UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

 

 

For the period ended May 31, 2002

 

Commission file number:  33-83868

 

 

 

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.

 

 

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

 

 

 

AMERICAN CRYSTAL SUGAR COMPANY

 

FORM 10-Q

 

INDEX

 

PART I	FINANCIAL INFORMATION
ITEM 1.	FINANCIAL STATEMENTS
	BALANCE SHEETS
	STATEMENTS OF OPERATIONS
	STATEMENTS OF CASH FLOWS
	NOTES TO THE FINANCIAL STATEMENTS
ITEM 2.	MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
PART II	OTHER INFORMATION
ITEM 1.	LEGAL PROCEEDINGS
ITEM 4.	SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
ITEM 6.	EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES

 

 

PART I. FINANCIAL INFORMATION

 

Item 1. Financial Statements

 

AMERICAN CRYSTAL SUGAR COMPANY

Balance Sheets

(Unaudited)

(Dollars in Thousands)

 

 

ASSETS

 

		May 31						August 31,
		2002			2001			2001*
Current Assets:
Cash and Cash Equivalents		$	21		$	26		$	5,902
Accounts Receivable:
Trade		60,315			67,681			67,332
Members		3,716			3,230			3,300
Other		839			889			1,553
Advances to Related Parties		15,786			5,944			14,924
Inventories		268,692			274,488			104,269
Prepaid Expenses		3,637			2,099			2,758
Total Current Assets		353,006			354,357			200,038
Property and Equipment:
Land		32,940			31,179			32,511
Buildings and Equipment		842,216			831,624			839,431
Construction-in-Progress		4,593			7,088			1,453
Less: Accumulated Depreciation		(546,926		)	(511,285		)	(510,015		)
Net Property and Equipment		332,823			358,606			363,380
Other Assets:
Investments in CoBank, ACB		15,772			15,676			15,676
Investments in Marketing Cooperatives		2,294			3,352			1,638
Investments in ProGold Limited Liability Company		40,350			38,559			38,533
Investments in Crystech, LLC		1,416			1,489			1,545
Notes Receivable - Crystech, LLC		13,905			13,905			13,905
Long-Term Prepaid Pension Expense		8,156			3,423			3,231
Other Assets		3,949			2,029			3,499
Total Other Assets		85,842			78,433			78,027
Total Assets		$	771,671		$	791,396		$	641,445

 

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

* Derived from Audited Financial Statements.

 

1

 

AMERICAN CRYSTAL SUGAR COMPANY

Balance Sheets

(Unaudited)

(Dollars in Thousands)

 

 

LIABILITIES AND MEMBERS’ INVESTMENTS

 

		May 31						August 31,
		2002			2001			2001*
Current Liabilities:
Short-Term Debt		$	136,787		$	134,264		$	13,963
Current Maturities of Long-Term Debt		19,045			18,930			19,070
Accounts Payable		5,970			7,076			19,775
Advances Due to Related Parties		5,762			5,786			3,568
Accrued Continuing Costs (see note 3)		79,529			93,220			—
Other Current Liabilities		17,208			16,064			15,555
Amounts Due Members		49,947			52,806			82,766
Total Current Liabilities		314,248			328,146			154,697
Long-Term Debt, Net of Current Maturities		182,372			200,306			201,416
Other Liabilities		30,058			27,208			29,672
Total Liabilities		526,678			555,660			385,785
Members’ Investments:
Preferred Stock		38,275			38,275			38,275
Common Stock		30			31			31
Additional Paid-in Capital		143,055			137,236			137,241
Unit Retains		100,145			97,241			116,480
Equity Retention		1,557			—			1,560
Accumulated Other Comprehensive Income/(Loss)		(436		)	(655		)	(436		)
Retained Earnings/(Deficit)		(37,633		)	(36,392		)	(37,491		)
Total Members’ Investments		244,993			235,736			255,660
Total Liabilities and Members’ Investments		$	771,671		$	791,396		$	641,445

 

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

* Derived from Audited Financial Statements.

