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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, 2002
                                       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 27, 2002 .
                                         --------------------
                                                             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 27, 2002
    ----------------------                     ---------------------------------
    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.

--------------------------------------------------------------------------------
--------------------------------------------------------------------------------

<PAGE>
                         FORM 10-K ANNUAL REPORT - 2002
                    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.................................................................................. 6
Item 4.        Submission of Matters to Vote of Security Holders.................................................. 6


                                     PART II

Item 5.        Market for the Registrant's Common Equity and Related Membership Matters........................... 7
Item 6.        Selected Financial Data............................................................................ 7
Item 7.        Management's Discussion and Analysis of Financial Condition and Results of Operations.............. 7
Item 7A.       Quantitative and Qualitative Disclosures About Market Risk.........................................15
Item 8.        Financial Statements...............................................................................16
Item 9.        Changes in and Disagreements with Accountants on Accounting and Financial Disclosure...............30


                                    PART III

Item 10.       Directors and Executive Officers of the Registrant.................................................31
Item 11.       Executive Compensation.............................................................................32
Item 12.       Security Ownership of Certain Beneficial Owners and Management.....................................36
Item 13.       Certain Relationships and Related Transactions.....................................................36


                                     PART IV

Item 14.       Exhibits, Financial Statement Schedules and Reports on Form 8-K....................................37

               Signatures.........................................................................................39

               Certifications Under New Exchange Act Rules 13a-14 and 15d-14 of the Exchange Act of 1934..........40
</TABLE>

                                        2
<PAGE>
                                     PART I

ITEM 1. & 2.  BUSINESS AND PROPERTIES

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,  we caution that,  while we believe such  assumptions  or basis to be
reasonable  and make 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 in this report 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  our  control.   Where,   in  any
forward-looking  statement,  we, or our  management,  express 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 we cannot assure you that the
statement of expectation  or belief will result or be achieved or  accomplished.
The words "believe," "expect," "intend" and "anticipate" and similar expressions
identify forward-looking statements.

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. We are 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.

On March 6, 2002, Agway announced its intention to pursue the sale of Telmark to
a third party as part of a plan that would have Agway focus on fewer businesses.
On May 23, 2002, Agway announced that, after lengthy  negotiations,  Agway and a
potential  buyer were  unable to reach  final  agreement  on a sale of  Telmark.
Goldman  Sachs & Co.  is  continuing  to  assist  Agway in  exploring  strategic
alternatives  involving  Telmark.  At this  stage,  we cannot  predict  with any
certainty  when  or if any  such  strategic  alternative  will  be  consummated.
However,  consummation of one or more strategic  alternatives  could result in a
change of control of the Company.

Agway's  membership  interest in Telmark has been  pledged to certain of Agway's
lenders  in  order to  secure  Agway's  obligations  to  those  lenders.  Agway,
simultaneously with this filing, will announce its intention to voluntarily file
petitions  for  reorganization  under Chapter 11 of the U.S.  Bankruptcy Code on
October 1, 2002. This filing WILL NOT include Telmark LLC. Telmark is separately
financed and does not  guarantee  any debt of Agway Inc.  Telmark and Agway have
certain  business  arrangements,  including  leases which we do not expect to be
impacted  by this  filing.  While we have no reason to expect  Agway's  intended
Bankruptcy  filing will have a material effect on Telmark,  the ultimate impact,
if any, on Telmark's  business,  financial  condition,  and results of operation
cannot  be  determined  at  this  time.  Telmark  has  had  another  financially
successful  year. For more information on the operations of Telmark see Item 7 -
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

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 233 Broadway,  New York,  New York 10279.  Copies of the materials
can be obtained from the Commission at prescribed rates.  Information  regarding
the operation of the Public Reference Room may be obtained by calling the SEC at
1-800-SEC-0330.  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.

                                        3
<PAGE>
ITEM 1. & 2.  BUSINESS AND PROPERTIES (CONTINUED)

Our operations  are comprised  almost  exclusively of direct finance  leasing of
agricultural related equipment,  vehicles and buildings.  We also provide retail
installment  loans to  customers  on a very  limited  basis.  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 17,000 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  primarily  farmers  and  other  rural
businesses  as well as  manufacturers  and  independent  dealers  who  serve the
agricultural  marketplace.  As of June 30, 2002, we had total assets of $741,819
and an average net investment in leases and notes of $736,000 for the year ended
June 30, 2002. See Item 8, "Financial Statements".

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.

The sales  force are all  Telmark  employees  working  under  the  direction  of
regional managers.  They call on customers and vendors,  solicit leads,  prepare
documentation and close transactions. There are 84 sales representatives located
in 33 states.  The captive sales force is the primary  distribution  channel for
Telmark's lease finance products.

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 68% 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, 2002,
the largest  concentration was in crops enterprises which represented 19% of the
portfolio,   dairy   enterprises   which   represented  15%  of  the  portfolio,
transportation  enterprises  which  represented  11% of the portfolio,  and wood
products  enterprises which  represented 9% of the portfolio.  At June 30, 2002,
approximately 42% 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.

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

                                        4

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

As of June 30, 2002,  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 a large number of our lease contracts, we have agreed to indemnify customers
if certain  adverse tax  consequences  arise or are alleged in connection with a
lease.  While we  cannot  predict  our  liability  under  these  indemnification
provisions,  we believe  that our  liability is remote and the net effect of any
liability would not be 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 lease  approval  authority to
members of management depending on position,  training, and experience,  as well
as the type  and size of the  lease in  question.  However,  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.  In addition,  where
appropriate, Telmark obtains a lien on certain other property of the customer as
collateral  for payments  under a lease (e.g. a lien on the real estate owned by
the customer as collateral for payments under a building lease). In addition, we
often  intervene in potential  default  scenarios  and work with the customer to
return the lease to current status. 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 relating to the
leased property.  In many cases, we pay certain costs (e.g., property taxes) and
bill the customer for the  appropriate  amount.  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 at the price we
determined to constitute fair market value of the property.

We may not be able to collect lease payments  under a variety of  circumstances,
including:

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

The  ultimate  collectibility  of  amounts  due  under our  leases  is  directly
dependent upon the  creditworthiness  of our customers,  the credit practices we
use to  evaluate  that  creditworthiness,  and the steps we take to protect  our
ability to collect amounts due and/or take back the leased property. Although we
follow our credit policies and 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.
                                        5

<PAGE>



ITEM 1. & 2.  BUSINESS AND PROPERTIES (CONTINUED)

We report our financial  results in only one segment.  See Item 7,  Management's
Discussion  and Analysis of Financial  Condition and Results of  Operations  and
Item 8,  Financial  Statements.  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 August 29, 2002,  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, to foreclose on
the Telmark  membership  interest  pledged as security,  which would result in a
change of  control  of  Telmark.  Agway  has  previously  disclosed  that it has
violated  certain of the  financial  covenants in that credit  agreement  and is
likely to violate those  covenants in the future.  However,  it is expected that
Agway's credit  agreement will be replaced with  Debtor-in-Possession  financing
with its existing lender group pending approval of the Bankruptcy  Court.  While
this new Agway credit  agreement  continues to include a pledge of Telmark stock
as collateral,  Agway has indicated to Telmark that it believes the covenants as
revised are  appropriate to Agway's  current  circumstances.  Foreclosure on the
Telmark stock would  require a default under the new Agway  Debtor-in-Possession
facility.  While there can be no assurances,  the  possibility of foreclosure is
considered  remote.  Also as noted above,  Agway is currently pursuing strategic
alternatives  involving Telmark,  which could also result in a change of control
of Telmark. The impact of a change in control of Telmark cannot be determined at
this time and would  depend  upon the  circumstances  relating  to the change in
control and the  decisions  made by the future  owner and certain of the Company
lenders and financing  sources in connection with a change in control and future
operations of the company.  See the Liquidity and Capital  Resources  Section of
Item 7, Management's  Discussion and Analysis of Financial Condition and Results
of Operations.

 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.

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.
                                        6
<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,  the pledge of Telmark's
membership  interest  by Agway and the  status  of  Agway's  divestment  process
announced  on March  6,  2002.  There is no  public  market  for the  membership
interest and we do not expect one to develop. In the fiscal years ended June 30,
2002 and 2000,  distributions  of $10,000 and $5,000  respectively,  in member's
equity  were  declared.  During  the year  ended  June 30,  2001,  there  was no
distribution 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,  2002,  $3,100 of  member's  equity  was free of this
restriction.  Telmark does not have a formal  distribution  policy and generally
makes permissible distributions when and if requested by its parent, Agway.

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.

