**UNITED STATESSECURITIES AND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

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**FORM 10-Q**

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| **x****Quarterly report pursuant to  Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|---------------------------------------------------------------------------------------------------|
| ** **                                                                                        |
| **For the  period May 31, 2007**                                                                  |
| ** **                                                                                        |
| **Commission  file number: 33-83868**                                                             |
| ** **                                                                                        |
| **AMERICAN  CRYSTAL SUGAR COMPANY**                                                               |
| (Exact name of  registrant as specified in its charter)                                           |

 

| **Minnesota**                                                   |   | **84-0004720**                        |
|-----------------------------------------------------------------|--------|---------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |   | (I.R.S. Employer  Identification No.) |
|                                                            |   |                                  |
| **101  North Third Street**                                     |
| **Moorhead,  Minnesota 56560**                                  |
| (Address of  principal executive offices)                       |
|                                                            |
| **Telephone  Number (218) 236-4400**                            |
| (Registrant’s  telephone number, including area code)      |

 

Indicate by check mark whether the registrant (1) has filed all reportsrequired to be filed by Section 13 or 15(d) of the Securities Exchange Act of1934 during the preceding 12 months, and (2) has been subject to such filingrequirements for the past 90 days.

YESx                                                                   NO o

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)

Large acceleratedfiler o               Accelerated filer o               Non-accelerated filer x

Indicate by check mark whether the registrant is a shell company (asdefined in rule 12b-2 of the Act).

YES o                                                                    NOx

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.
|                                          | ** ** | **Outstanding at**    | ** ** |
|------------------------------------------|------------|----------------------------|------------|
| **Class of Common Stock** | ** ** | **July 6, 2007** | ** ** |
| **$10 Par  Value**                       | ** ** | **2,879**                  | ** ** |

 

 

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**AMERICANCRYSTAL SUGAR COMPANY**

**FORM 10-Q**

**INDEX**
|                | ** ** | ** **                                                                                      | **PAGE NO.** |
|----------------|------------|-------------------------------------------------------------------------------------------------|--------------|
| **PART I**     |       | **FINANCIAL INFORMATION**                                                                       |         |   |
| ** **     | ** ** | ** **                                                                                      |         |   |
| **ITEM 1.**    | ** ** | **CONSOLIDATED FINANCIAL STATEMENTS**                                                           |         |   |
| ** **     | ** ** | ** **                                                                                      |         |   |
| ** **     |       | **CONSOLIDATED  BALANCE SHEETS**                                                                | **1**        | ** ** |
| ** **     | ** ** | ** **                                                                                      | ** **   | ** ** |
| ** **     |       | **CONSOLIDATED STATEMENTS OF OPERATIONS**                                                       | **3**        | ** ** |
| ** **     | ** ** | ** **                                                                                      | ** **   | ** ** |
| ** **     |       | **CONSOLIDATED STATEMENTS OF CASH FLOWS**                                                       | **4**        | ** ** |
| ** **     | ** ** | ** **                                                                                      | ** **   | ** ** |
| ** **     |       | **NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS**                                              | **5**        |   |
| ** **     | ** ** | ** **                                                                                      | ** **   | ** ** |
| **ITEM 2.**    | ** ** | **MANAGEMENT’S  DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION** | **11**       |   |
| **ITEM 3.**    |       | **QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK**                                 | **16**       |   |
| **ITEM 4.**    |       | **CONTROLS AND  PROCEDURES**                                                                    |         |   |
| ** **     |       |                                                                                            |         |   |
| **PART II.**   | ** ** | **OTHER INFORMATION**                                                                           | ** **   | ** ** |
| ** **     |       |                                                                                            |         |   |
| **ITEM 1**     | ** ** | **LEGAL PROCEEDINGS**                                                                           | **17**       | ** ** |
| **ITEM 1A.**   | ** ** | **RISK FACTORS**                                                                                | **18**       | ** ** |
| **ITEM 2.**    | ** ** | **UNREGISTERED  SALES OF EQUITY SECURITIES AND USE OF PROCEEDS**                                | **19**       |   |
| **ITEM 3.**    | ** ** | **DEFAULTS UPON  SENIOR SECURITIES**                                                            | **19**       | ** ** |
| **ITEM 4.**    | ** ** | **SUBMISSION OF  MATTERS TO A VOTE OF SECURITY HOLDERS**                                        | **19**       |   |
| **ITEM 5.**    | ** ** | **OTHER INFORMATION**                                                                           | **19**       | ** ** |
| **ITEM 6.**    | ** ** | **EXHIBITS**                                                                                    | **20**       | ** ** |
| ** **     | ** ** | ** **                                                                                      | ** **   | ** ** |
| **SIGNATURES** | **23**     | ** **                                                                                      |

 

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**AmericanCrystal Sugar Company**

**Consolidated Balance Sheets**

**(Unaudited)**

**(InThousands)**

 

**Assets**

 
| ** **                                     | ** ** | **May 31** | ** ** | **August 31** | ** ** |
|------------------------------------------------|------------|-----------------|------------|--------------------|------------|
| ** **                                     | ** ** | **2007**        | ** ** | **2006**           | ** ** | **2006*** | ** ** |
| **Current Assets:**                            | ** ** | ** **      | ** ** | ** **         | ** ** | ** ** | ** ** |
| Cash and Cash  Equivalents                     |       | $               | 344        |               | $          | 193 |   | $ | 345 |   |
| Receivables:                                   |       |            |       |               |       |   |   |
| Trade                                          |       | 80,389          |       | 45,951             |       | 78,242 |   |
| Members                                        |       | 3,706           |       | 3,884              |       | 3,383 |   |
| Other                                          |       | 2,049           |       | 2,182              |       | 4,036 |   |
| Advances to  Related Parties                   |       | 4,346           |       | 9,298              |       | 4,737 |   |
| Inventories                                    |       | 426,980         |       | 339,975            |       | 174,761 |   |
| Prepaid Expenses                               |       | 4,787           |       | 6,274              |       | 4,390 |   |
|                                           |       |            |       |               |       |   |   |
| **Total Current Assets**                       |       | 522,601         |       | 407,757            |       | 269,894 |   |
| ** **                                     | ** ** | ** **      | ** ** | ** **         | ** ** | ** ** | ** ** |
| **Property and Equipment:**                    | ** ** | ** **      | ** ** | ** **         | ** ** | ** ** | ** ** |
| Land and Land  Improvements                    |       | 56,231          |       | 53,669             |       | 55,808 |   |
| Buildings                                      |       | 106,679         |       | 100,379            |       | 102,986 |   |
| Equipment                                      |       | 823,910         |       | 776,430            |       | 799,175 |   |
| Construction in  Progress                      |       | 25,169          |       | 16,491             |       | 11,754 |   |
| Less Accumulated  Depreciation                 |       | (673,188        | )          | (637,410           | )          | (637,583 | ) |
|                                           |       |            |       |               |       |   |   |
| **Net Property and Equipment**                 |       | 338,801         |       | 309,559            |       | 332,140 |   |
| ** **                                     | ** ** | ** **      | ** ** | ** **         | ** ** | ** ** | ** ** |
| **Net Property and Equipment Held  for Lease** |       | 132,467         |       | 142,920            |       | 140,041 |   |
| ** **                                     | ** ** | ** **      | ** ** | ** **         | ** ** | ** ** | ** ** |
| **Other Assets:**                              | ** ** | ** **      | ** ** | ** **         | ** ** | ** ** | ** ** |
| Investments in  CoBank, ACB                    |       | 11,627          |       | 13,138             |       | 13,138 |   |
| Investments in  Marketing Cooperatives         |       | 5,829           |       | 6,240              |       | 5,638 |   |
| Investments in  Crystech, LLC                  |       | —          |       | 16,176             |       | 15,399 |   |
| Prepaid Pension  Expense                       |       | 46,891          |       | 45,434             |       | 45,425 |   |
| Other Assets                                   |       | 17,049          |       | 18,930             |       | 18,322 |   |
|                                           |       |            |       |               |       |   |   |
| **Total Other Assets**                         |       | 81,396          |       | 99,918             |       | 97,922 |   |
| ** **                                     | ** ** | ** **      | ** ** | ** **         | ** ** | ** ** | ** ** |
| **Total Assets**                               |       | $               | 1,075,265  |               | $          | 960,154 |   | $ | 839,997 |   |

 

The Accompanying Notes arean Integral Part of These Consolidated Financial Statements.

 

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* Derived from audited financial statements

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**AmericanCrystal Sugar Company**

**ConsolidatedBalance Sheets**

**(Unaudited)**

**(InThousands)**

 

