ITEM I.  FINANCIAL STATEMENTS

<TABLE>
Pro-Fac Cooperative, Inc. and Consolidated Subsidiaries - Agrilink Foods, Inc. and AgriFrozen Foods, Inc.
Consolidated Statements of Operations, Net Proceeds and Comprehensive Income
(Unaudited)

(Dollars in Thousands)
<CAPTION>
                                                                          Three Months Ended               Six Months Ended
                                                                  ------------------------------    ------------------------------
                                                                  December 23,      December 25,    December 23,      December 25,
                                                                      2000              1999            2000              1999
                                                                  ------------      ------------    ------------      ------------

<S>                                                                <C>              <C>              <C>               <C>
Net sales                                                          $  374,659       $   373,962      $  677,148        $  670,210
Cost of sales                                                        (257,800)         (245,030)       (474,639)         (455,686)
                                                                   ----------       -----------      ----------        ----------
Gross profit                                                          116,859           128,932         202,509           214,524
Selling, administrative, and general expense                          (82,833)          (91,481)       (147,170)         (155,467)
Income from joint venture                                                 949             1,204           1,224             1,695
Gain on sale of assets                                                      0             2,293               0             2,293
                                                                   ----------       -----------      ----------        ----------
Operating income                                                       34,975            40,948          56,563            63,045
Interest expense                                                      (22,415)          (21,835)        (43,941)          (42,484)
                                                                   ----------       -----------      ----------        ----------
Income before taxes, dividends, and allocation of net proceeds         12,560            19,113          12,622            20,561
Tax provision                                                          (3,321)           (4,633)         (4,164)           (5,678)
                                                                   ----------       -----------      ----------        ----------
Net income                                                         $    9,239       $    14,480      $    8,458        $   14,883
                                                                   ==========       ===========      ==========        ==========

Allocation of net proceeds:
   Net income                                                      $    9,239       $    14,480      $    8,458        $   14,883
   Dividends on common and preferred stock                             (1,840)           (1,603)         (4,210)           (3,706)
                                                                   ----------       -----------      ----------        ----------
   Net proceeds                                                         7,399            12,877           4,248            11,177
   Allocation to earned surplus                                        (5,303)           (6,301)         (2,152)           (4,601)
                                                                   ----------       -----------      ----------        ----------
   Net proceeds available to members                               $    2,096       $     6,576      $    2,096        $    6,576
                                                                   ==========       ===========      ==========        ==========

Net proceeds available to members:
   Estimated cash payment                                          $      524       $     1,644      $      524        $    1,644
   Qualified retains                                                    1,572             4,932           1,572             4,932
                                                                   ----------       -----------      ----------        ----------
   Net proceeds available to members                               $    2,096       $     6,576      $    2,096        $    6,576
                                                                   ==========       ===========      ==========        ==========

Net income                                                         $    9,239       $    14,480      $    8,458        $   14,883
Other comprehensive income:
   Unrealized (loss)/gain on hedging activity                          (1,414)                0             890                 0
                                                                   ----------       -----------      ----------        ----------
Comprehensive income                                               $    7,825       $    14,480      $    9,348        $   14,883
                                                                   ==========       ===========      ==========        ==========
<FN>
The  accompanying  notes are an integral  part of these  consolidated  financial statements.
</FN>
</TABLE>
<PAGE>
<TABLE>
Pro-Fac Cooperative, Inc. and Consolidated Subsidiaries - Agrilink Foods, Inc. and AgriFrozen Foods, Inc.
Consolidated Balance Sheets
(Dollars in Thousands)                                        ASSETS                    December 23,       June 24,    December 25,
<CAPTION>                                                                                   2000             2000          1999
                                                                                        ------------       --------    ------------
                                                                                         (Unaudited)                    (Unaudited)
<S>                                                <C>          <C>           <C>        <C>             <C>            <C>
Current assets:
   Cash and cash equivalents                                                             $    5,763      $    4,994     $   10,489
   Accounts receivable, trade, net                                                          126,239         101,065        122,849
   Accounts receivable, other                                                                14,337          10,488         13,163
   Income taxes refundable                                                                    1,511           9,869              0
   Current deferred tax asset                                                                12,176          12,176         16,160
   Inventories                                                                              419,338         341,931        437,750
   Current investment in CoBank                                                                 976           2,927            801
   Prepaid manufacturing expense                                                              4,675          26,364          3,962
   Prepaid expenses and other current assets                                                 20,268          19,688         20,664
                                                                                         ----------      ----------     ----------
           Total current assets                                                             605,283         529,502        625,838
Investment in CoBank                                                                         16,203          16,203         19,693
Investment in joint venture                                                                   8,000           6,775          8,374
Property, plant, and equipment, net                                                         339,859         348,359        349,459
Assets held for sale, at net realizable value                                                   339             339            329
Goodwill and other intangible assets, net                                                   253,680         258,545        259,832
Other assets                                                                                 32,091          27,543         29,073
                                                                                         ----------      ----------     ----------
           Total assets                                                                  $1,255,455      $1,187,266     $1,292,598
                                                                                         ==========      ==========     ==========
            Liabilities and Shareholders' and Members' Capitalization
Current liabilities:
   Notes payable - Agrilink Foods                                                        $  103,700      $    5,700     $   73,600
   Current portion of debt - AgriFrozen Foods                                                82,769          44,100         50,100
   Current portion of obligations under capital leases                                          218             218            208
   Current portion of long-term debt                                                         16,596          16,583         16,580
   Accounts payable                                                                          50,035          89,612         98,591
   Income taxes payable                                                                           0               0            549
   Accrued interest                                                                           9,193          11,398          8,594
   Accrued employee compensation                                                              9,189          11,216         15,229
   Other accrued expenses                                                                    68,763          66,397         92,480
   Dividends payable                                                                             13              41             15
   Amounts due Class B members                                                                    0           2,060              0
   Amounts due Class A members                                                               33,689          21,696         25,171
                                                                                         ----------      ----------     ----------
           Total current liabilities                                                        374,165         269,021        381,117
Obligations under capital leases                                                                520             520            568
Long-term debt                                                                              637,304         679,205        687,025
Deferred income tax liabilities                                                              36,825          36,825         23,072
Other non-current liabilities                                                                33,928          33,852         30,733
Non-controlling interest in AgriFrozen Foods                                                  8,000           8,000          8,000
                                                                                         ----------      ----------     ----------
           Total liabilities                                                              1,090,742       1,027,423      1,130,515
                                                                                         ----------      ----------     ----------
Commitments and contingencies
Class B cumulative  redeemable  preferred stock  liquidation  preference $10 per
   share, authorized - 500,000 shares; issued and
     outstanding 23,664, 23,664, and 26,061 shares, respectively                                237             237            261
Class A common stock, par value $5, authorized 5,000,000 shares
                                                   December 23,   June 24,   December 23,
                                                       2000         2000        1999
                                                   ------------ -----------  ------------
   Shares issued                                   2,184,230    2,132,981     2,083,601
   Shares subscribed                                 189,786      233,977       303,196
                                                   ---------    ---------     ---------
           Total subscribed and issued             2,374,016    2,366,958     2,386,797
   Less subscriptions receivable in installments    (189,786)    (233,977)     (303,196)
                                                   ---------    ---------     ---------
           Total issued and outstanding            2,184,230    2,132,981     2,083,601      10,921          10,665         10,418
                                                   =========    =========     =========
Class B common stock, par value $5, authorized
   2,000,000 shares; issued and outstanding 723,229, 723,229 and 0, respectively                  0               0              0

