UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-Q


 
 /x/		  
 Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

For the period ended February 29, 2000

Commission file number: 33-83868

AMERICAN CRYSTAL SUGAR COMPANY
(Exact name of registrant as specified in its charter)

Minnesota
(State or other jurisdiction of
incorporation or organization)		   84-0004720
(I.R.S. Employer
Identification No.)

101 North Third Street
Moorhead, Minnesota 56560
(Address of principal executive offices)

Telephone Number (218) 236-4400
(Registrant's telephone number, including area code)

    Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days.

YES   X   NO       

    Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class of Common Stock
   Outstanding at
March 28, 2000
$10 Par Value   2,940

AMERICAN CRYSTAL SUGAR COMPANY

FORM 10-Q

INDEX

 
    
   PAGE NO.
PART I   FINANCIAL INFORMATION    
 
ITEM 1.		  
 		  
FINANCIAL STATEMENTS		  
 		  
 
 
 		  
 		  
BALANCE SHEETS		  
 		  
1
 
 		  
 		  
STATEMENTS OF OPERATIONS		  
 		  
3
 
 		  
 		  
STATEMENTS OF CASH FLOWS		  
 		  
4
 
 		  
 		  
NOTES TO THE FINANCIAL STATEMENTS		  
 		  
5
 
ITEM 2.		  
 		  
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION		  
 		  
6
 
 
PART II		  
 
 		  
 
OTHER INFORMATION		  
 
 		  
 
 
 
ITEM 1.		  
 		  
LEGAL PROCEEDINGS		  
 		  
10
 
ITEM 6.		  
 		  
EXHIBITS AND REPORTS ON FORM 8-K		  
 		  
11
 
 
SIGNATURES		  
 
 		  
 
15

AMERICAN CRYSTAL SUGAR COMPANY

Balance Sheets

(Unaudited)

(Dollars in Thousands)

 
   February 29
2000
   February 28
1999
   August 31,
1999*
  
ASSETS  
Current Assets:                    
Cash and Cash Equivalents   $ 55   $ 56   $ 2,156  
Accounts Receivable:                    
Trade     64,212     70,962     71,654  
Members     10     1     1,595  
Other     2,857     753     2,642  
Advances to Related Parties     7,274     21,316     22,419  
Inventories     362,971     406,770     111,958  
Prepaid Expenses     520     2,788     2,944  
   
 
 
 
Total Current Assets     437,899     502,646     215,368  
   
 
 
 
Property and Equipment:                    
Land     26,068     14,277     24,456  
Buildings and Equipment     811,901     675,099     804,607  
Construction-in-Progress     11,404     127,991     6,648  
Less: Accumulated Depreciation     (481,187 )   (453,553 )   (459,096 )
   
 
 
 
Net Property and Equipment     368,186     363,814     376,615  
   
 
 
 
Other Assets:                    
Investments in CoBank     15,406     15,858     15,427  
Investments in Marketing Cooperatives     3,170     2,887     3,112  
Investments in ProGold Limited Liability Company     36,184     35,233     35,629  
Investments in Crystech, LLC     1,163     1,574     1,688  
Notes Receivable—Crystech, LLC     13,905     8,326     11,883  
Other Assets     4,069     4,528     6,170  
   
 
 
 
Total Other Assets     73,897     68,406     73,909  
   
 
 
 
Total Assets   $ 879,982   $ 934,866   $ 665,892  
   
 
 
 

* Derived from audited financial statements.

1

AMERICAN CRYSTAL SUGAR COMPANY

Balance Sheets

(Unaudited)

(Dollars in Thousands)

 
   February 29
2000
   February 28
1999
   August 31,
1999*
  
LIABILITIES AND MEMBERS' INVESTMENTS  
Current Liabilities:                    
Short-Term Debt   $ 130,509   $ 225,010   $ 60,844  
Current Maturities of Long-Term Debt     18,915     18,800     18,915  
Accounts Payable:                    
Trade     9,459     7,829     24,239  
Other     3,138     3,787     2,019  
Accrued Continuing Costs     75,677     45,785     —  
Other Current Liabilities     18,574     17,067     16,920  
Amounts Due Members     132,429     131,568     35,698  
   
 
 
 
Total Current Liabilities     388,701     449,846     158,635  
Long-Term Debt, Excluding Current                    
Maturities     231,335     232,795     233,135  
Deferred Income Taxes     1,879     1,753     1,838  
Other Liabilities     31,233     26,135     30,998  
   
