UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
                                    FORM 10-Q



(Mark One)
 X   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
----
ACT OF 1934
For the quarterly period ended March 31, 2000
                               --------------

                                       OR

     TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
----
EXCHANGE ACT OF 1934
For the transition period from                          to
                               ------------------------     --------------------

Commission file number 2-22791
                       -------


                                   AGWAY INC.
    ----------------------------------------------------------------------------
             (Exact name of registrant as specified in its charter)


DELAWARE                                                              15-0277720
--------------------------------------------------------------------------------
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)


333 Butternut Drive, DeWitt, New York                                      13214
--------------------------------------------------------------------------------
(Address of principal executive offices)                              (Zip Code)


                                  315-449-6431
   -----------------------------------------------------------------------------
              (Registrant's telephone number, including area code)




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 the number of shares  outstanding  of each of the  issuer's  classes of
common stock, as of the latest practicable date.



        Class                                         Outstanding at May 5, 2000
------------------------                              --------------------------
Membership Common Stock,                                      99,022 shares
$25 par value per share

                                        1

<PAGE>



                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

                                      INDEX

<TABLE>
<CAPTION>
                                                                                                                   PAGE NO.
                                                                                                                   --------



PART I.      FINANCIAL INFORMATION
-------      ---------------------

<S>          <C>                                                                                                         <C>
             Item 1.  Financial Statements (Unaudited)

             Condensed Consolidated Balance Sheets as of March 31, 2000 and June 30, 1999.............................   3

             Condensed Consolidated Statements of Operations and Retained Earnings for the three months
             and nine months ended March 31, 2000 and March 31, 1999..................................................   4

             Consolidated Statements of Comprehensive Income for the three months and nine months ended
             March 31, 2000 and March 31, 1999........................................................................   5

             Condensed Consolidated Cash Flow Statements for the nine months ended March 31, 2000
             and March 31, 1999.......................................................................................   6

             Notes to Condensed Consolidated Financial Statements.....................................................   7

             Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations...........  15

             Item 3.  Quantitative and Qualitative Disclosures About Market Risk......................................  22

PART II.     OTHER INFORMATION
--------     -----------------

             Item 1.  Legal Proceedings...............................................................................  24

             Item 6.  Exhibits and Reports on Form 8-K................................................................  24

             SIGNATURES...............................................................................................  25


</TABLE>












                                        2

<PAGE>



                          PART I. FINANCIAL INFORMATION
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
                  Item 1. CONDENSED CONSOLIDATED BALANCE SHEETS
                                   (Unaudited)
                             (Thousands of Dollars)
<TABLE>
<CAPTION>
                                                                                                       March 31,          June 30,
ASSETS                                                                                                    2000              1999
------                                                                                               -----------        -----------
<S>                                                                                                  <C>                <C>
Current Assets:
      Trade accounts  receivable  (including  notes  receivable  of  $19,478 and
           $45,960, respectively), less allowance for doubtful accounts of
           $7,873 and $7,155, respectively ...................................................       $   166,787        $   185,536
      Leases receivable, less unearned income of $68,491 and
           $64,330, respectively .............................................................           148,191            131,431
      Advances and other receivables .........................................................            39,625             23,456
      Inventories:
           Raw materials .....................................................................            11,014              6,892
           Finished goods ....................................................................           189,963            137,348
           Goods in transit and supplies .....................................................             1,803              1,826
                                                                                                     -----------        -----------
                Total inventories ............................................................           202,780            146,066
      Prepaid expenses and other assets ......................................................            51,269             52,341
                                                                                                     -----------        -----------
           Total current assets ..............................................................           608,652            538,830

Marketable securities available for sale .....................................................            36,539             35,099
Other security investments ...................................................................            52,062             51,010
Properties and equipment, net ................................................................           214,213            215,425
Long-term leases receivable, less unearned income of $156,348 and
      $134,623, respectively .................................................................           442,862            419,444
Net pension asset ............................................................................           208,459            198,160
Other assets .................................................................................            21,017             19,083
                                                                                                     -----------        -----------
                Total assets .................................................................       $ 1,583,804        $ 1,477,051
                                                                                                     ===========        ===========

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
      Notes payable ..........................................................................       $   160,388        $    81,800
      Current installments of long-term debt .................................................           100,249             94,699
      Current installments of subordinated debt ..............................................            72,109             76,968
      Accounts payable .......................................................................           163,533            115,350
      Other current liabilities ..............................................................           111,149            115,865
                                                                                                     -----------        -----------
           Total current liabilities .........................................................           607,428            484,682

Long-term debt ...............................................................................           274,547            279,417
Subordinated debt ............................................................................           417,097            409,335
Other liabilities ............................................................................           107,617            104,670
                                                                                                     -----------        -----------
           Total liabilities .................................................................         1,406,689          1,278,104
Commitments and contingencies
Shareholders' equity:
      Preferred stock, net ...................................................................            40,389             42,917
      Common stock, net ......................................................................             2,479              2,506
      Accumulated other comprehensive income (loss) ..........................................              (825)              (239)
      Retained earnings ......................................................................           135,072            153,763
                                                                                                     -----------        -----------
           Total shareholders' equity ........................................................           177,115            198,947
                                                                                                     -----------        -----------
                Total liabilities and shareholders' equity ...................................       $ 1,583,804        $ 1,477,051
                                                                                                     ===========        ===========
</TABLE>


     See accompanying notes to condensed consolidated financial statements.

                                        3

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

Item 1.  CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND RETAINED EARNINGS
                                   (Unaudited)
                             (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                      Three Months Ended                   Nine Months Ended
                                                                          March 31,                            March 31,
                                                               ------------------------------        ------------------------------
                                                                  2000               1999                2000               1999
                                                               -----------        -----------        -----------        -----------
<S>                                                            <C>                <C>                <C>                <C>
Net sales and revenues from:
      Product sales (including excise taxes) ...........       $   438,915        $   333,247        $ 1,084,519        $   904,606
      Leasing operations ...............................            19,264             17,269             56,592             51,765
      Insurance operations .............................             6,629              6,505             20,589             21,068
                                                               -----------        -----------        -----------        -----------
           Total net sales and revenues ................           464,808            357,021          1,161,700            977,439

Cost and expenses from:
      Products and plant operations ....................           397,444            296,728          1,021,143            840,344
      Leasing operations ...............................             6,921              5,610             22,801             20,164
      Insurance operations .............................             3,809              4,082             12,153             13,539
      Selling, general and administrative
          activities ...................................            38,031             37,217            116,829            111,100
                                                               -----------        -----------        -----------        -----------
           Total operating costs and expenses ..........           446,205            343,637          1,172,926            985,147



Operating earnings (loss) ..............................            18,603             13,384            (11,226)            (7,708)

Interest expense, net ..................................            (9,007)            (8,155)           (25,591)           (23,892)
Other income, net ......................................             6,080              1,904             13,312             19,194
                                                               -----------        -----------        -----------        -----------
Earnings (loss) before income taxes ....................            15,676              7,133            (23,505)           (12,406)
Income tax (expense) benefit ...........................            (7,013)            (4,364)             6,387              2,028
                                                               -----------        -----------        -----------        -----------

Net earnings (loss) ....................................             8,663              2,769            (17,118)           (10,378)

Retained earnings, beginning of period .................           126,409            140,243            153,763            155,082
      Dividends ........................................                 0                  0             (1,573)            (1,692)
                                                               -----------        -----------        -----------        -----------
Retained earnings, end of period .......................       $   135,072        $   143,012        $   135,072        $   143,012
                                                               ===========        ===========        ===========        ===========

</TABLE>
















     See accompanying notes to condensed consolidated financial statements.

                                        4

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

        Item 1. CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
                                   (Unaudited)
                             (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                       Three Months Ended                    Nine Months Ended
                                                                            March 31,                             March 31,
                                                                     ---------------------------         ---------------------------
                                                                       2000               1999              2000              1999
                                                                     --------          ---------         --------          ---------

<S>                                                                  <C>               <C>               <C>               <C>
Net earnings (loss) ........................................         $  8,663          $  2,769          $(17,118)         $(10,378)

Other comprehensive income, net of tax:
      Unrealized gains (losses) on
           available-for-sale securities:
      Unrealized holding gains (losses)
           arising during period ...........................              (93)             (405)             (634)             (108)
       Reclassification adjustment
           for (gains) losses included in
           net earnings ....................................               46                 6                48                21
                                                                     --------          --------          --------          --------

Other comprehensive income (loss) ..........................              (47)             (399)             (586)              (87)
                                                                     --------          --------          --------          --------

Comprehensive income (loss) ................................         $  8,616          $  2,370          $(17,704)         $(10,465)
                                                                     ========          ========          ========          ========

</TABLE>




























     See accompanying notes to condensed consolidated financial statements.

