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                UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549
                                    FORM 10-K
(MARK ONE)
X      ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
--     ACT OF 1934
For the fiscal year ended June 30, 2001
                                       OR
       TRANSITION REPORT PURSUANT TO SECTION  13  OR  15(d)  OF  THE  SECURITIES
--     EXCHANGE ACT OF 1934
         For the transition period from                 to
         Commission file number 33-70732

                                   TELMARK LLC
     (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CERTIFICATE OF FORMATION)

            DELAWARE                                              16-1551523
  (STATE OR OTHER JURISDICTION                                (I.R.S. EMPLOYER
OF INCORPORATION OR ORGANIZATION)                            IDENTIFICATION NO.)

                   333 BUTTERNUT DRIVE, DEWITT, NEW YORK 13214
              (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES AND ZIP CODE)

         REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE 315-449-7935

SECURITIES REGISTERED PURSUANT TO SECTION 12(B) OF THE ACT:

Title of each class                    Name of each exchange on which registered
-------------------                    -----------------------------------------
      None                                            None

SECURITIES REGISTERED PURSUANT TO SECTION 12(G) OF THE ACT:
                                      None

     INDICATE  BY CHECK MARK  WHETHER THE  REGISTRANT  (1) HAS FILED ALL REPORTS
REQUIRED TO BE FILED BY SECTION 13 OR 15(D) OF THE  SECURITIES  EXCHANGE  ACT OF
1934  DURING  THE  PRECEDING  12 MONTHS  (OR FOR SUCH  SHORTER  PERIOD  THAT THE
REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS),  AND (2) HAS BEEN SUBJECT TO SUCH
FILING REQUIREMENTS FOR THE PAST 90 DAYS.

                                         X
                                        ---     ---
                                        Yes      No

     INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT  FILERS PURSUANT TO ITEM
405 OF REGULATION S-K IS NOT CONTAINED HEREIN, AND WILL NOT BE CONTAINED, TO THE
BEST  OF  REGISTRANT'S   KNOWLEDGE,  IN  ANY  DEFINITIVE  PROXY  OR  INFORMATION
STATEMENTS  INCORPORATED  BY  REFERENCE  OF PART  III OF THIS  FORM  10-K OR ANY
AMENDMENT TO THIS FORM 10-K.  X
                             ---

     STATE THE AGGREGATE MARKET VALUE OF THE VOTING AND NON-VOTING COMMON EQUITY
HELD BY NON-AFFILIATES OF THE REGISTRANT SEPTEMBER 7, 2001 .
                                         -----------------
                                                           ZERO

     INDICATE  THE  NUMBER OF  SHARES  OUTSTANDING  OF EACH OF THE  REGISTRANT'S
EQUITY SECURITIES, AS OF THE LATEST PRACTICABLE DATE.

             CLASS                              OUTSTANDING AT SEPTEMBER 7, 2001
    ----------------------                      --------------------------------
    MEMBERSHIP CERTIFICATE                                     ONE

TELMARK IS A DIRECT WHOLLY OWNED SUBSIDIARY OF AGWAY, INC., WHICH IS A REPORTING
COMPANY UNDER THE SECURITIES  EXCHANGE ACT OF 1934, AND MEETS THE CONDITIONS SET
FORTH IN  GENERAL  INSTRUCTIONS  J(1)(A)  AND (B) OF FORM 10-K AND IS  THEREFORE
FILING THIS FORM WITH THE REDUCED DISCLOSURE FORMAT.

--------------------------------------------------------------------------------
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<PAGE>
                         FORM 10-K ANNUAL REPORT - 2001
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES

                              CROSS-REFERENCE SHEET

<TABLE>
<CAPTION>

                                     PART I
                                                                                                                 Page
<S>               <C>                                                                                            <C>
Item 1. & 2.      Business and Properties.........................................................................3
Item 3.           Legal Proceedings...............................................................................5
Item 4.           Submission of Matters to Vote of Security Holders...............................................5


                                     PART II

Item 5.           Market for the Registrant's Common Equity and Related Membership Matters........................6
Item 6.           Selected Financial Data.........................................................................6
Item 7.           Management's Discussion and Analysis of Financial Condition and Results of Operations...........6
Item 7A.          Quantitative and Qualitative Disclosures About Market Risk.....................................10
Item 8.           Financial Statements...........................................................................11
Item 9.           Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...........24


                                    PART III

Item 10.          Directors and Executive Officers of the Registrant.............................................25
Item 11.          Executive Compensation.........................................................................26
Item 12.          Security Ownership of Certain Beneficial Owners and Management.................................28
Item 13.          Certain Relationships and Related Transactions.................................................29


                                     PART IV

Item 14.          Exhibits, Financial Statement Schedules and Reports on Form 8-K................................30

                  Signatures.....................................................................................32
</TABLE>
                                        2

<PAGE>



                                     PART I

ITEM 1. & 2.  BUSINESS AND PROPERTIES

Telmark LLC ("Telmark," "we," "our," "us" or "Company") was organized in 1964 as
Telmark  Inc.  under  the  Business  Corporation  Law of the  State of New York.
Effective  July 1, 1998,  Telmark  Inc.  was merged into Telmark LLC, a Delaware
limited  liability  company  that was formed  solely to carry on the business of
Telmark in limited liability  company,  rather than corporate,  form. On July 1,
2001, we became a direct wholly owned subsidiary of Agway Inc. ("Agway"), one of
the largest agricultural supply and services  cooperatives in the United States,
in terms of revenues,  based on a 1999 Co-op 100 Index  produced by the National
Cooperative  Bank.  Prior  to  July  1,  2001,  we  were a  direct  wholly owned
subsidiary of Agway  Holdings  Inc.  ("AHI"),  an indirect  subsidiary of Agway.
Effective July 1, 2001, Agway simplified its corporate  structure by merging AHI
into Agway and assuming all assets and  liabilities of AHI. As discussed  below,
Agway's  membership  interest  in Telmark  has been  pledged  to secure  certain
obligations of Agway.

Telmark  is  subject  to certain  informational  reporting  requirements  of the
Securities  Exchange  Act of 1934 and in  accordance  with  those  rules,  files
reports  and other  information  with the  Commission.  Reports  filed  with the
Commission can be inspected at the Public Reference Section of the Commission at
450 Fifth Street N.W.,  Washington  D.C. 20549 and at the regional office of the
Commission at Suite 1400,  Northwestern  Atrium Center, 500 West Madison Street,
Chicago,  Illinois  60661.  Copies of the  materials  can be  obtained  from the
Commission at prescribed rates. Alternatively,  you may access Telmark's reports
filed on the  Commission's  Electronic  Data  Gathering,  Analysis and Retrieval
(EDGAR) system by going to the Commission's website at www.sec.gov.

Our operations  are comprised  almost  exclusively of direct finance  leasing of
agricultural related equipment, vehicles and buildings to farmers or other rural
businesses that serve the agricultural  marketplace.  Our leases offer customers
an  alternative  to directly  purchasing  or borrowing to purchase as a means of
acquiring the use of equipment, vehicles or buildings.

        o        We  brand  our  leasing   service  as Agrilease(R)  and Telease
                 Financial Services(R).
        o        We highlight our service-oriented  approach  in  advertisements
                 and product brochures.

We have over 18,000 customers,  most of whom are in the dairy, forestry,  crops,
and  transportation  industries.  We operate  throughout the continental  United
States and Canada.  Our customers are farmers and other rural businesses as well
as manufacturers and independent dealers who serve the agricultural marketplace.

We compete with finance  affiliates  of  equipment  manufacturers,  agricultural
financial  institutions,  other independent  finance and leasing companies,  and
commercial banks.  Many of these  organizations  have substantial  financial and
other resources and consequently are able to compete on a long-term basis within
the market segment which we serve.

We use  direct  mail,  advertisements  in trade  magazines  and  referrals  from
equipment  retailers and building  contractors  to solicit  customers.  Our main
competitors are  agricultural  lenders and other leasing  companies.  We believe
that we compete effectively because of:

        o        our special expertise in agricultural equipment financing;
        o        our close relationship with the farming community;
        o        our focus on service;
        o        our financial strength; and
        o        our credit management.

Telmark's   business  is   concentrated  in  agriculture  in  the  New  England,
Mid-Atlantic,  and Midwest states with  approximately 70% of its leases directly
related to production agriculture. However, the portfolio of agricultural leases
is diversified  into many different kinds of  agriculture.  As of June 30, 2001,
the largest  concentration is in crops  enterprises which represented 19% of the
portfolio,  dairy enterprises  which represented 15% of the portfolio,  and wood
products  enterprises which represented 11% of the portfolio.  At June 30, 2001,
approximately 43% of our net lease investment was in the states of Michigan, New
York,  Ohio, and  Pennsylvania.  Adverse  developments  in any of these areas of
concentration could have a corresponding adverse effect on the collectibility of
our lease receivables.
                                        3
<PAGE>
ITEM 1. & 2.  BUSINESS AND PROPERTIES (CONTINUED)

We offer a variety of lease financing  packages,  with varying payment schedules
on a monthly,  quarterly,  semiannual or annual basis, depending on the expected
timing of customer  cash flows,  customer  credit  quality,  and the  customer's
individual preferences.

With a direct finance lease our customers have use of the leased property over a
specified term for a periodic rental charge: i.e., the lease payment.  Customers
make lease payments in advance.  In most cases, at least two months of the lease
payments are collected  before the lease starts.  We require the advance payment
to provide protection in the event of default on the lease.

We offer most of the direct  finance  leases for a period which is less than our
estimate of the useful life of the equipment, vehicle, or the building leased.

        o        We offer equipment and vehicle leases typically for a period of
                 3 to 6 years, and generally do not exceed 8 years.
        o        We offer building leases typically for longer terms (e.g., 5 to
                 10 years) than for equipment leases, up to maximum terms of  15
                 years.

As of June 30, 2001,  our  outstanding  leases had an average  original  term of
approximately 5.8 years and average remaining term of approximately 4.7 years.

Generally,  the customer selects the supplier of the equipment or other property
to be leased and we are not responsible for its suitability,  performance, life,
or any other characteristics.  Our primary responsibility is to buy the property
from the supplier,  lease it to the customers,  and collect the lease  payments.
For certain  lease  contracts we have agreed to  indemnify  customers if certain
adverse tax consequences arise in connection with a lease. We cannot predict our
liability  under  these  indemnification  provisions,  but we  believe  that our
liability is remote and the net effect of any liability is not material.

Telmark has internal  credit  approval  policies that must be followed  prior to
entering into any lease  transaction.  The required  procedures vary by kind and
size of transaction.  We set credit approval limits based on the total amount of
leases outstanding with the customer.  We assign lending authority to members of
management depending on position,  training, and experience.  Telmark's Board of
Directors must approve all lease amounts exceeding $1.5 million. After a Telmark
field representative  completes a financial  application,  we conduct a thorough
credit approval process.

