**UNITED STATESSECURITIES AND EXCHANGE COMMISSION****Washington, D.C. 20549**

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**FORM 10-Q**

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

# **For theperiod February 28, 2007**

## **Commission file number:  33-83868**

**AMERICAN CRYSTAL 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  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) hasfiled all reports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months, and (2) has been subjectto such filing requirements for the past 90 days.
| YES | x | NO | o |
|-----|---|----|---|

Indicate by check mark whether the registrant is a largeaccelerated filer, an accelerated filer, or a non-accelerated filer.  See definition of “accelerated filer andlarge accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one)
| Large accelerated filer o |   | Accelerated filer o |   | Non-accelerated filer x |
|---------------------------|--------|---------------------|--------|-------------------------|

 

Indicate by check mark whether the registrant is a shell company (asdefined in rule 12b-2 of the Act).
| YES | o | NO | x |
|-----|---|----|---|

 

Indicate the number ofshares outstanding of each of the issuer’s classes of common stock, as of thelatest practicable date.
|                                          | ** ** | **Outstanding at**     | ** ** |
|------------------------------------------|------------|-----------------------------|------------|
| **Class of Common Stock** | ** ** | **April 5, 2007** | ** ** |
| **$10 Par Value**                        | ** ** | **2,830**                   | ** ** |

 

 

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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 1A.**   | ** ** | **RISK FACTORS**                                   | ** ** | ** ** |
| **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 SugarCompany**

**Consolidated BalanceSheets**

**(Unaudited)**

**(In Thousands)**

**Assets**
| ** **                                     | ** ** | **February 28** | ** ** | **August 31** | ** ** |
|------------------------------------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                     | ** ** | **2007**             | ** ** | **2006**           | ** ** | **2006*** | ** ** |
| **Current  Assets:**                           | ** ** | ** **           | ** ** | ** **         | ** ** | ** ** | ** ** |
| Cash and Cash Equivalents                      |       | $                    | 314        |               | $          | 818 |   | $ | 345 |   |
| Receivables:                                   |       |                 |       |               |       |   |   |
| Trade                                          |       | 69,206               |       | 41,655             |       | 78,242 |   |
| Members                                        |       | —               |       | 1                  |       | 3,383 |   |
| Other                                          |       | 2,216                |       | 2,155              |       | 4,036 |   |
| Advances to Related Parties                    |       | 2,081                |       | 6,075              |       | 4,737 |   |
| Inventories                                    |       | 542,731              |       | 433,045            |       | 174,761 |   |
| Prepaid Expenses                               |       | 5,023                |       | 6,176              |       | 4,390 |   |
|                                           |       |                 |       |               |       |   |   |
| **Total  Current Assets**                      |       | 621,571              |       | 489,925            |       | 269,894 |   |
|                                           |       |                 |       |               |       |   |   |
| **Property  and Equipment:**                   | ** ** | ** **           | ** ** | ** **         | ** ** | ** ** | ** ** |
| Land and Land Improvements                     |       | 56,542               |       | 53,660             |       | 55,808 |   |
| Buildings                                      |       | 103,807              |       | 98,757             |       | 102,986 |   |
| Equipment                                      |       | 806,139              |       | 773,285            |       | 799,175 |   |
| Construction in Progress                       |       | 19,265               |       | 12,968             |       | 11,754 |   |
| Less Accumulated Depreciation                  |       | (661,019             | )          | (625,321           | )          | (637,583 | ) |
|                                           |       |                 |       |               |       |   |   |
| **Net  Property and Equipment**                |       | 324,734              |       | 313,349            |       | 332,140 |   |
|                                           |       |                 |       |               |       |   |   |
| **Net  Property and Equipment Held for Lease** |       | 134,543              |       | 145,666            |       | 140,041 |   |
|                                           |       |                 |       |               |       |   |   |
| **Other  Assets:**                             | ** ** | ** **           | ** ** | ** **         | ** ** | ** ** | ** ** |
| Investments in CoBank, ACB                     |       | 13,138               |       | 14,940             |       | 13,138 |   |
| Investments in Marketing Cooperatives          |       | 5,766                |       | 6,179              |       | 5,638 |   |
| Investments in Crystech, LLC                   |       | 15,934               |       | 15,909             |       | 15,399 |   |
| Prepaid Pension Expense                        |       | 42,787               |       | 43,052             |       | 45,425 |   |
| Other Assets                                   |       | 17,356               |       | 19,412             |       | 18,322 |   |
|                                           |       |                 |       |               |       |   |   |
| **Total  Other Assets**                        |       | 94,981               |       | 99,492             |       | 97,922 |   |
|                                           |       |                 |       |               |       |   |   |
| **Total  Assets**                              |       | $                    | 1,175,829  |               | $          | 1,048,432 |   | $ | 839,997 |   |

 

The AccompanyingNotes are an Integral Part of These Consolidated Financial Statements.

* Derived fromaudited financial statements

1

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**Liabilities and Members'Investments**
| ** **                                           | ** ** | **February 28** | ** ** | **August 31** | ** ** |
|------------------------------------------------------|------------|----------------------|------------|--------------------|------------|
| ** **                                           | ** ** | **2007**             | ** ** | **2006**           | ** ** | **2006*** | ** ** |
| **Current  Liabilities:**                            | ** ** | ** **           | ** ** | ** **         | ** ** | ** ** | ** ** |
| Short-Term Debt                                      |       | $                    | 230,757    |               | $          | 172,443 |   | $ | 5,300 |   |
| Current Maturities of Long-Term Debt                 |       | 20,962               |       | 20,947             |       | 20,962 |   |
| Accounts Payable                                     |       | 19,128               |       | 19,673             |       | 27,120 |   |
| Advances Due to Related Parties                      |       | 7,683                |       | 8,020              |       | 7,033 |   |
| Accrued Continuing Costs                             |       | 76,454               |       | 68,715             |       | — |   |
| Other Current Liabilities                            |       | 25,042               |       | 22,614             |       | 27,617 |   |
| Amounts Due Growers                                  |       | 208,950              |       | 144,883            |       | 123,648 |   |
|                                                 |       |                 |       |               |       |   |   |
| **Total  Current Liabilities**                       |       | 588,976              |       | 457,295            |       | 211,680 |   |
|                                                 |       |                 |       |               |       |   |   |
| **Long-Term  Debt, Net of Current Maturities**       |       | 172,225              |       | 193,475            |       | 200,037 |   |
|                                                 |       |                 |       |               |       |   |   |
| **Accrued  Employee Benefits**                       |       | 40,958               |       | 40,146             |       | 40,987 |   |
|                                                 |       |                 |       |               |       |   |   |
| **Other  Liabilities**                               |       | 8,356                |       | 8,399              |       | 7,938 |   |
| ** **                                           |       |                 |       |               |       |   |   |
| **Total  Liabilities**                               |       | 810,515              |       | 699,315            |       | 460,642 |   |
|                                                 |       |                 |       |               |       |   |   |
| **Commitments  and Contingencies**                   | ** ** | ** **           | ** ** | ** **         | ** ** | ** ** | ** ** |
|                                                 |       |                 |       |               |       |   |   |
| **Minority  Interest in ProGold Limited Liability**  |       | 58,622               |       | 53,684             |       | 56,099 |   |
|                                                 |       |                 |       |               |       |   |   |
| **Members’  Investments:**                      | ** ** | ** **           | ** ** | ** **         | ** ** | ** ** | ** ** |
| Preferred Stock                                      |       | 38,275               |       | 38,275             |       | 38,275 |   |
| Common Stock                                         |       | 29                   |       | 29                 |       | 29 |   |
| Additional Paid-In Capital                           |       | 152,261              |       | 152,261            |       | 152,261 |   |
| Unit Retains                                         |       | 134,984              |       | 127,898            |       | 153,961 |   |
| Equity Retention                                     |       | 2,694                |       | 2,700              |       | 2,694 |   |
| Accumulated Other Comprehensive Income               |       | (440                 | )          | (832               | )          | (500 | ) |
| Retained Earnings (Accumulated Deficit)              |       | (21,111              | )          | (24,898            | )          | (23,464 | ) |
|                                                 |       |                 |       |               |       |   |   |
| **Total  Members’ Investments**                 |       | 306,692              |       | 295,433            |       | 323,256 |   |
|                                                 |       |                 |       |               |       |   |   |
| **Total Liabilities and Members’  Investments** |       | $                    | 1,175,829  |               | $          | 1,048,432 |   | $ | 839,997 |   |