Shareholders' and members' capitalization:
   Retained earnings allocated to members                                                    18,163          16,591         30,505
   Non-qualified allocation to members                                                          300             300          2,050
   Non-cumulative preferred stock, par value $25; authorized
     5,000,000 shares; issued and outstanding - 34,400,
       34,400, and 39,635, respectively                                                         860             860            991
   Class A cumulative preferred stock, liquidation preference
     $25 per share; authorized 10,000,000 shares; issued and
       outstanding 4,249,007 , 4,249,007 and 3,694,495 shares, respectively                 106,225         106,225         92,362
   Special membership interests                                                                   0               0              0
   Earned surplus                                                                            27,642          25,490         26,259
   Accumulated other comprehensive income:
     Unrealized gain on hedging activity                                                        890               0              0
     Minimum pension liability adjustment                                                      (525)           (525)          (763)
                                                                                         ----------      ----------     ----------
           Total shareholders' and members' capitalization                                  153,555         148,941        151,404
                                                                                         ----------      ----------     ----------
           Total liabilities and capitalization                                          $1,255,455      $1,187,266     $1,292,598
                                                                                         ==========      ==========     ==========
The accompanying notes are an integral part of these consolidated financial statements.
</TABLE>
<PAGE>
<TABLE>
Pro-Fac Cooperative, Inc. and Consolidated Subsidiaries - Agrilink Foods, Inc. and AgriFrozen Foods, Inc.
Consolidated Statements of Cash Flows
(Dollars in Thousands)
(Unaudited)
<CAPTION>
                                                                                                       Six Months Ended
                                                                                              -------------------------------------
                                                                                              December 23,           December 25,
                                                                                                  2000                   1999
                                                                                              --------------         --------------

<S>                                                                                            <C>                    <C>
Cash flows from operating activities:
     Net income                                                                                $     8,458            $    14,883
     Estimated cash payment due to Class A members                                                    (524)                (1,644)
     Adjustments to reconcile net income to net cash used in operating activities:
       Gain on sale of assets                                                                            0                 (2,293)
       Depreciation                                                                                 16,275                 16,838
       Amortization of goodwill and other intangible assets                                          4,964                  4,332
       Interest in-kind on subordinated promissory note                                                814                    776
       Amortization of debt issue and amendment costs
          and discount on subordinated promissory notes                                              2,680                  2,357
       Equity in undistributed earnings of joint venture                                            (1,224)                (1,695)
       Change in assets and liabilities:
         Accounts receivable                                                                       (29,023)               (38,286)
         Inventories and prepaid manufacturing expenses                                            (55,718)              (130,575)
         Income taxes refundable                                                                     8,358                 11,844
         Accounts payable and other accrued expenses                                               (41,471)                21,781
         Amounts due to Class A members                                                             11,993                  5,126
         Amounts due to/from Class B members                                                        (3,895)                (1,453)
         Other assets and liabilities, net                                                            (285)                 8,956
                                                                                               -----------            -----------
Net cash used in operating activities                                                              (78,598)               (89,053)
                                                                                               -----------            -----------

Cash flows from investing activities:
     Purchase of property, plant and equipment                                                     (14,963)               (16,009)
     Proceeds from disposals                                                                         5,072                 53,497
     Proceeds from investment in CoBank                                                              1,951                  1,602
                                                                                               -----------            -----------
Net cash (used in)/provided by investing activities                                                 (7,940)                39,090
                                                                                               -----------            -----------

Cash flows from financing activities:
     Net proceeds from issuance of short-term debt                                                 101,900                 68,800
     Payments on long-term debt                                                                     (8,932)                (8,997)
     Cash paid in conjunction with debt amendment                                                   (1,707)                (2,624)
     Issuances of common stock, net                                                                    256                    439
     Cash dividends paid                                                                            (4,210)                (3,706)
                                                                                               -----------            -----------
Net cash provided by financing activities                                                           87,307                 53,912
                                                                                               -----------            -----------
Net change in cash and cash equivalents                                                                769                  3,949
Cash and cash equivalents at beginning of period                                                     4,994                  6,540
                                                                                               -----------            -----------
Cash and cash equivalents at end of period                                                     $     5,763            $    10,489
                                                                                               ===========            ===========