Telmark  retains  title to the  equipment or building  leased.  If  appropriate,
Telmark  obtains a lien on the real  estate  owned by the farmer or  customer as
collateral for payments under a building lease. We maintain monthly  delinquency
reports to monitor leases that have been delinquent for over 30 days, as well as
non-earning leases.  Generally,  accounts past due at least 120 days, as well as
accounts in foreclosure or bankruptcy,  are  transferred to non-earning  status.
The potential losses from non-earning leases are partly offset by our ability to
repossess  leased  property and to foreclose on other  property in which we have
been  granted a security  interest.  Accounts are  generally  written off at the
earlier of the time they are determined to be  uncollectible or when they become
one year past due.

Although we retain title to the leased property,  our customers are responsible
for  insurance,  repairs,  maintenance,  service,  and  property  taxes.  At the
expiration of the direct finance lease term, the lessee has an option to:

        o        purchase the leased property,
        o        renew the lease, or
        o        return the leased property to us.

Historically,  in most of our lease  transactions,  the lessee has purchased the
leased property or equipment upon termination of the lease.

We may not be able to collect lease payments under the following circumstances:

        o        Bankruptcy of the customer;
        o        Defaults by customer; or
        o        Contract disputes between customers and suppliers.

                                        4
<PAGE>
ITEM 1. & 2.  BUSINESS AND PROPERTIES (CONTINUED)

The  ultimate  collectibility  of  amounts  due  under our  leases  is  directly
dependent  upon the credit  practices  we use, and the  creditworthiness  of our
customers.  Even though we follow our credit policies and we establish  reserves
for bad  debts,  there are  other  factors  that  could  significantly  impact a
customer's  ability  to  pay  and  consequently,  affect  our  lease  collection
experience and our earnings. Additional factors that might impact our ability to
collect lease payments are:

        o        Changes in general economic conditions;
        o        Changes  in  the  level  of  government  expenditures  on  farm
                 programs and  other changes in government agricultural programs
                 that adversely affect the level of income of our customers;
        o        Adverse weather-related conditions that negatively  impact  the
                 agricultural productivity and income of customers; and
        o        Oversupply of, or reduced demand for, agricultural  commodities
                 produced by our customers.

We  realize  net  earnings  if  revenues  from our leases  exceed our  operating
expenses and income taxes.

        o        "Revenue"  from  a lease is the sum of all  payments  due under
                 the lease plus the  residual value of the leased property, less
                 the cost of purchasing the leased property.
        o        "Operating  expenses"  include interest expense,  provision for
                 credit losses (the  dollar  amount  Telmark sets aside to cover
                 its  estimated  losses  should a customer fail to make required
                 payments   under  a    lease),   and   selling,   general   and
                 administrative   expenses,  including our payroll costs,  rent,
                 advertising  costs  and fees paid for credit checking and legal
                 and accounting services.
        o        "Interest  expense"  is the single largest operating expense of
                 Telmark  and is  primarily   the  interest  it must  pay on the
                 amounts borrowed from banks  and other investors to finance the
                 leases it makes to customers.

We lease  all of our  office  space  from  Agway.  We do not own any of the real
property  we use for office  facilities.  As of July 27,  2001,  Telmark had 226
employees.

As noted above,  we are a direct wholly owned  subsidiary of Agway. On September
14,  2001,  Agway  pledged  its  membership  interest  in Telmark as  additional
collateral under an asset-based credit agreement Agway has with certain lenders.
In the event Agway  defaults  on its  obligations  under this credit  agreement,
Agway lenders could choose among the remedies  available to them,  including the
right to foreclose on the Telmark membership interest pledged as security, which
would result in a change of control of Telmark.

We have three wholly owned subsidiaries:

        o        Telease Financial Services, Ltd.;
        o        Telmark Lease Funding II, LLC; and
        o        Telmark Lease Funding III, LLC.

Telease Financial  Services,  Ltd. is a Canadian  Corporation  formed to conduct
certain lease  transactions with Canadian  customers.  Telmark Lease Funding II,
LLC, and Telmark  Lease Funding III, LLC were  established  solely to enable the
lease  securitization  financings entered into in 1999, and 2000,  respectively.
Telmark  Lease  Funding I, LLC,  which was  established  solely to enable a 1997
lease securitization financing, was approved to be dissolved in June 2001.

ITEM 3.  LEGAL PROCEEDINGS

We are not a party to any  litigation or legal  proceedings  pending,  or to the
best  of  our  knowledge  threatened,  which,  in  the  opinion  of  management,
individually  or in the aggregate,  would have a material  adverse affect on our
results of operations, financial position, or liquidity.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

Not required.
                                        5
<PAGE>
                                     PART II
ITEM 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED MEMBERSHIP
         MATTERS (THOUSANDS OF DOLLARS)
Effective July 1, 1998,  Telmark Inc's.  common stock was cancelled by virtue of
the merger of Telmark Inc. with and into Telmark LLC, with Telmark LLC being the
surviving entity in the merger. We have one limited liability company membership
interest  outstanding,  which is directly and wholly owned by Agway.  See Item 1
and 2 for discussion of the merger of AHI into Agway and the pledge of Telmark's
membership  interest  by Agway.  There is no public  market  for the  membership
interest and we do not expect one to develop.  In the fiscal year ended June 30,
2000, a distribution of $5,000 in member's equity was declared. During the years
ended June 30, 2001 and 1999,  there were no  distributions  of member's  equity
declared.  Under a loan covenant,  distributions of member equity are prohibited
to the extent they exceed 50% of net income for the period  beginning on July 1,
2000, through the date of determination,  inclusive. As of June 30, 2001, $6,100
of member's equity was free of this restriction.

ITEM 6.  SELECTED FINANCIAL DATA
Not required.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (THOUSANDS OF DOLLARS)

Telmark  operates  in one  reportable  segment  of  direct  finance  leasing  of
agricultural related equipment, vehicles and buildings to farmers or other rural
businesses that serve the agricultural marketplace. Leases and notes outside the
United States represent less than one half of 1% of the total assets of Telmark.

2001 COMPARED TO 2000.

NET INCOME
Our net income increased by $500 (4.3%) from $11,700 in 2000 to $12,200 in 2001.
<TABLE>
<CAPTION>
                                            FY 2001           FY 2000           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Net income                         $12,200           $11,700           500              4.3%
</TABLE>
The increase was principally due to increased revenue from a larger  outstanding
portfolio of leases during 2001 as compared to 2000.

TOTAL REVENUES
Total revenues of $86,200 in 2001 increased  $9,400 (12.2%) as compared to total
revenues of $76,800 in 2000.
<TABLE>
<CAPTION>
                                            FY 2001           FY 2000           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Total revenues                     $86,200           $76,800           9,400            12.2%
</TABLE>
The increase in our total revenues this year is mostly due to an increase in our
average  investment in leases and notes,  as compared to the prior year,  partly
offset by a lower income rate on new and replacement  leases and notes.  Average
net  investment  in leases  and notes for the fiscal  year  ended June 30,  2001
compared to the prior year is as follows:
<TABLE>
<CAPTION>
                                            FY 2001           FY 2000           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Average net investment             $691,200          $614,400          76,800        12.5%
</TABLE>
INTEREST EXPENSE
Total  interest  expense of $36,900  increased  $5,400  (17.1%) as  compared  to
interest expense of $31,500 in 2000.
<TABLE>
<CAPTION>
                                            FY 2001           FY 2000           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Interest expense                   $36,900           $31,500           5,400            17.1%
</TABLE>
The increase in our interest expense is due to an increase in the average amount
of debt  required to finance the increase in the amount of net leases and notes,
combined with higher interest rates on new and replacement  debt compared to the
prior year.
                                        6
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

INTEREST EXPENSE (CONTINUED)
Average debt for the fiscal year ended June 30, 2001 compared to the prior year
is as follows:
<TABLE>
<CAPTION>
                                            FY 2001           FY 2000           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Average debt                       $544,700          $473,400          71,300           15.1%
</TABLE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and  administrative  expenses of $18,500 in 2001  increased by
$1,200 (6.9%) compared to expenses of $17,300 in 2000.
<TABLE>
<CAPTION>
                                            FY 2001           FY 2000           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Selling, general
         and administrative expenses        $18,500           $17,300           1,200            6.9%
</TABLE>
The increase was  primarily  the result of  additional  personnel  and incentive
costs   relating  to  overall   profitability,   retention  of   business,   and
profitability of new business.

PROVISION FOR CREDIT LOSSES
The  provision  for credit  losses of $9,500 in 2001  represents  an increase of
$1,600 (20.2%) compared to a provision for credit losses of $7,900 in 2000.
<TABLE>
<CAPTION>
                                            FY 2001           FY 2000           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>

         Provision for Credit Losses        $9,500            $7,900            1,600            20.2%
</TABLE>
This  provision  for credit  losses is based on our  analysis  of the  allowance
required to provide  for  uncollectible  receivables.  Telmark's  allowance  for
credit losses is based on a periodic  review of the  collection  history of past
leases,  current  credit  practices,  an analysis of  delinquent  accounts,  and
current  economic  conditions.  At June 30, 2001 the allowance for credit losses
was $35,500  compared to $32,500 at June 30,  2000.  A summary of the changes in
the allowance for credit losses is as follows:

                                            FY 2001             FY 2000
                                            --------            --------
         Balance, beginning of year         $ 32,500            $ 30,000
         Provision for credit losses           9,500               7,900
         Charge-offs                          (9,900)             (9,200)
         Recoveries                            3,400               3,800
                                            --------            --------
                  Balance, end of year      $ 35,500            $ 32,500
                                            ========            ========

During 2001 and 2000,  the total value of  non-earning  accounts  increased from
$6,000 in 2000 to $6,400 in 2001,  which as a percentage of the lease  portfolio
remained  unchanged  at 0.9% for both 2000 and 2001.  Additionally,  the average
level of current  accounts  for 2001 was  97.4%,  which is  consistent  with the
average level of current accounts during 2000 of 97.5%. Reserves are established
at a level  management  believes is sufficient to cover estimated  losses in the
portfolio.

PROVISION FOR INCOME TAXES
The  provision  for income taxes of $9,100 in 2001 as compared to $8,400 in 2000
results  in an  effective  tax of 42.7%  and  41.6%,  respectively.  Telmark  is
included in a  consolidated  federal tax return  filed by Agway and through June
30, 2001, the consolidated state tax return of AHI. In Agway's revised corporate
structure,  Telmark  will be  included in the  consolidated  state tax return of
Agway.  Under  Telmark's  tax sharing  agreement  with Agway,  the provision for
income taxes and related credits and carry forwards are calculated on a separate
company basis.

2000 COMPARED TO 1999.

NET INCOME
Our net income  increased  by $1,300  (12.5%) from $10,400 in 1999 to $11,700 in
2000.
<TABLE>
<CAPTION>
                                            FY 2000           FY 1999           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Net income                         $11,700           $10,400           1,300            12.5%
</TABLE>
The increase was principally due to increased revenue from a larger  outstanding
portfolio of leases during 2000 as compared to 1999.

