<PAGE>
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                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549
 
                                   FORM 10-K
 
             /X/  Annual Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934
                           For the fiscal year ended
                                AUGUST 31, 1998
                                       or
           / /  Transition Report Pursuant to Section 13 or 15(d) of
                      the Securities Exchange Act of 1934
 
                            ------------------------
 
                                Commission File
                     Nos. 33-83868; 333-11693 and 333-32251
 
                            ------------------------
 
                         AMERICAN CRYSTAL SUGAR COMPANY
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
 
<TABLE>
<S>                                <C>
            Minnesota                          84-0004720
    (STATE OF INCORPORATION)         (I.R.S. EMPLOYER IDENTIFICATION
                                                 NUMBER)
 
     101 North Third Street
       Moorhead, MN 56560                    (218) 236-4400
 (ADDRESS OF PRINCIPAL EXECUTIVE     (REGISTRANT'S TELEPHONE NUMBER)
            OFFICES)
</TABLE>
 
          SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
                                      NONE
          SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
                                      NONE
 
                             ---------------------
 
    Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes _X_ No ____
 
                            ------------------------
 
    Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K contained herein, and will not be contained, to the best
of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in part III of this Form 10-K or any amendment to this
Form 10-K. [X]
 
                            ------------------------
 
    As of November 23, 1998, 2,834 shares of the Registrant's Common Stock and
498,570 shares of the Registrant's Preferred Stock were outstanding. There is no
established public market for the Registrant's Common Stock or Preferred Stock.
Although there is a limited, private market for shares of the Registrant's
stock, the Registrant does not obtain information regarding the transfer price
in transactions between its members and therefore is unable able to estimate the
aggregate market value of the Registrant's shares held by non-affiliates.
 
                      DOCUMENTS INCORPORATED BY REFERENCE
 
    None
 
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<PAGE>
                                     PART I
 
    This report contains forward-looking statements and information based upon
assumptions by the Company's management, including assumptions about risks and
uncertainties faced by the Company. These forward-looking statements can be
identified by the use of forward-looking terminology such as "expects",
"believes", "will" or similar verbs or expressions. If any of management's
assumptions prove incorrect or should unanticipated circumstances arise, the
Company's actual results could materially differ from those anticipated by such
forward-looking statements. The differences could be caused by a number of
factors or combination of factors, including, but not limited to, those factors
influencing the Company and its business which are described in this report.
Readers are urged to consider these factors when evaluating any forward-looking
statement. The Company undertakes no obligation to update any forward-looking
statements in this Report to reflect future events or developments.
 
ITEM 1.  BUSINESS
 
GENERAL
 
    American Crystal is a Minnesota agricultural cooperative corporation owned
by approximately 2,835 sugarbeet growers in the Minnesota and North Dakota
portions of the Red River Valley. (The Red River Valley, the largest sugarbeet
growing area in the United States, forms a band approximately 35 miles wide on
either side of the North Dakota and Minnesota border and extends approximately
200 miles south from the border of the United States and Canada.) The Company
currently processes sugarbeets from a base level of approximately 499,000 acres,
subject to tolerances for overplanting and underplanting established by the
Board of Directors each year. By owning and operating five sugarbeet processing
facilities in the Red River Valley, the Company provides its shareholders with
the ability to process their sugarbeets into sugar and by-products, such as
molasses and beet pulp. The sugar is pooled and then marketed through the
services of a marketing agent under contract with the Company. The sugar
marketing agent, United Sugars Corporation, is a cooperative owned by its
members, American Crystal, Southern Minnesota Beet Sugar Cooperative, Minn-Dak
Farmers Cooperative and United States Sugar Corporation. The Company's molasses,
beet pulp and concentrated separated by-product (CSB) (a by-product of the
molasses desugarization process) are also marketed through a marketing agent,
Midwest Agri-Commodities Company. Midwest Agri-Commodities Company is a
cooperative whose members are the Company, Minn-Dak Farmers Cooperative and
Southern Minnesota Beet Sugar Cooperative. The Company is also one of three
members of ProGold Limited Liability Company, a joint venture which owns a corn
wet-milling plant in Wahpeton, North Dakota.
 
    American Crystal was organized in 1973 by sugarbeet growers to acquire the
business and assets of American Crystal Sugar Company, then a publicly held New
Jersey corporation in operation since 1899.
 
    American Crystal's corporate headquarters are located at 101 North Third
Street, Moorhead, Minnesota 56560 (telephone number (218) 236-4400). Its fiscal
year ends August 31.
 
PRODUCTS AND PRODUCTION
 
    American Crystal is engaged primarily in the production and marketing of
sugar from sugarbeets. American Crystal also markets beet pulp, molasses and
CSB, which are by-products of the sugar it produces, and sugarbeet seed.
 
    American Crystal processes sugarbeets grown by its members in five factories
located in the Red River Valley area of Minnesota and North Dakota. The growing
area is divided into five factory districts, each containing one sugarbeet
processing plant.
 
    The period during which the Company's plants are in operation to process
sugarbeets into sugar and by-products is referred to as the "campaign." During
the campaign, each of the Company's factories is operated twenty-four hours per
day, seven days per week. The campaign is expected to begin in September,
 
                                       2
<PAGE>
when a small portion of the sugarbeet crop is harvested, and continues until the
available supply of beets has been depleted, which generally occurs in April or
May of the following year. Based on current processing capacity, an average
campaign lasts approximately 250 days, assuming normal crop yields.
 
    Once the sugarbeets are harvested, rapid processing is important to maximize
sugar extraction and minimize spoilage. Members transport their crop by truck to
receiving stations designated by the Company and receive a hauling allowance
under the Grower's Contract. Beets are then stored in factory yards and at
outlying piling stations until processed.
 
    American Crystal's total sugar production is presently influenced by the
amount and quality of sugarbeets grown by its members, the processing capacity
of the Company's plants and by the ability to store harvested beets. Most of the
beet harvest is stored in piles. Although frozen sugarbeets may be stored for
extended periods, beets stored in unprotected piles at temperatures above
freezing must be processed within approximately 150 days. In most years,
therefore, the cold weather in North Dakota and Minnesota offers an advantage to
the Company as it permits the outdoor storage of sugarbeets in below-freezing
weather conditions. By contrast, unprotected piles of sugarbeets would
experience cycles of freezing and thawing and, therefore, be subject to some
deterioration.
 
    Subject to such freeze and thaw cycles, beets on the exterior of piles
freeze naturally. Beets near the center of the piles, however, may not freeze
and thus may be subject to spoilage. The Company utilizes a process called
"split pile storage" in which beets from the center of the piles are removed for
processing first. Split pile storage permits more of the stored beets to freeze
naturally.
 
    American Crystal also utilizes a ventilation technique to further reduce
spoilage. In this process, fans circulate air through ventilation channels
constructed within beet piles in order to precool and then deep freeze the
beets. Approximately 21% of an average crop may be stored in ventilated storage
sites. Enclosed cold storage facilities are also used to extend the beet storage
period at each of the Company's factory locations. Enclosed cold storage sites
presently have the capacity to cover approximately 7% of an average crop.
 
    Once the sugarbeets arrive in the factory, the basic steps in producing
sugar from them include: washing; slicing into thin strips called "cossettes";
extracting the sugar from the cossettes in a diffuser; purifying the resulting
"raw juice" and boiling it, first in an evaporator to thicken it and then in
vacuum pans to crystalize the sugar; separating the sugar crystals in a
centrifuge; drying the sugar; storing sugar in bulk form and grading and
screening the crystals for packaging and bulk shipping.
 
    The Company's sugarbeet by-products include molasses and beet pulp. After
the extraction of raw juice from the cossettes, the remaining pulp is dried and
processed into animal feeds. The Company processes approximately one-half of its
molasses through its molasses desugarization facility to extract additional
sugar. The remaining molasses and CSB from the molasses desugarization process
are marketed through Midwest Agri-Commodities Company and are sold primarily to
yeast and pharmaceutical manufacturers and for use in animal feeds.
 
    The Company also has its own Seed Division, which has been in existence
since the 1920's. The goal of the Seed Division is to ensure that the Company's
shareholders have the highest quality sugarbeet hybrids available to maximize
their production. Since the mid-1970s, American Crystal had an effective working
relationship with Danisco Seed of Denmark. In 1998, American Crystal signed a
10-year agreement with Betaseed covering exchange of germplasm, together with
purchasing, product development, production and trademark license agreements.
 
    Betaseed is the US subsidiary of KWS, a German seed company which is one of
the three largest seed companies in the world. The Seed Division markets its
seed to sugarbeet growers in Michigan, Ohio, Montana, Wyoming, Colorado,
Nebraska, Idaho, Oregon, California, Washington and to its own growers in North
Dakota and Minnesota.
 
                                       3
<PAGE>
RECENT CROPS
 
    The sugarbeet crop grown during 1998 produced a total of approximately 22.2
tons of sugarbeets per acre from approximately 481,000 acres. That production
exceeded the ten-year average of 16.8 tons per acre for the years 1988 through
1997. The sugar content of the 1998 crop was 17.66%, in comparison to a ten-year
average for the applicable period of 17.36%. The Company has begun processing
the sugarbeets produced in the 1998 crop and expects to produce a total of
approximately 27 million hundredweight of sugar from that crop.
 
    The sugarbeet crop grown during 1997 produced a total of approximately 18.5
tons of sugarbeets per acre from approximately 462,000 acres. That production
exceeded 16.9 tons per acre, which is the ten-year average of tons per acre for
the years from 1987 through 1996. The sugar content of the 1997 crop was 17.59%,
in comparison to a ten-year average for the applicable period of 17.39%. The
company produced a total of approximately 21.5 million hundredweight of sugar
from the 1997 sugarbeet crop.
 
    American Crystal's members harvested approximately 8.3 million tons of
sugarbeets from 459,000 acres for the 1996 crop. The approximately 18.1 ton per
acre yield was higher then the then-current 16.8 ton per acre 10 year average.
Sugar content for the 1996 crop was approximately 17.30%, which is 0.07% lower
than the then-current ten year average of 17.37%. Beet processing began on
September 5, 1996 and the Company produced 22.5 million hundredweights of sugar
during the 1996-1997 campaign.
 
    For a discussion of the 1997, 1996 and 1995 crops and results of operations
for fiscal years 1998, 1997 and 1996, see "Management's Discussion and Analysis
of Financial Condition and Results of Operations".
 
MARKET AND COMPETITION
 
    The United States is the world's largest sugar and sweetener complex.
Current US government statistics estimate total US sugar consumption at 183.4
million hundredweight for the year beginning October 1, 1997 and ending
September 30, 1998. For the same period starting October 1996, total consumption
was 182.6 million hundredweight. Comparing the two years shows relatively
marginal demand growth for US sugar sellers. This slowdown in consumption growth
rates is primarily attributable to the decline in the low-fat and non-fat food
trend, which used more sugar in product formulations. Continued substitution of
corn sweeteners for sugar and import leakages have also contributed to the
overall demand slowdown.
 
    Despite evidence of a sugar demand slowdown, the US government forecasts
growth between 1998 and 1999 to be slightly higher than 2%, which is slightly
above trendline and includes consumption increases due to population growth.
Although the Company believes that domestic consumption growth could once again
approach 2% annually over the longer term, recent trends have pressured growth
rates lower and slower growth may be more realistic to assume at the current
time. The US refined sugar market has grown over the past twenty years, despite
the enormous amount of demand lost to the substitution of high fructose corn
syrups for sugar in beverages and certain food products. Non-nutritive
sweeteners such as aspartame have also been developed to substitute for sugar.
While corn and non-nutritive sweeteners constitute a large portion of the
overall sweetener market, the Company believes that the market for sugar will
continue to grow between 1 and 2% per year due to population growth and
increased use of sugar in processed foods.
 
    The substitution of corn sweeteners for sugar not only reduced demand for
sugar in the United States, but also resulted in a high degree of sugar industry
consolidation. In 1978 there were 28 sugar producers and sellers in the US
market. Today there are eight sugar sellers, with over 75% of US sugar market
share concentrated in the top three sellers, all of which are fully integrated
beet and cane suppliers. Given the size of the domestic market, the Company's
(ACSC) sugar production and sales represented 11.8% of the total domestic market
for refined sugar in 1997/98. United Sugars, which sells the Company's
production through a sugar marketing pool, represents approximately 25% share of
the US sugar market.
 
                                       4
<PAGE>
    The Company's main competitors in the domestic market are
Imperial-Holly-Savannah, Tate & Lyle North America, Amalgamated Sugar Company
and California & Hawaiian Sugar Company. Competition in the US industry, because
sugar is a fungible commodity, is primarily based upon price, customer service
and reliability as a supplier.
 
    According to USDA statistics, the Red River Valley is generally one of the
most cost efficient sugarbeet producing areas in the nation. As a result, the
Company's management believes that it possesses the ability to compete
successfully with other producers of sugar in the United States. In the future,
while cost efficiency is a competitive advantage, substitute products for sugar
and sugar imports could have a material and adverse effect on the Company's
operations.
 
MARKETING, CUSTOMERS AND PRICES
 
    Since January, 1994, American Crystal's sugar has been marketed by United
Sugars Corporation, a cooperative common marketing agency. United Sugars
Corporation was formed in late 1993. Upon completion of the incorporation and
capitalization of United Sugars Corporation, American Crystal entered into a
"Uniform Member Marketing Agreement" with United Sugars Corporation. Under that
agreement, the sugar produced by American Crystal is pooled with sugar produced
by Minn-Dak Farmers Cooperative, and Southern Minnesota Beet Sugar Cooperative
and is then sold through the efforts of United Sugars Corporation. The Company
receives payment for its sugar by receiving its pro rata share of the net
proceeds from the sale of the pooled sugar. The net proceeds of such sales
represent the gross proceeds of sale of the sugar, adjusted for the various
costs and expenses of marketing the pooled sugar, including the Company's pro
rata share of the marketing and sales expenses incurred by United Sugars
Corporation. Any net proceeds from the operation of United Sugars Corporation
are distributed to the various members proportionally.
 
    On December 1, 1997, United States Sugar Corporation (USSC), a grower of
sugar cane and other agricultural products became a member of United Sugars
Corporation. United Sugars Corporation and USSC entered into a Uniform Cane
Sugar Marketing Agreement. Under that agreement, USSC will market all of its
refined sugar through United Sugars Corporation. Existing members of United
Sugars Corporation, including the Company, entered into amended marketing
agreements reflecting the admission of USSC. With the admission of USSC, United
Sugars Corporation is able to distribute both cane sugar and beet sugar, and
distribute sugar to customers over a large geographical area.
 
    The Company's sugar is marketed by United Sugars Corporation primarily to
industrial users such as confectioners, breakfast cereal manufacturers and
bakeries. For the fiscal year ended August 31, 1998, 89.7% (by weight) of the
Company's sugar production was sold to industrial users. The remaining portion
is marketed by United Sugars Corporation through sugar brokers to wholesalers
and retailers under the "Crystal Sugar" brand name and various private labels
for household consumption.
 
    Customers are located primarily in Illinois, Minnesota, Iowa, Wisconsin,
Pennsylvania, Michigan, Indiana, Ohio, Missouri and Tennessee. During fiscal
1998, the Company's 10 largest customers purchased approximately 57.6% (by
weight) of the Company's sugar sold.
 
    The prices at which United Sugars Corporation sells the Company's sugar
fluctuates periodically based on changes in domestic sugar supply and demand.
The largest proportion of American Crystal's sales are contracted one or more
quarters in advance, with the effect of stabilizing fluctuations in revenue from
quarter to quarter. Retail (grocery) products are sold on a spot price basis.
Sugar prices were at a premium in 1996 due to sugarbeet shortages and
insufficient refinery capacity. Sugar prices decreased in 1997 and 1998 due to
increased domestic production, larger import quotas and declining consumption
growth rates.
 
    American Crystal markets dried beet pulp, molasses and CSB through Midwest
Agri-Commodities Company, a cooperative whose members are American Crystal,
Minn-Dak Farmers Cooperative and Southern Minnesota Beet Sugar Cooperative. Beet
pulp is marketed to livestock feed mixers and livestock
 
                                       5
<PAGE>
feeders in the United States and foreign markets. For the year ended August 31,
1998, the majority of American Crystal's pulp production was exported to Japan
and Europe. The market for beet pulp is affected by the availability and quality
of competitive feedstuffs. Beet molasses is marketed primarily to yeast
manufacturers, pharmaceutical houses, livestock feed mixers and livestock
feeders. By-product sales accounted for approximately 10% of the Company's total
revenues during fiscal 1998. This relationship is primarily a function of the
average market prices for sugar, pulp and molasses and is not necessarily
indicative of future relationships between by-product and sugar revenues,
because prices of these commodities fluctuate independently of each other.
 
GOVERNMENT PROGRAMS AND REGULATION
 
    Domestic sugar prices are supported under a program administered by the
USDA. Under the current program, which was initiated in 1981 and extended under
the Food Security Act of 1985, the Food, Agriculture, Conservation and Trade Act
of 1990 and the Federal Agriculture Improvement and Reform Act of 1996 (the
"FAIR Act"), the price of sugar is maintained above the price at which producers
could forfeit sugar to repay nonrecourse loans obtained through the Commodity
Credit Corporation (the "CCC"). The USDA maintains sugar prices without cost to
the U.S. Treasury by regulating the quantity of sugar imports. Under the "Tariff
Rate Quota" implemented October 1, 1990, sugar producing countries are assigned
a fixed quantity of imports duty-free or subject to minimal duties. Unlimited
additional quantities may be imported upon payment of a tariff of 16 cents per
pound prior to shipment. (To date, only minute quantities of sugar have been
imported under this higher tariff level.)
 
    The Uruguay Round agreement under the General Agreement on Tariffs and Trade
(GATT) mandates imports of at least 1,257,000 short tons of sugar per year into
the United States. The FAIR Act maintains an 18 cent per pound loan rate for raw
sugar and a 22.90 cent per pound loan rate for refined beet sugar. Both loan
rates are effective for crop years 1996 through 2002. Price support loans are to
be made on a nonrecourse basis provided that United States sugar imports for
domestic usage exceed 1.5 million short tons raw value in a given fiscal
(October through September) year. Loans made on a nonrecourse basis enable the
sugar processor to forfeit sugar to the CCC if sugar prices are below the loan
rate. If imports during a given year are less than 1.5 million short tons, loans
must be made on a recourse basis, meaning that processors will not be able to
forfeit sugar to the CCC at its full loan value. In order to recover the full
value of a recourse loan, the CCC could require that cash or other assets be
provided in addition to the sugar used as collateral when the loan is made.
Another provision of the FAIR Act is a one cent per pound penalty paid by
processors if the processor defaults on sugar price support loans.
 
    The nature and scope of future legislation affecting the sugar market cannot
be predicted and there can be no assurance that price supports will continue in
their present form. If the price support program, including the Tariff Rate
Quota system described above, were eliminated in its entirety or if the
protection the United States' price support program provides from foreign
competitors were materially reduced, the Company could be materially and
adversely effected. In such a situation, if the Company were not able to adopt
strategies which would allow it to compete effectively in a greatly changed
domestic market for sugar, the adverse affects could impact the Company's
continued viability and the desirability of growing sugarbeets for delivery to
the Company. Such events could significantly impair the value of the shares of
Preferred Stock in which are embodied the right and obligation to deliver
sugarbeets.
 
