**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

 

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| **ý****Quarterly report pursuant  to Section 13 or 15(d) of the Securities Exchange Act of 1934** |
|--------------------------------------------------------------------------------------------------------|

 

**For theperiod ended February 28, 2003**

 

**Commissionfile 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.

 

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

 

Indicate the number of shares outstanding of each of the issuer’sclasses of common stock, as of the latest practicable date.

 

| **Class of  Common Stock** |   | **Outstanding  at  April 7, 2003** |
|----------------------------|--------|------------------------------------|
| $10 Par Value              |   | 3,002                              |

 

 

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**AMERICAN CRYSTAL 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.**               | **DISCLOSURE CONTROLS** |
|               |                      |   |
| **PART II**        | **OTHER INFORMATION**     |
|               |                      |   |
|               | **ITEM 1.**               | **LEGAL PROCEEDINGS** |
|               | **ITEM 2.**               | **CHANGES IN 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 AND REPORTS ON FORM 8-K** |
|               |                      |   |
| **SIGNATURES**     |
|               |
| **CERTIFICATIONS** |

 

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**PART I.FINANCIAL INFORMATION**

 

**Item 1. Consolidated Financial Statements**

 

AMERICANCRYSTAL SUGAR COMPANY

Consolidated Balance Sheets

(Unaudited)

(Dollarsin Thousands)

 

ASSETS

 
|                                              |   | **February 28** |    | **August 31,  2002*** |   |
|---------------------------------------------------|--------|-----------------|---------|-----------------------|--------|
|                                              |   | **2003**        |    | **2002**              |   |   |
| Current Assets:                                   |   |            |    |                  |   |   |   |
| Cash and Cash Equivalents                         |   | $               | 25      |                  | $      | 26 |   | $ | 22 |   |
| Accounts Receivable:                              |   |            |    |                  |   |   |   |
| Trade                                             |   | 59,102          |    | 57,620                |   | 60,812 |   |
| Members                                           |   | —          |    | —                |   | 3,987 |   |
| Other                                             |   | 2,033           |    | 954                   |   | 1,465 |   |
| Advances to Related  Parties                      |   | 6,845           |    | 8,987                 |   | 11,336 |   |
| Inventories                                       |   | 376,487         |    | 341,295               |   | 115,656 |   |
| Prepaid Expenses                                  |   | 4,931           |    | 5,301                 |   | 5,732 |   |
|                                              |   |            |    |                  |   |   |   |
| Total Current Assets                              |   | 449,423         |    | 414,183               |   | 199,010 |   |
|                                              |   |            |    |                  |   |   |   |
| Property and Equipment:                           |   |            |    |                  |   |   |   |
| Land                                              |   | 36,877          |    | 32,935                |   | 33,806 |   |
| Buildings                                         |   | 88,430          |    | 85,325                |   | 86,647 |   |
| Equipment                                         |   | 777,908         |    | 755,832               |   | 759,972 |   |
| Construction-in-Progress                          |   | 7,163           |    | 3,152                 |   | 5,154 |   |
| Less: Accumulated  Depreciation                   |   | (573,096        | )       | (535,846              | )      | (546,960 | ) |
|                                              |   |            |    |                  |   |   |   |
| Net Property and Equipment                        |   | 337,282         |    | 341,398               |   | 338,619 |   |
|                                              |   |            |    |                  |   |   |   |
| Other Assets:                                     |   |            |    |                  |   |   |   |
| Investments in Marketing  Cooperatives            |   | 2,674           |    | 1,630                 |   | 2,064 |   |
| Investments in ProGold  Limited Liability Company |   | 42,062          |    | 39,504                |   | 41,007 |   |
| Investments in Crystech,  LLC                     |   | 1,314           |    | 1,456                 |   | 1,403 |   |
| Notes Receivable -  Crystech, LLC                 |   | 13,905          |    | 13,905                |   | 13,905 |   |
| Other Assets                                      |   | 42,233          |    | 23,221                |   | 26,685 |   |
|                                              |   |            |    |                  |   |   |   |
| Total Other Assets                                |   | 102,188         |    | 79,716                |   | 85,064 |   |
|                                              |   |            |    |                  |   |   |   |
| Total Assets                                      |   | $               | 888,893 |                  | $      | 835,297 |   | $ | 622,693 |   |

 

The Accompanying Notes arean Integral Part of These Financial Statements.

 

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*Derived from Audited Financial Statements.

 

1

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AMERICANCRYSTAL SUGAR COMPANY

Consolidated Balance Sheets

(Unaudited)

(Dollarsin Thousands)

 

LIABILITIESAND MEMBERS’ INVESTMENTS

 
|                                             |   | **February 28** |    | **August 31,  2002*** |   |
|--------------------------------------------------|--------|-----------------|---------|-----------------------|--------|
|                                             |   | **2003**        |    | **2002**              |   |   |
| Current Liabilities:                             |   |            |    |                  |   |   |   |
| Short-Term Debt                                  |   | $               | 143,230 |                  | $      | 132,129 |   | $ | 7,000 |   |
| Current Maturities of  Long-Term Debt            |   | 20,664          |    | 19,070                |   | 18,045 |   |
| Accounts Payable                                 |   | 20,903          |    | 17,125                |   | 18,163 |   |
| Advances Due to Related  Parties                 |   | 9,264           |    | 5,768                 |   | 3,092 |   |
| Accrued Continuing Costs  (see note 3)           |   | 63,714          |    | 76,541                |   | — |   |
| Other Current Liabilities                        |   | 17,343          |    | 16,677                |   | 15,182 |   |
| Amounts Due Growers                              |   | 128,733         |    | 110,946               |   | 79,246 |   |
|                                             |   |            |    |                  |   |   |   |
| Total Current Liabilities                        |   | 403,851         |    | 378,256               |   | 140,728 |   |
|                                             |   |            |    |                  |   |   |   |
| Long-Term Debt, Net of  Current Maturities       |   | 192,714         |    | 182,617               |   | 182,371 |   |
| Other Liabilities                                |   | 32,808          |    | 30,435                |   | 30,927 |   |
|                                             |   |            |    |                  |   |   |   |
| Total Liabilities                                |   | 629,373         |    | 591,308               |   | 354,026 |   |
|                                             |   |            |    |                  |   |   |   |
| Members’ Investments:                       |   |            |    |                  |   |   |   |
| Preferred Stock                                  |   | 38,275          |    | 38,275                |   | 38,275 |   |
| Common Stock                                     |   | 30              |    | 31                    |   | 30 |   |
| Additional Paid-in Capital                       |   | 147,960         |    | 142,694               |   | 143,069 |   |
| Unit Retains                                     |   | 108,149         |    | 100,170               |   | 124,101 |   |
| Equity Retention                                 |   | 2,723           |    | 1,557                 |   | 2,733 |   |
| Accumulated Other  Comprehensive Income/(Loss)   |   | (1,317          | )       | (436                  | )      | (1,317 | ) |
| Retained  Earnings/(Deficit)                     |   | (36,300         | )       | (38,302               | )      | (38,224 | ) |
|                                             |   |            |    |                  |   |   |   |
| Total Members’ Investments                  |   | 259,520         |    | 243,989               |   | 268,667 |   |
|                                             |   |            |    |                  |   |   |   |
| Total Liabilities and  Members’ Investments |   | $               | 888,893 |                  | $      | 835,297 |   | $ | 622,693 |   |

