**UNITEDSTATES**

**SECURITIESAND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

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**ý**  Quarterly report pursuant to Section 13 or15(d) of the Securities Exchange Act of 1934

 

# **For the period ended November 30, 2005**

 

**Commission file number:  33-83868**

 

**AMERICANCRYSTAL SUGAR COMPANY**

(Exact name ofregistrant as specified in its charter)

 
| **Minnesota**                                                   | ** ** | **84-0004720**                        |
|-----------------------------------------------------------------|------------|---------------------------------------|
| (State or other  jurisdiction of incorporation or organization) |       | (I.R.S. Employer  Identification No.) |

 

**101 NorthThird Street**

**Moorhead,Minnesota  56560**

(Address ofprincipal executive offices)

 

**TelephoneNumber (218) 236-4400**

(Registrant’stelephone number, including area code)

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed bySection 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding12 months, and (2) has been subject to such filing requirements for the past 90days.

 

| YES | ý | NO | o |
|-----|--------|----|---|

 

Indicate by check markwhether the registrant is an accelerated filer (as defined in rule 12b-2 of theAct).

 

| YES | o | NO | ý |
|-----|---|----|--------|

 

Indicate by check markwhether the registrant is a shell company (as defined in rule 12b-2 of theAct).

 

| YES | o | NO | ý |
|-----|---|----|--------|

 

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.

 

| **Class of Common Stock** | ** ** | **Outstanding at****January 5, 2006** |
|--------------------------------|------------|---------------------------------------|
| **$10 Par Value**              | ** ** | **2,897**                             |

 

 

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**AMERICANCRYSTAL SUGAR COMPANY**

 

**FORM 10-Q**

 

**INDEX**

 
| **PART I**     | **FINANCIAL INFORMATION**                                                                       |   |
|----------------|-------------------------------------------------------------------------------------------------|--------|
|           |                                                                                            |   |
| **ITEM 1.**    | **CONSOLIDATED FINANCIAL  STATEMENTS**                                                          |   |
|           |                                                                                            |   |
| ** **     | **CONSOLIDATED BALANCE SHEETS**                                                                 |   |
|           |                                                                                            |   |
| ** **     | **CONSOLIDATED STATEMENTS OF  OPERATIONS**                                                      |   |
|           |                                                                                            |   |
| ** **     | **CONSOLIDATED STATEMENTS OF  CASH FLOWS**                                                      |   |
|           |                                                                                            |   |
| ** **     | **NOTES TO THE CONSOLIDATED  FINANCIAL STATEMENTS**                                             |   |
|           |                                                                                            |   |
| **ITEM 2.**    | **MANAGEMENT’S DISCUSSION AND  ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION** |   |
| **ITEM 3.**    | **QUANTITATIVE AND QUALITATIVE  DISCLOSURES ABOUT MARKET RISK**                                 |   |
| **ITEM  4.**   | **CONTROLS AND PROCEDURES**                                                                     |   |
|           |                                                                                            |   |
|           |                                                                                            |   |
| **PART II**    | **OTHER INFORMATION**                                                                           |   |
|           |                                                                                            |   |
| **ITEM 1.**    | **LEGAL PROCEEDINGS**                                                                           |   |
| **ITEM 2.**    | **UNREGISTERED SALES OF EQUITY  SECURITIES AND USE OF PROCEEDS**                                |   |
| **ITEM 3.**    | **DEFAULTS UPON SENIOR  SECURITIES**                                                            |   |
| **ITEM 4.**    | **SUBMISSION OF MATTERS TO A  VOTE OF SECURITY HOLDERS**                                        |   |
| **ITEM  5.**   | **OTHER INFORMATION**                                                                           |   |
| **ITEM 6.**    | **EXHIBITS**                                                                                    |   |
|           |                                                                                            |   |
|           |                                                                                            |   |
| **SIGNATURES** |                                                                                            |   |

 

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**American Crystal Sugar Company**

**Consolidated Balance Sheets**

**(Unaudited)**

**(In Thousands)**

 

**Assets**

 
| ** **                                    | ** ** | **November 30** | ** ** | **August 31** | ** ** |
|-----------------------------------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                    | ** ** | **2005**             | ** ** | **2004**           | ** ** | **2005*** | ** ** |
| **Current Assets:**                           |       |                 |       |               |       |   |   |
| Cash and Cash  Equivalents                    |       | $                    | 1,075      |               | $          | 758 |   | $ | 337 |   |
| Receivables:                                  |       |                 |       |               |       |   |   |
| Trade                                         |       | 45,079               |       | 72,877             |       | 39,752 |   |
| Members                                       |       | 1,971                |       | 2,650              |       | 3,683 |   |
| Other                                         |       | 3,338                |       | 3,613              |       | 3,490 |   |
| Advances to  Related Parties                  |       | 2,287                |       | 2,823              |       | 15,108 |   |
| Inventories                                   |       | 460,589              |       | 447,631            |       | 122,627 |   |
| Prepaid Expenses                              |       | 6,842                |       | 5,809              |       | 5,582 |   |
|                                          |       |                 |       |               |       |   |   |
| **Total Current Assets**                      |       | 521,181              |       | 536,161            |       | 190,579 |   |
|                                          |       |                 |       |               |       |   |   |
| **Property and Equipment:**                   |       |                 |       |               |       |   |   |
| Land                                          |       | 53,467               |       | 43,209             |       | 53,728 |   |
| Buildings                                     |       | 98,815               |       | 94,582             |       | 96,816 |   |
| Equipment                                     |       | 773,407              |       | 809,951            |       | 767,698 |   |
| Construction in  Progress                     |       | 12,924               |       | 6,134              |       | 14,345 |   |
| Less Accumulated  Depreciation                |       | (616,508             | )          | (632,149           | )          | (602,727 | ) |
|                                          |       |                 |       |               |       |   |   |
| **Net Property and Equipment**                |       | 322,105              |       | 321,727            |       | 329,860 |   |
|                                          |       |                 |       |               |       |   |   |
| **Net Property and Equipment Held for Lease** |       | 148,352              |       | 158,156            |       | 150,892 |   |
|                                          |       |                 |       |               |       |   |   |
| **Other Assets:**                             |       |                 |       |               |       |   |   |
| Investments in  CoBank, ACB                   |       | 15,828               |       | 18,557             |       | 16,716 |   |
| Investments in  Marketing Cooperatives        |       | 6,119                |       | 4,538              |       | 6,060 |   |
| Investments in  Crystech, LLC                 |       | 15,642               |       | 15,620             |       | 15,376 |   |
| Prepaid Pension  Expense                      |       | 42,670               |       | 30,296             |       | 43,789 |   |
| Other Assets                                  |       | 20,250               |       | 25,408             |       | 20,752 |   |
|                                          |       |                 |       |               |       |   |   |
| **Total Other Assets**                        |       | 100,509              |       | 94,419             |       | 102,693 |   |
|                                          |       |                 |       |               |       |   |   |
| **Total Assets**                              |       | $                    | 1,092,147  |               | $          | 1,110,463 |   | $ | 774,024 |   |

 

The Accompanying Notes are an Integral Part of These ConsolidatedFinancial Statements.

