UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

~~FORM 10-K~~ __________________________________________

xFORM ~~Annual Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934~~10-K

~~For the fiscal year ended December~~ ~~26, 2010~~ __________________________________________

¨S Annual ~~Transition~~ Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the ~~transition~~fiscal ~~period~~year ~~from to~~ ended December 25, 2011

~~Commission~~£ Transition ~~file~~Report ~~number~~Pursuant ~~333-116843~~ to Section 13 or 15(d) of the Securities Exchange Act of 1934

~~SOLO~~For ~~CUP~~the ~~COMPANY~~transition period from to

~~(Exact~~Commission ~~name~~File ofNumber: ~~registrant as specified in its charter)~~ 333-116843

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)

SOLO CUP COMPANY

~~Registrant’s~~(Exact ~~telephone~~name ~~number,~~of ~~including~~registrant ~~area~~as ~~code:~~specified ~~847/444-5000~~in its charter)

~~Securities registered pursuant to Section~~ ~~12(b) of the Act: None.~~ __________________________________________

Securities registered pursuant to Section 12(g) of the Act: None.



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)

~~Indicate~~Registrant’s bytelephone ~~check mark if the registrant is a well-known seasoned issuer~~number, asincluding ~~defined~~area incode: ~~Rule 405 of the Securities Act. Yes ¨ No x~~ 847/444-5000

~~Indicate by check mark if the registrant is not required to file reports pursuant to Section~~__________________________________________ ~~13 or Section 15(d) of the Act. Yes x No ¨~~

~~Indicate~~Securities ~~by check~~registered ~~mark~~pursuant ~~whether the registrant (1) has filed all reports required~~ to ~~be filed by~~ Section 13 ~~or 15~~12(db) 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~~None. ~~Yes x No ¨~~

~~Indicate~~Securities byregistered ~~check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Date File required to be submitted and posted~~ pursuant to ~~Rule~~Section ~~405 of Regulation S-T~~ 12(~~§232.405~~g) of ~~this chapter) during~~ the ~~preceding~~Act: ~~12 months (or such shorter period that the registrant was required to submit and post such files)~~None. ~~Yes ¨ No ¨~~

Indicate by check mark if ~~disclosure~~the ofregistrant ~~delinquent~~is ~~filers~~a ~~pursuant to Item 405 of Regulation S~~well-Kknown ~~(§229.405~~seasoned ~~of this chapter) is not contained herein~~issuer, ~~and~~as ~~will~~defined ~~not be contained, to the best of registrant’s knowledge,~~ in ~~definitive~~Rule ~~proxy~~405 ~~or information statements incorporated by reference in Part III~~ of ~~this~~the ~~Form~~Securities ~~10-K or any amendment to this Form 10-K~~Act. x Yes £ No S

Indicate by check mark ~~whether~~if the registrant is anot ~~large~~required ~~accelerated~~to ~~filer,~~file anreports ~~accelerated~~pursuant ~~filer, a~~to ~~non-accelerated~~Section ~~filer,~~13 or aSection ~~smaller~~15(d) ~~reporting company. See the definitions~~ of ~~“large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of~~ the ~~Exchange~~ Act. Yes S No £

~~Large~~Indicate ~~accelerated~~by ~~filer ¨ Accelerated~~check ~~filer~~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 ¨£ No S

~~Non-accelerated filer x (Do~~Indicate ~~not~~by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if aany, ~~smaller~~every ~~reporting~~Interactive ~~company) Smaller~~Data ~~reporting~~File ~~company ¨~~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 ~~shell~~large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. ~~(as~~See ~~defined~~the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act). ~~Yes ¨ No x~~ (Check one):

~~As of March~~Large ~~17, 2011, 100 shares of Common Stock, $0.01 par value, were outstanding. There is no trading market for the common stock of the registrant. No shares of the registrant were held by non~~accelerated filer £ Accelerated filer £ Non-~~affiliates.~~ accelerated filer S Smaller reporting company £

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

~~TABLE~~The OFnumber ~~CONTENTS~~of shares outstanding of the Registrant’s common stock as of March 23, 2012:

PART I
Item 1.	Business	1
Item 1A.	Risk Factors	6
Item 1B.	Unresolved Staff Comments	12
Item 2.	Properties	13
Item 3.	Legal Proceedings	14
Item 4.	Removed and Reserved	14
PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14
Item 6.	Selected Financial Data	15
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	16
Item 7a.	Quantitative and Qualitative Disclosures About Market Risk	30
Item 8.	Financial Statements and Supplementary Data	31
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	74
Item 9A.	Controls and Procedures	74
Item 9B.	Other Information	74
PART III
Item 10.	Directors, Executive Officers and Corporate Governance	75
Item 11.	Executive Compensation	78
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	86
Item 13.	Certain Relationships and Related Transactions, and Director Independence	88
Item 14.	Principal Accounting Fees and Services	90
PART IV
Item 15.	Exhibits and Financial Statement Schedules	90

Common Stock, $0.01 par value – 100 shares

Table of Contents

~~Part I~~ INDEX

Item 1. Business.



		Page
PART I.

Item 1.	Business	1

Item 1A.	Risk Factors	6

Item 1B.	Unresolved Staff Comments	12

Item 2.	Properties	12

Item 3.	Legal Proceedings	13

Item 4.	Removed and Reserved	14

PART II.

Item 5.	Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	14

Item 6.	Selected Financial Data	14

Item 7.	Management's Discussion and Analysis of Financial Condition and Results of Operation	15

Item 7a.	Quantitative and Qualitative Disclosures about Market Risk	29

Item 8.	Financial Statements and Supplementary Data	29

Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	72

Item 9A.	Controls and Procedures	73

Item 9B.	Other Information	73

PART III.

Item 10.	Directors, Executive Officers and Corporate Governance	73

Item 11.	Executive Compensation	77

Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	85

Item 13.	Certain Relationships and Related Transactions, and Director Independence	87

Item 14.	Principal Accounting Fees and Services	89

PART IV.

Item 15.	Exhibits and Financial Statement Schedules	90

~~In this annual report, the terms “we,” “us” and “our” refer to Solo Cup Company, a Delaware corporation, and its direct and indirect subsidiaries.~~ i

~~Overview~~Table of Contents

WePART ~~are~~I—FINANCIAL a leading producer and marketer of single-use products used to serve food and beverages in the home, quick-service restaurants and other foodservice settings. We distribute our products globally and have served our industry for 75 years. We manufacture and supply a broad portfolio of single-use products, including cups, lids, take-out and other food containers, plates, bowls, portion cups, cutlery and straws. Our products are available in plastic, paper, foam, post-consumer recycled content and annually renewable materials, and are marketed primarily under the Solo®, Jack Frost®, Trophy®, Bare™ by Solo and Creative Carryouts® brands. We are recognized for our customer service, and our products are known for their quality, reliability and consistency. We are one of the leading suppliers of branded single-use cups, plates and bowls in the United States. We also provide a line of products to select customers under private label brands. INFORMATION

WeItem currently operate 15 manufacturing facilities and 15 distribution centers, some of which are combined with a manufacturing facility at a single location, in the United States, Canada, Mexico, Panama and the United Kingdom1. Business.

WeIn ~~generated~~this ~~approximately~~annual ~~$1.6 billion~~report, ~~of net sales for~~ the ~~fiscal~~terms ~~year ended December 26~~“we,” ~~2010.~~“us” ~~Financial~~and ~~information~~“our” ~~about~~refer ~~our~~to ~~two~~Solo ~~business~~Cup ~~segments~~Company, –a ~~North~~Delaware ~~America~~corporation, and ~~Europe~~its –direct isand ~~disclosed~~indirect ~~in Note 20 to our consolidated financial statements included in Item 8 of this annual report~~subsidiaries.

~~Background~~Overview

~~Solo~~We ~~Cup~~are ~~Company~~a ~~(“Solo~~leading ~~Delaware”)~~producer ~~was~~and ~~incorporated~~marketer inof ~~Delaware~~single-use inproducts ~~January~~used ~~2004~~ to beserve food and beverages in the ~~holding~~home, ~~company~~quick-service ~~for~~restaurants ~~Solo~~and ~~Cup~~other ~~Company,~~foodservice ansettings. ~~Illinois~~We ~~corporation~~distribute ~~(“Solo~~our ~~Illinois”),~~products globally and ~~its subsidiaries,~~have ~~and~~served ~~for~~our SFindustry ~~Holdings~~for ~~Group,~~75 ~~Inc~~years. We manufacture and ~~its~~supply ~~subsidiaries~~a broad portfolio of single-use products, including ~~Sweetheart~~cups, ~~Cup~~lids, ~~Company~~take-out ~~Inc.~~and ~~Effective~~other ~~February 22~~food containers, ~~2004~~plates, ~~Solo~~bowls, ~~Illinois~~portion ~~became~~cups, acutlery ~~wholly~~and ~~owned~~straws. ~~subsidiary~~Our ofproducts ~~Solo~~are ~~Delaware~~available in plastic, paper, foam, post-consumer recycled content and ~~Solo~~annually ~~Delaware~~renewable ~~acquired~~materials. We ~~100%~~are one of the ~~outstanding~~ ~~capital~~leading ~~stock~~suppliers of SFbranded ~~Holdings.~~single-use ~~Prior~~products toin ~~these~~the ~~transactions~~United States, ~~Solo~~marketing ~~Delaware~~our ~~had~~products noprimarily ~~operations~~under ~~other~~the ~~than~~Solo®, inJack ~~connection~~Frost®, ~~with~~Trophy®, ~~its~~Bare® ~~formation~~by Solo® and ~~the~~Creative ~~authorization~~Carryouts® brands. We also provide a line of ~~the~~products ~~transactions~~to ~~described~~select ~~above~~customers under private label brands. We are recognized for our customer service, and our products are known for their quality, reliability and consistency.

~~Solo~~We ~~Illinois~~currently ~~was~~operate ~~established~~13 inmanufacturing ~~1936.~~facilities ~~Sweetheart Cup Company’s operating history dated back to the founding of a predecessor company in 1911. In September 2005, Sweetheart Cup Company changed its name to Solo Cup Operating Corporation,~~ and in13 ~~October~~distribution ~~2005~~centers, ~~Solo~~some ~~Illinois~~of ~~merged~~which ~~with~~are ~~and~~combined ~~into Solo Cup Operating Corporation,~~ with ~~Solo Cup Operating Corporation as the surviving entity. As~~ a ~~result~~manufacturing offacility ~~these~~at ~~transactions, Solo Delaware is~~ a ~~holding~~single ~~company~~location, ~~the~~in ~~material assets of which are 100% of~~ the ~~capital~~United ~~stock~~States, ofCanada, SFMexico, ~~Holdings.~~Panama SFand ~~Holdings owns 100% of~~ the ~~capital~~United ~~stock of Solo Cup Operating Corporation~~Kingdom.

~~Solo~~We ~~Delaware~~generated isapproximately a$1.6 ~~wholly~~billion ~~owned subsidiary~~ of ~~Solo~~net ~~Cup~~sales ~~Investment~~for ~~Corporation,~~the afiscal ~~Delaware~~year ~~corporation.~~ended ~~SCC Holding Company LLC~~December 25, a2011. ~~Delaware~~Financial ~~limited~~information ~~liability~~about ~~company,~~our ~~owns~~two ~~67.26%,~~business ~~Vestar~~segments ~~Capital~~- ~~Partners~~North ~~IV,~~America ~~L.P.~~ and ~~certain~~Europe of- ~~its~~is ~~affiliates~~disclosed ~~own~~in ~~32.71%,~~Note ~~and~~20 ~~management~~to ofour ~~Solo~~consolidated ~~Delaware~~financial ~~owns~~statements ~~the~~included ~~remaining~~in ~~0.03%,~~Item 8 of ~~Solo~~this ~~Cup~~annual ~~Investment Corporation as of March 15, 2011~~report.

1Background

~~Table~~Solo Cup Company (“Solo Delaware”) was incorporated in Delaware in January 2004 to be the holding company for Solo Cup Company, an Illinois corporation (“Solo Illinois”), and its subsidiaries, and for SF Holdings Group, Inc. and its subsidiaries, including Sweetheart Cup Company Inc. Effective February 22, 2004, Solo Illinois became a wholly owned subsidiary of ~~Contents~~Solo Delaware, and Solo Delaware acquired 100% of the outstanding capital stock of SF Holdings. Prior to these transactions, Solo Delaware had no operations other than in connection with its formation and the authorization of the transactions described above.

~~Our~~Solo ~~fiscal~~Illinois ~~year~~was isestablished ~~the~~in ~~52-~~1936. Sweetheart orCup ~~53-week~~Company's ~~period~~operating ~~ending~~history ondated back to the ~~last~~founding ~~Sunday~~of a predecessor company in ~~December~~1911. ~~Our~~In ~~fiscal~~September ~~quarters~~2005, ~~for 2010~~Sweetheart ~~were~~Cup ~~the~~Company ~~thirteen~~changed ~~weeks~~its ~~ended~~name ~~March 28~~to Solo Cup Operating Corporation, ~~June 27~~ and in October 2005, ~~September 26~~ Solo Illinois merged with and ~~December 26~~into Solo Cup Operating Corporation, ~~2010~~with Solo Cup Operating Corporation as the surviving entity. As a result of these transactions, Solo Delaware is a holding company, the material assets of which are 100% of the capital stock of SF Holdings. SF Holdings owns 100% of the capital stock of Solo Cup Operating Corporation.

~~Products~~ Solo Delaware is a wholly owned subsidiary of Solo Cup Investment Corporation, a Delaware corporation. SCC Holding Company LLC, a Delaware limited liability company, 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 as of March 1, 2012.

We produce a broad range of plastic, paper and foam single-use products used to serve food and beverages. Our plastic products include a wide range of cups, lids, take-out and other food containers, plates, bowls, cutlery and portion cups. Our paper products include cups, plates, bowls, portion cups and food containers. Our foam products include cups, plates and bowls. Our plastic, paper and foam products are offered in a variety of sizes, designs and colors, and at a range of price points. We also offer an Eco-forward™ product line called Bare by Solo, which includes products made with recycled plastic or paper, compostable products made with wax, plant-based polylactic acid (PLA) or sugarcane, and products made with other renewable resources. 1

~~Customers~~Table of Contents

WeOur ~~serve~~fiscal ~~two~~year ~~primary~~is ~~customer~~the ~~groups:~~52- ~~(1) foodservice distributors~~or ~~and~~53-week ~~operators,~~period ~~referred~~ending toon ~~collectively~~the inlast ~~this~~Sunday ~~annual~~in ~~report~~December. asOur ~~foodservice~~fiscal ~~customers;~~quarters ~~and~~for ~~(2) retailers~~2011 ofwere ~~consumer~~the ~~products,~~thirteen ~~referred~~weeks toended inMarch 27, June 26, September 25 ~~this~~and ~~annual~~December 25, ~~report as consumer customers~~2011.

~~Foodservice~~Products

~~Approximately~~We ~~79%~~produce a broad range of ~~our~~ ~~net~~plastic, ~~sales~~paper ~~for~~and ~~fiscal~~foam ~~year~~single-use ~~2010~~products ~~were~~used to ~~foodservice~~serve ~~customers~~food and beverages. Our plastic products include a wide range of cups, ~~including:~~lids, take-out and other food containers, plates, bowls, cutlery and portion cups. Our paper products include cups, plates, bowls, portion cups and food containers. Our foam products include cups, plates and bowls. Our plastic, paper and foam products are offered in a variety of sizes, designs and colors, and at a range of price points. We also offer an Eco-forward® product line called Bare by Solo, which includes products made with recycled plastic or paper, compostable products made with wax, plant-based polylactic acid (PLA) or sugarcane, and products made with other renewable resources.

• foodservice distributors, including broadline distributors, such as Sysco Corporation, U.S. Foodservice, Inc., Gordon Food Service and Foodservices of America Inc., and specialty distributors, such as Bunzl plc, Network Services Company and UniPro Foodservice, Inc.; andCustomers

•We serve two primary customer groups: (1) foodservice distributors and operators, ~~such~~referred to collectively in this annual report as ~~Starbucks~~foodservice ~~Corporation,~~customers; ~~Dunkin’~~and ~~Donuts,~~(2) ~~YUM!~~retailers ~~Brands,~~of ~~Inc.~~consumer products, ~~Panera~~referred ~~Bread~~to ~~Company,~~in ~~ARAMARK~~this ~~Corporation~~annual ~~and~~report ~~Sodexo~~as consumer customers.

Table of Contents

We believe we have strong relationships with our foodservice customers due to our broad array of product offerings, longstanding leadership in the industry and demonstrated capability in product quality, innovation, graphics and customer service. Foodservice

WeApproximately ~~sell~~79% ~~our~~of ~~products to foodservice customers through~~ our ~~regionally~~net ~~organized, in-house direct~~ sales ~~force,~~for ~~national~~fiscal ~~account~~year ~~direct~~2011 ~~sales~~were ~~force and,~~ to a lesser extent, select broker networks. We also maintain direct selling relationships with several of our major national accounts for which we provide direct customer service and tailored products for specific customer requirements. Our distributor-customers’ stocking decisions are based on demand from foodservice ~~operators. Consequently~~customers, our direct and national account sales force maintains a service-oriented supplier relationship with distributors and drives end-market demand from foodservice operators by offering a breadth of high-quality products. Our sales force also works closely with distributors and their customers to develop unique product offerings and promotional programs. including:

~~Consumer~~• foodservice distributors, including broadline distributors, such as Sysco Corporation, US Foods, Gordon Food Service and Foodservices of America Inc., and specialty distributors, such as Bunzl plc, Network Services Company and UniPro Foodservice, Inc.; and

~~Sales~~• tofoodservice ~~consumer~~operators, ~~customers~~such ~~accounted~~as ~~for~~Starbucks ~~approximately 21%~~Corporation, ofDunkin' ~~our~~Donuts, ~~net~~Burger ~~sales~~King ~~for~~Corporation, ~~fiscal~~Panera ~~year~~Bread ~~2010~~Company, ~~and~~ARAMARK ~~are~~Corporation ~~made~~and ~~through various outlets, including:~~ Sodexo.

•We ~~grocery~~believe ~~stores,~~we ~~such~~have asstrong ~~Publix~~relationships ~~Super~~with ~~Markets,~~our ~~Inc.~~foodservice customers due to our broad array of product offerings, ~~The~~longstanding ~~Kroger~~leadership ~~Co.~~in the industry and ~~Albertson’s~~demonstrated capability in product quality, ~~Inc~~innovation, graphics and customer service.;

•We ~~mass~~sell ~~merchandisers~~our products to foodservice customers through our regionally organized, ~~such~~in-house asdirect ~~Target~~sales ~~Corporation~~force, national account direct sales force and, ~~Wal~~to a lesser extent, select broker networks. We also maintain direct selling relationships with several of our major national accounts for which we provide direct customer service and tailored products for specific customer requirements. Our distributor-~~Mart~~customers' ~~Stores~~stocking decisions are based on demand from foodservice operators. Consequently, ~~Inc~~our direct and national account sales force maintains a service-oriented supplier relationship with distributors and drives end-market demand from foodservice operators by offering a breadth of high-quality products.; Our sales force also works closely with distributors and their customers to develop unique product offerings and promotional programs.

~~• warehouse clubs, such as Costco Wholesale Corporation and BJ’s Wholesale Club, Inc.;~~Consumer

•Sales ~~value~~to ~~channel~~consumer ~~stores,~~customers ~~such~~accounted asfor ~~Dollar~~approximately ~~General~~21% ~~Corporation,~~of ~~Family~~our ~~Dollar~~net ~~Stores~~sales ~~Inc.,~~for ~~ALDI~~fiscal ~~Inc.~~year 2011 and ~~Sav-A-Lot~~are ~~Foods~~made ~~Inc.;~~through ~~and~~various outlets, including:

• ~~other~~grocery ~~retail outlets~~stores, such as ~~drug~~Publix Super Markets, Inc., The Kroger Co. and ~~party~~Albertson's, ~~stores~~Inc.;

We• ~~sell~~mass ~~to a diverse group of consumer customers primarily through regional broker networks. In the case of some of our larger consumer customers~~merchandisers, wesuch ~~maintain~~as aTarget ~~direct~~Corporation ~~supplier relationship through our in-house direct sales force. Our sales~~ and marketing strategy for consumer customers is designed to support our strong brand names and private label product offerings and includes integrated marketing programs that consist of a combination of inWal-~~store,~~Mart ~~online~~Stores, ~~television, print and product-placement brand enhancement activities~~Inc. ;

~~Any~~• ~~backlog~~warehouse ofclubs, ~~orders~~such weas ~~may~~Costco ~~have with~~Wholesale ~~our~~Corporation ~~foodservice~~and orBJ's ~~consumer~~Wholesale ~~customers~~Club, ~~is not material~~Inc. ;

~~Seasonality~~• value channel stores, such as Dollar General Corporation, Family Dollar Stores Inc., ALDI Inc. and Sav-A-Lot Foods Inc.; and

~~Historically,~~• weother ~~have~~retail experienced fluctuations in sales by season. We have higher sales volume in the warmer months and realize the majority of our net cash flows from operations during the last nine months of the year. Typicallyoutlets, ~~during the first quarter we build inventory to meet demand in the warmer months. Sales for~~ such ~~periods~~as ~~reflect~~drug ~~the high seasonal demands of the summer months when outdoor~~ and ~~away-from-home~~party ~~consumption increases~~stores.

~~Raw~~We ~~Materials~~sell to a diverse group of consumer customers primarily through regional broker networks. In the case of some of our larger consumer customers, we maintain a direct supplier relationship through our in-house direct sales force. Our sales and marketing strategy for consumer customers is designed to support our strong brand names and private label product offerings and includes integrated marketing programs that consist of a combination of in-store, online, television, print and product-placement brand enhancement activities.

~~Our~~Any ~~principal~~backlog ~~raw materials are (1) various types~~ of ~~resins~~orders ~~for~~we ~~our~~may ~~plastic~~have ~~and~~with ~~foam products and (2) paperboard for~~ our ~~paper products.~~foodservice ~~The~~or ~~resins~~consumer ~~that~~customers weis ~~use~~not ~~include polystyrene, polypropylene, polyethylene terephthalate (PET), and PLA~~material. We purchase resins from large petrochemical and resin producers. Resin prices are influenced by input prices, such as crude oil, natural gas, benzene, ethylene, propylene and paraxylene, as well as availability of supply and changes in demand.

~~The~~Seasonality principal raw material used in our paper operations is solid bleached sulfate paperboard. We purchase coated and uncoated paperboard from a variety of large and small manufacturers. Paper prices are driven by global supply and demand as well as input costs for energy, fiber, chemicals, polyethylene and transportation.

WeHistorically, ~~believe~~ we have ~~good~~experienced ~~relationships~~fluctuations ~~with~~in ~~our~~sales ~~major~~by ~~raw material suppliers~~season. We ~~For~~have ~~2010,~~higher ~~our~~sales ~~overall~~volume ~~supply~~in the warmer months and realize the majority of ~~raw~~our ~~materials~~net ~~was~~cash ~~adequate,~~flows ~~and~~from ~~for~~operations ~~2011~~during the last nine months of the year. Typically, during the first quarter we ~~believe~~build itinventory ~~will~~to ~~remain~~meet ~~adequate~~demand in the warmer months. Sales for such periods reflect the high seasonal demands of the summer months when outdoor and away-from-home consumption increases.

Our raw material costs make up a significant portion of our cost of goods sold. Although we generally enter into one- to three-year supply contracts with a number of our raw material suppliers, we continue to have exposure to changes in raw material prices. Historically, we have not hedged our exposure to fluctuations in raw material prices. 3

3Table of Contents

~~Table~~Raw ofMaterials ~~Contents~~

~~Manufacturing~~Our principal raw materials are (1) various types of resins for our plastic and foam products and (2) paperboard for our paper products. The resins that we use include polystyrene, polypropylene, and polyethylene terephthalate (PET). We purchase resins from large petrochemical and resin producers. Resin prices are influenced by input feedstock prices, such as crude oil, natural gas, benzene, ethylene, propylene and paraxylene, as well as availability of supply and changes in demand.

~~Our~~The ~~manufacturing~~principal ~~strategy~~raw ismaterial toused ~~reduce~~in ~~costs through continuous process improvements and innovation, while meeting~~ our ~~customers’~~paper ~~needs~~operations ~~and~~is ~~maintaining~~solid ~~our~~bleached ~~standard~~sulfate ~~for quality~~paperboard. We ~~employ~~purchase ~~various technologies~~coated and ~~strategies~~uncoated topaperboard ~~supply~~from ~~our~~a ~~wide~~variety ~~product~~of ~~line,~~large ~~including~~and ~~working~~small ~~with~~manufacturers. ~~third~~Paper ~~parties~~prices ~~to supply manufacturing capability in instances where expertise or economies of scale~~ are ~~not~~driven ~~available~~by ~~in-house.~~global Wesupply ~~manufacture~~ and ~~supply~~demand aas ~~variety of~~well ~~products~~as ininput ~~plastic,~~costs ~~paper~~for ~~and~~energy, ~~foam.~~fiber, ~~Our~~chemicals, ~~flexibility~~polyethylene and ~~proficiency in these technologies enable us to respond quickly to customer needs~~transportation.

We ~~use~~believe ~~the~~we ~~following~~have ~~primary~~good ~~processes~~relationships towith ~~manufacture~~our major raw material suppliers. For 2011, our ~~products:~~overall supply of raw materials was adequate, and for 2012, we believe it will remain adequate.

•Our ~~Plastic~~raw ~~cups,~~material ~~lids,~~costs ~~plates~~make ~~and~~up ~~bowls,~~a ~~and~~significant ~~foam~~portion ~~plates.~~of Weour ~~use~~cost ~~plastic~~of ~~extrusion~~goods tosold. ~~convert~~Although ~~plastic~~we ~~resin~~generally ~~from~~enter ~~pellets~~into one- to athree-year ~~flat~~supply ~~extruded~~contracts ~~sheet.~~with ~~Using~~ a ~~thermoforming~~number ~~process,~~of weour ~~convert~~raw ~~the~~material ~~extruded~~suppliers, ~~sheet~~we ~~into~~continue ~~the~~to ~~final~~have ~~product.~~exposure Weto ~~add~~changes ~~graphics based on customer specifications and package our products~~ in ~~various~~raw ~~quantities~~material ~~depending~~prices. onHistorically, ~~customer~~we ~~requirements.~~have Wenot ~~have~~hedged ~~the~~our ~~capability~~exposure to ~~utilize~~fluctuations ain ~~variety~~raw ofmaterial ~~resins, including polystyrene, polypropylene, PET and PLA~~prices.

•Manufacturing Paper cups, plates and food containers, and foam cups. We emboss or print graphics on paperboard according to customer requirements and feed the paperboard through machines that cut, form or fold the material into the final product. We produce our thin-wall foam cups using a process similar to the one we employ for paper cups.

•Our ~~Plastic~~manufacturing ~~cutlery~~strategy is to reduce costs through continuous process improvements and ~~straws.~~innovation, Wewhile ~~utilize~~meeting ~~injection~~our ~~molding~~customers' ~~machines~~needs toand ~~manufacture~~maintaining ~~plastic~~our ~~cutlery~~standard for quality. We ~~melt~~employ ~~plastic~~various ~~pellets~~technologies and ~~inject~~strategies ~~the~~to ~~molten~~supply ~~resin~~our ~~into~~wide ~~molds.~~product ~~The~~line, ~~pieces~~including ofworking ~~cutlery~~with ~~are~~third ~~automatically~~parties ~~cooled,~~to ~~trimmed~~supply ~~and~~manufacturing ~~ejected~~capability ~~from~~in ~~the~~instances ~~machines.~~where Weexpertise ~~individually~~or ~~wrap~~economies orof ~~package~~scale ~~the~~are ~~product~~not inavailable ~~bulk~~in-house. AnWe ~~extrusion~~manufacture ~~process~~and issupply ~~used~~a tovariety ~~form~~of ~~different~~products ~~sizes~~in ofplastic, ~~straws~~paper ~~based~~and onfoam. ~~customer~~Our ~~specifications.~~flexibility Weand ~~can~~proficiency ~~make~~in ~~our~~these ~~plastic~~technologies ~~cutlery~~enable ~~and~~us ~~straws~~to ~~with~~respond ~~polypropylene~~quickly orto ~~polystyrene~~customer needs.

~~Distribution~~ We use the following primary processes to manufacture our products:

~~Our~~• ~~self-managed~~Plastic ~~distribution~~cups, ~~centers~~lids, inplates ~~North~~and ~~America~~bowls, ~~are~~and ~~located~~foam inplates. ~~proximity~~We touse ~~major~~plastic ~~population~~extrusion ~~centers,~~to ~~generally consolidating~~convert ~~the~~plastic ~~output~~resin offrom ~~our~~pellets ~~manufacturing~~to ~~operations. We offer~~ a ~~broad~~flat ~~range~~extruded ofsheet. ~~products~~Using ~~from~~a ~~these~~thermoforming ~~distribution~~process, ~~centers.~~we ~~This~~convert ~~strategy~~the ~~provides~~extruded ~~value~~sheet tointo ~~our~~the ~~customers~~final byproduct. ~~allowing~~We usadd tographics ~~respond~~based toon ~~demand~~customer ~~more~~specifications ~~rapidly~~ and ~~allowing~~package our ~~customers to~~products ~~carry~~in ~~less~~various ~~inventory.~~quantities ~~Our~~depending ~~international~~on ~~subsidiaries~~customer ~~operate~~requirements. ~~out~~We ofhave ~~owned~~the orcapability ~~leased~~to ~~warehouses~~utilize ~~and~~a ~~manage~~variety ~~the~~of ~~related~~resins, ~~distribution~~including ~~and~~polystyrene, ~~transportation~~polypropylene, ~~networks.~~and PET.

~~Competition~~• Paper cups, plates and food containers, and foam cups. We print graphics on paperboard according to customer requirements and feed the paperboard through machines that cut, form or fold the material into the final product. We produce our thin-wall foam cups using a process similar to the one we employ for paper cups.

We• ~~compete~~Plastic incutlery ~~the~~and ~~single-use~~straws. ~~foodservice~~We ~~products~~utilize ~~industry. The~~injection ~~industry~~molding ~~encompasses~~machines ato ~~wide~~manufacture ~~variety~~plastic ofcutlery. ~~products,~~We ~~including~~melt ~~single-use~~plastic ~~cups,~~pellets ~~lids,~~and ~~plates,~~inject ~~bowls,~~the ~~containers,~~molten ~~cutlery~~resin ~~and~~into ~~straws~~molds. ~~These~~The ~~products~~pieces ~~are~~of ~~manufactured~~cutlery ~~from~~are ~~plastic~~automatically ~~and paper raw materials~~cooled, ~~such~~trimmed asand ~~coated~~ejected ~~and~~from ~~uncoated~~the ~~paperboard, polystyrene,~~machines. ~~polypropylene~~We ~~and~~individually ~~PET,~~wrap ~~emerging~~or ~~bio-resins~~package ~~such~~the asproduct ~~PLA,~~in ~~and~~bulk. ~~renewable~~An ~~resources~~extrusion ~~such~~process asis ~~sugarcane.~~used ~~Our~~to ~~products~~form ~~also~~different ~~compete~~sizes ~~with~~of ~~metal,~~straws ~~glass~~based ~~and~~on ~~other~~customer ~~packaging~~specifications. ~~materials,~~We ascan ~~well~~make asour plastic ~~packaging~~cutlery ~~materials~~and ~~made~~straws ~~through~~with ~~different manufacturing~~polypropylene ~~processes.~~or polystyrene.

WeDistribution compete for customers based on brand reputation, quality, cost, service, breadth of product offering, product differentiation, innovation, marketing programs and value. Our competitors include large multinational companies as well as regional manufacturers. Some of our competitors compete across many of our product lines, while most compete with only some of our products.

~~Intellectual~~Our ~~Property~~self-managed distribution centers in North America are located in proximity to major population centers, generally consolidating the output of our manufacturing operations. We offer a broad range of products from these distribution centers. This strategy provides value to our customers by allowing us to respond to demand more rapidly and allowing our customers to carry less inventory. Our international subsidiaries operate out of owned or leased warehouses and manage the related distribution and transportation networks.

WeCompetition rely on a combination of trade secrets, confidentiality agreements, patents, trademarks, copyrights, licenses, and contractual provisions, as well as various intellectual property and unfair competition laws to protect our intellectual property and other proprietary rights. We own a number of patents and trademarks, which vary in duration depending upon when the application was filed or granted. We believe that, in the aggregate, the rights under our patents and trademarks are generally important to our business; however, no single right is material to our business.

~~Research~~We compete in the single-use foodservice products industry. The industry encompasses a wide variety of products, including single-use cups, lids, plates, bowls, containers, cutlery and ~~Development~~straws. These products are manufactured from plastic and paper raw materials, such as coated and uncoated paperboard, polystyrene, polypropylene and PET, emerging bio-resins such as PLA, and renewable resources such as sugarcane. Our products also compete with metal, glass and other packaging materials, as well as plastic packaging materials made through different manufacturing processes.

~~Our~~We ~~research~~compete ~~and~~for ~~development~~customers ~~strategy~~based ~~has~~on ~~three~~brand ~~goals:~~reputation, ~~(1) create~~quality, ~~innovative~~cost, ~~value-added~~service, ~~products~~breadth ~~and~~of ~~packaging~~product ~~that~~offering, ~~target~~product ~~both new and existing customers; (2) differentiate our products in the marketplace; and (3) explore new products~~differentiation, ~~processes and market opportunities that will enhance our overall market position. We continue to develop~~innovation, ~~test~~marketing ~~and~~programs ~~sample new~~ and ~~recycled~~ ~~raw~~value. ~~materials~~Our ~~for~~competitors ~~use~~include inlarge ~~our~~multinational ~~products,~~companies ~~including~~as ~~those~~well ~~derived~~as ~~from~~regional ~~renewable resources~~manufacturers. InSome ~~2010,~~of ~~we continued~~ our ~~investment~~competitors incompete ~~manufacturing~~across ~~lines~~many ~~for~~of our ~~core~~ product ~~categories~~lines, aswhile ~~well~~most ascompete inwith ~~support~~only some of ~~new products developed in conjunction with~~ our ~~customers~~products.