 

The Accompanying Notes arean Integral Part of These Financial Statements.

 

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* Derived from AuditedFinancial Statements.

 

2

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AMERICAN CRYSTAL SUGARCOMPANY

Consolidated Statements ofOperations

(Unaudited)

(Dollars in Thousands)

 
|                                                                           |   | **For the Six Months Ended  February 28** |    | **For the Three Months Ended  February 28** |   |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|---------|---------------------------------------------|--------|
|                                                                           |   | **2003**                                  |    | **2002**                                    |   | **2003** |   | **2002** |   |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Net Revenue                                                                    |   | $                                         | 393,058 |                                        | $      | 346,464 |   | $ | 191,847 |   | $ | 173,809 |   |
| Cost of Product Sold                                                           |   | 19,495                                    |    | (63,050                                     | )      | (19,964 | ) | (43,213 | ) |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Gross Proceeds                                                                 |   | 373,563                                   |    | 409,514                                     |   | 211,811 |   | 217,022 |   |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Selling, General &  Administrative Expenses                                |   | 79,976                                    |    | 76,305                                      |   | 40,185 |   | 37,075 |   |
| Accrued Continuing Costs  (see note 3)                                         |   | 63,714                                    |    | 76,541                                      |   | 37,873 |   | 41,789 |   |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Operating Proceeds                                                             |   | 229,873                                   |    | 256,668                                     |   | 133,753 |   | 138,158 |   |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Other Income/(Expense)                                                         |   |                                      |    |                                        |   |   |   |   |   |
| Interest Income                                                                |   | 790                                       |    | 1,019                                       |   | 360 |   | 338 |   |
| Interest Expense                                                               |   | (7,584                                    | )       | (8,085                                      | )      | (4,102 | ) | (4,833 | ) |
| Other, Net                                                                     |   | 1,479                                     |    | 888                                         |   | 761 |   | 559 |   |
| Other (Expense)                                                                |   | (5,315                                    | )       | (6,178                                      | )      | (2,981 | ) | (3,936 | ) |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Proceeds before Income  Taxes                                                  |   | 224,558                                   |    | 250,490                                     |   | 130,772 |   | 134,222 |   |
| Income Tax Expense                                                             |   | 6                                         |    | (5                                          | )      | 6 |   | (5 | ) |
| Net Proceeds Resulting  from Member and Non-Member Business                    |   | $                                         | 224,564 |                                        | $      | 250,485 |   | $ | 130,778 |   | $ | 134,217 |   |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Distribution of Net  Proceeds:                                                 |   |                                      |    |                                        |   |   |   |   |   |
| Credited/(Charged) to  Members’ Investments:                              |   |                                      |    |                                        |   |   |   |   |   |
| Non-Member Business  Income/(Loss)                                             |   | $                                         | 1,924   |                                        | $      | (811 | ) | $ | 1,125 |   | $ | (363 | ) |
| Unit Retains Declared to  Members                                              |   | —                                    |    | —                                      |   | — |   | — |   |
| Equity Retention Declared  to Members                                          |   | —                                    |    | —                                      |   | — |   | — |   |
| Net Credit(Charge) to  Members’ Investments                               |   | 1,924                                     |    | (811                                        | )      | 1,125 |   | (363 | ) |
| Payments to/due Members  for Sugarbeets, Net of Unit Retains Declared          |   | 222,640                                   |    | 240,626                                     |   | 129,653 |   | 123,910 |   |
| Payment to/due Members for  PIK Certificates, Net of Equity Retention Declared |   | —                                    |    | 10,670                                      |   | — |   | 10,670 |   |
|                                                                           |   |                                      |    |                                        |   |   |   |   |   |
| Total                                                                          |   | $                                         | 224,564 |                                        | $      | 250,485 |   | $ | 130,778 |   | $ | 134,217 |   |

 

The Accompanying Notes arean Integral Part of These Financial Statements.

 

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American Crystal SugarCompany

Consolidated Statements ofCash Flows

(Unaudited)

(Dollars in Thousands)