 

2

 

AMERICAN CRYSTAL SUGAR COMPANY

Statements of Operations

(Unaudited)

(Dollars in Thousands)

 

 

		For the Nine Months Ended May 31						For the Three Months Ended May 31
		2002			2001			2002			2001
Net Revenue		$	554,841		$	638,444		$	208,377		$	222,202
Cost of Product Sold		11,222			64,979			74,272			51,495
Gross Proceeds		543,619			573,465			134,105			170,707
Selling, General & Administrative Expenses		112,168			128,549			35,863			45,956
Accrued Continuing Costs (see note 3)		79,529			93,220			2,988			28,465
Operating Proceeds		351,922			351,696			95,254			96,286
Other Income/(Expense)
Interest Income		1,418			2,503			399			615
Interest Expense		(11,214		)	(16,159		)	(3,129		)	(5,227		)
Other, Net		2,437			1,406			1,549			739
Other (Expense)		(7,359		)	(12,250		)	(1,181		)	(3,873		)
Proceeds before Income Taxes		344,563			339,446			94,073			92,413
Income Tax Expense		(13		)	(67		)	(8		)	(28		)
Net Proceeds Resulting from Member and Non-Member Business		$	344,550		$	339,379		$	94,065		$	92,385
Distribution of Net Proceeds:
Credited/(Charged) to Members’ Investments:
Non-Member Business Income/(Loss)		$	(142	)	$	(785	)	$	669		$	(87	)
Unit Retains Declared to Members		—			—			—			—
Equity Retention Declared to Members		—			—			—			—
Net Credit(Charge) to Members’ Investments		(142		)	(785		)	669			(87		)
Payments to/due Members for Sugarbeets, Net of Unit Retains Declared		322,172			312,833			81,546			92,624
Payment to/due Members for PIK Certificates, Net of Equity Retention Declared		22,520			27,331			11,850			(152		)
Total		$	344,550		$	339,379		$	94,065		$	92,385

 

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

 

3

 

American Crystal Sugar Company

Statements of Cash Flows

(Unaudited)

(Dollars in Thousands)

 

		For the Nine Months Ended May 31
		2002			2001
Cash Provided By (Used In) Operations:
Net Proceeds Resulting from Member and Non-Member Business		$	344,550		$	339,379
Payments To/Due Members for Sugarbeets, Net of Unit Retains Declared		(322,172		)	(312,833		)
Payments To/Due Members for PIK Certificates, Net of Equity Rentention Declared		(22,520		)	(27,331		)
Add (Deduct) Non-Cash Items:
Depreciation and Amortization		38,661			37,960
(Income) from Equity Method Investees		(2,397		)	(1,735		)
Loss on the Disposition of Property and Equipment		208			747
Non-Cash Portion of Patronage Dividend from CoBank, ACB		(437		)	(541		)
Deferred Gain Recognition		(148		)	(148		)
Changes in Assets and Liabilities:
Receivables		7,315			(18,018		)
Inventories		(164,423		)	(231,598		)
Prepaid Expenses		(879		)	542
Long-Term Prepaid Pension Expense		(4,925		)	(1,700		)
Advances To/Due to Related Parties		1,332			216
Accounts Payable		(13,805		)	(19,215		)
Accrued Continuing Costs		79,529			93,220
Other Liabilities		2,038			(1,573		)
Amounts Due Members		(32,819		)	(860		)
Net Cash (Used In) Operations		(90,892		)	(143,488		)
Cash Provided By (Used In) Investing Activities:
Purchases of Property and Equipment		(8,228		)	(15,591		)
Proceeds from the Sale of Property and Equipment		177			6
Investments in CoBank, ACB		341			—
Changes in Other Assets		(509		)	(18		)
Net Cash (Used In) Investing Activities		(8,219		)	(15,603		)
Cash Provided By (Used In) Financing Activities:
Proceeds (Payments) on Short-Term Debt, Net		122,824			132,396
Proceeds from Long-Term Debt		1			8,415
Long-Term Debt Repayment		(19,070		)	(39,009		)
Issuance of Stock		5,813			6,166
Payment of Unit Retains & Equity Retention		(16,338		)	(18,975		)
Net Cash Provided by Financing Activities		93,230			88,993
(Decrease) In Cash and Cash Equivalents		(5,881		)	(70,098		)
Cash and Cash Equivalents, Beginning of Year		5,902			70,124
Cash and Cash Equivalents, End of Period		$	21		$	26
Supplemental Schedule of Non-Cash Financing Activities:
On September 30, 2000, the Company forfeited sugar in satisfaction of the Commodity Credit Corporation loans of $105.3 million including accrued interest of $3.8 million.

