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 (Fee Required)

For the fiscal year ended June 25, 1994
or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

For the Transition Period from __________ to _________

Registration Statement (Form S-1) No. 2-66772

PRO-FAC COOPERATIVE, INC.
(Exact name of registrant as specified in its charter)

New York 16-6036816
(State of incorporation) (I.R.S. Employer Identification No.)

90 Linden Place, P.O. Box 682, Rochester, New York 14603
(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (716) 383-1850

Securities Registered Pursuant to Section 12(b) of the Act: 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.

YES X 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 definitive proxy or information
statements incorporated by reference in Part III of this Form
10-K or any amendment to this Form 10-K. [X]

Aggregate market value of voting stock held by non-affiliates
of the registrant as of August 15, 1994:

Common Stock: $10,183,280
(based upon par value of shares since there is no market for
the Registrant's common stock)

Number of common shares outstanding at August 15, 1994:

Common stock: 2,036,656

The exhibit page begins on page 58
Page 1 of 59 pages

FORM 10-K ANNUAL REPORT -- 1994
PRO-FAC COOPERATIVE, INC.
TABLE OF CONTENTS

PART I
PAGE
Item 1. Business
General Development of Business . . . . . . . . . 3
Recent Developments . . . . . . . . . . . . . . . 3
Relationship with Curtice Burns . . . . . . . . . 4
Financial Information About Industry Segments . . 5
Narrative Description of Business . . . . . . . . 6
Backlog of Orders . . . . . . . . . . . . . . . . 6
Government Contracts. . . . . . . . . . . . . . . 6
Competitive Conditions. . . . . . . . . . . . . . 6
Seasonality of Business . . . . . . . . . . . . . 6
Working Capital . . . . . . . . . . . . . . . . . 7
Research and Development. . . . . . . . . . . . . 7
Compliance with EPA Regulations . . . . . . . . . 7
Financial Information About Foreign and Domestic
Operations and Export Sales . . . . . . . . . . 8
Item 2. Properties. . . . . . . . . . . . . . . . . . . . 8
Item 3. Legal Proceedings . . . . . . . . . . . . . . . . 12
Item 4. Submission of Matters to a Vote of Security
Holders . . . . . . . . . . . . . . . . . . . . 13

PART II

Item 5. Market for Registrant's Common Stock and Related
Security Holder Matters . . . . . . . . . . . . 13
Item 6. Selected Financial Data . . . . . . . . . . . . . 14
Item 7. Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . 15
Item 8. Financial Statements and Supplementary Data . . . 26
Item 9. Changes in and Disagreements with Accountants on
Accounting and Financial Disclosure . . . . . . 45

PART III

Item 10. Directors and Executive Officers of the Registrant. 45
Item 11. Executive Compensation. . . . . . . . . . . . . . . 47
Item 12. Security Ownership of Certain Beneficial Owners
and Management. . . . . . . . . . . . . . . . . . 47
Item 13. Certain Relationships and Related Transactions. . . 49

PART IV

Item 14. Exhibits, Financial Statement Schedules and Reports
on Form 8-K . . . . . . . . . . . . . . . . . . . 49
Signatures. . . . . . . . . . . . . . . . . . . . . 55

PART I

Item 1. BUSINESS

General Development of Business

Pro-Fac Cooperative, Inc. ('Pro-Fac' or 'the Cooperative') is
an agricultural cooperative corporation formed in 1960 under
New York law to process and market crops grown by its
members. Only growers of crops marketed through Pro-Fac (or
associations of such growers) can become members of Pro-Fac;
a grower becomes a member of Pro-Fac through the purchase of
common stock. Its approximately 700 members are growers (or
associations of growers) located principally in New York,
Pennsylvania, Illinois, Michigan, Washington, Oregon, Iowa,
Nebraska, North Dakota, Florida, California, and Georgia.
The principal office of Pro-Fac is at 90 Linden Place,
Rochester, New York 14625; its telephone number is (716) 383-
1850.

Pro-Fac owns 33 food processing plants and other distribution
and office facilities in 11 states, all of which are leased
to and operated by Curtice-Burns Foods, Inc. ('Curtice
Burns'), which processes the crops that are marketed through
Pro-Fac by its members and markets the finished food
products, as well as other products not manufactured from
Pro-Fac crops. See 'Relationship with Curtice Burns.'

Pro-Fac crops include fruits (cherries, apples, blueberries,
peaches, and plums), vegetables (snap beans, beets,
cucumbers, peas, sweet corn, carrots, cabbage, squash,
tomatoes, asparagus, potatoes, southern peas, dry beans,
turnip roots, and leafy greens), and popcorn. These
products, which are processed in facilities leased to Curtice
Burns, are highly seasonal. Partly for this reason, Pro-Fac
also permits Curtice Burns to process products unrelated to
Pro-Fac crops in these facilities. Such unrelated products
include cheese sauce, soups and prepared ethnic foods, salad
dressings, certain snack foods, and non-fruit fillings and
puddings. These products are not seasonal, and their
production permits better utilization of the Pro-Fac
facilities year round, reducing the overhead burden on all
products. Pro-Fac is compensated for this use of its
facilities through the payments made by Curtice Burns under
the facilities financing provisions of the Integrated
Agreement (the 'Agreement') with Curtice Burns as discussed
below and financing payments under the operations financing
provisions of the Agreement. See also discussion in Note 2
of the 'Notes to Financial Statements.'

Pro-Fac's business is conducted in one industry segment, the
marketing of its members' crops through Curtice Burns.
Curtice Burns is a food processing corporation with which
Pro-Fac has a contractual relationship (see 'Relationship
with Curtice Burns'). Pro-Fac has only one class of similar
products, raw fruits and vegetables and popcorn.

During the fiscal year ended June 25, 1994, Pro-Fac was not
involved in any bankruptcy, receivership, or similar pro-
ceeding; with any reclassification, merger, or consolidation;
or with any acquisition or disposition of any material amount
of assets other than in the ordinary course of business.
During such period, Pro-Fac did not make any material changes
in the manner in which it conducts its business.

Recent Developments

On September 27, 1994, Pro-Fac and Curtice Burns entered into
a Merger Agreement pursuant to which Pro-Fac will purchase
all of the shares of Class A common stock and Class B common
stock of Curtice Burns for $19.00 per share, or approximately
$167.0 million in the aggregate. Pro-Fac will immediately
commence a tender offer for all of the shares to be followed,
if successful, by a merger of a subsidiary of Pro-Fac into
Curtice Burns.

Pro-Fac has advised Curtice Burns that it
expects to complete its tender offer on or about November 1,
1994.

Relationship with Curtice Burns

See Note 2 'Notes to Financial Statements' regarding
potential change of control of Curtice Burns. Pro-Fac has a
contractual relationship with Curtice Burns, a New York
business corporation engaged in the processing and sale of
food products. The relationship between Pro-Fac and Curtice
Burns is governed by an Agreement between them, consisting of
five sections: operations financing; marketing; facilities
financing; management; and settlement. The management of
Pro-Fac believes that its relationship with Curtice Burns is
unique among agricultural cooperatives and that this
relationship has contributed materially to the successful
operations of Pro-Fac. Curtice Burns is a publicly held
corporation and files reports and other information with the
Securities and Exchange Commission; its Class A common stock
is listed on the American Stock Exchange and the Midwest
Stock Exchange.

Broadly speaking, Pro-Fac has contracted with Curtice Burns
to operate the plants owned by Pro-Fac and to process and
market as finished food products the crops produced by the
members of Pro-Fac. Pro-Fac sells to Curtice Burns all of
the crops produced and delivered to it by its members.
Curtice Burns pays Pro-Fac as the purchase price for those
crops the commercial market value ('CMV') of the crops,
which is defined in the Agreement between Pro-Fac and Curtice
Burns 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.

Curtice Burns pays rent for the use of the fixed and
intangible assets leased to it by Pro-Fac. The rental
payments are equal to the amortization of the leased assets
plus any other costs such as taxes and utilities which may be
incurred by Pro-Fac associated with the ownership of the
facilities. Curtice Burns also pays a basic financing charge
equal to the interest expenses incurred by Pro-Fac in
financing its facilities leased to Curtice Burns and in
carrying the loans of funds which have been loaned to Curtice
Burns. In addition, Curtice Burns pays or receives an
adjustment based upon the earnings or losses of Curtice Burns
on all products, determined according to a formula which
reflects the respective adjusted equity investments of the
two companies. As a result, Pro-Fac cannot assure its
members that it will always have sufficient proceeds from all
sources to pay full CMV to its members. See also discussion
in Note 2 of the 'Notes to Financial Statements.'

Pro-Fac and Curtice Burns were both formed with support from
Agway Inc. ('Agway'). As a farm supply business operated as
a cooperative Agway had an interest in ensuring a market for
crops grown by its grower members. Agway initiated meetings
between representatives of small New York food processors and
their suppliers and suggested the outlines of a relationship
between them. Agway provided Pro-Fac with advice concerning
operating as a cooperative, and Agway's involvement assisted
Pro-Fac in enlisting members. Agway provided Curtice Burns
with financial support and retains a substantial investment
in Curtice Burns, which enables Agway to elect 70 percent of
the Directors of Curtice Burns. Agway owns no stock of Pro-
Fac, although two directors of Agway, Donald E. Pease and
Christian F. Wolff, Jr., served as directors of Pro-Fac until
their resignations in fiscal 1994.

Operating originally only in Upstate New York, Pro-Fac and
Curtice Burns have grown through the acquisition of food
processing and marketing plants and facilities in the states
of Colorado, Pennsylvania, Indiana, Michigan, Washington,
Iowa, Ohio, Nebraska, Georgia, Texas, and Oregon as well as
additional acquisitions in Upstate New York and Canada. The
advisability of an acquisition is ordinarily assessed jointly
by Pro-Fac and Curtice Burns, with Pro-Fac assessing its
interest in and ability to organize as members of Pro-Fac the
growers who supply the crops to the company to be

acquired, and Curtice Burns assessing its ability to process and
market profitably the products of that company.

Curtice Burns produces and markets a variety of processed
food products, including canned and frozen fruits and
vegetables, condiments, potato chips and other snack foods,
puddings, fruit fillings and toppings, canned products
containing meat, salad dressings, specialty food products,
and popcorn. These products are distributed to various
consumer markets in all 50 states. Curtice Burns markets
products sold both under its own brands and under its
customers' brands. Pro-Fac currently supplies approximately
65 percent of the raw agricultural crops used by Curtice
Burns in its processing and marketing operations.

In March 1994, Curtice Burns advised Pro-Fac that in view of
the possibility that Curtice Burns might be acquired by a
third party, Pro-Fac should not rely on Curtice Burns to
purchase any crops from Pro-Fac or its growers in calendar
1995 and beyond. In addition, Curtice Burns notified Pro-Fac
that Curtice Burns will not commit to purchase a substantial
portion of the crops historically purchased from Pro-Fac in
the 1995 growing season. As a result, Pro-Fac has given
notice to its affected members terminating Pro-Fac's
obligation to purchase these crops beginning next year. The
affected Pro-Fac growers are principally Pro-Fac's New York
fruit and vegetable growers, Illinois and Nebraska popcorn
growers, and Northwest potato growers who represent more than
half of Pro-Fac's membership and have accounted for
approximately $29.9 million or 50 percent of the total crops
delivered by Pro-Fac to Curtice Burns in the past year. In
the arbitration proceedings currently pending between Curtice
Burns and Pro-Fac, Pro-Fac has asserted, among other matters,
that Curtice Burns is in default under the Integrated
Agreement for improper termination of crops and has claimed
damages that Pro-Fac estimates at more than $50 million. See
Note 2 of the 'Notes to Consolidated Financial Statements.'
Curtice Burns believes that its only obligation to purchase
crops from Pro-Fac is as set forth in the Profit Plan as
approved each year by the Boards of Directors of both Pro-Fac
and Curtice Burns. Because the most recent approved Profit
Plan was for fiscal year 1995 (which Plan corresponds to the
1994 calendar year crops), Curtice Burns believes that it is
not currently obligated to purchase any crops from Pro-Fac
for calendar year 1995 or later.

The Agreement between Pro-Fac and Curtice Burns extends to
1997, and provides for two successive renewals, each for a
term of five years, at the option of Curtice Burns. Curtice
Burns has the right to terminate the Agreement with 60-days
notice provided that it would then be obligated to purchase
the assets owned by Pro-Fac which are utilized in the
business of Curtice Burns.

Curtice Burns currently is involved in a restructuring
program and change of control initiative which could affect
Pro-Fac. See 'Recent Developments,' Management's Discussion
and Analysis of Financial Condition and Results of
Operations, 'Curtice Burns Restructuring Program' and
'Potential Change in Control of Curtice Burns.'

Financial Information About Industry Segments

As described above, the business of Pro-Fac is conducted in
only one industry segment, the marketing of its members'
crops through Curtice Burns. Since Pro-Fac's business is
conducted in only one industry segment, there were no
intersegment sales or transfers.

The financial statements for the fiscal years ended June 25,
1994, June 26, 1993, and June 26, 1992, which are included in
this report, relate solely to that industry segment.

Narrative Description of Business

In its industry segment, Pro-Fac deals in one class of
similar products, raw fruits and vegetables and popcorn.

The principal products produced and services rendered by
Pro-Fac in its industry segment and the principal markets
for, and methods of distribution of, such products and
services and raw material sources are discussed above.

Backlog of Orders

Backlog of orders has not historically been significant in
the business of Pro-Fac.

Governmental Contracts

No portion of the business of Pro-Fac is subject to
renegotiation of profits with, or termination by, any
governmental agency.

Competitive Conditions

As Pro-Fac sells all of the products it receives from its
members to Curtice Burns, competitive conditions in the food
processing industry affect Pro-Fac indirectly, through their
effect on the earnings of Curtice Burns and their resulting
effect on the purchase price which Curtice Burns must pay
Pro-Fac for crops and the payments Curtice Burns must make
for the use of Pro-Fac facilities and funds. See
'Relationship with Curtice Burns,' including the discussion
regarding the termination of crop agreements.

Curtice Burns competes with national and major regional food
manufacturers, particularly in the sale of its branded
products. Many of the national manufacturers have
substantially greater resources than Curtice Burns. The
principal methods of competition in the food industry are
ready availability of product, a broad line of products,
product quality, price, and advertising and sales promotion.
Curtice Burns distributes its products primarily in areas
which can be quickly served from its production and
distribution facilities. Pricing is generally competitive
with that of other food processors for products of comparable
quality.

While the major national brands are dominant in branded
products on a national level, Curtice Burns is a significant
factor in many of the marketing areas served by one or more
of its regional brands.

Seasonality of Business

The overall sales of Curtice Burns are not highly seasonal
since the demand for its products is fairly constant
throughout the year. Exceptions to this general rule include
some products that have higher sales volume in the cool
weather months (such as canned fruits and vegetables, chili,
fruit fillings and toppings, and sauerkraut) and others that
have higher sales in the warm weather months (such as potato
chips, salad dressings, and condiments). However, the
manufacture of products made from raw fruits and vegetables
is predominantly seasonal, with production occurring during
the summer and fall harvest seasons of the various crops
processed. Thus, Curtice Burns must maintain substantial
inventories throughout the year of those finished products
made from seasonal produce.

Profit margins for canned fruits and vegetables have been
subject to industry supply and demand cycles, which are
attributable to changes in growing conditions, acreage
planted, inventory carry-overs, and other factors. Curtice
Burns has emphasized the merchandising of its own brands and
expanded service and product development for its high-volume
private label and food service customers. See 'Relationship
with Curtice Burns.'

Working Capital

Short-term bank financing, principally for seasonal working
capital requirements, is obtained by both Pro-Fac and Curtice
Burns. A fruit and vegetable food processor such as Curtice
Burns requires seasonal borrowing because, while cash inflows
from sales are spread somewhat ratably throughout the year,
cash outflows are concentrated in limited production seasons
tied to the harvest seasons of the crops processed. Under
agreements with the Springfield Bank for Cooperatives ('the
Bank'), Pro-Fac and Curtice Burns must participate on a
proportionate basis in the average short-term bank borrowings
outstanding during the year. At least 55 percent of such
borrowings are obtained by Pro-Fac from the Bank and then
loaned by Pro-Fac to Curtice Burns at a rate of interest
equal to that charged Pro-Fac by the Bank. The balance is
borrowed by Curtice Burns at its option at the prime rate or
at money market rates directly from six commercial banks.
Curtice Burns and Pro-Fac each guarantees repayment of the
short-term borrowings of the other.

Research and Development

Pro-Fac does not spend any material amount on research
activities relating to the development of new products or the
improvement of existing products.

Compliance With EPA Regulations

Expenditures for facilities and improvements relating to
protection of the environment are made from the capital
budget of Pro-Fac, and the completed facilities are leased to
Curtice Burns.

The operations of Curtice Burns are subject to regulations
imposed by various governmental agencies, including the
Environmental Protection Agency ('EPA'), as well as certain
comparable state agencies. Curtice Burns is also subject to
standards imposed by regulatory agencies pertaining to the
occupational health and safety of its employees. Curtice
Burns believes that its standards and procedures generally
equal or exceed those imposed by such regulatory agencies.

