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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, 2000
                                       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 11, 2000.
                                      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 11, 2000
----------------------                         ---------------------------------
MEMBERSHIP CERTIFICATE                                        ONE

TELMARK  IS A  DIRECT  WHOLLY  OWNED  SUBSIDIARY  OF  AGWAY  HOLDINGS,  INC.,  A
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
I(1)(A) AND (B) OF FORM 10-K AND IS THEREFORE  FILING THIS FORM WITH THE REDUCED
DISCLOSURE FORMAT.


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



<PAGE>
                         FORM 10-K ANNUAL REPORT - 2000
                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES

                              CROSS-REFERENCE SHEET


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


                                     PART II

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


                                    PART III

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


                                     PART IV

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

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

                                        2

<PAGE>


                                     PART I

ITEM 1. & 2.  BUSINESS AND PROPERTIES

Telmark LLC ("Telmark," "we," "our," "us" or "Company") was organized in 1964 as
Telmark  Inc.  under  the  Business  Corporation  Law of the  State of New York.
Effective  July 1, 1998,  Telmark  Inc.  was merged into Telmark LLC, a Delaware
limited  liability  company  that was formed  solely to carry on the business of
Telmark in limited liability company, rather than corporate,  form. We are owned
and controlled by 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. We are a direct
wholly-owned  subsidiary  of Agway  Holdings,  Inc.,  ("Holdings")  an  indirect
subsidiary of Agway.

Telmark  is  subject  to certain  informational  reporting  requirements  of the
Securities  Exchange  Act of 1934 and in  accordance  with  those  rules,  files
reports  and other  information  with the  Commission.  Reports  filed  with the
Commission can be inspected at the Public Reference Section of the Commission at
450 Fifth Street N.W.,  Washington D.C. 20549 and at the regional offices of the
Commission at Suite 1400,  Northwestern  Atrium Center, 500 West Madison Street,
Chicago, Illinois 60661, and Seven World Trade Center, 13th Floor, New York, New
York 10048.  Copies of the  materials  can be obtained  from the  Commission  at
prescribed rates.

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

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

We have over 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 farmers and other rural businesses as well
as manufacturers and independent dealers who serve the agricultural marketplace.

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

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

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

Telmark's   business  is   concentrated  in  agriculture  in  the  New  England,
Mid-Atlantic,  and Midwest states with  approximately 70% of its leases directly
related to production agriculture. However, the portfolio of agricultural leases
is diversified  into many different kinds of  agriculture.  As of June 30, 2000,
the largest  concentration was in crops enterprises which represented 18% of the
portfolio,  dairy enterprises  which represented 17% of the portfolio,  and wood
products  enterprises which represented 11% of the portfolio.  At June 30, 2000,
approximately 44% 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 affect operating results.

                                        3

<PAGE>

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

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

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

We offer most of the direct  finance  leases for a period  which does not exceed
our  estimate  of the useful life of the  equipment,  vehicle,  or the  building
leased.

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

As of June 30, 2000,  our  outstanding  leases had an average  original  term of
approximately 5.9 years and average remaining term of approximately 4.6 years.

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

Telmark has internal  credit  approval  policies that must be followed  prior to
entering into any lease  transaction.  The required  procedures vary by kind and
size of transaction.  We set credit approval limits based on the total amount of
leases outstanding with the customer.  We assign lending authority to members of
management depending on position,  training, and experience.  Telmark's Board of
Directors must approve all lease amounts  exceeding $1 million.  After a Telmark
field representative  completes a financial  application,  we conduct a thorough
credit approval process.

Telmark  retains  title to the  equipment or building  leased.  If  appropriate,
Telmark  obtains a lien on the real  estate  owned by the farmer or  customer as
collateral for payments under a building lease. We maintain monthly  delinquency
reports which 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.

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

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

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




                                        4

<PAGE>


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

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

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

The  ultimate  collectibility  of  amounts  due  under our  leases  is  directly
dependent  upon the credit  practices  we use, and the  creditworthiness  of our
customers.  Even though we follow our credit policies and we establish  reserves
for bad  debts,  there are  other  factors  that  could  significantly  impact a
customer's  ability  to  pay  and  consequently,  effect  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 effect the level of income of our customers;
        o       Adverse  weather-related  conditions that  negatively impact the
                agricultural productivity and income of customers; and
        o       Oversupply of, or reduced demand for,  agricultural  commodities
                produced by our customers.

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

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

We lease  all of our  office  space  from  Agway.  We do not own any of the real
property we use for office facilities. As of September 11, 2000, Telmark had 234
employees.

We have four wholly owned subsidiaries:

        o        Telease Financial Services, Ltd.;
        o        Telmark Lease Funding I, LLC;
        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 I,
LLC,  Telmark  Lease  Funding II, LLC, and Telmark  Lease  Funding III, LLC were
established solely to enable the lease securitization financings entered into in
1997, 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 condition, or liquidity.

ITEM 4.  SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS

Not required.

                                        5

<PAGE>



                                     PART II

Item 5.  MARKET FOR THE REGISTRANT'S COMMON EQUITY AND RELATED MEMBERSHIP
         MATTERS (THOUSANDS OF DOLLARS)
Effective July 1, 1998,  Telmark Inc's.  common stock was cancelled by virtue of
the merger of Telmark Inc. with and into Telmark LLC, with Telmark LLC being the
surviving entity in the merger. We have one limited liability company membership
interest   outstanding,   which  is  indirectly   owned  by  Agway  through  its
wholly-owned  subsidiary Holdings.  There is no public market for the membership
interest and we do not expect one to develop.  In the fiscal year ended June 30,
2000, a  distribution  of $5,000 in member's  equity was paid.  During the years
ended June 30, 1999 and 1998,  there was no  distribution  of  member's  equity.
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, 1999,
through  the date of  determination,  inclusive.  As of June 30,  2000,  $900 of
member's equity was free of this restriction.

ITEM 6.  SELECTED FINANCIAL DATA
Not required.

ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
         OF OPERATIONS (THOUSANDS OF DOLLARS)
2000 COMPARED TO 1999.

NET INCOME
Our net income  increased  by $1,300  (13%)  from  $10,400 in 1999 to $11,700 in
2000.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 2000           FY 1999           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>

         Net income                         $11,700           $10,400           $1,300           13%
</TABLE>


The increase was principally due to increased revenue from a larger  outstanding
portfolio of leases during 2000 as compared to 1999.

TOTAL REVENUES
Total revenues of $76,800 in 2000 increased  $6,800 (10%) as compared to $70,000
in 1999.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 2000           FY 1999           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>
         Total revenues                     $76,800           $70,000           $6,800           10%
</TABLE>

The increase is  attributable  in part to a $75,500 (14%) increase in net leases
and notes  outstanding at June 30, 2000 compared to 1999.  Total  revenue,  as a
percentage of average net leases and notes outstanding, decreased slightly from
13.1% in 1999 to 12.6% in 2000.