 
|                                                                           |   | **For the Six Months Ended  February 28** |    |
|--------------------------------------------------------------------------------|--------|-------------------------------------------|---------|
|                                                                           |   | **2003**                                  |    | **2002** |   |
|                                                                           |   |                                      |    |   |   |
| Cash Provided By (Used In)  Operations:                                        |   |                                      |    |   |   |
| Net Proceeds Resulting  from Member and Non-Member Business                    |   | $                                         | 224,564 |   | $ | 250,485 |   |
| Payments To/Due Members for  Sugarbeets, Net of Unit Retains Declared          |   | (222,640                                  | )       | (240,626 | ) |
| Payments To/Due Members  for PIK Certificats, Net of Equity Retention Declared |   | —                                    |    | (10,670 | ) |
| Add (Deduct) Non-Cash  Items:                                                  |   |                                      |    |   |   |
| Depreciation and  Amortization                                                 |   | 28,996                                    |    | 27,178 |   |
| (Income) from Equity  Method Investees                                         |   | (1,149                                    | )       | (910 | ) |
| Loss on the Disposition of  Property and Equipment                             |   | 159                                       |    | 229 |   |
| Deferred Gain Recognition                                                      |   | (99                                       | )       | (99 | ) |
| Changes in Assets and  Liabilities:                                            |   |                                      |    |   |   |
| Receivables                                                                    |   | 5,236                                     |    | 13,611 |   |
| Inventories                                                                    |   | (259,993                                  | )       | (237,026 | ) |
| Prepaid Expenses                                                               |   | 801                                       |    | (2,543 | ) |
| Long-Term Prepaid Pension  Expense                                             |   | 1,617                                     |    | 190 |   |
| Advances To/Due to Related  Parties                                            |   | 10,663                                    |    | 8,137 |   |
| Accounts Payable                                                               |   | 2,741                                     |    | (2,650 | ) |
| Accrued Continuing Costs                                                       |   | 63,714                                    |    | 76,541 |   |
| Other Liabilities                                                              |   | 3,312                                     |    | 1,885 |   |
| Amounts Due Growers                                                            |   | 49,487                                    |    | 28,180 |   |
| Net Cash (Used In)  Operations                                                 |   | (92,591                                   | )       | (88,088 | ) |
|                                                                           |   |                                      |    |   |   |
| Cash Provided By (Used In)  Investing Activities:                              |   |                                      |    |   |   |
| Purchases of Property and  Equipment                                           |   | (10,593                                   | )       | (5,370 | ) |
| Proceeds from the Sale of  Property and Equipment                              |   | 91                                        |    | 119 |   |
| Equity Refund/CoBank, ACB                                                      |   | 682                                       |    | — |   |
| Investments in Marketing  Cooperatives                                         |   | (463                                      | )       | — |   |
| Acquisition from Imperial  Sugar Company                                       |   | (35,184                                   | )       | — |   |
| Changes in Other Assets                                                        |   | (60                                       | )       | (1,043 | ) |
| Net Cash (Used In)  Investing Activities                                       |   | (45,527                                   | )       | (6,294 | ) |
|                                                                           |   |                                      |    |   |   |
| Cash Provided By (Used In)  Financing Activities:                              |   |                                      |    |   |   |
| Proceeds (Payments) on  Short-Term Debt, Net                                   |   | 136,230                                   |    | 118,166 |   |
| Proceeds from Long-Term  Debt                                                  |   | 31,000                                    |    | — |   |
| Long-Term Debt Repayment                                                       |   | (18,038                                   | )       | (18,800 | ) |
| Issuance of Stock                                                              |   | 4,891                                     |    | 5,453 |   |
| Payment of Unit Retains  & Equity Retention                                |   | (15,962                                   | )       | (16,313 | ) |
| Net Cash Provided by  Financing Activities                                     |   | 138,121                                   |    | 88,506 |   |
|                                                                           |   |                                      |    |   |   |
| Increase (Decrease) In  Cash and Cash Equivalents                              |   | 3                                         |    | (5,876 | ) |
| Cash and Cash Equivalents,  Beginning of Year                                  |   | 22                                        |    | 5,902 |   |
|                                                                           |   |                                      |    |   |   |
| Cash and Cash Equivalents,  End of Period                                      |   | $                                         | 25      |   | $ | 26 |   |

 

The Accompanying Notes arean Integral Part of These Financial Statements.

 

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# **AMERICAN CRYSTAL SUGAR COMPANYNOTES TO THE CONSOLIDATED FINANCIALSTATEMENTSFOR THE SIX MONTHS ENDED FEBRUARY 28, 2003 AND 2002**

 

**Note1:  Basis of Presentation**

 

The unaudited consolidated financial statementscontained herein have been prepared pursuant to the rules and regulations ofthe Securities and Exchange Commission. Accordingly, they do not include all the information and footnotesrequired by generally accepted accounting principles.  However, in the opinion of management, all adjustments,consisting of normal recurring accruals, considered necessary for a fairpresentation have been included.

 

The unaudited consolidated financial statements arecomprised of American Crystal Sugar Company and its wholly-owned subsidiary,Sidney Sugars Incorporated (SSI), which was formed on September 17, 2002. OnOctober 7, 2002, SSI acquired certain assets of Holly Sugar Corporation, awholly-owned subsidiary of Imperial Sugar Company (Imperial).  All material inter-company transactions havebeen eliminated.

 

The operating results for the six month period endedFebruary 28, 2003 are not necessarily indicative of the results that may beexpected for the year ended August 31, 2003.

 

The amount paid to shareholders for sugarbeets (memberbeet payment) depends on the future selling prices of sugar and agri-productsas well as processing and other costs to be incurred during the remainder ofthe fiscal year associated with the 2002 Red River Valley sugarbeet crop (RRVcrop). The amount paid to non-member growers for sugarbeets (non-member beetpayment) depends on the future selling prices of sugar and the related sellingexpenses associated with the 2002 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 these estimates may be necessary in the future, asadditional information becomes available.

 

These financial statements should be read inconjunction with the financial statements and notes included in the Company’sannual report for the year ended August 31, 2002.

 

Certain reclassifications have been made to theFebruary 28, 2002 financial statements to conform with the February 28, 2003presentation.

 

**Note2:  Inventories**

 

The major components of inventories are as follows (In Thousands):

 
|                                                                    |   | **2/28/03** |    | **02/28/02** |   | **8/31/02** |   |
|-------------------------------------------------------------------------|--------|-------------|---------|--------------|--------|-------------|--------|
| Refined Sugar,  Pulp, Molasses, Other Agri-Products and Sugar Beet Seed |   | $           | 258,079 |         | $      | 273,955     |   | $ | 97,693 |   |
| Unprocessed  Sugarbeets                                                 |   | 101,047     |    | 49,329       |   | —      |   |
| Maintenance  Parts & Supplies                                       |   | 17,361      |    | 18,011       |   | 17,963      |   |
|                                                                    |   |        |    |         |   |        |   |
| Total  Inventories                                                      |   | $           | 376,487 |         | $      | 341,295     |   | $ | 115,656 |   |

 

Sugar, pulp, molasses and other agri-productsinventories are valued at estimated net realizable value.  Unprocessed sugarbeets are valued at theestimated gross beet payment. Maintenance parts & supplies and beet seedinventories are valued at the lower of average cost or market.