2002 COMPARED TO 2001.
NET INCOME
Our net income  increased  by $2,100  (17.2%) from $12,200 in 2001 to $14,300 in
2002.
<TABLE>
<CAPTION>
                                            FY 2002           FY 2001           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Net income                         $14,300           $12,200           2,100            17.2%
</TABLE>
The increase was principally due to increased revenue from a larger  outstanding
portfolio of leases during 2002 as compared to 2001,  and overall lower interest
rates on the  outstanding  debt  compared  to the prior  year,  all of which was
partially offset by an increase in selling,  general and administrative expenses
and an increase in the provision for credit losses, as discussed below.

TOTAL REVENUES
Total revenues of $90,200 in 2002  increased  $4,000 (4.6%) as compared to total
revenues of $86,200 in 2001.
<TABLE>
<CAPTION>
                                            FY 2002           FY 2001           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Total revenues                     $90,200           $86,200           4,000            4.6%
</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 average income rate on the outstanding portfolio.  Average net
investment  in leases and notes for the fiscal year ended June 30, 2002 compared
to the prior year is as follows:
<TABLE>
<CAPTION>
                                            FY 2002           FY 2001           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Average net investment             $736,000          $691,200          44,800           6.5%
</TABLE>
INTEREST EXPENSE
Total  interest  expense of  $33,900  decreased  $3,000  (8.1%) as  compared  to
interest expense of $36,900 in 2001.
<TABLE>
<CAPTION>
                                            FY 2002           FY 2001           ($ DECREASE)     (% DECREASE)
                                            -------           -------           ------------     ------------
         <S>                                <C>               <C>               <C>              <C>
         Interest expense                   $33,900           $36,900           (3,000)          (8.1%)
</TABLE>
                                        7
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)
INTEREST EXPENSE (CONTINUED)
The decrease in our interest  expense is due to lower average  interest rates on
the outstanding  debt compared to the prior year,  which was partially offset by
an increase in the average  amount of debt  required to finance the  increase in
the amount of net leases and notes.

Average debt for the fiscal year ended June 30, 2002  compared to the prior year
is as follows:
<TABLE>
<CAPTION>
                                            FY 2002           FY 2001           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Average debt                       $572,300          $544,700          27,600           5.1%
</TABLE>
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
Selling,  general and  administrative  expenses of $21,700 in 2002  increased by
$3,200 (17.3%) compared to expenses of $18,500 in 2001.
<TABLE>
<CAPTION>
                                            FY 2002           FY 2001           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Selling, general
         and administrative expenses        $21,700           $18,500           3,200            17.3%
</TABLE>
The increase was primarily the result of higher  information  services  expenses
due to  costs  associated  with the  implementation  of a new  lease  accounting
system,  and  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 $10,000 in 2002  represents an increase of
$500 (5.3%) compared to a provision for credit losses of $9,500 in 2001.
<TABLE>
<CAPTION>
                                            FY 2002           FY 2001           $ INCREASE       % INCREASE
                                            -------           -------           ----------       ----------
         <S>                                <C>               <C>               <C>              <C>
         Provision for Credit Losses        $10,000           $9,500            500              5.3%
</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, 2002 the allowance for credit losses
was $37,100  compared to $35,500 at June 30, 2001. In establishing our allowance
for credit losses,  no special  consideration was given to the credit worthiness
of Agway,  because we expect that payment on the leases will continue to be made
in the ordinary  course.  A summary of the changes in the  allowance  for credit
losses is as follows:
                                            FY 2002             FY 2001
                                            --------            --------
         Balance, beginning of year         $ 35,500            $ 32,500
         Provision for credit losses          10,000               9,500
         Charge-offs                         (14,800)             (9,900)
         Recoveries                            6,400               3,400
                                            --------            --------
                  Balance, end of year      $ 37,100            $ 35,500
                                            ========            ========
During 2002 and 2001,  the total value of  non-earning  accounts  increased from
$6,400 in 2001 to $7,400 in 2002 which as a  percentage  of the lease  portfolio
increased from 0.9% in 2001 to 1.0% in 2002. Additionally,  the average level of
current  accounts for 2002 was 97.3%,  which is slightly below the average level
of current  accounts  during 2001 of 97.4%.  Charge-offs  net of recoveries were
$8,400 in 2002 versus $6,500 for 2001, due in part to a general weakening in the
transportation  and  forestry  sectors.  The  allowance  for  credit  losses  is
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 $10,300 in 2002 as compared to $9,100 in 2001
results  in an  effective  tax of 41.7%  and  42.7%,  respectively.  Telmark  is
currently included in consolidated federal and state tax returns filed by Agway.
Under  Telmark's tax sharing  arrangement  with Agway,  the provision for income
taxes and  related  credits  and carry  forwards  are  calculated  on a separate
company basis.
                                       8
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)
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.

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>
                                        9
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

PROVISION FOR CREDIT LOSSES (CONTINUED)

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  arrangement  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,  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 10% over the past five  years.  Our  liability  to equity  ratio
increased from 4.7 in 2001 to 4.8 in 2002.
                                        FY 2002        FY 2001          FY 2000
                                       ---------      ---------        ---------

         CASH IN FLOWS
         Cash flows from operations    $ 26,900       $ 29,700         $ 24,400
         Cash flows from financing       12,000         42,900           59,000
                                       ---------      ---------        ---------
                  Total cash in flows    38,900         72,600           83,400
                                       =========      =========        =========
         CASH OUT FLOWS
         Cash flows from investing      (38,900)       (72,600)         (83,400)
                                       ---------      ---------        ---------

                  Total cash out flows $(38,900)      $(72,600)        $(83,400)
                                       =========      =========        =========

Telmark  supports  a  net  lease  receivable  portfolio  of  $716,800.  We  have
historically  generated  and expect to continue to generate  ample  earnings and
cash flow to meet our debt service requirements. Virtually all of the cash flows
from  operations  have  historically  been  invested  in  growth  of  the  lease
portfolio, repayment of debt and dividends to Agway.

                                       10
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES (CONTINUED)
<TABLE>
<CAPTION>

At June 30,  2002,  Telmark  borrowings  under  lines of  credit,  term debt and
subordinated debentures consisted of the following:
<S>                                                                                                <C>

Lines of credit and revolving loans payable to banks due in varying amounts and dates through
February 13, 2006, with interest ranging from 2.53% to 7.47%.......................................$379,263

Unsecured notes payable to insurance companies due in varying amounts and dates through
December 1, 2012, with interest ranging from 6.55% to 8.72%........................................ 106,667

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%.................................  52,909
                                                                                                   --------

Total borrowings under lines of credit and term debt............................................... 538,839

Subordinated debentures due in varying amounts and dates through March 31, 2010, with interest
ranging from 6.25% to 9.00%........................................................................  44,800
                                                                                                   --------
Total debt.........................................................................................$583,639
                                                                                                   ========
</TABLE>

LINES OF CREDIT AND REVOLVING LOANS
As of June 30, 2002,  Telmark has credit  facilities  available from banks which
allow it to borrow up to an aggregate of $429,300.  Uncommitted  short-term line
of credit  agreements  permit borrowing up to $54,300 on an unsecured basis with
interest paid upon  maturity.  The lines bear interest at money market  variable
rates.  Committed  partially  collateralized  revolving loan facilities totaling
$375,000  permit  Telmark 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,  2002,  under  the
short-term  lines of credit and the revolving term loan facility was $51,263 and
$328,000, respectively.

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. In addition,  in
consideration of the potential sale of the business,  management made a decision
to use short-term  debt through a potential  closing date instead of pursuing an
issuance of additional long-term debt. In May 2002, after lengthy  negotiations,
Agway and a potential  buyer were unable to reach final  agreement  on a sale of
Telmark.  Accordingly,  Telmark  decided  to issue  additional  senior  notes to
insurance  companies.  On August 1, 2002,  Telmark issued  $100,000 of unsecured
senior  notes to insurance  companies.  Proceeds of these notes were used to pay
down the revolving term loan facility,  increasing  the  availability  under the
lines of credit and revolving loans discussed above.

Unsecured Notes Payable to Insurance Companies
At June 30, 2002,  Telmark had  balances  outstanding  on unsecured  senior note
private placements totaling $106,677.  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.  For the year ended June 30,  2002,  Telmark  has  complied  with all
covenants contained in its borrowing agreements.

Lease-Backed Notes Payable to Insurance Companies
Telmark  has  issued  lease-backed  notes,   through  two  wholly  owned,  fully
consolidated,  special purpose funding subsidiaries. The total outstanding under
Telmark Lease Funding II, LLC and Telmark Lease Funding III, LLC was $13,128 and
$39,781, respectively as of June 2002.