                                        5

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

               Item 1. CONDENSED CONSOLIDATED CASH FLOW STATEMENTS
                                   (Unaudited)
                             (Thousands of Dollars)

<TABLE>
<CAPTION>

                                                                                                           Nine Months Ended
                                                                                                               March 31,
                                                                                                   --------------------------------
                                                                                                      2000                   1999
                                                                                                   ---------              ---------

<S>                                                                                                <C>                    <C>
Net cash flows (used in) provided by operating activities ............................             $  (2,693)             $  48,316

Cash flows provided by (used in) investing activities:
      Purchases of property, plant and equipment .....................................               (20,786)               (17,752)
      Proceeds from disposal of property, plant and equipment ........................                 8,576                    591
      Proceeds from sale of business .................................................                     0                 14,150
      Cash paid for acquisition of business ..........................................                (4,950)                (7,090)
      Leases originated ..............................................................              (203,635)              (176,672)
      Leases repaid ..................................................................               153,246                145,232
      Proceeds from sale of marketable securities ....................................                 2,319                  5,790
      Purchases of marketable securities .............................................                (4,345)                (6,345)
      Net purchase of investments in cooperatives ....................................                (1,477)                  (950)
                                                                                                   ---------              ---------

Net cash flows used in investing activities ..........................................               (71,052)               (43,046)

Cash flows provided by (used in) financing activities:
      Net change in short-term borrowings ............................................                78,588                 31,080
      Proceeds from long-term debt ...................................................                75,989                 13,273
      Repayment of long-term debt ....................................................               (73,856)               (67,106)
      Proceeds from sale of subordinated debt ........................................               111,929                128,629
      Maturity and redemption of subordinated debt ...................................              (109,026)              (102,553)
      Payments on capital leases .....................................................                (4,048)                  (185)
      Redemption of stock, net .......................................................                (2,556)                (4,876)
      Cash dividends paid ............................................................                (3,275)                (3,532)
                                                                                                   ---------              ---------

Net cash flows provided by (used in) financing activities ............................                73,745                 (5,270)
                                                                                                   ---------              ---------

Net increase (decrease) in cash and equivalents ......................................                     0                      0
Cash and equivalents at beginning of period ..........................................                     0                      0
                                                                                                   ---------              ---------

Cash and equivalents at end of period ................................................             $       0              $       0
                                                                                                   =========              =========


</TABLE>









See accompanying notes to condensed consolidated financial statements.

                                        6

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

          Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (Thousands of Dollars)


1.    SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
      ------------------------------------------
      Basis of Presentation
      The accompanying  unaudited condensed consolidated financial statements of
      Agway Inc. (the "Company") have been prepared in accordance with generally
      accepted accounting  principles for interim financial information and with
      the   instructions  to  Form  10-Q  and  Article  10  of  Regulation  S-X.
      Accordingly,  they do not include  all of the  information  and  footnotes
      required  by  generally  accepted   accounting   principles  for  complete
      financial  statements.  In the  opinion  of  management,  all  adjustments
      (consisting of normal recurring accruals)  considered necessary for a fair
      presentation  have been  included.  Operating  results for the  nine-month
      period ended March 31, 2000, are not necessarily indicative of the results
      that  may be  expected  for the year  ending  June  30,  2000,  due to the
      seasonal  nature of certain major  segments of our  business.  For further
      information,  refer to the  consolidated  financial  statements  and notes
      thereto included in the annual report on Form 10-K for the year ended June
      30, 1999.

      Future Accounting Requirements
      The Financial Accounting Standards Board has issued Statement of Financial
      Accounting  Standard  (SFAS)  No.  133  which  establishes   comprehensive
      accounting  and reporting  requirements  for  derivative  instruments  and
      hedging activities.  The standard requires companies to record derivatives
      on the balance sheet as assets or liabilities, measured at fair value. The
      accounting  for gains or losses  resulting  from  changes in the values of
      those  derivatives  is dependent on the use of the derivative and the type
      of risk being hedged. SFAS No. 137 was issued modifying the effective date
      for SFAS No. 133 to be for all  quarters of fiscal years  beginning  after
      June 15, 2000. At the present time, Agway has not completed its evaluation
      of the impact that the  adoption of these new  standards  will have on its
      consolidated financial statements.

      Reclassifications
      Certain  reclassifications  have been made to conform prior year financial
      statements with the current year presentation.





                                        7

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

          Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)
                             (Thousands of Dollars)


2.    AGWAY FINANCIAL CORPORATION
      ---------------------------
      Agway Financial  Corporation (AFC), a wholly owned subsidiary of Agway, is
      a  Delaware  corporation  incorporated  in 1986 with  principal  executive
      offices  located  in  Wilmington,   Delaware.   AFC's  principal  business
      activities  consist of securing  financing  through  bank  borrowings  and
      issuance  of  corporate  debt  instruments  to provide  funds for  general
      corporate  purposes  to Agway and AFC's  wholly  owned  subsidiary,  Agway
      Holdings Inc. (AHI), and AHI's subsidiaries.  The payment of principal and
      interest on this AFC debt is guaranteed by Agway.  This  guarantee is full
      and  unconditional,  and joint and several.  Telmark and Insurance finance
      their activities through operations and, in the case of Telmark, also with
      a combination of short- and long-term credit facilities.

      Major  holdings of AHI include Agway Energy  Products LLC and Agway Energy
      Services Inc. (Energy),  Telmark LLC and its subsidiaries  (Leasing),  and
      Agway  Insurance  Company  and  Agway  General  Agency  Inc.  (Insurance).
      Effective  June  26,  1999,  Agway  Consumer  Products  Inc.,  a  Delaware
      corporation  and former  holding of AHI, was merged into Agway Inc.  Agway
      Consumer  Products  Inc.  held the assets and business  operations  of the
      former Retail  segment and certain  assets and business  operations of the
      Country Products Group and Agriculture.  This merger into Agway aligns the
      legal  structure more closely with the  management  structure of Agway and
      facilitates   the   ability  to  manage   these   assets  and   businesses
      prospectively. The March 1999 results as shown below have been restated to
      reflect this merger.

      In exemptive relief granted pursuant to a "no action letter" issued by the
      staff of the SEC,  AFC is not required to file  periodic  reports with the
      SEC for itself but does report summarized financial information in Agway's
      financial statement footnotes. As required by the 1934 Act, the summarized
      financial information  concerning AFC and consolidated  subsidiaries is as
      follows:
<TABLE>
<CAPTION>

                                                           Three Months Ended                      Nine Months Ended
                                                               March 31,                                March 31,
                                                 ------------------------------------     ------------------------------------
                                                                          Restated                                 Restated
                                                       2000                 1999                2000                 1999
                                                 ----------------     ---------------     ----------------     ---------------


           <S>                                   <C>                  <C>                 <C>                  <C>
           Net sales and revenues..............  $       277,934      $      178,501      $       620,437      $       447,529
           Operating earnings (loss)...........           34,439              31,246               38,986               42,891
           Net earnings (loss).................           15,113              14,011               10,018                8,055
</TABLE>
<TABLE>
<CAPTION>

                                                                                              March 31,            June 30,
                                                                                                2000                 1999
                                                                                          ----------------     ---------------
           <S>                                                                            <C>                  <C>
           Current assets...............................................................  $       668,377      $       567,602
           Properties and equipment, net................................................           84,200               86,018
           Noncurrent assets............................................................          588,233              557,688
                                                                                          ----------------     ---------------
           Total assets.................................................................  $      1,340,810     $     1,211,308
                                                                                          ================     ===============

           Current liabilities..........................................................  $        103,330              67,391
           Short-term notes payable.....................................................           160,388              81,800
           Current installments of long-term debt.......................................            96,999              92,268
           Current installments of subordinated debt....................................            72,109              76,968
           Long-term debt...............................................................           262,312             264,021
           Subordinated debt............................................................           417,097             409,335
           Noncurrent liabilities.......................................................            22,879              23,262
           Shareholder's equity.........................................................           205,696             196,263
                                                                                          ----------------     ---------------
           Total liabilities and shareholder's equity...................................  $      1,340,810     $     1,211,308
                                                                                          ================     ===============
</TABLE>

                                        8

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

    Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
                             (Thousands of Dollars)

3.    BORROWING ARRANGEMENTS
      ----------------------
      As of March 31, 2000, Agway had certain facilities  available with banking
      institutions  whereby  lenders have agreed to provide funds up to $396,700
      to  separately  financed  units of Agway as  follows:  AFC -  $65,000  and
      Telmark - $331,700. In addition, AFC may issue up to $50,000 of commercial
      paper under the terms of a separate  agreement,  backed by a bank  standby
      letter of credit.