 

**Note3:  Accrued Continuing Costs**

 

For interim reporting, the Net Proceeds from MemberBusiness is based on (i) the forecasted member gross beet payment and thepercentage of the tons of RRV crop processed to the total estimated 

 

5

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tons of the RRV crop to process for a given crop year and (ii) on theforecasted gross PIK payment and the percentage of the hundredweight of sugarreceived to the total hundredweight of sugar to be received.  The Net Proceeds from the operations of SSIis based on the forecasted net income for the fiscal year and the percentage ofthe tons of Sidney crop processed to the total estimated tons of the Sidneycrop to be processed for a given fiscal year.

 

Accrued continuing costs represent the differencebetween the Net Proceeds as determined above and actual member business cropyear and SSI fiscal year revenues realized and expenses incurred through theend of the reporting period.  Accruedcontinuing costs are reflected in the Financial Statements as a cost on theStatements of Operations and as a current liability on the Balance Sheets.

 

**Note4:  Members’ Investments**

 
|               |   | **Par Value** |   | **Shares  Authorized** |    | **Shares  Issued  & Outstanding** |    |
|--------------------|--------|---------------|--------|------------------------|---------|---------------------------------------|---------|
| Preferred Stock:   |   |          |   |                   |    |                                  |    |
| April 7, 2003      |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
| February 28,  2003 |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
| August 31, 2002    |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
| February 28,  2002 |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
|               |   |          |   |                   |    |                                  |    |
| Common Stock:      |   |          |   |                   |    |                                  |    |
| April 7, 2003      |   | $             | 10.00  |                   | 4,000   |                                  | 3,002   |   |
| February 28,  2003 |   | $             | 10.00  |                   | 4,000   |                                  | 3,008   |   |
| August 31, 2002    |   | $             | 10.00  |                   | 4,000   |                                  | 3,035   |   |
| February 28,  2002 |   | $             | 10.00  |                   | 4,000   |                                  | 3,115   |   |

 

**Note5:  Interest Paid**

 

Interest paid, net of amounts capitalized, was $7.7million and $8.2 million for the six months ended February 28, 2003 and 2002,respectively.

 

# **Note 6:  Short-Term Debt**

 

The Company has a seasonal line of credit with aconsortium of lenders led by CoBank, ACB of $265 million and a line ofcredit with Wells Fargo Bank for $3 million, of which there is currentlyno debt outstanding. The Company’s commercial paper program provides short-termborrowings of up to $150 million of which approximately $143.2 million iscurrently outstanding.  Any borrowingsunder the commercial paper program will act to reduce the available creditunder the CoBank, ACB seasonal line of credit by a commensurate amount. Theacquisition from Imperial was financed utilizing available short-term debt.

 

As of February 28, 2003, the Company had outstandingcommercial paper of $143.2****million at an average interest rate of2.02% and maturity dates between March 3, 2003 and June 9, 2003.  The Company had no outstanding short-termdebt with CoBank, ACB as of February 28, 2003.

 

As of February 28, 2002, the Company had outstandingcommercial paper of $117.1****million at an average interest rate of2.56% and maturity dates between March 1, 2002****and May 31, 2002. TheCompany also had $15.0 million of outstanding short-term debt with CoBank, ACBat an average interest rate of 2.61% and maturity date of March 27, 2002.

 

6

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**Note 7:  Sidney SugarsIncorporated**

 

On October 7, 2002, theCompany, through SSI, acquired three sugarbeet processing facilities and therelated marketing allocations associated with such facilities from Imperial fora purchase price of approximately $35.2 million.

 

The facility located inHereford, Texas was idle at the time of the acquisition and will remain idlefor the foreseeable future.  Thefacility located in Torrington, Wyoming has been leased, on a long-term basis,to Western Sugar Cooperative, who will continue to operate the facility toprocess sugarbeets delivered by growers supplying the facility prior to theacquisition and from its own growers. The lease payments due under the long-term lease are nominal.

 

SSI will operate thefacility located at Sidney, Montana. The campaign for the 2002 Sidney crop commenced on September 25, 2002and was completed on February 28, 2003. A total of 863,000 tons of sugarbeetswere harvested, with a total production of approximately****2.5 million hundredweight ofsugar produced from the 2002 Sidney crop. Approximately 127,000 tons of beetsfrom the 2002 Sidney crop had been harvested prior to October 7, 2002. Thisportion of the crop and the resulting sugar produced from those beets remainedthe property of Imperial.

 

As part of the entiretransaction with Imperial, the Company acquired the rights to marketingallocations equal to an estimated 4.8% of the total allocation for the domesticsugarbeet segment.  A portion of thesemarketing allocations will be used to market the sugar produced at the Sidney,Montana facility.  Any excess allocationswill be available to the Company.  Thesugar produced by SSI will be marketed through United Sugars Corporation whilethe agri-products produced will be marketed through Midwest Agri-Commodities.

 

**Note8:  Recently Issued AccountingPronouncements**

 

The Financial Accounting Standards Board has recentlyissued Interpretation No. 46 regarding the Consolidation of Variable InterestEntities. This interpretation becomes effective for American Crystal in thefirst quarter of fiscal 2004. Management is reviewing the interpretation andhas not determined the effect, if any, that the adoption of this interpretationwill have on the Company’s financial statements.

 

**Item 2****.  Management’s Discussion and Analysis of Results of Operations andFinancial Condition for the Six Months and Three Months Ended February 28, 2003and 2002**

 

This report contains forward-looking statements thatinvolve risks and uncertainties.  Suchforward-looking statements include, among others, those statements includingthe words “expect”, “anticipate”, “believe”, “may” and similarexpressions.  The Company’s actualresults could differ materially from those indicated.  Important factors that could cause or contribute to suchdifferences include, without limitation, market factors, weather and generaleconomic conditions, farm and trade policy, available quantity and quality ofsugarbeets.  For a more completediscussion of “Important Factors”, please refer to the Company’s 2002 Form10-K.