Table of Contents

~~International~~Intellectual Property

~~Our~~We ~~international~~rely ~~operations~~on ~~consist~~a combination of ~~operating~~trade ~~subsidiaries~~secrets, inconfidentiality ~~Canada~~agreements, ~~Mexico~~patents, ~~Panama~~trademarks, ~~and~~copyrights, ~~the~~licenses, ~~United~~and ~~Kingdom~~contractual provisions, as well as ~~international~~various ~~export~~intellectual ~~sales~~property ~~originating in the United States~~ and atunfair ~~our international~~competition ~~subsidiaries.~~laws ~~Approximately~~to ~~20%~~protect of our ~~net~~intellectual ~~sales~~property ~~for~~and ~~fiscal~~other ~~year~~proprietary ~~2010~~rights. ~~were~~We ~~generated~~own ~~outside~~a number of ~~the~~patents ~~United~~and ~~States.~~trademarks, ~~International~~which ~~operations~~vary ~~are~~in ~~subject~~duration todepending ~~additional~~upon ~~risks~~when ~~inherent~~the inapplication ~~conducting~~was ~~business~~filed ~~outside~~or ~~the~~granted. ~~United~~We ~~States~~believe that, ~~such as changes~~ in ~~currency~~the ~~exchange rates~~aggregate, ~~price~~the ~~and~~rights ~~currency~~under ~~exchange~~our ~~controls,~~patents ~~import~~and ~~restrictions,~~trademarks ~~nationalization~~are ~~and~~generally ~~other~~important ~~restrictive~~to ~~governmental~~our ~~actions,~~business; ~~and~~however, inno ~~some~~single ~~countries,~~right ~~volatile~~is ~~economic,~~material ~~social~~to ~~and~~our ~~political conditions~~business.

~~Employees~~Research and Development

AsOur ~~of December 26,~~research ~~2010,~~and wedevelopment ~~had~~strategy ~~approximately~~has ~~6,700~~three ~~employees~~goals: ~~worldwide,~~(1) ~~including~~create ~~approximately 5~~innovative,~~500~~ invalue-added ~~the~~products ~~United~~and ~~States.~~packaging ~~Approximately~~that ~~5,300,~~target orboth ~~79%,~~new ~~of our total employees worldwide were hourly employees,~~ and ~~approximately~~existing ~~1,000,~~customers; or(2) ~~19%,~~differentiate ~~of those hourly employees were covered by collective bargaining agreements. We currently have collective bargaining agreements in effect at~~ our ~~facilities~~products in ~~Cuautitlan,~~the ~~Mexico~~marketplace; ~~Augusta, Georgia; Juan Diaz, Panama;~~ and ~~Scarborough,~~(3) ~~Ontario,~~explore ~~Canada. These~~new ~~agreements cover all hourly-paid production~~products, ~~maintenance~~processes and ~~distribution~~market ~~employees~~opportunities atthat ~~each~~will ofenhance ~~those~~our ~~facilities~~overall ~~and~~market ~~contain~~position. ~~standard~~We ~~provisions~~continue ~~relating~~ to, ~~among other things~~develop, ~~management~~test ~~rights,~~and ~~grievance~~sample ~~procedures~~new, ~~strikes~~alternative and ~~lockouts, seniority~~recycled ~~and~~raw ~~union~~materials ~~rights.~~for ~~The~~use ~~current~~in ~~expiration~~our ~~dates of the Cuautitlan~~products, ~~Augusta,~~including ~~Juan~~those ~~Diaz~~derived ~~and~~from ~~Scarborough~~renewable ~~agreements~~resources. ~~are~~In ~~December 31,~~ 2011, ~~March 31,~~ ~~2012, June 30,~~we ~~2013~~continued ~~and~~our ~~May 31,~~investment ~~2015,~~in ~~respectively.~~manufacturing ~~Other~~lines ~~than the~~for ~~agreements~~our ~~described~~core ~~above~~product categories, noas ~~employees~~well ~~currently~~as ~~are~~in ~~covered~~support byof ~~collective~~new ~~bargaining~~products ~~agreements.~~developed Wein ~~believe~~conjunction ~~that we have good relationships~~ with our ~~employees~~customers.

~~Environmental~~International ~~Regulation~~

InOur ~~the~~international ~~normal~~operations ~~course~~consist of ~~business~~operating subsidiaries in Canada, weMexico, ~~are~~Panama ~~required to~~and ~~comply~~the ~~with~~United ~~federal~~Kingdom, ~~state,~~as ~~foreign~~well ~~and~~as ~~local~~international ~~environmental~~export ~~and~~sales ~~occupational~~originating ~~health~~in ~~and~~the ~~safety~~United ~~laws~~States and ~~regulations,~~at ~~including~~our ~~those~~international ~~governing~~subsidiaries. ~~emissions~~Approximately 21% of ~~air~~our ~~pollutants,~~net ~~discharges~~sales offor ~~waste~~fiscal ~~and~~year ~~storm~~2011 ~~water,~~were ~~and~~generated ~~the~~outside ~~handling,~~of ~~use,~~the ~~treatment, storage~~United ~~and~~States. ~~disposal~~International ~~of,~~operations orare ~~exposure~~subject to, ~~hazardous~~additional ~~substances.~~risks ~~Historical~~inherent ~~capital~~in ~~and~~conducting ~~operating~~business ~~expenditures~~outside ~~deemed~~the ~~necessary~~United toStates, ~~remain~~such inas ~~compliance~~changes ~~have~~in ~~not~~currency ~~had~~exchange arates, ~~material~~price ~~impact~~and oncurrency ~~our~~exchange ~~financial~~controls, ~~position.~~import Werestrictions, ~~believe~~nationalization ~~that~~and weother ~~are~~restrictive ingovernmental ~~material compliance~~actions, ~~with~~and, ~~applicable~~in ~~standards~~some ~~and~~countries, ~~regulations~~volatile ofeconomic, ~~the~~social ~~various~~and ~~regulatory~~political ~~agencies~~conditions.

~~The~~Employees federal Clean Air Act requires the phase-out of specified refrigerant compounds. We must upgrade or retrofit the air conditioning and chilling systems we currently use over the next few years. We have decided to replace units as they become inefficient or unserviceable, and we do not believe that the costs associated with such replacement will be material to our business, financial condition, results of operations or cash flows.

~~Some~~As of December 25, 2011, we had approximately 6,400 employees worldwide, including approximately 5,100 in the United States. Approximately 5,100, or 80%, of our ~~facilities~~total ~~contain~~employees ~~asbestos~~worldwide were hourly employees, and approximately 900, or 18%, of those hourly employees were covered by collective bargaining agreements. We ~~monitor~~currently ~~such~~have ~~asbestos~~collective onbargaining anagreements ~~ongoing~~in ~~basis~~effect at our facilities in Augusta, Georgia; Cuautitlan, Mexico; Juan Diaz, Panama; and ~~maintain~~Scarborough, Ontario, Canada. These agreements cover all hourly-paid production, maintenance and~~/or~~ ~~remove~~distribution itemployees asat ~~appropriate~~each of those facilities and contain standard provisions relating to, ~~prevent~~among ~~the~~other ~~release~~things, management rights, grievance procedures, strikes and lockouts, seniority and union rights. The current expiration dates of ~~friable~~the ~~asbestos~~Augusta, Cuautitlan, Juan Diaz and Scarborough agreements are March 31, 2012, December 31, 2012, June 30, 2013 and May 31, 2015, respectively. WeThe doCompany ~~not~~and ~~believe~~the union are renegotiating the ~~costs associated~~terms ~~with~~of ~~this~~the ~~program~~collective ~~will~~bargaining beagreement ~~material~~with respect to our ~~business~~facility in Augusta, ~~financial~~Georgia. ~~condition~~Other than the agreements described above, ~~results~~no ofemployees ~~operations~~currently orare ~~cash~~covered ~~flows~~by collective bargaining agreements. We believe that we have good relationships with our employees.

~~We have received a number of requests for information or notifications of potential liability under the Comprehensive~~ Environmental Response, Compensation and Liability Act of 1980, or CERCLA, regarding the investigation or cleanup of environmental contamination at third-party sites. We have no reason to believe that the final outcome of these matters will have a material adverse effect on our business, financial condition, results of operations or cash flows; however, we can give you no assurance about the ultimate effect, if any, of such matters on us. Regulation

~~Available~~In ~~Information~~the normal course of business, we are required to comply with federal, state, foreign and local environmental and occupational health and safety laws and regulations, including those governing emissions of air pollutants, discharges of waste and storm water, and the handling, use, treatment, storage and disposal of, or exposure to, hazardous substances. Historical capital and operating expenditures deemed necessary to remain in compliance have not had a material impact on our financial position. We believe that we are in material compliance with applicable standards and regulations of the various regulatory agencies.

~~Our~~The ~~Internet~~federal ~~website~~Clean isAir ~~www.solocup.com.~~Act Werequires ~~are~~the anphase-out ~~electronic filer and make available free~~ of ~~charge~~specified onrefrigerant ~~our~~compounds. ~~website~~We ~~our~~must ~~Annual Reports~~upgrade ~~on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to our reports filed~~ or ~~furnished~~retrofit ~~pursuant to Section 15(d) of~~ the ~~Securities~~air ~~Exchange~~conditioning ~~Act~~and ofchilling ~~1934,~~systems ~~as soon as reasonably practicable after~~ we ~~electronically~~ ~~file~~currently ~~such~~use ~~materials~~over ~~with, or furnish such materials to,~~ the ~~Securities~~next ~~and~~few ~~Exchange Commission, or SEC~~years. ~~You~~We ~~may~~have ~~read~~decided ~~and~~to ~~copy~~replace ~~any~~units ~~materials~~as wethey ~~file~~become ~~with~~inefficient or ~~furnish to the SEC at its Public Reference Room at 100 F Street~~unserviceable, ~~NE., Washington,~~and DCwe ~~20549.~~do ~~Information~~not ~~relating~~believe tothat the ~~operation~~costs ofassociated ~~the~~with ~~SEC’s~~such ~~Public~~replacement ~~Reference~~will ~~Room may~~ be ~~obtained~~material byto ~~calling 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains~~ our ~~annual~~business, ~~quarterly~~financial ~~and current reports~~condition, ~~and~~results ~~other~~of ~~information~~operations ~~that we electronically file with~~ or ~~furnish~~cash ~~to the SEC~~flows.

5Some of our facilities contain asbestos. We monitor such asbestos on an ongoing basis and maintain and/or remove it as appropriate to prevent the release of friable asbestos. We do not believe the costs associated with this program will be material to our business, financial condition, results of operations or cash flows.

~~Table~~We have received a number of ~~Contents~~requests for information or notifications of potential liability under the Comprehensive Environmental Response, Compensation and Liability Act of 1980, or CERCLA, regarding the investigation or cleanup of environmental contamination at third-party sites. We have no reason to believe that the final outcome of these matters will have a material adverse effect on our business, financial condition, results of operations or cash flows; however, we can give you no

~~SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS~~ 5

~~This~~Table ~~annual report on Form 10-K, including without limitation the statements found in “Management’s Discussion and Analysis~~ of ~~Financial~~ Condition and Results of Operations” in Item 7 below, contain 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, prospects, plans and objectives, as well as information concerning industry trends and expected actions of third parties, are forward-looking statements. All 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 could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the factors listed in “Risk Factors” in Item 1A below. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the SEC, 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 statement. Contents

~~Item~~assurance ~~1A.~~about ~~Risk~~the ~~Factors~~ultimate effect, if any, of such matters on us.

~~Set~~Available ~~forth below~~Information and elsewhere in this annual report are risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report and in other documents we file or furnish with the SEC. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also affect our business. Any or all of these risks could have a material adverse effect on our business, financial condition, results of operations and cash flows.

Our ~~ability~~Internet towebsite ~~meet~~is ~~our~~www.solocup.com. ~~cash~~We ~~requirements~~are an electronic filer and ~~service~~make available free of charge on our ~~debt~~website isour ~~affected~~Annual byReports ~~many factors~~on ~~that~~Form ~~are~~10-K, ~~outside~~Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and amendments to our ~~control~~reports filed or furnished pursuant to Section 15(d) of the Securities Exchange Act of 1934, ~~including~~as soon as reasonably practicable after we electronically file such materials with, or furnish such materials to, the ~~current~~Securities ~~global~~and ~~recession~~Exchange Commission, or SEC. You may read and ~~restricted~~copy ~~credit~~any ~~markets~~materials we file with or furnish to the SEC at its Public Reference Room at 100 F Street, NE., Washington, DC 20549. Information relating to the operation of the SEC's Public Reference Room may be obtained by calling 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains our annual, quarterly and current reports, and other information that we electronically file with or furnish to the SEC.

~~Our~~SPECIAL ~~future operating~~NOTE ~~performance~~REGARDING is dependent on many factors, some of which are beyond our control, including prevailing economic, financial and industry conditions. The sales of our products are primarily dependent on the discretionary income of consumers. If global economic conditions continue to adversely affect employment rates and consumer discretionary spending, our sales could continue to decline or become increasingly concentrated in lowerFORWARD-~~margin~~LOOKING ~~products,~~STATEMENTS ~~and our business, financial condition, results of operations or cash flows could be materially adversely affected.~~

~~The~~This ~~impact~~annual ofreport on Form 10-K, including without limitation the ~~global~~statements ~~recession~~found in “Management's Discussion and ~~credit crisis~~Analysis onof ~~our~~Financial ~~suppliers~~Condition and ~~customers~~Results isof ~~also~~Operations” ~~unpredictable~~in Item 7 below, ~~outside~~contain offorward-looking ~~our~~statements. ~~control~~The ~~and~~words ~~may~~“anticipate,” ~~create~~“intend,” ~~additional~~“plan,” ~~risks~~“estimate,” ~~for~~“believe,” us“expect,” ~~both~~“predict,” ~~directly~~“potential,” ~~and~~“project,” ~~indirectly.~~“could,” ~~The~~“will,” ~~inability~~“should,” of“may,” ~~our~~“would” ~~raw~~and ~~material~~similar ~~suppliers~~expressions are intended to ~~access~~identify ~~financing~~forward-looking orstatements, ~~the~~although ~~insolvency~~not ofall ~~one~~forward-looking ~~or more~~statements contain such identifying words. All statements in this report other than statements of historical fact, including statements regarding our ~~raw~~business ~~material~~strategy, ~~suppliers~~future operations, ~~could~~financial ~~lead~~position, toprospects, ~~disruptions~~plans inand ~~our~~objectives, ~~supply~~as ~~chain~~well as information concerning industry trends and expected actions of third parties, ~~which~~are ~~could~~forward-looking ~~adversely~~statements. ~~affect~~All ~~our~~forward-looking ~~sales~~statements orspeak ~~increase~~only ~~our~~as ~~costs~~of the date on which they are made. ~~Our~~Such ~~suppliers~~statements ~~may~~reflect ~~require~~our uscurrent assumptions concerning future events and are subject to ~~pay~~a ~~cash~~number inof ~~advance~~risks orand ~~obtain~~uncertainties, ~~letters~~many of ~~credit~~which ~~for~~are ~~their~~outside ~~benefit~~our ascontrol ~~a condition~~and could cause actual results to ~~selling~~differ usmaterially ~~their~~from ~~products~~such statements. These risks and ~~services.~~uncertainties Ainclude, ~~number~~but ofare ~~restaurant~~not ~~chains~~limited ~~and~~to, ~~consumer~~the ~~product~~factors ~~retailers~~listed ~~have~~in ~~sought~~“Risk ~~bankruptcy~~Factors” ~~protection~~in Item 1A below. IfExcept ~~one~~as orrequired ~~more~~by ofapplicable ~~our~~law, ~~principal~~including ~~customers~~the ~~filed~~securities ~~for~~laws ~~bankruptcy,~~of ~~our~~the ~~sales~~United ~~could~~States beand ~~adversely affected~~the rules and ~~our~~regulations ~~ability~~of tothe ~~collect~~SEC, ~~outstanding~~we ~~accounts~~do ~~receivable~~not ~~from~~undertake any ~~such~~obligation ~~customer~~to ~~could~~publicly beupdate ~~limited.~~or ~~Any~~revise ofany ~~these~~forward-looking ~~risks~~statement, ~~and~~whether ~~uncertainties~~as ~~could~~a ~~have~~result aof ~~material~~new ~~adverse~~information, ~~effect~~future onevents ~~our~~or ~~business~~otherwise, ~~financial~~to ~~condition,~~reflect actual results ofor ~~operations~~changes in factors or ~~cash~~ ~~flows~~assumptions affecting such forward-looking statement.

~~Our~~Item operating performance is dependent on our continued ability to access funds under our asset-based revolving credit facility and Canadian credit facility, maintain sales volumes, drive profitable growth, realize cost savings and generate cash from operations1A. ~~The~~Risk ~~financial institutions that fund our asset-based revolving and Canadian credit facilities are also being affected by the volatility in the credit markets~~Factors. If one or more of those institutions cannot fulfill one of our revolving credit requests, then our operations may be adversely affected. If we cannot borrow under one of our credit facilities because a lender is unable to fund requested amounts, we do not have a sufficient borrowing base or we otherwise are unable to comply with the terms and conditions under the applicable credit facility, or if we do not meet our cost, sales or growth initiatives within the time frame we expect, our business, financial condition, results of operations and cash flows could be materially adversely affected.

6Set forth below and elsewhere in this annual report are risks and uncertainties that could cause our actual results to differ materially from the results contemplated by the forward-looking statements contained in this report and in other documents we file or furnish with the SEC. Additional risks and uncertainties not presently known to us, or that we currently deem immaterial, may also affect our business. Any or all of these risks could have a material adverse effect on our business, financial condition, results of operations and cash flows.

~~Table~~Our ofability ~~Contents~~to meet our cash requirements and service our debt is affected by many factors that are outside our control, including the current global recession and restricted credit markets.

AOur ~~material~~future ~~decline~~operating inperformance ~~our~~is ~~cash~~dependent ~~flows~~on ~~also~~many ~~could cause us to fail to pay interest or principal when due under our asset-based revolving or Canadian credit facility~~factors, ~~the~~some ~~indenture for our senior secured or senior subordinated notes or under our other financing arrangements. A payment default or a default under any~~ of ~~the~~which ~~other covenants~~are inbeyond our debt agreements or other financing arrangements could restrict or terminate our access to borrowings and materially impair our ability to meet our obligations as they come due. If we do not comply with our payment or other covenants under our debt agreements or other financing arrangements and we do not obtain a waiver or amendment that otherwise addresses that non-compliancecontrol, ~~the~~including ~~lenders~~prevailing ~~who participate in our asset-based revolving and Canadian credit facilities may accelerate payment of all amounts outstanding under the credit facilities~~economic, ~~which~~financial ~~amounts would immediately become due~~ and ~~payable,~~industry ~~together with accrued interest~~conditions. ~~Such~~The ansales ~~acceleration~~of ~~would cause a default under the indentures governing~~ our ~~senior~~products ~~secured~~are ~~and senior~~primarily ~~subordinated~~dependent ~~notes,~~on ~~under~~the ~~our~~discretionary ~~lease~~income ~~agreement with iStar SCC Financial Distribution Centers LLC covering six~~ of ~~our facilities and under other arrangements that provide us with access to funding~~consumers. ~~Our~~If ~~ability~~global toeconomic ~~generate~~conditions ~~sufficient~~continue ~~cash flow~~ to ~~service~~adversely ~~our~~affect ~~debt~~employment rates and ~~meet~~consumer ~~our~~discretionary ~~other needs~~spending, ~~or a default of any of the covenants under~~ our ~~debt~~sales agreements, may require us to reduce expenditures that we deem necessary to our business, refinance all or a portion of our debt or obtain additional financing. We cannot assure you that any refinancing of this kind would be possible or that any additional financing could bedecline ~~obtained on acceptable terms~~ or atbecome ~~all.~~increasingly ~~The~~concentrated ~~inability~~in tolower-margin ~~refinance~~products, ~~existing~~and ~~debt or obtain additional financing could have a material adverse effect on~~ our business, financial condition, results of operations ~~and~~or cash flows, ~~and~~could onbe ~~our~~materially ~~ability~~adversely ~~to meet our obligations under our credit facilities, indentures and other financing arrangements as they become due~~affected. ~~See “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Liquidity and Capital Resources” in Item 7 of this annual report.~~

~~Our~~The ~~significant~~impact ~~level~~of the global recession and credit crisis on our suppliers and customers is also unpredictable, outside of ~~debt~~our ~~could~~control ~~limit~~and ~~cash~~may ~~flows~~create ~~available~~additional risks for us, both directly and indirectly. The inability of our ~~operations~~raw material suppliers to access financing or the insolvency of one or more of our raw material suppliers, could lead to disruptions in our supply chain, which could adversely affect our ~~financial~~sales ~~health~~or ~~and~~increase ~~prevent~~our costs. Our suppliers may require us ~~from~~to ~~fulfilling~~pay ~~our~~cash ~~obligations~~in ~~under~~advance ~~our~~or obtain letters of credit ~~facilities~~for their benefit as a condition to selling us their products and services. A number of restaurant chains and consumer product retailers have sought bankruptcy protection. If one or more of our principal customers filed for bankruptcy, ~~indentures~~ our sales could be adversely affected and ~~other~~our ~~debt~~ability ~~agreements~~to collect outstanding accounts receivable from any such customer could be limited. Any of these risks and uncertainties could have a material adverse effect on our business, financial condition, results of operations or cash flows.

AsOur ofoperating ~~December 26,~~performance ~~2010,~~is wedependent ~~had~~on ~~total debt of $637.7 million, which included $325.0 million of~~ our ~~8.5%~~continued ~~senior~~ability ~~subordinated~~to ~~notes,~~access ~~$295.5~~funds ~~million of our 10.5% senior secured notes (reflecting $300.0 million in aggregate principal amount less $4.5 million of unamortized original issue discount), $10.0 million of borrowings~~ under our asset-based revolving credit facility, ~~$2.7~~and ~~million~~Canadian ofcredit ~~borrowings~~facility, ~~under~~maintain ~~our~~sales ~~Canadian~~volumes, ~~credit~~drive ~~facility~~profitable ~~and~~growth, ~~$4.5~~realize ~~million~~cost ofsavings ~~capital~~and ~~lease~~generate ~~obligations.~~cash

~~Our significant level of debt could have important consequences for our business, including:~~ 6

•Table ~~requiring that we use a large portion~~ of our cash flows to pay principal and interest on borrowings under our credit facilities, our senior secured and senior subordinated notes and our other debt, which would reduce the availability of cash to fund working capital, capital expenditures, research and development and other business activities;Contents

•from ~~increasing~~operations. The financial institutions that fund our ~~vulnerability~~asset-based revolving and Canadian credit facilities are also being affected by the volatility in the credit markets. If one or more of those institutions cannot fulfill one of our revolving credit requests, then our operations may be adversely affected. If we cannot borrow under one of our credit facilities because a lender is unable to ~~general~~fund ~~adverse~~requested ~~economic~~amounts, ~~and~~we ~~industry~~do not have a sufficient borrowing base or we otherwise are unable to comply with the terms and conditions; under the applicable credit facility, or if we do not meet our cost, sales or growth initiatives within the time frame we expect, our business, financial condition, results of operations and cash flows could be materially adversely affected.

•A ~~limiting~~material decline in our ~~flexibility~~cash inflows ~~planning~~also ~~for~~could cause us to fail to pay interest or principal when due under our asset-based revolving or Canadian credit facility, the indenture for our senior secured or ~~reacting~~senior subordinated notes or under our other financing arrangements. A payment default or a default under any of the other covenants in our debt agreements or other financing arrangements could restrict or terminate our access to borrowings and materially impair our ability to meet our obligations as they come due. If we do not comply with our payment or other covenants under our debt agreements or other financing arrangements and we do not obtain a waiver or amendment that otherwise addresses that non-compliance, ~~changes~~the lenders who participate in our ~~business~~asset-based revolving and Canadian credit facilities may accelerate payment of all amounts outstanding under the ~~industry~~credit infacilities, which amounts would immediately become due and payable, together with accrued interest. Such an acceleration would cause a default under the indentures governing our senior secured and senior subordinated notes, under our lease agreement with iStar SCC Financial Distribution Centers LLC covering six of our facilities and under other arrangements that provide us with access to funding. An inability to generate sufficient cash flow to service our debt and meet our other needs, or a default of any of the covenants under our debt agreements, may require us to reduce expenditures that we ~~operate;~~deem necessary to our business, refinance all or a portion of our debt or obtain additional financing. Our ability to refinance our existing debt or obtain additional financing is subject to a number of factors, including our financial performance and prevailing economic, financial and industry conditions, many of which are out of our control. We cannot assure you that any refinancing would be possible or that any additional financing could be obtained on acceptable terms or at all. An inability to refinance existing debt or obtain additional financing could have a material adverse effect on our business, financial condition, results of operations and cash flows, and on our ability to meet our obligations under our credit facilities, indentures and other financing arrangements as they become due. See “Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources” in Item 7 of this annual report.

•Our ~~restricting~~significant level of debt could limit cash flows available for our operations, adversely affect our financial health and prevent us from ~~making~~fulfilling ~~strategic~~our ~~acquisitions~~obligations orunder ~~exploiting~~our ~~business~~credit ~~opportunities;~~facilities, indentures and other debt agreements.

•As ~~making~~of itDecember 25, ~~more~~2011, ~~difficult~~we ~~for~~had ustotal todebt ~~satisfy~~of ~~our~~$662.5 ~~obligations~~million, ~~under~~which ~~the~~included ~~credit~~$325.0 ~~facilities,~~million ~~the~~of our 8.5% senior ~~secured~~subordinated ~~and~~notes, $296.9 million of our 10.5% senior ~~subordinated~~secured notes ~~and~~(reflecting $300.0 million in aggregate principal amount less $3.1 million of unamortized original issue discount), $36.5 million of borrowings under our ~~other~~asset-based ~~debt;~~revolving credit facility and $4.1 million of capital lease obligations.

•Our ~~placing~~significant uslevel atof adebt ~~competitive~~could ~~disadvantage~~have ~~relative~~important toconsequences ~~competitors~~for ~~that~~our ~~have~~business, ~~less~~including: ~~debt; and~~

• ~~limiting~~requiring that we use a large portion of our ~~ability~~cash flows to ~~borrow~~pay ~~additional~~principal ~~monies~~and ininterest on borrowings under our credit facilities, our senior secured and senior subordinated notes and our other debt, which would reduce the ~~future~~availability of cash to fund working capital, capital expenditures, research and development and other business activities.;

We• ~~may~~increasing beour ~~able~~vulnerability to ~~incur~~general ~~additional~~adverse ~~debt~~economic ~~that~~and ~~could~~industry ~~further exacerbate the risks associated with our substantial leverage.~~ conditions;

We• ~~may~~limiting ~~incur~~our ~~additional~~flexibility ~~debt~~ in ~~the~~planning future. Although the indentures governing our senior secured and senior subordinated notes and the terms of our asset-based revolving and Canadian credit facilities contain restrictions on our incurrence of additional debtfor, ~~these~~or ~~restrictions~~reacting ~~are subject~~ to ~~a number of qualifications and exceptions~~, ~~and~~ wechanges ~~could~~in ~~incur significant additional debt. As of December 26, 2010, we had available capacity, subject to borrowing base limitations and other specified terms and conditions, of $177.6 million under~~ our ~~asset-based~~business ~~revolving credit facility~~ and ~~$14.2~~the ~~million~~industry ~~under our Canadian credit facility,~~ in ~~each~~which ~~case after taking into account outstanding letters of credit. If~~ we incur additional debt, the risks described above under “Our significant level of debt could limit cash flows available for our operations, adversely affect our financial health and prevent us from fulfilling our obligations under our credit facilities, indentures and other debt agreements” would intensify. operate;

7• restricting us from making strategic acquisitions or exploiting business opportunities;

~~Table~~• ofmaking ~~Contents~~it more difficult for us to satisfy our obligations under the credit facilities, the senior secured and senior subordinated notes and our other debt;

~~Covenant~~• ~~restrictions~~placing ~~under~~us ~~our~~at ~~debt~~a ~~agreements~~competitive ~~may~~disadvantage ~~limit~~relative ~~our~~to ~~ability~~competitors tothat ~~operate~~have ~~our~~less ~~business.~~ debt; and

~~The~~• ~~indentures~~limiting ~~governing~~ our ~~senior~~ability ~~secured~~to ~~and~~borrow ~~senior~~additional ~~subordinated~~monies ~~notes,~~in the ~~agreements~~future ~~governing our asset-based revolving and Canadian credit facilities and the agreements governing our other financing arrangements contain covenants that may restrict our ability~~ to ~~finance~~fund ~~future~~working ~~operations~~capital, or capital ~~needs~~expenditures, orresearch toand ~~engage~~development inand other business activities~~, which restrictions include, among other things, limitations on our ability to:~~ .

•We may be able to incur additional debt orthat ~~issue~~could ~~preferred~~further ~~and~~exacerbate ~~other~~the ~~specified~~risks ~~classes~~associated ofwith ~~stock;~~our substantial leverage.

•We ~~create~~may ~~liens;~~incur significant additional debt in the future. Although the indentures governing our senior secured and senior subordinated notes and the terms of our asset-based revolving and Canadian credit facilities contain restrictions on our incurrence of additional debt, these restrictions are subject to a number of qualifications and exceptions. As of December 25, 2011, we had available capacity, subject to borrowing base limitations and other specified terms and conditions, of $150.7 million under our asset-based revolving credit facility and $16.7 million under our Canadian credit facility, in each case after taking into account outstanding letters of credit. If we incur additional debt, the risks described above under “Our significant level of debt could limit cash flows available for our operations, adversely affect our financial health and prevent us from fulfilling our obligations under our credit facilities, indentures and other debt agreements” would intensify.

~~• pay dividends, make investments or make other restricted payments;~~7

•Table ~~sell~~of ~~assets;~~Contents

•Covenant ~~consolidate,~~restrictions ~~merge,~~under ~~sell~~our ordebt ~~otherwise~~agreements ~~dispose~~may oflimit ~~all~~our orability ~~substantially~~to ~~all~~operate of our ~~assets;~~business.

•The ~~enter~~indentures ~~into~~governing ~~transactions~~our ~~with~~senior ~~affiliates;~~secured and senior subordinated notes, the agreements governing our asset-based revolving and Canadian credit facilities and the agreements governing our other financing arrangements contain covenants that may restrict our ability to finance future operations or capital needs or to engage in other business activities, which restrictions include, among other things, limitations on our ability to:

•incur ~~designate~~additional ~~subsidiaries~~debt asor ~~unrestricted~~issue ~~under~~preferred ~~specified~~and ~~agreements~~other ~~governing~~specified ~~our~~classes ~~indebtedness.~~of stock;

In•create addition, if available capacity under our asset-based revolving credit facility falls below a specified level (the greater of (a) $15,000,000 or (b) 15% of the lesser of our borrowing base or the aggregate amount of commitments under the facility), we will be required to maintain a Fixed Charge Coverage Ratio (as defined in the facility) of 1.1 to 1 for a trailing twelve-month period. liens;

A•pay breach of any of these covenants would result in a default under the loan agreements governing our asset-based revolving and Canadian credit facilities and under the indentures governing our senior secured and senior subordinated notes. If an event of default under the loan agreement governing our asset-based revolving or Canadian credit facilitydividends, ~~the~~make ~~indenture~~investments ~~governing our senior secured~~ or ~~senior~~make ~~subordinated notes or our~~ other ~~financing~~restricted arrangements, all amounts outstanding under those agreements and other arrangements could be declared immediately due and payable, together with accrued interest. If all or a portion of our debt were accelerated, we cannot assure you that we would have access to sufficient funds or other assets to pay amounts due. payments;

~~Failure~~•sell to maintain our credit ratings could limit our access to the capital markets, adversely affect the cost and terms upon which we are able to obtain additional financing and negatively impact our business. assets;

~~Although we believe existing cash~~•consolidate, ~~funds generated by operations and amounts available under our asset-based revolving and Canadian credit facilities will provide adequate resources to fund our ongoing operating requirements~~merge, wesell ~~may~~or beotherwise ~~required~~dispose toof ~~seek~~all ~~additional~~or ~~financing~~substantially toall compete effectively. Any downgrade to our credit ratings could, among other things, limit our access to the capital markets and adversely affect the cost and terms upon which we are able to obtain additional financing, including any financing from our suppliers, which could negatively affect our business. Our credit ratings have fluctuated in the past as a result of ~~a number of factors, including company performance and outlook, and conditions in~~ our ~~industry, the general economy and financial markets. We can provide no assurance that we will be able to maintain our existing credit ratings.~~ assets;

We•enter ~~could~~into betransactions ~~adversely~~with ~~affected~~affiliates; ~~by raw material availability~~ and ~~pricing or a shortage of supply due to supplier financial difficulties, natural disasters or other causes.~~

~~Our~~•designate ~~principal~~subsidiaries ~~raw~~as ~~materials~~unrestricted ~~include polystyrene,~~under ~~polypropylene,~~specified ~~PET~~agreements ~~and~~governing coated and uncoated paperboard. There are currently a limited number of polystyrene suppliers, and periods of short supply may occur if one or more suppliers’ operations are materially affected by financial difficulties, natural disasters or other factors. To the extent that our supply of raw materials becomes restricted and we cannot locate or substitute adequate alternative sources, our business, financial condition, results of operations and cash flows may be materially adversely affectedindebtedness.

In addition, ~~prices~~if ~~for~~available ~~our~~capacity ~~raw~~under ~~materials fluctuate. In recent years, including 2010,~~ our ~~industry~~asset-based ~~has~~revolving ~~experienced~~credit ~~volatility~~facility infalls ~~raw~~below material and energy pricing. When raw material prices decline, we face increased pressure from our customers to reduce our selling prices for products containing that raw material. When raw material prices increase, our selling prices have historically also increased, although often with a ~~time~~specified ~~lag.~~level ~~A number of factors affect~~ (the ~~impact~~greater ~~that raw material price changes have on us, including the underlying cause~~ of ~~price changes~~ (~~e.g., natural~~a) ~~disasters~~$15,000,000 ~~weather conditions~~ or ~~general economic conditions~~(b), ~~the~~15% ~~level~~ of ~~our inventories at~~ the ~~time~~lesser of ~~price~~our ~~changes,~~borrowing ~~the~~base ~~specific~~or ~~timing and frequency of price changes and~~ the ~~lead~~aggregate ~~and~~amount ~~lag time that generally accompany the implementation~~ of ~~both~~commitments ~~raw~~under ~~material price changes and subsequent selling price changes. If raw material prices increase and we are unable to pass~~ the ~~price~~facility), ~~increases on to our customers or there is a significant time lag in any selling price increases that~~ we ~~are~~will ~~able to implement, our profitability may~~ be ~~adversely~~required ~~affected,~~to ~~which~~maintain ~~could have~~ a ~~material~~Fixed ~~adverse~~Charge ~~effect~~Coverage onRatio ~~our~~(as ~~business,~~defined ~~financial~~in ~~condition,~~the ~~results~~facility) of ~~operations and cash flows~~1.1 ~~We have not historically employed hedging strategies~~ to ~~limit~~1 ~~our~~for ~~exposure~~a totrailing ~~fluctuations~~twelve-month ~~in raw material prices on any meaningful level~~period.