 

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

 

4

 

AMERICAN CRYSTAL SUGAR COMPANY

NOTES TO THE FINANCIAL STATEMENTS

FOR THE NINE MONTHS ENDED MAY 31, 2002 AND 2001

 

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 nine month period ended May 31, 2002 are not necessarily indicative of the results that may be expected for the year ended August 31, 2002.

 

The amount paid to growers for sugarbeets (beet payment) and PIK certificates 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, the PIK 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, 2001.

 

Certain reclassifications have been made to the May 31, 2001 financial statements to conform with the May 31, 2002 presentation.

 

Note 2:  Inventories

 

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

 

		05/31/02			05/31/01			8/31/01
Refined Sugar, Pulp, Molasses, Other Agri-Products and Sugar Beet Seed		$	250,673		$	256,855		$	86,367
Maintenance Parts & Supplies		18,019			17,633			17,902
Total Inventories		$	268,692		$	274,488		$	104,269

 

Sugar, pulp, molasses and other agri-products inventories are valued at estimated net realizable value.  Unprocessed sugarbeets are valued at the estimated gross beet payment. 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 (i) the forecasted gross 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 and (ii) on the forecasted gross PIK payment and the percentage of the hundredweight of sugar received to the total hundredweight of sugar to be received. Accrued continuing costs represent 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:
July 8, 2002		$	76.77		600,000		498,570
May 31, 2002		$	76.77		600,000		498,570
August 31, 2001		$	76.77		600,000		498,570
May 31, 2001		$	76.77		600,000		498,570
Common Stock:
July 8, 2002		$	10.00		4,000		3,035
May 31, 2002		$	10.00		4,000		3,025
August 31, 2001		$	10.00		4,000		3,134
May 31, 2001		$	10.00		4,000		3,135

 

Note 5:  Interest Paid

 

Interest paid, net of amounts capitalized, was $10.7 million and $16.1 million for the nine months ended May 31, 2002 and 2001, respectively.

 

Note 6: Short-Term Debt

 

As of May 31, 2002, the Company had outstanding commercial paper of $136.8 million at an average interest rate of 2.86% and maturity dates between June 18, 2002 and August 23, 2002.

 

As of May 31, 2001, the Company had outstanding commercial paper of $134.3 million at an average interest rate of 4.61% and maturity dates between June 1, 2001 and October 25, 2001.

 

In March 2002, the Company renewed its annual $180 million seasonal line of credit agreement with CoBank, ACB with terms and conditions similar to those contained in the previous agreement.

 

Item 2.   Management’s Discussion and Analysis of Results of Operations and Financial Condition for the Nine Months Ended May 31, 2002 and 2001

 

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 2001 Form 10-K.

 

Comparison of the Nine Months Ended May 31, 2002 and 2001

 

Revenue for the nine months ended May 31, 2002, was $554.8 million, a decrease of $83.6 million as compared to the same period last year. Revenue from total sugar sales decreased 15.1 percent which reflects the proceeds from the forfeiture of sugar to the Commodity Credit Corporation (CCC) last year and an 8.7 percent decrease in hundredweight sold partially offset by a 5.4 percent increase in the average selling price per hundredweight.  Revenue from pulp sales increased 17.8 percent due to a 24.4 percent increase in the volume of pulp sold partially offset by a 5.3 percent decrease in the average selling price per ton.  Revenue from molasses sales decreased 26.1 percent due to a 48.2 percent decrease in the volume of molasses sold partially offset by a 42.5 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 10.9 percent due to a 21.7 percent increase in the average selling price per ton partially offset by an 8.9 percent decrease in sales volume.

