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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 10-Q
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[X] Quarterly report pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE PERIOD ENDED NOVEMBER 30, 1996
COMMISSION FILE NUMBER: 33-83868
AMERICAN CRYSTAL SUGAR COMPANY
(Exact name of registrant as specified in its charter)
MINNESOTA 84-0004720
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) 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.
OUTSTANDING AT
CLASS OF COMMON STOCK JANUARY 3, 1997
--------------------- ---------------
$10 PAR VALUE 2,446
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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
STATEMENT OF CASH FLOWS 4
NOTES TO THE FINANCIAL STATEMENTS 5
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND
FINANCIAL CONDITION 7
PART II OTHER INFORMATION 9
SIGNATURES 10
<PAGE>
AMERICAN CRYSTAL SUGAR COMPANY
Balance Sheets
(Unaudited)
(Dollars in Thousands)
ASSETS
<TABLE>
<CAPTION>
November 30
--------------------------------- August 31,
1996 1995 1996
------------ ------------ -----------
<S> <C> <C> <C>
Current Assets: *
Cash and Cash Equivalents $ 5,034 $ 3,582 $ 3,807
Accounts Receivable:
Trade 54,810 51,912 50,915
Members 965 1,020 3,845
Other 4,332 3,456 1,399
Advances to Related Parties 2,942 1,236 10,308
Inventories (Note 2) 405,877 372,176 72,677
Prepaid Expenses 2,256 3,360 3,088
----------- ----------- -----------
Total Current Assets 476,216 436,742 146,039
----------- ----------- -----------
Property and Equipment
Land 12,059 11,876 12,059
Buildings and Equipment 572,446 535,587 572,446
Construction-in-Progress 50,142 42,106 41,098
Less: Accumulated Depreciation (400,419) (380,971) (391,665)
----------- ----------- -----------
Net Property and Equipment 234,228 208,598 233,938
----------- ----------- -----------
Other Assets:
Investments in Banks for Cooperatives 15,707 14,466 15,177
Investments in Marketing Cooperatives 17,075 7,170 15,468
Investment in ProGold LLC 53,336 25,378 51,330
Other Assets 3,073 4,044 3,184
----------- ----------- -----------
Total Other Assets 89,192 51,058 85,159
----------- ----------- -----------
Total Assets $ 799,635 $ 696,398 $ 465,136
----------- ----------- -----------
----------- ----------- -----------
</TABLE>
* Derived from audited financial statements.
The Accompanying Notes are an Integral Part of These Financial Statements.
1
<PAGE>
AMERICAN CRYSTAL SUGAR COMPANY
Balance Sheets
(Unaudited)
(Dollars in Thousands)
LIABILITIES AND MEMBERS' INVESTMENTS
<TABLE>
<CAPTION>
November 30
------------------------------- August 31,
1996 1995 1996
------------- ------------ ------------
<S> <C> <C> <C>
Current Liabilities: *
Short-Term Debt $ 158,000 $ 177,000 $ 13,643
Current Maturities of Long-Term Debt 14,525 12,115 13,525
Accounts Payable:
Trade 3,384 4,396 17,060
Other 23,247 7,838 7,490
Accrued Continuing Costs (Note 3) 25,743 5,476 -
Other Current Liabilities 13,257 7,792 15,132
Amounts Due Members 189,949 195,396 47,118
------------ ------------ ------------
Total Current Liabilities 428,105 410,014 113,968
Current
Maturities 176,394 125,514 177,394
Deferred Income Taxes 0 1,029 0
Other Liabilities 22,402 25,406 21,638
Commitments and Contingencies (Note 5) - - -
------------ ------------ ------------
Total Liabilities 626,901 561,962 313,000
------------ ------------ ------------
Members' Investments (Note 4):
Preferred Stock 33,369 31,879 31,879
Common Stock 24 23 24
Additional Paid-in Capital 60,655 32,417 33,041
Unit Retains 89,393 81,384 97,191
Pension Liability Adjustment (4,518) (5,674) (4,518)
Retained Earnings (6,189) (5,593) (5,481)
------------ ------------ ------------
Total Members' Investments 172,734 134,436 152,136
------------ ------------ ------------
Total Liabilities and Members'
Investments $ 799,635 $ 696,398 $ 465,136
------------ ------------ ------------
------------ ------------ ------------
</TABLE>
* Derived from audited financial statements.
The Accompanying Notes are an Integral Part of These Financial Statements.