**Liabilitiesand Members’ Investments**

 
| ** **                                                  | ** ** | **May 31** | ** ** | **August 31** | ** ** |
|-------------------------------------------------------------|------------|-----------------|------------|--------------------|------------|
| ** **                                                  | ** ** | **2007**        | ** ** | **2006**           | ** ** | **2006*** | ** ** |
| **Current  Liabilities:**                                   | ** ** | ** **      |       |               |       |   |   |
| Short-Term Debt                                             |       | $               | 221,463    | ** **         | $          | 158,815 |   | $ | 5,300 |   |
| Current Maturities of Long-Term Debt                        |       | 20,977          | ** ** | 20,962             |       | 20,962 |   |
| Accounts Payable                                            |       | 19,140          | ** ** | 11,577             |       | 27,120 |   |
| Advances Due to Related Parties                             |       | 1,939           | ** ** | 8,754              |       | 7,033 |   |
| Accrued Continuing Costs                                    |       | 85,579          | ** ** | 57,126             |       | — |   |
| Other Current Liabilities                                   |       | 25,761          | ** ** | 24,861             |       | 27,617 |   |
| Amounts Due Growers                                         |       | 118,987         | ** ** | 91,958             |       | 123,648 |   |
|                                                        | ** ** | ** **      |       |               |       |   |   |
| **Total  Current Liabilities**                              |       | 493,846         | ** ** | 374,053            |       | 211,680 |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Long-Term  Debt, Net of Current Maturities**              |       | 165,428         | ** ** | 185,781            |       | 200,037 |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Accrued  Employee Benefits**                              |       | 41,848          | ** ** | 41,293             |       | 40,987 |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Other  Liabilities**                                      |       | 7,847           | ** ** | 8,192              |       | 7,938 |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Total  Liabilities**                                      |       | 708,969         | ** ** | 609,319            |       | 460,642 |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Commitments  and Contingencies**                          | ** ** | ** **      |       |               |       |   |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Minority  Interest in ProGold Limited Liability Company** |       | 60,186          | ** ** | 54,987             |       | 56,099 |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Members’  Investments:**                             | ** ** | ** **      |       |               |       |   |   |
| Preferred Stock                                             |       | 38,275          | ** ** | 38,275             |       | 38,275 |   |
| Common Stock                                                |       | 29              | ** ** | 29                 |       | 29 |   |
| Additional Paid-In Capital                                  |       | 152,261         | ** ** | 152,261            |       | 152,261 |   |
| Unit Retains                                                |       | 134,711         | ** ** | 127,617            |       | 153,961 |   |
| Equity Retention                                            |       | 2,689           | ** ** | 2,696              |       | 2,694 |   |
| Accumulated Other Comprehensive Income (Loss)               |       | (428            | )          | (832               | )          | (500 | ) |
| Retained Earnings (Accumulated Deficit)                     |       | (21,427         | )          | (24,198            | )          | (23,464 | ) |
|                                                        | ** ** | ** **      |       |               |       |   |   |
| **Total  Members’ Investments**                        |       | 306,110         | ** ** | 295,848            |       | 323,256 |   |
| ** **                                                  | ** ** | ** **      |       |               |       |   |   |
| **Total Liabilities and Members’  Investments**        |       | $               | 1,075,265  | ** **         | $          | 960,154 |   | $ | 839,997 |   |

 

The Accompanying Notes arean Integral Part of These Consolidated Financial Statements.

 

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* Derived from audited financial statements

 

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**AmericanCrystal Sugar Company**

**Consolidated Statements of Operations**

**(Unaudited)**

**(InThousands)**

 
| ** **                                                      | ** ** | **For the Nine Months** | ** ** | **For the Three Months** | ** ** |
|-----------------------------------------------------------------|------------|----------------------------------------|------------|-----------------------------------------|------------|
| ** **                                                      | ** ** | **Ended May 31**             | ** ** | **Ended May 31**              | ** ** |
| ** **                                                      | ** ** | **2007**                               | ** ** | **2006**                                | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Net  Revenue**                                                |       | $                                      | 875,517    |                                    | $          | 707,585 |   | $ | 331,302 |   | $ | 258,265 |   |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Cost of  Sales**                                              |       | 44,874                                 |       | 82,799                                  |       | 58,087 |   | 83,565 |   |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Gross  Proceeds**                                             |       | 830,643                                |       | 624,786                                 |       | 273,215 |   | 174,700 |   |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Selling,  General and Administrative Expenses**               |       | 169,319                                |       | 146,276                                 |       | 61,765 |   | 48,404 |   |
| **Accrued  Continuing Costs**                                   |       | 85,579                                 |       | 57,126                                  |       | 9,125 |   | (11,589 | ) |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Operating  Proceeds**                                         |       | 575,745                                |       | 421,384                                 |       | 202,325 |   | 137,885 |   |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Other  Income (Expense):**                                    |       |                                   |       |                                    |       |   |   |   |   |
| Interest Income                                                 |       | 568                                    |       | 258                                     |       | 62 |   | 82 |   |
| Interest Expense, Net                                           |       | (15,455                                | )          | (13,962                                 | )          | (5,479 | ) | (4,413 | ) |
| Other, Net                                                      |       | 956                                    |       | 3,758                                   |       | 466 |   | 2,823 |   |
|                                                            |       |                                   |       |                                    |       |   |   |   |   |
| **Total  Other (Expense)**                                      |       | (13,931                                | )          | (9,946                                  | )          | (4,951 | ) | (1,508 | ) |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Proceeds  Before Minority Interest and Income Tax Expense**   |       | 561,814                                |       | 411,438                                 |       | 197,374 |   | 136,377 |   |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Minority  Interest**                                          |       | (4,087                                 | )          | (3,455                                  | )          | (1,564 | ) | (1,303 | ) |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Income  Tax Expense**                                         |       | (1,422                                 | )          | (1,060                                  | )          | 212 |   | (485 | ) |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Net  Proceeds Resulting from Member and Non-Member Business** |       | $                                      | 556,305    |                                    | $          | 406,923 |   | $ | 196,022 |   | $ | 134,589 |   |
| ** **                                                      |       |                                   |       |                                    |       |   |   |   |   |
| **Distributions  of Net Proceeds:**                             |       |                                   |       |                                    |       |   |   |   |   |
| Credited/(Charged) to Members’ Investments:                |       |                                   |       |                                    |       |   |   |   |   |
| Non-Member Business Income/(Loss)                               |       | $                                      | 2,037      |                                    | $          | 1,512 |   | $ | (316 | ) | $ | 700 |   |
| Unit Retains Declared to Members                                |       | —                                 |       | —                                  |       | — |   | — |   |
| Net Credit/(Charge) to Members’ Investments                |       | 2,037                                  |       | 1,512                                   |       | (316 | ) | 700 |   |
| Payments To/Due Members for Sugarbeets,                         |       |                                   |       |                                    |       |   |   |   |   |
| Net of Unit Retains Declared                                    |       | 554,268                                |       | 405,411                                 |       | 196,338 |   | 133,889 |   |
| **Total**                                                       |       | $                                      | 556,305    |                                    | $          | 406,923 |   | $ | 196,022 |   | $ | 134,589 |   |

 

The Accompanying Notes arean Integral Part of These Consolidated Financial Statements.

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**AmericanCrystal Sugar Company**

**Consolidated Statements of Cash Flows**

**For theNine Months Ended May 31**

**(Unaudited)**

**(InThousands)**

 
| ** **                                                            | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|-----------------------------------------------------------------------|------------|------------|------------|------------|------------|
| **Cash  Provided By (Used In) Operating Activities:**                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net Proceeds Resulting from Member and Non-Member  Business           |       | $          | 556,305    |       | $          | 406,923 |   |
| Payments To/Due Members for Sugarbeets, Net of Unit  Retains Declared |       | (554,268   | )          | (405,411   | )          |
| Add (Deduct) Non-Cash Items:                                          |       |       |       |       |       |
| Depreciation and Amortization                                         |       | 51,894     |       | 51,153     |       |
| Income from Equity Method Investees                                   |       | (738       | )          | (853       | )          |
| Loss on the Disposition of Property and Equipment                     |       | 846        |       | 363        |       |
| Non-Cash Portion of Patronage Dividend from CoBank,  ACB              |       | (182       | )          | (218       | )          |
| Deferred Gain Recognition                                             |       | (148       | )          | (148       | )          |
| Minority Interest in ProGold Limited Liability  Company               |       | 4,087      |       | 3,455      |       |
| Changes in Assets and Liabilities:                                    |       |       |       |       |       |
| Receivables                                                           |       | (483       | )          | (5,092     | )          |
| Inventories                                                           |       | (252,219   | )          | (217,348   | )          |
| Prepaid Expenses                                                      |       | (291       | )          | (692       | )          |
| Long-Term Prepaid Pension Expense                                     |       | (1,466     | )          | (1,645     | )          |
| Advances To/Due to Related Parties                                    |       | (401       | )          | 6,533      |       |
| Accounts Payable                                                      |       | (7,980     | )          | (15,588    | )          |
| Accrued Continuing Costs                                              |       | 85,579     |       | 57,126     |       |
| Other Liabilities                                                     |       | (1,086     | )          | 4,656      |       |
| Amounts Due Growers                                                   |       | (4,661     | )          | 58,524     |       |
| **Net  Cash Used In Operating Activities**                            |       | (125,212   | )          | (58,262    | )          |
| ** **                                                            |       |       |       |       |       |
| **Cash  Provided By (Used In) Investing Activities:**                 |       |       |       |       |       |
| Purchases of Property and Equipment                                   |       | (35,805    | )          | (21,072    | )          |
| Purchases of Property and Equipment Held for Lease                    |       | (754       | )          | (367       | )          |
| Proceeds from the Sale of Property and Equipment                      |       | 58         |       | 244        |       |
| Investments in Crystech, LLC                                          |       | (1,539     | )          | —     |       |
| Equity Refund from CoBank, ACB                                        |       | 1,693      |       | 3,796      |       |
| Changes in Other Assets                                               |       | (756       | )          | (205       | )          |
| **Net  Cash Used In Investing Activities**                            |       | (37,103    | )          | (17,604    | )          |
| ** **                                                            |       |       |       |       |       |
| **Cash  Provided By (Used In) Financing Activities:**                 |       |       |       |       |       |
| Net Proceeds from Short-Term Debt                                     |       | 216,163    |       | 128,130    |       |
| Proceeds from Issuance of Long-Term Debt                              |       | 11,736     |       | 5,000      |       |
| Long-Term Debt Repayment                                              |       | (46,330    | )          | (36,046    | )          |
| Payment of Unit Retains and Equity Retention                          |       | (19,255    | )          | (21,362    | )          |
| **Net  Cash Provided By Financing Activities**                        |       | 162,314    |       | 75,722     |       |
| **Decrease  In Cash and Cash Equivalents**                            |       | (1         | )          | (144       | )          |
| **Cash  and Cash Equivalents, Beginning of Year**                     |       | 345        |       | 337        |       |
| ** **                                                            |       |       |       |       |       |
| **Cash and Cash Equivalents, End  of Period**                         |       | $          | 344        |       | $          | 193 |   |

 

The Accompanying Notes arean Integral Part of These Consolidated Financial Statements.