GROWERS' CONTRACTS
 
    American Crystal purchases virtually all of its sugarbeets from members
under contract with the Company. All members have five-year contracts with the
Company covering the growing seasons of 1998 through 2002 (the "Growers'
Contracts"). Each member will be obligated to enter into a new five-year
contract for subsequent years. In addition, each member has an annual contract
with the Company specifying the number of acres the member is obligated to grow
during that year. Each share of Preferred Stock held by a member entitles that
member to grow one acre of sugarbeets for sale to the Company. The
 
                                       6
<PAGE>
Company's Board of Directors has the discretion to adjust the acreage which may
be planted for each share of Preferred Stock held by the members. However, it is
management's current intention and recommendation to the Board of Directors that
the relationship between shares of Preferred Stock and acres of sugarbeet
production be maintained at a ratio of 1 to 1 for the foreseeable future,
subject to tolerances for overplanting and underplanting established by the
Board each year.
 
    The total price for sugarbeets paid to a member (the "Net Beet Payment") is
based on the "Gross Beet Payment," as adjusted by certain allowances, costs and
deductions. The Gross Beet Payment is the value of recovered sugar from the
beets a member delivers plus the member's share of by-product revenues, minus
the member's share of member business operating costs, including depreciation
and interest. The following allowances, costs and deductions, if applicable, are
used to adjust the Gross Beet Payment to arrive at the Net Beet Payment: hauling
allowance program costs, pre-pile quality premium costs, minimum payment
allowance program costs, tare incentive premium/penalty program and unit
retains. Growers are paid a hauling allowance based on the distance they must
transport beets for delivery to the Company and may also receive minimum beet
payments and an allowance for early delivery of beets prior to the commencement
of the stockpiling of harvested sugarbeets. The costs of these programs are
shared among members on the basis of the net tonnage of beets delivered by each
member.
 
    Under the current Growers' Contracts, payments to members for sugarbeets
must be made in at least three installments: (i) on or about November 15, the
Company pays its members an amount equal to 65% of the Company's estimate of the
grower's Net Beet Payment; (ii) on or about March 31, the Company pays an amount
which combined with the November payment equals 90% of the estimated Net Beet
Payment; (iii) and not more than 15 days after completion and acceptance of the
audit of the Company's annual financial statements, the Company pays the
remainder of the member's Net Beet Payment. Except for unit retains, the Company
must pay to members for their sugarbeets all proceeds from the sale of sugar and
by-products in excess of related member business operating costs, as described
above.
 
                                       7
<PAGE>
    The following tables summarize the "Gross Beet Payment" and "Net Beet
Payment" and the "Sugar Content of Sugarbeets" for each of the last 10 completed
fiscal years, respectively:
<TABLE>
<CAPTION>
                                  1989       1990       1991       1992       1993       1994       1995       1996       1997
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                       DISTRIBUTION OF NET PROCEEDS--TOTALS (IN THOUSANDS)
<S>                             <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Net Proceeds..................  $ 216,878  $ 209,510  $ 259,229  $ 269,388  $ 303,842  $ 261,571  $ 320,549  $ 310,206  $ 366,756
Non-Member (Income)/Loss......        844        698      1,058      1,075         77        544         15        396     18,074
Hauling Allowance.............      3,482      3,900      4,140      5,522      5,413      4,531      6,144      6,038      6,893
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Gross Beet Payment............  $ 221,204  $ 214,108  $ 264,427  $ 275,985  $ 309,332  $ 266,646  $ 326,708  $ 316,640  $ 391,723
Unit Retains..................     (7,316)    (7,995)    (8,010)   (10,364)   (20,223)   (19,328)   (16,648)   (16,040)   (16,611)
Member Tax ADJ, Net...........      1,908      1,922        589        676        447     12,585      5,621          0          0
Hauling Allowance.............     (3,482)    (3,900)    (4,140)    (5,522)    (5,413)    (4,531)    (6,144)    (6,038)    (6,893)
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net Beet Payment..............  $ 212,314  $ 204,135  $ 252,866  $ 260,775  $ 284,143  $ 255,372  $ 309,537  $ 294,562  $ 368,219
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
 
                                                       DISTRIBUTION OF NET PROCEEDS--PER TON HARVESTED(1)
Net Proceeds..................  $   44.44  $   39.27  $   48.50  $   38.95  $   45.03  $   40.55  $   38.47  $   38.64  $   44.12
Non-Member (Income)/Loss......       0.17       0.13       0.20       0.16       0.01       0.09       0.00       0.05       2.17
Hauling Allowance.............       0.71       0.73       0.77       0.80       0.80       0.70       0.74       0.75        .83
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Gross Beet Payment............  $   45.32  $   40.13  $   49.47  $   39.91  $   45.84  $   41.34  $   39.21  $   39.44  $   47.12
Unit Retains..................      (1.50)     (1.50)     (1.50)     (1.50)     (3.00)     (3.00)     (2.00)     (2.00)     (2.00)
Member Tax ADJ, Net...........       0.39       0.36       0.11       0.10       0.07       1.95       0.68       0.00          0
Hauling Allowance.............      (0.71)     (0.73)     (0.77)     (0.80)     (0.80)     (0.70)     (0.74)     (0.75)      (.83)
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
Net Beet Payment..............  $   43.50  $   38.26  $   47.31  $   37.71  $   42.11  $   39.59  $   37.15  $   36.69  $   44.29
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
 
                                                                 SUGAR CONTENT OF SUGARBEETS(1)
Tons Harvested (In
  Thousands):.................      4,881      5,336      5,345      6,915      6,748      6,450      8,332      8,029      8,313
Tons Purchased Per Acre
  Harvested:..................       13.4       14.5       13.4       17.4       16.9       16.3       20.2       18.7       18.1
Sugar Content of Beets:.......       18.2%      16.7%      18.6%      17.0%      18.0%      17.6%      16.8%      16.4%      17.3%
 
<CAPTION>
                                  1998
                                ---------
 
<S>                             <C>
Net Proceeds..................  $ 305,797
Non-Member (Income)/Loss......      9,679
Hauling Allowance.............      7,210
                                ---------
Gross Beet Payment............  $ 322,686
Unit Retains..................     (8,545)
Member Tax ADJ, Net...........          0
Hauling Allowance.............     (7,210)
                                ---------
Net Beet Payment..............  $ 306,931
                                ---------
                                ---------
 
Net Proceeds..................  $   35.76
Non-Member (Income)/Loss......       1.13
Hauling Allowance.............        .84
                                ---------
Gross Beet Payment............  $   37.73
Unit Retains..................      (1.00)
Member Tax ADJ, Net...........          0
Hauling Allowance.............       (.84)
                                ---------
Net Beet Payment..............  $   35.89
                                ---------
                                ---------
 
Tons Harvested (In
  Thousands):.................      8,553
Tons Purchased Per Acre
  Harvested:..................       18.5
Sugar Content of Beets:.......       17.6%
</TABLE>
 
----------------------------------
 
(1) Information provided with respect to net proceeds, gross beet payment, net
    beet payment, tons harvested per acre and sugar content of beets represents
    an average of the financial and production results experienced by the
    Company's members. As described elsewhere in this annual report, the return
    to members for their sugarbeets is based upon the value of the recovered
    sugar from the beets delivered to the Company by each member. As a result of
    variations in the sugar content of the sugarbeets delivered by the various
    members to the Company, the payments received by the various members also
    vary.
 
ENVIRONMENTAL MATTERS
 
    American Crystal is subject to extensive federal and state environmental
laws and regulations with respect to water and air quality, solid waste disposal
and odor and noise control. The Company conducts an on-going and expanding
control program designed to meet these environmental laws and regulations.
American Crystal believes that it is in substantial compliance with applicable
environmental laws and regulations.
 
    The Company received a Notice of Violation from the State of Minnesota on
September 24, 1998 for an accidental discharge of wastewater that allegedly
contaminated a nearby river and caused a fish kill. The Company has responded to
the Minnesota Pollution Control Agency (MPCA) and is awaiting further action by
the MPCA. The accidental discharge occurred when a dike was breached at a
temporary wastewater holding pond the Company had constructed with the approval
of the MPCA. The MPCA has indicated a penalty will be assessed. The final
penalty and corrective actions will be determined when a final stipulation
agreement is drafted. This will occur sometime in December, 1998 or January,
1999. Management believes the outcome of the enforcement action should not have
a material adverse effect on the Company's financial condition.
 
                                       8
<PAGE>
JOINT VENTURE--PROGOLD LIMITED LIABILITY COMPANY
 
    American Crystal is one of three members of ProGold Limited Liability
Company ("ProGold"). ProGold was formed in July, 1994 as a limited liability
company to serve as a joint venture mechanism for the Company, Minn-Dak Farmers
Cooperative and Golden Growers Cooperative, a North Dakota cooperative
association comprised of corn producers. The joint venture was formed to
construct and operate a corn wet-milling plant capable of processing corn to
produce corn sweeteners (including high fructose corn syrups) and various
by-products. ProGold's plant, which became operational in late 1996, is
currently fully operational and has obtained certification from its significant
customers.
 
    American Crystal contributed a total of approximately $48 million for its
membership interest in ProGold and received a 46% interest in ProGold. Golden
Growers Cooperative contributed approximately $51 million in exchange for a 49%
interest in ProGold, while Minn-Dak Farmers Cooperative made a capital
contribution of approximately $5.2 million in exchange for a 5% interest in
ProGold. Under the terms of the ProGold Member Control Agreement, in each year
after September 1, 1997, the ProGold Board of Governors can require that the
three members of ProGold provide additional capital contributions in an
aggregate amount not to exceed $5 million per year, with each member obligated
to provide a portion of that capital contribution proportionate to its ownership
interest in ProGold. As a result, the Company could be required to make annual
contributions in an amount of up to $2.3 million per year, based on the
Company's ownership of a 46% interest in ProGold. Any other capital
contributions can be required only with the prior written consent of all of
ProGold's members, including the Company.
 
    ProGold and Cargill, Incorporated ("Cargill") have entered into a lease of
ProGold's corn wet-milling plant to Cargill. The lease commenced on November 1,
1997, and will terminate on December 31, 2007. Under the arrangement, the
Company and its ProGold partners will retain ownership of the plant, while
Cargill will operate the plant. ProGold will receive rental payments in a base
amount fixed for each year during the term of the lease. ProGold will also
receive supplemental rent equal to fifty percent (50%) of the amount by which
earnings before taxes from Cargill's operation of the facility exceeds a
contractually-specified base amount. Under the terms of the lease, Cargill has
also entered into a corn supply agreement with ProGold, pursuant to which
ProGold will be obligated to deliver approximately 15.6 million bushels of corn
per fiscal year. Cargill will pay ProGold a market price for any corn delivered
to Cargill under the corn supply agreement. The lease specifies a variety of
alternatives which may take effect upon expiration of the initial term of the
lease. ProGold and Cargill could negotiate a ten year extension of the lease
upon mutually agreeable terms and conditions, ProGold could offer to sell the
facility to Cargill at a fair market value or ProGold could offer to sell
Cargill a fifty percent (50%) ownership interest in ProGold. If the parties are
unable to agree upon the terms and conditions of any such transaction, ProGold
can enter into a similar transaction with a third party. However, in each case,
including a lease of the facility to a third party, Cargill would have the first
right to engage in the proposed transaction upon the same terms as agreed to by
the third party.
 
    If ProGold is successful in generating profits for distribution to is
members, those distributions would become the property of the Company. Under the
Company's Articles of Incorporation and Bylaws, the return, if any, from the
Company's involvement with ProGold would be classified as amounts received from
"non-patronage" sources. The Company's Bylaws currently provide that any
non-patronage net income is to become the property of the Company and is not to
be distributed directly to the members of the Company. Distributions from
ProGold could, in the discretion of the Company's Board of Directors, yield
benefits to the Company's members through such means as future reductions of
annual unit retain amounts, repayment of unit retains in advance of the current
seven year repayment schedule and the use of such returns, if any, for capital
investment in the Company. To date, the Company's Board of Directors has not
adopted any resolutions or made any commitments regarding the distribution of
non-patronage revenues directly to the Company's members or the application of
any such amounts for the indirect benefit of the Company's members. As described
above, any decisions regarding the application of
 
                                       9
<PAGE>
distributions received by the Company from ProGold will be made in the
discretion of the Company's Board of Directors.
 
JOINT VENTURE--CRYSTECH, LLC
 
    Crystech, LLC (Crystech) is a limited liability company formed on May 28,
1998. The Company is a member in Crystech and initially contributed $1,545,000,
or 50% of equity interest to form Crystech. The other 50% member is Newcourt
Capital USA, Inc., a Delaware corporation. As specified by the Limited Liability
Company Agreement, ACS and Newcourt each appointed three members to serve on
Crystech's six member Board of Managers.
 
    Crystech was formed to construct and operate a molasses de-sugarization
facility in Hillsboro, North Dakota. The total cost of the facility is estimated
at $103.0 million. It is anticipated that the plant will have the capacity of
processing 200,000 tons annually of softened molasses for conversion to sugar
extract and other by-products. Construction began in June 1998 and is
anticipated to reach mechanical completion in November 1999. The plant is
anticipated to be in full production approximately 30 days after mechanical
completion.
 
    To fund the construction of the facility, Crystech will obtain significant
amounts of debt financing. Under a Purchase Agreement between Crystech and the
lender group, Crystech Senior Lender Trust agreed to provide term debt to
Crystech in the sum of $86,005,000 via the purchase of notes from Crystech.
Additionally, ACS has agreed to provide $13,905,000 of subordinated debt to
Crystech. To support the construction of the facility, periodic draws from the
trust account are made several times each month during the entire construction
period. These draws are subject to certain approvals by the independent engineer
and Newcourt, as agent for Crystech Senior Lender Trust.
 
    As of August 31, 1998, Crystech was committed to construction costs related
to an Engineering, Procurement and Construction (EPC) Contract totaling $78.9
million. As of August 31,1998, Crystech had incurred $12.7 million related to
this contract. The EPC Contract with the general contractor of the project,
Process Systems Inc. of Memphis, Tennessee, also specifies certain cost
guarantees, and mechanical and performance warranties.
 
    The Company has a 12-year tolling services agreement with Crystech whereby
upon completion of construction, the Company pays for tolling services for
processing beet molasses delivered to Crystech with title and risk of loss
throughout the process maintained by the Company. The tolling agreement may be
terminated by the Company if the specific operational processing performance
required of Crystech in the contract is not achieved.
 
EMPLOYEES
 
    As of August 31, 1998, American Crystal had 1,221 full-time employees, of
which 996 were hourly and 225 were salaried. The Company also had 42 part-time
employees. In addition, the Company employs approximately 1,466 additional
hourly seasonal workers during the sugarbeet harvest and approximately 518
hourly seasonal workers during the remainder of the sugarbeet processing
campaign.
 
    Substantially all of the hourly employees at the factories, including
full-time and seasonal employees, are represented by the American Federation of
Grain Millers, AFL-CIO, and are covered by a collective bargaining agreement
expiring July 31, 1999. Negotiations for a new contract will take place in May,
June, and July of 1999. Office, clerical and management employees are not
unionized, except for certain office employees at the Moorhead and Crookston,
Minnesota, and Hillsboro, North Dakota, factories who are covered by the
collective bargaining agreement with the Grain Millers. The Company considers
its employee relations to be excellent.
 
    Substantially all employees who meet eligibility requirements of age and
length of service are covered by one of the Company's two retirement plans. Plan
A (nonunion employees) and Plan B (union
 
                                       10
<PAGE>
employees) are defined benefit, noncontributory plans. The plans provide for
vesting in five years with benefits for early retirement, normal retirement and
disability or death. The Company's policy is to fund pension costs accrued, and
the plans were fully funded for vested benefits as of February 28, 1998, the end
of the most recent plan year. Union and nonunion employees are also eligible to
participate in 401(k) savings plans.
 
ITEM 2.  PROPERTY AND PROCESSING FACILITIES
 
    American Crystal operates five sugarbeet processing factories in the Red
River Valley. The factories are located in Crookston, East Grand Forks and
Moorhead, Minnesota and Drayton and Hillsboro, North Dakota. American Crystal
owns all of its factories and the land on which they are located. The factories
range in size from 150,000 to 400,000 square feet and have a combined beet
processing capacity, expressed in terms of quantity of sugarbeets which may be
sliced into strips or "cossettes," of approximately 33,300 tons per day. The
Crookston, Minnesota plant has a capacity of 5,300 tons of sugarbeets per day,
the East Grand Forks, Minnesota plant has a capacity of 9,000 tons of sugarbeets
per day and the Moorhead plant has a capacity of 5,400 tons of sugarbeets per
day. The Company's Hillsboro, North Dakota plant has a capacity of 7,700 tons of
sugarbeets per day, while the Drayton, North Dakota plant has a capacity of
5,900 tons of sugarbeets per day. Each of the processing factories includes the
physical facilities and equipment necessary to process sugarbeets into sugar.
Each factory has space for sugarbeet storage, including ventilated and cold
storage sites. Approximately 28% of the sugarbeet crop is stored in either
ventilated storage sites or cold storage facilities. Each processing factory
includes the washing and slicing equipment necessary to cut the sugarbeets into
cossettes, the diffusers necessary to extract sugar from the cossettes in the
form of "raw juice" and the purification systems necessary to remove impurities
from the raw juice. The factories also contain the evaporators and vacuum pans
necessary to thicken the raw juice and then to crystalize the sugar. Each
factory also contains the centrifuges and dryers necessary to complete the
process. The Company's sugar packaging facilities are located at the Moorhead,
Hillsboro, Crookston and East Grand Forks factories. Each of the Company's
facilities is currently operating at or near its capacity.
 
    In 1998 the Company completed a number of capital improvements to its sugar
factories. A $57 million expansion of the Hillsboro processing facility was
completed in September 1998, raising daily capacity to slice sugarbeets from
5,900 to 7,700 tons per day. A $20 million replacement of beet slicing and
diffusion was completed at the East Grand Forks factory. Both projects increased
sugar recovery and processing efficiencies. Two new beet piling sites were
established, seven new beet pilers were added, and twenty-six upgrade kits to
beet pilers were added to allow harvesting of the expanded crop size (acreage).
In addition, 800,000 tons of additional deep freeze storage capacity was added,
which allows extended processing campaigns.
 
    Current capital projects in execution include a $103 million joint venture
to build a molasses desugarization (MDS) plant at the Hillsboro facility to
process the balance of the Company's molasses to extract additional sugar. Also,
a new wastewater treatment plant is being built at Hillsboro to accommodate the
MDS plant and extended campaign processing, plus storage tanks and expansion of
the sugar crystallization station at East Grand Forks to enhance sugar recovery
and allow extended processing.
 
    American Crystal's corporate office is located in a 30,000 square foot,
two-story office building in Moorhead, Minnesota. The Company also has a 100,000
square foot research center situated on approximately 200 acres in Moorhead,
Minnesota. The Company owns both facilities, and owns numerous sites as
sugarbeet receiving and storage stations. All the Company's property, plant and
equipment is mortgaged or pledged as collateral for its indebtedness to the St.
Paul Bank for Cooperatives.
 