2
<PAGE>
Statements of Operations
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
November 30 November 31
--------------------------- ---------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net Revenue $ 150,018 $ 159,189 $ 176,419 $ 166,266
Cost of Product Sold (28,529) (8,115) 174,382 159,491
---------- ---------- ---------- ----------
Gross Proceeds 178,546 167,304 2,037 6,775
Selling, General & Administrative
Expenses 30,836 35,747 44,959 36,560
Accrued Continuing Costs (Note 3) 25,743 5,476 (50,122) (17,854)
---------- ---------- ---------- ----------
Operating Proceeds 121,968 126,079 7,200 (11,931)
---------- ---------- ---------- ----------
Other Income (Expenses)
Interest Income 697 139 166 16
Interest Expense (2,910) (2,417) 451 (5,899)
Other Income 326 697 164 66
Other Expenses (347) (6) (484) (413)
---------- ---------- ---------- ----------
Other Income (Expense) (2,233) (1,588) 297 (6,229)
---------- ---------- ---------- ----------
Proceeds before Income Taxes 119,734 124,491 7,497 (18,160)
Income Taxes Provision/(Benefit) 0 0 (549) (3,636)
Net Proceeds Before Cummulative
---------- ---------- ---------- ----------
Effect of Changes in Accounting
Principle 119,734 124,491 8,045 (14,524)
Cummulative Effect of Changes in
Accounting Principle - 0 - -
---------- ---------- ---------- ----------
Net Proceeds Resulting from
Member and Non-Member Business $ 119,734 $ 124,491 $ 8,045 $ (14,524)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
Distribution of Net Proceeds:
Credited/(Charged) to Member's
Investments:
Member Tax Accounting
Adjustment, Net $ 0 $ 0 $ 0 $ 1,240
Non-Member Business Income/(Loss) (708) (507) (897) 333
Unit Retains Declared to Members - - - -
---------- ---------- ---------- ----------
Net Credit/(Charge) to Members'
Investments (708) (507) (897) 1,573
Payments to/due Members for
Sugarbeets, Net of Unit Retains
Declared 120,442 124,998 6,348 (7,242)
---------- ---------- ---------- ----------
Total $ 119,734 $ 124,491 $ 5,451 $ (5,669)
---------- ---------- ---------- ----------
---------- ---------- ---------- ----------
</TABLE>
The Accompanying Notes are an Integral Part of These Financial Statements.
3
<PAGE>
AMERICAN CRYSTAL SUGAR COMPANY 1/8/97 22:20
Statements of Cash Flows file:monthly/scfpd2
(Unaudited)
(Dollars In Thousands)
Three Months Ended
November 30
------------------------
1996 1995
-------- --------
Cash Provided by/(Used for) Operations:
Net Proceeds Resulting from Member and Non-
Member Business $ 119,734 $ 124,491
Payments to/due Members for Sugarbeets,
Including Unit Retains (120,442) (124,999)
Add/(Deduct) Noncash Items:
Depreciation and Amortization 8,871 7,348
Deferred Income Taxes 0 0
(Gain)/loss on the Disposition of Property
and Equipment (59) (75)
Noncash Portion of Patronage Dividend from
Banks for Cooperatives (551) (593)
Deferred Gain Recognition (53) (56)
Changes in Certain Elements of Working Capital
Accounts Receivable:
Trade (3,895) (3,799)
Members 2,880 3,187
Other (2,933) 1,739
Inventories (333,200) (268,885)
Prepaid Expenses 832 466
Advances to Related Parties 7,366 4,854
Accounts Payable:
Trade (13,676) (16,633)
Other 15,757 2,974
Other Current Liabilities 23,868 (650)
Amount Due Growers 142,831 155,159
---------- ----------
Net Cash (Used In) Operations (152,670) (115,472)
---------- ----------
Cash Provided by/(Used In) Investing Activities:
Purchases of Property and Equipment (9,044) (5,172)
Proceeds from the Sale of Property and Equipment 59 75
Investment in Banks for Cooperatives 20 59
Investment in Marketing Coops (1,554) (1,568)
Investment in ProGold LLC (2,006) (12,926)
Changes in Other Assets (6) 0
---------- ----------
Net Cash (Used In) Investing Activities (12,531) (19,532)
---------- ----------
Cash Provided by/(Used In) Financing Activities:
Net Proceeds (Payments) on Short-Term Debt 144,357 123,068
Proceeds from Long-Term Debt 0 18,600
Long-Term Debt Repayment 0 0
Changes in Other Long-Term Liabilities 765 601
Changes in Preferred Stock 1,490 0
Changes in Common Stock (0) 0
Changes in Additional Paid-In Capital 27,614 0
Payment of Unit Retains (7,798) (7,103)
---------- ----------
Net Cash Provided by Financing Activities 166,428 135,166
---------- ----------
Decrease in Cash and Cash Equivalents 1,227 162
Cash and Cash Equivalents Beginning of Period 3,807 3,420
---------- ----------
Cash and Cash Equivalents End of Period $ 5,034 $ 3,582
---------- ----------
---------- ----------
The Accompanying Notes are an Integral Part of These Financial Statements.
