**UNITEDSTATESSECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

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**FORM 10-Q**

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| **x**** ****Quarterly report pursuant to Section 13 or 15(d) of the Securities  Exchange Act of 1934** |
|-------------------------------------------------------------------------------------------------------------|
|                                                                                                        |   |   |
|                                                                                                        | **For  the period ended November 30, 2002** |   |
|                                                                                                        |   |   |
|                                                                                                        | **Commission  file number:  33-83868** |   |
|                                                                                                        |   |   |
|                                                                                                        |   |   |
|                                                                                                        | **AMERICAN  CRYSTAL SUGAR COMPANY** |   |
|                                                                                                        | (Exact name of  registrant as specified in its charter) |   |
|                                                                                                        |   |   |   |   |
|                                                                                                        | **Minnesota** |   | **84-0004720** |   |
|                                                                                                        | (State or other  jurisdiction of incorporation or organization) |   | (I.R.S. Employer  Identification No.) |   |
|                                                                                                        |   |   |   |   |
|                                                                                                        | **101 North Third Street  Moorhead, Minnesota  56560** |   |
|                                                                                                        | (Address of  principal executive offices) |   |
|                                                                                                        |   |   |   |   |
|                                                                                                        | **Telephone Number (218) 236-4400** |   |
|                                                                                                        | (Registrant’s  telephone number, including area code) |   |
|                                                                                                             |  |  |  |  |  |  |

 

Indicate by check markwhether the registrant (1) has filed all reports required to be filed by Section13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12months, and (2) has been subject to such filing requirements for the past 90days.

 

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

 

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

 

| **Class of  Common Stock** |   | **Outstanding  at  January 7, 2003** |
|----------------------------|--------|--------------------------------------|
| $10 Par Value              |   | 3,034                                |

 

 

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**AMERICAN CRYSTAL SUGAR COMPANY**

 

**FORM 10-Q**

 

**INDEX**

 
| **PART I**         | **FINANCIAL INFORMATION** |
|--------------------|---------------------------|
|               |                      |   |
|               | **ITEM 1.**               | **FINANCIAL STATEMENTS** |
|               |                      |   |
|               |                      | **BALANCE SHEETS** |
|               |                      |   |
|               |                      | **STATEMENTS OF  OPERATIONS** |
|               |                      |   |
|               |                      | **STATEMENTS OF  CASH FLOWS** |
|               |                      |   |
|               |                      | **NOTES TO  THE FINANCIAL STATEMENTS** |
|               |                      |   |
|               | **ITEM 2.**               | **MANAGEMENT’S DISCUSSION AND  ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION** |
|               | **ITEM 3.**               | **QUANTITATIVE  AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK** |
|               | **ITEM 4.**               | **DISCLOSURE  CONTROLS** |
|               |                      |   |
| **PART II**        | **OTHER INFORMATION**     |
|               |                      |   |
|               | **ITEM 1.**               | **LEGAL PROCEEDINGS** |
|               | **ITEM 2.**               | **CHANGES IN  SECURITIES AND USE OF PROCEEDS** |
|               | **ITEM 3.**               | **DEFAULTS  UPON SENIOR SECURITIES** |
|               | **ITEM 4.**               | **SUBMISSION  OF MATTERS TO A VOTE OF SECURITY HOLDERS** |
|               | **ITEM 5.**               | **OTHER  INFORMATION** |
|               | **ITEM 6.**               | **EXHIBITS  AND REPORTS ON FORM 8-K** |
|               |                      |   |
| **SIGNATURES**     |
|               |                      |   |
| **CERTIFICATIONS** |

# ** **

# ****

 

**PART I. FINANCIAL INFORMATION**

** **

**Item 1.Financial Statements**

 

AMERICAN CRYSTAL SUGARCOMPANY

Consolidated Balance Sheets

(Unaudited)

(Dollarsin Thousands)

 

ASSETS

 
|                                              |   | **November 30** |    | **August 31,  2002*** |   |
|---------------------------------------------------|--------|-----------------|---------|-----------------------|--------|
|                                              |   | **2002**        |    | **2001**              |   |   |
| Current Assets:                                   |   |            |    |                  |   |   |   |
| Cash and Cash Equivalents                         |   | $               | 28      |                  | $      | 793 |   | $ | 22 |   |
| Accounts Receivable:                              |   |            |    |                  |   |   |   |
| Trade                                             |   | 60,404          |    | 47,001                |   | 60,812 |   |
| Members                                           |   | 2,631           |    | 1,988                 |   | 3,987 |   |
| Other                                             |   | 3,764           |    | 940                   |   | 1,465 |   |
| Advances to Related Parties                       |   | 7,022           |    | 4,721                 |   | 11,336 |   |
| Inventories                                       |   | 407,554         |    | 354,621               |   | 115,656 |   |
| Prepaid Expenses                                  |   | 5,553           |    | 15,827                |   | 5,732 |   |
|                                              |   |            |    |                  |   |   |   |
| Total Current Assets                              |   | 486,956         |    | 425,891               |   | 199,010 |   |
|                                              |   |            |    |                  |   |   |   |
| Property and Equipment:                           |   |            |    |                  |   |   |   |
| Land                                              |   | 36,095          |    | 32,697                |   | 33,806 |   |
| Buildings                                         |   | 88,854          |    | 85,028                |   | 86,647 |   |
| Equipment                                         |   | 775,108         |    | 755,511               |   | 759,972 |   |
| Construction-in-Progress                          |   | 6,942           |    | 1,711                 |   | 5,154 |   |
| Less: Accumulated  Depreciation                   |   | (559,619        | )       | (523,092              | )      | (546,960 | ) |
|                                              |   |            |    |                  |   |   |   |
| Net Property and Equipment                        |   | 347,380         |    | 351,855               |   | 338,619 |   |
|                                              |   |            |    |                  |   |   |   |
| Other Assets:                                     |   |            |    |                  |   |   |   |
| Investments in Marketing  Cooperatives            |   | 2,594           |    | 1,654                 |   | 2,064 |   |
| Investments in ProGold  Limited Liability Company |   | 41,516          |    | 38,962                |   | 41,007 |   |
| Investments in Crystech,  LLC                     |   | 1,358           |    | 1,501                 |   | 1,403 |   |
| Notes Receivable -  Crystech, LLC                 |   | 13,905          |    | 13,905                |   | 13,905 |   |
| Other Assets                                      |   | 45,639          |    | 22,310                |   | 26,685 |   |
|                                              |   |            |    |                  |   |   |   |
| Total Other Assets                                |   | 105,012         |    | 78,332                |   | 85,064 |   |
|                                              |   |            |    |                  |   |   |   |
| Total Assets                                      |   | $               | 939,348 |                  | $      | 856,078 |   | $ | 622,693 |   |

 

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* Derived from Audited Financial Statements.