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# **AMERICAN CRYSTAL SUGAR COMPANY**

**NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTS**

**FOR THE NINE MONTHS AND THREEMONTHS ENDED**

**May 31, 2007 AND 2006**

**(Unaudited)**

**Note1:  Basis of Presentation**

The unaudited consolidated financial statements of American Crystal SugarCompany (the Company) contained herein have been prepared pursuant to the rulesand regulations of the Securities and Exchange Commission.  Accordingly, they do not include all theinformation and footnotes required by accounting principles generally acceptedin the United States of America. However, in the opinion of management, all adjustments, consisting ofnormal recurring accruals, considered necessary for a fair presentation havebeen included.

The Company’s consolidated financial statements are comprised of:American Crystal Sugar Company; its wholly-owned subsidiaries Sidney SugarsIncorporated (Sidney Sugars) and Crab Creek Sugar Company (Crab Creek); andProGold Limited Liability Company (ProGold), a limited liability company inwhich the Company holds a 51 percent ownership interest.

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s 50 percentownership interest in Crystech, LLC (Crystech) resulting in the Company’s 100percent ownership of Crystech.  Due tothe Company’s resulting controlling ownership interest in Crystech, effectiveMay 1, 2007, the Company began to include Crystech in its consolidatedfinancial statements.  Effective May 31,2007, Crystech was dissolved with all assets and liabilities transferred to theCompany.

All material inter-company transactions have been eliminated.

The operating results for the nine month period ended May 31, 2007, arenot necessarily indicative of the results that may be expected for the yearended August 31, 2007.

The amount paid to shareholders for sugarbeets (member beet payment)depends on the future selling prices of sugar and agri-products as well asprocessing and other costs incurred during the remainder of the fiscal yearassociated with the 2006 Red River Valley sugarbeet crop (RRV crop).  The amount paid to non-member growers forsugarbeets (non-member beet payment) depends on the future selling prices ofsugar and the related selling expenses associated with the 2006 Sidney Sugarssugarbeet crop (Sidney crop).  For thepurposes of this report, the amount of the beet payments, future revenues andcosts have been estimated.  Therefore,adjustments with respect to these estimates may be necessary in the future, asadditional information becomes available.

These financial statements should be read in conjunction with theconsolidated financial statements and notes included in the Company’s AnnualReport on Form 10-K for the year ended August 31, 2006.

5

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**Note 2: Recently IssuedAccounting Pronouncements**

The Financial Accounting Standards Board has recently issued StatementNo. 158, *Employers’ Accounting for Defined Benefit Pensionand Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106,and 132(R)*.  This Statementwill require the Company to recognize the overfunded or underfunded status of adefined benefit postretirement plan as an asset or liability in its statementof financial position and to recognize changes in that funded status in theyear in which the changes occur through comprehensive income.  This requirement becomes effective for theCompany as of August 31, 2007.  ThisStatement will also require the Company to measure the funded status of a planas of the date of its year-end statement of financial position.  This requirement becomes effective for the Companyas of August 31, 2009.  The Companyestimates that the adoption of this statement would have had the effect on theCompany’s Consolidated Balance Sheet as of May 31, 2007, of reducing PrepaidPension Expense by approximately $11.8 million, decreasing Accrued EmployeeBenefits liabilities by approximately $ .6 million and reducing Members’Investments by approximately $11.2 million. Due to changes during the remainder of the fiscal year in such items asthe return on plan assets, the discount rate, and contributions, the actualamount of the effect on the Company’s Balance Sheet as of August 31, 2007 willnot be known until the end of the fiscal year.

**Note3:  Inventories**

The major components of inventories are as follows (In Thousands):
|                                                                        | ** ** | **May 31  2007** | ** ** | **May 31  2006** | ** ** | **August 31   2006** | ** ** |
|------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|--------------------------------|------------|
| Refined Sugar,  Pulp, Molasses, Other Agri-Products and Sugarbeet Seed |       | $                     | 393,618    |                  | $          | 311,630                        |       | $ | 134,211 |   |
| Unprocessed  Sugarbeets                                                |       | 5,546                 |       | —                |       | 8,721                          |       |
| Maintenance  Parts and Supplies                                        |       | 27,816                |       | 28,345                |       | 31,829                         |       |
|                                                                   |       |                  |       |                  |       |                           |       |
| Total Inventories                                                      |       | $                     | 426,980    |                  | $          | 339,975                        |       | $ | 174,761 |   |

 

Sugar, pulp, molasses and other agri-products inventories are valued atestimated net realizable value. Unprocessed sugarbeets are valued at the estimated gross beetpayment.  Maintenance parts and suppliesand sugarbeet seed inventories are valued at the lower of average cost ormarket.

# **Note 4: Crystech, LLC**

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s 50 percentownership interest in Crystech for $1.5 million.  This acquisition results in the Company’s 100percent ownership of Crystech.  Due tothe Company’s resulting controlling ownership interest in Crystech, effectiveMay 1, 2007, the Company began to include Crystech in its consolidatedfinancial statements.  Effective May 31,2007, Crystech was dissolved with all assets and liabilities transferred to theCompany.

# **Note 5: Short-Term Debt**

TheCompany has a seasonal line of credit with a consortium of lenders led byCoBank, ACB of $350 million and a line of credit with Wells Fargo Bank for$1 million.  The Company’scommercial paper program provides short-term borrowings of up to $325million.  Any borrowings under the commercial paper program along withoutstanding short-term letters of credit will act to reduce the availablecredit under the CoBank, ACB seasonal line of credit by a commensurateamount.  The Company also utilizes theCommodity Credit Corporation (CCC) to meet its short-term borrowing needs.

As of May 31, 2007, theCompany had outstanding commercial paper of $210****millionat an average interest rate of 5.66% and maturity dates between June 1, 2007and July 24, 2007.  In addition, theCompany had an outstanding non-recourse loan with the CCC of $11.5 million,against which 500,000 hundredweight of sugar was pledged as collateral.  The CCC loan carried an interest rate of 6.0%and a maturity date of September 30, 2007. The Company had no outstanding short-term debt with CoBank, ACB as ofMay 31, 2007. The Company had $2.2 million of short-term letters of credit 

6

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outstanding as ofMay 31, 2007. The unused seasonal line of credit as of May 31, 2007 was $138.8million.

As of May 31, 2006, theCompany had outstanding commercial paper of $108.8****millionat an average interest rate of 4.88% and maturity dates between June 1, 2006,and June 30, 2006.  The Company also hadoutstanding short-term debt with CoBank, ACB of $50.0 million as of May 31,2006, at an interest rate of 5.67% and a maturity date of June 5, 2006.  The Company had no outstanding short-termdebt with the CCC as of May 31, 2006. The Company had $6.0 million of short-term letters of credit outstandingas of May 31, 2006.  The unused seasonalline of credit as of May 31, 2006, was $166.2 million.

**Note6:  Interest Paid and InterestCapitalized**

Interest paid, net of amounts capitalized, was $13.9 million and $12.8million for the nine months ended May 31, 2007 and 2006, respectively, and $4.4million and $3.0 million for the three months ended May 31, 2007 and 2006,respectively.  Interest capitalized, was $..8 million and $ .6 million for the nine months ended May 31, 2007 and 2006,respectively, and $ .3 million and $ .3 million for the three months ended May31, 2007 and 2006, respectively.

**Note7:  Accrued Continuing Costs**

For interim reporting, the net proceeds from memberbusiness is based on the forecasted gross beet payment and the percentage ofthe tons of sugarbeets processed to the total estimated tons of sugarbeets toprocess for a given crop year.  The net proceedsfrom the operations of Sidney Sugars is based on the forecasted net income forthe fiscal year and the percentage of the tons of non-member sugarbeetsprocessed to the total estimated tons of non-member sugarbeets to process for agiven fiscal year.

Accrued continuing costs represent the differencebetween the net proceeds as determined above and actual member business cropyear and Sidney Sugars fiscal year revenues realized and expenses incurredthrough the end of the reporting period. Accrued continuing costs are reflected in the Consolidated FinancialStatements as a cost on the Consolidated Statements of Operations and as acurrent liability on the Consolidated Balance Sheets.

7

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**Note8: ****NetPeriodic Pension and Post-Retirement Costs**

The following schedules provide the components ofthe Net Periodic Pension and Post-Retirement Costs for the nine months andthree months ended May 31, 2007 and 2006:

***Componentsof Net Periodic Pension Cost***

(In Thousands)
| ** **                           | ** ** | **For the Nine Months Ended** | ** ** | **For the Three Months Ended** | ** ** |
|--------------------------------------|------------|---------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                           | ** ** | **May 31**                                   | ** ** | **May 31**                                    | ** ** |
| ** **                           | ** ** | **2007**                                          | ** ** | **2006**                                           | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service Cost                         |       | $                                                 | 2,650      |                                               | $          | 3,167 |   | $ | 883 |   | $ | 1,056 |   |
| Interest Cost                        |       | 5,930                                             |       | 5,388                                              |       | 1,977 |   | 1,796 |   |
| Expected Return  on Plan Assets      |       | (8,182                                            | )          | (7,392                                             | )          | (2,727 | ) | (2,464 | ) |
| Multiple  Employer Adjustment        |       | (42                                               | )          | (44                                                | )          | (14 | ) | (15 | ) |
| Amortization of  Prior Service Costs |       | 2,184                                             |       | 1,029                                              |       | 728 |   | 343 |   |
| Amortization of  Net Actuarial Loss  |       | 325                                               |       | 2,240                                              |       | 108 |   | 747 |   |
| Net Periodic  Pension Cost           |       | $                                                 | 2,865      |                                               | $          | 4,388 |   | $ | 955 |   | $ | 1,463 |   |

 

***Components of Net Periodic Post-Retirement Cost***

(In Thousands)

 
| ** **                                 | ** ** | **For the Nine Months Ended** | ** ** | **For the Three Months Ended** | ** ** |
|--------------------------------------------|------------|---------------------------------------------------|------------|----------------------------------------------------|------------|
| ** **                                 | ** ** | **May 31**                                   | ** ** | **May 31**                                    | ** ** |
| ** **                                 | ** ** | **2007**                                          | ** ** | **2006**                                           | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service Cost                               |       | $                                                 | 827        |                                               | $          | 1,058 |   | $ | 275 |   | $ | 353 |   |
| Interest Cost                              |       | 1,442                                             |       | 1,566                                              |       | 481 |   | 522 |   |
| Amortization of  Net Actuarial (Gain)/Loss |       | (15                                               | )          | 290                                                |       | (5 | ) | 97 |   |
| Net Periodic  Post-Retirement Cost         |       | $                                                 | 2,254      |                                               | $          | 2,914 |   | $ | 751 |   | $ | 972 |   |

 

For the nine months ended May 31, 2007, the Company made contributionsto the pension plans of $5.0 million. The Company does not expect to make any additional contributions duringthe remainder of the current fiscal year. The Company has made payments for post-retirement benefits ofapproximately $680,000 for the nine months ended May 31, 2007, and expectstotal payments for the current fiscal year to be approximately $1.0 million.