 

6

 

Cost of product sold, for the nine months ended May 31, 2002, exclusive of payments for sugarbeets and PIK certificates, decreased $53.8 million as compared to the same period last year. Direct processing costs for sugar and pulp decreased 19.9 percent due to harvesting 16.3 percent fewer sugarbeets and processing 16.4 percent less sugarbeets. Fixed and committed expenses decreased .2 percent reflecting lower maintenance costs. The change in product inventories impacted the cost of product sold favorably by $33.6 million. This was primarily due to the value of the carryover sugar inventory as of August 31, 2000, which was sold in first quarter of fiscal 2001. This inventory value was approximately $43.0 million higher than the value of the carryover sugar inventory as of August 31, 2001, which was sold in the first quarter of fiscal 2002. The higher inventory level as of August 31, 2000 consisted largely of sugar pledged to the CCC, which was forfeited during the first quarter of fiscal 2001. This was partially offset by decreased inventory values for pulp as of May 31, 2002.

 

Selling, general and administrative expenses for the nine months ended May 31, 2002 decreased $16.4 million from 2001. Selling expenses decreased $16.2 million primarily due to lower sugar storage costs. General and Administrative expenses decreased $ ...2 million due to lower personnel costs and other general cost reductions.

 

As of May 31, 2002, 100 percent of the 2001 crop had been processed resulting in the recognition of net proceeds from member business of $322.2 million. This represented 100 percent of the $322.2 million projected gross beet payment for the 2001 crop. In addition, $22.5 million, representing 100 percent of the projected gross PIK payment had also been recognized as net proceeds from member business. The actual net proceeds from member business, for the nine months ended May 31, 2002, were $424.2 million. The difference between the actual net proceeds from member business and the amounts recognized as of May 31, 2002, resulted in the recognition of $79.5 million of accrued continuing costs. In comparison, as of May 31, 2001, 100 percent of the 2000 crop had been processed resulting in the recognition of net proceeds from member business of $312.8 million. This represented 100 percent of the projected gross beet payment for the 2000 crop. In addition, $27.5 million, representing 100 percent of the projected gross PIK payment, had also been recognized as net proceeds from member business. The actual net proceeds from member business, for the nine months ended May 31, 2001, were $433.5 million. The difference between the actual net proceeds from member business and the amounts recognized as of May 31, 2001, resulted in the recognition of $93.2 million of accrued continuing costs.

 

Interest income decreased $ 1.1 million for the nine months ended May 31, 2002 as compared to the same period last year primarily due to a lower average balance of investments and slightly lower interest rates.

 

Interest expense decreased $ 4.9 million from last year primarily due to lower long-term and short-term interest rates and lower average borrowing levels.

 

Non-member activities resulted in a loss of $ .1 million for the nine months ended May 31, 2002 as compared to a loss of $ .8 million for the same period last year.  The losses in both fiscal years were comprised mainly of activities related to the investment in ProGold Limited Liability Company partially offset in the current year by income from activities related to Midwest Agri-Commodities.

 

Comparison of the Three Months Ended May 31, 2002 and 2001

 

Revenue for the three months ended May 31, 2002, was $208.4 million, a decrease of $13.8 million as compared to the same period last year. Revenue from total sugar sales decreased 7.2 percent reflecting a 15.8 percent decrease in the hundredweight sold partially offset by a 10.2 percent increase in the average selling price per hundredweight. Revenue from pulp sales decreased 3.0 percent due to a 3.2 percent decrease in the average selling price per ton partially offset by a ...2 percent increase in the volume of pulp sold. Revenue from molasses sales decreased 44.6 percent due to a 58.7 percent decrease in the volume of molasses sold partially offset by a 33.9 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 3.4 percent due to a 22.4 percent increase in the average selling price per ton partially offset by a 15.5 percent decrease in sales volume.

