**UNITED STATES****SECURITIESAND EXCHANGE COMMISSION**

**Washington,D.C. 20549**

 

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**FORM 10-Q**

 

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**ý**  Quarterly report pursuant toSection 13 or 15(d) of the Securities Exchange Act of 1934

# ** **

# **For the period endedNovember 30, 2003**

 

**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.) |

 

 

**101North Third Street**

**Moorhead,Minnesota  56560**

(Address of principal executive offices)

 

**TelephoneNumber (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 bySection 13 or 15(d) of the Securities Exchange Act of 1934 during thepreceding 12 months, and (2) has been subject to such filing requirements forthe past 90 days.

 

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

 

 

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

 

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

 

Indicate 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, 2004** |
|---------------------------|--------|-------------------------------------------|
| **$10  Par Value**        |   | 2,990                                     |

 

 

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**AMERICANCRYSTAL SUGAR COMPANY**

 

**FORM10-Q**

 

**INDEX**

 

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

 

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**PART I.FINANCIAL INFORMATION**

** **

**Item 1.Financial Statements**

 

AMERICAN CRYSTAL SUGAR COMPANY

Consolidated Balance Sheets(Unaudited)(Dollars in Thousands)

 

ASSETS

 
|                                             |   | **November 30** |      | **August 31,  2003*** |   |
|--------------------------------------------------|--------|----------------------|-----------|----------------------------|--------|
|                                             |   | **2003**             |      | **2002**                   |   |   |
| Current Assets:                                  |   |                 |      |                       |   |   |   |
| Cash and Cash Equivalents                        |   | $                    | 846       |                       | $      | 28 |   | $ | 859 |   |
| Accounts Receivable:                             |   |                 |      |                       |   |   |   |
| Trade                                            |   | 65,662               |      | 60,404                     |   | 64,056 |   |
| Members                                          |   | 2,582                |      | 2,631                      |   | 3,993 |   |
| Other                                            |   | 3,617                |      | 3,764                      |   | 4,403 |   |
| Advances to Related Parties                      |   | 9,070                |      | 7,022                      |   | 4,891 |   |
| Inventories                                      |   | 530,179              |      | 407,554                    |   | 130,981 |   |
| Prepaid Expenses                                 |   | 6,133                |      | 5,553                      |   | 7,062 |   |
|                                             |   |                 |      |                       |   |   |   |
| Total Current Assets                             |   | 618,089              |      | 486,956                    |   | 216,245 |   |
|                                             |   |                 |      |                       |   |   |   |
| Property and Equipment:                          |   |                 |      |                       |   |   |   |
| Land                                             |   | 39,518               |      | 36,095                     |   | 39,393 |   |
| Buildings                                        |   | 90,206               |      | 88,854                     |   | 90,181 |   |
| Equipment                                        |   | 795,917              |      | 775,108                    |   | 794,416 |   |
| Construction-in-Progress                         |   | 4,646                |      | 6,942                      |   | 4,989 |   |
| Less: Accumulated Depreciation                   |   | (596,521             | )         | (559,619                   | )      | (586,167 | ) |
|                                             |   |                 |      |                       |   |   |   |
| Net Property and Equipment                       |   | 333,766              |      | 347,380                    |   | 342,812 |   |
|                                             |   |                 |      |                       |   |   |   |
| Net Property and Equipment Held for Lease        |   | 167,932              |      | —                     |   | 170,446 |   |
|                                             |   |                 |      |                       |   |   |   |
| Other Assets:                                    |   |                 |      |                       |   |   |   |
| Investments in CoBank, ACB                       |   | 20,618               |      | 15,089                     |   | 21,685 |   |
| Investments in Marketing Cooperatives            |   | 5,186                |      | 2,594                      |   | 6,166 |   |
| Investments in ProGold Limited Liability Company |   | —               |      | 41,516                     |   | — |   |
| Investments in Crystech, LLC                     |   | 15,597               |      | 1,358                      |   | 15,330 |   |
| Notes Receivable - Crystech, LLC                 |   | —               |      | 13,905                     |   | — |   |
| Other Assets                                     |   | 48,109               |      | 30,550                     |   | 37,067 |   |
|                                             |   |                 |      |                       |   |   |   |
| Total Other Assets                               |   | 89,510               |      | 105,012                    |   | 80,248 |   |
|                                             |   |                 |      |                       |   |   |   |
| Total Assets                                     |   | $                    | 1,209,297 |                       | $      | 939,348 |   | $ | 809,751 |   |

 

TheAccompanying Notes are an Integral Part of These Consolidated FinancialStatements.

 

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* Derived from AuditedFinancial Statements.

 

1

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AMERICAN CRYSTAL SUGAR COMPANY

Consolidated Balance Sheets(Unaudited)(Dollars in Thousands)

 

