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, 2002
                               --------------

                                       OR

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

Commission file number 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 10, 2002
-------------------------                            ---------------------------
Membership Common Stock,                                    96,616 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, 2002 and June 30, 2001......................    3

            Condensed Consolidated Statements of Operations and Retained Earnings for the three months
            and nine months ended March 31, 2002 and March 24, 2001...........................................    4

            Consolidated Statements of Comprehensive Income for the three months and nine months ended
            March 31, 2002 and March 24, 2001.................................................................    5

            Condensed Consolidated Cash Flow Statements for the nine months ended March 31, 2002
            and March 24, 2001................................................................................    6

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

            Item 2.  Management's Discussion and Analysis of Financial Condition and Results of Operations....   22

            Item 3.  Quantitative and Qualitative Disclosures About Market Risk...............................   29

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

            Item 1.  Legal Proceedings........................................................................   30

            Item 3.  Defaults Upon Senior Indebtedness........................................................   30

            Item 6.  Exhibits and Reports on Form 8-K.........................................................   31

            SIGNATURES........................................................................................   34

</TABLE>













                                        2

<PAGE>



                          PART I. FINANCIAL INFORMATION
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
                  Item 1. CONDENSED CONSOLIDATED BALANCE SHEETS
                             (Thousands of Dollars)

<TABLE>
<CAPTION>
                                                                                       March 31,          June 30,
ASSETS                                                                                   2002               2001
------                                                                               ------------        ------------
                                                                                       (Unaudited)
<S>                                                                                  <C>                 <C>
Current Assets:
     Trade accounts receivable  (including notes receivable of
          $2,346 and $2,197, respectively), less allowance for
          doubtful accounts of $6,574 and $9,044, respectively.....................  $      89,920       $   112,215
     Advances and other receivables................................................         12,445             6,175
     Inventories:
          Raw materials............................................................          8,146             6,122
          Finished goods...........................................................         28,993            37,532
          Goods in transit and supplies............................................          3,119             2,227
                                                                                     -------------       ------------
              Total inventories....................................................         40,258            45,881
     Prepaid expenses and other assets.............................................         45,909            43,313
                                                                                     -------------       ------------
          Total current assets.....................................................        188,532           207,584
Other security investments.........................................................         36,371            36,709
Properties and equipment, net......................................................        136,008           147,659
Net pension asset..................................................................        233,104           229,678
Other assets  .....................................................................         20,175            29,780
Total assets of discontinued operations............................................        976,052           990,728
                                                                                     -------------       ------------
              Total assets.........................................................  $   1,590,242       $ 1,642,138
                                                                                     =============       ============

LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current Liabilities:
     Notes payable.................................................................  $     10,725        $    61,342
     Current installments of long-term debt........................................         1,955              1,780
     Current installments of subordinated debt.....................................        36,739             47,628
     Accounts payable..............................................................        75,972             59,899
     Other current liabilities.....................................................        78,145             81,819
                                                                                     ------------        ------------
          Total current liabilities................................................       203,536            252,468
Long-term debt.....................................................................        21,244             21,594
Subordinated debt..................................................................       405,711            401,710
Other liabilities..................................................................        93,338             92,714
Total liabilities of discontinued operations.......................................       731,531            704,322
                                                                                     ------------        ------------
          Total liabilities........................................................     1,455,360          1,472,808
Commitments and contingencies......................................................
Shareholders' equity:
     Preferred stock, net..........................................................        34,326             37,603
     Common stock, net.............................................................         2,419              2,445
     Accumulated other comprehensive income (loss).................................           789                (61)
     Retained earnings.............................................................        97,348            129,343
                                                                                     ------------        ------------
          Total shareholders' equity...............................................       134,882            169,330
                                                                                     ------------        ------------
              Total liabilities and shareholders' equity...........................  $  1,590,242        $ 1,642,138
                                                                                     ============        ============
</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 24,           March 31,      March 24,
                                                    2002             2001               2002             2001
                                                ------------     -------------       ------------    ------------
<S>                                             <C>              <C>                 <C>             <C>
Net sales and revenues........................  $    272,411     $     362,411       $    724,692    $    909,174

Cost and expenses from:
     Products and plant operations............       231,601           324,386            656,083         835,677
     Selling, general and administrative
        activities............................        20,571            19,641             52,367          54,968
                                                ------------     -------------       ------------    ------------
          Total operating costs and expenses..       252,172           344,027            708,450         890,645

Operating earnings ...........................        20,239            18,384             16,242          18,529
Interest expense, net.........................        (4,358)           (2,646)           (15,155)        (12,578)

Other income, net.............................           490               (28)             2,456           3,365
                                                ------------     -------------       ------------    ------------
Earnings (loss) from continuing operations
     before income taxes......................        16,371            15,710              3,543           9,316
Income tax expense (benefit) .................         6,480             6,983              1,902           5,075
                                                ------------     -------------       ------------    ------------

Earnings (loss) from continuing operations....         9,891             8,727              1,641           4,241

Discontinued operations:
     Loss from operations, net of tax expense
          (benefit) of $1,097, $20,
          $(1,025) and $(2,917), respectively           (244)            (924)             (5,824)         (7,548)
     Loss on disposal, net of tax (benefit)
          of $(14,871)........................       (26,460)               0             (26,460)              0
                                                ------------     ------------        ------------    ------------
     Loss from discontinued operations........       (26,704)            (924)            (32,284)         (7,548)

Earnings (loss) before cumulative effect of
     an accounting change.....................       (16,813)           7,803             (30,643)         (3,307)
Cumulative effect of accounting change,
     net of tax (benefit) of $(723)...........             0                0                   0          (1,057)
                                                ------------     ------------        ------------    ------------
Net earnings (loss)...........................       (16,813)           7,803             (30,643)         (4,364)
                                                ------------     ------------        ------------    ------------
Retained earnings, beginning of period........       114,161          127,625             129,343         141,221
                                                ------------     ------------        ------------    ------------
Dividends.....................................             0                0              (1,352)         (1,429)
                                                ------------     ------------        ------------    ------------
Retained earnings, end of period..............  $     97,348     $    135,428        $     97,348    $    135,428
                                                ============     ============        ============    ============
</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 24,            March 31,         March  24,
                                                     2002              2001                 2002              2001
                                                --------------     -------------       --------------    --------------
<S>                                             <C>                <C>                 <C>               <C>
Net earnings (loss)...........................  $      (16,813)    $      7,803        $      (30,643)   $      (4,364)

Other comprehensive income (loss), net of tax:
Unrealized gains (losses) on
     available-for-sale securities held in
       discontinued operations................            (266)             280                   148              989

Deferred gains (losses) on cash flow hedges,
     net of tax:
     Cumulative effect of accounting change                  0                0                     0            3,061
     Holding gains (losses) arising
       during period.....................               (2,005)          (2,245)               (2,981)           2,404
     Reclassification adjustment for
       (gains) losses included in
       net earnings......................                2,486           (2,198)                3,683           (5,912)
                                                ---------------    -------------       --------------    -------------
Other comprehensive income (loss).............             215           (4,163)                  850              542
                                                ---------------    -------------       --------------    -------------

Comprehensive income (loss)...................  $      (16,598)    $      3,640        $      (29,793)   $      (3,822)
                                                ===============    =============       ==============    =============
</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,              March 24,
                                                                                       2002                    2001
                                                                                   -------------         --------------
<S>                                                                                <C>                   <C>
Net cash flows provided by (used in) continuing operations......................   $     55,198          $     (14,794)
Net cash flows provided by (used in) discontinued operations....................          9,602                 25,005
                                                                                   -------------         --------------
Net cash flows provided by (used in) operating activities.......................         64,800                 10,211

Cash flows provided by (used in) investing activities:
     Purchases of property, plant and equipment.................................         (5,273)                (3,558)
     Proceeds from disposal of property, plant and equipment....................          8,822                  4,424
     Net purchase (sale) of other security investments..........................            104                    823
                                                                                   -------------         --------------

Net cash flows provided by (used in) investing activities.......................          3,653                  1,689

Cash flows provided by (used in) financing activities:
     Net change in short-term notes payable.....................................        (50,617)               (30,700)
     Proceeds from long-term debt...............................................              0                     50
     Repayment of long-term debt................................................           (175)                  (777)
     Proceeds from sale of subordinated debt....................................         79,200                160,463
     Maturity and redemption of subordinated debt...............................        (86,088)              (154,709)
     Payments on capital leases.................................................         (4,596)                  (366)
     Redemption of stock, net ..................................................         (3,303)                (1,981)
     Cash dividends paid........................................................         (2,874)                (3,021)
                                                                                   -------------         --------------

Net cash flows provided by (used in) financing activities.......................        (68,453)               (31,041)
                                                                                   -------------         --------------

Net increase (decrease) in cash and equivalents.................................              0                (19,141)
Cash and equivalents at beginning of period.....................................              0                 19,141
                                                                                   -------------         --------------

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,  2002,  are not  necessarily  indicative  of the  results  that  may be
     expected for the year ending June 30, 2002,  due to the seasonal  nature of
     certain  major  segments  of our  business.  On March 6, 2002,  the Company
     announced  details of a  comprehensive  plan  designed  to refocus  capital
     resources  on four  selected  businesses:  Animal Feed and  Nutrition  (the
     principal  operation  within  the  Agriculture  segment),  Energy  Products
     (Energy segment), Produce, and Agricultural Technologies (operations within
     the  Country  Products  Group  segment).   This  plan  also  disclosed  our
     intentions  to  divest  of  four  business  operations:   Telmark  (Leasing
     segment),  Agway  Insurance (the principal  operation  within the Insurance
     segment), and Agronomy and Seedway (components of the Agriculture segment).
     As a result,  the financial  statements  separately  reflect these business
     operations as discontinued  operations.  For further information,  refer to
     Note 4 of these financial statements.

     Basis of Consolidation
     The consolidated  financial  statements  include the accounts of all wholly
     owned subsidiaries.  All significant intercompany transactions and balances
     have  been  eliminated  in  consolidation  except  for  certain  items  for
     intercompany  transactions  between  continuing and discontinued operations
     principally  related  to  leases  between  Telmark  (discontinued   Leasing
     segment) and the continuing operations.

     Cumulative Effect of Accounting Change
     On June 25,  2000,  upon  adoption of  Statement  of  Financial  Accounting
     Standards   (SFAS)   No.   133,   the   Company   recorded   a   net-of-tax
     cumulative-effect  loss of $1,100 to recognize at fair value the time value
     component of all option  contracts  associated  with the  Company's  Energy
     segment which is excluded from the  assessment  of hedge  effectiveness  as
     allowed  by the new  standard.  The  Company  also  recorded  a  net-of-tax
     cumulative-effect gain of $3,100 in other comprehensive income to recognize
     at fair value all derivative  instruments  in the Company's  Energy segment
     that are designated and qualify as cash-flow hedges. See Note 6 for further
     details of the Company's accounting for derivatives and hedging activities.

     Fiscal Quarter
     The fiscal  quarter-end  of Agway Inc. for the third quarter of the current
     and  prior  year was  March 31,  2002 and  March  24,  2001,  respectively.
     Effective  July 1, 2001,  the fiscal  year-end  has been changed to June 30
     each  year  for the  Company  as a whole  and  for  each of its  divisions.
     Quarterly  reports are at quarters ending on September 30, December 31, and
     March 31.

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

     Comprehensive Income
     Comprehensive  income  consists of net earnings  (loss),  the net change in
     unrealized gains and losses on  available-for-sale  securities (relating to
     Agway Insurance and included in discontinued  operations),  net of tax, and
     deferred  gains and losses on cash flow hedges,  net of tax. The unrealized
     gains and  losses on  available-for-sale  securities  in the  statement  of
     comprehensive  income are net of tax expense  (benefit)  of $(137) and $144
     and $76 and $509 for the three and nine  months  ended  March 31,  2002 and
     March 24, 2001, respectively.  The deferred gains and losses  on  cash flow
     hedges  in  the  statement of  comprehensive  income are net of tax expense
     (benefit) of $321 and  $(2,962) and $468 and  $(298) for the three and nine
     months ended March 31, 2002 and March 24, 2001, respectively.