 

The Accompanying Notesare an Integral Part of These Consolidated Financial Statements.

* Derived fromaudited financial statements

2

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**American Crystal Sugar Company**

**ConsolidatedStatements of Operations**

**(Unaudited)**

**(InThousands)**
| ** **                                                            | ** ** | **For the Six Months** | ** ** | **For the Three Months** | ** ** |
|-----------------------------------------------------------------------|------------|---------------------------------------|------------|-----------------------------------------|------------|
| ** **                                                            | ** ** | **Ended February 28**       | ** ** | **Ended February 28**         | ** ** |
| ** **                                                            | ** ** | **2007**                              | ** ** | **2006**                                | ** ** | **2007** | ** ** | **2006** | ** ** |
| **Net  Revenue**                                                      |       | $                                     | 544,215    |                                    | $          | 449,320 |   | $ | 285,969 |   | $ | 218,049 |   |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Cost of  Sales**                                                    |       | (13,213                               | )          | (766                                    | )          | 21,953 |   | (14,658 | ) |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Gross  Proceeds**                                                   |       | 557,428                               |       | 450,086                                 |       | 264,016 |   | 232,707 |   |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Selling,  General and Administrative Expenses**                     |       | 107,554                               |       | 97,872                                  |       | 57,631 |   | 47,888 |   |
| **Accrued  Continuing Costs**                                         |       | 76,454                                |       | 68,715                                  |       | 36,171 |   | 32,227 |   |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Operating  Proceeds**                                               |       | 373,420                               |       | 283,499                                 |       | 170,214 |   | 152,592 |   |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Other  Income (Expense):**                                          | ** ** | ** **                            | ** ** | ** **                              | ** ** | ** ** | ** ** | ** ** | ** ** |
| Interest Income                                                       |       | 506                                   |       | 176                                     |       | 30 |   | 32 |   |
| Interest Expense, Net                                                 |       | (9,976                                | )          | (9,549                                  | )          | (6,539 | ) | (5,619 | ) |
| Other, Net                                                            |       | 490                                   |       | 935                                     |       | 90 |   | 7 |   |
|                                                                  |       |                                  |       |                                    |       |   |   |   |   |
| **Total  Other (Expense)**                                            |       | (8,980                                | )          | (8,438                                  | )          | (6,419 | ) | (5,580 | ) |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Proceeds  Before Minority Interest and Income Tax Expense**         | ** ** | 364,440                               | ** ** | 275,061                                 | ** ** | 163,795 | ** ** | 147,012 | ** ** |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Minority  Interest**                                                |       | (2,523                                | )          | (2,152                                  | )          | (1,304 | ) | (1,068 | ) |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Income  Tax Expense**                                               |       | (1,634                                | )          | (575                                    | )          | (918 | ) | (299 | ) |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Net Proceeds Resulting from Member and Non-Member  Business**       | ** ** | $                                     | 360,283    | ** **                              | $          | 272,334 | ** ** | $ | 161,573 | ** ** | $ | 145,645 | ** ** |
| ** **                                                            |       |                                  |       |                                    |       |   |   |   |   |
| **Distributions  of Net Proceeds:**                                   | ** ** | ** **                            | ** ** | ** **                              | ** ** | ** ** | ** ** | ** ** | ** ** |
| Credited to Members’ Investments:                                |       |                                  |       |                                    |       |   |   |   |   |
| Non-Member Business Income                                            |       | $                                     | 2,353      |                                    | $          | 812 |   | $ | 1,323 |   | $ | 413 |   |
| Unit Retains Declared to Members                                      |       | —                                |       | —                                  |       | — |   | — |   |
| Net Credit to Members’ Investments                               |       | 2,353                                 |       | 812                                     |       | 1,323 |   | 413 |   |
| Payments To/Due Members for Sugarbeets, Net of Unit  Retains Declared |       | 357,930                               |       | 271,522                                 |       | 160,250 |   | 145,232 |   |
| **Total**                                                             |       | $                                     | 360,283    |                                    | $          | 272,334 |   | $ | 161,573 |   | $ | 145,645 |   |

 

The Accompanying Notesare an Integral Part of These Consolidated Financial Statements.