INCREASE IN LEASE PORTFOLIO
Increases in the lease portfolio resulting from new booked volume of $282,100 in
2000 and $252,100 in 1999 exceeding lease  reductions from leases repaid and net
bad debt expense of $206,600 and $196,700 in 2000 and 1999, respectively.

Increase In Lease Portfolio                 FY 2000           FY 1999
                                            ---------         ----------
         New booked volume                  $282,100          $252,100

         Leases repaid                      (198,700)         (188,700)

         Provision for credit losses        (  7,900)         (  8,000)
                                            ---------         ----------

         Portfolio increase                 $ 75,500          $ 55,400
                                            =========         ==========

The  increase  in new  booked  volume in excess  of leases  repaid  and bad debt
provisions had the effect of increasing total revenues.



                                        6

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

INTEREST EXPENSE
While the weighted average interest rate paid on debt remained constant at 6.9%,
total interest expense increased due to increased borrowings required to finance
the growth of the lease portfolio noted above.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 2000           FY 1999           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>
         Interest expense                   $31,500           $27,600           $3,900           14%
</TABLE>

Total debt  outstanding  at June 30,  2000  increased  by $83,600 to $517,300 as
compared to total debt at June 30, 1999.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling,  general,  and administrative  expenses of $17,300 in 2000 increased by
$1,100 (7%) compared to $16,200 in 1999.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 2000           FY 1999           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>
         Selling, general,
         and administrative
         expenses                           $17,300           $16,200           $1,100           7%
</TABLE>

The increase was  primarily  the result of  additional  personnel  and incentive
costs relating to the additional new business booked.

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

</TABLE>
This  decrease  is based on our  analysis  of  reserves  required to provide for
uncollectible  receivables.  Telmark's allowance for credit losses is based on a
periodic  review  of the  collection  history  of past  leases,  current  credit
practices,  an analysis of delinquent accounts, and current economic conditions.
At June 30, 2000 the allowance for credit losses was $32,500 compared to $30,000
at June 30, 1999.  During 2000 and 1999, the general economy remained strong and
the total value of non-earning  accounts increased from $4,900 in 1999 to $6,000
in 2000 and as a percentage of the lease  portfolio  remained  unchanged at 0.9%
for both 1999 and 2000.  Reserves are established at a level management believes
is sufficient to cover estimated losses in the portfolio.

1999 COMPARED TO 1998.

NET INCOME
Our Net Income increased by 1,600 (18%) from $8,800 in 1998 to $10,400 in 1999.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 1999           FY 1998           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>
         Net income                         $10,400           $8,800            $1,600           18%
</TABLE>

The increase was principally due to increased revenue from a larger  outstanding
portfolio of leases and notes receivable during 1999 as compared to 1998.

TOTAL REVENUES
Total Revenues of $70,000 in 1999  increased  $4,500 (7%) as compared to $65,500
in 1998.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 1999           FY 1998           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>
         Total revenues                     $70,000           $65,500           $4,500           7%
</TABLE>
                                        7

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

TOTAL REVENUES (CONTINUED)
The increase is  attributable  in part to a $55,400 (11%) increase in net leases
and notes in 1999 as compared to 1998.  Total revenue as a percentage of average
net leases and notes decreased from 13.5% in 1998 to 13.1% in 1999.

INCREASE IN LEASE PORTFOLIO
Increases  in the lease  portfolio  resulting  from new booked  lease  volume of
$252,100 in 1999 and  $227,300 in 1998  exceeded  lease  reductions  from leases
repaid and  provision  for credit  losses of $196,700  and  $177,400 in 1999 and
1998, respectively.

                                            FY 1999           FY 1998
                                            ---------         ---------
         New booked lease volume            $252,100          $227,300

         Leases repaid                      (188,700)         (169,800)
         Provision for credit losses        (  8,000)         (  7,600)
                                            ---------         ---------

         Portfolio increase                 $ 55,400          $ 49,900
                                            =========         =========

The increase in new booked lease volume in excess of leases repaid and provision
for credit losses had the effect of increasing the size of the lease  portfolio,
thereby  increasing total revenues.  The increased volume of new leases resulted
from  development  of  Telmark's  existing  markets  and  the  addition  of  new
employees.

INTEREST EXPENSE
Interest  expense  increased from $26,900 in 1998 to $27,600 in 1999.  While the
weighted  average  interest rate paid on debt decreased from 7.2% to 6.9%, total
interest expense increased due to increased  borrowings  required to finance the
growth of the lease portfolio noted above.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 1999           FY 1998           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>
         Interest expense                   $27,600           $26,900           $700             3%
</TABLE>

Total debt  outstanding  at June 30,  1999  increased  by $28,100 to $433,700 as
compared to total debt outstanding at June 30,1998.

SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES
Selling,  general,  and administrative  expenses of $16,200 in 1999 increased by
$600 (4%) compared to $15,600 in 1998.
<TABLE>
<CAPTION>

         <S>                                <C>               <C>               <C>              <C>
         Selling, general,                                                                      PERCENTAGE
         and administrative                 FY 1999           FY 1998           INCREASE        CHANGE
                                            -------           -------           --------        ----------
         expenses                           $16,200           $15,600           $600            4%
</TABLE>

The  increase  in  total  selling,  general,  and  administrative  expenses  was
primarily the result of  additional  personnel  and  incentives  paid to certain
employees relating to additional new business.  Expenses which are determined to
be related to  origination  of new lease business are deferred and recorded over
the term of the leases.

PROVISION FOR CREDIT LOSSES
The provision for credit losses of $8,000 in 1999 represents an increase of $400
(5%) compared to $7,600 in 1998.
<TABLE>
<CAPTION>
                                                                                                 PERCENTAGE
                                            FY 1999           FY 1998           INCREASE         CHANGE
                                            -------           -------           --------         ----------
         <S>                                <C>               <C>               <C>              <C>
         Provision for Credit Losses        $8,000            $7,600            $400             5%
</TABLE>

This  increase  is based on our  analysis  of  reserves  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,  1999,  the  allowance  for credit  losses was  $30,000  compared to
$27,100 at June 30, 1998.  During 1998 and 1999,  the general  economy  remained
strong,  however,  the total value of non-earning accounts increased from $3,000
in 1998 to $4,900 in 1999 and as a  percentage  of lease  portfolio  was 0.6% of
leases in 1998 to 0.9% of leases in 1999.  Reserves are  established  at a level
management believes is sufficient to cover estimated losses in the portfolio.

                                       8

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

LIQUIDITY AND CAPITAL RESOURCES
The ongoing  availability  of  adequate  financing  to maintain  the size of our
portfolio  and to  permit  lease  portfolio  growth  is  key  to our  continuing
profitability  and  stability.  We have  principally  financed  our  operations,
including the growth of our lease portfolio,  through borrowings under our lines
of credit,  private  placements of debt with  institutional  investors and other
term debt, lease backed notes, principal collections on leases and cash provided
from  operations.  Total assets have grown at an average annual rate of 16% over
the past fifteen years. The liability to equity ratio increased from 4.5 in 1999
to 4.8 in 2000.