<FN>
The  accompanying  notes are an integral  part of these  consolidated  financial statements.
</FN>
</TABLE>



<PAGE>

                            PRO-FAC COOPERATIVE, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1.       SUMMARY OF ACCOUNTING POLICIES

The Cooperative:  Pro-Fac Cooperative,  Inc. ("Pro-Fac" or the "Cooperative") is
an  agricultural  cooperative  which  processes  and markets  crops grown by its
members through its  wholly-owned  subsidiary  Agrilink Foods,  Inc.  ("Agrilink
Foods") and through its  subsidiary  PF  Acquisition  II, Inc. in which it has a
controlling  interest.  PF Acquisition II, Inc. conducts business under the name
AgriFrozen Foods  ("AgriFrozen").  Unless the context  otherwise  requires,  the
terms  "Cooperative"  and "Pro-Fac" refer to Pro-Fac  Cooperative,  Inc. and its
subsidiaries.

Agrilink Foods has four primary  product lines  including:  vegetables,  fruits,
snacks,  and canned meals.  AgriFrozen has vegetables as its one primary product
line. The majority of each of the product lines' net sales are within the United
States. In addition,  all of the Cooperative's  operating facilities,  excluding
one in Mexico, are within the United States.

Basis  of  Presentation:   The  accompanying  unaudited  consolidated  financial
statements have been prepared in accordance with accounting principles generally
accepted  in the  United  States  of  America  ("GAAP")  for  interim  financial
information and with the instructions to Form 10-Q and Article 10 of Regulations
S-X.  Accordingly,  they do not include all of the information  required by GAAP
for complete financial statement presentation. In the opinion of management, all
adjustments  (consisting only of normal recurring  adjustments)  necessary for a
fair  presentation  of the results of operations  have been included.  Operating
results  for the three  months and six months  ended  December  23, 2000 are not
necessarily  the results to be expected  for other  interim  periods or the full
year.  These  financial  statements  should  be read  in  conjunction  with  the
financial   statements  and   accompanying   notes   contained  in  the  Pro-Fac
Cooperative, Inc. Form 10-K for the fiscal year ended June 24, 2000.

New  Accounting  Pronouncement:  In December  1999,  the Securities and Exchange
Commission ("SEC") issued Staff Accounting Bulletin No. 101 "Revenue Recognition
in  Financial  Statements"  ("SAB No.  101").  SAB No. 101  provides  additional
guidance  on  revenue  recognition  as well as  criteria  for  when  revenue  is
generally  realized  and  earned.  The  Cooperative  plans to adopt SAB No.  101
effective in the fourth quarter of fiscal 2001 and is currently  determining the
impact of the adoption on its results of operations and financial position.

Consolidation: The consolidated financial statements include the Cooperative and
its subsidiaries,  Agrilink Foods and AgriFrozen.  The financial  statements are
after  elimination of  intercompany  transactions  and balances.  Investments in
affiliates  owned  more than 20  percent  but not in excess  of 50  percent  are
recorded under the equity method of accounting.

Reclassification:  Certain  items for  fiscal  2000 have  been  reclassified  to
conform with the current period presentation.

NOTE 2.       ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES

On June 25, 2000, the Cooperative adopted Financial  Accounting  Standards Board
("FASB")  Statement  of  Financial   Accounting   Standards  ("SFAS")  No.  133,
"Accounting  for Derivative  Instruments and Hedging  Activities."  SFAS No. 133
requires the  recognition  of all  derivative  financial  instruments  as either
assets or liabilities in the Consolidated Balance Sheet and measurement of those
instruments at fair value.  Changes in the fair values of those derivatives will
be reported in earnings or other  comprehensive  income  depending on the use of
the derivative and whether it qualifies for hedge accounting. The accounting for
gains and losses  associated  with changes in the fair value of a derivative and
the effect on the  consolidated  financial  statements  will depend on its hedge
designation  and whether the hedge is highly  effective in achieving  offsetting
changes in the fair value or cash flow of the asset or liability  hedged.  Under
the  provisions  of SFAS No. 133, the method that will be used for assessing the
effectiveness of a hedging derivative,  as well as the measurement  approach for
determining  the  ineffective  aspects of the hedge,  must be established at the
inception of the hedge.

The  Cooperative,  as a result of its  operating and  financing  activities,  is
exposed to changes in foreign currency exchange rates, certain commodity prices,
and interest  rates,  which may adversely  affect its results of operations  and
financial  position.  In seeking to minimize the risks  and/or costs  associated
with such activities, the Cooperative may enter into derivative contracts.

The adoption of SFAS No. 133 did not materially affect the Cooperative's results
of operations or financial position.



<PAGE>

Foreign  Currency:  Agrilink  Foods  manages its foreign  currency  related risk
primarily through the use of foreign currency forward  contracts.  The contracts
held by Agrilink Foods are denominated in Mexican pesos.

Agrilink  Foods has entered into foreign  currency  forward  contracts  that are
designated  as cash flow  hedges of  exchange  rate risk  related to  forecasted
foreign currency-denominated  intercompany sales. At December 23, 2000, Agrilink
Foods has cash flow hedges for the Mexican peso with maturity dates ranging from
December  2000 to April 2001.  At December 23, 2000,  the fair value of the open
contracts  was an  after-tax  gain of  approximately  $0.1  million  recorded in
accumulated other comprehensive income in shareholders' equity. Amounts deferred
to accumulated  other  comprehensive  income will be  reclassified  into cost of
goods sold  within the next 12 months.  During the second  quarter and first six
months  of  fiscal  2001,   approximately   $0.1   million  and  $0.2   million,
respectively,  was reclassified from other comprehensive income to cost of goods
sold. Hedge ineffectiveness was insignificant.