                                        7

<PAGE>



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

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


1.   SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
     ------------------------------------------------------
     New Financial Accounting Standards
     The Financial  Accounting  Standards  Board (FASB) has recently  issued the
     following:

     SFAS NO. 141, "BUSINESS COMBINATIONS," was issued in June 2001 and requires
     ------------------------------------
     that  the  purchase   method  of   accounting  be  used  for  all  business
     combinations  initiated  after June 30, 2001,  and prohibits the use of the
     pooling-of-interests method. Under the previous rules, the Company used the
     purchase method of accounting.  The adoption of this standard has no impact
     on the financial statements of the Company.

     SFAS NO. 142,  "GOODWILL AND OTHER  INTANGIBLE  ASSETS," was issued in June
     ------------------------------------------------------
     2001 and is effective for the Company on July 1, 2002.  Under SFAS No. 142,
     amortization  of goodwill,  including  goodwill and intangible  assets with
     indefinite lives recorded in past business  combinations,  will discontinue
     upon adoption of this standard. In addition,  goodwill recorded as a result
     of  business  combinations  completed  after  July  1,  2001,  will  not be
     amortized.  Instead,  all goodwill and  intangible  assets with  indefinite
     lives  will be  tested  for  impairment  annually,  or more  frequently  if
     circumstances  indicate potential impairment,  through a comparison of fair
     value to its  carrying  amount.  The Company is  currently  evaluating  the
     impact  of the new  accounting  standard  on  existing  goodwill  and other
     intangible assets.  The ultimate impact of the new accounting  standard has
     yet to be determined.  The net book value of goodwill and other  intangible
     assets of continuing operations was $8,200 at March 31, 2002.  Amortization
     of goodwill and other intangible  assets totaled $3,100 for the nine months
     ended March 31, 2002 and $2,700 for the year ended June 30, 2001.

     SFAS NO 143,  "ACCOUNTING FOR ASSET RETIREMENT  OBLIGATIONS," was issued in
     -----------------------------------------------------------
     June 2001 and is  effective  for the Company on July 1, 2002.  SFAS No. 143
     establishes financial accounting and reporting obligations  associated with
     the retirement of tangible  long-lived  assets and the  associated  assets'
     retirement costs. It applies to all legal  obligations  associated with the
     retirement  of  long-lived   assets  that  result  from  the   acquisition,
     construction,  development,  and/or the normal  operation  of a  long-lived
     asset. We believe that the  implementation of the statement will not have a
     material impact on the results of operations and financial  position of the
     Company.

     SFAS NO. 144,  "ACCOUNTING  FOR THE  IMPAIRMENT  OR DISPOSAL OF  LONG-LIVED
     ---------------------------------------------------------------------------
     ASSETS," was issued in August  2001.  SFAS No. 144 provides new guidance on
     -------
     the  recognition of impairment  losses on long-lived  assets to be held and
     used  or to be  disposed  of and  also  broadens  the  definition  of  what
     constitutes a  discontinued  operation and how the results of  discontinued
     operations are to be measured and presented.  SFAS No. 144 supersedes  SFAS
     No.  121,  "Accounting  for the  Impairment  of  Long-Lived  Assets and for
     Long-Lived Assets to be Disposed Of," and Accounting  Principle Board (APB)
     No. 30,  "Reporting  the  Results of  Operations-Reporting  the  Effects of
     Disposal  of  a  Segment  of a  Business,"  while  retaining  many  of  the
     requirements  of these two  statements.  Under SFAS No.  144,  discontinued
     operations  are no longer  measured on a net  realizable  value basis,  and
     future operating losses are no longer  recognized  before they occur.  This
     statement  broadens the  presentation  of  discontinued  operations  in the
     income statement to include a component of an entity (rather than a segment
     of a business).  A component  of an entity  comprises  operations  and cash
     flows that can be clearly  distinguished,  operationally  and for financial
     reporting purposes, from the rest of the entity.

     The  Company  early  adopted  this new  standard  on January  1, 2002,  and
     recognized no impact in its financial statements regarding the new guidance
     on the recognition of impairment losses on long-lived assets to be held and
     used.  As  further  described  in Note 4, the  Company  has  announced  the
     discontinuation  of four of its  business  operations  and has  adopted the
     guidance  of SFAS No.  144  regarding  the  measurement,  recognition,  and
     disclosure of these discontinued operations.

                                        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)

2.   BORROWING ARRANGEMENTS
     ----------------------
     Notes Payable
     Agway has  available  under its Senior  Debt  program  (described  below) a
     $150,000  short-term line of credit, up to $35,000 of which can be used for
     letters of credit. At March 31, 2002,  letters of credit issued,  primarily
     to back  Agway  insurance  programs,  totaled  approximately  $28,800.  The
     carrying amounts of Agway's  short-term  borrowings  approximate their fair
     value and were as follows:

                                                March 31, 2002   June 30, 2001
                                                --------------   -------------
     Lines of credit..........................  $      10,725    $      61,342
                                                ==============   =============
     Weighted average interest rate...........          5.87%            7.22%
                                                ==============   =============

     Agway Senior Debt
     The Agway  Senior Debt (as  amended-see  discussion  below) is a syndicated
     three-year asset-based revolving line of credit for up to $150,000 pursuant
     to  the  terms  of  a  credit  agreement  between  Agway,  certain  of  its
     subsidiaries  and a  syndicated  group of lenders  (the Credit  Agreement).
     Interest rates are determined at the option of Agway,  as either prime rate
     plus 2.5% or the London  Interbank  Offered  Rate  (LIBOR) plus 4%. In this
     asset-based line of credit,  the amount available to Agway is the lesser of
     the "collateral  borrowing base" or the $150,000 upper limit of the line of
     credit.  The  collateral  borrowing  base  consists  of  certain of Agway's
     eligible  accounts  receivable  and  inventory (as defined under the Credit
     Agreement).  Certain covenants and conditions of the Credit  Agreement,  as
     more  fully  discussed  below,  restrict  the use of funds and  reduce  the
     practical  availability  of financing  under the  agreement by $25,000 to a
     maximum of $125,000.

     The Credit  Agreement  dated March 28, 2001 has been  amended four times in
     response to violations  of financial  covenants.  In connection  with those
     amendments, those violations were waived. The latest amendment modified the
     minimum level of EBITDA  (defined below) and the minimum ratio of EBITDA to
     interest on senior debt for the twelve months ended March 31, 2002 and June
     30, 2002. In addition to amending these financial covenants and waiving the
     violation  of these  covenants  as of March 31, 2002,  the  amendment  also
     reduced  the  range  of  required  minimum  balance  of  outstanding  Agway
     securities, as defined in the agreement, by $15,000, to a range of $440,000
     to  $450,000  at various  times  throughout  the year;  reduced the maximum
     revolving  line of credit from  $175,000 to  $150,000;  and  increased  the
     interest  rate on the line of credit  0.5%,  to either  prime  plus 2.5% or
     LIBOR plus 4%. In exchange for this latest  amendment,  Agway agreed to pay
     the syndicated group of lenders amendment fees totaling $300.

     As of March 31, 2002,  the collateral  borrowing  base was $122,600,  which
     adequately  supported Agway's credit needs which totaled $39,500 as of that
     date. At this stage, in light of the recent  announcement to divest certain
     businesses,  the Company's  future financing needs cannot be predicted with
     certainty. However, management believes that adequate collateral exists and
     will continue to exist to support  amounts  required under the Agway Senior
     Debt.  It  is  expected  that  Agway's  ongoing  financial  needs  will  be
     reassessed with the syndicated group of lenders when, and if, proceeds from
     sale of  discontinued  operations  (see Note 4) are received.  In addition,
     such a  reassessment  might  also occur in the event the  Company  does not
     comply with its financial covenants in the Credit Agreement as currently in
     effect.

     The Credit Agreement has a number of financial covenants which restrict our
     capital  spending  and  require us to maintain  minimum  levels of earnings
     before interest, taxes, depreciation, and amortization (EBITDA), as defined
     in the Credit Agreement,  and minimum ratios of EBITDA to fixed charges and
     interest  on senior  debt (see above for  discussion  of the  violation  of
     certain covenants as of March 31, 2002). The Credit Agreement also required
     a minimum  outstanding  balance of preferred stock,  subordinated debt, and
     certain debt of a subsidiary.  That minimum outstanding balance requirement
     ranges from $440,000 to $450,000  throughout the year. (This minimum amount
     of capital we must  maintain is referred to as the Minimum  Capital.) As of
     March 31, 2002, the Minimum Capital was $480,500.

                                        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)


2.   BORROWING ARRANGEMENTS (CONTINUED)
     ----------------------------------
     Agway Senior Debt (continued)
     Other   conditions  of  the  Credit   Agreement   prevent  us,  in  certain
     circumstances, from using funds we borrow under the Credit Agreement to pay
     interest  or  dividends  on,  or  repurchase  or repay  principal  of,  our
     subordinated debt or preferred stock. To avoid these use restrictions,  the
     Credit Agreement requires us to have a minimum excess borrowing capacity as
     defined  in  the  agreement   (collateral   borrowing  base  in  excess  of
     outstanding  amounts borrowed) of at least $20,000 if we are not in default
     under  the  Credit  Agreement.  If we  are  in  default  under  the  Credit
     Agreement,  to avoid these use  restrictions,  the minimum excess borrowing
     capacity  we  must  maintain  (collateral   borrowing  base  in  excess  of
     outstanding amounts borrowed)  increases to $25,000.  Further, if we are in
     default  under  the  Credit   Agreement,   we  are  subject  to  these  use
     restrictions if:

     (a)  we default on our payment of principal, interest or other  amounts due
          to the lenders under the Credit Agreement;

     (b)  we fail to maintain the  cash  management  procedures we agree to with
          the lenders under the Credit Agreement;

     (c)  we  do  not  maintain  the  Minimum  Capital  balance  of  $440,000 to
          $450,000; or

     (d)  the agent under the Credit Agreement provides us with a written notice
          that such payments are no longer permitted.

     These conditions,  if present,  reduce the practical availability under the
     Agway  Senior  Debt from  $150,000  to  $125,000  or $25,000  less than the
     collateral  borrowing base,  whichever is lower.  The Credit  Agreement was
     designed  in part to allow and enable us to continue  our past  practice of
     repurchasing,  at face value, certain subordinated debt and preferred stock
     when  presented for  repurchase  prior to maturity.  However,  as discussed
     below, we are under no obligation to repurchase  subordinated debt prior to
     its maturity and preferred stock when so presented.

     Agway Subordinated Debt
     Agway registers with the Securities and Exchange  Commission (SEC) to offer
     debentures  and money  market  certificates  to the public on a  continuing
     basis.  The debentures are unsecured and subordinated to all senior debt of
     Agway. The Agway  subordinated debt bears interest payable  semiannually on
     January 1 and July 1 of each year.  The  interest  rates of  Agway's  money
     market  certificates  are at the greater of the stated rate or a rate based
     upon an average  discount rate for U.S.  Government  Treasury  Bills,  with
     maturities of 26 weeks.  Agway's subordinated debt is not redeemable by the
     holder,  though Agway historically  repurchased at face value plus interest
     accrued at the stated rate,  certain  subordinated debt whenever  presented
     for repurchase  prior to maturity.  However,  we are under no obligation to
     repurchase  subordinated debt prior to its maturity when so presented,  and
     may stop or suspend this practice at any time or may be required to stop or
     suspend such  practice if we do not continue to meet the  conditions of the
     Credit Agreement, including those described above.

     As disclosed by the Company on March 6, 2002 in its announcement  regarding
     the  discontinuation  of  certain  of its  businesses,  we had  temporarily
     stopped the sale of Agway  subordinated debt until this report on Form 10-Q
     for the  quarter  ended  March  31,  2002,  and  other  restated  financial
     information related to the announced transactions, was filed with the SEC.





