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COMMUNITY

AMERICAN CRYSTAL SUGAR COMPANYANNUAL REPORT2015

Sugarbeets develop deep roots to grow strong,

resilient and productive. The same is true for the

people, business partners and communities linked

to American Crystal Sugar Company. Because

of our presence in the Red River Valley, we’re

committed to sustainable agriculture, advanced

manufacturing, delighting customers, rewarding

employees, and being a quality neighbor and civic

contributor. This report is dedicated to the 4,000+

shareholders and employees of our company who

work to make a difference in their jobs and the

communities where we live.

Community RootsAmerican Crystal Sugar Company is a world-class agricultural cooperative

specializing in the production of sugar and related agri-products. American

Crystal is owned by about 2,650 shareholders who raise approximately one-third

of the nation’s sugarbeet acreage in the Red River Valley of Minnesota and North

Dakota. Additional acres are contracted in eastern Montana and western North

Dakota. As the largest beet sugar producer in the United States, the company

utilizes innovative farming practices, low-cost production methods, and sales

and marketing leadership to produce and sell about 15 percent of America’s

finest quality sugar. American Crystal operates sugar factories in Crookston,

East Grand Forks, and Moorhead, Minnesota; Drayton and Hillsboro, North

Dakota; and Sidney, Montana, under the name Sidney Sugars Incorporated. The

company’s technical services center and corporate headquarters are also located

in Moorhead.

Located in Bloomington, Minnesota, United Sugars Corporation markets American

Crystal’s sugar to retail and industrial customers throughout the nation. Midwest

Agri-Commodities Company, based in San Rafael, California, globally markets

American Crystal’s agri-products such as sugarbeet pulp, molasses, CSB, and betaine.

About the cover: Bob Powers, Maintenance Superintendent, Packaging and Warehouse, Corporate Headquarters; Al Zola, Factory Manager, Drayton factory; Scott Hamilton, Stores Specialist, East Grand Forks factory, and their family members participate as part of American Crystal’s Street Beets Crew in various races during The Wild Hog Grand Forks Half Marathon.

American Crystal Sugar Company 1

FINANCIAL PERFORMANCEAmerican Crystal’s financial results in Fiscal Year 2015 were lower than we would like. Operationally the company performed well, controlling costs and utilizing assets. However the dual effect of low sugar and agri-product prices and a below-average 2014 crop pressured our ability to deliver adequate returns to shareholders.

With many challenges of the past year behind us, we believe the company is well-positioned for success. Our balance sheet and debt-to-equity ratio remain healthy. Our capital investments and equipment are functioning at or above planned levels and the outlook for the 2015 sugarbeet crop and sugar market has strengthened.

GOVERNMENT AFFAIRSAmerican Crystal faced a year of old and new challenges in the public policy arena. The old challenges came from our typical opponents, the Coalition for Sugar Reform. Largely comprised of purchasers of sugar, they were joined by anti-government groups in an effort to dismantle the sugar program. This is nothing new and the end result was the same: Congress agreed with the sugar industry and did not allow any changes to the program. American Crystal did what it has done successfully for many years – join with the U.S. agriculture coalition in defending the Farm Bill. Congress agreed with us that the five-year Farm Bill should not be re-opened, especially as it was just signed into law in 2014. The new challenges were centered on the anti-dumping and countervailing duty cases the U.S. sugar industry brought against dumped and subsidized sugar exports from Mexico. We are extremely pleased that on

October 20, 2015, the International Trade Commission voted unanimously (6-0) that Mexico’s unfair trade practices injured the U.S. sugar industry. This vote was the final step in a nearly two-year process to prove that dumped, subsidized sugar from Mexico damaged the U.S. price of sugar and cost our industry hundreds of millions of dollars. This vote also solidified the Suspension Agreements the U.S. and Mexican governments negotiated in December 2014, which manage the volume and price of sugar exported by Mexico into the U.S. We believe this arrangement is a very fair solution to the long-running concern over Mexico’s unfair trade practices and that it should bring stability to the U.S. sugar market for several years to come.

SUGAR MARKETINGFor sugar, 2015 was a year of continued modest demand growth and a return to balanced supply and demand brought about by

the favorable conclusion of the U.S. sugar industry’s trade case against Mexico for its illegal sugar marketing tactics. American Crystal’s packaging and warehousing groups teamed with our marketing entity, United Sugars, to provide customers with safe, quality deliveries, reliable service, and satisfying sugar sourcing experiences.

AGRI-PRODUCT MARKETING2015 prices for American Crystal’s agri-products sold through our marketing entity, Midwest Agri-Products, were generally lower following declining prices for competing feed commodities. While demand for our beet pulp in North America remained strong, a smaller crop reduced our sales volume. Exporting beet pulp to Asia and Europe faced stiff competition from excess European beet pulp supplies. Liquid product pricing for raffinate was average while betaine prices were lower due to a downturn in the poultry industry.