The disposal of solid and liquid waste material resulting
from the preparation and processing of food and the emission
of odors inherent in the processing of food are also subject
to various federal, state, and local laws and regulations
relating to the protection of the environment. Such laws and
regulations have had an important effect on the food
processing industry as a whole, requiring substantially all
firms in the industry to incur material expenditures for
modification of existing processing facilities and for
construction of new waste treatment facilities.

Among the various programs for the protection of the
environment which have been adopted to date, the most
important for the operations of Curtice Burns are the
discharge permit programs administered by the EPA and
environmental protection agencies in those states in which
Curtice Burns does business. Under those programs, permits
are required for processing facilities which discharge
industrial wastes into streams and other bodies of water, and
Curtice Burns is required to meet certain discharge standards
in accordance with compliance schedules established by such
agencies. Curtice Burns has to date received permits for all
facilities for which renewal permits are required, and each
year submits applications for renewal permits for some of the
facilities. Such renewal permits are currently being
processed under normal agency procedures and it is expected
that they will be issued in due course.

In recent years, expenditures for facilities related to the
protection of the environment have not represented a
significant percentage of total capital expenditures. The
table below shows the total capital expenditures of Curtice
Burns and Pro-Fac and the amounts devoted to the construction
of environmental facilities for each of the last five fiscal
years:

1994 1993 1992 1991 1990
---- ---- ---- ---- ----

Total capital
expenditures
(000's) $19,545 $21,503 $16,163 $24,852 $39,978

Amount devoted to
environmental
facilities
(000's) $ 2,116 $ 870 $ 1,325 $ 1,433 $ 1,631

Percentage of capital
expenditures devoted
to environmental
facilities 10.8% 4.0% 8.2% 5.8% 4.1%

Additional expenditures as may be necessary for compliance
with environmental laws will be made from future capital
budgets, and it is expected that they will continue to
constitute a similar portion of the annual capital
expenditures of Pro-Fac for equipment which is leased to
Curtice-Burns. Pro-Fac and Curtice-Burns estimate that the
capital expenditures of Pro-Fac for environmental control
facilities, principally waste water treatment facilities, for
the current fiscal year will be approximately $2,668,000 and
for fiscal 1996 will be approximately $1,855,000. However,
the estimate for 1996 is based on recent experience rather
than detailed budget proposals.

Financial Information About Foreign and
Domestic Operations and Export Sales

Pro-Fac makes no export sales. It sells all of the crops
grown by its members to Curtice Burns, which processes such
crops at plants owned by Pro-Fac and leased to and operated
by Curtice Burns. All such plants are located within the
United States.

Item 2. PROPERTIES

Reference is made to 'Relationship with Curtice Burns.'

The following table describes the properties leased or owned
by Curtice Burns as of the end of the 1994 fiscal year.
Unless otherwise indicated, all properties are leased from
Pro-Fac.

Type of Property Square
(by Division) Location Feet
- - - --------------- -------- ------

COMSTOCK-MICHIGAN FRUIT:

Office building, manufacturing
plant, and warehouse for
cheese sauce, snack dips,
puddings, and fruit fillings
and toppings . . . . . . . . . . . . . . Benton Harbor, MI 239,252

Distribution center. . . . . . . . . . . Coloma, MI 400,000
Manufacturing plant and ware-
house for canned fruits and
vegetables, fruit fillings and
toppings . . . . . . . . . . . . . . . . Fennville, MI 370,600

Warehouse for maraschino
cherries, frozen fruits and
vegetables, fruit fillings
and supplies . . . . . . . . . . . . . . Sodus, MI 243,138

Type of Property Square
(by Division) Location Feet
- - - --------------- -------- ------

COMSTOCK-MICHIGAN FRUIT: (Cont'd.)

Property held for resale . . . . . . . . Clifton, NJ 250,000

Warehouse and office;
public storage facility (1). . . . . . . Vineland, NJ 198,000

Warehouse for finished goods . . . . . . Alton, NY 60,060

Property held for resale . . . . . . . . Alton, NY 170,000

Freezing Plant for green beans;
warehouse for frozen goods;
office and dry storage . . . . . . . . . Barker, NY 150,100

Freezing plant for peas, snap
beans, corn, and carrots . . . . . . . . Bergen, NY 122,009

Cold storage and repack
facility for frozen fruits
and vegetables and public
storage warehouse. . . . . . . . . . . . Brockport, NY 429,052

Cutting, curing and packaging
plant for sauerkraut . . . . . . . . . . Gorham, NY 55,534

Canning plant and warehouse
for peas, corn, lima beans,
beets, and dried bean
products; freezing plant
for corn . . . . . . . . . . . . . . . . Leicester, NY 205,599

Distribution center and
warehouse. . . . . . . . . . . . . . . . LeRoy, NY 137,300

Canning plant and warehouse
for snap beans and carrots;
freezing plant for snap beans,
corn and cabbage . . . . . . . . . . . . Oakfield, NY 203,403

Canning plant and warehouse for
snap beans . . . . . . . . . . . . . . . So. Dayton, NY 151,140

Canning plant and warehouse for
fruit fillings and toppings, fruit
specialty products and
applesauce . . . . . . . . . . . . . . . Red Creek, NY 137,264

Property held for resale . . . . . . . . Rushville, NY 315,701

Cutting, curing, and canning
plant for sauerkraut . . . . . . . . . . Shortsville, NY 103,686

Cutting and curing plant for
sauerkraut . . . . . . . . . . . . . . . Waterport, NY 21,626

Manufacturing plant - popcorn. . . . . . Ridgway, IL 50,000

Closed plant held for resale . . . . . . Wall Lake, IA 39,000

Manufacturing plant - popcorn. . . . . . North Bend, NE 50,000

Type of Property Square
(by Division) Location Feet
- - - ---------------- -------- ------

BROOKS FOODS:

Office building, canning
plant, and warehouse for
dried bean products and
tomato products. . . . . . . . . . . . . Mt. Summit, IN 200,000

CURTICE BURNS SNACK FOOD GROUP:

SNYDER SNACK FOODS:

Office, plant and warehouse
for potato chips and corn
snack foods. . . . . . . . . . . . . . . Berlin, PA 190,225

TIM'S:

Administrative, plant, warehouse
and distribution center (1). . . . . . . Auburn, WA 37,600

HUSMANS SNACK FOODS:

Office, plant and warehouse
for potato chips, and other
snack food . . . . . . . . . . . . . . . Cincinnati, OH 113,576

NALLEY'S FINE FOODS:

Office building, warehouse
and tank farm for pickles. . . . . . . . Enumclaw, WA 87,313

Office building, manufacturing
plant, and warehouse for pickles,
canned meat products, salad
dressings, peanut butter and
snack foods. . . . . . . . . . . . . . . Tacoma, WA 438,000

Sales offices and distribution
warehouse for chips and
snacks (1) . . . . . . . . . . . . . . . Spokane, WA 16,300

Parking lot and pickle vat
yards (1). . . . . . . . . . . . . . . . Tacoma, WA 162,570

Cucumber receiving and
grading station (1). . . . . . . . . . . Cornelius, OR 11,700

Sales offices and distribution
warehouses for chips and
snacks (1) . . . . . . . . . . . . . . . Portland, OR 14,365

Cucumber receiving and
grading station (1). . . . . . . . . . . Mount Vernon, WA 30,206

NALLEY'S CANADA LTD.:

Office, manufacturing plant
and distribution warehouse
for chips and snacks,
dressings, pickles, syrup,
peanut butter, canned
products and oatmeal (1) . . . . . . . . Anacis Island, BC 108,000

Type of Property Square
(by Division) Location Feet

NALLEY'S CANADA LTD. (Cont'd.):

Main office (1). . . . . . . . . . . . . Burnaby, BC 8,350

Office building and warehouse
for chips and snack food
distribution (1) . . . . . . . . . . . . Kelowna, BC 15,900

Office, manufacturing plant and ware-
house for salad dressings, syrup,
chip dip, and pickles (2). . . . . . . . Vancouver, BC 48,000

SOUTHERN FROZEN FOODS:

Office, freezing plant, cold
storage and repackaging facility
for southern vegetables, breaded
vegetables and other vegetables
and fruits . . . . . . . . . . . . . . . Montezuma, GA 545,942

Office, freezing plant and
cold storage for southern
vegetables . . . . . . . . . . . . . . . Alamo, TX 110,000

FINGER LAKES PACKAGING:

Can manufacturing plant. . . . . . . . . Lyons, NY 147,376

CORPORATE HEADQUARTERS:

Headquarters office (1)
(Includes office space for
Comstock Michigan Fruit Division
as well as Corporate Conference
Center). . . . . . . . . . . . . . . . . Rochester, NY 62,500

Sales Office (1) . . . . . . . . . . . . Cordova, TN 1,000

Closed facility held for resale. . . . . Denver, CO 80,000

Held for resale (subleased to Oberto sausage) . . Albany,OR 140,000

Closed plant held for resale . . . . . . Des Moines, IA 82,958

- - - -----------------
1. Leased from third parties, although the related equipment
may be owned by Pro-Fac.

2. Owned by Curtice Burns or one of its wholly-owned sub-
sidiaries.

Pro-Fac owns all processing facilities, warehouses, and other
plant and equipment utilized in Curtice Burns' business,
except for the facility owned by Nalley's Canada Ltd., or
those leased from third parties. Curtice Burns, including
its subsidiaries, owns one property in Canada and occupies 37
other properties, 26 of which are used under the facilities
financing section of the Agreement with Pro-Fac and 11 of
which are leased from third

parties. In the properties leased from third parties, however,
substantially all of the operating equipment is owned by Pro-Fac.
Under the facilities financing section of the Agreement with
Curtice Burns, Curtice Burns pays all taxes, insurance, and other
operating costs, as well as an amount equal to the annual
amortization taken on the assets. In addition to the 26 Pro-
Fac properties mentioned above, seven Pro-Fac properties are
not being utilized for production and are held for resale.
The net book value of these properties held for resale was
$11,898,000 at June 25, 1994.

If the Agreement with Curtice Burns above should be
terminated, Curtice Burns would have the option of
purchasing all plant and equipment covered by the facilities
financing section at its then book value as well as
associated intangible assets. The calculation for this
buyout is in dispute. See Note 2 to 'Notes to Financial
Statements'. The Agreement extends to June 27, 1997 and
provides for two successive renewals, each for five years, at
the option of Curtice Burns.

For the fiscal years ended June 25, 1994, June 26, 1993, and
June 26, 1992 payments to Pro-Fac under the facilities
financing section of the Agreement relating to the leased
assets amounted to $43,830,000, $53,826,000, and $26,928,000,
respectively, an amount equal to the amortization of the
assets. On June 25, 1994, the net book value of Pro-Fac's
fixed assets used by Curtice Burns was $141,322,000.

In the opinion of management of Curtice Burns and Pro-Fac,
all of the properties described in this Item 2 are suitable
for the use intended and adequately maintained. The extent
of utilization of such properties varies from property to
property and from time to time. Since the business of
Curtice Burns is conducted in principally one industry
segment.

Item 3. LEGAL PROCEEDINGS

In conjunction with the sale of the National Oats division by
Pro-Fac and Curtice Burns, Pro-Fac terminated the membership
of the Harvest States Cooperative ('Harvest States') in the
Cooperative. Harvest States was the only supplier of oats to
the Curtice Burns National Oats division. As a result of
this action, Harvest States filed a claim against Pro-Fac
for, among other things, the receipt of payments for future
oats purchases after the sale of National Oats division
through fiscal 1995.

Under the agreement between the two entities, Curtice Burns
agreed to indemnify Pro-Fac as to certain expenses arising
out of the termination of the membership of Harvest States in
Pro-Fac. It was agreed that any settlement payments would be
deemed an expense of Curtice Burns under the division of
earnings with Pro-Fac.

The exact amount of any potential settlement related to this
issue cannot be estimated at June 25, 1994, but management
does not believe that this is a material exposure to the
Cooperative.

On July 11, 1994, Curtice Burns commenced arbitration
proceedings against Pro-Fac under the Integrated Agreement by
serving a Demand for Arbitration on Pro-Fac. In the
arbitration, Curtice Burns is seeking, among other relief, a
declaration confirming its right to terminate the Integrated
Agreement and to purchase the assets owned by Pro-Fac upon
tender of the then current book value thereof, determined in
accordance with generally accepted accounting principles, a
declaration confirming the effect of termination of the
Integrated Agreement on the obligations of Curtice Burns
under the Integrated Agreement and a declaration confirming
that Curtice Burns does not have any obligations under the
Integrated Agreement to purchase crops except as set forth in
the fiscal 1995 Profit Plan. Curtice Burns is also seeking
an award of damages sustained by Curtice Burns in an amount
to be determined by the arbitrators, but in no event less
than the difference in value between the Dean Foods $20 per
share offer and the market price per share of Curtice Burns'
common stock following any public

announcement that the Dean Foods acquisition proposal has been
withdrawn. On August 2, 1994, Curtice Burns filed a petition in
the Supreme Court of New York for an order compelling Pro-Fac to
proceed with the arbitration which was subsequently withdrawn.

On August 4, 1994, Pro-Fac served Curtice Burns with Pro-
Fac's Response and Counterdemand for Arbitration (the
'Response'). In the Response, Pro-Fac asserted (1) that Pro-
Fac is entitled to a 50 percent share of the profits from the
consummation of the of the pending acquisition proposal from
Dean Foods, which share Pro-Fac calculated to be greater than
$5.75 per share of Curtice Burns' common stock; (2) that
Curtice Burns cannot terminate the Integrated Agreement at
all or not before, at the earliest, June 1996; (3) that the
book value of Pro-Fac's assets for the purposes of
calculating the price at which Curtice Burns may buy those
assets and terminate the Integrated Agreement should not take
into account the unilateral writedowns by Curtice Burns of
the Hiland and meat snack assets; (4) that Curtice Burns is
in default under the Integrated Agreement for improper
termination of crops; and (5) that Curtice Burns is in
default under the Integrated Agreement for failing to manage
the business of Pro-Fac. Pro-Fac also claimed damages that
it estimated at more than $50 million. In the Response, Pro-
Fac also generally denied Curtice Burns' allegations in its
Demand for Arbitration (see 'Recent Developments').

There are no other material pending legal proceedings other
than ordinary routine litigation incidental to the business
to which Pro-Fac is a party or to which any of its property
is subject. Further, no such proceedings are known to be
contemplated by governmental authorities.

Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

Not Applicable

PART II

Item 5. MARKET FOR REGISTRANT'S COMMON STOCK AND RELATED
SECURITY HOLDER MATTERS.

The information required by this item is contained in Notes 6
and 7 to the Financial Statements.

Item 6. SELECTED FINANCIAL DATA

Six-Year Summary

(Dollars in Thousands, Except Capital Stock Data)

1994 1993 1992 1991 1990 1989
-------- -------- -------- -------- -------- --------

Operating Data
Raw product deliveries at CMV $ 59,216 $ 59,800 $ 64,152 $ 61,204 $ 54,928 $ 43,528
Adjust to fiscal year basis (979) (65) (718) 990 5,895 763
Additional proceeds/(loss) from Curtice
Burns under the Integrated Agreement 18,599 (21,800) 9,505 5,907 11,448 24,225
Interest income 15,630 17,090 19,869 22,681 22,641 16,035
Other income 1,927 1,857 1,411 933 1,086 499
-------- -------- -------- -------- -------- --------
Total revenues 94,393 56,882 94,219 91,715 95,998 85,050
-------- -------- -------- -------- -------- --------
Total interest and other expenses 12,458 14,645 18,031 21,198 20,355 14,555
CMV paid or accrued 58,237 59,735 63,434 62,194 60,823 44,291
-------- -------- -------- -------- -------- --------
Total costs and expenses 70,695 74,380 81,465 83,392 81,178 58,846
-------- -------- -------- -------- -------- --------
Excess/(deficiency) of revenues before
taxes, dividends and allocation of net
proceeds 23,698 (17,498) 12,754 8,323 14,820 26,204
Tax benefit/(provision) for taxes on
income(1) 844 1,151 (3,023) (4,389) (4,234)
-------- -------- -------- -------- -------- --------
Net income/(loss) (proceeds before
dividends) 24,542 (17,498) 13,905 5,300 10,431 21,970
Dividends on common and preferred stock (4,390) (4,548) (4,437) (4,099) (3,553) (2,987)
-------- -------- -------- -------- -------- --------
Net proceeds 20,152 (22,046) 9,468 1,201 6,878 18,983
Allocation (to)/from earned surplus (2,856) 27,917 (155) (524)* (3,716) (4,312)
-------- -------- -------- -------- -------- --------
Net proceeds available to members 17,296 5,871 9,313 677 3,162 14,671
Payable to members currently 3,109 1,052 2,253 91 649 3,671
-------- -------- -------- -------- -------- --------
Retains allocated to members:
Qualified 12,437 4,209 6,760 271* 1,946 8,564
Non-qualified 1,750 610 300 315 567 2,436
-------- -------- -------- -------- -------- --------
Total retains allocated to members $ 14,187 $ 4,819 $ 7,060 $ 586 $ 2,513 $ 11,000
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Net proceeds as a percent of CMV 34.03% (36.87)% 14.76% 1.96% 12.52% 43.61%
-------- -------- -------- -------- -------- --------
Net proceeds available to members as a
percent of CMV:
Qualified 26.25% 8.80% 14.05% .59%* 4.72% 28.10%
Non-qualified 2.96% 1.02% .47% .52% 1.03% 5.60%
-------- -------- -------- -------- -------- --------
Total net proceeds allocated to members
as a percent of CMV 29.21% 9.82% 14.52% 1.11% 5.75% 33.70%
-------- -------- -------- -------- -------- --------
Percent of qualified net proceeds
available to members paid in cash 20.00% 20.00% 25.00% 25.00% 25.00% 30.00%
-------- -------- -------- -------- -------- --------
(1) Taxable Income/(Loss):
Excess of revenues before taxes,
dividends and allocation of net
proceeds $ 23,698 $(17,498) $ 12,754 $ 8,323 $ 14,820 $ 26,204
Less patronage income to be allocated to
members (15,546) (5,261) (13,040) (677) (3,162) (14,671)
Less cash dividends paid on capital
stock (4,390) (4,548) -- -- -- --
Less utilization of net operating loss
carryforward (3,857) -- -- -- -- --
Additional fiscal 1991 distribution -- -- 3,727 -- -- --
Difference between book and tax
methodologies 95 52 996 -- -- --
-------- -------- -------- -------- -------- --------
Taxable income/(loss) to the Cooperative $ -- $(27,255) $ 4,437 $ 7,646 $ 11,658 $ 11,533
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
Balance Sheet Data
Investment in direct financing leases $141,322 $173,513 $187,298 $193,300 $146,643 $124,811
Shareholders' investment and members'
capitalization $123,765 $109,904 $133,139 $126,595 $124,137 $116,248
Total long-term debt $127,134 $168,000 $164,000 $178,025 $192,406 $154,462
Total assets $296,051 $324,884 $361,408 $385,556 $385,091 $300,660
-------- -------- -------- -------- -------- --------
Capital Stock Data
Cash dividends per share:
Common (par value $5.00) $ .25 $ .25 $ .25 $ .25 $ .25 $ .25
Preferred (par value $25.00) $ 1.5625 $ 1.8125 $ 2.00 $ 2.1875 $ 2.25 $ 2.125
Average common stock investment per
member $ 14,546 $ 18,662 $ 17,771 $ 16,339 $ 13,938 $ 11,260
-------- -------- -------- -------- -------- --------
Number of Members 707 721 737 735 754 774

* Excludes an additional allocation of 1991 net proceeds which was
distributed to members in fiscal 1992. This allocation of $3,727 (6.09
percent of 1991 CMV) was distributed 25 percent in cash and the
remainder in the form of qualified retains. See 'Statement of Changes
in Shareholders' and Members' Capitalization' and also Notes 6 and 7 to
the 'Notes to Financial Statements.'