LIABILITIES AND MEMBERS’ INVESTMENTS

 
|                                                   |   | **November 30** |      | **August 31,  2003*** |   |
|--------------------------------------------------------|--------|----------------------|-----------|----------------------------|--------|
|                                                   |   | **2003**             |      | **2002**                   |   |   |
| Current Liabilities:                                   |   |                 |      |                       |   |   |   |
| Short-Term Debt                                        |   | $                    | 247,332   |                       | $      | 194,751 |   | $ | 49,989 |   |
| Current Maturities of Long-Term Debt                   |   | 21,067               |      | 18,045                     |   | 11,282 |   |
| Accounts Payable                                       |   | 26,189               |      | 26,824                     |   | 23,192 |   |
| Advances Due to Related Parties                        |   | 8,836                |      | 8,597                      |   | 4,604 |   |
| Accrued Continuing Costs (see note 3)                  |   | 42,131               |      | 25,841                     |   | — |   |
| Other Current Liabilities                              |   | 21,248               |      | 18,133                     |   | 18,710 |   |
| Amounts Due Growers                                    |   | 207,851              |      | 160,958                    |   | 58,896 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Total Current Liabilities                              |   | 574,654              |      | 453,149                    |   | 166,673 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Long-Term Debt, Net of Current Maturities              |   | 273,648              |      | 182,371                    |   | 286,922 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Accrued Employee Benefits                              |   | 32,165               |      | 28,547                     |   | 31,053 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Other Liabilities                                      |   | 10,593               |      | 3,475                      |   | 10,988 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Total Liabilities                                      |   | 891,060              |      | 667,542                    |   | 495,636 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Minority Interest in ProGold Limited Liability Company |   | 44,581               |      | —                     |   | 43,769 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Members’ Investments:                             |   |                 |      |                       |   |   |   |
| Preferred Stock                                        |   | 38,275               |      | 38,275                     |   | 38,275 |   |
| Common Stock                                           |   | 30                   |      | 30                         |   | 30 |   |
| Additional Paid-in Capital                             |   | 150,446              |      | 145,455                    |   | 148,238 |   |
| Unit Retains                                           |   | 125,246              |      | 124,057                    |   | 125,409 |   |
| Equity Retention                                       |   | 2,718                |      | 2,731                      |   | 2,719 |   |
| Accumulated Other Comprehensive Income/(Loss)          |   | (11,900              | )         | (1,317                     | )      | (11,900 | ) |
| Retained Earnings/(Deficit)                            |   | (31,159              | )         | (37,425                    | )      | (32,425 | ) |
|                                                   |   |                 |      |                       |   |   |   |
| Total Members’ Investments                        |   | 273,656              |      | 271,806                    |   | 270,346 |   |
|                                                   |   |                 |      |                       |   |   |   |
| Total Liabilities and Members’ Investments        |   | $                    | 1,209,297 |                       | $      | 939,348 |   | $ | 809,751 |   |

 

TheAccompanying Notes are an Integral Part of These Consolidated FinancialStatements.

 

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* Derived from AuditedFinancial Statements.

 

2

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AMERICAN CRYSTAL SUGAR COMPANY

ConsolidatedStatements of Operations(Unaudited)(Dollars in Thousands)

 
|                                                                 |   | **For the Three Months Ended  November 30** |    |
|----------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                 |   | **2003**                                         |    | **2002** | ** ** |
|                                                                 |   |                                             |    |   |   |
| Net Revenue                                                          |   | $                                                | 230,204 |   | $ | 201,211 |   |
| Cost of Product Sold                                                 |   | (7,014                                           | )       | 39,459 |   |
|                                                                 |   |                                             |    |   |   |
| Gross Proceeds                                                       |   | 237,218                                          |    | 161,752 |   |
|                                                                 |   |                                             |    |   |   |
| Selling, General & Administrative Expenses                       |   | 42,899                                           |    | 39,791 |   |
| Accrued Continuing Costs (see Note 3)                                |   | 42,131                                           |    | 25,841 |   |
|                                                                 |   |                                             |    |   |   |
| Operating Proceeds                                                   |   | 152,188                                          |    | 96,120 |   |
|                                                                 |   |                                             |    |   |   |
| Other Income/(Expense)                                               |   |                                             |    |   |   |
| Interest Income                                                      |   | 117                                              |    | 430 |   |
| Interest Expense                                                     |   | (4,910                                           | )       | (3,482 | ) |
| Other, Net                                                           |   | 96                                               |    | 718 |   |
| Other (Expense)                                                      |   | (4,697                                           | )       | (2,334 | ) |
|                                                                 |   |                                             |    |   |   |
| Proceeds before Minority Interest and Income Tax Expense             |   | 147,491                                          |    | 93,786 |   |
|                                                                 |   |                                             |    |   |   |
| Minority Interest                                                    |   | (812                                             | )       | — |   |
|                                                                 |   |                                             |    |   |   |
| Income Tax (Expense)/Benefit                                         |   | —                                           |    | — |   |
| Net Proceeds Resulting from Member and Non-Member Business           |   | $                                                | 146,679 |   | $ | 93,786 |   |
|                                                                 |   |                                             |    |   |   |
| Distribution of Net Proceeds:                                        |   |                                             |    |   |   |
| Credited/(Charged) to Members’ Investments:                     |   |                                             |    |   |   |
| Non-Member Business Income                                           |   | $                                                | 1,266   |   | $ | 799 |   |
| Unit Retains Declared to Members                                     |   | —                                           |    | — |   |
| Net Credit to Members’ Investments                              |   | 1,266                                            |    | 799 |   |
| Payments to/due Members for Sugarbeets, Net of Unit Retains Declared |   | 145,413                                          |    | 92,987 |   |
|                                                                 |   |                                             |    |   |   |
| Total                                                                |   | $                                                | 146,679 |   | $ | 93,786 |   |

 

TheAccompanying Notes are an Integral Part of These Consolidated Financial Statements.

 

3

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AMERICAN CRYSTAL SUGAR COMPANY

ConsolidatedStatements of Cash Flows(Unaudited)(Dollars in Thousands)