                                      FY 2000           FY 1999         FY 1998
                                      --------          --------        --------
        CASH IN FLOWS
        Cash flows from operations    $24,400           $22,800         $21,200
        Cash flows from financing      64,600            43,700          37,100
                                      --------          --------        --------
                 Total cash in flows   89,000            66,500          58,300
        CASH OUT FLOWS
        Cash flows from investing     (83,400)          (63,800)        (58,000)
        Cash flows to restricted cash ( 5,600)           (2,700)           (300)
                                      --------          --------        --------
                 Total cash out flows (89,000)          (66,500)        (58,300)

Virtually all of the cash flows from both  operations  and financing  activities
were invested in restricted cash and growth of the lease portfolio.  Telmark has
been  successful  in arranging  its past  financing  needs and believes that its
current  financing  arrangements are adequate to meet its foreseeable  operating
requirements.  There can be no assurance,  however, that Telmark will be able to
obtain  future  financing  in  amounts  or on  terms  that are  acceptable.  Our
inability to obtain adequate  financing would have a material  adverse effect on
our operations.  Management  conducts ongoing  discussions and negotiations with
existing and potential  lenders for future  financing  needs.  See Note 5 to the
Consolidated  Financial  Statements  "Borrowing  under  Lines of Credit and Term
Debt."

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

YEAR 2000 READINESS

We had no material  issues  relating to the millennium date change on January 1,
2000, the leap year on February 29, 2000, or the month end, the quarter-end,  or
the year end  processing.  As previously  disclosed,  we initiated our year 2000
efforts  in  January  1996  and  completed  extensive  work to  assure  that our
operations  were not  impacted by the century date change as of January 1, 2000.
Our efforts focused on information system  modification or replacement,  as well
as a review of all other areas of our business operations that might be impacted
by this event.  Business contingency and continuity plans were developed,  and a
command  center  was  established  to  monitor  and react to  critical  business
interruptions, if any, either prior or subsequent to the millennium date change.

Our cost for conversion and testing of existing applications and the replacement
of hardware was approximately $800.

The year 2000  statements  set forth above are designed as "Year 2000  Readiness
Disclosures"  pursuant to the Year 2000 Information and Readiness Disclosure Act
(P.L. 105-271).
                                        9

<PAGE>


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

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

FIXED INTEREST RATE                                                                                Fair Value
Liabilities                       2001    2002     2003     2004     2005     Thereafter  Total    6/30/00
                                 -------  -------  -------  -------  -------  ----------  -----    ----------
<S>                              <C>      <C>      <C>      <C>      <C>      <C>         <C>      <C>
Short Term Bank
     Lines of Credit             75,676     -        -        -        -        -          75,676   75,676
Weighted Average
      Interest Rate               7.36%     -        -        -        -        -             -        -

Long-Term Debt,
 including current portion       132,773  104,257  85,010   69,842   8,648    3,726       404,256  411,071
Weighted Average
      Interest Rate               6.90%   6.98%    7.11%    6.87%    7.69%    7.75%                    -

Subordinated Debentures,
 including current portion         5,497    7,321  11,071    6,096      -     7,413        37,398   35,950
Weighted Average
       Interest Rate              6.40%   6.94%    8.43%    8.25%      -      8.75%                    -

</TABLE>
Telmark  does  not use  derivatives  or  other  financial  instruments  to hedge
interest rate risk in its portfolio.  Telmark  endeavors to limit the effects of
changes in  interest  rates by matching  as closely as  possible,  on an ongoing
basis, the maturity and repricing  characteristics  of funds borrowed to finance
its leasing  activities with the maturity and repricing  characteristics  of its
lease  portfolio.  However,  a rise in interest rates would increase the cost of
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 5.96% as of June 30, 2000, as compared to the stated rates of
the  debentures,  which range from 6.0% to 8.75% at June 30, 2000,  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,  2000,  we do not  believe  that  reasonably  possible
near-term  changes in interest rates will result in a material  effect on future
earnings, fair values, or cash flows of Telmark.

                                       10

<PAGE>
ITEM 8.  FINANCIAL STATEMENTS

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

         Consolidated Balance Sheets, June 30, 2000 and 1999.....................................................13

         Consolidated Statements of Income and Member's Equity,
                  for the years ended June 30, 2000, 1999 and 1998...............................................14

         Consolidated Statements of Cash Flows for the years ended June 30, 2000, 1999 and 1998..................15

         Notes to Consolidated Financial Statements..............................................................16
</TABLE>


                                       11

<PAGE>

                        REPORT OF INDEPENDENT ACCOUNTANTS

To the Board of Directors of
  Telmark LLC:

In our opinion,  the  accompanying  consolidated  balance sheets and the related
consolidated  statements  of income and member's  equity and cash flows  present
fairly,  in all  material  respects,  the  financial  position of TELMARK LLC (a
wholly-owned  subsidiary of Agway Holdings,  Inc.) and its  subsidiaries at June
30, 2000 and 1999, and the results of their  operations and their cash flows for
each of the three years in the period ended June 30, 2000,  in  conformity  with
accounting  principles  generally accepted in the United States. These financial
statements are the responsibility of Telmark's management; our responsibility is
to express an opinion on these  financial  statements  based on our  audits.  We
conducted our audits of these  statements in accordance with auditing  standards
generally accepted in the United States,  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 the opinion  expressed
above.






PricewaterhouseCoopers LLP

Syracuse, New York
August 18, 2000


                                       12

<PAGE>


                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES

                                 BALANCE SHEETS
                             JUNE 30, 2000 AND 1999
                             (THOUSANDS OF DOLLARS)


                                     ASSETS
<TABLE>
<CAPTION>

                                                          2000             1999
                                                       ------------     ------------
<S>                                                    <C>              <C>
Restricted cash........................................$    10,103      $     4,480
Leases and notes receivable, net.......................    626,538          551,071
Investments............................................     13,606           12,780
Equipment, net.........................................        483              868
Deferred income taxes..................................          0            5,443
Other assets...........................................      1,753            1,345
                                                       ------------     ------------

Total Assets...........................................$   652,483      $   575,987
                                                       ============     ============


                                            LIABILITIES AND MEMBER'S EQUITY

                                                          2000             1999
                                                       ------------     ------------

Borrowings under lines of credit and term debt.........$   479,932      $   396,101
Subordinated debentures................................     37,398           37,633
Accounts payable.......................................      9,666            6,692
Payable to Agway Inc...................................      5,114           22,337
Deferred income taxes..................................         39                0
Accrued expenses, including interest of
      $4,020 - 2000 and $3,258 - 1999 .................      8,061            7,658
                                                       ------------     ------------