4
<PAGE>
AMERICAN CRYSTAL SUGAR COMPANY
NOTES TO THE FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
NOTE 1: BASIS OF PRESENTATION
The unaudited financial statements contained herein have been prepared pursuant
to the rules and regulations of the Security 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 three month period ended November 30, 1996 are not
necessarily indicative of the results that may be expected for the year ended
August 31, 1997.
The amount paid to growers for sugarbeets (beet payment) depends on the future
selling prices of sugar and by-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, 1996.
NOTE 2: INVENTORIES
The major components of inventories are as follows (In Thousands):
11/30/96 11/30/95 8/31/96
-------- -------- -------
Refined Sugar, Pulp, Molasses,
CSB and Beet Seed $137,702 $136,901 $ 46,155
Unprocessed Sugarbeets 245,343 213,779 -
Maintenance Parts & Supplies 22,832 21,496 26,522
-------- -------- --------
Total Inventories $405,877 $372,176 $ 72,677
-------- -------- --------
-------- -------- --------
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 the lower of average cost or market.
5
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NOTE 3: ACCRUED CONTINUING COSTS
For interim reporting, the Net Proceeds from Member Business is determined 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.
NOTE 4: MEMBERS' INVESTMENTS
Shares Shares Issued
Par Value Authorized & Outstanding
--------- ---------- -------------
Preferred Stock:
January 3, 1997 $76.77 600,000 436,065
November 30, 1996 $76.77 600,000 434,665
August 31, 1996 $76.77 600,000 415,255
November 30, 1995 $76.77 600,000 415,255
Common Stock:
January 3, 1997 $10.00 4,000 2,446
November 30, 1996 $10.00 4,000 2,443
August 31, 1996 $10.00 4,000 2,444
November 30, 1995 $10.00 4,000 2,343
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION
FOR THE THREE AND THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS ENDED NOVEMBER 30, 1996 AND 1995
Revenue for the three months ended November 30, 1996, was $150 million, a
decrease of $9.2 million from 1995. Revenue from total sugar sales decreased
6.9 percent reflecting an 11.8 percent decrease in hundredweight sold partially
offset by a 5.6 percent increase in the average selling price per hundredweight.
Revenue from pulp sales increased 8.3 percent due to a 17.8 percent increase in
the average selling price per ton partially offset by an 8.1 percent decrease in
the volume of pulp sold. Revenue from molasses sales increased 4.5 percent due
to a 1.5 percent increase in the volume of molasses sold and a 3 percent
increase in the average selling price per ton. Revenue from the sales of
Concentrated Separated By-Produce (CSB), a by-product of the molasses
desugarization process, increased 125.2 percent due to a 52.9 percent increase
in sales volume and a 47.3 percent increase in the average selling price per
ton.
Cost of product sold, exclusive of payments for sugarbeets, increased $20.4
million. Direct processing costs for sugar and pulp decreased 3.7 percent.
Fixed and committed expenses increased 9 percent reflecting higher maintenance
costs. Changes in product inventory levels between 1996 and 1995 impacted the
cost of product sold favorably by $36.6 million. The cost associated with sugar
purchased to meet customer needs was up $.8 million due to the available supply
of inventory.
Marketing expenses decreased $5 million due primarily to the decrease in the
volume of sugar sold. General and Administrative expenses remained at basically
the same amount.
The increase in accrued continuing costs was due primarily to changes in sugar
sales and production, differences in the timing of incurring processing costs.
Interest expense increased slightly due to higher average borrowing levels for
short and long-term debt this year.
Non-member activities resulted in a loss of $.7 million for the three months
ended November 30, 1996 as compared to a loss of $.5 million for the same period
last year. This increase was primarily due to more sugar purchased due to the
available supply of inventory.
7
<PAGE>
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 ("Bank"). American Crystal has a
short-term line of credit with the Bank in 1996 of $210 million.
The various loan agreements between the Bank and American Crystal obligate
American Crystal to maintain or achieve certain amounts of working capital and
certain financial ratios and impose restrictions on American Crystal. As of
November 30, 1996, American Crystal was in compliance with its loan agreements.
The primary factor for the changes in American Crystal's financial condition for
the three months ended November 30, 1996 was due to the 1996/1997 sugarbeet
processing campaign. The cash used in operations of $152.7 million and
investing activities of $12.5 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 $144.4 million
and proceeds from sale of stock of $29.1 million, partially offset by the
payment of the unit retains of $7.8 million. Working capital has increased $16
million from $32.1 million at the beginning of the year to $48.1 million as of
November 30, 1996 primarily due to increased inventories, partially offset by
increased short term and current maturities of long term debt, and higher
amounts due growers.