 
|                                                                 |   | **For the Three Months Ended  November 30** |    |
|----------------------------------------------------------------------|--------|--------------------------------------------------|---------|
|                                                                 |   | **2003**                                         |    | **2002** | ** ** |
| Cash Provided By/(Used In) Operations:                               |   |                                             |    |   |   |
| Net Proceeds Resulting from Member and Non-Member Business           |   | $                                                | 146,679 |   | $ | 93,786 |   |
| Payments to/due Members for Sugarbeets, Net of Unit Retains Declared |   | (145,413                                         | )       | (92,987 | ) |
| Add/(Deduct) Non-Cash Items:                                         |   |                                             |    |   |   |
| Depreciation and Amortization                                        |   | 17,789                                           |    | 14,250 |   |
| (Income) from Equity Method Investees                                |   | (293                                             | )       | (549 | ) |
| Loss on the Disposition of Property and Equipment                    |   | 294                                              |    | 37 |   |
| Deferred Gain Recognition                                            |   | (49                                              | )       | (49 | ) |
| Minority Interest in ProGold Limited Liability Company               |   | 812                                              |    | — |   |
| Changes in Assets and Liabilities:                                   |   |                                             |    |   |   |
| Receivables                                                          |   | 592                                              |    | (428 | ) |
| Inventories                                                          |   | (399,198                                         | )       | (291,059 | ) |
| Prepaid Expenses                                                     |   | 929                                              |    | 178 |   |
| Long-Term Prepaid Pension Expense                                    |   | (5,431                                           | )       | 809 |   |
| Advances To/Due to Related Parties                                   |   | 53                                               |    | 9,819 |   |
| Accounts Payable                                                     |   | 2,996                                            |    | 8,661 |   |
| Accrued Continuing Costs                                             |   | 42,131                                           |    | 25,841 |   |
| Other Liabilities                                                    |   | 3,255                                            |    | 3,315 |   |
| Amounts Due Growers                                                  |   | 148,956                                          |    | 81,711 |   |
| Net Cash (Used In) Operations                                        |   | (185,898                                         | )       | (146,665 | ) |
|                                                                 |   |                                             |    |   |   |
| Cash Provided By/(Used In) Investing Activities:                     |   |                                             |    |   |   |
| Purchases of Property and Equipment                                  |   | (5,049                                           | )       | (6,625 | ) |
| Purchases of Property and Equipment Held for Lease                   |   | (256                                             | )       | — |   |
| Proceeds from the Sale of Property and Equipment                     |   | 21                                               |    | 11 |   |
| Equity Refund from CoBank, ACB                                       |   | 1,067                                            |    | 341 |   |
| Investments in Marketing Cooperatives                                |   | 1,049                                            |    | (463 | ) |
| Acquisition by Sidney Sugars Incorporated                            |   | —                                           |    | (35,184 | ) |
| Acquisition by Crab Creek Sugar Company                              |   | (5,763                                           | )       | — |   |
| Changes in Other Assets                                              |   | (96                                              | )       | (1,500 | ) |
| Net Cash (Used In) Investing Activities                              |   | (9,027                                           | )       | (43,420 | ) |
|                                                                 |   |                                             |    |   |   |
| Cash Provided By/(Used In) Financing Activities:                     |   |                                             |    |   |   |
| Net Proceeds from/(Payments on) Short-Term Debt                      |   | 197,343                                          |    | 187,751 |   |
| Long-Term Debt Repayment                                             |   | (4,476                                           | )       | — |   |
| Proceeds from Issuance of Stock                                      |   | 2,209                                            |    | 2,386 |   |
| Payment of Unit Retains & Equity Retention                       |   | (164                                             | )       | (46 | ) |
| Net Cash Provided by Financing Activities                            |   | 194,912                                          |    | 190,091 |   |
|                                                                 |   |                                             |    |   |   |
| Increase/(Decrease) In Cash and Cash Equivalents                     |   | (13                                              | )       | 6 |   |
| Cash and Cash Equivalents, Beginning of Year                         |   | 859                                              |    | 22 |   |
| Cash and Cash Equivalents, End of Period                             |   | $                                                | 846     |   | $ | 28 |   |

 

**Non-CashInvesting and Financing Activities:**A note payable in the amount of $969,000 was issued in connection withthe acquisition by Crab Creek Sugar Company.

The Accompanying Notes are an Integral Part of TheseConsolidated Financial Statements.

 

4

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# **AMERICAN CRYSTAL SUGARCOMPANY**

**NOTES TO****THE CONSOLIDATED FINANCIAL STATEMENTS**

**FOR THETHREE MONTHS ENDED NOVEMBER 30, 2003 AND 2002**

 

**Note 1:  Basis of Presentation**

 

Theunaudited consolidated financial statements of American Crystal Sugar Company(the Company) contained herein have been prepared pursuant to the rules andregulations of the Securities and Exchange Commission.  Accordingly, they do not include all the informationand footnotes required by accounting principles generally accepted in theUnited States of America.  However, inthe opinion of management, all adjustments, consisting of normal recurringaccruals, considered necessary for a fair presentation have been included.

 

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

 

SidneySugars was formed in fiscal 2003 under the laws of the State of Minnesota, andon October 7, 2002, acquired three sugarbeet processing facilities and therelated marketing allocations associated with such facilities.  Activities associated with Sidney Sugars areconsidered non-member business.

 

CrabCreek was formed in fiscal 2003 under the laws of the State of Minnesota, andon September 8, 2003, acquired the control of a sugarbeet processingfacility and the related marketing allocations associated with such facility(See Note 8).

 

EffectiveMay 1, 2003, the Company acquired an additional five percent ownershipinterest in ProGold, resulting in an increase in the Company’s ownership inProGold to 51 percent.  Due to theCompany’s resulting controlling ownership interest in ProGold, effectiveMay 1, 2003, the Company began to include ProGold in its consolidatedfinancial statements.  The financialstatements for prior periods have not been restated and therefore do notinclude consolidated data pertaining to ProGold prior to May 1, 2003.

 

All material inter-company transactions have beeneliminated.

 

Theoperating results for the three month period ended November 30, 2003 arenot necessarily indicative of the results that may be expected for the yearended August 31, 2004.

 

Theamount paid to shareholders for sugarbeets (member beet payment) depends on thefuture selling prices of sugar and agri-products as well as processing and othercosts incurred during the remainder of the fiscal year associated with the 2003Red River Valley sugarbeet crop (RRV crop). The amount paid to non-member growers for sugarbeets (non-member beetpayment) depends on the future selling prices of sugar and the related sellingexpenses associated with the 2003 Sidney sugarbeet crop (Sidney crop).  For the purposes of this report, the amountof the beet payments, future revenues and costs have been estimated.  Therefore, adjustments with respect to theseestimates may be necessary in the future, as additional information becomesavailable.

 

Thesefinancial statements should be read in conjunction with the consolidatedfinancial statements and notes included in the Company’s annual report for theyear ended August 31, 2003.

 

Certainreclassifications have been made to the November 30, 2002 consolidatedfinancial statements to conform with the November 30, 2003 presentation.