      AFC
      As of March 31,  2000,  AFC's  available  bank  facilities  consisted of a
      short-term  line of  credit.  This  facility  and AFC's  ability  to issue
      commercial paper require  collateralization using certain of the Company's
      accounts  receivable and  non-petroleum  inventories  ("collateral").  The
      maximum  amounts which can be drawn under these AFC agreements are subject
      to a limitation based on a specific calculation relating to the collateral
      available.  Adequate  collateral has existed throughout the fiscal year to
      permit  AFC to borrow  amounts to meet the  ongoing  needs of Agway and is
      expected to continue  to do so. The line of credit also  requires  Agway's
      investment  in bank stock as  additional  collateral.  Effective  for each
      quarter  commencing with the quarter ended March 2000, the bank agreements
      also limit available credit to a multiple of the 12-month rolling earnings
      as defined in the agreement.  The earnings level as measured at March 2000
      was  adequate to support the  borrowing  level  under the  agreements.  In
      addition,  the agreements include certain covenants,  the most restrictive
      of which  require Agway to maintain  specific  current  ratios,  quarterly
      levels of  interest  coverage,  and monthly  levels of  tangible  retained
      earnings.

      The Company's  long-term  revolving line of credit expired on December 31,
      1999,  and was not  renewed by the  banks.  This line had never been drawn
      upon.  The  short-term  line of credit and  commercial  paper program were
      renewed  through  December  2000  at  a  level   management   believes  is
      appropriate  and adequate to meet the Company's  normal ongoing  financing
      needs. Based on negotiations with the lenders, the terms, conditions,  and
      financial  covenants of these arrangements have been made more restrictive
      and costs have increased. Given the historical volatility of the Company's
      operating   results,   these  more  restrictive   covenants  increase  the
      possibility of future covenant violations. During the third quarter, Agway
      violated  a  financial  covenant  and  subsequently  obtained  appropriate
      waivers and amendments from its lenders.  The Company believes the lenders
      continue to be supportive of the Company,  and the Company expects to have
      ongoing  discussions with the lenders as management executes the Company's
      business plans.

      The specifics of the current arrangements are as follows:
<TABLE>
<CAPTION>

                                                                                             Outstanding
                                                             Available        ------------------------------------
                                                              3/31/00             3/31/00              6/30/99         Term Expires
                                                         ---------------      ---------------     ----------------     ------------

      <S>                                                <C>                  <C>                 <C>                      <C>
      Short-term line of credit*......................   $        65,000      $        28,700     $              0         12/31/00
      Commercial paper................................   $        50,000      $        50,000     $         38,500         12/31/00
</TABLE>

      *AFC's short-term line of credit facility  decreases to $50,000 at July 1,
      2000,  through  December  31,  2000,  to reflect  the  decline in seasonal
      financing needs and expected future financing requirements.

      In  addition,   Agway,  through  AFC,  offers  subordinated  money  market
      certificates  (and  previously  offered  subordinated  debentures)  to the
      public. AFC's subordinated debt is not redeemable by the holder.  However,
      AFC does have a practice  of  repurchasing  at face value,  plus  interest
      accrued at the stated rate,  certain  subordinated debt whenever presented
      for repurchase, although AFC can discontinue this practice of repurchasing
      at any time. The foregoing debt bears interest  payable  semi-annually  on
      January  l  and  July  1 of  each  year.  The  subordinated  money  market
      certificates  bear  interest  at a rate that is the  greater of the stated
      rate or a rate  based upon the  average  discount  rate for U.S.  Treasury
      Bills, with maturities of 26 weeks. Subordinated money market certificates
      due between October 2000 and October 2014 bear a weighted average interest
      rate of 7.9%, while subordinated debentures due between July 2001 and July
      2003 bear a weighted average interest rate of 8.0%.

                                        9

<PAGE>




                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

    Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
                             (Thousands of Dollars)


3.    BORROWING ARRANGEMENTS (continued)
      ----------------------------------
      Telmark
      As of March 31, 2000,  Telmark's  available  credit  facilities from banks
      allow  Telmark  to  borrow up to an  aggregate  of  $331,700.  Uncommitted
      short-term  line of  credit  agreements  permit  Telmark  to  borrow up to
      $81,700 on an uncollateralized basis with interest paid upon maturity. The
      lines bear interest at money market variable  rates. A committed  $250,000
      partially  collateralized revolving line of credit permits Telmark to draw
      short-term  funds bearing interest at money market rates or draw long-term
      debt at rates appropriate for the term of the note drawn. The total amount
      outstanding as of March 31, 2000, under the short-term lines of credit was
      $56,600 and under the revolving term loan facility was $205,100,  of which
      $180,000 was long-term.  As of June 30, 1999, the total amount outstanding
      was $35,000 under the  short-term  lines of credit and under the revolving
      term loan  facility was $156,300,  of which  $148,000 was  long-term.  The
      uncommitted  lines of credit  expire at various  times  within the next 12
      months, and the $250,000 revolving term loan facility is available through
      August 1, 2001.

      Telmark had balances  outstanding  on unsecured  senior notes from private
      placements  totaling  $122,000 at March 31, 2000, and $146,000 at June 30,
      1999.  The  principal  bears  interest at fixed rates ranging from 6.5% to
      7.6%. The principal payments commence November 2000 with final installment
      due in May 2004.  Interest is payable  semiannually  on each senior  note.
      Principal payments are both semiannual and annual. The note agreements are
      similar  to one  another  and each  contains  several  specific  financial
      covenants.

      Telmark,  through  two wholly  owned  special  purpose  subsidiaries,  has
      lease-backed  notes payable to insurance  companies that total $54,400 and
      $58,800 at March 31, 2000 and June 30, 1999, respectively.  Interest rates
      on different classes of these notes range from 6.5% to 7.6%. The notes are
      collateralized by leases, which Telmark sold to these subsidiaries, having
      an aggregate  present value of  contractual  lease  payments  equal to the
      principal  balance of the notes.  The final  scheduled  maturity  of these
      notes is December 2007.

      Telmark offers  subordinated  debentures to the public. The debentures are
      unsecured and subordinated to all senior debt at Telmark.  The interest on
      the debt is payable  quarterly on January 1, April 1, July 1 and October 1
      and is allowed to be reinvested.

      The Company's  long-term and  subordinated  debt  outstanding at March 31,
      2000, as compared to June 30, 1999, is as follows:
<TABLE>
<CAPTION>

                                                                         AFC
                                                 Agway          (excluding Telmark)            Telmark                  Total
                                          ------------------    --------------------    --------------------    --------------------
                                           3/00        6/99       3/00        6/99        3/00        6/99        3/00        6/99
                                          -------    -------    --------    --------    --------    --------    --------    --------

      <S>                                 <C>        <C>        <C>         <C>         <C>         <C>         <C>         <C>
      Long-term debt .................    $15,485    $17,827    $  2,893    $  3,488    $356,418    $352,801    $374,796    $374,116
      Currently payable ..............      3,250      2,431         802         807      96,197      91,461     100,249      94,699
                                          -------    -------    --------    --------    --------    --------    --------    --------
      Net long-term debt .............    $12,235    $15,396    $  2,091    $  2,681    $260,221    $261,340    $274,547    $279,417
                                          =======    =======    ========    ========    ========    ========    ========    ========

      Subordinated debt ..............    $     0    $     0    $444,677    $448,670    $ 44,529    $ 37,633    $489,206    $486,303
      Currently payable ..............          0          0      53,170      58,768      18,939      18,200      72,109      76,968
                                          -------    -------    --------    --------    --------    --------    --------    --------
      Net subordinated debt ..........    $     0    $     0    $391,507    $389,902    $ 25,590    $ 19,433    $417,097    $409,335
                                          =======    =======    ========    ========    ========    ========    ========    ========
</TABLE>




                                       10

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

    Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
                             (Thousands of Dollars)


4.    COMMITMENTS AND CONTINGENCIES
      -----------------------------
      Environmental
      Agway and its  subsidiaries  are subject to various laws and  governmental
      regulations concerning  environmental matters. We expect to be required to
      expend funds to participate in the remediation of certain sites, including
      sites where we have been designated by the Environmental Protection Agency
      (EPA) as a  potentially  responsible  party (PRP) under the  Comprehensive
      Environmental Response,  Compensation and Liability Act (CERCLA) and sites
      with  underground  fuel storage  tanks.  We will also incur other expenses
      associated with environmental compliance.