8A breach of any of these covenants would result in a default under the loan agreements governing our asset-based revolving and Canadian credit facilities and under the indentures governing our senior secured and senior subordinated notes. If an event of default under the loan agreement governing our asset-based revolving or Canadian credit facility, the indenture governing our senior secured or senior subordinated notes or our other financing arrangements were to occur, all amounts outstanding under those agreements and other arrangements could be declared immediately due and payable, together with accrued interest. If all or a portion of our debt were accelerated, we cannot assure you that we would have access to sufficient funds or other assets to pay amounts due.

~~Table~~Failure ofto ~~Contents~~maintain our credit ratings could limit our access to the capital markets, adversely affect the cost and terms upon which we are able to obtain additional financing and negatively impact our business.

~~Our~~Although ~~ability~~we believe existing cash, funds generated by operations and amounts available under our asset-based revolving and Canadian credit facilities will provide adequate resources to ~~successfully~~fund ~~operate~~our isongoing ~~dependent~~operating onrequirements, we may be required to seek additional financing to compete effectively. Any downgrade to our credit ratings could, among other things, limit our access to the ~~availability~~capital markets and adversely affect the cost and terms upon which we are able to obtain additional financing, including any financing from our suppliers, which could negatively affect our business. Our credit ratings have fluctuated in the past as a result of ~~energy~~a number of factors, including company performance and ~~fuel~~outlook, atand ~~anticipated prices~~conditions in our industry, the general economy and financial markets. We cannot assure you that we will be able to maintain our existing credit ratings.

~~Sustained~~We ~~increases~~could inbe ~~global~~adversely ~~energy~~affected ~~prices,~~by ~~particularly~~raw ~~for~~material ~~crude~~availability ~~oil~~ and ~~electricity,~~pricing ator ~~prices greater than we have anticipated could have~~ a ~~material~~shortage ~~adverse~~of ~~impact~~supply ondue ~~our operations if we are unable~~ to ~~pass~~supplier through such increases to our customers in a timely manner. Increases in crude oil prices particularly impact our transportation and production costs and the price we pay for some raw materials. Global energy prices are determined by many factors that are beyond our control and unpredictable. Consequently, we cannot predict whether global energy prices will remain at their current levels, and we cannot predict the impact that these prices will have on our business, financial ~~condition~~difficulties, ~~results~~natural ofdisasters ~~operations~~ or ~~cash~~other ~~flows~~causes.

WeOur ~~operate~~principal inraw materials include polystyrene, polypropylene, PET and coated and uncoated paperboard. There are currently a ~~highly~~limited ~~competitive~~number ~~environment~~of polystyrene suppliers, and periods of short supply may ~~not~~occur beif ~~able~~one toor ~~compete~~more ~~successfully~~suppliers' operations are materially affected by financial difficulties, natural disasters or other factors. To the extent that our supply of raw materials becomes restricted and we cannot locate or substitute adequate alternative sources, our business, financial condition, results of operations and cash flows may be materially adversely affected.

~~The~~In ~~single-use~~addition, ~~foodservice~~prices ~~products~~for ~~industry~~our israw ~~extremely~~materials ~~competitive and highly fragmented~~fluctuate. In Werecent ~~compete for customers based on brand reputation~~years, ~~quality,~~including ~~cost~~2011, ~~service,~~our ~~breadth~~industry ofhas ~~product~~experienced ~~offering,~~volatility ~~product~~in ~~differentiation,~~raw ~~innovation,~~material ~~marketing programs~~ and ~~value~~energy pricing. When ~~Some~~raw ofmaterial ~~our~~prices ~~competitors~~decline, ~~compete~~we ~~across~~face ~~many~~increased ofpressure from our ~~product~~customers ~~lines,~~to ~~while~~reduce ~~most~~our ~~compete~~selling ~~with~~prices ~~only~~for ~~some of our~~ products~~. A~~ ~~few~~containing ofthat ~~our~~raw ~~competitors~~material. ~~are~~When ~~integrated~~raw inmaterial ~~the~~prices ~~manufacturing~~increase, ofour ~~single-use~~selling ~~foodservice~~prices ~~products~~have ~~and~~historically ~~related~~also ~~raw materials~~increased, ~~which~~although ~~reduces~~often ~~their~~with ~~costs~~a ~~for~~time ~~these~~lag. ~~materials~~A ~~and~~number ~~gives~~of ~~them~~factors ~~greater~~affect ~~access to~~ the ~~materials~~impact inthat ~~periods~~raw ofmaterial ~~short~~price ~~supply.~~changes ~~We also~~have ~~face~~on ~~competition~~us, ~~from~~including ~~foreign~~the ~~competitors~~underlying ~~who~~cause ~~are~~of ~~entering~~price ~~regional~~changes U(e.Sg., ~~markets~~natural indisasters, ~~some~~weather ~~product~~conditions ~~categories~~or ~~and~~general ~~are~~economic ~~aggressively~~conditions), ~~trying~~the tolevel ~~differentiate~~of ~~their~~our ~~product~~inventories ~~offerings~~at ~~based~~the ontime of price. ~~Our~~changes, ~~current~~the orspecific ~~potential~~timing ~~competitors~~and ~~may~~frequency ~~offer products~~of ~~at a lower~~ price orchanges ~~products~~ and ~~services~~the ~~that~~lead ~~are~~and ~~superior~~lag totime ~~ours.~~that Ingenerally ~~addition,~~accompany ~~our~~the ~~competitors~~implementation ~~may~~of beboth ~~more effective and efficient in integrating new technologies or emerging~~ raw ~~materials~~material toprice ~~meet~~changes ~~changing~~and ~~consumer~~subsequent ~~demands~~selling orprice ~~legislative mandates~~changes. ~~Our~~If ~~success~~raw ~~depends~~material ~~upon~~prices ~~successful~~increase ~~research, development~~ and ~~engineering~~we ~~efforts~~are unable to ~~utilize~~pass ~~emerging~~the ~~and~~price ~~legislatively~~increases ~~mandated~~on ~~raw~~to ~~materials,~~ our ~~ability~~customers toor ~~expand~~there oris ~~modify~~a ~~our~~significant ~~manufacturing~~time ~~capacity~~lag ~~and~~in ~~the~~any ~~extent~~selling toprice ~~which~~increases that we are able to ~~convince customers and consumers~~ to ~~accept~~implement, our ~~new~~profitability ~~products.~~may Ifbe weadversely ~~fail to successfully innovate~~affected, ~~introduce,~~which ~~market,~~could ~~manufacture~~have ~~and~~a ~~differentiate~~material ~~our~~adverse ~~products~~effect ~~from~~on ~~those of~~ our ~~competitors~~business, ~~our~~financial ~~ability~~condition, toresults ~~maintain~~of oroperations ~~expand our net sales~~ and ~~to maintain~~cash orflows. ~~enhance~~We ~~our~~have ~~industry~~not ~~position~~historically oremployed ~~profit~~hedging ~~margins~~strategies ~~could~~to belimit ~~adversely~~our ~~affected.~~exposure ~~This,~~to fluctuations in ~~turn,~~raw ~~could~~material ~~materially~~prices ~~adversely~~on ~~affect~~any ~~our~~meaningful ~~business, financial condition, results of operations or cash flows~~level.

Our products also compete with products that incorporate metal, glass, reusables and other packaging materials. If we are unable to react timely to changing consumer demands, legislative mandates and competitive conditions that favor those or other competing products, we may experience lower prices, sales volume and gross margins, and a reduced ability to attract and retain customers. 8

~~Our~~Table ~~operations and products are subject to environmental and governmental regulations that could adversely affect our business, financial condition, results~~ of ~~operations or cash flows.~~ Contents

Our ~~operations~~ability ~~are subject~~ to ~~comprehensive~~successfully and frequently changing federal, state, local and foreign environmental and occupational health and safety laws and regulations. These laws and regulations include the federal Food, Drug and Cosmetic Act, which regulates materials that have direct contact with food, and laws governing the use of specified raw materials in our products, emissions of air pollutants, discharges of waste and storm water, and the handling, use, treatment, storage and disposal of, or exposure to, hazardous substances. We are presently, and may in the future be, subject to liability for the investigation and remediation of environmental contamination, including contamination caused by other parties, at properties that we own or operate oris ~~formerly~~dependent ~~owned~~on ~~or operated, and at other properties where we or our predecessors arranged for~~ the ~~disposal~~availability of ~~hazardous~~energy ~~substances. As a result, we are involved from time to time in administrative~~ and ~~judicial~~fuel proceedings and inquiries relating to environmental matters. Any present or future investigations, future clean up costs or remedial efforts relating to environmental matters could entail material costs or otherwise result in material liabilities. Under environmental laws applicable to our operations and our properties, we are required to obtain various environmental permits granted by federal, state, local and foreign authorities. There are various risks associated with noncompliance with these permits, including cessation of our operations at ~~the noncompliant~~anticipated ~~facilities and significant fines and penalties~~prices.

WeSustained ~~cannot~~increases ~~predict~~in ~~what~~global ~~environmental~~energy ~~legislation~~prices, orparticularly ~~regulations will~~for becrude ~~enacted~~oil inand ~~the future~~electricity, ~~how~~at ~~existing~~prices orgreater ~~future~~than ~~laws~~we orhave ~~regulations~~anticipated ~~will~~could behave ~~administered~~a ormaterial ~~interpreted~~adverse orimpact ~~affect~~on ~~the~~our ~~use~~operations ofif we are unable to pass through such increases to our ~~products,~~customers orin ~~what~~a ~~environmental~~timely ~~conditions~~manner. ~~may~~Increases bein ~~found~~crude tooil ~~exist~~prices atparticularly impact our ~~facilities~~transportation orand atproduction ~~third-party~~costs ~~sites~~and ~~for which~~the price we ~~are~~pay ~~liable~~for some raw materials. ~~Enactment~~Global ofenergy ~~stricter~~prices ~~laws~~are ordetermined ~~regulations,~~by ~~stricter~~many ~~interpretation~~factors ofthat ~~existing~~are ~~laws~~beyond our control and ~~regulations~~unpredictable. orConsequently, ~~the~~we ~~requirement~~cannot topredict ~~undertake~~whether ~~the~~global ~~investigation~~energy orprices ~~remediation~~will ofremain ~~currently~~at ~~unknown~~their ~~environmental~~current ~~contamination~~levels, atand ~~our~~we ~~own~~cannot ~~or third-party~~predict ~~sites~~the ~~may~~impact ~~require~~that usthese toprices ~~make~~will ~~additional~~have ~~expenditures~~on our business, ~~some~~financial condition, results of ~~which~~operations ~~could~~or becash ~~material~~flows.

9We operate in a highly competitive environment and may not be able to compete successfully.

~~Table~~The single-use foodservice products industry is extremely competitive and highly fragmented. We compete for customers based on brand reputation, quality, cost, service, breadth of ~~Contents~~product offering, product differentiation, innovation, marketing programs and value. Some of our competitors compete across many of our product lines, while most compete with only some of our products. A few of our competitors are integrated in the manufacturing of single-use foodservice products and related raw materials, which reduces their costs for these materials and gives them greater access to the materials in periods of short supply. We also face competition from foreign competitors who are entering regional U.S. markets in some product categories and are aggressively trying to differentiate their product offerings based on price. Our current or potential competitors may offer products at a lower price or products and services that are superior to ours. In addition, our competitors may be more effective and efficient in integrating new technologies or emerging raw materials to meet changing consumer demands or legislative mandates. Our success depends upon successful research, development and engineering efforts to utilize emerging and legislatively mandated raw materials, our ability to expand or modify our manufacturing capacity and the extent to which we are able to convince customers and consumers to accept our new products. If we fail to successfully innovate, introduce, market, manufacture and differentiate our products from those of our competitors, our ability to maintain or expand our net sales and to maintain or enhance our industry position or profit margins could be adversely affected. This, in turn, could materially adversely affect our business, financial condition, results of operations or cash flows.

~~The~~Our ~~single-use foodservice~~ products ~~industry~~also iscompete ~~subject~~with ~~to evolving federal, state, local and foreign legislation and regulations affecting the types of raw materials we may use in our~~ products. ~~Some~~that ofincorporate ~~the legislation and regulations are designed to reduce solid waste and litter by requiring~~metal, ~~among other things~~glass, ~~that~~reusables ~~manufacturers pay for the disposal of products they create or use raw materials that are recyclable, biodegradable or compostable. Other legislation~~ and ~~regulations~~other ~~are~~packaging ~~intended to promote health and safety by prohibiting, or requiring the disclosure of, the use of specified~~ materials. ~~The~~If ~~legislation passed to date has not had a material adverse effect on our operations; however, if~~ we are unable to ~~procure~~react ortimely ~~substitute~~to ~~raw~~changing ~~materials~~consumer ~~that meet the requirements of future environmental legislation or regulations~~demands, ~~our~~legislative ~~sales~~mandates ~~may decline in those localities where such laws~~ and ~~regulations~~competitive ~~have~~conditions ~~been adopted. Proposed legislation could increase our operating costs as a result of any fees imposed on manufacturers of foodservice products for the disposal of products~~ that ~~are~~favor ~~not~~those ~~recyclable~~ or ~~compostable~~other ~~and~~competing ~~could increase the cost of our~~ products, bywe ~~prohibiting~~may ~~the~~experience ~~use~~lower ofprices, ~~traditional~~sales ~~raw~~volume ~~materials~~ and ~~requiring~~gross ~~the~~margins, ~~use of emerging materials that are more expensive. Proposed legislation~~ and ~~regulations~~ ~~also~~a ~~could~~reduced ~~lower~~ability ~~demand~~to ~~for~~attract ~~products that include, or are associated with, materials that are the focus of health~~ and ~~safety~~retain ~~legislation or regulations~~customers.

Our ~~international~~ operations ~~expose~~and usproducts are subject to ~~risks~~environmental ~~related~~and togovernmental ~~conducting~~regulations that could adversely affect our business, infinancial ~~multiple~~condition, ~~jurisdictions~~results ~~outside~~of ~~the~~operations ~~United~~or ~~States.~~cash flows.

Our ~~international~~ operations ~~consist~~are subject to comprehensive and frequently changing federal, state, local and foreign environmental and occupational health and safety laws and regulations. These laws and regulations include the federal Food, Drug and Cosmetic Act, which regulates materials that have direct contact with food, and laws governing the use of ~~operating~~specified ~~subsidiaries~~raw materials in ~~four~~our ~~countries~~products, asemissions ~~well~~of asair ~~international~~pollutants, ~~export~~discharges ~~sales~~of ~~originating~~waste and storm water, and the handling, use, treatment, storage and disposal of, or exposure to, hazardous substances. We are presently, and may in the ~~United~~ ~~States~~future be, subject to liability for the investigation and remediation of environmental contamination, including contamination caused by other parties, at properties that we own or operate or formerly owned or operated, and at other properties where we or our ~~international~~predecessors ~~facilities.~~arranged ~~The~~for ~~international~~the ~~scope~~disposal of ~~our~~hazardous ~~operations~~substances. ~~may~~As ~~lead~~a result, we are involved from time to ~~volatile~~time ~~financial~~in ~~results~~administrative and ~~difficulties~~judicial inproceedings ~~managing~~and ~~our~~inquiries ~~business~~relating to environmental matters. WeAny ~~generated~~present ~~approximately~~or ~~20%~~future ofinvestigations, ~~our~~future ~~net~~clean ~~sales~~up ~~outside~~costs ~~the~~or ~~United~~remedial ~~States during~~efforts ~~fiscal~~relating ~~year~~to ~~2010~~environmental matters could entail material costs or otherwise result in material liabilities. ~~International~~Under ~~sales~~environmental ~~and~~laws applicable to our operations and our properties, we are ~~subject~~required to aobtain ~~number~~various ofenvironmental permits granted by federal, state, local and foreign authorities. There are various risks associated with noncompliance with these permits, including cessation of our operations at the ~~following:~~noncompliant facilities and significant fines and penalties.

•We ~~exchange~~cannot ~~rate~~predict ~~fluctuations~~what environmental legislation or regulations will be enacted in the future, how existing or future laws or regulations will be administered or interpreted or affect the use of our products, or what environmental conditions may be found to exist at our facilities or at third-party sites for which we are liable. Enactment of stricter laws or regulations, stricter interpretation of existing laws and ~~limitations~~regulations onor ~~currency~~the ~~convertibility;~~requirement to undertake the investigation or remediation of currently unknown environmental contamination at our own or third-party sites may require us to make additional expenditures, some of which could be material.

•The ~~import~~single-use ~~limitations~~foodservice products industry is subject to evolving federal, state, local and ~~export~~foreign ~~control~~legislation ~~restrictions~~and regulations affecting the types of raw materials we may use in our products. Some of the legislation and regulations are designed to reduce solid waste and litter by requiring, among other things, that manufacturers pay for the disposal of products they create or use raw materials that are recyclable, biodegradable or compostable. Other legislation and regulations are intended to promote health and safety by prohibiting, or requiring the disclosure of, the use of specified materials. The legislation passed to date has not had a material adverse effect on our operations; however, if we are unable to procure or substitute raw materials that meet the requirements of future environmental legislation or regulations, our sales may decline in

~~• social and political turmoil, corruption and civil unrest;~~9

•Table ~~restrictive governmental actions, such as the imposition~~ of ~~trade quotas and restrictions on transfers of funds;~~Contents

•those ~~changes~~localities inwhere ~~non-U~~such laws and regulations have been adopted.S Proposed legislation could increase our operating costs as a result of any fees imposed on manufacturers of foodservice products for the disposal of products that are not recyclable or compostable and could increase the cost of our products by prohibiting the use of traditional raw materials and requiring the use of emerging materials that are more expensive. ~~labor~~Proposed ~~laws~~legislation and regulations ~~affecting~~also ~~our~~could ~~ability~~lower todemand ~~hire,~~for ~~retain~~products that include, or ~~dismiss~~are ~~employees;~~associated with, materials that are the focus of health and safety legislation or regulations.

•Our ~~violations~~international ofoperations ~~U.S.~~expose orus ~~local~~to ~~laws,~~risks ~~including~~related ~~the~~to ~~U.S.~~conducting ~~Foreign~~business ~~Corrupt~~in ~~Practices~~multiple ~~Act;~~jurisdictions outside the United States.

•Our ~~compliance~~international ~~with~~operations ~~multiple~~consist of operating subsidiaries in four countries, as well as international export sales originating in the United States and ~~potentially~~at ~~conflicting~~our ~~laws~~international facilities. The international scope of our operations may lead to volatile financial results and ~~regulations;~~difficulties in managing our business. We generated approximately 21% of our net sales outside the United States during fiscal year 2011. International sales and operations are subject to a number of risks, including the following:

• ~~preference~~exchange ~~for~~rate ~~locally-branded~~fluctuations ~~products,~~ and ~~laws~~limitations ~~and~~on ~~business~~currency ~~practices favoring local competition~~convertibility;

• ~~less~~import ~~effective~~limitations ~~protection~~and ofexport ~~intellectual~~control ~~property~~restrictions;

• ~~difficulties~~social and ~~costs~~political ~~of staffing~~turmoil, ~~managing~~corruption and ~~accounting~~civil ~~for foreign operations~~unrest; ~~and~~

• ~~unfavorable~~restrictive ~~business~~governmental ~~conditions~~actions, orsuch ~~economic~~as ~~instability~~the inimposition ~~any~~of ~~particular~~trade ~~country~~quotas orand ~~region.~~restrictions on transfers of funds;

~~Our~~• ~~exposure~~changes to risks associated with currency exchange rate fluctuations results primarily from translation exposure associated with the preparation of our consolidated financial statements, as well as from transaction exposure associated with generating revenues and incurring expenses in ~~different currencies. While our consolidated financial statements are reported in~~ non-U.S. ~~dollars, the~~labor ~~financial~~laws ~~statements of our foreign subsidiaries are measured using the local currency as the functional currency~~ and ~~translated~~regulations ~~into~~affecting ~~U.S. dollars by applying an appropriate exchange rate. As a result, fluctuations in the exchange rate of the U.S. dollar relative to the local currencies in which~~ our foreign subsidiaries report could cause significant fluctuations in our consolidated results. We record sales and expenses in a variety of currencies. While our expenses with respect to foreign operations are generally denominated in the same currency as the corresponding sales, we have transaction exposure to the extent our receipts and expenditures are not offsetting in any currency. Moreover, the costs of doing business abroad may increase as a result of adverse exchange rate fluctuations. In addition, we may lose customers if exchange rate fluctuations, currency devaluation or economic crises increase the local currency price of our products or reduce our customers’ ability to ~~purchase our products. If we are unable to manage the operational challenges associated with our international activities~~hire, ~~our~~retain ~~business, financial condition, results of operations~~ or ~~cash~~dismiss ~~flows could be materially adversely affected.~~ employees;

10• violations of U.S. or local laws, including the U.S. Foreign Corrupt Practices Act;

~~Table~~• ofcompliance ~~Contents~~with multiple and potentially conflicting laws and regulations;

In• ~~the~~preference ~~event~~for oflocally-branded aproducts, ~~catastrophic~~and ~~loss~~laws ofand ~~one of our key manufacturing facilities, our~~ business ~~would~~practices ~~be adversely~~favoring ~~affected.~~local competition;

~~While~~• weless ~~manufacture~~effective ~~our~~protection ~~products in a number~~ of ~~diversified~~intellectual facilities and maintain insurance covering our facilities, including business interruption insurance, a catastrophic loss of the use of all or a portion of one of our key manufacturing facilities due to accident, weather conditions, natural disaster or otherwise, whether short- or long-term, could have a material adverse effect on our business, financial condition, results of operations or cash flows. property;

We• ~~are controlled~~difficulties byand ~~the~~costs ~~stockholders~~ of ~~Solo Cup Investment Corporation~~staffing, ~~the~~managing ~~interests~~and ofaccounting ~~which~~for ~~may~~foreign ~~conflict~~operations; ~~with the interests of holders of our senior secured~~ and ~~senior subordinated notes.~~

~~All~~• ofunfavorable ~~our~~business ~~outstanding~~conditions ~~capital~~or ~~stock~~economic isinstability ~~owned~~in byany ~~our~~particular ~~parent~~country company, Solo Cup Investment Corporation. Holders of SCC Holding’s voting interests control 100% of the outstanding common stock of Solo Cup Investment Corporation, and affiliates of Vestar hold 99.9% of Solo Cup Investment Corporation’s outstanding convertible participating preferred stock, or ~~SCIC preferred stock, with the remaining balance of the SCIC preferred stock held by members of our management~~region.

~~The~~Our ~~SCIC~~exposure ~~preferred~~to ~~stock~~risks ~~is currently~~associated ~~convertible~~with atcurrency ~~any~~exchange ~~time,~~rate atfluctuations results primarily from translation exposure associated with the ~~option~~preparation of ~~the~~our ~~holders~~consolidated financial statements, ~~into~~as ~~32.71%~~well ofas ~~the~~from ~~common~~transaction ~~stock~~exposure ofassociated ~~Solo~~with ~~Cup~~generating ~~Investment~~revenues ~~Corporation.~~and ~~The~~incurring ~~SCIC~~expenses ~~preferred~~in ~~stock~~different iscurrencies. ~~entitled~~While toour ~~vote~~consolidated onfinancial ~~all~~statements ~~matters,~~are ~~voting~~reported ~~together~~in ~~with~~U.S. dollars, the ~~holders~~financial statements of ~~common~~our ~~stock~~foreign subsidiaries are measured using the local currency as ~~a single~~the ~~class~~functional currency and translated into U.S. Indollars ~~December~~by ~~2006,~~applying ~~Vestar~~an appropriate exchange rate. As a result, fluctuations in ~~its~~the ~~capacity~~exchange asrate of the ~~significant~~U.S. ~~shareholder~~dollar ofrelative ~~SCIC~~to ~~preferred~~the ~~stock,~~local ~~became~~currencies ~~entitled~~in towhich ~~appoint~~our aforeign ~~majority~~subsidiaries ofreport ~~the~~could ~~director~~cause ~~positions~~significant offluctuations ~~Solo~~in ~~Delaware~~our consolidated results. We record sales and ~~Solo~~expenses ~~Cup~~in ~~Investment~~a ~~Corporation~~variety ~~pursuant~~of currencies. While our expenses with respect to ~~a stockholders’~~foreign ~~agreement~~operations ~~dated~~are asgenerally ofdenominated ~~February 27,~~in ~~2004,~~the same currency as ~~amended,~~the ~~among~~corresponding ~~Vestar~~sales, ~~Solo~~we ~~Cup~~have ~~Investment~~transaction ~~Corporation,~~exposure ~~SCC~~to ~~Holding,~~the ~~Solo~~extent ~~Delaware~~our receipts and ~~various~~expenditures ~~other~~are ~~parties~~not offsetting in any currency. IfMoreover, ~~Vestar~~the ~~receives~~costs aof ~~bona~~doing ~~fide~~business ~~offer~~abroad ~~from~~may increase as a ~~third~~result ~~party~~of toadverse ~~purchase (whether~~exchange byrate ~~stock~~fluctuations. ~~purchase~~In addition, ~~merger~~we may lose customers if exchange rate fluctuations, currency devaluation or ~~otherwise)~~economic atcrises ~~least~~increase ~~80%~~the local currency price of ~~Solo~~our ~~Delaware’s~~products ~~common~~or ~~stock,~~reduce ~~SCC~~our ~~Holding~~customers' ~~has~~ability ~~agreed~~to atpurchase ~~Vestar’s~~our ~~request~~products. If we are unable to ~~vote~~manage inthe ~~favor~~operational challenges associated with our international activities, our business, financial condition, results of ~~such~~operations ~~offer.~~or cash flows could be materially adversely affected.

~~The~~In ~~interests of SCC Holding and~~ the ~~holders~~event of ~~SCIC~~a ~~preferred~~catastrophic ~~stock,~~loss ~~including Vestar, could conflict with the interests~~ of ~~holders~~one of ~~our~~ ~~senior secured and senior subordinated notes. For example, if we encounter financial difficulties or are unable to pay~~ our ~~debts~~key asmanufacturing ~~they mature~~facilities, ~~the interests of these indirect equity holders might conflict with the interests of a holder of~~ our ~~notes.~~ Solo Cup Investment Corporation’s stockholders may also have an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though the transactions might involve risks to a holder of our senior secured or senior subordinated notes. In addition, SCC Holding and Vestar, or any of their affiliates, may in the future own businesses that directly compete with our business. ~~While~~would webe ~~are subject~~adversely ~~to specified provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, these provisions do not require us to have independent directors~~affected.

~~The~~While we manufacture our products in a number of diversified facilities and maintain insurance covering our facilities, including business interruption insurance, a catastrophic loss of ~~one~~the use of all or ~~more~~a portion of one of our ~~principal~~key ~~customers~~manufacturing facilities due to accident, weather conditions, natural disaster or otherwise, whether short- or long-term, could have a material adverse effect on our business, financial condition, results of operations or cash flows.

We ~~have~~are acontrolled ~~number~~by ofthe ~~large~~stockholders ~~customers that account for a significant portion~~ of ~~our~~Solo ~~net~~Cup ~~sales.~~Investment ~~For fiscal year 2010~~Corporation, ~~our~~the ~~five~~interests ~~largest customers represented approximately 30%~~ of ~~our~~which ~~net~~may ~~sales,~~conflict with nothe ~~one~~interests ~~customer accounting for more than 9%~~ of ~~our~~holders ~~net sales. The loss~~ of ~~one or more of~~ our ~~large~~senior ~~customers~~secured ~~could~~and ~~have~~senior asubordinated ~~material adverse effect on our business, financial condition, results of operations or cash flows~~notes. ~~In line with industry practice, we generally do not enter into long-term sales agreements with customers.~~

WeAll ~~may~~of ~~undertake~~our ~~acquisitions~~outstanding orcapital ~~divestitures~~stock ~~and~~is ~~consequently~~owned ~~face~~by ~~potential~~our ~~integration~~parent company, ~~management~~Solo ~~diversion~~Cup Investment Corporation. Holders of SCC Holding's voting interests control 100% of the outstanding common stock of Solo Cup Investment Corporation, and ~~other~~affiliates ~~risks~~of Vestar hold 99. 9% of Solo Cup Investment Corporation's outstanding convertible participating preferred stock, or SCIC preferred stock, with the remaining balance of the SCIC preferred stock held by members of our management.

WeThe ~~may~~SCIC ~~make~~preferred ~~acquisitions~~stock oris ~~divestitures~~currently inconvertible ~~the~~at ~~future.~~any ~~Any~~time, ~~future~~at ~~acquisitions~~the oroption ~~divestitures~~of ~~could~~the beholders, into 32.71% of ~~significant~~ ~~size~~the ~~and~~common ~~may~~stock ~~involve~~of ~~U.S.~~Solo orCup ~~international~~Investment ~~parties~~Corporation. ToThe ~~acquire~~SCIC ~~and~~preferred ~~integrate~~stock ais ~~separate~~entitled ~~organization~~to orvote ~~significant~~on ~~new~~all ~~assets~~matters, orvoting totogether ~~divest~~with athe ~~portion~~holders of ~~our~~common ~~business~~stock ~~would~~as ~~divert~~a ~~management~~single ~~attention~~class. ~~from~~In ~~other~~December ~~business~~2006, ~~activities.~~Vestar, ~~This diversion~~in its capacity as the significant shareholder of SCIC preferred stock, ~~together~~became ~~with~~entitled ~~other~~to ~~difficulties~~appoint wea ~~may~~majority ~~encounter~~of inthe ~~integrating~~director anpositions ~~acquired~~of ~~business~~Solo orDelaware ~~selling~~and Solo Cup Investment Corporation pursuant to a ~~portion~~stockholders' agreement dated as of ~~our~~February ~~business~~27, ~~could~~2004, ~~have~~as aamended, ~~material~~among ~~adverse~~Vestar, ~~effect~~Solo onCup ~~our~~Investment ~~business~~Corporation, ~~financial~~SCC ~~condition~~Holding, ~~results~~Solo ofDelaware ~~operations~~and orvarious ~~cash~~other ~~flows~~parties. If ~~In connection~~Vestar ~~with~~receives ~~future~~a ~~acquisitions,~~bona wefide ~~may~~offer ~~assume~~from ~~undisclosed~~a ~~liabilities~~third ofparty ~~the~~to ~~businesses~~purchase we(whether ~~acquire.~~by ~~These~~stock ~~liabilities~~purchase, ~~could~~merger ~~materially~~or ~~adversely~~otherwise) ~~affect~~at ~~our~~least ~~business,~~80% ~~financial~~of ~~condition~~Solo Delaware's common stock, ~~results~~SCC ofHolding ~~operations~~has oragreed ~~cash~~at ~~flows.~~Vestar's request to vote in favor of such offer.

11 10

Table of Contents

WeThe interests of SCC Holding and the holders of SCIC preferred stock, including Vestar, could conflict with the interests of holders of our senior secured and senior subordinated notes. For example, if we encounter financial difficulties or are unable to pay our debts as they mature, the interests of these indirect equity holders might conflict with the interests of a holder of our notes. Solo Cup Investment Corporation's stockholders may ~~not~~also behave ~~able~~an interest in pursuing acquisitions, divestitures, financings or other transactions that, in their judgment, could enhance their equity investments, even though the transactions might involve risks to ~~adequately~~a ~~protect~~holder of our ~~intellectual~~senior ~~property~~secured or senior subordinated notes. In addition, SCC Holding and ~~other~~Vestar, ~~proprietary~~or ~~rights~~any of their affiliates, may in the future own businesses that directly compete with our business. While we are subject to specified provisions of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated thereunder, these provisions do not require us to have independent directors.

WeThe ~~rely~~loss ~~on a combination~~ of ~~trade~~one secrets, confidentiality agreements, patents, trademarks, copyrights, licenses, and contractual provisions, as well as various intellectual property and unfair competition laws to protect our intellectual property and other proprietary rights. Such measures may not provide adequate protection and may not prevent our competitors from gaining access to our intellectual property and proprietary information or ~~independently~~more ~~developing~~of ~~technologies that are substantially equivalent or superior to~~ our ~~technology,~~principal ~~which~~customers could ~~harm our competitive position and could~~ have a material adverse effect on our business, financial condition, results of operations or cash flows. Furthermore, we cannot give you any assurance that any pending patent application or trademark application made by us will result in an issued patent or registered trademark, or that any issued or registered patents or trademarks will not be challenged, invalidated, circumvented or rendered unenforceable.

~~Litigation~~We ~~may~~have bea ~~necessary~~number toof ~~enforce~~large ~~our~~customers ~~intellectual~~that ~~property~~account ~~rights~~for ~~and~~a ~~protect~~significant ~~our~~portion ~~proprietary~~of ~~information,~~our ornet tosales. ~~defend~~For ~~against~~fiscal ~~claims~~year by2011, ~~third~~our ~~parties~~five ~~related~~largest tocustomers ~~our~~represented ~~intellectual~~approximately ~~property.~~30% ~~Even~~of if our ~~proprietary~~net ~~rights are enforceable~~sales, ~~others~~with ~~may~~no beone ~~able~~customer toaccounting ~~design~~for ~~around~~more ~~our~~than ~~patents~~9.5% orof ~~independently develop products and processes equivalent to~~ our ~~proprietary~~net ~~and confidential information~~sales. ~~Any~~The ~~litigation~~loss orof ~~claims~~one ~~brought by~~ or ~~against~~more ~~us, whether successful or not, could result in substantial costs and diversion~~ of our ~~resources,~~large ~~which~~customers could have a material adverse effect on our business, financial condition, results of operations or cash flows. ~~Any~~In ~~intellectual~~line ~~property~~with ~~litigation or~~industry ~~claims against us could result in the loss or compromise of our intellectual property and proprietary rights~~practice, ~~subject~~we usgenerally todo ~~significant~~not ~~liabilities,~~enter ~~require~~into uslong-term tosales ~~seek~~agreements ~~licenses~~with on unfavorable terms, if available at all, prevent us from manufacturing or selling products or require us to redesign, relabel or, in the case of trademark claims, rename our products, any of which could have a material adverse effect on our business, financial condition, results of operations or cash flowscustomers.