 

5

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**Note 2:  Inventories**

 

The major components ofinventories are as follows (In Thousands):

 
|                                                                    |   | **11/30/03** |    | **11/30/02** |   | **8/31/03** |   |
|-------------------------------------------------------------------------|--------|--------------|---------|--------------|--------|-------------|--------|
| Refined Sugar, Pulp, Molasses, Other Agri-Products  and Sugar Beet Seed |   | $            | 214,986 |         | $      | 139,365     |   | $ | 111,259 |   |
| Unprocessed Sugarbeets                                                  |   | 296,611      |    | 249,305      |   | —      |   |
| Maintenance Parts & Supplies                                        |   | 18,582       |    | 18,884       |   | 19,722      |   |
|                                                                    |   |         |    |         |   |        |   |
| Total Inventories                                                       |   | $            | 530,179 |         | $      | 407,554     |   | $ | 130,981 |   |

 

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 beetseed inventories are valued at the lower of average cost or market.

 

**Note 3:  Accrued Continuing Costs**

 

Forinterim reporting, the Net Proceeds from Member Business is based on the forecastedgross beet payment and the percentage of the tons of sugarbeets processed tothe total estimated tons of sugarbeets to process for a given crop year.  The Net Proceeds from the operations ofSidney Sugars is based on the forecasted net income for the fiscal year and thepercentage of the tons of non-member sugarbeets processed to the totalestimated tons of non-member sugarbeets to process for a given fiscal year.

 

Accruedcontinuing costs represent the difference between the Net Proceeds as determinedabove and actual member business crop year and Sidney Sugars fiscal yearrevenues realized and expenses incurred through the end of the reportingperiod.  Accrued continuing costs arereflected in the Consolidated Financial Statements as a cost on theConsolidated Statements of Operations and as a current liability on theConsolidated Balance Sheets.

 

**Note 4:  Members’ Investments**

 
|                   |   | **Par Value** |   | **Shares  Authorized** |    | **Shares Issued  & Outstanding** |    |
|------------------------|--------|---------------|--------|------------------------|---------|--------------------------------------|---------|
| Preferred Stock:       |   |          |   |                   |    |                                 |    |
| January 7, 2004   |   | $             | 76.77  |                   | 600,000 |                                 | 498,570 |   |
| November 30, 2003 |   | $             | 76.77  |                   | 600,000 |                                 | 498,570 |   |
| August 31, 2003   |   | $             | 76.77  |                   | 600,000 |                                 | 498,570 |   |
| November 30, 2002 |   | $             | 76.77  |                   | 600,000 |                                 | 498,570 |   |
|                   |   |          |   |                   |    |                                 |    |
| Common Stock:          |   |          |   |                   |    |                                 |    |
| January 7, 2004   |   | $             | 10.00  |                   | 4,000   |                                 | 2,990   |   |
| November 30, 2003 |   | $             | 10.00  |                   | 4,000   |                                 | 2,995   |   |
| August 31, 2003   |   | $             | 10.00  |                   | 4,000   |                                 | 2,995   |   |
| November 30, 2002 |   | $             | 10.00  |                   | 4,000   |                                 | 3,033   |   |

 

**Note 5:  Interest Paid**

 

Interestpaid, net of amounts capitalized, was $3.4 million and $3.7 million for thethree months ended November 30, 2003 and 2002, respectively.

# ** **

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

 

The Company has a seasonal line of credit with aconsortium of lenders led by CoBank, ACB of $280 million and a line ofcredit with Wells Fargo Bank for $1 million.  The Company’s commercial

 

6

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paperprogram provides short-term borrowings of up to $225 million.  Anyborrowings under the commercial paper program 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 ofNovember 30, 2003, the Company had outstanding commercial paper of $197.3****millionat an average interest rate of 1.26% and maturity dates betweenDecember 1, 2003 and May 20, 2004. The Company also had $40.0 million of outstanding short-term debt withCoBank, ACB at an average interest rate of 2.12% with a maturity date ofDecember 5, 2003.  In addition, theCompany had an outstanding non-recourse loan with the CCC of $10.0 million,against which 438,000 hundredweight of sugar was pledged as collateral.  The CCC loan carried an interest rate of2.25% and a maturity date of August 31, 2004.

 

As ofNovember 30, 2002, the Company had outstanding commercial paper of $148.8****millionat an average interest rate of 1.74% and maturity dates betweenDecember 2, 2002 and May 30, 2003. The Company also had $46.0 million of outstanding short-term debt withCoBank, ACB at an average interest rate of 2.45% and maturity dates betweenDecember 6, 2002 and December 13, 2002.

 

**Note 7:  Segment Reporting**

 

TheCompany has identified two reportable segments: Sugar and Leasing.  The sugar segment is engaged primarily inthe production 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 leasingsegment has a major customer that accounts for all of that segment’s revenue.

 

Summarizedfinancial information concerning the Company’s reportable segments for thethree months ended November 30, 2003 is shown below:

 
|                                |   | **For the  Three Months Ended November 30, 2003** |    |
|-------------------------------------|--------|--------------------------------------------------------|---------|
|                                |   | **(Dollars  In Thousands)**                            |    |
|                                |   | **Sugar**                                              |    | **Leasing** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
| Net Revenue from External Customers |   | $                                                      | 223,769 |   | $ | 6,435 |   | $ | — |   | $ | 230,204 |   |
| Gross Proceeds                      |   | $                                                      | 233,771 |   | $ | 3,447 |   | $ | — |   | $ | 237,218 |   |
| Depreciation and Amortization       |   | $                                                      | 15,038  |   | $ | 2,751 |   | $ | — |   | $ | 17,789 |   |
| Interest Income                     |   | $                                                      | 115     |   | $ | 2 |   | $ | — |   | $ | 117 |   |
| Interest Expense                    |   | $                                                      | 3,167   |   | $ | 1,743 |   | $ | — |   | $ | 4,910 |   |
| Income from Equity Method Investees |   | $                                                      | 1,138   |   | $ | — |   | $ | (845 | ) | $ | 293 |   |
| Other Income/(Expense), Net         |   | $                                                      | 966     |   | $ | (25 | ) | $ | (845 | ) | $ | 96 |   |
| Net Proceeds                        |   | $                                                      | 146,679 |   | $ | 1,657 |   | $ | (1,657 | ) | $ | 146,679 |   |
|                                |   |                                                   |    |   |   |   |   |   |   |
| Capital Expenditures                |   | $                                                      | 5,049   |   | $ | 256 |   | $ | — |   | $ | 5,305 |   |

