accepted accounting principles. All intercompany balances and transactions have been eliminated.

(Continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Condensed Consolidated Balance SheetMarch 27, 2011(In thousands)
	SoloDelaware(1)			SFHoldings(2)(Guarantor)			SCOC(3)		OtherGuarantors(4)			Non-Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	—		$	1,850	$	5,701		$	8,809	$	—		$	16,360
Accounts receivable - trade	—			—			88,038		17,988			20,356		—			126,382
Accounts receivable - other	2,072			—			22,554		2,185			—		(22,139		)	4,672
Inventories	—			—			230,049		19,395			25,841		(2,912		)	272,373
Deferred income taxes	—			—			10,707		—			549		—			11,256
Prepaid expenses and other current assets	—			—			18,490		2,269			1,882		—			22,641
Total current assets	2,072			—			371,688		47,538			57,437		(25,051		)	453,684
Property, plant and equipment, net	—			—			367,446		12,536			30,793		—			410,775
Intangible assets, net	—			—			856		—			—		—			856
Intercompany receivables - non-current	184,093			—			6,088		—			—		(190,181		)	—
Intercompany debt - non-current	400,728			—			39,467		—			—		(440,195		)	—
Investments in subsidiaries	(70,147		)	255,802			56,275		—			20,473		(262,403		)	—
Other assets	11,068			—			9,582		1,014			2,648		—			24,312
Total assets	$	527,814		$	255,802		$	851,402	$	61,088		$	111,351	$	(917,830	)	$	889,627
Liabilities and Shareholder’s (Deficit) Equity
Current liabilities:
Accounts payable	$	—		$	—		$	71,481	$	11,737		$	5,828	$	—		$	89,046
Intercompany payable	—			—			4,257		8,404			9,480		(22,141		)	—
Accrued expenses and other current liabilities	16,429			—			86,731		1,766			6,366		—			111,292
Current maturities of long-term debt	—			—			173		273			—		—			446
Total current liabilities	16,429			—			162,642		22,180			21,674		(22,141		)	200,784
Long-term debt, net of current maturities	620,870			—			41,694		741			1,330		—			664,635
Long-term debt, net of current maturities - intercompany	—			135,768			264,960		39,465			—		(440,193		)	—
Deferred income taxes	—			—			11,266		—			1,482		—			12,748
Long-term payable - intercompany	—			190,181			—		—			—		(190,181		)	—
Other long-term liabilities	—			—			115,038		522			5,385		—			120,945
Total liabilities	637,299			325,949			595,600		62,908			29,871		(652,515		)	999,112
Total shareholder’s (deficit) equity	(109,485		)	(70,147		)	255,802		(1,820		)	81,480		(265,315		)	(109,485		)
Total liabilities and shareholder’s (deficit) equity	$	527,814		$	255,802		$	851,402	$	61,088		$	111,351	$	(917,830	)	$	889,627

(11) GUARANTOR NOTE (CONTINUED)



	Condensed Consolidated Balance Sheet June 26, 2011 (In thousands)
	Solo Delaware⁽¹⁾			SF Holdings⁽²⁾ (Guarantor)			SCOC⁽³⁾		Other Guarantors⁽⁴⁾			Non- Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	—		$	6	$	3,819		$	11,267	$	—		$	15,092
Accounts receivable - trade	—			—			96,957		18,747			23,448		—			139,152
Accounts receivable - other	1,996			—			21,314		2,186			—		(21,102		)	4,394
Inventories	—			—			238,393		22,615			25,777		(2,773		)	284,012
Deferred income taxes	—			—			4,751		—			684		—			5,435
Prepaid expenses and other current assets	—			—			34,757		3,227			2,624		—			40,608
Total current assets	1,996			—			396,178		50,594			63,800		(23,875		)	488,693
Property, plant and equipment, net	—			—			324,350		12,139			29,097		—			365,586
Intangible assets, net	—			—			803		—			—		—			803
Intercompany receivables - non-current	190,306			—			6,088		—			—		(196,394		)	—
Intercompany debt - non-current	391,238			—			39,224		—			—		(430,462		)	—
Investments in subsidiaries	(95,625		)	236,538			57,742		—			20,520		(219,175		)	—
Other assets	10,135			—			10,603		1,127			2,832		—			24,697
Total assets	$	498,050		$	236,538		$	834,988	$	63,860		$	116,249	$	(869,906	)	$	879,779
Liabilities and Shareholder’s (Deficit) Equity
Current liabilities:
Accounts payable	$	—		$	—		$	75,338	$	14,481		$	6,655	$	—		$	96,474
Intercompany payable	—			—			4,182		8,349			8,571		(21,102		)	—
Accrued expenses and other current liabilities	15,460			—			83,170		2,143			6,916		—			107,689
Current maturities of long-term debt	—			—			182		272			—		—			454
Total current liabilities	15,460			—			162,872		25,245			22,142		(21,102		)	204,617
Long-term debt, net of current maturities	621,214			—			61,998		677			4,122		—			688,011
Long-term debt, net of current maturities - intercompany	—			135,769			255,471		39,222			—		(430,462		)	—
Deferred income taxes	—			—			5,311		—			1,785		—			7,096
Long-term payable - intercompany	—			196,394			—		—			—		(196,394		)	—
Other long-term liabilities	—			—			112,798		335			5,546		—			118,679
Total liabilities	636,674			332,163			598,450		65,479			33,595		(647,958		)	1,018,403
Total shareholder’s (deficit) equity	(138,624		)	(95,625		)	236,538		(1,619		)	82,654		(221,948		)	(138,624		)
Total liabilities and shareholder’s (deficit) equity	$	498,050		$	236,538		$	834,988	$	63,860		$	116,249	$	(869,906	)	$	879,779


(1)	Issuer of 8.5% Senior Subordinated Notes; co-issuer of 10.5% Senior Secured Notes


(2)	Guarantor of 8.5% Senior Subordinated Notes and 10.5% Senior Secured Notes


(3)	Guarantor of 8.5% Senior Subordinated Notes; co-issuer of 10.5% Senior Secured Notes


(4)	Guarantors of 8.5% Senior Subordinated Notes and 10.5% Senior Secured Notes

(Continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Condensed Consolidated Balance SheetDecember 26, 2010(In thousands)
	SoloDelaware			SFHoldings(Guarantor)			SCOC		OtherGuarantors			Non-Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	—		$	7,455	$	4,896		$	9,160	$	—		$	21,511
Accounts receivable - trade	—			—			82,118		16,612			17,483		—			116,213
Accounts receivable - other	2,756			—			15,633		2,184			—		(16,061		)	4,512
Inventories	—			—			189,455		15,625			24,598		(2,089		)	227,589
Deferred income taxes	—			—			12,573		—			483		—			13,056
Restricted cash	1,940			—			—		—			—		—			1,940
Prepaid expenses and other current assets	—			—			20,379		1,726			1,743		—			23,848
Total current assets	4,696			—			327,613		41,043			53,467		(18,150		)	408,669
Property, plant and equipment, net	—			—			385,381		12,905			30,827		—			429,113
Intangible asssets, net	—			—			910		—			—		—			910
Intercompany receivables - non-current	178,021			—			6,088		—			—		(184,109		)	—
Intercompany debt - non-current	407,488			—			37,894		—			—		(445,382		)	—
Investments in subsidiaries	(51,681		)	268,197			56,089		—			19,488		(292,093		)	—
Other assets	11,984			—			9,915		1,662			2,419		—			25,980
Total assets	$	550,508		$	268,197		$	823,890	$	55,610		$	106,201	$	(939,734	)	$	864,672
Liabilities and Shareholder’s Equity (Deficit)
Current liabilities:
Accounts payable	$	—		$	—		$	46,925	$	10,861		$	5,272	$	—		$	63,058
Intercompany payable	—			—			5,265		4,805			5,991		(16,061		)	—
Accrued expenses and other current liabilities	17,476			—			89,448		1,649			6,495		—			115,068
Current maturities of long-term debt	—			—			168		262			—		—			430
Total current liabilities	17,476			—			141,806		17,577			17,758		(16,061		)	178,556
Long-term debt, net of current maturities	620,536			—			13,330		747			2,672		—			637,285
Long-term debt, net of current maturities - intercompany	—			135,768			271,720		37,893			—		(445,381		)	—
Deferred income taxes	—			—			13,132		—			1,744		—			14,876
Long-term payable - intercompany	—			184,110			—		—			—		(184,110		)	—
Other long-term liabilities	—			—			115,705		667			5,087		—			121,459
Total liabilities	638,012			319,878			555,693		56,884			27,261		(645,552		)	952,176
Total shareholder’s equity (deficit)	(87,504		)	(51,681		)	268,197		(1,274		)	78,940		(294,182		)	(87,504		)
Total liabilities and shareholder’s equity (deficit)	$	550,508		$	268,197		$	823,890	$	55,610		$	106,201	$	(939,734	)	$	864,672