                                        7
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

TOTAL REVENUES
Total revenues of $76,800 in 2000  increased  $6,800 (9.7%) as compared to total
revenues of $70,000 in 1999.
<TABLE>
<CAPTION>
                                            FY 2000           FY 1999           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Total revenues                     $76,800             $70,000         6,800            9.7%
</TABLE>
The increase in our total  revenues was mostly due to an increase in our average
investment in leases and notes as compared to the prior year, partly offset by a
lower  income  rate  on new  and  replacement  leases  and  notes.  Average  net
investment  in leases and notes for the fiscal year ended June 30, 2000 compared
to the prior year is as follows:
<TABLE>
<CAPTION>
                                            FY 2000           FY 1999           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Average net investment             $614,400            $546,600        67,800           12.4%
</TABLE>
INTEREST EXPENSE
Total  interest  expense of $31,500  increased  $3,900  (14.1%) as  compared  to
interest expense of $27,600 in 1999.
<TABLE>
<CAPTION>
                                            FY 2000           FY 1999           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Interest expense                   $31,500           $27,600           3,900            14.1%
</TABLE>
This  increase  in our  interest  expense  was mostly due to an  increase in the
average  amount of debt  required to finance  the  increase in the amount of net
leases and notes as compared to the prior year.

Average debt for the fiscal year ended June 30, 2000  compared to the prior year
was as follows:
<TABLE>
<CAPTION>
                                            FY 2000           FY 1999           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Average debt                       $473,400          $411,700          61,700           15.0%
</TABLE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and  administrative  expenses of $17,300 in 2000  increased by
$1,100 (6.8%) compared to expenses of $16,200 in 1999.
<TABLE>
<CAPTION>
                                            FY 2000           FY 1999           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Selling, general
         and administrative expenses        $17,300           $16,200           1,100            6.8%
</TABLE>
The increase was  primarily  the result of  additional  personnel  and incentive
costs relating to the additional new business booked.

PROVISION FOR CREDIT LOSSES
The provision for credit losses of $7,900 in 2000 represented a decrease of $100
(1%) compared to a provision for credit losses of $8,000 in 1999.
<TABLE>
<CAPTION>
                                                                                $ INCREASE       %INCREASE
                                            FY 2000           FY 1999           (DECREASE)       (DECREASE)
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>

         Provision for Credit Losses        $7,900            $8,000            (100)            (1.2%)
</TABLE>
This  provision  for credit  losses is based on our  analysis  of the  allowance
required to provide  for  uncollectible  receivables.  Telmark's  allowance  for
credit losses is based on a periodic  review of the  collection  history of past
leases,  current  credit  practices,  an analysis of  delinquent  accounts,  and
current  economic  conditions.  At June 30, 2000 the allowance for credit losses
was $32,500  compared to $30,000 at June 30,  1999.  A summary of the changes in
the allowance for credit losses is as follows:
                                             FY 2000             FY 1999
                                            --------            --------
         Balance, beginning of year         $ 30,000            $ 27,100
         Provision for credit losses           7,900               8,000
         Charge-offs                          (9,200)             (6,800)
         Recoveries                            3,800               1,700
                                            --------            --------
                  Balance, end of year      $ 32,500            $ 30,000
                                            ========            ========
                                        8

<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

PROVISION FOR CREDIT LOSSES (CONTINUED)
During 2000 and 1999, the general economy remained strong and the total value of
non-earning  accounts  increased  from $4,900 in 1999 to $6,000 in 2000 and as a
percentage of the lease portfolio  remained  unchanged at 0.9% for both 1999 and
2000.  Reserves are established at a level management  believes is sufficient to
cover estimated losses in the portfolio.

PROVISION FOR INCOME TAXES
The  provision  for income taxes of $8,400 in 2000 as compared to $7,800 in 1999
resulted  in an  effective  tax of 41.6% and  42.7%,  respectively.  Telmark  is
included in a  consolidated  federal tax return filed by Agway and  consolidated
state tax return of AHI. Under Telmark's tax sharing  agreement with Agway,  the
provision for income taxes and related credits and carry forwards are calculated
on a separate company basis.

LIQUIDITY AND CAPITAL RESOURCES
The ongoing  availability  of  adequate  financing  to maintain  the size of our
portfolio  and to  permit  lease  portfolio  growth  is  key  to our  continuing
profitability  and  stability.  We have  principally  financed  our  operations,
including the growth of our lease portfolio,  through borrowings under our lines
of credit,  private  placements of debt with  institutional  investors and other
term debt, subordinated debentures, lease-backed notes, principal collections on
leases and cash provided from operations.  Total assets have grown at an average
annual  rate of 11% over the past five  years.  The  liability  to equity  ratio
decreased from 4.8 in 2000 to 4.7 in 2001.
                                           FY 2001      FY 2000      FY 1999
                                           --------     --------     --------
         CASH IN FLOWS
         Cash flows from operations        $29,700      $24,400      $22,800
         Cash flows from financing          42,900       59,000       41,000
                                           --------     --------     --------
                  Total cash in flows       72,600       83,400       63,800
                                           ========     ========     ========
         CASH OUT FLOWS
         Cash flows from investing         (72,600)     (83,400)     (63,800)
                                           --------     --------     --------
                  Total cash out flows     (72,600)     (83,400)     (63,800)
                                           ========     ========     ========

Virtually all of the cash flows from both  operations  and financing  activities
were invested in growth of the lease  portfolio.  Telmark has been successful in
arranging  its past  financing  needs and  believes  that its current  financing
arrangements are adequate to meet its foreseeable operating requirements.  There
can be no  assurance,  however,  that  Telmark  will be able  to  obtain  future
financing in amounts or on terms that are  acceptable.  Our  inability to obtain
adequate  financing would have a material  adverse effect on our operations.  In
addition,  as noted previously,  Agway's membership interest in Telmark has been
pledged as additional  collateral with respect to certain  obligations of Agway.
While the terms of the pledge  generally do not restrict  Telmark's  operations,
Telmark has acknowledged and agreed to the pledge,  has agreed to cooperate with
Agway's  lenders in respect to their rights under the pledge,  and has agreed to
refrain  from  creating  any lien or  encumbrance  with respect to the equity of
Telmark Subsidiaries.  A foreclosure on the pledge following an event of default
would result in a change of control,  giving  Telmark's senior lenders rights to
demand  repayment of existing  outstanding  debt.  Depending  upon the financial
markets  and  Telmark's  financial  circumstances  at that  time,  if the senior
lenders chose to execute those rights,  it could have a material  adverse effect
on Telmark's results of operations, liquidity and financial position. Management
conducts  ongoing  discussions  and  negotiations  with  existing and  potential
lenders for future financing  needs.  See Note 5 to the  Consolidated  Financial
Statements "Borrowing under Lines of Credit and Term Debt."

OTHER MATTERS
CAUTIONARY STATEMENT FOR PURPOSES OF THE "SAFE HARBOR" PROVISIONS OF THE PRIVATE
SECURITIES  LITIGATION  REFORM  ACT OF  1995
We are including the  following  cautionary  statement in this Form 10-K to make
applicable  and take  advantage of the "safe  harbor"  provisions of the Private
Securities Litigation Reform Act of 1995 for any forward-looking  statement made
by, or on behalf of, Telmark. Where any such forward-looking  statement includes
a  statement  of  the  assumptions  or  basis  underlying  such  forward-looking
statement, Telmark cautions that, while it believes such assumptions or basis to
be reasonable and makes them in good faith, assumed facts or basis almost always
vary from actual results, and the differences between assumed facts or basis and
actual  results  can be  material,  depending  upon the  circumstances.  Certain
factors  that  could  cause  actual  results  to differ  materially  from  those
projected  have been  discussed  herein and include the factors set forth below.
Other  factors  that could cause  actual  results to differ  materially  include
uncertainties of economic,  competitive and market decisions and future business
decisions,  all of which are difficult or impossible to predict  accurately  and
many of which are beyond the control of Telmark.  Where, in any  forward-looking
statement, Telmark, or its management,  expresses an expectation or belief as to
future  results,  such  expectation  or belief is  expressed  in good  faith and
believed to have a  reasonable  basis,  but there can be no  assurance  that the
statement of expectation  or belief will result or be achieved or  accomplished.
The words "believe," "expect" and "anticipate" and similar expressions  identify
forward-looking statements.
                                        9

<PAGE>
ITEM 7A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
          (THOUSANDS OF DOLLARS)

The following  table provides  information  about  Telmark's debt securities and
loans that are  sensitive  to  changes in  interest  rates.  The table  presents
principal cash flows (in 000's) and related  weighted  average interest rates by
contractual maturity dates.
<TABLE>
<CAPTION>

FIXED INTEREST RATE                                                                                Fair Value
Liabilities                       2002    2003     2004     2005     2006     Thereafter  Total    6/30/01
                                 -------  -------  -------  -------  -------  ----------  -----    ----------
<S>                              <C>      <C>      <C>      <C>      <C>      <C>         <C>      <C>
Short Term Bank
     and Revolving
     Lines of Credit             $120,638      -       -       -       -        -         $120,638 $120,638
Weighted Average
     Interest Rate                4.67%        -       -       -       -        -           -        -

Long-Term Debt,
 including current portion        146,496   111,924 79,091   6,323  23,213    39,213       406,260  419,753
Weighted Average
     Interest Rate                6.67%      6.76%   6.74%   7.65%   8.22%    8.44%                  -

Subordinated Debentures,
 including current portion          8,320    11,608  9,534     -       -       9,310        38,772   38,772
Weighted Average
     Interest Rate                6.31%      8.43%   8.32%     -       -      8.78%                  -
</TABLE>
We do not use derivatives or other financial  instruments to hedge interest rate
risk in our portfolio.  We try to limit the effects of changes in interest rates
by matching as closely as possible,  on an ongoing basis,  the maturity and cost
of the funds we borrow to finance our leasing  activities  with the maturity and
repricing  characteristics  of our lease portfolio.  However, a rise in interest
rates would increase the cost of funds we borrow to finance our lease portfolio,
including  that  portion  of the debt  which  is not  precisely  matched  to the
characteristics  of the portfolio.  Telmark has a formal risk management  policy
which limits the  short-term  exposure to an amount which is  immaterial  to the
results of operations or cash flows.