 

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* Derived from audited financial statements

 

1

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**Liabilities and Members’ Investments**

 
| ** **                                          | ** ** | **November 30** | ** ** | **August 31** | ** ** |
|-----------------------------------------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                          | ** ** | **2005**             | ** ** | **2004**           | ** ** | **2005*** | ** ** |
| **Current Liabilities:**                            |       |                 |       |               |       |   |   |
| Short-Term Debt                                     |       | $                    | 169,567    |               | $          | 181,246 |   | $ | 30,685 |   |
| Current  Maturities of Long-Term Debt               |       | 20,947               |       | 20,932             |       | 20,947 |   |
| Accounts Payable                                    |       | 26,835               |       | 28,243             |       | 27,165 |   |
| Advances Due to  Related Parties                    |       | 9,799                |       | 11,211             |       | 8,031 |   |
| Accrued  Continuing Costs                           |       | 36,488               |       | 20,621             |       | — |   |
| Other Current  Liabilities                          |       | 26,097               |       | 23,355             |       | 22,803 |   |
| Amounts Due  Growers                                |       | 173,738              |       | 181,800            |       | 33,434 |   |
|                                                |       |                 |       |               |       |   |   |
| **Total Current Liabilities**                       |       | 463,471              |       | 467,408            |       | 143,065 |   |
|                                                |       |                 |       |               |       |   |   |
| **Long-Term Debt, Net of Current Maturities**       |       | 212,081              |       | 245,872            |       | 216,842 |   |
|                                                |       |                 |       |               |       |   |   |
| **Accrued Employee Benefits**                       |       | 39,189               |       | 34,999             |       | 37,990 |   |
|                                                |       |                 |       |               |       |   |   |
| **Other Liabilities**                               |       | 8,759                |       | 9,919              |       | 8,897 |   |
| ** **                                          |       |                 |       |               |       |   |   |
| **Total Liabilities**                               |       | 723,500              |       | 758,198            |       | 406,794 |   |
|                                                |       |                 |       |               |       |   |   |
| **Commitments and Contingencies**                   |       |                 |       |               |       |   |   |
|                                                |       |                 |       |               |       |   |   |
| **Minority Interest in ProGold Limited Liability**  |       | 52,616               |       | 48,284             |       | 51,532 |   |
|                                                |       |                 |       |               |       |   |   |
| **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                                        |       | 148,907              |       | 138,714            |       | 148,972 |   |
| Equity Retention                                    |       | 2,702                |       | 2,708              |       | 2,703 |   |
| Accumulated  Other Comprehensive Income (Loss)      |       | (832                 | )          | (376               | )          | (832 | ) |
| Retained  Earnings (Accumulated Deficit)            |       | (25,311              | )          | (27,630            | )          | (25,710 | ) |
|                                                |       |                 |       |               |       |   |   |
| **Total Members’ Investments**                 |       | 316,031              |       | 303,981            |       | 315,698 |   |
|                                                |       |                 |       |               |       |   |   |
| **Total Liabilities and Members’ Investments** |       | $                    | 1,092,147  |               | $          | 1,110,463 |   | $ | 774,024 |   |

 

The Accompanying Notes are an Integral Part of These ConsolidatedFinancial Statements.

 

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* Derived from audited financial statements

 

2

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**American Crystal Sugar Company**

**Consolidated Statements of Operations**

**For the Three Months Ended November 30**

**(Unaudited)**

**(In Thousands)**

 
| ** **                                                        | ** ** | **2005** | ** ** | **2004** | ** ** |
|-------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **Net Revenue**                                                   |       | $        | 231,271    |     | $          | 247,336 |   |
| ** **                                                        |       |     |       |     |       |
| **Cost of Sales**                                                 |       | 13,892   |       | 58,117   |       |
| ** **                                                        |       |     |       |     |       |
| **Gross Proceeds**                                                |       | 217,379  |       | 189,219  |       |
| ** **                                                        |       |     |       |     |       |
| **Selling, General and Administrative Expenses**                  |       | 49,984   |       | 51,417   |       |
| **Accrued Continuing Costs**                                      |       | 36,488   |       | 20,621   |       |
| ** **                                                        |       |     |       |     |       |
| **Operating Proceeds**                                            |       | 130,907  |       | 117,181  |       |
| ** **                                                        |       |     |       |     |       |
| **Other Income (Expense):**                                       |       |     |       |     |       |
| Interest Income                                                   |       | 144      |       | 132      |       |
| Interest  Expense, Net                                            |       | (3,930   | )          | (4,432   | )          |
| Other, Net                                                        |       | 928      |       | (111     | )          |
|                                                              |       |     |       |     |       |
| **Total Other (Expense)**                                         |       | (2,858   | )          | (4,411   | )          |
| ** **                                                        |       |     |       |     |       |
| **Proceeds Before Minority Interest and Income Tax  Expense**     |       | 128,049  |       | 112,770  |       |
| ** **                                                        |       |     |       |     |       |
| **Minority Interest**                                             |       | (1,084   | )          | (922     | )          |
| ** **                                                        |       |     |       |     |       |
| **Income Tax Expense**                                            |       | (276     | )          | —   |       |
| ** **                                                        |       |     |       |     |       |
| **Net Proceeds Resulting from Member and Non-Member  Business**   |       | $        | 126,689    |     | $          | 111,848 |   |
| ** **                                                        |       |     |       |     |       |
| **Distributions of Net Proceeds:**                                |       |     |       |     |       |
| Credited to  Members’ Investments:                           |       |     |       |     |       |
| Non-Member  Business Income                                       |       | $        | 399        |     | $          | 555 |   |
| Unit Retains  Declared to Members                                 |       | —   |       | —   |       |
| Net Credit to  Members’ Investments                          |       | 399      |       | 555      |       |
| Payments to  Members for Sugarbeets, Net of Unit Retains Declared |       | 126,290  |       | 111,293  |       |
| **Total**                                                         |       | $        | 126,689    |     | $          | 111,848 |   |

 

The Accompanying Notes are an Integral Part of These ConsolidatedFinancial Statements.