                                       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)

3.   AGRICULTURE REALIGNMENT
     -----------------------
     In the second  quarter  of last  fiscal  year  (2001),  the Agway  Board of
     Directors approved a plan (the Agriculture Plan) to realign the Agriculture
     segment of Agway's  business with the continuing  concentration  of farming
     and our  farmer-members in the northeastern  United States. The realignment
     into a Feed  and  Nutrition  Division  and an  Agronomy  Division  has been
     completed.  In  addition,  a total of 45 locations  have been  converted to
     dealers,  sold,  or closed and 395 employees at these  locations  have been
     paid severance.  During the realignment  process,  gains experienced on the
     sale of properties  have been recognized  when realized,  inventories  have
     been reduced to their estimated net realizable  values, and operating costs
     during the transition period are recognized when incurred.

     As  announced  on March 6, 2002 (as further  described  in Note 4), we have
     decided to exit the agronomy  business  (among  others) and have  presented
     these  operations  as  discontinued  operations.  Therefore,  the financial
     impact  associated with the Agriculture  Plan for the three and nine months
     ended March 31, 2002, is included in both the continuing  and  discontinued
     operations as follows:
<TABLE>
<CAPTION>
                                                              Three Months Ended        Nine Months Ended
                                                                MARCH 31, 2002           MARCH  31, 2002
                                                              ------------------       ------------------
     <S>                                                      <C>                      <C>
     CONTINUING OPERATIONS
     Net gain and (loss) on sale of assets.................   $            311         $            861
     Impairment on long-lived assets.......................                  0                     (398)
     Gain (loss) on sale/liquidation of inventory..........                (44)                      32
     Severance cost .......................................                  1                   (1,533)
     Other transaction costs...............................                  0                      (51)
                                                              ------------------       ------------------
     Net gain (loss) on realignment activity...............   $            268         $         (1,089)
                                                              ==================       ==================

     DISCONTINUED OPERATIONS
     Net gain and (loss) on sale of assets.................   $            539         $          1,739
     Impairment on long-lived assets.......................                  0                     (373)
     Gain (loss) on sale/liquidation of inventory..........                 26                      226
     Severance cost .......................................                  1                   (1,731)
     Other transaction costs...............................                  0                      (47)
                                                              ------------------       -----------------
     Net gain (loss) on realignment activity...............   $            566         $           (186)
                                                              ==================       =================
</TABLE>
<TABLE>
<CAPTION>
                                                                                         Three and Nine
                                                                                          Months Ended
                                                                                         MARCH 24, 2001
                                                                                       -----------------
<S>                                                                                    <C>
     CONTINUING OPERATIONS
     Net gain and (loss) on sale of assets.........................................    $           16
     Impairment on long-lived assets...............................................              (209)
     Gain (loss) on sale/liquidation of inventory..................................               (15)
     Severance cost ...............................................................              (470)
     Other transaction costs.......................................................                (6)
                                                                                       -----------------
     Net gain (loss) on realignment activity.......................................    $         (684)
                                                                                       =================
     DISCONTINUED OPERATIONS
     Net gain and (loss) on sale of assets.........................................    $           37
     Impairment on long-lived assets...............................................               (51)
     Gain (loss) on sale/liquidation of inventory..................................                 0
     Severance cost ...............................................................              (427)
     Other transaction costs.......................................................                (5)
                                                                                       -----------------
     Net gain (loss) on realignment activity.......................................    $         (446)
                                                                                       =================
</TABLE>
                                       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)


4.   DISCONTINUED OPERATIONS
     -----------------------
     On March 6, 2002, the Company  announced  details of a  comprehensive  plan
     designed to refocus the Company and to strengthen the financial position of
     the  Cooperative.  This plan  focuses  our  capital  resources  on selected
     businesses which we believe are well positioned for  profitability,  future
     growth, and service to our farm and other customers. It is also designed to
     provide capital resources from businesses that we are choosing to exit, and
     to allow us to restructure our capital and reduce debt.

     Agway's  future  operational  focus  will  be  on  four  selected  business
     operations  that  have a clear  history  and  connection  to our  farm  and
     cooperative heritage.  Our focus and commitment of resources will center on
     the  following  businesses:   Animal  Feed  and  Nutrition  (the  principal
     operation  within  the  Agriculture   segment),   Energy  Products  (Energy
     segment),  Fresh Produce and Agricultural  Technologies  (operations within
     the Country Products Group segment).

     At the same time, we have also made  decisions  regarding  businesses  that
     Agway is  taking  steps to sell.  These  businesses  are  Telmark  (Leasing
     segment), Agway  Insurance (the  principal  operation  within the Insurance
     segment), and  Agronomy  and  Seedway  (operations  within the  Agriculture
     segment).  We expect the sale of these  businesses to occur within the next
     year.

     With the announcement of this plan and our adoption of SFAS No. 144, we are
     required to separately  report the  businesses  that we are taking steps to
     sell as discontinued  operations and to immediately recognize any estimated
     losses  directly  related to the sales of those  businesses.  Any estimated
     gains on sale of those businesses are not reported until they are realized.
     The results of operations of the  discontinued  businesses  are reported in
     discontinued  operations  in the periods in which they occur.  Discontinued
     operations are separately  disclosed in the income  statement,  net of tax,
     in  earnings (loss) from  operations of discontinued  operations  and  gain
     (loss) on disposal of  discontinued  operations and in the balance sheet as
     total  assets  of   discontinued   operations  and  total   liabilities  of
     discontinued operations.

     In the second quarter of fiscal 2000, the Agway Board of Directors approved
     a plan to restructure the retail store distribution system. The plan called
     for the sale or closure of 227 Agway  retail  properties.  In the spring of
     2000,  the Agway Board of Directors  authorized  the sale of the  wholesale
     procurement  and supply  system to  Southern  States  Cooperative,  Inc. An
     agreement  for this sale was  executed  on June 20, 2000 and closed on July
     31, 2000. The sale of the wholesale  procurement  and supply  system,  when
     combined with the sale and closure of the  Agway-owned  or operated  retail
     stores, constituted a plan to discontinue operations of the retail services
     business.  The  discontinued  retail  services  business  was  measured and
     recognized    under   APB   No.    30,    "Reporting    the    Results   of
     Operations-Reporting  the Effects of Disposal of a  Segment of a Business."
     For financial  reporting  purposes,  the  measurement  date upon which this
     discontinued  operation plan became effective was June 20, 2000. All retail
     store  operations  ceased  during 2001,  and the Company is  continuing  to
     market the  remaining  store  properties  for sale. No  adjustments  to the
     estimated  net  loss  on  disposal  established  as of the  June  20,  2000
     measurement  date was required in the three- and  nine-month  periods ended
     March 31, 2002.

                                       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)


4.   DISCONTINUED OPERATIONS (CONTINUED)
     -----------------------------------
     For  the  businesses   noted  above  that  are  reflected  in  discontinued
     operations,  a summary  of net sales and  revenues  and  pre-tax  operating
     results for the three months and nine months ended March 31, 2002 and March
     24, 2001,  respectively,  and total assets of  discontinued  operations and
     total liabilities of discontinued operations at March 31, 2002 and June 30,
     2001 are detailed below.  Furthermore,  a portion of the Company's interest
     expense  has  been  allocated  to  discontinued  operations  based  on  the
     outstanding  debt  attributable to holding these  operations.  Income taxes
     have been allocated between continuing and discontinued  operations for all
     periods presented.
<TABLE>
<CAPTION>
                                                        THREE MONTHS ENDED               NINE MONTHS ENDED
                                                   ----------------------------    ------------------------------
                                                     March 31,      March 24,        March 31,        March 24,
                                                       2002           2001             2002             2001
                                                   ------------   -------------    -------------    -------------
     <S>                                           <C>            <C>              <C>              <C>
     Total sales and revenues...................   $     75,671   $      82,037    $     191,276    $     234,894

     Pre-tax operating results..................   $        853   $        (904)   $      (6,849)   $     (10,645)

     Interest expense allocated to discontinued
       operations...............................   $      5,245   $       5,614    $      13,700    $      14,531

</TABLE>
<TABLE>
<CAPTION>
                                                                                       DISCONTINUED OPERATIONS
                                                                                   -------------------------------
                                                                                   MARCH 31, 2002    JUNE 30, 2001
                                                                                   --------------   --------------
<S>                                                                                <C>              <C>
     Discontinued Assets:
       Cash.....................................................................   $       5,898    $       3,043
       Accounts receivable (including notes receivable,
            net of allowance for doubtful accounts).............................          45,598          101,172
       Lease receivables........................................................         696,052          688,879
       Inventories..............................................................          66,441           41,090
       Restricted cash..........................................................           6,881            8,306
       Prepaid and other current assets.........................................          30,459           30,479
       Marketable securities available for sale.................................          38,843           37,556
       Other security investments...............................................          16,210           15,121
       Property, plant and equipment............................................          32,163           38,221
       Other assets.............................................................          37,507           26,861
                                                                                   -------------    -------------
            Total assets of discontinued operations.............................   $     976,052    $     990,728
                                                                                   =============    =============

     Discontinued Liabilities:
       Notes payable............................................................   $     141,298    $     140,638
       Current portion of long-term debt........................................         124,330          136,264
       Accounts payable.........................................................          53,889           34,644
       Other current liabilities................................................          80,931           63,374
       Long-term debt...........................................................         297,161          299,986
       Other long-term liabilities..............................................          33,922           29,416
                                                                                   -------------    -------------
            Total liabilities of discontinued operations........................   $     731,531    $     704,322
                                                                                   =============    =============
</TABLE>


                                       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)


4.   DISCONTINUED OPERATIONS (CONTINUED)
     -----------------------------------
     The loss on  disposal of  discontinued  operations,  net of tax,  which was
     recorded in the third quarter  consisted of the following for the three and
     nine months ended March 31, 2002:
<TABLE>
<CAPTION>
     <S>                                                                          <C>
     Impairment on long-lived assets............................................  $   (24,738)
     Direct costs of sale.......................................................       (4,228)
     Benefit plans curtailment..................................................      (12,365)
                                                                                  -------------
     Pre-tax loss...............................................................      (41,331)
     Income tax benefit.........................................................       14,871
                                                                                  -------------
     Net loss on disposal of discontinued operations............................  $   (26,460)
                                                                                  =============
</TABLE>

     The above net loss on disposal of discontinued  operations  could be offset
     in future periods to the extent gains,  if any, are realized on the sale of
     the discontinued operations. In addition, the net loss reported above could
     be adjusted  (either  increased or decreased) for changes  experienced from
     the original estimate for net loss on disposal of discontinued operations.

5.   RETIREMENT BENEFITS
     -------------------
     Pension Plan
     The Employees' Retirement Plan of Agway Inc. is a non-contributory  defined
     benefit  pension plan  covering the majority of employees of Agway Inc. The
     plan's  benefit  formulae  bases  payment  on  a  pension  equity  formula.
     Generally,  pension  costs are funded  annually  at no less than the amount
     required by law and no more than the maximum  allowed by federal income tax
     guidelines.  The  projected  benefit  obligation  is based on the actuarial
     present value of the benefits that the employee would be entitled to at the
     expected retirement date.

     The  Employees'  Retirement  Plan of Agway Inc.  has assets that exceed the
     benefit obligation.  The majority of the plan's investments consist of U.S.
     government and agency  securities,  U.S.  corporate bonds, U.S. and foreign
     equities,  equity  and bond  funds and  temporary  investments  (short-term
     investments in demand notes and money market funds).  At March 31, 2002 and
     June 30, 2001,  retirement  plan assets  included Agway debt securities and
     preferred   stock  with  estimated  fair  values  of  $5,100  and  $10,100,
     respectively.