Item 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS

The purpose of this review is to highlight the more
significant changes in the major items of Pro-Fac's statement
of net proceeds from fiscal 1992 through 1994.

Most of the proceeds of Pro-Fac are derived from the sale to
Curtice-Burns Foods, Inc. ('Curtice Burns') of the crops of
its members and hence depend primarily upon the volume and
commercial market value ('CMV') of these crops (which accrues
to Pro-Fac at the time of delivery). In addition, proceeds
depend upon the profitability of the finished products made
from Pro-Fac crops and raw materials from other sources which
are then processed and sold by Curtice Burns during the
course of the fiscal year. Under the Integrated Agreement
('the Agreement') between the two companies presently in
effect, the total purchase price for crops and the financing
charge are both based in part on the results of operations of
Curtice Burns.

Because of the profit split provisions within the Agreement
between Curtice Burns and Pro-Fac, business conditions and
trends affecting Curtice Burns' profitability will also
affect the profitability of Pro-Fac. See Note 2 of 'Notes to
Financial Statements.'

CHANGES FROM FISCAL 1993 TO FISCAL 1994

Curtice Burns' Results of Operations -- General

In addition to the results of operations there were two
significant developments in fiscal 1994: the completion of
the first phase of a major restructuring program designed to
enhance Curtice Burns' shareholder value; and significant
progress in the effort to sell Curtice Burns to serve Agway's
purpose of liquidating its interest in Curtice Burns.

Restructuring Program
The Conceptual Vision and Strategy

The restructuring program first initiated in fiscal 1993 was
based on Curtice Burns' new vision of a company smaller in
sales but more profitable, as measured by return on sales and
equity, and possessing the financial and management resources
sufficient to drive growth in carefully selected product line
markets in which Curtice Burns can prosper for the long term.
Thus, the strategy was to focus on a more limited number of
product lines which now have a strong, competitive position.

The Plan outlined in 1993 is to restructure the business to a
more profitable base. At the same time, the remaining
businesses were to be managed to optimize earnings growth by
installing corporate-wide purchasing, and a corporate-wide
focus of capital spending.

The third leg of the strategy was to accelerate Curtice
Burns's national sales and distribution programs by executing
new product programs in store-brand retail dressings, salsa
and chunky soups, and the 'More Fruit/More Flavor' pie
filling program.

Execution of the Program

approximately $1 million paid in installments over three months.
On February 22, 1994, Curtice Burns sold the meat snacks business
located in Denver, Colorado and Albany, Oregon to Oberto Sausage Company
of Kent, Washington. Under the agreement, Oberto has
purchased certain assets and assumed certain liabilities of
the meat snacks operation, excluding plant, equipment, and
trademarks. Curtice Burns will lease its Albany Oregon
manufacturing facility and equipment and license its
trademarks, trade names, etc. to Oberto until February 1995,
at which time Oberto is contractually obligated to purchase
these assets. The sale of the Hiland and meat snacks
businesses did not result in any significant gain or loss in
fiscal 1994 after giving effect to the restructuring charges
recorded in fiscal 1993; however, charges of $3.1 million
were incurred in fiscal 1994 to adjust previous estimates.
In the fiscal year ended June 26, 1993, Curtice Burns
incurred losses of $13.2 million from the meat snacks and
Hiland potato chip businesses before dividing such losses
with Pro-Fac and before taxes.

Thus, a major part of the restructuring plan was successfully
executed during fiscal 1994.

On November 19, 1993, Curtice Burns sold the oats portion of
the National Oats business for $39 million. The oats
business contributed approximately $1.4 million of earnings
in fiscal 1993 before dividing with Pro-Fac and before taxes.
The sale of the oats business resulted in an approximate
$10.9 million gain. The popcorn portion of the National Oats
Division was transferred to the Comstock Michigan Fruit
Division.

During fiscal 1993 and 1994, Curtice Burns also made staff
reductions in selected locations throughout Curtice Burns. A
$1 million accrual relating to such costs was recorded as
part of the fiscal 1993 restructuring charge.

As reported above, Curtice Burns incurred restructuring
charges in fiscal 1993 of $61.0 million (before dividing such
charges with Pro-Fac and before taxes), which included the
loss incurred on the sale of the Lucca frozen entree
business, anticipated losses on the sale of the meat snacks
and Hiland businesses, and other costs (primarily severance
and losses prior to sale) in conjunction with the
restructuring program. Virtually all of this charge was a
revaluation of assets, rather than cash expense.

Having completed the first phase of the restructuring program
in fiscal 1993, the second phase was approved by Curtice
Burns's Board of Directors in August 1994. In connection
with the second phase, the company is evaluating several
alternatives regarding the Nalley's snack food business in
the United States, including its possible sale to a third
party. A charge, not to exceed $12 million before split with
Pro-fac and before taxes, for this phase of the restructuring
program will be recorded during the first quarter of fiscal
1995.

With respect to the potential sale of the snack food
business, Curtice Burns has signed a letter of intent with
Country Crisp Foods of Salt Lake City, Utah. The letter of
intent is subject to a number of conditions, including
successful financing by the purchaser and the negotiation of
a definitive purchase agreement. Country Crisp, a regional
snack food company operating in the inter-mountain states of
Colorado, Utah, Wyoming, Idaho, Nevada and New Mexico, will
continue to market the Nalley's brand snacks under a
licensing arrangement with Curtice Burns. If this sale is
finalized, it may result in a revision to the aforementioned
reserve.

Potential Change of Control of Curtice Burns

advice of its investment bankers, to pursue strategic alternatives for
Curtice Burns. These options included negotiations with Pro-Fac relative to
Pro-Fac gaining control of the business; the possible sale of the
entire equity of Curtice Burns to a third party; and the
implementation of additional restructuring actions that may
include recapitalizing Curtice Burns to buy out Pro-Fac.
Under the Agreement with Pro-Fac, title to substantially all
of Curtice Burns' fixed assets is held by Pro-Fac, and Pro-
Fac provides the major portion of the financing of Curtice
Burns' operations. Under the Agreement Curtice Burns has an
option to purchase these assets from Pro-Fac at their book
value. However, as mentioned in Note 2 of the 'Consolidated
Financial Statements,' there presently exists, among other
things, a disagreement with Pro-Fac as to how such
settlement amount would be calculated. Exercise of the
option would result in the termination of the Agreement with
Pro-Fac. In such event, Curtice Burns would be required to
repay all debt owed to Pro-Fac.

On June 8, 1994, the Curtice Burns Board of Directors voted
to pursue an offer from Dean Foods Company for a maximum of
$20 per share which was contingent upon Curtice Burns buying
Pro-Fac's assets at book value and upon the sale of the
Nalley's Fine Foods Division and the Nalley's Canada, Ltd.
subsidiary, both excluding the chips and snack businesses, to
George A. Hormel and Company.

On July 11, 1994, Curtice Burns demanded that certain
disputes between Curtice Burns and Pro-Fac arising under the
Integrated Agreement be submitted for arbitration. Curtice
Burns sought a decision that, among other things (i) Pro-Fac
would not be entitled to one-half of the profits from a sale
of the business, (ii) that certain asset writedowns by
Curtice Burns as of June 26, 1993 would reduce the amount
owed Pro-Fac on termination of the Integrated Agreement and
(iii) Curtice Burns had not breached the Integrated Agreement
in several respects.

Curtice Burns also sought an award of damages against Pro-Fac
in the event that a pending proposal by Dean Foods to
purchase Curtice Burns was withdrawn, such damages to be at
least equal to the difference between $20 per share and the
market price per share of the Curtice Burns' stock following
any public announcement of a withdrawal of the proposal.
Curtice Burns also sought reimbursement for the legal fees
and expenses of the arbitration.

Pro-Fac submitted its Response and Counterdemand on August 3,
1994 in which it sought a decision confirming certain of its
rights under the Integrated Agreement, denied the allegations
set forth in the Curtice Burns' Demand for Arbitration and
made certain additional claims against Curtice Burns.

However, resolution of these disputes is anticipated in
conjunction with the Merger Agreement dated September 27,
1994, as described below.

of senior subordinated debt privately placed through Dillon,
Read and Co.Inc. Upon completion of the merger transaction,
Pro-Fac would have an equity investment of $133 million in
Curtice Burns, most of which was existing financing to
Curtice Burns under the Integrated Agreement.

During fiscal 1994, Curtice Burns expensed $3.5 million of
legal, accounting and other expenses relative to the change
in control issue and allocated half of those expenses to Pro-
Fac. Pro-Fac has disputed this allocation and the fiscal
1994 financial statements do not reflect the charge as
management believes it should not be included as a component
of the fiscal 1994 earnings split. Resolution of this
dispute is anticipated in conjunction with the Merger
Agreement described above.

Curtice Burns's fiscal 1994 net earnings were $10.1 million
or $1.17 per share compared to a loss of $23.8 million or
$2.77 per share for fiscal 1993. Included in the fiscal 1994
results was a charge against earnings of $.5 million,
equivalent to $.06 per share, to adjust deferred taxes to the
higher rate as legislated by Congress and as required under
Financial Accounting Standards Board No. 109. Also included
in fiscal 1994 results was a net gain of $7.8 million ($3.1
million after dividing with Pro-Fac and after taxes)
comprised of a gain on sale of $10.9 million, net of a charge
of $3.1 million to adjust previous estimates regarding
activities initiated in fiscal 1993, and a charge of $3.5
million of legal, accounting, investment banking and other
expenses ($1.7 millon after dividing with Pro-Fac and after
taxes) relating to the potential change in control of Curtice
Burns. Included in the fiscal 1993 results were
restructuring charges of $61.0 million ($29.9 million after
dividing with Pro-Fac and after taxes). Net earnings,
excluding these items, was approximately $9.1 million
(equivalent to $1.05 per share) for fiscal 1994 and $5.9
million (equivalent to $.68 per share) for fiscal 1993, an
increase of 54.2 percent.

Pretax earnings before dividing with Pro-Fac increased $77.4
million from the prior year. The major elements of this
change are:

(Millions)

Restructuring including net gain/(loss) from
division disposals $68.8
Change in control expenses (3.5)
Disposed operations, including Hiland, meat snacks, oats,
and Lucca businesses 13.2
Nalley's U.S. Chips and Snacks to be sold in fiscal 1995 (2.6)
Major product line changes from ongoing businesses 4.1
Deferred profit sharing and other (2.6)
-----
$77.4
-----
-----

The major changes from the prior year for product line
earnings (before dividing with Pro-Fac and before taxes),
excluding operations sold or to be sold are as follows:

Increase/(Decrease)
-------------------
Amount %
(Millions) Change
--------- ------

Vegetables $13.2 681.1 %
Fruits (4.5) (37.0)
Condiments and specialty products (2.0) (10.3)
Snack foods (1.2) (188.6)
Entrees (1.4) (32.5)
-----
$ 4.1
-----
-----

The increased profitability in the vegetable category was
driven by the price increases permitted by the national short
crop due to poor weather conditions in the Midwest during the
1993 growing season.

The fruit category was negatively affected by increased trade
promotion and advertising related to reformulated fruit
fillings and promotions on pumpkin pie filling.

The snack foods category has continued to be affected by the
competitive pressures of the salty snacks business and the
decline in consumption for the potato chip category.

The change in condiments and specialty products was primarily
because the profitability of peanut butter was negatively
affected by both a sales volume decline and an increase in
costs. While the canned meats and entree product line
produced increased volume, increased trade promotions and
selling costs exceeded the effect of the sales increase.

The following sets forth the major changes in the
consolidated statement of income from the prior year.

Net sales for the year ended June 25, 1994 decreased $49.5
million or 5.6 percent from the prior year. This decrease
is comprised of the following:

Variance in Millions of Dollars
---------------------------------------------
Due to Due to Due to Total
Dispositions Other Volume Price/Mix Variance
------------ ------------ --------- --------

Vegetables $ -- $ 17.6 $ 7.8 $ 25.4
Condiment and specialty
products -- 1.1 3.0 4.1
Snack foods (20.3) (15.8) (.2) (36.3)
Fruits -- (3.8) (2.7) (6.5)
Entrees (7.6) .6 .1 (6.9)
Other (includes aseptic, can
making and cereals) (31.1) 6.3 (4.5) (29.3)
------ ------ ----- ------
$(59.0) $ 6.0 $ 3.5 $(49.5)
------ ------ ----- ------
------ ------ ----- ------

The disposition of businesses reduced sales by $59.0 million
as shown above. The increase in vegetable sales volume
resulted from higher demand created by a vegetable crop
shortage caused by flooding in the Midwest and a drought in
the South during the 1993 growing season. The decrease in
sales volume for snack foods is due to the continued
competitive pressures of the salty snack business and the
decline in consumption for the potato chip category.

Cost of sales decreased $40.0 million. As a percent of
sales, costs decreased to 71.4 percent from 72.0 percent.
Gross profit decreased $9.5 million or 3.8 percent. These
changes resulted primarily from dispositions and changes in
volume, price and product mix.

Selling, administrative and general expenses decreased $20.2
million or 9.7 percent. Cost reductions include a $.7
million decrease in trade promotions, a $13.1 million
decrease in advertising and selling costs and a $6.4 million
decrease in administrative costs.

Interest expense decreased $1.3 million or 6.9 percent
resulting from a $.2 million increase due to loan volume on
Pro-Fac related debt and a $1.5 million reduction due to
lower interest rates.

Income before taxes improved $38.7 million or 194.1 percent,
primarily due to the factors described above.

Pro-Fac Results of Operations -- General

The 1994 commercial market value of crops delivered during
the production season decreased to $59,216,000 from
$59,800,000 in fiscal 1993. This 1.0 percent decrease was
the net result of a 2.5 percent tonnage increase offset by
the effect of price and mix variations from the commodities.

For the year ended June 25, 1994, the change in net proceeds
and the allocation to members compared to the prior year is
summarized below:

Increased proceeds from Curtice Burns $ 40,399,000
Increased net interest income 706,000
Change in bank dividend 70,000
All other 21,000
------------
Change in excess of revenues before taxes, dividends,
and allocation of net proceeds 41,196,000
Benefit for taxes 844,000
Change in dividends 158,000
------------
Change in net proceeds 42,198,000
Less increase in allocation to earned surplus (30,773,000)
------------
Increase in net proceeds available to members $ 11,425,000
------------
------------

The $40,399,000 positive change in proceeds from Curtice
Burns is caused by the 1993 restructuring charge which
resulted in a negative amount of proceeds of $21.8 million
for that year. The fiscal 1994 amount of $18.6 million
reflects improved earnings at Curtice Burns and a share of
the gain in sale of assets of $3.9 million during 1994.