Subsequent to December 23, 2000,  Agrilink  Foods entered into  additional  cash
flow hedges for 132 million Mexican pesos with maturity dates through June 2002.

Commodity  Prices:  Agrilink Foods is exposed to commodity price risk related to
forecasted purchases of soybean oil, an ingredient in the manufacturing of salad
dressings and  mayonnaise.  To mitigate  this risk,  Agrilink  Foods  designates
soybean oil forward contracts as cash flow hedges of its forecasted  soybean oil
purchases.   Agrilink  Foods  maintained   soybean  oil  contracts  that  hedged
approximately 70 percent of its planned soybean oil  requirements  during fiscal
2001.  These  contracts were either sold or expired during the second quarter of
fiscal 2001 and an immaterial loss on these transactions was recorded in cost of
goods sold.

Agrilink Foods is also exposed to commodity  price risk to forecasted  purchases
of flour in its  manufacturing  process.  To mitigate this risk,  Agrilink Foods
designates  a swap  agreement  as a cash  flow  hedge  of its  forecasted  flour
purchases.  At  December  23,  2000,  Agrilink  Foods had an open  swap  hedging
approximately 59 percent of its planned flour  requirements  during fiscal 2001.
The  termination  date for the  agreement is March 2001.  The fair value of this
agreement  was  immaterial at December 23, 2000.  During the second  quarter and
first  six  months of fiscal  2001,  an  immaterial  loss on this  contract  was
recorded in cost of goods sold.

Agrilink  Foods is also  exposed to commodity  price risk related to  forecasted
purchases of corrugated (unbleached kraftliner) in its manufacturing process. To
mitigate this risk,  Agrilink  Foods  designates a swap agreement as a cash flow
hedge of its forecasted  corrugated  purchases.  At December 23, 2000,  Agrilink
Foods  had an  open  swap  hedging  approximately  80  percent  of  its  planned
corrugated  requirements.  The fair value of this  agreement  was  immaterial at
December 23, 2000. The termination date for the agreement is June 2001.

Interest  Rates:  Agrilink  Foods is exposed  to  interest  rate risk  primarily
through its  borrowing  activities.  The majority of Agrilink  Foods'  long-term
borrowings  are  variable  rate  instruments.  Agrilink  Foods  entered into two
interest rate swap contracts  under which Agrilink Foods agrees to pay an amount
equal to a specified fixed rate of interest times a notional  principal  amount,
and to  receive  in return  an  amount  equal to a  specified  variable  rate of
interest times the same notional  principal amount.  The notional amounts of the
contract are not exchanged and no other cash payments are made. The two interest
rate swap  contracts  were entered into with a major  financial  institution  in
order to minimize credit risk.

The first  interest  rate swap  contract  requires  payment  of a fixed  rate of
interest  (4.96  percent)  and the  receiving  of a  variable  rate of  interest
(three-month  LIBOR of 6.80  percent as of December  23,  2000) on $150  million
notional amount of indebtedness.  Agrilink Foods had a second interest rate swap
contract to pay a fixed rate of interest  (5.32  percent) and receive a variable
rate of interest  (three-month LIBOR of 6.80 percent as of December 23, 2000) on
$100 million  notional amount of  indebtedness.  Approximately 60 percent of the
underlying debt is being hedged with these interest rate swaps.

Agrilink  Foods  designates  these  interest  rate swap  contracts  as cash flow
hedges.  At December 23, 2000,  the fair value of the contracts was an after-tax
gain of $0.8 million,  recorded in  accumulated  other  comprehensive  income in
shareholder's equity.

To the  extent  that any of these  contracts  are not  considered  effective  in
offsetting the change in the value of the interest  payments  being hedged,  any
changes in fair value relating to the ineffective  portion of these contacts are
immediately  recognized  in  income.  However,  the  net  gain  or  loss  on the
ineffective  portion of these  interest  rate swap  contracts  was not  material
during the second quarter and first six months of fiscal 2001.  Amounts deferred
to other  comprehensive  income will be reclassified  into interest expense over
the life of the swap contracts.
<PAGE>
NOTE 3.       CLOSINGS AND DISPOSITIONS

AgriFrozen to Close Facilities:  On January 22, 2001, AgriFrozen Foods announced
it is closing its frozen vegetable business  facilities in Woodburn,  Oregon and
Walla Walla and Grandview,  Washington.  This  announcement  followed the recent
decision by  AgriFrozen's  board of directors  not to plant or process crops for
the 2001 growing season and indications by AgriFrozen's lender that it would not
continue to fund  AgriFrozen's  operations.  The combination of current industry
trends, which have shown a steady decline in private label and industrial frozen
vegetable sales and pricing,  and the highly competitive nature of the business,
were the  basis  for this  action.  The  repacking  operations  at the  Woodburn
facility are expected to continue through April 2001 and warehousing  operations
at the Woodburn and Walla Walla facilities are expected to continue through June
2001.  In addition,  certain  administrative  functions are expected to continue
through a transition period.

At the request of AgriFrozen's  lender,  Agrilink Foods has submitted a proposal
to purchase the inventory of AgriFrozen.  AgriFrozen and its lender have reached
an agreement in principle on this transaction,  which is dependent upon a number
of conditions,  including the final approval of Pro-Fac's,  Agrilink  Foods' and
AgriFrozen's  respective  lenders,  and the approval and execution of definitive
agreements.  If these  conditions and other conditions to closing are satisfied,
it is expected that the  acquisition of the  AgriFrozen  inventory will close in
February 2001.