 
|                        |   | **As of November 30, 2003** | ** ** |
|-----------------------------|--------|----------------------------------|------------|
|                        |   | **(Dollars In Thousands)**       | ** ** |
|                        |   | **Sugar**                        |       | **Leasing** | ** ** | **Eliminations** | ** ** | **Consolidated** | ** ** |
| Property and Equipment, Net |   | $                                | 333,762    |   | $ | 4 |   | $ | — |   | $ | 333,766 |   |
| Assets Held for Lease, Net  |   | $                                | —     |   | $ | 167,932 |   | $ | — |   | $ | 167,932 |   |
| Identifiable Assets         |   | $                                | 1,075,666  |   | $ | 180,032 |   | $ | (46,401 | ) | $ | 1,209,297 |   |

 

TheCompany had only one reportable segment, Sugar, for the three months endedNovember 30, 2002.

 

7

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**Note 8:  Crab Creek Sugar Company**

 

On September 8, 2003, the Company, through itswholly-owned subsidiary Crab Creek Sugar Company (Crab Creek), acquired all ofthe assets of Pacific Northwest Sugar Company, LLC (PNSC), certain assets ofCentral Leasing of Washington, LLC (Central Leasing) that were associated withPNSC and the Moses Lake, Washington sugarbeet factory previously operated byPNSC and control of the sugar production assets owned by Central Leasingassociated with the Moses Lake, Washington sugarbeet factory for a purchaseprice of approximately $6.7 million.  Toaccomplish this outcome, Crab Creek entered into various arrangements withCentral Leasing such that Crab Creek controls the long-term production of sugarat the Moses Lake facility.  Inconnection with this acquisition, the USDA transferred to the Company the sugarmarketing allocations formerly allocated to PNSC.  Neither Crab Creek nor the Company intends to operate the MosesLake facility.

 

**Item 2.  Management’s Discussion and Analysis of Results of Operations andFinancial Condition for the Three Months** EndedNovember 30, 2003 and 2002

 

Thisreport contains forward-looking statements that involve risks anduncertainties.  Such forward-lookingstatements include, among others, those statements including the words“expect”, “anticipate”, “believe”, “may” and similar expressions.  The Company’s actual results could differmaterially from those indicated. Important factors that could cause or contribute to such differencesinclude, without limitation, market factors, weather and general economic conditions,farm and trade policy, available quantity and quality of sugarbeets.  For a more complete discussion of “ImportantFactors”, please refer to the Company’s 2003 Form 10-K.

 

**Comparison of the Three MonthsEnded November 30, 2003 and 2002**

 

Revenue for the three months ended November 30, 2003, was $230.2million, an increase of $29.0 million from the same period last year.  Revenue from total sugar sales increased10.2 percent due to a 9.2 percent increase in the hundredweight sold and a .9percent increase in the average selling price per hundredweight.  Revenue from pulp sales increased 29.1percent due to a 27.1 percent increase in the volume of pulp tons sold and a1.6 percent increase in the average selling price per ton.  Revenue from molasses sales increased 138.0percent due to a 158.8 percent increase in the volume of molasses sold,partially offset by an 8.1 percent decrease in the average selling price perton.  The increase in the volume ofproducts sold was due primarily to the additional sales associated with theproduction at the Sidney, Montana factory. Revenue from sales of Concentrated Separated By-Product (CSB), aby-product of the molasses desugarization process, decreased 20.0 percent dueto a 17.3 percent decrease in the average selling price per ton and a 2.8percent decrease in the volume of CSB sold. Rental revenue on the ProGold operating lease was $6.4 million.

 

Cost of product sold for the three months ended November 30, 2003,exclusive of payments to members for sugarbeets, decreased $46.5 million ascompared to the same period last year. The cost recognized associated with the non-member sugarbeets (Sidneycrop) was $21.4 million for the three months ended November 30, 2003, anincrease of $8.2 million from the same period last year.  Direct processing costs for sugar and pulpincreased 38.2 percent.  This was due toharvesting 15.7 percent more sugarbeets and processing 41.7 percent moresugarbeets than in fiscal 2002.  Theincrease in sugarbeets processed was primarily due the delay of the 2002 RedRiver Valley crop campaign startup because of adverse planting and growingconditions which slowed the maturity of the crop.  Higher natural gas prices this year also added to the increase inprocessing costs.  Fixed and committedexpenses increased 9.9 percent reflecting higher chemical, coal and limerockcosts for wastewater treatment and increased costs related to the operations ofSidney Sugars.  The change in productinventories impacted the cost of product sold favorably by $62.0 million. Thevalue for sugar inventories as of November 30, 2003, increased compared tothe prior year due to a higher inventory level partially offset by a lower netrealizable value per hundredweight. The cost associated with sugar purchased tomeet customer needs decreased $13.2 million due to no delay in the startup ofthe 2003 crop campaign.  The delayedstartup last year resulted in the requirement to purchase additional sugar toservice customers during the delay. Costs related to ProGold were $3.0 million.  Costs related to Crab Creek Sugar were $ .3 million.  The

 

8

----

 

resultingnegative cost of product sold amount for the three months endedNovember 30, 2003 was due to the amount recognized from the valuation ofproduct inventories at net realizable value exceeding costs incurred.