     As  described in Note 4, the Company has made a decision to exit certain of
     its business  operations.  This decision will result in  approximately  980
     employees  leaving the Company and causes a curtailment of both the pension
     and  postretirement  benefit  plans.  The  impact  of  the  curtailment  is
     reflected in the table below:

                                               Change in Benefit   Curtailment
                                                  OBLIGATION          CHARGE
                                                --------------    --------------
     Pension..................................  $       5,352     $       9,493
     Postretirement...........................  $       1,820     $       2,872

     The  curtailment  charge for both the pension and  postretirement  benefits
     noted  above were  included  in the net loss on  disposal  of  discontinued
     operations for the three and nine months ended March 31, 2002.



                                       14

<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.   RETIREMENT BENEFITS (CONTINUED)
     -------------------------------
     Pension Plan (continued)
     The  following  tables  set forth the  plan's  funded  status  and  amounts
     recognized in Agway's  consolidated  financial statements at March 31, 2002
     and June  30,  2001 as a net  pension  asset.  The net  pension  income  is
     summarized  for the nine months ended March 31, 2002 and for the year ended
     June 30, 2001:
<TABLE>
<CAPTION>
                                                                                       March 31,         June 30,
                                                                                        2002               2001
                                                                                     -----------       -----------
     <S>                                                                             <C>               <C>
     CHANGE IN PROJECTED BENEFIT OBLIGATION
     --------------------------------------
     Projected benefit obligation at beginning of year.............................  $   333,134       $   338,503
     Service cost (with interest)..................................................        6,982             9,195
     Interest cost.................................................................       18,356            24,697
     Amendments....................................................................          583               419
     Curtailment...................................................................        5,352                 0
     Actuarial loss ...............................................................       32,031             4,650
     Benefits paid.................................................................      (31,000)          (44,330)
                                                                                     -----------       -----------
     Projected benefit obligation at end of period.................................  $   365,438       $   333,134
                                                                                     ===========

     CHANGE IN PLAN ASSETS
     ---------------------
     Fair value of plan assets at beginning of year................................  $   566,809       $   569,633
     Actual return on plan assets..................................................       18,291            41,506
     Benefits paid.................................................................      (31,000)          (44,330)
                                                                                     -----------       -----------
     Fair value of plan assets at end of period....................................  $   554,100       $   566,809
                                                                                     ===========       ===========

     Funded status.................................................................  $   188,662       $   233,675
     Unrecognized prior service cost...............................................       14,665            20,147
     Unrecognized net loss (gain)..................................................       29,777           (24,144)
                                                                                     -----------       -----------
     Net pension asset.............................................................  $   233,104       $   229,678
                                                                                     ===========       ===========

                                                                                     Nine Months           Year
                                                                                        Ended              Ended
                                                                                       March 31,          June 30,
                                                                                          2002              2001
                                                                                     -----------       ------------
     COMPONENTS OF NET PENSION INCOME
     --------------------------------
     Service cost (with interest)..................................................  $     6,982       $      9,195
     Interest cost.................................................................       18,356             24,697
     Expected return on plan assets................................................      (40,180)           (53,606)
     Amortization of prior service cost............................................        1,925              3,491
     Recognized curtailment (gain)/loss............................................        9,493                  0
                                                                                     -----------       ------------
     Net pension income............................................................  $    (3,424)      $    (16,223)
                                                                                     ===========       ============

     WEIGHTED-AVERAGE ASSUMPTIONS
     ----------------------------
     Discount rate.................................................................        7.00%              7.75%
     Expected return on plan assets................................................        9.00%              9.75%
     Rate of compensation increase.................................................        5.00%              5.00%
</TABLE>
                                       15

<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.   RETIREMENT BENEFITS (CONTINUED)
     -------------------------------
     Postretirement Benefits
     Agway provides  postretirement  health care and life insurance  benefits to
     eligible  retirees and their  dependents.  Eligibility for benefits depends
     upon  age and  years of  service.  The  benefit  obligation  under  Agway's
     postretirement  benefit  plans are general,  unsecured  obligations  of the
     Company  and  are not  funded.  The  accrued  postretirement  benefit  cost
     expected to be paid in the next year is in other current liabilities, while
     the remaining amount is included in other  liabilities.  The reconciliation
     of funded  status at March 31, 2002 and June 30, 2001 and the net  periodic
     postretirement  benefit  cost for the nine months  ended March 31, 2002 and
     the year ended June 30, 2001 recognized in Agway's  consolidated  financial
     statements were as follows:

<TABLE>
<CAPTION>
                                                                                      Nine Months         Year
                                                                                        Ended            Ended
                                                                                      March 31,         June 30,
                                                                                        2002              2001
                                                                                     ------------     ------------
     <S>                                                                             <C>              <C>
     CHANGE IN PROJECTED BENEFIT OBLIGATION
     --------------------------------------
     Benefit obligation at beginning of year.......................................  $   (42,211)     $   (40,704)
     Service cost (with interest)..................................................         (532)            (668)
     Interest cost.................................................................       (2,334)          (2,999)
     Plan participant contributions................................................         (831)          (1,108)
     Actuarial gain (loss).........................................................         (448)          (2,269)
     Curtailment...................................................................        1,820                0
     Benefits paid.................................................................        4,000            5,537
                                                                                     ------------     ------------
     Benefit obligation at end of period...........................................  $   (40,536)     $   (42,211)
                                                                                     ============     ============

     Funded status.................................................................  $   (40,536)     $   (42,211)
     Unrecognized prior service cost...............................................          646              917
     Unrecognized net gain.........................................................       (1,345)            (138)
     Unrecognized net transition obligation........................................       10,192           13,886
                                                                                     ------------     ------------
     Accrued postretirement benefit cost...........................................  $   (31,043)     $   (27,546)
                                                                                     ============     ============

                                                                                      Nine Months         Year
                                                                                         Ended            Ended
                                                                                        March 31,        June 30,
                                                                                          2002            2001
                                                                                     ------------     ------------
     COMPONENTS OF NET PERIODIC POSTRETIREMENT BENEFIT COST
     ------------------------------------------------------
     Service cost (with interest)..................................................  $       532      $       668
     Interest cost.................................................................        2,334            2,999
     Amortization of:
       Transition obligation.......................................................          867            1,156
       Prior service cost..........................................................           91              121
     Actuarial gains and losses....................................................          (30)               0
     Recognized curtailment (gain)/loss............................................        2,872                0
                                                                                     ------------     ------------
     Net periodic postretirement expense...........................................  $     6,666      $     4,944
                                                                                     ============     ============

</TABLE>



                                       16

<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.   RETIREMENT BENEFITS (CONTINUED)
     -------------------------------
     Postretirement Benefits (continued)
     In determining the benefit  obligation,  the weighted average discount rate
     used was 7.00% as of March 31, 2002 and 7.75% as of June 30, 2001.  Assumed
     health  care cost trend  rates  have a  significant  effect on the  amounts
     reported for the health care plans.  A one  percentage  point change in the
     assumed health care cost trend rates would have the following effect:
<TABLE>
<CAPTION>
                                                                                      1% Point       1% Point
                                                                                      INCREASE       DECREASE
                                                                                     -----------    -----------
     <S>                                                                             <C>            <C>
     NINE MONTHS ENDED MARCH 31, 2002
     --------------------------------
     Effect on total of service and interest cost components.......................  $      144     $    (123)
     Effect on benefit obligation..................................................  $    1,170     $  (1,028)
</TABLE>

     For measurement  purposes,  the assumed health care cost trend rate used to
     measure Agway's accumulated benefit obligation for persons under age 65 was
     9% for March 31,  2002.  The health  care cost trend  rate  assumption  for
     fiscal 2002 and forward at June 30, 2001 decreases gradually until the year
     2006,  when the  ultimate  trend rate is then fixed at 5%. For persons over
     age 65, Agway has an insured medical program  limiting Agway's subsidy to a
     per month/per retiree basis.




                                       17

<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.   ACCOUNTING FOR DERIVATIVES AND HEDGING ACTIVITIES
     -------------------------------------------------
     All derivatives are recognized on the balance sheet at their fair value. At
     the  time a  derivative  contract  is  entered  into,  the  Company  either
     designates  the  derivative  as a fair value or cash flow  hedge.  For fair
     value hedge  transactions  in which the Company is hedging  changes in fair
     value of an asset, liability, or firm commitment, changes in the fair value
     of the  derivative  will  generally  be offset in the income  statement  by
     changes in the hedged item's fair value.  For cash flow hedge  transactions
     in which the Company is hedging the  variability of cash flows related to a
     variable-priced asset,  liability,  commitment,  or forecasted transaction,
     changes  in the  fair  value  of  the  derivative  are  reported  in  other
     comprehensive  income.  The gains and  losses on the  derivatives  that are
     reported  in  comprehensive  income are  reclassified  as  earnings  in the
     periods in which earnings are impacted by the variability of the cash flows
     of the hedged item. The ineffective portion of derivatives' changes in fair
     value  and the  change  in fair  value of  derivatives  designated  but not
     qualifying as effective hedges are recognized in current- period earnings.

     For all derivatives  designated as a hedge, the Company formally  documents
     the  relationship  between the hedging  instrument  and the hedged item, as
     well as the  risk  management  objective  and  strategy  for the use of the
     hedging  instrument.  This  documentation  includes linking the derivatives
     that are designated as fair value or cash flow hedges to specific assets or
     liabilities   on  the  balance   sheet,   commitments,   or  to  forecasted
     transactions.  The Company  assesses at the time a  derivative  contract is
     entered into and at least quarterly whether the hedge relationship  between
     the  derivative  and the  hedged  item is highly  effective  in  offsetting
     changes  in fair  value or cash  flows.  Any  change  in fair  value of the
     derivative resulting from  ineffectiveness,  as defined by SFAS No. 133, is
     recognized currently in earnings. Further, for derivatives that have ceased
     to be a highly effective hedge, the Company  discontinues  hedge accounting
     prospectively.

     The Company's  Energy segment enters into a combination of  exchange-traded
     futures  and options  contracts  and,  in certain  circumstances,  over the
     counter  options  (collectively  derivatives)  to  manage  the  price  risk
     associated with future purchases of the commodities sold in its operations,
     principally  heating  oil  and  propane.   Energy  has  fair  value  hedges
     associated  with its fixed price  purchase  contracts and cash flows hedges
     for  its  variable   priced   purchase   contracts.   The  derivatives  are
     specifically  matched  in volume and  maturity  with the  various  purchase
     commitments  of the business and generally  expire within a year. The value
     of option  contracts that Energy enters into has two  components:  time and
     intrinsic value. The intrinsic value is the value by which the option is in
     the money.  The remaining  amount of option value is  attributable  to time
     value.  Energy does not include the time value of option  contracts  in its
     assessment of hedge effectiveness and therefore records changes in the time
     value  component of its options  currently in earnings.  At March 31, 2002,
     Energy  had a  derivative  asset of  $853.  An  after-tax  total of $702 of
     deferred net unrealized gains on derivatives instruments was accumulated in
     other comprehensive income and is expected to be reclassified into earnings
     during the next twelve  months.  The pre-tax  earnings  impact for the time
     value component of option value not used in assessing  hedge  effectiveness
     totaled  $1,800 upon the initial  adoption of SFAS No. 133 at July 1, 2000,
     and is included, net of tax, in the cumulative effect of accounting change.
     A charge to cost of goods sold for the change in option time value not used
     in the assessment of hedge  effectiveness  was $100 and $800 and $1,300 and
     $3,300 for the three and nine  months  ended  March 31,  2002 and March 24,
     2001, respectively.

     In the Agriculture  segment,  the purchase of corn, soy complex,  and oats,
     which can be sold directly as ingredients or included in feed products sold
     by Agriculture,  creates price risk for this business.  Agriculture intends
     to use natural hedges of purchase and sales  contracts  whenever  possible;
     however,  exchange-traded  commodity  instruments  are used  principally to
     manage the price risk  associated  with  unmatched  commodity  purchases or
     sales.  Agriculture matches all derivative  contracts with their underlying
     purchase or sale contracts;  however, due to the differences in the changes
     in the commodity cash price at an Agriculture  location  versus the Chicago
     Board of Trade, a highly effective hedging relationship (as defined by SFAS
     No.  133)  has  not  been  achieved.  Therefore,  the  derivatives  used in
     Agriculture  are  marked to market  currently  in  earnings.  The impact of
     marking  these  derivatives  to market for the three and nine months  ended
     March 31, 2002, was immaterial.