The subordinated  debentures' interest rate is at the greater of the quoted rate
or a rate based upon an average discount rate for U.S. Government Treasury Bills
(T-Bill),  with maturities of 26 weeks.  Based on the T-Bill rate of 3.55% as of
June 30, 2001,  as compared to the stated rates of the  debentures,  which range
from 6.25% to 9.00% at June 30, 2001, we believe a reasonably possible near-term
change in interest rates and the conversion of debt to a variable rate would not
cause material near-term losses in future earnings or cash flows.  Finally,  for
the portion of debt which is not  precisely  matched as of June 30, 2001,  we do
not believe that reasonably  possible near-term increases in interest rates will
result in a material  near-term loss in future  earnings,  fair values,  or cash
flows of Telmark.
                                       10
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                                 PAGES
                                                                                                                 -----
<S>                                                                                                              <C>
TELMARK LLC AND CONSOLIDATED SUBSIDIARIES:
         Report of Independent Accountants.......................................................................12

         Consolidated Balance Sheets, June 30, 2001 and 2000.....................................................13

         Consolidated Statements of Income and Member's Equity,
                  for the years ended June 30, 2001, 2000 and 1999...............................................14

         Consolidated Statements of Cash Flows for the years ended June 30, 2001, 2000 and 1999..................15

         Notes to Consolidated Financial Statements..............................................................16
</TABLE>
                                       11
<PAGE>
                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of Telmark LLC:

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements  of income and member's  equity and cash flows  present
fairly,  in all  material  respects,  the  financial  position of TELMARK LLC (a
wholly owned subsidiary of Agway Holdings Inc.) and its subsidiaries at June 30,
2001 and 2000, and the results of their operations and their cash flows for each
of the three  years in the  period  ended  June 30,  2001,  in  conformity  with
accounting principles generally accepted in the United States of America.  These
financial  statements  are  the  responsibility  of  Telmark's  management;  our
responsibility  is to express an opinion on these financial  statements based on
our audits.  We conducted  our audits of these  statements  in  accordance  with
auditing  standards  generally  accepted in the United States of America,  which
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,  assessing the  accounting  principles
used and  significant  estimates made by management,  and evaluating the overall
financial  statement  presentation.   We  believe  that  our  audits  provide  a
reasonable basis for our opinion.






PricewaterhouseCoopers LLP

Syracuse, New York
July 29, 2001
                                       12
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES

                                 BALANCE SHEETS
                             JUNE 30, 2001 AND 2000
                             (THOUSANDS OF DOLLARS)


                                     ASSETS
<TABLE>
<CAPTION>

                                                          2001             2000
                                                       ------------     ------------
<S>                                                    <C>              <C>
Restricted cash........................................$      8,306     $     10,103
Leases and notes receivable, net.......................     688,878          626,538
Investments............................................      14,695           13,606
Equipment, net.........................................       1,017              483
Other assets...........................................       1,700            1,753
                                                       ------------     ------------

      Total Assets.....................................$    714,596     $    652,483
                                                       ============     ============
</TABLE>


                         LIABILITIES AND MEMBER'S EQUITY

<TABLE>
<CAPTION>

                                                          2001             2000
                                                       ------------     ------------
<S>                                                    <C>              <C>
Accounts payable.......................................$     6,839      $     9,666
Payable to Agway Inc...................................      5,652            5,114
Accrued expenses, including interest of
      $5,562 - 2001 and $4,020 - 2000 .................     10,315            8,061
Deferred income taxes..................................      1,681               39
Borrowings under short term bank lines of credit.......     71,138           75,176
Borrowings under revolving loan facility...............    215,500          164,500
Notes payable..........................................    240,260          240,256
Subordinated debentures................................     38,772           37,398
                                                       ------------     ------------


      Total Liabilities................................    590,157          540,210

Commitments & Contingencies............................
Member's Equity........................................    124,439          112,273
                                                       ------------     ------------

      Total Liabilities and Member's Equity............$   714,596      $   652,483
                                                       ============     ============
</TABLE>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.
                                       13
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    STATEMENTS OF INCOME AND MEMBER'S EQUITY
                FISCAL YEARS ENDED JUNE 30, 2001, 2000, AND 1999
                             (THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                                2001           2000         1999
                                             ---------     ----------    ----------
<S>                                          <C>           <C>           <C>
Revenues:
     Interest and finance charges .......    $ 84,493      $ 75,131      $ 68,337
     Service fees and other income ......       1,700         1,654         1,669
                                             ---------     ---------     ---------

         Total revenues .................      86,193        76,785        70,006
                                             ---------     ---------     ---------
Expenses:
     Interest expense ...................      36,941        31,536        27,626
     Provision for credit losses ........       9,461         7,899         8,024
     Selling, general and administrative       18,549        17,291        16,198
                                             ---------     ---------     ---------

         Total expenses .................      64,951        56,726        51,848
                                             ---------     ---------     ---------


         Income before income taxes .....      21,242        20,059        18,158

Provision for income taxes ..............       9,076         8,352         7,756
                                             ---------     ---------     ---------


         Net income .....................      12,166        11,707        10,402

Member's equity, beginning of year ......     112,273       105,566        95,164

Distribution of member's equity .........           0        (5,000)            0
                                             ---------     ---------     ---------


Member's equity, end of year.............    $124,439      $112,273      $105,566
                                             =========     =========     =========
</TABLE>

     The accompanying  notes are an integral part of the consolidated  financial
statements.
                                       14
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                FISCAL YEARS ENDED JUNE 30, 2001, 2000, AND 1999
                             (THOUSANDS OF DOLLARS)

INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>

                                                2001           2000         1999
                                             ---------     ----------    ----------
<S>                                          <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income ...........................  $ 12,166     $  11,707      $ 10,402
     Adjustments to reconcile net income to
       net cash from operating activities:
         Depreciation and amortization ....       303           386           510
         Deferred taxes ...................     1,642         5,481         1,587
         Provision for credit losses ......     9,461         7,899         8,024
         Patronage refund received in stock    (1,089)         (826)         (930)
         Changes in assets and liabilities:
              Other assets ................        53          (408)         (239)
              Payables ....................    (2,827)        2,974         1,584
              Income taxes payable ........     7,750        (3,190)        2,153
              Accrued expenses ............     2,254           403          (260)
                                              ---------     ---------     ---------
         Net cash flow provided by
              operating activities ........    29,713        24,426        22,831
                                             ---------     ---------     ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Leases originated ....................  (284,510)     (282,064)     (252,107)
     Leases repaid ........................   212,709       198,698       188,637
     Purchases of equipment, net ..........      (837)            0          (378)
                                             ---------     ---------     ---------
         Net cash flow used
              in investing activities .....   (72,638)      (83,366)      (63,848)
                                             ---------     ---------     ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net change in borrowings under
         short term bank and revolving
         lines of credit ..................    44,962        (3,080)       (9,841)
     Proceeds from revolving line of credit   126,000       143,100       109,384
     Repayment of revolving line of credit   (124,000)      (91,644)      (93,243)
     Proceeds from notes payable ..........    61,000             0             0
     Repayment of notes payable ...........   (33,500)      (24,000)      (23,000)
     Proceeds from lease backed notes .....         0        68,100        48,384
     Repayment of lease backed notes ......   (27,496)       (8,645)       (7,243)
     Repayment of capital lease ...........         0             0           (17)
     Net change in payable to Agway Inc.
         excluding income taxes ...........    (2,212)      (19,033)       15,742
     Proceeds from sale of debentures .....     5,888        18,145         3,627
     Repayment of debentures ..............    (4,514)      (18,380)            0
     Distribution of member's equity ......    (5,000)            0             0
     Net change in restricted cash ........     1,797        (5,623)       (2,776)
                                             ---------     ---------     ---------
         Net cash flow provided by
                financing activities ......    42,925        58,940        41,017
                                             ---------     ---------     ---------

     Net change in cash ...................         0             0             0
     Cash at beginning of year ............         0             0             0
                                             ---------     ---------     ---------
     Cash at end of year ..................  $      0      $      0      $      0
                                             =========     =========     =========


     Cash paid during period for:
         Interest .........................  $ 35,399      $ 30,774      $ 28,629
         Income Taxes .....................  $   (345)     $  6,202      $  3,556
</TABLE>


     The accompanying  notes are an integral part of the consolidated  financial
statements.
                                       15

<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                          NOTES TO FINANCIAL STATEMENTS
                             (THOUSANDS OF DOLLARS)

1. SIGNIFICANT ACCOUNTING POLICIES

Operations
      Telmark LLC  ("Telmark" or the "Company") was organized in 1964 as Telmark
Inc. under the Business Corporation Law of the State of New York. Effective July
1, 1998,  Telmark Inc. was merged into Telmark LLC, a Delaware limited liability
company.  Telmark is in the business of leasing  agricultural related equipment,
vehicles,  and  buildings.  Telmark's  customers  are  farmers  and other  rural
businesses  as well as  manufacturers  and  independent  dealers  that serve the
agricultural  marketplace.  Telmark operates  throughout the continental  United
States  and  Canada.  On July 1,  2001,  Telmark  became a direct  wholly  owned
subsidiary of Agway Inc. ("Agway"),  one of the largest  agricultural supply and
services cooperatives in the United States. Prior to July 1, 2001, Telmark was a
direct  wholly owned  subsidiary  of Agway  Holdings  Inc.  ("AHI") an  indirect
subsidiary of Agway.  Effective  July 1, 2001,  Agway  simplified  its corporate
structure by merging AHI into Agway and assuming all assets and  liabilities  of
AHI.

Basis of Consolidation
      The consolidated  financial  statements include the accounts of all wholly
owned subsidiaries.  All significant intercompany transactions and balances have
been eliminated in consolidation.

Business Segments
      Telmark  operates in one reportable  segment of direct finance  leasing of
agricultural related equipment, vehicles and buildings to farmers or other rural
businesses that serve the agricultural marketplace. Leases and notes outside the
United States represent less than one half of 1% of the total assets of Telmark.

Reclassifications
      Certain   amounts  in  prior  years'   financial   statements   have  been
reclassified to conform to the current year's  consolidated  financial statement
presentation.

Cash and Equivalents
      Telmark  considers all investments with a maturity of three months or less
when purchased to be cash equivalents.

Restricted Cash
      Certain  cash  accounts  amounting to $8,306 and $10,103 at June 30, 2001,
and 2000, respectively,  collateralize  lease-backed notes payable. This cash is
held in segregated cash accounts  pending  distribution and is restricted in its
use. See Note 5.

Lease Accounting
      Completed  lease  contracts,  which  qualify as direct  finance  leases as
defined  by  Statement  of  Financial   Accounting  Standards  ("SFAS")  No.  13
"Accounting for Leases," are accounted for by recording on the balance sheet the
total future minimum lease payments receivable,  plus the estimated unguaranteed
residual  value of leased  equipment,  less the  unearned  interest  and finance
charges. Unearned interest and finance charges represent the excess of the total
future  minimum lease  payments plus the estimated  unguaranteed  residual value
expected  to be  realized  at the end of the  lease  term  over  the cost of the
related equipment.  Interest and finance charge income is recognized as revenue,
by  using  the  interest  method  over  the term of the  lease,  which  for most
commercial  and  agricultural  leases is 60 months or less with a maximum of 180
months for  buildings.  Income  recognition is suspended on all leases and notes
which become past due greater than 120 days. As of June 30, 2001,  and 2000, the
recognition of interest income was suspended on leases and notes totaling $6,362
and $6,048, respectively.
      Initial  direct costs  incurred in  consummating  a lease are not expensed
when the lease is originated.  The expense is capitalized and amortized over the
life of the lease.  This  deferral  of expenses  has the effect of reducing  the
expense  recorded in the period the lease is booked,  and increasing the expense
recognized over the remaining life of the lease.