Total Liabilities......................................    540,210          470,421

Commitments & Contingencies

Member's Equity........................................    112,273          105,566
                                                       ------------     ------------
     Total Liabilities and Member's Equity.............$   652,483      $   575,987
                                                       ============     ============
</TABLE>

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

                                       13

<PAGE>

                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    STATEMENTS OF INCOME AND MEMBER'S EQUITY
                FISCAL YEARS ENDED JUNE 30, 2000, 1999, AND 1998
                             (THOUSANDS OF DOLLARS)
<TABLE>
<CAPTION>

                                               2000         1999        1998
                                            ---------    ---------   ---------
<S>                                         <C>          <C>         <C>
Revenues:
     Interest and finance charges .......   $  75,131    $  68,337   $  63,872
     Service fees and other income ......       1,654        1,669       1,604
                                            ---------    ---------   ---------

         Total revenues .................      76,785       70,006      65,476
                                            ---------    ---------   ---------

Expenses:
     Interest expense ...................      31,536       27,626      26,871
     Provision for credit losses ........       7,899        8,024       7,587
     Selling, general and administrative       17,291       16,198      15,606
                                            ---------    ---------   ---------

         Total expenses .................      56,726       51,848      50,064
                                            ---------    ---------   ---------

         Income before income taxes .....      20,059       18,158      15,412

Provision for income taxes ..............       8,352        7,756       6,654
                                            ---------    ---------   ---------

         Net income .....................      11,707       10,402       8,758

Member's equity, beginning of year ......     105,566       95,164      86,406

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

Member's equity, end of year ............   $ 112,273    $105,566    $  95,164
                                            =========    =========   =========
</TABLE>



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

                                       14

<PAGE>


                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES

                            STATEMENTS OF CASH FLOWS
                FISCAL YEARS ENDED JUNE 30, 2000, 1999, AND 1998
                             (THOUSANDS OF DOLLARS)

                           INCREASE (DECREASE) IN CASH
<TABLE>
<CAPTION>
                                                     2000         1999         1998
                                                  ---------    ---------    ---------
<S>                                               <C>          <C>          <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
     Net income ...............................   $  11,707    $  10,402    $   8,758
     Adjustments to reconcile net income to
       net cash from operating activities:
         Depreciation and amortization ........         386          510          607
         Deferred taxes .......................       5,481        1,587        3,614
         Provision for credit losses ..........       7,899        8,024        7,587
         Patronage refund received in stock ...        (826)        (930)      (1,043)
         Changes in assets and liabilities:
              Other assets ....................        (408)        (239)        (169)
              Payables ........................       2,974        1,584          709
              Income taxes payable ............      (3,190)       2,153        1,330
              Accrued expenses ................         403         (260)        (231)
                                                  ---------    ---------    ---------

         Net cash flow provided by
              operating activities ............      24,426       22,831       21,162
                                                  ---------    ---------    ---------

CASH FLOWS FROM INVESTING ACTIVITIES:
     Leases originated ........................    (282,064)    (252,107)    (227,270)
     Leases repaid ............................     198,698      188,637      169,827
     Purchases of equipment, net ..............           0         (378)        (552)
                                                  ---------    ---------    ---------

         Net cash flow used
              in investing activities .........     (83,366)     (63,848)     (57,995)
                                                  ---------    ---------    ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
     Net change in borrowings under
         short term line of credit ............      40,176       15,000       16,000
     Net change under revolving line of credit        8,200       (8,700)     (25,900)
     Proceeds from notes payable ..............           0            0      100,000
     Repayment of notes payable ...............     (24,000)     (23,000)     (50,723)
     Proceeds from lease backed notes .........      68,100       48,384            0
     Repayment of lease backed notes ..........      (8,645)      (7,243)      (7,785)
     Repayment of capital lease ...............           0          (17)         (73)
     Net change payable to Agway Inc. .........     (14,033)      15,742        2,663
     Repayment of debentures ..................     (18,380)           0      (11,208)
     Proceeds from sale of debentures .........      18,145        3,627       14,170
     Distribution of member's equity ..........      (5,000)           0            0
                                                  ---------    ---------    ---------

         Net cash flow provided by
                financing activities ..........      64,563       43,793       37,144
                                                  ---------    ---------    ---------

     Net change in cash .......................       5,623        2,776          311
     Cash at beginning of year ................       4,480        1,704        1,393
                                                  ---------    ---------    ---------
     Cash at end of year ......................   $  10,103    $   4,480    $   1,704
                                                  =========    =========    =========

     Cash paid during period for:
         Interest .............................   $  30,774    $  28,629    $  27,395
         Income Taxes .........................   $   6,202    $   3,556    $   2,972
</TABLE>

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

                                       15

<PAGE>


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

1. SIGNIFICANT ACCOUNTING POLICIES

Operations
     Telmark LLC  ("Telmark" or the  "Company") was organized in 1964 as Telmark
Inc. under the Business Corporation Law of the State of New York. Effective July
1, 1998,  Telmark Inc. was merged into Telmark LLC, a Delaware limited liability
company.  Telmark is in the business of leasing  agricultural related equipment,
vehicles,  and  buildings.  Telmark's  customers  are  farmers  and other  rural
businesses  as well as  manufacturers  and  independent  dealers  that serve the
agricultural  marketplace.  Telmark is indirectly  owned and controlled by Agway
Inc. and  subsidiaries  ("Agway"),  one of the largest  agricultural  supply and
services cooperatives in the United States. Telmark is a wholly-owned subsidiary
of Agway Holdings,  Inc.  ("Holdings"),  a subsidiary of Agway. Telmark operates
throughout the continental United States and Canada.

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.

Cash and Equivalents
     Telmark  considers all investments  with a maturity of three months or less
when  purchased  to be cash  equivalents.  Certain  cash  accounts  amounting to
$10,103  and  $4,480 at June 30,  2000,  and 1999,  respectively,  collateralize
lease- backed notes  payable.  See Note 5. This cash is held in segregated  cash
accounts pending distribution and is restricted in its use.

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,  2000, and 1999, the
recognition of interest income was suspended on leases and notes totaling $6,048
and $4,890, respectively.

     Initial direct costs incurred in consummating a lease are not expensed when
the lease is originated.  The expense is capitalized and amortized over the life
of the lease.  This  deferral of expenses has the effect of reducing the expense
recorded  in the  period  the  lease  is  booked,  and  increasing  the  expense
recognized  over the remaining life of the lease.  Initial direct costs deferred
and amortization expense recognized were as follows for the years ended June 30:

<TABLE>
<CAPTION>
                                                   2000       1999       1998
                                                   ------     ------     ------
<S>                                                <C>        <C>        <C>
           Expenses not recognized this year
           are deferred to later years             7,524      6,745      5,256

           Expenses from prior years amortized
           this year                               5,643      4,969      4,553
</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.