CHANGES FROM FISCAL 1992 TO FISCAL 1993

Curtice Burns' Results of Operations -- General

Pretax earnings before dividing with Pro-Fac decreased $62.2
million from the prior year. The major elements of this
change are:

(Millions)
---------

Restructuring $(61.0)
Operations disposed in fiscal 1993 (Lucca and beverage) .2
Operations disposed in fiscal 1994 (Hiland, meat snacks,
and oats businesses) (6.7)
Operations to be disposed in fiscal 1995 (Nalley's U.S.
chips and snacks) (.8)
Major product line changes from ongoing businesses 7.4
Other (1.3)
------
$(62.2)
------
------

Excluding the restructuring charges recorded in fiscal 1993,
the Company was slightly less profitable in 1993 in
comparison to the prior year, but results of operations
comprised many increases to product line earnings that were
offset by significant losses incurred in the meat snacks,
Hiland snack food, Nalley's U.S. Chips and Snacks, and
vegetable businesses.

Curtice Burns benefited from strong performances from some of
its regional brands and from its can-making operations. The
major changes from the prior year for product line earnings
(before dividing with Pro-Fac and before taxes), excluding
operations sold or to be sold are as follows:

Increase/(Decrease)
----------------------
Amount %
(Millions) Change
---------- ------

Fruits $ 2.0 19.9%
Entrees 2.0 45.0
Condiments and specialty sauces (.6) (3.0)
Vegetables (1.1) 135.6
Snack foods (.2) 111.7
Other (includes aseptic, can making,
and miscellaneous) 5.3 171.5
-----
$ 7.4
-----
-----

Price increases instituted in the fourth quarter of fiscal
1992 were maintained in fiscal 1993 in the can making
operation and improved margins from the prior year. The
increased profits from the fruit filling category were
primarily due to reduced raw product costs that improved
margins for that category.

The entree category also achieved higher margins as a result
of moving the production for the Lucca canned operation to
the Nalley's Fine Foods Division. As previously discussed,
the Hiland and meat snacks operations were placed for sale as
part of the restructuring program to divest unprofitable or
declining businesses. The decrease in earnings relative to
the snack operations other than Hiland, meat snacks and
Nalley's U.S. Chips and Snacks is due to the continuing
competitive pressures in the snack industry that prevent the
implementation of price increases that would improve margins
without the incurrence of a loss of market share.

During fiscal 1993 Curtice Burns continued to experience
pressure on earnings from the depressed commodity vegetable
business.

The following sets forth the major changes in the
consolidated statement of income from the prior year.

Net sales for the year ended June 26, 1993 decreased $18.3
million or 2.0 percent from the prior year. This decrease is
comprised of the following:

Variance in Millions of Dollars

Due to Due to Due to Total
Disposition Other Volume Price/Mix Variance
----------- ------------ --------- --------

Beverages $(14.1) $ -- $ -- $(14.1)
Vegetables -- 4.4 .2 4.6
Condiments and specialty
products -- (4.2) (2.2) (6.4)
Snack foods -- .9 (2.6) (1.7)
Fruits -- 5.6 (8.8) (3.2)
Entrees (3.6) 3.7 (1.3) (1.2)
Other (includes aseptic,
can making and cereals) -- 5.4 (1.7) 3.7
------ ----- ------ ------
$(17.7) $15.8 $(16.4) $(18.3)
------ ----- ------ ------
------ ----- ------ ------

The disposition of the soft drink bottling business in July
1992 and Lucca frozen entrees in December 1992 reduced sales
by $17.7 million as shown above.

The volume decrease for condiments and specialty products
resulted from lower cheese sauce and ketchup sales. Sales
volume for cheese sauce decreased in the first part of the
fiscal year due to a loss of business partially reinstated
later in the year. The ketchup decrease in sales was due to
the discontinuation of the private label business for that
product. The variance due to price and mix in the fruit
category resulted from a decreased raw product purchase price
for cherries which was passed along in part to customers.

Cost of sales decreased $19.7 million. As a percent of
sales, costs decreased to 72.0 percent from 72.7 percent.
Gross profit increased $1.4 million or .6 percent. These
changes resulted primarily from increases in volume partially
offset by effects of price and product mix changes.

Selling, administrative and general expenses increased $5.8
million or 2.9 percent. This variance includes an $8.6
million increase in trade promotions, a $1.9 million decrease
in advertising and selling costs, a $3.3 million benefit due
to operational changes in Curtice Burns's salaried vacation
policy, and a $2.4 million increase in other administrative
costs. The increase in trade promotions directly contributed
to the increased sales volume and increased margins discussed
above.

Interest expense decreased $3.3 million or 14.4 percent
resulting from a $.9 million decrease due to a reduction in
debt and a $2.4 million reduction due to lower interest
rates.

Pro-Fac's share of Curtice Burns's profits decreased $31.3
million, of which $30.5 million was due to the restructuring
charges.

Income before taxes decreased $30.9 million, primarily due to
the restructuring charges discussed above.

Taxes on income decreased $.9 million or 18.3 percent.
Curtice Burns's effective tax rate was significantly impacted
by the writedown of goodwill and other intangibles having a
lower tax basis than book value.

Net income decreased $30 million, almost entirely due to the
restructuring program (after allocating to Pro-Fac its share
of the loss) and Curtice Burns's effective tax rate as
previously discussed.

Pro-Fac's Results of Operations -- General

The 1993 commercial market value of crops delivered during
the production season decreased to $59,800,000 from
$64,152,000 in fiscal 1992. This decrease of 6.8 percent was
the net result of a 12.0 percent tonnage increase offset by
the effect of price and mix variations for the commodities.
Significant supplies of cherries in 1992 drove CMV for that
crop down so that even though the volume delivered to Pro-Fac
increased 64 percent from the prior year the dollar amount of
CMV decreased by 39 percent.

For the year ended June 26, 1993, the change in net proceeds
and the allocation to members compared to the prior year is
summarized below:

Decreased proceeds from Curtice Burns $(31,305,000)
Increased net interest income 647,000
Change in bank dividend 446,000
All other (40,000)
------------
Change in excess of revenues before taxes,
dividends and allocation of net proceeds (30,252,000)
Decrease in the benefit for taxes (1,151,000)
Increase in dividends (111,000)
------------
Change in net proceeds (31,514,000)
Decrease in allocation to earned surplus 28,072,000
------------
Decrease in net proceeds available to members from
current operations (3,442,000)
Additional distribution of 1991 net proceeds from
earned surplus in fiscal 1992 (3,727,000)
------------

Decrease in net proceeds available to members $ (7,169,000)
------------
------------

Pro Forma Combined Results of Operations

The following analysis of the pro forma combined results of
operations of Pro-Fac and Curtice Burns for the fiscal year
ended June 25, 1994, as compared to the prior fiscal year, is
based on the combined pro forma condensed statement of
operations for that period set forth in Note 3 to the
accompanying financial statements of Pro-Fac and is subject
to the caveats and limitations set forth in Note 3.

Because most revenues and expenses of Pro-Fac result from, or
are offset by, transactions with Curtice Burns, the pro forma
combined results of operations of the two entities depend
predominantly on the results of operations of Curtice Burns.
The results of operations of Curtice Burns are discussed in
general terms under 'Curtice Burns' Results of Operations -
General' above.

Sales and revenues decreased $49.5 million or 5.6 percent.
The change is comprised of a $59.0 million decrease due to
the disposition of businesses, a $6.0 million increase due to
changes in volume other than the dispositions and an increase
of $3.5 million due to changes in price and mix.

Cost of sales decreased $40.1 million. As a percent of
sales, costs decreased to 71.4 percent from 72.0 percent.
Gross profit decreased $9.4 million or 3.8 percent. These
changes resulted primarily from dispositions and changes in
price and product mix.

Selling, administrative and general expenses, other than the
restructuring gains/(losses) decreased $19.6 million or 9.5
percent. Cost changes include a $.7 million decrease in
trade promotions, a $13.1 million reduction in advertising
and selling costs, and a $5.8 million reduction of other
administrative costs.

Interest expense decreased $2.6 million or 15.5 percent; $1.5
million decrease due to lower rates and $1.1 million decrease
due to reduction in debt.

Income before taxes increased $78.1 million, primarily due to
the restructuring gains and losses and the increased
profitability of the canned and frozen vegetable product
lines.

Liquidity and Capital Resources

Substantially all cash not distributed by Pro-Fac to its
members or security holders is either invested in assets
leased to Curtice Burns or loaned to Curtice Burns to finance
its operations. In order to gauge the working capital and
other resources available to the companies, the combined pro
forma condensed financial statements should be used. The
relationship with Pro-Fac and the combined financial
statements are shown in Notes 2 and 3 to the Consolidated
Financial Statements. Such financial statements should not
be used as a basis for determining shareholders' interest in
Pro-Fac, but only as a measure of the total financial
resources available to Curtice Burns and Pro-Fac.

Certain borrowing agreements require that the companies
maintain specified levels with regard to working capital,
current ratio, ratio of net worth to assets, ratio of long-
term debt to net worth, tangible net worth, net income,
coverage of interest and fixed charges and the incurrence of
additional debt. The companies are in compliance with, or
have obtained waivers for, restrictions and requirements
under the terms of the borrowing agreements. The revolving
lines of credit under such agreements have been renewed
through November of 1994. Such agreements provide for
adjustments in interest rates and covenants and grant to both
short-term and long-term lenders, or entitle such lenders to
obtain, liens on substantially all assets of Curtice Burns
and Pro-Fac as collateral for borrowings under such
agreements.

Should the resolution of Agway's potential sale of its
interest in Curtice Burns result in Curtice Burns exercising
its option to purchase from Pro-Fac the property and
equipment and certain other assets used by the Curtice Burns
in its business, the amount required to accomplish this
(including the repayment of debt) as calculated by Curtice
Burns would be approximately $267.7 million (as measured at
the book value on June 25, 1994). Of this amount, $101.5
million represents short- and long-term debt, $24.9 million
relates to intangible assets and $141.3 million relates to
leased fixed assets. As there is presently a disagreement
with Pro-Fac regarding the calculation of the fiscal 1994
earnings split, management of Pro-Fac believes that the
amount of short- and long-term debt receivable from Curtice
Burns at June 25, 1994 is $103.3 million. The $267.7 million
at June 25, 1994 compares to $303.8 million at June 26, 1993,
which was comprised of $103.8 million of short- and long-term
debt, $26.5 million relating to intangible assets and $173.5
million leased fixed assets. The decrease in leased assets
during the period of $32.2 million is primarily

the result of the reduction of leased assets due to the sale
of businesses and depreciation of assets exceeding additions.
However, as discussed in Note 2 to the Consolidated Financial
Statements, there has been a disagreement with Pro-Fac on
that purchase price and the calculation of the fiscal 1994
earnings split. Resolution of these issues is anticipated
with the completion of the transaction agreed to in the
Merger Agreement described at 'Recent Developments.'

Cash flows from operating activities are generally the cash
effects of transactions and other events that enter into the
determination of net income. In the fiscal year, net cash
provided by operating activities of the combined companies of
$39.0 reflects net income of $10.1 million for Curtice Burns
and $24.5 million for Pro-Fac. Amortization of assets
amounted to $25.7 million. Inventories decreased $.3 million
and accounts receivable decreased $5.7 million. Changes in
other assets and liabilities amounted to $27.3 million.

Cash flows from investing activities include the acquisition
and disposition of property, plant and equipment and other
assets held for or used in the production of goods. Net cash
provided by investing activities of $22.4 million in the
period was comprised of $19.6 million paid for purchases of
property, plant and equipment, $1.3 million received for
disposals of fixed assets, and a $1.4 million increase in the
investment of Springfield Bank for Cooperatives. During the
period, $42.1 million was received in proceeds from the
disposition of the oats portion of the National Oats business
and the Hiland Potato Chip business. Proceeds from
dispositions have been applied to debt.

Net cash used in financing activities of $65.1 million in the
period was comprised of payments on short-term debt of $.5
million, payments on long-term debt of $50.2 million,
payments on capital leases of $2.1 million, issuance of
capital stock of $.7 million, less repurchases of $3.2
million, and dividends paid of $9.9 million.

Short- and Long-Term Trends

The fruit and vegetable portion of the business can be
positively or negatively affected by weather conditions
nationally and the resulting impact on crop yields.
Favorable weather conditions can produce high crop yields and
an oversupply situation. This results in depressed selling
prices and reduced profitability on the inventory produced
from that year's crops. Excessive rain or drought conditions
can produce low crop yields and a shortage situation. This
typically results in higher selling prices and increased
profitability. While the national supply situation controls
the pricing, the supply can differ regionally because of
variations in weather. The 1993 floods in the Midwest and
the drought in the South have increased prices, even though
the crops in Curtice Burns's growing areas have been at
normal levels.

Seasonal lines of credit of $100.0 million were available to
Curtice Burns and Pro-Fac up to September 1993, $86 million
after that date, and the maximum borrowing on those lines was
$81.0 million. The balance outstanding at June 25, 1994 was
$11.5 million.

There are no current plans for the acquisition of businesses.
Capital expenditures are expected to approximate $20.0
million in the next year.

Scheduled payments on long-term debt will approximate $15
million in the coming year. Net cash provided from
operations and the cash proceeds from the planned sales of
excess facilities should be sufficient to cover the scheduled
payments on long-term debt and planned capital expenditures
as well as anticipated dividends of approximately $10 million
in the coming year. Proceeds from the sale of business
units, if any, will be applied to debt.

Impact of Inflation and Changing Prices

General inflation levels have not significantly affected Pro-
Fac sales and revenues. The sales prices of Pro-Fac crops
sold to Curtice Burns have been more affected by agricultural
crop size, prices and trends.

Favorable Tax Ruling and Developments

In December 1991, the national office of the Internal Revenue
Service issued a technical advice memorandum ('TAM')
concluding that virtually all of Pro-Fac's income arises from
patronage sources. As a result of the TAM, in January 1992
an additional distribution of patronage proceeds for fiscal
1991 was made to members in the amount of $3,727,000.
Patronage proceeds available for distribution are determined
by the Board of Directors each year, as stipulated in the
Bylaws. As the longer term effects of the TAM are further
researched and analyzed, it is possible that the Board may
calculate future patronage proceeds available for
distribution utilizing a different formula than that used for
1992, 1993, and 1994.

In August of 1993, the Internal Revenue Service issued a
determination letter which concluded that the Cooperative is
exempt from federal income tax to the extent provided by
Section 521 of the Internal Revenue Code, 'Exemption of
Farmers' Cooperatives from Tax.' Unlike a non-exempt
cooperative, a tax-exempt cooperative is entitled to deduct
cash dividends it pays on its capital stock in computing its
taxable income. The exempt status is retroactive to fiscal
year 1986 and is anticipated to apply to future years as long
as there is no significant change in the way in which the
Cooperative operates. In conjunction with this ruling, the
Cooperative has filed for tax refunds for fiscal years 1986
to 1990 in the amount of approximately $5.8 million and
interest payments of approximately $3.4 million. In
addition, it is anticipated that the Cooperative will file
for tax refunds for fiscal years 1991 and 1992 in the amount
of approximately $3.1 million and interest payments of
approximately $.4 million. No such refund amounts have been
reflected in the financial statements of Pro-Fac as of June
25, 1994. It is anticipated that the refund amounts will be
recognized upon receipt.

Accounting for Income Taxes

In February 1992, the Financial Accounting Standards Board
issued SFAS 109, 'Accounting for Income Taxes.' SFAS 109
eliminates and simplifies part of the requirements of the
previously issued SFAS 96. The Statement is effective for
fiscal years beginning after December 15, 1992, with retro-
active adoption permitted. The Cooperative has retro-
actively adopted the provisions of this standard as of June
29, 1991. There was no effect on the Cooperative for this
accounting change.

Other Matters

The Financial Accounting Standards Board issued Statement of
Accounting Standards No. 115, 'Accounting for Certain
Investments in Debt and Equity Securities' ('SFAS No. 115'),
effective for fiscal years beginning after December 15, 1993.
SFAS No. 115 addresses the accounting and reporting for
investments in equity securities that have readily
determinable fair values and for all investments in debt
securities. At acquisition, debt and equity securities will
be classified into one of three categories, and at each
reporting date, the classification of the securities will be
assessed as to its appropriateness. Management anticipates
that the implementation of SFAS No. 115 will not have a
material effect on the Cooperative's results of operations
and financial position.

Item 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Index to Financial Statements

Report of Independent Accountants. . . . . . . . . . . . . 27

Management's Responsibility for Financial Statements . . . 28

Statement of Net Proceeds for the years ended June 25, 1994,
June 26, 1993, and June 26, 1992. . . . . . . . . . . . 29

Balance Sheet as of June 25, 1994 and June 26, 1993. . . . 30

Statement of Cash Flows for the years ended June 25, 1994,
June 26, 1993 and June 26, 1992 . . . . . . . . . . . . 31

Statement of Changes in Shareholders' and
Members' Capitalization for the years ended June 25, 1994,
June 26, 1993 and June 26, 1992 . . . . . . . . . . . . 32

Notes to Financial Statements for the years ended June 25,
1994, June 26, 1993 and June 26, 1992. . . . . . . . . . 33

The following additional financial data are submitted as part
of Item 14 - Exhibits, Financial Statement Schedules and Reports
on Form 8-K, of this report:

Schedule II - Amounts receivable from related parties and
underwriters, promoters and employees other than
related parties.

Schedule IV - Indebtedness of and to related parties - not
current.