      Agway is  designated  as a PRP  under  CERCLA  or as a third  party to the
      original PRPs in several  Superfund  sites.  The liability under CERCLA is
      joint and  several,  meaning that Agway could be required to pay in excess
      of its pro rata share of remediation costs.  Agway's  understanding of the
      financial  strength  of  other  PRPs at  these  Superfund  sites  has been
      considered,   where   appropriate,   in  determination  of  its  estimated
      liability.

      We  continually   monitor  our   operations   with  respect  to  potential
      environmental issues,  including changes in legally mandated standards and
      remediation  technologies.   Agway's  recorded  liability  reflects  those
      specific issues where  remediation  activities are currently  deemed to be
      probable and where the cost of remediation can be estimated.  Estimates of
      the extent of our degree of  responsibility  of a particular  site and the
      method and ultimate cost of  remediation  require a number of  assumptions
      for which the ultimate outcome may differ from current estimates. However,
      we believe that past experience provides a reasonable basis for estimating
      our liability. As additional information becomes available,  estimates are
      adjusted as necessary. While we do not anticipate that any such adjustment
      would be material to our financial  statements,  it is reasonably possible
      that the result of ongoing  and/or future  environmental  studies or other
      factors  could  alter  this  expectation  and  require  the  recording  of
      additional  liabilities.  The  extent or amount  of such  events,  if any,
      cannot be  estimated  at this  time.  The  settlement  of the  liabilities
      established will cause future cash outlays over  approximately  five years
      based upon current  estimates,  and it is not  expected  that such outlays
      will materially impact Agway's liquidity position.

      Other
      Agway  is also  subject  to  various  investigations,  claims,  and  legal
      proceedings  covering a wide range of matters  that arise in the  ordinary
      course of our  business  activities.  Each of these  matters is subject to
      various  uncertainties,  and it is possible that some of these matters may
      be resolved unfavorably to Agway. We have established accruals for matters
      for which payment is probable and amounts reasonably estimable. Management
      believes any liability that may  ultimately  result from the resolution of
      these matters in excess of amounts  provided under the above stated policy
      will not have a material adverse effect on the financial position, results
      of operations, or liquidity of Agway.



                                       11

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

    Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
                             (Thousands of Dollars)


5.    FINANCIAL INFORMATION CONCERNING SEGMENT REPORTING
      --------------------------------------------------
      Agway is an agricultural  cooperative  directly engaged in  manufacturing,
      processing, distribution, and marketing of agricultural feed and agronomic
      products  and  services  for  its   farmer-members  and  other  customers,
      primarily in the  northeastern  United States and Ohio.  Agway reports its
      operations principally in five business segments. Total sales and revenues
      of each  industry  segment  includes  the sale of products and services to
      unaffiliated  customers,  as reported in the Agway consolidated statements
      of  operations,  as well as sales to other  segments  of Agway  which  are
      competitively priced.

      The Other  category  within the  summary  of  business  segments  includes
      intersegment  eliminations  and  interest.  The category also includes net
      corporate  expenses and pension income.  Finally,  interest income for the
      Leasing segment is reported as "Net Sales and Revenues."
<TABLE>
<CAPTION>

                                                                        Three Months Ended March 31, 2000
                                         -------------------------------------------------------------------------------------------
                                                         Country
                                                         Products
                                         Agriculture      Group        Energy      Leasing     Insurance     Other(a)   Consolidated
                                         -----------   ----------   ----------    ----------   ----------   ----------  ------------
<S>                                      <C>           <C>          <C>           <C>          <C>          <C>          <C>
Net sales and revenues to
  unaffiliated customers .............   $   150,653   $   51,240   $  237,077    $   19,184   $    6,629   $       25   $   464,808
Intersegment sales and
  revenues ...........................           131        2,113          130            80            0       (2,454)            0
                                         -----------   ----------   ----------    ----------   ----------   ----------   -----------
    Total sales and revenues .........   $   150,784   $   53,353   $  237,207    $   19,264   $    6,629   $   (2,429)  $   464,808
                                         ===========   ==========   ==========    ==========   ==========   ==========   ===========

Earnings (loss) before
   income taxes ......................   $   (12,034)  $   (1,636)   $   25,158   $    5,845   $       78   $   (1,735)  $    15,676
                                         ===========   ==========    ==========   ==========   ==========   ==========   ===========

Total assets .........................   $   366,073   $   88,188    $  191,784   $  638,897   $   55,001   $  243,861   $ 1,583,804
                                         ===========   ==========    ==========   ==========   ==========   ==========   ===========
<CAPTION>


                                                                        Three Months Ended March 31, 1999
                                         -------------------------------------------------------------------------------------------
                                                         Country
                                                         Products
                                         Agriculture      Group        Energy      Leasing     Insurance     Other(a)   Consolidated
                                         -----------   ----------    ----------   ----------   ----------   ----------  ------------
<S>                                      <C>           <C>           <C>          <C>          <C>          <C>          <C>
Net sales and revenues to
  unaffiliated customers .............   $   145,627   $   39,979    $  147,700   $   17,262   $    6,505   $      (52)  $   357,021
Intersegment sales and
  revenues ...........................            29        2,144           151            7            0       (2,331)            0
                                         -----------   ----------    ----------   ----------   ----------   ----------   -----------
   Total sales and revenues ..........   $   145,656   $   42,123    $  147,851   $   17,269   $    6,505   $   (2,383)  $   357,021
                                         ===========   ==========    ==========   ==========   ==========   ==========   ===========

Earnings (loss) before
   income taxes ......................   $   (19,723)  $     (656)   $   21,816   $    5,758   $       34   $      (96)  $     7,133
                                         ===========   ==========    ==========   ==========   ==========   ==========   ===========

Total assets .........................   $   378,143   $   65,850    $  144,456   $  556,003   $   53,082   $  242,466   $ 1,440,000
                                         ===========   ==========    ==========   ==========   ==========   ==========   ===========

</TABLE>

(a)    Represents unallocated net corporate items and intersegment eliminations.


                                       12

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

    Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
                             (Thousands of Dollars)


5.    FINANCIAL INFORMATION CONCERNING SEGMENT REPORTING (continued)
      --------------------------------------------------------------
<TABLE>
<CAPTION>


                                                                      Nine Months Ended March 31, 2000
                                        -------------------------------------------------------------------------------------------
                                                         Country
                                                         Products
                                        Agriculture       Group         Energy     Leasing     Insurance   Other(a)     Consolidated
                                        -----------    -----------    ---------    --------    ---------  ---------     ------------
<S>                                     <C>            <C>            <C>          <C>         <C>        <C>           <C>
Net sales and revenues to
  unaffiliated customers ...........    $   440,183    $   137,056    $ 507,343    $ 56,501    $  20,589  $      28     $ 1,161,700
Intersegment sales and
  revenues .........................            819          9,230          329          91            0    (10,469)              0
                                        -----------    -----------    ---------    --------    ---------  ---------     -----------
    Total sales and revenues .......    $   441,002    $   146,286    $ 507,672    $ 56,592    $  20,589  $ (10,441)    $ 1,161,700
                                        ===========    ===========    =========    ========    =========  =========     ===========

Earnings (loss) before
   income taxes ....................    $   (43,315)   $    (2,326)   $  19,267    $ 14,244    $      71  $ (11,446)    $   (23,505)
                                        ===========    ===========    =========    ========    =========  =========     ===========

Total assets .......................    $   366,073    $    88,188    $ 191,784    $638,897    $  55,001  $ 243,861     $ 1,583,804
                                        ===========    ===========    =========    ========    =========  =========     ===========
<CAPTION>


                                                                      Nine Months Ended March 31, 1999
                                        -------------------------------------------------------------------------------------------
                                                         Country
                                                         Products
                                        Agriculture       Group         Energy     Leasing     Insurance    Other(a)    Consolidated
                                        -----------    -----------    ---------    --------    ---------   ---------    ------------
<S>                                     <C>            <C>            <C>          <C>         <C>         <C>          <C>
Net sales and revenues to
  unaffiliated customers ...........    $   439,265    $   113,472    $ 351,881    $ 51,745    $  21,068   $       8    $   977,439
Intersegment sales and
  revenues .........................             78          8,702          397          20            0      (9,197)             0
                                        -----------    -----------    ---------    --------    ---------   ---------    -----------
   Total sales and revenues ........    $   439,343    $   122,174    $ 352,278    $ 51,765    $  21,068   $  (9,189)   $   977,439
                                        ===========    ===========    =========    ========    =========   =========    ===========

Earnings (loss) before
   income taxes ....................    $   (53,469)   $    12,678    $  19,376    $ 13,199    $    (154)  $  (4,036)   $   (12,406)
                                        ===========    ===========    =========    ========    =========   =========    ===========

Total assets .......................    $   378,143    $    65,850    $ 144,456    $556,003    $  53,082   $ 242,466    $ 1,440,000
                                        ===========    ===========    =========    ========    =========   =========    ===========
</TABLE>


(a)    Represents unallocated net corporate items and intersegment eliminations.