                                       16

<PAGE>


                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

1. SIGNIFICANT ACCOUNTING POLICIES (CONT)

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 totalled  $1,180,  $1,329,  and
$1,489 for the years ended June 30, 2000, 1999, and 1998, respectively.

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

Advertising Costs
     Advertising  costs are  expensed as incurred.  Advertising  expense for the
years  ended June 30,  2000,  1999,  and 1998,  was  $1,034,  $1,008,  and $877,
respectively.

Income Taxes
     Telmark  provides for income taxes in  accordance  with the  provisions  of
Statement of Financial  Accounting  Standards  (SFAS) No. 109,  "Accounting  for
Income Taxes." Under the liability  method  specified by SFAS No. 109,  deferred
tax assets and  liabilities  are based on the  difference  between the financial
statement and tax basis of assets and  liabilities  as measured by the tax rates
which are  anticipated  to be in effect  when  these  differences  reverse.  The
deferred tax provision  represents the net change in the assets and  liabilities
for deferred tax.

     Telmark is included in a  consolidated  federal tax return  filed by Agway.
Through June 30, 1998, Telmark filed separate state tax returns.  Effective July
1,  1998,  for income tax filing  purposes,  Telmark is  included  as a business
division of Holdings.  Under Telmark's tax sharing agreement,  the provision for
income taxes and related credits and carry forwards are calculated on a separate
company basis and billed to Telmark as appropriate on an interim basis.

Use of Estimates
     The  preparation  of financial  statements  in  conformity  with  generally
accepted  accounting  principles  requires  management  to  make  estimates  and
assumptions  that  affect the  reported  amounts of assets and  liabilities  and
disclosure of  contingent  assets and  liabilities  at the date of the financial
statements,  and the  reported  amounts  of  revenues  and  expenses  during the
reporting period. Actual results could differ from those estimates.


                                       17

<PAGE>



                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

2. LEASES, NOTES AND ALLOWANCE FOR CREDIT LOSSES

      Leases and notes as of June 30 were as follows:
<TABLE>
<CAPTION>
                                                   2000         1999
                                                 --------     --------
      <S>                                        <C>          <C>
      Leases:
         Commercial and agricultural             $861,863     $740,011
         Leasing to Agway Inc. and subsidiaries     4,000          220
                                                 --------     --------
                                                  865,863      740,231
      Retail installment loans                     20,388       28,349
                                                 --------     --------
            Total leases and notes               $886,251     $768,580
                                                 ========     ========

      Net investment in leases and notes at June 30 are summarized as follows:

                                                   2000         1999
                                                 --------     --------
      Leases and notes                           $886,251     $768,580
      Unearned interest and finance charges      (240,745)    (199,122)
      Net deferred origination costs               13,568       11,591
                                                 --------     --------
         Net investment                           659,074      581,049
      Allowance for credit losses                 (32,536)     (29,978)
                                                 --------     --------
         Leases and notes, net                   $626,538     $551,071
                                                 ========     ========
</TABLE>
Included within the above leases and notes are unguaranteed  estimated  residual
values of leased  property  approximating  $92,700 and $82,100 at June 30, 2000,
and 1999, respectively.

    Contractual maturities of leases and notes were as follows at June 30, 2000:

<TABLE>
<CAPTION>
                                 Leases
                        --------------------------
                         Commercial     To Agway        Retail
                              and        Inc. and     Installment
                        Agricultural  Subsidiaries      Loans         Total
                        ------------  ------------    -----------   ---------

      <S>               <C>           <C>             <C>           <C>
      2001              $   229,809   $  555          $ 8,124       $ 238,488
      2002                  183,283      526            5,260         189,069
      2003                  138,468      507            2,577         141,552
      2004                   97,675      479            1,568          99,722
      2005                   61,989      479              732          63,200
      Thereafter            150,639    1,454            2,127         154,220
                        ------------  ------------    -----------   ---------
           Totals       $   861,863   $4,000          $20,388       $ 886,251
                        ============  ============    ===========   =========

</TABLE>

Changes in the  allowance  for credit losses for the years ended June 30 were as
follows:

<TABLE>
<CAPTION>
                                                         2000       1999       1998
                                                         --------   --------   --------
<S>                                                      <C>        <C>        <C>
     Balance, beginning of year                          $29,978    $27,071    $24,014
     Provision for credit losses charged to operations     7,899      8,024      7,587
     Charge-offs                                          (9,179)    (6,820)    (6,513)
     Recoveries                                            3,838      1,703      1,983
                                                         --------   --------   --------
         Balance, end of year                            $32,536    $29,978    $27,071
                                                         ========   ========   ========
</TABLE>


                                       18

<PAGE>


                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)
3. EQUIPMENT

      Equipment, at cost, consisted of the following at June 30:
                                   2000       1999
                                --------   --------
Office and other equipment ..   $ 2,571    $ 2,571
Less accumulated depreciation    (2,088)    (1,703)
                                --------   --------
                                $   483    $   868
                                ========   ========
4. INCOME TAXES

      The provision for income taxes consists of the following:
                     2000     1999     1998
                     ------   ------   ------
Currently payable:
     Federal .....   $2,427   $4,451   $2,321
     State .......      444    1,718      719
Deferred .........    5,481    1,587    3,614
                     ------   ------   ------
                     $8,352   $7,756   $6,654
                     ======   ======   ======

Telmark's  effective  income tax rate on pre-tax income differs from the federal
statutory tax rate as follows:

                                            2000    1999    1998
                                            -----   -----   -----
Statutory federal income tax rate .....     34.0%   34.0%   34.0%

Tax effects of:
    State taxes, net of federal benefit      6.4     8.0     8.7
    Other items .......................      1.2      .7      .5
                                            -----   -----   -----

Effective income tax rate .............     41.6%   42.7%   43.2%
                                            =====   =====   =====

The components of the net deferred tax asset as of June 30 were as follows:
                                              2000        1999
                                          ---------   ---------
Deferred tax assets:
    Allowance for credit losses .......   $ 12,839    $ 11,849
    Alternative minimum tax
       credit carryforward ............      5,870       3,574
    Other .............................        917         960
                                          ---------   ---------
    Total deferred tax assets .........     19,626      16,383
                                          ---------   ---------

Deferred tax liabilities:
    Difference between book and
        tax treatment of leases .......     19,470      10,745
    Other .............................        195         195
                                          ---------   ---------
         Total deferred tax liabilities     19,665      10,940
                                          ---------   ---------
         Net deferred tax asset
          (liability) .................   $    (39)   $  5,443
                                          =========   =========

Based on  Telmark's  history of taxable  earnings and its  expectations  for the
future,  management has determined  that operating  income will more likely than
not be  sufficient  to  recognize  its  deferred  tax assets.  At June 30, 2000,
Telmark's  federal  alternative  minimum  tax  credit  can  be  carried  forward
indefinitely.