 

Selling, general and administrative expenses for the three months endedNovember 30, 2003, increased $3.1 million as compared to the same periodlast year.  Selling expenses increased$2.9 million primarily due to the increase in the volume of sugar sold alongwith increased warehousing costs and additional costs related to SidneySugars.  General and Administrativecosts were up $ .2 million this year due to general cost increases.

 

Interest income for the three months ended November 30, 2003,decreased $ .3 million when compared to the same period last year. This wasprimarily due to a lower average balance of investments and slightly lowerinterest rates.

 

Interest expense for the three months ended November 30, 2003,increased $1.4 million when compared to the same period last year.  This was the result of the consolidation ofProGold and increased average borrowing levels for short-term and long-termdebt, partially offset by lower long-term and short-term interest rates.

 

Non-member business activities resulted in a gain of $1.3 million forthe three months ended November 30, 2003, as compared to a gain of $ .8million for the same period last year. The gain in both years was due primarily to activities related to SidneySugars partially offset by the activities related to the investment in ProGold.

 

**Regionaland Bilateral Free Trade Agreements**

 

The United States Government is pursuing anaggressive agenda on international trade. It has reached preliminary agreement on the terms of the CentralAmerican Free Trade Agreement with several Central American countries andnegotiations are continuing for new free trade agreements with a number ofadditional countries and regions that are major producers of sugar.  The Company believes these agreements, ifthey are entered into and approved, could negatively impact the Company’sprofitability.  The primary agreementsunder consideration, to the Company’s knowledge, are the Free Trade Area of theAmericas; the Central American Free Trade Agreement; the Australian Free TradeAgreement and the South African Customs Union Free Trade Agreement.  Many of the countries included in theseagreements are major sugar producers and exporters.  If reductions in sugar tariffs are included in these agreements,eventually excess sugar from these regions could enter the U.S. market and putpressure on domestic sugar prices.  TheU.S. sugar industry and the Company, as an influential member of such industry,recognize the potential negative impact that would result if these agreementsare entered into by the United States and are taking steps to attempt to managethe situation.  The Company and thesugar industry intend to continue to focus a great deal of attention on tradeissues in the future.

 

**EnvironmentalMatters**

 

On May 21, 2003, Sidney Sugars received anEnforcement Action for Air Quality Violation letter from the Montana Departmentof Environmental Quality for alleged violations of allowed particulateemissions at the Sidney, Montana facility. On December 5, 2003, the Montana Department of EnvironmentalQuality and Sidney Sugars entered into an Administrative Order on Consent(Consent Order) resolving this matter. The Consent Order, among of matters, requires Sidney Sugars to pay anadministrative civil penalty of $52,104. The seller of the Sidney, Montana factory has agreed to indemnify SidneySugars for any amounts that are payable for this action.

 

**Liquidity and Capital Resources**

 

Underthe Company’s Bylaws and Member Grower Contracts, payments for member deliveredsugarbeets, the principal raw material used in producing the sugar andagri-products it sells, are

 

9

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subordinated toall member business expenses.  Inaddition, the beet payments made to member growers and non-member growers arepaid in three payments over the course of a year, and the member payments aremade net of any anticipated unit retain for 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.

 

Becausesugar is sold throughout the year (while sugarbeets are processed primarily inthe fall, winter and spring) and because substantial amounts of equipment arerequired for its operations, the Company has utilized substantial outsidefinancing on both a seasonal and long-term basis to fund such operations.  The majority of such financing has beenprovided by a consortium of lenders lead by CoBank, ACB.  The Company has a long-term debt commitmentwith CoBank, ACB of****$208.3 million, of which $177.8million was outstanding as of November 30, 2003.  In addition, the Company had long-term debt outstanding, as ofNovember 30, 2003, of $50 million from a private placement of SeniorNotes that occurred in September of 1998; $17.8 million from aprivate placement of Senior Notes that occurred in January of 2003;$43.3 million from nine separate issuances of Pollution Control andIndustrial Development Revenue Bonds, a term loan with Bank of North Dakota of$4.8 million and note payable of   $1.0million.  The Company also has aseasonal line of credit with a consortium of lenders led by CoBank, ACB of$280 million, of which $40.0 million was outstanding as ofNovember 30, 2003, and a line of credit with Wells Fargo Bank for$1 million.  The Company’scommercial paper program provides short-term borrowings of up to$225 million of which approximately $197.3 million was outstanding as ofNovember 30, 2003.  Any borrowingsunder the commercial paper program will act to reduce the available creditunder the CoBank, ACB seasonal line of credit by a commensurate amount.  The Company also had an outstandingnon-recourse loan with the CCC, as of November 30, 2003, of $10.0 million,against which 438,000 hundredweight of sugar was pledged as collateral.

 

Thechanges that have occurred in the Company’s financial statements fromAugust 31, 2003 to November 30, 2003 were primarily due to normalbusiness seasonality and the acquisition activities related to Crab Creek.  The first three months of the Company’sfiscal year includes the completion of the sugarbeet harvest, start of theprocessing campaign, the final payments to growers for sugarbeets deliveredfrom the previous year’s crop and the initial payments to growers forsugarbeets delivered from the current year’s crop.  The cash used in operations of $185.9 million and investingactivities of $9.0 million was funded primarily through the cash provided bythe proceeds from short-term debt.  Thenet cash provided by financing activities of $194.9 million was primarilycomprised of the net proceeds from short-term debt of $197.3 million andproceeds from the installment sale of stock of $2.2 million partially offset bythe repayment of long-term debt of $4.5 million.

 

Workingcapital has decreased $6.2 million from $49.6 million at the beginning of theyear to $43.4 million as of November 30, 2003 primarily due to additionalshort-term debt, increases in payables and an increase in amounts due growerspartially offset by increased inventories. All of which are primarily related to the commencement of the processingcampaign.  Working capital as ofNovember 30, 2003 was $43.4 million, an increase of $9.6 million whencompared to $33.8 million of working capital as of November 30, 2002.  The lower level of working capital as ofNovember 30, 2002 was primarily due to the delayed processing campaignstart-up last year.