 

3

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**American Crystal Sugar Company**

**ConsolidatedStatements of Cash Flows**

**For the Six Months Ended February28**

**(Unaudited)**

**(InThousands)**
| ** **                                                            | ** ** | **2007**   | ** ** | **2006**   | ** ** |
|-----------------------------------------------------------------------|------------|------------|------------|------------|------------|
| **Cash  Provided By (Used In) Operating Activities:**                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net Proceeds Resulting from Member and Non-Member  Business           |       | $          | 360,283    |       | $          | 272,334 |   |
| Payments To/Due Members for Sugarbeets, Net of Unit  Retains Declared |       | (357,930   | )          | (271,522   | )          |
| Add (Deduct) Non-Cash Items:                                          |       |       |       |       |       |
| Depreciation and Amortization                                         |       | 35,662     |       | 35,384     |       |
| Income from Equity Method Investees                                   |       | (576       | )          | (567       | )          |
| Loss on the Disposition of Property and Equipment                     |       | 495        |       | 448        |       |
| Deferred Gain Recognition                                             |       | (99        | )          | (99        | )          |
| Minority Interest in ProGold Limited Liability  Company               |       | 2,523      |       | 2,152      |       |
| Changes in Assets and Liabilities:                                    |       |       |       |       |       |
| Receivables                                                           |       | 14,239     |       | 3,114      |       |
| Inventories                                                           |       | (367,970   | )          | (310,418   | )          |
| Prepaid Expenses                                                      |       | (574       | )          | (594       | )          |
| Long-Term Prepaid Pension Expense                                     |       | 2,638      |       | 737        |       |
| Advances To/Due to Related Parties                                    |       | 3,306      |       | 9,022      |       |
| Accounts Payable                                                      |       | (7,992     | )          | (7,492     | )          |
| Accrued Continuing Costs                                              |       | 76,454     |       | 68,715     |       |
| Other Liabilities                                                     |       | (2,183     | )          | 1,469      |       |
| Amounts Due Growers                                                   |       | 85,302     |       | 111,449    |       |
| **Net  Cash Used In Operating Activities**                            |       | (156,422   | )          | (85,868    | )          |
| ** **                                                            |       |       |       |       |       |
| **Cash  Provided By (Used In) Investing Activities:**                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| Purchases of Property and Equipment                                   |       | (21,890    | )          | (12,526    | )          |
| Purchases of Property and Equipment Held for Lease                    |       | (59        | )          | (334       | )          |
| Proceeds from the Sale of Property and Equipment                      |       | 54         |       | 127        |       |
| Equity Refund from CoBank, ACB                                        |       | —     |       | 1,776      |       |
| Changes in Other Assets                                               |       | (382       | )          | (8         | )          |
| **Net  Cash Used In Investing Activities**                            |       | (22,277    | )          | (10,965    | )          |
| ** **                                                            |       |       |       |       |       |
| **Cash  Provided By (Used In) Financing Activities:**                 | ** ** | ** ** | ** ** | ** ** | ** ** |
| Net Proceeds from Short-Term Debt                                     |       | 225,457    |       | 141,758    |       |
| Proceeds from Issuance of Long-Term Debt                              |       | 11,500     |       | 5,000      |       |
| Long-Term Debt Repayment                                              |       | (39,312    | )          | (28,367    | )          |
| Payment of Unit Retains and Equity Retention                          |       | (18,977    | )          | (21,077    | )          |
| **Net  Cash Provided By Financing Activities**                        |       | 178,668    |       | 97,314     |       |
| **Increase/(Decrease)  In Cash and Cash Equivalents**                 |       | (31        | )          | 481        |       |
| **Cash  and Cash Equivalents, Beginning of Year**                     |       | 345        |       | 337        |       |
| ** **                                                            |       |       |       |       |       |
| **Cash and Cash Equivalents, End  of Period**                         |       | $          | 314        |       | $          | 818 |   |

 

The Accompanying Notesare an Integral Part of These Consolidated Financial Statements.

4

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# **AMERICAN CRYSTAL SUGAR COMPANY**

**NOTES TO THE CONSOLIDATEDFINANCIAL STATEMENTSFOR THE SIX MONTHS AND THREE MONTHS ENDEDFebruary 28, 2007 AND 2006(Unaudited)**

**Note1:  Basis of Presentation**

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

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

All material inter-company transactions have been eliminated.

The operating results for the six month period ended February 28, 2007,are not necessarily indicative of the results that may be expected for the yearended August 31, 2007.

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

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

**Note 2: Recently Issued AccountingPronouncements**

The Financial Accounting Standards Board has recently issued StatementNo. 158, *Employers’ Accounting for Defined Benefit Pensionand Other Postretirement Plans—an amendment of FASB Statements No. 87, 88, 106,and 132(R)*.  This Statement willrequire the Company to recognize the overfunded or underfunded status of adefined benefit postretirement plan as an asset or liability in its statementof financial position and to recognize changes in that funded status in theyear in which the changes occur through comprehensive income.  This requirement becomes effective for theCompany as of August 31, 2007.  ThisStatement will also require the Company to measure the funded status of a planas of the date of its year-end statement of financial position.  This requirement becomes effective for theCompany as of August 31, 2009.  TheCompany estimates that the adoption of this statement would have had the effecton the Company’s Consolidated Balance Sheet as of February 28, 2007, ofreducing Prepaid Pension Expense by approximately $26.6 million, increasingAccrued Employee Benefits liabilities by approximately $1.1 million andreducing Members’ Investments by approximately $27.7 million.  Due to changes during the remainder of thefiscal year in such items as the return on plan assets, the discount rate, andcontributions, the actual amount of the effect on the Company’s Balance Sheetas of August 31, 2007 will not be known until the end of the fiscal year.

5

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**Note3:  Inventories**

The major components of inventories are as follows (In Thousands):
| ** **                                                             | ** ** | **February 28  2007** | ** ** | **February 28  2006** | ** ** | **August 31  2006** | ** ** |
|------------------------------------------------------------------------|------------|-----------------------|------------|-----------------------|------------|---------------------|------------|
| Refined Sugar,  Pulp, Molasses, Other Agri-Products and Sugarbeet Seed |       | $                     | 357,093    |                  | $          | 319,425             |       | $ | 134,211 |   |
| Unprocessed  Sugarbeets                                                |       | 155,263               |       | 85,415                |       | 8,721               |       |
| Maintenance  Parts and Supplies                                        |       | 30,375                |       | 28,205                |       | 31,829              |       |
|                                                                   |       |                  |       |                  |       |                |       |
| Total Inventories                                                      |       | $                     | 542,731    |                  | $          | 433,045             |       | $ | 174,761 |   |

 

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

# **Note 4: Short-Term Debt**

TheCompany has a seasonal line of credit with a consortium of lenders led by CoBank,ACB of $400 million and a line of credit with Wells Fargo Bank for$1 million.  The Company’scommercial paper program provides short-term borrowings of up to $325million.  Any borrowings under the commercial paper program along withoutstanding short-term letters of credit will act to reduce the availablecredit under the CoBank, ACB seasonal line of credit by a commensurateamount.  The Company also utilizes theCommodity Credit Corporation (CCC) to meet its short-term borrowing needs.