(11) GUARANTOR NOTE (CONTINUED)



	Condensed Consolidated Balance Sheet December 26, 2010 (In thousands)
	Solo Delaware			SF Holdings (Guarantor)			SCOC		Other Guarantors			Non- Guarantors		Eliminations			Consolidated
Assets
Current assets:
Cash and cash equivalents	$	—		$	—		$	7,455	$	4,896		$	9,160	$	—		$	21,511
Accounts receivable - trade	—			—			82,118		16,612			17,483		—			116,213
Accounts receivable - other	2,756			—			15,633		2,184			—		(16,061		)	4,512
Inventories	—			—			189,455		15,625			24,598		(2,089		)	227,589
Deferred income taxes	—			—			12,573		—			483		—			13,056
Restricted cash	1,940			—			—		—			—		—			1,940
Prepaid expenses and other current assets	—			—			20,379		1,726			1,743		—			23,848
Total current assets	4,696			—			327,613		41,043			53,467		(18,150		)	408,669
Property, plant and equipment, net	—			—			385,381		12,905			30,827		—			429,113
Intangible asssets, net	—			—			910		—			—		—			910
Intercompany receivables - non-current	178,021			—			6,088		—			—		(184,109		)	—
Intercompany debt - non-current	407,488			—			37,894		—			—		(445,382		)	—
Investments in subsidiaries	(51,681		)	268,197			56,089		—			19,488		(292,093		)	—
Other assets	11,984			—			9,915		1,662			2,419		—			25,980
Total assets	$	550,508		$	268,197		$	823,890	$	55,610		$	106,201	$	(939,734	)	$	864,672
Liabilities and Shareholder’s (Deficit) Equity
Current liabilities:
Accounts payable	$	—		$	—		$	46,925	$	10,861		$	5,272	$	—		$	63,058
Intercompany payable	—			—			5,265		4,805			5,991		(16,061		)	—
Accrued expenses and other current liabilities	17,476			—			89,448		1,649			6,495		—			115,068
Current maturities of long-term debt	—			—			168		262			—		—			430
Total current liabilities	17,476			—			141,806		17,577			17,758		(16,061		)	178,556
Long-term debt, net of current maturities	620,536			—			13,330		747			2,672		—			637,285
Long-term debt, net of current maturities - intercompany	—			135,768			271,720		37,893			—		(445,381		)	—
Deferred income taxes	—			—			13,132		—			1,744		—			14,876
Long-term payable - intercompany	—			184,110			—		—			—		(184,110		)	—
Other long-term liabilities	—			—			115,705		667			5,087		—			121,459
Total liabilities	638,012			319,878			555,693		56,884			27,261		(645,552		)	952,176
Total shareholder’s (deficit) equity	(87,504		)	(51,681		)	268,197		(1,274		)	78,940		(294,182		)	(87,504		)
Total liabilities and shareholder’s (deficit) equity	$	550,508		$	268,197		$	823,890	$	55,610		$	106,201	$	(939,734	)	$	864,672

(Continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Consolidated Statement of OperationsFor the thirteen weeks ended March 27, 2011(In thousands)
	SoloDelaware			SF Holdings(Guarantor)			SCOC			OtherGuarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	—		$	—		$	315,073		$	26,815		$	52,352		$	(23,095	)	$	371,145
Cost of goods sold	—			—			290,258			24,998			48,235			(22,767		)	340,724
Gross profit	—			—			24,815			1,817			4,117			(328		)	30,421
Selling, general and administrative expenses	—			—			30,117			2,172			3,325			(27		)	35,587
Loss on asset disposals	—			—			369			—			175			—			544
Operating (loss) income	—			—			(5,671		)	(355		)	617			(301		)	(5,710		)
Interest expense, net	3,519			6,070			7,485			161			47			—			17,282
Foreign currency exchange loss (gain), net	—			—			1,505			(50		)	703			—			2,158
Equity in loss of subsidiaries	21,778			15,708			767			—			—			(38,253		)	—
Loss before income taxes	(25,297		)	(21,778		)	(15,428		)	(466		)	(133		)	37,952			(25,150		)
Income tax provision (benefit)	—			—			280			(22		)	(111		)	—			147
Net loss	$	(25,297	)	$	(21,778	)	$	(15,708	)	$	(444	)	$	(22	)	$	37,952		$	(25,297	)
	Consolidated Statement of OperationsFor the thirteen weeks ended March 28, 2010(In thousands)
	SoloDelaware			SF Holdings(Guarantor)			SCOC			OtherGuarantors			Non-Guarantors			Eliminations			Consolidated
Net sales	$	—		$	—		$	288,597		$	25,125		$	43,788		$	(12,638	)	$	344,872
Cost of goods sold	—			—			255,461			24,612			39,143			(12,628		)	306,588
Gross profit	—			—			33,136			513			4,645			(10		)	38,284
Selling, general and administrative expenses	—			—			30,362			1,875			2,613			(28		)	34,822
Loss on asset disposals	—			—			921			42			—			—			963
Operating income (loss)	—			—			1,853			(1,404		)	2,032			18			2,499
Interest expense, net	3,484			5,529			7,947			131			9			—			17,100
Foreign currency exchange loss (gain), net	—			—			568			1,163			(355		)	—			1,376
Equity in loss of subsidiaries	13,044			7,515			928			—			—			(21,487		)	—
(Loss) income before income taxes	(16,528		)	(13,044		)	(7,590		)	(2,698		)	2,378			21,505			(15,977		)
Income tax (benefit) provision	—			—			(75		)	(33		)	659			—			551
Net (loss) income	$	(16,528	)	$	(13,044	)	$	(7,515	)	$	(2,665	)	$	1,719		$	21,505		$	(16,528	)

(11) GUARANTOR NOTE (CONTINUED)



	Consolidated Statement of Operations For the thirteen weeks ended June 26, 2011 (In thousands)
	Solo Delaware			SF Holdings (Guarantor)			SCOC			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	—		$	382,464		$	33,045		$	60,013		$	(39,646	)	$	435,876
Cost of goods sold	—			—			354,214			30,545			53,452			(39,425		)	398,786
Gross profit	—			—			28,250			2,500			6,561			(221		)	37,090
Selling, general and administrative expenses	—			—			30,395			2,152			3,443			(32		)	35,958
Gain on asset disposals	—			—			(823		)	—			—			—			(823		)
Asset impairment	—			—			12,343			—			—			—			12,343
Operating (loss) income	—			—			(13,665		)	348			3,118			(189		)	(10,388		)
Interest expense, net	3,659			6,214			7,593			131			59			—			17,656
Foreign currency exchange (gain) loss, net	—			—			(802		)	94			923			—			215
Equity in loss (income) of subsidiaries	25,479			19,265			(1,164		)	—			—			(43,580		)	—
(Loss) income before income taxes	(29,138		)	(25,479		)	(19,292		)	123			2,136			43,391			(28,259		)
Income tax (benefit) provision	—			—			(27		)	(15		)	921			—			879
Net (loss) income	$	(29,138	)	$	(25,479	)	$	(19,265	)	$	138		$	1,215		$	43,391		$	(29,138	)