Subordinated Debentures
In anticipation of the possible sale of Telmark,  effective as of March 6, 2002,
Telmark  ceased  issuing  debentures  to the public,  other than pursuant to the
interest  reinvestment  option of the debentures.  Under that option,  debenture
holders  may elect to receive  interest on  debentures  either in cash or in the
form of  additional  principal  on the  debentures.  However,  once a  debenture
reaches  maturity,  the holder will not be  permitted  to invest the proceeds in
additional debentures.

                                       11
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

LIQUIDITY AND CAPITAL RESOURCES  (CONTINUED)

On March 6, 2002,  Agway, the owner of 100% of the equity of Telmark,  announced
its  intention  to pursue the sale of Telmark to a third party as part of a plan
that  would  have  Agway  focus on fewer  businesses.  Agway  has  retained  the
investment  banking  firm  Goldman,  Sachs & Co. to assist  in  pursuing  a sale
transaction.  The  impact,  if any,  of a change of  control  of  Telmark on its
outstanding  borrowings cannot be predicted.  However, if Agway is successful in
finding a buyer for Telmark,  a change of control of Telmark and  ownership by a
new owner might  result in changes to the  operations  and capital  structure of
Telmark. In particular,  a buyer may have different financing needs than Telmark
currently has, may have available to it lower-cost  financing  alternatives than
those currently  available to Telmark or may be required by our lenders to repay
outstanding debt. As a result, a buyer might choose to or be required to replace
some or all of  Telmark's  sources of  capital,  which could  involve  redeeming
outstanding  debentures and repaying  outstanding  debt in accordance with their
terms.  Such repayment may involve certain costs in addition to the repayment of
principal and interest,  such as termination fees or "make whole" payments.  See
Note 5 to the  Consolidated  Financial  Statements  "Borrowings  under  lines of
Credit and Term Debt."

In addition,  Agway's membership interest in Telmark has been pledged to General
Electric  Capital  Corporation,  as lender  and agent on behalf of a  syndicated
group of lenders,  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.  As discussed in Agway's public filings,  Agway
has violated the  financial  covenants in its lending  agreements on a number of
occasions  and it is likely  that such  violations  may occur in the  future.  A
foreclosure on the pledge following an event of default would result in a change
of  control  of  Telmark,  giving  Telmark's  senior  lenders  rights  to demand
repayment of existing  outstanding debt and requiring Telmark to find additional
funding sources.  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.

Agway   simultaneously   with  this  filing,  will  announce  its  intention  to
voluntarily  file  petitions  for  reorganization  under  Chapter 11 of the U.S.
Bankruptcy  Code on October 1, 2002.  This filing WILL NOT include  Telmark LLC.
Telmark is separately  financed,  as discussed above, and does not guarantee any
debt of Agway Inc.  Agway Inc., in connection  with its intended  petition,  has
agreed  to  terms  of a  $125,000  of  Debtor-in-Possession  financing  with its
existing lender group,  pending approval of the Bankruptcy Court. While this new
Agway  credit  arrangement  continues  to include a pledge of  Telmark  stock as
collateral,  Agway has  indicated to Telmark  that it believes the  covenants as
revised are appropriate to Agway's current circumstances. Foreclosure on Telmark
stock would require a default under the new Agway Debtor-in-Possession facility.
While there can be no assurances,  the  possibility of foreclosure is considered
remote.

As of June 30,  2002,  Telmark had entered into leases with Agway and certain of
its subsidiaries  representing a net investment of approximately  $19,900, which
represents  Telmark's  greatest exposure to a single customer.  The inability of
Agway or its  subsidiaries  to pay those  leases on time  could  have a material
adverse effect of Telmark's  operating  results and  liquidity.  Notwithstanding
Agway's  intended  Bankruptcy  filing discussed above, it is expected that these
leases will continue to be paid in accordance with their terms. On September 16,
2002, subsequent to Telmark's year end, Agway's Sunflower operation sold and the
Telmark lease obligation totaling  approximately  $3,400 was paid off as part of
this transaction.

                                       12
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

OTHER MATTERS

CRITICAL ACCOUNTING POLICIES
Critical  accounting  policies  are  those  accounting  policies  that  are very
important to the  portrayal of the  Company's  financial  condition  and results
which require  management's  most difficult,  subjective or complex  judgements,
often as a result of the need to make estimates about the effect of matters that
are inherently uncertain.  The Company believes the following to be critical and
could result in materially different  amounts  being  reported  under  different
conditions or using different assumptions.

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.

   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.

Provision for Credit Loss
   The  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.

   To  evaluate  the adequacy of the allowance for losses,  the Company utilizes
certain  estimates  and  assumptions.   Management  bases  these  estimates  and
assumptions  on  historical  experience  and on various  other  factors  that we
believe to be reasonable under the circumstances applying different estimates on
assumptions  could produce  materially  different results from those reported by
the  Company.  At June 30,  2002 the  allowance  for credit  losses was  $37,100
compared to $35,500 at June 30, 2001.

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 on a
separate  company  basis to reduce  deferred  tax  assets to  amounts  for which
realization  is  reasonably  assumed.  Realization  of  deferred  tax assets and
payment of deferred tax  liabilities  are as a result of interaction  with Agway
Inc.  through  the tax sharing  arrangement.  Telmark is  currently  included in
consolidated  federal and state tax returns filed by Agway.  Under Telmark's tax
sharing  arrangement,  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.

                                       13
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS (THOUSANDS OF DOLLARS) (CONTINUED)

OTHER MATTERS (CONTINUED)

IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS

The Financial  Accounting Standards Board (FASB) has recently issued a number of
Statements of Financial Accounting Standards (SFAS) including:

   o   SFAS No. 141 - "Business Combinations"

   o   SFAS No. 142 - "Goodwill and Other Intangible Assets"

   o   SFAS No. 143 - "Accounting for Asset Retirement Obligations"

   o   SFAS No. 144 - "Accounting  for  Impairment  or  Disposal  of  Long-Lived
       Assets"

   o   SFAS No. 146 -  "Accounting  for Costs  Associated  with Exit or Disposal
       Activities"

The  adoption  of these  standards  are not  expected  to have an  impact on the
financial statements of the Company.

                                       14
<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                       2003    2004     2005     2006     2007     Thereafter  Total    6/30/02
                                 -------  -------  -------  -------  -------  ----------  -------- ----------
<S>                              <C>      <C>      <C>      <C>      <C>      <C>         <C>      <C>
Short Term Bank
     and Revolving
     Lines of Credit             $204,263 -        -        -        -        -           $204,263 $204,263
Weighted Average
      Interest Rate              2.79%    -        -        -        -        -

Long-Term Debt,
     including current portion   $112,626 79,248   42,279   61,217   16,873   22,333      $334,576 $349,018
Weighted Average
      Interest Rate              6.77%    6.75%    5.49%    6.66%    8.34%    8.52%

Subordinated Debentures,
     including current portion   $ 12,820 16,805   540      -        -        14,635      $ 44,800 $ 46,293
Weighted Average
     Interest Rate               8.43%    8.40%    6.25%    -        -        8.84%
</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 1.78% as of
June 30, 2002,  as compared to the stated rates of the  debentures,  which range
from 6.25% to 9.00% at June 30, 2002, 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, 2002,  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.

                                       15
<PAGE>
ITEM 8.  FINANCIAL STATEMENTS

                          INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
                                                                                                                 PAGES
                                                                                                                 -----
<S>                                                                                                              <C>
TELMARK LLC AND CONSOLIDATED SUBSIDIARIES:
         Report of Independent Accountants.......................................................................17

         Consolidated Balance Sheets, June 30, 2002 and 2001.....................................................18

         Consolidated Statements of Income and Member's Equity,
                   for the years ended June 30, 2002, 2001 and 2000..............................................19

         Consolidated Statements of Cash Flows for the years ended June 30, 2002, 2001 and 2000..................20

         Notes to Consolidated Financial Statements..............................................................21
</TABLE>

                                       16
<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 of cash flows present
fairly, in all material respects,  the financial position of Telmark LLC and its
subsidiaries at June 30, 2002 and 2001, and the results of their  operations and
their cash flows for each of the three  years in the period  ended June 30, 2002
in conformity with accounting principles generally accepted in the United States
of America.  These financial  statements are the responsibility of the Company'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.

As described in Note 1 in the financial statements,  Telmark LLC's parent, Agway
Inc., expects to voluntarily file  petitions for reorganization under Chapter 11
of the U.S.  Bankruptcy Code on October 1, 2002.  This bankruptcy  filing is not
expected to include  Telmark LLC. In addition,  as further  described in Note 1,
Agway Inc. is actively pursuing the sale of Telmark LLC.