ITEM 3.  LEGAL PROCEEDINGS
 
    From time to time and in the ordinary course of its business, the Company is
named as a defendant in legal proceedings related to various issues, including
worker's compensation claims, tort claims and
 
                                       11
<PAGE>
contractual disputes. The Company is currently involved in certain legal
proceedings which have arisen in the ordinary course of American Crystal's
business; the Company is also aware of certain other potential claims which
could result in the commencement of legal proceedings. The Company carries
insurance which provides protection against certain types of claims. With
respect to current litigation and potential claims of which the Company is
aware, the Company's management believes that (i) the Company has insurance
protection to cover all or a portion of any judgments which may be rendered
against the Company with respect to certain claims or actions and (ii) any
judgments which may be entered against the Company and which may exceed such
insurance coverage or which may arise in actions involving potential liabilities
not covered by insurance policies are not likely to have a material adverse
effect upon the Company, or its assets or operations.
 
ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
    No matters were submitted to a vote of the Company's shareholders during the
quarter ended August 31, 1998.
 
                                       12
<PAGE>
                                    PART II
 
ITEM 5.  MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER
         MATTERS
 
    There is no established public market for the Company's Common Stock or
Preferred Stock, as such shares may be held only by farmer-producers who are
eligible for membership in the Company. The Company's shares are not listed for
trading on any exchange or quotation system. Although transfers of the Company's
shares may occur only with the consent of the Board of the Directors, the
Company does not obtain information regarding the transfer price in connection
with such transfers. As a result, the Company is not able to provide information
regarding the prices at which the Company's shares have been transferred.
 
    Because the number of acres of sugarbeets a member may grow for sale to the
Company is directly related to the number of shares of Preferred Stock owned, a
limited, private market for Preferred Stock exists. However, it is not
anticipated that a general public market for the Company's shares of Common
Stock or Preferred Stock will develop due to the limitations on transfer and the
various membership requirements which must be satisfied in order to acquire such
shares.
 
    A member desiring to sell his or her Common Stock or Preferred Stock must
first offer them to the Company for purchase at par value. If the Company
declines to purchase such shares, either class may be sold to a new member
(i.e., another farm operator not already a member) and Preferred Stock may be
sold to one or more existing members or farm operators approved for membership,
in each case subject to approval by the Board of Directors. To date, the
Company's Board of Directors has not exercised the Company's right of first
refusal to purchase shares offered for sale by its members. In the absence of
the exercise of such right of first refusal, the Company is aware of sales of
Preferred Stock at prices in excess of the par value of those shares. However,
as the Company does not require parties seeking approval for transfers to
provide information regarding the transfer price, the Company does not possess
verifiable information regarding the transfer price involved in recent transfers
of the Company's Preferred Stock.
 
                                       13
<PAGE>
ITEM 6.  SELECTED FINANCIAL DATA
 
    The selected financial data of the Company should be read in conjunction
with the financial statements and related notes included elsewhere in this
Annual Report.
 
<TABLE>
<CAPTION>
                                                                   FISCAL YEAR ENDED AUGUST 31,
                                            ---------------------------------------------------------------------------
                                              1998       1997       1996       1995       1994       1993       1992
                                            ---------  ---------  ---------  ---------  ---------  ---------  ---------
                                                                 (IN THOUSANDS, EXCEPT FOR RATIOS)
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>        <C>
Revenues..................................  $ 676,625  $ 677,004  $ 688,012  $ 605,960  $ 563,420  $ 542,665  $ 545,220
Net Proceeds Before Accounting Change.....  $ 305,797  $ 366,756  $ 310,206  $ 320,549  $ 273,785  $ 303,842  $ 269,388
Cumulative Effect of Accounting
  Change(1)...............................                --         --         --      $ (12,214)    --         --
Net Proceeds(2)...........................  $ 305,797  $ 366,756  $ 310,206  $ 320,549  $ 261,571  $ 303,842  $ 269,388
Total Assets..............................  $ 646,460  $ 581,504  $ 465,136  $ 420,890  $ 324,469  $ 303,318  $ 278,989
Long-Term Debt, including current
  maturities..............................  $ 212,495  $ 204,600  $ 190,919  $ 119,029  $ 115,834  $  98,039  $  91,615
Members' Investments......................  $ 224,843  $ 175,928  $ 152,136  $ 142,047  $ 115,609  $ 120,113  $ 107,679
Property and Equipment Additions, net of
  retirements.............................  $  98,992  $  69,542  $  43,168  $  48,394  $  50,824  $  35,659  $  42,046
Working Capital...........................  $  30,357  $  45,652  $  32,071  $  28,046  $  30,859  $  32,819  $  27,254
Ratio of Long-Term Debt to Equity(3)......       87:1     1.06:1     1.17:1      .75:1      .88:1      .71:1      .71:1
Ratio of Net Proceeds to Fixed
  Charges(4)..............................       11.1       13.3       14.3       11.6       15.0       14.2       15.0
</TABLE>
 
<TABLE>
<CAPTION>
                                                                         FISCAL YEAR ENDED AUGUST 31,
                                            --------------------------------------------------------------------------------------
PRODUCTION DATA(5)                            1998       1997       1996       1995       1994       1993       1992       1991
------------------------------------------  ---------  ---------  ---------  ---------  ---------  ---------  ---------  ---------
<S>                                         <C>        <C>        <C>        <C>        <C>        <C>        <C>        <C>
Acres harvested...........................        462        459        429        413        396        400        397        400
Tons purchased............................      8,553      8,313      8,029      8,332      6,450      6,748      6,915      5,345
Tons purchased per acre harvested.........       18.5       18.1       18.7       20.2       16.3       16.9       17.4       13.4
Net beet payment per ton of sugarbeets
  purchased, plus unit retains............  $   36.89  $   46.29  $   38.69  $   39.15  $   42.59  $   45.11  $   39.21  $   48.81
Sugar hundredweight--
  Produced................................     21,528     22,465     19,947     21,369     18,093     18,979     16,474     15,057
  Sold, including purchased sugar.........     21,735     20,579     22,179     19,702     19,450     17,957     17,262     14,936
  Purchased sugar sold....................        901        869        490        509        293         81        195         15
Pulp and molasses tons--
  Produced................................        679        690        651        643        488        667        724        570
  Sold....................................        651        618        638        659        472        688        706        569
</TABLE>
 
------------------------------
 
(1) During 1994, the Company adopted Statement of Financial Accounting Standards
    No. 106, "Employers' Accounting for Post-Retirement Benefits Other than
    Pensions" and Financial Accounting Standards No. 112, "Employers Accounting
    for Post-Employment Benefits." The cumulative effect of application of the
    new standards resulted in the reduction of net proceeds shown above for the
    year ended August, 1994. See note number 8 to the Financial Statements for
    the fiscal year ended August 31, 1996, for a more detailed description of
    the accounting change.
 
(2) Net Proceeds are the Company's gross revenues, less the costs and expenses
    of producing and marketing sugar, by-products and beet seed, but before
    payments to members for sugarbeets. Payments to be made to members for the
    delivery of sugarbeets are liabilities of the Company. (For a more complete
    description of the calculation of Net Proceeds, see "Description of Business
    Growers' Contracts.")
 
(3) Calculated by dividing the Company's long term debt, exclusive of the
    current maturities of such debt, by members' investments.
 
(4) Computed by dividing (i) the sum of Net Proceeds plus interest plus
    depreciation by (ii) the sum of interest plus principal payments. Although
    the Company does lease certain items, such as some office furniture, office
    equipment and computers, due to the proportionately small amounts involved,
    such lease payments have not been included in the total of the Company's
    Fixed Charges or the calculation of this ratio.
 
(5) Information for a fiscal year relates to the crop planted and harvested in
    the preceding calendar year (e.g., information for the fiscal year ended
    August 31, 1998 relates to the crop of 1997).
 
                                       14
<PAGE>
ITEM 7.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
  RESULTS OF OPERATIONS:
 
    THE FOLLOWING DISCUSSION OF THE FINANCIAL CONDITIONS AND RESULTS OF
OPERATIONS OF THE COMPANY SHOULD BE READ IN CONJUNCTION WITH THE COMPANY'S
FINANCIAL STATEMENTS AND NOTES THERETO INCLUDED ELSEWHERE IN THIS REPORT.
 
FORWARD-LOOKING STATEMENTS AND ASSOCIATED RISKS
 
    This Report contains forward-looking statements regarding, among other
items, the Company's growth strategy and anticipated trends in the Company's
business. These forward-looking statements are based largely on the Company's
expectations and are identified by the use of words such as "believes",
"intends", and "will", subject to a number of risks and uncertainties, certain
of which are beyond the Company's control. Actual results could differ
materially from these forward-looking statements as a result of the factors
described elsewhere herein, including, among others, weather, regulatory or
economic influences. In light of these risks and uncertainties, there can be no
assurance that the forward-looking information contained in this Report will in
fact transpire or prove to be accurate.
 
LIQUIDITY AND CAPITAL RESOURCES
 
    Because American Crystal operates as a cooperative, payments for member
delivered sugarbeets, the principal raw material used in producing the sugar and
agri-products it sells, are subordinated to all member business expenses. In
addition, actual cash payments to members are spread over a period of
approximately one year following delivery of their sugarbeet crops to American
Crystal and are net of unit retains allocated to them, both of which remain
available to meet American Crystal's capital requirements. This member financing
arrangement may result in an additional source of liquidity and reduced outside
financing requirements in comparison to a similar business operated on a
non-cooperative basis. However, because sugar is sold throughout the year (while
sugarbeets are processed primarily in the fall and winter) and because
substantial amounts of equipment are required for its operations, American
Crystal has utilized substantial outside financing on both a seasonal and
long-term basis to fund such operations. The majority of such financing has been
provided by the St. Paul Bank for Cooperatives (the "Bank"). American Crystal
has a long-term debt commitment with the Bank in 1998 of $191.2 million. In
addition, American Crystal has long-term debt outstanding of $50 million in a
private placement. The Company also has a seasonal line of credit with the Bank
of $280 million, including any amounts obtained through issuance of instruments
in its commercial paper program. American Crystal also has a line of credit with
Norwest Bank for $10 million. The Company also utilizes a commercial paper
program, which provides short-term borrowings of up to $150 million.
 
RESULTS OF OPERATIONS
 
    INDUSTRY ENVIRONMENT
 
    The US sweetener industry experienced three significant trends during the
1970s and 1980s: increased consumption of non-nutritive sweeteners, principally
aspartame; the increased use of high fructose corn syrup (HFCS) as a substitute
for refined sugar (sucrose) in certain food products, primarily beverages; and a
significant degree of sugar industry consolidation.
 
    US sugar consumption has continued to expand over the past decade, with
domestic demand increasing from 153 million hundredweights in 1988 to 183
million in 1998. Although consumption growth rates have slowed to less than 1.5%
over the past two years, growth rates averaged close to 2.5% annually from 1990
to 1996. Sugar consumption growth rates are a function of population growth,
which has increased slightly over the past five years, and food market trends.
The non-fat and low-fat food trend of the early and mid-1990s resulted in
increased sugar use due to replacement of sucrose for fat in processed foods.
Currently, slowdowns in the non-fat and low-fat food product area contributed in
part to an overall
 
                                       15
<PAGE>
decline in sugar consumption growth rates. Despite this slowdown, the Company
believes that sugar consumption should continue to trend upward over time.
 
    Consumption of corn sweeteners is projected to grow at an annual rate of 4
to 5% over the next five years. Food manufacturers continue to increase research
and development budgets to expand use of corn and alternative sweeteners in
products.
 
    The Company's operational results are substantially dependent on market
factors, including domestic prices for refined sugar. These factors are
continuously influenced by a wide variety of market forces, including domestic
sugarbeet and cane production, weather conditions and United States farm and
trade policy, that the Company is unable to predict (see "Business Government
Programs and Regulations"). In addition, highly variable weather conditions
during the growing, harvesting and processing seasons, as well as diseases and
insects, may materially affect the quality and quantity of sugarbeets available
for purchase as well as the unit costs of raw materials and processing. Sugar
prices were at a premium during 1995 and 1996 due to shortages of domestic
sugarbeet production and less than adequate cane refinery capacity to cover this
shortfall. Refined pricing declined to more average levels during 1997 and 1998
due to increased sugar supplies and a softening demand outlook.
 
COMPARISON OF THE YEARS ENDED AUGUST 31, 1998 AND 1997
 
    Revenue for the year ended August 31, 1998, was $677 million, virtually the
same as in 1997. Revenue from total sugar sales increased 1.8%, reflecting a
5.6% increase in hundredweight sold, offset by a 3.7% decrease in the average
selling price per hundredweight. Revenue from pulp sales decreased 18.3% due to
a 25.1% decrease in the average selling price per ton, partially offset by a
9.1% increase in the volume of pulp sold. Revenue from molasses sales decreased
14.3% due to a 1.4% decrease in the volume of molasses sold and a 13.1% decrease
in the average selling price per ton. Revenue from concentrated separated by-
product (CSB) decreased 8.5% due to a 1.3% decrease in the volume of CSB sold
and a 7.4% decrease in the average selling price per ton.
 
    Cost of product sold, exclusive of payments to members for sugarbeets,
increased $64.8 million. This was primarily due to an increase in inventories
during 1997, which decreased the cost of product sold in 1997 by $62.1 million.
Direct costs increased by 3.2% due to higher freight and chemical costs. The
cost associated with purchased sugar decreased $.8 million in 1998 compared to
1997, when the short supply of inventory at the beginning of the fiscal year
created a greater need to purchase sugar to meet customer requirements. Fixed
and committed expenses increased by 6.4% due to higher depreciation and higher
storage costs.
 
    Selling expenses increased $11.5 million. The increase is attributable
primarily to the increase in the marketing and packaging costs. General and
Administrative expenses were approximately the same as 1997.
 
    Interest expense decreased from $18.3 million during the year ended August
31, 1997, to $14.4 million for the same period in 1998. This resulted from an
increase in pollution control bond interest income, bank patronage income along
with an increase in interest charged to United Sugars Corporation for the
marketing assets.
 
    Non-member business activities resulted in a loss of $9.7 million for the
year ended August 31, 1998, as compared to a loss of $18.1 million for the same
period in 1997. The majority of this loss is related to American Crystal's
investment in ProGold Limited Liability Company.
 
    Payments to members for sugarbeets decreased by $61.3 million from $368.2
million during the year ended August 31, 1997 to $306.9 million during the same
period in 1998. The decrease is attributable primarily to a lower per-ton beet
payment for the current fiscal year.
 
                                       16
<PAGE>
    As of August 31, 1998, American Crystal has made extensive efforts to become
Year 2000 compliant. Eighteen months ago, a new computer software package (SAP)
was installed which made most of the company-wide computer systems and its
hardware compliant for the Year 2000. This includes software for the financial
applications such as accounts payable, accounts receivable and general ledger as
well as costing, project accounting, sales and distribution, plant maintenance,
and production planning. The payroll and human resources software has also been
upgraded to be Year 2000 compliant and will be running on hardware that is
compliant by the end of 1998.
 
    Work has also been done at the factories to ensure the systems and controls
used in the day-to-day production of sugar will not be adversely effected by
Year 2000 problems.
 
    A Year 2000 Assessment Team has been formed with representation from various
locations and departments, information services functions as well as two of
American Crystal's associated companies, United Sugars Corporation and Midwest
Agri-Commodities Company. This committee is in the process of assessing what
additional systems the Company uses and if there are any Year 2000 compliance
problems. The systems that are determined to be non-compliant will then be
examined, risk assessed and action will be taken as deemed appropriate and
necessary.
 
    Year 2000 compliance may also adversely affect the operations and financial
performance of the Company indirectly by causing complications of, or otherwise
affecting, the operations of any one or more of the Company's suppliers and
customers. The Company has begun contacting its significant suppliers and
customers as part of its Year 2000 compliance plan. The Company's goal is to
identify any potential year 2000 compliance issues with the enterprises with
whom the Company does business. Although the results of this effort indicate
that many of the Company's customers and suppliers will be year 2000 compliant,
the Company is currently unable to predict the magnitude of the operational and
financial impact on the Company of year 2000 compliance issues with the
Company's suppliers and customers.
 
    The Company expects to incur (and expense) up to $60,000 during the fiscal
year which began on September 1, 1998 to resolve the remaining year 2000
compliance issues. The Company also expects to incur up to $20,000 during that
fiscal year for new software and hardware; those amounts will be capitalized.
 
COMPARISON OF THE YEAR ENDED AUGUST 31, 1997 AND 1996
 
    Revenue for the year ended August 31, 1997, was $677 million, a decrease of
$11 million from the same period in 1996. Revenue from total sugar sales
decreased 1.8% reflecting a 7.2% decrease in hundredweight sold and a 5.9%
increase in the average selling price per hundredweight. Revenue from pulp sales
increased 5.1% due to a 2.9% increase in the volume of pulp sold and a 2.1%
increase in the average selling price per ton. Revenue from molasses sales
decreased 11.5% due to a 12.3% decrease in the volume of molasses sold partially
offset by a .9% increase in the average selling price per ton. Revenue from
concentrated separated by-product (CSB) increased 21.2% due to a 10.3% decrease
in the volume of CSB sold and a 35.5% increase in the average selling price per
ton.
 
    Cost of product sold, exclusive of payments to members for sugarbeets,
decreased $79.9 million. The decrease was primarily due to the amount of
products sold compared to the prior year which was partially offset by increased
direct processing costs. Changes in product inventory levels decreased the cost
of product sold by $103 million. The cost associated with sugar purchased to
meet customer needs was up $1.1 million due to the short supply of inventory at
the beginning of the fiscal year. Fixed and committed expenses increased by 4.7%
due to higher depreciation costs.
 
    Selling expenses decreased $10.5 million. The decrease is attributable
primarily to the decrease in the volume of sugar and by-products sold. General
and Administrative expenses decreased $2.7 million due primarily to lower
outside services and other general cost decreases.
 
                                       17
<PAGE>
    Interest expense increased $7.1 million from $11.2 million during the year
ended August 31, 1996, to $18.3 million for the same period in 1997. This
resulted from higher average borrowing levels for long and short-term debt.
 
    Non-member business activities resulted in a loss of $18.1 million for the
year ended August 31, 1997 as compared to a loss of $396,000 for the same period
in 1996. The majority of this loss is related to American Crystal's investment
in ProGold Limited Liability Company.
 
    Payments to members for sugarbeets increased by $73.6 million from $294.6
million during the year ending August 31, 1996 to $368.2 million during the same
period in 1997. The increase is attributable to an increase in the sales price
for the Company's products, a reduction in the Company's expenses and additional
tons harvested.
 