                                       13

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

    Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
                             (Thousands of Dollars)


6.    RETAIL RESTRUCTURING PLAN
      -------------------------
      On October 19, 1999, the Board of Directors approved a plan to restructure
      the retail  operations  within Agway's  Agriculture  segment.  The plan is
      intended to improve the  operating  results in our retail  operations  and
      provide a greater  opportunity  to meet  customer  needs with  products we
      manufacture and sell. The  restructuring is focused on converting  Agway's
      retail distribution into a dealer-based system by converting a majority of
      the Agway-operated retail stores into dealer-operated stores and by adding
      additional retail dealer-operated stores to the currently operating retail
      dealer system.  As of the beginning of the current fiscal year, there were
      approximately 160 Agway-operated stores and 300 retail dealer stores. This
      conversion  of  Agway-operated  stores  is  taking  place in a  series  of
      transactions  with numerous  counter-parties.  Certain locations are being
      sold for alternative uses. During this transition period which affects two
      fiscal  years,  we  expect  continued  operating  losses  from our  retail
      operations,  but at a reduced  level as compared to the prior year.  There
      have been and will  continue to be costs for such items as  severance  pay
      and inventory  liquidation.  Further, there have been and will continue to
      be gains and losses  related  to the sale or  conversion  of these  retail
      business  locations.  The level of gain or loss is being  determined  on a
      transaction-by-transaction  basis  over the  transition  period and cannot
      presently be reasonably  estimated for all locations.  As costs associated
      with  these   restructuring   transactions  become  probable  and  can  be
      reasonably estimated, they are being accrued.

      In the third quarter, the retail restructuring efforts have resulted in 30
      stores being converted to dealers, 6 stores/properties being sold, 1 store
      being closed, and 21 new wholesale dealers being established.  The efforts
      to date  have  resulted  in 41  stores  being  converted  to  dealers,  18
      stores/properties being sold, 11 stores being closed, and 80 new wholesale
      dealers being  established.  Additionally,  approximately 70 locations are
      currently  under  negotiations,  some of which have a commitment in place.
      This  activity has  generated  approximately  $13,100 in net cash from the
      sale of fixed assets and inventory.  The following  represents the gain or
      loss from the retail  restructuring  for the periods ended March 31, 2000,
      including  estimated  losses of $800  accrued as of that date for business
      locations  where  transactions  are probable and losses can  reasonably be
      estimated:
<TABLE>
<CAPTION>

                                                                                                    Three                     Nine
                                                                                                   Months                    Months
                                                                                                    Ended                     Ended
                                                                                                   3/31/00                  3/31/00
                                                                                                   -------                  -------

      <S>                                                                                          <C>                      <C>
      Net gain on sale of assets .................................................                 $ 1,500                  $ 3,400
      Loss on sale/liquidation of inventory ......................................                  (1,900)                  (2,700)
      Severance costs ............................................................                    (100)                    (200)
      Other transaction costs(1) .................................................                    (400)                    (800)
                                                                                                   -------                  -------
           Net gain (loss) on restructuring activity .............................                 $  (900)                 $  (300)
                                                                                                   =======                  =======
</TABLE>

           (1)  Other  transaction  costs  include  items  such as  professional
           services fees, environmental surveys and advertising.

      In addition to the above costs, a $5,800  non-cash  charge to earnings was
      accrued in the corporate accounts ("other segments") in the second quarter
      to  recognize  the effect of the retail plan on the  Company's  retirement
      benefit plans in accordance with curtailment accounting requirements.


                                       14

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


RESULTS OF OPERATIONS
---------------------
Agway is including the following  cautionary statement in this Form 10-Q to make
applicable  and take  advantage of the "safe  harbor"  provisions of the Private
Securities Litigation Reform Act of 1995 for any forward-looking  statement made
by, or on behalf of, Agway. Where any such forward-looking  statement includes a
statement of the assumptions or basis underlying such forward-looking statement,
Agway  cautions  that,  while  it  believes  such  assumptions  or  basis  to be
reasonable  and makes them in good faith,  assumed  facts or basis almost always
vary from actual results, and the differences between assumed facts or basis and
actual results can be material, depending upon the circumstances.  Where, in any
forward-looking statement, Agway, or its management, expresses an expectation or
belief as to future  results,  such  expectation  or belief is expressed in good
faith and  believed to have a  reasonable  basis,  but there can be no assurance
that the  statement  of  expectation  or belief  will  result or be  achieved or
accomplished.  The words "intend,"  "believe,"  "expect," and  "anticipate"  and
phrases  "it is  probable"  and "it is  possible"  or  similar  words or phrases
identify forward-looking statements.

Agway's net sales and revenues and operating results are significantly  impacted
by seasonal  fluctuations due to the nature of its operations and the geographic
location of its service area, which is primarily the northeastern United States.
Agriculture  net sales and  revenues are  traditionally  higher in the spring as
customers  acquire  products to initiate the growing  season.  Energy  generally
realizes significantly higher net sales and revenues in the winter months due to
the higher demand from cold winter conditions.  Country Products Group, Leasing,
and Insurance are not materially impacted by seasonal fluctuations.

Numbers in the  following  narrative  have been  rounded to the nearest  hundred
thousand.

Consolidated Results
--------------------
Consolidated net sales and revenues of $464,800 and $1,161,700 for the three and
nine months ended March 31, 2000,  increased  $107,800 (30%) and $184,300 (19%),
respectively,  as compared to the same periods in the prior year.  The increases
in both the three-month and nine-month  periods were substantially the result of
increased sales in the Energy and Country Products Group segments.  The increase
in Energy was  principally  due to increases  in the cost of petroleum  products
over the prior year combined with volume  improvements.  The increase in Country
Products  Group sales  resulted  from new  acquisitions  in its Produce  Group's
operations.  The sales  increases  during the three months ended March 31, 2000,
were  further  enhanced by  increased  sales in the  Agriculture  segment in the
agronomy  business from early spring weather and from improved  wholesale dealer
sales, a direct result of the Agriculture segment concentrating on enhancing its
relationship with these dealers. The Company's sales increases in the nine-month
period ended March 31, 2000, were further enhanced by the Leasing segment, which
had improvement from continued growth of the lease portfolio.



                                       15

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Consolidated Results (continued)
--------------------------------
Consolidated  pre-tax  earnings of $15,700 for the three  months ended March 31,
2000,  increased  $8,500  (120%)  over  the  same  period  in  the  prior  year.
Consolidated  pre-tax loss from  operations of $23,500 for the nine months ended
March 31, 2000,  increased  $11,100  (90%) as compared to the same period in the
prior year.  From  operations,  the three months ended March 31, 2000,  improved
$10,200  (140%)  over the  prior  year.  Improvements  in  Agriculture,  Energy,
Leasing,  and  Insurance  were  partially  offset by the  decreases  in  Country
Products Group.  Increased net corporate costs further reduced pre-tax  earnings
for the three-month  period. For the nine months ended March 31, 2000,  business
unit operating  results  improved $7,000 (37%) as compared to the same period in
the prior year.  Operating  result  improvements  in Agriculture,  Leasing,  and
Insurance  were  partially  offset by reduced  earnings  from  operations in the
Country Products Group.  Energy earnings for nine months were equivalent to last
year. The two principal  reasons for the difference in pre-tax  earnings for the
nine-month period are a $10,700 net improvement to results recorded in the first
quarter  of last  year on the CPG sale of  Allied  Seed  and a  $5,800  non-cash
corporate-level  charge  to  earnings  in the  second  quarter  of this  year to
currently recognize the effect of the retail restructuring plan on the Company's
retirement benefit plans in accordance with curtailment accounting requirements.
See the detailed business segment discussion below.

Agriculture
-----------
Total  Agriculture sales and revenues of $150,800 and $441,000 for the three and
nine  months  ended  March 31,  2000,  increased  $5,100  (4%) and $1,700  (0%),
respectively, as compared to the same periods in the prior year.