/s/PricewaterhouseCoopers LLP
-----------------------------
PricewaterhouseCoopers LLP

Syracuse, New York
September 27, 2002


                                       17
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES

                                 BALANCE SHEETS
                             JUNE 30, 2002 AND 2001
                             (THOUSANDS OF DOLLARS)


                                     ASSETS
<TABLE>
<CAPTION>
                                                          2002             2001
                                                       ------------     ------------
<S>                                                    <C>              <C>
Restricted cash........................................$      6,014     $      8,306
Leases and notes receivable, net.......................     716,798          688,878
Investments............................................      15,784           14,695
Equipment, net.........................................       1,648            1,017
Other assets...........................................       1,575            1,700
                                                       ------------     ------------

      Total Assets.....................................$    741,819      $   714,596
                                                       ============     ============


                         LIABILITIES AND MEMBER'S EQUITY

                                                          2002             2001
                                                       ------------     ------------
Accounts payable.......................................$     10,557     $      6,839
Payable to Agway Inc...................................         674            5,652
Accrued expenses, including interest of
      $5,549 - 2002 and $5,562 - 2001 .................      12,363           10,315
Deferred income taxes..................................       5,822            1,681
Borrowings under short term bank lines of credit.......      51,263           71,138
Borrowings under revolving loan facility...............     328,000          215,500
Notes payable..........................................     159,576          240,260
Subordinated debentures................................      44,800           38,772
                                                       ------------     ------------


      Total Liabilities................................     613,055          590,157

Commitments & contingencies............................

Member's equity........................................     128,764          124,439
                                                       ------------     ------------

      Total Liabilities and Member's equity............$    741,819     $    714,596
                                                       ============     ============
</TABLE>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                       18
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    STATEMENTS OF INCOME AND MEMBER'S EQUITY
                FISCAL YEARS ENDED JUNE 30, 2002, 2001, AND 2000
                             (THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                                2002           2001         2000
                                             ---------     ----------    ---------
<S>                                          <C>           <C>           <C>
Revenues:
     Interest and finance charges........    $ 88,378       $ 84,493     $ 75,131
     Service fees and other income.......       1,785          1,700        1,654
                                             ---------     ----------    ---------

         Total revenues..................      90,163         86,193       76,785
                                             ---------     ----------    ---------

Expenses:
     Interest expense....................      33,856         36,941       31,536
     Provision for credit losses.........      10,049          9,461        7,899
     Selling, general and administrative.      21,673         18,549       17,291
                                             ---------     ----------    ---------

         Total expenses..................      65,578         64,951       56,726
                                             ---------     ----------    ---------

         Income before income taxes......      24,585         21,242       20,059

Provision for income taxes...............      10,260          9,076        8,352
                                             ---------     ----------    ---------

         Net income......................      14,325         12,166       11,707

Member's equity, beginning of year.......     124,439        112,273      105,566

Distribution of member's equity..........     (10,000)             0       (5,000)
                                             ---------     ----------    ---------

Member's equity, end of year.............    $128,764      $ 124,439     $112,273
                                             =========     ==========    =========
</TABLE>
The  accompanying  notes  are an  integral  part of the  consolidated  financial
statements.

                                       19
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                            STATEMENTS OF CASH FLOWS
                FISCAL YEARS ENDED JUNE 30, 2002, 2001, AND 2000
                             (THOUSANDS OF DOLLARS)

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

                                                   2001          2000          1999
                                                ---------     ----------    ----------
<S>                                             <C>           <C>           <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income   ............................. $  14,325     $ 12,166      $ 11,707
     Adjustments to reconcile net income to
       net cash from operating activities:
         Depreciation and amortization.........       249          303           386
         Deferred taxes........................     4,141        1,642         5,481
         Provision for credit losses...........    10,049        9,461         7,899
         Patronage refund received in stock....    (1,089)      (1,089)         (826)
         Changes in assets and liabilities:
              Other assets.....................       125           53          (408)
              Payables.........................     3,718       (2,827)       2,974
              Income taxes payable to Agway Inc.   (6,675)       7,750        (3,190)
              Accrued expenses.................     2,048        2,254           403
                                                ---------     ----------    ----------
         Net cash flow provided by
              operating activities.............    26,891       29,713        24,426
                                                ---------     ----------    ----------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Leases originated.........................  (252,406)    (271,216)     (272,270)
     Leases repaid.............................   214,437      199,415       188,904
     Purchases of equipment, net...............      (880)        (837)            0
                                                ---------     ----------    ----------
         Net cash flow used
              in investing activities..........   (38,849)     (72,638)      (83,366)
                                                ---------     ----------    ----------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net change in borrowings under
         short term bank and revolving
         lines of credit.......................    63,625       65,462        (3,080)
     Proceeds from revolving loan..............    48,000      120,800       143,100
     Repayment of revolving loan...............   (19,000)    (139,300)      (91,644)
     Proceeds from notes payable...............         0       61,000             0
     Repayment of notes payable................   (42,833)     (33,500)      (24,000)
     Proceeds from lease backed notes..........         0            0        68,100
     Repayment of lease backed notes...........   (37,851)     (27,496)       (8,645)
     Net change in payable to Agway Inc.
         excluding income taxes................     1,697       (2,212)      (19,033)
     Proceeds from sale of debentures..........    13,789        5,888        18,145
     Repayment of debentures...................    (7,761)      (4,514)      (18,380)
     Distribution of member's equity...........   (10,000)      (5,000)            0
     Net change in restricted cash.............     2,292        1,797        (5,623)
                                                ---------     ----------    ----------
         Net cash flow provided by
                financing activities...........    11,958       42,925        58,940
                                                ---------     ----------    ----------

     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 ............................. $  33,869     $ 35,399      $ 30,774
         Income Taxes
         (including amounts paid to Agway Inc.) $  13,980     $   (345)     $  6,202

</TABLE>

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

                                       20
<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  that was formed  solely to carry on the  business of Telmark in limited
liability  company,  rather than corporate  form.  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.

      On March 6, 2002,  Agway  announced  its  intention  to pursue the sale of
Telmark to a third  party as part of a plan that would have Agway focus on fewer
businesses.  Goldman  Sachs & Co.  is  assisting  Agway in  exploring  strategic
alternatives for Telmark.

      Agway's  membership  interest  in Telmark  has been  pledged to certain of
Agway's lenders in order to secure Agway's obligations to those lenders.  Agway,
simultaneously with this filing, will announce its intention to voluntarily file
petitions for  reorganization  under Chapter  11 of the U.S.  Bankruptcy Code on
October 1, 2002. This filing WILL NOT include Telmark LLC. Telmark is separately
financed and does not  guarantee  any debt of Agway Inc.  Telmark and Agway have
certain  business  arrangements,  including  leases which we do not expect to be
impacted  by this  filing.  While we have no reason to expect  Agway's  intended
Bankruptcy  filing will have a material effect on Telmark,  the ultimate impact,
if any, on Telmark's  business,  financial  condition,  and results of operation
cannot  be  determined  at  this  time.  Telmark  has  had  another  financially
successful  year. For more information on the operations of Telmark see Item 7 -
Management's  Discussion  and  Analysis of  Financial  Condition  and Results of
Operations.

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 $6,014 and $8,306 at June 30, 2002, and
2001, 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, 2002 and 2001,  the
recognition of interest income was suspended on leases and notes totaling $7,391
and $6,362, respectively.
                                       21
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)

Lease Accounting (continued)
      Certain  initial direct costs incurred in  consummating a lease as defined
by SFAS No. 91 "Accounting  for  Nonrefundable  Fees and Costs  Associated  with
Originating or Acquiring  Loans and Initial Costs of Leases" are 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.

       Initial direct costs deferred and amortization expense recognized were as
follows for the years ended June 30:
<TABLE>
<CAPTION>
                                                          2002            2001            2000
                                                          ----            ----            ----
           <S>                                            <C>             <C>             <C>
           Expenses not recognized this year
           and deferred to later years                    7,126           7,404           7,524

           Expenses from prior years recognized
           this year                                      6,664           5,887           5,643
</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  $1,785,  $1,555,  and
$1,180 for the years ended June 30, 2002, 2001, and 2000, 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, 2002, 2001, and 2000.

Advertising Costs
      Advertising  costs are expensed as incurred.  Advertising  expense for the
years ended June 30,  2002,  2001,  and 2000,  was $1,143,  $1,171,  and $1,034,
respectively.

Income Taxes
      Telmark  provides for income taxes in  accordance  with the  provisions of
SFAS No. 109,  "Accounting for Income Taxes" on a separate company basis.  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 on a separate
company basis to reduce deferred tax assets to amounts for which  realization is
reasonably  assumed.  Realization of deferred tax assets and payment of deferred
tax liabilities are as a result of interaction  with Agway Inc.  through the tax
sharing arrangement.