COMPARISON OF THE YEARS ENDED AUGUST 31, 1996, AND 1995
 
    Revenue for the year ended August 31, 1996, was $688.0 million, an increase
of $82.0 million from 1995. Revenue from total sugar sales increased 15.4%,
reflecting a 12.6% increase in hundredweight sold and a 2.5% increase in the
average selling price per hundredweight. Revenue from pulp sales decreased 7.5%,
due to a 16.9% decrease in the volume of pulp sold partially offset by an 11.3%
increase in the average selling price per ton. Revenue from molasses sales
increased 32.4%, due to a 29.0% increase in the volume of molasses sold and a
2.6% increase in the average selling price per ton. Revenue from concentrated
separated by-products (CSB) increased 4.6%, due to a 2.4% increase in the volume
of CSB sold and a 2.2% increase in the average selling price per ton. Revenue
from beet seed sales was down 4.5%, primarily due to decreased sales volume
offset by an increase in sales prices.
 
    Cost of product sold, exclusive of payments to members for sugarbeets,
increased $72.5 million. The increase was primarily due to changes in product
inventory levels between 1996 and 1995, which impacted the cost of product sold
unfavorably by $77.1 million. Direct processing costs for sugar and pulp
decreased 2.5% primarily due to the harvesting and processing of a 3.6% smaller
crop. Fixed and committed expenses decreased by 2.9% due to a shorter processing
campaign.
 
    Selling expenses increased $17.9 million. The increase was attributable
primarily to increased sales volume. General and administrative expenses
increased $4.5 million due primarily to higher information services costs,
capital projects expense and general increases in personnel costs, partially
offset by a favorable settlement of an IRS tax case.
 
    Interest expense decreased $3.2 million from $14.5 million in 1995, to $11.3
million in 1996. This resulted from lower 1996 average interest rates for both
long-term and short-term debt, partially offset by higher average borrowing
levels.
 
    Non-member business activities resulted in a loss of $396,000 in 1996 and a
loss of $15,000 in 1995.
 
    Unit retains of $16.0 million and $16.6 million were withheld from members
in 1996 and 1995, respectively. The unit retain per-ton-purchased was $2.00 in
1996 and 1995.
 
    Payments to members for sugarbeets decreased by $14.9 million from $309.5
million in 1995 to $294.6 million in 1996. The decrease is attributable
primarily to a decrease in tons harvested and a lower average sugar content from
the 1995 crop of sugarbeets.
 
1998 CROP AND ESTIMATED FISCAL YEAR 1999 INFORMATION
 
    As noted earlier, the agreements between the Company and its members
regarding the delivery of sugarbeets to the Company require payment for members'
sugarbeets in three installments throughout the year after harvest of the
applicable sugarbeet crop. As only the final payment is made after the close of
the fiscal year in question, the first two payments to members for their
sugarbeets are, of necessity, based upon the Company's then-current estimates of
the Net Beet Payment arising from the processing of the crop in
 
                                       18
<PAGE>
question and the subsequent sale of the products obtained from processing those
sugarbeets. This discussion contains a summary of the Company's current
estimates of the financial results to be obtained from the Company's processing
of the 1998 sugarbeet crop. Given the nature of the estimates required in
connection with the payments to members for their sugarbeets, this discussion
includes forward-looking statements regarding the quantity of sugar to be
produced from the 1998 sugarbeet crop, the net selling price for the sugar and
agri-products produced by the Company and the Company's operating costs. These
forward-looking statements are based largely upon the Company's expectations and
estimates of future events; as a result, they are subject to a variety of risks
and uncertainties. Some of those estimates, such as the selling price for the
Company's products and the quantity of sugar produced from the sugarbeet crop,
are beyond the Company's control. The actual results experienced by the Company
could differ materially from the forward-looking statements contained herein. As
indicated above, the Company will prepare new, then-current estimates in
connection with the payment to the members of the second installment of the Net
Beet Payment. (That installment is expected to be made to the members with
respect to the 1998 sugarbeet crop on or about March 31, 1999.)
 
    The completed harvest of the sugarbeet crop grown during 1998 produced a
total of 10.7 million tons of sugarbeets, or approximately 22.2 tons of
sugarbeets per acre from approximately 481,000 acres. That production exceeded
16.8 tons per acre, which is the ten-year average of tons per acre for the years
1988 through 1997. The sugar content of the 1998 crop is 17.66% in comparison to
a ten year average for the applicable period of approximately 17.36%. The
Company expects to produce a total of approximately 27.0 million hundredweight
of sugar from the 1998 crop, representing an estimated increase of 5.3 million
hundredweight of sugar in comparison to the 1997 crop. Such sugar production
provides a total sugar recovery of approximately 256 pounds of sugar for each
ton of sugarbeets harvested by the Company.
 
    The Company's anticipated recovery of sugar from each ton of sugarbeets
results in expected sugar revenue per ton of sugarbeets in an amount equal to
$58.76 per ton.
 
    The Company's sales of sugar must be added to the revenue produced by the
agri-products: molasses, beet pulp and concentrated separated by-product to
determine the net beet payment. The Company's estimates of additional revenue
from those sources would be $3.28 per ton of sugarbeets.
 
    From the revenues generated from the sale of products produced from each ton
of sugarbeets must be deducted the Company's operating costs, which are
currently estimated to be $23.74 per ton. The deduction of those operating costs
results in an estimated gross beet payment of $38.50 per ton of sugarbeets. With
the deduction of an anticipated unit retain of $2.00 per ton for the fiscal year
ending on August 31, 1999, the Company's current estimated Net Beet Payment is
$36.50 per ton of sugarbeets. If successful in achieving the estimated results,
the Company's Net Beet Payment will be lower than the ten year average Net Beet
Payment by approximately $3.74 per ton.
 
THE COMPANY'S CURRENT STRATEGIC PLAN
 
    In order to obtain the best selling price for its products, the Company
intends to focus on sales and marketing strategies which allow the Company to
provide its customers with an appropriate mixture of the Company's products. The
Company is optimizing its customer mix, improving logistics and continually
trying to evaluate and improve its customer performance.
 
    To pursue the goal of maintaining and improving upon its current status as a
low cost producer, the Company intends to focus on working with its members to
increase the productivity of the members' sugarbeet farming operations. In
addition, the Company plans to focus on cost reduction at the factory level. At
the member level, the Company expects to focus on, among others, programs for
nitrogen management and new seed varieties. At the factory level, the Company
intends to pursue on-going maintenance and improvements. The Company is part of
the Crystech joint venture to construct and operate a molasses desugarization
plant at the Company's Hillsboro plant, which would allow the Company to desugar
the balance of its molasses to extract additional sugar. Currently,
approximately one-
 
                                       19
<PAGE>
half of the Company's molasses is desugared. The Company's goal in participating
in the molasses desugarization plant is to reduce the Company's average cost of
sugar production, through the use of current separation technologies.
 
ITEM 8.  FINANCIAL STATEMENTS
 
    The financial statements of the Company for the fiscal years ended August
31, 1998, 1997 and 1996 have been audited by Eide Bailly LLP, Fargo, North
Dakota, independent certified public accountants. Such financial statements have
been included herein in reliance upon the report of Eide Bailly LLP. The
financial statements of the Company are included in Appendix A to this annual
report.
 
ITEM 9.  CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
         FINANCIAL DISCLOSURE
 
    None
 
                                       20
<PAGE>
                                    PART III
 
ITEM 10.  DIRECTORS AND EXECUTIVE OFFICERS
 
BOARD OF DIRECTORS
 
    The Board of Directors of the Company consists of three directors from each
of the five factory districts. Directors must be common shareholders or
representatives of common shareholders belonging to the district they represent
and are elected by the members of that district. In the case of a common
shareholder who is other than a natural person, a duly appointed or elected
representative of such common shareholder may serve as a director. The directors
have been elected to serve three-year terms expiring in December of the years
indicated in the table below. One director is elected each year from each
factory district.
 
    The table below lists certain information concerning current directors of
the Company and a director-elect.
 
<TABLE>
<CAPTION>
                                                                                               TERM
                                              YEAR OF                           DIRECTOR    EXPIRES IN
NAME AND ADDRESS                               BIRTH       FACTORY DISTRICT       SINCE        DEC.
------------------------------------------  -----------  --------------------  -----------  -----------
<S>                                         <C>          <C>                   <C>          <C>
Michael A. Astrup ........................        1953   Moorhead                    1996         1999
Box 219
Dilworth, MN 56529
Jerry D. Bitker ..........................        1948   Hillsboro                   1996         1999
1694 Co. Highway #19
Halstad, MN 56548
Richard Borgen ...........................        1949   Moorhead                    1997         2000
R.R. 1, Box 36
Perley, MN 56574
Aime J. Dufault ..........................        1954   East Grand Forks            1990         2000
R.R. 1, Box 162
Argyle, MN 56713
Steven M. Goodwin ........................        1958   East Grand Forks            1995         2001
R.R. 3, Box 116
Angus, MN 56712
Court G. Hanson ..........................        1948   Hillsboro                   1993         2001
R.R. 2, Box 1
Blanchard, ND 58009
Lonn M. Kiel .............................        1953   Crookston                   1994         2000
R.R. 3, Box 71
Crookston, MN 56716
David J. Kragnes .........................        1952   Moorhead                    1995         2001
R.R. 1, Box 100
Felton, MN 56536
Francis L. Kritzberger ...................        1945   Hillsboro                   1996         2000
R.R. #1, Box 22
Hillsboro, ND 58045
Wayne Langen (Chairman) ..................        1939   Drayton                     1988         2000
P.O. Box 133
Kennedy, MN 56733
</TABLE>
 
                                       21
<PAGE>
<TABLE>
<CAPTION>
                                                                                               TERM
                                              YEAR OF                           DIRECTOR    EXPIRES IN
NAME AND ADDRESS                               BIRTH       FACTORY DISTRICT       SINCE        DEC.
------------------------------------------  -----------  --------------------  -----------  -----------
<S>                                         <C>          <C>                   <C>          <C>
Patrick D. Mahar .........................        1942   Drayton                     1993         1999
R.R. 1, Box 363
Cavalier, ND 58220-9789
Barry W. Malme ...........................        1947   Crookston                   1986         1998
R.R. 1, Box 19K
Shelly, MN 56581
Ronald E. Reitmeier ......................        1945   Crookston                   1996         1999
Route 1, Box 49
Fisher, MN 56723
Jim A. Ross (Director Elect) .............        1950   Crookston                   1998         2001
Route 1, Box 5
Fisher, MN 56723
G. Terry Stadstad ........................        1943   East Grand Forks            1993         1999
1774 22nd Avenue NE
Grand Forks, ND 58203
Robert Vivatson (Vice Chairman) ..........        1949   Drayton                     1992         2001
P.O. Box 631
Cavalier, ND 58220
</TABLE>
 
    MICHAEL A. ASTRUP.  Mr. Astrup has been a director since 1996. He has been a
farmer near Dilworth, Minnesota, since 1977. He serves on the Board of Directors
for the American Sugarbeet Growers Association.
 
    JERRY D. BITKER.  Mr. Bitker has been a director since 1996 and has been a
farmer since 1974 near Halstad and Ada, Minnesota.
 
    RICHARD BORGEN.  Mr. Borgen has been a director since 1997. He has farmed
east of Perley, Minnesota since 1967 and has served as a director on the Perley
Co-op Elevator Board for nine years and the Norman County West school board for
10 years.
 
    AIME J. DUFAULT.  Mr. Dufault has been a director since 1990. He has farmed
near Argyle, Minnesota since 1974. Mr. Dufault serves on the Board of Directors
for Midwest Agri-Commodities Company.
 
    STEVEN M. GOODWIN.  Mr. Goodwin has been a director since 1995. Mr. Goodwin
has been a farmer since 1980 and owns and operates a farm near Angus, Minnesota.
 
    COURT G. HANSON.  Mr. Hanson has been a director since 1993 and has been a
farmer since 1971. Mr. Hanson is president of C. Hanson Farm, Inc., operating
near Blanchard, North Dakota. Prior to farming, Mr. Hanson was an assistant
national bank examiner from 1970 to 1973.
 
    LONN M. KIEL.  Mr. Kiel has been a director since 1994 and has been farming
near Crookston, Minnesota since 1982. He is the president of Kiel Corporation
and also serves on the Board of Directors of the Crookston Fuel Company.
 
    DAVID J. KRAGNES.  Mr. Kragnes has been a director since 1995. Mr. Kragnes
has been a farmer since 1972, with his farming operation located near Felton,
Minnesota. Mr. Kragnes is a director for the American Sugarbeet Growers
Association.
 
    FRANCIS L. KRITZBERGER.  Mr. Kritzberger has been a director since 1996. He
has previously served as a director with the Company, from July 30, 1989 until
July 30, 1993. Mr. Kritzberger has been a farmer since 1964. He serves on the
Board of Directors of the North Dakota Council of Cooperatives.
 
                                       22
<PAGE>
    WAYNE LANGEN.  Mr. Langen has been a director since 1988 and a farmer since
1963. Mr. Langen is a partner of Langen Bros. Joint Venture and operates its
farming operations near Kennedy, Minnesota. Mr. Langen serves on the Board of
Directors of Kennedy Farmers Elevator Company, United Sugars Corporation and
Midwest Agri-Commodities Company and on the Board of Governors of ProGold
Limited Liability Company.
 
    PATRICK D. MAHAR.  Mr. Mahar has been a director since 1993 and has been a
farmer since 1962. He is currently a partner of Mahar Farms near Cavalier, North
Dakota. Mr. Mahar previously served as president of the Red River Valley
Sugarbeet Growers Association, Fargo, North Dakota, and as president of the
American Sugarbeet Growers Association, Washington, D.C. Mr. Mahar is currently
serving as a director for Midwest Agri-Commodities Company and also on the
Boards of Directors of First State Bank and Farmers Co-op Elevator, both of
Cavalier, North Dakota.
 
    BARRY W. MALME.  Mr. Malme has been a director since 1986. His current term
expires in December, 1998. Pursuant to the Company's By-laws, a director may not
serve for more than four consecutive terms; as a result, Mr. Malme was not
eligible to stand for re-election for an additional term. Mr. Malme has been a
farmer near Shelly, Minnesota since 1974. Mr. Malme serves on the Board of
Directors for Midwest Agri-Commodities Company and the Minnesota Association of
Cooperatives.
 
    RONALD E. REITMEIER.  Mr. Reitmeier has been a director since 1996, and has
been a farmer since 1968. He previously served on the Board of Directors of PKM
Electric Co-op for ten years.
 
    JIM A. ROSS.  Mr. Ross was elected a director at the Company's recent
district meetings. His term as a director will begin in December, 1998. He has
farmed near Fisher, Minnesota since 1971 and is a board member of Fisher Fuel
and Hardware Cooperative.
 
    G. TERRY STADSTAD.  Mr. Stadstad has been a director since 1993 and has been
farming near Grand Forks, North Dakota since 1965. Mr. Stadstad serves on the
Board of Directors of United Sugars Corporation.
 
    ROBERT VIVATSON.  Mr. Vivatson has been a director since 1992. Operating as
a farmer near Cavalier, North Dakota since 1975, Mr. Vivatson is a partner of
Vivatson Bros. and president of Vivatson Farms Inc. Mr. Vivatson is serving on
the Board of Directors of First State Bank, Cavalier, North Dakota and on the
Board of Governors of ProGold Limited Liability Company and United Sugars
Corporation.
 
    The Board of Directors meets monthly. The Company provides its directors
with minimal compensation, consisting of (i) a payment of $200 per month, (ii) a
per diem payment of $200 for each day spent on Company activities, including
board meetings and other Company functions, and (iii) reimbursement of expenses
for attendance at Board of Directors' meetings. The Chairman of the Board of
Directors receives a payment of $500 per month, rather than $200 per month; the
Chairman also receives a per diem in the amount of $200 for each day spent on
Company activities.
 
EXECUTIVE OFFICERS
 
    The table below lists the principal officers of the Company, none of whom
owns any shares of Common or Preferred Stock. Officers are elected annually by
the Board of Directors.
 
<TABLE>
<CAPTION>
                                             YEAR OF
NAME                                          BIRTH                     POSITION
-----------------------------------------  -----------  -----------------------------------------
<S>                                        <C>          <C>
James J. Horvath.........................        1945   Chief Executive Officer
Marcus F. Richardson.....................        1941   Chief Operating Officer
Robert W. Levos..........................        1943   Vice President-Agriculture
James W. Dudley..........................        1950   Vice President-Agriculture
Joseph J. Talley.........................        1960   Vice President-Finance
</TABLE>
 
                                       23
<PAGE>
<TABLE>
<CAPTION>
                                             YEAR OF
NAME                                          BIRTH                     POSITION
-----------------------------------------  -----------  -----------------------------------------
<S>                                        <C>          <C>
Lawrence L. Mathias......................        1941   Vice President-Human Resources and Public
                                                          Relations
David A. Berg............................        1954   Vice President-Administration
David A. Walden..........................        1953   Vice President-Operations
Ralph K. Morris..........................        1940   Secretary
Brian I. Ingulsrud.......................        1962   Treasurer
Samuel S.M. Wai..........................        1953   Corporate Controller, Assistant Secretary
                                                          and Assistant Treasurer
Mark L. Lembke...........................        1955   Assistant Secretary & Assistant Treasurer
Daniel C. Mott...........................        1959   Assistant Secretary
Ronald K. Peterson.......................        1955   Assistant Secretary & Assistant Treasurer
David L. Malmskog........................        1957   Assistant Secretary & Assistant Treasurer
</TABLE>
 
    JAMES J. HORVATH.  Mr. Horvath was named Chief Executive Officer in May,
1998. He served as Chief Financial Officer from 1996 to 1998. From June, 1994 to
March, 1996, Mr. Horvath served as the Company's Vice President-Joint Ventures
as well as Chief Manager and Chief Operating Officer of ProGold Limited
Liability Company. Mr. Horvath also served as the Company's Vice
President-Finance from 1985-1994. Mr. Horvath currently serves on the Boards of
Directors of United Sugars Corporation and Midwest Agri-Commodities Company.
 
    MARCUS F. RICHARDSON.  Mr. Richardson has been Chief Operating Officer since
1995 after serving as interim Chief Executive Officer for one year. He served in
various manufacturing positions with the Company since 1980 including Vice
President-Operations. Mr. Richardson currently serves as a director of the Beet
Sugar Development Foundation, a non-profit industry association, on the Board of
Governors of ProGold Limited Liability Company and as chairman of the Board of
Managers of Crystech, LLC. In addition, he served as Trustee for the United
States Beet Sugar Association and on the Board of Directors of the Moorhead
Economic Development Authority. Mr. Richardson plans to retire January 1, 1999.
 
    ROBERT W. LEVOS.  Mr. Levos has been Vice President-Agriculture since 1986.
From 1981 to 1986 he was General Agriculturalist. He has been employed by the
Company since 1965. Mr. Levos currently serves on the Boards of Directors of
West Coast Beet Seed Company and the Beet Sugar Development Foundation. Mr.
Levos retired August 31, 1998.
 
    JAMES W. DUDLEY.  Mr. Dudley was appointed Vice President-Agriculture in
January, 1998. He had served as Vice President-Operations, Factory Operations
Manager and Regional Manager from 1985 through 1997.
 
    JOSEPH J. TALLEY.  Mr. Talley was named Vice President-Finance in 1998. He
served as the Company's Treasurer and Finance Director, Assistant Treasurer and
Assistant Secretary from March 1996 until his appointment as Vice
President-Finance. Mr. Talley served as Finance Director of ProGold Limited
Liability Company and Assistant Treasurer and Assistant Secretary of Golden
Growers Cooperative. He currently serves on the Board of Governors for ProGold
Limited Liability Company, as well as ProGold/ Cargill Oversight Board. Prior to
July 1994, Mr. Talley was a partner with the accounting firm of Eide Helmeke
PLLP.
 