	Consolidated Statement of Operations For the thirteen weeks ended June 27, 2010 (In thousands)
	Solo Delaware			SF Holdings (Guarantor)			SCOC			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	—		$	359,817		$	28,922		$	51,120		$	(20,680	)	$	419,179
Cost of goods sold	—			—			336,549			26,964			43,661			(20,590		)	386,584
Gross profit	—			—			23,268			1,958			7,459			(90		)	32,595
Selling, general and administrative expenses	—			—			36,161			1,844			2,805			(44		)	40,766
Loss (gain) on asset disposals	—			—			1,100			(65		)	(1		)	—			1,034
Asset impairment	—			—			13,218			—			—			—			13,218
Operating (loss) income	—			—			(27,211		)	179			4,655			(46		)	(22,423		)
Interest expense, net	2,761			5,660			8,785			121			8			—			17,335
Foreign currency exchange loss (gain), net	—			—			198			117			(341		)	—			(26		)
Equity in loss (income) of subsidiaries	36,960			31,300			(3,485		)	—			—			(64,775		)	—
Gain on bargain purchase	—			—			(1,703		)	—			—			—			(1,703		)
(Loss) income before income taxes	(39,721		)	(36,960		)	(31,006		)	(59		)	4,988			64,729			(38,029		)
Income tax provision (benefit)	—			—			294			(33		)	1,431			—			1,692
Net (loss) income	$	(39,721	)	$	(36,960	)	$	(31,300	)	$	(26	)	$	3,557		$	64,729		$	(39,721	)

(Continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Condensed Consolidated Statement of Cash FlowsFor the thirteen weeks ended March 27, 2011(In thousands)
	SoloDelaware			SF Holdings(Guarantor)		SCOC			OtherGuarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(8,700	)	$	—	$	(21,307	)	$	783		$	1,945		$	—		$	(27,279	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment	—			—		1,098			—			—			(9		)	1,089
Purchases of property, plant and equipment	—			—		(7,003		)	(175		)	(50		)	9			(7,219		)
Decrease in restricted cash	1,940			—		—			—			—			—			1,940
Net cash provided by (used in) investing activities	1,940			—		(5,905		)	(175		)	(50		)	—			(4,190		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving credit facilities	—			—		28,407			—			(1,418		)	—			26,989
Repayments of other debt	—			—		(40		)	(70		)	—			—			(110		)
Collection on (repayment of) intercompany debt	6,760			—		(6,760		)	—			—			—			—
Net cash provided by (used in) financing activities	6,760			—		21,607			(70		)	(1,418		)	—			26,879
Effect of exchange rate changes on cash	—			—		—			267			(828		)	—			(561		)
Net (decrease) increase in cash and cash equivalents	—			—		(5,605		)	805			(351		)	—			(5,151		)
Cash and cash equivalents, beginning of period	—			—		7,456			4,895			9,160			—			21,511
Cash and cash equivalents, end of period	$	—		$	—	$	1,851		$	5,700		$	8,809		$	—		$	16,360

(11) GUARANTOR NOTE (CONTINUED)



	Consolidated Statement of Operations For the twenty-six weeks ended June 26, 2011 (In thousands)
	Solo Delaware			SF Holdings (Guarantor)			SCOC			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	—		$	697,538		$	59,860		$	112,365		$	(62,742	)	$	807,021
Cost of goods sold	—			—			644,472			55,543			101,688			(62,193		)	739,510
Gross profit	—			—			53,066			4,317			10,677			(549		)	67,511
Selling, general and administrative expenses	—			—			60,513			4,324			6,768			(59		)	71,546
(Gain) loss on asset disposals	—			—			(454		)	—			175			—			(279		)
Asset impairment	—			—			12,343			—			—			—			12,343
Operating (loss) income	—			—			(19,336		)	(7		)	3,734			(490		)	(16,099		)
Interest expense, net	7,176			12,285			15,078			293			104			—			34,936
Foreign currency exchange loss, net	—			—			704			43			1,626			—			2,373
Equity in loss (income) of subsidiaries	47,258			34,973			(396		)	—			—			(81,835		)	—
(Loss) income before income taxes	(54,434		)	(47,258		)	(34,722		)	(343		)	2,004			81,345			(53,408		)
Income tax provision (benefit)	—			—			251			(37		)	812			—			1,026
Net (loss) income	$	(54,434	)	$	(47,258	)	$	(34,973	)	$	(306	)	$	1,192		$	81,345		$	(54,434	)

	Consolidated Statement of Operations For the twenty-six weeks ended June 27, 2010 (In thousands)
	Solo Delaware			SF Holdings (Guarantor)			SCOC			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
Net sales	$	—		$	—		$	661,386		$	54,047		$	94,908		$	(46,289	)	$	764,052
Cost of goods sold	—			—			604,980			51,577			82,803			(46,187		)	693,173
Gross profit	—			—			56,406			2,470			12,105			(102		)	70,879
Selling, general and administrative expenses	—			—			66,522			3,718			5,419			(70		)	75,589
Loss (gain) on asset disposals	—			—			2,021			(23		)	(1		)	—			1,997
Asset impairment	—			—			13,218			—			—			—			13,218
Operating (loss) income	—			—			(25,355		)	(1,225		)	6,687			(32		)	(19,925		)
Interest expense, net	6,245			11,189			16,732			252			17			—			34,435
Foreign currency exchange loss (gain), net	—			—			767			1,280			(697		)	—			1,350
Equity in loss (income) of subsidiaries	50,004			38,815			(2,554		)	—			—			(86,265		)	—
Gain on bargain purchase	—			—			(1,703		)	—			—			—			(1,703		)
(Loss) income before income taxes	(56,249		)	(50,004		)	(38,597		)	(2,757		)	7,367			86,233			(54,007		)
Income tax provision (benefit)	—			—			218			(66		)	2,090			—			2,242
Net (loss) income	$	(56,249	)	$	(50,004	)	$	(38,815	)	$	(2,691	)	$	5,277		$	86,233		$	(56,249	)

(Continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

	Condensed Consolidated Statement of Cash FlowsFor the thirteen weeks ended March 28, 2010(In thousands)
	SoloDelaware			SF Holdings(Guarantor)		SCOC			OtherGuarantors			Non-Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(8,917	)	$	—	$	(15,247	)	$	(1,726	)	$	514		$	—		$	(25,376	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment	—			—		28			17			—			(24		)	21
Purchases of property, plant and equipment	—			—		(19,754		)	(137		)	(165		)	24			(20,032		)
Decrease in restricted cash	2,170			—		—			—			—			—			2,170
Net cash used in investing activities	2,170			—		(19,726		)	(120		)	(165		)	—			(17,841		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving credit facilities	—			—		42,300			—			—			—			42,300
Repayments of term notes	—			—		—			—			(348		)	—			(348		)
Return of capital to parent	(100		)	—		—			—			—			—			(100		)
Collection on (repayment of) intercompany debt	7,173			—		(7,173		)	—			—			—			—
Repayments of other debt	—			—		—			(64		)	—			—			(64		)
Debt issuance costs	(326		)	—		(154		)	—			—			—			(480		)
Net cash (used in) provided by financing activities	6,747			—		34,973			(64		)	(348		)	—			41,308
Effect of exchange rate changes on cash	—			—		—			(151		)	479			—			328
Net (decrease) increase in cash and cash equivalents	—			—		—			(2,061		)	480			—			(1,581		)
Cash and cash equivalents, beginning of period	—			—		5			4,517			25,484			—			30,006
Cash and cash equivalents, end of period	$	—		$	—	$	5		$	2,456		$	25,964		$	—		$	28,425

(11) GUARANTOR NOTE (CONTINUED)



	Condensed Consolidated Statement of Cash Flows For the twenty-six weeks ended June 26, 2011 (In thousands)
	Solo Delaware			SF Holdings (Guarantor)		SCOC			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(18,189	)	$	—	$	(26,566	)	$	(347	)	$	1,099		$	—		$	(44,003	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment	—			—		1,717			—			—			(479		)	1,238
Purchases of property, plant and equipment	—			—		(13,531		)	(802		)	(126		)	479			(13,980		)
Decrease in restricted cash	1,940			—		—			—			—			—			1,940
Other	—			—		(1,500		)	—			—			—			(1,500		)
Net cash provided by (used in) investing activities	1,940			—		(13,314		)	(802		)	(126		)	—			(12,302		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving credit facilities	—			—		48,762			—			1,450			—			50,212
Repayments of other debt	—			—		(82		)	(143		)	—			—			(225		)
Collection on (repayment of) intercompany debt	16,249			—		(16,249		)	—			—			—			—
Net cash provided by (used in) financing activities	16,249			—		32,431			(143		)	1,450			—			49,987
Effect of exchange rate changes on cash	—			—		—			215			(316		)	—			(101		)
Net (decrease) increase in cash and cash equivalents	—			—		(7,449		)	(1,077		)	2,107			—			(6,419		)
Cash and cash equivalents, beginning of period	—			—		7,455			4,896			9,160			—			21,511
Cash and cash equivalents, end of period	$	—		$	—	$	6		$	3,819		$	11,267		$	—		$	15,092