The  obligations  of AgriFrozen  are not guaranteed by Pro-Fac or Agrilink Foods
and are  expressly  nonrecourse.  We  anticipate  that  Pro-Fac will abandon its
ownership  interest in  AgriFrozen  as a result of these  recent  closings.  The
recent  decisions  regarding  AgriFrozen  are not  expected  to have a  material
adverse effect on Pro-Fac or Agrilink Foods.

See further  discussion at "Agreements  with AgriFrozen" at NOTE 4 to the "Notes
to  Consolidated  Financial  Statements"  and  at  "Other  Matters"  within  the
"Management's  Discussion  and  Analysis of Financial  Condition  and Results of
Operations."

Sale of Pickle  Business:  On June 23,  2000,  Agrilink  Foods  sold its  pickle
business  based in Tacoma  Washington  to Dean  Pickle  and  Specialty  Products
Company.  This  business  included  pickle,  pepper,  and relish  products  sold
primarily  under the  Nalley  and  Farman's  brand  names.  Agrilink  Foods will
continue to contract  pack Nalley and Farman's  pickle  products for a period of
two years beginning June 23, 2000, at the existing Tacoma processing plant which
Agrilink Foods will operate.

In a related  transaction,  on July 21, 2000,  Agrilink Foods sold the machinery
and equipment  utilized in the production of pickles and other related  products
to Dean Pickle and Specialty  Products Company.  No significant gain or loss was
recognized on this transaction. Agrilink Foods received proceeds of $5.0 million
which  were  applied  to bank loans  ($3.2  million of which was  applied to the
Agrilink  Foods' term loan facility and $1.8 million of which was applied to the
Agrilink Foods' revolving credit facility).

Sale of Midwest Private Label Canned  Vegetable  Business:  On November 8, 1999,
Agrilink Foods completed the sale of its Midwest private label canned  vegetable
business  to Seneca  Foods.  Included  in this  transaction  was the  Arlington,
Minnesota  facility.  Agrilink Foods received  proceeds of  approximately  $42.4
million  which were applied to  borrowings  outstanding  under  Agrilink  Foods'
revolving credit facility. In addition,  Seneca Foods issued to Agrilink Foods a
$5.0 million unsecured  subordinated  promissory note due February 8, 2009. This
transaction   did  not  include  the  Agrilink   Foods'  retail  branded  canned
vegetables, Veg-All and Freshlike. No significant gain or loss was recognized on
this transaction.

On  December  17,  1999,  Agrilink  Foods  completed  the  sale of its  Cambria,
Wisconsin  processing  facility to Del Monte. The sale includes an agreement for
Del Monte to produce a portion of Agrilink  Foods  product needs during the 2000
packing season.  Agrilink Foods received proceeds of approximately $10.5 million
which were  applied to bank  loans.  A gain of  approximately  $2.3  million was
recognized on this transaction.

NOTE 4.       AGREEMENTS WITH AGRILINK FOODS AND AGRIFROZEN

Agrilink Foods: The contractual  relationship between Pro-Fac and Agrilink Foods
is defined in the Pro-Fac  Marketing and  Facilitation  Agreement  (the "Pro-Fac
Marketing  Agreement").  Under the Pro-Fac Marketing  Agreement,  Agrilink Foods
pays  Pro-Fac the  commercial  market  value  ("CMV") for all crops  supplied by
Pro-Fac.  CMV is defined as the weighted  average price paid by other commercial
processors  for similar  crops sold under  preseason  contracts  and in the open
market in the same or competing  market area.  Although CMV is intended to be no
more than the fair market value of the crops purchased by Agrilink Foods, it may
be more or less than the price  Agrilink  Foods  would pay in the open market in
the absence of the Pro-Fac Marketing Agreement.

<PAGE>
Under the Pro-Fac Marketing Agreement, Agrilink Foods is required to have on its
board of directors  individuals  who are neither  members of nor affiliated with
Pro-Fac ("Disinterested  Directors"). The number of Disinterested Directors must
at least equal the number of  directors  who are members of  Pro-Fac's  board of
directors.  The volume and type of crops to be purchased by Agrilink  Foods from
Pro-Fac under the Pro-Fac  Marketing  Agreement are  determined  pursuant to its
annual  profit  plan,   which  requires  the  approval  of  a  majority  of  the
Disinterested  Directors of Agrilink  Foods.  In addition,  in any year in which
Agrilink Foods has earnings on products which were processed from crops supplied
by Pro-Fac ("Pro-Fac  Products"),  Agrilink Foods pays to Pro-Fac, as additional
patronage income, up to 90 percent of such earnings, but in no case more than 50
percent of all pretax earnings (before dividing with Pro-Fac) of Agrilink Foods.
In years in which Agrilink Foods has losses on Pro-Fac Products,  Agrilink Foods
reduces  the CMV it would  otherwise  pay to Pro-Fac by up to 90 percent of such
losses,  but in no case by more than 50  percent of all  pretax  losses  (before
dividing with Pro-Fac) of Agrilink Foods. Additional patronage income is paid to
Pro-Fac for services  provided to Agrilink  Foods,  including the provision of a
long term, stable crop supply, favorable payment terms for crops and the sharing
of risks in losses of certain  operations of the  business.  Earnings and losses
are  determined  at the end of the fiscal year,  but are accrued on an estimated
basis  during  the year.  Under the  Pro-Fac  Marketing  Agreement,  Pro-Fac  is
required to reinvest at least 70 percent of the additional  patronage  income in
Agrilink Foods.