                                       16
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Lease Accounting (continued)
Initial  direct  costs  deferred and  amortization  expense  recognized  were as
follows for the years ended June 30:
<TABLE>
<CAPTION>

                                                      2001          2000          1999
                                                     ------        ------        ------
           <S>                                       <C>           <C>           <C>
           Expenses not recognized this year
           and deferred to later years               7,404         7,524         6,745

           Expenses from prior years recognized
           this year                                 5,887         5,643         4,969
</TABLE>

      Provisions  for credit losses are charged to income in amounts  sufficient
to maintain the allowance at a level considered  adequate to cover losses in the
existing  portfolio.  The net  investment  in a lease  is  charged  against  the
allowance  for credit  losses when  determined  to be  uncollectible,  generally
within one year of becoming past due.

Investments
      Investments comprise capital stock of a cooperative bank acquired from the
bank at par or  stated  value.  This  stock is not  traded  and is  historically
redeemed on a periodic  basis by the bank at cost. By its nature,  this stock is
held for redemption and is reported at cost. Patronage refunds on this stock are
recorded as a reduction  of interest  expense and totaled  $1,555,  $1,180,  and
$1,329 for the years ended June 30, 2001, 2000, and 1999, respectively.

Equipment
      Depreciation  is  calculated  using  the  straight-line  method  over  the
estimated useful lives of the equipment.

Impairment of Long-Lived Assets
      Long-lived  assets  to be  held  and  used by  Telmark  are  reviewed  for
impairment  whenever  events  or  changes  in  circumstances  indicate  that the
carrying  amount of an asset may not be  recoverable.  There were no charges for
impairment for the years ended June 30, 2001, 2000, and 1999.

Advertising Costs
      Advertising  costs are expensed as incurred.  Advertising  expense for the
years ended June 30,  2001,  2000,  and 1999,  was $1,171,  $1,034,  and $1,008,
respectively.

Income Taxes
      Telmark  provides for income taxes in  accordance  with the  provisions of
Statement of Financial  Accounting  Standards  (SFAS) No. 109,  "Accounting  for
Income Taxes." Under the liability  method  specified by SFAS No. 109,  deferred
tax assets and  liabilities  are based on the  difference  between the financial
statement and tax basis of assets and  liabilities  as measured by the tax rates
which are  anticipated  to be in effect  when  these  differences  reverse.  The
deferred tax provision  represents the net change in the assets and  liabilities
for deferred tax. A valuation  allowance is established  when it is necessary to
reduce  deferred  tax  assets to amounts  for which  realization  is  reasonably
assumed.
      Telmark is included in a  consolidated  federal tax return filed by Agway.
Effective  July 1,  1998,  for State  income  tax  filing  purposes,  Telmark is
included as a business  division of AHI, and effective July 1, 2001,  Telmark is
included as a business division of Agway. Under Telmark's tax sharing agreement,
the  provision  for income  taxes and  related  credits and carry  forwards  are
calculated on a separate  company basis and billed to Telmark as  appropriate on
an interim basis.

Use of Estimates
      The  preparation  of financial  statements in conformity  with  accounting
principles   generally  accepted  in  the  United  States  of  America  requires
management to make estimates and assumptions that affect the reported amounts of
assets and  liabilities  and disclosure of contingent  assets and liabilities at
the date of the financial  statements,  and the reported amounts of revenues and
expenses  during the reporting  period.  Actual  results could differ from those
estimates.
                                       17
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

2. LEASES, NOTES AND ALLOWANCE FOR CREDIT LOSSES

      Leases and notes as of June 30 were as follows:
<TABLE>
<CAPTION>

                                                          2001             2000
                                                       ---------       ---------
<S>                                                    <C>              <C>
      Leases:
        Commercial and agricultural                    $936,162        $861,863
        Leasing to Agway Inc. and subsidiaries           30,813           4,000
                                                       ---------       ---------
                                                        966,975         865,863
      Retail installment loans                           17,562          20,388
                                                       ---------       ---------
             Total leases and notes                    $984,537        $886,251
                                                       =========       =========
</TABLE>

      Net investment in leases and notes at June 30 are summarized as follows:
<TABLE>
<CAPTION>

                                                          2001             2000
                                                       ---------        ---------
<S>                                                    <C>              <C>
      Leases and notes                                 $ 984,537        $ 886,251
      Unearned interest and finance charges             (275,228)        (240,745)
      Net deferred origination costs                      15,085           13,568
                                                       ---------        ---------
         Net investment                                  724,394          659,074
      Allowance for credit losses                        (35,516)         (32,536)
                                                       ---------        ---------
         Leases and notes receivable, net              $ 688,878        $ 626,538
                                                       =========        =========
</TABLE>

Included within the above leases and notes are unguaranteed  estimated  residual
values of leased property  approximating  $103,700 and $92,700 at June 30, 2001,
and 2000, respectively.

      Contractual  maturities  of leases  and notes  were as follows at June 30,
2001:
<TABLE>
<CAPTION>
                                                          LEASES
                                            -----------------------------------
                                              COMMERCIAL           TO AGWAY                 RETAIL
                                                  AND              INC. AND               INSTALLMENT
                                             AGRICULTURAL         SUBSIDIARIES               LOANS              TOTAL
                                            -------------         -------------           -----------     --------------
      <S>                                   <C>                   <C>                     <C>             <C>
      2002                                  $     241,631         $    4,364              $    6,210      $      252,205
      2003                                        198,400              4,018                   3,883             206,301
      2004                                        154,255              3,809                   2,481             160,545
      2005                                        107,065              3,603                   1,308             111,976
      2006                                         69,679              3,451                   1,074              74,204
      Thereafter                                  165,132             11,568                   2,606             179,306
                                            -------------         -------------           -----------     --------------
           Leases and notes                       936,162             30,813                  17,562             984,537
      Unearned interest and finance charges      (261,355)           (10,306)                 (3,567)           (275,228)
      Net deferred origination costs               15,029                 13                      43              15,085
                                            -------------         -------------           -----------     --------------
         Net investment                     $     689,836         $   20,520              $   14,038      $      724,394
                                            =============         =============           ===========     ==============
</TABLE>

      Changes in the  allowance  for credit  losses for the years  ended June 30
were as follows:
<TABLE>
<CAPTION>
                                                                       2001               2000                  1999
                                                                  --------------      -------------       -------------
              <S>                                                 <C>                 <C>                 <C>
              Balance, beginning of year                          $      32,536       $     29,978        $     27,071
              Provision for credit losses charged to operations           9,461              7,899               8,024
              Charge-offs                                                (9,851)            (9,179)             (6,820)
              Recoveries                                                  3,370              3,838               1,703
                                                                  --------------      -------------       -------------
                  Balance, end of year                            $      35,516       $     32,536        $     29,978
                                                                  ==============      =============       =============
</TABLE>
                                       18
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)
3. EQUIPMENT

      Equipment, at cost, consisted of the following at June 30:
<TABLE>
<CAPTION>
                                                          2001                  2000
                                                     -------------         --------------
      <S>                                            <C>                   <C>
      Office and other equipment.................    $      1,757          $      2,571
      Less accumulated depreciation..............            (740)               (2,088)
                                                     -------------         -------------
                                                     $      1,017          $        483
                                                     =============         =============
</TABLE>

4. INCOME TAXES

      The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                                 2001                 2000             1999
                                                              -------------     -------------    -------------
           <S>                                                <C>               <C>              <C>
           Currently payable:
                Federal..................                     $      5,569      $       2,427    $       4,451
                State....................                            1,865                444            1,718
           Deferred......................                            1,642              5,481            1,587
                                                              -------------     -------------    -------------

                                                              $      9,076      $       8,352    $       7,756
                                                              =============     =============    =============
</TABLE>
Telmark's  effective  income tax rate on pre-tax income differs from the federal
statutory tax rate as follows:
<TABLE>
<CAPTION>
                                                              2001              2000              1999
                                                              -----             -----             -----
           <S>                                                <C>               <C>               <C>
                Statutory federal income tax rate ........    35.0%             34.0%             34.0%

                Tax effects of:
                    State taxes, net of federal benefit ..     6.2               6.4               8.0
                    Other items...........................     1.5               1.2                .7
                                                              -----             -----             -----

                Effective income tax rate                     42.7%             41.6%             42.7%
                                                              =====             =====             =====
</TABLE>
The  components of the net deferred tax asset  (liability) as of June 30 were as
follows:
<TABLE>
<CAPTION>
                                                         2001                    2000
                                                     -------------         -------------
              <S>                                    <C>                   <C>
              Deferred tax assets:
                  Allowance for credit losses....    $     14,046          $     12,839
                  Alternative minimum tax
                     credit carryforward.........           5,944                 5,870
                  Other..........................             243                   917
                                                     -------------         -------------
                  Total deferred tax assets                20,233                19,626
                                                     -------------         -------------

              Deferred tax liabilities:
                  Difference between book and
                      tax treatment of leases....          21,914                19,470
                  Other..........................               0                   195
                                                     -------------         -------------
                       Total deferred tax liabilities      21,914                19,665
                                                     -------------         -------------
                       Net deferred tax asset
                        (liability)..............    $     (1,681)         $        (39)
                                                     =============         =============
</TABLE>
Based on  Telmark's  history of taxable  earnings and its  expectations  for the
future,  management has determined  that operating  income will more likely than
not be  sufficient  to  recognize  its  deferred  tax assets.  At June 30, 2001,
Telmark's  federal  alternative  minimum  tax  credit  can  be  carried  forward
indefinitely.
                                       19
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT
At June 30, borrowings under lines of credit, term debt
      and subordinated debentures consisted of the following:                      2001           2000
                                                                                ----------     ----------
<S>                                                                             <C>            <C>
Lines of credit and revolving loans payable to banks due in
   varying amount and dates through April 12, 2004 with
   interest ranging from 4.45% to 7.47%...........................              $ 286,638      $ 239,676
Unsecured notes payable to insurance companies due in varying
   amount and dates through December 1, 2012, with interest
   ranging from 6.55% to 8.72%....................................                149,500        122,000
Lease-backed notes payable to insurance companies in varying
   amounts and dates through December 15, 2008 with interest
   rates ranging from 6.54% to 9.05%..............................                 90,760        118,256
                                                                                ----------     ----------
     Total borrowings under lines of credit and Term Debt.........                526,898        479,932
Subordinated debentures due in varying amount and dates through
   March 31, 2009, with interest ranging from 6.25% to 9.00%......                 38,772         37,398
                                                                                ----------     ----------
     Total Debt...................................................              $ 565,670      $ 517,330
                                                                                ==========     ==========
</TABLE>

Lines of Credit and Revolving Loans
      As of June 30, 2001,  Telmark has credit  facilities  available from banks
which allow it to borrow up to an aggregate of $389,300.  Uncommitted short-term
line of credit  agreements  permit borrowing up to $89,300 on an unsecured basis
with  interest  paid upon  maturity.  The lines bear  interest  at money  market
variable rates. A committed  $300,000  partially  collateralized  revolving term
loan facility  permits us to draw  short-term  funds  bearing  interest at money
market rates or draw  long-term  debt at rates  appropriate  for the term of the
note  drawn.  The  total  amount  outstanding  as of June 30,  2001,  under  the
short-term  lines of credit and the revolving term loan facility was $71,138 and
$215,500,  respectively.  The  revolving  term  loan  facility  of  $300,000  is
partially  collateralized  by our investment in a cooperative bank having a book
value of $14,695 at June 30, 2001.
      Telmark  borrows under its  short-term  line of credit  agreements and its
revolving term agreement  from time to time to fund its  operations.  Short-term
debt  serves as interim  financing  between the  issuances  of  long-term  debt.
Telmark  renews its lines of credit  annually.  The $89,300  lines of credit all
have terms expiring during the next 12 months.  The $300,000 revolving term loan
facility is available through May 1, 2002.