**Note9:  Members’ Investments**
|                  | ** ** | ** **         | ** ** | ** Shares** | ** ** | **Shares Issued**     | ** ** |
|------------------|------------|--------------------|------------|------------------|------------|----------------------------|------------|
| ** **       | ** ** | **Par Value** | ** ** | **Authorized**   | ** ** | **& Outstanding** | ** ** |
| Preferred Stock: |       |               |       |             |       |                       |       |
| July 6, 2007     |       | $                  | 76.77      |             | 600,000    |                       | 498,570    |   |
| May 31, 2007     |       | $                  | 76.77      |             | 600,000    |                       | 498,570    |   |
| August 31, 2006  |       | $                  | 76.77      |             | 600,000    |                       | 498,570    |   |
| May 31, 2006     |       | $                  | 76.77      |             | 600,000    |                       | 498,570    |   |
|             |       |               |       |             |       |                       |       |
| Common Stock:    |       |               |       |             |       |                       |       |
| July 6, 2007     |       | $                  | 10.00      |             | 4,000      |                       | 2,879      |   |
| May 31, 2007     |       | $                  | 10.00      |             | 4,000      |                       | 2,879      |   |
| August 31, 2006  |       | $                  | 10.00      |             | 4,000      |                       | 2,874      |   |
| May 31, 2006     |       | $                  | 10.00      |             | 4,000      |                       | 2,871      |   |

 

8

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**Note 10:Shipping and Handling Costs**

Thecosts incurred for the shipping and handling of products sold are classified inthe financial statements as a selling expense on the Statements ofOperations.  Shipping and handling costswere $116.4 million and $95.5 million for the nine months ended May 31, 2007and 2006, respectively and $44.1 million and $31.8 million for the three monthsended May 31, 2007 and 2006, respectively.

**Note 11:Segment Reporting**

The Company hasidentified two reportable segments: Sugar and Leasing.  The sugar segment is engaged primarily in theproduction and marketing of sugar from sugarbeets.  It also sells agri-products and sugarbeetseed.  The leasing segment is engaged inthe leasing of a corn wet-milling plant used in the production of high-fructosecorn syrup sweetener.  The segments aremanaged separately.  There are nointer-segment sales.  The leasing segmenthas a major customer that accounts for all of that segment’s revenue.

Summarized financialinformation concerning the Company’s reportable segments for the nine monthsand three months ended May 31, 2007 and 2006, is shown below:
|                                      | ** ** | **For the Nine Months Ended May 31, 2007** | ** ** |
|--------------------------------------|------------|-------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                          | ** ** |
| ** **                           | ** ** | **Sugar**                                                                     | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                             | 856,859    |   | $ | 18,658 |   | $ | 875,517 |   |
| Gross Proceeds                       |       | $                                                                             | 820,931    |   | $ | 9,712 |   | $ | 830,643 |   |
| Depreciation and  Amortization       |       | $                                                                             | 43,574     |   | $ | 8,320 |   | $ | 51,894 |   |
| Interest Income                      |       | $                                                                             | 538        |   | $ | 30 |   | $ | 568 |   |
| Interest Expense                     |       | $                                                                             | 14,139     |   | $ | 1,316 |   | $ | 15,455 |   |
| Income from  Equity Method Investees |       | $                                                                             | 772        |   | $ | — |   | $ | 772 |   |
| Other  Income/(Expense), Net         |       | $                                                                             | 192        |   | $ | (8 | ) | $ | 184 |   |
| Net Proceeds                         |       | $                                                                             | 552,051    |   | $ | 4,254 |   | $ | 556,305 |   |
|                                 |       |                                                                          |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                             | 35,805     |   | $ | 754 |   | $ | 36,559 |   |

 
|                                      | ** ** | **For the Nine Months Ended May 31, 2006** | ** ** |
|--------------------------------------|------------|-------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                          | ** ** |
| ** **                           | ** ** | **Sugar**                                                                     | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                             | 688,679    |   | $ | 18,906 |   | $ | 707,585 |   |
| Gross Proceeds                       |       | $                                                                             | 614,928    |   | $ | 9,858 |   | $ | 624,786 |   |
| Depreciation and  Amortization       |       | $                                                                             | 42,814     |   | $ | 8,339 |   | $ | 51,153 |   |
| Interest Income                      |       | $                                                                             | 226        |   | $ | 32 |   | $ | 258 |   |
| Interest Expense                     |       | $                                                                             | 11,199     |   | $ | 2,763 |   | $ | 13,962 |   |
| Income from  Equity Method Investees |       | $                                                                             | 853        |   | $ | — |   | $ | 853 |   |
| Other  Income/(Expense), Net         |       | $                                                                             | 2,904      |   | $ | 1 |   | $ | 2,905 |   |
| Net Proceeds                         |       | $                                                                             | 403,327    |   | $ | 3,596 |   | $ | 406,923 |   |
|                                 |       |                                                                          |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                             | 21,072     |   | $ | 367 |   | $ | 21,439 |   |

 

9

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|                                      | ** ** | **For the Three Months Ended May 31, 2007** | ** ** |
|--------------------------------------|------------|--------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                           | ** ** |
| ** **                           | ** ** | **Sugar**                                                                      | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                              | 325,062    |   | $ | 6,240 |   | $ | 331,302 |   |
| Gross Proceeds                       |       | $                                                                              | 269,900    |   | $ | 3,315 |   | $ | 273,215 |   |
| Depreciation and  Amortization       |       | $                                                                              | 13,461     |   | $ | 2,771 |   | $ | 16,232 |   |
| Interest Income                      |       | $                                                                              | 48         |   | $ | 14 |   | $ | 62 |   |
| Interest Expense                     |       | $                                                                              | 5,372      |   | $ | 107 |   | $ | 5,479 |   |
| Income from  Equity Method Investees |       | $                                                                              | 196        |   | $ | — |   | $ | 196 |   |
| Other  Income/(Expense), Net         |       | $                                                                              | 270        |   | $ | — |   | $ | 270 |   |
| Net Proceeds                         |       | $                                                                              | 194,394    |   | $ | 1,628 |   | $ | 196,022 |   |
|                                 |       |                                                                           |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                              | 13,915     |   | $ | 695 |   | $ | 14,610 |   |

 
|                                      | ** ** | **For the Three Months Ended May 31, 2006** | ** ** |
|--------------------------------------|------------|--------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                           | ** ** |
| ** **                           | ** ** | **Sugar**                                                                      | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                              | 252,052    |   | $ | 6,213 |   | $ | 258,265 |   |
| Gross Proceeds                       |       | $                                                                              | 171,503    |   | $ | 3,197 |   | $ | 174,700 |   |
| Depreciation and  Amortization       |       | $                                                                              | 12,990     |   | $ | 2,779 |   | $ | 15,769 |   |
| Interest Income                      |       | $                                                                              | 70         |   | $ | 12 |   | $ | 82 |   |
| Interest Expense                     |       | $                                                                              | 3,886      |   | $ | 527 |   | $ | 4,413 |   |
| Income from  Equity Method Investees |       | $                                                                              | 286        |   | $ | — |   | $ | 286 |   |
| Other  Income/(Expense), Net         |       | $                                                                              | 2,536      |   | $ | 1 |   | $ | 2,537 |   |
| Net Proceeds                         |       | $                                                                              | 133,233    |   | $ | 1,356 |   | $ | 134,589 |   |
|                                 |       |                                                                           |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                              | 8,546      |   | $ | 33 |   | $ | 8,579 |   |

 
|                              | ** ** | **As of May 31, 2007** | ** ** |
|------------------------------|------------|--------------------------------------------|------------|
| ** **                   | ** ** | **(Dollars In Thousands)**       | ** ** |
| ** **                   | ** ** | **Sugar**                                  | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Property and  Equipment, Net |       | $                                          | 338,801    |   | $ | — |   | $ | 338,801 |   |
| Assets Held for  Lease, Net  |       | $                                          | —     |   | $ | 132,467 |   | $ | 132,467 |   |
| Segment Assets               |       | $                                          | 934,722    |   | $ | 140,543 |   | $ | 1,075,265 |   |

 
|                              | ** ** | **As of May 31, 2006** | ** ** |
|------------------------------|------------|--------------------------------------------|------------|
| ** **                   | ** ** | **(Dollars In Thousands)**       | ** ** |
| ** **                   | ** ** | **Sugar**                                  | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Property and  Equipment, Net |       | $                                          | 309,559    |   | $ | — |   | $ | 309,559 |   |
| Assets Held for  Lease, Net  |       | $                                          | —     |   | $ | 142,920 |   | $ | 142,920 |   |
| Segment Assets               |       | $                                          | 808,051    |   | $ | 152,103 |   | $ | 960,154 |   |

 

**Note 12:Environmental Matters:**

The Company’s Crookston, East Grand Forks and Moorhead, Minnesotafactories have experienced hydrogen sulfide emissions from their watertreatment ponds that have exceeded permissible limits.  The Company is working with the MinnesotaPollution Control Agency and is aggressively addressing the situation.  While the Company may be assessed penaltiesand/or fines related to these occurrences, as of the date of this report nonehave been assessed.  Any potentialpenalties and/or fines are not expected to be material to the Company.  Capital expenditures will be required toaddress future occurrences of the emissions. The Company’s fiscal 2007 budget includes capital expenditures ofapproximately $5.0 million to address these situations.  The amount and timing of any additionalcapital expenditures that may be required is not currently known.