    LAWRENCE L. MATHIAS.  Mr. Mathias has been Vice President-Human Resources
and Public Relations since 1990. He was Industrial Relations Manager with the
Company from 1976 to 1990. He currently serves
 
                                       24
<PAGE>
on the Board of Directors of Blue Cross Blue Shield of Minnesota. Mr. Mathias
plans to retire January 1, 1999.
 
    DAVID A. BERG.  Mr. Berg served as a Factory Shift Supervisor and Packaging
and Warehousing Superintendent during 1998 as part of a development assignment.
In October 1998, he was named Vice President-Administration. During the period
from 1994 to 1998, Mr. Berg served as the Company's Vice President-Business
Development, Vice President-Strategic Planning, Director-Market Information,
Manager of Marketing and Analysis and Manager-Economic Research. He currently
serves on the Domestic Sugar Committee of the New York Coffee, Sugar and Cocoa
Exchange which oversees the administration and regulatory compliance of sugar
futures contracts traded on the Exchange.
 
    DAVID W. WALDEN.  Mr. Walden was elected Vice President of Operations in
January 1998. He served as Production Manager from 1995 until 1998. He joined
American Crystal in 1979 as a Resident Engineer at the Crookston facility and
has held positions of Engineering and Maintenance Superintendent, Production
Superintendent, Assistant Operations Manager and Maintenance Manager.
 
    RALPH K. MORRIS.  Mr. Morris has been Secretary of the Company since 1995.
He is a shareholder in the law firm of Doherty, Rumble & Butler Professional
Association. The firm acts as corporate counsel to American Crystal. Mr. Morris
is not an employee of the Company.
 
    BRIAN I. INGULSRUD.  Mr. Ingulsrud became the Company's Treasurer in 1998.
Mr. Ingulsrud began his employment with the Company in 1990, initially serving
as a Financial Analyst. He has also served as an Operations Financial Planning
Supervisor, Factory Office Manager and Financial Planning Manager. In 1996 Mr.
Ingulsrud served as SAP Implementation Manager. Mr. Ingulsrud was appointed as
Assistant Secretary and Assistant Treasurer for Golden Growers Cooperative in
1998.
 
    SAMUEL S.M. WAI.  Mr. Wai served as the Company's Treasurer from 1985 to
1996. He currently serves as the Company's Corporate Controller. He held various
financial positions with the Company from 1979 to 1985. Mr. Wai also serves on
the Board of Managers of Crystech, LLC and as treasurer of the American Crystal
Sugar Political Action Committee.
 
    MARK L. LEMBKE.  Mr. Lembke was named Assistant Secretary and Assistant
Treasurer in March 1996. Mr. Lembke has also served as the Company's Corporate
Accounting Manager since August 1995. From July 1987 through July 1995, Mr.
Lembke served as Factory Accounting Supervisor.
 
    DANIEL C. MOTT.  Mr. Mott has been Assistant Secretary of the Company since
1995. He is a shareholder in the law firm of Doherty, Rumble & Butler
Professional Association. The firm acts as corporate counsel to American
Crystal. Mr. Mott is not an employee of the Company.
 
    RONALD K. PETERSON.  Mr. Peterson has served as the Financial Systems
Manager since 1996 and as Assistant Treasurer and Assistant Secretary since
1993. Mr. Peterson also served as the Company's Corporate Accounting Manager
from 1991 through 1996. Mr. Peterson has held various financial positions with
the Company since 1979. He is also the Assistant Treasurer for the American
Crystal Sugar Political Action Committee.
 
    DAVID L. MALMSKOG.  Mr. Malmskog currently serves as Director-Business
Development and was appointed Assistant Secretary and Assistant Treasurer in
1998. Mr. Malmskog has held various financial positions with the Company since
1980.
 
                                       25
<PAGE>
ITEM 11.  EXECUTIVE COMPENSATION
 
    The following table summarizes the amount of compensation paid for services
rendered to the Company during the fiscal year ended August 31, 1998 and the two
prior fiscal years to those persons serving as the Company's Chief Executive
Officer and to the four other most highly compensated executive officers of the
Company whose cash compensation exceeded $100,000 per annum.
 
                           SUMMARY COMPENSATION TABLE
 
<TABLE>
<CAPTION>
                                                                                       LONG-TERM COMPENSATION
                                                                               ---------------------------------------
                                                                                         AWARDS
                                                  ANNUAL COMPENSATION          --------------------------    PAYOUTS
                                          -----------------------------------   RESTRICTED                 -----------
                                                                OTHER ANNUAL       STOCK       OPTIONS/       LTIP
                                           SALARY               COMPENSATION     AWARD(S)        SARS        PAYOUTS
                                 YEAR        ($)     BONUS ($)     ($)(1)           ($)           (#)          ($)
                               ---------  ---------  ---------  -------------  -------------  -----------  -----------
James J. Horvath ............       1998  $ 388,840  $  64,556    $  51,354                                $  19,546(3)
  Chief Executive Officer           1997  $ 217,650  $  97,943    $  37,958                                $  45,925(3)
                                    1996  $ 205,330  $  71,866    $  27,646
<S>                            <C>        <C>        <C>        <C>            <C>            <C>          <C>
 
Daniel J. McCarty(2) ........       1998  $ 475,600  $  --        $  12,727                                $ 146,648(3)
  Chief Executive Officer           1997  $ 410,000  $ 184,500    $  19,101                                $ 146,938(3)
                                    1996  $ 149,808  $  70,000    $  77,372
 
Marcus F. Richardson(4) .....       1998  $ 264,485  $  55,897    $  90,265                                $  47,713(3)
  Chief Operating Officer           1997  $ 254,555  $ 114,550    $  71,718                                $ 112,110(3)
                                    1996  $ 245,500  $  93,683    $  60,550
 
Robert W. Levos .............       1998  $ 198,660  $  39,732    $  63,194                                $  18,396(3)
  Vice President--Agriculture       1997  $ 189,200  $  85,140    $  47,399                                $  43,223(3)
                                    1996  $ 178,490  $  62,472    $  37,222
 
Lawrence L. Mathias .........       1998  $ 177,790  $  35,558    $  52,797                                $  15,527(3)
  Vice President--Human             1997  $ 172,610  $  69,044    $  42,840                                $  36,469(3)
  Resources and Public              1996  $ 162,840  $  56,994    $  31,121
  Relations
 
James W. Dudley .............       1998  $ 177,900  $  35,580    $  28,713                                $  16,096(3)
  Vice President--Acriculture       1997  $ 161,725  $  72,776    $  20,042                                $  36,469(3)
                                    1996  $ 150,440  $  45,132    $  16,052
</TABLE>
 
------------------------------
 
(1) Includes the cost of additional life insurance coverage, use of a company
    car, costs of tax return preparation, imputed interest, taxable moving
    expenses reimbursed, the Company's matching contribution for 401(k) and SERP
    and pension valuations.
 
(2) Mr. McCarty's employment with the Company began on March 28, 1996, and Mr.
    McCarty's salary is shown on an annualized basis. Mr. McCarty ended his
    employment on June 1, 1998.
 
(3) Represents the sum of (i) dollar value at $1,500 per share of contract
    rights with respect to the vested portion of contract rights granted to the
    executive under the Company's LTIP plan (described below) during the fiscal
    year and (ii) "profit per acre payments" made to the executive under the
    Company's LTIP plan. The profit per acre payments are determined by
    subtracting from the Company's beet payment per acre the average cost of
    production per acre incurred by the Company's members and multiplying the
    result by the number of contract rights held by the executive.
 
(4) Mr. Richardson also served as interim Chief Executive Officer between June
    1995 and March 1996.
 
    Effective May 15, 1998, the Company and Mr. Horvath entered into an
"Employment Agreement" regarding Mr. Horvath's employment by the Company. The
agreement provides that Mr. Horvath shall serve as an "at will" employee at the
pleasure of the Board of Directors. Among other terms, the agreement establishes
Mr. Horvath's base compensation at $388,840 per year, and also provides that he
may participate in other benefit plans offered by the Company. If the Board of
Directors terminates Mr. Horvath's employment with the Company without cause
after age 60 or he incurs a termination due to disability, Mr. Horvath is
entitled to receive reimbursement for the cost of medical and dental coverage
for himself and his spouse from the date of termination through their respective
deaths; life insurance
 
                                       26
<PAGE>
coverage to age 59 1/2 equal to his base salary on the date of termination, from
age 65 to 70 equal to 50% of his base salary on the date of termination, and
after age 70 equal to 25% of his base salary on the date of termination; and
supplemental pension benefits equal to the difference between the cumulative
monthly amount of the retirement benefit Mr. Horvath would have received under
Retirement Plan A and the Supplemental Executive Retirement Plan (SERP) computed
as though Mr. Horvath continued his employment to age 65 and had attained 30
years of service, and the cumulative monthly amount of the retirement benefits
actually paid to Mr. Horvath under Retirement Plan A and the Supplemental
Executive Retirement Plan (SERP). If the Board of Directors terminates Mr.
Horvath's employment with the Company without cause before age 55 or he incurs a
termination due to disability, Mr. Horvath is entitled to receive supplemental
early retirement benefits equal to the difference between the cumulative monthly
amount of the retirement benefit Mr. Horvath would have received under
Retirement Plan A and the Supplemental Executive Retirement Plan (SERP) computed
as though Mr. Horvath continued his employment to age 55 and assuming
compensation equal to that in effect as of the termination date with no
reduction in benefits for death benefits payable to Mr. Horvath's spouse, and
the cumulative monthly amount of the retirement benefits actually paid to Mr.
Horvath under Retirement Plan A and the Supplemental Executive Retirement Plan
(SERP) assuming commencement at age 55. If the Board of Directors terminates Mr.
Horvath's employment with the Company without cause after age 60 and Mr. Horvath
subsequently dies, or if Mr. Horvath dies prior to terminating his employment
with the Company, Mr. Horvath's spouse is entitled to receive monthly payments
for the remainder of her life equal to the difference between the cumulative
monthly amount of the retirement benefit Mr. Horvath would have received under
Retirement Plan A and the Supplemental Executive Retirement Plan (SERP) computed
as though Mr. Horvath continued his employment to age 65 and had attained 30
years of service, and the cumulative monthly amount of the retirement benefits
actually payable to his spouse under Retirement Plan A and the Supplemental
Executive Retirement Plan (SERP). The agreement also contains the provision of a
three-year non-compete/non-solicitation agreement with Mr. Horvath.
 
    Certain management employees are entitled to participate in an incentive
program that provides for cash awards based partially on the performance of the
Company and partially on achievement of certain management performance
objectives. Those performance objectives are determined by the Board of
Directors. An executive is not eligible for any awards under the incentive
program unless that executive's performance for the applicable fiscal year is
rated as "fully satisfactory" or better. Depending on the executive's
responsibilities, the performance of the Company (measured in terms of revenues
returned to the members) and the results of the executive's evaluation for the
fiscal year, the program provides for an incentive bonus in amounts ranging from
4% to 40% of the eligible executive's base salary.
 
    The Company has also adopted a Long Term Incentive Plan ("LTIP") which
provides deferred compensation to certain key executives of American Crystal
effective September 1, 1995. The LTIP creates financial incentives that reward
executives for long-term commitment to the Company and for successfully
implementing the Company's long-term growth strategies. Such incentives are
based upon contract rights which are available to the executive under the terms
of the LTIP, the value of which is related to the value of preferred shares of
the Company. The LTIP allows participants to purchase a limited number of
contract rights at the end of each three-year cycle. The LTIP establishes both
minimum and maximum ownership levels. When an executive reaches his minimum
ownership level, he or she may sell any vested shares over the minimum to any
qualified grower. The executive or his estate may also sell any vested shares at
the time of his termination, disability or death. At the point of sale, the
contract right becomes a share of Preferred Stock which the Company issues to
the purchasing grower. The executive receives the proceeds of the sale, less
appropriate taxes. The long-term cost of the stock will not be to the Company,
but to the grower who eventually purchases the stock from the executive. The
LTIP also provides for annual payments of "profit per acre payments" to
executives holding contract rights. The profit per acre payments are determined
by subtracting from the Company's beet payment per acre the average cost of
production per acre incurred by the Company's members and multiplying the result
by the number of contract rights held by the executive.
 
                                       27
<PAGE>
    A total of 389 contract rights have been granted under the plan. As of the
date hereof, those executives listed above have been granted and hold contract
rights with respect to number of shares set forth below. Each contract right
listed below carried a stated value upon grant of $1,485 per share; the current
stated value is $1,500 per share.
 
              LONG-TERM INCENTIVE PLAN--AWARDS IN LAST FISCAL YEAR
 
<TABLE>
<CAPTION>
                                                                        CONTRACT     REPRESENTATIVE
EXECUTIVE OFFICERS                                                       RIGHTS        PAYOUT(1)
--------------------------------------------------------------------  -------------  -------------
<S>                                                                   <C>            <C>
Marcus F. Richardson................................................           83      $  10,435
James J. Horvath....................................................           34      $   4,275
Robert W. Levos.....................................................           32      $   4,023
James J. Dudley.....................................................           28      $   3,520
Lawrence L. Mathias.................................................           27      $   3,395
David A. Berg.......................................................           15      $   1,886
George Sinner.......................................................           15      $   1,886
</TABLE>
 
------------------------
 
(1) The amount shown represents a representative amount, determined for the last
    fiscal year, with respect to "profit per acre payments", which are non-stock
    price based payments. The profit per acre payments are determined by
    subtracting from the Company's beet payment per acre the average cost of
    production per acre incurred by the Company's members and multiplying the
    result by the number of contract rights held by the executive. Based on that
    formula, the Company must provide a beet payment per acre to its members
    equal to the average cost of production for an acre of sugarbeets in order
    for executives holding contract rights to obtain any payment of profit per
    acre payments. Given the method of determining the profit per acre payments,
    there is no maximum payment amount.
 
    To date, only Mr. McCarty has exercised his contract rights, having sold 155
contract rights in May, 1998.
 
                     LONG-TERM INCENTIVE PLAN--RIGHTS SOLD
 
<TABLE>
<CAPTION>
                                                               CONTRACT     PRICE PER     VALUE
EXECUTIVE OFFICERS                                              RIGHTS        SHARE      REALIZED
------------------------------------------------------------  -----------  -----------  ----------
<S>                                                           <C>          <C>          <C>
Daniel J. McCarty...........................................         155    $   1,500   $  232,500
</TABLE>
 
    Management employees are also eligible to participate in the Company's
Retirement Plan "A," a 401(k) savings plan and, beginning on September 1, 1994,
a "Supplemental Executive Plan." Those plans are described below.
 
RETIREMENT PLANS
 
    The Company has established noncontributory, defined benefit retirement
plans which are available to all eligible employees of the Company. Those
employees who are covered by a collective bargaining agreement participate in
one plan, while employees who are not subject to a collective bargaining
agreement, including the executive officers listed on the Summary Compensation
Table, participate in another pension plan. That plan is known as Retirement
Plan "A." The benefits of the plan are funded by periodic Company contributions
to a retirement trust which invests the Company's contributions and the earnings
from such contributions in order to pay the benefits to the employees. The plan
provides for the payment of monthly retirement benefits determined under a
calculation based on years of service and a participant's compensation.
Retirement benefits are paid to participants upon normal retirement at the age
 
                                       28
<PAGE>
of 65 or later or upon early retirement. The plan also provides for the payment
of certain disability and death benefits.
 
    The following table reflects the estimated annual benefits payable to a
fully-vested executive officer of the Company under Retirement Plan "A," upon
retirement at age 65, after 15, 20, 25, 30 and 35 years of annual service at the
remuneration levels set forth in the table:
 
                         AMERICAN CRYSTAL SUGAR COMPANY
                                1998 CALCULATION
                           PLAN A--QUALIFIED BENEFITS
 
<TABLE>
<CAPTION>
                                                           YEARS OF SERVICE
                                         -----------------------------------------------------
REMUNERATION                                15         20         25         30         35
---------------------------------------  ---------  ---------  ---------  ---------  ---------
<S>                                      <C>        <C>        <C>        <C>        <C>
$125,000...............................  $  24,382  $  32,510  $  40,637  $  48,765  $  48,765
$150,000...............................  $  29,632  $  39,510  $  49,387  $  59,265  $  59,265
$175,000...............................  $  31,732  $  42,310  $  52,887  $  63,465  $  63,465
$200,000...............................  $  31,732  $  42,310  $  52,887  $  63,465  $  63,465
$225,000...............................  $  31,732  $  42,310  $  52,887  $  63,465  $  63,465
$250,000...............................  $  31,732  $  42,310  $  52,887  $  63,465  $  63,465
$300,000...............................  $  31,732  $  42,310  $  52,887  $  63,465  $  63,465
$400,000...............................  $  31,732  $  42,310  $  52,887  $  63,465  $  63,465
$500,000...............................  $  31,732  $  42,310  $  52,887  $  63,465  $  63,465
</TABLE>
 
    The five executive officers named in the Summary Compensation Table who are
currently employees of the Company, have years of service under the plan as
follows: Mr. Horvath has served for 13 years; Mr. Richardson has served for 18
years; Mr. Dudley has served for 14 years; Mr. Levos has served for 33 years;
and Mr. Mathias has served for 22 years.
 
    The Company maintains a Section 401(k) plan that permits employees to elect
to set aside, on a pre-tax basis, a portion of their gross compensation in trust
to pay future retirement benefits. The Company matches 100% of the employee's
first 4% of compensation. The total annual pre-income tax addition to any
employees' account in any calendar year may not exceed the lesser of (i) $30,000
or (ii) 25% of annual compensation less the amount of the contribution and any
salary conversion. During 1998, the employee pre-income tax contribution was
limited to $10,000. An employee may also contribute up to 10% of his annual
compensation on an after-tax basis. Benefits under the 401(k) plan begin to be
paid to the employee upon the close of the plan year in which one of the
following events has occurred: the date the employee attains age 59 1/2 , the
date the employee terminates his service with the employer and the date
specified in a written election made by the employee to receive benefits no
later than April 1 of the year following the calendar year in which the employee
retires, dies, becomes disabled, reaches age 70 1/2 or is terminated.
 
    Effective September 1, 1994, certain executive employees of the Company
became eligible to participate in a "Supplemental Executive Retirement Plan."
That plan was adopted by the Company's Board of Directors on June 30, 1994.
Subject to the discretion of the Board of Directors, the plan provides for the
Company to credit to the account of each executive eligible to participate in
the Supplemental Plan amounts equal to (i) the difference between amounts
actually contributed to the Company's 401(k) plan on behalf of the executive and
the amounts which could have been contributed if certain provisions of the
Internal Revenue Code did not prohibit the contribution of such amounts and (ii)
the difference between the benefits actually payable to the executive under the
provisions of Retirement Plan "A" and the amounts which would be payable under
Retirement Plan "A" if certain provisions of the Internal Revenue Code did not
prohibit the payment of such benefits. In addition, the executive may elect to
defer a portion of his or her compensation, ranging from 2% to 16%, by regular
payroll deductions under the Supplemental Plan,
 
                                       29
<PAGE>
and may also defer 100% of all bonus and profits-per-acre payments. The
Supplemental Plan is an "unfunded" plan, with all amounts to be paid under the
Supplemental Plan to be paid from the general assets of the Company when due and
also to be subject to the claims of the Company's creditors.
 