As of February 28, 2007,the Company had outstanding commercial paper of $219.3****millionat an average interest rate of 4.54% and maturity dates between March 1, 2007and May 31, 2007.  In addition, theCompany had an outstanding non-recourse loan with the CCC of $11.5 million,against which 500,000 hundredweight of sugar was pledged as collateral.  The CCC loan carried an interest rate of 6.0%and a maturity date of September 30, 2007. The Company had no outstanding short-term debt with CoBank, ACB as ofFebruary 28, 2007. The Company had $5.4 million of short-term letters of creditoutstanding as of February 28, 2007. The unused seasonal line of credit as ofFebruary 28, 2007 was $176.3 million.

As of February 28, 2006,the Company had outstanding commercial paper of $172.4****millionat an average interest rate of 4.86% and maturity dates between March 1, 2006,and May 31, 2006.  The Company had nooutstanding short-term debt with CoBank, ACB or the CCC as of February 28,2006. The Company had $5.9 million of short-term letters of credit outstandingas of February 28, 2006. The unused seasonal line of credit as of February 28,2006, was $102.7 million.

**Note5:  Interest Paid and InterestCapitalized**

Interest paid, net of amounts capitalized, was $9.5 million and $9.8million for the six months ended February 28, 2007 and 2006, respectively, and$7.3 million and $7.2 million for the three months ended February 28, 2007 and2006, respectively.  Interestcapitalized, was $ .7 million and $ .4 million for the six months ended February28, 2007 and 2006, respectively, and $ .3 million and $ .2 million for thethree months ended February 28, 2007 and 2006, respectively.

**Note6:  Accrued Continuing Costs**

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

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sugarbeetsprocessed to the total estimated tons of non-member sugarbeets to process for agiven fiscal year.

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

**Note7: ****NetPeriodic Pension and Post-Retirement Costs**

The following schedules provide the components ofthe Net Periodic Pension and Post-Retirement Costs for the six months and threemonths ended February 28, 2007 and 2006:

***Components of Net Periodic Pension Cost***

(In Thousands)
| ** **                           | ** ** | **For the Six Months Ended** | ** ** | **For the Three Months** | ** ** |
|--------------------------------------|------------|--------------------------------------------------|------------|-----------------------------------------|------------|
| ** **                           | ** ** | **February 28,**                            | ** ** | **February 28,**                   | ** ** |
| ** **                           | ** ** | **2007**                                         | ** ** | **2006**                                | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service Cost                         |       | $                                                | 1,766      |                                    | $          | 2,111 |   | $ | 883 |   | $ | 1,055 |   |
| Interest Cost                        |       | 3,954                                            |       | 3,592                                   |       | 1,977 |   | 1,796 |   |
| Expected Return  on Plan Assets      |       | (5,455                                           | )          | (4,928                                  | )          | (2,727 | ) | (2,464 | ) |
| Multiple  Employer Adjustment        |       | (28                                              | )          | (30                                     | )          | (14 | ) | (15 | ) |
| Amortization of  Prior Service Costs |       | 1,456                                            |       | 686                                     |       | 728 |   | 343 |   |
| Amortization of  Net Actuarial Loss  |       | 217                                              |       | 1,494                                   |       | 108 |   | 747 |   |
| Net Periodic Pension  Cost           |       | $                                                | 1,910      |                                    | $          | 2,925 |   | $ | 955 |   | $ | 1,462 |   |

 

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

(In Thousands)
| ** **                                 | ** ** | **For the Six Months Ended** | ** ** | **For the Three Months** | ** ** |
|--------------------------------------------|------------|--------------------------------------------------|------------|-----------------------------------------|------------|
| ** **                                 | ** ** | **February 28,**                            | ** ** | **February 28,**                   | ** ** |
| ** **                                 | ** ** | **2007**                                         | ** ** | **2006**                                | ** ** | **2007** | ** ** | **2006** | ** ** |
| Service Cost                               |       | $                                                | 551        |                                    | $          | 705 |   | $ | 275 |   | $ | 352 |   |
| Interest Cost                              |       | 962                                              |       | 1,044                                   |       | 481 |   | 522 |   |
| Amortization of  Net Actuarial (Gain)/Loss |       | (10                                              | )          | 194                                     |       | (5 | ) | 97 |   |
| Net Periodic  Post-Retirement Cost         |       | $                                                | 1,503      |                                    | $          | 1,943 |   | $ | 751 |   | $ | 971 |   |

 

For the six months ended February 28, 2007, the Company made nocontributions to the pension plans.  TheCompany expects to make contributions of approximately $5.0 million during theremainder of the current fiscal year. The Company has made payments for post-retirement benefits ofapproximately $571,000 for the six months ended February 28, 2007, and expectstotal payments for the current fiscal year to be approximately $1.1 million.

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**Note8:  Members’ Investments**
| ** **         | ** ** | ** **         | ** ** | **Shares**     | ** ** | **Shares Issued**     | ** ** |
|--------------------|------------|--------------------|------------|----------------|------------|----------------------------|------------|
| ** **         | ** ** | **Par Value** | ** ** | **Authorized** | ** ** | **& Outstanding** | ** ** |
| Preferred Stock:   |       |               |       |           |       |                       |       |
| April 5, 2007      |       | $                  | 76.77      |           | 600,000    |                       | 498,570    |   |
| February 28, 2007  |       | $                  | 76.77      |           | 600,000    |                       | 498,570    |   |
| August 31, 2006    |       | $                  | 76.77      |           | 600,000    |                       | 498,570    |   |
| February 28, 2006  |       | $                  | 76.77      |           | 600,000    |                       | 498,570    |   |
|               |       |               |       |           |       |                       |       |
| Common Stock:      |       |               |       |           |       |                       |       |
| April 5, 2007      |       | $                  | 10.00      |           | 4,000      |                       | 2,830      |   |
| February 28, 2007  |       | $                  | 10.00      |           | 4,000      |                       | 2,866      |   |
| August 31, 2006    |       | $                  | 10.00      |           | 4,000      |                       | 2,874      |   |
| February 28,  2006 |       | $                  | 10.00      |           | 4,000      |                       | 2,871      |   |

 

**Note 9:Shipping and Handling Costs**

Thecosts incurred for the shipping and handling of products sold are classified inthe financial statements as a selling expense on the Statements ofOperations.  Shipping and handling costswere $72.3 million and $63.7 million for the six months ended February 28, 2007and 2006, respectively and $39.4 million and $31.1 million for the three monthsended February 28, 2007 and 2006, respectively.