Unsecured Notes Payable to Insurance Companies
      At June 30, 2001,  we had balances  outstanding  on unsecured  senior note
private placements  totaling $149,500.  In November 2000, Telmark issued $61,000
of  unsecured  senior  notes  to  insurance   companies.   Interest  is  payable
semiannually  on each senior note.  Principal  payments are both  semiannual and
annual. The note agreements are similar to each other and each contains specific
financial covenants, the most restrictive of which prohibit:
      (i)   tangible  net worth,  defined as consolidated  tangible  assets less
            total  liabilities  (excluding  notes payable to Agway),  from being
            less than an amount  equal to or  greater  than the sum of  $85,000,
            plus 50% of all net  income (if a  positive  number)  for all fiscal
            years ended after January 1, 2000. As of June 30, 2001, the required
            minimum net worth is $96,900;
      (ii)  the ratio of total liabilities  less  subordinated  notes payable to
            Agway to member's  equity plus  subordinated  notes payable to Agway
            from exceeding 5:1;
      (iii) the ratio of earnings  available  for fixed  charges from being less
            than 1.25:1, and
      (iv)  equity distributions  and restricted  investments (as defined)  made
            after July 1, 2000 to exceed 50% of consolidated  net income for the
            period beginning on July 1, 2000 through the date of  determination,
            inclusive. As of June 30, 2001, $6,100 of member's equity is free of
            this restriction.
      (v)   entering  into  leasing  transactions  with Agway which exceed 5% of
            total  assets.  As of  June  30,  2001,  $15,200  is  free  of  this
            restriction.
For the year  ended June 30,  2001,  Telmark  has  complied  with all  covenants
contained in its borrowing agreements.

                                       20
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT (CONT.)
Lease-Backed Notes Payable to Insurance Companies
     Telmark  has issued lease-backed  notes,  through  two wholly owned special
purpose funding subsidiaries as follows:
<TABLE>
<CAPTION>
TELMARK LEASE FUNDING         YEAR ISSUED      ISSUED CLASS A    ISSUED CLASS B      RATE CLASS A    RATE CLASS B
---------------------         -----------      --------------    --------------      ------------    ------------
         <S>                       <C>              <C>               <C>                <C>             <C>
         II                        1999             44,800            3,600              6.54%           7.61%
         III                       2000             63,000            5,100              7.69%           9.05%
</TABLE>

     The notes are collateralized by leases having an aggregate present value of
contractual lease payments equal to or greater than the principal balance of the
notes, and the notes are further  collateralized by the residual values of these
leases and by  segregated  cash  accounts.  Two notes  relating to Telmark Lease
Funding I, LLC were paid in full during  2001,  and in June 2001  Telmark  Lease
Funding I, LLC was approved to be dissolved. The total outstanding under Telmark
Lease  Funding  II, LLC and  Telmark  Lease  Funding  III,  LLC was  $27,218 and
$63,542, respectively, as of June, 2001.

Subordinated Debentures
     The subordinated debentures represent the outstanding balance of registered
debentures  offered  to and  held by the  general  public.  The  debentures  are
unsecured and are subordinate to all senior debt of Telmark. Interest is paid on
the  debentures  on January  1, April 1, July 1, and  October 1 of each year and
may, at the holders option, be reinvested.  The interest rate paid on debentures
is the greater of the stated rate or a rate based upon an average  discount rate
for U.S. Government Treasury Bills with a maturity of 26 weeks.

Maturities
     The  aggregate  amounts  of  notes  payable,  and  subordinated  debentures
maturing after June 30, 2001, are as follows:
<TABLE>
<CAPTION>

                                        NOTES PAYABLE                    SUBORDINATED
     Year Ending June 30,             BANK      INS. COMPANIES           DEBENTURES                TOTAL
                             -------------    ----------------           -------------     ----------------
     <S>                     <C>              <C>                        <C>               <C>
     2002                    $     185,638    $         81,496           $       8,320     $       275,454
     2003                           61,000              50,924                  11,608             123,532
     2004                           40,000              39,091                   9,534              88,625
     2005                                0               6,323                       0               6,323
     2006                                0              23,213                       0              23,213
     Thereafter                          0              39,213                   9,310              48,523
                             -------------    ----------------           -------------      ---------------
                             $     286,638    $        240,260           $      38,772      $      565,670
                             =============    ================           =============      ===============
</TABLE>

Fair Value
     The carrying amounts and estimated fair values of our significant financial
instruments held for purposes other than trading at June 30, were as follows:
<TABLE>
<CAPTION>

                                                     2001                              2000
                                         ---------------------------            -----------------------
                                         CARRYING             FAIR              CARRYING            FAIR
                                          AMOUNT             VALUE               AMOUNT            VALUE
                                         --------           --------            --------          --------
<S>                                      <C>                <C>                 <C>               <C>
Lines of Credit and Term Debt            $526,898           $540,391            $479,932          $486,747
Subordinated Debentures                    38,772             38,772              37,398            35,950
</TABLE>
                                       21
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

6.  EMPLOYEE BENEFIT PLANS

Employees  of Telmark  participate  in Agway's  employee  benefit  plans,  which
include a defined benefit Retirement Plan, a defined contribution 401(K) plan, a
medical and dental benefit plan, a  postretirement  medical plan, and a life and
health  insurance  plan.  Total benefit costs under these plans are allocated by
Agway to Telmark primarily based on payroll costs. Benefit costs for those plans
included  in selling,  general and  administrative  expense  were  approximately
$1,900,  $1,500, and $1,400 for the periods ended June 30, 2001, 2000, and 1999,
respectively.

7.  RELATED PARTY TRANSACTIONS

Payable to Agway Inc.
     During the quarter ended March 31, 2000,  Telmark  discontinued  the use of
the  depository  and  disbursement  accounts  of  Agway  and  initiated  its own
independent cash management  system. The payable to Agway Inc. after this change
is principally any unpaid member equity distribution and/or any net income taxes
payable.

Inter-Company Transactions
     Inter-company  transactions related to leases with Agway, income taxes, and
Agway's  employee  benefit  plans  are  separately  disclosed  in the  financial
statements. Other inter-company transactions with Agway for the years ended June
30 are:
<TABLE>
<CAPTION>
   (Revenue) Expense                                  2001           2000           1999
                                                   ----------     ----------     ----------
   <S>                                             <C>            <C>            <C>
   Interest and finance charges..................  $(1,325)       $ (159)        $  (27)
   Administrative and general expense............    1,199         1,546          1,691
</TABLE>

Interest  and  finance  charges  are earned on  equipment  leases to Agway.  The
administrative  and general  expense caption  described  above includes  certain
shared expenses incurred by Agway on behalf of Telmark,  including the corporate
insurance program,  information services,  payroll,  benefits,  accounts payable
administration,  and  facilities  management.  These  expenses were allocated to
Telmark based on what management believes is a reasonable methodology.

During the year ended June 30, 2000,  Telmark declared a $5,000  distribution of
member's  equity.  During the years ended June 30, 2001 and 1999,  there were no
distributions of member's equity declared.

8.  COMMITMENTS & CONTINGENCIES

COMMITMENTS

Commitments  to extend  credit are  agreements  to lend to a customer as long as
there is no violation of any condition established in the contract.  Commitments
generally have fixed expiration dates or other termination  clauses.  Since some
of the  commitments  are expected to expire  without being drawn upon, the total
commitment  amounts  do not  necessarily  represent  future  cash  requirements.
Outstanding  commitments to extend lease  financing at June 30, 2001 amounted to
$14,397.

LEGAL PROCEEDINGS

Telmark is not a party to any litigation or legal proceedings pending, or to the
best of its  knowledge  threatened,  which,  in the  opinion of its  management,
individually  or in the aggregate,  would have a material  adverse affect on its
results of operations, financial position or liquidity.
                                       22
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

9.  FINANCIAL INSTRUMENTS

Off Balance-Sheet Risk
     Telmark is a party to financial  instruments with off-balance sheet risk in
the normal course of its business to meet the financing  needs of its customers.
These  financial  instruments  consist  of  commitments  to  extend  credit  not
recognized in the balance sheet.  In the event of  non-performance  by the other
party to the  financial  instrument,  Telmark's  credit  risk is  limited to the
contractual  amount of Telmark's  commitment to extend credit.  Telmark uses the
same  credit  and  collateral  policies  in  making  commitments  as it does for
on-balance sheet instruments.

Credit and Market Risk
     Telmark's  business is  concentrated  in  agriculture  in the New  England,
Mid-Atlantic,  and Midwest states with  approximately 70% of its leases directly
related to production agriculture. However, the portfolio of agricultural leases
is diversified  into many different kinds of  agriculture.  As of June 30, 2001,
the largest  concentration is in crops  enterprises  which represents 19% of the
portfolio,  dairy  enterprises  which represents 15% of the portfolio,  and wood
products  enterprises  which represents 11% of the portfolio.  At June 30, 2001,
approximately 43% of our net lease investment is in the states of Michigan,  New
York,  Ohio, and  Pennsylvania.  Adverse  developments  in any of these areas of
concentration could have a corresponding adverse effect on the collectibility of
its lease receivables.

     The  ultimate  collectibility  of  amounts  due under  Telmark's  leases is
directly dependent upon the credit practices used, and the  creditworthiness  of
its customers.  Even though Telmark  follows its credit policies and establishes
reserves for bad debts, there are other factors that could significantly  impact
a customer's ability to pay and consequently, affect lease collection experience
and earnings.  Additional factors that might impact Telmark's ability to collect
lease payments are:

     o        Changes in general economic conditions;
     o        Changes in the level of government  expenditures  on farm programs
              and  other  changes  in  government   agricultural  programs  that
              adversely affect the level of income of our customers;
     o        Adverse  weather-related  conditions  that  negatively  impact the
              agricultural productivity and income of customers; and
     o        Oversupply of, or reduced  demand  for,  agricultural  commodities
              produced by our customers.
                                       23
<PAGE>
ITEM 9.       CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE

There were no changes in or  disagreements  with  accountants  on accounting and
financial disclosure.