The  increase  in sales for the  three-month  period  was due  principally  from
increased sales in the enterprise agronomy business ,direct marketing sales, and
in the  wholesale  dealer  sales,  which were  partially  offset by decreases in
enterprise retail sales and in the enterprise feed business. Enterprise agronomy
sales increased $4,900 (28%) for the three-month  period as compared to the same
period in the prior year as early  spring  weather in the  southern  portions of
Agway's  market  territory  has  moved  some  crop-related   services  typically
performed in the fourth quarter into the third quarter.  Direct  marketing sales
increased $2,100 (10%) for the three-month period as compared to the same period
in the prior  year.  The  continued  growth  in the  commercial  vegetable  seed
business and increased direct  fertilizer sales from a greater emphasis on these
sales increased  agronomy-related  direct marketing sales by $5,100 (31%) in the
third quarter.  These agronomy direct marketing  increases were partially offset
by a decline in feed-related direct marketing sales of $3,100 (60%) in the third
quarter,  substantially due to a planned reduction of grain marketing operations
during the first nine months of this year. The wholesale  dealer sales increased
$4,700  (33%) in the third  quarter as  compared to the same period in the prior
year,  principally from improved relationships with existing dealers and from an
increase in new dealers as a result of the retail  restructuring  plan initiated
in the second quarter of this year.  (See Note 6 of the  consolidated  financial
statements for more  discussion on the retail  restructuring  plan.) These sales
improvements  in the third  quarter  were  partially  offset  by a $5,600  (16%)
decline in  enterprise  retail sales in the third  quarter,  from planned  store
conversions and closings  associated with the retail  restructuring  plan, and a
$900 (2%)  decline  in the  third  quarter  in  enterprise  feed  sales due to a
combination of slightly lower volume and lower sales dollars per ton.

For the nine-month  period,  we experienced  increased  enterprise feed sales of
$2,500 (2%) on the strength of a unit volume increase of 3% over the same period
in the prior year and  increases in  wholesale  dealer sales of $7,300 (18%) for
the same reasons as explained above. These increases were  substantially  offset
by an $8,300 (6%)  decrease in  enterprise  retail sales from the planned  store
closings and conversions noted above.





                                       16

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Agriculture (continued)
-----------------------
Agriculture  pre-tax  loss of $12,000  and $43,300 for the three and nine months
ended March 31, 2000, decreased $7,700 (39%) and $10,200 (19%), respectively, as
compared to the same periods in the prior year.

The improvement to pre-tax results in the three-month  period as compared to the
same  period in the prior  year  resulted  from  improved  operating  results in
enterprise  agronomy of $1,700 (42%) and in direct  marketing of $1,300  (314%),
reduced  support  costs of $2,500  and a  negotiated  settlement  of $3,300  for
amounts due the  Company on claims  from prior  years'  business  activity.  The
improvement to enterprise agronomy pre-tax earnings resulted  substantially from
improved product margins resulting from the early spring sales. Direct marketing
improvements are due to a combination of improved results in the seed operations
and an  increase  in direct  marketing  earnings,  principally  related to grain
marketing losses of $600 (which occurred last year from unauthorized speculative
transactions)  that impacted  direct  marketing  earnings during the three-month
period.  Reduced  support  costs  result  from the  consolidation  of the retail
structure  and  management  into the  enterprises  and the  wholesale  operation
restructuring  which took place in April  1999.  These  improvements  to pre-tax
results were  partially  offset by a $1,200 (21%)  decrease in  enterprise  feed
operations  due to higher  commodity and higher  operating  expenses than in the
prior year.

The  improvements to pre-tax  results for the nine-month  period ended March 31,
2000,  as  compared  to the same  period in the prior  year,  are from  improved
results  of  $3,400  (40%) in  direct  marketing,  $3,200  (223%)  in  wholesale
operations,  $1,200 (12%) in enterprise agronomy, a $4,200 decline in retail and
administrative  support costs, and $3,300 from a favorable litigation settlement
in the third quarter of this year. These  improvements  were partially offset by
declines of $3,100  (19%) in  enterprise  feed and $2,000  (482%) in  enterprise
retail operating results.  Direct marketing improved  substantially due to lower
losses in the grain  marketing  operations as operating  losses  decreased  from
$5,900 in the first nine  months of the prior year to $1,900 for the same period
in the current year. As disclosed in the Company's Form 10-K for the fiscal year
ended June 30,  1999,  net pre-tax  losses  totaling  $5,600  from  unauthorized
speculative  activity  occurred  in the first  nine  months  of  fiscal  1999 as
compared  to the  current  year loss,  where  $1,300 of costs were  incurred  in
closing the unauthorized speculative positions that were outstanding at June 30,
1999.  The  wholesale   operations   improvements  and  decline  in  retail  and
administrative   support   costs   results  from  the  reduced  costs  from  the
consolidation of the retail structure and management into the enterprise and the
wholesale operations  restructuring which took place in April 1999. The earnings
fluctuations  in the enterprise  agronomy,  retail support cost and,  enterprise
feed operations were for the same reasons as in the three-month period described
above.



                                       17

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)

Country Products Group
----------------------
Country  Products  Group (CPG) total sales and  revenues of $53,400 and $146,300
for the three and nine months ended March 31, 2000,  increased $11,200 (27%) and
$24,100 (20%), respectively,  as compared to the same periods in the prior year.
The growth in CPG sales over the prior year in the three- and nine-month periods
was  substantially  in the Produce  Group,  where sales in this group  increased
$13,100 (48%) and $26,700 (35%), respectively. Of the Produce Group sales growth
in the three- and nine-month periods, $12,500 and $25,900, respectively, was due
to the  acquisition  of new produce  businesses  in the second half of the prior
year and in the first half of the current year.  The sales growth in the Produce
Group was partially  offset by declines in sales in the Business Group of $2,100
(14%) for the three- month period and $2,700 (6%) for the nine-month period. The
Business  Group sales decline  resulted  principally  from a poor sunflower seed
crop this year.

CPG  pre-tax  losses of $1,600 and $2,300  for the three and nine  months  ended
March 31, 2000, are compared to a pre- tax loss of $700 and pre-tax  earnings of
$12,700  for the same  periods in the prior year.  The prior year first  quarter
earnings  included a $10,700 net improvement in results  relating to the sale of
Allied seed  business.  CPG earnings  from ongoing  operations  declined  $1,000
(144%) and $4,600 (219%) for the three- and nine-month periods, respectively, as
compared  to the same  periods in the prior  year.  In the  three-month  and the
nine-month  periods,  pre-tax  earnings  related to the Business  Group declined
$1,000 (216%) and $1,700 (79%),  respectively.  The Business  Group's  sunflower
operations  experienced  lower  margins due to high  product  costs in the first
quarter  and  increased  production  costs  in the  second  and  third  quarters
associated  with a poor  sunflower  crop  harvest  in the fall of 1999  that was
widespread in its territory due to adverse growing  conditions.  For the Produce
Group,  gross margin from increased  sales was at a lower percent than the prior
year and was more than  offset by  additional  costs,  principally  from the new
produce operations. Consequently, the Produce Group's pre-tax earnings decreased
$300 (63%) and $1,500 (46%) for the three- and nine-month periods, respectively.
CPG's  Investment  Group  experienced  a decrease in pre-tax  loss for the third
quarter  of  $300  (26%)  which  was  substantially  due to a  write-down  of an
investment  made in the third  quarter of the prior year, an increase in pre-tax
loss of $1,600 (69%) for the nine-month period as compared to the same period in
the prior year occurred as the Investment Group continues to incur costs related
to several of its initiatives for future growth.

Energy
------
Energy sales and revenues of $237,200 and $507,700 for the three and nine months
ended March 31, 2000, increased $89,400 (60%) and $155,400 (44%),  respectively,
as  compared  to the same  periods  in the prior  year.  Overall,  sales  dollar
increases from product volume  increases were $3,900 (3%) during the three-month
period and $12,300 (4%) during the nine-month period, respectively,  as compared
to the same  periods  in the prior  year.  The  petroleum  industry  experienced
enormous  increases in the pricing of product in the third  quarter  ended March
31, 2000.  Pressures on global supply caused a sudden spike in these commodities
prices and, as a result, Energy experienced sales dollars increases due to price
of  $79,200  (54%)  for  the  three-month  period  and  $128,600  (37%)  for the
nine-month  period.  Additionally,  sales increases in the three and nine months
ended March 31, 2000,  of $6,300 and $14,500,  respectively,  resulted  from the
continued  growth of  revenues  in  heating,  ventilation  and  air-conditioning
installation  and service sales and  continued  sales growth in the electric and
natural gas marketing business.