 
 
 
Total Liabilities     653,148     710,529     424,606  
   
 
 
 
Members' Investments:                    
Preferred Stock     38,275     38,275     38,275  
Common Stock     30     28     30  
Additional Paid-in Capital     130,112     122,666     123,948  
Unit Retains     97,157     95,597     116,849  
Accumulated Other Comprehensive Income/(Loss)     (4,088 )   (2,259 )   (4,088 )
Retained Earnings/(Deficit)     (34,652 )   (29,970 )   (33,728 )
   
 
 
 
Total Members' Investments     226,834     224,337     241,286  
   
 
 
 
Total Liabilities and Members'                    
Investments   $ 879,982   $ 934,866   $ 665,892  
   
 
 
 

* Derived from audited financial statements.

2

AMERICAN CRYSTAL SUGAR COMPANY

Statements of Operations

(Unaudited)

(Dollars in Thousands)

 
   For the Six Months Ended
   Three Months Ended
  
 
   February 29
2000
   February 28
1999
   February 29
2000
   February 28
1999
  
Net Revenue   $ 385,807   $ 375,975   $ 167,829   $ 180,302  
Cost of Product Sold     (20,614 )   (12,038 )   (33,539 )   (13,952 )
   
 
 
 
 
Gross Proceeds     406,421     388,013     201,368     194,254  
Selling, General & Administrative Expenses     82,303     85,707     37,804     41,433  
Accrued Continuing Costs     75,677     45,785     35,938     21,783  
   
 
 
 
 
Operating Proceeds     248,441     256,521     127,626     131,038  
   
 
 
 
 
Other Income (Expenses)                          
Interest Income     1,132     438     668     159  
Interest Expense     (10,177 )   (10,941 )   (6,006 )   (6,332 )
Other Income     1,178     4,613     579     234  
Other Expenses     (636 )   (1,226 )   (605 )   (1,204 )
   
 
 
 
 
Other Income (Expense)     (8,503 )   (7,116 )   (5,364 )   (7,143 )
   
 
 
 
 
Proceeds before Income Taxes     239,938     249,405     122,262     123,895  
Income Taxes (Provision)/Benefit     (52 )   —     (30 )   —  
   
 
 
 
 
Net Proceeds Resulting from Member and Non-Member Business   $ 239,886   $ 249,405   $ 122,232   $ 123,895  
   
 
 
 
 
Distribution of Net Proceeds:                          
Credited/(Charged) to Members' Investments:                          
Non-Member Business Income/(Loss)   $ (924 ) $ 3,264   $ (663 ) $ (695 )
Unit Retains Declared to Members     —     —     —     —  
   
 
 
 
 
Net Credit/(Charge) to Members' Investments     (924 )   3,264     (663 )   (695 )
Payments to/due Members for Sugarbeets, Net of Unit Retains Declared     240,810     246,141     122,895     124,590  
   
 
 
 
 
Total   $ 239,886   $ 249,405   $ 122,232   $ 123,895  
   
 
 
 
 

3

American Crystal Sugar Company

Statements of Cash Flows

(Unaudited)

(In Thousands)

 
   For the Six Months Ended
  
 
   February 29
2000
   February 28
1999
  
Cash Provided By (Used In) Operations:              
Net Proceeds Resulting from Member and Non-Member Business   $ 239,886   $ 249,405  
Payments to Members for Sugarbeets, Net of Unit Retains Declared     (240,810 )   (246,141 )
Add (Deduct) Non-Cash Items:              
Depreciation and Amortization     22,248     14,906  
(Income) Loss from Equity Method Investees     (64 )   (162 )
(Gain) Loss on the Disposition of Property and Equipment     (20 )   55  
Non-Cash Portion of Patronage Dividend from Banks for Cooperatives     21     33  
Deferred Gain Recognition     (99 )   (100 )
Changes in Assets and Liabilities:              
Receivables     8,812     (12,484 )
Inventories     (251,013 )   (264,388 )
Prepaid Expenses     2,424     291  
Advances to Related Parties     15,145     5,086  
Accounts Payable     (13,661 )   (24,516 )
Accrued Continuing Costs     75,677     45,785  
Other Liabilities     1,930     2,698  
Amounts Due Members     96,731     117,153  
   