10

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**Note 13:Legal Matters:**

Another sugar company has appealed to federal court a decision by theUSDA relative to the determination and transfer of sugar marketing allocationsmade by the USDA.  While the Company isnot a party to this case, it is an intervenor. If the decision by the chief judicial officer of the USDA in this caseis overturned, it would result in the Company experiencing a reduction inmarketing allocations equal to the loss of approximately 25,000 acres in futurecrop years assuming no other related factors were to change.

**Item 2.   Management’s Discussion and Analysis ofResults of Operations and Financial Condition for the Nine Months and ThreeMonths Ended May 31, 2007 and 2006**

This report containsforward-looking statements that involve risks and uncertainties.  Such forward-looking statements include,among others, those statements including the words “expect”, “anticipate”, “believe”,“may” and similar expressions.  TheCompany’s actual results could differ materially from those indicated.  Risk factors that could cause or contributeto such differences include, without limitation, market factors, weather andgeneral economic conditions, farm and trade policy, available quantity andquality of sugarbeets.  For a morecomplete discussion of “Risk Factors”, please refer to the Company’s 2006 Form10-K.

**Overview**

Dueto the large size of the 2006 Red River Valley crop, the Company instituted aneight percent reduction in the number of acres harvested by its members,approximately 40,000 acres, in order to manage the quantity and quality of thesugarbeets available for processing during fiscal 2007.  Alsodue to the large size of the 2006 Red River Valley crop, the Company commencedthe harvest and processing of the crop in August 2006 this year as compared toa typical start-up in September 2006. All the costs incurred prior to the beginning of the Company’s 2007fiscal year that related to receiving and processing the 2006 sugarbeet cropwere deferred in fiscal 2006 and recognized in fiscal 2007.  Similarly, the net realizable values ofproducts produced prior to the beginning of the Company’s 2007 fiscal year thatrelated to the 2006 sugarbeet crop were deferred in fiscal 2006 and recognizedin fiscal 2007.

Theharvest of the sugarbeet crop (Red River Valley crop and Sidney crop) grownduring 2006 and to be processed during fiscal 2007 produced a total of12.8 million tons of sugarbeets, or approximately 25.3 tons of sugarbeetsper acre from approximately 507,000 acres. This represents an increase in total tons harvested of approximately33.4 percent compared to the 2005 crop. The sugar content of the 2006 crop is 18.2 percent as compared to the18.0 percent sugar content of the 2005 crop. The Company expects to produce a total of approximately37.2 million hundredweight of sugar from the 2006 crop, an increase ofapproximately 25.1 percent compared to the 2005 crop.

Withthe higher expected production volumes of its products this fiscal year ascompared to the previous fiscal year and the average selling prices for theseproducts remaining relatively firm, Net Proceeds from Member and Non-MemberBusiness for fiscal 2007 are expected to be approximately 26 percent higherthan in fiscal 2006.  This increase isprimarily the result of the anticipated increase in production volumes.

**Comparisonof the Nine Months Ended May 31, 2007 and 2006**

Revenue for the nine months ended May 31, 2007, was $875.5 million, anincrease of $167.9 million from the same period last year.  The table below reflects the percentagechanges in product revenues, prices and volumes for the nine months ended May31, 2007, as compared to the same period last year.

11

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| **Product** | ** ** | **Revenue** | ** ** | **Selling Price** | ** ** | **Volume** | ** ** |
|-------------|------------|-------------|------------|------------------------|------------|------------|------------|
| Sugar       |       | 23.9        | %          | 6.3                    | %          | 16.6       | %          |
| Pulp        |       | 23.3        | %          | 0.3                    | %          | 22.9       | %          |
| Molasses    |       | 204.5       | %          | 17.2                   | %          | 159.9      | %          |
| CSB         |       | 23.4        | %          | 22.1                   | %          | 1.1        | %          |
| Betaine     |       | -23.2       | %          | 10.5                   | %          | -30.5      | %          |

 

Thesubstantial increase in the volume of molasses sold is a result of the increasedamount of molasses available from the larger crop this year exceeding theability to process the molasses through the desugarization facilities whichresults in more molasses available for sale. The decrease in the volume of Betaine sold is primarily a result of thetiming of sales this year as compared to last year.

Rentalrevenue on the ProGold operating lease was $18.7 million and $18.9 million forthe nine months ended May 31, 2007 and 2006, respectively.

Costof sales for the nine months ended May 31, 2007, exclusive of payments tomembers for sugarbeets, decreased $37.9 million as compared to the same periodlast year.  At the end of each reportingperiod, product inventories are recorded at their net realizable value. Thechange in the net realizable value of the product inventories from thebeginning of the reporting period is recorded on the balance sheet as either anincrease or decrease to inventories with a corresponding dollar for dollaradjustment to cost of sales on the statement of operations.  The increase in the net realizable value ofproduct inventories for the nine months ended May 31, 2007 was $276.2 millionas compared to an increase of $214.6 million for the same period ending May 31,2006 resulting in a $61.6 million favorable change in the cost of sales betweenthe two periods as shown in the table below.

**Changein the Net Realizable Value of Product Inventories**

 
| ** **                                                   | ** ** | **For the Nine Months Ended May 31** | ** ** |
|--------------------------------------------------------------|------------|--------------------------------------------------------------------|------------|
| **(In Millions)**                                       | ** ** | **2007**                                                           | ** ** | **2006** | ** ** | **Change** | ** ** |
| Beginning  Product Inventories at Net Realizable Value       |       | $                                                                  | 116.0      |   | $ | 95.0 |   | $ | 21.0 | (1) |
| Ending Product  Inventories at Net Realizable Value          |       | (392.2                                                             | )          | (309.6 | ) | (82.6 | )(2) |
| Increase in the Net  Realizable Value of Product Inventories |       | $                                                                  | (276.2     | ) | $ | (214.6 | ) | $ | (61.6 | ) |

----

(1) The change is primarily due to a 23percent increase in the per hundredweight net realizable value of sugar as ofAugust 31, 2006 as compared to August 31, 2005.

(2) The change isprimarily due to a 25 percent increase in the hundredweight of sugar as of May31, 2007 as compared to May 31, 2006 and a 1.8 percent increase in the perhundredweight net realizable value of sugar as of May 31, 2007 as compared toMay 31, 2006.

Thecosts associated with sugar purchased to meet customer needs decreased by $1.6million due to an earlier campaign start-up this year.  The cost recognized associated with thenon-member sugarbeets increased $1.3 million for the nine months ended May 31,2007, when compared to the same period last year.  This increase was primarily due to anincrease in tons purchased partially offset by a lower per ton estimated growerpayment this year resulting from the lower sugar content of the 2006 Sidneycrop.  Direct processing costs for sugarand pulp increased 7.5 percent.  Theincrease in direct processing costs was due to a 28.0 percent increase in tonsprocessed partially offset by increased factory slice efficiencies, lower coalcosts and reduced energy usage.  Fixedand committed expenses increased 14.2 percent reflecting higher depreciation,insurance, property taxes and other general cost increases.

Selling, general and administrative expenses increased $23.0 millionfor the nine months ended May 31, 2007, as compared to the same period lastyear.  Selling expenses increased $22.2million primarily due to an increase in the volume of sugar, pulp and molassessold resulting in increased shipping and handling expenses.  General and Administrative expenses increased$ .8 million due to general cost increases.

Interest expense increased $1.5 million for the nine months ended May31, 2007 as compared to the same period last year. This reflects an increasedaverage borrowing level and a higher average interest rate for short-term debtpartially offset by a lower average balance and a lower average interest ratefor long-term debt.

12

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The decrease of $2.8 million in Other, Net was primarily the result ofthe receipt of a sales tax refund of $2.3 million in 2006.

Non-member business activities resulted in a gain of $2.0 million forthe nine months ended May 31, 2007, as compared to a gain of $1.5 million forthe same period last year.  The increasewas primarily related to the activities of ProGold.

**Comparisonof the Three Months Ended May 31, 2007 and 2006**

Revenue for the three months ended May 31, 2007, was $331.3 million, anincrease of $73.0 million from the same period last year.  The table below reflects the percentagechanges in product revenues, prices and volumes for the three months ended May31, 2007, as compared to the same period last year.
| **Product** | ** ** | **Revenue** | ** ** | **Selling Price** | ** ** | **Volume** | ** ** |
|-------------|------------|-------------|------------|------------------------|------------|------------|------------|
| Sugar       |       | 29.0        | %          | -1.9                   | %          | 31.6       | %          |
| Pulp        |       | 23.2        | %          | -0.7                   | %          | 24.1       | %          |
| Molasses    |       | 292.2       | %          | 11.7                   | %          | 251.1      | %          |
| CSB         |       | 31.5        | %          | 27.4                   | %          | 3.2        | %          |
| Betaine     |       | -42.0       | %          | 5.3                    | %          | -45.0      | %          |

 

 The substantial increase in the volume ofmolasses sold is a result of the increased amount of molasses available fromthe larger crop this year exceeding the ability to process the molasses throughthe desugarization facilities which results in more molasses available forsale.  The decrease in the volume of Betainesold is primarily a result of the timing of sales this year as compared to lastyear.

Rentalrevenue on the ProGold operating lease was $6.3 million and $6.2 million forthe three months ended May 31, 2007 and 2006, respectively.