 

The Accompanying Notes are anIntegral Part of These Financial Statements.

 

1

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AMERICAN CRYSTAL SUGARCOMPANY

Consolidated Balance Sheets

(Unaudited)

(Dollars in Thousands)

 

LIABILITIES AND MEMBERS’INVESTMENTS

 
|                                             |   | **November 30** |    | **August 31,  2002*** |   |
|--------------------------------------------------|--------|-----------------|---------|-----------------------|--------|
|                                             |   | **2002**        |    | **2001**              |   |   |
| Current Liabilities:                             |   |            |    |                  |   |   |   |
| Short-Term Debt                                  |   | $               | 194,751 |                  | $      | 133,087 |   | $ | 7,000 |   |
| Current Maturities of  Long-Term Debt            |   | 18,045          |    | 19,070                |   | 18,045 |   |
| Accounts Payable                                 |   | 26,824          |    | 19,466                |   | 18,163 |   |
| Advances Due to Related  Parties                 |   | 8,597           |    | 7,225                 |   | 3,092 |   |
| Accrued Continuing Costs  (see note 3)           |   | 25,841          |    | 34,752                |   | — |   |
| Other Current Liabilities                        |   | 18,133          |    | 17,924                |   | 15,182 |   |
| Amounts Due Growers                              |   | 160,958         |    | 135,448               |   | 79,246 |   |
|                                             |   |            |    |                  |   |   |   |
| Total Current Liabilities                        |   | 453,149         |    | 366,972               |   | 140,728 |   |
|                                             |   |            |    |                  |   |   |   |
| Long-Term Debt, Net of  Current Maturities       |   | 182,371         |    | 200,417               |   | 182,371 |   |
| Other Liabilities                                |   | 32,022          |    | 30,160                |   | 30,927 |   |
|                                             |   |            |    |                  |   |   |   |
| Total Liabilities                                |   | 667,542         |    | 597,549               |   | 354,026 |   |
|                                             |   |            |    |                  |   |   |   |
| Members’ Investments:                       |   |            |    |                  |   |   |   |
| Preferred Stock                                  |   | 38,275          |    | 38,275                |   | 38,275 |   |
| Common Stock                                     |   | 30              |    | 31                    |   | 30 |   |
| Additional Paid-in Capital                       |   | 145,455         |    | 140,600               |   | 143,069 |   |
| Unit Retains                                     |   | 124,057         |    | 116,441               |   | 124,101 |   |
| Equity Retention                                 |   | 2,731           |    | 1,557                 |   | 2,733 |   |
| Accumulated Other  Comprehensive Income/(Loss)   |   | (1,317          | )       | (436                  | )      | (1,317 | ) |
| Retained  Earnings/(Deficit)                     |   | (37,425         | )       | (37,939               | )      | (38,224 | ) |
|                                             |   |            |    |                  |   |   |   |
| Total Members’ Investments                  |   | 271,806         |    | 258,529               |   | 268,667 |   |
|                                             |   |            |    |                  |   |   |   |
| Total Liabilities and  Members’ Investments |   | $               | 939,348 |                  | $      | 856,078 |   | $ | 622,693 |   |

 

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* Derived from Audited Financial Statements.

 

The Accompanying Notes arean Integral Part of These Financial Statements.

 

2

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AMERICAN CRYSTAL SUGARCOMPANY

Consolidated Statements ofOperations

(Unaudited)

(Dollars in Thousands)

 
|                                                                           |   | **For the Three Months Ended  November 30** |    |
|--------------------------------------------------------------------------------|--------|---------------------------------------------|---------|
|                                                                           |   | **2002**                                    |    | **2001** |   |
|                                                                           |   |                                        |    |   |   |
| Net Revenue                                                                    |   | $                                           | 201,211 |   | $ | 172,655 |   |
| Cost of Product Sold                                                           |   | 39,459                                      |    | (19,837 | ) |
|                                                                           |   |                                        |    |   |   |
| Gross Proceeds                                                                 |   | 161,752                                     |    | 192,492 |   |
|                                                                           |   |                                        |    |   |   |
| Selling, General &  Administrative Expenses                                |   | 39,791                                      |    | 39,230 |   |
| Accrued Continuing Costs  (see note 3)                                         |   | 25,841                                      |    | 34,752 |   |
|                                                                           |   |                                        |    |   |   |
| Operating Proceeds                                                             |   | 96,120                                      |    | 118,510 |   |
|                                                                           |   |                                        |    |   |   |
| Other Income/(Expense)                                                         |   |                                        |    |   |   |
| Interest Income                                                                |   | 430                                         |    | 681 |   |
| Interest Expense                                                               |   | (3,482                                      | )       | (3,252 | ) |
| Other, Net                                                                     |   | 718                                         |    | 329 |   |
| Other (Expense)                                                                |   | (2,334                                      | )       | (2,242 | ) |
|                                                                           |   |                                        |    |   |   |
| Proceeds before Income  Taxes                                                  |   | 93,786                                      |    | 116,268 |   |
| Income Tax Expense                                                             |   | —                                      |    | — |   |
| Net Proceeds Resulting  from Member and Non-Member Business                    |   | $                                           | 93,786  |   | $ | 116,268 |   |
|                                                                           |   |                                        |    |   |   |
| Distribution of Net Proceeds:                                                  |   |                                        |    |   |   |
| Credited/(Charged) to  Members’ Investments:                              |   |                                        |    |   |   |
| Non-Member Business  Income/(Loss)                                             |   | $                                           | 799     |   | $ | (448 | ) |
| Unit Retains Declared to  Members                                              |   | —                                      |    | — |   |
| Equity Retention Declared  to Members                                          |   | —                                      |    | — |   |
| Net Credit(Charge) to  Members’ Investments                               |   | 799                                         |    | (448 | ) |
| Payments to/due Members  for Sugarbeets, Net of Unit Retains Declared          |   | 92,987                                      |    | 116,716 |   |
| Payment to/due Members for  PIK Certificates, Net of Equity Retention Declared |   | —                                      |    | — |   |
|                                                                           |   |                                        |    |   |   |
| Total                                                                          |   | $                                           | 93,786  |   | $ | 116,268 |   |

 

The Accompanying Notes arean Integral Part of These Financial Statements.