                                       19

<PAGE>

                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

5. BORROWINGS UNDER LINES OF CREDIT AND TERM DEBT
As of June 30,  2000,  Telmark has credit facilities  available from banks which
allow it to borrow up to an aggregate of $336,700.  Uncommitted  short-term line
of credit agreements permit borrowing up to $86,700 on an uncollateralized basis
with  interest  paid upon  maturity.  The lines bear  interest  at money  market
variable rates. A committed  $250,000  partially  collateralized  revolving term
loan facility  permits us to draw  short-term  funds  bearing  interest at money
market rates or draw  long-term  debt at rates  appropriate  for the term of the
note  drawn.  The  total  amount  outstanding  as of  June 30,  2000,  under the
short-term  lines of credit and the revolving term loan facility was $75,200 and
$164,500,  respectively.  The  revolving  term  loan  facility  of  $164,500  is
partially  collateralized  by our investment in a cooperative bank having a book
value of $13,600 at June 30, 2000.

Telmark has issued  lease-backed  notes,  through  three  wholly  owned  special
purpose funding subsidiaries as follows:

<TABLE>
<CAPTION>

TELMARK LEASE FUNDING         YEAR ISSUED      ISSUED CLASS A    ISSUED CLASS B      RATE CLASS A    RATE CLASS B
---------------------         -----------      --------------    --------------      ------------    ------------
         <S>                     <C>             <C>               <C>                   <C>             <C>
         I                       1997            $24,000           $  2,000              6.58%           7.01%
         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 the principal balance of the notes, and the
notes are further  collateralized  by the residual values of these leases and by
segregated cash accounts.

Telmark borrows under its short-term line of credit agreements and its revolving
term agreement from time to time to fund its operations.  Short-term debt serves
as interim financing between the issuances of long-term debt. Telmark renews its
lines of credit  annually.  The $86,700 lines of credit all have terms  expiring
during  the next 12  months.  The  $250,000  revolving  term  loan  facility  is
available through August 1, 2001.

At June 30, 2000, we had balances  outstanding on  uncollateralized  senior note
private placements totaling $122,000.  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 contain financial  covenants,  the
most restrictive of which prohibit:
     (i)   tangible  net  worth,  defined  as consolidated  tangible assets less
           total liabilities  (excluding notes payable to Holdings),  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, 2000 required minimum net
           worth is $90,900;
     (ii)  the ratio of total liabilities less  subordinated  notes  payable  to
           Holdings  to  member's  equity  plus  subordinated  notes  payable to
           Holdings from exceeding 5:1;
     (iii) the ratio of earnings  available  for fixed  charges from being  less
           than 1.25:1, and
     (iv)  equity  distributions  and restricted  investments  (as defined) made
           after July 1, 1999 to exceed 50% of  consolidated  net income for the
           period  beginning on July 1, 1999 through the date of  determination,
           inclusive.  As of June 30, 2000,  $900 of member's  equity is free of
           this restriction.

For the year  ended June 30,  2000,  Telmark  has  complied  with all  covenants
contained in its borrowing agreements.
<TABLE>
<CAPTION>
At June 30, borrowings under lines of credit, term debt
      and subordinated debentures consisted of the following:       2000       1999
                                                                  --------   --------
<S>                                                               <C>        <C>
Notes payable to banks due in varying amount and dates through
   April 12, 2004 with interest ranging from 5.56% to 8.5% ....   $239,676   $191,300
Unsecured notes payable to insurance companies due in varying
   amount and dates through May 29, 2004, with interest
   ranging from 6.47% to 7.64% ................................    122,000    146,000
Lease-backed notes payable to insurance companies in varying
   amounts and dates through December 15, 2008 with interest
   rates ranging from 6.54% to 9.05% ..........................    118,256     58,801
                                                                  --------   --------
     Total borrowings under lines of credit and Term Debt .....    479,932    396,101
Subordinated debentures due in varying amount and dates through
   March 31, 2008, with interest ranging from 6.00% to 8.75% ..     37,398     37,633
                                                                  --------   --------
     Total Debt ...............................................   $517,330   $433,734
                                                                  ========   ========

</TABLE>

                                       20

<PAGE>


                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

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

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

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

                                                                      2000                 1999
                                                              -------------------   -------------------
                                                              Carrying    Fair      Carrying    Fair
                                                               Amount    Value       Amount     Value
                                                              --------   --------   --------   --------
<S>                                                           <C>        <C>        <C>        <C>
Lines of Credit and Term Debt .............................   $479,932   $486,747   $396,101   $404,386
Subordinated Debentures ...................................     37,398     35,950     37,633     37,887
</TABLE>


The aggregate  amounts of notes payable,  and subordinated  debentures  maturing
after June 30, 2000, are as follows:
<TABLE>
<CAPTION>
                                                  Notes Payable
                                        ---------------------------------           Subordinated
     Year Ending June 30,                     Bank        Ins. Companies            Debentures            Total
                                        ---------------  ----------------           -------------      -------------
     <S>                                <C>              <C>                        <C>                <C>
     2001                               $     148,676    $         59,773           $       5,497      $    213,946
     2002                                      25,000              79,257                   7,321           111,578
     2003                                      36,000              49,010                  11,071            96,081
     2004                                      30,000              39,842                   6,096            75,938
     2005                                           0               8,648                       0             8,648
     Thereafter                                     0               3,726                   7,413            11,139
                                        ---------------  ----------------           -------------      -------------
                                        $     239,676    $        240,256           $      37,398      $    517,330
                                        ===============  ================           =============      =============
</TABLE>
                                       21
<PAGE>

                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

6.  EMPLOYEE BENEFIT PLANS

Employees  of Telmark  participate  in Agway's  employee  benefit  plans,  which
include a defined benefit Retirement Plan, a defined contribution 401(K) plan, a
medical and dental benefit plan, a  postretirement  medical plan, and a life and
health  insurance  plan.  Total benefit costs under these plans are allocated by
Agway to Telmark primarily based on payroll costs. Benefit costs for those plans
included  in selling,  general and  administrative  expense  were  approximately
$1,500,  $1,400, and $1,100 for the periods ended June 30, 2000, 1999, and 1998,
respectively.

7.  RELATED PARTY TRANSACTIONS

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

Inter-Company Transactions
--------------------------
Inter-company  transactions  related to leases with  Agway,  income  taxes,  and
Agway's employee  benefit  plans  are  separately  disclosed  in  the  financial
statements. Other inter-company transactions with Agway for the years ended June
30 are:

   (Revenue) Expense                               2000       1999       1998
   -----------------                             -------    -------    -------
   Interest and finance charges..................$ (159)    $  (27)    $  (49)
   Administrative and general expense............ 1,546      1,691      1,638

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

During the year ended June 30,  2000,  Telmark  distributed  $5,000 of  member's
equity.  During  the  years  ended  June  30,  1999  and  1998,  there  were  no
distributions of member's equity.