 
 
Net Cash (Used In) Operations     (42,793 )   (112,379 )
   
 
 
Cash Provided By (Used In) Investing Activities:              
Purchases of Property and Equipment     (14,172 )   (26,786 )
Proceeds from the Sale of Property and Equipment     530     104  
Investments in Marketing Cooperatives     —     (609 )
Investments in Crystech LLC     (47 )   —  
Notes Receivable—Crystech LLC     (2,022 )   (4,608 )
Changes in Other Assets     2,066     275  
   
 
 
Net Cash (Used In) Investing Activities     (13,645 )   (31,624 )
   
 
 
Cash Provided By (Used In) Financing Activities:              
Net Proceeds (Payments) on Short-Term Debt     69,665     108,688  
Proceeds from Long-Term Debt     —     57,000  
Long-Term Debt Repayment     (1,800 )   (17,900 )
Issuance of Stock     6,164     6,483  
Payment of Unit Retains     (19,692 )   (10,253 )
   
 
 
Net Cash Provided by Financing Activities     54,337     144,018  
   
 
 
Increase (Decrease) In Cash and Cash Equivalents     (2,101 )   15  
Cash and Cash Equivalents, Beginning of Year     2,156     41  
   
 
 
Cash and Cash Equivalents, End of Period   $ 55   $ 56  
   
 
 

4

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED FEBRUARY 29, 2000 AND FEBRUARY 28, 1999

Note 1: Basis of Presentation

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

    The operating results for the six month period ended February 29, 2000 are not necessarily indicative of the results that may be expected for the year ended August 31, 2000.

    The amount paid to growers for sugarbeets (beet payment) depends on the future selling prices of sugar and agri-products as well as processing and other costs to be incurred during the remainder of the fiscal year. For the purposes of this report, the amount of the beet payment, future revenues and costs have been estimated. Therefore, adjustments with respect to these estimates may be necessary in the future as additional information becomes available.

    These financial statements should be read in conjunction with the financial statements and notes included in the Company's annual report for the year ended August 31, 1999.

    Certain reclassifications have been made to the 1999 financial statements to conform with the 2000 presentation.

Note 2: Inventories

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

 
   02/29/00
   02/28/99
   8/31/99
Refined Sugar, Pulp, Molasses, CSB and Beet Seed   $ 241,756   $ 249,265   $ 88,466
Unprocessed Sugarbeets     101,526     138,300     3,817
Maintenance Parts & Supplies     19,689     19,205     19,675
   
 
 
Total Inventories   $ 362,971   $ 406,770   $ 111,958
   
 
 

    Sugar, pulp, molasses and CSB inventories are valued at estimated net realizable value. Unprocessed sugarbeets are valued at the estimated net beet payment plus estimated unit retains to be withheld. Maintenance parts & supplies and beet seed inventories are valued at the lower of average cost or market.

Note 3: Accrued Continuing Costs

    For interim reporting, the Net Proceeds from Member Business is based on the forecasted beet payment and the percentage of the tons of sugarbeets processed to the total estimated tons of sugarbeets to process for a given crop year. Accrued continuing costs represents the difference between the Net Proceeds from Member Business as determined above and actual member business crop year revenues realized and expenses incurred through the end of the reporting period. Accrued continuing costs are reflected in the Financial Statements as a cost on the Statements of Operations and as a current liability on the Balance Sheets.

5

Note 4: Members' Investments

 
   Par Value
   Shares
Authorized
   Shares Issued
& Outstanding
Preferred Stock:              
March 28, 2000   $ 76.77   600,000   498,570
February 29, 2000   $ 76.77   600,000   498,570
August 31, 1999   $ 76.77   600,000   498,570
February 28, 1999   $ 76.77   600,000   498,570
Common Stock:              
March 28, 2000   $ 10.00   4,000   2,940
February 29, 2000   $ 10.00   4,000   2,953
August 31, 1999   $ 10.00   4,000   2,950
February 28, 1999   $ 10.00   4,000   2,842

Item 2. Management's Discussion and Analysis of Results of Operations and Financial Condition For the Three and Six Months Ended February 29, 2000 and February 28, 1999

    This report contains forward-looking statements that involve risks and uncertainties. Such forward-looking statements include, among others, those statements including the words "expect", "anticipate", "believe", "may" and similar expressions. The Company's actual results could differ materially from those indicated. Important factors that could cause or contribute to such differences include, without limitation, market factors, weather and general economic conditions, farm and trade policy, available quantity and quality of sugarbeets. For a more complete discussion of "Important Factors", please refer to the Company's 1999 Form 10-K.