Costof sales for the three months ended May 31, 2007, exclusive of payments tomembers for sugarbeets, decreased $25.5 million as compared to the same periodlast year.  At the end of each reportingperiod, product inventories are recorded at their net realizable value. The changein the net realizable value of the product inventories from the beginning ofthe reporting period is recorded on the balance sheet as either an increase ordecrease to inventories with a corresponding dollar for dollar adjustment tocost of sales on the statement of operations. The increase in the net realizable value of product inventories for thethree months ended May 31, 2007 was $37.6 million as compared to a decrease of$6.0 million for the same period ending May 31, 2006 resulting in a $43.6million favorable change in the cost of sales between the two periods as shownin the table below.

**Change in the Net Realizable Value of ProductInventories**
| ** **                                                              | ** ** | **For the Three Months Ended May 31** | ** ** |
|-------------------------------------------------------------------------|------------|---------------------------------------------------------------------|------------|
| **(In Millions)**                                                  | ** ** | **2007**                                                            | ** ** | **2006** | ** ** | **Change** | ** ** |
| Beginning  Product Inventories at Net Realizable Value                  |       | 354.6                                                               |       | 315.6 |   | $ | 39.0 | (1) |
| Ending Product  Inventories at Net Realizable Value                     |       | (392.2                                                              | )          | (309.6 | ) | (82.6 | )(2) |
| (Increase)/Decrease in  the Net Realizable Value of Product Inventories |       | $                                                                   | (37.6      | ) | $ | 6.0 |   | $ | (43.6 | ) |
|                                                                         |            |                                                                     |            |  |  |  |  |  |  |  |

 

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(1) The change is primarily due to a 17 percent increase in thehundredweight of sugar as of February 28, 2007 as compared to February 28,2006.  This increase was partially offsetby a two percent decrease in the per hundredweight net realizable value ofsugar and lower quantities of agri-products on hand as of February 28, 2007 ascompared to February, 2006.

(2) The change isprimarily due to a 25 percent increase in the hundredweight of sugar as of May31, 2007 as compared to May 31, 2006 and a 1.8 percent increase in the perhundredweight net realizable value of sugar as of May 31, 2007 as compared toMay 31, 2006.

13

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The cost recognized associated with the non-member sugarbeets decreased$ .7 million for the three months ended May 31, 2007, when compared to the sameperiod last year.  This decrease wasprimarily due to a lower per ton estimated grower payment this year resultingfrom the lower sugar content of the 2006 Sidney crop partially offset by anincrease in tons processed.  Directprocessing costs for sugar and pulp increased 27.0 percent.  The increase in direct processing costs wasdue to a 56.2 percent increase in tons processed partially offset by increasedfactory slice efficiencies, lower coal costs and reduced energy usage.  Fixed and committed expenses increased 24.3percent reflecting increased maintenance, insurance, property taxes and othergeneral cost increases.

Selling, general and administrative expenses increased $13.4 millionfor the three months ended May 31, 2007, as compared to the same period lastyear.  Selling expenses increased $13.8million primarily due to an increase in the volume of sugar, pulp and molassessold resulting in increased shipping and handling expenses.  General and Administrative decreased $ .4million due to general cost reductions.

Interest expense increased $1.1 million for the three months ended May31, 2007 as compared to the same period last year. This reflects an increasedaverage borrowing level and a higher average interest rate for short-term debtpartially offset by a lower average balance and a lower average interest ratefor long-term debt.

The decrease of $2.4 million in Other, Net was primarily the result ofthe receipt of a sales tax refund of $2.3 million in 2006.

Non-member business activities resulted in a loss of $ .3 million forthe three months ended May 31, 2007, as compared to a gain of $ .7 million forthe same period last year.  The decreasewas primarily due to lower earnings from the activities related to SidneySugars partially offset by the increased earnings of ProGold.

**NorthAmerican Free Trade Agreement**

The North American Free Trade Agreement (NAFTA) governs sweetener tradebetween the United States and Mexico.  Under an agreement reached betweenthe two countries on July 27, 2006, Mexico is eligible toship, tariff-free, 250,000 metric tons of raw sugar to the UnitedStates in fiscal year 2007 and up to an additional 250,000 metric tons in thefirst quarter of fiscal year 2008.  Reciprocal quantities of highfructose corn syrup may be shipped from the United States to Mexico during therespective time periods.  Under the NAFTA, tariffs on over-quota importsof sugar from Mexico are set to expire by January 1, 2008.  For 2007,the over-quota tariff for raw cane sugar stands at 1.51 cents per pound. Depending on market conditions in Mexico and the United States, over-quotaimports of Mexican sugar beyond the tariff-free amounts could be feasible in2007 and beyond.  Excessive imports of Mexican sugar could cause materialharm to the U.S. sugar market.  The Company has no way to predict theextent to which Mexico will fulfill its tariff-free or over-quota exportopportunities**.**

**Regionaland Bilateral Free Trade Agreements**

The United States government is pursuing an aggressive agenda oninternational trade.  It is seeking tonegotiate new free trade agreements with a number of countries and regions thatare major producers of sugar.  TheCompany believes these agreements, if they reach fruition, could negativelyimpact the Company’s profitability.  Theprimary agreements under consideration that affect sugar, to the Company’sknowledge, are the U.S.-Panama Free Trade Agreement and the Associationof Southeastern Nations Free Trade Agreement. Many of the countries included in these agreements are major sugar producersand exporters.  If increases inguaranteed access or reductions in sugar tariffs are included in theseagreements, excess sugar from these regions could enter the U.S. market and putpressure on domestic sugar prices.

Portions of these agreements have been completed.  The U.S.-Peru Free Trade Agreement wassigned on April 12, 2006.  The U.S.-ColombiaFree Trade Agreement is also nearing completion.  The Company expects that these two tradeagreements may be brought before Congress for a vote later in 2007.

14

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The Doha Round negotiations of the World Trade Organization continue tobe pursued by the U.S. Administration and some of its internationalcounterparts.  It is unclear at this timewhether negotiations will be completed. If the negotiations are completed, the outcome of any negotiatedarrangement could have adverse consequences for the Company.

The U.S. sugar industry and the Company, as an influential member ofsuch industry, recognize the potential negative impact that would result ifthese agreements are entered into by the United States and are taking steps toattempt to manage the situation.  TheCompany and the sugar industry intend to continue to focus significantattention on trade issues in the future.

The impact of the various trade agreements on the Company cannot beassessed at this time due to the uncertainty concerning the terms of theagreements and whether they will ultimately be implemented.  It is possible, however, that the passage ofvarious trade agreements could have a material adverse effect on the Companythrough a reduction in acreage that can be planted by the Company’sshareholders and by the growers for Sidney Sugars, and/or a reduction in sugarselling prices, and a corresponding reduction in the beet payment to theshareholders and the Company earnings. Although the magnitude of the impact cannot be determined at this time,the Company estimates that for every 500,000 tons of sugar entering the U.S.market and therefore reducing the overall allotment quantity (and assuming noother variables change), the Company may need to reduce planted acres byapproximately 40,000, which would negatively impact shareholder profits.

**Environmental**

The Company’s Crookston, East Grand Forks and Moorhead, Minnesotafactories have experienced hydrogen sulfide emissions from their watertreatment ponds that have exceeded permissible limits.  The Company is working with the MinnesotaPollution Control Agency and is aggressively addressing the situation.  While the Company may be assessed penaltiesand/or fines related to these occurrences, as of the date of this report nonehave been assessed.  Any potentialpenalties and/or fines are not expected to be material to the Company.  Capital expenditures will be required toaddress future occurrences of the emissions. The Company’s fiscal 2007 budget includes capital expenditures ofapproximately $5.0 million to address these situations.  The amount and timing of any additionalcapital expenditures that may be required is not currently known.

**Liquidityand Capital Resources**

Under the Company’s Bylaws and Member Grower Contracts, payments formember-delivered sugarbeets, the principal raw material used in producing thesugar and agri-products it sells, are subordinated to all member businessexpenses.  In addition, the beet paymentsmade to member growers and non-member growers are paid in three payments overthe course of a year, and the member payments are made net of any anticipatedunit retain for the crop.  Theseprocedures have the effect of providing the Company with an additional sourceof short-term financing.  This financingarrangement may result in an additional source of liquidity and reduced needfor outside financing in comparison to a similar business operated on anon-cooperative basis.

Because sugar is sold throughout the year (while sugarbeets areprocessed primarily in the fall, winter and spring) and because substantialamounts of equipment are required for its operations, the Company has utilizedsubstantial outside financing on both a seasonal and long-term basis to fundits operations.  The majority of suchfinancing has been provided by a consortium of lenders led by CoBank, ACB.

The Company has long-term debt availability with CoBank, ACB of****$220.3 million, of which $78.2 million in loans and$70.1 million in long-term letters of credit were outstanding as of May 31,2007.  The unused long-term line ofcredit as of May 31, 2007, was $72.0 million. In addition, the Company had long-term debt outstanding, as of May 31,2007, of $50 million from a private placement of Senior Notes thatoccurred in September of 1998; $7.9 million from a private placement of SeniorNotes that occurred in January of 2003; $48.7 million from ten separateissuances of Pollution Control andIndustrial Development Revenue Bonds; and a term loan with Bank of North Dakotaof $1.6 million.

15

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The Company also has a seasonal line of credit with a consortium oflenders led by CoBank, ACB of $350 million, against which there was nooutstanding balance as of May 31, 2007 and a line of credit with Wells FargoBank for $1 million, against which there was no outstanding balance as ofMay 31, 2007.  The Company’s commercialpaper program provides short-term borrowings of up to $325 million of whichapproximately $210.0 million was outstanding as of May 31, 2007.  The Company had $2.2 million of short-termletters of credit outstanding as of May 31, 2007.  The unused short-term line of credit as ofMay 31, 2007, was $138.8 million.  Anyborrowings under the commercial paper program along with outstanding short-termletters of credit will act to reduce the available credit under the CoBank, ACBseasonal line of credit by a commensurate amount.  In addition, the Company had an outstandingnon-recourse loan with the CCC of $11.5 million, against which 500,000hundredweight of sugar was pledged as collateral.