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, 2000 amounted to
$4,415.

LEGAL PROCEEDINGS

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


                                       22
<PAGE>

                    TELMARK LLC AND CONSOLIDATED SUBSIDIARIES
                    NOTES TO FINANCIAL STATEMENTS (CONTINUED)
                             (THOUSANDS OF DOLLARS)

9.  FINANCIAL INSTRUMENTS

Off Balance-Sheet Risk

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

Market Risk

Telmark's  business is concentrated in agriculture  industry in the New England,
Mid-Atlantic,  and Midwest states with  approximately 70% of its leases directly
related to production agriculture. However, the portfolio of agricultural leases
is diversified into many different  agriculture  segments.  As of June 30, 2000,
the largest  concentration is in crops  enterprises  which represents 18% of the
portfolio,  dairy  enterprises  which represents 17% of the portfolio,  and wood
products  enterprises  which represents 11% of the portfolio.  At June 30, 2000,
approximately 44% of our net lease investment is in the states of Michigan,  New
York,   Ohio,  and   Pennsylvania.   Developments  in  any  of  these  areas  of
concentration could affect operating results adversely.

Telmark  endeavors to limit the effects of changes in interest rates by matching
as  closely as  possible,  on an  ongoing  basis,  the  maturity  and  repricing
characteristics  of funds  borrowed to finance its leasing  activities  with the
maturity and repricing  characteristics of its lease portfolio.  However, a rise
in interest  rates would  increase the cost of that portion of the debt which is
not precisely  matched to the  characteristics  of the portfolio and could lower
the value of our outstanding leases in the secondary market.



                                       23

<PAGE>

ITEM 9.       CHANGES IN  AND  DISAGREEMENTS  WITH ACCOUNTANTS ON ACCOUNTING AND
              FINANCIAL DISCLOSURE

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

                                       24

<PAGE>


                                    PART III

ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

                            DIRECTORS AND MANAGEMENT
                                   DIRECTORS,
   EXECUTIVE OFFICERS AND SIGNIFICANT MEMBERS OF MANAGEMENT OF THE REGISTRANT

The  Directors of Telmark  determine our policy and are elected by the member at
each  annual  meeting to serve  until the next  annual  meeting  or until  their
successors  are elected and  qualified.  The following  table sets forth certain
information  regarding Telmark's  Directors,  executive officers and significant
members of management:
<TABLE>
<CAPTION>

                                                                 Years served        Year Became          Term
         Name                  Age  Position                      as Officer         a Director          Expires
         --------------------------------------------------------------------        -----------       ----------

<S>                            <C>  <C>                               <C>               <C>            <C>
Peter J. O'Neill               53   Senior Vice President,
                                    Finance and Control,
                                    Chairman of the
                                    Board and Director                 6                1995           July, 2001
Andrew J. Gilbert              41   Director                                            1997           July, 2001
Samuel F. Minor                62   Director                                            1989           July, 2001
Edwin C. Whitehead             59   Director                                            1999           July, 2001
William W. Young               47   Director                                            1992           July, 2001
Daniel J. Edinger              49   President and Director            12                1988           July, 2001
Raymond G. Fuller              49   Director of Customer               6
                                    Operations
Herbert E. Gerhart             55   Secretary and                     23
                                    Director of Finance
Karen J. Ohliger               38   Treasurer                          1
Richard A. Kalin               51   Controller                         6
Kipp R. Weaver                 50   Director of Credit                 6
</TABLE>

The Board of  Directors,  except for Messrs.  O'Neill and  Edinger,  are paid an
annual  retainer  fee of $1,000 for their  services  on the Telmark  Board.  The
executive  officers and  significant  members of management  of Telmark  provide
operating  control  to  carry  out the  policies  established  by the  Board  of
Directors  and  serve  at the  discretion  of the  Board  with no  guarantee  of
employment.  Telmark is organized with nine  functional  managers and six 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,   Director  of  Finance,  and  the
Controller. More detailed biographies of each person listed above, are set forth
below.

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

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

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

KAREN J. OHLIGER - Ms.  Ohliger is  Treasurer of Agway.  She served as Assistant
Treasurer of Agway from September  1992 to August 1998. She was named  Treasurer
of Agway and Telmark in August 1998.

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

KIPP R. WEAVER - Mr. Weaver's  principal  occupation has been Director of Credit
of Telmark for more than five years.

                                       25

<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION

Employees  of Telmark  are  eligible  to  participate  in Agway's  benefits  and
compensation plans. The following table sets forth information  regarding annual
and  long-term  compensation  for services in all  capacities to Telmark for the
fiscal years ended June 30, 2000, 1990, and 1998, 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, 2000 and were
compensated over $100,000.
<TABLE>
<CAPTION>

                           SUMMARY COMPENSATION TABLE
-----------------------------------------------------------------------------------------------------

                                                        ANNUAL
                                                   COMPENSATION(4)
                                             ----------------------------
                                                                                 ALL OTHER
NAME AND                                                                       COMPENSATION
PRINCIPAL POSITION                 YEAR         SALARY(1)      BONUS(2)             (3)
------------------------------ ------------  --------------- ------------   -------------------
<S>                                <C>          <C>           <C>              <C>
Daniel J. Edinger.............     2000         $224,637      $184,950         $5,017
 President                         1999          199,710       155,040          3,764
                                   1998          178,853       105,240          3,033


Raymond G. Fuller.............     2000         $ 70,018      $ 56,804         $2,852
 Director of                       1999           69,139        61,616          1,556
 Customer Operations               1998           60,580        38,688            814


Herbert E. Gerhart............     2000         $70,018       $56,804          $3,684
 Secretary and                     1999          69,208        61,616           1,480
 Director of Finance               1998          61,152        39,059           1,253


Richard A. Kalin..............     2000         $70,018       $56,804          $4,042
 Controller                        1999          69,238        61,616           2,001
                                   1998          61,412        39,220           1,258


Kipp R. Weaver................     2000         $84,890       $68,871          $4,310
 Director of Credit                1999          84,890        74,703           2,126
                                   1998          82,394        52,632             968
</TABLE>
------------------


     (1) Total compensation (defined as base salary or wages, overtime and bonus
or  incentive   compensation)   is  used  in  determining   the  average  annual
compensation  pursuant  to the  Employees'  Retirement  Plan of Agway Inc.  This
amount  includes all deferred  amounts  under the Agway Inc.  Employees'  401(K)
Thrift Investment Plan and the Agway Inc. Employee's Benefits Equalization Plan.