Comparison of the Six Months Ended February 29, 2000 and February 28, 1999

    Revenue for the six months ended February 29, 2000, was $385.8 million, an increase of $9.8 million from 1999. Revenue from total sugar sales increased 6.7 percent reflecting a 7.5 percent increase in hundredweight sold partially offset by a .7 percent decrease in the average selling price per hundredweight. Revenue from pulp sales decreased 14.3 percent due to a 26.4 percent decrease in the volume of pulp sold partially offset by a 16.4 percent increase in the average selling price per ton. Revenue from molasses sales decreased 35.7 percent due to a 27.6 percent decrease in the volume of molasses sold and an 11.1 percent decrease in the average selling price per ton. Revenue from the sales of Concentrated Separated By-Product (CSB), a by-product of the molasses desugarization process, increased 17.0 percent due to a 82.1 percent increase in sales volume partially offset by a 35.8 percent decrease in the average selling price per ton.

    Cost of product sold for the six months ended February 29, 2000, exclusive of payments for sugarbeets, decreased $8.6 million as compared to the same period in 1999. Direct processing costs for sugar and pulp increased 2.8 percent due to processing 2.7 percent more sugarbeets partially offset by reduced costs of harvesting fewer tons. Fixed and committed expenses increased 20.8 percent reflecting higher depreciation and maintenance costs. The cost associated with sugar purchased to meet customer needs was up $6.6 million due to the increase in purchased sugar activity in distant geographic markets. The change in inventories impacted the cost of product sold favorably by $28.0 million in the first six

6

months of fiscal 2000 as compared to fiscal 1999. The negative cost of product sold amount is due to the credit from the valuation of product inventories at net realizable value.

    Selling, General and Administrative expenses for the six months ended February 29, 2000, decreased $3.4 million from 1999. Selling expenses decreased $2.3 million due to lower agri-product freight costs and the suspension of the Commodity Credit Corporation marketing assessment fee as of September 1, 1999. General and Administrative expenses decreased $1.1 million from 1999, primarily due to lower personnel costs and general cost reductions.

    The increase in accrued continuing costs was due primarily to changes in the volume of sugar sales and production, differences in the timing of incurring processing costs and the amount of unsold inventory on hand.

    Interest income increased $1.7 million in fiscal 2000 primarily due to interest received on the Crystech, LLC note receivable.

    Interest expense decreased $.8 million in fiscal 2000 primarily due to lower average borrowing levels for short-term debt this year along with slightly lower interest rates.

    Other income decreased $3.4 million from last year primarily due to the gain in fiscal 1999 from the sale of certain beet seed assets to Betaseed Inc. (BETA), a wholly owned subsidiary of Kleinwanzlebener Saatzucht, Ag.

    Other expense decreased $.6 million between years, with decreased supplemental retiree benefits being partially offset by a loss from the first month of Crystech, LLC operations. Crystech was formed in 1998 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. Crystech became operational on February 1, 2000.

    Non-member activities resulted in a loss of $.9 million for the six months ended February 29, 2000 as compared to a gain of $3.3 million for the same period last year. The majority of the fiscal 1999 gain is related to the sale of beet seed assets to BETA. The loss in fiscal 2000 is primarily comprised of activities related to ProGold, LLC.

Comparison of the Three Months Ended February 29, 2000 and February 28, 1999

    Revenue for the three months ended February 29, 2000, was $167.8 million, an increase of $12.5 million from 1999. Revenue from total sugar sales decreased 3.5 percent reflecting a 1.2 percent decrease in hundredweights sold and a 2.4 percent decrease in the average selling price per hundredweight. Revenue from pulp sales increased 28.3 percent due to a 1.0 percent increase in volume of pulp sold and a 27.1 percent increase in the average selling price per ton. Revenue from molasses sales decreased 46.4 percent due to a 47.0 percent decrease in the volume of molasses sold partially offset by a 1.2 percent increase in the average selling price per ton. Revenue from the sales of Concentrated Separated By-Product (CSB), a by-product of the molasses desugarization process, increased 33.5 percent due to a 115.2 percent increase in sales volume partially offset by a 38.0 percent decrease in average selling price per ton.