Capital expenditures for the three months ended November 30, 1996 were $9
million. These capital expenditures are a continuation of American Crystal's
strategy of expanding capacity and improving operating efficiencies.
American Crystal anticipates that the funds necessary for the Bank's working
capital requirements and future capital expenditures will be derived from
depreciation, unit retains and long-term borrowing.
The growth in the market for refined sugar in the late 1980's and the mid 1990's
is a reversal of trends in the 1970's and early 1980's which resulted in a
reduced market for refined sugar. During the 1970's and early 1980's, high
fructose corn syrup was increasingly used as a replacement for refined sugar in
certain food products. (The prime example of this trend was the use of high
fructose corn syrup in beverages such as soft drinks.) In addition, non-
nutritive sweeteners such as aspartame were developed and used in food products.
While high fructose corn syrup and non-nutritive sweeteners constitute a large
portion of the overall sweetener market, the Company believes that the recent
trend of increased use of refined sugar results from population growth and, more
importantly, increased acceptance of the use of sugar as a desirable natural
ingredient in a normal diet.
8
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
American Crystal is subject to various lawsuits and claims which arise in the
ordinary course of its business. While the results of such litigation and
claims cannot be predicted with certainty, 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 position, results of
operations or cash flows. Management is not aware of any threatened claims which
could result in the commencement of legal proceedings.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
At the Hillsboro Factory District Meeting on November 12, 1996, an election of
two (2) Board of Directors was held. Jerry Bitker received 150 of the 248 votes
cast. His three year term expires in December, 1999. Mr. Bitker replaces Thomas
Bryl who received 93 of the 248 votes cast for the three-year term. Francis
Kritzberger received 102 of the 248 votes cast to replace Michael Warner who
resigned in August, 1996, after serving eight (8) years. Mr. Kritzberger's term
expires in one year, December, 1997, as he fills a vacant one-year unexpired
term.
At the Crookston Factory District Meeting on November 12, 1996, an election of a
Board of Director was held. Ronald Reitmeier received 96 of the 182 votes cast.
His three year term expires in December, 1999. Mr. Reitmeier replaces Duane
Lien whose term expired December 5, 1996. Mr. Lien was not eligible to stand
for re-election due to the provisions of the company By-Laws which prohibit any
person from serving more than four (4) consecutive terms.
At the Drayton Factory District Meeting on November 11, 1996, an election of a
Board of Director was held. Patrick Mahar who sought re-election received 190
of the 198 votes cast. His three year term expires in December, 1999.
At the East Grand Forks Factory District Meeting on November 11, 1996, an
election of a Board of Director was held. G. Terry Stadstad who sought re-
election was unanimously re-elected. His three year term expires in December,
1999.
At the Moorhead Factory District Meeting on November 13, 1996, an election of a
Board of Director was held. Michael Astrup received 113 of the 214 votes cast.
His three year term expires in December, 1999. Mr. Astrup replaces Robert
Nyquist who was unable to stand for re-election due to the provisions of the
Company By-Laws which prohibit a person from serving more than four (4)
consecutive terms as a Director.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
No exhibits are included herein.
The Company did not file any reports on Form 8-K during the three months ended
November 30, 1996.
9
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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: JANUARY 3, 1997 /s/ SAMUEL S. M. WAI
------------------------ ------------------------------
SAMUEL S. M. WAI
CORPORATE CONTROLLER
DULY AUTHORIZED OFFICER
10
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> AUG-31-1997
<PERIOD-START> SEP-01-1996
<PERIOD-END> NOV-30-1996
<CASH> 5,034
<SECURITIES> 0
<RECEIVABLES> 63,049
<ALLOWANCES> 0
<INVENTORY> 405,877
<CURRENT-ASSETS> 476,216
<PP&E> 634,647
<DEPRECIATION> 400,419
<TOTAL-ASSETS> 799,635
<CURRENT-LIABILITIES> 428,105
<BONDS> 176,394
0
33,369
<COMMON> 24
<OTHER-SE> 139,341
<TOTAL-LIABILITY-AND-EQUITY> 799,635
<SALES> 150,018
<TOTAL-REVENUES> 150,018
<CGS> (28,529)
<TOTAL-COSTS> (28,529)
<OTHER-EXPENSES> 2,233
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,910
<INCOME-PRETAX> 119,734
<INCOME-TAX> 0
<INCOME-CONTINUING> 119,734
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 119,734
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