(Continued)

Table of Contents

SOLO CUP COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

(11) GUARANTOR NOTE (CONTINUED)



	Condensed Consolidated Statement of Cash Flows For the twenty-six weeks ended June 27, 2010 (In thousands)
	Solo Delaware			SF Holdings (Guarantor)		SCOC			Other Guarantors			Non- Guarantors			Eliminations			Consolidated
CASH FLOWS FROM OPERATING ACTIVITIES
Net cash (used in) provided by operating activities	$	(18,821	)	$	—	$	(30,308	)	$	(1,050	)	$	(6,535	)	$	—		$	(56,714	)
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment	—			—		54			84			—			(24		)	114
Purchases of property, plant and equipment	—			—		(30,751		)	(366		)	(264		)	24			(31,357		)
Business acquisition, net of cash acquired	—			—		(23,661		)	—			—			—			(23,661		)
Decrease in restricted cash	4,270			—		—			—			—			—			4,270
Net cash provided by (used in) investing activities	4,270			—		(54,358		)	(282		)	(264		)	—			(50,634		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings under revolving credit facilities	—			—		100,200			—			—			—			100,200
Repayments of term notes	—			—		—			—			(410		)	—			(410		)
Return of capital to parent	(100		)	—		—			—			—			—			(100		)
Collection on (repayment of) intercompany debt	15,024			—		(15,024		)	—			—			—			—
Repayments of other debt	—			—		(38		)	(126		)	—			—			(164		)
Debt issuance costs	(373		)	—		(157		)	—			—			—			(530		)
Net cash provided by (used in) financing activities	14,551			—		84,981			(126		)	(410		)	—			98,996
Effect of exchange rate changes on cash	—			—		—			(283		)	645			—			362
Net increase (decrease) in cash and cash equivalents	—			—		315			(1,741		)	(6,564		)	—			(7,990		)
Cash and cash equivalents, beginning of period	—			—		5			4,517			25,484			—			30,006
Cash and cash equivalents, end of period	$	—		$	—	$	320		$	2,776		$	18,920		$	—		$	22,016

Table of Contents


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

You should read the following discussion in conjunction with the consolidated financial statements and related notes appearing elsewhere in this report, as well as the consolidated financial statements and related notes, and management’s discussion and analysis of financial condition and results of operations included in our 2010 Annual Report on Form 10-K.

Executive Summary

Economic and industry conditions

Our results of operations ~~for~~continue ~~the thirteen weeks ended March 27, 2011 continued~~ to be affected by economic and industry conditions. Weak economic conditions ~~continued~~continue to reduce the discretionary income of consumers and negatively affect demand for single-use products used to serve food and beverages. We believe the decline is driven by a variety of external factors such as consumers eating out less frequently and higher unemployment rates, which has contracted the market for our foodservice operators. Lower consumer discretionary spending translated into a smaller consumer market, as did a shift from national brands to private label products, which are traditionally offered at lower prices. All of these factors have resulted in increased competition and pressure on the price at which our products may be offered. Concurrently, we continue to experience significant increases in raw material costs, particularly resins utilized to manufacture plastic products.

All of these factors have resulted in increased competition and pressure on the price at which our products may be offered. Concurrently, we continue to experience increases in raw material costs, particularly resins utilized to manufacture plastic products, and paperboard. Resin prices are influenced by other input prices such as crude oil, natural gas, benzene, ethylene, propylene and paraxylene, as well as availability of supply and changes in demand. Paper prices are driven by global supply and demand as well as input costs for energy, fiber, chemicals, polyethylene and transportation.

Strategic initiatives

We have undertaken strategic initiatives designed to grow our business and improve our profitability., ~~These~~the ~~initiatives~~most ~~had~~noteworthy aof ~~significant~~which ~~effect~~is on our ~~results~~plan ofdesigned ~~operations~~to ~~for~~further optimize our manufacturing footprint. Pursuant to the ~~thirteen~~plan, ~~weeks~~we ~~ended~~closed our manufacturing facility in Springfield, Missouri in March 272011 and our North Andover, Massachusetts facility in May 2011, and we intend to close our manufacturing facility in Owings Mills, Maryland during the third quarter of 2011.

~~Acquisition~~In ofMay ~~InnoWare~~2011, ~~Plastic~~we -entered Oninto ~~March 31,~~an ~~2010,~~agreement ~~during~~to sell our ~~2nd~~Owings ~~fiscal~~Mills, ~~quarter~~Maryland infacility ~~2010,~~for we$15.0 ~~acquired~~million aand ~~manufacturer~~to oflease aback ~~comprehensive~~the ~~line~~property for a period of ~~plastic~~seven ~~take-out~~months ~~containers.~~from ~~The~~the ~~new~~closing ~~product~~date. The ~~line~~closing, which weis ~~market~~expected ~~under~~to ~~our~~occur ~~Creative~~during ~~Carryouts~~the ~~brand,~~third ~~further~~quarter ~~broadened~~of ~~our~~2011, ~~product~~is ~~offering.~~subject ~~Operating~~to ~~results~~satisfactory completion of due diligence by the ~~acquired~~purchaser ~~business~~and ~~are~~other ~~included~~customary inconditions. We ~~our~~recorded ~~results~~an impairment of ~~operations~~approximately ~~from~~$12.3 ~~the~~million ~~acquisition~~to ~~date,~~adjust ~~and~~the ~~are~~carrying ~~therefore~~value ~~reflected~~of inthis ~~the~~property ~~thirteen~~to ~~weeks~~fair ~~ended~~value ~~March 27,~~less ~~2011~~cost ~~but~~to ~~not~~sell induring the ~~comparable~~thirteen ~~prior-year~~weeks ~~period~~ended June 26, 2011.

Optimization of manufacturing footprint - On May 6, 2010, our Board of Directors committed to a plan designed to further optimize our manufacturing footprint. Pursuant to the plan, we closed our manufacturing facility in Springfield, Missouri in March 2011 and we intend to close our manufacturing facilities in North Andover, Massachusetts and Owings Mills, Maryland by the end of 2011. We expect to incur costs over the life of the plan in the range of $~~115~~119 to $124 million, of which approximately $27 to $29 million (identified in the table below as severance and equipment relocation and related costs) will require cash expenditures. Approximately $23.4 million of severance has been paid through ~~March~~June 2726, 2011, including $12.89 million during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011. Approximately $1016.96 million of equipment relocation and related costs have been paid to date, including $511.52 million during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011. The total costs also include a future charge attributable to lease payments for our North Andover facility that we will remain obligated to make in periods after we exit the facility, asset impairment charges, and accelerated depreciation for certain property, plant and equipment that will not be used after the facilities are closed. The following table summarizes the estimated costs that we expect to incur over the life of the plan as well as the amounts incurred (expensed) to date (in millions):

The total costs also include a future charge attributable to lease payments for our North Andover facility that we will remain obligated to make in periods after we exit the facility, asset impairment charges, and accelerated depreciation for certain property, plant and equipment that will not be used after the facilities are closed. The following table summarizes the estimated costs that we expect to incur over the life of the plan as well as the amounts incurred (expensed) to date (in millions):



	Estimated range				Incurred (expensed)
	As of				Year ended		Twenty-six weeks ended		Life to date
	June 26, 2011				December 26, 2010		June 26, 2011		June 26, 2011
Severance	$	7	$	7	$	7	$	—	$	7
Equipment relocation and related costs	20		22		5		11		16
Pension plan curtailment loss	2		2		2		—		2
Accrual of remaining lease payments	4		6		—		—		—
Asset impairment	29		29		17		12		29
Accelerated depreciation	57		58		40		17		57
Total expected costs	$	119	$	124	$	71	$	40	$	111