 

### **Comparison of theSix Months Ended February 28, 2003 and 2002**

 

Revenue for the six months ended February 28, 2003,was $393.1 million, an increase of $46.6 million as compared to the same periodlast year.  Revenue from total sugarsales increased 12.2 percent reflecting a 6.3 percent increase in the hundredweightsold and a 5.5 percent increase in the average selling price perhundredweight.  Revenue from pulp salesincreased 23.2 percent due to a 10.3 percent increase in the volume of pulpsold and an 11.7 percent increase in the average selling price per ton.  Revenue from molasses sales increased 45.9percent due to a 53.9 percent increase in the volume of molasses sold partiallyoffset by a 5.2 percent decrease in the average selling price per ton.  Revenue from the sales of ConcentratedSeparated By-Product (CSB), a by-product of the molasses desugarizationprocess, increased 8.2 percent due to a 10.9 percent increase in the averageselling price per ton partially offset by a 2.4 percent decrease in the volumeof CSB sold.

 

7

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Cost of product sold, for the six months endedFebruary 28, 2003, exclusive of payments for member sugarbeets, increased $82.5million as compared to the same period last year.  The cost associated with the cost of non-member sugar beets(Sidney Crop) was $31.4 million for the six months ended February 28,2003.  Direct processing costs for sugarand pulp increased 10.2 percent. This was due to harvesting 17.8 percent moresugarbeets and processing 12.5 percent more sugarbeets related to the Sidneycrop, partially offset by processing 10.7 percent fewer RRV crop sugarbeetsthis year due to delaying the commencement of the RRV crop processingcampaign.  Higher natural gas pricesalso added to this increase.  Fixed andcommitted expenses increased 7.6 percent reflecting higher purchased powercosts, insurance costs, and costs related to SSI.  The change in productinventories impacted the cost of product sold unfavorably by $26.4 millionprimarily due to lower sugar inventory levels. The cost associated with sugar purchased to meet customer needs was up$14.1 million due to delaying the commencement of the 2002 RRV cropcampaign.  The 2002 RRV crop campaignstart-up was delayed because of adverse planting and growing conditions whichslowed the maturity of the crop.

 

Selling, general and administrative expenses for thesix months ended February 28, 2003 increased $3.7 million from 2002.  Selling expenses increased $3.6 millionprimarily due to the increase in the volume of products sold along withincreased freight costs.  General andAdministrative expenses increased $ .1 million due to general cost increases.

 

During the six months ended February 28, 2003, 68.8percent of the 2002 RRV crop was processed resulting in the recognition of net proceedsfrom member business of $222.6 million. This represented 68.8 percent of the $323.7 million projected membergross beet payment for the 2002 RRV crop. The actual net proceeds from member business, for the six months endedFebruary 28, 2003, were $276.2 million. During the six months ended February 28, 2003, 100.0 percent of the 2002Sidney crop was processed resulting in the recognition of net proceeds from SSIof $2.6 million.  This represented 100.0percent of the $2.6 million projected SSI net income for fiscal 2003.  The actual net proceeds from SSI, for thesix months ended February 28, 2003, was $12.8 million.  The difference between the actual netproceeds from member business and SSI and the amounts recognized for the sixmonths ended February 28, 2003, resulted in the recognition of $63.7 million ofaccrued continuing costs.  Incomparison, during the six months ended February 28, 2002, 83.2 percent of the2001 RRV crop was processed resulting in the recognition of net proceeds frommember business of $240.6 million.  Thisrepresented 83.2 percent of the $289.2 million projected member gross beetpayment for the 2001 RRV crop. In addition, $10.7 million, representing 50percent of the $21.3 million projected gross PIK payment, had also beenrecognized as net proceeds from member business.  The actual net proceeds from member business, for the six monthsended February 28, 2002, were $327.8 million. The difference between the actual net proceeds from member business andthe amounts recognized for the six months ended February 28, 2002, resulted inthe recognition of $76.5 million of accrued continuing costs.

 

Interest income for the six months ended February 28,2003 decreased slightly compared to the same period last year primarily due toa lower average balance of investments.

 

Interest expense decreased from last year primarilydue to lower average borrowing levels for short-term and long-term debt andlower average borrowing rates on short-term debt.

 

Non-member activities resulted in income of $1.9million for the six months ended February 28, 2003 compared to a loss of $..8 million for the same period last year. The non-member income in fiscal 2003is primarily the result of activities related to SSI.  The non-member loss in fiscal 2002 was primarily the result ofactivities related to the investment in ProGold Limited Liability Company.

 

### **Comparison of theThree Months Ended February 28, 2003 and 2002**

 

Revenue for the three months ended February 28, 2003,was $191.8 million, an increase of $18.0 million as compared to the same periodlast year.  Revenue from total sugarsales increased 6.4 percent reflecting a 3.7 percent increase in thehundredweight sold and a 2.7 percent increase in the average selling price perhundredweight.  Revenue from pulp salesincreased 54.3 percent due to a 33.6 percent increase in the volume of pulpsold and a 15.5 percent increase in the average selling price per ton.

 

8

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Revenue from molasses sales increased 56.2 percent due to a 76.9percent increase in the volume of molasses sold partially offset by an 11.7percent decrease in the average selling price per ton.  Revenue from the sales of ConcentratedSeparated By-Product (CSB), a by-product of the molasses desugarizationprocess, increased 20.5 percent due to a 15.4 percent increase in the volume ofCSB sold and a 4.4 percent increase in average selling price per ton.

 

Cost of product sold, for the three months endedFebruary 28, 2003, exclusive of payments for member sugarbeets, increased $23.2million as compared to the same period last year.  The cost associated with the cost of non-member sugar beets(Sidney Crop) was $18.2 million for the three months ended February 28,2003.  Direct processing costs for sugarand pulp increased 21.9 percent. This was due to processing 16.1 percent moresugarbeets along with higher natural gas prices and beet transportationcosts.  Fixed and committed expensesincreased 10.6 percent reflecting higher purchased power costs, insurance costsand costs related to SSI.  The change in product inventories impacted thecost of product sold favorably by $8.8 million primarily due to the increasednet realizable value for sugar partially offset by lower sugar inventorylevels.  The cost associated with sugarpurchased to meet customer needs was up $ .6 million due to minimal purchasedsugar activity last year.

 

Selling, general and administrative expenses for thethree months ended February 28, 2003 increased $3.1 million from 2002.  Selling expenses increased $4.0 millionprimarily due to the increase in the volume of products sold and higher freightand warehousing costs.  General andAdministrative expenses decreased $ .9 million due to general cost decreases.