                                       24
<PAGE>
                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

DIRECTORS AND  EXECUTIVE OFFICERS
The  Directors of Telmark  determine our policy and are elected by the member at
each  annual  meeting to serve  until the next  annual  meeting  or until  their
successors are elected and qualified. The Board of Directors, except for Messrs.
O'Neill  and  Edinger,  are paid an  annual  retainer  fee of  $1,000  for their
services on the Telmark Board. The executive officers and significant members of
management  of  Telmark  provide  operating  control  to carry out the  policies
established  by the Board of Directors and serve at the  discretion of the Board
with no  guarantee of  employment.  Telmark is  organized  with nine  functional
managers and five region managers reporting to the President, Daniel J. Edinger.
The officers with company wide  responsibilities who report to the President are
the  Director  of Credit,  Director  of  Customer  Operations  and  Collections,
Treasurer and  Secretary,  and the  Controller.  The following  table sets forth
certain  information  regarding  Telmark's  Directors,  executive  officers  and
significant members of management:
<TABLE>
<CAPTION>
                                                                 Years served        Year Became          Term
         Name                  Age  Position                      as Officer         a Director          Expires
         ----                  ---  --------                     ------------        ----------          -------
<S>                            <C>  <C>                               <C>            <C>                 <C>
Peter J. O'Neill               54   Senior Vice President,
                                    Finance and Control,
                                    Chairman of the
                                    Board and Director                 7             1995                July, 2002
Andrew J. Gilbert              42   Director                                         1997                July, 2002
Samuel F. Minor                63   Director                                         1989                July, 2002
Edwin C. Whitehead             60   Director                                         1999                July, 2002
William W. Young               48   Director                                         1992                July, 2002
Daniel J. Edinger              50   President and Director            13             1988                July, 2002
Raymond G. Fuller              50   Director of Customer               7
                                    Operations & Collections
Herbert E. Gerhart             56   Director of Finance               24
Jennifer L. Hicks              38   Treasurer & Secretary
Richard A. Kalin               52   Controller                         7
Kipp R. Weaver                 51   Director of Credit                 7
</TABLE>

More detailed biographies of each person listed above, are set forth below.

PETER J.  O'NEILL - Mr.  O'Neill's  principal  occupation  has been  Senior Vice
President, Finance and Control of Agway for more than five years.

ANDREW J. GILBERT - Mr. Gilbert is a member of the Agway Board of Directors.  He
has been engaged in full-time farming at Adon Farms for more than five years.

SAMUEL J. MINOR - Mr. Minor is a member of the Agway Board of Directors.  He has
been engaged in full-time farming at The Spring House for more than five years.

EDWIN C. WHITEHEAD - Mr.  Whitehead is a member of the Agway Board of Directors.
He has been  engaged  in full  time  farming  at White Ayr Farms for more than 5
years.

WILLIAM W. YOUNG - Mr. Young is a member of the Agway Board of Directors. He has
been engaged in full-time farming at Will-O-Crest Farm for more than five years.

DANIEL J. EDINGER - Mr.  Edinger's  principal  occupation  has been President of
Telmark for more than five years.

RAYMOND G.  FULLER - Mr.  Fuller's  principal  occupation  has been  Director of
Customer Operations and Collections of Telmark for more than five years.

HERBERT E. GERHART - Mr.  Gerhart's  principal  occupation  has been Director of
Finance of Telmark for more than five years. He retired in July 2001.

JENNIFER L. HICKS - Ms. Hicks was named  Treasurer of Telmark in June 2001.  She
served as Vice President of Business Operations of the Country Products Group of
Agway  from May 1999 to June 2001.  From  April 1995 to May 1999,  she served as
Director of Finance for Country Products Group.

RICHARD A. KALIN - Mr.  Kalin's  principal  occupation  has been  Controller  of
Telmark for more than five years.

KIPP R. WEAVER - Mr. Weaver's  principal  occupation has been Director of Credit
of Telmark for more than five years.
                                       25
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION

Employees  of Telmark  are  eligible  to  participate  in Agway's  benefits  and
compensation plans. The following table sets forth information  regarding annual
and  long-term  compensation  for services in all  capacities to Telmark for the
fiscal years ended June 30, 2001, 2000, and 1999, of the chief executive officer
and any of the other four most highly compensated  executive officers of Telmark
(other than the CEO) who were serving in such capacity at June 30, 2001 and were
compensated over $100,000.
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------
                                                          ANNUAL
                                                      COMPENSATION(4)
                                                ---------------------------
                                                                               ALL OTHER
NAME AND                                                                      COMPENSATION
PRINCIPAL POSITION                 YEAR         SALARY(1)      BONUS(2)           (3)
------------------------------ ------------  --------------- ------------  -------------------
<S>                                <C>       <C>             <C>           <C>
Daniel J. Edinger.............     2001      $230,022        $222,680      $  5,030
 President                         2000       224,637         184,950         5,017
                                   1999       199,710         155,040         3,764


Raymond G. Fuller.............     2001      $ 88,553        $100,022      $  3,449
 Director of Customer              2000        70,018          56,804         2,852
 Operations & Collections          1999        69,139          61,616         1,556


Herbert E. Gerhart............     2001      $ 82,206        $ 85,020      $ 16,046
 Secretary and                     2000        70,018          56,804         3,684
 Director of Finance               1999        69,208          61,616         1,480


Richard A. Kalin..............     2001      $ 82,206        $ 85,020      $  3,148
 Controller                        2000        70,018          56,804         4,042
                                   1999        69,238          61,616         2,001


Kipp R. Weaver................     2001      $ 97,316        $100,022      $  4,272
 Director of Credit                2000        84,890          68,871         4,310
                                   1999        84,890          74,703         2,126
</TABLE>
------------------
     (1) Total compensation (defined as base salary or wages, overtime and bonus
or  incentive   compensation)   is  used  in  determining   the  average  annual
compensation  pursuant  to the  Employees'  Retirement  Plan of Agway Inc.  This
amount  includes all deferred  amounts  under the Agway Inc.  Employees'  401(K)
Thrift Investment Plan and the Agway Inc. Employee's Benefits Equalization Plan.

     (2) Members of Agway's chief executive officer's staff and other executives
designated by Agway's chief executive  officer are eligible for participation in
Agway's management  incentive plan. Within Telmark,  the President qualified for
this program.  A bonus may be paid to each eligible  executive  contingent  upon
each  individual's  performance as determined by the President and CEO of Agway,
Telmark's net margin, and other performance  factors.  Bonuses for other Telmark
executive officers may be paid to each eligible  executive  contingent upon each
individual's  performance  as determined by the President of Telmark,  Telmark's
net margin and other  performance  factors.  Bonuses are reflected in the fiscal
year earned regardless of payment date.

     (3) Amounts shown include contributions  made to  the Agway Inc. Employees'
401(K)  Thrift   Investment  Plan  and  the  Agway  Inc.   Employees'   Benefits
Equalization  Plan and any other  payment  not  appropriately  characterized  as
salary or bonus.

     (4) There are no perquisites  paid by us in excess of the lesser of $50,000
or 10% of an executives total salary and bonus for the years disclosed.

                                       26
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION - CONTINUED

EMPLOYEES' RETIREMENT PLAN

The  Employees'  Retirement  Plan of  Agway  Inc.  (the  Retirement  Plan)  is a
non-contributory  defined  benefit  plan  covering  nearly  all  employees.  The
Retirement Plan was amended  effective July 1, 1998, to include a pension equity
formula,  as  well  as  to  recognize  incentive   compensation  as  pensionable
compensation for all employees.  It provides for retirement benefits,  up to the
limits provided by law, based upon average annual  compensation  received during
the  highest 36  consecutive  months in the last 10 years of service and credits
earned for years of service with Telmark. Full credits are earned for service on
and after July 1,  1998,  and  credits  equal to  approximately  3/4 of the full
credits are earned for service prior to July 1, 1998.  The benefit is defined as
an account balance and can be paid out as a lump sum or an annuity.  An employee
is 100% vested in his benefit  after  completing 5 years of service or attaining
age 55 after completing one year of service.

The following  table shows  estimated  annual  benefits  payable upon retirement
using the credit  formula in effect for service  after June 30,  1998,  based on
certain 3-year average remuneration levels and years-of-service classifications.
Under  the  formula,  base  credits  are  applied  to the total  average  annual
compensation  and excess credits are applied to the average annual  compensation
in excess of one-half the Social  Security Wage Base. In developing  this table,
both base and  excess  credits  have been  applied to the total  average  annual
compensation.  Further,  the table was developed assuming a normal retirement at
age 65 and an annuity conversion factor based on a 6% interest rate.

                               PENSION PLAN TABLE
                                  (NEW FORMULA)
                            YEARS OF CREDITED SERVICE
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
   3-YEAR AVERAGE
    REMUNERATION           5             10             15              20             25             30             35
--------------------  ------------  -------------  -------------  -------------- -------------- -------------- --------------
      <S>                  <C>            <C>            <C>             <C>            <C>            <C>            <C>
     $ 125,000             $ 8,800        $16,800        $24,800         $32,100        $39,500        $46,300        $53,000
       150,000              10,600         20,200         29,700          38,500         47,400         55,500         63,600
       175,000              12,400         23,500         34,700          45,000         55,300         64,800         74,300
       200,000              14,100         26,900         39,600          51,400         63,200         74,000         84,900
       225,000              15,900         30,200         44,600          57,800         71,100         83,300         95,500
       250,000              17,700         33,600         49,500          64,200         79,000         92,500        106,100
       275,000              19,400         37,000         54,500          70,700         86,900        101,800        116,700
       300,000              21,200         40,300         59,400          77,100         94,800        111,000        127,300
       325,000              23,000         43,700         64,400          83,500        102,700        120,300        137,900
       350,000              24,800         47,000         69,300          89,900        110,600        129,500        148,500
       375,000              26,500         50,400         74,300          96,400        118,500        138,800        159,100
       400,000              28,300         53,700         79,200         102,800        126,400        148,000        169,700
       425,000              30,100         57,100         84,200         109,200        134,300        157,200        180,300
       450,000              31,800         60,500         89,100         115,600        142,100        166,500        190,900
</TABLE>
Active  participants  are  entitled  to  receive no less than the value of their
benefits  accrued  under the old  retirement  plan benefit  formula which was in
effect through June 30, 1998. In addition,  most active  participants  whose age
plus  service  totaled 55 years or more as of July 1,  1998,  will  receive  the
greater of the benefit  determined under the new formula described above, or the
benefit determined had the old formula remained in effect (grandfathered).

The  old  retirement   plan  benefit   formula  is  based  upon  average  annual
compensation  received  during the highest 60 consecutive  months in the last 10
years of service and credited years of service.  Optional earlier retirement and
other  benefits are also  provided.  The old formula  pays a monthly  retirement
benefit based on the greater amount  calculated under two formulas.  The benefit
amount under one formula is subject to an offset for Social Security benefits.
                                       27

<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION - CONTINUED
EMPLOYEES' RETIREMENT PLAN - CONTINUED

The following  table shows  estimated  annual  benefits under the old retirement
plan formula in effect for service before July 1, 1998, upon retirement based on
certain 5-year average remuneration levels and years-of-service classifications.
The table was  developed  assuming  a normal  retirement  at age 65 and does not
reflect  an offset  for up to 50% of the  Social  Security  benefit,  subject to
certain minimum benefits.