	Estimated range				Incurred (expensed)
	As of				Year ended		Thirteen weeks ended		Life to date
	March 27, 2011				December 26, 2010		March 27, 2011		March 27, 2011
Severance	$	7	$	7	$	7	$	—	$	7
Equipment relocation and related costs	20		22		5		6		11
Pension plan curtailment loss	2		2		2		—		2
Accrual of remaining lease payments	4		6		—		—		—
Asset impairment	17		17		17		—		17
Accelerated depreciation	65		70		40		9		49
Total expected costs	$	115	$	124	$	71	$	15	$	86

Table of Contents

Thirteen weeks ended ~~March~~June 2726, 2011 compared to the thirteen weeks ended ~~March~~June 2827, 2010

	For the thirteen weeks ended								~~Favorable (Unfavorable)~~	Favorable (Unfavorable)
(In millions)	~~March~~June 2726, 2011				~~March 28, 2010~~	June 27, 2010			$	$		%
Net sales	$	~~371~~435.19		419.2	$	~~344.9~~$	419.2		$	2616.27		74.60
Cost of goods sold	~~340~~398.78			386.6	~~306.6~~	386.6			~~(34.1~~	(12.2	)	(113.12	)
Gross profit	3037.41			32.6	~~38.3~~	32.6			~~(7.9~~	4.5	)	~~(20~~13.68	)
Selling, general and administrative expenses	3536.60			40.8	~~34.8~~	40.8			~~(0.8~~	4.8	)	(211.38	)
Loss on asset disposals	0.5				1.0				0.5			50.0
(Gain) loss on asset disposals	(0.8		)	1.0		1.0				1.8		*
Operating (loss) income	(5.7		)		2.5				(8.2		)	*
Asset impairment	12.3			13.2		13.2				0.9		6.8
Interest expense, net	17.3				17.1				(0.2		)	(1.2	)
Operating loss	(10.4		)			(22.4		)		12.0		53.6
Foreign currency exchange loss, net	2.2				1.4				(0.8		)	(57.1	)
Interest expense, net	17.6					17.4				(0.2	)	(1.1	)
Loss before income taxes	(25.2		)		(16.0		)		(9.2		)	(57.5	)
Foreign currency exchange loss, net	0.2					—				(0.2	)	*
Income tax provision	0.1				0.5				0.4			80.0
Gain from bargain purchase	—					(1.7		)		(1.7	)	(100.0	)
Net loss	$	(25.3	)		$	(16.5	)		$	(8.8	)	(53.3	)
Loss before income taxes	(28.2		)			(38.1		)		9.9		26.0
Income tax provision	0.9					1.7				0.8		47.1
Net loss	$	(29.1	)			$	(39.8	)		10.7		26.9

* Not meaningful

Net sales increased by $2616.27 million, or 74.60%, for the thirteen weeks ended ~~March~~June 2726, 2011 compared to the prior-year period. The increase in net sales resulted from a 710.96% increase in average realized sales price and an increase of 01.94% attributable to foreign currency fluctuations, partially offset by aan 18.20% decline in sales volume.

The increase in average realized sales price reflects the price increases we implemented in the second half of 2010 and, to a lesser extent, the first half of 2011, as a result of higher raw material costs, and the favorable impact of a shift in product mix. The decline in sales volume ~~resulted~~was ~~from lower sales volumes for our historical product portfolio~~ primarily due to the economic and industry conditions described above, ~~partially~~as ~~offset~~well byas ~~incremental~~a ~~sales~~result ~~attributable~~of to our ~~March~~strategic ~~31,~~decision ~~2010~~to ~~acquisition~~eliminate certain unprofitable business.

For the thirteen weeks ended ~~March~~June 2726, 2011, gross profit ~~decreased~~increased by $74.95 million compared to the prior-year period. The ~~decline~~increase in gross profit was primarily driven by ~~$15~~an ~~million~~increase ~~in plant consolidation costs during the current quarter, including accelerated depreciation~~ of approximately $914 million ~~and~~in ~~costs related to~~ the ~~transfer~~difference ofbetween ~~equipment~~sales ~~from~~prices ~~closing~~and ~~manufacturing~~raw ~~facilities~~material tocosts ~~receiving~~for ~~manufacturing~~our ~~facilities~~U.S. ofoperations and approximately $69 million, ~~including~~of ~~ramp-down~~benefit ~~costs~~from ata ~~the~~favorable ~~closing~~shift ~~facilities~~in ~~and~~product ~~start-up~~mix. While ~~costs at~~ the ~~receiving~~favorable ~~facilities.~~spread ~~The~~quarter ~~decline~~over ~~was~~quarter ~~also~~reflects ~~driven~~the bybenefit anof ~~approximate~~recent $6price ~~million~~increases, ~~decline~~raw inmaterial ~~fixed~~costs ~~cost~~have ~~absorption~~continued ~~due~~ to ~~lower~~escalate ~~production volumes~~ in ~~the~~2011 ~~current-year period~~ and ahighly $2competitive ~~million~~industry ~~increase~~conditions incontinue ~~logistics costs, primarily due~~ to ~~increases~~make infull ~~diesel~~recovery ~~fuel prices~~difficult.

~~These~~In ~~decreases~~addition, plant consolidation costs included in ~~gross~~cost ~~profit~~of ~~were~~goods ~~partially~~sold ~~mitigated~~during bythe ancurrent ~~increase~~quarter ofwere approximately $913 million compared to approximately $16 million in the ~~difference~~prior ~~between~~year ~~sales~~period. Plant ~~prices~~consolidation ~~and~~costs ~~raw~~in ~~material~~the ~~costs~~quarter ~~for~~included ~~our~~accelerated ~~U.S.~~depreciation ~~operations,~~of approximately $47 million and costs related to the transfer of ~~benefit~~equipment from ~~increased~~closing ~~efficiencies~~manufacturing infacilities ~~our~~to ~~U.S.~~receiving ~~operations~~manufacturing ~~and~~facilities of approximately $26 million, ofincluding ~~benefit~~ramp-down ~~from~~costs aat ~~favorable~~the ~~shift~~closing infacilities ~~product~~and ~~mix~~start-up costs at the receiving facilities.

~~Gross~~These ~~margin,~~increases orin gross profit aswere apartially ~~percentage~~offset ofby ~~net~~(1) ~~sales,~~a ~~was~~decrease ~~8.2%~~ in ~~the~~gross ~~first~~profit ~~quarter~~ of ~~2011~~approximately ~~versus~~$12 ~~11.1%~~million inresulting ~~the~~from ~~first~~lower ~~quarter~~sales ofvolumes, ~~2010.~~(2) ~~The~~an ~~decrease~~approximate in$4 ~~gross~~million ~~margin~~decline ~~was~~in ~~primarily~~fixed ~~driven~~cost byabsorption ~~the~~due ~~plant~~to ~~consolidation~~lower ~~costs,~~production ~~partially~~volumes ~~offset by the increase~~ in the ~~difference~~current-year ~~between sales prices and raw material costs~~period, a(3) ~~favorable~~approximately ~~shift~~$3 inmillion ~~product~~of ~~mix~~higher ~~and~~employee-related ~~lower operating~~ costs, ~~all~~compared asto ~~described~~the ~~above.~~prior ~~Excluding~~year ~~plant~~quarter, ~~consolidation~~and ~~costs,~~(4) ~~gross~~an ~~margin~~increase in ~~the~~logistics ~~first~~costs ~~quarter~~ of ~~2011~~approximately ~~was~~$2 ~~12.3%~~million, ~~compared~~primarily due to ~~11.1%~~increases in ~~the~~diesel ~~first~~fuel ~~quarter of 2010, in which no plant consolidation costs were incurred~~prices.