 

During the three months ended February 28, 2003, 40.1percent of the 2002 RRV crop was processed resulting in the recognition of netproceeds from member business of $129.7 million.  This represented 40.1 percent of the $323.7 million projectedmember gross beet payment for the 2002 RRV crop.  The actual net proceeds from member business, for the threemonths ended February 28, 2003, were $160.8 million.  During the three months ended February 28, 2003, 58.5 percent ofthe 2002 Sidney crop was processed resulting in the recognition of net proceedsfrom SSI of $1.5 million.  Thisrepresented 58.5 percent of the $2.6 million projected SSI net income forfiscal 2002.  The actual net proceedsfrom SSI, for the three months ended February 28, 2003, were $8.2 million.  The difference between the actual netproceeds from member business and SSI and the amounts recognized for the threemonths ended February 28, 2003, resulted in the recognition of $37.9 million ofaccrued continuing costs.  In comparison,during the three months ended February 28, 2002, 42.8 percent of the 2001 RRVcrop was processed resulting in the recognition of net proceeds from memberbusiness of $123.9 million.  Thisrepresented 42.8 percent of the $289.2 million projected member gross beetpayment for the 2001 RRV crop. In addition, $10.7 million, representing 50percent of the $21.3 million projected gross PIK payment, had also beenrecognized as net proceeds from member business.  The actual net proceeds from member business, for the threemonths ended February 28, 2002, were $176.4 million.  The difference between the actual net proceeds from memberbusiness and the amounts recognized for the three months ended February 28,2002, resulted in the recognition of $41.8 million of accrued continuing costs.

 

Interest income for the three months ended February28, 2003 increased marginally compared to the same period last year primarilydue to a higher average balance of investments.

 

Interest expense decreased slightly for the threemonths ended February 28, 2003 as compared to the same period last yearprimarily due to lower average borrowing levels for long-term debt and  lower average interest rates for short-termdebt.

 

Non-member activities resulted in income of $1.1million for the three months ended February 28, 2003 compared to a loss of $ .4million for the same period last year. This non-member income in fiscal 2003 isprimarily the result of activities related to SSI.  The non-member loss in fiscal 2002 was primarily the result ofactivities related to the investment in ProGold Limited Liability Company.

 

**Liquidityand Capital Resources**

 

Under the Company’s Bylaws and Member GrowerContracts, payments for member delivered sugarbeets, the principal raw materialused in producing the sugar and agri-products it sells, are 

 

9

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subordinated to all member business expenses.  In addition, the beet payments made to member growers andnon-member growers are paid in three payments over the course of a year, andthe member payments are made net of any anticipated unit retain for the crop.These procedures have the effect of providing the Company with an additionalsource of short-term financing.  Thismember financing arrangement may result in an additional source of liquidity andreduced need for outside financing in comparison to a similar business operatedon a non-cooperative basis.

 

Because sugar is sold throughout the year (whilesugarbeets are processed primarily in the fall, winter and spring) and becausesubstantial amounts of equipment are required for its operations, the Companyhas utilized substantial outside financing on both a seasonal and long-termbasis to fund such operations. The majority of such financing has been providedby a consortium of lenders lead by CoBank, ACB. The Company has a long-termdebt commitment with CoBank, ACB of****$132.4 million, of which $95.3million is currently outstanding.  Inaddition, the Company has long-term debt outstanding of $50 million from aprivate placement of Senior Notes that occurred in September of 1998;$19.8 million from a private placement of Senior Notes that occurred inJanuary of 2003; $43.5 million from nine separate issuances of PollutionControl and Industrial Development Revenue Bonds and a term loan with Bank of NorthDakota of $4.8 million.  The Companyalso has a seasonal line of credit with a consortium of lenders led by CoBank,ACB of $265 million, of which there is no current balance outstanding, anda line of credit with Wells Fargo Bank for $3 million. The Company’scommercial paper program provides short-term borrowings of up to$150 million of which approximately $143.2 million is currentlyoutstanding.  Any borrowings under thecommercial paper program will act to reduce the available credit under the CoBank,ACB seasonal line of credit by a commensurate amount.

 

The changes that occurred in the Company’s financialstatements from August 31, 2002 to February 28, 2003 were primarily due tonormal business seasonality and the acquisition activities related to SSI.  The first six months of the Company’s fiscalyear includes the completion of the sugarbeet harvest, start of the processingcampaign, and the initial payments to growers for delivered sugarbeets.  The cash used in operations of $92.6 millionand investing activities of $45.5 million was funded primarily through the cashprovided by financing activities. The net cash provided by financing activitieswas primarily comprised of the net proceeds from short-term debt of $136.2million, proceeds from long-term debt of $31.0 million, and proceeds from theinstallment sale of stock of $4.9 million partially offset by the payment ofunit retains of $16.0 million and long-term debt repayment of $18.0 million.

 

Working capital has decreased $12.7 million from $58.3million at the beginning of the year to $45.6 million as of February 28, 2003primarily due to additional short-term debt, increases in payables and anincrease in amounts due growers partially offset by increased inventories.  Working capital as of February 28, 2003 was$45.6 million, an increase of $9.7 million when compared to $35.9 million ofworking capital as of February 28, 2002.

 

Capital expenditures for the six months ended February28, 2003 were $45.8 million, which included $35.2 related to the acquisitionactivities of SSI.  Capital expendituresfor the same period in 2002 were $5.4 million. The Company had outstanding commitments totaling $5.2 million as of February28, 2003 for equipment and construction contracts related to various capitalprojects.

 

The Company anticipates that the funds necessary forworking capital requirements and future capital expenditures will be derivedfrom operations, short-term borrowings, depreciation, unit retains andlong-term borrowings.

 

**Item 3****.  Quantitativeand Qualitative Disclosures about Market Risk**

 

Market risk is the risk of loss to future earnings, tofair values or to future cash flows that may result from changes in the priceof a financial instrument.  The value ofa financial instrument may change as a result of changes in the interest rates,exchange rates, commodity prices, equity prices and other market changes.  Market risk is attributed to all market-risksensitive financial instruments, including long term debt.

 

10

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The Company does not believe that there is anymaterial market risk exposure with respect to interest rates, exchange rates,commodity prices, equity prices and other market changes that would requiredisclosure under this item.