7

    Cost of product sold for the three months ended February 29, 2000, exclusive of payments for sugarbeets, decreased $19.6 million as compared to the same period in 1999. Direct processing costs for sugar and pulp remained relatively level between years. Fixed and committed expenses increased 23.3 percent this year due to higher depreciation and maintenance. The cost associated with sugar purchased to meet customer needs was up $.2 million due to the increase in purchased sugar activity in distant geographic markets. Changes in inventory levels between 2000 and 1999, impacted the cost of product sold favorably by $26.4 million. The negative cost of product sold amount is due to the credit from the valuation of product inventories at net realizable value.

    Selling, general and administrative expenses for the three months ended February 29, 2000, decreased $3.6 million from the same period in 1999. Selling expenses decreased $2.4 million due to lower agri-product freight costs and the suspension of the Commodity Credit Corporation marketing assessment fee. Administrative expenses were $1.2 million lower in 2000 primarily due to lower personnel costs and general cost reductions.

    The increase in accrued continuing costs was due primarily to changes in the volume of sugar sales and production, differences in the timing of incurring processing costs, and the amount of unsold inventory on hand.

    Interest income increased $.5 million in fiscal 2000 primarily due to interest received on the Crystech, LLC note receivable.

    Interest expense decreased $.3 million in fiscal 2000 primarily due to lower average borrowing levels for short and long term debt this year along with slightly lower interest rates.

    Other income increased $.3 million due mainly to the gain from the sale of assets from our Nampa, Idaho beet seed facility.

    Other expense remained relatively level between years, with decreased supplemental retiree benefits being partially offset by a loss from the first month of Crystech, LLC operations. Crystech was formed in 1998 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. Crystech became operational on February 1, 2000.

    Non-member activities for the three months ended February 29, 2000 and February 28, 1999, remained constant with a loss of $.7 million in both years. The loss during fiscal 2000 was primarily due to activities related to ProGold, LLC. The loss during fiscal 1999 was due primarily to non-member beet seed activities.

Results of Year 2000 Rollover

    As a result of the extensive efforts over the past two years to become year 2000 compliant, the Company, all of its facilities and associated companies transitioned smoothly into the new year. All production, vendor and customer activities proceeded without incident. The Company remains vigilant and continues to monitor systems and processes to ensure on-going year 2000 compliance.

8

Current Market Trends

    The domestic sugar market is currently experiencing an oversupply of refined sugar. This oversupply is the result of the several factors. First, the World Trade Organization (WTO) requires imports of sugar, regardless of the domestic supply situation, from approximately 40 foreign nations that produce and export sugar. Second, sugar is currently entering the United States from Canada each year, over and above the WTO minimum, in the form of "stuffed molasses." "Stuffed molasses" is molasses that contains an extremely high percentage of sugar. Once the "stuffed molasses" reaches the United States, it is run through a desugarization process that separates the liquid sugar from the molasses. The liquid sugar is then sold in the domestic market. Third, in addition to the sugar currently being imported into the domestic market this year, Mexico, under the North American Free Trade Agreement (NAFTA), will be allowed, in October, 2000, to export an additional 5 million hundredweight of sugar, tariff free, into the United States. Fourth, both the sugarbeet crop and sugar cane crop for this year were the largest in history. The increased size of these crops resulted from an expansion in the acreage planted, the development of higher yielding cane varieties and generally good growing conditions across the country.

    Due to these factors, the supply of refined sugar currently exceeds the domestic demand for refined sugar in the United States. This excess supply has resulted in a decline in domestic sugar prices. Lower sugar prices adversely impact the profitability of selling refined sugar in the United States, resulting in a direct negative impact on the gross beet payment.

    The Company has a significant amount of sugar pledged as collateral for non-recourse loans through the Commodity Credit Corporation (the "CCC"). The domestic sugar price may decrease to a level below the forfeiture price for these non-recourse loans. The Company is currently contemplating the forfeiture of sugar.