 

3

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American Crystal SugarCompany

Consolidated Statements ofCash Flows

(Unaudited)

(Dollars in Thousands)

 
|                                                                  |   | **For the Three Months Ended  November 30** |   |
|-----------------------------------------------------------------------|--------|---------------------------------------------|--------|
|                                                                  |   | **2002**                                    |   | **2001** |   |
|                                                                  |   |                                        |   |   |   |
| Cash Provided By (Used In)  Operations:                               |   |                                        |   |   |   |
| Net Proceeds Resulting  from Member and Non-Member Business           |   | $                                           | 93,786 |   | $ | 116,268 |   |
| Payments To/Due Members  for Sugarbeets, Net of Unit Retains Declared |   | (92,987                                     | )      | (116,716 | ) |
| Add (Deduct) Non-Cash  Items:                                         |   |                                        |   |   |   |
| Depreciation and  Amortization                                        |   | 14,250                                      |   | 13,586 |   |
| (Income) from Equity  Method Investees                                |   | (549                                        | )      | (419 | ) |
| Loss on the Disposition of  Property and Equipment                    |   | 37                                          |   | 162 |   |
| Deferred Gain Recognition                                             |   | (49                                         | )      | (49 | ) |
| Changes in Assets and Liabilities:                                    |   |                                        |   |   |   |
| Receivables                                                           |   | (428                                        | )      | 22,256 |   |
| Inventories                                                           |   | (291,059                                    | )      | (250,352 | ) |
| Prepaid Expenses                                                      |   | 178                                         |   | (13,069 | ) |
| Long-Term Prepaid Pension  Expense                                    |   | 809                                         |   | 95 |   |
| Advances To/Due to Related  Parties                                   |   | 9,819                                       |   | 13,860 |   |
| Accounts Payable                                                      |   | 8,661                                       |   | (309 | ) |
| Accrued Continuing Costs                                              |   | 25,841                                      |   | 34,752 |   |
| Other Liabilities                                                     |   | 3,315                                       |   | 2,857 |   |
| Amounts Due Growers                                                   |   | 81,711                                      |   | 52,682 |   |
| Net Cash (Used In)  Operations                                        |   | (146,665                                    | )      | (124,396 | ) |
|                                                                  |   |                                        |   |   |   |
| Cash Provided By (Used In)  Investing Activities:                     |   |                                        |   |   |   |
| Purchases of Property and  Equipment                                  |   | (6,625                                      | )      | (2,253 | ) |
| Proceeds from the Sale of  Property and Equipment                     |   | 11                                          |   | 117 |   |
| Investments in Marketing  Cooperatives                                |   | (463                                        | )      | — |   |
| Acquisition from Imperial  Sugar Company                              |   | (35,184                                     | )      | — |   |
| Changes in Other Assets                                               |   | (1,159                                      | )      | (19 | ) |
| Net Cash (Used In)  Investing Activities                              |   | (43,420                                     | )      | (2,155 | ) |
|                                                                  |   |                                        |   |   |   |
| Cash Provided By (Used In)  Financing Activities:                     |   |                                        |   |   |   |
| Proceeds (Payments) on  Short-Term Debt, Net                          |   | 187,751                                     |   | 119,125 |   |
| Long-Term Debt Repayment                                              |   | —                                      |   | (1,000 | ) |
| Issuance of Stock                                                     |   | 2,386                                       |   | 3,359 |   |
| Payment of Unit Retains  & Equity Retention                       |   | (46                                         | )      | (42 | ) |
| Net Cash Provided by  Financing Activities                            |   | 190,091                                     |   | 121,442 |   |
|                                                                  |   |                                        |   |   |   |
| Increase (Decrease) In  Cash and Cash Equivalents                     |   | 6                                           |   | (5,109 | ) |
| Cash and Cash Equivalents,  Beginning of Year                         |   | 22                                          |   | 5,902 |   |
|                                                                  |   |                                        |   |   |   |
| Cash and Cash Equivalents,  End of Period                             |   | $                                           | 28     |   | $ | 793 |   |

 

The Accompanying Notes arean Integral Part of These Financial Statements.

 

4

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# **AMERICAN CRYSTAL SUGAR COMPANY**

**NOTESTO THE CONSOLIDATED FINANCIAL STATEMENTS**

**FORTHE THREE MONTHS ENDED NOVEMBER 30, 2002 AND 2001**

 

**Note 1:  Basis of Presentation**

 

The unauditedconsolidated financial statements contained herein have been prepared pursuantto the rules and regulations of the Securities and Exchange Commission.  Accordingly, they do not include all theinformation and footnotes required by generally accepted accountingprinciples.  However, in the opinion ofmanagement, all adjustments, consisting of normal recurring accruals,considered necessary for a fair presentation have been included.

 

The unauditedconsolidated financial statements are comprised of American Crystal SugarCompany and its wholly-owned subsidiary, Sidney Sugars Incorporated (SSI),which was formed on September 17, 2002 and acquired certain assets of HollySugar Corporation, a wholly-owned subsidiary of Imperial Sugar Company(Imperial).  All material inter-companytransactions have been eliminated.

 

The operatingresults for the three month period ended November 30, 2002 are not necessarilyindicative of the results that may be expected for the year ended August 31,2003.

 

The amount paid toshareholders for sugarbeets (member beet payment) depends on the future sellingprices of sugar and agri-products as well as processing and other costs to beincurred during the remainder of the fiscal year. The amount paid to non-membergrowers for sugarbeets (non-member beet payment) depends on the future sellingprices of sugar and the related selling expenses associated with the 2002 Sidneysugarbeet crop.  For the purposes ofthis report, the amount of the beet payments, future revenues and costs havebeen estimated. Therefore, adjustments with respect to these estimates may benecessary in the future, as additional information becomes available.

 

These financialstatements should be read in conjunction with the financial statements andnotes included in the Company’s annual report for the year ended August 31,2002.

 

Certainreclassifications have been made to the November 30, 2001 financial statementsto conform with the November 30, 2002 presentation.