 

**Item 4****.   Controlsand Procedures**

 

The Company’s chief executive officer and chieffinancial officer have reviewed and evaluated the effectiveness of theCompany’s disclosure controls and procedures (as defined in Rules 240.13a-14(c)and 15d-14(c) promulgated under the Securities Exchange Act of 1934) as ofFebruary 28, 2003.  Based on that reviewand evaluation, which included inquiries made to certain other employees of theCompany, the chief executive officer and chief financial officer have concludedthat the Company’s current disclosure controls and procedures, as designed andimplemented, are reasonably adequate to ensure that they are provided withmaterial information relating to the Company required to be disclosed in thereports the Company files or submits under the Securities Exchange Act of 1934.

 

There have been no significant changes in theCompany’s internal controls or in other factors that could significantly affectthese controls subsequent to the date of their evaluation.  There were no significant deficiencies ormaterial weaknesses identified, and therefore no corrective actions were taken.

 

## **PART II**.OTHER INFORMATION

 

#### **Item 1**.  Legal Proceedings

 

From time to time and in the ordinary course of itsbusiness, the Company is named as a defendant in legal proceedings related tovarious issues, including worker’s compensation claims, tort claims andcontractual disputes. The Company is currently involved in certain legalproceedings, which have arisen in the ordinary course of the Company’s business.The Company is also aware of certain other potential claims, which could resultin the commencement of legal proceedings. The Company carries insurance, whichprovides protection against certain types of claims. 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.

 

**Item 2.  Changes i****n Securities and Use of Proceeds.**

 

None

 

**Item 3.  Defau****lt Upon Senior Securities**

 

None

 

### **Item4.  Submiss**ion of Matters to a Vote of SecurityHolders

 

None

 

**Item 5.  Othe****r Information.**

 

None.

 

11

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### **Item6. Exhibit**sand Reports on Form 8-K

 

(a)          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         |   | Trademark License Agreement between Registrant and  United Sugars Corporation, dated November 1, 1993                                   |   | Incorporated by reference to Exhibit 10(l) from the  Company’s Registration Statement on Form S-1 (File No. 33-83868), declared  effective November 23, 1994.  |
|         |   |                                                                                                                                         |   |                                                                                                                                                                     |
| 10.2         |   | Amended and Restated Loan Agreement between  Registrant and US Bank, formerly First Bank National Association, dated  November 22, 1993 |   | Incorporated by reference to Exhibit 10(q) from the  Company’s Registration Statement on Form S-1 (File No. 33-83868), declared  effective November 23, 1994.  |
|         |   |                                                                                                                                         |   |                                                                                                                                                                     |
| 10.3         |   | 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.  |
|         |   |                                                                                                                                         |   |                                                                                                                                                                     |
| 10.4         |   | 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.  |
|         |   |                                                                                                                                         |   |                                                                                                                                                                     |
| 10.5         |   | Administrative Services Agreement between Registrant  and ProGold Limited Liability Company                                                  |   | Incorporated by reference to Exhibit 10(w) from the  Company’s Registration Statement on Form S-1 (File No. 33-83868), declared  effective November 23, 1994.  |

 

12

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| +10.6   |   | Coal Supply Agreement between Registrant and Spring  Creek Coal Company, dated August 25, 1995                    |   | Incorporated by reference to Exhibit 10(y) from the  Company’s Registration Statement on Form S-1 (File No. 333-11693), declared  effective November 13, 1996. |
|---------|--------|------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| +10.7   |   | Coal Transportation Agreement between Registrant and  Northern Coal Transportation Company, dated August 25, 1995 |   | Incorporated by reference to Exhibit 10(z) from the  Company’s Registration Statement on Form S-1 (File No. 333-11693), declared  effective November 13, 1996. |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| +10.8   |   | Trademark License Agreement between Registrant and  The Pillsbury Company, dated as of April 9, 1997              |   | Incorporated by reference to Exhibit 10(dd) from the  Company’s Registration Statement on Form S-1 (File No. 333-32251), declared  effective October 24, 1997. |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.9    |   | 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.                                      |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.10   |   | 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.                                      |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.11   |   | 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.                                      |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.12   |   | 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.                                      |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| ++10.13 |   | 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.                                      |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.14   |   | Master Agreement between the Registrant and Bakery,  Confectionery, Tobacco Workers & Grain Millers AFL-CIO, CLC   |   | Incorporated by reference to Exhibit 10.22 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 1999                                        |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.15   |   | 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                                        |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.16   |   | Registrant’s  Senior Note Intercreditor 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                                        |
|    |   |                                                                                                                   |   |                                                                                                                                                                     |
| 10.17   |   | 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                                        |

 

13

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| 10.18  |   | 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 |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.19  |   | 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                   |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.20  |   | 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 10K for the year ended August 31, 2000   |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.21  |   | Long Term Incentive Plan, dated June 23, 1999                                                                                                         |   | Incorporated by reference to Exhibit 10.31 from the  Company’s Annual Report on Form 10K for the year ended August 31, 2000   |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.22  |   | Addendum to Master Agreement between the Registrant  and Bakery, Confectionery, Tobacco Workers & Grain Millers AFL-CIO, CLC  dated July 10, 2001 |   | Incorporated by reference to Exhibit 10.30 from the  Company’s Annual Report on Form 10K for the year ended August 31, 2001   |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.23  |   | 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              |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.24  |   | 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              |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.25  |   | Term and Seasonal Loan Agreements between the  Registrant and CoBank, ACB dated March 27, 2002                                                        |   | Incorporated by reference to Exhibit 10.27 from the  Company’s Form 10-Q for the quarter ended May 31, 2002                   |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.26  |   | Retirement Plan A Restatement                                                                                                                         |   | Incorporated by reference to Exhibit 10.28 from the  Company’s Annual Report on Form 10K for the year ended August 31, 2002   |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.27  |   | Retirement Plan B Restatement                                                                                                                         |   | Incorporated by reference to Exhibit 10.29 from the  Company’s Annual Report on Form 10K for the year ended August 31, 2002   |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.28  |   | Amendments to Term and Seasonal Loan Agreements  between the Registrant and CoBank, ACB dated November 6, 2002                                        |   | Incorporated by reference to Exhibit 10.30 from the  Company’s Form 10-Q for the quarter ended November 30, 2002              |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.29  |   | Registrant’s Senior Note  Purchase Agreement dated January 15, 2003                                                                              |   | Filed herewith electronically                                                                                                      |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.30  |   | Growers’ Contract (5-year Agreement) for the crop  years 2003 through 2007                                                                       |   | Filed herewith electronically                                                                                                      |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 10.31  |   | Growers’ Contract (Annual Contract) for crop year  2003.                                                                                         |   | Filed herewith electronically                                                                                                      |
|   |   |                                                                                                                                                  |   |                                                                                                                               |
| 21.1   |   | List of Subsidiaries of the Registrant                                                                                                                |   | Incorporated by reference to Exhibit 21.1 from the  Company’s Annual Report on Form 10K for the year ended August 31, 2002    |