    The following table reflects the estimated annual benefits payable to a
fully-vested executive officer of the Company under the Supplemental Plan, upon
retirement at age 65, after 15, 20, 25, 30 and 35 years of annual service at the
remuneration levels set forth in the table:
 
                PLAN A--NON QUALIFIED BENEFITS 1998 CALCULATION
 
<TABLE>
<CAPTION>
                                                         YEARS OF SERVICE
                                     --------------------------------------------------------
REMUNERATION                            15         20          25          30          35
-----------------------------------  ---------  ---------  ----------  ----------  ----------
<S>                                  <C>        <C>        <C>         <C>         <C>
$125,000...........................  $       0  $       0  $        0  $        0  $        0
$150,000...........................  $       0  $       0  $        0  $        0  $        0
$175,000...........................  $   3,150  $   4,200  $    5,250  $    6,300  $    6,300
$200,000...........................  $   8,400  $  11,200  $   14,000  $   16,800  $   16,800
$225,000...........................  $  13,650  $  18,200  $   22,750  $   27,300  $   27,300
$250,000...........................  $  18,900  $  25,200  $   31,500  $   37,800  $   37,800
$300,000...........................  $  29,400  $  39,200  $   49,000  $   58,800  $   58,800
$400,000...........................  $  50,400  $  67,200  $   84,000  $  100,800  $  100,800
$450,000...........................  $  60,900  $  81,200  $  101,500  $  121,800  $  121,800
$500,000...........................  $  71,400  $  95,200  $  119,000  $  142,800  $  142,800
</TABLE>
 
ITEM 12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
    As of the date hereof, no director owns beneficially more than 1% of the
Company's issued and outstanding Preferred Stock and the directors, as a group,
beneficially own less than 3% of the Company's issued and outstanding Preferred
Stock. To the best of the Company's knowledge, no other party beneficially owns
more than 1% of the Company's Preferred Stock.
 
ITEM 13.  CERTAIN RELATIONSHIPS RELATED TRANSACTIONS
 
    Each of the Company's directors is also a sugarbeet farmer and a shareholder
member or representative of a shareholder member of American Crystal. By virtue
of their status as such members of the Company, each director or the member he
represents sells sugarbeets to the Company and receives payments for those
sugarbeets. Such payments for sugarbeets often exceed $60,000. However, such
payments are received by the directors or the entities they represent on exactly
the same basis as payments are received by other members of the Company for the
delivery of their sugarbeets. Except for the sugarbeet sales described in the
preceding sentences, none of the directors or executive officers of the Company
have engaged in any other transactions with the Company involving amounts in
excess of $60,000.
 
                                       30
<PAGE>
                                    PART IV
 
ITEM 14.  EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.
 
    (a) Documents filed as part of this report
 
       1.  Financial Statements
             Report of Independent Auditors
             Balance Sheets as of August 31, 1998 and 1997
             Statements of Operations for the Years Ended August 31, 1998, 1997
           and 1996
             Statements of Changes in Members' Investment for the Years Ended
           August 31, 1998, 1997 and 1996
             Statements of Cash Flows for the Years Ended August 31, 1998, 1997
           and 1996
             Notes to consolidated Financial Statements
 
       2.  Financial Statement Schedules
             None
 
    (b) Reports on Form 8-K
 
             None
 
    (c) Exhibits
 
<TABLE>
<CAPTION>
  EXHIBITS                                                DESCRIPTION
------------  ---------------------------------------------------------------------------------------------------
<C>           <S>
       *3(i)  Restated Articles of Incorporation of American Crystal Sugar Company.
 
      **3(ii) Restated By-laws of American Crystal Sugar Company.
 
     **10(f)  Growers' Contract (5-year Agreement).
 
      *10(g)  Growers' Contract (Annual Contract).
 
      *10(h)  Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 1, 1986.
 
      *10(i)  Coal Transportation Agreement between Registrant and Northern Coal Transportation Company, dated
                August 1, 1986.
 
      *10(j)  Beet Loading and Hauling Agreement between Registrant and Transystems, Inc., dated May 18, 1993.
 
      *10(k)  Form of Uniform Member Marketing Agreement between Registrant and United Sugars Corporation, dated
                January 1, 1994.
 
      *10(l)  Trademark License Agreement between Registrant and United Sugars Corporation, dated November 1,
                1993.
 
      *10(m)  Uniform Member Marketing Agreement, Pool Basis between Registrant and Midwest Agri-Commodities
                Company, dated April 14, 1992.
 
      *10(n)  Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency.
 
      *10(o)  Master Agreement between Registrant, United Sugars Corporation, American Federation of Grain
                Millers, AFL-CIO, CLC, et al.
 
      *10(p)  Loan Agreement between Registrant and St. Paul Bank for Cooperatives, dated December 20, 1993.
 
      *10(q)  Amended and Restated Loan Agreement between Registrant and First Bank National Association, dated
                November 22, 1993.
 
      *10(r)  Pension Contract and Amendments.
</TABLE>
 
                                       31
<PAGE>
<TABLE>
<CAPTION>
  EXHIBITS                                                DESCRIPTION
------------  ---------------------------------------------------------------------------------------------------
<C>           <S>
      *10(s)  Compensation, Severance and Loan Agreement with Mr. J. Famalette, dated March 2, 1992.
 
      *10(t)  Compensation and Loan Agreement with Mr. J. Famalette, dated October 1, 1993.
 
      *10(u)  Form of Operating Agreement between Registrant and ProGold Limited Liability Company.
 
      *10(v)  Form of Member Control Agreement between Registrant and ProGold Limited Liability Company.
 
      *10(w)  Administrative Services Agreement between Registrant and ProGold Limited Liability Company
 
      *10(x)  Uniform Member Marketing Agreement.
 
    **+10(y)  Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 25, 1995.
 
    **+10(z)  Coal Transportation Agreement between Registrant and Northern Coal Transportation Company, dated
                August 25, 1995.
 
    **+10(aa) Gas Sales Contract between Registrant and Coastal Gas Marketing Company, dated as of March 20,
                1996.
 
     **10(bb) Employment Agreement with Mr. Daniel McCarty, dated as of April 8, 1996.
 
    ***10(cc) Amendment to Employment Agreement with Mr. Daniel McCarty, dated as of July, 1997.
 
   ***+10(dd) Trademark License Agreement between Registrant and The Pillsbury Company, dated as of April 9,
                1997.
 
       10(ee) Pledge Agreement between Registrant and First Union Trust Company, NA
 
       10(ff) Indemnity Agreement between Registrant, Newcourt Capital USA Inc., Crystech, LLC and Crystech
                Senior Lender Trust
 
       10(gg) Tolling Services Agreement between Crystech, LLC and Registrant
 
       10(hh) Operations and Maintenance Agreement between Crystech, LLC and Registrant
 
     ++10(ii) Limited Liability Agreement of Crystech, LLC
 
       27     Financial Data Schedule
</TABLE>
 
------------------------
 
*   Incorporated by reference from the Company's Registration Statement on Form
    S-1 (File No. 33-83868), declared effective November 23, 1994.
 
**  Incorporated by reference from the Company's Registration Statement on Form
    S-1 (File No. 333-11693), declared effective November 13, 1996.
 
*** Incorporated by reference from the Company's Registration Statement on Form
    S-1 (File No. 333-32251), declared effective October 24, 1997.
 
+   Certain portions of the Exhibit have been granted confidential treatment by
    the Commission. The omitted portions have been filed separately with the
    Commission.
 
++  Portions of the Exhibit have been deleted from the publicly filed document
    and have been filed separately with the Commission pursuant to a request for
    confidential treatment.
 
                                       32
<PAGE>
                                   SIGNATURES
 
    PURSUANT TO THE REQUIREMENTS OF SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934, THE REGISTRANT HAS DULY CAUSED THIS REPORT TO BE SIGNED ON
ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, ON NOVEMBER 28, 1997.
 
<TABLE>
<S>                             <C>  <C>
                                AMERICAN CRYSTAL SUGAR COMPANY
 
                                By:             /s/ JAMES J. HORVATH
                                     -----------------------------------------
                                                  James J. Horvath
                                              CHIEF EXECUTIVE OFFICER
</TABLE>
 
Dated: November 28, 1997
 
    PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THIS
REPORT HAS BEEN SIGNED BY THE FOLLOWING PERSONS ON BEHALF OF THE REGISTRANT IN
THE CAPACITIES AND ON THE DATES INDICATED.
 
<TABLE>
<CAPTION>
                   SIGNATURE                                       TITLE                            DATE
------------------------------------------------  ---------------------------------------  ----------------------
 
<C>                                               <S>                                      <C>
              /s/ JAMES J. HORVATH
     --------------------------------------       Chief Executive Officer (Principal       November 27, 1998
                James J. Horvath                    Executive Officer)
 
             /s/ JOSEPH J. TALLEY--
     --------------------------------------       Vice President-Finance (Chief Financial  November 27, 1998
               Joseph J. Talley--                   Officer)
 
             /s/ MICHAEL A. ASTRUP
     --------------------------------------       Director                                 November 27, 1998
               Michael A. Astrup
 
              /s/ JERRY D. BITKER
     --------------------------------------       Director                                 November 27, 1998
                Jerry D. Bitker
 
               /s/ RICHARD BORGEN
     --------------------------------------       Director                                 November 27, 1998
                 Richard Borgen
 
              /s/ AIME J. DUFAULT
     --------------------------------------       Director                                 November 27, 1998
                Aime J. Dufault
 
             /s/ STEVEN M. GOODWIN
     --------------------------------------       Director                                 November 27, 1998
               Steven M. Goodwin
</TABLE>
 
                                       33
<PAGE>
<TABLE>
<CAPTION>
                   SIGNATURE                                       TITLE                            DATE
------------------------------------------------  ---------------------------------------  ----------------------
 
<C>                                               <S>                                      <C>
              /s/ COURT G. HANSON
     --------------------------------------       Director                                 November 27, 1998
                Court G. Hanson
 
                /s/ LONN M. KIEL
     --------------------------------------       Director                                 November 27, 1998
                  Lonn M. Kiel
 
              /s/ DAVID J. KRAGNES
     --------------------------------------       Director                                 November 27, 1998
                David J. Kragnes
 
           /s/ FRANCIS L. KRITZBERGER
     --------------------------------------       Director                                 November 27, 1998
             Francis L. Kritzberger
 
                /s/ WAYNE LANGEN
     --------------------------------------       Director                                 November 27, 1998
                  Wayne Langen
 
              /s/ PATRICK D. MAHAR
     --------------------------------------       Director                                 November 27, 1998
                Patrick D. Mahar
 
               /s/ BARRY W. MALME
     --------------------------------------       Director                                 November 27, 1998
                 Barry W. Malme
 
            /s/ RONALD E. REITMEIER
     --------------------------------------       Director                                 November 27, 1998
              Ronald E. Reitmeier
 
                /s/ JIM A. ROSS
     --------------------------------------       Director Elect                           November 27, 1998
                  Jim A. Ross
 
             /s/ G. TERRY STADSTAD
     --------------------------------------       Director                                 November 27, 1998
               G. Terry Stadstad
 
              /s/ ROBERT VIVATSON
     --------------------------------------       Director                                 November 27, 1998
                Robert Vivatson
</TABLE>
 
                                       34
<PAGE>
                                   APPENDIX A
 
                         INDEX TO FINANCIAL STATEMENTS
 
<TABLE>
<S>                                                                                      <C>
AMERICAN CRYSTAL SUGAR COMPANY
 
  FINANCIAL STATEMENTS:
 
    Report of Independent Auditors.....................................................         36
 
    Balance Sheets as of August 31, 1998 and 1997......................................         33
 
    Statements of Operations for the Years Ended August 31, 1998, 1997 and 1996........         39
 
    Statements of Changes in Members' Investment for the Years Ended August 31, 1998,
     1997 and 1996.....................................................................         40
 
    Statements of Cash Flows for the Years Ended August 31, 1998, 1997 and 1996........         41
 
    Notes to the Financial Statements..................................................         42
</TABLE>
 
                                       35
<PAGE>
                         REPORT OF INDEPENDENT AUDITORS
 
To the Members of American Crystal Sugar Company
Moorhead, Minnesota
 
    We have audited the accompanying balance sheets of the American Crystal
Sugar Company (a Minnesota cooperative corporation) as of August 31, 1998 and
1997, and the related statements of operations, changes in members' investments
and cash flows for the years ended August 31, 1998, 1997 and 1996. These
financial statements are the responsibility of the company's management. Our
responsibility is to express an opinion on these financial statements based on
our audits.
 
    We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
 
    In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of the American Crystal Sugar
Company as of August 31, 1998 and 1997, and the results of its operations and
its cash flows for the years ended August 31, 1998, 1997 and 1996, in conformity
with generally accepted accounting principles.
 
Eide Bailly LLP
October 2, 1998
Fargo, North Dakota
 
                                       36
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
                                 BALANCE SHEETS
                                   AUGUST 31
                                 (IN THOUSANDS)
                                     ASSETS
 
<TABLE>
<CAPTION>
                                                                                             1998         1997
                                                                                          -----------  -----------
<S>                                                                                       <C>          <C>
CURRENT ASSETS:
  Cash and Cash Equivalents.............................................................  $        41  $    11,551
  Receivables:
    Trade...............................................................................       53,874       60,940
    Members.............................................................................        2,558        2,857
    Other...............................................................................        2,801        5,618
  Advances to Related Parties...........................................................       26,402       15,064
  Inventories...........................................................................      142,382      140,057
  Prepaid Expenses......................................................................        3,079        2,892
                                                                                          -----------  -----------
TOTAL CURRENT ASSETS....................................................................      231,137      238,979
                                                                                          -----------  -----------
PROPERTY AND EQUIPMENT:
  Land..................................................................................       13,818       13,101
  Buildings and Equipment...............................................................      664,453      635,671
  Construction in Progress..............................................................      112,470       43,938
  Less Accumulated Depreciation.........................................................     (438,801)    (413,211)
                                                                                          -----------  -----------
NET PROPERTY AND EQUIPMENT..............................................................      351,940      279,499
                                                                                          -----------  -----------
OTHER ASSETS:
  Investments in Banks for Cooperatives.................................................       15,890       14,568
  Investments in Marketing Cooperatives.................................................        2,197        1,650
  Investments in ProGold Limited Liability Company......................................       35,172       43,007
  Investments in Crystech, LLC..........................................................        1,574      --
  Other Assets..........................................................................        8,550        3,801
                                                                                          -----------  -----------
TOTAL OTHER ASSETS......................................................................       63,383       63,026
                                                                                          -----------  -----------
TOTAL ASSETS............................................................................  $   646,460  $   581,504
                                                                                          -----------  -----------
                                                                                          -----------  -----------
</TABLE>
 
   The Accompanying Notes are an Integral Part of These Financial Statements.
 
                                       37
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
                                 BALANCE SHEETS
                                   AUGUST 31
                                 (IN THOUSANDS)
                      LIABILITIES AND MEMBERS' INVESTMENTS
 
<TABLE>
<CAPTION>
                                                                                             1998         1997
                                                                                          -----------  -----------
<S>                                                                                       <C>          <C>
CURRENT LIABILITIES:
  Short-Term Debt.......................................................................  $   116,322  $    67,960
  Current Maturities of Long-Term Debt..................................................       17,800       17,800
  Accounts Payable......................................................................       36,131       25,897
  Other Current Liabilities.............................................................       16,112       15,515
  Amounts Due Members...................................................................       14,415       66,155
                                                                                          -----------  -----------
TOTAL CURRENT LIABILITIES...............................................................      200,780      193,327
 
LONG-TERM DEBT, NET OF CURRENT MATURITIES...............................................      194,695      186,800
 
OTHER LIABILITIES.......................................................................       26,142       25,449
                                                                                          -----------  -----------
TOTAL LIABILITIES.......................................................................      421,617      405,576
                                                                                          -----------  -----------
MEMBERS' INVESTMENTS:
  Preferred Stock.......................................................................       38,275       33,542
  Common Stock..........................................................................           28           26
  Additional Paid-In Capital............................................................      116,183       64,596
  Unit Retains..........................................................................      105,850      105,450
  Pension Liability Adjustment..........................................................       (2,259)      (4,131)
  Retained Earnings.....................................................................      (33,234)     (23,555)
                                                                                          -----------  -----------
TOTAL MEMBERS' INVESTMENTS..............................................................      224,843      175,928
                                                                                          -----------  -----------
TOTAL LIABILITIES AND MEMBERS' INVESTMENTS..............................................  $   646,460  $   581,504
                                                                                          -----------  -----------
                                                                                          -----------  -----------
</TABLE>
 
   The Accompanying Notes are an Integral Part of These Financial Statements.
 
                                       38
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
                            STATEMENTS OF OPERATIONS
                         FOR THE YEARS ENDED AUGUST 31
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                  1998        1997        1996
                                                                               ----------  ----------  ----------
<S>                                                                            <C>         <C>         <C>
REVENUE......................................................................  $  676,625  $  677,004  $  688,012
COST OF PRODUCT SOLD, EXCLUDING PAYMENTS TO MEMBERS FOR SUGARBEETS...........     201,159     136,330     216,229
                                                                               ----------  ----------  ----------
GROSS PROCEEDS...............................................................     475,466     540,674     471,783
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES.................................     153,561     141,949     155,188
                                                                               ----------  ----------  ----------
OPERATING PROCEEDS...........................................................     321,905     398,725     316,595
                                                                               ----------  ----------  ----------
OTHER INCOME (EXPENSE):
  Interest Income............................................................       2,045       2,063       3,564
  Other Income...............................................................       1,058       1,066       1,121
  Interest Expense, Net......................................................     (14,390)    (18,321)    (11,252)
  Other Expenses.............................................................      (4,866)    (15,050)       (371)
                                                                               ----------  ----------  ----------
TOTAL OTHER (EXPENSE)........................................................     (16,153)    (30,242)     (6,938)
                                                                               ----------  ----------  ----------
PROCEEDS BEFORE INCOME TAXES.................................................     305,752     368,483     309,657
INCOME TAX BENEFIT/(EXPENSE).................................................          45      (1,727)        549
                                                                               ----------  ----------  ----------
NET PROCEEDS RESULTING FROM MEMBER AND NON-MEMBER BUSINESS...................  $  305,797  $  366,756  $  310,206
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
DISTRIBUTIONS OF NET PROCEEDS:
  Credited (Charged) to Members' Investments:
    Non-Member Business (Loss)...............................................  $   (9,679) $  (18,074) $     (396)
    Unit Retains Declared to Members.........................................       8,545      16,611      16,040
                                                                               ----------  ----------  ----------
  Net Credit (Charge) to Members' Investments................................      (1,134)     (1,463)     15,644
  Payments to Members for Sugarbeets, Net of Unit Retains Declared...........     306,931     368,219     294,562
                                                                               ----------  ----------  ----------
TOTAL........................................................................  $  305,797  $  366,756  $  310,206
                                                                               ----------  ----------  ----------
                                                                               ----------  ----------  ----------
</TABLE>
 
   The Accompanying Notes are an Integral Part of These Financial Statements.
 