Amounts  received by Class A members of Pro-Fac from Agrilink  Foods for the six
months ended December 23, 2000 and December 25, 1999 include:  commercial market
value of crops  delivered  $66.9 million and $67.2  million,  respectively;  and
additional  proceeds from profit  sharing  provisions of, $6.3 million and $10.3
million, respectively.

AgriFrozen:  The  contractual  relationship  between  Pro-Fac and  AgriFrozen is
defined in a marketing and facilitation agreement between Pro-Fac and AgriFrozen
(the  "AgriFrozen  Marketing  Agreement").  Under  this  agreement,   AgriFrozen
purchases  raw  products  from  Pro-Fac and  processes  and markets the finished
products.  AgriFrozen will pay Pro-Fac CMV for the crops supplied by Pro-Fac. In
addition,  in any  year  in  which  AgriFrozen  has  earnings,  AgriFrozen  will
distribute  such earnings to Class B members of Pro-Fac.  However,  in the event
AgriFrozen  experiences  any losses,  AgriFrozen will deduct the losses from the
total CMV payable.  If there are earnings,  the agreement permits  AgriFrozen to
pay 20 percent in cash and retain 80 percent of its earnings on Pro-Fac products
as working capital.  Earnings and losses are determined at the end of the fiscal
year, but are accrued on an estimated basis during the year.

Under the AgriFrozen Marketing  Agreement,  the board of directors of AgriFrozen
is required to consist of: (i) at least three and as many as five  directors who
are  individuals  who currently serve as directors of Pro-Fac and who are chosen
by  Pro-Fac's  board of  directors;  (ii) one  director  who is nominated by the
president of Agrilink Foods from among Agrilink Foods' management employees; and
(iii)  any  number  of  Disinterested  Directors  who  are  to be  elected  from
individuals  suggested  by  the  president  of  Agrilink  Foods.   Disinterested
Directors  are persons who are neither  employees,  shareholders,  nor otherwise
affiliated with Pro-Fac or AgriFrozen,  but may include a Disinterested Director
of Agrilink Foods. The current composition of the board meets these requirements
and includes two Class B members.

Amounts  received  by Class B members of  Pro-Fac  from  AgriFrozen  for the six
months ended December 23, 2000 and December 25, 1999 for the  commercial  market
value of crops delivered was $9.4 million and $13.9 million,  respectively.  Due
to the current operating losses of AgriFrozen, it is anticipated that there will
be no additional earnings to distribute to Class B members of Pro-Fac for fiscal
2001. See further  discussion at NOTE 3 to the "Notes to Consolidated  Financial
Statements."

NOTE 5.       INVENTORIES

The major classes of inventories are as follows:

(Dollars in Thousands)

                            December 23,         June 24,        December 25,
                                2000               2000              1999
                            ------------       ----------        ------------

Finished goods               $  387,070        $  290,195          $ 404,893
Raw materials and supplies       32,268            51,736             32,857
                             ----------        ----------          ---------
                             $  419,338        $  341,931          $ 437,750
                             ==========        ==========          =========
<PAGE>
NOTE 6.       DEBT
<TABLE>
Summary of Long-Term Debt:
<CAPTION>
(Dollars in Thousands)                                          December 23, 2000                  June 24,         December 25,
                                                  --------------------------------------------
                                                  Agrilink Foods   AgriFrozen          Total         2000               1999
                                                  ---------------- -------------    ----------   -----------       --------------
<S>                                                 <C>              <C>            <C>           <C>                <C>
Term Loan Facility                                  $  419,700       $ 30,000       $  449,700    $  458,300         $  467,700
Senior Subordinated Notes                              200,015              0          200,015       200,015            200,015
Subordinated Promissory Note (net of discount)          27,682          4,769           32,451        30,637             28,989
Other                                                    6,503         48,000           54,503         6,836              6,901
                                                    ----------       --------       ----------    ----------         ----------
Total debt                                             653,900         82,769          736,669       695,788            703,605
Less current portion                                   (16,596)       (82,769)         (99,365)      (16,583)           (16,580)
                                                    ----------       --------       ----------    ----------         ----------
Total long-term debt                                $  637,304       $      0       $  637,304    $  679,205         $  687,025
                                                    ==========       ========       ==========    ==========         ==========
</TABLE>

Amendments to Agrilink Foods' Term Loan Facility:  The Agrilink Foods' term loan
facility  contains  customary  covenants and restrictions on Agrilink Foods' and
the Cooperative's  ability to engage in certain activities,  including,  but not
limited to: (i)  limitations on the incurrence of indebtedness  and liens,  (ii)
limitations on sale-leaseback  transactions,  consolidations,  mergers,  sale of
assets,  transactions  with affiliates and investments and (iii) covenants which
require  Pro-Fac to maintain a minimum level of consolidated  EBITDA,  a minimum
consolidated  interest  coverage  ratio,  a minimum  consolidated  fixed  charge
coverage ratio, a maximum  consolidated  leverage ratio,  and a minimum level of
consolidated net worth. Under the Credit Agreement, the assets, liabilities, and
results  of  operations  of  AgriFrozen,   a  subsidiary  of  Pro-Fac,  are  not
consolidated with Pro-Fac for purposes of determining debt covenant compliance.