 

14

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| 99.1   |   | Section 1350 Certification of the Chief Executive  Officer |   | Accompanying herewith electronically |
|--------|--------|------------------------------------------------------------|--------|--------------------------------------|
|   |   |                                                       |   |                                 |
| 99.2   |   | Section 1350 Certification of the Chief Financial  Officer |   | Accompanying herewith electronically |

 

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+                                         Portionsof the Exhibit have been granted confidential treatment by the Commission. Theomitted portions have been filed separately with the Commission.

++                                  Portionsof the Exhibit have been deleted from the publicly filed document and have beenfiled separately with the Commission pursuant to a request for confidentialtreatment.

 

**(b)Reports on Form 8-K**

 

The Company filed the following Current Reports on Form 8-K during thisquarter.

 

(i)                                     CurrentReport on Form 8-K, dated January 14, 2003, under item 9 stating that theCompany had filed its quarterly report on form 10-Q for the period endedNovember 30, 2002 and in connection with the filing, certifications by theJames J. Horvath, President and Chief Executive Officer, and Joseph J. Talley,Chief Financial Officer had also been submitted.

 

(ii)                                  CurrentReport on Form 8-K, dated January 27, 2003, under item 9, the Company statedthat it had announced to its shareholders on January 27, 2002, that the Boardof Directors had modified the planting policy for the 2003 crop to be equal tostock acres with a permitted under-plant of up to two percent.

 

 

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:** | **April  14, 2003** |                          |   | **/s/  Brian Ingulsrud** |   |
|-----------|---------------------|-------------------------------|--------|--------------------------|--------|
|      |                | **Brian  Ingulsrud**          |
|      |                | **Corporate  Controller,**    |
|      |                | **Chief  Accounting Officer** |
|      |                | **Duly  Authorized Officer**  |
|      |                |                          |

 

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**CERTIFICATIONS**

 

I, James J. Horvath, President and Chief Executive Officer of AmericanCrystal Sugar Company, certify that:

 

1.                                       Ihave reviewed this quarterly report on Form 10-Q of American Crystal SugarCompany (the registrant);

 

2.                                       Basedon my knowledge, this quarterly report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this quarterlyreport;

 

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

 

4.                                       Theregistrant’s other certifying officer and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)                                      designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)                                     evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (theEvaluation Date); and

 

c)                                      presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.                                       Theregistrant’s other certifying officer and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee of theregistrant’s board of directors:

 

a)                                      allsignificant deficiencies in the design or operation of the internal controlswhich could adversely affect the registrant’s ability to record, process,summarize and report financial data and have identified for the registrant’sauditors any material weaknesses in internal controls; and

 

b)                                     anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls.

 

6.                                       Theregistrant’s other certifying officer and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

April 14, 2003

 

 
| /s/ James J. Horvath                  |   |
|---------------------------------------|--------|
|                                  |
| James J. Horvath                      |
| President and Chief Executive Officer |

 

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**CERTIFICATIONS**

 

I, Joseph J. Talley, Vice President-Finance and Chief Financial Officerof American Crystal Sugar Company, certify that:

 

1.                                       Ihave reviewed this quarterly report on Form 10-Q of American Crystal SugarCompany (the registrant);

 

2.                                       Basedon my knowledge, this quarterly report does not contain any untrue statement ofa material fact or omit to state a material fact necessary to make thestatements made, in light of the circumstances under which such statements weremade, not misleading with respect to the period covered by this quarterlyreport;

 

3.                                       Basedon my knowledge, the financial statements, and other financial informationincluded in this quarterly report, fairly present in all material respects thefinancial condition, results of operations and cash flows of the registrant asof, and for, the periods presented in this quarterly report;

 

4.                                       Theregistrant’s other certifying officer and I are responsible for establishingand maintaining disclosure controls and procedures (as defined in Exchange ActRules 13a-14 and 15d-14) for the registrant and we have:

 

a)                                      designedsuch disclosure controls and procedures to ensure that material informationrelating to the registrant, including its consolidated subsidiaries, is madeknown to us by others within those entities, particularly during the period inwhich this quarterly report is being prepared;

 

b)                                     evaluatedthe effectiveness of the registrant’s disclosure controls and procedures as ofa date within 90 days prior to the filing date of this quarterly report (theEvaluation Date); and

 

c)                                      presentedin this quarterly report our conclusions about the effectiveness of thedisclosure controls and procedures based on our evaluation as of the EvaluationDate;

 

5.                                       Theregistrant’s other certifying officer and I have disclosed, based on our mostrecent evaluation, to the registrant’s auditors and the audit committee of theregistrant’s board of directors:

 

a)                                      allsignificant deficiencies in the design or operation of the internal controlswhich could adversely affect the registrant’s ability to record, process,summarize and report financial data and have identified for the registrant’sauditors any material weaknesses in internal controls; and

 

b)                                     anyfraud, whether or not material, that involves management or other employees whohave a significant role in the registrant’s internal controls.

 

6.                                       Theregistrant’s other certifying officer and I have indicated in this quarterlyreport whether or not there were significant changes in internal controls or inother factors that could significantly affect internal controls subsequent tothe date of our most recent evaluation, including any corrective actions withregard to significant deficiencies and material weaknesses.

 

April 14, 2003

 
| /s/ Joseph J. Talley                               |   |
|----------------------------------------------------|--------|
|                                               |
| Joseph J. Talley                                   |
| Vice President-Finance and Chief Financial Officer |

 

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