 

3

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**American Crystal Sugar Company**

**Consolidated Statements of Cash Flows**

**For the Three Months Ended November 30**

**(Unaudited)**

**(In Thousands)**

 
| ** **                                                            | ** ** | **2005** | ** ** | **2004** | ** ** |
|-----------------------------------------------------------------------|------------|----------|------------|----------|------------|
| **Cash Provided By (Used In) Operating Activities:**                  |       |     |       |     |       |
| Net Proceeds  Resulting from Member and Non-Member Business           |       | $        | 126,689    |     | $          | 111,848 |   |
| Payments To/Due  Members for Sugarbeets, Net of Unit Retains Declared |       | (126,290 | )          | (111,293 | )          |
| Add (Deduct)  Non-Cash Items:                                         |       |     |       |     |       |
| Depreciation and  Amortization                                        |       | 17,602   |       | 17,422   |       |
| Income from  Equity Method Investees                                  |       | (284     | )          | (275     | )          |
| (Gain)/Loss on  the Disposition of Property and Equipment             |       | (6       | )          | 599      |       |
| Deferred Gain  Recognition                                            |       | (49      | )          | (49      | )          |
| Minority  Interest in ProGold Limited Liability Company               |       | 1,084    |       | 922      |       |
| Changes in  Assets and Liabilities:                                   |       |     |       |     |       |
| Receivables                                                           |       | (3,463   | )          | 8,755    |       |
| Inventories                                                           |       | (337,962 | )          | (318,346 | )          |
| Prepaid Expenses                                                      |       | (1,260   | )          | (963     | )          |
| Long-Term  Prepaid Pension Expense                                    |       | 1,118    |       | (362     | )          |
| Advances To/Due  to Related Parties                                   |       | 14,589   |       | 14,032   |       |
| Accounts Payable                                                      |       | (330     | )          | 1,180    |       |
| Accrued  Continuing Costs                                             |       | 36,488   |       | 20,621   |       |
| Other  Liabilities                                                    |       | 4,355    |       | 3,536    |       |
| Amounts Due  Growers                                                  |       | 140,304  |       | 111,313  |       |
| **Net Cash (Used In) Operating Activities**                           |       | (127,415 | )          | (141,060 | )          |
| ** **                                                            |       |     |       |     |       |
| **Cash Provided By (Used In) Investing Activities:**                  |       |     |       |     |       |
| Purchases of  Property and Equipment                                  |       | (6,503   | )          | (5,785   | )          |
| Purchases of  Property and Equipment Held for Lease                   |       | (238     | )          | (277     | )          |
| Proceeds from  the Sale of Property and Equipment                     |       | 125      |       | —   |       |
| Equity Refund  from CoBank, ACB                                       |       | 888      |       | 512      |       |
| Changes in Other  Assets                                              |       | (174     | )          | 351      |       |
| **Net Cash (Used In) Investing Activities**                           |       | (5,902   | )          | (5,199   | )          |
| ** **                                                            |       |     |       |     |       |
| **Cash Provided By (Used In) Financing Activities:**                  |       |     |       |     |       |
| Net Proceeds  from (Payments on) Short-Term Debt                      |       | 138,882  |       | 151,047  |       |
| Long-Term Debt  Repayment                                             |       | (4,761   | )          | (4,214   | )          |
| Payment of Unit  Retains and Equity Retention                         |       | (66      | )          | —   |       |
| **Net Cash Provided By Financing Activities**                         |       | 134,055  |       | 146,833  |       |
| **Increase In Cash and Cash Equivalents**                             |       | 738      |       | 574      |       |
| **Cash and Cash Equivalents, Beginning of Year**                      |       | 337      |       | 184      |       |
| ** **                                                            |       |     |       |     |       |
| **Cash and Cash Equivalents, End of Period**                          |       | $        | 1,075      |     | $          | 758 |   |

 

The Accompanying Notes are an Integral Part of These ConsolidatedFinancial Statements.

 

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# **AMERICAN CRYSTAL SUGAR COMPANY**

**NOTES TO THE CONSOLIDATED FINANCIALSTATEMENTS**

**FOR THE THREE MONTHS ENDED**

**November 30, 2005 AND 2004**

**(Unaudited)**

 

**Note1:  Basis of Presentation**

 

The unaudited consolidatedfinancial statements of American Crystal Sugar Company (the Company) containedherein have been prepared pursuant to the rules and regulations of theSecurities and Exchange Commission. Accordingly, they do not include all the information and footnotesrequired by accounting principles generally accepted in the United States ofAmerica.  However, in the opinion ofmanagement, all adjustments, consisting of normal recurring accruals,considered necessary for a fair presentation have been included.

 

TheCompany’s consolidated financial statements are comprised of: American Crystal SugarCompany; its wholly-owned subsidiaries Sidney Sugars Incorporated (SidneySugars) and Crab Creek Sugar Company (Crab Creek); and ProGold LimitedLiability Company (ProGold), a limited liability company in which the Companyholds a 51 percent ownership interest.

 

Allmaterial inter-company transactions have been eliminated.

 

The operating results forthe three month period ended November 30, 2005 are not necessarily indicativeof the results that may be expected for the year ended August 31, 2006.

 

The amount paid toshareholders for sugarbeets (member beet payment) depends on the future sellingprices of sugar and agri-products as well as processing and other costsincurred during the remainder of the fiscal year associated with the 2005 RedRiver Valley sugarbeet crop (RRV crop).  Theamount paid to non-member growers for sugarbeets (non-member beet payment)depends on the future selling prices of sugar and the related selling expensesassociated with the 2005 Sidney sugarbeet crop (Sidney crop).  For the purposes of this report, the amountof the beet payments, future revenues and costs have been estimated.  Therefore, adjustments with respect to theseestimates may be necessary in the future, as additional information becomesavailable.

 

These financial statementsshould be read in conjunction with the consolidated financial statements andnotes included in the Company’s Annual Report on Form 10-K for the year endedAugust 31, 2005.

 

Certain reclassificationshave been made to the November 30, 2004 consolidated financial statements toconform with the November 30, 2005 presentation.  These reclassifications had no effect onpreviously reported results of operations or Members’ Investments.

 

**Note 2:  Inventories**

 

Themajor components of inventories are as follows (In Thousands):

 
| ** **                                                             | ** ** | **11/30/05** | ** ** | **11/30/04** | ** ** | **8/31/05** | ** ** |
|------------------------------------------------------------------------|------------|--------------|------------|--------------|------------|-------------|------------|
| Refined Sugar,  Pulp, Molasses, Other Agri-Products and Sugarbeet Seed |       | $            | 182,721    |         | $          | 151,576     |       | $ | 96,647 |   |
| Unprocessed Sugarbeets                                                 |       | 250,614      |       | 274,500      |       | —      |       |
| Maintenance Parts and Supplies                                         |       | 27,254       |       | 21,555       |       | 25,980      |       |
|                                                                   |       |         |       |         |       |        |       |
| Total Inventories                                                      |       | $            | 460,589    |         | $          | 447,631     |       | $ | 122,627 |   |
|                                                                        |            |              |            |              |            |             |            |  |  |  |  |

 

5

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Sugar, pulp, molasses andother agri-products inventories are valued at estimated net realizablevalue.  Unprocessed sugarbeets are valuedat the estimated gross beet payment.  Maintenanceparts and supplies and sugarbeet seed inventories are valued at the lower ofaverage cost or market.