Operating ResponsiblyAdding to the livelihood of our region is at the core of our cooperative.

Every action we take is aimed at delivering sustainable, long-term results. On the farm our growers use land and water responsibly because it’s always been a part of the job. In our workplaces we prioritize safety and training to hone our edge as a leading employer. In the marketplace we supply distinctive quality products that win customers. In the sugar industry we vigorously defend U.S. sugar policy against unprovoked attacks and illegal trade activities. In the Red River Valley we engage in actions that enrich and nourish lives in our communities.

Making a differenceRonnie Tang, Shareholder,Bread of LIfe Food Pantry VolunteerFelton, MN

Ronnie saw the need for food pantry supplies in rural communities and works to secure bales of sugar for the Bread of Life Food Pantry in Felton.

Along with his son and daughter-in-law, Ronnie grows sugarbeets and operates Tang Farms in Felton, MN.

FISCAL YEAR 2015

Beet Payment To Shareholders

$419 MILLION

Per Ton Purchased

Per Acre Harvested

$44.01 $1019,

Hundredweight of Sugar27.3MILLION

Acres Harvested

411,213 9.5 MILLIONTons of sugarbeets

purchased/harvested

SELECT HIGHLIGHTS

GROSS BEET PAYMENT

2014 CROP AND STORAGEA wet fall and cold winter combined with a cool, late spring to delay planting of the 2014 sugarbeet crop. For the second consecutive year, the cooperative’s Board authorized an acreage increase. The upper planting tolerance was increased from 404,000 to 427,000 acres to help offset potential yield loss of a late planted crop. In mid-June, the last of the 413,000-acre crop was

seeded. Temperatures were normal with slightly below-average rainfall in most of July and August. Growing conditions turned favorable in late August through September with slightly above-average temperatures and near-average precipitation, allowing the crop to recover somewhat from its late start. Pre-pile harvest started September 2 with the anticipation of a smaller crop. Full harvest

opened up October 1. Rainfall amounts north of East Grand Forks caused many of the stations to delay harvest. Once the rain cleared we had one of the quickest harvests in history. On October 13 we were 98 percent done with receiving of the 2014 crop. Storing this crop had its challenges. In mid-November extreme cold temperatures for several days froze the outer two-foot rim of the beet piles. The remainder of November was warmer than average followed by rains in the first week of December, causing damage to the previously frozen rim beets. Cold temperatures in mid-December allowed the deep freeze process to begin. Moving into early 2015, it was challenging to get enough cold weather to complete freezing the long-term piles. In the end, storage results were respectable for the year.

2014-2015 OPERATIONSA smaller 2014 crop allowed our operations employees to focus on maintaining a steady, optimum throughput level to maximize sugar recovery and manage costs. During the processing campaign, we also worked to enhance automation utilization, fine tune operating procedures, and advance the cross-training of our workforce. Improving our productivity and product quality requires continual investment. This past year at our Hillsboro factory, we installed a new sugar dryer and sugar cooler. A new multi-year lime kiln project and a new sugar truck loading facility were also successfully brought on line at Hillsboro. A new rock catcher and associated equipment were installed at the Crookston factory. Numerous other improvements included updating

the controls at our Molasses Desugarization facility in Hillsboro and the East Grand Forks factory’s beet and sugar end controls. Effective management of environmental assets is important to our operations. We strive to comply with regulatory guidelines and diligently work to minimize adverse effects on our neighbors.

SIDNEY SUGARSThe Sidney area growers raised a record-yielding crop of 30.4 tons per acre on 29,000 acres in 2014, with a very good sugar content of 18.4%. As a result of the good crop, the factory produced 2.4 million hundredweight of sugar, up 14% from the previous year. Unfortunately, in spite of the nice crop for the growers, Sidney Sugars was financially challenged for the second straight year due to low prices for sugar and agri-products.

Refining PotentialSkillful performances in agriculture and manufacturing drive our abilities forward.

Riding to the rescueJackie Basgaard, Lab Foreman, Polk County Mounted Posse VolunteerCrookston, MN

Jackie and her horse, Spiderman, volunteer with the Polk County Sheriff’s Mounted Posse assisting in search and rescue efforts and monitoring local community events.

A Lab Foreman at the East Grand Forks factory, Jackie provides sugar and by-product analyses, results reporting, and acts as a first responder if needed.

The work that goes into running a progressive farmer-owned sugar company isn’t always visible. But the commitment behind the scenes is nonetheless incredible. The convergence of planning, investment, decision-making, and manpower to create sugar and agri-products from sugarbeets on the scale of American Crystal is unduplicated anywhere else in the world.