~~Financial~~We ~~market~~may ~~conditions~~undertake ~~have~~acquisitions ~~had~~or adivestitures ~~negative~~and ~~impact~~consequently onface ~~the~~potential ~~return of plan assets for our pension plans~~integration, ~~which~~management ~~may~~diversion ~~require additional funding~~ and ~~negatively~~other ~~impact our cash flows~~risks.

~~Certain~~We ~~U.S.,~~may ~~Canadian~~make ~~and~~acquisitions ~~European~~or ~~hourly~~divestitures ~~and~~in ~~salaried employees~~the ~~are~~future. ~~covered~~Any byfuture ~~our~~acquisitions ~~defined~~or ~~benefit~~divestitures ~~pension~~could ~~plans.~~be ~~Between~~of ~~December 31,~~significant ~~1987~~size and ~~March 31,~~may ~~2001,~~involve ~~the majority of the~~ U.S. ~~plans~~or ~~were~~international ~~frozen to new participants~~parties. ~~Our~~To ~~pension~~acquire ~~expense~~ and ~~required~~integrate ~~contributions~~a toseparate ~~our~~organization ~~pension~~or ~~plan are~~significant ~~directly~~new ~~affected by the value of plan~~ assets, ~~the~~or ~~projected~~to ~~rate~~divest ofa ~~return~~portion ~~on plan assets, the actual rate~~ of ~~return~~our onbusiness ~~plan~~would ~~assets~~divert ~~and~~management ~~the~~attention ~~actuarial~~from ~~assumptions~~other webusiness ~~use to measure the defined benefit pension plan obligations~~activities. ~~Due~~This todiversion, ~~the significant~~together ~~financial~~with ~~market~~other ~~downturn~~difficulties ~~that~~we ~~started~~may encounter in ~~2008~~integrating ~~and~~an ~~continued~~acquired ~~into~~business ~~2009,~~or ~~the~~selling ~~funded~~a ~~status~~portion of our ~~pension~~business, ~~plans~~could ~~has~~have ~~declined~~a ~~and~~material ~~actual~~adverse ~~asset~~effect ~~returns~~on ~~were~~our ~~below~~business, ~~the~~financial ~~assumed~~condition, ~~rate~~results of ~~return~~operations ~~used~~or tocash ~~determine pension expense~~flows. ~~Our~~In ~~pension plans~~connection ~~were~~with ~~underfunded~~future byacquisitions, ~~approximately~~we ~~$31.3~~may ~~million~~assume ~~and~~undisclosed ~~$29.3~~liabilities ~~million as~~ of ~~December 26,~~the ~~2010~~businesses ~~and~~we ~~December 27, 2009~~acquire. IfThese ~~plan~~liabilities ~~assets continue to perform below expectations, future pension expense and funding obligations will increase, which~~ could ~~have~~materially aadversely ~~negative~~affect ~~impact on~~ our ~~cash flows from operations~~business, ~~decrease~~financial ~~borrowing capacity and increase interest expense. Moreover~~condition, ~~under~~results ~~the Pension Protection Act~~ of ~~2006,~~operations itor iscash ~~possible that continued losses to asset values may necessitate accelerated funding of U~~flows.~~S. pension plans in the future to meet minimum federal government requirements.~~

~~Item~~We ~~1B.~~may ~~Unresolved~~not ~~Staff~~be ~~Comments~~able to adequately protect our intellectual property and other proprietary rights.

~~None~~We rely on a combination of trade secrets, confidentiality agreements, patents, trademarks, copyrights, licenses, and contractual provisions, as well as various intellectual property and unfair competition laws to protect our intellectual property and other proprietary rights. Such measures may not provide adequate protection and may not prevent our competitors from gaining access to our intellectual property and proprietary information or independently developing technologies that are substantially equivalent or superior to our technology, which could harm our competitive position and could have a material adverse effect on our business, financial condition, results of operations or cash flows. Furthermore, we cannot give you any assurance that any pending patent application or trademark application made by us will result in an issued patent or registered trademark, or that any issued or registered patents or trademarks will not be challenged, invalidated, circumvented or rendered unenforceable.

12Litigation may be necessary to enforce our intellectual property rights and protect our proprietary information, or to defend against claims by third parties related to our intellectual property. Even if our proprietary rights are enforceable, others may be able to design around our patents or independently develop products and processes equivalent to our proprietary and confidential information. Any litigation or claims brought by or against us, whether successful or not, could result in substantial costs and diversion of our resources, which could have a material adverse effect on our business, financial condition, results of operations or cash flows. Any intellectual property litigation or claims against us could result in the loss or compromise of our intellectual property and proprietary rights, subject us to significant liabilities, require us to seek licenses on unfavorable terms, if available at all, prevent us from manufacturing or selling products or require us to redesign, relabel or, in the case of trademark claims, rename our products, any of which could have a material adverse effect on our business, financial condition, results of operations or cash flows.

~~Table of Contents~~11

~~Item~~Table 2.of ~~Properties.~~Contents

WeFinancial ~~own, lease~~market ~~and~~conditions ~~operate~~may ~~manufacturing~~negatively ~~and~~impact ~~distribution facilities in North America, Panama and~~ the ~~United~~return ~~Kingdom.~~on ~~The~~plan ~~table~~assets ~~below provides summary information regarding the material manufacturing, distribution and office properties that we currently utilize. We believe these properties are being used, and are adequate,~~ for ~~their intended purposes and are well-maintained. A number of~~ our ~~owned~~pension properties are mortgaged as collateral under the indenture governing our senior secured notes and under our asset-based revolving credit facility. The table below does not include our manufacturing facilities in Belenplans, ~~New~~require ~~Mexico~~additional ~~and~~funding ~~our manufacturing~~ and ~~office~~negatively ~~facilities~~impact ~~in Highland Park, Illinois. We closed the Belen and Highland Park facilities in 2009 and currently are seeking buyers for the facilities. The table below also does not reflect~~ our ~~118-acre~~cash ~~undeveloped land parcel in Chicago, Illinois, which currently is under contract for sale~~flows. Finally, the table excludes a leased distribution facility in Ontario, California and leased office space in Alpharetta, Georgia. We currently sublease our entire space in each of these facilities and accordingly do not utilize the facilities in our operations.

Facilities
Location		Function	Owned/Leased	Size (ApproximateSquare Footage)
California	Rialto	Distribution	Leased		882,230
Georgia	Augusta	Manufacturing	Leased		364,000
	Conyers	Manufacturing	Leased		367,000
	Social Circle	Distribution	Leased		1,225,716
	Thomaston	Manufacturing	Owned		171,232
		Distribution	Leased		166,000
Idaho	Twin Falls	Manufacturing	Owned		130,000
Illinois	Chicago	Manufacturing	Leased		820,000
	Lake Forest	Executive Office	Leased		133,218
	University Park (2 facilities)	Distribution	Leased		1,846,025
	Urbana	Manufacturing	Leased		269,000
Maryland	Federalsburg	Manufacturing	Leased		405,000
		Distribution	Leased		54,000
	Hampstead	Distribution	Leased		1,034,000
	Owings Mills (2 facilities)(1)	Manufacturing/Distribution	Owned		1,703,292
Massachusetts	North Andover(1)	Manufacturing	Leased		248,500
Oklahoma	Ada	Manufacturing	Owned		267,000
Texas	Dallas	Manufacturing/Distribution	Leased		1,220,000
	Grand Prairie	Distribution	Leased		603,354
Washington	Sumner	Distribution	Leased		401,076
Non-US	Mississauga, Ontario, Canada	Distribution/Office	Leased		262,087
	Toronto, Ontario, Canada	Manufacturing/Distribution	Owned		485,825
	Cuautitlan, Mexico (4 facilities)	Manufacturing/Distribution	1 Owned/ 3 Leased		98,425
	Panama (2 facilities)	Manufacturing/Distribution	1 Owned/ 1 Leased		359,773
	United Kingdom (5 facilities)	Manufacturing/Distribution	Leased (2)		287,000

Certain U.S., Canadian and European hourly and salaried employees are covered by our defined benefit pension plans. Between December 31, 1987 and March 31, 2001, the majority of the U.S. plans were frozen to new participants. Our pension expense and required contributions to our pension plan are directly affected by the value of plan assets, the projected rate of return on plan assets, the actual rate of return on plan assets and the actuarial assumptions we use to measure the defined benefit pension plan obligations. Due to the significant financial market downturn that started in 2008 and continued into 2009, the funded status of our pension plans has declined and actual asset returns were below the assumed rate of return used to determine pension expense. Our pension plans were underfunded by approximately $40.2 million and $31.3 million as of December 25, 2011 and December 26, 2010. If plan assets continue to perform below expectations, future pension expense and funding obligations will increase, which could have a negative impact on our cash flows from operations, decrease borrowing capacity and increase interest expense. Moreover, under the Pension Protection Act of 2006, it is possible that continued losses to asset values may necessitate accelerated funding of U.S. pension plans in the future to meet minimum federal government requirements.

~~(1)~~Item ~~In June 2010, we announced our plans to close our manufacturing facilities in Springfield, Missouri; North Andover, Massachusetts; and Owings Mills, Maryland~~1B. WeUnresolved ~~sold~~Staff ~~our Springfield manufacturing facility in December 2010 and leased it back through August 2011 at which time we expect to have fully decommissioned the facility~~Comments. We ceased operations at the facility in the first quarter of 2011. We intend to close our North Andover facility in the second quarter of 2011 and our Owings Mills facility in the third quarter of 2011. We currently are seeking a long-term subtenant for our leased North Andover facility and a buyer for our owned Owings Mills facility.

~~(2) At one of these facilities we own a building on leased land~~None.

13 12

Table of Contents

Item 32. ~~Legal Proceedings~~Properties.

We ~~are~~ ~~involved~~own, lease and operate manufacturing and distribution facilities in ~~various~~North ~~claims~~America, Panama and ~~legal~~the ~~actions~~United ~~arising~~Kingdom. ~~from~~The ~~time~~table tobelow ~~time~~provides insummary information regarding the ~~ordinary~~material ~~course~~manufacturing, ofdistribution ~~business~~and office properties that we currently utilize. We ~~establish~~believe ~~reserves~~these properties are being used, and are adequate, for ~~claims~~their intended purposes and ~~actions~~are ~~when~~well-maintained. itA isnumber ~~probable~~of ~~that~~our weowned ~~will~~properties ~~incur~~are amortgaged ~~loss~~as ~~and~~collateral ~~such~~under ~~loss~~the isindenture ~~capable~~governing ofour ~~being~~senior ~~estimated~~secured notes and under our asset-based revolving credit facility. ~~While~~ The wetable ~~cannot~~below ~~predict~~does ~~the~~not ~~outcome~~include ofour ~~these~~owned ~~claims~~manufacturing and ~~actions~~office ~~with~~facilities ~~certainty~~in Highland Park, weIllinois ~~believe~~or ~~that~~our ~~based~~leased onmanufacturing ~~our~~facility ~~current~~in ~~assessment~~North ofAndover, Massachusetts. We closed the ~~facts~~Highland ~~and~~Park ~~circumstances~~facility wein 2009 and currently are ~~not~~seeking a ~~party~~buyer tofor ~~any~~the ~~pending~~facility. We ~~legal~~closed ~~proceeding,~~ the ~~ultimate~~North ~~disposition~~Andover offacility ~~which would~~in ~~have~~2011 and currently are seeking a ~~material~~subtenant ~~adverse~~for ~~effect~~the onfacility. The ~~our~~table ~~business~~also excludes a leased distribution facility in Ontario, ~~financial~~California ~~position~~and leased office space in Alpharetta, ~~results~~Georgia. We currently sublease our entire space in each of ~~operations~~these orfacilities ~~cash~~and ~~flows.~~accordingly do not utilize the facilities in our operations.

Item 4. Removed and Reserved.



Facilities
Location		Function	Owned/ Leased	Size (Approximate Square Footage)
California	Rialto	Distribution	Leased	882,230
Georgia	Augusta	Manufacturing	Leased	364,000
	Conyers	Manufacturing	Leased	367,000
	Social Circle	Distribution	Leased	1,225,716
	Thomaston	Manufacturing	Owned	171,232
		Distribution	Leased	166,000
Idaho	Twin Falls	Manufacturing	Owned	130,000
Illinois	Chicago	Manufacturing	Leased	820,000
	Lake Forest	Executive Office	Leased	133,218
	University Park	Distribution	Leased	1,552,475
	Urbana	Manufacturing	Leased	269,000
Maryland	Federalsburg	Manufacturing	Leased	405,000
	Hampstead	Distribution	Leased	1,034,000
Oklahoma	Ada	Manufacturing	Owned	267,000
Texas	Dallas	Manufacturing/Distribution	Leased	1,220,000
	Grand Prairie	Distribution	Leased	603,354
Washington	Sumner	Distribution	Leased	201,966
Non-US	Mississauga, Ontario, Canada	Distribution/Office	Leased	262,087
	Toronto, Ontario, Canada	Manufacturing/Distribution	Owned	485,825
	Cuautitlan, Mexico (4 facilities)	Manufacturing/Distribution	1 Owned/ 3 Leased	98,425
	Panama (2 facilities)	Manufacturing/Distribution	1 Owned/ 1 Leased	359,773
	United Kingdom (5 facilities)	Manufacturing/Distribution	Leased ⁽¹⁾	287,000

~~Part~~ II(1) At one of these facilities we own a building on leased land.

~~Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.~~13

~~There~~Table ~~is no public trading market for Solo Delaware’s common stock. Solo Cup Investment Corporation is the owner~~ of ~~record of all of the common stock of Solo Delaware. We do not have any equity compensation plans under which Solo Delaware securities may be issued.~~ Contents

~~Since~~Item ~~our formation in January 2004, we have not paid dividends on Solo Delaware’s common stock and we do not anticipate paying cash dividends in the foreseeable future~~3. InLegal ~~addition, our bank credit facilities and the indentures governing our senior secured and senior subordinated notes restrict our ability to pay dividends on Solo Delaware’s common stock~~Proceedings.

14We 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.

~~Table~~Item of4. ~~Contents~~Removed and Reserved.

~~Item~~PART 6.II—OTHER ~~Selected Financial Data.~~INFORMATION

~~The~~Item ~~following table sets forth our selected historical consolidated financial data~~5. ~~You~~Market ~~should~~for ~~read the information in this table in conjunction with “Management’~~Registrant's ~~Discussion~~Common ~~and~~Equity, ~~Analysis~~Related ofStockholder ~~Financial~~Matters ~~Condition~~ and ~~Results~~Issuer ofPurchases ~~Operations” included in Item 7~~ of ~~this~~Equity ~~annual report and our consolidated financial statements and related notes included in Item 8 of this annual report~~Securities.

(In millions)	Year EndedDecember 26,2010			Year EndedDecember 27,2009			Year EndedDecember 28,2008			Year EndedDecember 30,2007			Year EndedDecember 31,2006
Statement of Operations Data:
Net sales	$	1,582.9		$	1,502.6		$	1,847.0		$	2,110.1		$	2,124.0
Cost of goods sold		1,439.3			1,296.2			1,599.2			1,859.7			1,921.4
Gross profit		143.6			206.4			247.8			250.4			202.6
Selling, general and administrative expenses		150.4			150.1			159.0			203.6			216.4
Loss (gain) on asset disposals		3.9			9.0			22.6			(8.5	)		4.4
Impairment of goodwill		—			17.2			—			—			228.5
Asset impairment		20.5			—			0.6			—			—
Operating (loss) income		(31.2	)		30.1			65.6			55.3			(246.7	)
Interest expense, net		70.6			63.1			61.6			79.8			75.3
Prepayment penalty		—			—			—			1.3			—
Loss on debt extinguishment		—			2.5			—			4.0			—
Reclassification of unrealized loss on cash flow hedges to interest expense		—			9.1			—			—			—
Foreign currency exchange loss (gain), net		2.2			(2.6	)		14.1			(4.1	)		(6.9	)
Gain from bargain purchase		(1.7	)		—			—			—			—
Other (income) expense, net		—			—			—			(0.2	)		0.1
Loss from continuing operations before income taxes		(102.3	)		(42.0	)		(10.1	)		(25.5	)		(315.2	)
Income tax provision (benefit)		1.9			(6.3	)		2.1			(19.5	)		56.3
Loss from continuing operations		(104.2	)		(35.7	)		(12.2	)		(6.0	)		(371.5	)
Loss from discontinued operations, net of income tax provision		—			—			(0.7	)		(0.1	)		(2.9	)
Gain on sale of discontinued operations, net of income tax provision		—			—			0.8			77.2			—
Net (loss) income	$	(104.2	)	$	(35.7	)	$	(12.1	)	$	71.1		$	(374.4	)
Balance Sheet Data (1)(2) :
Cash and cash equivalents	$	21.5		$	30.0		$	57.5		$	33.6		$	26.4
Total assets		864.7			987.4			1,073.8			1,203.2			1,556.1
Total debt, including current maturities		637.7			636.1			718.2			759.0			1,150.1
Total shareholder’s (deficit) equity		(87.5	)		18.2			31.3			88.5			9.2
Other Financial Data (2) :
Net cash provided by (used in) operating activities	$	43.7		$	137.9		$	131.9		$	95.6		$	(51.5	)
Net cash (used in) provided by investing activities		(48.4	)		(65.6	)		(68.4	)		305.6			(33.8	)
Net cash (used in) provided by financing activities		(3.9	)		(101.1	)		(40.3	)		(394.9	)		99.8
Capital expenditures		42.2			71.8			79.7			49.0			60.5

There is no public trading market for Solo Delaware's common stock. Solo Cup Investment Corporation is the owner of record of all of the common stock of Solo Delaware. We do not have any equity compensation plans under which Solo Delaware securities may be issued.

~~(1)~~Since ~~Balance~~our ~~Sheet~~formation ~~Data~~in isJanuary as2004, ofwe have not paid dividends on Solo Delaware's common stock and we do not anticipate paying cash dividends in the ~~last~~foreseeable ~~day~~future. ofIn addition, our bank credit facilities and the ~~relevant~~indentures ~~fiscal~~governing ~~year~~our senior secured and senior subordinated notes restrict our ability to pay dividends on Solo Delaware's common stock.

~~(2) Balance Sheet Data for our 2006 fiscal year and Other Financial Data for our 2006 and 2007 fiscal years include our continuing and discontinued operations.~~14

15Item 6. Selected Financial Data.

~~Table~~The following table sets forth our selected historical consolidated financial data. You should read the information in this table in conjunction with “Management's Discussion and Analysis of ~~Contents~~Financial Condition and Results of Operations” included in Item 7 of this annual report and our consolidated financial statements and related notes included in Item 8 of this annual report.

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



(In millions)	For the year ended
Statement of Operations Data:	December 25, 2011			December 26, 2010			December 27, 2009			December 28, 2008			December 30, 2007
Net sales	$	1,636.3		$	1,582.9		$	1,502.6		$	1,847.0		$	2,110.1
Cost of goods sold	1,505.9			1,439.3			1,296.2			1,599.2			1,859.7
Gross profit	130.4			143.6			206.4			247.8			250.4
Selling, general and administrative expenses	135.2			150.4			150.1			159.0			203.6
Loss (gain) on asset disposals	0.9			3.9			9.0			22.6			(8.5		)
Impairment of goodwill	—			—			17.2			—			—
Asset impairment	13.1			20.5			—			0.6			—
Operating (loss) income	(18.8		)	(31.2		)	30.1			65.6			55.3
Interest expense, net	70.6			70.6			63.1			61.6			79.8
Prepayment penalty	—			—			—			—			1.3
Loss on debt extinguishment	—			—			2.5			—			4.0
Reclassification of unrealized loss on cash flow hedges to interest expense	—			—			9.1			—			—
Foreign currency exchange loss (gain), net	1.8			2.2			(2.6		)	14.1			(4.1		)
Gain from bargain purchase	—			(1.7		)	—			—			—
Other income, net	—			—			—			—			(0.2		)
Loss from continuing operations before income taxes	(91.2		)	(102.3		)	(42.0		)	(10.1		)	(25.5		)
Income tax provision (benefit)	2.3			1.9			(6.3		)	2.1			(19.5		)
Loss from continuing operations	(93.5		)	(104.2		)	(35.7		)	(12.2		)	(6.0		)
Loss from discontinued operations, net of income tax provision	—			—			—			(0.7		)	(0.1		)
Gain on sale of discontinued operations, net of income tax provision	—			—			—			0.8			77.2
Net (loss) income	$	(93.5	)	$	(104.2	)	$	(35.7	)	$	(12.1	)	$	71.1
Balance Sheet Data ⁽¹⁾:
Cash and cash equivalents	$	19.3		$	21.5		$	30.0		$	57.5		$	33.6
Total assets	779.1			864.7			987.4			1,073.8			1,203.2
Total debt, including current maturities	662.5			637.7			636.1			718.2			759.0
Total shareholder's (deficit) equity	(194.7		)	(87.5		)	18.2			31.3			88.5
Other Financial Data ⁽²⁾:
Net cash (used in) provided by operating activities	$	(21.1	)	$	43.7		$	137.9		$	131.9		$	95.6
Net cash (used in) provided by investing activities	(3.3		)	(48.4		)	(65.6		)	(68.4		)	305.6
Net cash provided by (used in) financing activities	23.5			(3.9		)	(101.1		)	(40.3		)	(394.9		)
Capital expenditures	28.3			42.2			71.8			79.7			49.0

~~Executive~~(1) Balance ~~Summary~~Sheet Data is as of the last day of the relevant fiscal year.

We(2) Other ~~are~~Financial aData leading producer and marketer of single-use products used to serve food and beverages in the home, quick-service restaurants, and other foodservice settings. We manufacture and supply a broad portfolio of single-use products, including cups, lids, take-out and other food containers, plates, bowls, portion cups, cutlery and straws, with products available in plastic, paper, foam, post-consumer recycled content and annually renewable materials. We serve two primary customer groups, foodservice and consumer. Sales to foodservice customers, including foodservice and specialty distributors, and foodservice operators, accounted for ~~approximately 79% of~~ our ~~net~~2007 ~~sales~~fiscal inyear ~~2010.~~includes ~~Sales to~~our ~~consumer~~continuing ~~customers, including grocery stores, mass merchandisers, warehouse clubs, value channel stores~~ and ~~other~~discontinued ~~retail outlets, accounted for the remaining 21%~~operations.

During 2010, we undertook strategic initiatives designed to grow our business and improve our profitability. These initiatives had a significant effect on our results of operations for our 2010 fiscal year. 15

~~Acquisition~~Item ~~of InnoWare Plastic~~7. OnManagement's ~~March 31,~~Discussion ~~2010,~~and weAnalysis ~~acquired a manufacturer~~ of aFinancial ~~comprehensive~~Condition ~~line~~and ofResults ~~plastic take-out containers. The new product line, which we market under our Creative Carryouts® brand, further broadens our product offering. Operating results~~ of ~~the acquired business are included in our results from the March 31, 2010 acquisition date~~Operations.

~~While~~Executive ~~the~~Summary majority of our 5.3% increase in consolidated net sales for 2010 was driven by growth in our existing product portfolio, the acquisition also contributed significantly to this improvement. Approximately 40% of our sales volume increase in 2010 was driven by the acquisition. The acquisition also resulted in an increase in our selling, general and administrative expenses primarily due to costs to close the acquired administrative office, and severance costs related to the consolidation of selling, general and administrative functions, which we completed during the third quarter of 2010.

~~Optimization~~We ofare ~~manufacturing~~a ~~footprint.~~leading Weproducer ~~believe~~and ~~that~~marketer ~~our capital~~of ~~expenditures~~single-use ~~over~~products ~~the~~used ~~past~~to ~~two~~serve ~~years~~food ~~have~~and ~~increased~~beverages ~~our~~in ~~efficiency~~the ~~and~~home, ~~provided~~quick-service ~~the~~restaurants, ~~opportunity~~and toother befoodservice ~~more~~settings. ~~productive~~We ~~within~~manufacture and supply a ~~smaller~~broad ~~manufacturing~~portfolio ~~footprint.~~of ~~Accordingly~~single-use products, onincluding ~~May 6~~cups, ~~2010~~lids, ~~our~~take-out ~~Board~~and ofother ~~Directors~~food ~~committed~~containers, toplates, abowls, ~~plan~~portion ~~to close~~cups, ~~our~~cutlery ~~manufacturing~~and ~~facilities~~straws, with products available in ~~Owings~~plastic, ~~Mills~~paper, ~~Maryland;~~foam, ~~North~~post-consumer ~~Andover,~~recycled ~~Massachusetts;~~content and ~~Springfield,~~annually ~~Missouri~~renewable materials. We ~~closed~~serve ~~our~~two ~~Springfield~~primary ~~facility~~customer ~~during~~groups, ~~the~~foodservice ~~first~~and ~~quarter~~consumer. ofSales ~~2011~~to foodservice customers, including foodservice and ~~expect~~specialty todistributors, ~~complete~~and ~~the~~foodservice ~~remaining~~operators, ~~two~~accounted ~~closures~~for byapproximately ~~the~~79% ~~end~~ of our net sales in 2011. Sales to consumer customers, retailers that sell convenience tableware to consumers, such as grocery stores, mass merchandisers, warehouse clubs, value channel stores and other retail outlets, accounted for the remaining 21%.

~~Over~~Manufacturing ~~the~~Footprint life of the plan, we expect to incur costs in the range of $111 to $126 million. Of these costs, approximately $25 to $29 million are expected to be cash expenditures, including anticipated severance payments and equipment relocation and related costs. The other costs included in the range consist of pension plan curtailment loss, a charge attributable to lease payments that we will remain obligated to make in periods after the related closure, asset impairment charges, and accelerated depreciation for certain property, plant and equipment that will not be used after the facilities are closed, as follows (in millions): Optimization

	Estimated range				Incurred to date
	As ofDecember 26, 2010				Thirteen weeks endedDecember 26, 2010		Fiscal year endedDecember 26, 2010
Severance	$	5	$	7	$	—	$	7
Equipment relocation and related costs		20		22		4		5
Pension plan curtailment loss		1		2		—		2
Accrual of remaining lease payments		4		6		—		—
Asset impairment		16		19		—		17
Accelerated depreciation		65		70		11		40
Total expected costs	$	111	$	126	$	15	$	71

During 2011, as we completed the execution of our plan to further optimize our manufacturing footprint, we closed our manufacturing facilities in Owings Mills, Maryland; North Andover, Massachusetts; and Springfield, Missouri. Over the life of the plan, we incurred costs of approximately $132 million. Of these costs, approximately $35 million were cash expenditures, including severance payments and equipment relocation and related costs. The other costs consist of a pension plan curtailment loss, a charge attributable to lease payments that we remain obligated to make in periods after we ceased use of the related facility, a lease termination charge, asset impairment charges related to these three plant closures, and accelerated depreciation for certain property, plant and equipment that would not be used after the facilities were closed, as follows (in millions):

Excluding the asset impairment, all of the amounts incurred to date are reflected in cost of goods sold. The asset impairment charges of approximately $17 million include $13.2 million related to equipment that we no longer expect to utilize in our operations and $3.4 million to adjust the carrying value of our Springfield property to fair value less costs to sell.



	Year ended		Year ended		Total costs
	December 26, 2010		December 25, 2011		incurred (expense)
Severance	$	7	$	—	$	7
Equipment relocation and related costs	5		23		28
Pension plan curtailment loss	2		—		2
Lease charges	—		8		8
Asset impairment ⁽¹⁾	17		12		29
Accelerated depreciation	40		18		58
Total costs	$	71	$	61	$	132

~~Plant~~(1) ~~closure~~The ~~and~~asset ~~consolidation~~impairment ~~costs~~charges ~~included~~ in ~~cost~~2010 ofrelated ~~goods~~to ~~sold~~equipment ~~increased~~that bywe ~~$42~~no ~~million~~longer expected to ~~$54~~utilize ~~million~~ in ~~2010 compared~~our tooperations ~~$12~~and ~~million~~a incharge ~~2009.~~to ~~The~~adjust ~~increase~~the ~~significantly~~carrying ~~affected~~value of our ~~gross~~Springfield ~~profit~~property ~~for~~to ~~2010,~~fair ~~which~~value ~~decreased~~less bycosts ~~$63~~to ~~million from 2009~~sell. The ~~Excluding~~asset ~~these~~impairment ~~costs~~charges in ~~both~~2011 ~~years,~~related ~~gross~~primarily ~~profit~~to as a ~~percentage~~charge ofto ~~net~~adjust ~~sales~~the ~~was~~carrying ~~12.5%~~value ~~for~~of ~~2010~~our ~~compared~~Owings Mills property to ~~14.5%~~ ~~for~~fair ~~2009.~~value less costs to sell.

~~Economic~~Excluding the asset impairment charges, all of the amounts included in the above table are reflected in cost of goods sold. Plant closure and consolidation costs included in cost of goods sold decreased by $5 million to $49 million in 2011 compared to $54 million in 2010. Excluding these costs in both years, gross profit as a percentage of net sales was 10.9% for 2011 compared to 12.5% for 2010. The decline in gross profit was primarily driven by the economic and industry conditions that our company has faced in recent years, as described below.

~~Our~~Economic ~~results of operations for the year ended December 26, 2010 also were affected by economic~~ and industry conditions. The economic downturn has reduced the discretionary income of consumers and negatively affected demand for single-use products used to serve food and beverages. We believe this decline was driven by a variety of external factors such as consumers eating out less frequently and higher unemployment rates, which 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, raw material, particularly resins utilized to manufacture plastic products and paperboard has risen. 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.

16Our results of operations were significantly affected directly and indirectly by economic and industry conditions. The economic downturn has reduced the discretionary income of consumers and negatively affected demand for single-use products used to serve food and beverages. We believe this decline was driven by a variety of external factors such as consumers eating out less frequently and higher unemployment rates, which 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, raw material, particularly resins utilized to manufacture plastic products and paperboard has risen. 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.

~~Table~~As a result of ~~Contents~~these economic and industry conditions, we experienced a decline in sales volume in 2011 compared to 2010 which had a significant impact on gross profit. Partially offsetting the gross profit impact of lower sales volume was an increase in average realized sales price driven by both pricing increases and a favorable shift in product mix.

As a result of these economic and industry conditions, our average realized sales price decreased slightly during our 2010 fiscal year compared to the prior year. Competitive pricing decisions, together with increasing raw material costs, contributed to the decline in gross profit. 16

Results of Operations for Fiscal Years ~~2010~~2011, ~~2009~~2010 and ~~2008~~2009

														2010 vs. 2009								2009 vs. 2008
													2011 vs. 2010							2010 vs. 2009
	Fiscal Year**	Fiscal Year**											Favorable / (Unfavorable)	~~Favorable / (Unfavorable)~~
(In millions)		2010				2009				2008				$				%				$				%
($ in millions)	2011				2010				2009				$				%			$				%
Net sales	$	$1,636.3	~~1,582.9~~		$	$1,582.9	~~1,502.6~~		$	$1,502.6	~~1,847.0~~		$	$53.4	~~80.3~~		3.4		~~5.3~~	$	80.3	$	~~(344.4~~	)5.3			~~(18.6~~	)
Cost of goods sold	1,505.9		~~1,439.3~~		1,439.3		~~1,296.2~~		1,296.2		~~1,599.2~~		(66.6		~~(143.1~~)	)	(4.6	)	~~(11.0~~	)(143.1		)	~~303.0~~	(11.0	)		~~18.9~~
Gross profit	130.4		~~143.6~~		143.6		~~206.4~~		206.4		~~247.8~~		(13.2		~~(62.8~~)	)	(9.2	)	~~(30.4~~	)(62.8		)	~~(41.4~~	)(30.4	)		~~(16.7~~	)
Selling, general and administrative expenses	135.2		~~150.4~~		150.4		~~150.1~~		150.1		~~159.0~~		15.2		~~(0.3~~	)	10.1		~~(0.0~~	)(0.3		)	~~9.0~~	—			~~5.7~~
Loss on asset disposals	0.9		~~3.9~~		3.9		~~9.0~~		9.0		~~22.6~~		3.0		~~5.1~~		76.9		~~56.8~~	5.1			~~13.6~~	56.7			~~60.2~~
Impairment of goodwill	—		—		—		~~17.2~~		17.2		—		—		~~17.2~~		—		~~100.0~~	17.2			~~(17.2~~	)100.0			*
Asset impairment	13.1		~~20.5~~		20.5		—		—		~~0.6~~		7.4		~~(20.5~~	)	36.1		*	(20.5		)	~~0.6~~	*			~~100.0~~
Operating (loss) income	(18.8		~~(31.2~~)	)	(31.2		~~30.1~~)		30.1		~~65.6~~		12.4		~~(61.3~~	)	39.7		~~(203.7~~	)(61.3		)	~~(35.5~~	)(203.7	)		~~(54.1~~	)
Interest expense, net	70.6		~~70.6~~		70.6		~~63.1~~		63.1		~~61.6~~		—		~~(7.5~~	)	—		~~(11.9~~	)(7.5		)	~~(1.5~~	)(11.9	)		~~(2.4~~	)
Loss on debt extinguishment	—		—		—		~~2.5~~		2.5		—		—		~~2.5~~		—		~~100.0~~	2.5			~~(2.5~~	)100.0			*
Reclassification of unrealized loss on cash flow hedges to interest expense	—		—		—		~~9.1~~		9.1		—		—		~~9.1~~		—		~~100.0~~	9.1			~~(9.1~~	)100.0			*
Foreign currency exchange loss (gain), net	1.8		~~2.2~~		2.2		~~(2.6~~	)	(2.6		~~14.1~~)		0.4		~~(4.8~~	)	18.2		*	(4.8		)	~~16.7~~	*			*
Gain from bargain purchase	—		~~(1.7~~	)	(1.7		—)		—		—		(1.7		~~1.7~~)		(100.0	)	*	1.7			—	*			*
Loss from continuing operations before income taxes			(102.3	)			(42.0	)			(10.1	)			(60.3	)			(143.5	)			(31.9	)			(315.8	)
Loss before income taxes	(91.2		)		(102.3		)		(42.0		)		11.1				10.9			(60.3		)		(143.5	)
Income tax provision (benefit)	2.3		~~1.9~~		1.9		~~(6.3~~	)	(6.3		~~2.1~~)		(0.4		~~(8.2~~)	)	(21.1	)	*	(8.2		)	~~8.4~~	*			*
Loss from continuing operations			(104.2	)			(35.7	)			(12.2	)			(68.5	)			(191.9	)			(23.5	)			(192.3	)
Net loss	$	(93.5	)		$	(104.2	)		$	(35.7	)		$	10.7			10.3			$	(68.5	)		(191.9	)
Loss from discontinued operations, net of income tax provision of $0			—				—				(0.7	)			—				*				0.7				*
Gain on sale of discontinued operations, net of income tax provision of $0			—				—				0.8				—				*				(0.8	)			(100.0	)
Net loss		$	(104.2	)		$	(35.7	)		$	(12.1	)		$	(68.5	)			(191.9	)		$	(23.6	)			*

* Not meaningful

** Our fiscal year is the 52- or 53-week period ending on the last Sunday in December. Fiscal year ~~2010~~2011 ended on December 2625, ~~2010~~2011, fiscal year ~~2009~~2010 ended on December 2726, ~~2009~~2010, and fiscal year ~~2008~~2009 ended on December 2827, ~~2008~~2009. Each was a 52-week period.