 

**Note 2:  Inventories**

 

The majorcomponents of inventories are as follows (In Thousands):

 
|                                                                    |   | **11/30/02** |    | **11/30/01** |   | **8/31/02** |   |
|-------------------------------------------------------------------------|--------|--------------|---------|--------------|--------|-------------|--------|
| Refined  Sugar, Pulp, Molasses, Other Agri-Products and Sugar Beet Seed |   | $            | 139,365 |         | $      | 163,636     |   | $ | 97,693 |   |
| Unprocessed  Sugarbeets                                                 |   | 249,305      |    | 173,239      |   | —      |   |
| Maintenance  Parts & Supplies                                       |   | 18,884       |    | 17,746       |   | 17,963      |   |
|                                                                    |   |         |    |         |   |        |   |
| Total  Inventories                                                      |   | $            | 407,554 |         | $      | 354,621     |   | $ | 115,656 |   |

 

Sugar, pulp,molasses and other agri-products inventories are valued at estimated netrealizable value.  Unprocessedsugarbeets are valued at the estimated gross beet payment. Maintenance parts& supplies and beet seed inventories are valued at the lower of averagecost or market.

 

**Note 3:  Accrued Continuing Costs**

 

For interimreporting, the Net Proceeds from Member Business is based on (i) the forecastedgross beet payment and the percentage of the tons of sugarbeets processed tothe total estimated tons of sugarbeets to process for a given crop year and(ii) on the forecasted gross PIK payment and the percentage of thehundredweight of sugar received to the total hundredweight of sugar to bereceived.

 

5

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The Net Proceedsfrom the operations of SSI is based on the forecasted net income for the fiscalyear and the percentage of the tons of non-member sugarbeets processed to thetotal estimated tons of non-member sugarbeets to process for a given fiscalyear

 

Accrued continuingcosts represent the difference between the Net Proceeds as determined above andactual member business crop year and SSI fiscal year revenues realized andexpenses incurred through the end of the reporting period.  Accrued continuing costs are reflected inthe Financial Statements as a cost on the Statements of Operations and as acurrent liability on the Balance Sheets.

 

**Note 4:  Members’ Investments**

 
|               |   | **Par Value** |   | **Shares  Authorized** |    | **Shares  Issued  & Outstanding** |    |
|--------------------|--------|---------------|--------|------------------------|---------|---------------------------------------|---------|
| Preferred  Stock:  |   |          |   |                   |    |                                  |    |
| January  7, 2003   |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
| November  30, 2002 |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
| August  31, 2002   |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
| November  30, 2001 |   | $             | 76.77  |                   | 600,000 |                                  | 498,570 |   |
|               |   |          |   |                   |    |                                  |    |
| Common  Stock:     |   |          |   |                   |    |                                  |    |
| January  7, 2003   |   | $             | 10.00  |                   | 4,000   |                                  | 3.034   |   |
| November  30, 2002 |   | $             | 10.00  |                   | 4,000   |                                  | 3,033   |   |
| August  31, 2002   |   | $             | 10.00  |                   | 4,000   |                                  | 3,035   |   |
| November  30, 2001 |   | $             | 10.00  |                   | 4,000   |                                  | 3,133   |   |

 

**Note 5:  Interest Paid**

 

Interest paid, netof amounts capitalized, was $3.7 million and $2.1 million for the three monthsended November 30, 2002 and 2001, respectively.

 

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

 

The Company has a seasonal line of credit with a consortium of lendersled by CoBank, ACB of $265 million, of which approximately $46.0 millionis currently outstanding, and a line of credit with Wells Fargo Bank for$3 million. The Company’s commercial paper program provides short-termborrowings of up to $150 million of which approximately $148.8 million iscurrently outstanding.  Any borrowingsunder the commercial paper program will act to reduce the available creditunder the CoBank, ACB seasonal line of credit by a commensurate amount. Theacquisition from Imperial was financed utilizing available short-term debt.

 

As of November 30,2002, the Company had outstanding commercial paper of $148.8****millionat an average interest rate of 1.74% and maturity dates between December 2,2002 and May 30, 2003.  The Company alsohad $46.0 million of outstanding short-term debt with CoBank, ACB at an averageinterest rate of 2.45% and maturity dates between December 6, 2002 and December13, 2002.

 

As of November 30,2001, the Company had outstanding commercial paper of $103.1****millionat an average interest rate of 3.06% and maturity dates between December 3,2001****andApril 30, 2002. The Company also had $30.0 million of outstanding short-termdebt with CoBank, ACB at an average interest rate of 2.83% and maturity datesbetween February 21, 2002 and February 28, 2002.

 

**Note 7:  Sidney Sugars Incorporated**

 

On October 7, 2002, the Company, through SSI, acquired three sugarbeetprocessing facilities and the related marketing allocations associated withsuch facilities from Imperial for a purchase price of approximately $35.2million.

 

6

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The facility located in Hereford, Texas was idle at the time of theacquisition and will remain idle for the foreseeable future.  The facility located in Torrington, Wyominghas been leased, on a long-term basis, to Western Sugar Cooperative, who willcontinue to operate the facility to process sugarbeets delivered by growerssupplying the facility prior to the acquisition and from its own growers.  The lease payments due under the long-termlease are nominal.

 

SSI will operate the facility located at Sidney, Montana.  The campaign for the 2002 crop to beprocessed at the facility commenced on September 25, 2002, with a total of863,000 tons of sugarbeets harvested, with a total production of approximately****2.5million hundredweight of sugar expected to be produced from the 2002 crop.Approximately 127,000 tons of beets from the 2002 crop had been harvested priorto October 7, 2002. This portion of the crop and the resulting sugar producedfrom those beets remained the property of Imperial.

 

As part of the entire transaction with Imperial, SSI acquired therights to marketing allocations equal to an estimated 4.8% of the totalallocation for the domestic sugarbeet segment. SSI will use a portion of these marketing allocations to market the sugarproduced at the Sidney, Montana facility. Any excess allocations will be available to the Company.  The sugar produced by SSI will be marketedthrough United Sugars Corporation while the agri-products produced will bemarketed through Midwest Agri-Commodities.

 

**Item 2****.  Management’s Discussion and Analysis ofResults of Operations and Financial Condition for the Three Months EndedNovember 30, 2002 and 2001**

 

This reportcontains forward-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. The Company’s actual results could differ materially from thoseindicated.  Important factors that couldcause or contribute to such differences include, without limitation, marketfactors, weather and general economic conditions, farm and trade policy,available quantity and quality of sugarbeets. For a more complete discussion of “Important Factors”, please refer tothe Company’s 2002 Form 10-K.