Best 24-hour period - 10/5

RECEIVED

EMPLOYEE WELLNESS American Crystal launched its BeWell initiative to support healthy lifestyle choices for employees. BeWell promotes the benefits of good nutrition, regular exercise, proper rest, and the advantages of a healthy approach to living. The program kicked off with a fitness

challenge, with 419 employees logging 573,000 exercise miles in 12 weeks. To further encourage active lifestyles, we’re sponsoring employee sports teams and employees and family members who participate in races like the Fargo marathon and the Grand Forks half marathon.

SKILL DEVELOPMENTAmbitious employees bring initiative and innovation to our business processes. We offer a broad spectrum of training options to develop their talents. This past year we added a Process Technician IV position to our 5-level employee advancement path. Each level offers greater responsibility and knowledge of our manufacturing process and requires in-depth training, testing, and on-the-job mentoring.

SOCIAL REACHOur company is people-driven so it makes sense to share more about us with social media. Early in 2015 we introduced our Facebook and LinkedIn pages. Each has grown tremendously in terms of content, friends, story sharing, and traffic. These sites also allow us to showcase our brand, our people

and our activities, while highlighting the benefits of working at American Crystal. By joining the conversation, we not only tell our story, we get feedback from community members. Our goal is to keep our social media platforms active, noteworthy, and fresh.

H.E.L.P. SAFETY COACHINGTo enhance workplace safety, we’ve implemented H.E.L.P. Safety Coaching. The program identifies and addresses situations where the majority of our workplace accidents and injuries occur. Through training, observation and coaching we’re reinforcing our commitment to employees that no priority is higher than safety.

Taking our company to the next level requires energy, goal setting, and collaboration. Successfully executing these efforts directly benefits everyone involved in our cooperative enterprise. It also makes us a stronger company which, in turn, helps create stronger communities. This mutually beneficial relationship expands when the people of American Crystal volunteer their talents and resources to civic and social organizations that support community needs.

Pivotal EffortsBringing together people and passions can produce wide-ranging impacts.

Answering the callWes Heyen, Beet Seed Processing Supervisor,Volunteer Firefighter and Emergency Responder, Abercrombie, ND

Wes has been helping neighbors and communities in need at a moment’s notice for more than 20 years. Like his fellow volunteers, he does it to make a difference during what can be a life-changing event for people.

The four focal areas of H.E.L.P Safety Coaching are:

• Hand Protection and proper personal protective equipment

• Eyes on Path – situational awareness

• Line of Fire – stay clear of hot liquids/moving objects

• Positioning – proper footing and body positioning

IN THE COMMUNITY

Organizations receivedcontributions, sponsorships, or products

One Al BloomquistMemorial Scholarship

$500 ScholarshipsAwarded to area highschool seniors

$1000047

American Crystal matched every dollar

Ours is a distinctive story of teamwork, in which 10,000 people come together from near and far to help with the annual sugarbeet harvest. We leverage our cold winters with specialized equipment to freeze sugarbeets and manufacture sugar longer than anywhere else in the world. It’s also a story that transforms sugarbeet roots from area farms into pure, all-natural crystalized sugar for customers who make the trusted foods we feed our families. Then, at the end of the year, we do it all over again – with an eye on doing it better.

2015 CROPIn general, the fall of 2014 ended fairly dry, allowing primary seedbed preparation and fall fertilization to be handled in a timely manner. Planting commenced in the second week of April and continued through May 8 for a total of 25 planting days for the vast majority of the 399,670 planted acres. The planting tolerance was tightened to a range of 78-80 percent of stock and with an early planting season, the Company’s new Spring TAP (Targeted Acres Program) for increasing overall harvested tons did not need implementation for the 2015 crop.

Precipitation ranged from light in the south growing region to heavier in the north. Root diseases generally trended below normal. We are seeing Glyphosate-resistant weeds become more numerous with a larger geographic spread. Overall, a good, early start followed by long warm growing season and timely rains progressed the 2015 crop toward impressive yields. Pre-pile harvest started August 17, the second earliest date in company history. We received around 16 percent of the crop during this period. Full stockpile harvest began October 1. With great cooperation from the weather, shareholders and piling site teams expertly produced record-breaking performances taking in over one million tons per day for the first several days of harvest. The Company released the Fall TAP acres program allowing all available acres to be harvested. On October 10 we were 94 percent done harvesting the 11 million ton crop.

DEEPLY ENGRAINED American Crystal has a long record of success. While there have been setbacks from time to time, we’ve managed through them by learning, adapting and investing in our strengths.

Connective landscapeAmerican Crystal’s success is closely tied to the expansive resources unique to the Red River Valley.