 

# **Note 3: Short-Term Debt**

 

The Company has a seasonal line of credit with a consortium of lendersled by CoBank, ACB of $280 million and a line of credit with Wells FargoBank for $1 million.  The Company’scommercial paper program provides short-term borrowings of up to $225million.  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 November 30,2005, the Company had outstanding commercial paper of $119.6****million at an average interest rate of 4.31% and maturitydates between December 1, 2005 and March 22, 2006.  The Company also had $50.0 million ofoutstanding short-term debt with CoBank, ACB as of November 30, 2005, at aninterest rate of 5.0% and a maturity date of January 17, 2006.  The Company had no outstanding short-termdebt with the CCC as of November 30, 2005. The Company had $4.6 million ofshort-term letters of credit outstanding as of November 30, 2005. The unusedseasonal line of credit as of November 30, 2005 was $106.8 million.

 

As of November 30,2004, the Company had outstanding commercial paper of $181.2****million at an average interest rate of 2.6% and maturitydates between December 1, 2004 and May 31, 2005.  The Company had no outstanding short-termdebt with CoBank, ACB or the CCC as of November 30, 2004. The Company had $6.0million of short-term letters of credit outstanding as of November 30, 2004.

 

**Note 4:  Interest Paid**

 

Interest paid, net ofamounts capitalized, was $2.6 million and $3.4 million for the three monthsended November 30, 2005 and 2004, respectively.

 

**Note 5:  Accrued Continuing Costs**

 

For interimreporting, the net proceeds from member business is based on the forecastedgross beet payment and the percentage of the tons of sugarbeets processed tothe total estimated tons of sugarbeets to process for a given crop year.  The net proceeds from the operations of SidneySugars is based on the forecasted net income for the fiscal year and thepercentage of the tons of non-member sugarbeets processed to the totalestimated tons of non-member sugarbeets to process for a given fiscal year.

 

Accrued continuingcosts represent the difference between the net proceeds as determined above andactual member business crop year and Sidney Sugars fiscal year revenuesrealized and expenses incurred through the end of the reporting period.  Accrued continuing costs are reflected in theConsolidated Financial Statements as a cost on the Consolidated Statements ofOperations and as a current liability on the Consolidated Balance Sheets.

 

6

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**Note 6: ****Net Periodic Pension andPost-Retirement Costs**

 

The following schedules provide the components of theNet Periodic Pension and Post-Retirement Costs for the Three Months ended November30, 2005and 2004:

 

***Components of Net Periodic PensionCost***

(In Thousands)

 
| ** **                            | ** ** | **For the Three Months Ended** | ** ** |
|---------------------------------------|------------|--------------------------------|------------|
| ** **                            | ** ** | **November 30,**          | ** ** |
| ** **                            | ** ** | **2005**                       | ** ** | **2004** | ** ** |
| Service Cost                          |       | $                              | 1,056      |   | $ | 817 |   |
| Interest Cost                         |       | 1,796                          |       | 1,771 |   |
| Expected Return on Plan Assets        |       | (2,464                         | )          | (2,016 | ) |
| Multiple Employer Adjustment          |       | (15                            | )          | (40 | ) |
| Amortization of Net Transition Assets |       | —                         |       | (5 | ) |
| Amortization of Prior Service Costs   |       | 343                            |       | 256 |   |
| Amortization of Net Actuarial Loss    |       | 747                            |       | 333 |   |
| Net Periodic Pension Cost             |       | $                              | 1,463      |   | $ | 1,116 |   |

 

***Components of Net PeriodicPost-Retirement Cost***

(In Thousands)

 
| ** **                         | ** ** | **For the Three Months Ended** | ** ** |
|------------------------------------|------------|--------------------------------|------------|
| ** **                         | ** ** | **November 30,**          | ** ** |
| ** **                         | ** ** | **2005**                       | ** ** | **2004** | ** ** |
| Service Cost                       |       | $                              | 353        |   | $ | 275 |   |
| Interest Cost                      |       | 522                            |       | 543 |   |
| Amortization of Net Actuarial Loss |       | 97                             |       | 72 |   |
| Net Periodic Post-Retirement Cost  |       | $                              | 972        |   | $ | 890 |   |

 

For the three months ended November30, 2005, the Company did not make any contributions to the pension plans.  The Company expects to contribute $6.0million prior to the end of the current fiscal year.  The Company has made payments for post-retirementbenefits of approximately $169,000 for the three months ended November 30, 2005,and expects total payments for the current fiscal year to be approximately $760,000.

 

**Note 7:  Members’ Investments**

 
| ** **         | ** ** | ** **    | ** ** | **Shares**     | ** ** | **Shares Issued**     | ** ** |
|--------------------|------------|---------------|------------|----------------|------------|-----------------------|------------|
| ** **         | ** ** | **Par Value** | ** ** | **Authorized** | ** ** | **& Outstanding** | ** ** |
| Preferred Stock:   |       |          |       |           |       |                  |       |
| January 5, 2006    |       | $             | 76.77      |           | 600,000    |                  | 498,570    |   |
| November 30,  2005 |       | $             | 76.77      |           | 600,000    |                  | 498,570    |   |
| August 31, 2005    |       | $             | 76.77      |           | 600,000    |                  | 498,570    |   |
| November 30,  2004 |       | $             | 76.77      |           | 600,000    |                  | 498,570    |   |
|               |       |          |       |           |       |                  |       |
| Common Stock:      |       |          |       |           |       |                  |       |
| January 5, 2006    |       | $             | 10.00      |           | 4,000      |                  | 2,897      |   |
| November 30, 2005  |       | $             | 10.00      |           | 4,000      |                  | 2,904      |   |
| August 31, 2005    |       | $             | 10.00      |           | 4,000      |                  | 2,904      |   |
| November 30,  2004 |       | $             | 10.00      |           | 4,000      |                  | 2,873      |   |

 

7

----

 

**Note 8:Shipping and Handling Costs**

 

The costs incurred for the shipping and handling of products sold areclassified in the financial statements as a selling expense on the Statementsof Operations.  Shipping and handlingcosts were $32.0 million and $31.7 million for the three months ended November30, 2005 and 2004, respectively.