**Note 10:Segment Reporting**

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

Summarized financialinformation concerning the Company’s reportable segments for the six months andthree months ended February 28, 2007 and 2006, is shown below:
| ** **                           | ** ** | **For the Six Months Ended February 28, 2007** | ** ** |
|--------------------------------------|------------|-----------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                              | ** ** |
| ** **                           | ** ** | **Sugar**                                                                         | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                                 | 531,797    |   | $ | 12,418 |   | $ | 544,215 |   |
| Gross Proceeds                       |       | $                                                                                 | 551,031    |   | $ | 6,397 |   | $ | 557,428 |   |
| Depreciation and  Amortization       |       | $                                                                                 | 30,113     |   | $ | 5,549 |   | $ | 35,662 |   |
| Interest Income                      |       | $                                                                                 | 490        |   | $ | 16 |   | $ | 506 |   |
| Interest Expense                     |       | $                                                                                 | 8,767      |   | $ | 1,209 |   | $ | 9,976 |   |
| Income from  Equity Method Investees |       | $                                                                                 | 576        |   | $ | — |   | $ | 576 |   |
| Other  Income/(Expense), Net         |       | $                                                                                 | (78        | ) | $ | (8 | ) | $ | (86 | ) |
| Net Proceeds                         |       | $                                                                                 | 357,657    |   | $ | 2,626 |   | $ | 360,283 |   |
|                                 |       |                                                                              |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                                 | 21,890     |   | $ | 59 |   | $ | 21,949 |   |

 

8

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| ** **                           | ** ** | **For the Six Months Ended February 28, 2006** | ** ** |
|--------------------------------------|------------|-----------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                              | ** ** |
| ** **                           | ** ** | **Sugar**                                                                         | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                                 | 436,627    |   | $ | 12,693 |   | $ | 449,320 |   |
| Gross Proceeds                       |       | $                                                                                 | 443,425    |   | $ | 6,661 |   | $ | 450,086 |   |
| Depreciation and  Amortization       |       | $                                                                                 | 29,824     |   | $ | 5,560 |   | $ | 35,384 |   |
| Interest Income                      |       | $                                                                                 | 156        |   | $ | 20 |   | $ | 176 |   |
| Interest Expense                     |       | $                                                                                 | 7,313      |   | $ | 2,236 |   | $ | 9,549 |   |
| Income from  Equity Method Investees |       | $                                                                                 | 567        |   | $ | — |   | $ | 567 |   |
| Other  Income/(Expense), Net         |       | $                                                                                 | 368        |   | $ | — |   | $ | 368 |   |
| Net Proceeds                         |       | $                                                                                 | 270,094    |   | $ | 2,240 |   | $ | 272,334 |   |
|                                 |       |                                                                              |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                                 | 12,526     |   | $ | 334 |   | $ | 12,860 |   |

 
| ** **                           | ** ** | **For the Three Months Ended February 28, 2007** | ** ** |
|--------------------------------------|------------|-------------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                                | ** ** |
| ** **                           | ** ** | **Sugar**                                                                           | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                                   | 279,734    |   | $ | 6,235 |   | $ | 285,969 |   |
| Gross Proceeds                       |       | $                                                                                   | 260,788    |   | $ | 3,228 |   | $ | 264,016 |   |
| Depreciation and  Amortization       |       | $                                                                                   | 15,121     |   | $ | 2,771 |   | $ | 17,892 |   |
| Interest Income                      |       | $                                                                                   | 23         |   | $ | 7 |   | $ | 30 |   |
| Interest Expense                     |       | $                                                                                   | 5,995      |   | $ | 544 |   | $ | 6,539 |   |
| Income from  Equity Method Investees |       | $                                                                                   | 288        |   | $ | — |   | $ | 288 |   |
| Other  Income/(Expense), Net         |       | $                                                                                   | (190       | ) | $ | (8 | ) | $ | (198 | ) |
| Net Proceeds                         |       | $                                                                                   | 160,216    |   | $ | 1,357 |   | $ | 161,573 |   |
|                                 |       |                                                                                |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                                   | 9,060      |   | $ | 56 |   | $ | 9,116 |   |

 
| ** **                           | ** ** | **For the Three Months Ended February 28, 2006** | ** ** |
|--------------------------------------|------------|-------------------------------------------------------------------------------------|------------|
| ** **                           | ** ** | **(Dollars In Thousands)**                                                | ** ** |
| ** **                           | ** ** | **Sugar**                                                                           | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Net Revenue from  External Customers |       | $                                                                                   | 211,774    |   | $ | 6,275 |   | $ | 218,049 |   |
| Gross Proceeds                       |       | $                                                                                   | 229,449    |   | $ | 3,258 |   | $ | 232,707 |   |
| Depreciation and  Amortization       |       | $                                                                                   | 15,001     |   | $ | 2,781 |   | $ | 17,782 |   |
| Interest Income                      |       | $                                                                                   | 21         |   | $ | 11 |   | $ | 32 |   |
| Interest Expense                     |       | $                                                                                   | 4,554      |   | $ | 1,065 |   | $ | 5,619 |   |
| Income from  Equity Method Investees |       | $                                                                                   | 283        |   | $ | — |   | $ | 283 |   |
| Other  Income/(Expense), Net         |       | $                                                                                   | (276       | ) | $ | — |   | $ | (276 | ) |
| Net Proceeds                         |       | $                                                                                   | 144,534    |   | $ | 1,111 |   | $ | 145,645 |   |
|                                 |       |                                                                                |       |   |   |   |   |
| Capital Expenditures                 |       | $                                                                                   | 6,023      |   | $ | 96 |   | $ | 6,119 |   |

 

9

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| ** **                   | ** ** | **As of February 28, 2007** | ** ** |
|------------------------------|------------|-------------------------------------------------|------------|
| ** **                   | ** ** | **(Dollars In Thousands)**            | ** ** |
| ** **                   | ** ** | **Sugar**                                       | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Property and  Equipment, Net |       | $                                               | 324,734    |   | $ | — |   | $ | 324,734 |   |
| Assets Held for  Lease, Net  |       | $                                               | —     |   | $ | 134,543 |   | $ | 134,543 |   |
| Segment Assets               |       | $                                               | 1,032,084  |   | $ | 143,745 |   | $ | 1,175,829 |   |

 
| ** **                   | ** ** | **As of February 28, 2006** | ** ** |
|------------------------------|------------|-------------------------------------------------|------------|
| ** **                   | ** ** | **(Dollars In Thousands)**            | ** ** |
| ** **                   | ** ** | **Sugar**                                       | ** ** | **Leasing** | ** ** | **Consolidated** | ** ** |
| Property and  Equipment, Net |       | $                                               | 313,349    |   | $ | — |   | $ | 313,349 |   |
| Assets Held for  Lease, Net  |       | $                                               | —     |   | $ | 145,666 |   | $ | 145,666 |   |
| Segment Assets               |       | $                                               | 891,804    |   | $ | 156,628 |   | $ | 1,048,432 |   |

 

**Note 11:Environmental Matters:**

The Company’s East Grand Forks, Minnesota factory has experiencedhydrogen sulfide emissions from its water treatment ponds that have exceededpermissible limits.  The Company isworking with the Minnesota Pollution Control Agency and is aggressivelyaddressing the situation.  While theCompany may be assessed penalties and/or fines related to this occurrence, asof the date of this report none have been assessed.  Any potential penalties and/or fines are notexpected to be material to the Company. Capital expenditures will be required to prevent future occurrences ofthe emissions.  The Company’s fiscal 2007budget includes capital expenditures of approximately $4.0 million at the EastGrand Forks, Minnesota factory to address this situation.  The amount and timing of any additionalcapital expenditures that may be required is not currently known.