Liquidity and Capital Resources

    Under the Company's Bylaws and Grower Contracts, payments for member delivered sugarbeets, the Company's principal raw material, are subordinated to all member business expenses. Cash payments to members are spread over a period of approximately one year following delivery of their sugarbeet crops to the Company. All unpaid portions remain available to meet the Company'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. Because sugar is sold throughout the year (while sugarbeets are processed primarily in the fall, winter and spring) and because substantial amounts of equipment are required for its operations, the Company 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 CoBank, ACB. The Company has a long-term debt commitment with CoBank during 2000 of $201.2 million. In addition, the Company has long-term debt outstanding of $50 million from a private placement of Senior Notes that occurred in September of 1998, a term loan with US Bank of $3.0 million, a term loan with Bank of North Dakota of $7.2 million, and $38.2 million from eight separate issuances of Pollution Control and Industrial Development Revenue Bonds. The Company also has a seasonal line of credit with CoBank, ACB of $290 million that includes a line of credit with Norwest Bank for $3 million and any amounts obtained through issuance of instruments in its commercial paper program. The Company's commercial paper program provides short-term borrowings of up to $150 million.

9

    The various loan agreements between CoBank, ACB and the Company obligate the Company to maintain or achieve certain amounts of working capital and certain financial ratios and impose restrictions on the Company. As of February 29, 2000, the Company was in compliance with its loan agreements.

    The change in the Company's financial condition from August 31, 1999 to February 29, 2000 is primarily due to normal business seasonality. The first six months of the Company's fiscal year includes the completion of the sugarbeet harvest, start of the processing campaign, and the initial payments to members for delivered sugarbeets. The cash used in operations of $42.8 million and investing activities of $13.7 million was funded through the cash provided by financing activities. The net cash provided by financing activities was primarily comprised of the net proceeds from short-term debt of $69.7 million, and proceeds from the installment sale of stock of $6.2 million, partially offset by the payment of the unit retains of $19.7 million.

    Working capital has decreased $7.5 million from $56.7 million at the beginning of the year to $49.2 million as of February 29, 2000 primarily due to additional short-term debt and the amounts due growers partially offset by increased inventories. Working capital as of February 29, 2000 was $49.2 million, a decrease of $3.6 million when compared to $52.8 million of working capital as of February 28, 1999. This decrease was mainly due to decreased inventory levels, partially offset by a decrease in short-term debt.

    Capital expenditures for the six months ended February 29, 2000 were $13.7 million.

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

PART II. OTHER INFORMATION

Item 1. 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 contractual disputes. The Company is currently involved in certain legal proceedings which have arisen in the ordinary course of the Company'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.

10

Item 6. Exhibits and reports on Form 8-K


Item No.
    
   Method of Filing
 
3.1		  
 		  
Restated Articles of Incorporation of American Crystal Sugar Company		  
 		  
Incorporated by reference to Exhibit 3(i) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
3.2		  
 		  
Restated By-laws of American Crystal Sugar Company		  
 		  
Incorporated by reference to Exhibit 3(ii) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
 
4.1		  
 		  
Restated Articles of Incorporation of American Crystal Sugar Company		  
 		  
See Exhibit 3.1
 
4.2		  
 		  
Restated By-laws of American Crystal Sugar Company		  
 		  
See Exhibit 3.2
 
10.1		  
 		  
Growers' Contract (5-year Agreement)		  
 		  
Incorporated by reference to Exhibit 10(f) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
 
10.2		  
 		  
Growers' Contract (Annual Contract)		  
 		  
Incorporated by reference to Exhibit 10(g) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.3		  
 		  
Trademark License Agreement between Registrant and United Sugars Corporation, dated November 1, 1993		  
 		  
Incorporated by reference to Exhibit 10(l) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.4		  
 		  
Uniform Member Marketing Agreement, Pool Basis between Registrant and Midwest Agri-Commodities Company, dated April 14, 1992		  
 		  
Incorporated by reference to Exhibit 10(m) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.5		  
 		  
Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency		  
 		  
Incorporated by reference to Exhibit 10(n) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.6		  
 		  
Loan Agreement between Registrant and St. Paul Bank for Cooperatives, dated December 20, 1993		  
 		  
Incorporated by reference to Exhibit 10(p) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
 		  
 		  
 		  
 		  
 

11

 
10.7		  
 		  
Amended and Restated Loan Agreement between Registrant and First Bank National Association, dated November 22, 1993		  
 		  
Incorporated by reference to Exhibit 10(q) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.8		  
 		  
Pension Contract and Amendments		  
 		  
Incorporated by reference to Exhibit 10(r) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.9		  
 		  
Form of Operating Agreement between Registrant and ProGold Limited Liability Company		  
 		  