                                       18

<PAGE>



                    PART I. FINANCIAL INFORMATION (continued)
                    AGWAY INC. AND CONSOLIDATED SUBSIDIARIES
    Item 1. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (continued)
                                   (Unaudited)
                             (Thousands of Dollars)

7.   COMMITMENTS AND CONTINGENCIES
     -----------------------------
     Environmental
     We 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 at sites  with
     underground   fuel  storage  tanks.  We  will  also  incur  other  expenses
     associated with environmental compliance.

     We are designated as a PRP under CERCLA or as a third party by the original
     PRPs in several  Superfund  sites.  The liability under CERCLA is joint and
     several, meaning that we could be required to pay in excess of our pro rata
     share  of  remediation  costs.  As a  result  of the  use and  handling  of
     hazardous substances in our normal operations,  an unexpected environmental
     event or significant changes in environmental compliance requirements could
     have a material  adverse  impact on our financial  condition and results of
     operations.

     We   continually   monitor  our   operations   with  respect  to  potential
     environmental   issues,   including  changes  in  legal   requirements  and
     remediation   technologies.   Our  recorded   liability  in  our  financial
     statements  reflects  those  specific  issues  where we  think  remediation
     activities  are likely and where we can estimate  the cost of  remediation.
     Estimating the extent of our  responsibility  for a particular site and the
     method and ultimate cost of remediation of that site require that we make a
     number of assumptions.  As a result, the ultimate outcome of remediation of
     a site may differ from our  estimates.  However,  we believe  that our past
     experience   provides  us  with  a  reasonable  basis  for  estimating  our
     liability.  When we receive additional  information we adjust our estimates
     as necessary.  While we do not anticipate  that any such adjustment will be
     material to our financial  statements,  the result of ongoing and/or future
     environmental  studies or other  factors could alter this  expectation  and
     require that we record additional liabilities. We currently can't determine
     whether we will incur  additional  liabilities  in the future or, if we do,
     the extent or amount of such additional liabilities.

     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 its  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. Agway has 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  results  of  operations,
     financial position, or liquidity of Agway.

     Insurance Coverage
     The Company uses various insurance companies to insure its primary casualty
     insurance  risks as well as to  obtain  various  umbrella/excess  liability
     coverages.  On October  3, 2001,  the  Commonwealth  Court of  Pennsylvania
     approved the petition of the  Pennsylvania  Insurance  Commissioner  for an
     Order of  Liquidation  for  Reliance  Insurance  Company  (RIC).  Agway has
     obtained  insurance  coverage from RIC in various segments of its insurance
     programs since 1991.  Presently,  Agway has four pending claims which could
     be  affected by this  liquidation.  Total  covered  amounts by RIC on these
     claims as of March 31, 2002 are  estimated at $3,500.  In addition,  future
     claims  could be  affected by this  liquidation.  The  liquidation  statute
     establishes certain priorities for payment of claims.  Direct policyholders
     are one of the top  priorities for payment.  To the extent,  if any, RIC is
     unable  to meet  its  claim  obligations  to its  policyholders  and  other
     creditors,  certain state insurance  guarantee funds may provide additional
     sources of claim  payments.  The Company  cannot at this time determine the
     ultimate outcome of this liquidation,  its impact on outstanding and future
     claims  against RIC policies held by Agway,  or the impact on the Company's
     financial results.  However, it is anticipated that due to this proceeding,
     the Company,  at a minimum,  can expect delays in receiving cash settlement
     for claims outstanding under RIC policies and that we will not receive full
     value for such  claims.  Therefore,  the Company has  established  a $1,500
     allowance for loss on amounts reimbursable from RIC.

                                       19

<PAGE>

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

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

8.   FINANCIAL INFORMATION CONCERNING SEGMENT REPORTING
     --------------------------------------------------
     Agway is an agricultural  cooperative  directly  engaged in  manufacturing,
     processing,  marketing and direct  distribution of various animal feeds and
     services  for its  farmer-members  and other  customers,  primarily  in the
     northeastern United States and Ohio. In addition,  Agway is involved in the
     manufacturing,  processing  and  repacking  of a  variety  of  agricultural
     products  marketed  directly  to  consumers,  retailers,  wholesalers,  and
     processors;  is involved in the  distribution  of petroleum  products;  the
     installation and servicing of heating,  ventilation,  and  air-conditioning
     equipment;  and  the  marketing  of  natural  gas  and  electricity,  where
     deregulation  makes  that possible. Agway reports its continuing operations
     principally in three  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 net
     corporate expenses, the Agway General Agency, pension income,  intersegment
     eliminations,  and  interest.  Total Other assets  consist  principally  of
     discontinued assets and other corporate assets.

     As  discussed  in Note 4, as a result  of the  discontinuation  of  certain
     businesses  during the quarter ended March 31, 2002, the following  changes
     to  segments,  as  previously  reported,  have been made:  The  Agriculture
     segment no longer includes the results of Agronomy and Seedway; the Leasing
     segment has been  deleted;  the  principal  operation  within the Insurance
     segment (Agway Insurance) was removed.  Finally, the General  Agency is now
     combined in the Other segment.
<TABLE>
<CAPTION>
                                                                  THREE MONTHS ENDED MARCH 31, 2002
                                             --------------------------------------------------------------------
                                                              Country
                                                              Products
                                             AGRICULTURE       GROUP          ENERGY         OTHER      CONSOLIDATED
                                             -----------    ------------   ------------   -----------   ------------
<S>                                          <C>            <C>            <C>            <C>           <C>
Net sales and revenues to unaffiliated
   customers...............................  $    56,334    $    46,462    $   169,474    $       141   $    272,411
Intersegment sales and revenues............            0            978             38         (1,016)             0
                                             -----------    ------------   ------------   -----------   ------------
       Total sales and revenues............  $    56,334    $    47,440    $   169,512    $      (875)  $    272,411
                                             ===========    ============   ============   ===========   ============
Earnings (loss) from continuing
   operations before income taxes..........  $    (2,178)   $      (596)   $    21,998    $    (2,853)  $     16,371
                                             ===========    ============   ============   -----------   ============
Total assets...............................  $    74,292    $     67,306   $   156,998    $ 1,291,646   $  1,590,242
                                             ===========    ============   ============   ===========   ============
<CAPTION>
                                                                  THREE MONTHS ENDED MARCH 24, 2001
                                             -----------------------------------------------------------------------
                                                               Country
                                                              Products
                                             AGRICULTURE       GROUP          ENERGY         OTHER      CONSOLIDATED
                                             -----------    ------------   ------------   -----------   ------------
<S>                                          <C>            <C>            <C>            <C>           <C>
Net sales and revenues to
   unaffiliated customers..................  $    62,560    $     52,627   $   247,066    $       158   $    362,411
Intersegment sales and revenues............           44             717           306         (1,067)             0
                                             -----------    ------------   ------------   -----------   ------------
    Total sales and revenues ..............  $    62,604    $     53,344   $   247,372    $      (909)  $    362,411
                                             ===========    ============   ============   ===========   ============
Earnings (loss) from continuing
   operations before income taxes..........  $    (3,352)   $     (2,213)  $    22,396    $    (1,121)  $     15,710
                                             ===========    ============   ============   ===========   ============
Total assets...............................  $    89,175    $     77,028   $   209,439    $ 1,273,470   $  1,649,112
                                             ===========    ============   ============   ===========   ============
</TABLE>
                                       20

<PAGE>



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

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


8.   FINANCIAL INFORMATION CONCERNING SEGMENT REPORTING (CONTINUED)
     --------------------------------------------------------------
<TABLE>
<CAPTION>
                                                                   NINE MONTHS ENDED MARCH 31, 2002
                                             -----------------------------------------------------------------------
                                                              Country
                                                              Products
                                             AGRICULTURE       GROUP          ENERGY         OTHER      CONSOLIDATED
                                             -----------    ------------   ------------   -----------   ------------
<S>                                          <C>            <C>            <C>            <C>           <C>
Net sales and revenues to unaffiliated
   customers...............................  $   174,503    $   134,383    $   415,374    $       432   $    724,692
Intersegment sales and revenues............            0          3,011            105         (3,116)             0
                                             -----------    ------------   ------------   -----------   ------------
    Total sales and revenues...............  $   174,503    $   137,394    $   415,479    $    (2,684)  $    724,692
                                             ===========    ============   ============   ===========   ============

Earnings (loss) from continuing
   operations before income taxes..........  $    (4,089)   $    (1,425)   $    16,059    $    (7,002)  $      3,543
                                             ===========    ============   ============   ===========   ============

Total assets...............................  $    74,292    $     67,306   $   156,998    $ 1,291,646   $  1,590,242
                                             ===========    ============   ============   ===========   ============

<CAPTION>
                                                                    NINE MONTHS ENDED MARCH 24, 2001
                                             -----------------------------------------------------------------------
                                                              Country
                                                              Products
                                             AGRICULTURE       GROUP          ENERGY         OTHER      CONSOLIDATED
                                             -----------    ------------   ------------   -----------   ------------
<S>                                          <C>            <C>            <C>            <C>           <C>
Net sales and revenues to unaffiliated
   customers...............................  $   183,554    $    139,840   $    585,297   $       483   $    909,174
Intersegment sales and revenues............          914           3,388            528        (4,830)             0
                                             -----------    ------------   ------------   -----------   ------------
    Total sales and revenues ..............  $   184,468    $    143,228   $    585,825   $    (4,347)  $    909,174
                                             ===========    ============   ============   ===========   ============

Earnings (loss) from continuing
   operations before income taxes..........  $    (7,977)   $     (5,601)  $     28,412   $    (5,518)  $      9,316
                                             ===========    ============   ============   ===========   ============

Total assets...............................  $    89,175    $     77,028   $    209,439   $ 1,273,470   $  1,649,112
                                             ===========    ============   ============   ===========   ============

</TABLE>


                                       21

<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.  Certain
factors  that  could  cause  actual  results  to differ  materially  from  those
projected  have been  discussed in this report and include the factors set forth
below.  Other  factors  that could  cause  actual  results to differ  materially
include uncertainties of economic, competitive, and market conditions and future
business  decisions,  all of  which  are  difficult  or  impossible  to  predict
accurately   and  many  of  which  are  beyond  our  control.   Where,   in  any
forward-looking statement, 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.
Energy  generally  realizes  significantly  higher net sales and revenues in the
winter  months  due to the  higher  demand  for its  products  from cold  winter
conditions.  The Agriculture  feed business and Country Products Group net sales
and  revenues  and  operating  results are not  materially  impacted by seasonal
fluctuations.

As further  described  in Note 4, on March 6, 2002,  the Company  announced  its
intentions to divest of four business  operations:  Telmark  (Leasing  segment),
Agway  Insurance (the principal  operation  within the Insurance  segment),  and
Agronomy and Seedway (components of the Agriculture  segment).  As a result, the
financial   statements   separately   reflect  these   business   operations  as
discontinued  operations.  The  following  management  discussion  and  analysis
explains the operating results only of Agway's continuing business operations.

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

CONSOLIDATED RESULTS
--------------------
Consolidated  net sales and revenues of $272,400 and $724,700 for the three- and
nine-month  periods  ended March 31, 2002  decreased  $90,000 (25%) and $184,500
(20%),  respectively,  as  compared to the same  periods in the prior year.  The
decreases  in both the three- and  nine-month  periods  were  substantially  the
result of decreased sales in Energy, as more fully discussed below.