 

Capitalexpenditures for the three months ended November 30, 2003 were $5.3million.  Capital expenditures for thesame period in 2002 were $22.4 million which included $15.8 million related tothe acquisition of property and equipment by Sidney Sugars.  The Company had outstanding commitmentstotaling $3.2 million as of November 30, 2003 for equipment andconstruction contracts related to various capital projects.

 

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

 

On September 8, 2003, theCompany, through its wholly-owned subsidiary Crab Creek Sugar Company (CrabCreek), acquired all of the assets of Pacific Northwest Sugar Company, LLC(PNSC),

 

10

----

 

certain assets of Central Leasing of Washington, LLC(Central Leasing) that were associated with PNSC and the Moses Lake, Washingtonsugarbeet factory previously operated by PNSC and control of the sugarproduction assets owned by Central Leasing associated with the Moses Lake,Washington sugarbeet factory for a purchase price of approximately $6.7million.  To accomplish this outcome,Crab Creek entered into various arrangements with Central Leasing such thatCrab Creek controls the long-term production of sugar at the Moses Lakefacility.  In connection with thisacquisition, the USDA transferred to the Company the sugar marketingallocations formerly allocated to PNSC. Neither Crab Creek nor the Company intends to operate the Moses Lakefacility.

 

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

 

Market risk is the riskof loss to future earnings, to fair values or to future cash flows that mayresult 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 does notbelieve 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’s chief executive officer and chieffinancial officer have reviewed and evaluated the effectiveness of theCompany’s disclosure controls and procedures (as defined in Rules 240.13a-15eand 15d-15e promulgated under the Securities Exchange Act of 1934) as ofNovember 30, 2003.  Based on thatreview and evaluation, which included inquiries made to certain other employeesof the Company, the chief executive officer and chief financial officer haveconcluded that the Company’s current disclosure controls and procedures, asdesigned and implemented, are reasonably adequate to ensure that they areprovided with material information relating to the Company required to bedisclosed in the reports the Company files or submits under the SecuritiesExchange Act of 1934.

 

Therehave been no significant changes in the Company’s internal controls or in otherfactors that could significantly affect these controls subsequent to the dateof their evaluation.  There were nosignificant deficiencies or material weaknesses identified, and therefore nocorrective actions were taken.

 

## **PARTII. OTHER INFORMATION**

 

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

 

Fromtime to time and in the ordinary course of its business, the Company is namedas a defendant in legal proceedings related to various issues, includingworker’s compensation claims, tort claims and contractual disputes.  The Company is currently involved in certainlegal proceedings, which have arisen in the ordinary course of the Company’sbusiness.  The Company is also aware ofcertain other potential claims, which could result in the commencement of legalproceedings.  The Company carriesinsurance, which provides protection against certain types of claims.  With respect to current litigation andpotential claims of which the Company is aware, the Company’s managementbelieves that (i) the Company has insurance protection to cover all or aportion of any judgments which may be rendered against the Company with respectto certain claims or actions and (ii) any judgments which may be enteredagainst the Company and which may exceed such insurance coverage or which mayarise in actions involving potential liabilities not covered by insurancepolicies are not likely to have a material adverse effect upon the Company, orits assets or operations.

 

11

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**Item 2.  Changes inSecurities and Use of Proceeds.**

 

None

 

**Item 3.  Default UponSenior Securities**

 

None

### ** **

### **Item 4.  Submission of Matters to a Vote of SecurityHolders**

 

TheCompany held meetings in November 2003 with its shareholders from the fivegeographical districts where the Company’s factories are located.

 

At theMoorhead Factory District Meeting held on November 11, 2003, RichardBorgen was re-elected as a Director, receiving 77 of the 87 votes cast with twoabstentions.  His three-year term expiresin December 2006.  Michael A.Astrup and David J. Kragnes will continue as Directors for the Moorhead FactoryDistrict.

 

At theHillsboro Factory District Meeting held on November 11, 2003, Francis L.Kritzberger was re-elected as a Director, receiving 68 of the 69 votescast.  His three-year term expires inDecember 2006.  Jerry D. Bitker andJeff McInnes will continue as Directors for the Hillsboro Factory District.

 

At the Drayton Factory District Meeting held onNovember 12, 2003, Neil Widner was re-elected as a Director, receiving 155of the 155 votes cast with one abstention and one spoiled ballot.  His three-year term expires inDecember 2006.  Patrick D. Maharand Robert Vivatson will continue as Directors for the Drayton FactoryDistrict.

 

At theCrookston Factory District Meeting held on November 13, 2003, Lonn M. Kielwas re-elected as a Director, receiving 80 of the 80 votes cast.  His three-year term expires inDecember 2006.  Ronald E. Reitmeierand Jim A. Ross will continue as Directors for the Crookston Factory District.

 

At theEast Grand Forks Factory District Meeting held on November 13, 2003, JohnGudajtes was elected as a Director, replacing Paul J. Driscoll, whose termexpires in December 2003.  Mr.Gudajtes received 110 of the 198 votes cast with one abstention.  His three-year term expires in December 2006. Mr. Gudajtes has been farming in the EastGrand Forks area since 1967 and is the President of the John & SusanGudajtes Farms.  Mr. Gudajtes is alsothe owner of Quality Bean of Minto, North Dakota.  Mr. Gudajtes has been the President of the Walsh CountyHistorical Society for two years. G. Terry Stadstad and Curtis Haugen will continue as Directors for theEast Grand Forks Factory District.

 

**Item5.  Other Information.**

 

None.