Incorporated by reference to Exhibit 10(u) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.10		  
 		  
Form of Member Control Agreement between Registrant and ProGold Limited Liability Company		  
 		  
Incorporated by reference to Exhibit 10(v) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.11		  
 		  
Administrative Services Agreement between Registrant and ProGold Limited Liability Company		  
 		  
Incorporated by reference to Exhibit 10(w) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
10.12		  
 		  
Uniform Member Marketing Agreement		  
 		  
Incorporated by reference to Exhibit 10(x) from the Company's Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
 
+10.13		  
 		  
Coal Supply Agreement between Registrant and Spring Creek Coal Company, dated August 25, 1995		  
 		  
Incorporated by reference to Exhibit 10(y) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
 
+10.14		  
 		  
Coal Transportation Agreement between Registrant and Northern Coal Transportation Company, dated August 25, 1995		  
 		  
Incorporated by reference to Exhibit 10(z) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
 
+10.15		  
 		  
Gas Sales Contract between Registrant and Coastal Gas Marketing Company, dated as of March 20, 1996		  
 		  
Incorporated by reference to Exhibit 10(aa) from the Company's Registration Statement on Form S-1 (File No. 333-11693), declared effective November 13, 1996.
 
+10.16		  
 		  
Trademark License Agreement between Registrant and The Pillsbury Company, dated as of April 9, 1997		  
 		  
Incorporated by reference to Exhibit 10(dd) from the Company's Registration Statement on Form S-1 (File No. 333-32251), declared effective October 24, 1997.
 
10.17		  
 		  
Pledge Agreement between Registrant and First Union Trust Company, NA		  
 		  
Incorporated by reference to Exhibit 10(ee) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
 
 		  
 		  
 		  
 		  
 

12

 
10.18		  
 		  
Indemnity Agreement between Registrant, Newcourt Capital USA Inc., Crystech, LLC and Crystech Senior Lender Trust		  
 		  
Incorporated by reference to Exhibit 10(ff) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
 
10.19		  
 		  
Tolling Services Agreement between Crystech, LLC and Registrant		  
 		  
Incorporated by reference to Exhibit 10(gg) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
 
10.20		  
 		  
Operations and Maintenance Agreement between Crystech, LLC and Registrant		  
 		  
Incorporated by reference to Exhibit 10(hh) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
 
++10.21		  
 		  
Limited Liability Company Agreement of Crystech, LLC		  
 		  
Incorporated by reference to Exhibit 10(ii) from the Company's Annual Report on Form 10-K for the year ended August 31, 1998.
 
10.22		  
 		  
Master Agreement between the Registrant and Bakery, Confectionery, Tobacco Workers & Grain Millers AFL-CIO, CLC		  
 		  
Incorporated by reference to Exhibit 10(ii) from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
 
10.23		  
 		  
Uniform Member Beet Sugar Marketing Agreement		  
 		  
Incorporated by reference to Exhibit 10.23 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
 
10.24		  
 		  
Registrant's Senior Note Purchase Agreement		  
 		  
Incorporated by reference to Exhibit 10.24 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
 
10.25		  
 		  
Registrant's Senior Note Intercreditor and Collateral Agency Agreement		  
 		  
Incorporated by reference to Exhibit 10.25 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
 
10.26		  
 		  
Registrant's Senior Note Restated Mortgage and Security Agreement		  
 		  
Incorporated by reference to Exhibit 10.26 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
 
10.27		  
 		  
Term and Seasonal Loan Agreements between the Registrant and St. Paul Bank for Cooperatives dated March 5, 1999		  
 		  
Incorporated by reference to Exhibit 10.27 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
 
10.28		  
 		  
Employment Agreement between the Registrant and James J. Horvath		  
 		  
Incorporated by reference to Exhibit 10.28 from the Company's Annual Report on Form 10-K for the year ended August 31, 1999.
 
 		  
 		  
 		  
 		  
 

13

 
27		  
 		  
Financial Data Schedule		  
 		  
Filed herewith electronically.
+
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.

14


SIGNATURES

    Pursuant to the requirement 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.

    AMERICAN CRYSTAL SUGAR COMPANY
(Registrant)
 
Date: April 13, 2000		  
 		  
By:		  
 		  
/s/ THOMAS S. ASTRUP   
Thomas S. Astrup
 Corporate Controller
Duly Authorized Officer

15