Consolidated  pre-tax  earnings  of  $16,400  and  $3,500  for  the  three-  and
nine-month  periods ended March 31, 2002 increased $700 (4%) for the three-month
period and decreased $5,800 (62%) for the nine-month period , as compared to the
same periods in the prior year.  Business  segment  pre-tax  earnings  increased
$2,400 (14%) and  decreased  $4,400 (29%) while net  corporate  costs  increased
$1,700  (153%) and $1,400  (26%) for the three and nine  months  ended March 31,
2002,  respectively.  Improvements in Agriculture and Country  Products Group in
both the three- and nine- month periods were partially offset in the three-month
period and more than offset in the nine-month period by a decline in Energy. The
increase in net corporate  costs for both the three- and nine-month  periods was
substantially  the result of the establishment of a $1,500 allowance for loss on
amounts reimbursable from Reliance Insurance Company. See further explanation of
pre-tax results by business segment below.

Effective  June 25, 2000,  Agway adopted a new  accounting  requirement  for all
derivative  instruments.  As a  result,  a loss  on  the  cumulative  effect  of
accounting  change,  net of tax, of $1,100 is reflected in the first  quarter of
the prior year.

                                       22

<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
-----------
Total  Agriculture  sales and revenues of $56,300 and $174,500 for the three and
nine months  ended March 31,  2002,  decreased  $6,300  (10%) and $10,000  (5%),
respectively,  as  compared  to the same  periods  in the prior  year.  The feed
business sales and revenues decreased $5,300 (9%) and $6,400 (4%) for the three-
and  nine-month  periods ended March 31, 2002,  respectively.  The declines were
substantially  the result of reduced volumes in  manufactured  dairy and poultry
feeds. The reduced dairy feed volume is directly attributable to the realignment
of the  Agriculture  business  started in December  2000,  which was designed to
realign the feed  business  with the  concentration  of farming and Agway member
farmers in the  northeastern  United States.  This alignment  resulted in closed
locations  and the  corresponding  reduction  in volumes in the current  year as
compared  to the same  periods  in the prior  year.  The  poultry  feed  decline
resulted from a significant reduction in customer flock sizes as compared to the
prior year;  that  reduction in customer flock sizes was caused by poor economic
conditions that affected  certain of our poultry farmer  customers.  The average
selling price of feeds has remained relatively flat compared to the same periods
in the  prior  year.  This  is due in  large  part  to  commodity  prices  being
consistent with prior-year periods. Additionally,  sales decreases of $1,900 and
$6,300 for the three and nine months  ended March 31, 2002,  respectively,  were
the result of closed  Agriculture  farm stores as part of the  planned  business
realignment.  The  declines  in sales  noted  above  were  partially  offset  by
increased TSPF heifer rearing  service  revenues of $900 (87%) and $2,700 (100%)
for the  three- and nine-  month  periods,  respectively,  and was the result of
increased  utilization  of the  facilities  this  year as  compared  to the same
periods in the prior year.

Agriculture  pre-tax  loss of $2,200 and  $4,100  for the three and nine  months
ended March 31, 2002 represents an improvement of $1,200 (35%) and $3,900 (49%),
respectively, as compared to the same periods in the prior year. The improvement
to pre-tax  results is  substantially  from the feed business which improved its
results  $1,100 (34%) and $4,200 (54%) for the three and nine months ended March
31, 2002,  respectively,  as compared to the same periods in the prior year. For
both the three- and nine-month periods,  expense reductions in manufacturing and
selling costs were related to the Agriculture  realignment effort where facility
rationalization and operational  efficiencies reduced these costs. For the three
months ended March 31, 2002,  efforts to reduce  procurement  and logistic costs
contributed  to improved  gross  margins as compared to the prior year.  For the
nine-month period,  increased  competitive pressures caused a reduction in gross
margins  over the same  periods in the prior  year.  The  remaining  Agriculture
businesses  experienced a $100 improvement to pre-tax results in the three-month
period  and a  $300  decline  to  pre-tax  results  in  the  nine-month  period,
respectively, as compared to the same periods in the prior year.

COUNTRY PRODUCTS GROUP
----------------------
Country  Products  Group (CPG) total sales and  revenues of $47,400 and $137,400
for the three and nine months  ended March 31, 2002  decreased  $5,900 (11%) and
$5,800  (4%),  respectively,  as compared to the same periods in the prior year.
Sales in CPG ongoing  operations  increased $3,500 (8%) and $10,800 (9%) for the
three- and nine-months  ended March 31, 2002,  respectively,  as compared to the
same  periods  in the  prior  year.  An  increase  in  sales  in the  continuing
operations  of the Produce Group of $700 (2%) and $4,900 (5%) for the three- and
nine-month periods, respectively,  resulted primarily from increased volume. The
sunflower  business  also  experienced  an increase in sales of $1,900 (21%) and
$4,900 (18%) for the three- and nine-month periods, respectively, as a result of
strong  promotion sales in the second quarter of this year on bird food products
and an increase in human edible  sunflower seeds as a result of increased demand
for  their  use in snack  foods  and  bakery  products.  Finally,  sales for the
agricultural  technology operations of the Investment Group increased $700 (94%)
and  $1,600  (78%)  for  the  three-  and  nine-month   periods,   respectively,
substantially   due  to   higher   sales   volume   of   Optigen(TM)   1200,   a
controlled-release  nitrogen feed product. The overall decrease in sales for the
three- and  nine-month  periods  was the result of a decision  made in the prior
year to shut  down  or sell a  number  of  business  operations  within  the CPG
portfolio of businesses,  the most significant being a Texas produce  operation.
The exit of these  businesses  resulted in reduced  sales and revenues of $9,400
and  $16,600  for the  three-  and  nine-month  periods  ended  March 31,  2002,
respectively, as compared to the same periods in the prior year.

                                       23

<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 (CONTINUED)
---------------------------------
CPG pre-tax  loss of $600 and $1,400 for the three and  nine-months  ended March
31,  2002   represents  an   improvement  of  $1,600  (73%)  and  $4,100  (75%),
respectively, as compared to the same periods in the prior year. The combination
of closed  business  locations and operations to be divested  incurred losses of
$200 and $1,800 in the three- and nine-month  periods in the prior year compared
to  income  for the same  periods  in the  current  year of $1,000  and  $1,400,
respectively.  The  ongoing  Produce  Group  pre-tax  results for the three- and
nine-month periods ended March 31, 2002 were consistent with the same periods in
the prior year.  The sunflower  business  pre-tax loss  decreased $100 (24%) and
$1,300 (88%) for the three- and nine-month periods, respectively, as compared to
the same  periods in the prior year due to higher  margins  from the product mix
sold this year.  For the  nine-month  period,  lower margins  experienced in the
first half of the prior year due to high product costs and increased  production
costs  associated with the poor sunflower crop in that year also  contributed to
the  improvement  this year over the prior year.  The remaining  CPG  businesses
experienced a $300 improvement in pre-tax results in the three months and a $400
deterioration  in pre-tax  results  for the nine months  ended  March 31,  2002,
respectively, as compared to the same periods in the prior year.

ENERGY
------
Energy sales and revenues of $169,500 and $415,500 for the three and nine months
ended March 31, 2002, decreased $77,900 (32%) and $170,300 (29%),  respectively,
as  compared  to the same  periods  in the  prior  year.  Overall  sales  dollar
decreases  from liquid  product  volume were  $38,100  (15%) and $96,900  (17%),
respectively  as  compared  to the same  periods in the prior  year.  The volume
decreases were  primarily the result of warmer and milder weather  conditions in
our primary  markets as compared  to the same  periods in the prior year.  Total
degree  days (an  industry  standard  measurement  unit of  temperature  used in
determining  fuel  requirements)  for the three and nine months  ended March 31,
2002,  decreased 12% and 17%,  respectively,  as compared to the same periods in
the prior year and  resulted in lower sales in heating  fuels and  propane.  The
volume decline is also  attributable to lower  wholesale  volumes in power fuels
(gasoline  and  diesel).  The mild  winter  in the  Northeast  this year and the
generally weaker economic  conditions as compared to the prior year have lowered
the demand for power  fuels.  Finally,  as a result of market  conditions  and a
decrease in  commodity  prices this year as compared to the same  periods in the
prior year, Energy  experienced sales dollar decreases  relating to price in its
liquid products of $39,600 (16%) and $73,500 (13%) for the three- and nine-month
periods ended March 31, 2002, as compared to the same periods in the prior year.

Energy  pre-tax  earnings  of $22,000  and $16,100 for the three and nine months
ended March 31, 2002,  decreased $400 (2%) and $12,400 (44%),  respectively,  as
compared  to the same  periods in the prior year.  In the three- and  nine-month
periods of the current year,  overall gross margin dollars decreased $4,300 (6%)
and $13,300 (8%), respectively, over the same periods in the prior year and were
substantially  driven by the  decrease in sales  noted  above.  Additionally,  a
decrease in pre-tax earnings for the nine months ended March 31, 2002,  resulted
from a $1,500  gain on sale of fixed  assets in the second  quarter of the prior
year. These declines in pre-tax earnings were partially offset by a reduction in
total  operating  expenses of $3,500 (7%) and $3,000 (2%) for the three and nine
months  ended  March 31,  2002,  respectively.  These  reductions  in  operating
expenses  resulted from lower payroll and contract  hauling costs, the result of
lower volumes.

DISCONTINUED OPERATIONS
-----------------------
See Note 4 to the condensed  consolidated  financial  statements  for details of
discontinued operations.





                                       24

<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
-------------------------------
The  cash  flows  generated  from  external  borrowings  and the  operations  of
continuing  and  discontinued  businesses  are Agway's major sources of funds to
finance capital improvements,  business acquisitions, and shareholder dividends.
The following is a summary of net cash flows for the six months ended:
<TABLE>
<CAPTION>
                                                               March 31,      March 24,         Increase
                                                                 2002            2001          (DECREASE)
                                                             ------------    ------------     ------------
<S>                                                          <C>             <C>              <C>
Net cash flows provided by (used in):
     Operating activities..................................  $     64,800    $     10,211     $     54,589
     Investing activities..................................         3,653           1,689            1,964
     Financing activities..................................       (68,453)        (31,041)         (37,412)
                                                             ------------    ------------     ------------
Net increase (decrease) in cash and equivalents............  $          0    $    (19,141)    $     19,141
                                                             ============    ============     ============
</TABLE>

Cash Flows Provided By Operating Activities
Cash flows from  operations  of $64,800 for the nine months ended March 31, 2002
improved  $54,600 over the same period in the prior year.  This  improvement  is
primarily related to reduced working  capital  needs.  For the nine months ended
March 31,  2002, changes  in working capital  generated cash flows of $40,300 as
compared  to  using  cash of $35,800 for the same period in the prior year.  The
generation  of cash flows from  working  capital  items was a result of declines
in  receivables  and inventory,  principally  in  Energy and  Agriculture.  This
increase in  operating  cash flow  from  working  capital changes  was partially
offset by  an  increased  net loss  which  was $30,600 for the nine months ended
March 31, 2002 as compared  to  a  net loss of $4,400 in the same  period in the
prior  year.  Cash  flows from  the  assets  and  liabilities  of   discontinued
operations  generated  cash  of  $40,600 compared  to  generating  cash flows of
$32,600 for the same period in the prior year.

As discussed  in Note 7 to the  financial  statements,  the Company has obtained
insurance  coverage from Reliance Insurance Company (RIC) in various segments of
its insurance programs since 1991. On October 3, 2001, the Commonwealth Court of
Pennsylvania  approved the petition of the Pennsylvania  Insurance  Commissioner
for an Order of Liquidation  for RIC.  Presently,  Agway has four pending claims
with RIC  (estimated  at  approximately  $3,500) and may make more claims in the
future  under  policies  issued  by  RIC.  While  the  impact,  if  any,  of the
liquidation  of RIC on the Company  cannot be predicted at this time,  if RIC is
unable to satisfy, or is delayed in satisfying,  its obligations to the Company,
such failure or delay in paying claims could negatively affect our liquidity.

Cash Flows Used in Investing Activities
The cash flows used in investing  activities  increased in the nine months ended
March 31, 2002, by $2,000 as compared to the same period in the prior year. This
increase was generated primarily from an increase in sales proceeds of property,
plant and  equipment  totaling  $4,400 for the nine months ended March 31, 2002,
being partially  offset by an increase of $1,700 of cash used in the purchase of
property, plant and equipment.