During the first quarter of fiscal 2001,  Agrilink Foods negotiated an amendment
to the covenants  outlined under the credit facility.  In consideration for this
amendment, Agrilink Foods incurred a fee of approximately $1.7 million. This fee
is being  amortized  over  the  life of the  credit  facility.  Pursuant  to the
amendment,  the interest rates were modified and the credit  facility  currently
bears  interest,  at  Agrilink  Foods'  option,  at the  Administrative  Agent's
alternate base rate or the London Interbank Offered Rate ("LIBOR") plus, in each
case,  applicable  margins of: (i) in the case of alternate base rate loans, (x)
1.25  percent  for loans  under the  Revolving  Credit  Facility  and the Term A
Facility,  (y) 3.00  percent  for loans  under the Term B Facility  and (z) 3.25
percent for loans under the Term C Facility and (ii) in the case of LIBOR loans,
(x) 3.00 percent for loans under the  Revolving  Credit  Facility and the Term A
Facility,  (y) 4.00  percent  for loans  under the Term B Facility  and (z) 4.25
percent  for  loans  under  the  Term C  Facility.  The  Administrative  Agent's
"alternate  base rate" is defined as the  greater  of: (i) the prime  commercial
rate as announced  by the  Administrative  Agent or (ii) the Federal  Funds rate
plus  0.50  percent.  Pro-Fac  and  Agrilink  Foods are in  compliance  with all
covenants, restrictions, and requirements under the terms of the credit facility
as amended.

Agrilink Foods' Subordinated  Promissory Note: As partial  consideration for the
Dean Foods Vegetable Company acquisition,  Agrilink Foods issued to Dean Foods a
Subordinated  Promissory  Note for $30 million  aggregate  principal  amount due
November  22,  2008.  Interest on the  Subordinated  Promissory  Note is accrued
quarterly in arrears  commencing  December  31,  1998,  at a rate per annum of 5
percent until November 22, 2003, and at a rate of 10 percent thereafter.  As the
rates on the Note are  below  market  value,  Agrilink  Foods  has  imputed  the
appropriate  discount  utilizing an effective  interest rate of 11-7/8  percent.
Interest  accruing  through  November  22,  2003 is  required to be paid in kind
through the issuance by Agrilink  Foods of  additional  subordinated  promissory
notes identical to the  Subordinated  Promissory Note.  Interest  accruing after
November 22, 2003 is payable in cash. The  Subordinated  Promissory  Note may be
prepaid at Agrilink Foods' option without premium or penalty.

The  Subordinated  Promissory  Note  is  expressly  subordinate  to  its  Senior
Subordinated Notes and the credit facility and contains no financial  covenants.
The Subordinated Promissory Note is guaranteed by Pro-Fac.

On December 1, 2000, Dean Foods sold the  Subordinated  Promissory Note to Great
Lakes Kraut Company,  LLC, a joint venture  between  Agrilink Foods and Flanagan
Brothers, Inc. This sale did not affect the terms of the note.

Credit   Agreement  and  Subordinated   Note  Agreement  of  AgriFrozen:   Under
AgriFrozen's Credit Facility,  AgriFrozen is able, under certain conditions,  to
borrow up to $50.0  million for  seasonal  working  capital  purposes  under the
AgriFrozen  Revolving  Credit  Facility.  As of  December  23,  2000,  (i)  cash
borrowings outstanding under the AgriFrozen Revolving Credit Facility were $48.0
million, and (ii) additional  availability under the AgriFrozen Revolving Credit
Facility, after taking into account the amount of borrowings,  was $2.0 million.
The AgriFrozen  Revolving Credit Facility  requires that AgriFrozen meet certain
financial tests and ratios and comply with certain restrictions and limitations.

As reported in our Form 10-Q for the fiscal  quarter  ended  September 23, 2000,
AgriFrozen's  lender had  previously  verbally  agreed to forbear from enforcing
rights or exercising remedies in respect of existing  noncompliance with certain
financial tests and ratios and
<PAGE>
existing noncompliance with certain restrictions and limitations.  Subsequent to
December  23, 2000,  and as  previously  highlighted  in NOTE 3 to the "Notes to
Consolidated  Financial  Statements,"  AgriFrozen's lender has indicated it will
not continue to fund AgriFrozen's operations indefinitely.

AgriFrozen's obligations are not guaranteed by Pro-Fac or Agrilink Foods and are
expressly  nonrecourse as to Pro-Fac and Agrilink  Foods.  In addition,  neither
Pro-Fac  nor  Agrilink  Foods  pledged  any of their  respective  properties  as
security for AgriFrozen's indebtedness.  As such, these current circumstances of
AgriFrozen's  debt and liquidity  are not expected to have a material  effect on
the business of Pro-Fac or Agrilink Foods.

NOTE 7:       OPERATING SEGMENTS

The  Cooperative  is  organized by product line for  management  reporting  with
operating   income   being  the  primary   measure  of  segment   profitability.
Accordingly,  no items below operating  earnings are allocated to segments.  The
Cooperative's  four  primary  operating  segments  are as  follows:  vegetables,
fruits, snacks, and canned meals.

The  vegetable  product  line  consists of canned and frozen  vegetables,  chili
beans,  and  various  other  products.  Branded  products  within the  vegetable
category include Birds Eye, Birds Eye Voila!, Freshlike, Veg-All, McKenzies, and
Brooks Chili Beans.  The fruit product line consists of canned and frozen fruits
including  fruit  fillings  and  toppings.  Branded  products  within  the fruit
category  include  Comstock and  Wilderness.  The snack product line consists of
potato chips,  popcorn and other corn-based snack items. Branded products within
the snacks category include Tim's Cascade Chips,  Snyder of Berlin,  Husman,  La
Restaurante,  Erin's, Beehive, Pops-Rite, and Super Pop. The canned meal product
line includes  canned meat products such as chilies,  stew,  soups,  and various
other  ready-to-eat  prepared  meals.  Branded  products  within the canned meal
category  include  Nalley.   Other  product  lines  primarily   represent  salad
dressings.  Branded products within the "other" category include Bernstein's and
Nalley.