~~Selling~~Gross margin, ~~general~~or ~~and~~gross ~~administrative~~profit ~~expenses~~as ~~increased~~a bypercentage ~~$0.8~~of ~~million~~net ~~for~~sales, ~~the~~was ~~thirteen~~8.5% ~~weeks~~in ~~ended~~the ~~March 27,~~second quarter of 2011 ~~compared~~versus to7.8% in the ~~thirteen~~second ~~weeks~~quarter ~~ended~~of ~~March 28,~~ 2010. ~~The~~Excluding ~~increase~~plant ~~was~~consolidation ~~primarily~~costs, ~~driven~~gross bymargin ~~higher~~in ~~incentive-based~~the ~~compensation~~second ~~and~~quarter ~~higher~~of ~~selling,~~2011 ~~general~~was ~~and~~11.6% ~~administrative~~compared ~~costs~~to ~~for~~11.8% ~~our~~in ~~foreign~~the ~~subsidiaries~~second quarter of 2010, ~~mostly~~primarily ~~offset~~driven by ~~lower~~the ~~advertising~~impact ~~and~~of ~~related~~lower ~~costs~~sales ~~compared~~volumes toand ~~the~~lower ~~prior-year~~production ~~period.~~volumes Ason afixed ~~percentage~~cost ofabsorption, ~~net~~partially ~~sales,~~offset ~~selling,~~by ~~general~~the ~~and~~increase ~~administrative~~in ~~expenses~~the ~~decreased~~difference tobetween ~~9.6%~~sales inprices ~~the~~and ~~first~~raw ~~quarter~~material ofcosts ~~2011~~and ~~from~~favorable ~~10.1%~~shift in ~~the~~product ~~first~~mix, ~~quarter~~all ofas ~~2010~~described above.

~~During the thirteen weeks ended March 27~~Selling, ~~2011,~~general ~~the~~and ~~income~~administrative ~~tax~~expenses ~~provision~~decreased ofby $04.18 million ~~reflects~~for the ~~net~~thirteen ~~impact~~weeks ofended ~~minimal~~June 26, ~~domestic~~2011 ~~income~~compared ~~tax~~to ~~expense~~the ~~partially~~thirteen ~~offset~~weeks byended ~~income~~June 27, ~~tax~~2010. ~~benefit~~The ~~from~~decrease ~~foreign~~was ~~jurisdictions~~primarily ~~and~~driven ~~from~~by ~~pension~~lower ~~activity~~employee-related ~~included in other comprehensive income. In the United States~~costs, weas ~~are~~well inas alower ~~net~~advertising ~~operating loss carryforward position~~ and ~~our~~related ~~deferred~~costs ~~income~~compared ~~tax~~to ~~assets~~the ~~are~~prior-year ~~subject~~period. As to a ~~full~~percentage ~~valuation~~of ~~allowance;~~net ~~therefore~~sales, ~~any~~selling, ~~loss~~general ~~before~~and ~~income~~administrative ~~taxes~~expenses ~~does~~improved ~~not~~to ~~generate a corresponding income tax benefit~~8.3% ~~During~~in the ~~thirteen~~second ~~weeks~~quarter ~~ended~~of ~~March 28,~~2011 ~~2010,~~from ~~the~~9.7% ~~income~~in ~~tax~~the ~~provision~~second quarter of ~~$0.5~~2010, ~~million~~partially ~~primarily~~driven ~~represents~~by ~~income~~the ~~tax~~increase ~~expense~~in ~~from~~net ~~our foreign jurisdictions~~sales.

1718

Table of Contents

During the thirteen weeks ended June 26, 2011, the income tax provision of $0.9 million reflects the net impact of income tax provision for foreign jurisdictions partially offset by the benefit from pension activity included in other comprehensive income. In the United States, we are in a net operating loss carryforward position and our deferred income tax assets are subject to a full valuation allowance; therefore, any loss before income taxes does not generate a corresponding income tax benefit. During the thirteen weeks ended June 27, 2010, the income tax provision of $1.7 million primarily represents income tax expense from our foreign jurisdictions.

Twenty-six weeks ended June 26, 2011 compared to the twenty-six weeks ended June 27, 2010



	For the twenty-six weeks ended							Favorable (Unfavorable)
(In millions)	June 26, 2011				June 27, 2010			$		%
Net sales	$	807.0		419.2	$	764.1		42.9		5.6
Cost of goods sold	739.5			386.6	693.2			(46.3	)	(6.7	)
Gross profit	67.5			32.6	70.9			(3.4	)	(4.8	)
Selling, general and administrative expenses	71.6			40.8	75.6			4.0		5.3
(Gain) loss on asset disposals	(0.3		)	1.0	2.0			2.3		115.0
Asset impairment	12.3			13.2	13.2			0.9		6.8
Operating loss	(16.1		)		(19.9		)	3.8		19.1
Interest expense, net	34.9				34.4			(0.5	)	(1.5	)
Foreign currency exchange loss, net	2.4				1.4			(1.0	)	(71.4	)
Gain from bargain purchase	—				(1.7		)	(1.7	)	(100.0	)
Loss before income taxes	(53.4		)		(54.0		)	0.6		1.1
Income tax provision	1.0				2.3			1.3		56.5
Net loss	$	(54.4	)		$	(56.3	)	1.9		3.4

* Not meaningful

Net sales increased by $42.9 million, or 5.6%, for the twenty-six weeks ended June 26, 2011 compared to the prior-year period. The increase in net sales resulted from a 9.3% increase in average realized sales price and an increase of 1.2% attributable to foreign currency fluctuations, partially offset by a 4.9% decline in sales volume.

The increase in average realized sales price reflects the price increases we implemented in the second half of 2010, and to a lesser extent the first half of 2011, as a result of higher raw material costs, and the favorable impact of a shift in product mix. The decline in sales volume was primarily due to the economic and industry conditions described above, as well as a result of our strategic decision to eliminate certain unprofitable business.

For the twenty-six weeks ended June 26, 2011, gross profit decreased by $3.4 million compared to the prior-year period. The decrease was primarily driven by (1) a decrease in gross profit of approximately $12 million resulting from lower sales volumes, (2) higher plant consolidation costs during the current year of approximately $28 million compared to approximately $17 million in the prior year period, (3) an approximate $10 million decline in fixed cost absorption due to lower production volumes in the current-year period and (4) an increase in logistics costs of approximately $4 million, primarily due to increases in diesel fuel prices.

Plant consolidation costs in the first half of 2011 included accelerated depreciation of approximately $17 million and costs related to the transfer of equipment from closing manufacturing facilities to receiving manufacturing facilities of approximately $11 million, including ramp-down costs at the closing facilities and start-up costs at the receiving facilities. Plant consolidation costs in the first half of 2010 included accelerated depreciation of approximately $11 million and severance of approximately $6 million.

The decreases in gross profit described above were partially offset by an increase of approximately $23 million in the difference between sales prices and raw material costs for our U.S. operations and approximately $11 million of benefit from a favorable shift in product mix. While the favorable spread reflects the benefit of recent price increases, raw material costs have continued to escalate in 2011 and highly competitive industry conditions continue to make full recovery difficult.

Gross margin, or gross profit as a percentage of net sales, was 8.4% in the twenty-six weeks ended June 26, 2011 versus 9.3% in the twenty-six weeks ended June 27, 2010. The decrease in gross margin was primarily driven by the higher plant consolidation costs and lower fixed cost absorption, partially offset by the increase in the difference between sales prices

Table of Contents

and raw material costs and favorable shift in product mix. Excluding plant consolidation costs, gross margin in the first half of 2011 was 11.9% compared to 11.5% in the first half of 2010.

Selling, general and administrative expenses decreased by $4.0 million for the twenty-six weeks ended June 26, 2011 compared to the twenty-six weeks ended June 27, 2010. The decrease was primarily driven by lower overall employee-related costs and lower advertising and related costs compared to the prior-year period. As a percentage of net sales, selling, general and administrative expenses decreased to 8.9% in the first half of 2011 from 9.9% in the first half of 2010, partially driven by the increase in net sales.

During the twenty-six weeks ended June 26, 2011, the income tax provision of $1.0 million reflects the net impact of income tax provision from foreign jurisdictions partially offset by minimal domestic income tax benefit and the benefit from pension activity included in other comprehensive income. In the United States, we are in a net operating loss carryforward position and our deferred income tax assets are subject to a full valuation allowance; therefore, any loss before income taxes does not generate a corresponding income tax benefit. During the twenty-six weeks ended June 27, 2010, the income tax provision of $2.3 million primarily represents income tax expense from our foreign jurisdictions.