 

### **Comparison of the Three Months Ended November 30, 2002and 2001**

 

Revenue for thethree months ended November 30, 2002, was $201.2 million, an increase of $28.6million as compared to the same period last year.  Revenue from total sugar sales increased 17.9 percent reflectingan 8.8 percent increase in the hundredweight sold and an 8.4 percent increasein the average selling price per hundredweight.  Revenue from pulp sales decreased 12.7 percent due to an 18.4 percentdecrease in the volume of pulp sold partially offset by a 7.0 percent increasein the average selling price per ton. Revenue from molasses sales increased 34.3 percent due to a 36.5 percentincrease in the volume of molasses sold partially offset by a 1.6 percentdecrease in the average selling price per ton. Revenue from the sales of Concentrated Separated By-Product (CSB), aby-product of the molasses desugarization process, decreased 3.4 percent due toa 17.7 percent decrease in the volume of CSB sold partially offset by a 17.4percent increase in average selling price per ton.

 

Cost of productsold, for the three months ended November 30, 2002, exclusive of payments formember sugarbeets, increased $59.3 million as compared to the same period lastyear.  The cost associated with the costof non-member sugar beets (Sidney Crop) was $13.2 million for the three monthsended November 30, 2002.  Directprocessing costs for sugar and pulp decreased 2.4 percent. This was due toprocessing 13.4 percent fewer sugarbeets due to delaying the commencement ofthe member crop processing campaign partially offset by the processing of theSidney crop and harvesting 17.8 percent more sugarbeets this year.  Fixed and committed expenses increased 4.6percent reflecting higher maintenance and insurance costs.  Thechange in product inventories impacted the cost of product sold unfavorably by$35.2 million primarily due to lower sugar inventory levels.  The cost associated with sugar purchased tomeet customer needs was up $13.5 million due to delaying the commencement ofthe 2002 crop campaign in the Red River Valley.  The 2002 crop campaign start-up was delayed because of adverseplanting and growing conditions which slowed the maturity of the crop.

 

7

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Selling, generaland administrative expenses for the three months ended November 30, 2002increased $ .6 million from 2001. Selling expenses decreased $ .3 million primarily due to the eliminationof the market assessment last year pursuant to the Farm Bill and lower sugarstorage costs which were partially offset by the costs associated with theincrease in the volume of sugar sold. General and Administrative expenses increased $ .9 million due to higheremployee benefit costs and general cost increases.

 

During the threemonths ended November 30, 2002, 28.7 percent of the 2002 member sugarbeet cropwas processed resulting in the recognition of net proceeds from member businessof $93.0 million.  This represented 28.7percent of the $323.7 million projected gross beet payment for the 2002crop.  The actual net proceeds frommember business, for the three months ended November 30, 2002, were $115.4million.  During the three months endedNovember 30, 2002, 41.5 percent of the 2002 non-member sugarbeet crop was processedresulting in the recognition of net proceeds from SSI of $1.1 million.  This represented 41.5 percent of the $2.6million projected SSI net income for fiscal 2002.  The actual net proceeds from SSI, for the three months endedNovember 30, 2002, were $4.5 million. The difference between the actual net proceeds from member business andSSI and the amounts recognized for the three months ended November 30, 2002,resulted in the recognition of $25.8 million of accrued continuing costs.  In comparison, during the three months endedNovember 30, 2001, 40.3 percent of the 2001 member sugarbeet crop was processedresulting in the recognition of net proceeds from member business of $116.7million.  This represented 40.3 percentof the $290.0 million projected gross beet payment for the 2001 crop.  The actual net proceeds from memberbusiness, for the three months ended November 30, 2001, were $151.5million.  The difference between theactual net proceeds from member business and the amounts recognized for the threemonths ended November 30, 2001, resulted in the recognition of $34.8 million ofaccrued continuing costs.

 

Interest incomefor the three months ended November 30, 2002 decreased slightly compared to thesame period last year primarily due to a lower average balance of investments.

 

Interest expenseincreased minimally from last year primarily due to higher average borrowinglevels for short-term debt partially offset by lower average long-term debtborrowing levels.

 

Non-memberactivities resulted in income of $ .8 million for the three months endedNovember 30, 2002 compared to a loss of $ .4 million for the same period lastyear. This non-member income in fiscal 2003 is primarily the result ofactivities related to Sidney Sugars Incorporated.  The non-member loss in fiscal 2002 was primarily the result ofactivities related to the investment in ProGold Limited Liability Company.

 

**Liquidity and Capital Resources**

 

Under theCompany’s Bylaws and Member Grower Contracts, payments for member deliveredsugarbeets, the principal raw material used in producing the sugar andagri-products it sells, are subordinated to all member business expenses.  In addition, the beet payments made tomember growers and non-member growers are paid in three payments over the courseof a year, and the member payments are made net of any anticipated unit retainfor the crop. These procedures have the effect of providing the Company with anadditional source of short-term financing. This member financing arrangement may result in an additional source ofliquidity and reduced need for outside financing in comparison to a similarbusiness operated on a non-cooperative basis.

 

Because sugar issold throughout the year (while sugarbeets are processed primarily in the falland winter) and because substantial amounts of equipment are required for itsoperations, the Company has utilized substantial outside financing on both aseasonal and long-term basis to fund such operations. The majority of suchfinancing has been provided by a consortium of lenders lead by CoBank, ACB. TheCompany has a long-term debt commitment with CoBank, ACB of****$132.4 million, ofwhich $101.3 million is currently outstanding. In addition, the Company has long-term debt outstanding of$50 million from a private placement of Senior Notes that occurred inSeptember of 1998; $43.5 million from nine separate issuances of Pollution Control and Industrial DevelopmentRevenue Bonds; and a term loan with 

 

8

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Bank of North Dakota of $5.6 million.  The Company also has a seasonal line of credit with a consortiumof lenders led by CoBank, ACB of $265 million, of which approximately$46.0 million is currently outstanding, and a line of credit with Wells FargoBank for $3 million. The Company’s commercial paper program providesshort-term borrowings of up to $150 million of which approximately $148.8million is currently outstanding.  Anyborrowings under the commercial paper program will act to reduce the availablecredit under the CoBank, ACB seasonal line of credit by a commensurate amount.

 

The changes thatoccurred in the Company’s financial statements from August 31, 2002 to November30, 2002 were primarily due to normal business seasonality and the acquisitionactivities related to Sidney Sugars Incorporated (SSI).  The first three months of the Company’sfiscal year includes the completion of the sugarbeet harvest, start of theprocessing campaign, and the initial payments to growers for deliveredsugarbeets.  The cash used in operationsof $146.7 million and investing activities of $43.4 million was fundedprimarily through the cash provided by financing activities. The net cashprovided by financing activities was primarily comprised of the net proceedsfrom short-term debt of $187.8 million, and proceeds from the installment saleof stock of $2.4 million.