Schedule IX - Short-term borrowings.

Schedules other than those listed above are omitted because
they are either not applicable or not required, or the
required information is shown in the financial statements or
the notes thereto.

REPORT OF INDEPENDENT ACCOUNTANTS

To the Members, Shareholders and
Board of Directors of
Pro-Fac Cooperative, Inc.

In our opinion, the financial statements listed under Item 8
of this Form 10-K present fairly, in all material respects,
the financial position of Pro-Fac Cooperative, Inc. at June
25, 1994 and June 26, 1993, and the results of its operations
and cash flows for each of the three fiscal years in the
period ended June 25, 1994 in conformity with generally
accepted accounting principles. These financial statements
are the responsibility of the Cooperative'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 generally accepted
auditing standards 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.

There currently exists several disputes between Curtice-Burns
Foods, Inc. and the Cooperative. Both Curtice-Burns Foods,
Inc. and the Cooperative have requested arbitration to
resolve these matters. In addition, both the Cooperative and
a third party have made an offer to acquire the outstanding
common stock of Curtice-Burns Foods, Inc. The outcome of
such transactions could affect the Integrated Agreement with
the Cooperative. These matters are described in Note 2 to
the financial statements.

Our audits of the financial statements also included an audit
of the financial statement schedules listed in the
accompanying index and appearing under Item 14 of this Form
10-K. In our opinion, these financial statement schedules
present fairly, in all material respects, the information set
forth therein when read in conjunction with the related
financial statements.

PRICE WATERHOUSE LLP

Rochester, New York
September 28, 1994
27

MANAGEMENT'S RESPONSIBILITY FOR FINANCIAL STATEMENTS

Management is responsible for the preparation and integrity
of the financial statements and related notes which appear on
pages 29 through 45. These statements have been prepared in
accordance with generally accepted accounting principles.

The Cooperative's accounting systems include internal
controls designed to provide reasonable assurance of the
reliability of its financial records and the proper
safeguarding and use of its assets. Such controls are
monitored through the internal and external audit programs.

The financial statements have been audited by Price
Waterhouse LLP, independent accountants, who were responsible
for conducting their examination in accordance with generally
accepted auditing standards. Their resulting report is on
the preceding page.

The Board of Directors exercises its responsibility for these
financial statements through its Finance and Audit Committee,
which consists entirely of non-management board members. The
independent accountants have full and free access to the
Finance and Audit Committee. The Finance and Audit Committee
periodically meets with the independent accountants with
management present to discuss accounting, auditing and
financial reporting matters.

Roy A. Myers
General Manager

William D. Rice
Assistant Treasurer

September 28, 1994
28

Statement of Net Proceeds (Dollars in Thousands)

Fiscal Years Ended
-------------------------------------------------
June 25, 1994 June 26, 1993 June 26, 1992
------------- ------------- -------------

Revenues
Proceeds from sale of crops to Curtice Burns Foods, Inc.
Established commercial market value:
Delivered during production season (April through March
in each period) $59,216 $ 59,800 $64,152
Adjust to fiscal year basis (979) (65) (718)
---------- -------- -------
Deliveries during the period 58,237 59,735 63,434
Proceeds/(loss) under the Integrated Agreement 18,599 (21,800) 9,505
Interest income 15,630 17,090 19,869
Patronage dividend from Springfield Bank for Cooperatives 1,927 1,857 1,411
---------- -------- -------
Total revenues 94,393 56,882 94,219
---------- -------- -------
Costs and Expenses
Established commercial market value paid to or accrued
for the accounts of members during the period 58,237 59,735 63,434
Interest expense 11,587 13,753 17,179
Administrative expenses 871 892 852
---------- -------- -------
Total costs and expenses 70,695 74,380 81,465
---------- -------- -------
Excess/(deficiency) of revenues before taxes, dividends and
allocation of net proceeds from current operations 23,698 (17,498) 12,754
Benefit for taxes 844 1,151
---------- -------- -------
Net income/(loss) (proceeds before dividends) 24,542 (17,498) 13,905
Dividends on common and preferred stock (4,390) (4,548) (4,437)
---------- -------- -------
Net proceeds/(loss) 20,152 (22,046) 9,468
Allocation (to)/from earned surplus (2,856) 27,917 (155)
---------- -------- -------
Net proceeds available to members from current operations 17,296 5,871 9,313
Additional distribution of 1991 net proceeds 3,727
---------- -------- -------
Total net proceeds available to members $17,296 $ 5,871 $13,040
---------- -------- -------
---------- -------- -------
Net proceeds available to members as a percent of
commercial market value:
From current operations 29.21% 9.82% 14.52%
From additional distribution of 1991 net proceeds 5.81%

Allocation of net proceeds available to members
Distribution from current operations:
Payable to members currently (20%, 20%, and 25%,
respectively, qualified proceeds available to members) $ 3,109 $ 1,052 $ 2,253
Allocated to members but retained by the Cooperative:
Qualified retains 12,437 4,209 6,760
Non-qualified retains 1,750 610 300
---------- -------- -------
17,296 5,871 9,313
---------- -------- -------
Additional distribution of 1991 net proceeds:
Cash 932
Qualified Retains 2,795
-------
3,727
---------- -------- -------
Total allocation of net proceeds available to members $17,296 $ 5,871 $13,040
---------- -------- -------
---------- -------- -------

The accompanying notes are an integral part of these financial
statements.

Balance Sheet (Dollars in Thousands)
Assets

June 25, 1994 June 26, 1993
------------- -------------

Current assets:
Cash $ 10 $ 19
Accounts receivable 68 25
Receivable from Curtice Burns Foods, Inc. 11,197 9,113
Current portion of long-term loans receivable
from Curtice Burns Foods, Inc. 14,000 16,000
Current portion of investment in direct
financing leases 17,645 21,184
Current portion of investment in
Springfield Bank for Cooperatives 1,324 1,172
Income taxes refundable -- 70
Prepaid expenses 2,464 693
-------- -------
Total current assets 46,708 48,276
Long-term portion of investment in direct
financing leases 123,677 152,329
Long-term loans receivable from Curtice
Burns Foods, Inc. 78,040 78,648
Long-term portion of investment in Springfield
Bank for Cooperatives 19,632 16,814
Deferred tax benefit 2,623 2,010
Finance receivable related to intangibles 24,909 26,545
Other assets 462 262
-------- -------
Total assets $296,051 $324,884
-------- -------
-------- -------
Liabilities and Shareholders' and Members Capitalization
Current liabilities:
Notes payable $ 11,500 $ 12,000
Accounts payable 617 1,019
Accrued interest 2,536 3,019
Federal and state income taxes payable 668
Current portion of long-term debt 14,000 16,000
Amounts due members 15,327 14,525
-------- -------
Total current liabilities 44,648 46,563
Long-term debt 127,134 168,000
Other non-current liabilities 504 417
-------- -------
Total liabilities 172,286 214,980
-------- -------
Commitments and contingencies

Shareholders' and members' capitalization:
Retained earnings allocated to members 36,924 29,446
Non-qualified allocation to members 7,454 5,704
Capital Stock -
Preferred, par value $25, authorized -
5,000,000 and shares; issued and
outstanding - 2,576,720 and
2,378,807, respectively 64,418 59,470
Common, par value $5, authorized -
5,000,000 shares
6/25/94 6/26/93
------- -------
Shares issued 2,056,878 2,690,430
Shares subscribed 9,270 24,788
--------- ---------
Total subscribed and issued 2,066,148 2,715,218
Less subscriptions receivable
in installments (9,270) (24,788)
--------- ---------
2,056,878 2,690,430 10,284 13,455
--------- ---------
--------- ---------
Earned surplus (unallocated and
apportioned) 4,685 1,829
-------- --------
Total shareholders' and members'
capitalization 123,765 109,904
-------- --------
Total liabilities and capitalization $296,051 $324,884
-------- --------
-------- --------

The accompanying notes are an integral part of these financial statements.

Statement of Cash Flows (Dollars in Thousands)

Fiscal Years Ended June 25, 1994 June 26,1993 June 26, 1992
------------- ------------ -------------

Cash flows from operating activities:
Net income/(loss) $ 24,542 $(17,498) $ 13,905
Less amounts payable to members
currently (3,109) (1,052) (2,253)
-------- -------- --------
21,433 (18,550) 11,652
Adjustments to reconcile net income
to net cash provided by operating activities:
Equity in undistributed earnings of
Springfield (1,541) (1,486) (1,129)
(Benefit)/provision for deferred taxes (613) 207 307
Change in assets and liabilities:
Accounts receivable (43) 618 (552)
Accounts payable and accrued expenses (885) 309 (1,117)
Amounts due to members 802 (2,277) 372
Federal and state taxes payable 738 (1,180) 265
Other assets and liabilities (1,895) (319) 591
-------- -------- --------
Net cash provided by/(used in) operating
activities 17,996 (22,678) 10,389
-------- -------- --------
Cash flows from investing activities:
Due from Curtice Burns, net 524 (1,694) 18,242
Return from/(investment in) direct
financing leases 32,191 13,785 6,002
Investment in Springfield Bank (1,429) (1,937) (1,691)
Cash received from the finance receivable
related to intangibles 1,636 26,898 2,405
-------- -------- --------
Net cash provided by investing activities 32,922 37,052 24,958
-------- -------- --------
Cash flows from financing activities:
Payments on short term debt (500) (16,000) (18,000)
Proceeds from long-term debt 120 20,000
Payments on long-term debt (42,986) (14,025) (14,027)
Repurchases of common stock, net of issuances (3,171) 358 1,088
Payments for the repurchase of preferred stock (165)
Cash dividends paid (4,390) (4,548) (4,437)
-------- -------- --------
Net cash used in financing activities (50,927) (14,380) (35,376)
-------- -------- --------
Net decrease in cash (9) (6) (29)
Cash at beginning of year 19 25 54
-------- -------- --------
Cash at end of year $ 10 $ 19 $ 25
-------- -------- --------
-------- -------- --------
Supplemental Disclosure of Cash Flow Information
Cash paid or received during the year for:
Interest $ 12,068 $ 14,050 $ 18,349
-------- -------- --------
-------- -------- --------
Income taxes, net $ (970) $ 970 $ (1,711)
-------- -------- --------
-------- -------- --------

Supplemental schedule of non-cash investing
and financing activities
Conversion of retains to preferred stock $ 4,948 $ 5,934 $ 5,739
-------- -------- --------
-------- -------- --------
Net proceeds allocated to members but
retained by the Cooperative $ 14,187 $ 4,819 $ 9,855
-------- -------- --------
-------- -------- --------

The accompanying notes are an integral part of these financial statements.

Statement of Changes in Shareholders' and Members' Capitalization (Dollars
in Thousands)

Fiscal Years Ended June 25, 1994 June 26,1993 June 26, 1992
------------- ------------ -------------

Retained earnings allocated to members:
Qualified retains:
Balance at beginning of period $ 29,446 $ 29,950 $ 24,128
Additional distribution of 1991 net proceeds -- -- 2,795
Net proceeds allocated to members 12,437 4,209 6,760
Converted to preferred stock (4,948) (4,702) (3,719)
Cash paid in lieu of fractional shares (11) (11) (14)
-------- -------- --------
Balance at end of period 36,924 29,446 29,950
-------- -------- --------
Non-qualified retains:
Balance at beginning of period 5,704 6,645 9,178
Distribution of 1987, 1986, and 1985
non-qualified retains -
Cash paid -- (319) (813)
Converted to preferred stock (1,232) (2,020)
Net proceeds allocated to members 1,750 610 300
-------- -------- --------
Balance at end of period 7,454 5,704 6,645
-------- -------- --------
Total retains allocated to members
at end of period 44,378 35,150 36,595
-------- -------- --------
Preferred stock:
Balance at beginning of period 59,470 53,701 47,962
Converted from earnings retained for
preferred stock 4,948 4,702 3,719
Conversion of 1987, 1986 and 1985 non-
qualified retains 1,232 2,020
Repurchased and canceled -- (165) --
-------- -------- --------
Balance at end of period 64,418 59,470 53,701
-------- -------- --------
Common stock:
Balance at beginning of period 13,455 13,097 12,009
Repurchased, net of issued (3,171) 358 1,088
-------- -------- --------
Balance at end of period 10,284 13,455 13,097
-------- -------- --------
Earned surplus (unallocated and apportioned):
Balance at beginning of period 1,829 29,746 33,318
Additional distribution of 1991 net proceeds -- -- (3,727)
Net proceeds arising from after tax
undistributed income/(loss) 2,856 (27,917) 155
-------- -------- --------
Balance at end of period 4,685 1,829 29,746
-------- -------- --------
Total shareholders' and members' capitalization $123,765 $109,904 $133,139
-------- -------- --------
-------- -------- --------

The accompanying notes are an integral part of these financial statements.
32

NOTES TO FINANCIAL STATEMENTS

Note 1. SUMMARY OF ACCOUNTING POLICIES

The accompanying financial statements have been prepared in
accordance with generally accepted accounting principles
including the following major accounting policies:

Fiscal Year - Fiscal 1994 ended on June 25, 1994, and fiscal
1993 ended on June 26, 1993, the last Saturday in June. All
future fiscal years will end on the last Saturday in June.
The fiscal year ended on the last Friday in June in fiscal
1992. The years ended June 25, 1994, June 26, 1993, and June
26, 1992 each comprised 52 weeks.

Leases - The Cooperative leases its property, plant,
equipment and intangibles to Curtice Burns Foods, Inc.
('Curtice Burns') under an agreement described in Note 2.
Such leases are recorded under the financing method of
accounting. See further discussion in Note 4.

Investment in Springfield Bank for Cooperatives
('Springfield' or 'the Bank') - The Cooperative's investment
in Springfield is comprised of revolving securities which are
presently being redeemed by the Bank on the basis of a six-
year cycle. These securities are not physically issued by
the Bank, but the Cooperative is notified as to their
monetary value. The investment is carried on the
Cooperative's books at cost (the cash purchases of securities
each year in an amount equal to a percentage of the annual
interest paid by the Cooperative on its borrowings from the
Bank) plus the Cooperative's share of the undistributed
earnings of the Bank (that portion of patronage refunds not
distributed currently in cash).

The current portion of the investment represents securities
which are expected to be redeemed by the Bank during the
subsequent fiscal year.

Income Taxes - In February 1992, the Financial Accounting
Standards Board issued Statement of Financial Accounting
Standards No. 109, 'Accounting for Income Taxes,' ('SFAS
109') with retro-active adoption permitted. The Cooperative
has adopted the provisions of this standard as of June 29,
1991. Deferred income taxes arise from the issuance of non-
qualified retains (see Note 5). Income taxes are recorded
under the liability method specified by SFAS 109 in 1992,
1993 and 1994.

Finance receivable relating to goodwill and other intangibles
- - - - Under the provisions of the Agreement with Curtice Burns,
the Cooperative has provided financing for a portion of the
goodwill and other intangible assets which represent the
excess of the fair value of net tangible assets acquired in
purchase transactions. The decrease in the receivable
related to intangibles in fiscal 1993 is attributable to the
restructuring efforts initiated by Curtice Burns (see Note
8).

Reclassification - Certain items for fiscal 1993 and 1992
have been reclassified to conform with 1994 presentations.

Earnings Per Share Data Omitted - Net income or net proceeds
per share amounts are not presented because earnings are not
distributed to members in proportion to their common stock
holdings. For example, patronage related earnings
(representing those earnings derived from patronage-sourced
business) are distributed to members in proportion to the
dollar value of deliveries under Pro-Fac contracts rather
than based on the number of shares of common stock held.

Note 2. AGREEMENT WITH CURTICE BURNS FOODS, INC.

Pro-Fac has a contractual relationship with Curtice Burns
under an Agreement ('the Agreement') consisting of five
sections: Operations Financing, Marketing, Facilities
Financing, Management, and Settlement, which extends
33

to 1997 and provides for two successive five-year renewals at
the option of Curtice Burns.

The provisions of the Agreement include the financing of
certain assets utilized in the business of Curtice Burns and
provide a sharing of income and losses between Curtice Burns
and Pro-Fac. Should Curtice Burns terminate the Agreement,
Curtice Burns has the option of purchasing those assets
financed by Pro-Fac at the book value at that time.

Revenues received from Curtice Burns under the Agreement for
the years ended June 25, 1994, June 26, 1993, and June 26,
1992, include: commercial market value of crops delivered,
$59,216,000, $59,800,000, and $64,152,000, respectively;
interest income, $15,617,000, $16,515,000, and $19,869,000,
respectively; and additional proceeds from profit sharing
provisions, $18,599,000 gain, $21,800,000 loss, and
$9,505,000 gain, respectively. In addition, Pro-Fac received
financing amortization payments of $43,830,000, $53,826,000,
and $26,232,000 for the years ended June 25, 1994, June 26,
1993, and June 26, 1992, respectively.