The following table illustrates the Cooperative's operating segment information:
<TABLE>
(Dollars in Millions)
<CAPTION>
                                                                        Three Months Ended              Six Months Ended
                                                                  ------------------------------    -----------------------------
                                                                  December 23,      December 25,    December 23,      December 25,
                                                                      2000              1999            2000              1999
                                                                  ------------      ------------    ------------      ------------
<S>                                                                  <C>              <C>              <C>              <C>
Net Sales:
   Vegetables                                                        $  265.2         $   236.4        $  472.9         $   408.7
   Fruits                                                                45.2              45.6            70.7              68.9
   Snacks                                                                23.3              22.0            46.7              43.4
   Canned Meals                                                          17.8              18.4            33.5              35.0
   Other                                                                 11.0              13.2            23.7              27.9
                                                                     --------         ---------        --------         ---------
     Continuing segments                                                362.5             335.6           647.5             583.9
   Businesses sold or to be closed1                                      12.1              38.4            29.6              86.3
                                                                     --------         ---------        --------         ---------
       Total                                                         $  374.6         $   374.0        $  677.1         $   670.2
                                                                     ========         =========        ========         =========

Operating income:
   Vegetables2                                                       $   21.1         $    26.5        $   31.6         $    39.9
   Fruits                                                                 7.2               6.3            11.0               9.6
   Snacks                                                                 1.9               1.4             3.6               2.9
   Canned Meals                                                           2.2               2.6             4.7               4.5
   Other                                                                  0.4               0.6             1.2               1.5
                                                                     --------         ---------        --------         ---------
     Continuing segments                                                 32.8              37.4            52.1              58.4
   Businesses sold or to be closed1                                       2.2               1.2             4.5               2.3
                                                                     --------         ---------        --------         ---------
       Total                                                             35.0              38.6            56.6              60.7
Gain on sale of assets                                                    0.0               2.3             0.0               2.3
                                                                     --------         ---------        --------         ---------
Total consolidated operating income                                      35.0              40.9            56.6              63.0
Interest expense                                                        (22.4)            (21.8)          (44.0)            (42.5)
                                                                     --------         ---------        --------         ---------
Income before taxes, dividends, and allocation of net proceeds       $   12.6         $    19.1        $   12.6         $    20.5
                                                                     ========         =========        ========         =========
<FN>
1    Includes the private label canned  vegetable  business and pickle  business
     sold in fiscal 2000,  and the activity of AgriFrozen  facilities due to the
     recent  announcement  regarding the closing of this operation.  See NOTES 3
     and 4 to the "Notes to Consolidated Financial Statements."

2    The vegetable  product line includes  earnings derived from Agrilink Foods'
     investment  in Great Lakes Kraut  Company of $0.9  million and $1.2 million
     for the three  months  ended  December  23,  2000 and  December  25,  1999,
     respectively,  and $1.2  million and $1.7  million for the six months ended
     December 23, 2000 and December 25, 1999, respectively.
</FN>
</TABLE>
<PAGE>
NOTE 8.       SUBSIDIARY GUARANTORS

Kennedy  Endeavors,   Incorporated  and  Linden  Oaks  Corporation  wholly-owned
subsidiaries  of Agrilink Foods  ("Subsidiary  Guarantors"),  and Pro-Fac,  have
jointly  and  severally,  fully  and  unconditionally  guaranteed,  on a  senior
subordinated  basis,  the obligations of Agrilink Foods with respect to Agrilink
Foods' 11-7/8 percent Senior  Subordinated  Notes due 2008 ("the Notes") and the
Credit  Facility.  The  covenants  in the Notes and the Credit  Facility  do not
restrict the ability of the Subsidiary  Guarantors to make cash distributions to
Agrilink Foods.

Separate  financial  statements and other disclosures  concerning the Subsidiary
Guarantors  are not  presented  because  management  has  determined  that  such
financial  statements and other disclosures are not material.  Accordingly,  set
forth below is certain summarized  financial  information derived from unaudited
historical financial  information for the Subsidiary  Guarantors,  on a combined
basis.

<TABLE>
(Dollars in Millions)
<CAPTION>
                                                    Three Months Ended      Six Months Ended
                                            ----------------------------------------------------------------
                                            December 23,      December 25,    December 23,      December 25,
                                                2000              1999            2000              1999
                                            ------------      ------------    ------------      ------------
<S>                                             <C>              <C>             <C>              <C>
Summarized Statement of Operations:
   Net sales                                    $  22.4          $   20.9        $  41.4          $  39.2
   Gross profit                                    18.5              17.4           33.3             31.8
   Income from continuing operations               19.8              17.6           35.5             31.7
   Net income                                      12.9              11.4           23.1             20.6

Summarized Balance Sheet:
   Current assets                               $   3.5          $    2.9
   Noncurrent assets                              207.9             214.3
   Current liabilities                              9.3               7.7
</TABLE>

NOTE 9.       OTHER MATTERS

Restructuring: During the third quarter of fiscal 1999, Agrilink Foods completed
a corporate-wide  restructuring program. The overall objectives of the plan were
to reduce expenses,  improve productivity,  and streamline operations. The total
restructuring  charge  amounted to $5.0 million and was  primarily  comprised of
employee  termination  benefits.  Efforts have focused on the  consolidation  of
operating  functions and the  elimination of  approximately  five percent of the
work force.  Reductions  in personnel  include  operational  and  administrative
positions and have improved annual earnings by  approximately  $8.0 million.  Of
this  charge,  $4.8  million  has been  liquidated  to date,  and the  remaining
termination benefits are anticipated to be liquidated during fiscal 2001.

Dividends:  Subsequent to quarter end, the Cooperative  declared a cash dividend
of $0.43 per share on the Class A Cumulative  Preferred  Stock.  These dividends
approximate $1.9 million and were paid on January 31, 2001.