 

**Note 9: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.

 

Summarizedfinancial information concerning the Company’s reportable segments for the threemonths ended November 30, 2005 and 2004 is shown below:

 
| ** **                          | ** ** | **For the Three Months Ended November 30, 2005** | ** ** |
|-------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                          | ** ** | **(Dollars In Thousands)**                            | ** ** |
| ** **                          | ** ** | **Sugar**                                             | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from External Customers |       | $                                                     | 224,853    |   | $ | 6,418 |   | $ | 231,271 |   |
| Gross Proceeds                      |       | $                                                     | 213,976    |   | $ | 3,403 |   | $ | 217,379 |   |
| Depreciation and Amortization       |       | $                                                     | 14,823     |   | $ | 2,779 |   | $ | 17,602 |   |
| Interest Income                     |       | $                                                     | 135        |   | $ | 9 |   | $ | 144 |   |
| Interest Expense                    |       | $                                                     | 2,759      |   | $ | 1,171 |   | $ | 3,930 |   |
| Income from Equity Method Investees |       | $                                                     | 284        |   | $ | — |   | $ | 284 |   |
| Other Income, Net                   |       | $                                                     | 644        |   | $ | — |   | $ | 644 |   |
| Net Proceeds                        |       | $                                                     | 125,560    |   | $ | 1,129 |   | $ | 126,689 |   |
|                                |       |                                                  |       |   |   |   |   |
| Capital Expenditures                |       | $                                                     | 6,503      |   | $ | 238 |   | $ | 6,741 |   |

 
| ** **                          | ** ** | **For the Three Months Ended November 30, 2004** | ** ** |
|-------------------------------------|------------|-------------------------------------------------------|------------|
| ** **                          | ** ** | **(Dollars In Thousands)**                            | ** ** |
| ** **                          | ** ** | **Sugar**                                             | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from External Customers |       | $                                                     | 240,879    |   | $ | 6,457 |   | $ | 247,336 |   |
| Gross Proceeds                      |       | $                                                     | 185,762    |   | $ | 3,457 |   | $ | 189,219 |   |
| Depreciation and Amortization       |       | $                                                     | 14,658     |   | $ | 2,764 |   | $ | 17,422 |   |
| Interest Income                     |       | $                                                     | 129        |   | $ | 3 |   | $ | 132 |   |
| Interest Expense                    |       | $                                                     | 2,879      |   | $ | 1,553 |   | $ | 4,432 |   |
| Income from Equity Method Investees |       | $                                                     | 275        |   | $ | — |   | $ | 275 |   |
| Other Expense, Net                  |       | $                                                     | (386       | ) | $ | — |   | $ | (386 | ) |
| Net Proceeds                        |       | $                                                     | 110,889    |   | $ | 959 |   | $ | 111,848 |   |
|                                |       |                                                  |       |   |   |   |   |
| Capital Expenditures                |       | $                                                     | 5,785      |   | $ | 277 |   | $ | 6,062 |   |

 

8

----

 
| ** **                  | ** ** | **As of November 30, 2005** | ** ** |
|-----------------------------|------------|----------------------------------|------------|
| ** **                  | ** ** | **(Dollars In Thousands)**       | ** ** |
| ** **                  | ** ** | **Sugar**                        | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Property and Equipment, Net |       | $                                | 322,105    |   | $ | — |   | $ | 322,105 |   |
| Assets Held for Lease, Net  |       | $                                | —     |   | $ | 148,352 |   | $ | 148,352 |   |
| Segment Assets              |       | $                                | 932,263    |   | $ | 159,884 |   | $ | 1,092,147 |   |

 
| ** **                  | ** ** | **As of November 30, 2004** | ** ** |
|-----------------------------|------------|----------------------------------|------------|
| ** **                  | ** ** | **(Dollars In Thousands)**       | ** ** |
| ** **                  | ** ** | **Sugar**                        | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Property and Equipment, Net |       | $                                | 321,725    |   | $ | 2 |   | $ | 321,727 |   |
| Assets Held for Lease, Net  |       | $                                | —     |   | $ | 158,156 |   | $ | 158,156 |   |
| Segment Assets              |       | $                                | 940,284    |   | $ | 170,179 |   | $ | 1,110,463 |   |

 

**Note 11:Legal Matters:**

 

Asof the date of this report, four administrative proceedings have been broughtagainst the United States Department of Agriculture (USDA) seeking reversal ofprior decisions regarding the determination and transfer of sugar marketingallocations made by the USDA.  Theseproceedings are in various stages of the applicable administrativeprocess.  While the Company is not aparty to any of these administrative proceedings, it is, solely or incoordination with other sugar processors, an intervenor in these administrativeproceedings.  The initial decisions bythe USDA in the four proceedings were decided such that the Company would notexperience a reduction in its marketing allocations.  The initial decisions by the USDA wereappealed to an administrative law judge under guidelines promulgated by theUSDA.  Three of these appeals weredecided such that the Company would not experience a reduction in its marketingallocations.  The decision in the fourthproceeding, however, if it stands, will result in the Company experiencing a reductionin marketing allocations equal to the loss of approximately 25,000 acres infuture crop years assuming no other related factors were to change.  All of the decisions of the administrativelaw judge have been appealed by various parties, including the Company, to thechief judicial officer of the USDA.  Twoof the decisions that were favorable to the Company were affirmed by the chiefjudicial officer and the other two appeals are still pending.  Any decision made by the chief judicialofficer of the USDA can be further appealed in federal court.  The Company intends to vigorously pursuefavorable outcomes in these matters.

 

**Item 2. Management’s Discussion and Analysis of Results of Operations andFinancial Condition for the Three Months Ended November 30, 2005 and 2004**

 

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.  Important factors that could cause orcontribute to such differences include, without limitation, market factors,weather and general economic conditions, farm and trade policy, availablequantity and quality of sugarbeets.  Fora more complete discussion of “Important Factors”, please refer to the Company’s2005 Form 10-K.

 

The harvest of the sugarbeet crop grown during 2005 and to be processedduring fiscal 2006 produced a total of 9.6 million tons of sugarbeets, orapproximately 19.0 tons of sugarbeets per acre from approximately 507,000acres.  This represents a decrease intotal tons harvested of approximately 5.7 percent compared to the 2004 crop.  The sugar content of the 2005 crop is 18.3percent as compared to the 17.8 percent sugar content of the 2004 crop.  The Company expects to produce a total ofapproximately 29.2 million hundredweight of sugar from the 2005 crop, adecrease of approximately 4.3 percent compared to the 2004 crop. While theCompany expects lower production volumes of its products this fiscal year ascompared to the previous fiscal year, the average selling prices for theseproducts are anticipated to increase slightly due to supply and demand factors.