In March 1994, Curtice Burns advised Pro-Fac that in view of
the possibility that Curtice Burns might be acquired by a
third party, Pro-Fac should not rely on Curtice Burns to
purchase any crops from Pro-Fac or its growers in calendar
1995 and beyond. In addition, Curtice Burns notified Pro-Fac
that Curtice Burns will not commit to purchase a substantial
portion of the crops historically purchased from Pro-Fac in
the 1995 growing season. As a result, Pro-Fac has given
notice to its affected members terminating Pro-Fac's
obligation to purchase these crops beginning next year. The
affected Pro-Fac growers are principally Pro-Fac's New York
fruit and vegetable growers, Illinois and Nebraska popcorn
growers, and Northwest potato growers who represent more than
half of Pro-Fac's membership and have accounted for
approximately $29.9 million or 50 percent of the total crops
delivered by Pro-Fac to Curtice Burns in the past year. In
the arbitration proceedings currently pending between Curtice
Burns and Pro-Fac, Pro-Fac has asserted, among other matters,
that Curtice Burns is in default under the Integrated
Agreement for improper termination of crops and has claimed
damages that Pro-Fac estimates at more than $50 million.
Curtice Burns believes that its only obligation to purchase
crops from Pro-Fac is as set forth in the Profit Plan as
approved each year by the Boards of Directors of both Pro-Fac
and Curtice Burns. Because the most recent approved Profit
Plan was for fiscal year 1995 (which Plan corresponds to the
1994 calendar year crops), Curtice Burns believes that it is
not currently obligated to purchase any crops from Pro-Fac
for calendar year 1995 or later. Management believes these
matters will be resolved in conjunction with the Merger
Agreement described above.

Potential Change of Control of Curtice Burns

On March 23, 1993, the Curtice Burns announced that Agway
Inc., which owns 99 percent of Curtice Burns' Class B shares
and approximately 14 percent of Class A shares, was
considering the potential sale of its interest in Curtice
Burns. At its meeting held on August 9 and 10, 1993, the
Curtice Burns Board of Directors authorized Curtice Burns'
management, with the advice of its investment bankers, to
pursue strategic alternatives for Curtice Burns. These
options included negotiations with Pro-Fac relative to Pro-
Fac gaining control of the business; the possible sale of the
entire equity of Curtice Burns to a third party; and the
implementation of additional restructuring actions that may
include recapitalizing Curtice Burns to buy out Pro-Fac.
Under the Agreement with Pro-Fac, title to substantially all
of Curtice Burns' fixed assets is held by Pro-Fac, and Pro-
Fac provides the major portion of the financing of Curtice
Burns' operations. Under the Agreement Curtice Burns has an
option to purchase these assets from Pro-Fac at their book
value. However, there presently exists a disagreement with
Pro-Fac as to how such settlement amount would be calculated.
Exercise of the option would result in the termination of the
Agreement with Pro-Fac. In such event, Curtice Burns would
be required to repay all debt owed to Pro-Fac.
34

In connection with the proposed purchase of Curtice Burns,
Pro-Fac has obtained the commitment of the Springfield Bank
to provide up to $200 million in long-term financing and up
to $86 million in seasonal financing. In addition, Pro-Fac
intends to issue up to $160 million principal amount of
senior subordinated debt privately placed through Dillon,
Read and Co, Inc. Upon completion of the merger transaction,
Pro-Fac would have an equity investment of $133 million in
Curtice Burns, most of which was existing financing to
Curtice Burns under the Integrated Agreement.

During fiscal 1994, Curtice Burns expensed $3.5 million of
legal, accounting and other expenses relative to the change
in control issue and allocated half of those expenses to Pro-
Fac. Pro-Fac has disputed this allocation and the financial
statements do not reflect the charge as management believes
it should not be included as a component of the fiscal 1994
earnings split. Resolution of this dispute is anticipated in
conjunction with the Merger Agreement described above.

Note 3. DEBT

Short-Term Debt

Short-term borrowings are made by the Cooperative under a
seasonal line of credit with Springfield which currently
provides for borrowings up to $46,000,000. Outstanding
borrowings at June 25, 1994 amounted to $11,500,000 at 5.5
percent. The maximum amount of short-term borrowings
outstanding during the 52-week period ended June 25, 1994 was
$46,000,000. The approximate average aggregate short-term
borrowings were: fiscal 1994 -$30,464,000, fiscal 1993 -
$39,444,000, fiscal 1992 - $47,764,000 The approximate daily
weighted average interest rates were: fiscal 1994 - 4.6
percent, fiscal 1993 - 4.6 percent, and fiscal 1992 - 6.2
percent.

The Cooperative's short-term borrowings are loaned to Curtice
Burns under the same conditions and at the same rates as the
Cooperative obtained from its lenders. Provisions of the
Agreement between the two companies do however, allow Pro-
Fac, with sufficient notice to Curtice Burns, to accelerate
the repayment of outstanding debt.

Long-Term Debt

The Cooperative's long-term debt consists of the following:

June 25, 1994 June 26, 1993
------------- -------------

Term loans due Springfield:
Interest rate of 6.7% and 6.2% at
June 25, 1994 and June 26, 1993,
respectively $141,014,000 $184,000,000
Other debt 120,000
------------- -------------
141,134,000 184,000,000
Less current portion 14,000,000 16,000,000
------------- -------------
$127,134,000 $168,000,000
------------- -------------
------------- -------------

The term loans due Springfield are payable as follows: $14.0
million annually fiscal 1995 through fiscal 2002; $12 million
in fiscal 2003; $10.0 million in fiscal 2004 and $7.0 million
in fiscal 2005. The term loans are collateralized by fixed
assets and the Cooperative's investment in Springfield (see
Note 1). In addition, Curtice Burns guarantees all of the
Cooperative's bank debt and the Cooperative guarantees
Curtice Burns' short-term notes payable to commercial banks
and certain other debt. The total lines of credit available
to the companies for seasonal borrowings expire annually
unless extended or renewed. Curtice Burns had no short-term
notes payable to commercial banks at June 25, 1994, June 26,
1993, or June 26, 1992. Other Curtice Burns debt which Pro-
Fac guarantees amounted to $106,000 at June 25, 1994 and
$6,294,000 at June 23, 1993.

Pro-Fac's other debt of $120,000 is payable in nine
installments from fiscal 1996 to fiscal 20005. The rate on
this debt is 4 percent.

Based on an estimated borrowing rate at 1994 fiscal year end
of 8.0 percent for long-term debt with similar terms and
maturities, the fair value of the Cooperative's long-term
debt outstanding is approximately $136,779,000 at June 25,
1994.

Additional Information with Respect to Borrowing Arrangements

Because Pro-Fac's income is largely determined by the income
of Curtice Burns and because Pro-Fac guarantees the debt of
Curtice Burns and Curtice Burns guarantees the debt of
Pro-Fac (substantially all of which is advanced to Curtice
Burns), management and lenders use combined pro forma
financial statements to assess the financial strength of the
two companies. Specifically, the combined statement of
operations, balance sheet and statement of cash flows portray
the financial results, cash flows and equity of Curtice Burns
and Pro-Fac. Management believes that combined financial
statements are useful because they provide information
concerning Pro-Fac's ability to continue present credit
arrangements and/or obtain additional borrowings in the
future.

Certain borrowing agreements require that the companies
maintain specified levels with regard to working capital,
tangible net worth, fixed charges and the incurrence of
additional debt. The Cooperative is in compliance with, or
has obtained waivers for, restrictions and requirements under
the terms of the borrowing agreements.

Such financial statements are neither necessary for a fair
presentation of the financial position of Pro-Fac nor
appropriate as primary statements for Curtice Burns'
shareholders or for Pro-Fac shareholders and members because
they combine earnings, assets and liabilities and cash flows
which are legally attributable to either Curtice Burns'
shareholders or to Pro-Fac shareholders and members, but not
to both. Accordingly, the condensed pro forma financial
statements presented below are special purpose in nature and
should be used only within the context described.

Combined Pro Forma Condensed Statement of Operations
Unaudited

Fiscal Year Ended
----------------------------------------------------------------
June 25, 1994 June 26, 1993
-------------------------------------------- ---------------
Curtice
(Dollars in Millions) Burns Pro-Fac Eliminations Combined Combined
------ ------- ------------ -------- ---------

Sales and revenues $829.1 $94.4 $(94.4) $829.1 $878.6
------ ------ ------------ ------- --------
Cost of sales 592.6 58.2 (58.2) 592.6 632.7
Restructuring, including net
(gain)/loss from division
disposals (7.8) -- -- (7.8) 61.0
Change in control costs 3.5 -- -- 3.5 --

Other selling, administrative
and general expenses 187.0 .9 (2.0) 185.9 205.5
Interest expense 18.2 11.6 (15.6) 14.2 16.8
Pro-Fac share of earnings 16.8 -- (16.8) -- --
------- ---- ---- ----- -----

Total cost and expenses 810.3 70.7 (92.6) 788.4 916.0
------- ---- ---- ----- -----

Income/(loss) before taxes 18.8 23.7 (1.8) (A) 40.7 (37.4)

(Provision)/benefit for taxes (8.7) .8 -- (7.9) (3.9)
------- ----- ---- ----- -----
Net income/(loss) $ 10.1 $24.5 $ (1.8) (A) $ 32.8 $(41.3)
------- ----- ---- ----- -----
------- ----- ---- ----- -----

(A) Amounts represent the balance of the fiscal 1994 share of earnings
between Curtice Burns and Pro-Fac which is currently under dispute. See
discussion at Note 2.

Transactions between Curtice Burns and Pro-Fac have been eliminated for
purposes of this combined statement of operations.

Combined Pro Forma Condensed Balance Sheet
Unaudited

June 25, 1994 June 26, 1993
-------------------------------------------- ---------------
Curtice
(Dollars in Millions) Burns Pro-Fac Eliminations Combined Combined
------ ------- ------------ -------- ---------

Assets
Current assets (A)(C) $247.5 $ 46.7 $ (42.9) $251.3 $268.9
Property, plant and
equipment, net (B) 167.5 -- -- 167.5 192.5
Investment in direct
financing leases (C) -- 123.7 (123.7) -- --
Due from Curtice Burns (D) -- 78.0 (78.0) -- --
Goodwill and other intangibles 24.9 24.9 -- 49.8 53.1
Other assets 7.0 22.7 -- 29.7 26.9
------ ----- ---- ----- -----
Total assets $446.9 $296.0 $(244.6) $498.3 $541.4
------ ------ ------- ------ ------
------ ------ ------- ------
Liabilities and Net Worth
Current liabilities (A)(C) $143.4 $ 44.6 $ (41.1) $146.9 $166.8
Lease obligations (C) 125.0 -- (123.7) 1.3 1.8
Long-term debt--
Due Pro-Fac (D) 78.0 -- (78.0) -- --
Due others (E) 1.1 127.1 128.2 174.4
Other liabilities 18.5 .5 -- 19.0 12.8
----- ----- ----- ----- ------
Total liabilities 366.0 172.2 (242.8) 295.4 355.8
Shareholders' equity and
members' capitalization (E) 80.9 123.8 (1.8) (F) 202.9 185.6
----- ----- ----- ----- ------
Total Liabilities and
Net Worth $446.9 $296.0 $(244.6) $498.3 $541.4
------ ------ ------- ------ ------
------ ------ ------- ------ ------

Notes to combined balance sheet:

(A) Current assets of Pro-Fac consist principally of amounts due from Curtice
Burns with respect to the Agreement described in Note 2. Such amounts
are eliminated for purposes of this balance sheet.

(B) Property, plant and equipment owned by Pro-Fac (with net book value
$141.3 million at June 25, 1994) is leased to Curtice Burns on a
financing basis. Such leased assets are reclassified as property, plant
and equipment for purposes of this balance sheet.

(C) The majority of Curtice Burns' lease obligations are payable to Pro-Fac
and amount to $141.3 million at June 25, 1994, of which $17.6 million is
payable currently. The related Curtice Burns liability and Pro-Fac
receivable are eliminated for purposes of this balance sheet.

(D) Long-term borrowings by Curtice Burns form Pro-Fac under the Agreement
are eliminated for purposes of this balance sheet.

(E) Shareholders' equity of Curtice Burns consists of Class A common stock,
$6.6 million; Class B common stock, $2.0 million; additional paid-in
capital, $14.2 million; and retained earnings, $58.1 million.

(F) Amount represents the balance of the fiscal 1994 share of earnings
between Curtice Burns and Pro-Fac which is currently under dispute. See
discussion at Note 2.

Combined Pro Forma Condensed Statement of Cash Flows
Unaudited

June 25, 1994 June 26, 1993
-------------------------------------------- ------------
Curtice
(Dollars in Millions) Burns Pro-Fac Eliminations Combined Combined
------ ------- ------------ -------- ---------

Net cash provided by
operating activities $ 21.8 $ 18.0 $ (.9) $ 38.9 $42.2

Net cash provided by/(used in)
investing activities 33.9 32.9 (44.4) 22.4 (A) (17.1)

Net cash (used in)/provided by
financing activities (59.4) (50.9) 45.3 (65.0) (24.7)
------ ------ ----- ------ ------
Net change in cash (3.7) -- -- (3.7) .4

Cash at beginning of year 6.5 -- -- 6.5 6.1
------ ------ ----- ------ ------
Cash at end of year $ 2.8 $ -- $ -- $ 2.8 $ 6.5
------ ------ ----- ------ ------
------ ------ ----- ------ ------
Supplemental disclosure of
cash flow information

Cash paid during the period for:

Interest (net of amount
capitalized) $ 18.6 $ 12.1 $(15.6) $ 15.1 $ 17.3
------- ------ ----- ------ ------
------- ------ ----- ------ ------
Income taxes, net $ 15.0 $ (1.0) $ -- $ 14.0 $ 2.9
------- ------ ----- ------ ------
------- ------ ----- ------ ------

Supplemental Schedule of
Non-Cash Investing and
Financing Activities:

Capital lease obligations
incurred $ 10.7 $ -- $(10.0) $ .7 $ 3.0
------ ------ ----- ------ ------
------ ------ ----- ------ ------
Conversion of retains
into preferred stock $ 4.9 $4.9 $ 5.9
------ ------ ------
------ ------ ------
Net proceeds allocated to
members but retained by
the Cooperative $ 14.2 $14.2 $ 4.8
------ ------ ------
------ ------ ------

(A) Amount represents the balance of the fiscal 1994 share of earnings
between Curtice Burns and Pro-Fac which is currently under dispute. See
discussion at Note 2.

Transactions between Curtice Burns and Pro-Fac have been eliminated for
purposes of this combined statement of cash flows.

Note 4. LEASES

At June 25, 1994 and June 26, 1993 Pro-Fac had investments in
financing leases of $141,322,000 and $173,513,000, respectively,
of which $17,645,000 and $21,184,000, were due currently.

Minimum rent payments to be received during each of the next five
fiscal years are as follows: 1995-$17,645,000; 1996-$15,829,000;
1997-$14,590,000; 1998-$13,276,000; and 1999-$11,963,000. The
minimum rent payments do not include executory costs, since such
costs are paid directly by Curtice Burns and they do not include
interest, since interest amounts are determined and billed to
Curtice Burns based upon Pro-Fac's borrowing costs required to
finance the leased assets.
39

Note 5. TAXES ON INCOME

In December 1991, the national office of the Internal Revenue
Service issued a technical advice memorandum ('TAM') concluding
that virtually all of Pro-Fac's income arises from patronage
sources. As a result of the TAM, in January 1992 an additional
distribution of patronage proceeds for fiscal 1991 was made to
members in the amount of $3,727,000. Patronage proceeds
available for distribution are determined by the Board of
Directors each year, as stipulated in the Bylaws. As the longer
term effects of the TAM are further researched and analyzed, it
is possible that the Board may calculate future patronage
proceeds available for distribution utilizing a different formula
than that used for 1992 and 1993.

A summary of taxable income/(loss) and the related
(benefit)/provision for income taxes for fiscal 1994, 1993 and
1992 follows.

Dollars in Thousands

Fiscal Years Ended June 25, 1994 June 26, 1993 June 26,1992
------------ ------------- -------------

Taxable income/(loss):
Excess/(deficiency) of revenues before
taxes, dividends and allocation of
net proceeds $ 23,698 $(17,498) $ 12,754
Less patronage income to be allocated
to members for current period (15,546) (5,261) (13,040)
Less cash dividends paid on
capital stock (4,390) (4,548) --
Less utilization of net operating loss
carryforwards (3,857) -- --
Additional fiscal 1991 distribution -- -- 3,727
Difference between book and tax
methodologies 95 52 996
-------- -------- --------
Taxable income/(loss) to the
Cooperative $ 0 $(27,255) $ 4,437
-------- -------- --------
-------- -------- --------
Provision/(benefit) for income taxes:
Federal -
Current $ 267 $ 207 $(1,560)
Deferred (613) (207) 307
-------- -------- --------
(346) -- (1,253)
State (498) 102
-------- -------- --------
$ (844) $ -- $(1,151)
-------- -------- --------
-------- -------- --------
Effective tax rate (percent):
Federal 34.0% (34.0)% 34.0%
Loss for which no benefit was recorded -- 34.0 --
Utilization of net operating loss
carryforward (34.0) -- --
State (net of federal tax benefit) .4 -- 1.6
Other (4.0) -- .7
-------- -------- -------
Subtotal (3.6) -- 36.3

Tax benefits resulting from the IRS
Technical Advice Memorandum -- -- (62.3)
-------- -------- --------
Total (3.6)% --% (26.0)%
-------- -------- --------
-------- -------- --------

approximately $5.8 million and interest payments of
approximately $3.4 million. In addition, it is anticipated
that the Cooperative will file for tax refunds for fiscal
years 1991 and 1992 in the amount of approximately $3.1
million and interest payments of approximately $.4 million.
No such refund amounts have been reflected in the
Cooperative's financial statements as of June 26, 1994. It
is anticipated that the refund amounts will be recognized
upon receipt.