 

Working capitalhas decreased $24.5 million from $58.3 million at the beginning of the year to$33.8 million as of November 30, 2002 primarily due to additional short-termdebt, increases in payables and an increase in amounts due growers partiallyoffset by increased inventories. Working capital as of November 30, 2002 was $37.2 million, a decrease of$25.1 million when compared to $58.9 million of working capital as of November30, 2001.

 

Capitalexpenditures for the three months ended November 30, 2002 were $41.8 million,which included $35.2 related to the acquisition activities of SSI and therelated marketing allocations.  Capitalexpenditures for the same period in 2001 were $2.3 million.  The Company had outstanding commitmentstotaling $3.7 million as of November 30, 2002 for equipment and constructioncontracts related to various capital projects.

 

The Companyanticipates that the funds necessary for working capital requirements andfuture capital expenditures will be derived from operations, short-termborrowings, depreciation, unit retains and long-term borrowings.

 

**Sidney Sugars Incorporated**

 

On October 7, 2002, the Company, through SSI, acquired three sugarbeetprocessing facilities and the related marketing allocations associated withsuch facilities from Imperial for a purchase price of approximately $35.2million.

 

The facility located in Hereford, Texas was idle at the time of theacquisition and will remain idle for the foreseeable future.  The facility located in Torrington, Wyominghas been leased, on a long-term basis, to Western Sugar Cooperative, who willcontinue to operate the facility to process sugarbeets delivered by growerssupplying the facility prior to the acquisition and from its own growers.  The lease payments due under the long-termlease are nominal.

 

SSI will operate the facility located at Sidney, Montana.  The campaign for the 2002 crop to beprocessed at the facility commenced on September 25, 2002, with a total of863,000 tons of sugarbeets harvested, with a total production of approximately****2.5million hundredweight of sugar expected to be produced from the 2002 crop.Approximately 127,000 tons of beets from the 2002 crop had been harvested priorto October 7, 2002. This portion of the crop and the resulting sugar producedfrom those beets remained the property of Imperial.

 

As part of the entire transaction with Imperial, SSI acquired therights to marketing allocations equal to an estimated 4.8% of the totalallocation for the domestic sugarbeet segment. SSI will use a portion of these marketing allocations to market thesugar produced at the Sidney, Montana facility.  Any excess allocations will be available to the Company.  The sugar produced by SSI will be marketed 

 

9

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through United Sugars Corporation while the agri-products produced willbe marketed through Midwest Agri-Commodities.

 

**United Sugars Corporation**

 

On November 15, 2002, United Sugars Corporation, the Company’s sugarmarketing agent, received a notice of termination from one of its members,Southern Minnesota Beet Sugar Cooperative. The termination will be effective August 31, 2004.  Southern Minnesota Beet Sugar Cooperativeowns approximately 11 percent of United Sugars Corporation. The Uniform MemberMarketing Agreements require the return of the exiting member’s capital over aperiod of five years.  The Companyanticipates that the decrease in the sugar to be marketed by United SugarsCorporation caused by the termination of Southern Minnesota Beet SugarCooperative’s membership will eventually be substantially offset by theadditional SSI sugar to be marketed by United Sugars Corporation.

 

**Item 3****.  Quantitative and Qualitative Disclosuresabout Market Risk**

 

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

 

The Company doesnot believe that there is any material market risk exposure with respect tointerest rates, exchange rates, commodity prices, equity prices and othermarket changes that would require disclosure under this item.

 

**Item 4****.  Controls and Procedures**

 

The Company’schief executive officer and chief financial officer have reviewed and evaluatedthe effectiveness of the Company’s disclosure controls and procedures (asdefined in Rules 240.13a-14(c) and 15d-14(c) promulgated under the SecuritiesExchange Act of 1934) as of November 30, 2002. Based on that review and evaluation, which included inquiries made tocertain other employees of the Company, the chief executive officer and chieffinancial officer have concluded that the Company’s current disclosure controlsand procedures, as designed and implemented, are reasonably adequate to ensurethat they are provided with material information relating to the Companyrequired to be disclosed in the reports the Company files or submits under theSecurities Exchange Act of 1934.

 

There have been nosignificant changes in the Company’s internal controls or in other factors thatcould significantly affect these controls subsequent to the date of theirevaluation.  There were no significantdeficiencies or material weaknesses identified, and therefore no correctiveactions were taken.

 

**PARTII. OTHER INFORMATION**

 

**Item1.  Legal Proceedings**

 

From time to timeand in the ordinary course of its business, the Company is named as a defendantin legal proceedings related to various issues, including worker’s compensationclaims, tort claims and contractual disputes. The Company is currently involvedin certain legal proceedings, which have arisen in the ordinary course of theCompany’s business. The Company is also aware of certain other potential claims,which could result in the commencement of legal proceedings. The Companycarries insurance, which provides protection against certain types of claims.With respect to current litigation and potential claims of which the Company isaware, the Company’s management believes that (i) the Company hasinsurance protection to cover all or a portion of any judgments which may berendered against the Company with respect to certain claims or actions and(ii) any judgments which may be entered against the Company and which mayexceed such insurance coverage or which may arise in 

 

10

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actions involvingpotential liabilities not covered by insurance policies are not likely to havea material adverse effect upon the Company, or its assets or operations.

 

**Item 2****.  Changes in Securities and Use of Proceeds.**

 

None

 

**Item 3****.  Default Upon Senior Securities**

 

None

 

### **Item 4**.  Submissionof Matters to a Vote of Security Holders

 

The Company heldmeetings in November 2002 with its shareholders from the five geographicaldistricts where the Company’s factories are located.

 

At the CrookstonFactory District Meeting held on November 12, 2002, Ronald E. Reitmeier wasre-elected as a Director, receiving 82 of the 83 votes cast.  His three-year term expires in December2005.  Lonn M. Kiel and Jim A. Ross willcontinue as Directors for the Crookston Factory District.

 

At the East GrandForks Factory District Meeting held on November 12, 2002, G. Terry Stadstad wasre-elected as a Director, receiving 133 of the 133 votes cast with 4 abstentions.  His three-year term expires in December 2005.  Paul Driscoll and Curtis Haugen willcontinue as Directors for the East Grand Forks Factory District.