Liquidity and Capital Resources

Our net cash provided by or used in operating, investing and financing activities was as follows:

	For the thirteen weeks ended
	For the twenty-six weeks ended
(in thousands)	~~March~~June 2726, 2011			~~March~~June 2827, 2010
Net cash used in operating activities	$	(2744,~~279~~003	)	$	(2556,~~376~~714	)
Net cash used in investing activities	(412,~~190~~302		)	(1750,~~841~~634		)
Net cash provided by financing activities	2649,~~879~~987			4198,~~308~~996

Historically, we have relied on cash flows from operations and borrowings under our revolving credit facilities to finance our working capital requirements and capital expenditures. Net cash used in operating activities during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011 was $2744.30 million compared to $2556.47 million during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2827, 2010.

Working capital increased by $2254.80 million to $~~252~~284.91 million as of ~~March~~June 2726, 2011, from $230.1 million as of December 26, 2010. The increase mostly reflects (1) an increase in inventories driven by a planned seasonal build of finished goods ~~in preparation for demand during the spring~~ and, ~~summer~~to ~~seasons~~a ~~and~~lesser extent, an increase in the cost of raw materials, and (2) higher accounts receivable driven by increased sales during the quarter. These increases in working capital were partially offset by an increase in accounts payable as a result of raw material purchases to support the inventory build during the period.

Net cash used in investing activities during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011 was $412.23 million compared to $1750.86 million during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2827, 2010. The decrease was driven by lower capital expenditures~~. During~~ during the ~~thirteen~~current ~~weeks ended March 27~~period, ~~2011, our capital expenditures were~~ $714.20 million compared to $2031.0 4 million during the ~~thirteen~~prior-year ~~weeks~~period, ~~ended~~as ~~March 28,~~well ~~2010.~~as our $24 million acquisition in the prior-year period.

Net cash provided by financing activities during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2726, 2011 was $2650.90 million compared to $4199.30 million during the ~~thirteen~~twenty-six weeks ended ~~March~~June 2827, 2010. The prior-year period included a greater use of borrowings under our asset-based revolving credit facility to fund our capital expenditures and our March 31, 2010 acquisition and to support a larger build of finished goods inventories during the prior-year period.

~~The following is a summary of our long-term debt and our committed revolving credit facilities as of March 27, 2011 (in thousands):~~20

	March 27, 2011
Long-term debt:
10.5% Senior Secured Notes due 2013	$	300,000
Unamortized discount	(4,130		)
10.5% Senior Secured Notes due 2013, net	295,870
8.5% Senior Subordinated Notes due 2014	325,000
Asset-based Revolving Credit Facility	38,435
Canadian Revolving Credit Facility	1,329
Capital lease obligations	4,447
Total long-term debt	665,081
Less: Current maturities of long-term debt	446
Long-term debt, net of current maturities	$	664,635

Table of Contents

	CommitmentAmount		AmountsOutstanding		Letters ofCredit(1)		AvailableCapacity
Asset-based revolving credit facility(2)	$	200,000	$	38,435	$	12,246	$	113,648
Canadian revolving credit facility(3)	17,383		1,329		—		11,343
	$	217,383	$	39,764	$	12,246	$	124,991

The following is a summary of our long-term debt and our committed revolving credit facilities as of June 26, 2011 (in thousands):



	June 26, 2011
Long-term debt:
10.5% Senior Secured Notes due November 2013	$	300,000
Unamortized discount	(3,786		)
10.5% Senior Secured Notes due November 2013, net	296,214
8.5% Senior Subordinated Notes due February 2014	325,000
Asset-based Revolving Credit Facility	58,790
Canadian Revolving Credit Facility	4,122
Capital lease obligations	4,339
Total long-term debt	688,465
Less: Current maturities of long-term debt	454
Long-term debt, net of current maturities	$	688,011



	Commitment Amount		Amounts Outstanding		Letters of Credit⁽¹⁾		Available Capacity
Asset-based revolving credit facility⁽²⁾	$	200,000	$	58,790	$	16,496	$	104,728
Canadian revolving credit facility⁽³⁾	17,262		4,122		—		7,568
	$	217,262	$	62,912	$	16,496	$	112,296


(1)	Availability under the credit facilities is reduced by letters of credit issued under the facilities.

(2) The commitment amount for the asset-based revolving credit facility is $200.0 million; however, available capacity was $~~113~~104.67 million due to the borrowing base limit of $~~164~~180.30 million in effect at ~~March~~June 2726, 2011.

(3) The commitment amount for the Canadian revolving credit facility is CA$17.0 million (approximately $17.43 million); however, available capacity was CA$117.15 million (approximately $117.36 million) due to the borrowing base limit in effect at ~~March~~June 2726, 2011.

Government Obligations

We are subject to agreements with the City of Chicago and the State of Illinois relating to an undeveloped property located in Chicago, Illinois that we acquired in 2001. Pursuant to those agreements, the City of Chicago paid on our behalf a portion of the 2001 purchase price of the property in the form of cash and the issuance of a note. The State of Illinois also provided a grant to us. Under these agreements, we are required to fulfill specified obligations relating to the development of the property and retention of a specified number of employees. ~~The~~As of June 26, 2011, the amounts potentially repayable under the agreements for failure to comply with the obligations included therein ~~total~~totaled approximately $16.3 million, of which approximately $3.0 million iswas interest bearing,. These ~~and~~amounts are included in other current liabilities in the accompanying consolidated balance sheets.

We no longer intend to develop the property, and in February 2011, we entered into an agreement to sell the property for $5.0 million in cash and the assumption by the buyer of the government obligations described above. Our obligation to sell the property is contingent upon our full release from those government obligations. In addition, the transaction is contingent upon certain other governmental incentives and/or approvals. The sale, which is subject to other customary terms and conditions, is expected to close in the third quarter of 2011.

Contractual Obligations

During the thirteen weeks ended ~~March~~June 2726, 2011, there were no material changes outside the normal course of business in the contractual obligations disclosed under the caption “Contractual Obligations” in Item 7 of our 2010 Annual Report on Form 10-K.

Outlook

Management believes that cash generated by operations, existing cash and cash equivalents and amounts available under our credit facilities will be sufficient to meet our reasonably foreseeable liquidity needs, including operating needs, planned capital expenditures, expenses related to announced plant closures, payments in conjunction with our lease commitments and debt service requirements. We currently expect that our total 2011 capital ~~expenditures~~investment will be in the range of $35 million to $45 million. In addition, we contributed approximately $13 million to our defined benefit plans during the first ~~quarter~~half of 2011 and expect to contribute an additional $64 million during the remainder of 2011.

Table of Contents

Net Operating Loss Carryforwards

As of ~~March~~June 2726, 2011, we had approximately $~~344~~363.01 million of U.S. federal tax net operating loss carryforwards that expire between 2018 and 2031, of which $17.0 million were subject to the provisions of Internal Revenue Code Section 382. We establish a valuation allowance for deferred tax assets, including our net operating loss carryforwards, when the amount of expected future taxable income is not likely to support the use of the deduction or credit. During the thirteen weeks ended ~~March~~June 2726, 2011, our valuation allowance on all tax attributes increased by $918.38 million to $~~161~~171.95 million primarily related to activity from our U.S. and European operations. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible.

Critical Accounting Estimates

Our critical accounting estimates are described in our 2010 Annual Report on Form 10-K filed with the Securities and Exchange Commission on March 17, 2011. There have been no changes to the critical accounting estimates since that filing.