A benefit has not been recorded for the net operating loss
carryforward resulting from 1993 operations due to the
uncertainties surrounding utilization in future years.

Deferred tax assets have been established for the future tax
benefit of the redemption on non-qualified retains.

In February 1992, the Financial Accounting Standards Board
issued Statement of Financial Accounting Standards No. 109,
'Accounting for Income Taxes,' ('SFAS 109') and the
Cooperative has adopted the provisions of this standard as of
June 29, 1991. There was no effect on the 1992 provision for
income taxes for this accounting change as the Cooperative
was previously accounting for income taxes in accordance with
SFAS 96.

Note 6. CAPITALIZATION

Preferred Stock - Preferred stock originates from the
conversion at par value of retains. Preferred stock is non-
voting, except that the holders of preferred and common stock
would be entitled to vote as separate classes on certain
matters which would affect or subordinate the rights of the
class. The preferred stock is segregated by the original
year of issue in the records of the Cooperative.

The Cooperative is entitled to redeem or retire all or any
portion of its outstanding preferred stock, at par value,
upon 90 days notice.

Common Stock - The common stock purchased by members is
related to the crop delivery of each member. Regardless of
the number of shares held, each member has one vote.

Common stock may be transferred to another grower only with
approval of the Pro-Fac Board of Directors. If a member
ceases to be a producer of agricultural products which he
markets through the Cooperative, then he must sell his common
stock to another grower acceptable to the Cooperative. If no
such grower is available to purchase the stock, then the
member must provide one year's advance written notice of his
intent to withdraw, after which the Cooperative must purchase
his common stock at par value. (See Note 7 for common stock
dividend information.)

Due to the uncertainty surrounding the potential change of
control of Curtice Burns and its implications to the
Integrated Agreement, The Board of Directors, during 1994,
approved a moratorium on all transactions involving common
stock and waived the restriction on the utilization of agent
farmers to satisfy supply commitments. As a Merger Agreement
between the Cooperative and Curtice Burns was entered into on
September 27, 1994, it is anticipated that the Board of
Directors will re-evaluate the above described restrictions.

At June 25, 1994 and June 26, 1993, there were outstanding
subscriptions, at par value, for 9,270 and 24,788 shares of
common stock, respectively. These shares are issued as
subscription payments are received.

Retained Earnings Allocated to Members ('Retains') - Retains
arise from patronage income and are allocated to the accounts
of members within 8.5 months of the end of each fiscal year.
41

Qualified Retains - Qualified retains are freely
transferable and normally mature into preferred stock in
December of the fifth year after allocation. Qualified
retains are taxable income to the member in the year the
allocation is made.

Non-Qualified Retains - Non-qualified retains may not be
sold or purchased. The present intention of the board of
directors is that the non-qualified retains allocation be
redeemed in five years through partial payment in cash
and issuance of preferred stock. The non-qualified
retains will not be taxable to the member until the year
of conversion. Non-qualified retains may be subject to
later adjustment if such is deemed necessary by the Board
of Directors because of events which may occur after the
retains were allocated.

Earned Surplus (Unallocated and Apportioned) - Earned surplus
consists of accumulated income after distribution of earnings
allocated to members, dividends and after state and federal
income taxes. Earned surplus is reinvested in the business
in the same fashion as retains. (See Note 5.)

Stabilization Program - Each year a portion of the earnings
is available for the commercial market value stabilization
program. The amount designated for the program is determined
at the discretion of the board of directors based upon the
amount needed to accumulate the maximum authorized, which is
15 percent of the previous year's commercial market value of
crops delivered. In a year when revenues are insufficient to
pay 100 percent of commercial market value, the stabilization
program, with board approval, will provide for extra payments
to be made up to the amount previously designated for the
program. The amount designated to the program was $8,970,000
at June 25, 1994.

Market for Pro-Fac Securities - There is no established
market for trading Pro-Fac common stock. All trades have
been arranged on a private basis between buyers and sellers.

Transfers of preferred stock and qualified retained earnings
can be arranged on a regular basis through the Buffalo
offices of First Albany Corporation or Trubee, Collins and
Company, registered securities broker dealers. Transfers of
preferred stock can also be arranged on a regular basis
through the Erie, Pennsylvania office of Advest, registered
securities broker dealer. There can be no assurance this
market will have the necessary volume of transactions to
continue in the future.

Note 7. DIVIDENDS ON CAPITAL STOCK

Dividends on preferred and common stock are declared at the
discretion of the board of directors and are paid out of
legally available funds. Preferred shareholders are entitled
to a dividend of up to 12 percent of the par value of the
stock if declared by the board. Pursuant to New York State
laws, applicable to agricultural cooperatives, dividends have
been declared and paid subsequent to the fiscal year to which
they relate. In fiscal 1994 and 1993, dividends on preferred
stock were paid at a rate of 6.25 and 7.25 percent,
respectively, of the par value and dividends on common stock
were paid at a rate of 5 percent of the par value.

Subsequent to June 25, 1994, the Cooperative declared a cash
dividend of 6.75 percent of the par value of preferred stock
and 5.5 percent of the par value of the common stock, payable
on July 15, 1994. These dividends amounted to $4,914,000 and
will appear in the fiscal 1995 Statement of Net Proceeds.

Note 8. RESTRUCTURING PROGRAM

The Conceptual Vision and Strategy

The third leg of the strategy was to accelerate Curtice
Burns' national sales and distribution programs by executing
new product programs in store-brand retail dressings, salsa
and chunky soups, and the 'More Fruit/More Flavor' pie
filling program.

Execution of the Program

The first step of the restructuring program was to divest
businesses that were unprofitable or declining for Curtice
Burns but would fit strategically with other business
portfolios. During fiscal 1993, Curtice Burns divested Lucca
Frozen Foods. A loss of approximately $2.7 million (before
dividing with Pro-Fac and before taxes) was recognized on
this transaction. At the end of fiscal 1993, Curtice Burns
wrote down the assets and provided for the expenses to
dispose of the Hiland potato chips and meat snacks businesses
during fiscal 1994. On November 22, 1993, Curtice Burns sold
certain assets of the Hiland Potato Chip business for $2
million at closing, plus approximately $1 million paid in
installments over three months. On February 22, 1994,
Curtice Burns sold the meat snacks business located in
Denver, Colorado and Albany, Oregon to Oberto Sausage Company
of Kent, Washington. Under the agreement, Oberto has
purchased certain assets and assumed certain liabilities of
the meat snacks operation, excluding plant, equipment, and
trademarks. Curtice Burns will lease its Albany Oregon
manufacturing facility and equipment and license its
trademarks, trade names, etc. to Oberto until February 1995,
at which time Oberto is contractually obligated to purchase
these assets. The sale of the Hiland and meat snacks
businesses did not result in any significant gain or loss in
fiscal 1994 after giving effect to the restructuring charges
recorded in fiscal 1993; however, charges of $3.1 million
were incurred in fiscal 1994 to adjust previous estimates.
In the fiscal year ended June 26, 1993, Curtice Burns
incurred losses of $13.2 million from the meat snacks and
Hiland potato chip businesses before dividing such losses
with Pro-Fac and before taxes.

Thus, a major part of the restructuring plan was successfully
executed during fiscal 1994.

Having completed the first phase of the restructuring program
in fiscal 1993, the second phase was approved by Curtice
Burns' Board of Directors in August 1994. In connection with
the second phase, the company is evaluating several
alternatives regarding the Nalley's snack food business in
the United States, including its possible sale to a third
party. A charge, not exceed $12 million before split with
Pro-fac and before taxes, for this phase of the restructuring
program will be recorded during the first quarter of fiscal
1995.

Note 9. OTHER MATTERS

Harvest States Cooperative

In conjunction with the sale of the National Oats division by
Curtice Burns, Pro-Fac terminated the membership of the
Harvest States Cooperatives ('Harvest States') in Pro-Fac.
Harvest States was the National Oats divisions's only
supplier of oats. As a result of this action, Harvest States
filed a claim against Pro-Fac for, among other things, the
receipt of payments for future oats purchases after the sale
of National Oats division through fiscal year 1995.

Under an agreement with Curtice Burns, Curtice Burns agreed
to indemnify Pro-Fac as to certain expenses arising out of
the termination of the membership of Harvest States in Pro-
Fac. It was agreed that any settlement payments would be
deemed an expense of Curtice Burns under the division of
earnings with Pro-Fac. The exact amount of any potential
settlement related to this issue cannot be estimated at June
25, 1994, but management does not believe that this is a
material exposure to Curtice Burns.

Subsequent Events

In July 1994, a plant operated by the Curtice Burns' Southern
Frozen Foods division, located in Montezuma, Georgia, was
damaged by fire. The plant itself is owned by Pro-Fac and
leased to Curtice Burns under the terms of the Integrated
Agreement. Management is currently in the process of
assessing the extent of damage to the facility. All material
costs associated with the facility repairs and business
interruption are anticipated to be covered under the Curtice
Burns' insurance policies. The Springfield Bank for
Cooperatives is loss payee on the property insurance policy
under the terms of the Security Agreement with lenders. See
Note 5.

Pro-Fac has advised Curtice Burns that it expects to complete its
tender offer on or about November 1, 1994.

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

Not Applicable

PART III

Item 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The following are the directors of Pro-Fac:

Year First Current Region
Year of Elected Term District (4)
Name Birth Director Expires Represented
- - - ------ ------ -------- ------ -----------

Dale E. Burmeister 1940 1992 1995 II - 1
Robert V. Call, Jr. (1), (2), (3) 1926 1962 1997 I - 1
Glen Lee Chase 1937 1989 1996 V
Tommy R. Croner (1) 1942 1985 1995 I - 3
Albert P. Fazio 1936 1976 1995 IV
Bruce R. Fox (1) 1947 1974 1996 II - 1
Kennneth D. Mattingly 1948 1993 1996 I - 1
Steven D. Koinzan (1) 1948 1982 1997 III
Allan D. Mitchell 1927 1975 1997 I - 2
Allan W. Overhiser 1960 1994 1997 II - 1
Paul E. Roe (1) 1939 1986 1996 I - 2
Edward L. Whitaker (1) 1926 1991 1997 II - 2

(1) Member of the Finance and Audit Committee, which
sometimes functions as an executive committee of the
Board.

(2) Member of the Board of Directors of Curtice Burns Foods,
Inc.

(3) Ex-officio member of Finance and Audit committee and
other committees of the Board as President of Pro-Fac.

(4) Regional Representation:

The business of Pro-Fac is conducted pursuant to
policies established by its Board of Directors. The
territorial area in which Pro-Fac operates has been
divided into geographical regions based on natural
divisions of product and location. In addition, some
regions have been further divided into districts. The
members within each region or district are represented
on the Board by at least one director. The board
designates the number of directors to be elected from
each region or district, based on the value of raw
product delivered, so as to attain reasonably balanced
representation on the Board. At present, there are five
regions of Pro-Fac covering the following areas and
represented by the number of directors indicated:
45

Present
Number
Region Area of Directors
----- ---- ------------

I (Dist. 1) Western Upstate New York 2
(Dist. 2) Eastern Upstate New York 2
(Dist. 3) Pennsylvania and Maryland 1

II (Dist. 1) Michigan 3
(Dist. 2) Illinois 1

III Iowa, Nebraska, North Dakota
and Minnesota 1

IV Washington, Oregon
and California 1

V Georgia and Florida 1

Directors are elected for three-year terms. The directors of
Pro-Fac are all engaged as growers in the production of agri-
cultural products, and have been so engaged for at least five
years.

The following are the executive officers of Pro-Fac:

Robert V. Call, Jr. President -
A grower based in Batavia, New York - a member of Pro-Fac
since 1961, Treasurer from 1973-1984, and President since
1986.

Albert P. Fazio, Vice President -
A grower based in Vancouver, Washington - a member of Pro-Fac
since 1975 and Vice President since March 1993, Secretary
March 1991 to March 1993.

Steven D. Koinzan, Secretary -
A grower based in Valentine, Nebraska - a member of Pro-Fac
since 1982.

Bruce R. Fox, Treasurer -
A grower based in Shelby, Michigan - a member of Pro-Fac
since 1974, Treasurer since November 1984 and Secretary from
November 1978 to November 1984.

Thomas R. Kalchik -
20 Skelby Moor Lane, Fairport, New York 14450 - Vice
President of Member Relations since June 1990, Assistant
Secretary since August 1983, Director of Member Relations
from August 1983 to June 1990, Assistant Director of Member
Relations from September 1981 to August 1983, and Area
Manager from January 1977 to September 1981.

Roy A. Myers -
72 Waterview Circle, Rochester, New York 14625 - General
Manager since June 1987, Assistant General Manager from
August 1983 to June 1987 - he has been an Executive Vice
President of Curtice Burns since June 1987 and a Vice
President of Curtice Burns from August 1983 to June 1987 and
President of the Corporate Services Division of Curtice Burns
since January 1979.

William D. Rice -
5 Brightford Heights Road, Rochester, New York 14610 -
Assistant Treasurer since 1970 - he is Senior Vice President-
Administration, Secretary, and Treasurer of Curtice Burns -
employed by Curtice Burns since 1969.

Officers are elected for one-year terms.

There are no family relationships among any directors or
executive officers.
46

Item 11. EXECUTIVE COMPENSATION

Pro-Fac reimburses Curtice Burns annually for the salaries
and expenses of three Curtice Burns employees who perform
Pro-Fac membership relations functions.

For the fiscal year ended June 25, 1994, the salary expense
paid by Pro-Fac was $180,000 and the employee expense (travel
and telephone) was $68,000. Each director of Pro-Fac
received an annual fee of $6,000 (except the President who
received $12,000) plus an additional fee of $200 per day
(except the President who received $400) for attendance at
Board and other designated meetings. Pro-Fac directors were
also reimbursed for their out-of-pocket expenses.

Pro-Fac has no pension or retirement plan under which
retirement benefits are proposed to be paid to any of its
officers or directors.

Item 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT

As of June 25, 1994, the following were the only persons
known to Pro-Fac to be the beneficial owners of more than 5
percent of any class of the voting securities of Pro-Fac:

Title of Name and Address of Number of Percent
Class Beneficial Owner Shares of Class
- - - ----------- ------------------ -------- --------

Common Stock Cherry Central Cooperative 383,942 18.70%
P.O. Box 988
Traverse City, MI 49685

Common Stock Michigan Blueberry Growers 116,400 5.66%
P.O. Drawer B
Grand Junction, MI 49056

The following table shows, as of June 25, 1994, both classes
of equity securities of Pro-Fac, the number and percentage of
shares issued and outstanding which are beneficially owned by
each director and by all directors and officers as a group.

Amount and Nature of
Title Beneficial Ownership Percent of
Name of Director(1) of Class (2) Class (3)
- - - --------------------- ---------- ------------------- ----------

Dale E. Burmeister Common 3,318-indirect
(record ownership
by Lakeshore
Farms, Inc.) 0.16%

Preferred 357-indirect (record
ownership by Lakeshore
Farms, Inc. 0.01%

7,535-direct (record
ownership in own
name) 0.29%

Robert V. Call, Jr. Common 35,197-indirect
(record ownership
by My-T Acres,
Inc.) 1.71%

Preferred 25,504-indirect
(record ownership
by My-T Acres,
Inc.) 0.99%

13,088-indirect
(record ownership
by My-T Acres, Inc.
Employee
Profit-Sharing
Plan) 0.51%

1,506 shares-direct
(record ownership
in own name) 0.06%

Amount and Nature of
Title Beneficial Ownership Percent of
Name of Director(1) of Class (2) Class (3)
- - - --------------------- ---------- ------------------- ----------

Glen Lee Chase Common 9,472-indirect
(record ownership
by Chase Farms,
Inc.) 0.46%

Preferred 3,347-indirect
(record ownership
by Chase Farms,
Inc.) 0.13%

Tommy R. Croner Common 7,026-indirect
(record ownership
by Richard Croner
& Son) 0.34%

Preferred 8,876-indirect
(record ownership
by T-Rich, Inc.) 0.34%

Albert P. Fazio Common 6,975-indirect
(record ownership
by New Columbia
Garden Co., Inc.) 0.34%

Preferred 6,773-indirect
(record ownership
by New Columbia
Garden Co., Inc.) 0.26%

Allan W. Overhiser Common 1,139-indirect
(record ownership
by A.W. Overhiser
Orchards) 0.06%

Preferred 1,314-indirect
(record ownership
by A.W. Overhiser
Orchards) 0.05%

Bruce R. Fox Common 20,222-indirect
(record ownership
by N.J. Fox &
Sons, Inc.) 0.98%

Preferred 7,306-indirect
(record ownership
by N.J. Fox &
Sons, Inc.) 0.28%

1,085-direct (record
ownership in own
name) 0.04%

Kenneth D. Mattingly Common 4,338-indirect
(record ownership
by M-B Farms,
Inc.) 0.21%

Preferred 2,541-indirect
(record ownership
by M-B Farms,
Inc.) 0.10%

Steven D.Koinzan Common 7,140-direct (record
ownership in own
name) 0.35%

Preferred 370-direct (record
ownership in own
name) 0.01%

Allan D. Mitchell Common 3,719-indirect
record ownership
by Agpro Farms,
Inc.) 0.18%

78-direct (record
ownership in own
name) 0.00%

Allan D. Michell Preferred 1,674-direct (record
ownership jointly
with spouse) 0.06%

4,978-direct (record
ownership in own
name) 0.19%

Paul E. Roe Common 12,005-indirect
(record ownership
by Roe Acres,
Inc.) 0.58%

Preferred 2,623-indirect
(record ownership
by Roe Acres,
Inc.) 0.10%

Amount and Nature of
Title Beneficial Ownership Percent of
Name of Director(1) of Class (2) Class (3)
- - - --------------------- ---------- ------------------- ----------

Edward L. Whitaker Common 240-direct (record
ownership in own
name) 0.01%

Preferred -- --
All Directors and Common 110,869 5.4%
Officers as a Group Preferred 88,877 3.4%

(1) No Pro-Fac equity securities are owned by Curtice Burns.