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


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

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

                                       26
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION - CONTINUED

EMPLOYEES' RETIREMENT PLAN

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

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

                               PENSION PLAN TABLE
                                  (NEW FORMULA)
                            YEARS OF CREDITED SERVICE

<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------------
   3-YEAR AVERAGE
    REMUNERATION           5              10             15             20             25              30             35
--------------------  ------------  -------------- -------------- --------------  -------------  -------------- --------------
    <S>                   <C>             <C>            <C>            <C>            <C>              <C>            <C>
     $ 125,000            $  8,800        $ 16,800       $ 24,800       $ 32,100       $ 39,500         $46,300        $53,000
       150,000              10,600          20,200         29,700         38,500         47,400          55,500         63,600
       175,000              12,400          23,500         34,700         45,000         55,300          64,800         74,300
       200,000              14,100          26,900         39,600         51,400         63,200          74,000         84,900
       225,000              15,900          30,200         44,600         57,800         71,100          83,300         95,500
       250,000              17,700          33,600         49,500         64,200         79,000          92,500        106,100
       275,000              19,400          37,000         54,500         70,700         86,900         101,800        116,700
       300,000              21,200          40,300         59,400         77,100         94,800         111,000        127,300
       325,000              23,000          43,700         64,400         83,500        102,700         120,300        137,900
       350,000              24,800          47,000         69,300         89,900        110,600         129,500        148,500
       375,000              26,500          50,400         74,300         96,400        118,500         138,800        159,100
       400,000              28,300          53,700         79,200        102,800        126,400         148,000        169,700
       425,000              30,100          57,100         84,200        109,200        134,300         157,200        180,300

</TABLE>

Active  participants  are  entitled  to  receive no less than the value of their
benefits  accrued  under the old  retirement  plan benefit  formula which was in
effect through June 30, 1998. In addition,  most active  participants  whose age
plus  service  totaled 55 years or more as of July 1,  1998,  will  receive  the
greater of the benefit  determined under the new formula described above, or the
benefit determined had the old formula remained in effect (grandfathered).

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


                                       27

<PAGE>

ITEM 11.  EXECUTIVE COMPENSATION - CONTINUED
EMPLOYEES' RETIREMENT PLAN (CONTINUED)

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

<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
   5-YEAR AVERAGE
    REMUNERATION           5             10             15              20             25             30             35
--------------------  ------------  -------------  -------------  -------------- -------------- -------------- --------------
      <S>                  <C>            <C>            <C>             <C>            <C>            <C>            <C>
      $100,000             $ 8,000        $16,000        $24,000         $32,000        $40,000        $48,000        $56,000
       125,000              10,000         20,000         30,000          40,000         50,000         60,000         70,000
       150,000              12,000         24,000         36,000          48,000         60,000         72,000         84,000
       175,000              14,000         28,000         42,000          56,000         70,000         84,000         98,000
       200,000              16,000         32,000         48,000          64,000         80,000         96,000        112,000
       225,000              18,000         36,000         54,000          72,000         90,000        108,000        126,000
       250,000              20,000         40,000         60,000          80,000        100,000        120,000        140,000
       275,000              22,000         44,000         66,000          88,000        110,000        132,000        154,000
       300,000              24,000         48,000         72,000          96,000        120,000        144,000        168,000
       325,000              26,000         52,000         78,000         104,000        130,000        156,000        182,000
       350,000              28,000         56,000         84,000         112,000        140,000        168,000        196,000
       375,000              30,000         60,000         90,000         120,000        150,000        180,000        210,000
       400,000              32,000         64,000         96,000         128,000        160,000        192,000        224,000
       425,000              34,000         68,000        102,000         136,000        170,000        204,000        238,000
</TABLE>

Amounts  under the  Retirement  Plan may be subject to reduction  because of the
limitations imposed under the Internal Revenue Code; however,  the extent of any
reduction will vary in individual cases according to  circumstances  existing at
the  time  pension  payments  commence.   The  Agway  Inc.   Employees'  Benefit
Equalization  Plan has been  established  to provide  for the amount of any such
reduction in annual pension benefits under the Retirement Plan.

The benefits  shown are computed on a straight  life basis and do not reflect an
offset for up to 50% of the Social Security benefit,  subject to certain minimum
benefits.  Also,  the benefits are based on  continuing  the  retirement  plan's
benefit  formulas  as in  effect  on June 30,  2000.  As of June 30,  2000,  the
officers  and their  respective  number of credited  years of service  under the
Retirement Plan were as follows:  Messrs.  Edinger, 21; Fuller, 15; Gerhart, 27;
Kalin,  27; and Weaver,  5.  "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 and bonuses or special pay.

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.

ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

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

                                       28

<PAGE>


ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS


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

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

                                PRINCIPAL MEMBER

Telmark is a  wholly-owned  subsidiary of Holdings.  Holdings is a  wholly-owned
subsidiary  of  Agway  Financial  Corporation  which  in turn is a  wholly-owned
subsidiary  of  Agway.   Agway  is  one  of  the  largest  supply  and  services
cooperatives in the United States.




                                       29
<PAGE>




                                     PART IV

ITEM 14.      EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
<TABLE>
<CAPTION>
                                                                                                                    PAGE
              (A)     INDEX TO DOCUMENT LIST                                                                       LOCATION
                                                                                                                   --------
                      <S>      <C>                                                                                       <C>

                      (1)      FINANCIAL STATEMENTS
                               Among the responses to this Item 14(a)(1) are the following financial statements
                               which are included in Item 8.
                               (i)   Report of Independent Accountants...................................................12
                               (ii)  Consolidated Balance Sheets, June 30, 2000 and 1999.................................13
                               (iii) Consolidated Statements of  Income and Member's Equity, for the years ended
                                     June 30, 2000, 1999, and 1998.......................................................14
                               (iv)  Consolidated Statements of Cash Flow, for the years ended June 30, 2000,
                                      1999, and 1998.....................................................................15
                               (v)   Notes to the Consolidated Financial Statements......................................16

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

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

                               3 -    ARTICLES OF INCORPORATION

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

                                      BY-LAWS

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

                                      CERTIFICATE OF FORMATION

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

                                      LIMITED LIABILITY COMPANY AGREEMENT

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

                                      CERTIFICATE OF MERGER

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

                                       30
<PAGE>

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

                               4 -    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.

              (b)     REPORTS ON FORM 8-K
                      No reports on Form 8-K for the three months ended June 30, 2000, have been filed.

</TABLE>

                                       31

<PAGE>



                                   SIGNATURES

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


                                    TELMARK LLC
                                    (Registrant)


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

                                            Date   9/11/00

     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                                   9/11/00
    --------------------      (Principal Executive Officer)



/s/ Peter J. O'Neill         Senior Vice President, Finance and Control  9/11/00
    --------------------     Chairman of the Board and Director
                              (Principal Financial Officer
                              & Principal Accounting Officer)



/s/ Andrew J. Gilbert        Director                                    9/11/00
    --------------------


/s/ Samuel F. Minor          Director                                    9/11/00
    --------------------


/s/ Edwin C. Whitehead       Director                                    9/11/00
    --------------------


/s/ William W. Young         Director                                    9/11/00
    --------------------





                                       32