 

At the Drayton Factory District Meeting held on November 13, 2002,Patrick D. Mahar was re-elected as a Director, receiving 146 of the 151 votescast with 9 abstentions.  His three-yearterm expires in December 2005.  NeilWidner and Robert Vivatson will continue as Directors for the Drayton Factory District.

 

At the HillsboroFactory District Meeting held on November 14, 2002, Jerry D. Bitker wasre-elected as a Director, receiving 73 of the 75 votes cast with 6abstentions.  His three-year termexpires in December 2005.  Francis L.Kritzberger and Jeff McInnes will continue as Directors for the HillsboroFactory District.

 

At the MoorheadFactory District Meeting held on November 14, 2002, Michael A. Astrup wasre-elected as a Director, receiving 99 of the 100 votes cast with 5abstentions.  His three-year termexpires in December 2005.  RichardBorgen and David J. Kragnes will continue as Directors for the Moorhead FactoryDistrict.

 

**Item 5****.  Other Information.**

 

None.

 

11

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### **Item 6.** Exhibits andReports on Form 8-K

 

(a)          Exhibits

 
| **Item No.** |   |                                                                                                                                                  |   | **Method of Filing**                                                                                                                                                     |
|--------------|--------|-------------------------------------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 3.1          |   | Restated Articles of  Incorporation of American Crystal Sugar Company                                                                                 |   | Incorporated by  reference to Exhibit 3(i) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.   |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 3.2          |   | Restated By-laws of  American Crystal Sugar Company                                                                                                   |   | Incorporated by  reference to Exhibit 3(ii) from the Company’s Registration Statement on Form  S-1 (File No. 333-11693), declared effective November 13, 1996. |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 4.1          |   | Restated Articles of  Incorporation of American Crystal Sugar Company                                                                                 |   | See Exhibit 3.1                                                                                                                                                          |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 4.2          |   | Restated By-laws of  American Crystal Sugar Company                                                                                                   |   | See Exhibit 3.2                                                                                                                                                          |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.1         |   | Trademark License  Agreement between Registrant and United Sugars Corporation, dated  November 1, 1993                                           |   | Incorporated by  reference to Exhibit 10(l) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.  |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.2         |   | Amended and Restated  Loan Agreement between Registrant and US Bank, formerly First Bank National  Association, dated November 22, 1993          |   | Incorporated by  reference to Exhibit 10(q) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.  |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.3         |   | Form of Operating  Agreement between Registrant and ProGold Limited Liability Company                                                                 |   | Incorporated by  reference to Exhibit 10(u) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.  |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.4         |   | Form of Member Control  Agreement between Registrant and ProGold Limited Liability Company                                                            |   | Incorporated by  reference to Exhibit 10(v) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.  |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.5         |   | Administrative Services  Agreement between Registrant and ProGold Limited Liability  Company                                                     |   | Incorporated by  reference to Exhibit 10(w) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.  |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| +10.6        |   | Coal Supply Agreement  between Registrant and Spring Creek Coal Company, dated August 25, 1995                                                   |   | Incorporated by  reference to Exhibit 10(y) from the Company’s Registration Statement on Form  S-1 (File No. 333-11693), declared effective November 13, 1996. |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| +10.7        |   | Coal Transportation  Agreement between Registrant and Northern Coal Transportation Company, dated  August 25, 1995                               |   | Incorporated by  reference to Exhibit 10(z) from the Company’s Registration Statement on Form  S-1 (File No. 333-11693), declared effective November 13, 1996. |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| +10.8        |   | Trademark License  Agreement between Registrant and The Pillsbury Company, dated as of  April 9, 1997                                            |   | Incorporated by  reference to Exhibit 10(dd) from the Company’s Registration Statement on Form  S-1 (File No. 333-32251), declared effective October 24, 1997. |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.9         |   | Pledge Agreement  between Registrant and First Union Trust Company, NA                                                                                |   | Incorporated by  reference to Exhibit 10(ee) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998.                                     |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.10        |   | Indemnity Agreement  between Registrant, Newcourt Capital USA Inc., Crystech, LLC and Crystech  Senior Lender Trust                                   |   | Incorporated by  reference to Exhibit 10(ff) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998.                                     |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.11        |   | Tolling Services  Agreement between Crystech, LLC and Registrant                                                                                      |   | Incorporated by  reference to Exhibit 10(gg) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998.                                     |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.12        |   | Operations and  Maintenance Agreement between Crystech, LLC and Registrant                                                                            |   | Incorporated by  reference to Exhibit 10(hh) from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1998.                                     |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| ++10.13      |   | Limited Liability  Company Agreement of Crystech, LLC                                                                                                 |   | Incorporated by reference  to Exhibit 10(ii) from the Company’s Annual Report on Form 10-K for the year  ended August 31, 1998.                                     |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.14        |   | Master Agreement  between the Registrant and Bakery, Confectionery, Tobacco Workers & Grain  Millers AFL-CIO, CLC                                 |   | Incorporated by reference  to Exhibit 10.22 from the Company’s Annual Report on Form 10-K for the year  ended August 31, 1999                                       |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.15        |   | Registrant’s  Senior Note Purchase Agreement                                                                                                     |   | Incorporated by  reference to Exhibit 10.24 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1999                                       |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.16        |   | Registrant’s  Senior Note Intercreditor and Collateral  Agency Agreement                                                                    |   | Incorporated by  reference to Exhibit 10.25 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1999                                       |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.17        |   | Registrant’s  Senior Note Restated Mortgage and Security Agreement                                                                               |   | Incorporated by  reference to Exhibit 10.26 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 1999                                       |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.18        |   | Employment Agreement  between the Registrant and James J. Horvath                                                                                     |   | Incorporated by  reference to Exhibit 10.28 from the Company’s Annual Report on Form 10-K form  the year ended August 31, 1999                                      |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.19        |   | Stipulation Agreement  between Registrant and State of Minnesota Pollution Control Agency, dated  April 4, 2000                                       |   | Incorporated by  reference to Exhibit 10.28 from the Company’s Form 10-Q for the quarter ended  May 31, 2000                                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.20        |   | Board of Directors  Deferred Compensation Plan, dated June 30, 1994                                                                                   |   | Incorporated by  reference to Exhibit 10.29 from the Company’s Annual Report on Form 10K for  the year ended August 31, 2000                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.21        |   | Long Term Incentive  Plan, dated June 23, 1999                                                                                                        |   | Incorporated by  reference to Exhibit 10.31 from the Company’s Annual Report on Form 10K for  the year ended August 31, 2000                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.22        |   | Growers’ Contract  (5-year Agreement) for the crop years 1998 through 2002                                                                       |   | Incorporated by  reference to Exhibit 10.29 from the Company’s Form 10-Q for the quarter ended  February 28, 2001                                                   |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.23        |   | Addendum to Master  Agreement between the Registrant and Bakery, Confectionery, Tobacco Workers  & Grain Millers AFL-CIO, CLC dated July 10, 2001 |   | Incorporated by  reference to Exhibit 10.30 from the Company’s Annual Report on Form 10K for  the year ended August 31, 2001                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.24        |   | 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                                                   |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.25        |   | 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                                                   |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.26        |   | Term and Seasonal Loan  Agreements between the Registrant and CoBank, ACB dated March 27, 2002                                                        |   | Incorporated by  reference to Exhibit 10.27 from the Company’s Form 10-Q for the quarter ended  May 31, 2002                                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.27        |   | Growers’ Contract  (Annual Contract) for crop year 2002.                                                                                         |   | Incorporated by  reference to Exhibit 10.28 from the Company’s Form 10-Q for the quarter ended  May 31, 2002                                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.28        |   | Retirement Plan A  Restatement                                                                                                                        |   | Incorporated by  reference to Exhibit 10.28 from the Company’s Annual Report on Form 10K for  the year ended August 31, 2002                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.29        |   | Retirement Plan B  Restatement                                                                                                                        |   | Incorporated by  reference to Exhibit 10.29 from the Company’s Annual Report on Form 10K for  the year ended August 31, 2002                                        |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 10.30        |   | Amendments to Term and  Seasonal Loan Agreements between the Registrant and CoBank, ACB dated  November 6, 2002                                       |   | Filed herewith  electronically                                                                                                                                           |
|         |   |                                                                                                                                                  |   |                                                                                                                                                                     |
| 21.1         |   | List of Subsidiaries of  the Registrant                                                                                                               |   | Incorporated by  reference to Exhibit 21.1 from the Company’s Annual Report on Form 10K for  the year ended August 31, 2002                                         |