 

9

----

 

**Comparisonof the Three Months Ended November 30, 2005 and 2004**

 

Revenuefor the three months ended November 30, 2005, was $231.3 million, a decrease of$16.1 million from the same period last year. Revenue from total sugar sales decreased 7.5 percent due to a 9.1percent decrease in the hundredweight sold partially offset by a 1.9 percent increasein the average selling price per hundredweight. Revenue from pulp sales increased 20.7 percent due to a 10.1 percent increasein the volume of pulp tons sold and a 9.7 percent increase in the averageselling price per ton.  Revenue frommolasses sales decreased 48.5 percent due to a 58.6 percent decrease in thevolume of molasses sold partially offset by a 24.5 percent increase in theaverage selling price per ton.  Revenuefrom sales of Concentrated Separated By-Product (CSB), a by-product of themolasses desugarization process, decreased 32.2 percent due to a 36.5 percentdecrease in the volume of CSB sold partially offset by a 6.8 percent increasein the average selling price per ton. Revenue from the sales of betaine, a by-product of the molassesdesugarization process, increased 55.8 percent due to a 66.7 percent increasein the volume of betaine tons sold partially offset by a 6.5 percent decreasein the average selling price per ton. Rental revenue on the ProGold operating lease was $6.4 million and $6.5million for the three months ended November 30, 2005 and 2004, respectively.

 

Costof sales for the three months ended November 30, 2005, exclusive of payments tomembers for sugarbeets, decreased $44.2 million as compared to the same periodlast year.  The change in the netrealizable value of product inventories impacted the cost of sales favorably by$42.8 million.  The costs associated withsugar purchased to meet customer needs decreased by $10.9 million due to anearlier campaign start-up this year.  Thecost recognized associated with the non-member sugarbeets increased $ .5million or 2.8 percent for the three months ended November 30, 2005 whencompared to the same period last year. This increase was primarily due to a higher estimated grower paymentresulting from an increase in the projected sugar net selling price thisyear.  Direct processing costs for sugarand pulp increased 15.3 percent.  Theincrease was due in part to processing 9.2 percent more sugarbeets in the firstquarter this year as compared to the same period last year.  Also adding to the increase in directprocessing costs were higher prices related to energy products and majorsupplies.  Fixed and committed expensesincreased 6.0 percent reflecting increased maintenance expenses and generalcost increases.

 

Selling,general and administrative expenses decreased $1.4 million for the three monthsended November 30, 2005, as compared to the same period last year.  Selling expenses decreased $ .4 millionprimarily due to a decrease in the volume of sugar sold partially offset by higherfreight and packaging costs.  General andAdministrative expenses decreased $1.0 million due to general cost reductions.

 

Interestexpense decreased $ .5 million for the three months ended November 30, 2005, ascompared to the same period last year. This was the result of decreased averageborrowing levels for short-term and long-term debt, partially offset by highershort-term and long-term interest rates.

 

Non-memberbusiness activities resulted in a gain of $ .4 million for the three monthsended November 30, 2005, as compared to a gain of $ .6 million for the sameperiod last year.  The gain in both yearswas due primarily to activities related to Sidney Sugars.

 

**TheDominican Republic - Central American Free Trade Agreement**

 

TheDominican Republic - Central American Free Trade Agreement (DR-CAFTA) wassigned into law on August 2, 2005 and is anticipated to be implemented in 2006.As a result, the Company expects an increase in the amount of sugar that willbe imported into the United States. The impact of this trade agreement on theCompany can not be fully assessed at this time. It is possible, however, thatthe trade agreement could have a material adverse effect on the Company througha reduction in acreage that can be planted by the Company’s shareholders and bythe growers for Sidney Sugars, and/or a reduction in sugar selling prices, anda corresponding reduction in the beet payment to the shareholders and theCompany earnings. The magnitude of the impact can not be determined at thistime.

 

10

----

 

**Regionaland Bilateral Free Trade Agreements**

 

TheUnited States government is pursuing an aggressive agenda on internationaltrade. It is seeking to negotiate new free trade agreements with a number ofcountries and regions that are major producers of sugar. The Company believesthese agreements, if they reach fruition, could negatively impact the Company’sprofitability. The primary agreements under consideration, to the Company’sknowledge, are the Free Trade Area of the Americas; the Andean Free TradeAgreement; the Thailand Free Trade Agreement; the U.S.-Panama Free TradeAgreement; and the South African Customs Union Free Trade Agreement. Many ofthe countries included in these agreements are major sugar producers andexporters. If increases in guaranteed access or reductions in sugar tariffs areincluded in these agreements, excess sugar from these regions could enter theU.S. market and put pressure on domestic sugar prices. The U.S. sugar industryand the Company, as an influential member of such industry, recognize thepotential negative impact that would result if these agreements are enteredinto by the United States and are taking steps to attempt to manage thesituation. The Company and the sugar industry intend to continue to focussignificant attention on trade issues in the future.

 

Theimpact of the various trade agreements on the Company can not be assessed atthis time due to the uncertainty concerning the terms of the agreements andwhether they will ultimately be implemented. It is possible, however, that thepassage of various trade agreements could have a material adverse effect on theCompany through 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. The magnitude of the impact can not bedetermined at this time.

 

**EnergyPrices**

 

The prices paid by theCompany for energy related products, such as natural gas, coal and coke, haverecently increased significantly due to supply and demand imbalances.  The Company uses substantial amounts of theseproducts in its manufacturing process. The Company believes that the prices for energy related productsincluding natural gas, coal and coke will remain high and will very likelyincrease.  The Company expects that theprices for these products will increase approximately 40 percent in fiscal 2006over that of fiscal 2005.  The Companyalso expects that higher fuel prices will increase the costs of many goods andservices it acquires.  These higherprices may materially increase the cost of production, thus impacting thefinancial results of the Company.

 

**Liquidityand Capital Resources**

 

Under the Company’s Bylawsand Member Grower Contracts, payments for member delivered sugarbeets, theprincipal raw material used in producing the sugar and agri-products it sells,are subordinated to all member business expenses.  In addition, the beet payments made to membergrowers and non-member growers are paid in three payments over the course of ayear, and the member payments are made net of any anticipated unit retain forthe crop.  These procedures have theeffect of providing the Company with an additional source of short-termfinancing.  This member 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.

 

Becausesugar is sold throughout the year (while sugarbeets are processed primarily inthe fall, winter and spring) and because substantial amounts of equipment arerequired for its operations, the Company has utilized substantial outsidefinancing on both a seasonal and long-term basis to fund its operations.  The majority of such financing has beenprovided by a consortium of lenders led by CoBank, ACB.