Fiscal Year ~~2010~~ 2011 Compared to Fiscal Year ~~2009~~2010

Net sales



($ in millions)	For the year ended						Favorable (Unfavorable)
Reportable segment:	December 25, 2011			December 26, 2010			$			%
North America	$	1,530.5		$	1,481.6		$	48.9		3.3
Europe	120.5			109.7			10.8			9.8
Other	15.1			12.9			2.2			17.1
Inter-segment eliminations	(29.8		)	(21.3		)	(8.5		)	(39.9	)
Consolidated net sales	$	1,636.3		$	1,582.9		$	53.4		3.4

~~Net~~Consolidated net sales increased by $8053.34 million, or 5.3.4%, ~~to $1,582.9 million~~ for ~~fiscal~~the year ~~2010~~ended ~~compared to $1~~December 25,~~502.6~~ ~~million~~2011 ~~for~~from ~~fiscal~~the comparable prior-year ~~2009~~period. The increase inresulted ~~net~~from ~~sales reflects~~ a 58.36% increase in average realized sales ~~volume~~ price and a 0.97% increase ~~resulting~~in ~~from~~net sales attributable to foreign currency fluctuations, partially offset by a 05.9% ~~decrease~~decline in ~~average realized~~ sales ~~price compared to the prior year. About 60% of the increase in sales~~ volume resulted from growth in our historical product portfolio and an increase in new product offerings (other than Creative Carryouts) despite continuing difficult economic conditions that resulted in lower industry demand. The remaining increase in sales volume reflects incremental sales attributable to Creative Carryouts. The decrease in average realized sales price compared to the previous year reflects lower overall pricing driven ~~primarily~~ by ~~the continuing competitive conditions in the marketplace, partially offset by a favorable shift in~~ our ~~product~~North ~~mix.~~American ~~The year over year impact of lower pricing had less impact on our fourth fiscal quarter, as we began to experience the benefit of price increases that we implemented in the second half of the year~~segment.

17North America - Net sales for our North American segment increased by $48.9 million, or 3.3%, for the year ended December 25, 2011 from the comparable prior-year period. The increase in net sales excluding intersegment sales was 2.8% and resulted from a 8.9% increase in average realized sales price and a 0.5% increase in net sales attributable to foreign currency fluctuations, offset by a 6.6% 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, in response to 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 under Executive Summary above, and, to a lesser extent, our strategic decision to eliminate certain unprofitable business.

~~Table of Contents~~17

~~Gross~~Europe ~~profit~~- Net sales for our European segment increased by $10.8 million, or 9.8%, for the year ended December 25, 2011 from the comparable prior-year period. The increase in net sales resulted from a 4.2% increase attributable to foreign currency fluctuations, a 3.2% increase in average realized sales price, and a 2.4% increase in sales volume. Inter-segment eliminations primarily consist of intercompany sales from North America to Europe which increased from the prior period due to higher sales volume driven by increased demand.

Gross profit decreased by $62.8 million, or 30.4%, to $143.6 million for fiscal year 2010 from $206.4 million for fiscal year 2009. The decline in gross profit resulted primarily from a decrease of approximately $59 million in the difference between sales prices and raw material costs for our U.S. operations due to both an increase in raw material costs and a decline in average realized sales price in 2010 compared to 2009. The gross profit decline also reflects an increase of $42 million in network optimization costs compared to the prior-year period. The current-year period includes accelerated depreciation of approximately $40 million, severance expense of approximately $7 million, a pension plan curtailment loss of approximately $2 million and costs incurred to transfer equipment from closing manufacturing facilities of approximately $5 million, including ramp-down costs at the closing facilities and start-up costs at the receiving plants. The prior-year period included $12 million of costs related to plant consolidation, consisting of costs incurred to transfer equipment from closed manufacturing facilities, ramp-down costs and start-up costs.

~~The~~For ~~decrease~~the inyear ~~gross~~ended ~~profit~~December 25, ~~was~~2011, ~~partially~~consolidated ~~mitigated~~gross byprofit ~~(1) an~~decreased ~~approximately~~by $1813.2 million, ~~benefit~~or 9.2%, from ~~lower~~the ~~operating~~comparable ~~costs~~prior-year ~~for our U~~period.S. Consolidated ~~operations~~gross margin, ~~driven~~or bygross ~~greater~~profit ~~overhead~~as ~~absorption~~a ~~from~~percentage ~~higher~~of ~~production~~net insales, ~~the~~was ~~current~~8.0% for fiscal year ~~and~~2011 ~~one~~versus ~~less~~9.1% ~~manufacturing~~for ~~facility~~fiscal year 2010. Excluding plant consolidation costs, ~~(2) a~~consolidated $9gross ~~million~~margin ~~benefit~~for ~~attributable~~fiscal toyear ~~higher~~2011 ~~sales~~was ~~volumes~~10.9% incompared ~~the~~to ~~United~~12.5% ~~States,~~for ~~(3) a~~fiscal $6year ~~million benefit~~2010, ~~from~~primarily adue ~~favorable~~to ~~shift~~the inimpact ~~product~~of ~~mix~~lower sales volumes and ~~(4) a~~lower $5production ~~million~~volumes ~~gross~~on ~~profit~~fixed ~~contribution~~cost ~~from~~absorption for our ~~international~~North ~~subsidiaries.~~America segment, all as described below.

~~Gross~~North ~~margin,~~America or- The decrease in gross profit asfor our North American segment of approximately $19 million includes (1) a ~~percentage~~decrease in gross profit of ~~net~~approximately $26 million resulting from lower sales volumes in North America, ~~was~~(2) ~~9.1%~~an increase in ~~2010~~logistics ~~versus~~costs ~~13.7%~~of approximately $8 million, primarily due to increases in ~~2009.~~diesel ~~The~~fuel ~~decrease~~prices, (3) an approximate $7 million decline in ~~gross~~fixed ~~margin~~cost ~~was~~absorption ~~primarily~~due ~~driven~~to bylower ~~the~~production ~~decrease~~volumes in the ~~difference~~current-year ~~between~~period ~~sales prices~~ and ~~raw~~(4) ~~material~~a ~~costs~~decrease ~~and~~in gross profit of approximately $6 million representing the ~~increase~~net inimpact ~~plant~~of ~~consolidation~~incremental manufacturing costs, ~~partially~~driven ~~offset~~primarily by athe ~~favorable~~accelerated ~~shift~~timing inof ~~product~~the ~~mix~~plant ~~and~~closures, ~~lower~~partially ~~operating~~offset ~~costs~~by asthe ~~described~~benefits ~~above.~~of fewer manufacturing facilities.

~~Selling~~These decreases in gross profit were partially offset by a benefit of approximately $16 million due to a more favorable product mix, ~~general~~an increase of approximately $7 million in the difference between sales prices and ~~administrative~~raw ~~expenses~~material costs for our U.S. operations in 2011 compared to 2010, and a $5 million decrease in plant consolidation costs compared to the prior-year period.

~~Selling,~~Plant ~~general~~consolidation ~~and administrative~~costs ~~expenses~~included ~~increased~~in ~~slightly~~cost toof ~~$150.4~~goods ~~million~~sold induring ~~fiscal~~2011 ~~year~~were ~~2010~~approximately ~~from~~ $~~150.1~~49 million inand ~~fiscal~~comprised ~~year~~(1) ~~2009.~~accelerated Andepreciation ~~increase~~of inapproximately ~~employee-related~~$18 ~~costs~~million, to(2) ~~normalized~~costs ~~levels~~related into ~~2010~~the ~~compared~~transfer toof ~~2009,~~equipment ~~when~~from weclosing ~~reduced~~manufacturing ~~such~~facilities ~~costs~~to inreceiving ~~response~~manufacturing ~~to the~~facilities ~~uncertain~~of ~~global~~approximately ~~economy~~$23 million, ~~were~~including ~~mostly~~ramp-down ~~offset~~costs byat ~~reductions~~the inclosing ~~professional~~facilities ~~fees~~ and ~~lower~~start-up ~~expenses~~costs ~~for~~at ~~advertising~~the ~~and~~receiving ~~trade~~facilities, ~~fund~~and ~~spending.~~(3) As a ~~percentage~~charge of ~~net~~approximately ~~sales,~~$7 ~~selling,~~million ~~general~~attributable ~~and~~to ~~administrative~~lease ~~expenses~~payments ~~were 9.5%~~ for ~~fiscal~~our ~~year~~North ~~2010 versus~~Andover ~~10.0%~~facility ~~for~~we ~~fiscal~~remain ~~year~~obligated ~~2009,~~to ~~driven~~make ~~by the increase~~ in ~~sales~~future ~~volume~~periods and a ~~continuing~~lease ~~focus~~termination oncharge ~~the management~~ of ~~selling,~~approximately ~~general~~$1 ~~and administrative expenses~~million.

~~Loss~~Europe on- ~~asset~~The ~~disposals~~decline in North American gross profit was partially offset by an approximate $6 million increase in gross profit for our European segment. The increase was primarily driven by increased manufacturing efficiencies resulting from targeted cost improvements, higher sales volume and the impact of changes in foreign currency exchange rates.

~~Loss~~Operating onincome asset disposals was $3.9 million for fiscal year 2010 compared to $9.0 million for fiscal year 2009. The losses in both years reflect the disposal of production equipment in connection with plant closures and consolidation. The 2009 (loss also includes adjustments made to record approximately $5.8 million of equipment retirements that should have been reflected in prior periods. We determined that the adjustments were immaterial to our current- and prior-period consolidated financial statements. )

Asset impairment



($ in millions)	For the year ended						Favorable (Unfavorable)
Reportable segment:	December 25, 2011			December 26, 2010			$			%
North America	$	(22.3	)	$	(29.4	)	$	7.1		24.1
Europe	2.3			(3.0		)	5.3			176.7
Other	1.4			1.1			0.3			27.3
Inter-segment eliminations	(0.2		)	0.1			(0.3		)	*
Consolidated operating loss	$	(18.8	)	$	(31.2	)	$	12.4		39.7

As* Not a result of our decision in the second fiscal quarter of 2010 to close three manufacturing facilities, we recognized approximately $13.2 million of asset impairment related to equipment that we no longer expect to utilize in our operations. In addition, during the third fiscal quarter of 2010, we entered into a contract to sell our Springfield, Missouri manufacturing facility and recorded $3.4 million of asset impairment to adjust the carrying value of the facility to fair value less costs to sell. We completed the sale transaction in December 2010 and recognized a loss of approximately $0.9 million. In the fourth fiscal quarter of 2010, we recorded impairment of approximately $3.9 million to reduce the carrying amounts of certain real estate to estimated fair value less costs to sell. meaningful

~~Interest expense~~North America - Operating loss for our North American segment decreased by $7.1 million, ~~net~~or 24.1%, for the year ended December 25, 2011 from the comparable prior-year period. The improvement was driven primarily by lower selling, general and administrative expenses and less asset impairment partially offset by lower gross profit, as discussed above.

~~Interest~~As ~~expense,~~a ~~net~~percentage ~~increased~~of bynet ~~$7.5 million~~sales, ~~or 11.9%~~selling, togeneral ~~$70.6~~and ~~million~~administrative ~~for~~expenses ~~fiscal~~improved ~~year 2010 compared~~ to ~~$63~~ 8.12% ~~million~~ for ~~fiscal~~2011 ~~year~~from ~~2009~~9.6% for 2010. The ~~increase~~improvement inresulted ~~interest expense was driven~~ primarily byfrom ~~higher~~decreases ~~average interest rates~~ in ~~2010~~employee-related ~~compared~~costs, toadvertising ~~2009~~and asrelated ~~a result of our July 2009 refinancing~~costs, ~~which~~and ~~included~~professional ~~the issuance of our 10~~fees.5% Lower ~~senior~~employee-related ~~secured notes.~~costs Towere ~~a lesser extent, the increase in interest expense was~~ driven by anlower ~~increase~~headcount inas ~~average~~well ~~outstanding~~as ~~borrowings~~lower ~~year~~incentive-based ~~over~~compensation ~~year~~expense.

~~Foreign~~The ~~currency~~improvement ~~exchange~~was ~~loss~~also ~~(gain)~~driven by lower asset impairment, ~~net~~which was $13.0 million in 2011 compared to $20.5 million in 2010. The current-period impairment primarily related to our Owings Mills, Maryland manufacturing facility, which we sold during our fourth fiscal quarter of 2011. The prior-period impairments related to equipment we no longer expected to utilize after the plant closures and our Springfield, Missouri manufacturing facility, which we sold during 2010.

We recognized a net foreign currency exchange loss of $2.2 million for fiscal year 2010 compared to a net gain of $2.6 million for fiscal year 2009. The fluctuation was primarily the exchange rate impact on our United Kingdom subsidiary’s financial statements driven by their U.S. dollar intercompany payable, which resulted in a net loss in 2010 compared to a net gain in 2009. To a lesser extent, the net foreign currency exchange loss for 2010 reflects the net loss on our forward contracts that we use to hedge the net foreign currency exposure in each our foreign subsidiaries. 18

18Europe - Operating income for our European segment increased by $5.3 million due primarily to higher gross profit, as discussed above. Inter-segment eliminations consist of the change in the amount of intercompany profit in the other segment's inventory resulting from intercompany sales from North America to such segment.

~~Table~~Income oftax ~~Contents~~provision

~~Gain~~Our consolidated income tax provision was $2.3 million for fiscal year 2011 compared to an income tax provision of $1.9 million for fiscal year 2010. The 2011 income tax provision was attributable to the income tax expense from ~~bargain~~foreign ~~purchase~~jurisdictions with a minimal offsetting domestic income tax benefit. The 2010 income tax provision primarily reflects income tax expense from foreign jurisdictions with a minimal offsetting domestic income tax benefit resulting 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.

WeFiscal ~~recognized~~Year ~~a bargain purchase gain of approximately $1.7 million on our March 31,~~ 2010 ~~acquisition,~~Compared ~~which~~to ~~represents~~Fiscal ~~the~~Year ~~excess of the fair value of the assets acquired, net of liabilities assumed, over the acquisition consideration of $24 million.~~ 2009

~~Income~~On ~~tax~~March ~~provision~~31, ~~(benefit)~~2010, we acquired InnoWare Plastic, a manufacturer of a comprehensive line of plastic take-out containers. The new product line, which we market under our Creative Carryouts® brand, further broadened our product offering. Operating results of the acquired business are included in our results from the March 31, 2010 acquisition date.

~~Income~~While ~~tax~~the ~~provision~~majority ~~was~~of $1our 5.93% ~~million~~increase ~~for~~in ~~fiscal~~consolidated ~~year~~net ~~2010~~sales ~~compared~~for to2010 anwas ~~income~~driven ~~tax~~by ~~benefit~~growth ofin ~~$6.3~~our ~~million~~existing ~~for~~product ~~fiscal~~portfolio, ~~year~~the ~~2009.~~acquisition ~~The~~also ~~2010~~contributed ~~income~~significantly ~~tax~~to ~~provision~~this ~~primarily~~improvement. Approximately ~~reflects~~40% ~~income~~of ~~tax~~our ~~expense~~sales ~~from foreign~~volume ~~jurisdictions~~increase ~~with~~in a2010 ~~minimal~~was ~~offsetting~~driven ~~domestic~~by ~~income~~the ~~tax~~acquisition. The ~~benefit~~acquisition ~~resulting~~also ~~from~~resulted ~~pension~~in ~~activity~~an ~~included~~increase in ~~other~~our ~~comprehensive~~selling, ~~income. In~~general ~~the~~and ~~United~~administrative ~~States,~~expenses weprimarily ~~are~~due into acosts ~~net~~to ~~operating~~close ~~loss~~the ~~carryforward~~acquired ~~position~~administrative office, and ~~our~~severance ~~deferred income~~costs ~~tax~~related ~~assets are subject~~ to athe ~~full~~consolidation ~~valuation~~of ~~allowance; therefore~~selling, ~~any~~general ~~loss~~and ~~before~~administrative ~~income~~functions, ~~taxes~~which ~~does~~we ~~not~~completed ~~generate~~during athe ~~corresponding~~third ~~income~~quarter ~~tax~~of ~~benefit~~2010.

~~The~~Net ~~benefit~~sales in 2009 includes a $5.1 million adjustment made during the first fiscal quarter of 2009 to correct an error in our previously reported deferred tax liabilities. If the adjustment had been recorded in the corresponding prior period financial statements, it would have increased (decreased) income tax provision by approximately $0.7 million, $2.4 million and $(8.0) million in fiscal years 2008, 2007 and 2006, respectively, and increased other comprehensive income by $0.2 million in fiscal year 2008. Excluding the $5.1 million adjustment, the remaining income tax benefit in 2009 of approximately $1.2 million reflects a U.S. tax benefit relating to current year pension activity included in other comprehensive income and the acceleration of taxable temporary differences associated with the goodwill impairment charge related to our Europe reporting unit, partially offset by income tax provision related to our foreign entities.

~~Fiscal~~Net ~~Year~~sales increased by $80.3 million, or 5.3%, to $1,582.9 million for fiscal year 2010 compared to $1,502.6 million for fiscal year 2009. ~~Compared~~The increase in net sales reflects a 5.3% increase in sales volume and a 0.9% increase resulting from foreign currency fluctuations, partially offset by a 0.9% decrease in average realized sales price compared to ~~Fiscal~~the ~~Year~~prior ~~2008~~year. About 60% of the increase in sales volume resulted from growth in our historical product portfolio and an increase in new product offerings (other than Creative Carryouts) despite continuing difficult economic conditions that resulted in lower industry demand. The remaining increase in sales volume reflects incremental sales attributable to Creative Carryouts. The decrease in average realized sales price compared to the previous year reflects lower overall pricing driven primarily by the continuing competitive conditions in the marketplace, partially offset by a favorable shift in our product mix. The year over year impact of lower pricing had less impact on our fourth fiscal quarter, as we began to experience the benefit of price increases that we implemented in the second half of the year.

~~Net~~Gross ~~sales~~profit

~~Net~~Gross ~~sales~~profit decreased by $~~344~~62.48 million, or 1830.64%, to $~~1,502~~143.6 million for fiscal year ~~2009~~2010 ~~compared~~from to $~~1,847~~206.04 million for fiscal year ~~2008~~ 2009. The ~~decrease~~decline in ~~net~~gross ~~sales~~profit ~~reflects~~resulted aprimarily ~~16.3%~~from a decrease of approximately $59 million in the difference between sales ~~volume,~~prices aand 2raw material costs for our U.1%S. ~~decrease~~operations ~~resulting~~due ~~from~~to ~~foreign~~both ~~currency~~an ~~fluctuations~~increase in raw material costs and a ~~slight~~decline ~~decrease~~ in average realized sales price in 2010 compared to 2009. The gross profit decline also reflects an increase of $42 million in network optimization costs compared to the prior-year period. The current-year period includes accelerated depreciation of approximately $40 million, severance expense of approximately $7 million, a pension plan curtailment loss of approximately $2 million and costs incurred to transfer equipment from closing manufacturing facilities of approximately $5 million, including ramp-down costs at the closing facilities and start-up costs at the receiving plants. The prior-year period included $12 million of costs related to plant consolidation, consisting of costs incurred to transfer equipment from closed manufacturing facilities, ramp-down costs and start-up costs.

~~Lower~~The ~~sales~~decrease ~~volumes~~in ~~resulted~~gross ~~from~~profit ~~the~~was ~~continued~~partially ~~softness~~mitigated inby ~~demand~~(1) ~~across~~an ~~the~~approximately ~~industry,~~$18 ~~competition~~million inbenefit ~~the~~from ~~marketplace~~lower ~~and~~operating costs for our ~~strategic initiatives~~U.S. ~~Approximately~~operations, ~~half~~driven ofby ~~the~~greater ~~decrease~~overhead inabsorption ~~sales~~from ~~volume~~higher ~~reflects~~production ~~our~~in ~~decision~~the tocurrent ~~de-emphasize~~year ~~specified product categories, such as straws~~ and ~~stirrers,~~one ~~which~~less ~~are~~manufacturing ~~high-volume commodity products~~facility, ~~and~~(2) ~~other~~a ~~strategic~~$9 ~~decisions~~million ~~made~~benefit ~~during~~attributable ~~2008 and 2007~~ to ~~improve~~higher ~~commercial~~sales ~~arrangements~~volumes ~~and~~in tothe ~~exit~~United ~~certain~~States, ~~unfavorable~~(3) ~~relationships.~~a ~~The~~$6 ~~other~~million ~~half~~benefit offrom ~~the~~a ~~decrease~~favorable ~~reflects~~shift ~~the~~in ~~continuing~~product ~~global~~mix ~~economic~~and ~~recession,~~(4) ~~which resulted in~~ a ~~significant~~$5 ~~contraction~~million ingross ~~the~~profit ~~market~~contribution ~~for~~from our ~~products and~~international ~~an increasingly competitive marketplace~~subsidiaries.

~~The~~Gross ~~slight~~margin, ~~decrease~~or ingross ~~average~~profit ~~realized~~as ~~sales~~a ~~price~~percentage ~~reflects~~of ~~lower~~net ~~pricing during 2009~~sales, aswas a9.1% ~~result~~in of2010 ~~lower~~versus ~~raw~~13.7% ~~material~~in ~~costs~~2009. ~~and~~The ~~consumer~~decrease ~~demand,~~in ~~which~~gross ~~were~~margin inwas ~~part~~primarily ~~due~~driven toby the ~~impact~~decrease ofin the ~~global~~difference ~~economic~~between ~~recession.~~sales ~~The~~prices ~~impact~~and ofraw ~~lower~~material ~~pricing~~costs ~~was~~and the increase in plant consolidation costs, partially offset by a favorable shift in ~~our~~ product mix and lower operating costs as described above.

~~Gross profit~~ 19

~~Gross profit decreased by $41.4 million~~Selling, orgeneral ~~16.7%, to $206.4 million for fiscal year 2009 from $247.8 million for fiscal year 2008. Gross profit declined by approximately $80 million as a result of lower sales~~ and ~~production~~administrative ~~volume~~expenses for our U.S. operations, by approximately $14 million due to the results of our international subsidiaries, which decline was partially driven by foreign currency fluctuations, and by $4 million in connection with the resolution of a contractual dispute during the first quarter of 2009. The decline in gross profit was partially offset by lower operating costs for our U.S. operations of approximately $32 million, driven by the benefit of a consolidated manufacturing footprint (net of related consolidation costs) and lower distribution costs, and an increase of approximately $25 million in the difference between sales prices and raw material costs for our U.S. operations, mostly realized during the first half of the year due to the lag in timing between the decline in raw material costs and the subsequent decrease in sales prices.

~~As noted above~~Selling, ~~gross~~general ~~profit~~and ~~includes~~administrative ~~costs~~expenses ~~related~~increased slightly to ~~the~~$150.4 ~~consolidation~~million ofin ~~our~~fiscal ~~production~~year ~~facilities,~~2010 ~~which~~from ~~were approximately~~ $12150.1 million in fiscal year 2009. An ~~and~~increase ~~$15~~in ~~million~~employee-related costs to normalized levels in ~~2008.~~2010 Incompared ~~both~~to ~~years~~2009, ~~these consolidation~~when we reduced such costs ~~included~~in ~~equipment~~response ~~transfers~~to the uncertain global economy, ~~ramp-down~~were ~~costs~~mostly atoffset ~~the~~by ~~closing~~reductions ~~facilities~~in professional fees and ~~start-up~~lower expenses atfor ~~the~~advertising ~~receiving~~and ~~plants~~trade fund spending. As Ina ~~2008~~percentage of net sales, selling, general and administrative expenses were 9.5% for fiscal year 2010 versus 10.0% for fiscal year 2009, driven by the ~~consolidation~~increase ~~costs~~in ~~also~~sales ~~included~~volume ~~severance~~and ata continuing focus on the ~~closing~~management ~~facilities~~of selling, general and administrative expenses.

~~Gross~~Loss ~~margin,~~on orasset ~~gross~~disposals profit as a percentage of net sales, was 13.7% in 2009 versus 13.4% in 2008. The increase in gross margin was primarily driven by a favorable shift in product mix, and to a lesser extent, an increase in the difference between sales prices and raw material costs.

19Loss on asset disposals was $3.9 million for fiscal year 2010 compared to $9.0 million for fiscal year 2009. The losses in both years reflect the disposal of production equipment in connection with plant closures and consolidation. The 2009 loss also includes adjustments made to record approximately $5.8 million of equipment retirements that should have been reflected in prior periods. We determined that the adjustments were immaterial to our current- and prior-period consolidated financial statements.

~~Table~~Asset ~~of Contents~~impairment

~~Selling~~As a result of our decision in the second fiscal quarter of 2010 to close three manufacturing facilities, ~~general~~we recognized approximately $13.2 million of asset impairment related to equipment that we no longer expect to utilize in our operations. In addition, during the third fiscal quarter of 2010, we entered into a contract to sell our Springfield, Missouri manufacturing facility and ~~administrative~~recorded ~~expenses~~$3.4 million of asset impairment to adjust the carrying value of the facility to fair value less costs to sell. We completed the sale transaction in December 2010 and recognized a loss of approximately $0.9 million. In the fourth fiscal quarter of 2010, we recorded impairment of approximately $3.9 million to reduce the carrying amounts of certain real estate to estimated fair value less costs to sell.

~~Selling,~~Interest general and administrative expenses decreased $9.5 million, or 6.0%, to $150.1 million in fiscal year 2009 compared to $159.6 million in fiscal year 2008. The decrease primarily reflects an approximately $11.0 million reduction in employee-related costs resulting from cost-savings measures implemented in December 2008 and continuing through 2009, and a reduction of approximately $1.5 million in intangible asset amortization expense~~. The decrease in selling~~, general and administrative expenses was partially offset by a $1.6 million increase in management advisory fees paid to SCC Holding Company and Vestar. No fees were incurred in 2008 due to December 2008 amendments to our management agreements. In addition, fiscal year 2008 selling, general and administrative expenses included $3.1 million of earnest money forfeited to us and recognized as a reduction of expense as a result of the termination of a sale agreement related to vacant real estate located in Chicago, Illinois. As a percentage of net ~~sales, selling, general and administrative expenses were 10.0% for fiscal year 2009 versus 8.6% for fiscal year 2008.~~

~~Impairment~~Interest expense, net increased by $7.5 million, or 11.9%, to $70.6 million for fiscal year 2010 compared to $63.1 million for fiscal year 2009. The increase in interest expense was driven primarily by higher average interest rates in 2010 compared to 2009 as a result of ~~goodwill~~our July 2009 refinancing, which included the issuance of our 10.5% senior secured notes. To a lesser extent, the increase in interest expense was driven by an increase in average outstanding borrowings year over year.

WeForeign ~~tested~~currency ~~goodwill~~exchange ~~for~~loss impairment at least annually, as of the end of October, or sooner if a triggering event that suggested possible impairment of the value of our goodwill occurred. During the third quarter of 2009, despite increasing sales in the first and second quarters and the implementation of programs intended to reduce costs and (gain ~~manufacturing efficiencies~~), ~~our~~net Europe reporting unit continued to incur declining margins and lower operating results. These results were in part due to increased competition, a decline in the European economy and higher input costs, such as resin and electricity, which we were unable to pass along through further price increases. We considered this combination of factors to be evidence of a permanent change in the long-term prospects of our European business. As a result, we became uncertain as to whether our European reporting unit’s estimated fair value was substantially in excess of its carrying value and determined that there was a risk that the reporting unit would fail step one of the impairment test. Accordingly, we concluded that sufficient indicators existed to perform an interim goodwill impairment analysis of our Europe reporting unit. Step one of the impairment test was performed as of September 27, 2009. We estimated the fair value of the reporting unit based on the present value of expected future cash flows, assuming a discount rate of 14% and a terminal value growth rate of 3%, and determined that the fair value was less than the carrying value. We consequently performed step two of the impairment test to calculate the amount of impairment, and concluded that the goodwill of our Europe reporting unit was fully impaired. Accordingly, we recorded a goodwill impairment charge of approximately $17.2 million for the thirteen weeks ended September 27, 2009. After this charge, there is no remaining goodwill on our consolidated balance sheet.

~~Loss~~We recognized a net foreign currency exchange loss of $2.2 million for fiscal year 2010 compared to a net gain of $2.6 million for fiscal year 2009. The fluctuation was primarily the exchange rate impact on ~~asset~~our ~~disposals~~United Kingdom subsidiary's financial statements driven by their U.S. dollar intercompany payable, which resulted in a net loss in 2010 compared to a net gain in 2009. To a lesser extent, the net foreign currency exchange loss for 2010 reflects the net loss on our forward contracts that we use to hedge the net foreign currency exposure in each our foreign subsidiaries.

~~Loss~~Gain onfrom ~~asset~~bargain disposals was $9.0 million for fiscal year 2009 compared to $22.6 million for fiscal year 2008. The 2009 loss reflects the disposal of production equipment in connection with plant closures and consolidation, and includes corrections made during the third and fourth fiscal quarters of 2009 to record approximately $5.8 million of equipment retirements that should have been recorded in prior periods. We determined these adjustments were immaterial to our current and prior period consolidated financial statements. During 2010, we continued to refine the controls related to our asset disposal process. The loss during the prior-year period primarily reflects the disposal of non-core assets, including the sale of our dairy packaging machinery and equipment in March 2008. purchase

~~Interest~~We ~~expense~~recognized a bargain purchase gain of approximately $1.7 million on our March 31, 2010 acquisition, which represents the excess of the fair value of the assets acquired, net of liabilities assumed, over the acquisition consideration of $24 million.

~~Interest~~Income ~~expense,~~tax ~~net~~provision increased $1.5 million, or 2.4%, to $63.1 million for fiscal year 2009 compared to $61.6 million for fiscal year 2008. Higher interest expense is primarily attributable to higher average interest rates compared to the prior year period due to our refinancing transaction in July 2009, partially offset by lower outstanding debt, mainly due to prepayments of the term loan under our first lien credit facility. (benefit)

~~Reclassification~~Income oftax ~~unrealized~~provision ~~losses~~was on$1.9 ~~cash~~million ~~flow hedges~~for fiscal year 2010 compared to ~~interest~~an income tax benefit of $6.3 million for fiscal year 2009. The 2010 income tax provision primarily reflects income tax expense from foreign jurisdictions with a minimal offsetting domestic income tax benefit resulting 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.

WeThe ~~reclassified~~benefit in 2009 includes a $95.1 million ofadjustment ~~unrealized~~made ~~losses~~during onthe ~~our~~first ~~cash~~fiscal ~~flow~~quarter ~~hedges~~of 2009 to ~~interest~~correct ~~expense in~~an ~~connection~~error ~~with~~in our ~~July~~previously ~~2009~~reported ~~refinancing.~~deferred ~~See~~tax ~~further~~liabilities. If ~~discussion~~the ~~under~~adjustment ~~Liquidity~~had ~~and~~been ~~Capital~~recorded ~~Resources~~in ~~below.~~the Wecorresponding ~~had~~prior ~~previously~~period ~~accounted~~financial ~~for~~statements, ~~our~~it ~~interest~~would ~~rate~~have ~~swap~~increased ~~agreements~~(decreased) asincome ~~cash~~tax ~~flow~~provision ~~hedges~~by ofapproximately ~~the~~$0.7 ~~variable-rate~~million, ~~interest~~$2.4 ~~payments~~million onand ~~our first~~$(8.0) ~~lien~~million ~~term~~in ~~loan~~fiscal ~~borrowings.~~years ~~Due~~2008, to2007 ~~the~~and ~~repayment~~2006, ofrespectively, ~~the~~and ~~term~~increased ~~loan~~other ~~under~~comprehensive ~~the~~income ~~first~~by ~~lien~~$0.2 ~~credit~~million ~~facility~~in asfiscal ~~part~~year of2008. Excluding the ~~refinancing~~$5.1 million adjustment, the ~~hedged~~remaining ~~forecasted~~income ~~payments~~tax benefit in 2009 of ~~variable-rate~~approximately ~~interest~~$1.2 ~~under~~million ~~our~~reflects ~~first~~a ~~lien~~U.S. ~~term~~tax ~~loan~~benefit ~~borrowings~~relating ~~were~~to nocurrent ~~longer probable~~year ofpension ~~occurring.~~activity ~~Accordingly,~~included in ~~June~~other ~~2009,~~comprehensive weincome ~~discontinued~~and ~~hedge~~the ~~accounting~~acceleration ~~prospectively,~~of ~~and~~taxable ~~reclassified~~temporary differences associated with the ~~cumulative~~goodwill ~~mark-to-market~~impairment ~~loss~~charge ofrelated ~~$9.1~~to ~~million~~our ~~associated~~Europe ~~with~~reporting ~~these~~unit, ~~swaps~~partially ~~from~~offset ~~accumulated~~by ~~other~~income ~~comprehensive~~tax ~~loss~~provision related to ~~interest expense.~~our foreign entities.

~~Loss on debt extinguishment~~ 20

~~During~~Liquidity ~~2009,~~and weCapital ~~incurred~~Resources a loss on debt extinguishment of $2.5 million, which represents the write-off of unamortized deferred financing fees related to our first lien credit facility in connection with the extinguishment of that facility in July 2009.

20Operating Cash Flows

~~Table~~We rely on cash flows from operations and borrowings under our asset-based revolving credit facilities to finance our working capital requirements. Net cash used in operating activities during 2011 was $21.1 million compared to net cash provided by operating activities of ~~Contents~~$43.7 million during 2010. The decreased cash flows from operations resulted primarily from a net cash inflow from inventories during 2010 compared to a net cash outflow for inventories during 2011. During 2011, working capital increased by $34.5 million, primarily reflecting the net increase in inventory levels during the year, and to a lesser extent, an increase in the cost of plastic resins and paper, our primary raw materials.