 

7

 

Cost of product sold, for the three months ended May 31, 2002, exclusive of payments for sugarbeets, increased $22.8 million as compared to the same period last year. Direct processing costs for sugar and pulp decreased 34.1 percent due to lower pulp hauling costs, lower major operating supplies expense and natural gas expense.  Fixed and committed expenses increased 4.3 percent reflecting higher maintenance costs. The change in product inventories impacted the cost of product sold unfavorably by $ 32.6 million due to lower inventory values for sugar and pulp.

 

Selling, general and administrative expenses for the three months ended May 31, 2002 decreased $10.1 million from 2001. Selling expenses decreased $10.9 million primarily due to lower sugar storage costs. General and Administrative expenses increased $ ...8 million due to general cost increases.

 

During the three months ended May 31, 2002, 25.3 percent of the 2001 crop was processed resulting in the recognition of net proceeds from member business of $81.5 million. This represented 25.3 percent of the $322.2 million projected gross beet payment for the 2001 crop. In addition, $11.9 million, representing 52.4 percent of the $22.5 million projected gross PIK payment, had also been recognized as net proceeds from member business. The actual net proceeds from member business, for the three months ended May 31, 2002, were $96.3 million. The difference between the actual net proceeds from member business and the amounts recognized for the three months ended May 31, 2002, resulted in the recognition of $3.0 million of accrued continuing costs. In comparison, during the three months ended May 31, 2001, 29.6 percent of the 2000 crop was processed resulting in the recognition of net proceeds from member business of $92.6 million. This represented 29.6 percent of the $312.8 million projected gross beet payment for the 2000 crop. In addition, an adjustment of ($.1) million for the projected gross PIK payment, was also recognized in net proceeds from member business. The actual net proceeds from member business, for the three months ended February 28, 2001, were $121 million. The difference between the actual net proceeds from member business and the amounts recognized for the three months ended May 31, 2001, resulted in the recognition of $28.5 million of accrued continuing costs.

 

Interest income decreased $ .2 million for the three months ended May 31, 2002 as compared to the same period last year primarily due to a lower average balance of investments and slightly lower interest rates.

 

Interest expense decreased $ 2.1 million from last year primarily due to lower long-term and short-term interest rates and lower average borrowing levels.

 

Non-member activities resulted in income of $ .7 million for the three months ended May 31, 2002 compared to a loss of $ .1 million for the same period last year. This non-member income in fiscal 2002 is the result of activities related to Midwest Agri-Commodities, partially offset by activities related to the investment in ProGold Limited Liability Company.

 

Payment-In-Kind Program

 

In September 2001, the United States Department of Agriculture (USDA) announced a Payment-In-Kind (PIK) program for the 2001 crop year. Under this program, the Company’s shareholders were paid to destroy a portion of their 2001 sugarbeet crop.  Payments to the Company’s shareholders were made by the USDA in the form of certificates to be exchanged for sugar held by the USDA.  The Company entered into contracts with its shareholders to purchase the sugar certificates they received from the USDA and reduced the shareholders’ delivery obligation to the Company to the extent sugarbeets were destroyed. As a result of the PIK program, the number of acres of the 2001 sugarbeet crop harvested by the shareholders was reduced by approximately 29,000 acres. On December 3, 2001, the CCC finalized the amount of sugar to be exchanged for the PIK certificates. As a result, the Company received approximately 588,673 hundredweight of sugar in exchange for the PIK certificates on December 3, 2001 and received an additional 588,802 hundredweight of sugar on March 1, 2002.