 

TheCompany has long-term debt availability with CoBank, ACB of****$225.0 million,of which $124.7 million in loans and $48.7 million in long-term letters ofcredit were outstanding as of November 30, 2005.  The unused long-term line of credit as of November30, 2005 was $51.6 million.  In addition,the Company has long-term debt outstanding, as of November 30, 2005, of$50 million from a private 

 

11

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placement of Senior Notes that occurred inSeptember of 1998; $12.2 million from a private placement of Senior Notes thatoccurred in January of 2003; $42.9 million from ten separate issuances of Pollution Control and Industrial DevelopmentRevenue Bonds; and a term loan with Bank of North Dakota of $3.2 million.

 

TheCompany also has a seasonal line of credit with a consortium of lenders led byCoBank, ACB of $280 million, of which $50.0 million was outstanding as of November30, 2005, and a line of credit with Wells Fargo Bank for $1 million, ofwhich there was no outstanding balance as of November 30, 2005.  The Company’s commercial paper programprovides short-term borrowings of up to $225 million of which approximately $119.6million was outstanding as of November 30, 2005.  The Company had $4.6 million of short-termletters of credit outstanding as of November 30, 2005.  The unused short-term line of credit as of November30, 2005 was $106.8 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.

 

TheCompany had outstanding commitments totaling $8.8 million as of November 30,2005 for equipment and construction contracts related to various capital andmaintenance projects.

 

Thechanges that have occurred in the Company’s financial statements from August31, 2005 to November 30, 2005 were primarily due to normal business seasonality.  The first three months of the Company’sfiscal year includes: the completion of the sugarbeet harvest; start of theprocessing 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.

 

TheCompany controls 50 percent of Crystech, LLC, a special purpose entity thatoperates a molasses desugarization facility at the Company’s Hillsboro, NorthDakota sugar factory.  The Companyaccounts for its investment using the equity method.  As of November 30, 2005, Crystech hadoutstanding debt of $18.4 million.

 

Thenet cash used by operations was $127.4 million for the three months ended November30, 2005 as compared to $141.1 million for the same period last year.  This decrease of $13.7 million was primarilydue to changes in the amounts due growers of $29.0 million partially offset bychanges in inventories of $19.6 million. The change in the amounts due growers was due to less cash required thisyear to fund the previous crop year’s final grower payment which occurs in Novembereach year along with a lower estimated current year grower payment due to thesmaller crop this year.  The change ininventories was due primarily to increased sugar production resulting from anearlier campaign start-up this year and an increase in the net realizable valueof sugar as of November 30, 2005 as compared to that of November 30, 2004.

 

Thenet cash used in investing activities was $5.9 million for the three monthsended November 30, 2005 as compared to $5.2 million for same period lastyear.  The increase of $ .7 million wasprimarily related to increased purchases of property and equipment.

 

Thenet cash provided by financing activities was $134.1 million for the threemonths ended November 30, 2005 as compared to $146.8 million for the sameperiod last year.  This decrease of $12.7million was primarily due to lower net proceeds from short-term debt. Therequirement for short-term debt was lower in the first quarter this year primarilydue to decreased grower payments.

 

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

 

12

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**Item3.  Quantitative and QualitativeDisclosures about Market Risk**

 

Marketrisk is the risk of loss to future earnings, to fair values or to future cashflows that may result from changes in the price of a financial instrument.  The value of a financial instrument maychange as a result of changes in the interest rates, exchange rates, commodityprices, equity prices and other market changes. Market risk is attributed to all market-risk sensitive financialinstruments, including long term debt.

 

TheCompany does not believe that there is any material market risk exposure withrespect to interest rates, exchange rates, commodity prices, equity prices andother market changes that would require disclosure under this item.

 

**Item4.   Controls and Procedures**

 

TheCompany’s chief executive officer and chief financial officer have reviewed andevaluated the effectiveness of the Company’s disclosure controls and procedures(as defined in Rules 240.13a-15(e) and 15d-15(e) promulgated under theSecurities Exchange Act of 1934) as of November 30, 2005.  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 Security 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.

 

## **PARTII. OTHER INFORMATION**

 

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

 

From time to time and in theordinary course of its business, the Company is named as a defendant in legalproceedings related to various issues, including worker’s compensation claims,tort claims and contractual disputes.  TheCompany is currently involved in certain legal proceedings, which have arisenin the ordinary course of the Company’s business.  The Company is also aware of certain otherpotential claims, which could result in the commencement of legal proceedings.  The Company carries insurance, which providesprotection against certain types of claims.  With respect to current litigation andpotential claims of which the Company is aware, the Company’s managementbelieves that (i) the Company has insurance protection to cover all or a portionof any judgments which may be rendered against the Company with respect tocertain claims or actions and (ii) any judgments which may be enteredagainst the Company and which may exceed such insurance coverage or which mayarise in actions involving potential liabilities not covered by insurancepolicies are not likely to have a material adverse effect upon the Company, orits assets or operations.

 

As of the date of thisreport, four administrative proceedings have been brought against the United StatesDepartment of Agriculture (USDA) seeking reversal of prior decisions regardingthe determination and transfer of sugar marketing allocations made by theUSDA.  These proceedings are in variousstages of the applicable administrative process.  While the Company is not a party to any ofthese administrative proceedings, it is, solely or in coordination with othersugar processors, an intervenor in these administrative proceedings.  The initial decisions by the USDA in the fourproceedings were decided such that the Company would not experience a reductionin its marketing allocations.  Theinitial decisions by the USDA were appealed to an administrative law judgeunder guidelines promulgated by the USDA. Three of these appeals were decided such that the Company would notexperience a reduction in its marketing allocations.  The decision in the fourth proceeding,however, if it stands, will result in the 

 

13

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Company experiencing a reduction in marketingallocations equal to the loss of approximately 25,000 acres in future cropyears assuming no other related factors were to change.  All of the decisions of the administrativelaw judge have been appealed by various parties, including the Company, to thechief judicial officer of the USDA.  Twoof the decisions that were favorable to the Company were affirmed by the chiefjudicial officer and the other two appeals are still pending.  Any decision made by the chief judicialofficer of the USDA can be further appealed in federal court.  The Company intends to vigorously pursuefavorable outcomes in these matters.

 

Theoutcome of any contested matter is never certain and the eventual decisions ofthe administrative proceedings identified above may result in a change in thecurrent sugar marketing allocations.  Inthe event these proceedings are decided in a manner that reduces the Company’ssugar allocations, the amount of sugar the Company can produce and market maybe adversely impacted.