**Note 12:Legal Matters:**

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

**Item 2.   Management’s Discussion and Analysis ofResults of Operations and Financial Condition for the Six Months and ThreeMonths Ended February 28, 2007 and 2006**

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

**Overview**

Dueto the large size of the 2006 Red River Valley crop, the Company instituted aneight percent reduction in the number of acres harvested by its members,approximately 40,000 acres, in order to manage the quantity and quality of the sugarbeetsavailable for processing during fiscal 2007.  Alsodue to the large size of the 2006 Red River Valley crop, the Company commencedthe harvest and processing of the crop in August 2006 this year as compared toa typical start-up in September 2006. All the costs incurred prior to the beginning of the Company’s 2007fiscal year that related to receiving and processing

10

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the 2006 sugarbeet crop were deferred in fiscal 2006 and recognized infiscal 2007.  Similarly, the netrealizable values of products produced prior to the beginning of the Company’s2007 fiscal year that related to the 2006 sugarbeet crop were deferred infiscal 2006 and recognized in fiscal 2007.

Theharvest of the sugarbeet crop (Red River Valley crop and Sidney crop) grownduring 2006 and to be processed during fiscal 2007 produced a total of12.8 million tons of sugarbeets, or approximately 25.3 tons of sugarbeetsper acre from approximately 507,000 acres. This represents an increase in total tons harvested of approximately33.4 percent compared to the 2005 crop. The sugar content of the 2006 crop is 18.2 percent as compared to the18.0 percent sugar content of the 2005 crop. The Company expects to produce a total of approximately34.8 million hundredweight of sugar from the 2006 crop, an increase ofapproximately 16.9 percent compared to the 2005 crop.

Whilethe Company expects higher production volumes of its products this fiscal yearas compared to the previous fiscal year, the average selling prices for theseproducts are anticipated to decrease during the year due to supply and demandfactors.  Net Proceeds from Member andNon-Member Business for fiscal 2007 are expected to be approximately 13 percenthigher than in fiscal 2006.  Thisincrease is primarily the result of the anticipated increase in productionvolumes being partially offset by lower average selling prices, higherprocessing costs and higher selling expenses.

**Comparisonof the Six Months Ended February 28, 2007 and 2006**

Revenue for the six months ended February 28, 2007, was $544.2 million,an increase of $94.9 million from the same period last year.  The table below reflects the percentagechanges in product revenues, prices and volumes for the six months endedFebruary 28, 2007, as compared to the same period last year.
| **Product** | ** ** | **Revenue** | ** ** | **Selling Price** | ** ** | **Volume** | ** ** | ** ** |
|-------------|------------|-------------|------------|------------------------|------------|------------|------------|------------|
| Sugar       |       | 21.0        | %          | 11.2                   | %          | 8.8        | %          |       |
| Pulp        |       | 23.4        | %          | 0.9                    | %          | 22.3       | %          |       |
| Molasses    |       | 159.4       | %          | 19.4                   | %          | 117.3      | %          |       |
| CSB         |       | 18.8        | %          | 19.0                   | %          | -0.1       | %          |       |
| Betaine     |       | -13.3       | %          | 13.7                   | %          | -23.7      | %          |       |

 

Rentalrevenue on the ProGold operating lease was $12.4 million and $12.7 million forthe six months ended February 28, 2007 and 2006, respectively.

Cost of sales for the six months ended February 28, 2007, exclusive ofpayments to members for sugarbeets, decreased $12.4 million as compared to thesame period last year.  The change in thenet realizable value of product inventories impacted the cost of salesfavorably by $18.0 million.  The costsassociated with sugar purchased to meet customer needs decreased by $1.2million due to an earlier campaign start-up this year.  The cost recognized associated with thenon-member sugarbeets increased   $2.0million for the six months ended February 28, 2007, when compared to the sameperiod last year.  This increase wasprimarily due to an increase in tons purchased partially offset by a lower perton estimated grower payment this year resulting from the lower sugar contentof the 2006 Sidney crop.  Directprocessing costs for sugar and pulp increased 0.8 percent.  The increase in direct processing costs wasdue to a 19.9 percent increase in tons processed partially offset by increasedfactory slice efficiencies,   favorablenatural gas prices and lower natural gas usage. Fixed and committed expenses increased 8.7 percent reflecting increasedmaintenance and other general cost increases.

Selling, general and administrative expenses increased $9.7 million forthe six months ended February 28, 2007, as compared to the same period lastyear.  Selling expenses increased $8.4million primarily due to an increase in the volume of sugar, pulp and molassessold resulting in increased shipping and handling expenses.  General and Administrative expenses increased$1.3 million due to general cost increases.

Interest expense increased $ .4 million for the six months ended February28, 2007 as compared to the same period last year. This reflects an increasedaverage borrowing level and a higher average

11

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interestrate for short-term debt partially offset by a lower average borrowing leveland average interest rate for long-term debt.

Non-member business activities resulted in a gain of $2.3 million forthe six months ended February 28, 2007, as compared to a gain of $ .8 millionfor the same period last year.  The gainin both years was due primarily to activities related to Sidney Sugars.

**Comparisonof the Three Months Ended February 28, 2007 and 2006**

Revenue for the three months ended February 28, 2007, was $286.0million, an increase of $67.9 million from the same period last year.  The table below reflects the percentagechanges in product revenues, prices and volumes for the three months endedFebruary 28, 2007, as compared to the same period last year.
| **Product** | ** ** | **Revenue** | ** ** | **Selling Price** | ** ** | **Volume** | ** ** | ** ** |
|-------------|------------|-------------|------------|------------------------|------------|------------|------------|------------|
| Sugar       |       | 31.9        | %          | 7.2                    | %          | 23.0       | %          |       |
| Pulp        |       | 32.1        | %          | -1.6                   | %          | 34.2       | %          |       |
| Molasses    |       | 145.5       | %          | 16.5                   | %          | 110.8      | %          |       |
| CSB         |       | -3.0        | %          | 19.8                   | %          | -19.1      | %          |       |
| Betaine     |       | -8.2        | %          | 14.0                   | %          | -19.5      | %          |       |

 

Rentalrevenue on the ProGold operating lease was $6.2 million and $6.3 million forthe three months ended February 28, 2007 and 2006, respectively.