 

12

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**Item 6.Exhibits and Reports on Form 8-K**

 

(a)  Exhibits

 
| **Item No.** |   |                                                                                                        |   | **Method of Filing**                                                                                                                                                     |
|--------------|--------|-------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 3.1          |   | Restated  Articles of Incorporation of American Crystal Sugar Company                                       |   | Incorporated by  reference to Exhibit 3(i) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.   |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 3.2          |   | Restated By-laws  of American Crystal Sugar Company                                                         |   | Incorporated by  reference to Exhibit 3(ii) from the Company’s Registration Statement on Form  S-1 (File No. 333-11693), declared effective November 13, 1996. |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 4.1          |   | Restated  Articles of Incorporation of American Crystal Sugar Company                                       |   | See Exhibit 3.1                                                                                                                                                          |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 4.2          |   | Restated By-laws  of American Crystal Sugar Company                                                         |   | See Exhibit 3.2                                                                                                                                                          |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 10.1         |   | Trademark  License Agreement between Registrant and United Sugars Corporation, dated  November 1, 1993 |   | Incorporated by  reference to Exhibit 10(l) from the Company’s Registration Statement on Form  S-1 (File No. 33-83868), declared effective November 23, 1994.  |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 10.2         |   | 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.  |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 10.3         |   | 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.  |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| 10.4         |   | 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.  |
|         |   |                                                                                                        |   |                                                                                                                                                                     |
| +10.5        |   | 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. |

 

13

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| +10.6  |   | 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. |
|--------|--------|-------------------------------------------------------------------------------------------------------------------------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.7   |   | 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.                                |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.8   |   | 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.                                |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.9   |   | 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.                                |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.10  |   | 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.                                |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| +10.11 |   | 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.                                |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.12  |   | 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                                  |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.13  |   | 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                                  |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.14  |   | 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                                  |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.15  |   | 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                                  |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.16  |   | 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                                 |
|   |   |                                                                                                                    |   |                                                                                                                                                                     |
| 10.17  |   | 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                                                   |

 

14

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| 10.18  |   | 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 |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------|--------|-----------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.19  |   | 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 |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.20  |   | 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 10-K for  the year ended August 31, 2001 |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.21  |   | 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             |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.22  |   | 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             |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.23  |   | Retirement Plan  A Restatement                                                                                                                             |   | Incorporated by  reference to Exhibit 10.28 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 2002 |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.24  |   | Retirement Plan  B Restatement                                                                                                                             |   | Incorporated by  reference to Exhibit 10.29 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 2002 |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.25  |   | 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             |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.26  |   | 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             |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.27  |   | Growers’  Contract (Annual Contract) for crop year 2003.                                                                                              |   | Incorporated by  reference to Exhibit 10.31 from the Company’s Form 10-Q for the quarter ended  February 28, 2003             |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| +10.28 |   | 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                  |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| +10.29 |   | 2003 Sugarbeet  Delivery Agreement between Sidney Sugars Incorporated and Growers                                                                          |   | Incorporated by  reference to Exhibit 10.32 from the Company’s Form 10-Q for the quarter ended  May 31, 2003                  |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.30  |   | 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 |
|   |   |                                                                                                                                                       |   |                                                                                                                                    |
| 10.31  |   | Term and  Seasonal Loan Agreements between the Registrant and CoBank, ACB dated  July 21, 2003                                                        |   | Incorporated by  reference to Exhibit 10.31 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 2003 |

 

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| 10.32  |   | Seasonal Loan  Agreement between the Registrant and CoBank, ACB dated November 7, 2003   |   | Filed herewith  electronically                                                                                                         |
|--------|--------|-----------------------------------------------------------------------------------------------|--------|----------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                          |   |                                                                                                                                   |
| 10.33  |   | Amendments to Registrant’s Senior Note Purchase Agreements dated  November 26, 2003 |   | Filed herewith  electronically                                                                                                         |
|   |   |                                                                                          |   |                                                                                                                                   |
| 21.1   |   | List of  Subsidiaries of the Registrant                                                       |   | Incorporated by  reference to Exhibit 21.1 from the Company’s Annual Report on Form 10-K for  the year ended August 31, 2003 |
|   |   |                                                                                          |   |                                                                                                                                   |
| 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.

 

**(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, datedSeptember 29, 2003, under item 5 stating that the Company, through itswholly-owned subsidiary, Crab Creek Sugar Company, had completed theacquisition of all of the assets of PacificNorthwest Sugar Company, LLC (“PNSC”) and the control of the sugar productionassets associated with the Moses Lake, Washington sugarbeet factory previouslyoperated by PNSC.  Under item 9,the Company stated that it had announced to its shareholders in a letter datedSeptember 29, 2003, that the Company does not intend to operate the MosesLake facility and that the marketing allocations associated with the Moses Lakefacility will allow more sugarbeets to be planted in the Red River Valley thanwould have otherwise been the case. Also under item 9, in the same letter, theCompany announced that the gross beetpayment for the 2002 crop is currently estimated to increase approximately $2.70from $38.00 to $40.70 per average ton of sugarbeets.  The actual gross beet payment for the 2002 crop may differ fromthe current estimate based on the final, year-end financial statements, whichhave not yet been finalized.

 

(ii)                                  Current Report on Form 8-K, datedNovember 5, 2003, under item 9 stating that the Company announced to itsshareholders on November 5, 2003 that the final gross beet payment for the2002 crop was $40.70 per average ton of sugarbeets.  The Company alsoannounced a projected gross beet payment for the 2003 crop of $43.00 peraverage ton of sugarbeets.  The actual gross beet payment for the 2003crop will necessarily differ from the current estimate to reflect actual cropstatistics, Company operations, and selling prices for the Company’s productsduring fiscal year 2004.

 

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**SIGNATURES**

 

 

Pursuantto the requirement of the Securities Exchange Act of 1934, the registrant hasduly caused this report to be signed on its behalf by the undersigned thereuntoduly authorized.

 

 
|        |                  |   | AMERICAN CRYSTAL SUGAR COMPANY |
|-------------|-----------------------|--------|--------------------------------|
|        |                  |   | (Registrant)                   |
|        |                  |   |                           |
|        |                  |   |                           |
| Date:  | January 14, 2004 |   |                           | /s/ Brian Ingulsrud |
|        |                  |   |                           | Brian Ingulsrud |
|        |                  |   |                           | Corporate Controller, |
|        |                  |   |                           | Chief Accounting Officer |
|        |                  |   |                           | Duly Authorized Officer |

 

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