                                       39
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
                 STATEMENTS OF CHANGES IN MEMBERS' INVESTMENTS
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                               ADDITIONAL              PENSION
                                          PREFERRED   COMMON    PAID-IN       UNIT    LIABILITY    RETAINED
                                            STOCK     STOCK     CAPITAL     RETAINS   ADJUSTMENT   EARNINGS   TOTAL
                                          ---------   ------   ----------   --------  ----------   --------  --------
<S>                                       <C>         <C>      <C>          <C>       <C>          <C>       <C>
BALANCE, AUGUST 31, 1995................   $31,879     $23      $ 32,417    $ 88,487   $(5,674)    $(5,085 ) $142,047
                                          ---------   ------   ----------   --------  ----------   --------  --------
  Non-Member Business (Loss)............     --        --         --           --        --           (396 )     (396)
  Unit Retains Withheld from Members
    ($2.00/Ton).........................     --        --         --          16,040     --          --        16,040
  Payments to Estates and Disabled
    Individuals.........................     --        --         --            (296)    --          --          (296)
  Payments of 1988 Crop Unit Retains to
    Members.............................     --        --         --          (7,040)    --          --        (7,040)
  Contributed Capital of Investee.......     --        --            624       --        --          --           624
  Pension Liability Adjustment..........     --        --         --           --        1,156       --         1,156
  Stock Issued, Net.....................     --          1        --           --        --          --             1
                                          ---------   ------   ----------   --------  ----------   --------  --------
BALANCE, AUGUST 31, 1996................   $31,879     $24      $ 33,041    $ 97,191   $(4,518)    $(5,481 ) $152,136
                                          ---------   ------   ----------   --------  ----------   --------  --------
  Non-Member Business (Loss)............     --        --         --           --        --        (18,074 )  (18,074)
  Unit Retains Withheld from Members
    ($2.00/Ton).........................     --        --         --          16,611     --          --        16,611
  Payments to Estates and Disabled
    Individuals.........................     --        --         --            (673)    --          --          (673)
  Payments of 1989 Crop Unit Retains to
    Members.............................     --        --         --          (7,679)    --          --        (7,679)
  Contributed Capital of Investee.......     --        --            892       --        --          --           892
  Pension Liability Adjustment..........     --        --         --           --          387       --           387
  Stock Issued, Net.....................     1,663       2        30,663       --        --          --        32,328
                                          ---------   ------   ----------   --------  ----------   --------  --------
BALANCE, AUGUST 31, 1997................   $33,542     $26      $ 64,596    $105,450   $(4,131)    $(23,555) $175,928
                                          ---------   ------   ----------   --------  ----------   --------  --------
  Non-Member Business (Loss)............     --        --         --           --        --         (9,679 )   (9,679)
  Unit Retains Withheld from Members
    ($1.00/Ton).........................     --        --         --           8,545     --          --         8,545
  Payments to Estates and Disabled
    Individuals.........................     --        --         --            (478)    --          --          (478)
  Payments of 1990 Crop Unit Retains to
    Members.............................     --        --         --          (7,667)    --          --        (7,667)
  Contributed Capital of Investee.......     --        --             21       --        --          --            21
  Pension Liability Adjustment..........     --        --         --           --        1,872       --         1,872
  Stock Issued, Net.....................     4,733       2        51,566       --        --          --        56,301
                                          ---------   ------   ----------   --------  ----------   --------  --------
BALANCE, AUGUST 31, 1998................   $38,275     $28      $116,183    $105,850   $(2,259)    $(33,234) $224,843
                                          ---------   ------   ----------   --------  ----------   --------  --------
                                          ---------   ------   ----------   --------  ----------   --------  --------
</TABLE>
 
   The Accompanying Notes are an Integral Part of These Financial Statements.
 
                                       40
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
                            STATEMENTS OF CASH FLOWS
                         FOR THE YEARS ENDED AUGUST 31
                                 (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                1998         1997         1996
                                                                             -----------  -----------  -----------
<S>                                                                          <C>          <C>          <C>
CASH PROVIDED BY (USED IN) OPERATIONS:
  Net Proceeds Resulting from Member and Non-Member Business...............  $   305,797  $   366,756  $   310,206
  Payments to Members for Sugarbeets, Net of Unit Retains..................     (306,931)    (368,219)    (294,562)
  Add (Deduct) Non-Cash Items:
    Depreciation and Amortization..........................................       26,630       24,048       20,314
    Loss on Investment Activities..........................................        4,007       13,919          343
    Loss on the Disposition of Property and Equipment......................        2,412           37          230
    Non-Cash Portion of Patronage Dividend from the Banks for
      Cooperatives.........................................................       (1,322)         609       (1,245)
    Deferred Gain Recognition..............................................         (209)        (213)        (223)
Changes in Assets and Liabilities:
  Receivables..............................................................       10,182      (13,256)       1,355
  Inventories..............................................................       (2,325)     (67,380)      30,614
  Prepaid Expenses.........................................................         (187)         196          737
  Advances to Related Parties..............................................      (11,338)      (4,756)      (4,217)
  Accounts Payable.........................................................       10,234        1,346       (1,343)
  Other Liabilities........................................................        3,242        4,717         (997)
  Amounts Due Members......................................................      (51,740)      19,037        6,881
                                                                             -----------  -----------  -----------
NET CASH PROVIDED BY (USED IN) OPERATIONS..................................      (11,548)     (23,159)      68,093
                                                                             -----------  -----------  -----------
CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES:
  Purchases of Property and Equipment......................................     (101,769)     (70,246)     (43,549)
  Proceeds from the Sale of Property and Equipment.........................          365          667          151
  Investments in Marketing Cooperatives....................................         (338)      14,031       (9,700)
  Investment in ProGold Limited Liability Company and Crystech, LLC........        2,254       (5,595)     (39,221)
  Changes in Other Assets..................................................       (4,908)        (814)        (271)
                                                                             -----------  -----------  -----------
NET CASH USED IN INVESTING ACTIVITIES......................................     (104,396)     (61,957)     (92,590)
                                                                             -----------  -----------  -----------
CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES:
  Net Proceeds (Payments) on Short-Term Debt...............................       48,362       54,317      (40,289)
  Proceeds from Long-Term Debt.............................................       26,695       28,200       85,000
  Long-Term Debt Repayment.................................................      (18,800)     (14,525)     (13,115)
  Issuance of Stock........................................................       56,322       33,220          624
  Payment of Unit Retains..................................................       (8,145)      (8,352)      (7,336)
                                                                             -----------  -----------  -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES..................................      104,434       92,860       24,884
                                                                             -----------  -----------  -----------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS...........................      (11,510)       7,744          387
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD.............................       11,551        3,807        3,420
                                                                             -----------  -----------  -----------
CASH AND CASH EQUIVALENTS, END OF PERIOD...................................  $        41  $    11,551  $     3,807
                                                                             -----------  -----------  -----------
                                                                             -----------  -----------  -----------
</TABLE>
 
   The Accompanying Notes are an Integral Part of These Financial Statements.
 
                                       41
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                       NOTES TO THE FINANCIAL STATEMENTS
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
 
    ORGANIZATION
 
    American Crystal Sugar Company (American Crystal or Company) is a Minnesota
agricultural cooperative corporation which processes and markets sugar,
sugarbeet pulp, molasses and seed. Business done with its shareholders (members)
constitutes "patronage business" as defined by the Internal Revenue Code, and
the net proceeds therefrom are credited to members' investments in the form of
unit retains or distributed to members in the form of payments for sugarbeets.
Members are paid the net amounts realized from the current year's production
less member operating costs determined in conformity with generally accepted
accounting principles.
 
    CASH AND CASH EQUIVALENTS
 
    American Crystal considers financial instruments purchased with a maturity
of three months or less to be cash equivalents. American Crystal places its
temporary cash investments with high credit quality financial institutions. At
times, such investments may be in excess of the applicable insurance limit.
 
    RECEIVABLES
 
    American Crystal grants credit, individually and through its marketing
cooperatives, to its customers, which are primarily companies in the food
processing industry located throughout the United States. Ongoing credit
evaluations of customers' financial condition are performed and the Company
maintains a reserve for potential credit losses. The Company has a major
customer that accounted for approximately 10 percent of gross sugar sales for
the year ended August 31, 1998. Accounts receivable from this customer totaled
approximately 12 percent of total receivables as of August 31, 1998.
 
    INVENTORIES
 
    Sugar, pulp, molasses and other agri-products inventories are valued at
estimated net realizable value. Maintenance parts and supplies and beet seed
inventories are valued at the lower of average cost or market.
 
    PROPERTY, EQUIPMENT AND DEPRECIATION
 
    Property and equipment are recorded at cost. Indirect costs and construction
period interest are capitalized as a component of the cost of qualified assets.
Property and equipment are depreciated for financial reporting purposes
principally using straight-line and declining-balance methods with estimated
useful lives ranging from 3 to 45 years. Statutory lives and methods are used
for income tax reporting purposes.
 
    Indirect costs capitalized were $1.3 million, $1.1 million and $1.0 million
in 1998, 1997 and 1996, respectively. Construction period interest capitalized
was $3.9 million, $2.6 million and $3.8 million in 1998, 1997 and 1996,
respectively.
 
    INVESTMENTS
 
    Investments in the Banks for Cooperatives are stated at cost plus unredeemed
patronage refunds received in the form of capital stock. Investments in
marketing cooperatives, ProGold Limited Liability Company (ProGold) and
Crystech, LLC (Crystech) are accounted for using the equity method. The net
 
                                       42
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
capitalized interest related to the investment in ProGold totaled $1.1 million
and $3.1 million for the years ended August 31, 1997 and 1996, respectively. The
net capitalized interest in Crystech totaled $29,000 for the year ended August
31, 1998.
 
    MEMBERS' INVESTMENTS
 
    PREFERRED AND COMMON STOCK--The ownership of common and preferred stock is
restricted to a "farm operator" as defined by the bylaws of American Crystal.
Each "farm operator" may own only one share of common stock and is entitled to
one vote in the affairs of American Crystal. Each "farm operator" is entitled to
grow a specified number of acres of sugarbeets in proportion to the shares of
preferred stock owned. The preferred shares are non-voting. All transfers of
stock must be approved by American Crystal's board of directors and any
shareholder desiring to sell stock must first offer it to American Crystal for
repurchase at its par value. American Crystal has never exercised this
repurchase option. The bylaws do not allow dividends to be paid on either the
common or preferred stock.
 
<TABLE>
<CAPTION>
                                                                       SHARES     SHARES ISSUED
                                                          PAR VALUE  AUTHORIZED   & OUTSTANDING
                                                          ---------  -----------  --------------
<S>                                                       <C>        <C>          <C>
Preferred Stock:
  August 31, 1998.......................................  $   76.77     600,000        498,570
  August 31, 1997.......................................  $   76.77     600,000        436,915
  August 31, 1996.......................................  $   76.77     600,000        415,255
 
Common Stock:
  August 31, 1998.......................................  $   10.00       4,000          2,835
  August 31, 1997.......................................  $   10.00       4,000          2,585
  August 31, 1996.......................................  $   10.00       4,000          2,444
</TABLE>
 
    UNIT RETAINS--The bylaws authorize American Crystal's board of directors to
require additional direct capital investments by members in the form of a
variable unit retain per ton of up to a maximum of 10% of the weighted average
gross per ton beet payment. American Crystal has a policy whereby the Company
refunds, to the entity legally entitled thereto, the unit retains attributable
to a deceased or totally and permanently disabled former shareholder.
 
    RETAINED EARNINGS--Retained earnings represent the cumulative net
income/(loss) resulting from non-member business and the difference between
member income as determined for financial reporting purposes and federal income
tax reporting purposes from the years prior to 1996. The non-member net loss was
$9.7 million, $18.1 million and $.4 million in 1998, 1997 and 1996,
respectively.
 
    STOCK OFFERING
 
    On July 23, 1997, the Board of Directors authorized an offer of up to 61,500
shares of Preferred Stock, $76.77 par value and up to 500 shares of Common
Stock, $10.00 par value for sale at $1,500.00 per share and $10.00 per share,
respectively, to sugarbeet farm operators in the territory in which the Company
is engaged in business. The filings with the Securities and Exchange Commission
and the North Dakota Securities Commission became effective in November, 1997.
The Company sold all of the 61,500 shares of preferred stock offered. The shares
of Preferred Stock offered equal approximately 13.7% of preferred shares
outstanding on July 25, 1997. The Company received approximately $56.0 million
from the sale of
 
                                       43
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES: (CONTINUED)
stock during the year ended August 31, 1998, with the remaining installment
amounts to be received over the next six years.
 
    INTEREST EXPENSE, NET
 
    American Crystal earns patronage dividends from the Banks for Cooperatives
based on American Crystal's share of the net income earned by the banks. These
patronage dividends are applied against interest expense.
 
    INCOME TAXES
 
    American Crystal is a non-exempt cooperative for federal income tax
purposes. As such, American Crystal is subject to corporate income taxes on its
net income from non-member sources. The provision for income taxes relates to
the results of operations from non-member business, state income taxes and
certain other permanent differences between financial and income tax reporting.
Total income tax payments (refunds) were $106,000, $(4,000) and $(139,000), in
the years ended August 31, 1998, 1997 and 1996, respectively.
 
    As of August 31, 1998, American Crystal had accumulated approximately $29.0
million of net operating loss carryforwards. The majority of the net operating
loss carryforwards expire in 2012. American Crystal has provided a valuation
allowance for the entire balance of the deferred tax asset related to the loss
carryforwards.
 
    ACCOUNTING ESTIMATES
 
    The preparation of the financial statements in conformity with generally
accepted accounting principals requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
 
    RECLASSIFICATIONS
 
    Certain reclassifications have been made to the 1997 and 1996 financial
statements to conform with the 1998 financial statement presentation.
 
(2) INVENTORIES:
 
    The major components of inventories are as follows:
 
<TABLE>
<CAPTION>
                                                                           1998        1997
                                                                        ----------  ----------
                                                                            (IN THOUSANDS)
<S>                                                                     <C>         <C>
Refined Sugar, Pulp, Molasses, other Agri-Products and Beet Seed......  $  123,628  $  115,026
Corn..................................................................      --           3,758
Maintenance Parts and Supplies........................................      18,754      21,273
                                                                        ----------  ----------
Total Inventories.....................................................  $  142,382  $  140,057
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
                                       44
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(3) INVESTMENTS IN MARKETING COOPERATIVES:
 
    American Crystal has a 65% ownership interest in United Sugars Corporation
(United). The investment is accounted for using the equity method. All sugar
products produced are sold by United as an agent for American Crystal. The
amount of sales and related costs to be recognized by each owner of United is
allocated based on its pro rata share of sugar production for the year. The
owners provide United with cash advances on an ongoing basis for operating and
marketing expenses incurred by United. American Crystal had outstanding advances
to United of $19.2 million and $11.9 million as of August 31, 1998 and 1997,
respectively. American Crystal provides administrative services for United and
is reimbursed for costs incurred. American Crystal was reimbursed $1.1 million,
$.7 million and $.7 million for services provided during 1998, 1997 and 1996,
respectively.
 
    American Crystal has a 33 1/3% ownership interest in Midwest
Agri-Commodities Company (Midwest). The investment is accounted for using the
equity method. All beet pulp, molasses and agri-products produced are sold by
Midwest as an agent for American Crystal. The amount of sales and related costs
to be recognized by each owner is allocated based on its pro rata share of
production for each product for the year. The owners provide Midwest with cash
advances on an ongoing basis for operating and marketing expenses incurred by
Midwest. American Crystal had outstanding advances to Midwest of $5.0 million
and $2.3 million as of August 31, 1998 and 1997, respectively. The owners are
guarantors of the short-term line of credit Midwest has with the St. Paul Bank
for Cooperatives. As of August 31, 1998, Midwest had outstanding short-term debt
with the St. Paul Bank for Cooperatives of $2.4 million, of which $1.7 million
was guaranteed by American Crystal.
 
(4) PROGOLD LIMITED LIABILITY COMPANY:
 
    American Crystal has a 46% ownership interest in ProGold Limited Liability
Company (ProGold). On November 1, 1997, ProGold signed an agreement to lease
substantially all of its assets to Cargill, Incorporated. Under the terms of
this operating lease, Cargill, Incorporated manages all aspects of the
operations of the ProGold corn wet-milling plant. Following is summary financial
information for ProGold.
 
                                       45
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(4) PROGOLD LIMITED LIABILITY COMPANY: (CONTINUED)
SUMMARY INFORMATION (IN THOUSANDS)
 
<TABLE>
<CAPTION>
                                                                                       1998
                                                                                    ----------
<S>                                                                                 <C>
Current Assets....................................................................  $    2,661
Long-Term Assets..................................................................     230,655
                                                                                    ----------
  Total Assets....................................................................  $  233,316
                                                                                    ----------
                                                                                    ----------
Current Liabilities...............................................................  $   12,759
Long-Term Liabilities.............................................................     152,608
                                                                                    ----------
  Total Liabilities...............................................................     165,367
Equity............................................................................      67,949
                                                                                    ----------
Total Liabilities and Equity......................................................  $  233,316
                                                                                    ----------
                                                                                    ----------
Rental Revenue on Operating Lease.................................................  $   23,055
Expenses from Continuing Operations...............................................      19,824
                                                                                    ----------
Income from Continuing Operations.................................................       3,231
Loss from Discontinued Operations.................................................     (11,942)
                                                                                    ----------
Net (Loss)........................................................................  $   (8,711)
                                                                                    ----------
                                                                                    ----------
</TABLE>
 
(5) CRYSTECH, LLC:
 
    On May 28, 1998, the Company entered into an agreement with Newcourt Capital
U.S.A., Inc. to form a joint venture (special purpose) entity, Crystech, LLC
(Crystech). Crystech was formed to acquire, construct, finance, operate and
maintain a molasses desugarization facility at the Company's Hillsboro, North
Dakota sugar factory together with certain sugar processing equipment located at
the Hillsboro, North Dakota and Moorhead, Minnesota sugar factories. The Company
acquired an initial 50% ownership interest in Crystech through a $1.5 million
cash contribution. The Company accounts for its investment in the joint venture
using the equity method.
 
    As of August 31, 1998, the Company had an outstanding note receivable from
Crystech totaling $3.7 million. The note is subordinate to long-term debt of
Crystech totaling $23.0 million as of August 31, 1998. The note bears interest
at the rate of 7.62%. Interest income related to this note totaled $70,000
during 1998. Equal quarterly payments of principal on the note begin at the
earlier of April 30, 2000, or provisional acceptance (when 90% of expected plant
performance is reached), but no later than October 31, 2000. American Crystal
has agreed to provide $13.9 million of subordinated debt to Crystech. Payments
are to be made each quarter in 28 installments of $496,607 for the subordinated
debt. Subsequent quarterly principal payments are due on the following dates
annually: March 1, June 1, September 1 and December 1. As of August 31, 1998,
the Company also had an outstanding receivable of $1.4 million relating to
expenses paid on behalf of Crystech.
 