      Telmark  is  currently  included  in  consolidated  federal  and state tax
returns filed by Agway.  For the period July 1, 1998 through June 30, 2001,  for
State income tax filing purposes,  Telmark is included as a business division of
AHI.  Effective July 1, 2001, for State income tax filing  purposes,  Telmark is
included as a business of Agway Inc.  Under  Telmark's  tax sharing  arrangement
with  Agway,  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.
                                       22
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

1. SIGNIFICANT ACCOUNTING POLICIES (CONT.)

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.

New Accounting Standards

The Financial  Accounting Standards Board (FASB) has recently issued a number of
Statements of Financial Accounting Standards (SFAS) including:

      o    SFAS No. 141 - "Business Combinations"
      o    SFAS No. 142 - "Goodwill and Other Intangible Assets"
      o    SFAS No. 143 - "Accounting for Asset Retirement Obligations"
      o    SFAS No. 144 - "Accounting for Impairment  or  Disposal of Long-Lived
           Assets"
      o    SFAS No. 146 - "Accounting for Costs Associated with Exit or Disposal
           Activities"

The  adoption  of these  standards  are not  expected  to have an  impact on the
financial statements of the Company.

2. LEASES, NOTES AND ALLOWANCE FOR CREDIT LOSSES

      Leases and notes as of June 30 were as follows:

<TABLE>
<CAPTION>
                                                       2002              2001
                                                   -----------       -----------
      <S>                                          <C>               <C>
      Leases:
         Commercial and agricultural               $  964,233        $  936,162
         Leasing to Agway Inc. and subsidiaries        31,060            30,813
                                                   -----------       -----------
                                                      995,293           966,975
      Retail installment loans                         14,651            17,562
                                                   -----------       -----------
            Total leases and notes                 $1,009,944          $984,537
</TABLE>
                                                   ===========       ===========

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

                                                       2002              2001
                                                   -----------       -----------
      <S>                                          <C>               <C>
      Leases and notes                             $1,009,944        $  984,537
      Unearned interest and finance charges          (271,576)         (275,228)
      Net deferred origination costs                   15,547            15,085
                                                   -----------       -----------
         Net investment                               753,915           724,394
      Allowance for credit losses                     (37,117)          (35,516)
                                                   -----------       -----------
         Leases and notes receivable, net          $  716,798        $  688,878
                                                   ===========       ===========
</TABLE>

Included within the above leases and notes are unguaranteed  estimated  residual
values of leased property  approximating $110,400 and $103,700 at June 30, 2002,
and 2001, respectively.

                                       23
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)
2. LEASES, NOTES AND ALLOWANCE FOR CREDIT LOSSES (CONTINUED)

   Contractual maturities of leases and notes were as follows at June 30, 2002:
<TABLE>
<CAPTION>
                                                          LEASES
                                            -----------------------------------
                                              COMMERCIAL           TO AGWAY                 RETAIL
                                                  AND              INC. AND               INSTALLMENT
                                             AGRICULTURAL         SUBSIDIARIES               LOANS              TOTAL
                                            -------------         -------------           -----------     --------------
      <S>                                   <C>                   <C>                     <C>             <C>
      2003                                  $    254,189          $     4,332             $    4,037      $     262,558
      2004                                       204,337                4,128                  3,145            211,610
      2005                                       157,096                3,904                  1,958            162,958
      2006                                       109,228                3,834                  1,354            114,416
      2007                                        71,021                3,605                    939             75,565
      Thereafter                                 168,362               11,257                  3,218            182,837
                                            -------------         -------------           -----------     --------------
           Leases and notes                      964,233               31,060                 14,651          1,009,944
      Unearned interest and finance charges     (257,221)             (11,139)                (3,216)          (271,576)
      Net deferred origination costs              15,512                   16                     19             15,547
                                            -------------         -------------           -----------     --------------
         Net investment                     $    722,524          $    19,937             $   11,454      $     753,915
                                            =============         =============           ===========     ==============
</TABLE>
      On September 16, 2002, in  connection  with the sale of Agway's  Sunflower
operation, leases with Agway totaling approximately $3,400 were paid off.

      Changes in the  allowance  for credit  losses for the years  ended June 30
were as follows:
<TABLE>
<CAPTION>
                                                                       2002               2001                  2000
                                                                  --------------      -------------       -------------
              <S>                                                 <C>                 <C>                 <C>

              Balance, beginning of year                          $   35,516          $   32,536          $    29,978
              Provision for credit losses charged to operations       10,049               9,461                7,899
              Charge-offs                                            (14,829)             (9,851)              (9,179)
              Recoveries                                               6,381               3,370                3,838
                                                                  --------------      -------------       -------------
                  Balance, end of year                            $   37,117          $   35,516   $           32,536
                                                                  ==============      =============       =============
</TABLE>

3. EQUIPMENT

   Equipment, at cost, consisted of the following at June 30:
<TABLE>
<CAPTION>
                                                          2002                  2001
                                                     -------------         --------------
      <S>                                            <C>                   <C>
      Office and other equipment.................    $      2,457          $      1,757
      Less accumulated depreciation..............            (809)                 (740)
                                                     -------------         --------------
                                                     $      1,648          $      1,017
                                                     =============         ==============
</TABLE>
4. INCOME TAXES

   The provision for income taxes consists of the following:
<TABLE>
<CAPTION>
                                                   2002               2001                  2000
                                              --------------      -------------       -------------
           <S>                                <C>                 <C>                 <C>
           Currently payable:
                Federal..................     $       4,336       $      5,569        $      2,427
                State....................             1,783              1,865                 444
           Deferred......................             4,141              1,642               5,481
                                              --------------      -------------       -------------
                                              $      10,260       $      9,076        $      8,352
                                              ==============      =============       =============
</TABLE>
                                       24
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)
4. INCOME TAXES (CONTINUED)

Telmark's  effective  income tax rate on pre-tax income differs from the federal
statutory tax rate as follows:
<TABLE>
<CAPTION>
                                                                       2002               2001                  2000
                                                                  --------------      -------------       -------------
                <S>                                               <C>                 <C>                 <C>

                Statutory federal income tax rate                     35.0%              35.0%                 34.0%

                Tax effects of:
                    State taxes, net of federal benefit                6.7                6.2                   6.4
                    Other items                                         -                 1.5                   1.2
                                                                  --------------      -------------       -------------

                Effective income tax rate                             41.7%              42.7%                 41.6%
                                                                  ==============      =============       =============
</TABLE>
The  components of the net deferred tax asset  (liability) as of June 30 were as
follows:
<TABLE>
<CAPTION>
                                                               2002                  2001
                                                          -------------         -------------
      <S>                                                 <C>                   <C>
              Deferred tax assets:
                  Allowance for credit losses....         $     14,646          $     14,046
                  Alternative minimum tax
                     credit carryforward.........                5,944                 5,944
                  Other..........................                  223                   243
                                                          -------------         -------------
                  Total deferred tax assets                     20,813                20,233
                                                          -------------         -------------

              Deferred tax liabilities:
                  Difference between book and
                     tax treatment of leases.....               26,635                21,914
                  Other..........................                    0                    0
                                                          -------------         ------------
                     Total deferred tax liabilities             26,635                21,914
                                                          -------------         -------------
                     Net deferred tax liabilities         $     (5,822)         $     (1,681)
                                                          =============         =============
</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.  Under existing  federal
income tax laws,  there is no expiration date on the use of federal  alternative
minimum tax credits.
<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:                              2002              2001
                                                                                  ---------------     ---------------
<S>                                                                               <C>                 <C>
Lines of credit and revolving loans payable to banks due in
   varying amount and dates through February 13, 2006 with
   interest ranging from 2.53% to 7.47%.................................          $      379,263      $      286,638
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%..........................................                 106,667             149,500
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%....................................                  52,909              90,760
                                                                                  ---------------     ---------------
     Total borrowings under lines of credit and Term Debt...............                 538,839             526,898
Subordinated debentures due in varying amount and dates through
   March 31, 2010, with interest ranging from 6.25% to 9.00%............                  44,800              38,772
                                                                                  ---------------     ---------------
     Total Debt.........................................................          $      583,639      $      565,670
                                                                                  ===============     ===============
</TABLE>
                                       25
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT (CONT.)

