Agway, Inc. today reported sales from continuing operations for the year ended June 24, 2000 were $1.43 billion, an increase of $205 million compared to sales for the prior year. On a continuing operations basis, the Cooperative reported net earnings of $6.2 million, compared to last year's net earnings of $12.9 million. Including the discontinued operations of its Retail business, the Cooperative reported a net loss of $9.4 million compared to net earnings of $1.8 million for the prior year.

The 17 percent increase in sales from continuing operations was primarily attributable to significantly higher commodity prices in energy and the acquisition of several new produce operations during fiscal 2000. This sales improvement was partially offset by weak agronomy sales, particularly in New York State and New England, as a result of unfavorable weather conditions that delayed spring planting throughout much of the Northeast.

The decline in net earnings from continuing operations was primarily due to weakness in demand for agronomy products in New York State and New England during the last quarter of fiscal 2000 and start-up costs for several new businesses. A net gain related to the sale of Allied Seed in fiscal 1999 was matched by a net gain on the sale of six of the Cooperative's energy terminals in fiscal 2000.

Agway reported strong earnings for Telmark (Agway's lease financing subsidiary), Agway Energy  Products, Agway Insurance and the Country Products Groups' produce operations.

In its Agriculture business, volume growth was reported in feed tonnage. This was primarily attributable to the Cooperative's four new livestock nutrition centers and the introduction of a new feed product, Optigen(TM) 1200, by Agway's CPG Nutrients division. Volume growth was also reported for the agronomy consulting business and the TSPF(TM) heifer raising facilities.

"This has been a challenging year. One of our top priorities was to stop the long run of losses in our Retail business. We are pleased that we accomplished that goal,'' said Donald P. Cardarelli, Agway president and CEO. "We strongly believe that the actions we took during the year to exit the Retail business provide a solid foundation for achieving improved financial results for the Cooperative in the years ahead.''

"Agway stores had been the heart of the Cooperative for much of its existence,'' said Cardarelli. "Agway was established by farmers in 1964-65 through the merger of three Northeast cooperatives that date back to the early 1900's. During most of this time, farmers bought their supplies through our stores and participated in the governance of the Cooperative through store-based member committees. In more recent times, as farming has changed and many farms have become larger, nearly all farm supply purchases are delivered to farms directly from mills and wholesale distribution points. Last year, for example, less than two percent of Agway's energy and farm supply sales to its farmer-members occurred at Agway-owned stores. During this past year, many of these stores have been converted to dealer stores and will continue to provide similar products and services. As such, our farm customers will be mostly unaffected by our change in Retail.''

At the end of fiscal 1999, Agway reported 162 company-owned retail stores and 306 independently-owned Agway dealer stores throughout the Northeast. Since Agway announced its intent last fall, Agway has been converting its company-owned retail stores to independently-owned Agway dealer stores and selling remaining properties. Last month, the Cooperative announced the completion of the sale of its consumer wholesale business to Southern States Cooperative, Inc. of Richmond, Virginia. The consumer wholesale business, which supports the Agway dealer system, includes all dealer marketing, development, operations,
distribution and logistics. Agway will continue to manufacture, promote, distribute and sell its Agway and Legends bagged feed products through the dealer channel in the Northeast. Agway will also continue to manufacture its branded products, including Feathered Friend® bird food, Agway seed and Seedway vegetable seed and turf seed products, for distribution by Southern States Cooperative.

"Currently, our number one focus is our Agriculture business,'' the Agway CEO said. "As farming methods and the concentration of agriculture in the Northeast continue to change, we will continue to work to align our existing asset base with these changes and we will continue to look for new ways to serve farmers through technology, knowledge, new partnerships and new distribution methods. We are committed to farming and we are committed to continuing as a leader in the Northeast agriculture marketplace.''

The Cooperative also reported that, during fiscal 2000, Agway and Telmark paid nearly $40 million in dividends and interest to their investors, principally Agway farmer-members, employees and retirees.

Agway will hold its 2000 Annual Meeting on October 17 in Syracuse, NY. Four incumbent directors, nominated earlier in the year, and one new director-nominee are expected to be officially elected to three-year terms on the Agway Board of Directors at the Syracuse meeting. The incumbent directors include: Gary K. Van Slyke, Pike, NY; Jeffrey B. Martin, Cazenovia, NY; Edwin C. Whitehead, Washington Depot, CT; and Samuel F. Minor, Washington, PA. The new director-nominee is Dennis C. Wolff, Millville, PA. Mr. Wolff succeeds Ralph H. Heffner, Pine Grove, PA, who will be retiring from the Board following twenty-seven years of service.

Agway, Inc. is an agricultural cooperative owned by 71,000 Northeast farmer-members. The Cooperative is headquartered in DeWitt, NY. Visit Agway's website at http://www.agway.com. 

Company news release
N2946