    The Company has a 12-year tolling services agreement with Crystech whereby
upon completion of construction, the Company pays for tolling services for
processing beet molasses delivered to Crystech with title and risk of loss
throughout the process maintained by the Company. The tolling agreement may be
terminated by the Company if the specified plant performance is not achieved.
 
                                       46
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(6) LONG-TERM AND SHORT-TERM DEBT:
 
    The long-term debt outstanding as of August 31, 1998 and 1997, is summarized
below:
 
<TABLE>
<CAPTION>
                                                                           1998        1997
                                                                        ----------  ----------
                                                                            (IN THOUSANDS)
<S>                                                                     <C>         <C>
Term Loans from the St. Paul Bank for Cooperatives, Due in Varying
  Amounts through 2008, Interest at 6.20% to 8.50%, with Senior Lien
  on Substantially all Non-Current Assets.............................  $  155,300  $  172,300
Term Loans from Insurance Companies, Due in Varying Amounts From 2018
  through 2028, Interest at 7.32% to 7.42%, with Senior Lien on
  Substantially all Non-Current Assets................................      10,000      --
Term Loans from US Bank, Minneapolis, Due in Equal Amounts through
  2002, Interest at 8.25%, unsecured..................................       4,000       5,000
Term Loan from the Bank of North Dakota, Due in Equal Amounts through
  2009, Interest at 6.34%, unsecured..................................       8,800       9,600
Pollution Control and Industrial Development Revenue Bonds, Due in
  Varying Amounts through 2018, Interest at 3.67% to 8.00%,
  substantially secured by letters of credit..........................      34,395      17,700
                                                                        ----------  ----------
                                                                           212,495     204,600
Less Current Maturities...............................................     (17,800)    (17,800)
                                                                        ----------  ----------
Total Long-Term Debt..................................................  $  194,695  $  186,800
                                                                        ----------  ----------
                                                                        ----------  ----------
</TABLE>
 
    Aggregate maturities of long-term debt are as follows (in thousands):
 
<TABLE>
<S>                                                                 <C>
1999..............................................................  $  17,800
2000..............................................................     18,915
2001..............................................................     18,925
2002..............................................................     18,930
2003..............................................................     18,940
Thereafter........................................................    118,985
                                                                    ---------
  Total...........................................................  $ 212,495
                                                                    ---------
                                                                    ---------
</TABLE>
 
    Subsequent to August 31, 1998, $50.0 million of long-term debt was borrowed
from a group of insurance companies. The long-term debt has maturities from 2018
through 2028 at interest rates from 7.32% to 7.42%. The proceeds were used to
repay short-term debt in September 1998. As of August 31, 1998, $10.0 million of
short-term debt was reclassified as long-term debt.
 
    As of August 31, 1998, the unused portion of the term loan line of credit
with the St. Paul Bank for Cooperatives was $36.0 million. The undrawn amount of
cash relating to the Pollution Control and Industrial Development Revenue bonds
was $.4 million.
 
    During the year ended August 31, 1998, American Crystal borrowed from the
St. Paul Bank for Cooperatives and issued commercial paper to meet its
short-term borrowing requirements. American Crystal had outstanding short-term
commercial paper debt of $69.3 million and St. Paul Bank for
 
                                       47
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(6) LONG-TERM AND SHORT-TERM DEBT: (CONTINUED)
Cooperatives seasonal loans of $47.0 million as of August 31, 1998. During the
year ended August 31, 1998, American Crystal had available short-term lines of
credit totaling $280.0 million.
 
    Maximum borrowings, average borrowing levels and average interest rates for
short-term debt for the years ended August 31, 1998 and 1997, follow:
 
<TABLE>
<CAPTION>
                                                                        1998        1997
                                                                     ----------  ----------
                                                                      (IN THOUSANDS EXCEPT
                                                                        INTEREST RATES)
<S>                                                                  <C>         <C>
Maximum Borrowings.................................................  $  218,265  $  230,000
                                                                     ----------  ----------
                                                                     ----------  ----------
Average Borrowing Levels...........................................  $  147,703  $  113,227
                                                                     ----------  ----------
                                                                     ----------  ----------
Average Interest Rates.............................................        6.07%       6.06%
                                                                     ----------  ----------
                                                                     ----------  ----------
</TABLE>
 
    The terms of the loan agreements with the St. Paul Bank for Cooperatives
contain certain covenants related to, among other matters, the: level of working
capital; ratio of term liabilities to members' investment; current ratio; level
of term debt to net funds generated; and investment in bank stock in amounts
prescribed by the bank. Substantially all non-current assets are pledged to the
senior lenders to provide security to support the Company's seasonal and
long-term financing. As of August 31, 1998, American Crystal was in compliance
with the terms of the loan agreements.
 
    Interest paid was $19.7 million, $21.6 million and $16.1 million for the
years ended August 31, 1998, 1997 and 1996, respectively.
 
(7) FAIR VALUE OF FINANCIAL INSTRUMENTS:
 
    The fair value of financial instruments is generally defined as the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced liquidation sale. Quoted market prices
are generally not available for the Company's financial instruments.
 
    Accordingly, fair values are based on judgments regarding anticipated cash
flows, future expected loss experience, current economic conditions, risk
characteristics of various financial instruments and other factors. These
estimates involve uncertainties and matters of judgment, and therefore, cannot
be determined with precision. Changes in assumptions could significantly affect
the estimates.
 
    LONG-TERM DEBT--Based upon current borrowing rates with similar maturities,
the fair value of the long-term debt approximates the carrying value.
 
    INVESTMENTS IN BANKS FOR COOPERATIVES, INVESTMENTS IN MARKETING
COOPERATIVES, INVESTMENT IN PROGOLD LIMITED LIABILITY COMPANY AND INVESTMENT IN
CRYSTECH, LLC--American Crystal believes it is not practical to estimate the
fair value of these investments without incurring excessive costs because there
is no established market for these securities and equity interest, and it is
inappropriate to estimate future cash flows which are largely dependent on
future earnings of these organizations.
 
                                       48
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(8) EMPLOYEE BENEFIT PLANS:
 
COMPANY-SPONSORED DEFINED BENEFIT PENSION PLANS
 
    Substantially all employees who meet eligibility requirements of age and
length of service are covered by a Company-sponsored retirement plan. Plan A
(non-union employees) and Plan B (union employees) are defined benefit,
non-contributory plans. The plans provide for vesting after 5 years of service
with benefits for early retirement, normal retirement and disability or death.
 
    The assets of the plans are held by a bank and trust company. American
Crystal's funding policy for Plan A is to contribute the normal cost of the plan
determined under the entry age normal actuarial cost method, plus amounts
necessary to amortize changes over 30 years. The funding policy for Plan B is to
contribute the minimum required amount determined under the frozen initial
liability actuarial cost method. The actuarial assumptions are shown below:
 
<TABLE>
<CAPTION>
                                               1998   1997   1996
                                               ----   ----   ----
<S>                                            <C>    <C>    <C>
Discount Rate................................  7.0%   7.5%   7.5%
Compensation Rate Increase (Plan A Only).....  5.0%   5.0%   5.0%
Rate of Return...............................  9.0%   9.0%   9.0%
</TABLE>
 
    The Company also has a non-qualified Supplemental Executive Retirement Plan
for certain employees. The plan is unfunded and provides for vesting after 5
years of service with benefits for early retirement, normal retirement and
disability or death.
 
    The plans' status as of August 31, 1998, 1997 and 1996, is shown below:
 
<TABLE>
<CAPTION>
                                                                 1998       1997       1996
                                                               ---------  ---------  ---------
                                                                       (IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Normal Service Cost..........................................  $   1,627  $   1,545  $   1,366
Interest Cost on Projected Benefit Obligation................      4,305      4,066      3,718
Return on Plan Assets........................................     (9,292)    (5,561)    (7,414)
Multiple Employer Adjustment.................................        (38)       (34)       (17)
Net Amortization (Deferral)..................................      5,208      2,078      4,739
                                                               ---------  ---------  ---------
Net Pension Expense..........................................  $   1,810  $   2,094  $   2,392
                                                               ---------  ---------  ---------
                                                               ---------  ---------  ---------
Actuarial Present Value of Benefit Obligations:
  Estimated Present Value of Vested Benefits.................  $  50,743  $  46,359  $  44,933
  Estimated Present Value of Non-Vested Benefits.............      4,398      5,758      3,368
                                                               ---------  ---------  ---------
Accumulated Benefit Obligation...............................     55,141     52,117     48,301
Value of Future Pay Increases................................      7,852      6,667      7,239
                                                               ---------  ---------  ---------
Projected Benefit Obligation.................................     62,993     58,784     55,540
Estimated Market Value of Plan Assets........................     55,951     49,058     43,853
                                                               ---------  ---------  ---------
Projected Benefit Obligation in Excess of Plan Assets........      7,042      9,726     11,687
Unrecognized Net Costs.......................................     (9,371)   (12,331)   (14,407)
Unrecognized Net Assets......................................      1,457      1,753      2,049
Minimum Pension Liability Adjustment.........................      4,398      6,350      6,872
                                                               ---------  ---------  ---------
Net Pension Liability........................................  $   3,526  $   5,498  $   6,201
                                                               ---------  ---------  ---------
                                                               ---------  ---------  ---------
</TABLE>
 
                                       49
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(8) EMPLOYEE BENEFIT PLANS: (CONTINUED)
    As required by Statement of Financial Accounting Standards No. 87,
"Employers' Accounting for Pensions," American Crystal has recognized, as of
August 31, 1998, a minimum pension liability of $4.4 million, an intangible
pension asset of $2.1 million and a direct equity reduction of $2.3 million.
 
LONG-TERM INCENTIVE PLAN
 
    The Long-Term Incentive Plan provides deferred compensation to certain key
executives of American Crystal Sugar Company. The Plan creates financial
incentives that are based upon contract rights which are available to the
executive under the terms of the Plan, the value of which is related to the
value of preferred shares of the Company. As of August 31, 1998, there were 234
rights issued which were 100% vested.
 
POST-RETIREMENT AND POST-EMPLOYMENT BENEFITS OTHER THAN PENSIONS
 
    American Crystal Sugar Company has a medical plan and a Medicare supplement
plan which are available to substantially all American Crystal retirees.
American Crystal also has a medical plan that covers disabled employees who have
not attained retirement age. The costs of these plans are paid by the Company.
 
    The rates used in determining the actuarial present value of the accumulated
other post-retirement and postemployment benefit (OPEB) obligations are in the
following table:
 
<TABLE>
<CAPTION>
                                                                     1998        1997         1996
                                                                  ----------  -----------  -----------
<S>                                                               <C>         <C>          <C>
Discount Rate...................................................       7.00%       7.50%        7.50%
Increase in Future Health Cost..................................       8.25%      10.50%        9.75%
Health Care Trend Rate..........................................       5.50%       5.50%        5.50%
</TABLE>
 
    The components of accumulated OPEB obligations and the periodic OPEB costs
are set forth in the following table. If the health care cost trend rate was
increased by one percentage point for each year,
 
                                       50
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(8) EMPLOYEE BENEFIT PLANS: (CONTINUED)
OPEB expense would have increased approximately $323,950 in 1998, and the
actuarial present value of accumulated OPEB obligations at August 31, 1998,
would have increased approximately $2.2 million.
 
<TABLE>
<CAPTION>
                                                                 1998       1997       1996
                                                               ---------  ---------  ---------
                                                                       (IN THOUSANDS)
<S>                                                            <C>        <C>        <C>
Actuarial Present Value of Accumulated OPEB Obligations:
  Retiree Benefits...........................................  $   3,483  $   4,314  $   3,552
  Other Fully Eligible Active Plan Participants..............      2,346      2,690      2,295
  Other Active Plan Participants.............................      8,573      9,383      7,186
                                                               ---------  ---------  ---------
Present Value of Accumulated OPEB Obligations................     14,402     16,387     13,033
  Unrecognized Net Gain from Experience Different from
    Actuarial Assumptions....................................      2,922        462      1,255
                                                               ---------  ---------  ---------
  Total Accrued OPEB Obligation..............................     17,324     16,849     14,288
  Less Current Portion.......................................        544        643        831
                                                               ---------  ---------  ---------
    Non-Current Accrued OPEB Obligation......................  $  16,780  $  16,206  $  13,457
                                                               ---------  ---------  ---------
                                                               ---------  ---------  ---------
Net Periodic OPEB Costs:
  Service Cost...............................................  $     618  $   1,199  $     903
  Interest Cost..............................................      1,086        917        742
  Amortization...............................................     --             (4)      (100)
                                                               ---------  ---------  ---------
Net Periodic OPEB Costs......................................  $   1,704  $   2,112  $   1,545
                                                               ---------  ---------  ---------
                                                               ---------  ---------  ---------
</TABLE>
 
DEFINED CONTRIBUTION PLANS
 
    American Crystal also has qualified 401(k) plans for all eligible employees.
The plans provide for immediate vesting of benefits. Participants contribute a
percentage of their gross earnings each pay period as provided in the
participation agreement. The Company matches the nonunion and union
participants' contribution up to 4% and 1% respectively, of their gross
earnings. The Company's contributions to these plans totaled $1.4 million, $1.1
million and $.9 million for the years ended August 31, 1998, 1997 and 1996,
respectively.
 
(9) ENVIRONMENTAL MATTERS:
 
    American Crystal is subject to extensive federal and state environmental
laws and regulations with respect to water pollution, discharge permits, air
pollution, noise pollution and solid waste disposal. American Crystal conducts
an ongoing pollution control program designed to meet these environmental laws
and regulations. In June 1998, a dike failure occurred near the East Grand
Forks, Minnesota factory. The Minnesota Pollution Control Agency has informed
the Company that enforcement action will be taken. Management believes the
outcome of the enforcement action should not have a material adverse effect on
the Company's financial condition.
 
(10) COMMITMENTS AND CONTINGENCIES:
 
    American Crystal had outstanding letters of credit totaling $34.9 million as
of August 31, 1998.
 
                                       51
<PAGE>
                         AMERICAN CRYSTAL SUGAR COMPANY
 
                 NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
 
(10) COMMITMENTS AND CONTINGENCIES: (CONTINUED)
    American Crystal is subject to various lawsuits and claims that arise in the
ordinary course of its business. Management believes the disposition of all such
proceedings, individually or in the aggregate, should not have a material
adverse effect on the Company's financial condition.
 
    American Crystal has outstanding commitments totaling $27.1 million as of
August 31, 1998, for consulting services, equipment and construction contracts
related to various capital projects.
 
                                       52
<PAGE>
                               INDEX TO EXHIBITS
 
<TABLE>
<CAPTION>
  EXHIBITS                                                                                                      PAGE
------------                                                                                                    -----
<C>           <S>                                                                                            <C>
       *3(i)  Restated Articles of Incorporation of American Crystal Sugar Company.........................
 
      **3(ii) Restated By-laws of American Crystal Sugar Company...........................................
 
     **10(f)  Growers' Contract (5-year Agreement).........................................................
 
      *10(g)  Growers' Contract (Annual Contract)..........................................................
 
      *10(h)  Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 1,
                1986.......................................................................................
 
      *10(i)  Coal Transportation Agreement between Registrant and Northern Coal Transportation Company,
                dated August 1, 1986.......................................................................
 
      *10(j)  Beet Loading and Hauling Agreement between Registrant and Transystems, Inc., dated May 18,
                1993.......................................................................................
 
      *10(k)  Form of Uniform Member Marketing Agreement between Registrant and United Sugars Corporation,
                dated January 1, 1994......................................................................
 
      *10(l)  Trademark License Agreement between Registrant and United Sugars Corporation, dated November
                1, 1993....................................................................................
 
      *10(m)  Uniform Member Marketing Agreement, Pool Basis between Registrant and Midwest
                Agri-Commodities Company, dated April 14, 1992.............................................
 
      *10(n)  Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency.....
 
      *10(o)  Master Agreement between Registrant, United Sugars Corporation, American Federation of Grain
                Millers, AFL-CIO, CLC, et al...............................................................
 
      *10(p)  Loan Agreement between Registrant and St. Paul Bank for Cooperatives, dated December 20,
                1993.......................................................................................
 
      *10(q)  Amended and Restated Loan Agreement between Registrant and First Bank National Association,
                dated November 22, 1993....................................................................
 
      *10(r)  Pension Contract and Amendments..............................................................
 
      *10(s)  Compensation, Severance and Loan Agreement with Mr. J. Famalette, dated March 2, 1992........
 
      *10(t)  Compensation and Loan Agreement with Mr. J. Famalette, dated October 1, 1993.................
 
      *10(u)  Form of Operating Agreement between Registrant and ProGold Limited Liability Company.........
 
      *10(v)  Form of Member Control Agreement between Registrant and ProGold Limited Liability Company....
 
      *10(w)  Administrative Services Agreement between Registrant and ProGold Limited Liability Company...
 
      *10(x)  Uniform Member Marketing Agreement...........................................................
 
    **+10(y)  Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 25,
                1995.......................................................................................
 
    **+10(z)  Coal Transportation Agreement between Registrant and Northern Coal Transportation Company,
                dated August 25, 1995......................................................................
</TABLE>
 
                                       53
<PAGE>
<TABLE>
<CAPTION>
  EXHIBITS                                                                                                      PAGE
------------                                                                                                    -----
<C>           <S>                                                                                            <C>
    **+10(aa) Gas Sales Contract between Registrant and Coastal Gas Marketing Company, dated as of March
                20, 1996...................................................................................
 
     **10(bb) Employment Agreement with Mr. Daniel McCarty, dated as of April 8, 1996......................
 
    ***10(cc) Amendment to Employment Agreement with Mr. Daniel McCarty, dated as of July, 1997............
 
   ***+10(dd) Trademark License Agreement between Registrant and The Pillsbury Company, dated as of April
                9, 1997....................................................................................
 
       10(ee) Pledge Agreement between Registrant and First Union Trust Company, NA........................
 
       10(ff) Indemnity Agreement between Registrant, Newcourt Capital USA Inc., Crystech, LLC and Crystech
                Senior Lender Trust........................................................................
 
       10(gg) Tolling Services Agreement between Crystech, LLC and Registrant..............................
 
       10(hh) Operations and Maintenance Agreement between Crystech, LLC and Registrant....................
 
     ++10(ii) Limited Liability Company Agreement of Crystech, LLC.........................................
 
       27     Financial Data Schedule......................................................................
</TABLE>
 
------------------------
 
*   Incorporated by reference from the Company's Registration Statement on Form
    S-1 (File No. 33-83868), declared effective November 23, 1994.
 
**  Incorporated by reference from the Company's Registration Statement on Form
    S-1 (File No. 333-11693), declared effective November 13, 1996.
 
*** Incorporated by reference from the Company's Registration Statement on Form
    S-1 (File No. 333-32251), declared effective October 24, 1997.
 
+   Portions of the Exhibit have been granted confidential treatment by the
    Commission. The omitted portions have been filed separately with the
    Commission.
 
++  Portions of the Exhibit have been deleted from the publicly filed document
    and have been filed separately with the Commission pursuant to a request for
    confidential treatment.
 
                                       54