Lines of Credit and Revolving Loans
   As of June 30, 2002, Telmark has credit facilities available from banks which
allow it to borrow up to an aggregate of $429,300.  Uncommitted  short-term line
of credit  agreements  permit borrowing up to $54,300 on an unsecured basis with
interest paid upon  maturity.  The lines bear interest at money market  variable
rates.  The amount of short term lines  available at June  30,2002  represents a
decrease of $35,000 from the amount  ($89,300)  available at June 30, 2001. This
decrease  resulted  from  non-renewal  of certain  lines of credit  for  reasons
unrelated to the Company's  financial  condition  (e.g.  based on the relatively
small amount of related  business the company  does with the relevant  bank).  A
committed $375,000 partially  collateralized  revolving 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. In November
2001, this revolving loan facility was increased from $300,000 to $375,000.  The
total amount  outstanding  as of June 30, 2002,  under the  short-term  lines of
credit  and  the  revolving   term  loan  facility  was  $51,263  and  $328,000,
respectively.  The  revolving  term  loan  facility  of  $375,000  is  partially
collateralized  by our  investment in a cooperative  bank having a book value of
$15,784 at June 30, 2002.

   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. In
addition,  in  consideration  of the potential sale of the business,  management
made a decision to use short term debt through a potential  closing date instead
of pursuing an issuance of additional long-term debt. In May 2002, after lengthy
negotiations,  Agway and a potential  buyer were unable to reach final agreement
on a sale of Telmark.  Accordingly,  Telmark decided to issue additional  senior
notes to insurance  companies.  On August 1, 2002,  Telmark  issued  $100,000 of
unsecured senior notes to insurance companies. Proceeds of these notes were used
to pay down the revolving term loan facility,  increasing the availability under
the lines of credit and revolving loans discussed above.

   Telmark  normally  renews its lines of credit  annually.  However,  since the
previously  mentioned  announcement  of Agway's  intention to pursue the sale of
Telmark,   continuing  lenders  under  the  uncommitted  short-term  lines  have
shortened  their  renewal  periods  to  expire  in six  months  or less.  Due to
uncertainty  related to the reported  financial  condition of Agway Inc., at the
request of two banks, Telmark has paid down all amounts outstanding on a $15,000
line,  which Telmark  expects will not renew in October 2002,  and has paid down
$2,000 on a $6,000  line,  which is scheduled  to expire in December  2002.  The
$300,000  portion of the revolving loan facility is available  through  December
31, 2002. In September 2002, the bank extended $50,000 of the $75,000  remaining
revolving term facility to December 31, 2002. Telmark has financing availability
in excess of $86,000 to meet its needs through December 31, 2002.

   The ongoing  availability  of adequate  financing to maintain the size of its
portfolio and to permit lease  portfolio  growth is key to Telmark's  continuing
profitability  and stability.  Telmark has been successful in arranging its past
financing needs.  Management  conducts ongoing discussions and negotiations with
existing and potential lenders for future financing needs. Telmark believes that
its current financial  arrangements are adequate to meet its immediate operating
requirements  and that its bank support will continue to be adequate to meet its
foreseeable  needs  as  Telmark  goes  through  this  period  of  transition  in
ownership.  There can be no  assurance,  however,  that  Telmark will be able to
obtain future financing in amounts,  or on terms, that are favorable to Telmark.
Telmark's  inability to obtain adequate  financing would have a material adverse
effect on its operations.

Unsecured Notes Payable to Insurance Companies
   At June 30,  2002,  we had  balances  outstanding  on  unsecured  senior note
private placements totaling $106,667.  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, 2002, the required
            minimum net worth is $104,000;
                                       26
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)
5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT (CONT.)
Unsecured Notes Payable to Insurance Companies (continued)
      (ii)  the ratio of total  liabilities less  subordinated  notes payable to
            Agway to member's  equity plus  subordinated  notes payable to Agway
            from exceeding 5.5:1;
      (iii) the ratio of earnings available  for fixed  charges  from being less
            than 1.25:1,
      (iv)  equity  distributions and restricted  investments (as defined in the
            rate   agreements)  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, 2002,
            $3,100 of member's equity is free of this restriction; and
      (v)   entering  into  leasing  transactions  with Agway which exceed 5% of
            total  assets.  As of  June  30,  2002,  $17,200  was  free  of this
            restriction. However, under the terms of the revolving loan facility
            as renewed on July 31,  2002,  Telmark  has agreed to not enter into
            any new leasing transactions with Agway.
For the year  ended June 30,  2002,  Telmark  has  complied  with all  covenants
contained in its borrowing agreements.

Lease-Backed Notes Payable to Insurance Companies
     Telmark has issued  lease-backed  notes,  through two wholly  owned,  fully
consolidated, 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.  The total  outstanding  under
Telmark Lease Funding II, LLC and Telmark Lease Funding III, LLC was $13,128 and
$39,781, respectively, as of June 30, 2002.

Subordinated Debentures
      We have historically offered  subordinated  debentures to the public.  The
debentures  are  unsecured  and are  subordinate  to all our  senior  debt.  The
interest on the  debentures is payable  quarterly on January 1, April 1, July 1,
and October 1 and may, at the holder's option,  be reinvested.  Our subordinated
debentures  bear  interest at a rate that 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.  As of June 30,  2002,  $44,800  of  debentures  were
outstanding.  Those  debentures  are due through  March 2010 and bear a weighted
average interest rate of 8.40%.

      In anticipation of the possible sale of Telmark,  effective as of March 6,
2002,  Telmark ceased issuing  debentures to the public,  other than pursuant to
the interest reinvestment option of the debentures. Under that option, debenture
holders  may elect to receive  interest on  debentures  either in cash or in the
form of  additional  principal  on the  debentures.  However,  once a  debenture
reaches  maturity,  the holder will not be  permitted  to invest the proceeds in
additional debentures.

Maturities
      The  aggregate  amounts  of notes  payable,  and  subordinated  debentures
maturing after June 30, 2002, are as follows:
<TABLE>
<CAPTION>
                                        NOTES PAYABLE                    SUBORDINATED
     Year Ending June 30:        BANK          INS. COMPANIES             DEBENTURES             TOTAL
                             -------------    ----------------           -------------     ----------------
     <S>                     <C>              <C>                        <C>               <C>
     2003                    $     265,263    $         51,626           $      12,820     $       329,709
     2004                           40,000              39,248                  16,805              96,053
     2005                           36,000               6,279                     540              42,819
     2006                           38,000              23,217                       0              61,217
     2007                                0              16,873                       0              16,873
     Thereafter                          0              22,333                  14,635              36,968
                             -------------    ----------------           -------------     ----------------
                             $      379,263   $        159,576           $      44,800     $       583,639
                             =============    ================           =============     ================
</TABLE>
                                       27
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT (CONT.)
Fair Value
      The carrying  amounts and estimated  fair values of our  significant  debt
obligations at June 30, were as follows:
<TABLE>
<CAPTION>

                                                     2002                              2001
                                         ---------------------------            -----------------------
                                         CARRYING             FAIR              CARRYING            FAIR
                                          AMOUNT             VALUE               AMOUNT            VALUE
                                         --------           --------            --------          --------
<S>                                      <C>                <C>                 <C>               <C>
Lines of Credit and Term Debt            $538,839           $553,281            $526,898          $540,391
Subordinated Debentures                    44,800             46,293              38,772            38,772
</TABLE>

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
$2,000,  $1,900, and $1,500 for the periods ended June 30, 2002, 2001, and 2000,
respectively.

7.  RELATED PARTY TRANSACTIONS

Payable to Agway Inc.
     The  payable  to  Agway  Inc.  is  principally  any  unpaid  member  equity
distribution   and/or  any  net  income  taxes  payable  and  any   intercompany
administrative or general expense 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                                  2002           2001           2000
                                                   ----------     ----------     ----------
   <S>                                             <C>            <C>            <C>
   Interest and finance charges..................  $  (2,477)     $ (1,325)      $  (159)
   Administrative and general expense............      1,278         1,199         1,546
</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 and benefits  administration,
accounts payable administration,  and facilities management. These expenses were
allocated  to  Telmark  based  on what  management  believes  is an  appropriate
methodology.

During the years  ended June 30,  2002 and 2000,  Telmark  declared  $10,000 and
$5,000  distributions  of member's equity,  respectively.  During the year ended
June 30, 2001, there was no distribution 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, 2002 amounted to
$14,218.

                                       28
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

8. COMMITMENTS & CONTINGENCIES (CONT.)

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.

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 68% 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, 2002,
the largest  concentration is in crops  enterprises  which represents 19% of the
portfolio,   dairy   enterprises   which   represents   15%  of  the  portfolio,
transportation  enterprises  which  represents  11% of the  portfolio,  and wood
products  enterprises  which  represents 9% of the portfolio.  At June 30, 2002,
approximately 42% 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 our  leases  is  directly
dependent upon the  creditworthiness  of our customers,  the credit practices we
use to  evaluate  that  creditworthiness,  and the steps we take to protect  our
ability to collect amounts due and/or take back the leased property. Although we
follow our credit policies and 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.