The Company had outstanding purchase commitments totaling $27.4 millionas of May 31, 2007, for equipment and construction contracts related to variouscapital and maintenance projects.

On May 1, 2007, the Company acquired CIT Capital USA Inc.’s 50 percentownership interest in Crystech for $1.5 million.  This acquisition results in the Company’s 100percent ownership of Crystech.  EffectiveMay 31, 2007, Crystech was dissolved with all assets and liabilitiestransferred to the Company.

The changes that have occurred in the Company’s financial statementsfrom August 31, 2006, to May 31, 2007, were primarily due to normal businessseasonality.  The first nine months ofthe Company’s fiscal year includes: the completion of the sugarbeet harvest,the processing campaign; the final payments to growers for sugarbeets deliveredfrom the previous year’s crop; and the initial payments to growers forsugarbeets delivered from the current year’s crop.

The net cash used by operations was $125.2 million for the nine monthsended May 31, 2007, as compared to $58.3 million for the same period lastyear.  This increase of $66.9 million wasprimarily due to changes in inventories of $34.9 million, changes in theamounts due growers of $63.2 million and changes in advances due to relatedparties of $6.9 million partially offset by the changes in receivables of $4.6million, accounts payable of $7.6 million and accrued continuing costs of $28.5million.  The change in inventories wasdue primarily to an increase in the quantity of product inventories this yearresulting from an earlier campaign start up in the Red River Valley, a longerRed River Valley campaign and sugar production out pacing sales at a higherrate this year.  The change in theamounts due growers was primarily due to the higher final previous crop year’sgrower payment made in fiscal 2007 as compared to that made in fiscal 2006partially offset by the higher expected current year’s member grower paymentdue to the increased tons harvested and the higher expected per ton membergrower payment.

The net cash used in investing activities was $37.1 million for thenine months ended May 31, 2007, as compared to $17.6 million for same periodlast year.  The increase of $19.5 millionwas primarily related to increased purchases of property and equipment and theacquisition of CIT Capital USA Inc.’s 50 percent ownership interest in Crystechpartially offset by lower equity distributions form CoBank, ACB.

The net cash provided by financing activities was $162.3 million forthe nine months ended May 31, 2007, as compared to $75.7 million for the sameperiod last year.  This increase of $86.6million was primarily due to increased borrowings of short-term and long-termdebt partially offset by increased payments on long-term debt.

The Company anticipates that the funds necessary for working capitalrequirements and future capital expenditures will be derived from operations,short-term borrowings, depreciation, unit retains and long-term borrowings.

16

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**Item 3.  Quantitative andQualitative Disclosures about Market Risk**

Market risk is the risk of loss to future earnings, to fair values orto future cash flows that may result from changes in the price of a financialinstrument.  The value of a financialinstrument may change as a result of changes in the interest rates, exchangerates, commodity prices, equity prices and other market changes.  Market risk is attributed to all market-risksensitive financial instruments, including long term debt.

The Company does not believe that there is any material market riskexposure with respect to interest rates, exchange rates, commodity prices,equity prices and other market changes that would require disclosure under thisitem.

**Item 4.   Controls and Procedures**

The Company’s chief executive officer and chief financial officer havereviewed and evaluated the effectiveness of the Company’s disclosure controlsand procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgatedunder the Securities Exchange Act of 1934) as of May 31, 2007.  Based on that review and evaluation, whichincluded inquiries made to certain other employees of the Company, the chiefexecutive officer and chief financial officer have concluded that the Company’scurrent disclosure controls and procedures, as designed and implemented, areeffective in ensuring that information relating to the Company required to bedisclosed in the reports the Company files or submits under the SecuritiesExchange Act of 1934 is recorded, processed, summarized and reported within thetime periods specified in the Securities and Exchange Commission’s rules andforms, including ensuring that such information is accumulated and communicatedto the Company’s management, including the chief executive officer and thechief financial officer, as appropriate to allow timely decisions regardingrequired disclosure.  There were nochanges in the Company’s internal controls over financial reporting thatoccurred during the Company’s most recent fiscal quarter that may havematerially affected, or are reasonably likely to materially affect, the Company’sinternal control over financial reporting.

## **PART II. OTHER INFORMATION**

#### **Item1.  Legal Proceedings**

From time to time and in the ordinary course of its business, theCompany is named as a defendant in legal proceedings related to various issues,including worker’s compensation claims, tort claims and contractualdisputes.  The Company is currentlyinvolved in certain legal proceedings, which have arisen in the ordinary courseof the Company’s business.  The Companyis also aware of certain other potential claims, which could result in thecommencement of legal proceedings.  TheCompany carries insurance, which provides protection against certain types ofclaims.  With respect to currentlitigation and potential claims of which the Company is aware, the Company’smanagement believes that (i) the Company has insurance protection to coverall or a portion of any judgments which may be rendered against the Companywith respect to certain claims or actions and (ii) any judgments which maybe entered against the Company and which may exceed such insurance coverage orwhich may arise in actions involving potential liabilities not covered byinsurance policies are not likely to have a material adverse effect upon theCompany, or its assets or operations.

Another sugar company has appealed to federal court a decision by theUSDA relative to the determination and transfer of sugar marketing allocationsmade by the USDA.  While the Company isnot a party to this case, it is an intervenor. If the decision by the chief judicial officer of the USDA in this caseis overturned, it would result in the Company experiencing a reduction inmarketing allocations equal to the loss of approximately 25,000 acres in futurecrop years assuming no other related factors were to change.

17

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**Item1A.  Risk Factors.**

For a detailed discussion of certain risk factors that could affect theCompany’s operations, financial condition or results for future periods, seethe risk factor discussed below, and Item 1A, Risk Factors, in the Company’s2006 Annual Report on Form 10-K.

**Quantityand quality of sugarbeets is sensitive to weather and other factors such asseed varieties.**

The sugarbeet, as with most other crops, is affected by many factors,including seed varieties and weather conditions during the growing season.  Additionally, the quantity of sugarbeets tobe processed and weather conditions during the processing season affect ourability to store sugarbeets held for processing.  Growing and storage conditions different fromwhat we predict or expect may change the quantity and quality of sugarbeetsavailable for processing and therefore may affect the quantity of the sugar weproduce.

A significant increase in the quantity or quality of sugarbeetsharvested due to good weather conditions or improved seed varieties couldresult in an unpredictably large quantity of sugarbeets to be processed.  If we are required to process a larger thananticipated quantity of sugarbeets we may experience increased per unit ofsugar processing cost which in turn would have an adverse financial consequenceto us and our members.

Inorder to manage the quantity and quality of sugarbeets that are harvested oravailable for processing, our Grower Contract allows for a reduction in thenumber of acres to be planted at the beginning of a crop year or harvested atthe end of a crop year.  Up through the2005 crop year, we had not instituted or required a reduction in the number ofacres harvested at the end of a crop year. Due to the large size of the 2006 Red River Valley crop, we institutedan eight percent, approximately 40,000 acres, reduction in the number of acresharvested by our members in order to manage the quantity and quality of thesugarbeets that we have available for processing.  The harvest of the 2006 Red River Valley cropresulted in a total of 11.9 million tons or an average of 25.4 tons peracre.  This represents the largest RedRiver Valley crop and the highest tonnage per acre in our history.  Also due to the large size of the 2006 RedRiver Valley crop, we commenced the harvest and processing of the crop inAugust this year as compared to a typical start-up in September.  The processing of the 2006 Red River Valleycrop was completed on June 7, 2007.

Adequatestorage conditions during a processing campaign are critical to ensure that thequantity and quality of sugarbeets available for processing aremaintained.  If we are not able to obtainor maintain adequate storage conditions, the sugarbeets stored for processingat a later date may deteriorate, resulting in increased production costs, anddecreased production which in turn would have an adverse financial consequenceto us and our members.

Based on results of recent yield trials and crop results, we expectthat new sugarbeet varieties, including Roundup Ready® varieties, may continueto result in significant increases in the average sugarbeet crop yields overthe next five years.  As a result, weanticipate that there may need to be a reduction in the number of acres ofsugarbeets that can be planted by each shareholder of the Company in order tomatch the sugarbeet crop volume to our processing and marketing capacity.  This reduction, if necessary, would beaccomplished by reducing the per share planting tolerance by an amount that maybe material.  Assuming there are nochanges in other variables, the increased yield per acre expected to resultfrom the continued use of the new sugarbeet varieties would allow shareholdersto deliver substantially the same number of tons of sugarbeets to the Companyfrom fewer acres.  Individual shareholderprofitability will continue to depend on the circumstances unique to eachshareholder.  The Board of Directors ofthe Company will continue to establish the planting tolerance on an annualbasis based on the facts existing at that time.

If we are unable to manage the quantity and quality of sugarbeetsavailable for processing, we could experience adverse financial consequencesthat would impact both us and our members.

18

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**If weare unable to compete in the sweetener market, our operating results maysuffer.**

Sugar is a fungible commodity with competition for sales volume basedprimarily upon customer service, price and reliability, though differences inproximity to various geographic markets within the United States result indifferences in freight and shipping costs which in turn generally affectpricing and competitiveness.  The overallsweetener market, in addition to sugar, includes corn-based sweeteners, such asregular and high fructose corn syrups, and non-nutritive, high-intensitysweeteners such as aspartame. Differences in functional properties and prices have tended to definethe use of these various sweeteners. Although the various sweeteners are not interchangeable in allapplication, the substitution of other sweeteners for sugar has occurred incertain products, such as soft drinks. We cannot predict the availability, development or potential use ofthese and other alternative sweeteners and their possible impact on us or ourmembers.  We believe that we possess theability to compete successfully with other producers of sugar in the UnitedStates.  In spite of this competitiveadvantage, substitute products and sugar imports could reduce the demand forsugar which could lower the price of sugar, resulting in a change to ouroperations in the future.