 

8

 

Farm Security and Investment Act of 2002

 

The Farm Security and Investment Act of 2002 was enacted into law on May 13, 2002. This act contains several provisions related to the domestic sugar industry with the overriding goal of these sugar provisions to achieve balance and stability in the U.S. sugar market while minimizing the cost to the Federal government. The act covers the 2002 through the 2007 sugarbeet crop years. The act restricts imports of foreign sugar and maintains the non-recourse loan program for domestic sugar that was in place under the prior farm bill. The act also includes a system of marketing allotments and allocations for beet sugar and cane sugar producers that are meant to balance the supply and demand of sugar in the U.S. domestic sugar market. These allotments may reduce the amount of sugar that a particular processor can sell into the domestic sugar market, which could result in a reduction in the number of acres of sugarbeets required for processing. The act also gives the USDA the authority to implement a pre-plant PIK program to help offset an oversupply situation should it occur. It also eliminates the marketing assessment fee as well as the CCC loan forfeiture penalty. The bill mandates that the sugar program be run at no cost to the government. The final rules and regulations required to implement the details of this act are still being drafted, with the final impact on the Company not certain until these rules and regulations are finalized.

 

Liquidity and Capital Resources

 

Under the Company’s Bylaws and Grower Contracts, 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, the beet payments made to members are paid in three payments over the course of a year, and the payments are made net of any anticipated unit retain for the crop. These procedures have the effect of providing the Company with an additional source of short-term financing.  This member financing arrangement may result in an additional source of liquidity and reduced need for outside financing 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 and winter) 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 a consortium of lenders lead by CoBank, ACB. The Company has a long-term debt commitment with CoBank, ACB of $132.4 million, of which $101.3 million is currently outstanding.  In addition, the Company has long-term debt outstanding of $50 million from a private placement of Senior Notes that occurred in September of 1998; $43.6 million from nine separate issuances of Pollution Control and Industrial Development Revenue Bonds; a term loan with Bank of North Dakota of $5.6 million; and a $1 million term loan from US Bank.  The Company also has a seasonal line of credit with a consortium of lenders led by CoBank, ACB of $180 million and a line of credit with Wells Fargo Bank for $3 million. The Company’s commercial paper program provides short-term borrowings of up to $150 million of which approximately $136.8 million is currently outstanding.  Any borrowings under the commercial paper program will act to reduce the available credit under the CoBank, ACB seasonal line of credit by a commensurate amount.

 

The change in the Company’s financial condition from August 31, 2001 to May 31, 2002 is primarily due to normal business seasonality.  The first nine months of the Company’s fiscal year includes the completion of the sugarbeet harvest, the processing campaign, and the initial payments to members for delivered sugarbeets.  The cash used in operations of $81.7 million and investing activities of $17.4 million was funded primarily 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 $122.8 million, and proceeds from the installment sale of stock of $5.8 million partially offset by the payment of unit retains of $16.3 million and long-term debt repayment of $19.1 million.

 

Working capital has decreased $9.8 million from $48.6 million at the beginning of the year to $38.8 million as of May 31, 2002 primarily due to additional short-term debt, increases in payables and an increase in receivables partially offset by a decrease in amounts due growers and increased inventories.  Working capital as of May 31, 2002 was $38.8 million, an increase of $9.2 million when compared to $29.6 million of working capital as of May 31, 2001.

 

9

 

Capital expenditures for the nine months ended May 31, 2002 were $8.2 million as compared to $15.6 million for the same period in 2001. The Company had outstanding commitments totaling $6.1 million as of May 31, 2002, for equipment and construction contracts related to various capital projects.

 

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.

 

Item 4.  Submission of Matters to a Vote of Security Holders

 

None

 

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Item 6. Exhibits and Reports on Form 8-K

 

(a)          Exhibits

 