                               PENSION PLAN TABLE
                                  (OLD FORMULA)
                            YEARS OF CREDITED SERVICE

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
   5-YEAR AVERAGE
    REMUNERATION           5             10             15              20             25             30             35
--------------------  ------------  -------------  -------------  -------------- -------------- -------------- --------------
      <S>                  <C>            <C>            <C>             <C>            <C>            <C>            <C>
      $125,000             $10,000        $20,000        $30,000         $40,000        $50,000        $60,000        $70,000
       150,000              12,000         24,000         36,000          48,000         60,000         72,000         84,000
       175,000              14,000         28,000         42,000          56,000         70,000         84,000         98,000
       200,000              16,000         32,000         48,000          64,000         80,000         96,000        112,000
       225,000              18,000         36,000         54,000          72,000         90,000        108,000        126,000
       250,000              20,000         40,000         60,000          80,000        100,000        120,000        140,000
       275,000              22,000         44,000         66,000          88,000        110,000        132,000        154,000
       300,000              24,000         48,000         72,000          96,000        120,000        144,000        168,000
       325,000              26,000         52,000         78,000         104,000        130,000        156,000        182,000
       350,000              28,000         56,000         84,000         112,000        140,000        168,000        196,000
       375,000              30,000         60,000         90,000         120,000        150,000        180,000        210,000
       400,000              32,000         64,000         96,000         128,000        160,000        192,000        224,000
       425,000              34,000         68,000        102,000         136,000        170,000        204,000        238,000
       450,000              36,000         72,000        108,000         144,000        180,000        216,000        252,000
</TABLE>
Amounts  under the  Retirement  Plan may be subject to reduction  because of the
limitations imposed under the Internal Revenue Code; however,  the extent of any
reduction will vary in individual cases according to  circumstances  existing at
the  time  pension  payments  commence.   The  Agway  Inc.   Employees'  Benefit
Equalization  Plan has been  established  to provide  for the amount of any such
reduction in annual pension benefits under the Retirement Plan.

The benefits  shown are computed on a straight  life basis and do not reflect an
offset for up to 50% of the Social Security benefit,  subject to certain minimum
benefits.  Also,  the benefits are based on  continuing  the  Retirement  Plan's
benefit  formulas  as in  effect  on June 30,  2001.  As of June 30,  2001,  the
officers  and their  respective  number of credited  years of service  under the
Retirement Plan were as follows:  Messrs.  Edinger, 22; Fuller, 16; Gerhart, 28;
Kalin,  28; and Weaver,  6.  "Compensation"  is defined as the regular salary or
wages,  as reported in the Salary and Bonus columns of the Summary  Compensation
Table, which is paid to an employee for services rendered to Telmark,  including
overtime,  vacation  pay or special  pay and  bonuses as  reported  in the bonus
column of the Executive Compensation disclosure on page 26.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Telmark  has no  compensation  committee.  The  salary  of  Daniel  J.  Edinger,
President of Telmark is determined by Donald P. Cardarelli, President and CEO of
Agway.  The salary of the other  Executive  Officers of Telmark is determined by
Mr.  Edinger.  Salaries of all  Executive  Officers  are  included in the annual
operating  budget,  which budget is approved by the entire Board of Directors of
Telmark.

None of the Executive  Officers or Directors who  participated  in  establishing
compensation  policies  had  interlocks  reportable  under  Section  402  (j) of
Regulation S-K.
                                       28
<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of the  outstanding  member's  equity of Telmark,  as of June 30, 2001,  was
indirectly  owned by Agway.  Effective  July 1,  2001,  Telmark  became a direct
wholly  owned  subsidiary  of  Agway.  None of the  executive  officers  who are
directors of Telmark own any membership interest of Telmark or equity securities
of Agway or Agway's subsidiaries.  All of the other directors are also directors
of  Agway.  Agway  is an  agricultural  cooperative  and  each  of its  members,
including  each Agway  director,  owns one share of $25 par value common  stock.
None of the Telmark executive officers and directors,  either individually or in
the aggregate,  own greater than 1% of any class of equity  security of Telmark,
of Agway, or of any Agway subsidiaries.

 ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

Agway's  members,  including  its  directors,  are customers of Agway and/or its
subsidiaries and may be customers of Telmark.  They purchase products from Agway
or enter into leases with Telmark in the normal  course of operating  their farm
businesses. The price, terms and conditions of any sale or lease transaction are
on the same basis for all of Agway's members.

As of June 30, 2001, Telmark is an indirect wholly owned subsidiary of Agway and
as  such,  had  intercompany  transactions.  See  "Management's  Discussion  and
Analysis of Financial  Condition and Results of Operations" and Notes 2 and 7 to
the Financial Statement for further information.

                                PRINCIPAL MEMBER

As of June 30, 2001,  Telmark is an indirect  wholly owned  subsidiary of Agway.
Agway is one of the largest agricultural supply and services cooperatives in the
United States.
                                       29
<PAGE>
                                     PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
                                                                                                                 PAGE
     ITEM 14 (A)      INDEX TO DOCUMENT LIST                                                                   LOCATION
                                                                                                               --------
                      <S>    <C>                                                                                     <C>
                      (1)    FINANCIAL STATEMENTS
                             Among the responses to this Item 14(a)(1) are the following financial statements
                             which are included in Item 8.
                             (i)    Report of Independent Accountants................................................12
                             (ii)   Consolidated Balance Sheets, June 30, 2001 and 2000..............................13
                             (iii)  Consolidated Statements of  Income and Member's Equity, for the years ended
                                    June 30, 2001, 2000, and 1999....................................................14
                             (iv)   Consolidated Statements of Cash Flow, for the years ended June 30, 2001,
                                     2000, and 1999..................................................................15
                             (v)    Notes to the Consolidated Financial Statements...................................16

                      (2)    FINANCIAL STATEMENT SCHEDULES
                             Schedules are omitted for the reason that they are not required or are not  applicable,  or
                             the required information is shown in the financial statements or notes thereto.

     ITEM 14 (B)      REPORTS ON FORM 8-K
                      No reports on Form 8-K for the three months ended June 30, 2001, have been filed.

     ITEM 14 (C)(1)   EXHIBITS REQUIRED BY SECURITIES AND EXCHANGE COMMISSION REGULATION S-K

                      THE FOLLOWING REQUIRED EXHIBITS ARE EITHER ATTACHED HERETO OR ARE HEREBY INCORPORATED BY REFERENCE
                      TO PREVIOUSLY FILED REGISTRATION STATEMENTS OR THE APPLICABLE FORM 10-K FILED AS SPECIFIED.

                      ARTICLES OF INCORPORATION

                      3(a) - Certificate of Incorporation of Telmark  Inc.  (predecessor  to  Telmark  LLC)  dated  June
                             4, 1964,  as amended  September  8, 1964;  January 15, 1975;  and June 16,  1987,  filed by
                             reference to Exhibit 3 of the Registration  Statement (Form S-1), File No. 33-70732,  dated
                             October 22, 1993.

                      BY-LAWS

                      3(b) - By-laws of Telmark Inc. (predecessor to Telmark LLC) as  amended September 19, 1995,  filed
                             by reference to Exhibit 3 of the Annual Report (Form 10-K) dated August 23, 1996.

                      CERTIFICATE OF FORMATION

                      3(c) - Certificate of  formation of Telmark LLC dated June 25, 1998, filed by reference to Item 14
                             of the Annual Report (Form 10-K) dated August 21, 1998.

                      LIMITED LIABILITY COMPANY AGREEMENT

                      3(d) - Operating agreement of Telmark LLC dated July 1, 1998, filed by reference to Item 14 of the
                             Annual Report (Form 10-K) dated August 21, 1998.

                      CERTIFICATE OF MERGER

                      3(e) - Certificate  of Merger of  Telmark  Inc.  into Telmark  LLC  effective  July 1, 1998, filed
                             by reference to Item 14 of the Annual Report (Form 10-K) dated August 21, 1998.

                                                           30

<PAGE>
ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K (CONTINUED)

     ITEM 14 (C)(1)   EXHIBITS REQUIRED BY SECURITIES AND EXCHANGE COMMISSION REGULATION S-K (CONTINUED)

                      INSTRUMENT DEFINING THE RIGHTS OF SECURITY HOLDERS, INCLUDING INDENTURES

                      4(a) - The Indenture dated as of September 30, 1993, between Telmark Inc. and OnBank &  Trust  Co.
                             of  Syracuse,  New York,  Trustee,  filed by  reference  to  Exhibit 4 of the  Registration
                             Statement (Form S-1), File No. 33-70732, dated October 22, 1993.

                      4(b) - Telmark Inc.  Board  of Directors resolutions dated as of June  21,  1995,  authorizing the
                             issuance of  Debentures  under the  Indenture  filed by  reference to Exhibit 4 of the post
                             effective  Amendment No. 1 to the  Registration  Statement (Form S-1),  File No.  33-84442,
                             dated August 28, 1995.

                      4(c) - Supplemental Indenture dated as of June 30, 1998  between  Telmark  Inc.  and Manufacturers
                             and Trust Company,  filed by reference to Exhibit 4 of the Current Report (Form 8-K),  File
                             No. 33-70732, dated July 6, 1998.

                      4(d) - Supplemental Indenture dated as of July 1, 1998   between   Telmark   Inc.  and Telmark LLC
                             and Manufacturers and Traders Trust Company, filed by reference to Exhibit 4 of the Current
                             Report (Form 8-K), dated July 6, 1998.

                      MATERIAL CONTRACTS
                      10(a)- Agway Inc. (Commission File  Number  2-22791) Pledge Agreement with its lenders dated March
                             28, 2001, filed by reference to Exhibit 10(c) of Agway Inc. Form 10-Q as of March 24, 2001,
                             dated May 8, 2001.

                      10(b)- Agway  Inc.  (Commission  File  Number  2-22791)  Pledge Agreement with  its lenders, dated
                             September 14, 2001,  filed by reference to Exhibit 10(g) of Agway Inc. Form 10-K as of June
                             30, 2001, dated September 18, 2001.
</TABLE>

                                                           31

<PAGE>
                                   SIGNATURES

     Pursuant  to the  requirements  of  Section  13 or 15(d) of the  Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.

                                    TELMARK LLC
                                    (Registrant)

                                              By   DANIEL J. EDINGER
                                                   -----------------------------
                                                   President
                                                   (Principal Executive Officer)

                                            Date   9/12/01

     Pursuant  to the requirements of the Securities  Exchange Act of 1934, this
report  has  been  signed  below  by the  following  persons  on  behalf  of the
registrant and in the capacities and on the date indicated.


      SIGNATURE              TITLE                                        DATE
      ---------              -----                                       -------


/s/ Daniel J. Edinger        President                                   9/12/01
    --------------------      (Principal Executive Officer)



/s/ Peter J. O'Neill         Senior Vice President, Finance and Control  9/12/01
    --------------------     Chairman of the Board and Director
                              (Principal Financial Officer
                              & Principal Accounting Officer)



/s/ Andrew J. Gilbert        Director                                    9/12/01
    --------------------


/s/ Samuel F. Minor          Director                                    9/12/01
    --------------------


/s/ Edwin C. Whitehead       Director                                    9/12/01
    --------------------


/s/ William W. Young         Director                                    9/12/01
    --------------------





                                       32