(2) Certain of the directors named above may have the
opportunity, along with the other members producing a
specific crop, to acquire beneficial ownership of
additional shares of the common stock of Pro-Fac within a
period of approximately 60 days commencing February 1, 1995
if Pro-Fac determines that a permanent change is required
in the total quantity of that particular crop marketed
through it.

(3) In the above table, each director who has direct beneficial
ownership of common or preferred shares by reason of being
the record owner of such shares has sole voting and
investment power with respect to such shares, while each
director who has direct beneficial ownership of common or
preferred shares as a result of owning such shares as a
joint tenant has shared voting and investment power
regarding such shares. Each director who has indirect
beneficial ownership of common or preferred shares
resulting from his status as a shareholder or a partner of
a corporation or partnership which is the record owner of
such shares has sole voting and investment power if he
controls such corporation or partnership. If he does not
control such corporation or partnership, he has shared
voting and investment power. Pro-Fac does not believe that
the percentage ownership of any such corporation or
partnership by a director is material, since in the
aggregate no director beneficially owns in excess of 5
percent of either the common or preferred shares of Pro-
Fac.

Item 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

All of the directors of Pro-Fac elected by its members are
members of the Cooperative and deliver various quantities of
raw product to it, either individually or through
partnerships, corporations, or other production units. The
prices paid to such directors for produce are in all cases
identical to the prices paid all others for like produce.

When Curtice Burns finds it necessary to purchase on the open
market additional quantities of crops of the kinds purchased
from Pro-Fac, the members of Pro-Fac are given the first
opportunity to supply those crops. Thus, certain of the
directors of Pro-Fac, like other members, may from time to
time sell agricultural products to Curtice Burns. Prices
paid in such transactions are identical to those paid in
other open market transactions for similar produce on the
same dates.

No other material transactions between Pro-Fac and its
officers or directors, other than the payment of ordinary
compensation and directors' fees as described above, the sale
of common stock to support membership production obligations,
and the issuance of retains and preferred stock, have taken
place within the past three years.

PART IV

Item 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K
An index of financial statements is set forth in Part II,
Item 8 of this report.
49

The following additional financial data should be read in
conjunction with the financial statements included in Item 8
of this Form 10-K Annual Report:

Schedule II - Amounts receivable from related parties and
underwriters, promoters and employees other than related
parties.

Schedule IV - Indebtedness of and to related parties - not
current.

Schedule IX - Short-term borrowings.

Schedules other than those listed above are omitted because
they are either not applicable or not required, or the
required information is shown in the financial statements or
the notes thereto.

The following exhibits are filed herein or have been
previously filed with the Securities and Exchange Commission:

Number Description
- - - ----- -----------

3(A) Certificate of Incorporation of the registrant,
as amended, incorporated by reference to the
Annual Report on Form 10-K of the registrant for
the fiscal year ended June 27, 1986, wherein
such exhibit is designated as Exhibit 3(A).

3(B) Certificate of Amendment to Certificate of
Incorporation, incorporated by reference to the
Quarterly Report on Form 10-Q of the registrant
for the quarter ended December 25, 1987, wherein
such exhibit is designated Exhibit 6(a).

3(C) Certificate of Amendment to the Certificate of
Incorporation of registrant, incorporated by
reference to the Registration Statement of the
registrant on Form S-2, Registration No. 33-
26797, filed February 2, 1989, wherein such
exhibit is designated as Exhibit 4(B).

3(D) Certificate of Amendment to the Certificate of
Incorporation incorporated by reference to the
Annual Report on Form 10-K of the registrant for
the fiscal year ended June 26, 1993, wherein
such exhibit is designated Exhibit 3(D).

3(E) By-laws of the registrant, as amended to date
for the fiscal year ended June 26, 1992, wherein
such exhibit is designated as Exhibit 3(E).

10(A) Integrated Agreement between the registrant and Curtice
Burns, dated as of June 27, 1992 for the fiscal year
ended June 26, 1992, wherein such exhibit is designated
as Exhibit 10(A).

10(B) (i) Master Agreement between the registrant and the
Springfield Bank for Cooperatives, dated October 8,
1981, incorporated by reference to the Registration
Statement of the registrant on Form S-1, Registration
No. 2-75576, filed January 4, 1982, wherein such
exhibit is designated Exhibit 10(G)(i).

(ii) Modification of Master Agreement between the
Registrant and Springfield Bank for Cooperatives, dated
November 22, 1989, incorporated by reference to the
Annual Report on Form 10-K of the Registrant for the
fiscal year ended June 29, 1990, wherein such exhibit
is designated Exhibit 10(E)(ii).

(iii) Modification of Master Agreement between the Registrant
and Springfield Bank for Cooperatives, dated March 15,
1990, incorporated by reference to the Registration
Statement of the registrant on Form S-2, Registration
No. 33-46619, filed March 30, 1992, wherein such
exhibit is designated Exhibit 10(D)(iii).

(iv) Term Loan Agreement Nos. T-5715-G and T-5716-G between
the Registrant and Springfield Bank for Cooperatives
dated December 20, 1991, incorporated by reference to
the Registration Statement of the registrant on Form S-
2, Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(iv).

(v) Term Loan Agreement Nos. T-5718-G and T-5719-G between
the registrant and Springfield Bank for Cooperatives
dated December 20, 1991, incorporated by reference to the
Registration Statement of the registrant on Form
S-2, Registration No. 33-46619, filed March 30,
1992, wherein such exhibit is designated Exhibit
10(D)(v).

(vi) Term Loan Agreement Nos. T-5720F and T-5721F between
the Registrant and Springfield Bank for Cooperatives,
dated December 20, 1991, incorporated by reference to
the Registration Statement of the registrant on Form S-2,
Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(vi).

(vii) Seasonal Loan Agreement Nos. S-5933 and S-5934 between
the Registrant and Springfield Bank for Cooperatives,
dated November 25, 1991, incorporated by reference to
the Registration Statement of the registrant on Form S-2,
Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(vii).

(viii) Agreement of Guaranty executed by Curtice Burns, dated
July 2 1990, incorporated by reference to the
Registration Statement of the registrant on Form S-2,
Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(viii).

(ix) Modification of Guaranty executed by Curtice Burns,
dated February 20, 1991, incorporated by reference to
the Registration Statement of the registrant on Form S-
2, Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(ix).

(x) Modification of agreements with Springfield Bank for
Cooperatives

10(C) Pro-Fac Guaranty of Curtice Burns Indebtedness, as
Amended, incorporated by reference to the Annual Report
on Form 10-K of the registrant for the fiscal year
ended June 26, 1993, wherein such exhibit is designated
Exhibit 10(C).

10(D) Waiver of Events of Default Under Financing Agreements
and Amendments to Financing Agreements dated September
21, 1993, incorporated by reference to the Annual
Report on Form 10-K of the registrant for the fiscal
year ended June 26, 1993, wherein such exhibit is
designated as Exhibit 10(D).

21 Subsidiaries of the Registrant

27 Financial Data Schedule

Reports on Form 8-K

No Reports on Form 8-K were filed by Pro-Fac during the last
quarter of the fiscal year covered by this report.
51

PRO-FAC COOPERATIVE, INC.

SCHEDULE II

Amounts receivable from related parties and underwriters,
promoters, and employees other than related parties.

Balance at
beginning of Balance at
Name of debtor Additions Additions Deductions end of period
- - - ---------------- ------------- --------- ---------- -------------

Curtice Burns Foods

June 25, 1994 $ 9,113,000 $123,153,000 $121,069,000 $11,197,000

June 26, 1993 $26,767,000 $113,478,000 $131,132,000 $ 9,113,000

June 26, 1992 $45,210,000 $121,836,000 $140,279,000 $26,767,000

The cash needs of a fruit and vegetable food processor such as
Curtice Burns fluctuate greatly during the year because of the
peak cash outflow required during a limited production season
that is tied to the harvest season of the crops involved, while
the cash inflow from sales is more ratably spread throughout the
year. By reason of the agreements with Pro-Fac, these peak cash
needs are supplied to Curtice Burns by Pro-Fac. Such receivables
from Curtice Burns include:

1. Advances under a short-term line of credit.

2. Accrued interest on all short-term and long-term
borrowings that will be paid by Curtice Burns to
Pro-Fac when Pro-Fac pays its lenders.

3. Raw product delivered to Curtice Burns for which
Pro-Fac has agreed on extended terms under the
marketing section of the Integrated Agreement.

4. Amounts due under the profit split provisions of
the operations financing section of the Integrated
Agreement.

PRO-FAC COOPERATIVE, INC.

SCHEDULE IV

Indebtedness of and to related parties - not current

Balance at
beginning of Additions Deductions Balance at
Name of person period (2) (3) end of period
- - - ---------------- ------------- --------- ---------- -------------

Receivable from
Curtice Burns Foods

June 25, 1994 $78,648,000 $40,378,000 $40,986,000 $78,040,000

June 26, 1993 $61,300,000 $33,348,000 $16,000,000 $78,648,000

June 26, 1992 $61,099,000 $14,201,000 $14,000,000 $61,300,000

Under the terms of the operations financing section of the
Integrated Agreement between Pro-Fac and Curtice Burns, Pro-Fac
lends to Curtice Burns all funds not required for its own
operations or for purchases of assets to be leased to Curtice
Burns. Funds loaned to Curtice Burns bear the same conditions
and interest rates as Pro-Fac has obtained from its lenders. The
interest rates on such borrowings at June 25, 1994, June 26, 1993
and June 26, 1992, were 6.7 percent, 6.2 percent, and 7.1
percent, respectively.

PRO-FAC COOPERATIVE, INC.

SCHEDULE IX - SHORT-TERM BORROWINGS
FOR THE THREE YEARS ENDED JUNE 25, 1994

Maximum Average Weighted
Category Weighted amount amount average
of aggregate Balance average outstanding outstanding interest rate
short-term at end interest during during during
borrowings of period rate the period the period the period
- - - ----------- ---------- --------- ------------ ----------- ------------

June 25, 1994

Payable to
Springfield Bank
for Cooperatives $11,500,000 5.50% $46,000,000 $30,464,000 4.79%

June 26, 1993

Payable to
Springfield Bank
for Cooperatives $12,000,000 4.32% $56,000,000 $39,444,000 4.6%

June 26, 1992

Payable to
Springfield Bank
for Cooperatives $28,000,000 4.85% $77,000,000 $47,764,000 6.20%

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant had duly
caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
Dated: 8/10/94

PRO-FAC COOPERATIVE, INC.

By: /s/ Roy A. Myers
-------------------------
Roy A. Myers
General Manager

POWER OF ATTORNEY

KNOW ALL MEN BY THESE PRESENTS, that each person whose
signature appears below constitutes and appoints ROY A. MYERS
AND WILLIAM D. RICE, and each of them, his true and lawful
attorneys-in-fact and agents, with full power of substitution
and resubstitution for him and in his name, place and stead,
in any and all capacities to sign any and all amendments to
this Annual Report on Form 10-K and to file the same, with
all exhibits thereto and other documents in connection
therewith, with the Securities and Exchange Commission,
granting unto said attorneys-in-fact and agents, and each of
them, full power and authority to do and perform each and
every act and thing requisite or necessary to be done in and
about the premises, as fully to all intents and purposes as
he might or could do in person, hereby satisfying and
confirming all that said attorneys-in-fact and agents, or any
of them, or their or his substitute or substitutes, may
lawfully do or cause to be done by virtue hereof.

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 dates indicated.

Signature Title Date
- - - ----------- ----- -------
[S] [C] [C]

/s/ Robert V. Call, Jr. President; Director 8/11/93
- - - --------------------------
Robert V. Call, Jr.

/s/ Roy A. Myers General Manager 8/10/94
- - - -------------------------- (Principal Executive
Roy A. Myers Officer)

/s/ Albert P. Fazio Vice President; 8/10/94
- - - -------------------------- Director
Albert P. Fazio

/s/ Bruce R. Fox Treasurer; Director 8/10/94
- - - -------------------------- (Principal Financial
Bruce R. Fox Officer)

/s/ Steven D. Koinzan Secretary; Director 8/10/94
- - - --------------------------
Steven D. Koinzan

/s/ William D. Rice Assistant Treasurer 8/10/94
- - - -------------------------- (Principal Accounting
William D. Rice Officer)

/s/ Dale Burmeister Director 8/10/94
- - - --------------------------
Dale Burmeister

/s/ Glen Lee Chase Director 8/10/94
- - - --------------------------
Glen Lee Chase
56

Signature Title Date
- - - ------------- ----- ----

/s/ Tommy R. Croner Director 8/10/94
- - - --------------------------
Tommy R. Croner

/s/ Kenneth Mattingly Director 8/10/94
- - - --------------------------
Kenneth Mattingly

/s/ Allan D. Mitchell Director 8/10/94
- - - --------------------------
Allan D. Mitchell

/s/ Allan W. Overhiser Director 8/10/94
- - - --------------------------
Allan W. Overhiser

/s/ Paul E. Roe Director 8/10/94
- - - --------------------------
Paul E. Roe

/s/ Edward L. Whitaker Director 8/10/94
- - - --------------------------
Edward L. Whitaker

SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED
PURSUANT TO SECTION 15(d) OF THE ACT BY REGISTRANTS WHICH HAVE
NOT REGISTERED SECURITIES PURSUANT TO SECTION 12 OF THE ACT.

No proxy statement, form of proxy or other proxy soliciting
material has been or will be sent to security holders with
respect to the 1994 annual meeting. Pro-Fac's 1994 annual report
to security holders has not yet been sent to its security
holders. Copies of such report will be sent to the Commission
when it is sent to the security holders.

EXHIBIT INDEX

Number Description
- - - ------ -----------

3(A) Certificate of Incorporation of the registrant, as
amended, incorporated by reference to the Annual Report
on Form 10-K of the registrant for the fiscal year
ended June 27, 1986, wherein such exhibit is designated
as Exhibit 3(A).

3(B) Certificate of Amendment to Certificate of
Incorporation, incorporated by reference to the
Quarterly Report on Form 10-Q of the registrant for the
quarter ended December 25, 1987, wherein such exhibit
is designated Exhibit 6(a).

3(C) Certificate of Amendment to the Certificate of
Incorporation of registrant, incorporated by reference
to the Registration Statement of the registrant on Form
S-2, Registration No. 33-26797, filed February 2, 1989,
wherein such exhibit is designated as Exhibit 4(B).

3(D) Certificate of Amendment to the Certificate of
Incorporation incorporated by reference to the Annual
Report on Form 10-K of the registrant for the fiscal
year ended June 26, 1993, wherein such exhibit is
designated Exhibit 3(D).

3(E) By-laws of the registrant, as amended to date for the
fiscal year ended June 26, 1992, incorporated by reference
wherein such exhibit is designated as Exhibit 3(E).

10(A) Integrated Agreement between the registrant and Curtice
Burns, dated as of June 27, 1992 for the fiscal year
ended June 26, 1992, incorporated by reference wherein
such exhibit is designated as Exhibit 10(A).

(ii) Modification of Master Agreement between the Registrant
and Springfield Bank for Cooperatives, dated November
22, 1989, incorporated by reference to the Annual
Report on Form 10-K of the Registrant for the fiscal
year ended June 29, 1990, wherein such exhibit is
designated Exhibit 10(E)(ii).

(v) Term Loan Agreement Nos. T-5718-G and T-5719-G between
the registrant and Springfield Bank for Cooperatives
dated December 20, 1991, incorporated by reference to
the Registration Statement of the registrant on Form S-
2, Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(v).

Number Description
- - - ----- -----------

(vi) Term Loan Agreement Nos. T-5720F and T-5721F between
the Registrant and Springfield Bank for Cooperatives,
dated December 20, 1991, incorporated by reference to
the Registration Statement of the registrant on Form S-
2, Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(vi).

(vii) Seasonal Loan Agreement Nos. S-5933 and S-5934 between
the Registrant and Springfield Bank for Cooperatives,
dated November 25, 1991, incorporated by reference to
the Registration Statement of the registrant on Form S-
2, Registration No. 33-46619, filed March 30, 1992,
wherein such exhibit is designated Exhibit 10(D)(vii).

(x) Modification of agreements with Springfield Bank for
Cooperatives

21 Subsidiaries of the Registrant

27 Financial Data Schedule

Reports on Form 8-K

No Reports on Form 8-K were filed by Pro-Fac during the last
quarter of the fiscal year covered by this report.