Item No.				Method of Filing
3.1		Restated Articles of Incorporation of American Crystal Sugar Company		Incorporated by reference to Exhibit 3.1 from the Company’s Form 10-Q for the quarter ended May 31, 1998.
3.2		Restated By-laws of American Crystal Sugar Company		Incorporated by reference to Exhibit 3.1 from the Company’s Form 10-Q for the quarter ended May 31, 1998.
4.1		Restated Articles of Incorporation of American Crystal Sugar Company		See Exhibit 3.1
4.2		Restated By-laws of American Crystal Sugar Company		See Exhibit 3.2
10.1		Trademark License Agreement between Registrant and United Sugars Corporation, dated November 1, 1993		Incorporated by reference to Exhibit 10(l) from the Company’s Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.2		Amended and Restated Loan Agreement between Registrant and US Bank, formerly First Bank National Association, dated November 22, 1993		Incorporated by reference to Exhibit 10(q) from the Company’s Registration Statement on Form S-1 (File No. 33-83868), declared effective November 23, 1994.
10.3		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.
10.4		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.
10.5		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.
10.6		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.
+10.7		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.
+10.8		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.
+10.9		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.
10.10		Pledge Agreement between Registrant and First Union Trust Company, NA		Incorporated by reference to Exhibit 10(ee) from the Company’s Annual Report on Form 10-K for the year ended August 31, 1998.
10.11		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.
10.12		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.
10.13		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.
++10.14		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.
10.15		Master Agreement between the Registrant and Bakery, Confectionery, Tobacco Workers & Grain Millers AFL-CIO, CLC		Incorporated by reference to Exhibit 10.22 from the Company’s Annual Report on Form 10-K for the year ended August 31, 1999
10.16		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
10.17		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
10.18		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
10.19		Employment Agreement between the Registrant and James J. Horvath		Incorporated by reference to Exhibit 10.28 from the Company’s Annual Report on Form 10-K form the year ended August 31, 1999
10.20		Stipulation Agreement between Registrant and State of Minnesota Pollution Control Agency, dated April 4, 2000		Incorporated by reference to Exhibit 10.28 from the Company’s Form 10-Q for the quarter ended May 31, 2000
10.21		Board of Directors Deferred Compensation Plan, dated June 30, 1994		Incorporated by reference to Exhibit 10.29 from the Company’s Annual Report on Form 10K for the year ended August 31, 2000
10.22		Long Term Incentive Plan, dated June 23, 1999		Incorporated by reference to Exhibit 10.31 from the Company’s Annual Report on Form 10K for the year ended August 31, 2000
10.23		Growers’ Contract (5-year Agreement) for the crop years 1998 through 2002.		Incorporated by reference to Exhibit 10.29 from the Company’s Form 10-Q for the quarter ended February 28, 2001
10.24		Addendum to Master Agreement between the Registrant and Bakery, Confectionery, Tobacco Workers & Grain Millers AFL-CIO, CLC dated July 10, 2001.		Incorporated by reference to Exhibit 10.30 from the Company’s Annual Report on Form 10K for the year ended August 31, 2001
10.25		Uniform Member Sugar Marketing Agreement between the Registrant and United Sugars Corporation dated September 1, 2001.		Incorporated by reference to Exhibit 10.27 from the Company’s Form 10-Q for the quarter ended November 30, 2001
10.26		Uniform Member Marketing Agreement between the Registrant and Midwest Agri-Commodities Company dated September 1, 2001.		Incorporated by reference to Exhibit 10.28 from the Company’s Form 10-Q for the quarter ended November 30, 2001
10.27		Term and Seasonal Loan Agreements between the Registrant and CoBank, ACB dated March 27, 2002		Filed herewith electronically
10.28		Growers’ Contract (Annual Contract) for crop year 2002.		Filed herewith electronically
21.1		List of Subsidiaries of the Registrant		Incorporated by reference to Exhibit 21.1 from the Company’s Annual Report on Form 10K for the year ended August 31, 1999

 

+              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.

 

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(b) Reports on Form 8-K

 

The Company filed the following Current Report on Form 8-K during this quarter.

 

(i)            Current Report on Form 8-K, dated March 19, 2002, under item 9 stating that the Company had announced to its shareholders on March 19, 2002, that the forecasted gross beet payment for the 2001 crop has increased $4.00 from $36.00 to $40.00 per average ton of sugarbeets.

 

 

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:	July 11, 2002		/s/ Brian Ingulsrud
			Brian Ingulsrud
			Corporate Controller,
			Chief Accounting Officer
			Duly Authorized Officer

 

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