~~Foreign~~Investing ~~currency~~Cash ~~exchange~~Flows ~~(gain) loss, net~~

WeNet ~~recognized~~cash aused ~~foreign~~in ~~currency~~investing ~~exchange~~activities ~~gain~~during of2011 was $23.63 million ~~for fiscal year 2009~~ compared to ~~a loss of~~ $1448.14 million ~~for~~during ~~fiscal year 2008~~2010. The ~~loss~~reduction ~~in 2008~~ was ~~primarily~~mostly ~~attributable~~due to ~~unfavorable~~lower ~~currency~~capital ~~fluctuations~~expenditures ~~affecting~~and ~~our~~higher ~~Great~~proceeds ~~Britain pound sterling denominated inter-company debt. During 2008, we amended the inter-company loan agreement to change the maturity~~ from ~~a date certain, as settlement of~~ the ~~loan~~sale ~~is not planned or anticipated in the foreseeable future. From the effective date~~ of ~~the amendment~~property, weplant ~~have~~and ~~reflected the currency fluctuations related to the inter-company loan as a component of equity, within accumulated other comprehensive income (loss)~~equipment.

~~Income~~Capital ~~tax~~expenditures during 2011 were $28.3 million compared to $65.8 million during 2010. Capital expenditures during 2010 included the cost of the acquisition of InnoWare Plastic (~~benefit~~$23.7 million, net of cash acquired). We ~~provision~~funded our capital expenditures in both years, including the acquisition in 2010, with cash flows from operations and borrowings under our U.S. asset-based revolving credit facility.

~~Income~~During ~~tax~~2011, ~~benefit~~proceeds ~~was~~from the sale of property, plant and equipment of $625.37 million ~~for~~consisted ~~fiscal~~mainly ~~year~~of ~~2009~~proceeds ~~compared~~from tothe sale of our Owings Mills, Maryland manufacturing facility, an ~~income~~undeveloped ~~tax~~property ~~provision~~in ofChicago, ~~$2.1~~Illinois ~~million~~and ~~for~~our ~~fiscal~~Belen, ~~year~~New ~~2008~~Mexico manufacturing facility. Cash ~~The benefit~~and incash ~~2009~~equivalents as of December 25, 2011 includes aapproximately $56.17 million ~~adjustment~~representing ~~made~~the ~~during~~net proceeds from the ~~thirteen~~sale ~~weeks~~of ~~ended~~the ~~March 29,~~Owings ~~2009~~Mills facility. The indentures governing our senior secured and senior subordinated notes generally require us to ~~correct~~use anthese ~~error~~proceeds to purchase or improve assets useful in our ~~previously~~business ~~reported~~or ~~deferred~~to ~~tax~~purchase ~~liabilities. We~~a ~~determined~~business that ~~this~~is ~~adjustment~~related, ~~was~~complementary ~~immaterial~~or ancillary to our ~~current~~ ~~and~~existing ~~prior~~business. ~~period~~During ~~financial~~2010, ~~statements~~investing cash inflows of $7.7 Ifmillion consisted mainly of proceeds from the ~~adjustment~~sale ~~had~~of ~~been~~our ~~recorded~~Springfield, inMissouri ~~the~~manufacturing ~~corresponding~~facility ~~prior~~during ~~period~~the ~~financial~~fourth ~~statements,~~quarter. Cash itand ~~would~~cash ~~have~~equivalents ~~increased~~as ~~(decreased)~~of ~~income~~December ~~tax~~26, ~~provision~~2010 byincludes approximately $0.7.3 million, ~~$2.4~~representing ~~million~~the ~~and $(8.0)~~net ~~million~~proceeds infrom ~~fiscal~~the ~~years~~sale. These ~~2008,~~proceeds ~~2007~~had ~~and~~the ~~2006,~~same ~~respectively,~~restriction and ~~increased~~were ~~other~~fully ~~comprehensive~~utilized ~~income~~to byfund ~~$0.2~~capital ~~million~~expenditures inby ~~fiscal~~April ~~year 2008~~2011.

~~Excluding~~Financing ~~the~~Cash ~~$5.1~~Flows million adjustment, the remaining income tax benefit of approximately $1.2 million is reflective of a U.S. tax benefit relating to current year pension activity included in other comprehensive income and the acceleration of taxable temporary differences associated with the goodwill impairment charge related to our Europe reporting unit, partially offset by income tax provision related to our foreign entities. Our fiscal year 2008 provision primarily reflects the income tax provision related to our foreign entities. For our U.S. operations, the tax benefit generated from operating losses was offset by a corresponding increase in the valuation allowance; therefore, we recorded a minimal net U.S. tax expense, primarily for state income taxes.

~~Liquidity~~Net ~~and~~cash ~~Capital~~used ~~Resources~~in financing activities during 2011 was $23.5 million compared to net cash provided by financing activities of $3.9 million during 2010. The fluctuation was driven by net borrowings under revolving credit facilities of $23.9 million in 2011 compared to net repayments of $2.3 million in 2010. The increase in borrowings in 2011 was a result of lower cash flow generated from operations.

~~Operating~~The ~~Cash~~following ~~Flows~~is a summary of long-term debt as of December 25, 2011 and December 26, 2010 (in thousands):

We rely on cash flows from operations and borrowings under our asset-based revolving credit facilities to finance our working capital requirements. Net cash provided by operating activities for continuing operations during 2010 was $43.7 million compared to $137.9 million during 2009. The decreased cash flows from operations resulted primarily from less of a reduction in working capital in 2010 compared to 2009 and, to a lesser extent, lower operating results. During 2010, working capital decreased by $20.8 million, primarily reflecting the net impact of changes in inventory levels during the year. Increased levels in the first half of the year were more than offset by a reduction in the second half of the year resulting from continuous improvements in inventory management. Partially offsetting the improvement efforts was an increase in the cost of plastic resins and paper, our primary raw materials, which increased our inventory and negatively affected cash flows in 2010. During 2009, working capital decreased by $95.6 million driven by a significant reduction in inventory levels primarily during the first half of the year in anticipation of a significant decrease in demand as a result of the global economic recession.



	December 25, 2011			December 26, 2010
Long-term debt:
10.5% Senior Secured Notes due November 2013	$	300,000		$	300,000
Unamortized discount	(3,066		)	(4,464		)
10.5% Senior Secured Notes due November 2013, net	296,934			295,536
8.5% Senior Subordinated Notes due February 2014	325,000			325,000
Asset-based Revolving Credit Facility, maturing July 2013	36,480			10,027
Canadian Revolving Credit Facility, maturing December 2013	—			2,669
Capital lease obligations	4,050			4,483
Total long-term debt	662,464			637,715
Less: Current maturities of long-term debt	452			430
Long-term debt, net of current maturities	$	662,012		$	637,285

~~Investing Cash Flows~~ 21

~~Net~~Refinancing ~~cash~~Transactions used in investing activities for continuing operations during 2010 was $48.4 million compared to $65.6 million during 2009. The reduction was mostly due to the decrease in restricted cash in 2010 compared to an increase in restricted cash in 2009, described below. Capital expenditures for our continuing operations during 2010, including the cost of the acquisition of InnoWare Plastic ($23.7 million, net of cash acquired), were $65.8 million compared to $71.8 million during 2009. We funded our capital expenditures in both years, including the acquisition, with cash flows from operations and borrowings under our U.S. asset-based revolving credit facility.

~~During~~On ~~2010~~July 2, ~~investing~~2009, ~~cash~~we ~~inflows~~issued of $7300.70 million ~~consisted mainly~~ of ~~proceeds from~~10.5% ~~the~~Senior ~~sale~~Secured ofNotes ~~our~~due ~~Springfield~~2013, ~~Missouri~~which ~~manufacturing~~we ~~facility~~refer ~~during~~to as the ~~fourth~~senior ~~quarter.~~secured ~~Cash~~notes, and ~~cash~~entered ~~equivalents~~into asa ofnew ~~December 26,~~asset-based ~~2010~~revolving ~~includes~~credit ~~approximately~~facility providing for borrowings of up to $7200.30 million, ~~representing~~subject ~~the~~to ~~net~~borrowing ~~proceeds~~base ~~from~~limitations ~~the~~and ~~sale~~other specified terms and conditions. We ~~The~~used ~~indentures governing~~the ~~our~~initial ~~senior~~borrowings ~~secured~~under ~~and~~our ~~senior~~asset-based ~~subordinated~~revolving ~~notes~~credit ~~generally~~facility ~~require~~of us$28.3 tomillion, ~~use~~together ~~these~~with net proceeds toof ~~purchase~~$293.8 ormillion ~~improve~~from ~~assets~~the ~~useful~~issuance inof our ~~business~~senior orsecured notes to ~~purchase~~(1) arepay ~~business~~the ~~that~~$300.9 ismillion ~~related~~of borrowings outstanding, ~~complementary~~including oraccrued ~~ancillary~~interest tothereon, under our ~~existing business.~~first ~~During~~lien ~~2009~~credit facility, ~~investing~~(2) ~~cash~~pay ~~inflows of~~ $1617.63 million ~~consisted~~of ~~mainly~~debt ofissuance ~~proceeds~~costs ~~from~~relating to the ~~September~~senior ~~2009~~secured ~~sale~~notes ofand aasset-based ~~distribution~~revolving ~~center~~credit facility, ~~which~~and we(3) ~~closed~~provide in$3.9 ~~the~~million ~~fourth~~for ~~quarter~~operating ofneeds. ~~2008,~~We ~~and~~deferred the ~~July~~debt ~~2009~~issuance ~~sale~~costs ofand aare ~~manufacturing~~amortizing ~~plant~~them through 2013, ~~which we~~when ~~closed~~the insenior secured notes and borrowings under the ~~fourth~~asset-based ~~quarter~~revolving ofcredit ~~2007~~facility mature.

~~The~~In ~~$10.4~~connection ~~million~~with ~~increase~~the inrefinancing ~~restricted~~transactions, ~~cash~~we inreclassified ~~2009~~$9.1 ~~represents~~million ~~collateral~~of ~~that~~unrealized ~~the counterparty~~losses toassociated ~~our~~with interest rate ~~swaps~~swap ~~required~~agreements usfrom toaccumulated ~~post~~other ~~against~~comprehensive ~~the~~loss ~~then-current~~to ~~market~~interest ~~value~~expense ofin ~~the~~July ~~swaps~~2009. ~~Our~~These ~~obligation~~interest torate ~~post~~swap ~~collateral~~agreements ~~continued~~had ~~through~~a ~~the~~total ~~expiration~~notional ~~date~~amount of $150.0 million. Under the ~~swaps~~agreements, inwe ~~February~~received ~~2011.~~a ~~The~~variable amount ofbased ~~collateral~~on ~~that~~the ~~had to~~Eurodollar ~~remain~~rate onand ~~account~~pay ~~with~~a ~~the~~fixed ~~counterparty~~amount ~~fluctuated~~ based on ~~changes~~an ininterest ~~the~~rate ~~estimated fair value~~ of ~~the swaps~~5.3765%. InThe ~~2010,~~swap ~~the required amount of collateral decreased by $8.5 million~~agreements, ~~from~~which ~~$10.4~~became ~~million~~effective ason ~~of December~~August 2728, ~~2009~~2007, toexpired ~~$1.9~~on ~~million as of December~~February 2628, ~~2010~~2011.

21We also wrote off the remaining $2.5 million of unamortized debt issuance costs related to the first lien credit facility in July 2009 as a result of the refinancing.

~~Table~~Available ~~of Contents~~Capacity

~~Financing~~The ~~Cash~~following ~~Flows~~is a summary of our committed revolving credit facilities as of December 25, 2011 (in thousands):

Net cash used in financing activities for continuing operations during 2010 was $3.9 million compared to $101.1 million during 2009. The significant net cash outflows in 2009 resulted primarily from the prepayment of $105.0 million of principal on the term loan under our first lien credit facility that we made from cash on hand and cash flows generated from operations during the first half of 2009. In addition, the net proceeds we received in July 2009 from the issuance of our 10.5% senior secured notes of approximately $293.8 million ($300 million less $6.2 million of original issue discount) and initial borrowings under our asset-based revolving credit facility of approximately $28.3 million were used to repay the outstanding borrowings and accrued interest due on our first lien credit facility and debt issuance costs for the senior secured notes and asset-based revolving credit facility.



	Commitment Amount		Amounts Outstanding		Letters of Credit ⁽¹⁾		Available Capacity
Asset-based revolving credit facility ⁽²⁾	$	200,000	$	36,480	$	12,867	$	122,499
Canadian revolving credit facility ⁽³⁾	16,662		—		—		13,080
	$	216,662	$	36,480	$	12,867	$	135,579

~~The~~(1) ~~following~~Availability isunder athe ~~summary~~credit offacilities ~~long-term~~is ~~debt~~reduced asby letters of ~~December 26,~~credit ~~2010~~issued ~~and~~under ~~December 27, 2009~~the ~~(in thousands):~~ facilities.

	December 26, 2010			December 27, 2009
Long-term debt:
10.5% Senior Secured Notes due 2013	$	300,000		$	300,000
Unamortized discount		(4,464	)		(5,703	)
10.5% Senior Secured Notes due 2013, net		295,536			294,297
8.5% Senior Subordinated Notes due 2014		325,000			325,000
Asset-based Revolving Credit Facility		10,027			15,000
Canadian Credit Facility – Revolver		2,669			—
Canadian Credit Facility – Term Loan		—			404
Capital lease obligations		4,483			1,388
Total long-term debt		637,715			636,089
Less: Current maturities of long-term debt		430			779
Long-term debt, net of current maturities	$	637,285		$	635,310


⁽²⁾	The commitment amount for the asset-based revolving credit facility is $200.0 million; however, available capacity is $122.5 million due to the borrowing base limit of $171.8 million in effect as of December 25, 2011.

~~Refinancing~~(3) ~~Transactions~~The commitment amount for the Canadian revolving credit facility is CA$17.0 million (approximately $16.7 million); however, available capacity is CA$13.3 million (approximately $13.1 million) due to the borrowing base limit in effect as of December 25, 2011.

~~On July 2, 2009, we issued $300.0 million of~~ 10.5 % Senior Secured Notes due 2013, which we refer to as the senior secured notes, and entered into a new asset-based revolving credit facility providing for borrowings of up to $200.0 million, subject to borrowing base limitations and other specified terms and conditions. We used the initial borrowings under our asset-based revolving credit facility of $28.3 million, together with net proceeds of $293.8 million from the issuance of our senior secured notes to (1) repay the $300.9 million of borrowings outstanding, including accrued interest thereon, under our first lien credit facility, (2) pay $17.3 million of debt issuance costs relating to the senior secured notes and asset-based revolving credit facility, and (3) provide $3.9 million for operating needs. We deferred the debt issuance costs and are amortizing them through 2013, when the senior secured notes and borrowings under the asset-based revolving credit facility mature.

InSolo ~~connection~~Delaware ~~with~~and ~~the~~Solo ~~refinancing~~Cup ~~transactions,~~Operating ~~we reclassified~~Corporation ~~$9.1~~co-issued ~~million~~the ofsenior ~~unrealized~~secured ~~losses~~notes ~~associated~~under ~~with~~an ~~interest~~indenture, ~~rate~~dated ~~swap~~as ~~agreements~~of ~~from accumulated other comprehensive loss to interest expense in~~ July 2, 2009., ~~These~~among ~~interest rate swap agreements had a total notional amount of $150.0 million. Under~~ the ~~agreements~~co-issuers, wethe ~~received~~subsidiary aguarantors ~~variable~~identified ~~amount~~therein ~~based on the Eurodollar rate~~ and ~~pay a fixed amount based on an interest rate of 5~~U.~~3765%~~S. ~~The~~Bank ~~swap~~National ~~agreements~~Association, ~~which~~as ~~became effective on August 28, 2007, expired on February 28, 2011~~trustee.

WeThe ~~also~~senior ~~wrote~~secured ~~off~~notes ~~the~~mature ~~remaining~~on $2November 1, 2013 and bear interest at a rate of 10.5% per ~~million~~annum. ofInterest ~~unamortized~~on ~~debt~~the ~~issuance~~senior ~~costs~~secured ~~related~~notes tois ~~the~~payable semi-annually on May 1 and November 1 of each year. We made our first ~~lien~~interest ~~credit facility~~payment inon ~~July~~November 1, 2009, asand awe ~~result~~have made all scheduled interest payments to date. The senior secured notes were issued at 97.928% of ~~the~~their ~~refinancing~~aggregate principal amount for gross proceeds of $293.8 million, representing a yield to maturity of 11.125%.

22Guarantees and security - The obligations of Solo Delaware and Solo Cup Operating Corporation under the senior secured notes are fully and unconditionally guaranteed, jointly and severally, by the existing guarantors under the indenture (SF Holdings Group, Inc., Solo Manufacturing LLC, P. R. Solo Cup, Inc., Solo Cup Owings Mills Holdings, Lily-Canada Holding Corporation, Solo Cup (UK) Limited, Insulpak Holdings Limited and Solo Cup Europe Limited and Solo Cup Finance Limited) and will be so guaranteed by any future domestic subsidiaries of Solo Delaware, subject to specified exceptions. The term “domestic subsidiaries,” as used in this description, includes, in addition to U.S. subsidiaries, non-U.S. subsidiaries (including the Company's current subsidiaries located in the United Kingdom) other than controlled foreign corporations (as such term is defined under the Internal Revenue Code of 1986, as amended) and subsidiaries of controlled foreign corporations. The senior secured notes and related guarantees are secured by a senior lien on substantially all of the assets (other than accounts receivable, specified payment intangibles, inventory, deposit accounts, commodity accounts, securities accounts, lock-boxes, instruments, chattel paper, cash and cash equivalents, general intangibles related to any of the foregoing, proceeds and products of the foregoing and specified assets related thereto, and specifically excluded assets) of the co-issuers and guarantors and by a junior lien on the accounts receivable and other assets identified above that are not subject to the senior lien.

~~Table of Contents~~22

~~Available~~Redemption ~~Capacity~~ options

~~The~~We ~~following~~have isthe option to redeem all or a ~~summary~~portion of ~~our~~the ~~committed~~senior ~~revolving~~secured ~~credit~~notes ~~facilities~~at asa redemption price equal to a percentage of ~~December 26,~~the ~~2010~~principal ~~(in~~amount ~~thousands)~~thereof plus any accrued and unpaid interest, as follows:

	CommitmentAmount		AmountsOutstanding		Letters ofCredit (1)		AvailableCapacity
Period	Redemption price
Asset-based revolving credit facility (2)	$	200,000	$	10,027	$	12,346	$	145,368
For the twelve-month period beginning May 1, 2011	105.25%
Canadian revolving credit facility (3)		16,898		2,669		—		11,848
May 1, 2012 and thereafter	100%
	$	216,898	$	12,696	$	12,346	$	157,216

~~(1)~~Requirements ~~Availability~~to ~~under~~repurchase - If specified change of control events occur, we must offer to repurchase the ~~credit~~senior ~~facilities~~secured isnotes ~~reduced~~at bya ~~letters~~repurchase price equal to 101% of ~~credit~~the ~~issued~~principal amount of the senior secured notes repurchased, plus any accrued and unpaid interest to the applicable repurchase date. If we sell assets under specified circumstances, we must offer to repurchase the ~~facilities~~senior secured notes at a repurchase price equal to 100% of the principal amount of the senior secured notes repurchased, plus any accrued and unpaid interest to the applicable repurchase date.

~~(2)~~Covenants - The ~~commitment~~indenture ~~amount~~ for ~~the~~our ~~asset-based~~senior ~~revolving~~secured ~~credit~~notes ~~facility~~contains iscovenants ~~$200.0 million; however~~that, ~~available~~among ~~capacity~~other isthings, ~~$145.4~~restrict ~~million due to~~ the ~~borrowing~~ability ~~base~~of ~~limit~~Solo ofDelaware, ~~$167.7~~Solo ~~million~~Cup inOperating ~~effect~~Corporation asand oftheir ~~December~~restricted ~~26,~~subsidiaries ~~2010.~~to:

~~(3)~~• ~~The~~incur ~~commitment~~additional ~~amount~~debt ~~for~~or ~~the~~issue ~~Canadian~~disqualified ~~revolving~~stock ~~credit~~or ~~facility~~preferred ~~is CA$17.0 million (approximately $16.9 million)~~stock; ~~however, available capacity is CA$11.9 million (approximately $11.8 million) due to the borrowing base limit of CA$14.6 million (approximately $14.5 million) in effect as of December 26, 2010.~~

~~10.5 %~~• ~~Senior~~create ~~Secured Notes~~ liens;

~~Solo~~• ~~Delaware~~pay ~~and Solo Cup Operating Corporation co-issued the senior secured notes under an indenture~~dividends, ~~dated~~make asinvestments ofor ~~July 2,~~make ~~2009,~~other ~~among~~restricted ~~the co-issuers, the subsidiary guarantors identified therein and U.S. Bank National Association, as trustee.~~ payments;

~~The~~• ~~senior~~sell secured notes mature on November 1, 2013 and bear interest at a rate of 10.5% per annum. Interest on the senior secured notes is payable semi-annually on May 1 and November 1 of each year. We made our first interest payment on November 1, 2009, and we have made all scheduled interest payments to date. The senior secured notes were issued at 97.928% of their aggregate principal amount for gross proceeds of $293.8 million, representing a yield to maturity of 11.125%. assets;

~~Guarantees~~• ~~and security - The obligations of Solo Delaware and Solo Cup Operating Corporation under the senior secured notes are fully and unconditionally guaranteed~~consolidate, ~~jointly and severally~~merge, bysell ~~the~~or ~~existing~~otherwise ~~guarantors~~dispose under the indenture (SF Holdings Group, Inc., Solo Manufacturing LLC, P. R. Solo Cup, Inc., Solo Cup Owings Mills Holdings, Lily-Canada Holding Corporation, Solo Cup (UK) Limited, Insulpak Holdings Limited and Solo Cup Europe Limited and Solo Cup Finance Limited) and will be so guaranteed by any future domestic subsidiaries of ~~Solo~~all ~~Delaware,~~or subject to specified exceptions. The term “domestic subsidiaries,” as used in this description, includes, in addition to U.S. subsidiaries, non-U.S. subsidiaries (including the Company’s current subsidiaries located in the United Kingdom) other than controlled foreign corporations (as such term is defined under the Internal Revenue Code of 1986, as amended) and subsidiaries of controlled foreign corporations. The senior secured notes and related guarantees are secured by a senior lien on substantially all of the ~~assets~~ (other than accounts receivable, specified payment intangibles, inventory, deposit accounts, commodity accounts, securities accounts, lock-boxes, instruments, chattel paper, cash and cash equivalents, general intangibles related to any of the foregoing, proceeds and products of the foregoing and specified assets ~~related thereto, and specifically excluded assets)~~ of ~~the~~Solo ~~co-issuers~~Delaware and ~~guarantors~~its ~~and~~restricted ~~by a junior lien on the accounts receivable and other assets identified above that are not subject to the senior lien.~~ subsidiaries;

~~Redemption~~• ~~options~~enter into transactions with affiliates;

At• ~~any~~designate ~~time~~subsidiaries prior to May 1, 2011, we may, on one or more than one occasion, redeem some or all of the senior secured notes at a redemption price equal to 100% of the principal amount of the senior secured notes redeemed, plus a “make-whole” premium as ~~of,~~unrestricted; and ~~any accrued and unpaid interest to, the applicable redemption date.~~

In• ~~addition,~~undertake atother ~~any~~specified ~~time~~business ~~prior to May 1, 2011, we may redeem up to 35% of the aggregate principal amount of senior secured notes, using the proceeds of qualifying equity offerings, at a redemption price of 110~~activities.5% of the principal amount of the notes redeemed and may, not more than once in any 12-month period, redeem up to 10% of the original aggregate principal amount of the senior secured notes at a redemption price of 103%, in each case, plus any accrued and unpaid interest to the applicable redemption date.

OnThese orcovenants ~~after~~are ~~May 1,~~subject ~~2011,~~to ~~we may redeem all or~~ a ~~part~~number of ~~the~~important ~~senior~~limitations ~~secured~~and ~~notes~~exceptions. As atof aDecember 25, ~~redemption~~2011, ~~price~~we ~~equal~~were toin acompliance ~~percentage~~with of the ~~principal~~covenants ~~amount~~included ~~thereof,~~in ~~plus~~this ~~any accrued and unpaid interest, as follows:~~ indenture.

Period	Redemption price
For the twelve-month period beginning May 1, 2011		105.250	%
May 1, 2012 and thereafter		100.000	%

Events of default - The indenture for our senior secured notes provides for customary events of default, including without limitation, cross defaults to specified other debt of Solo Delaware and its subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding notes will become due and payable immediately without further action or notice. If any other event of default under the indenture occurs and is continuing, the trustee or holders of at least 25% in principal amount of the then-outstanding senior secured notes may declare all of the senior secured notes to be due and payable immediately, provided that, if any debt is outstanding under the asset-based revolving credit facility, the acceleration of the senior secured notes will not be effective until the earlier of the acceleration of debt under the asset-based revolving credit facility or five business days after receipt by the issuers and the administrative agent under the related loan agreement of notice of the acceleration.

23Asset-Based Revolving Credit Facility

~~Table~~On July 2, 2009, we entered into a loan agreement with Bank of ~~Contents~~America, N.A., as administrative agent, co-collateral agent and lender; General Electric Capital Corporation, as co-collateral agent and lender; and Wells Fargo Foothill, LLC and Goldman Sachs Lending Partners LLC, as lenders, providing for revolving credit financing of up to $200.0 million, including a $40.0 million sub-limit for letters of credit, with a maturity date of July 2, 2013.

~~Requirements~~Guarantors ~~to repurchase~~ - IfSubject to specified ~~change of control events occur~~exceptions, wenewly-created ~~must offer~~or toacquired ~~repurchase~~direct ~~the~~and ~~senior~~indirect ~~secured~~domestic ~~notes~~subsidiaries atof aSolo ~~repurchase~~Delaware ~~price~~will ~~equal~~be required to ~~101%~~become ofguarantors under the ~~principal~~asset-based ~~amount~~revolving ofcredit ~~the~~facility. ~~senior~~The ~~secured~~term ~~notes~~“domestic ~~repurchased~~subsidiaries,” ~~plus~~as ~~any~~used ~~accrued~~in ~~and~~this ~~unpaid~~description, ~~interest~~includes, toin ~~the~~addition ~~applicable~~to ~~repurchase date~~U.S. Ifsubsidiaries, wenon-U.S. ~~sell~~subsidiaries ~~assets~~(including ~~under specified~~the ~~circumstances,~~Company's wecurrent ~~must~~subsidiaries ~~offer~~located toin ~~repurchase~~ the ~~senior~~United ~~secured~~Kingdom) ~~notes~~other atthan acontrolled ~~repurchase~~foreign ~~price~~corporations ~~equal~~(as tosuch ~~100%~~term ofis ~~the~~defined ~~principal~~under ~~amount of~~ the ~~senior~~Internal ~~secured~~Revenue ~~notes~~Code ~~repurchased~~of 1986, ~~plus~~as ~~any~~amended) ~~accrued~~ and ~~unpaid~~subsidiaries ~~interest~~of tocontrolled ~~the~~foreign ~~applicable repurchase date~~corporations.

~~Covenants~~Borrowing base and availability - ~~The~~Our ~~indenture~~ability ~~for~~to ~~our~~borrow ~~senior~~under ~~secured~~the ~~notes~~asset-based ~~contains~~revolving ~~covenants~~credit ~~that,~~facility ~~among~~is ~~other~~limited ~~things,~~to ~~restrict~~a ~~the ability~~borrowing base equal to 85% of ~~Solo~~eligible ~~Delaware,~~accounts ~~Solo~~receivable ~~Cup~~plus ~~Operating~~the ~~Corporation~~lower of (1) 65% of eligible inventory and ~~their~~(2) 85% ~~restricted~~of ~~subsidiaries~~the net orderly liquidation value of eligible inventory minus availability reserves, and is subject to: other conditions, limitations and reserve requirements.

~~• incur additional debt or issue disqualified stock or preferred stock;~~23

•Under ~~create~~the ~~liens;~~asset-based revolving credit facility, we have the right to increase the aggregate principal amount of the commitments from time to time, in an aggregate amount not to exceed $100.0 million, without the consent of any lender (other than the lenders participating in such increase), so long as any such increase is at least $25.0 million, subject to borrowing base limitations and other specified terms and conditions.

•Security ~~pay~~- ~~dividends,~~We ~~make~~are ~~investments~~jointly and severally liable for all obligations under the asset-based revolving credit facility and under certain hedging arrangements and bank product and cash management services provided by the asset-based revolving credit facility lenders or ~~make~~their ~~other~~affiliates ~~restricted~~to ~~payments;~~us, and such obligations will be guaranteed by the direct and indirect domestic subsidiaries of Solo Delaware that are not borrowers, subject to specified exceptions. These obligations will be secured by:

• ~~sell~~senior liens on the following assets of the asset-based revolving credit facility borrowers and guarantors, referred to as ABL Collateral: their accounts receivable, specified payment intangibles, inventory, deposit accounts, commodity accounts, securities accounts, lock-boxes, instruments, chattel paper, cash and cash equivalents, general intangibles related to any of the foregoing and proceeds and products of the foregoing and certain assets related thereto, subject to specified exceptions; and

• ~~consolidate~~junior liens on the following assets of the asset-based revolving credit facility borrowers and guarantors, ~~merge~~referred to as Notes Collateral, ~~sell~~which orare ~~otherwise~~subject ~~dispose~~to senior liens in favor of ~~all~~holders orof the senior secured notes and Solo Cup Operating Corporation: substantially all of ~~the~~their tangible and intangible assets, ofother ~~Solo~~than ~~Delaware~~ABL Collateral and ~~its~~specified ~~restricted~~excluded ~~subsidiaries;~~assets.

•Interest ~~enter~~- ~~into~~Interest ~~transactions~~accrues on outstanding borrowings under the 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 were subject to adjustment after July 2, 2010 based on borrowing base availability. Letters of credit issued and outstanding under the asset-based revolving credit facility accrue fees at a per annum rate equal to the LIBOR interest rate margin described above plus a 0.125% per annum fronting fee to the issuing bank on the face amount thereof, in addition to the issuing bank's customary fees and charges in connection with ~~affiliates;~~the issuance, amendment, negotiation, payment, processing, transfer and administration of such letters of credit. An unused line fee of 0.75% per annum accrues on an amount equal to (1) the aggregate lending commitments under the asset-based revolving credit facility less (2) the average daily amount of the outstanding borrowings plus the face amount of any outstanding letters of credit under the asset-based revolving credit facility.

•Covenants ~~designate~~- ~~subsidiaries~~The asasset-based ~~unrestricted;~~revolving credit facility contains customary affirmative and negative covenants, including covenants that restrict the ability of each borrower, each guarantor and each subsidiary of the foregoing to, among other things:

• ~~undertake~~incur, ~~other~~assume, ~~specified~~guarantee ~~business~~or ~~activities.~~suffer to exist additional debt or liens;

~~These~~• ~~covenants~~make ~~are~~investments ~~subject~~or toloans aor ~~number~~acquire ofany ~~important~~person ~~limitations~~or ~~and exceptions.~~ entity;

~~Events~~• ofenter ~~default~~into -transactions ~~The~~with indenture for our senior secured notes provides for customary events of default, including without limitation, cross defaults to specified other debt of Solo Delaware and its subsidiaries. In the case of an event of default arising from specified events of bankruptcy or insolvency, all outstanding notes will become due and payable immediately without further action or notice. If any other event of default under the indenture occurs and is continuing, the trustee or holders of at least 25% in principal amount of the then-outstanding senior secured notes may declare all of the senior secured notes to be due and payable immediately, provided that, if any debt is outstanding under the asset-based revolving credit facility, the acceleration of the senior secured notes will not be effective until the earlier of the acceleration of debt under the asset-based revolving credit facility or five business days after receipt by the issuers and the administrative agent under the related loan agreement of notice of the acceleration. affiliates;

~~Asset-Based~~• ~~Revolving~~enter ~~Credit~~into ~~Facility~~certain restrictive agreements;

On• ~~July 2,~~engage ~~2009,~~in ~~we entered into a loan agreement with Bank of America~~mergers, ~~N.A.~~acquisitions, asconsolidations ~~administrative agent, co-collateral agent~~ and ~~lender;~~asset ~~General Electric Capital Corporation, as co-collateral agent and lender~~sales; and Wells Fargo Foothill, LLC and Goldman Sachs Lending Partners LLC, as lenders, providing for revolving credit financing of up to $200.0 million, including a $40.0 million sub-limit for letters of credit, with a maturity date of July 2, 2013.

~~Guarantors~~• ~~- Subject to specified exceptions~~prepay, newly-created or acquired direct and indirect domestic subsidiaries of Solo Delaware will be required to become guarantors under the asset-based revolving credit facility. The term “domestic subsidiariesredeem,” ~~as used in this description~~purchase, ~~includes,~~defease inor ~~addition~~otherwise tosatisfy ~~U.S.~~specified ~~subsidiaries, non-U.S.~~types ~~subsidiaries (including the Company’s current subsidiaries located in the United Kingdom) other than controlled foreign corporations (as such term is defined under the Internal Revenue Code~~ of ~~1986, as amended) and subsidiaries of controlled foreign corporations.~~ debt;

~~Borrowing~~• ~~base~~modify ~~and availability - Our ability to borrow under~~ the ~~asset-based revolving~~terms ~~credit facility is limited to a borrowing base equal to 85%~~ of ~~eligible accounts receivable plus the lower of (1) 65% of eligible inventory and (2) 85% of the net orderly liquidation value of eligible inventory minus availability reserves, and is subject to~~ other ~~conditions,~~debt; ~~limitations~~ and ~~reserve requirements.~~

~~Under~~• ~~the asset-based revolving credit facility~~declare, wepay ~~have~~or ~~the~~make ~~right~~distributions toor ~~increase the aggregate principal amount of the commitments from time to time, in an aggregate amount not to exceed $100~~dividends.0 million, without the consent of any lender (other than the lenders participating in such increase), so long as any such increase is at least $25.0 million, subject to borrowing base limitations and other specified terms and conditions.

24These covenants are subject to a number of important limitations and exceptions. As of December 25, 2011, we were in compliance with the covenants included in this agreement.

~~Table~~In addition, the asset-based revolving credit facility contains a springing covenant that is not currently applicable to us. In the event our available capacity under the facility drops below a specified threshold (the greater of ~~Contents~~(a) $15.0 million or (b) 15% of the lesser of our borrowing base or the aggregate amount of commitments under the facility), all cash receipts would be controlled by our lenders and used to pay down outstanding borrowings under the facility. In addition, we would be required to maintain a minimum Fixed Charge Coverage Ratio (as defined in the facility) of 1.1 to 1 for a trailing twelve-month period. The lenders would maintain control over our receipts and the minimum Fixed Charge Coverage Ratio requirement would remain in effect until such time that our available capacity rises to a level that equals or exceeds the above specified threshold for 45 consecutive days.