Cash Flows Used in Financing Activities
The net cash provided from  operating and investing  activities  noted above was
used to reduce the financing obligations of the Company, principally a reduction
in short-term notes payable and net redemptions of subordinated debentures.  The
following details the Company's current financing activities:




                                       25

<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)
Cash Flows Used in Financing Activities (continued)

Notes Payable
Agway has available under its Senior Debt program  (described  below) a $150,000
short-term  line of credit,  up to  $35,000 of which can be used for  letters of
credit.  At March 31, 2002,  letters of credit  issued,  primarily to back Agway
insurance  programs,  totaled  approximately  $28,800.  The carrying  amounts of
Agway's short-term borrowings approximate their fair value and were as follows:

                                                 March 31, 2002   June 30, 2001
                                                 --------------   -------------
Lines of credit...............................   $      10,725    $     61,342
                                                 ==============   =============
Weighted average interest rate................           5.87%           7.22%
                                                 ==============   =============

Agway Senior Debt
The  Agway  Senior  Debt  (as  amended-see  discussion  below)  is a  syndicated
three-year  asset-based  revolving line of credit for up to $150,000 pursuant to
the terms of a credit agreement between Agway, certain of its subsidiaries and a
syndicated  group  of  lenders  (the  Credit  Agreement).   Interest  rates  are
determined at the option of Agway,  as either prime rate plus 2.5% or the London
Interbank Offered Rate (LIBOR) plus 4%. In this asset-based line of credit,  the
amount  available to Agway is the lesser of the  "collateral  borrowing base" or
the $150,000 upper limit of the line of credit.  The  collateral  borrowing base
consists of certain of Agway's  eligible  accounts  receivable and inventory (as
defined under the Credit  Agreement).  Certain  covenants and  conditions of the
Credit Agreement,  as more fully discussed below,  restrict the use of funds and
reduce the practical availability of financing under the agreement by $25,000 to
a maximum of $125,000.

The  Credit  Agreement  dated  March 28,  2001 has been  amended  four  times in
response  to  violations  of  financial  covenants.  In  connection  with  those
amendments,  those  violations were waived.  The latest  amendment  modified the
minimum  level of EBITDA  (defined  below)  and the  minimum  ratio of EBITDA to
interest on senior debt for the twelve  months ended March 31, 2002 and June 30,
2002.  In  addition  to  amending  these  financial  covenants  and  waiving the
violation of these  covenants as of March 31, 2002,  the amendment  also reduced
the range of  required  minimum  balance of  outstanding  Agway  securities,  as
defined in the  agreement,  by  $15,000,  to a range of  $440,000 to $450,000 at
various times throughout the year;  reduced the maximum revolving line of credit
from $175,000 to $150,000; and increased the interest rate on the line of credit
0.5%,  to either  prime plus 2.5% or LIBOR plus 4%. In exchange  for this latest
amendment,  Agway agreed to pay the syndicated  group of lenders  amendment fees
totaling $300.

As of  March  31,  2002,  the  collateral  borrowing  base was  $122,600,  which
adequately supported Agway's credit needs which totaled $39,500 as of that date.
At this stage, in light of the recent announcement to divest certain businesses,
the  Company's  future  financing  needs  cannot be  predicted  with  certainty.
However,  management  believes that adequate collateral exists and will continue
to exist to support amounts required under the Agway Senior Debt. It is expected
that Agway's  ongoing  financial  needs will be reassessed  with the  syndicated
group of lenders when,  and if,  proceeds from sale of  discontinued  operations
(see Note 4) are received. In addition,  such a reassessment might also occur in
the event the Company does not comply with its financial covenants in the Credit
Agreement as currently in effect.

The Credit  Agreement  has a number of financial  covenants  which  restrict our
capital  spending and require us to maintain  minimum levels of earnings  before
interest,  taxes,  depreciation,  and amortization  (EBITDA),  as defined in the
Credit Agreement,  and minimum ratios of EBITDA to fixed charges and interest on
senior debt (see above for  discussion of the violation of certain  covenants as
of March 31, 2002).  The Credit  Agreement  also required a minimum  outstanding
balance of preferred stock, subordinated debt, and certain debt of a subsidiary.
That minimum  outstanding  balance  requirement ranges from $440,000 to $450,000
throughout  the year.  (This  minimum  amount of  capital  we must  maintain  is
referred to as the Minimum  Capital.) As of March 31, 2002, the Minimum  Capital
was $480,500.
                                       26

<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)
------------------------------------------
Cash Flows Used in Financing Activities (continued)

Agway Senior Debt (continued)
Other conditions of the Credit Agreement  prevent us, in certain  circumstances,
from  using  funds we borrow  under the  Credit  Agreement  to pay  interest  or
dividends  on, or repurchase or repay  principal  of, our  subordinated  debt or
preferred stock. To avoid these use restrictions,  the Credit Agreement requires
us to have a minimum  excess  borrowing  capacity  as defined  in the  agreement
(collateral  borrowing  base in excess of  outstanding  amounts  borrowed) of at
least $20,000 if we are not in default under the Credit Agreement.  If we are in
default under the Credit Agreement, to avoid these use restrictions, the minimum
excess borrowing capacity we must maintain (collateral  borrowing base in excess
of outstanding  amounts borrowed)  increases to $25,000.  Further,  if we are in
default under the Credit Agreement, we are subject to these use restrictions if:

(a)  we default on our payment of  principal, interest  or  other amounts due to
     the lenders under the Credit Agreement;

(b)  we fail to  maintain  the  cash  management procedures we agree to with the
     lenders under the Credit Agreement;

(c)  we do not maintain the Minimum Capital balance of $440,000 to $450,000; or

(d)  the agent under the Credit Agreement provides us with a written notice that
     such payments are no longer permitted.

These conditions,  if present, reduce the practical availability under the Agway
Senior  Debt from  $150,000  to  $125,000  or $25,000  less than the  collateral
borrowing base, whichever is lower. The Credit Agreement was designed in part to
allow and enable us to  continue  our past  practice  of  repurchasing,  at face
value,  certain  subordinated  debt  and  preferred  stock  when  presented  for
repurchase  prior to  maturity.  However,  as discussed  below,  we are under no
obligation to repurchase  subordinated  debt prior to its maturity and preferred
stock when so presented.

Agway Subordinated Debt
Agway  registers  with the  Securities  and Exchange  Commission  (SEC) to offer
debentures and money market  certificates  to the public on a continuing  basis.
The debentures are unsecured and  subordinated to all senior debt of Agway.  The
Agway  subordinated  debt bears interest  payable  semiannually on January 1 and
July 1 of each year. The interest rates of Agway's money market certificates are
at the greater of the stated rate or a rate based upon an average  discount rate
for U.S.  Government  Treasury  Bills,  with  maturities  of 26  weeks.  Agway's
subordinated  debt is not  redeemable by the holder,  though Agway  historically
repurchased  at face value plus  interest  accrued at the stated  rate,  certain
subordinated debt whenever presented for repurchase prior to maturity.  However,
we are under no obligation to repurchase subordinated debt prior to its maturity
when so  presented,  and may stop or suspend this practice at any time or may be
required  to stop or suspend  such  practice  if we do not  continue to meet the
conditions of the Credit Agreement, including those described above.

As disclosed by the Company on March 6, 2002 in its  announcement  regarding the
discontinuation  of certain of its businesses,  we had  temporarily  stopped the
sale of Agway  subordinated  debt until this report on Form 10-Q for the quarter
ended March 31, 2002, and other restated  financial  information  related to the
announced transactions, was filed with the SEC.





                                       27

<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)
------------------------------------------
Cash Flows Used in Financing Activities (continued)

Sources of Long-Term Financing
Sources of long-term financing include the following as of March 31, 2002:
<TABLE>
<CAPTION>

SOURCE OF DEBT
--------------
<S>                                                                                 <C>
Other long-term debt - due 2002 to 2018, interest at a weighted average rate of
   9.3% with a range of 6.54% to 10%............................................    $    1,873
Capital lease obligations with Telmark - due 2002 to 2022, interest with a range
   of 10.83% to 12.2%...........................................................        21,326
Subordinated money market certificates - due 10/02 to 10/17, interest at a
   weighted average rate of 8.23% with a range of 5.50% - 9.75%.................       438,707
Subordinated debentures - due 2003, interest at a weighted average rate of 7.92%
   with a range of 7.50% to 8.00%...............................................         3,743
                                                                                    -----------
     Total debt.................................................................    $  465,649
                                                                                    ===========
</TABLE>

                                                    28

<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 the normal  course of our  operations,  we have  exposure to market risk from
price fluctuations  associated with commodities such as corn, soy complex, oats,
gasoline,  distillate and propane.  These price  fluctuations  impact  commodity
inventories,   product  gross  margins,  and  anticipated  transactions  in  our
Agriculture  and  Energy  businesses.   We  manage  the  risk  of  market  price
fluctuations  of  some  of  these  commodities  by  using  commodity  derivative
instruments.  Commodity derivative instruments include  exchange-traded  futures
and option contracts and, in limited circumstances,  over-the-counter  contracts
with third  parties.  We have  policies  that specify what we can use  commodity
derivative  instruments for and set limits on the maturity of contracts we enter
into and the level of exposure to market price  fluctuations  that we are trying
to protect  ourselves  against (or  hedge).  However,  because  the  commodities
markets  are very  volatile,  our gains or losses on these  contracts  might not
fully offset the corresponding change in the prices of the underlying commodity,
which could lower our earnings.

A sensitivity  analysis has been prepared to estimate Agway's exposure to market
risk of its  commodity  instrument  positions as of March 31, 2002 and March 24,
2001.  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% adverse 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 for
which the  commodity  instruments  are managing the price risk.  As of March 31,
2002 and March 24,  2001,  assuming  a 10%  hypothetical  adverse  change in the
underlying  commodity price, the potential  decrease in fair value of our Energy
business commodity  instruments for both periods was $800. The potential loss in
fair value of commodity  instruments  for  Agriculture  was  immaterial for both
periods.

                                       29

<PAGE>



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


ITEM 1.  LEGAL PROCEEDINGS
--------------------------
On May 5, 2000,  approximately  90 North Dakota  farmers  (Jorgenson,  et al. v.
Agway Inc.) filed a Complaint  against  Agway Inc. in the U.S.  District  Court,
District of North Dakota,  Southeastern Division,  alleging that they bought and
planted a variety of  confection  sunflower  seed during the spring of 1999 from
Agway Inc.  which was  defective.  The farmers  allege that,  as a result of the
defective  seed,  they  are  entitled  to  monetary  damages  in the  amount  of
approximately  $2,900. In addition,  upon referral from the U.S. District Court,
the North  Dakota  Supreme  Court ruled in May 2001 that the farmers may proceed
with their claims against Agway under the North Dakota Consumer Fraud Act (Act).
Possible  remedies under the Act include treble damages and attorneys'  fees. In
October 2001, the U.S.  District allowed the farmers to amend their Complaint to
add  approximately  18  additional  farmers,  a claim  for fraud and a claim for
punitive damages. Agway Inc. has reached a tentative settlement with the farmers
to resolve all their claims.

ITEM 3.  DEFAULTS UPON SENIOR INDEBTEDNESS
------------------------------------------
As previously reported, based on Agway's June 30, 2001, financial results, Agway
was in violation of certain financial covenants within its Credit Agreement.  On
September 14, 2001,  the lenders agreed to waive these  violations,  and further
agreed to amend the  covenants.  Effective  January 31, 2002,  lenders agreed to
amend and waive (the Second Amendment and Waiver to Credit Agreement) certain of
the financial  covenants within the Credit Agreement for the twelve months ended
December 31, 2001.  As of December 31, 2001,  after giving effect to this Credit
Agreement amendment,  the Company met the amended covenants and conditions under
the  Credit  Agreement.  As  discussed  in  Note  2 of the  condensed  financial
statements,  Agway violated certain financial  covenants on its Credit Agreement
for the twelve months ended March 31, 2002.  Effective April 3, 2002 and May 13,
2002,  lenders  agreed to amend and waive  (the  Third  Amendment  and Waiver to
Credit Agreement and the Waiver under Credit Agreement) certain of the financial
covenants  within the Credit  Agreement  for the twelve  months  ended March 31,
2002.  As of March  31,  2002,  after  giving  effect to this  Credit  Agreement
amendment,  the Company has met the amended  covenants and conditions  under the
Credit Agreement.