                                       18

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


Energy (continued)
------------------
Energy  pre-tax  earnings of $25,200  and $19,300 for the three- and  nine-month
periods ended March 31, 2000,  increased  $3,300 (15%) and decreased  $100 (1%),
respectively,  as compared to the same periods in the prior year.  In the three-
and nine-month periods,  overall gross margin dollars increased $7,700 (12%) and
$10,500  (8%),  respectively,  over the same  periods in the prior year and were
driven by the  continued  growth in heating,  ventilation  and  air-conditioning
sales and  services  and the  increase in liquid  product  volume  with  margins
comparable with the prior year. The improved gross margin dollars, however, were
partially  offset in the three- and  nine-month  periods by  increases  in total
operating expenses of $3,100 (7%) and $8,800 (8%), respectively,  as compared to
the same periods in the prior year.  Payroll costs associated with the increased
service  sales  and  unit  volume  as well as  increased  administrative  costs,
principally  information  systems cost from  implementation  of a new  operating
system and automotive  costs,  increased  overall operating costs from the prior
year.

Leasing
-------
Total revenue of $19,300 and $56,600 for the three- and nine-month periods ended
March 31,  2000,  increased  $2,000  (12%) and  $4,800  (9%),  respectively,  as
compared to the same periods in the prior year.  These  increases were primarily
due to a higher average  investment in leases which was partly offset by a lower
income rate on new and replacement  leases.  Telmark's average net investment in
leases  increased  $71,000 (13%) in the three-month  period and $64,800 (12%) in
the nine-month period as compared to the same periods in the prior year.

Pre-tax  earnings  from  operations of $5,800 and $14,200 for the three and nine
months ended March 31, 2000, increased $100 (2%) and $1,000 (8%),  respectively,
as compared to the same periods in the prior year.  The total revenue  increases
noted above were  partially  offset by an  increase in total  expenses of $l,900
(17%) for the three  months and $3,800 (10%) for the nine months ended March 31,
2000,  as compared to the same periods in the prior year.  The increase in total
expenses for both periods was substantially  due to increased  interest expense.
The  increased  interest  expense  is due to an  increase  in the amount of debt
required to finance the increase in the lease  portfolio as compared to the same
periods in the prior year,  partially  offset by lower interest rates on new and
replacement debt.

Insurance
---------
Insurance Group net revenues of $6,600 and $20,600 for the three- and nine-month
periods ended March 31, 2000, increased $100 (2%) for the three-month period and
decreased $500 (2%) for the nine-month period as compared to the same periods in
the prior year.  These changes were  experienced in net earned premiums of Agway
Insurance  Company.  Reinsurance  premiums,  which reduce earned revenues,  were
lower in the three-month period as compared to the same period in the prior year
due to a large reinstatement premium occurring in the third quarter of the prior
year due to unfavorable losses,  while no comparable  reinstatement  premium was
required in the current year. Reinsurance premiums were higher in the nine-month
period of the  current  year as  compared  to the same period in the prior year.
Higher  reinsurance  premiums  for the  nine-month  period are due to  favorable
claims  development   during  the  prior  year  in  the  1995   experience-rated
reinsurance contract,  which resulted in lower reinsurance premium cost incurred
by the Insurance Company in the prior year.

Pre-tax  earnings of the  Insurance  Company of $200 and $500 for the three- and
nine-month  periods ended March 31, 2000,  increased $100 (40%) and $300 (150%),
respectively, as compared to the same periods in the prior year. The improvement
in pre-tax  earnings for the three-month  period resulted from the increased net
earned  premiums  (while losses and expenses were comparable to the prior year).
The Agway General  Agency  experienced  pre-tax  losses of $100 and $400 for the
three and nine months ended March 31, 2000, which represent the same results for
the three  months and the nine months  ended as compared to the same  periods in
the prior year.


                                       19

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)


LIQUIDITY AND CAPITAL RESOURCES
-------------------------------
Cash  generated  from external  borrowings  and/or  operations are Agway's major
ongoing sources of funds to finance capital improvements, business acquisitions,
shareholder  dividends,  and a growing lease portfolio at Telmark. The following
is a summary of net cash flows for the nine months ended March 31:
<TABLE>
<CAPTION>
                                                                                                                           Increase
                                                                                   2000                 1999              (Decrease)
                                                                                 --------             --------             --------
<S>                                                                              <C>                  <C>                  <C>
Net cash flows provided by (used in):
      Operating activities ..........................................            $ (2,693)            $ 48,316             $(51,009)
      Investing activities ..........................................             (71,052)             (43,046)             (28,006)
      Financing activities ..........................................              73,745               (5,270)              79,015
                                                                                 --------             --------             --------
Net increase (decrease) in cash and equivalents .....................            $      0             $      0             $      0
                                                                                 ========             ========             ========
</TABLE>

Cash Flows Provided By Operating Activities
The decrease in cash flows provided by operating  activities for the nine months
ended  March 31,  2000,  of $51,000 is  substantially  due to changes in working
capital.  In the first nine months of this year,  working capital generated cash
of $7,100,  while for the same time  period in the prior year,  working  capital
generated cash of $63,500. The Energy business is the reason for the significant
decrease in cash  generated from working  capital  activities.  The  significant
increase in cost of energy commodities in the first nine months of this year has
increased  the cash needs for  inventory  by $15,200 in the first nine months of
this year as compared to inventory  balances declining $600 over the same period
in the prior year. Also,  receivable  balances increased by $41,200 in the first
nine months of this year as compared to a $3,400  increase  over the same period
in the prior year. The Energy  working  capital needs  historically  peak in the
third quarter due to the seasonal  nature of our heating oil and propane heating
business.  Consequently,  reduced Energy  working  capital  requirements  in the
fourth quarter are expected to generate cash.

Cash Flows Used In Investing Activities
The net cash  flows used in  investing  activities  increased  in the first nine
months of this year by $28,000 as compared to the first nine months of the prior
year.  Cash of $14,200 was generated  during the first quarter of the prior year
from the sale of the Allied Seed business,  where no comparable sale occurred in
the current  year,  and there was a $18,900  greater net  investment  in Telmark
leases  in the  first  nine  months  of this year  compared  to last  year.  The
increased  generation  of cash of $8,000 from the sale of fixed  assets,  mainly
attributable to the retail restructuring, partially reduced the need for cash in
the first nine months of the year.

Cash Flows Provided By (Used In) Financing Activities
Financing  activities for the nine months ended March 31, 2000, provided cash of
$73,700 compared to net cash used to pay down debt of $5,300 for the same period
in the prior year. This $79,000 change in cash related to financing activity was
substantially from increased  short-term  borrowings and long-term debt to cover
the changed requirements for cash for operations and investing activities.

The Company  finances its  operations  and the  operations of all its continuing
business and subsidiaries, except Insurance and Telmark, through Agway Financial
Corporation  (AFC).  External sources of short-term  financing for Agway and all
its other  continuing  operations  include  revolving  credit lines,  letters of
credit,  and a commercial  paper  program.  Insurance  finances  its  activities
through  operations.  Telmark's  finance  arrangements  are explained in Note 3,
Borrowing  Arrangements,  to the  Condensed  Financial  Statements.  The Company
believes its borrowing  arrangements  are  appropriate  and adequate to meet the
normal ongoing financing needs of the Company.



                                       20

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
                            AND RESULTS OF OPERATIONS
                                   (Unaudited)
                             (Thousands of Dollars)

LIQUIDITY AND CAPITAL RESOURCES (continued)
-------------------------------------------
Sources of longer-term financing include the following as of March 31, 2000:
<TABLE>
<CAPTION>
                                                                                                 AFC
                                                                                Agway        (excluding
Source of debt                                                                   Inc.         Telmark)       Telmark          Total
--------------                                                                  -------       --------       --------       --------
<S>                                                                             <C>           <C>            <C>            <C>
Banks - due 5/00 to 4/04, interest at a weighted average
   rate of 6.9% with a range of 5.6% - 8.6% .............................       $     0       $    700       $180,000       $180,700
Insurance companies - due 4/00 to 3/07, interest at a
   weighted average rate of 6.8% with a range of
   6.5% - 7.6% ..........................................................             0              0        176,418        176,418
Capital leases and other - due 2000 to 2018, interest at a
   weighted average rate of 9.3% with a range of 6% to 12% ..............        15,485          2,193              0         17,678
                                                                                -------       --------       --------       --------
      Long-term debt ....................................................        15,485          2,893        356,418        374,796
Subordinated  money  market  certificates  - due 10/00 to 10/14,
   interest at a weighted average rate of 8.0% with a range of
   4.5% - 9.5% ..........................................................             0        437,383              0        437,383
Subordinated debentures - due 3/01 to 7/03, interest at a
   weighted average rate of 8.0% with a range of 6.0%
   to 8.5% ..............................................................             0          7,294         44,529         51,823
                                                                                -------       --------       --------       --------
      Total debt ........................................................       $15,485       $447,570       $400,947       $864,002
                                                                                =======       ========       ========       ========
</TABLE>

For a further description of the Company's credit facilities  available at March
31, 2000, see Note 3 to the Condensed Consolidated Financial Statements.