On June 27, 2007, the Company’s Board ofDirectors authorized the planting of Roundup Ready® sugarbeets for the 2008crop year.  Sugar and agri-productsproduced from Roundup Ready® sugarbeets have received regulatory approval inmost of the countries in which we have direct or indirect sales of ourproducts.  While the sale of sugar andagri-products from Roundup Ready® sugarbeet seed has been approved in mostmarkets, marketing risks still exist. United Sugars Corporation and Midwest Agri-Commodities, our sugar andagri-product marketing agents, respectively, feel they can successfully selland distribute products from Roundup Ready® sugarbeets with minimal affect on ourrevenue.  However, customers’ views on theuse of products from biotechnology derived crops such as Roundup Ready®sugarbeets may change over time which could negatively impact ourprofitability.

**Item2.  Unregistered Sales of EquitySecurities and Use of Proceeds.**

None

**Item3.  Defaults Upon Senior Securities**

None

**Item 4.  Submission of Matters toa Vote of Security Holders**

None

**Item5.  Other Information.**

None.

19

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### **Item6. Exhibits**

| Item No.   | ** ** | ** **                                                                                                      | ** ** | **Method of Filing**                                                                                                                                                     |
|------------|------------|-----------------------------------------------------------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| ** ** | ** ** | ** **                                                                                                      | ** ** | ** **                                                                                                                                                               |
| 3.1        |       | Restated Articles of Incorporation of American  Crystal Sugar Company.                                          |       | Incorporated by reference to Exhibit 3(i) from the  Company’s Registration Statement on Form S-1 (File No. 33-83868), declared  effective November 23, 1994.   |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 3.2        |       | Restated By-laws of American Crystal Sugar Company.                                                             |       | Incorporated by reference to Exhibit 3(ii) from the  Company’s Registration Statement on Form S-1 (File No. 333-11693), declared  effective November 13, 1996. |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 4.1        |       | Restated Articles of Incorporation of American  Crystal Sugar Company.                                          |       | See Exhibit 3.1.                                                                                                                                                         |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 4.2        |       | Restated By-laws of American Crystal Sugar Company.                                                             |       | See Exhibit 3.2.                                                                                                                                                         |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 10.1       |       | Form of Operating Agreement between Registrant and  ProGold Limited Liability Company.                          |       | Incorporated by reference to Exhibit 10(u) from the  Company’s Registration Statement on Form S-1 (File No. 33-83868), declared  effective November 23, 1994.  |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 10.2       |       | Form of Member Control Agreement between Registrant  and ProGold Limited Liability Company.                     |       | Incorporated by reference to Exhibit 10(v) from the  Company’s Registration Statement on Form S-1 (File No. 33-83868), declared  effective November 23, 1994.  |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 10.3       |       | Registrant’s Senior Note  Purchase Agreement.                                                              |       | Incorporated by reference to Exhibit 10.24 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 1999.                                       |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 10.4       |       | Registrant’s Senior Note  Inter-creditor and Collateral Agency Agreement.                                  |       | Incorporated by reference to Exhibit 10.25 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 1999.                                       |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 10.5       |       | Registrant’s Senior Note  Restated Mortgage and Security Agreement.                                        |       | Incorporated by reference to Exhibit 10.26 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 1999.                                       |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| ++10.6     |       | Employment Agreement between the Registrant and  James J. Horvath.                                              |       | Incorporated by reference to Exhibit 10.28 from the  Company’s Annual Report on Form 10-K form the year ended August 31, 1999.                                      |
|       |       |                                                                                                            |       |                                                                                                                                                                     |
| 10.7       |       | Stipulation Agreement between Registrant and State  of Minnesota Pollution Control Agency, dated April 4, 2000. |       | Incorporated by reference to Exhibit 10.28 from the  Company’s Form 10-Q for the quarter ended May 31, 2000.                                                        |

 

20

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| ++10.8  |   | Board of Directors Deferred Compensation Plan, dated  June 30, 1994.                                                     |   | Incorporated by reference to Exhibit 10.29 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 2000. |
|---------|--------|--------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                     |   |                                                                                                                               |
| ++10.9  |   | Long Term Incentive Plan, dated June 23, 1999.                                                                           |   | Incorporated by reference to Exhibit 10.31 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 2000. |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.10   |   | Uniform Member Sugar Marketing Agreement between the  Registrant and United Sugars Corporation dated September 1, 2001.  |   | Incorporated by reference to Exhibit 10.27 from the  Company’s Form 10-Q for the quarter ended November 30, 2001.             |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.11   |   | Uniform Member Marketing Agreement between the  Registrant and Midwest Agri-Commodities Company dated September 1, 2001. |   | Incorporated by reference to Exhibit 10.28 from the  Company’s Form 10-Q for the quarter ended November 30, 2001.             |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.12   |   | Registrant’s Senior Note  Purchase Agreement dated January 15, 2003.                                                |   | Incorporated by reference to Exhibit 10.29 from the  Company’s Form 10-Q for the quarter ended February 28, 2003.             |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.13   |   | Growers’ Contract (5-year Agreement) for the crop years  2003 through 2007.                                         |   | Incorporated by reference to Exhibit 10.30 from the  Company’s Form 10-Q for the quarter ended February 28, 2003.             |
|    |   |                                                                                                                     |   |                                                                                                                               |
| +10.14  |   | Beet Loading and Hauling Agreement between the  Registrant and Transystems LLC for the crop years 2003 through 2007.     |   | Incorporated by reference to Exhibit 10.31 from the  Company’s Form 10-Q for the quarter ended May 31, 2003.                  |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.15   |   | Stipulation Agreement between Registrant and State  of Minnesota Pollution Control Agency, dated August 5, 2003.         |   | Incorporated by reference to Exhibit 10.30 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 2003. |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.16   |   | Crop year 2005, 2006 and 2007 Sugarbeet Delivery  Agreements between Sidney Sugars Incorporated and Growers.             |   | Incorporated by reference to Exhibit 10.25 from the  Company’s Form 10-Q for the quarter ended May 31, 2005.                  |
|    |   |                                                                                                                     |   |                                                                                                                               |
| ++10.17 |   | Amendment to Employment Agreement dated September  28, 2005 between the Company and James J. Horvath.                    |   | Incorporated by reference to Exhibit 10.1 from the  Company’s Form 8-K dated September 30, 2005.                              |
|    |   |                                                                                                                     |   |                                                                                                                               |
| ++10.18 |   | Long Term Incentive Plan, dated August 24, 2005.                                                                         |   | Incorporated by reference to Exhibit 10.25 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 2005. |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.19   |   | Term and Seasonal Loan Agreements between the  Registrant and CoBank, ACB dated July 31, 2006                            |   | Incorporated by reference to Exhibit 10.24 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 2006. |
|    |   |                                                                                                                     |   |                                                                                                                               |
| 10.20   |   | Second Amendment to Amended and Restated Loan  Agreement between the Registrant and CoBank, ACB dated November 3, 2006.  |   | Incorporated by reference to Exhibit 10.25 from the  Company’s Form 10-Q for the quarter ended November 30, 2006.             |
|    |   |                                                                                                                     |   |                                                                                                                               |
| ++10.21 |   | Employment Agreement dated March 21, 2007 between  the Registrant and David A. Berg.                                     |   | Incorporated by reference to Exhibit 10.26 from the  Company’s Form 10-Q for the quarter ended February 28, 2007.             |

 

21

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| 10.22  |   | Third Amendment to Amended and Restated Loan Agreement  between the Registrant and CoBank, ACB dated April 2, 2007. |   | Filed herewith electronically.        |
|--------|--------|---------------------------------------------------------------------------------------------------------------------|--------|---------------------------------------|
|   |   |                                                                                                                |   |                                  |
| 21.1   |   | List of Subsidiaries of the Registrant.                                                                             |   | Filed herewith electronically.        |
|   |   |                                                                                                                |   |                                  |
| 31.1   |   | Rule 13a-14(a)/15(d)-14(a) Certification of the  Chief Executive Officer.                                           |   | Accompanying herewith electronically. |
|   |   |                                                                                                                |   |                                  |
| 31.2   |   | Rule 13a-14(a)/15(d)-14(a) Certification of the  President.                                                         |   | Accompanying herewith electronically. |
|   |   |                                                                                                                |   |                                  |
| 31.3   |   | Rule 13a-14(a)/15(d)-14(a) Certification of the  Chief Financial Officer.                                           |   | Accompanying herewith electronically. |
|   |   |                                                                                                                |   |                                  |
| 32.1   |   | Section 1350 Certification of the Chief Executive  Officer.                                                         |   | Accompanying herewith electronically. |
|   |   |                                                                                                                |   |                                  |
| 32.2   |   | Section 1350 Certification of the President.                                                                        |   | Accompanying herewith electronically. |
|   |   |                                                                                                                |   |                                  |
| 32.3   |   | Section 1350 Certification of the Chief Financial  Officer.                                                         |   | Accompanying herewith electronically. |

 

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+              Confidentialtreatment under Rule 24b-2 of the Securities and Exchange Act of 1934, asamended, has been granted with respect to designated portions of this document.

++           Amanagement contract or compensatory plan required to be filed with this report.

22

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SIGNATURES

**Pursuantto the requirement of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.**
|       | **AMERICAN CRYSTAL SUGAR COMPANY** |             |
|------------|------------------------------------|------------------|
| ** ** | ** **                         | **(Registrant)** |
|            |                                    |                  |  |  |

 

 
| **Date:**  | **July  16, 2007** | ** **                    | ** ** | **/s/ Mark Kalvoda** | ** ** |
|------------|--------------------|-------------------------------|------------|----------------------|------------|
| ** ** |               | **Mark  Kalvoda**             |
| ** ** |               | **Corporate  Controller,**    |
| ** ** |               | **Chief  Accounting Officer** |
| ** ** |               | **Duly Authorized  Officer**  |

 

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