                                       30

<PAGE>

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


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K
-----------------------------------------
(a)  Exhibits

     EXHIBITS REQUIRED BY SECURITIES AND EXCHANGE COMMISSION REGULATION S-K

     (i)  The following  required exhibits are hereby  incorporated by reference
          to previously filed Registration Statements on Forms S-1, S-2, S-3, or
          S-7 or on Form 10-K, 10-Q, or 8-K filed on the dates as specified:

          PLAN  OF  ACQUISITION,  REORGANIZATION,  ARRANGEMENT,  LIQUIDATION, OR
          SUCCESSION

          2(a)  -  Certificate of Ownership and Merger  merging  Agway Financial
                   Corporation with and into Agway Inc., filed by  reference  to
                   Exhibit  2(a) of Form 8-K,  dated  July 2, 2001.

          ARTICLES OF INCORPORATION AND BY-LAWS

          3(a)  -  Restated Certificate  of  Incorporation  dated  November  24,
                   1975,   filed   by   reference   to   Exhibit   3(a) (4)  of
                   Registration Statement on  Form S-1, File No. 2-57227,  dated
                   September 21, 1976.

          3(b)  -  Certificate creating series of preferred stock  of Agway Inc.
                   dated July 5, 1977,  filed by reference to Exhibit 3(a)(5) of
                   Registration  Statement on Form S-1, File No.  2-59896, dated
                   September 16, 1977.

          3(c)  -  Certificate  creating  series  of  Honorary  Member Preferred
                   Stock of Agway Inc. dated  June 15, 1981, filed  by reference
                   to Exhibit  1(c) of  the  Registration Statement on Form S-1,
                   File No. 2-73928, dated September 3, 1981.

          INSTRUMENTS  DEFINING   THE  RIGHTS  OF  SECURITY  HOLDERS,  INCLUDING
          INDENTURES

          4(a)  -  The Indenture dated  as of  September 1, 1978  between  Agway
                   Inc.  and  First  Trust  and  Deposit  Company  of  Syracuse,
                   New   York,   Trustee,   including   forms   of  Subordinated
                   Debentures   (Minimum  8.0% per annum) due July  1, 2003, and
                   Subordinated  Debentures (Minimum 7.5% per annum) due July 1,
                   2003,  filed by reference  to  Exhibit 4 of the  Registration
                   Statement  (Form S-1),  File No. 2-62549, dated  September 8,
                   1978.

          4(b)  -  The Indenture dated as of  September 1, 1985,  between  Agway
                   Inc.  and Key Bank of Central New York of Syracuse, New York,
                   Trustee, including forms of Subordinated Member Money  Market
                   Certificates  (Minimum  8% per  annum) due October  31, 2005,
                   and   Subordinated Money  Market Certificates  (Minimum  7.5%
                   per annum)  due  October  31, 2005,  filed  by  reference  to
                   Exhibit 4  of the Registration Statement (Form S-2), File No.
                   2-99905,  dated August 27, 1985.

         4(c)   -  The Indenture dated as of September 1, 1986, between  AFC and
                   Key Bank of Central New York of Syracuse, New York,  Trustee,
                   including  forms  of   Subordinated   Member   Money   Market
                   Certificates (Minimum 6% per annum) due October 31, 2006, and
                   Subordinated  Money  Market  Certificates  (Minimum  5.5% per
                   annum) due October 31, 2006, filed by reference to  Exhibit 4
                   of the  Registration Statement  (Form S-3), File No. 33-8676,
                   dated September 11, 1986.

         4(d)   -  The Supplemental Indenture dated as of October 1, 1986, among
                   AFC, Agway Inc. and Key Bank of Central New York of Syracuse,
                   New   York,   Trustee,   including   forms   of  subordinated
                   debt  securities  filed  by  reference  to  Exhibit 4 of  the
                   Registration Statement (Form  S-3),  File  No. 33-8676, dated
                   September 11, 1986.


                                       31

<PAGE>

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


ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
-----------------------------------------------------
(a)  Exhibits (continued)

     EXHIBITS  REQUIRED  BY  SECURITIES  AND  EXCHANGE COMMISSION REGULATION S-K
     (CONTINUED)

          INSTRUMENTS  DEFINING  THE  RIGHTS  OF  SECURITY  HOLDERS,  INCLUDING
          INDENTURES (CONTINUED)


          4(e)  -  The  Indenture  dated  as of August 24, 1987, between AFC and
                   Key  Bank  of  Central  New  York  of  Syracuse,  New   York,
                   Trustee, including forms  of Subordinated Member Money Market
                   Certificates  (Minimum  6.5% per annum) due October 31, 2008,
                   and  Subordinated  Money  Market Certificates (Minimum 6% per
                   annum) due October 31, 2008, filed by reference to
                   Exhibit  4 of the Registration Statement (Form S-3), File No.
                   33-16734, dated August 31, 1987.

          4(f)  -  The  Indenture  dated  as of August 23, 1988, between AFC and
                   Key Bank of Central New York  of Syracuse, New York, Trustee,
                   including   forms   of   Subordinated   Member   Money Market
                   Certificates (Minimum 9% per annum) due October 31, 2008, and
                   Subordinated  Money  Market  Certificates  (Minimum  8.5% per
                   annum) due  October 31, 2008, filed by reference to Exhibit 4
                   of  the Registration Statement (Form S-3), File No. 33-24093,
                   dated August 31, 1988.

          4(g)  -  The  Supplemental  Indenture  dated  as  of October 14, 1988,
                   among  AFC,  Agway  Inc. and  Key  Bank  of Central New York,
                   National  Association, Trustee, amending the Indentures dated
                   as of August 23, 1988,  and August 24, 1988, filed on October
                   18, 1988.

          4(h)  -  The  Indenture dated  as of August 23, 1989, among AFC, Agway
                   Inc. and Key Bank of  Central New York of Syracuse, New York,
                   Trustee,  including  forms  of   Subordinated  Money   Market
                   Certificates   and   Subordinated   Member   Money   Market
                   Certificates,    filed  by  reference  to  Exhibit  4  of the
                   Registration  Statement (Form S-3), File  No. 33-30808, dated
                   August 30, 1989.

          4(i)  -  The Supplemental Indenture dated as of August 24, 1992, among
                   AFC, Agway Inc. and Key Bank of New York,  Trustee,  amending
                   the Indenture dated as of August 23, 1989, filed by reference
                   to Exhibit 4 of the  Registration  Statement (Form S-3), File
                   No. 33-52418, dated September 25, 1992.

          4(j)  -  Agreement of Resignation,  Appointment  and Acceptance  among
                   KeyCorp, Key Bank of New York, AFC and Mellon  Bank,  F.S.B.,
                   dated  as  of  September 3, 1996, five  agreements,  filed by
                   reference  to  Exhibit  4(o) of  the  Registration  Statement
                   (Form S-3), File No. 333-34781, dated September 2, 1997.

          4(k)  -  Letter  dated November 14, 1997 from Chase Manhattan Bank, as
                   Successor Trustee, to Mellon Bank, F.S.B., filed by reference
                   to  Exhibit  4(a) of  the  Annual Report on  Form 10-K, dated
                   September 21, 2000.

          4(l)  -  The Supplemental Indenture dated as of July 1, 2001  between
                   Agway  Financial  Corporation,  Agway  Inc.,  and  The  Chase
                   Manhattan Bank, amending the Indentures dated as of September
                   1, 1986,  August  24,  1987,  August 23,  1988  (amended by a
                   supplemental  indenture  dated as of October 14,   1988)  and
                   August 23, 1989  (as  amended  by  a  supplemental  indenture
                   dated as of August 24, 1992), filed by  reference  to Exhibit
                   4(a) of Form 8-K,  dated July 2, 2001.



                                       32

<PAGE>



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

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K (CONTINUED)
-----------------------------------------------------
(a)  Exhibits (continued)

     EXHIBITS  REQUIRED  BY  SECURITIES  AND  EXCHANGE COMMISSION REGULATION S-K
     (CONTINUED

          MATERIAL CONTRACTS
          10(a)  -  Credit Agreement with lenders dated March 28, 2001, filed by
                    reference  to  Exhibit  10(a)  of Form  10-Q as of March 24,
                    2001, dated May 8, 2001.

          10(b)  -  Security Agreement  with lenders dated March 28, 2001, filed
                    by  reference  to Exhibit 10(b) of Form 10-Q as of March 24,
                    2001, dated May 8, 2001.

          10(c)  -  Pledge Agreement with lenders dated March 28, 2001, filed by
                    reference  to  Exhibit  10(c)  of  Form 10-Q as of March 24,
                    2001, dated May 8, 2001.

          10(d)  -  Intellectual Property Security  Agreement with lenders dated
                    March 28, 2001, filed by reference to Exhibit 10(d) of  Form
                    10-Q as of March 24, 2001, dated May 8, 2001.

          10(e)  -  First  Amendment  and  Waiver  to Credit  Agreement,  dated
                    September 14, 2001, filed by reference to Exhibit  10 (e) of
                    Form 10-K as of June 30,  2001,  dated  September  14, 2001.

          10(f)  -  First Amendment to Security Agreement,  dated September  14,
                    2001, filed by  reference  to Exhibit  10(f) of Form 10-K as
                    of June 30, 2001, dated September 14, 2001.

          10(g)  -  Pledge   Amendment  with  lenders, dated September 14, 2001,
                    filed by reference to Exhibit 10(g) of  Form 10-K as of June
                    30, 2001, dated September 14, 2001.

          10(h)  -  Vehicle  Security and Escrow  Agreement  with lenders, dated
                    September 14, 2001,  filed by reference to  Exhibit 10(h) of
                    Form 10-K as of June 30, 2001,  dated  September 14, 2001.

          10(i)  -  Directors  -  Deferred  Compensation  Agreement,  filed  by
                    reference to Exhibit 10(i) of Form 10-K as of June 30, 2001,
                    dated September 14, 2001.

          10(j)  -  Board  Officers - Deferred  Compensation Agreement, filed by
                    reference to Exhibit 10(j) of Form 10-K as of June 30, 2001,
                    dated September 14, 2001.

          10(k)  -  Second  Amendment  and  Waiver  to  Credit  Agreement, dated
                    January 31, 2002,filed by reference to Exhibit 10(k) of Form
                    10-Q as of December 31, 2001, dated February 4, 2002.

     (ii) The following exhibits are filed as a separate section of this report:

          ARTICLES OF INCORPORATION AND BY-LAWS
          3(d)   -  Agway Inc. By-laws,  as amended May 2, 2002, filed herewith.

          MATERIAL CONTRACTS
          10(l)  -  Third  Amendment  and  Waiver  to  Credit  Agreement,  dated
                    April  3,  2002,  filed  herewith.
          10(m)  -  Waiver  to  Credit  Agreement,  dated  May  13,  2002, filed
                    herewith.

(b)  Reports on Form 8-K
          Agway filed a report on Form 8-K during the three  months  ended March
          31, 2002, as follows:

          On March 6, 2002, to announce the details of a  comprehensive  plan to
          refocus the Company on certain  businesses  and our intentions to exit
          four business operations.

                                       33

<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 15, 2002                       /S/ PETER J. O'NEILL
      ---------------------------      -----------------------------------------
                                                   Peter J. O'Neill
                                                Senior Vice President,
                                                  Finance & Control
                                           (Principal Financial Officer and
                                                Chief Accounting Officer)







                                       34