                                       29
<PAGE>
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES

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.


                                       30
<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 their successors are elected and qualified or
until such  Director's  earlier  death,  resignation  or  removal.  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;  a fee of $200 is also
earned by such directors for each day they were involved in business for Telmark
other than days when the Agway Inc.  Board of  Directors  was in session.  These
above fees and any other expenses of Board Members  incurred in connection  with
Telmark  business are reimbursed by Telmarks'  parent,  Agway Inc. 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, Chief Financial Officer 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
Name                           Age  Position                      as Officer         a Director
----                           ---  --------                     ------------        ----------
<S>                            <C>                                    <C>              <C>
Peter J. O'Neill               55   Senior Vice President,            8                1995
                                    Finance and Control,
                                    Chairman of the
                                    Board and Director
Andrew J. Gilbert              43   Director                                           1997
Samuel F. Minor                64   Director                                           1989
Edwin C. Whitehead             61   Director                                           1999
William W. Young               49   Director                                           1992
Daniel J. Edinger              51   President and Director            14               1988
Raymond G. Fuller              51   Director of Customer               8
                                    Operations & Collections
Jennifer L. Hicks              39   Chief Financial Officer            1
Richard A. Kalin               53   Controller                         8
Kipp R. Weaver                 52   Director of Credit                 8
</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. Mr. O'Neill is
a Board Member of Planet Polymer Technologies Inc.: Agway owns approximately 33%
of the outstanding shares of that Company.

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.

JENNIFER L. HICKS - Ms. Hicks was named Chief Financial Officer in October 2001,
and was Treasurer of Telmark from June 2001 to October 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.
                                       31
<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, 2002, 2001, and 2000, 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, 2002 and were
compensated over $100,000 (the "Named Executive Officers").
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE
----------------------------------------------------------------------------------------------
                                                          ANNUAL
                                                      COMPENSATION
                                                ---------------------------
                                                                               ALL OTHER
NAME AND                                                                      COMPENSATION
PRINCIPAL POSITION                 YEAR         SALARY(1)      BONUS(2)           (3) (4)
------------------------------ ------------  --------------- ------------  -------------------
<S>                                <C>       <C>             <C>           <C>
Daniel J. Edinger.............     2002      $230,022        $298,000      $  6,831
 President                         2001       230,022         222,680         8,721
                                   2000       224,637         184,950         8,548


Raymond G. Fuller.............     2002      $100,022        $180,040      $  2,176
 Director of Customer              2001        88,553         100,022         3,449
 Operations & Collections          2000        70,018          56,804         2,852


Jennifer L. Hicks(5)..........     2002      $ 95,406        $290,096      $  2,146
  Chief Financial Officer          2001        n/a             n/a              n/a
                                   2000        n/a             n/a              n/a


Richard A. Kalin..............     2002      $ 85,020        $153,253      $  1,824
 Controller                        2001        82,206          85,020         3,148
                                   2000        70,018          56,804         4,042


Kipp R. Weaver................     2002      $100,022        $180,040      $  2,176
 Director of Credit                2001        97,316         100,022         4,272
                                   2000        84,890          68,871         4,310
------------------
</TABLE>
     (1)  Salary  and  bonus  are  used  in   determining   the  average  annual
compensation pursuant to the Employees' Retirement Plan of Agway Inc. (see pages
33-35).  This  amount  includes  all  deferred  amounts  under  the  Agway  Inc.
Employees' 401(k) Thrift Investment Plan and the Agway Inc.  Employees'  Benefit
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.  Of the amount  shown for Ms.  Hicks,
$100,000 represents a one-time bonus in recognition of her efforts in connection
with the ongoing sale process for Telmark paid by Agway.  The  remaining  amount
represents annual bonus.
     (3) Amounts  shown  include  contributions  made by Agway to the Agway Inc.
Employees' 401 Thrift  Investment  Plan and the Agway Inc.  Employees'  Benefits
Equalization  Plan on behalf of the executive  officer and any other payment not
appropriately characterized as salary or bonus. Additionally,  for  Mr. Edinger,
includes  premium payment on a supplemental disability insurance policy paid for
by Agway.
     (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.
     (5)  Ms.  Hicks  became  an  executive  officer  of  Telmark  at the end of
Telmark's fiscal year 2001. Accordingly, no amounts are required to be disclosed
for fiscal year 2001 or 2000.

                                       32
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION - CONTINUED

CERTAIN AGREEMENTS WITH EXECUTIVES

In connection  with the  announcement by Agway of its intention to pursue a sale
of Telmark,  the Company  entered into  retention  incentive  agreements  with a
number of management  employees of the Company,  including  the Named  Executive
Officers.  Those agreements  generally  provided for the payment of an incentive
bonus to the  relevant  officer in the event  Company was sold on or before June
30,  2002 and the  officer  was  still  employed  on the date of sale.  The sale
deadline under those  arrangements was subsequently  extended from June 30, 2002
to December 31, 2002. In September  2002,  those  arrangements  were replaced by
retention  agreements  that  provided for an incentive  bonus based on continued
employment with, but not the sale of, the Company.

The retention agreements for the Named Executive Officers other than Mr. Edinger
each provide for a payment in an amount equal to $137,500  ($122,500 in the case
of Mr.  Kalin),  with 50% payable on March 31, 2003 and 50% payable on September
30, 2003.  Those payments are  conditioned  upon  continued  employment on those
dates and compliance with a confidentiality agreement. The unpaid portion of the
foregoing incentive will be accelerated in the event of a sale of the Company to
a third party,  and a pro rata portion of the unpaid  amount will be paid in the
event  the  officer's  employment   terminates   involuntarily  other  than  for
performance  reasons.  The  retention  agreements  further  provide for pro rata
payment  of annual  bonus  accrued  through  the  earlier of the date of sale or
termination  of employment,  as well as certain  severance  benefits  (including
continued health coverage and outplacement services for a limited period) in the
event the officer was not offered continued  employment with Telmark following a
sale. The additional  severance benefits are conditioned upon the execution of a
standard release.

The current  retention  agreement with Mr.  Edinger  provides that any voluntary
termination of his  employment in connection  with a sale of the Company will be
considered  termination for "good reason," thereby  entitling him to a severance
payment in an amount equal to one times base salary,  plus a pro rata portion of
his annual bonus accrued  through the date of sale. In addition,  if Mr. Edinger
remains  employed as President of the Company during the period ended  September
30,  2003,  he will receive a retention  incentive  of up to $230,022,  with 50%
payable on March 31, 2003 and 50% payable on September  30,  2003.  In the event
Mr. Edinger is employed on the date of a sale of the Company to a third party on
or prior to September 30, 2003,  the unpaid  portion of the foregoing  incentive
will be  accelerated;  in addition,  Mr. Edinger will receive an incentive bonus
payment of $985,000 in  connection  with the sale,  less any amounts  payable in
connection with the sale or previously paid under the retention agreement.

The  amount  payable  to the above  named  Executive  Officers  are  subject  to
reduction  to the extent  necessary  to avoid  adverse  tax  consequences  under
Section 280G and 4999 of the Internal Revenue Code of 1986, as amended.

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.

                                       33
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION - CONTINUED
EMPLOYEES' RETIREMENT PLAN - CONTINUED

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>
      $150,000            $ 10,600       $ 20,200      $ 29,700       $ 38,500       $ 47,400       $ 55,500        $ 63,600
       200,000              14,100         26,900        39,600         51,400         63,200         74,000          84,900
       250,000              17,700         33,600        49,500         64,200         79,000         92,500         106,100
       300,000              21,200         40,300        59,400         77,100         94,800        111,000         127,300
       350,000              24,800         47,000        69,300         89,900        110,600        129,500         148,500
       400,000              28,300         53,700        79,200        102,800        126,400        148,000         169,700
       450,000              31,800         60,500        89,100        115,600        142,100        166,500         190,900
       500,000              35,400         67,200        99,000        128,500        157,900        185,100         212,200
       550,000              38,900         73,900       108,900        141,300        173,700        203,600         233,400
</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.