Table of Contents

Forward-Looking Statements

This report on Form 10-Q contains forward-looking statements. The words “anticipate,” “intend,” “plan,” “estimate,” “believe,” “expect,” “predict,” “potential,” “project,” “could,” “will,” “should,” “may,” “would” and similar expressions are intended to identify forward-looking statements, although not all forward-looking statements contain such identifying words. All statements in this report other than statements of historical fact, including statements regarding our business strategy, future operations, financial ~~position~~condition, prospects, plans and objectives, as well as information concerning industry and economic trends and any expected action or inaction of third parties, are forward-looking statements. ~~All~~Such forward-looking statements ~~speak only as of the date on which they are made. Such statements~~ reflect our current assumptions concerning future events and are subject to a number of risks and uncertainties, many of which are outside our control, ~~and~~that could cause actual results to differ materially from ~~such~~those expressed in the forward-looking statements. These risks and uncertainties include, but are not limited to:


•	the impact of the continuing global recession and restricted credit markets on our cash flow and debt service requirements;

• the impact of our significant current and future debt ~~level~~levels on the availability of cash flows for operations, our financial health and our ability to service debt;


•	the impact of covenant restrictions under our debt agreements on our ability to operate our business;

• the impact of economic, financial, and industry conditions and of our ~~continued~~ realization of cost savings on our ability to drive capital growth to service our debt;

• our ability to implement successfully ~~our manufacturing footprint optimization plan and other~~ measures designed to improve our cost structure;


•	the impact of any downgrades in our corporate ratings on the credit terms offered to us by our vendors and the interest rates offered to us if we require additional capital or financing;


•	the availability of, and our ability to pass on increases in the price of, raw materials, energy and fuel;


•	the impact of competitive products and pricing and fluctuations in demand for our products;

• the effect of increased regulation of certain raw materials used in our products and changing federal, state, foreign and local environmental and occupational health and safety laws and regulations;


•	the impact of any significant deficiencies or material weaknesses in our internal controls over financial reporting;


•	the risks associated with conducting business in multiple foreign jurisdictions, including foreign currency exchange rate fluctuations;


•	our ability to improve existing products and develop new products;


•	a catastrophic loss of one of our key manufacturing facilities;


•	the potential conflicts of interest between our noteholders and the stockholders of Solo Cup Investment Corporation;


•	the loss of one or more of our principal customers;

• the risks associated with acquisitions and divestitures, including without limitation the assumption of undisclosed liabilities ~~and the potential diversion of management attention from other business activities~~;


•	our ability to enforce our intellectual property and other proprietary rights; and


•	the impact that financial market conditions have on our requirements to fund our pension plans.

For a more detailed description of risks and uncertainties that could cause actual results to differ materially from those expressed in the forward-looking statements, see the “Risk Factors” ~~included~~disclosed in Item 1A of our ~~2010~~ Annual Report on Form 10-K. ~~Except~~for asthe ~~required~~fiscal byyear ~~applicable~~ended ~~law~~December 26, ~~including~~2010, ~~the~~which ~~securities~~we ~~laws~~filed ofwith the ~~United States and the rules and regulations of the~~ Securities and Exchange Commission, weon ~~do not undertake any obligation to publicly update or revise any forward-looking statement~~March 17, ~~whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements~~2011.

20All forward-looking statements speak only as of the date on which they are made. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission, we do not undertake any obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events or otherwise, to reflect actual results or changes in factors or assumptions affecting such forward-looking statements.

Table of Contents


Item 3.	Quantitative and Qualitative Disclosures about Market Risk.

In the ordinary course of business, we are exposed to market risk-sensitive instruments that consist primarily of our variable interest rate debt.

Interest accrues on outstanding borrowings under our asset-based revolving credit facility at a rate of either LIBOR (as defined in the asset-based revolving credit facility) plus a margin of 4% per annum, or a specified base rate plus a margin of 3% per annum, at our option. These interest rate margins are subject to adjustment based on borrowing base availability. No adjustments to these interest rate margins have been required to date.

As of ~~March~~June 2726, 2011, the asset-based revolving credit facility had an outstanding balance of $3858.48 million and carried an effective interest rate of 4.~~736~~481%. As of ~~March~~June 2726, 2011, $~~113~~104.67 million was available under the asset-based revolving credit facility, after taking into account borrowing base limitations.

We also have a Canadian revolving credit facility which bears interest at the Canadian prime rate plus 1.25% or the Canadian bankers’ acceptance rate plus 2.50%, at our option. As of ~~March~~June 2726, 2011, there was CA$14.31 million (approximately $14.31 million) of outstanding borrowings under the Canadian revolving credit facility, and CA$117.1 5 million (approximately $117.36 million) was available under the revolving credit facility, after taking into account borrowing base limitations.

Based upon the information above, our annual pre-tax income would decrease by approximately $0.46 million for each one-percentage point increase in the interest rates applicable to our variable rate debt. At the end of ~~March~~June 2011, three-month LIBOR was less than one percent; therefore, the maximum increase in our annual pre-tax income based on a decrease in interest rates applicable to our variable rate debt to zero would be approximately $0.12 million. The level of our exposure to interest rate movements may fluctuate significantly as a result of changes in the amount of debt outstanding under our credit facilities.


Item 4.	Controls and Procedures.

(a)

Disclosure Controls and Procedures. The Company’s management, with the participation of the Company’s chief executive officer and chief financial officer, evaluated the effectiveness of the Company’s disclosure controls and procedures (as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this report. Based upon that evaluation, the Company’s chief executive officer and chief financial officer concluded that, as of the end of such period, the Company’s disclosure controls and procedures were effective.

(b) Changes in Internal Control over Financial Reporting. During the thirteen weeks ended June 26, 2011, the domestic and Canadian operations completed a system implementation to consolidate their procurement software onto a single system which we believe resulted in a significant change to our internal controls. Through the implementation process, the Company retired redundant systems and refined our internal controls over the related processes. This software automates the vendor, purchase order and overall spending review and approval processes, and integrates directly with our manufacturing system. While we believe the change has improved and strengthened our overall system of internal control, there are inherent risks associated with implementing software changes. We believe that our controls in the affected areas, as modified, continue to be designed appropriately and operate effectively. There have been no other changes in the Company’s internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act) during the thirteen weeks ended ~~March~~June 2726, 2011, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

2123

Table of Contents

PART II—OTHER INFORMATION


Item 1.	Legal Proceedings.

We are involved in various claims and legal actions arising from time to time in the ordinary course of business. We establish reserves for claims and actions when it is probable that we will incur a loss and such loss is capable of being estimated. While we cannot predict the outcome of these claims and actions with certainty, we believe that based on our current assessment of the facts and circumstances we are not a party to any pending legal proceeding, the ultimate disposition of which would have a material adverse effect on our business, financial position, results of operations or cash flows.


Item 1A.	Risk Factors.

We do not believe there ~~have~~has been any material ~~changes~~change infrom the risk factors previously disclosed in our Annual Report on Form 10-K for the fiscal year ended December 26, 2010, which we filed with the Securities and Exchange Commission on March 17, 2011.


Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.


Item 3.	Defaults upon Senior Securities.

Not applicable.


Item 4.	(Removed and Reserved).


Item 5.	Other Information.

Not applicable.


Item 6.	Exhibits.

31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS *	XBRL Instance Document.
101.SCH *	XBRL Taxonomy Extension Schema Document.
101.CAL *	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *	XBRL Taxonomy Extension Presentation Linkbase Document.

22* XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.

Table of Contents

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 thereunto duly authorized.

		SOLO CUP COMPANY
Date:	~~May~~August 109, 2011	By:	/s/ Robert D. Koney, Jr.
			Robert D. Koney, Jr.
			Executive Vice President and Chief Financial Officer
			(Principal Financial and Accounting Officer and Duly Authorized Officer)

2325

Table of Contents

INDEX OF EXHIBITS FILED WITH OR

INCORPORATED BY REFERENCE INTO

FORM 10-Q OF SOLO CUP COMPANY

FOR THE THIRTEEN WEEKS ENDED ~~MARCH~~JUNE 2726, 2011

31.1	Certification of Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
31.2	Certification of Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
32.1	Certification of Principal Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
32.2	Certification of Principal Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
101.INS *	XBRL Instance Document.
101.SCH *	XBRL Taxonomy Extension Schema Document.
101.CAL *	XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF *	XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB *	XBRL Taxonomy Extension Label Linkbase Document.
101.PRE *	XBRL Taxonomy Extension Presentation Linkbase Document.

24 * XBRL information is furnished and not filed for purposes of Sections 11 and 12 of the Securities Act of 1933 and Section 18 of the Securities Exchange Act of 1934, and is not subject to liability under those sections, is not part of any registration statement or prospectus to which it relates and is not incorporated or deemed to be incorporated by reference into any registration statement, prospectus or other document.

Filing Compare · Solo Cup CO