Cost of sales for the three months ended February 28, 2007, exclusiveof payments to members for sugarbeets, increased $36.6 million as compared tothe same period last year.  The change inthe net realizable value of product inventories impacted the cost of salesunfavorably by $35.6 million.  The costrecognized associated with the non-member sugarbeets increased $2.3 million forthe three months ended February 28, 2007, when compared to the same period lastyear.  This increase was primarily due toan increase in tons processed partially offset by a lower per ton estimatedgrower payment this year resulting from the lower sugar content of the 2006Sidney crop.  Direct processing costs forsugar and pulp decreased 9.9 percent. The decrease in direct processing costs was due to increased factoryslice efficiencies, favorable natural gas prices and lower natural gas usagepartially offset by a 3.2 percent increase in tons processed.  Fixed and committed expenses increased 8.9percent reflecting increased maintenance and other general cost increases.

Selling, general and administrative expenses increased $9.7 million forthe three months ended February 28, 2007, as compared to the same period lastyear.  Selling expenses increased $8.7million primarily due to an increase in the volume of sugar, pulp and molassessold resulting in increased shipping and handling expenses.  General and Administrative expenses increased$1.1 million due to general cost increases.

Interest expense increased $ .9 million for the three months endedFebruary 28, 2007 as compared to the same period last year. This reflects anincreased average borrowing level and a higher average interest rate forshort-term debt partially offset by a lower average borrowing level and averageinterest rate for long-term debt.

Non-member business activities resulted in a gain of $1.3 million forthe three months ended February 28, 2007, as compared to a gain of $ .4 millionfor the same period last year.  The gainin both years was due primarily to activities related to Sidney Sugars.

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**NorthAmerican Free Trade Agreement**

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

**Regionaland Bilateral Free Trade Agreements**

The United States government is pursuing an aggressive agenda oninternational trade.  It is seeking tonegotiate new free trade agreements with a number of countries and regions thatare major producers of sugar.  TheCompany believes these agreements, if they reach fruition, could negativelyimpact the Company’s profitability.  Theprimary agreements under consideration that affect sugar, to the Company’sknowledge, are the Andean Free Trade Agreement; the U.S.-Panama FreeTrade Agreement; and the Association of Southeastern Nations Free TradeAgreement.  Many of the countriesincluded in these agreements are major sugar producers and exporters.  If increases in guaranteed access orreductions in sugar tariffs are included in these agreements, excess sugar fromthese regions could enter the U.S. market and put pressure on domestic sugarprices.

Portions of these agreements have been completed.  Within the Andean Free Trade Agreement, theU.S.-Peru Free Trade Agreement was signed on April 12, 2006.  The U.S.-Colombia Free Trade Agreementis also nearing completion.  The Companyexpects that these two trade agreements may be brought before Congress for avote later in 2007.

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

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

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

**Environmental**

The Company’s East Grand Forks, Minnesota factory has experiencedhydrogen sulfide emissions from its water treatment ponds that have exceededpermissible limits.  The Company isworking with the Minnesota Pollution Control Agency and is aggressively addressingthe situation.

13

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Whilethe Company may be assessed penalties and/or fines related to this occurrence,as of the date of this report none have been assessed.  Any potential penalties and/or fines are notexpected to be material to the Company. Capital expenditures will be required to prevent future occurrences ofthe emissions.  The Company’s fiscal 2007budget includes capital expenditures of approximately $4.0 million at the EastGrand Forks, Minnesota factory to address this situation.  The amount and timing of any additionalcapital expenditures that may be required is not currently known.

**Liquidityand Capital Resources**

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

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

The Company has long-term debt availability with CoBank, ACB of****$226.3 million, of which $84.2 million in loans and$71.1 million in long-term letters of credit were outstanding as of February28, 2007.  The unused long-term line ofcredit as of February 28, 2007, was $71.0 million.  In addition, the Company has long-term debtoutstanding, as of February 28, 2007, of $50 million from a privateplacement of Senior Notes that occurred in September of 1998; $8.6 million froma private placement of Senior Notes that occurred in January of 2003; $48.8 millionfrom ten separate issuances of PollutionControl and Industrial Development Revenue Bonds; and a term loan with Bank ofNorth Dakota of $1.6 million.

On December 13, 2006, the Company closed a bond issuance for $17.6million.  The City of East Grand Forks,Minnesota issued the Solid Waste Disposal Revenue Bonds.  Proceeds of the Bonds will be used by theCompany to construct a pressurized steam pulp dryer at the Company’s sugar beetprocessing facility in East Grand Forks, Minnesota.   The principal amount of the Bonds is dueDecember 1, 2021.  Interest on the Bondsis payable quarterly commencing March 1, 2007. As of February 28, 2007, no funds from the proceeds had been disbursed.

The Company also has a seasonal line of credit with a consortium oflenders led by CoBank, ACB of $400 million, against which there was nooutstanding balance as of February 28, 2007 and a line of credit with WellsFargo Bank for $1 million, against which there was no outstanding balanceas of February 28, 2007.  The Company’scommercial paper program provides short-term borrowings of up to $325 millionof which approximately $219.3 million was outstanding as of February 28,2007.  The Company had $5.4 million ofshort-term letters of credit outstanding as of February 28, 2007.  The unused short-term line of credit as ofFebruary 28, 2007, was $176.3 million. Any borrowings under the commercial paper program along with outstandingshort-term letters of credit will act to reduce the available credit under theCoBank, ACB seasonal line of credit by a commensurate amount.  In addition, the Company had an outstandingnon-recourse loan with the CCC of $11.5 million, against which 500,000hundredweight of sugar was pledged as collateral.

The Company had outstanding purchase commitments totaling $17.1 millionas of February 28, 2007, for equipment and construction contracts related tovarious capital and maintenance projects.

The changes that have occurred in the Company’s financial statementsfrom August 31, 2006, to February 28, 2007, were primarily due to normalbusiness seasonality.  The first sixmonths of the

14

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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.

The Company controls 50 percent of Crystech, LLC, a special purposeentity that operates a molasses desugarization facility at the Company’sHillsboro, North Dakota sugar factory. The Company accounts for its investment using the equity method.  As of February 28, 2007, Crystech hadoutstanding debt of $3.1 million.

The net cash used by operations was $156.4 million for the six monthsended February 28, 2007, as compared to $85.9 million for the same period lastyear.  This increase of $70.5 million wasprimarily due to changes in inventories of $57.6 million and changes in theamounts due growers of $26.1 million partially offset by the changes inreceivables of $11.1 million.  The changein inventories was due primarily to an increase in the quantity of productinventories this year resulting from an earlier campaign start up in the RedRiver Valley and sugar production out pacing sales at higher rate thisyear.  Also adding to the increase ininventories was the increased quantity of unprocessed sugarbeets this year dueto the large 2006 crop.