 

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

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

 

12

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

 

The Company filedthe following Current Reports on Form 8-K during this quarter.

 
| (i)    |   | Current Report on Form  8-K, dated October 10, 2002, under item 2 stating that the Company had issued  a press release announcing its acquisition, through its wholly-owned  subsidiary, Sidney Sugars Incorporated, of three sugarbeet factories from  Imperial Sugar Company. Under item 9, the Company stated that it had  announced to its shareholders on October 10, 2002, an increase in the  projected beet payment for the 2001 crop. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (ii)   |   | Current Report on Form  8-K, dated November 5, 2002, under item 9 stating that the Company had  announced to its shareholders on November 5, 2002, that the final gross beet  payment for the 2001 crop was $46.64 per average ton of sugarbeets and the  projected gross beet payment for the 2002 crop is estimated at $37.00 per  average ton of sugarbeets.                                                                                |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (iii)  |   | Current Report on Form  8-K, dated November 13, 2002, under item 9 stating that the Company had  announced at various shareholder meetings that due to the 2002 Farm Bill, the  Company estimates that authorized acres for the 2003 Red River Valley crop  will be equivalent to approximately 96 percent of the outstanding shares of  preferred stock, plus or minus two percent.                                                           |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                           |
| (iv)   |   | Current Report on Form  8-K, dated November 27, 2002, under item 9 stating that the Company had filed  its annual report on form 10-K for the fiscal year ended August 31, 2002 and  in connection with the filing, certifications by the James J. Horvath,  President and Chief Executive Officer, and Joseph J. Talley, Chief Financial  Officer had also been submitted.                                                                    |

 

 

SIGNATURES

 

 

**Pursuant to the requirement of theSecurities Exchange Act of 1934, the registrant has duly caused this report tobe signed on its behalf by the undersigned thereunto duly authorized.**

 

 
|                              | **AMERICAN CRYSTAL SUGAR COMPANY** |                                                                                          |
|-----------------------------------|------------------------------------|-----------------------------------------------------------------------------------------------|
|                              | **(Registrant)**                   |                                                                                          |
|                              |                               |
|                              |                               |
| **Date:  January 14,  2003** |                               | **/s/ Brian Ingulsrud**                                                                       |   |
|                              |                               | **Brian Ingulsrud  Corporate Controller,  Chief Accounting Officer  Duly Authorized Officer** |
|                                   |                                    |                                                                                               |  |  |

 

13

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**CERTIFICATIONS**

 

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

 

1.                                       I have reviewed this quarterly report on Form10-Q of American Crystal Sugar Company (the registrant);

 

2.                                       Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.                                       Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.                                       The registrant’s other certifying officer andI are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

 

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

 

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

 

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

 

5.                                       The registrant’s other certifying officer andI have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors:

 

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

 

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

 

6.                                       The registrant’s other certifying officer andI have indicated in this quarterly report whether or not there were significantchanges in internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recent evaluation,including any corrective actions with regard to significant deficiencies andmaterial weaknesses.

 

January14, 2003

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

 

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

 

1.                                       I have reviewed this quarterly report on Form10-Q of American Crystal Sugar Company (the registrant);

 

2.                                       Based on my knowledge, this quarterly reportdoes not contain any untrue statement of a material fact or omit to state amaterial fact necessary to make the statements made, in light of thecircumstances under which such statements were made, not misleading withrespect to the period covered by this quarterly report;

 

3.                                       Based on my knowledge, the financialstatements, and other financial information included in this quarterly report,fairly present in all material respects the financial condition, results ofoperations and cash flows of the registrant as of, and for, the periodspresented in this quarterly report;

 

4.                                       The registrant’s other certifying officer andI are responsible for establishing and maintaining disclosure controls andprocedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for theregistrant and we have:

 

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

 

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

 

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

 

5.                                       The registrant’s other certifying officer andI have disclosed, based on our most recent evaluation, to the registrant’sauditors and the audit committee of the registrant’s board of directors:

 

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

 

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

 

6.                                       The registrant’s other certifying officer andI have indicated in this quarterly report whether or not there were significantchanges in internal controls or in other factors that could significantlyaffect internal controls subsequent to the date of our most recent evaluation,including any corrective actions with regard to significant deficiencies andmaterial weaknesses.

 

January14, 2003

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

 

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