 

**Item 2.  Unregistered Sales of Equity Securities andUse of Proceeds.**

 

None

 

**Item 3.  Defaults Upon Senior Securities**

 

None

### ** **

**Item4.  Submission of Matters to a Vote ofSecurity Holders**

 

The Company held meetingsin November 2005 with its shareholders from the five geographical districtswhere the Company’s factories are located.

 

At the Moorhead FactoryDistrict Meeting held on November 7, 2005, Michael A. Astrup was re-elected asa Director, receiving 55 of the 56 votes cast with one abstention.  His three-year term expires in December 2008.Richard Borgen and David J. Kragnes will continue as Directors for the MoorheadFactory District.

 

At the Crookston FactoryDistrict Meeting held on November 8, 2005, Ronald E. Reitmeier was re-electedas a Director, receiving all of the 56 votes cast.  His three-year term expires in December 2008.  Lonn M. Kiel and Jim A. Ross will continue asDirectors for the Crookston Factory District.

 

At the Hillsboro FactoryDistrict Meeting held on November 8, 2005, John Brainard was elected as a Director,receiving 46 of the 50 votes cast.  Histhree-year term expires in December 2008. Mr. Brainard is 46 years old and has been a sugarbeet grower since 1998.  Mr. Brainard is a past director of theMinnesota Farm Bureau and has served on the executive committee of the RedRiver Valley Sugarbeet Growers Association. Mr. Brainard replaces Jerry D. Bitker who did not seek re-election as aDirector at the end of his term for reasons unrelated to the Company.  Jeff McInnes and Francis L. Kritzberger willcontinue as Directors for the Hillsboro Factory District.

 

At the East Grand ForksFactory District Meeting held on November 9, 2005, Brian Erickson was electedas a Director, receiving 75 of the 142 votes cast.  His three-year term expires in December 2008. Mr. Erickson is 57 years old and hasbeen a sugarbeet grower for 20 years. Mr. Erickson is the Chairman of the East Grand Forks EconomicDevelopment and Housing Authority.  Mr.Erickson replaces G. Terry Stadstad who was unable to stand for re-election due to the provisions of theCompany By-Laws which prohibit a person from serving more than four consecutiveterms as a Director.  JohnGudajtes and Curtis Haugen will continue as Directors for the East Grand ForksFactory District.

 

Atthe Drayton Factory District Meeting held on November 10, 2005, Robert Green waselected as a Director, receiving 124 of the 127 votes cast with one abstention.  His three-year term expires in December 2008.  Mr. Green is 51 years old and has been asugarbeet grower since 1976.  Mr. Green recentlycompleted 12 years as a director of the Red River Valley SugarbeetGrowers Association and iscurrently a director of the Wells Fargo Bank in Grafton, ND.  Mr. Green replaces Patrick D. Mahar who wasunable to stand for re-election due to the provisions of the Company By-Lawswhich prohibit a 

 

14

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person from serving morethan four consecutive terms as a Director. William Baldwin and Neil Widner will continue as Directors for the DraytonFactory District.

 

**Item 5. Other Information.**

 

None.

### ** **

### **Item 6. 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         |       | Pledge Agreement  between Registrant and First Union Trust Company, NA.                                              |       | Incorporated by  reference to Exhibit 10(ee) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998.                                     |
|         |       |                                                                                                                 |       |                                                                                                                                                                     |
| 10.4         |       | Indemnity Agreement  between Registrant, Newcourt Capital USA Inc., Crystech, LLC and Crystech  Senior Lender Trust. |       | Incorporated by  reference to Exhibit 10(ff) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998.                                     |
|         |       |                                                                                                                 |       |                                                                                                                                                                     |
| 10.5         |       | Tolling Services  Agreement between Crystech, LLC and Registrant.                                                    |       | Incorporated by  reference to Exhibit 10(gg) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998.                                     |

 

15

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| 10.6    |   | Operations and  Maintenance Agreement between Crystech, LLC and Registrant.                                               |   | Incorporated by  reference to Exhibit 10(hh) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998. |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                      |   |                                                                                                                                 |
| +10.7   |   | Limited Liability  Company Agreement of Crystech, LLC.                                                                    |   | Incorporated by  reference to Exhibit 10(ii) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998. |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.8    |   | 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.  |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.9    |   | 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.  |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.10   |   | 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.  |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| ++10.11 |   | 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. |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.12   |   | 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.                   |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| ++10.13 |   | 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.  |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| ++10.14 |   | 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.  |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.15   |   | 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.              |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.16   |   | 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.              |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.17   |   | 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.              |
|    |   |                                                                                                                      |   |                                                                                                                                 |
| 10.18   |   | 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.              |

 

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| +10.19  |   | 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.                  |
|---------|--------|---------------------------------------------------------------------------------------------------------------------------------|--------|-------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                            |   |                                                                                                                                |
| 10.20   |   | 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. |
|    |   |                                                                                                                            |   |                                                                                                                                |
| 10.21   |   | Term and Seasonal Loan  Agreements between the Registrant and CoBank, ACB dated July 21, 2003.                                  |   | Incorporated by  reference to Exhibit 10.31 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 2003. |
|    |   |                                                                                                                            |   |                                                                                                                                |
| 10.22   |   | 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.                  |
|    |   |                                                                                                                            |   |                                                                                                                                |
| ++10.23 |   | 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.                              |
|    |   |                                                                                                                            |   |                                                                                                                                |
| 10.24   |   | Supplements to Term and  Seasonal Loan Agreements between the Registrant and CoBank, ACB dated July 8,  2005 and July 11, 2005. |   | Incorporated by  reference to Exhibit 10.24 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 2005. |
|    |   |                                                                                                                            |   |                                                                                                                                |
| ++10.25 |   | 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. |
|    |   |                                                                                                                            |   |                                                                                                                                |
| 21.1    |   | List of Subsidiaries of  the Registrant.                                                                                        |   | Incorporated by  reference to Exhibit 21.1 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 2005.  |
|    |   |                                                                                                                            |   |                                                                                                                                |
| 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 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 Chief Financial Officer.                                                                     |   | Accompanying herewith  electronically.                                                                                              |

 

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+              Confidential treatment under Rule 24b-2 of theSecurities and Exchange Act of 1934, as amended, has been granted with respectto designated portions of this document.

 

++           A management contract or compensatoryplan required to be filed with this report.

 

17

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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:**  | **January 16, 2006**               | ** ** |   | **/s/ Mark Kalvoda** |   |
| ** ** | ** **                         | **Mark Kalvoda** |
| ** ** | ** **                         | **Corporate Controller,** |
| ** ** | ** **                         | **Chief Accounting Officer** |
| ** ** | ** **                         | **Duly  Authorized Officer** |
|            |                                    |  |  |  |  |  |

 

18

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