Security - We are jointly and severally liable for all obligations under the asset-based revolving credit facility and under certain hedging arrangements and bank product and cash management services provided by the asset-based revolving credit facility lenders or their affiliates to us, and such obligations will be guaranteed by the direct and indirect domestic subsidiaries of Solo Delaware that are not borrowers, subject to specified exceptions. These obligations will be secured by: 24

•Events ~~senior~~of ~~liens~~default on- ~~the~~The ~~following~~loan ~~assets~~agreement ofunderlying ~~the~~our asset-based revolving credit facility ~~borrowers~~contains ~~and~~customary ~~guarantors~~events of default, ~~referred~~including, but not limited to, ascross ~~ABL~~defaults ~~Collateral:~~to ~~their~~specified ~~accounts~~other ~~receivable~~debt of Solo Delaware and its subsidiaries, and specified ~~payment~~change ~~intangibles,~~of ~~inventory,~~control ~~deposit~~events. ~~accounts,~~Failure ~~commodity~~to ~~accounts,~~maintain ~~securities~~the ~~accounts,~~minimum ~~lock-boxes,~~Fixed ~~instruments,~~Charge ~~chattel~~Coverage ~~paper~~Ratio, ~~cash~~if ~~and~~applicable ~~cash~~in ~~equivalents~~the future as discussed in the immediately preceding paragraph, ~~general~~would ~~intangibles~~also ~~related~~constitute toan ~~any~~event of ~~the~~default. ~~foregoing~~If an event of default occurs and ~~proceeds~~is continuing under the loan agreement, the lenders may, among other things, terminate their commitments and ~~products~~require immediate repayment of all amounts owed by the ~~foregoing~~borrowers and ~~certain~~the ~~assets~~guarantors ~~related~~under ~~thereto,~~the ~~subject~~asset-based torevolving ~~specified~~credit ~~exceptions;~~facility. ~~and~~

•8.5% ~~junior~~Senior ~~liens~~Subordinated ~~on the following assets of the asset-based revolving credit facility borrowers and guarantors, referred to as~~ Notes Collateral, which are subject to senior liens in favor of holders of the senior secured notes and Solo Cup Operating Corporation: substantially all of their tangible and intangible assets, other than ABL Collateral and specified excluded assets.

~~Interest~~On -February 27, ~~Interest~~2004, ~~accrues~~we onissued ~~outstanding~~$325.0 ~~borrowings~~million ~~under~~of ~~the~~8.5% ~~asset-based~~Senior ~~revolving~~Subordinated ~~credit facility~~Notes atdue a2014, ~~rate~~which ofwe ~~either~~refer ~~LIBOR~~to (as ~~defined in~~ the ~~asset-based~~senior ~~revolving~~subordinated ~~credit~~notes. The ~~facility)~~senior ~~plus~~subordinated anotes ~~margin~~mature ofon ~~4% per~~February ~~annum~~15, or2014 aand ~~specified~~bear ~~base~~interest ~~rate~~at ~~plus~~ a ~~margin~~rate of 38.5% per annum~~, at our option~~. Interest ~~These interest rate margins were subject to adjustment after July 2, 2010 based~~ on ~~borrowing~~the ~~base~~senior ~~availability.~~subordinated ~~Letters~~notes ofis ~~credit~~payable ~~issued and outstanding under the asset~~semi-~~based~~annually ~~revolving~~every ~~credit~~February 15 ~~facility~~and ~~accrue~~August 15. ~~fees~~We athave amade ~~per~~all ~~annum~~scheduled ~~rate~~interest ~~equal~~payments to ~~the LIBOR interest rate margin described above plus a 0~~date.~~125% per~~ ~~annum~~Under ~~fronting fee to~~ the ~~issuing~~indenture ~~bank~~governing on the ~~face~~senior ~~amount~~subordinated ~~thereof~~notes, insubject ~~addition~~ to ~~the~~exceptions, ~~issuing~~we ~~bank’s~~must ~~customary~~meet ~~fees~~a ~~and~~minimum ~~charges~~fixed incharge ~~connection~~coverage ~~with~~ratio ~~the~~to ~~issuance,~~incur ~~amendment,~~additional ~~negotiation,~~debt. ~~payment,~~We ~~processing,~~have ~~transfer~~the ~~and administration~~option ofto ~~such~~redeem ~~letters~~all ofor ~~credit.~~a Anportion ~~unused~~of ~~line~~the ~~fee~~senior ofsubordinated ~~0.75% per~~notes ~~annum~~at ~~accrues~~a onredemption anprice ~~amount~~ equal to ~~(1) the~~100% ~~aggregate~~of ~~lending commitments under~~ the ~~asset-based~~principal ~~revolving credit facility less (2) the average daily~~ amount ~~of the~~thereof ~~outstanding borrowings~~ plus ~~the~~accrued ~~face amount of any outstanding letters of credit under the asset-based revolving credit facility~~interest.

~~Covenants~~The -senior ~~The~~subordinated ~~asset-based~~notes ~~revolving~~provide ~~credit~~that ~~facility~~upon ~~contains~~the ~~customary~~occurrence ~~affirmative~~of ~~and~~a ~~negative~~change ~~covenants~~in control, ~~including~~as ~~covenants~~defined, ~~that~~the ~~restrict~~holders will have an option to require the ~~ability~~redemption of ~~each~~the ~~borrower,~~senior ~~each~~subordinated ~~guarantor~~notes ~~and~~at ~~each subsidiary~~a redemption price equal to 101% of the ~~foregoing~~principal amount thereof plus accrued interest. The indenture governing the senior subordinated notes contains various covenants which, subject to exception, prohibit, or limit, among other things:

• ~~incur,~~asset ~~assume, guarantee or suffer to exist additional debt or liens~~sales;

• ~~make~~changes ~~investments~~of ~~or loans or acquire any person or entity~~control;

• ~~enter~~dividend ~~into transactions with affiliates~~payments;

• ~~enter~~equity ~~into~~repurchases ~~certain~~or ~~restrictive agreements~~redemptions;

• ~~engage~~the inincurrence ~~mergers,~~of ~~acquisitions,~~additional ~~consolidations and asset sales~~debt;

• ~~prepay,~~the ~~redeem,~~issuance ~~purchase, defease or otherwise satisfy specified types~~ of ~~debt~~disqualified stock;

• ~~modify~~certain ~~the~~transactions ~~terms~~with ~~of other debt~~affiliates; ~~and~~

• ~~declare,~~the ~~pay~~creation orof ~~make~~additional ~~distributions~~liens; ~~or dividends.~~and

~~These~~• ~~covenants~~certain ~~are~~other ~~subject~~business ~~to a number of important limitations and exceptions~~activities.

InThese ~~addition,~~covenants ~~the~~are ~~asset-based~~subject ~~revolving~~to ~~credit facility contains~~ a ~~springing~~number ~~covenant~~of ~~that~~important islimitations ~~not~~and ~~currently applicable to us~~exceptions. As ~~In the event our available capacity under the facility drops below a specified threshold (the greater~~ of ~~(a)~~December ~~$15~~25,~~000,000~~ ~~or (b) 15% of the lesser of our borrowing base or the aggregate amount of commitments under the facility)~~2011, ~~all cash receipts would be controlled by our lenders and used to pay down outstanding borrowings under the facility. In addition,~~ we ~~would~~were ~~be required to maintain a minimum Fixed Charge Coverage Ratio (as defined~~ in ~~the~~compliance ~~facility)~~with ~~of 1.1 to 1 for a trailing twelve-month period. The lenders would maintain control over our receipts and~~ the ~~minimum~~covenants ~~Fixed~~included ~~Charge Coverage Ratio requirement would remain~~ in ~~effect~~this ~~until such time that our available capacity rises to a level that equals or exceeds the above specified threshold for 45 consecutive days~~indenture.

~~Events~~From oftime ~~default - The loan agreement underlying our asset-based revolving credit facility contains customary events of default, including, but not limited~~ to, ~~cross defaults to specified other debt of Solo Delaware and its subsidiaries~~time, and ~~specified~~in ~~change~~accordance ofwith ~~control~~any ~~events. Failure to maintain the minimum Fixed Charge Coverage Ratio, if~~ applicable insecurities ~~the future as discussed in the immediately preceding paragraph~~laws, ~~would~~Solo ~~also~~Delaware's ~~constitute~~principal anshareholders ~~event~~or oftheir ~~default.~~affiliates Ifmay anenter ~~event of default occurs and is continuing under~~ the ~~loan~~market ~~agreement,~~to ~~the~~purchase ~~lenders~~or ~~may,~~sell ~~among~~senior ~~other~~subordinated ~~things, terminate~~notes ~~their~~or ~~commitments~~senior ~~and~~secured ~~require immediate repayment of all amounts owed by the borrowers and the guarantors under the asset-based revolving credit facility~~notes.

25Canadian Revolving Credit Facility

~~Table~~On December 15, 2010, Solo Cup Canada Inc., an indirect wholly owned subsidiary of ~~Contents~~Solo Delaware, entered into a credit agreement with GE Canada Finance Holding Company, as a lender and agent for all lenders, providing for asset-based revolving credit financing of up to CA$17.0 million, including a CA$2.0 million sublimit for letters of credit. The Canadian credit facility expires on December 15, 2013. The Canadian credit agreement amended and replaced in its entirety the Credit Agreement dated as of September 24, 2004, as amended, between Solo Cup Canada (formerly known as Lily Cups Inc.), as borrower, and GE Canada Finance Holding Company, as agent and lender, and terminated the availability of borrowings thereunder.

8Solo Cup Canada is the sole borrower under the Canadian credit facility.5% ~~Senior~~Its ~~Subordinated~~obligations ~~Notes~~under the Canadian credit agreement will be guaranteed by any future subsidiary of Solo Cup Canada, unless the provisions of the Canadian credit agreement specifically exclude that subsidiary from the requirement to provide a guarantee or the lenders otherwise agree not to require that subsidiary to provide a guarantee.

OnSolo ~~February 27,~~Cup ~~2004,~~Canada's weability ~~issued~~to ~~$325.0~~borrow ~~million~~under ofthe ~~8.5%~~Canadian ~~Senior~~credit ~~Subordinated~~facility ~~Notes~~is ~~due~~limited ~~2014, which we refer~~ to asa ~~the~~borrowing ~~senior subordinated~~base ~~notes.~~equal ~~The~~to ~~senior~~85% ~~subordinated~~of ~~notes~~eligible ~~mature~~accounts onreceivable ~~February 15,~~plus ~~2014~~the ~~and~~lower ~~bear interest at a rate~~ of ~~8.5%~~(1) ~~per~~70% ~~annum.~~of ~~Interest~~eligible onraw ~~the~~materials ~~senior~~and ~~subordinated~~finished ~~notes~~goods isinventory ~~payable semi-annually every February 15~~ and ~~August~~(2) ~~15.~~85% ~~We have~~of ~~made all scheduled interest payments to date. Under~~ the ~~indenture~~net ~~governing~~orderly ~~the~~liquidation ~~senior~~value ~~subordinated~~of ~~notes,~~eligible ~~subject~~raw tomaterials ~~exceptions,~~and wefinished ~~must~~goods ~~meet~~inventory aplus ~~minimum fixed charge coverage ratio to incur additional debt. We have~~ the ~~option~~lower toof ~~redeem all or~~ (a ~~portion~~) 25% of ~~the~~eligible ~~senior~~work-in-process ~~subordinated~~inventory ~~notes~~and at(b) aCA$1.0 ~~redemption~~million ~~price~~minus ~~equal~~availability toreserves, aand ~~percentage~~is ofsubject ~~the~~to ~~principal~~other ~~amount~~conditions, ~~thereof~~limitations ~~plus~~and ~~accrued~~reserve ~~interest~~requirements. ~~as follows:~~

Period	Redemption price
For the twelve-month period beginning February 15, 2011		101.417	%
February 16, 2012 and thereafter		100.000	%

The ~~senior~~obligations ~~subordinated notes provide that upon the occurrence~~ of aSolo ~~change~~Cup inCanada ~~control,~~and asany ~~defined,~~future ~~the~~subsidiary ~~holders~~guarantor ~~will~~under ~~have an option to require~~ the ~~redemption~~Canadian ofcredit ~~the~~facility ~~senior~~are ~~subordinated~~secured ~~notes~~by atfirst apriority ~~redemption~~liens ~~price~~on, ~~equal~~subject to ~~101%~~specified ofexclusions, the ~~principal~~existing ~~amount~~and ~~thereof~~after-acquired ~~plus~~personal ~~accrued interest.~~property ~~The~~of ~~indenture~~Solo ~~governing~~Cup ~~the~~Canada ~~senior~~and ~~subordinated~~any ~~notes~~future ~~contains~~subsidiary ~~various~~guarantor. ~~covenants which, subject to exception, prohibit, or limit, among other things:~~

•Solo ~~asset~~Cup ~~sales~~Canada may borrow funds under the Canadian credit facility, at its option, in Canadian or U.S. dollars. Canadian dollar denominated loans bear interest, at Solo Cup Canada's option, at a variable rate equal to: (1) the Canadian Bankers Acceptance Rate (the “BA Rate”), plus 2.5% per annum; or (2) the Canadian Prime Rate (being the higher of the (a) Canadian Bank Prime Rate and (b) 1.35% over the 30-day BA Rate), plus 1.25% per annum. U.S. dollar denominated loans bear interest, at Solo Cup Canada's option, at a variable rate equal to: (1) the U.S. Base Rate, plus 0.75% per annum; or (b) LIBOR, plus 2.5% per annum. As of December 25, 2011, we had no borrowings outstanding under this facility, and we were in compliance with the covenants included in this facility

•Contractual ~~changes~~obligations ~~of control;~~

•The ~~dividend~~following ~~payments;~~table summarizes our contractual obligations as of December 25, 2011, and the effect such obligations are expected to have on our liquidity and cash flows in future periods (in thousands):

• equity repurchases or redemptions;



			Payments due in fiscal year
	Total		2012⁽²⁾		2013		2014		2015		2016		Thereafter
Long-term debt obligations	$	661,480	$	—	$	336,480	$	325,000	$	—	$	—	$	—
Capital lease obligations⁽¹⁾	5,762		765		769		696		476		476		2,580
Non-cancelable operating leases	513,108		47,595		45,891		44,316		39,119		37,197		298,990
Interest payments⁽³⁾	140,518		64,064		62,641		13,813		—		—		—
Total	$	1,320,868	$	112,424	$	445,781	$	383,825	$	39,595	$	37,673	$	301,570

•(1) We ~~the~~had ~~incurrence~~capital lease obligations of ~~additional~~approximately ~~debt;~~$4.1 million as of December 25, 2011. Amounts in the table above also include the interest obligation attributable to these leases.

•(2) We expect that our contributions in 2012 to our defined benefit plans will be approximately $9 million, which are not included in the ~~issuance~~contractual ofobligations ~~disqualified~~table ~~stock;~~above.

•(3) ~~certain~~In ~~transactions~~estimating ~~with~~future ~~affiliates;~~interest payments for 2012 and 2013, we used interest rates in effect as of December 25, 2011 and used our average outstanding borrowings under the asset-based revolving credit facility during 2011, taking into consideration the July 2013 maturity of such facility, to estimate future years' average outstanding borrowings.

•The above table excludes the ~~creation~~liability for unrecognized tax benefits as these are not contractual obligations by nature. We cannot determine with any degree of ~~additional~~reliability ~~liens;~~the ~~and~~years in which these liabilities might ultimately settle. The above table also excludes the governmental obligations described below.

•Government ~~certain~~Obligations ~~other business activities.~~

~~From~~We ~~time~~entered into agreements with the City of Chicago and the State of Illinois in 2001 relating to ~~time~~an undeveloped property located in Chicago, ~~and~~Illinois that we acquired in ~~accordance~~that ~~with~~year. ~~any~~Pursuant ~~applicable~~to ~~securities~~those ~~laws~~agreements, ~~Solo~~the ~~Delaware’s~~City ~~principal~~of ~~shareholders~~Chicago orpaid ~~their~~on ~~affiliates~~our ~~may~~behalf ~~enter~~a portion of the ~~market~~acquisition price of the property in the form of cash and the issuance of a note. The State of Illinois also provided a grant to ~~purchase~~us. orUnder ~~sell~~these ~~senior~~agreements, ~~subordinated~~we ~~notes or~~were ~~senior~~required ~~secured~~to ~~notes~~fulfill specified obligations relating to the development of the property and retention of a specified number of employees.

~~Canadian~~In ~~Revolving~~February ~~Credit~~2011, ~~Facility~~we entered into an agreement to sell the property for $5.0 million in cash and received $1.0 million at that time towards the purchase price. Our obligation to sell the property was contingent upon the assumption by the buyer and our release from the government obligations described above, which totaled approximately $19.8 million as of June 26, 2011. These amounts were included in other current liabilities in our consolidated balance sheet as of that date.

OnWe ~~December 15,~~closed ~~2010,~~the ~~Solo~~sale ~~Cup~~of ~~Canada~~the ~~Inc.,~~undeveloped anproperty ~~indirect~~in ~~wholly~~September ~~owned subsidiary of Solo Delaware~~2011, ~~entered~~during ~~into~~our athird ~~credit~~fiscal ~~agreement with GE Canada Finance Holding Company~~quarter, asand areceived ~~lender~~gross ~~and~~proceeds ~~agent~~of ~~for~~$4 ~~all lenders~~million, ~~providing~~representing ~~for~~the ~~asset-based~~remaining ~~revolving~~balance ~~credit financing~~ of upthe ~~to CA~~$~~17.0~~5 million, ~~including~~purchase aprice ~~CA$2.0~~payable ~~million~~to ~~sublimit~~us. In ~~for~~connection ~~letters~~with ofthe ~~credit.~~sale, ~~The~~the ~~Canadian~~buyer ~~credit~~assumed ~~facility expires~~all onof ~~December 15,~~the ~~2013.~~government ~~The~~obligations ~~Canadian~~described ~~credit~~above ~~agreement amended~~ and ~~replaced~~we inwere ~~its~~released ~~entirety~~from ~~the~~all ~~Credit~~but ~~Agreement~~$3.3 ~~dated~~million as of ~~September 24,~~those ~~2004,~~obligations. asAt ~~amended~~closing, ~~between~~the ~~Solo~~buyer ~~Cup~~agreed ~~Canada~~to ~~(formerly~~indemnify ~~known~~us asfully ~~Lily~~from ~~Cups~~any ~~Inc.), as borrower,~~ and GE ~~Canada~~all ~~Finance~~liability ~~Holding~~relating ~~Company,~~to asthe ~~agent~~$3.3 ~~and~~million ~~lender,~~of ~~and~~obligations ~~terminated~~from ~~the~~which ~~availability~~we ofwere ~~borrowings~~not ~~thereunder~~released.

~~Solo~~As ~~Cup Canada~~a isresult of the ~~sole~~sale ~~borrower~~transaction, ~~under~~we ~~the~~reduced ~~Canadian~~our ~~credit~~other ~~facility~~current liabilities by approximately $16.5 ~~Its~~million ~~obligations~~to ~~under~~reflect the ~~Canadian~~government ~~credit~~obligations ~~agreement~~from ~~will~~which bewe ~~guaranteed~~were byreleased. The ~~any~~government ~~future~~obligations ~~subsidiary~~ of ~~Solo~~$3.3 ~~Cup~~million ~~Canada,~~from ~~unless~~which ~~the~~we ~~provisions~~were ofnot ~~the~~released ~~Canadian~~remain ~~credit~~as ~~agreement~~other ~~specifically exclude~~current ~~that~~liabilities ~~subsidiary~~in ~~from~~ the ~~requirement~~accompanying tobalance ~~provide~~sheet as of December 25, 2011, with a ~~guarantee~~corresponding orreceivable ~~the~~of ~~lenders~~$3.3 ~~otherwise~~million ~~agree~~in ~~not~~other assets to ~~require~~reflect ~~that~~our ~~subsidiary~~right to ~~provide~~receive aindemnification ~~guarantee.~~from the buyer.

Solo Cup Canada’s ability to borrow under the Canadian credit facility is limited to a borrowing base equal to 85% of eligible accounts receivable plus the lower of (1) 70% of eligible raw materials and finished goods inventory and (2) 85% of the net orderly liquidation value of eligible raw materials and finished goods inventory plus the lower of (a) 25% of eligible work-in-process inventory and (b) $1,000,000 minus availability reserves, and is subject to other conditions, limitations and reserve requirements. 26

~~The~~2012 ~~obligations~~Outlook of Solo Cup Canada and any future subsidiary guarantor under the Canadian credit facility are secured by first priority liens on, subject to specified exclusions, the existing and after-acquired personal property of Solo Cup Canada and any future subsidiary guarantor.

26Management 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, payments in conjunction with our lease commitments and debt service requirements during 2012. We expect that our total 2012 capital investment will be in the range of $35 million to $40 million. In addition, we expect to contribute approximately $9 million to our defined benefit plans.

~~Table~~For 2012, we expect raw material prices to rise in comparison to 2011. Increases in resin prices are expected to occur throughout 2012 and are primarily driven by supply and demand, feedstock availability, and geopolitical unrest. Paper prices are expected to remain flat compared to 2011, with the potential to increase in the second half of ~~Contents~~2012 depending on supplier backorder levels.

Solo Cup Canada may borrow funds under the Canadian credit facility, at its option, in Canadian or U.S. dollars. Canadian dollar denominated loans bear interest, at Solo Cup Canada’s option, at a variable rate equal to: (1) the Canadian Bankers Acceptance Rate (the “BA Rate”), plus 2.5% per annum; or (2) the Canadian Prime Rate (being the higher of the (a) Canadian Bank Prime Rate and (b) 1.35% over the 30Off-~~day~~balance BAsheet ~~Rate),~~arrangements plus 1.25% per annum. U.S. dollar denominated loans bear interest, at Solo Cup Canada’s option, at a variable rate equal to: (1) the U.S. Base Rate, plus 0.75% per annum; or (b) LIBOR, plus 2.5% per annum. As of December 26, 2010, we had approximately CA$2.7 million (approximately $2.7 million) outstanding on the revolving facility with an effective interest rate of approximately 4.25%.

~~Contractual~~We ~~obligations~~issue letters of credit to ensure performance and payment to third parties in accordance with specified terms and conditions. Under our asset-based revolving credit facility, we have the ability to issue up to $40.0 million in letters of credit. As of December 25, 2011, approximately $12.9 million of standby letters of credit were outstanding. These standby letters of credit are primarily used to support our workers' compensation insurance programs. We are not required to provide cash collateral for letters of credit issued. All issued letters of credit are secured by the asset-based revolving credit facility.

~~The~~We ~~following~~also ~~table~~have ~~summarizes~~the ~~our~~ability ~~contractual~~to ~~obligations~~issue asup ofto ~~December 26,~~CA$2.0 ~~2010,~~million ~~and~~in ~~the~~letters ~~effect~~of ~~such~~credit ~~obligations~~under ~~are~~our ~~expected~~Canadian ~~to have~~credit onfacility. As ~~our~~of ~~liquidity~~December 25, ~~and~~2011, ~~cash~~no ~~flows~~letters inof ~~future~~credit ~~periods~~were ~~(in~~outstanding ~~thousands):~~ thereunder.

			Payments due in fiscal year
	Total		2011 (2)		2012		2013		2014		2015		Thereafter
Long-term debt obligations	$	637,696	$	—	$	—	$	312,696	$	325,000	$	—	$	—
Capital lease obligations (1)		6,529		763		767		771		697		476		3,055
Non-cancelable operating leases		519,939		44,804		43,041		41,444		38,933		35,057		316,660
Interest payments (3)		207,365		65,387		65,387		62,778		13,813		—		—
Total	$	1,371,529	$	110,954	$	109,195	$	417,689	$	378,443	$	35,533	$	319,715

In June 2007, we entered into a lease agreement in conjunction with the sale of six of our manufacturing facilities. The sale proceeds of $130.0 million were used to retire our term loan under our senior secured second lien credit facility. Upon the sale of the six properties, we immediately leased them back pursuant to a 20-year term lease. The lease contains four five-year renewal term options and is non-cancelable. Rent for the six properties is payable on a quarterly basis, due on the first day of each calendar quarter, with an annual 2% escalation. Annual rent expense of $14.2 million is recognized on a straight-line basis over the 20-year term of the lease. The lease is classified as an operating lease in accordance with Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 840, Leases.

~~(1)~~Net WeOperating ~~had~~Loss ~~capital~~Carryforwards ~~lease obligations of approximately $4.5 million as of December 26, 2010. Amounts in the table above also include the interest obligation attributable to these leases.~~

~~(2)~~As Weof ~~expect~~December 25, 2011, we had approximately $413.3 million of U.S. federal tax net operating loss carryforwards that expire between 2017 and 2031, of which approximately $17 million were subject to the provisions of Internal Revenue Code Section 382. We establish a valuation allowance for deferred tax assets, including our ~~contributions~~net inoperating ~~2011~~loss carryforwards, when the amount of expected future taxable income is not likely to support the use of the deduction or credit. During the fiscal year ended December 25, 2011, our ~~defined~~valuation ~~benefit~~allowance ~~plans~~on ~~will~~all betax ~~approximately~~attributes increased by $737.4 million, ~~which~~to ~~are~~$190.0 ~~not~~million ~~included~~primarily inrelated to activity from our U.S. and European operations. The ultimate realization of deferred tax assets is dependent upon the ~~contractual~~generation ~~obligations~~of ~~table~~future ~~above~~taxable income during the periods in which those temporary differences become deductible.

~~(3)~~Critical InAccounting ~~estimating~~Estimates future interest payments for 2011-2015, we used interest rates in effect as of December 26, 2010 and used our average outstanding borrowings under the asset-based revolving credit facility during 2010 as the estimate of future years’ average outstanding borrowings.

~~The~~In ~~above~~preparing ~~table~~our ~~excludes~~consolidated financial statements in conformity with accounting principles generally accepted in the ~~liability~~United ~~for~~States, ~~unrecognized~~we ~~tax~~make ~~benefits~~decisions asthat ~~these~~impact ~~are~~the ~~not~~reported ~~contractual~~amounts ~~obligations~~of byassets, ~~nature.~~liabilities, Werevenues ~~cannot~~and ~~determine~~expenses, ~~with~~and ~~any~~related ~~degree~~disclosures. Such decisions include the selection of ~~reliability~~the appropriate accounting principles to be applied and the ~~years~~assumptions inon which ~~these liabilities~~to ~~might~~base ~~ultimately~~accounting ~~settle~~estimates. ~~The~~In ~~above~~reaching ~~table~~such ~~also~~decisions, ~~excludes~~we apply judgments based on our understanding and analysis of the ~~governmental~~relevant ~~obligations~~circumstances, ~~described~~current ~~below~~developments and historical experience. Actual amounts could differ from those estimated at the time the consolidated financial statements are prepared. Management has discussed the development and selection of these critical accounting estimates with the Audit Committee of the Board of Directors, and the members of the Audit Committee have reviewed this disclosure.

~~Government~~Our ~~Obligations~~significant accounting policies are described in Note 2 to the consolidated financial statements in Item 8 of this annual report. Some of these significant accounting policies require us to make difficult, subjective or complex judgments or estimates. An accounting estimate is considered to be critical if it meets both of the following criteria: (1) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made and (2) different estimates reasonably could have been used or changes in the estimate that are reasonably likely to occur from period to period would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. Our critical accounting estimates include the following:

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 amounts potentially repayable under the agreements for failure to comply with the obligations included therein total approximately $16.3 million, of which approximately $3.0 million is interest bearing, and are included in other current liabilities in the accompanying consolidated balance sheets. 27

Accounts receivable valuation. We novalue ~~longer~~accounts ~~intend~~receivable, tonet ~~develop~~of ~~the~~an ~~property, and~~allowance infor ~~February~~doubtful ~~2011~~accounts. Each quarter, we ~~entered~~estimate ~~into~~our anability ~~agreement~~ to ~~sell~~collect ~~the~~outstanding ~~property~~receivables and establish an allowance for ~~$5.0~~doubtful ~~million~~accounts inthat ~~cash~~reflects ~~and~~our ~~the~~best ~~assumption~~estimate byof the ~~buyer~~amount of ~~the~~probable ~~government obligations~~credit ~~described~~losses ~~above~~in our existing accounts receivable. ~~Our~~ ~~obligation~~In todoing ~~sell~~so, ~~the~~we ~~property~~evaluate isthe ~~contingent~~age ~~upon~~of our ~~full~~receivables, ~~release~~past ~~from~~collection ~~those~~history, ~~government~~current ~~obligations~~financial condition of key customers and economic conditions. In ~~addition~~Based on this evaluation, ~~the~~we ~~transaction~~establish isa ~~contingent~~reserve ~~upon~~for ~~certain~~specific ~~other~~accounts ~~governmental~~receivable ~~incentives~~that ~~and/or approvals. The~~we ~~sale~~believe are uncollectible, ~~which~~as well as an estimate of uncollectible receivables not specifically known. Our estimate of the allowance for doubtful accounts is ~~subject~~a critical accounting estimate because it is highly susceptible to ~~other~~change ~~customary~~from ~~terms~~period ~~and~~to ~~conditions~~period. In addition, isit ~~scheduled~~requires us to ~~close~~make injudgments about the ~~third~~future ~~quarter~~financial condition of ~~2011~~our customers.

27Deterioration in the financial condition of any key customer or a significant downturn in the economy could have a material negative impact on our ability to collect a portion or all of the accounts receivable. We believe that analysis of historical trends and current knowledge of potential collection problems provide us with sufficient information to establish a reasonable estimate of an allowance for doubtful accounts; however, since we cannot predict with certainty future changes in the financial stability of our customers, our actual future losses from uncollectible accounts may differ from our estimates. In the event we determine that a smaller or larger balance of the allowance for doubtful accounts was appropriate, we would record a credit or charge to selling, general and administrative expenses in the period in which we made such a determination.

~~Table~~Customer discounts and allowances. We provide allowances for customer incentive programs when the revenue is recognized, based on historical experience and current trends. The customer allowances are determined with significant management judgment and reviewed regularly to determine the adequacy of ~~Contents~~the amounts. Changes in economic conditions, markets and customer relationships may require adjustments to these allowances from period to period. In the event that future trends vary significantly from past or expected trends, our reported net sales may increase or decrease by a material amount.

~~2011~~Certain ~~Outlook~~customer discounts and allowances are earned and payable to customers if a specified level of sales volume is met. We record such customer discounts and allowances based on the estimated and probable allowances for the period. The amounts are recorded as a reduction of net sales based on the customers' actual sales volume during the period. If actual allowances differ from management estimates, gross profit and operating income could be affected. The most significant allowance reflects our estimates of discounts that certain foodservice customers are entitled to claim based on their distribution activities.

~~Management~~Vendor ~~believes~~incentives. ~~that~~Certain ~~cash~~vendor ~~generated~~incentives byare ~~operations,~~earned ~~existing~~only ~~cash~~if ~~and~~a ~~cash~~specified ~~equivalents~~level ~~and~~of ~~amounts~~annual ~~available~~purchases ~~under~~is ~~our~~achieved. ~~credit~~We ~~facilities~~record ~~will~~such beincentives ~~sufficient~~during tothe ~~meet~~interim ~~our~~periods ~~reasonably~~based ~~foreseeable~~on ~~liquidity needs,~~the ~~including~~actual ~~operating~~results ~~needs,~~achieved ~~planned~~on ~~capital~~a ~~expenditures,~~year-to-date ~~expenses~~basis ~~related~~compared to ~~announced~~targets ~~plant~~or ~~closures,~~specified ~~payments~~levels inof ~~conjunction~~purchases. ~~with~~The ~~our~~amounts ~~lease~~are ~~commitments~~recorded ~~and~~as ~~debt~~a ~~service~~reduction ~~requirements~~of ~~during~~cost ~~2011.~~of Wegoods ~~expect~~sold ~~that~~based ~~our~~on ~~total~~the ~~2011~~purchase ~~capital expenditures~~volume ~~will~~during ~~be in~~ the ~~range~~interim ofperiod. ~~$35~~If ~~million~~actual topurchase ~~$45~~volume ~~million.~~differs Infrom ~~addition~~management estimates, wegross ~~expect~~margin toand ~~contribute~~operating ~~approximately~~income $7could ~~million~~be ~~to our defined benefit plans~~affected.

~~For~~Inventory ~~2011,~~valuation. weInventories ~~expect~~are ~~raw~~valued ~~material~~at ~~prices~~the tolower ~~rise~~of incost ~~comparison~~or ~~to 2010~~market. ~~Increases~~Cost inis ~~resin~~determined ~~prices~~using ~~are~~the ~~expected~~first-in, tofirst-out ~~occur~~method ~~throughout~~for ~~2011~~all ~~and~~inventories. We ~~are~~write ~~primarily~~down ~~driven~~inventory bythat ~~supply~~has ~~and~~become ~~demand~~obsolete, ~~feedstock availability,~~inventory ~~and~~that ~~geopolitical~~has ~~unrest.~~a ~~Paper~~cost ~~prices~~basis ~~are~~in excess of its expected tonet ~~remain~~realizable ~~flat~~value ~~compared~~and toinventory ~~the~~in ~~second~~excess ~~half~~of expected requirements. The estimate of ~~2010~~excess ~~for~~quantities ~~the~~is ~~first~~subjective ~~half~~and primarily dependent on our estimates of ~~2011~~future demand, ~~with~~which ~~the~~are ~~potential~~based toon ~~increase~~criteria inestablished ~~the~~by ~~second~~our ~~half~~supply ofchain ~~2011~~organization ~~depending~~taking oninto ~~supplier~~account ~~backorder~~our historical experience. We monitor inventory levels on a regular basis and write-downs of inventory are recorded in cost of goods sold.

~~Off~~Impairment of long-~~balance~~lived ~~sheet~~assets. ~~arrangements~~For purposes of testing impairment, we group our long-lived assets at the lowest level for which there are identifiable cash flows independent of other asset groups. In performing this analysis, we consider whether the results and cash flows of an asset or asset group can be clearly distinguished, operationally and for financial reporting purposes, from the rest of the entity. We generally group our long-lived assets by geographic location.