OTHER MATTERS
-------------
Year 2000
As previously  disclosed,  Agway initiated its year 2000 efforts in January 1996
and completed  extensive work to assure that the Company's  operations  were not
impacted by the century date change as of January 1, 2000.

Our efforts focused on information system  modification or replacement,  as well
as a review of all other areas  within the Company  that may be impacted by this
event.  Business contingency and continuity plans were developed,  and a command
center was established to monitor and react to critical business  interruptions,
if any, either prior or subsequent to the millennium date change.

The Company  reports it had no material  issues  relating to the millennium date
change on January 1, 2000,  the leap year on February  29, 2000,  the  month-end
processing,  and the  quarter-end  processing.  Based on this experience and the
amount  of work  and  testing  we have  previously  performed,  we  believe  the
likelihood of a year 2000 issue that would have a material effect on the results
of operations,  liquidity,  or financial  condition continues to be remote as we
run year-end programs.

The Company's cost estimates relating to year 2000 efforts reflect the fact that
no issues have arisen to date. The  conversion  and testing of existing  systems
and the  replacement of systems are estimated to cost the Company  approximately
$15,900,  of which  85% has  been  capitalized.  Additionally,  the cost to have
remediated all other areas of the Company was approximately $2,500.

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

FUTURE ACCOUNTING REQUIREMENTS
------------------------------
See Note 1 to the Condensed Consolidated Financial Statements.

                                       21

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
                                   (Unaudited)
                             (Thousands of Dollars)


COMMODITY PRICE EXPOSURE
------------------------
In its normal course of operations, Agway has exposure to market risk from price
fluctuations  associated with commodity inventories,  product gross margins, and
anticipated transactions in its Agriculture and Energy businesses. To manage the
risk of market price fluctuations,  Agway uses commodity derivative instruments,
including commodity instruments  available through a regulated exchange,  option
contracts and, in limited circumstances,  over-the-counter  contracts with third
parties (commodity  instruments).  Agway has policies with respect to the use of
these  commodity  instruments  that specify what they are to be used for and set
limits on the maturity of contracts entered into and the level of exposure to be
hedged.

In the Energy  segment,  commodity  instruments  available  through a  regulated
exchange and, in certain  circumstances,  over-the-counter  contracts with third
parties are used  principally for gasoline,  distillate,  and propane.  They are
entered  into as a  hedge  against  the  price  risk  associated  with  Energy's
inventories  or  future  purchases  and  sales  of the  commodities  used in its
operations.  Generally, the price risk extends for a period of one year or less.
A sensitivity analysis has been prepared to estimate Energy's exposure to market
risk of its  commodity  instruments  position  as of March 31, 2000 and June 30,
1999.  The fair  value  of such  position  is a  summation  of the  fair  values
calculated  for each  commodity  instrument  by valuing each  position at quoted
futures prices or, in the case of options,  a delta-adjusted  calculated  price.
The market risk of the commodity  position is estimated as the potential loss in
fair value  resulting  from a  hypothetical  10% change in market  prices of the
underlying  commodities.  This estimated loss in fair value does not reflect the
offsetting impact of market price changes to the underlying commodities that the
commodity  instruments  are  hedging.  As of March 31,  2000 and June 30,  1999,
assuming  a 10%  hypothetical  change in the  underlying  commodity  price,  the
potential  change in fair value of Energy's  commodity  instruments was $300 and
$1,100, respectively.

In the  Agriculture  segment's feed business,  commodity  instruments  available
through a regulated  exchange are used  principally  to hedge corn, soy complex,
and  oats,  which  can be sold  directly  as  ingredients  or  included  in feed
products.  All transactions  involving derivative  financial  instruments in the
feed  business  are  required  to have a direct  relationship  to the price risk
associated with existing inventories or future purchase or sale of its products.
A sensitivity analysis has been prepared to estimate Agriculture's feed business
exposure  to market  risk of its  instruments  position as of March 31, 2000 and
June 30, 1999. The fair value of such position is a summation of the fair values
calculated  for each  commodity  instrument  by valuing each  position at quoted
futures prices or, in the case of options,  a delta-adjusted  calculated  price.
The market risk of the commodity  position is estimated as the potential loss in
fair value  resulting  from a  hypothetical  10% change in market  prices of the
underlying  commodities.  This estimated loss in fair value does not reflect the
offsetting impact of market price changes to the underlying commodities that the
commodity  instruments  are  hedging.  As of March 31,  2000 and June 30,  1999,
assuming  a 10%  hypothetical  change in the  underlying  commodity  price,  the
potential  change  in  fair  value  of  Agriculture's  feed  business  commodity
instruments was not material.

In the Agriculture  segment's grain marketing  business,  commodity  instruments
available  through a regulated  exchange are used to hedge inventory and forward
purchase and sales contracts for grains,  principally  corn, soy complex,  oats,
and wheat,  which are purchased and sold by the grain marketing  department (the
department).  The  department  historically  entered into both forward  purchase
contracts  and forward  sales  contracts  (forward  contracts)  with farmers and
others  on a  variety  of  grain  products.  Agway's  policy  requires  that the
department  enter into  generally  matched  transactions  (in both  maturity and
amount) using  offsetting  forward  contracts or commodity  instruments to hedge
against  price  fluctuations  in the market price of grains.  Agway  records the
grain marketing  program on a mark-to-market  basis by adjusting all outstanding
forward contracts, commodity instruments, and inventory values to market value.



                                       22

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES

       Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
       -------------------------------------------------------------------
                                   (Unaudited)
                             (Thousands of Dollars)


COMMODITY PRICE EXPOSURE (continued)
------------------------------------
A sensitivity  analysis has been prepared to estimate the department's  exposure
to market risk of its  commodity  instruments  position as of March 31, 2000 and
June 30, 1999. The fair value of such position is a summation of the fair values
calculated  for each  commodity  instrument  by valuing each  position at quoted
futures prices or, in the case of options,  a delta-adjusted  calculated  price.
The market risk of the commodity  position is estimated as the potential loss in
fair value  resulting  from a  hypothetical  10% change in market  prices of the
underlying commodities. As noted above, grain marketing historically enters into
generally matched transactions to hedge against price fluctuations.  However, as
discussed in prior filings and above in "Management's Discussion and Analysis of
Financial   Condition  and  Results  of   Operations,"  as  of  June  30,  1999,
unauthorized  speculative  positions  had  been  taken  so  that  the  commodity
instrument  activity of the department at that date was not effectively  hedging
the underlying commodities and forward contracts.  As of March 31, 2000 and June
30, 1999, assuming a 10% hypothetical change in the underlying  commodity price,
the potential change in fair value of the department's commodity instruments was
$100 and $2,900, respectively.

                                       23

<PAGE>



                           PART II. OTHER INFORMATION
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
                             (Thousands of Dollars)


Item 1.  Legal Proceedings
--------------------------
In August 1995,  the EPA notified  Agway that the EPA has reason to believe that
Agway is a PRP under CERCLA at the Tri-Cities Barrel site, Port Crane, New York.
In April  1999,  the EPA issued the Record of  Decision  (ROD) for the  Remedial
Design/Remedial Action (RD/RA) for the site. Agway anticipates that the EPA will
request that Agway and the other PRPs  participate  in the RD/RA.  In June 1997,
the cooperating  PRPs agreed upon an allocation of  responsibility  for past and
future  investigation  and remediation  costs.  Based on this allocation and the
cost  estimates  for the  site,  Agway has  accrued  its best  estimate  for any
additional costs at the site.

While Agway is not depending on contributions from insurance or third parties in
determining its reserves for environmental clean-up liability, we will determine
on a site-by-site basis whether such a contribution claim is warranted.


Item 6.  Exhibits and Reports on Form 8-K
-----------------------------------------
There were no reports on Form 8-K  required to be filed  during the three months
ended March 31, 2000.

                                       24

<PAGE>


SIGNATURES

Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.




                                                               AGWAY INC.
                                                       -------------------------
                                                             (Registrant)





Date            May 5, 2000                         /s/ PETER J. O'NEILL
      -------------------------------       ------------------------------------
                                                       Peter J. O'Neill
                                                    Senior Vice President,
                                                      Finance & Control,
                                               (Principal Financial Officer and
                                                    Chief Accounting Officer)










                                       25