The net cash used in investing activities was $22.3 million for thethree months ended February 28, 2007, as compared to $11.0 million for sameperiod last year.  The increase of $11.3million was primarily related to increased purchases of property and equipment.

The net cash provided by financing activities was $178.7 million forthe three months ended February 28, 2007, as compared to $97.3 million for thesame period last year.  This increase of$81.4 million was primarily due to increased borrowings of short-term andlong-term debt partially offset by increased payments on long-term debt.

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

**Recent Developments**

On March 21, 2007 the Company’sBoard of Directors elected David A. Berg, 52, as President of the Company.  Mr. Berg has served as the Company’s VicePresident-Operations and Chief Operations Officer since January 2004. Prior to that appointment, Mr. Berg was Vice President-Agriculture of theCompany from December 2000 to January 2004 and Vice President-Administration ofthe Company from October 1998 to December 2000.  From 1994 to 1998,Mr. Berg served as the Company’s Vice President-Business Development, VicePresident-Strategic Planning, Director-Market Information, Manager of Marketingand Analysis and Manager-Economic Research.  Mr. Berg currently serves onthe Board of Governors of ProGold Limited Liability Company and as Chairman ofthe Board of Managers of Crystech, LLC.   Mr. Berg holds a degree in Mass Communicationfrom Minnesota State University Moorhead and a Masters in AgriculturalEconomics from North Dakota State University.

James J. Horvath, who hasserved as the Company’s Chief Executive Officer and President since 1998, willcontinue to serve as the Company’s Chief Executive Officer while Mr. Berg willassume the position of President.

In connection with his election as President, the Company and Mr. Bergentered into an employment agreement. Mr. Berg, whose initial base salary will be $324,000, will continueto participate in other incentive compensation and benefit programs availableto the Company’s executive officers.  If Mr. Berg is terminated withoutcause he will be eligible for severance pay equal to two times his then currentbase salary. The Agreement further provides that Mr. Berg will assume the addedrole of Chief Executive Officer upon the retirement of James J. Horvath.

15

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

Market risk is the risk of loss to future earnings, to fair values orto future cash flows that may result from changes in the price of a financialinstrument.  The value of a financial instrumentmay 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.

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

**Item 4.   Controls and Procedures**

The Company’s chief executive officer and chief financial officer havereviewed and evaluated the effectiveness of the Company’s disclosure controlsand procedures (as defined in Rules 240.13a-15(e) and 15d-15(e) promulgatedunder the Securities Exchange Act of 1934) as of February 28, 2007.  Based on that review and evaluation, whichincluded inquiries made to certain other employees of the Company, the chiefexecutive officer and chief financial officer have concluded that the Company’scurrent disclosure controls and procedures, as designed and implemented, areeffective in ensuring that information relating to the Company required to bedisclosed in the reports the Company files or submits under the SecuritiesExchange Act of 1934 is recorded, processed, summarized and reported within thetime periods specified in the Securities and Exchange Commission’s rules andforms, including ensuring that such information is accumulated and communicatedto the Company’s management, including the chief executive officer and thechief financial officer, as appropriate to allow timely decisions regardingrequired disclosure.  There were nochanges in the Company’s internal controls over financial reporting thatoccurred during the Company’s most recent fiscal quarter that may havematerially affected, or are reasonably likely to materially affect, the Company’sinternal control over financial reporting.

## **PARTII. OTHER INFORMATION**

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

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

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

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**Item1A.  Risk Factors.**

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

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

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

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

Inorder to manage the quantity and quality of sugarbeets that are harvested oravailable for processing, our Grower Contract allows for a reduction in thenumber of acres to be planted at the beginning of a crop year or harvested atthe end of a crop year.  Up through the2005 crop year, we had not instituted or required a reduction in the number ofacres harvested at the end of a crop year. Due to the large size of the 2006 Red River Valley crop, we institutedan eight percent, approximately 40,000 acres, reduction in the number of acresharvested by our members in order to manage the quantity and quality of thesugarbeets that we have available for processing.  Also due to the large size of the 2006 RedRiver Valley crop, the Company commenced the harvest and processing of the cropin August this year as compared to a typical start-up in September.

Theharvest of the 2006 Red River Valley crop resulted in a total of 11.9 milliontons or an average of 25.4 tons per acre. This represents the largest Red River Valley crop and the highesttonnage per acre in the Company’s history. Adequate storage conditions for the remainder of the processing campaignare critical to ensure that the quantity and quality of sugarbeets availablefor processing are maintained.  If we arenot able to obtain or maintain adequate storage conditions, the sugarbeets currentlybeing stored for processing at a later date may deteriorate, resulting inincreased production costs, and decreased production which in turn would havean adverse financial consequence to us and our members.

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

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

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

None

**Item3.  Defaults Upon Senior Securities**

None

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

None

**Item5.  Other Information.**

None.

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### **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.                                      |
|       |       |                                                                                                                |       |                                                                                                                                                                     |
| 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.                                      |

 

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| 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.              |
|    |   |                                                                                                                     |   |                                                                                                                                |
| +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   |   | 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.                   |

 

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| ++10.22 |   | 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.                              |
|---------|--------|-------------------------------------------------------------------------------------------------------------------------|--------|------------------------------------------------------------------------------------------------------------------------------------|
|    |   |                                                                                                                    |   |                                                                                                                               |
| ++10.23 |   | Long Term Incentive Plan, dated August 24, 2005.                                                                        |   | Incorporated by reference to Exhibit 10.25 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 2005. |
|    |   |                                                                                                                    |   |                                                                                                                               |
| 10.24   |   | Term and Seasonal Loan Agreements between the  Registrant and CoBank, ACB dated July 31, 2006                           |   | Incorporated by reference to Exhibit 10.24 from the  Company’s Annual Report on Form 10-K for the year ended August 31, 2006. |
|    |   |                                                                                                                    |   |                                                                                                                               |
| 10.25   |   | Second Amendment to Amended and Restated Loan  Agreement between the Registrant and CoBank, ACB dated November 3, 2006. |   | Incorporated by reference to Exhibit 10.25 from the  Company’s Form 10-Q for the quarter ended November 30, 2006.             |
|    |   |                                                                                                                    |   |                                                                                                                               |
| ++10.26 |   | Employment Agreement dated March 21, 2007 between  the Registrant and David A. Berg.                                    |   | 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 10-K for the year ended August 31, 2006.  |
|    |   |                                                                                                                    |   |                                                                                                                               |
| 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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+            Confidentialtreatment under Rule 24b-2 of the Securities and Exchange Act of 1934, asamended, has been granted with respect to designated portions of this document.

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

21

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

 

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