We ~~issue~~test ~~letters~~an ofasset ~~credit~~or toasset ~~ensure~~group ~~performance~~for ~~and~~recoverability ~~payment~~whenever toevents ~~third~~or ~~parties~~changes in ~~accordance~~circumstances ~~with~~indicate ~~specified~~that ~~terms~~its ~~and~~carrying ~~conditions~~value may not be recoverable. ~~Under~~Such ~~our~~events ~~asset-based~~include, ~~revolving~~but ~~credit~~are ~~facility~~not limited to, wesignificant ~~have~~adverse changes in the ~~ability~~business ~~to issue~~climate, upthe toimpact ~~$40.0~~of ~~million~~significant incustomer ~~letters~~losses, current period operating or cash flow losses, forecasted continuing losses, or a current expectation that an asset or asset group will be disposed of ~~credit.~~before Asthe end of ~~December 26~~its useful life, ~~2010~~for example, ~~approximately~~as ~~$12.3~~a ~~million~~result of ~~standby~~a ~~letters~~decision ofto ~~credit~~exit ~~were~~a ~~outstanding~~product line or close a manufacturing facility. Recoverability ~~These~~is ~~standby~~evaluated ~~letters~~by a comparison of ~~credit~~the ~~are~~carrying ~~primarily~~amount ~~used~~of an asset or asset group to ~~support~~future ~~our~~net ~~workers’~~undiscounted ~~compensation insurance~~cash ~~programs~~flows expected to be generated by the asset or asset group. WeIf ~~are~~these comparisons indicate that an asset is not ~~required~~recoverable, tothe ~~provide~~impairment ~~cash~~loss ~~collateral~~recognized ~~for~~is ~~letters~~the amount by which the carrying amount of ~~credit~~the ~~issued~~asset exceeds the estimated fair value. ~~All~~When ~~issued~~an ~~letters~~impairment loss is recognized for assets to be held and used, the adjusted carrying amount of ~~credit~~those assets is depreciated over their remaining useful lives. Restoration of a previously recognized impairment loss is not allowed. There are ~~secured~~inherent byuncertainties ~~the~~associated ~~asset-based~~with ~~revolving~~these ~~credit~~judgments ~~facility~~and estimates.

~~We also have the ability to issue up to CA$2.0 million in letters of credit under our Canadian credit facility. As of December 26, 2010, no letters of credit were outstanding thereunder.~~ 28

InIncome ~~June~~taxes. ~~2007,~~We weaccount ~~entered~~for ~~into~~income ataxes ~~lease agreement~~ in ~~conjunction~~accordance with the ~~sale~~asset ofand ~~six~~liability ofmethod ~~our~~under ~~manufacturing~~FASB ~~facilities~~ASC Topic 740, Income Taxes. Deferred ~~The~~income ~~sale~~tax ~~proceeds~~assets ofand ~~$130.0~~liabilities ~~million~~are ~~were~~recognized ~~used~~for the future tax consequences attributed to ~~retire~~differences ~~our~~between ~~term~~the ~~loan~~financial ~~under~~statement ~~our~~and ~~senior~~income ~~secured~~tax ~~second~~bases ~~lien~~of assets and liabilities and tax credit ~~facility.~~and ~~Upon~~operating ~~the~~loss ~~sale~~carryforwards ofusing enacted tax rates expected to apply to taxable income in the ~~six~~years ~~properties,~~in wewhich ~~immediately~~the ~~leased~~differences ~~them~~are ~~back pursuant~~expected to abe ~~20-year~~recovered ~~term~~or ~~lease~~settled. The ~~lease~~effect ~~contains~~on ~~four~~deferred ~~five-year~~income ~~renewal~~tax ~~term~~assets ~~options~~ and isliabilities ~~non-cancelable.~~of ~~Rent~~a ~~for~~change ~~the~~in ~~six~~tax ~~properties~~rates is ~~payable~~recognized onin aincome ~~quarterly~~in ~~basis,~~the ~~due~~period onthat includes the ~~first~~enactment ~~day~~date. ofThe ~~each~~recoverability ~~calendar~~of ~~quarter,~~deferred ~~with~~tax anassets ~~annual~~is 2%dependent ~~escalation. Annual~~upon ~~rent~~our ~~expense~~assessment of ~~$14.2~~whether ~~million~~it is ~~recognized~~more onlikely athan ~~straight-line~~not ~~basis~~that ~~over~~sufficient future taxable income will be generated in the ~~20-year~~relevant ~~term~~tax ofjurisdiction to utilize the ~~lease~~deferred tax asset. In ~~Payments~~evaluating ~~during~~our ~~fiscal~~ability ~~years~~to ~~2010~~recover ~~and~~our ~~2009~~deferred ~~were~~tax ~~$12.3~~assets, ~~million~~in ~~and~~full ~~$9.1~~or ~~million~~in part, ~~respectively.~~we Weconsider ~~made~~all ~~the~~available ~~fourth~~positive ~~quarterly~~and ~~payment~~negative ~~in 2009~~evidence including our past operating results, the existence of ~~approximately~~cumulative ~~$3.0~~losses ~~million~~in ~~subsequent~~the tomost ~~December 27,~~recent ~~2009~~fiscal years, and our ~~fiscal~~forecast ~~year~~of ~~end,~~future ~~and~~taxable income on a jurisdiction by jurisdiction basis. In determining future taxable income, we ~~made~~review the ~~fourth~~reversal ~~quarterly~~of ~~payment~~temporary indifferences ~~2010~~and the implementation of ~~approximately~~feasible $3and prudent tax planning strategies.1 ~~million~~In ~~subsequent~~the event we determine that our future taxable income will not be sufficient to utilize our ~~December 26~~deferred tax assets, ~~2010~~we ~~fiscal~~record ~~year~~a ~~end~~valuation allowance. ~~The~~If ~~fourth quarterly~~our ~~payment~~determination ~~for~~changes, ~~2008~~a ~~was~~charge ~~made~~or a benefit would be recorded in our ~~2008~~statement ~~fiscal~~of ~~year~~operations. We ~~The~~currently ~~lease~~do isnot ~~classified~~believe asthat anwe ~~operating~~will ~~lease~~fully realize the benefit of our deferred tax assets in ~~accordance~~the ~~with~~United ~~FASB~~States ~~ASC~~and ~~Topic~~Europe, ~~840~~except for the reversal of deferred tax liabilities, ~~Leases~~and therefore we have a full valuation allowance against these deferred tax assets.

~~Net~~Recent ~~Operating~~Accounting ~~Loss Carryforwards~~ Pronouncements

AsIn ofJune ~~December 26~~2011, ~~2010,~~the weFASB ~~had approximately~~amended ~~$319.3~~its ~~million~~guidance on the presentation of Ucomprehensive income.S. ~~federal~~Under ~~tax~~the ~~net~~amended ~~operating~~guidance, ~~loss~~an ~~carryforwards~~entity ~~that~~has ~~expire~~the ~~between~~option ~~2018~~to ~~and~~present ~~2030,~~comprehensive ofincome ~~which~~in ~~$17~~either one continuous statement or two consecutive financial statements.0 ~~million~~A ~~were~~single ~~subject~~statement tomust present the ~~provisions~~components of ~~Internal~~net ~~Revenue~~income ~~Code~~and ~~Section 382.~~total Wenet ~~establish~~income, athe ~~valuation~~components ~~allowance for~~of ~~deferred~~other ~~tax~~comprehensive ~~assets~~income and total other comprehensive income, ~~including~~and ~~our~~a ~~net~~total ~~operating~~for ~~loss~~comprehensive ~~carryforwards~~income. In a two-statement approach, ~~when~~an entity must present the ~~amount~~components of ~~expected~~net ~~future~~income ~~taxable~~and total net income isin ~~not~~the ~~likely~~first tostatement. ~~support~~That statement must be immediately followed by a financial statement that presents the ~~use~~components of ~~the~~other ~~deduction~~comprehensive orincome, ~~credit~~a total for other comprehensive income, and a total for comprehensive income. ~~During~~The option under the ~~fiscal~~current ~~year~~guidance ~~ended~~that ~~December 26,~~permits ~~2010,~~the ~~our valuation~~presentation ~~allowance~~of oncomponents ~~all~~of ~~tax~~other ~~attributes~~comprehensive ~~increased~~income byas ~~$36.8~~part ~~million~~of tothe ~~$152.6~~statement ~~million~~of ~~primarily~~changes ~~related~~in tostockholders’ ~~activity~~equity ~~from~~has ~~our~~been Ueliminated.S. The amendment becomes effective on January 1, 2012 and ~~European~~is ~~operations~~applied retrospectively. ~~The~~Early ~~ultimate~~adoption ~~realization~~is ofpermitted. ~~deferred~~This ~~tax~~guidance ~~assets~~will isnot ~~dependent~~have ~~upon~~an ~~the~~impact ~~generation~~on ofour ~~future taxable~~consolidated ~~income~~financial ~~during~~position, ~~the~~results ~~periods~~of inoperations ~~which~~or ~~those~~cash ~~temporary~~flows ~~differences~~as ~~become~~it ~~deductible~~is disclosure-only in nature.

~~Critical~~Item ~~Accounting~~7a. ~~Estimates~~Quantitative and Qualitative Disclosures about Market Risk.

In ~~preparing~~the ~~our~~ordinary ~~consolidated~~course ~~financial~~of ~~statements~~business, inwe ~~conformity~~are ~~with~~exposed ~~accounting~~to ~~principles~~market ~~generally~~risk-sensitive ~~accepted~~instruments inthat ~~the~~consist ~~United~~primarily ~~States,~~of ~~we make~~our ~~decisions~~variable ~~that~~interest ~~impact~~rate ~~the~~debt. ~~reported~~Interest ~~amounts~~accrues ofon ~~assets,~~outstanding ~~liabilities,~~borrowings ~~revenues~~under ~~and~~our ~~expenses,~~asset-based ~~and~~revolving ~~related~~credit ~~disclosures.~~facility ~~Such~~at ~~decisions~~a ~~include~~rate ~~the~~of ~~selection~~either ofLIBOR (as defined in the ~~appropriate~~asset-based ~~accounting~~revolving ~~principles~~credit tofacility) beplus ~~applied~~a ~~and~~margin ~~the~~of ~~assumptions~~4% per onannum, ~~which~~or toa specified base ~~accounting~~ ~~estimates.~~rate Inplus ~~reaching~~a ~~such~~margin ~~decisions,~~of we3% per ~~apply~~annum, ~~judgments~~at ~~based~~our onoption. ~~our~~These ~~understanding~~interest ~~and~~rate ~~analysis~~margins ofare ~~the~~subject ~~relevant~~to ~~circumstances,~~adjustment ~~current~~based ~~developments~~on ~~and~~borrowing ~~historical~~base ~~experience~~availability. As ~~Actual~~of ~~amounts~~December 25, ~~could~~2011, ~~differ~~the ~~from~~asset-based ~~those~~revolving ~~estimated~~credit atfacility ~~the~~had ~~time the~~an ~~consolidated~~outstanding ~~financial~~balance ~~statements~~of ~~are prepared~~$36.5 ~~Management~~million ~~has~~and ~~discussed~~carried ~~the~~an ~~development~~effective ~~and~~interest ~~selection~~rate of ~~these~~4.897%. As ~~critical~~of ~~accounting~~December 25, ~~estimates~~2011, ~~with~~$122.5 ~~the~~million ~~Audit~~was ~~Committee~~available ofunder the ~~Board~~asset-based ofrevolving ~~Directors~~credit facility, ~~and~~after ~~the~~taking ~~members~~into ofaccount ~~the~~borrowing ~~Audit~~base ~~Committee have reviewed this disclosure~~limitations.

28We 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 December 25, 2011, CA$13.3 million (approximately $13.1 million) was available under the revolving credit facility, after taking into account borrowing base limitations.

~~Table~~Based upon the information above, our annual pre-tax income would decrease by approximately $0.4 million for each one-percentage point increase in the interest rates applicable to our variable rate debt. At the end of ~~Contents~~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 $0.2 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.

Our significant accounting policies are described in Note 2 to the consolidated financial statements in Item 8 of this annual report. Some of these significant accounting policies require us to make difficult, subjective or complex judgments or estimates. An accounting estimate is considered to be critical if it meets both of the following criteria: (1) the estimate requires assumptions about matters that are highly uncertain at the time the accounting estimate is made and (2) different estimates reasonably could have been used or changes in the estimate that are reasonably likely to occur from period to period would have a material impact on the presentation of our financial condition, changes in financial condition or results of operations. Our critical accounting estimates include the following: 29

~~Accounts~~Item ~~receivable valuation~~8. WeFinancial ~~value~~Statements ~~accounts receivable, net of an allowance for doubtful accounts. Each quarter, we estimate our ability to collect outstanding receivables~~ and ~~establish~~Supplementary ~~an allowance for doubtful accounts that reflects our best estimate of the amount of probable credit losses in our existing accounts receivable~~Data. In doing so, we evaluate the age of our receivables, past collection history, current financial condition of key customers and economic conditions. Based on this evaluation, we establish a reserve for specific accounts receivable that we believe are uncollectible, as well as an estimate of uncollectible receivables not specifically known. Our estimate of the allowance for doubtful accounts is a critical accounting estimate because it is highly susceptible to change from period to period. In addition, it requires us to make judgments about the future financial condition of our customers.

~~Deterioration~~Report ~~in the financial condition~~ of ~~any~~Independent ~~key~~Registered ~~customer or~~Public aAccounting ~~significant~~Firm downturn in the economy could have a material negative impact on our ability to collect a portion or all of the accounts receivable. We believe that analysis of historical trends and current knowledge of potential collection problems provide us with sufficient information to establish a reasonable estimate of an allowance for doubtful accounts; however, since we cannot predict with certainty future changes in the financial stability of our customers, our actual future losses from uncollectible accounts may differ from our estimates. In the event we determine that a smaller or larger balance of the allowance for doubtful accounts was appropriate, we would record a credit or charge to selling, general and administrative expenses in the period in which we made such a determination.

~~Customer discounts and allowances. We provide allowances for customer incentive programs when the revenue is recognized, based on historical experience and current trends.~~ The ~~customer~~Board ~~allowances are determined with significant management judgment and reviewed regularly to determine the adequacy~~ of ~~the~~Directors ~~amounts. Changes in economic conditions, markets~~ and ~~customer~~Shareholder relationships may require adjustments to these allowances from period to period. In the event that future trends vary significantly from past or expected trends, our reported net sales may increase or decrease by a material amount.

~~Certain~~Solo ~~customer~~Cup ~~discounts~~Company: and allowances are earned and payable to customers if a specified level of sales volume is met. We record such customer discounts and allowances based on the estimated and probable allowances for the period. The amounts are recorded as a reduction of net sales based on the actual customers’ sales volume during the period. If actual allowances differ from management estimates, gross profit and operating income could be affected. The most significant allowance reflects our estimates of discounts that certain foodservice customers are entitled to claim based on their distribution activities.

~~Vendor~~We ~~incentives.~~have ~~Certain~~audited ~~vendor incentives~~the ~~are~~accompanying ~~earned~~consolidated ~~only~~balance ifsheets aof ~~specified~~Solo ~~level~~Cup ofCompany ~~annual~~and ~~purchases~~subsidiaries is(the ~~achieved.~~Company) Weas ~~record~~of ~~such~~December ~~incentives~~25, ~~during~~2011 ~~the~~and ~~interim~~December ~~periods~~26, ~~based~~2010, onand the ~~actual~~related ~~results~~consolidated ~~achieved~~statements onof aoperations, ~~year-to-date~~shareholder's ~~basis~~(deficit) ~~compared~~equity toand ~~targets~~comprehensive orincome ~~specified~~(loss), ~~levels~~and cash flows for each of ~~purchases. The~~the ~~amounts~~years ~~are~~in ~~recorded~~the asthree-year aperiod ~~reduction~~ended ofDecember 25, ~~cost~~2011. ofThese ~~goods~~consolidated ~~sold~~financial ~~based~~statements onare the ~~purchase~~responsibility ~~volume~~of ~~during~~ the ~~interim~~Company's ~~period~~management. IfOur ~~actual~~responsibility ~~purchase~~is ~~volume~~to ~~differs~~express ~~from~~an ~~management~~opinion ~~estimates,~~on ~~gross~~these ~~margin~~consolidated ~~and~~financial ~~operating~~statements ~~income~~based ~~could~~on beour ~~affected~~audits.

~~Inventory reserves.~~ We ~~establish~~conducted ~~reserves for~~ our ~~inventory~~audits toin ~~reflect~~accordance ~~those~~with ~~conditions when~~ the ~~cost~~standards of the ~~inventory~~Public isCompany ~~not expected~~Accounting toOversight beBoard ~~recovered~~(United States). WeThose ~~review~~standards ~~such~~require ~~circumstances~~that ~~when~~we ~~products~~plan ~~are~~and ~~not~~perform ~~expected~~the audit to beobtain ~~saleable~~reasonable ~~based~~assurance onabout ~~criteria~~whether ~~established~~the byfinancial ~~our~~statements ~~supply~~are ~~chain~~free ~~organization~~of ~~and~~material ~~estimates~~misstatement. ~~based~~An onaudit ~~historical~~includes ~~experience.~~examining, ~~The~~on ~~reserve~~a ~~for~~test ~~these~~basis, ~~products~~evidence issupporting ~~equal to~~the ~~all~~amounts orand adisclosures ~~portion~~in of the ~~cost~~financial ofstatements. ~~the~~An ~~inventory~~audit ~~based~~also onincludes assessing the ~~specific~~accounting ~~facts~~principles used and ~~circumstances.~~significant Weestimates ~~monitor~~made ~~inventory~~by ~~levels~~management, onas awell ~~regular~~as ~~basis~~evaluating ~~and~~the ~~record~~overall ~~changes~~financial instatement ~~inventory~~presentation. ~~reserves~~We asbelieve ~~part~~that ofour ~~cost~~audits ofprovide ~~goods~~a ~~sold~~reasonable basis for our opinion.

~~Impairment~~In ofour ~~long-lived~~opinion, ~~assets.~~the Weconsolidated ~~test~~financial ~~property~~statements ~~for~~referred ~~recoverability~~to ~~whenever~~above ~~events~~present ~~or changes in circumstances indicate that its carrying value may not be recoverable. Such events include~~fairly, ~~but are not limited to, significant adverse changes~~ in ~~the~~all ~~business~~material ~~climate~~respects, the ~~impact~~financial position of ~~significant~~Solo ~~customer~~Cup ~~losses,~~Company ~~current~~and ~~period~~subsidiaries ~~operating~~as orof ~~cash~~December ~~flow losses~~25, ~~forecasted~~2011 ~~continuing losses,~~and orDecember ~~a current expectation that an asset or asset group will be disposed of before the end of its useful life~~26, ~~for example~~2010, asand ~~a result of a decision to exit a product line or close a manufacturing facility. Recoverability of property is evaluated by a comparison of~~ the ~~carrying~~results ~~amount~~ of antheir ~~asset~~operations orand ~~asset~~their ~~group to future net undiscounted~~ cash flows ~~expected~~for toeach ~~be generated by the asset or asset group. If these comparisons indicate that an asset is not recoverable, the impairment loss recognized is the amount by which the carrying amount~~ of the ~~asset~~years ~~exceeds~~in the ~~estimated~~three-year ~~fair~~period ~~value.~~ended ~~When~~December 25, ~~an impairment loss is recognized for assets to be held and used~~2011, ~~the~~in ~~adjusted~~conformity ~~carrying~~with ~~amount of those assets is depreciated over their remaining useful lives~~U. ~~Restoration of a previously recognized impairment loss is not allowed~~S. ~~There~~generally ~~are~~accepted ~~inherent~~accounting ~~uncertainties associated with these judgments and estimates~~principles.

29/s/ KPMG LLP

~~Table~~Chicago, ofIllinois ~~Contents~~

~~Income taxes. We account for income taxes in accordance with the asset and liability method under FASB ASC Topic 740~~March 23, ~~Income~~2012 Taxes. Deferred income tax assets and liabilities are recognized for the future tax consequences attributed to differences between the financial statement and income tax bases of assets and liabilities and tax credit and operating loss carryforwards using enacted tax rates expected to apply to taxable income in the years in which the differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. The recoverability of deferred tax assets is dependent upon our assessment of whether it is more likely than not that sufficient future taxable income will be generated in the relevant tax jurisdiction to utilize the deferred tax asset. In evaluating our ability to recover our deferred tax assets, in full or in part, we consider all available positive and negative evidence including our past operating results, the existence of cumulative losses in the most recent fiscal years, and our forecast of future taxable income on a jurisdiction by jurisdiction basis. In determining future taxable income, we review the reversal of temporary differences and the implementation of feasible and prudent tax planning strategies. In the event we determine that our future taxable income will not be sufficient to utilize our deferred tax assets, we record a valuation allowance. If our determination changes, a charge or a benefit would be recorded in our statement of operations. We currently do not believe that we will fully realize the benefit of our deferred tax assets in the United States, except for the reversal of deferred tax liabilities, and therefore we have a full valuation allowance against these deferred tax assets.

~~Item 7a. Quantitative and Qualitative Disclosures About Market Risk.~~30

InSOLO ~~the~~CUP ~~ordinary~~COMPANY ~~course~~AND ~~of business, we are exposed to market risk-sensitive instruments, which consist primarily of our variable interest rate debt.~~ SUBSIDIARIES

~~Interest~~CONSOLIDATED ~~accrues~~BALANCE on outstanding borrowings under our U.S. 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. As of December 26, 2010, the asset-based revolving credit facility had an outstanding balance of approximately $10.0 million and carried an effective interest rate of 6.25%. SHEETS

Solo Cup Canada may borrow funds under the Canadian credit facility, at its option, in Canadian or U.S. dollars. Canadian dollar denominated loans bear interest, at Solo Cup Canada’s option, at a variable rate equal to: (1)In ~~the Canadian Bankers’ Acceptance Rate (the “BA Rate”)~~thousands, ~~plus~~except ~~2.5% per~~share ~~annum; or (2) the Canadian Prime Rate (being the higher of the (a) Canadian Bank Prime Rate~~ and ~~(b) 1.35% over the 30-day BA Rate), plus 1.25%~~ per ~~annum.~~share ~~U.S. dollar denominated loans bear interest, at Solo Cup Canada’s option, at a variable rate equal to: (1~~data) the U.S. Base Rate, plus 0.75% per annum; or (b) LIBOR, plus 5% per annum. As of December 26, 2010, the Canadian credit facility had an outstanding balance of CA$2.7 million (approximately $2.7 million) and carried an effective interest rate of 4.25%.

As of December 26, 2010, we had three forward-starting receive-variable, pay-fixed interest rate swap agreements with a total notional amount of $150.0 million that were entered into in August 2007 to hedge a portion of our exposure to interest rate risk related to our variable interest rate borrowings under our first lien credit facility. The variable rate of interest received was the Eurodollar rate. The fixed rate of interest paid was 5.3765%. The swap agreements were effective from August 28, 2007 to their expiration on February 28, 2011. Prior to our July 2009 refinancing transactions, the interest rate swaps were designated and qualified as highly-effective cash flow hedges. As long as these interest rate swaps were designated as cash flow hedges, the mark-to-market changes on these swaps had been reported as a component of accumulated other comprehensive loss. As a result of our July 2009 refinancing, the hedged forecasted payments of variable-rate interest on the first lien credit facility borrowings 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. In periods subsequent to June 2009 through the expiration of these interest rate swaps, we were exposed to variations in the fair value of the swaps as three-month LIBOR fluctuated.



	December 25, 2011			December 26, 2010
Assets
Current assets:
Cash and cash equivalents	$	19,322		$	21,511
Accounts receivable - trade, less allowance for doubtful accounts of $831 and $1,837	121,720			116,213
Accounts receivable - other	7,947			4,512
Inventories	255,510			227,589
Deferred income taxes	7,746			13,056
Prepaid expenses	5,288			6,039
Restricted cash	—			1,940
Other current assets	19,115			17,809
Total current assets	436,648			408,669
Property, plant and equipment, less accumulated depreciation and amortization of $565,853 and $612,847	318,102			429,113
Intangible assets, net	696			910
Other assets	23,629			25,980
Total assets	$	779,075		$	864,672
Liabilities and Shareholder’s Deficit
Current liabilities:
Accounts payable	$	91,286		$	63,058
Accrued payroll and related costs	23,707			28,707
Accrued customer allowances	20,794			27,172
Current maturities of long-term debt	452			430
Accrued interest	16,201			20,000
Other current liabilities	19,650			39,189
Total current liabilities	172,090			178,556
Long-term debt, net of current maturities	662,012			637,285
Deferred income taxes	7,829			14,876
Pensions and other postretirement benefits	46,547			38,428
Deferred gain on sale-leaseback	38,280			40,758
Other liabilities	47,026			42,273
Total liabilities	973,784			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	(424,645		)	(331,116		)
Accumulated other comprehensive loss	(24,959		)	(11,283		)
Total shareholder’s deficit	(194,709		)	(87,504		)
Total liabilities and shareholder’s deficit	$	779,075		$	864,672

~~Based~~See ~~upon~~accompanying ~~the~~Notes ~~information above, our annual pre-tax income would increase by approximately $1.4 million for each one-percentage point increase in the interest rates applicable~~ to ~~our~~Consolidated ~~variable~~Financial ~~rate debt and interest rate swap agreements~~Statements. At the end of 2010, three-month LIBOR was less than one percent; therefore, the maximum decrease in our annual pre-tax income based on a decrease in interest rates applicable to our variable rate debt and interest rate swap agreements would be approximately $0.4 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.

30 31

Table of Contents

~~Item~~SOLO 8.CUP ~~Financial~~COMPANY ~~Statements~~AND ~~and Supplementary Data.~~SUBSIDIARIES

~~Report~~CONSOLIDATED ofSTATEMENTS ~~Independent~~OF ~~Registered Public Accounting Firm~~ OPERATIONS

~~The~~(In ~~Board of Directors and Shareholder~~ thousands)

Solo Cup Company:



	For the year ended
	December 25, 2011			December 26, 2010			December 27, 2009
Net sales	$	1,636,315		$	1,582,861		$	1,502,552
Cost of goods sold	1,505,915			1,439,312			1,296,132
Gross profit	130,400			143,549			206,420
Selling, general and administrative expenses	135,205			150,339			150,139
Loss on asset disposals	946			3,879			8,969
Impairment of goodwill	—			—			17,210
Asset impairment	13,048			20,536			—
Operating (loss) income	(18,799		)	(31,205		)	30,102
Interest expense, net of interest income of $164, $211 and $535	70,581			70,616			63,096
Loss on debt extinguishment	—			—			2,520
Reclassification of unrealized loss on cash flow hedges to interest expense	—			—			9,108
Foreign currency exchange loss (gain), net	1,826			2,221			(2,577		)
Gain from bargain purchase	—			(1,733		)	—
Loss before income taxes	(91,206		)	(102,309		)	(42,045		)
Income tax provision (benefit)	2,323			1,904			(6,389		)
Net loss	$	(93,529	)	$	(104,213	)	$	(35,656	)

~~We have~~See ~~audited the~~ accompanying ~~consolidated~~Notes balance sheets of Solo Cup Company and subsidiaries (the Company) as of December 26, 2010 and December 27, 2009, and the related consolidated statements of operations, shareholder’s (deficit) equity and comprehensive income (loss), and cash flows for each of the years in the three-year period ended December 26, 2010. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to ~~express~~Consolidated anFinancial ~~opinion on these consolidated financial statements based on our audits~~Statements.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion. 32

InTable ~~our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position~~ of Solo Cup Company and subsidiaries as of December 26, 2010 and December 27, 2009, and the results of their operations and their cash flows for each of the years in the three-year period ended December 26, 2010, in conformity with U.S. generally accepted accounting principles. Contents

~~/s/~~SOLO ~~KPMG~~CUP ~~LLP~~COMPANY AND SUBSIDIARIES

~~Chicago,~~CONSOLIDATED ~~Illinois~~STATEMENTS OF SHAREHOLDER’S DEFICIT

~~March 17~~(In thousands, ~~2011~~except share amounts)



				Additional paid-in capital			Accumulated deficit			Accumulated other comprehensive loss			Total shareholder’s equity (deficit)			Comprehensive income (loss)
	Common Stock
	Shares	Amount
December 28, 2008	100	$	—	$	254,995		$	(191,247	)	$	(32,456	)	$	31,292
Net loss	—	—		—			(35,656		)	—			(35,656		)	$	(35,656	)
Foreign currency translation adjustment	—	—		—			—			10,435			10,435			10,435
Pension liability adjustments, net of tax of $1,050	—	—		—			—			1,174			1,174			1,174
Unrealized investment loss, net of tax of $0	—	—		—			—			12			12			12
Recognition of realized gain on cash flow hedge, net of tax benefit of $215	—	—		—			—			(150		)	(150		)	(150		)
Unrealized loss on cash flow hedges, net of tax of $0	—	—		—			—			(1,514		)	(1,514		)	(1,514		)
Reclassification of realized loss on cash flow hedges to interest expense, net of tax of $0	—	—		—			—			3,512			3,512			3,512
Reclassification of unrealized loss on cash flow hedges to interest expense upon termination of hedge accounting, net of tax of $0	—	—		—			—			9,108			9,108			9,108
Total comprehensive loss																$	(13,079	)
December 27, 2009	100	$	—	$	254,995		$	(226,903	)	$	(9,879	)	$	18,213
Net loss	—	—		—			(104,213		)	—			(104,213		)	$	(104,213	)
Foreign currency translation adjustment	—	—		—			—			1,845			1,845			1,845
Pension liability adjustments, net of tax benefit of $395	—	—		—			—			(3,249		)	(3,249		)	(3,249		)
Return of capital to parent	—	—		(100		)	—			—			(100		)
Total comprehensive loss																$	(105,617	)
December 26, 2010	100	$	—	$	254,895		$	(331,116	)	$	(11,283	)	$	(87,504	)
Net loss	—	—		—			(93,529		)	—			(93,529		)	$	(93,529	)
Foreign currency translation adjustment	—	—		—			—			(2,026		)	(2,026		)	(2,026		)
Pension liability adjustments, net of tax benefit of $1,022	—	—		—			—			(11,650		)	(11,650		)	(11,650		)
Total comprehensive loss																$	(107,205	)
December 25, 2011	100	$	—	$	254,895		$	(424,645	)	$	(24,959	)	$	(194,709	)

~~Table~~See ofaccompanying ~~Contents~~Notes to Consolidated Financial Statements.

~~SOLO CUP COMPANY AND SUBSIDIARIES~~ 33

~~CONSOLIDATED~~Table ~~BALANCE~~of ~~SHEETS~~ Contents

~~(In~~SOLO ~~thousands,~~CUP ~~except~~COMPANY ~~share~~AND ~~and per share amounts)~~ SUBSIDIARIES

	December 26, 2010			December 27, 2009
Assets
Current assets:
Cash and cash equivalents	$	21,511		$	30,006
Accounts receivable:
Trade, less allowance for doubtful accounts of $1,837 and $1,114		116,213			117,203
Other		4,512			7,662
Inventories		227,589			232,582
Deferred income taxes		13,056			19,131
Prepaid expenses		6,039			6,193
Restricted cash		1,940			—
Assets held for sale		—			2,825
Other current assets		17,809			20,799
Total current assets		408,669			436,401
Property, plant and equipment, less accumulated depreciation and amortization of $612,847 and $527,050		429,113			508,964
Intangible assets, net		910			—
Restricted cash		—			10,410
Other assets		25,980			31,643
Total assets	$	864,672		$	987,418
Liabilities and Shareholder’s Equity
Current liabilities:
Accounts payable	$	63,058		$	81,990
Accrued payroll and related costs		28,707			25,785
Accrued customer allowances		27,172			29,810
Current maturities of long-term debt		430			779
Accrued interest		20,000			19,499
Other current liabilities		39,189			27,608
Total current liabilities		178,556			185,471
Long-term debt, net of current maturities		637,285			635,310
Deferred income taxes		14,876			22,672
Pensions and other postretirement benefits		38,428			36,011
Deferred gain on sale-leaseback		40,758			43,540
Other liabilities		42,273			46,201
Total liabilities		952,176			969,205
Shareholder’s (deficit) equity:
Common stock – Par value $0.01 per share; 1,000 shares authorized; 100 shares issued and outstanding		—			—
Additional paid-in capital		254,895			254,995
Accumulated deficit		(331,116	)		(226,903	)
Accumulated other comprehensive loss		(11,283	)		(9,879	)
Total shareholder’s (deficit) equity		(87,504	)		18,213
Total liabilities and shareholder’s (deficit) equity	$	864,672		$	987,418

CONSOLIDATED STATEMENTS OF CASH FLOWS

~~See~~(In ~~accompanying notes to consolidated financial statements.~~ thousands)



	For the year ended
	December 25, 2011			December 26, 2010			December 27, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(93,529	)	$	(104,213	)	$	(35,656	)
Adjustments to reconcile net loss to net cash (used in) provided by operating activities:
Depreciation and amortization	80,569			109,576			70,003
Deferred financing fee amortization	7,397			6,989			6,017
Loss on asset disposals	946			3,879			8,969
Loss on debt extinguishment	—			—			2,520
Gain from bargain purchase	—			(1,733		)	—
Impairment of goodwill	—			—			17,210
Asset impairment	13,048			20,536			—
Pension plan curtailment loss	—			1,475			—
Reclassification of unrealized loss on cash flow hedges to interest expense	—			—			9,108
Deferred income taxes	(508		)	(911		)	(8,553		)
Foreign currency exchange loss (gain), net	1,826			2,221			(2,577		)
Changes in operating assets and liabilities, net of business acquisition:
Accounts receivable, net	(5,924		)	5,450			1,245
Inventories	(28,840		)	12,123			54,523
Prepaid expenses and other current assets	2,384			(1,415		)	5,596
Other assets	(598		)	2,013			1,106
Accounts payable	23,553			(14,086		)	23
Accrued expenses and other current liabilities	(19,168		)	3,336			493
Other liabilities	(4,999		)	(3,300		)	5,600
Other, net	2,700			1,761			2,310
Net cash (used in) provided by operating activities	(21,143		)	43,701			137,937
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of property, plant and equipment	25,650			7,721			16,610
Purchases of property, plant and equipment	(28,342		)	(42,155		)	(71,815		)
Business acquisition, net of cash acquired	—			(23,661		)	—
Decrease (increase) in restricted cash	1,940			8,470			(10,410		)
Decrease in cash in escrow	—			—			50
Proceeds from insurance reimbursement	—			1,201			—
Other	(2,500		)	—			—
Net cash used in investing activities	(3,252		)	(48,424		)	(65,565		)
CASH FLOWS FROM FINANCING ACTIVITIES
Net borrowings (repayments) under revolving credit facilities	23,931			(2,321		)	(13,000		)
Borrowings under the 10.5% Senior Secured Notes	—			—			293,784
Repayments of term notes	—			(410		)	(363,204		)
Repayments of other debt	(443		)	(373		)	(344		)
Return of capital to parent

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