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>
      $150,000             $ 12,000       $ 24,000       $ 36,000        $ 48,000       $ 60,000       $ 72,000       $ 84,000
       200,000               16,000         32,000         48,000          64,000         80,000         96,000        112,000
       250,000               20,000         40,000         60,000          80,000        100,000        120,000        140,000
       300,000               24,000         48,000         72,000          96,000        120,000        144,000        168,000
       350,000               28,000         56,000         84,000         112,000        140,000        168,000        196,000
       400,000               32,000         64,000         96,000         128,000        160,000        192,000        224,000
       450,000               36,000         72,000        108,000         144,000        180,000        216,000        252,000
       500,000               40,000         80,000        120,000         160,000        200,000        240,000        280,000
       550,000               44,000         88,000        132,000         176,000        220,000        264,000        308,000
</TABLE>
                                       34

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

Amounts  under the  Retirement  Plan may be subject to reduction  because of the
limitations imposed under the Internal Revenue Code. The extent of any reduction
in payments from the Retirement Plan will vary in individual  cases according to
circumstances  existing at the time pension  payments  commence.  The Agway Inc.
Employees'  Benefit  Equalization  Plan is a non-qualified  plan  established to
provide that the amount of any reduction in annual  pension  benefits  under the
Retirement  Plan will be paid by Agway Inc.  Under terms of an  amendment to the
Retirement  Plan,  adopted by the Agway Inc.  Board of Directors on May 1, 2002,
the Human  Resources  Committee of the Agway Inc. Board of Directors may, at its
discretion from time to time, direct  non-discriminatory  qualified supplemental
retirement  benefits  initially  restricted from payment by the Retirement Plan,
and  otherwise  payable from the Benefit  Equalization  Plan,  to be paid by the
Retirement  Plan. On August 1, 2002,  subsequent  to the  Company's  fiscal year
ended June 30, 2002,  the Human  Resources  Committee of the Agway Inc. Board of
Directors approved a non-discriminatory benefit.

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,  2002.  As of June 30,  2002,  the
officers  and their  respective  number of credited  years of service  under the
Retirement Plan were as follows: Messrs. Edinger, 23; Fuller, 17; Kalin, 29; and
Weaver, 7 and Ms.  Hicks,  10.  With regard to the named  Executive  Officers of
Telmark,  "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 32.

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.

                                       35
<PAGE>
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

All of the  outstanding  member's  equity of Telmark,  as of June 30, 2002,  was
directly owned by Agway. As discussed elsewhere in this report, all of Telmark's
outstanding  member's  equity  has been  pledged  to  General  Electric  Capital
Corporation,  as lender and agent on behalf of a syndicated group of lenders, in
order to secure Agway's obligations to those lenders, in order to secure Agway's
obligations  to those  lenders.  A foreclosure  on that pledge could result in a
change of control of Telmark.  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,  other than Agway  membership  common stock (discussed
below).  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
determined on the same basis for all of Agway's members.

As of June 30, 2002, Telmark is a direct wholly owned subsidiary of Agway and as
such, had intercompany  transactions,  including approximately $19,900 in leases
to Agway.  On September  16, 2002,  subsequent  to Telmark's  year end,  Agway's
Sunflower operation sold and the Telmark lease obligation totaling approximately
$3,400 was paid off as part of this transaction.  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, 2002, Telmark is a direct wholly owned subsidiary of Agway. Agway
is one of the  largest  agricultural  supply and  services  cooperatives  in the
United States.

                                       36
<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................................................17
                             (ii)   Consolidated Balance Sheets, June 30, 2002 and 2001..............................18
                             (iii)  Consolidated Statements of  Income and Member's Equity, for the years ended
                                    June 30, 2002, 2001, and 2000....................................................19
                             (iv)   Consolidated Statements of Cash Flow, for the years ended June 30, 2002,
                                     2001, and 2000..................................................................20
                             (v)    Notes to the Consolidated Financial Statements...................................21
                      (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

                      The Company  filed a Current  Report on form 8-K on May 23, 2002 to  announce  that after  lengthy
                      negotiations,  Agway and a potential  buyer were unable to reach  final  agreement  on the sale of
                      Telmark  and that  Goldman  Sachs & Co. is  continuing  to  assist  Agway in  exploring  strategic
                      alternatives for Telmark.

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

                      (I)  THE FOLLOWING  REQUIRED  EXHIBITS ARE HEREBY  INCORPORATED  BY REFERENCE TO PREVIOUSLY  FILED
                           REGISTRATION  STATEMENTS  OR THE  APPLICABLE  FORM  10-K,  10-Q,  OR 8-K FILED ON THE DATE AS
                           SPECIFIED.  THE COMPANY  UNDERTAKES TO PROVIDE TO THE  COMMISSION  UPON REQUEST COPIES OF ANY
                           INSTRUMENT WITH RESPECT TO LONG-TERM DEBT NOT BEING REGISTERED WHERE THE AMOUNT OF SECURITIES
                           AUTHORIZED  THEREUNDER  DOES NOT EXCEED 10 PERCENT OF THE TOTAL ASSETS OF THE COMPANY AND ITS
                           SUBORDINATES ON A CONSOLIDATED BASIS.

                      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.

                                                           37

<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.

                      (II)     THE FOLLOWING EXHIBITS ARE FILED A SEPARATE SECTION OF THIS REPORT:

                      INSTRUMENT DEFINING THE RIGHTS OF SECURITY HOLDERS,  INCLUDING  INDENTURES

                      4(e) -   Telmark LLC Note Agreement dated August 1, 2002.

                      MATERIAL CONTRACTS

                      10(c)-   Amended and Restated Master Loan Agreement  between  CoBank,  ACB and Telmark  LLC  dated
                               June 29, 1998 and effective July 1, 1998.

                      10(d)-   Amendment dated November 19, 2001 of the Master Loan Agreement between CoBank,   ACB  and
                               Telmark LLC.

                      10(e)-   Amendment  dated July 31, 2002 of the Master Loan  Agreement  between  CoBank,   ACB  and
                               Telmark LLC.

                      10(f)-   Pay to Stay Arrangement between Daniel J. Edinger and Telmark LLC.

                      10(g)-   Annual Incentive Plan for Fiscal 2002, Ending June 30, 2002 - Daniel J. Edinger

                      10(h)-   Annual Incentive Plan for Fiscal 2003, Ending June 30, 2003 - Daniel J. Edinger

                      10(i)-   Pay to Stay Arrangement between Raymond G. Fuller and Telmark LLC.

                      10(j)-   Pay to Stay Arrangement between Jennifer L. Hicks and Telmark LLC.

                      10(k)-   Pay to Stay Arrangement between Richard A. Kalin and Telmark LLC.

                      10(l)-   Pay to Stay Arrangement between Kipp R. Weaver and Telmark LLC.

                      10(m)-   Telmark LLC Supplemental Severance Program

                      10(n)-   Amendment  dated September 27, 2002 of the Master Loan Agreement  between CoBank,  ACB and
                               Telmark LLC.

                      OTHER EXHIBITS
                      99       Sarbanes - Oxley Act of 2002 - Certifications

                      99.1     Certification of Chief Executive Officer

                      99.2     Certification of Chief Financial Officer
</TABLE>

                                       38
<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   /s/DANIEL J. EDINGER
                                                   -----------------------------
                                                   President
                                                   (Principal Executive Officer)

                                            Date   9/27/02

      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                                   9/27/02
    --------------------      (Principal Executive Officer)


 /s/ Peter J. O'Neill        Senior Vice President, Finance and Control  9/27/02
    --------------------     Chairman of the Board and Director
                              (Principal Financial Officer
                              & Principal Accounting Officer)


/s/ Jennifer L. Hicks        Chief Financial Officer                     9/27/02
    --------------------


/s/ Andrew J. Gilbert        Director                                    9/27/02
    --------------------


/s/ Samuel F. Minor          Director                                    9/27/02
    --------------------


/s/ Edwin C. Whitehead       Director                                    9/27/02
    --------------------


/s/ William W. Young         Director                                    9/27/02
    --------------------

                                       39
<PAGE>
CERTIFICATIONS  UNDER NEW  EXCHANGE  ACT RULES 13A-14 AND 15D-14 OF THE EXCHANGE
ACT OF 1934


I, Daniel J. Edinger, certify that:

1.   I have reviewed this annual report on Form 10-K of Telmark LLC;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;

Date:    September 30, 2002
         --------------------------------------------

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



                                       40

<PAGE>
CERTIFICATIONS  UNDER NEW  EXCHANGE  ACT RULES 13A-14 AND 15D-14 OF THE EXCHANGE
ACT OF 1934


I, Peter J. O'Neill, certify that:

1.   I have reviewed this annual report on Form 10-K of Agway Inc.;

2.   Based on my  knowledge,  this  annual  report  does not  contain any untrue
     statement of a material fact or omit to state a material fact  necessary to
     make the statements  made, in light of the  circumstances  under which such
     statements  were made, not misleading with respect to the period covered by
     this annual report;

3.   Based on my  knowledge,  the  financial  statements,  and  other  financial
     information included in this annual report,  fairly present in all material
     respects the financial  condition,  results of operations and cash flows of
     the registrant as of, and for, the periods presented in this annual report;



Date:    September 30, 2002
         --------------------------------------------

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

                                       41
<PAGE>