Customers, shareholders, employees, and communities get the most value from our company when we are effectively functioning in multiple capacities. Sustaining our operations strategically and responsibly is critical to securing our role as an agricultural leader and important regional business.

Advancing CommunityJohn Rehder, Shareholder, Warren City Council Member Warren, MN

A Warren City Council member for seven years, John was instrumental in the construction of the new North Valley Health Medical Center in 2013. He also served on the Alvarado Farmers Elevator and as the township clerk for the Farley Township.

A third-generation sugarbeet farmer, John operates R & R Farms Inc, in Warren, MN.

But most importantly, we’ve endured by being straight with our customers and relying on our people and the communities of the Red River Valley. Together, we’re proudly intertwined in a business and a region destined for sugar.

David Berg President & Chief Executive Officer

Robert Green Chairman, Board of Directors

SUGARBEET CROP 2015 SUGARBEET CROP

harvest PERFORMANCE

11.1 MILLION Total Tons

Harvested

Acres Harvested397,416

Per Acre Average

27.9 TONS 17.8% AVG.Sugar Content

Best 24-hour period - 10/3

1.14 millionTons Received

New Record

YIELD PERFORMANCE

ACREAGE

Management’s Report on the Consolidated Financial Statements

The management of American Crystal Sugar Company is responsible for the preparation, integrity and fair presentation of the accompanying consolidated financial statements and related information contained in this Annual Report. The consolidated financial statements, which include amounts based on management’s estimates and judgments, have been prepared in conformity with accounting principles generally accepted in the United States of America.

The Company maintains accounting and internal control systems to provide reasonable assurance at reasonable cost that assets are safeguarded against loss from unauthorized use or disposition, that transactions are properly recorded and executed in accordance with management’s authorization, and that the financial records provide a solid foundation from which to prepare the consolidated financial statements. These systems are augmented by written policies, an organizational structure providing division of responsibilities and careful selection and training of qualified personnel.

The Company’s consolidated financial statements have been audited by independent auditors CliftonLarsonAllen LLP. The independent auditors were given unrestricted access to all financial records and related data.

The Audit Committee of the Board of Directors meets with the independent auditors and management periodically to review their respective responsibilities and activities and to provide oversight to the Company’s accounting policies, internal controls and the financial reporting process. The independent auditors have free access to the Board of Directors and its Audit Committee, with or without management present, to discuss the scope and results of their audits and the adequacy of the system of internal controls.

David A. Berg, President and Chief Executive Officer

Teresa A. Warne, Vice President – Finance

Moorhead District

Senior Management

Hillsboro District

Senior Management

East Grand Forks DistrictDrayton District

Teresa WarneVice President Finance

Steve WilliamsVice Chairman

Jim NelsonDirector

Robert GreenChairman

Wayne TangDirector

Perry SkaurudDirector

Curt KnutsonDirector

John GudajtesDirector

Kelly EricksonDirector

David MuellerDirector

Donald AndringaDirector

Brian EricksonDirector

William “Buzz” BaldwinDirector

Dale FischerDirector

William HejlDirector

John BrainardDirector

Brian IngulsrudVice President Agriculture

Lisa BorgenVice President Administration

Daniel MottSecretary andGeneral Counsel

Kevin PriceVice President Government Relations

David Berg President & Chief Executive Officer

Thomas AstrupVice President Operations

Crookston District

Strategic Pursuits

Our strategy to invest for the longer term continues to have a major impact on performance. At the same time, our intense focus on safe, efficient operations and responsive customer service reinforces the durability of our business. Thanks to the tireless work of our shareholders, employees, and business partners, we remain confident in American Crystal’s direction.

Exploring options and capitalizing on opportunities is a team approach at American Crystal.

Independent Auditors’ Report

To the Audit Committee American Crystal Sugar Company Moorhead, Minnesota

We have audited the accompanying consolidated financial statements of American Crystal Sugar Company and Subsidiaries, which comprise the consolidated balance sheets as of August 31, 2015 and 2014 and the related consolidated statements of operations, comprehensive income, changes in members’ investments, and cash flows for the years then ended, and the related notes to the consolidated financial statements.

Management’s Responsibility for the Financial StatementsManagement is responsible for the preparation and fair presentation of these consolidated financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

Auditors’ ResponsibilityOur responsibility is to express an opinion on these consolidated financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements. The procedures selected depend on the auditors’ judgment, including the assessment of the risks of material misstatement of the consolidated financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the consolidated financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.

OpinionIn our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of American Crystal Sugar Company and Subsidiaries as of August 31, 2015 and 2014, and the results of their operations and their cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.

CliftonLarsonAllen LLP Stevens Point, Wisconsin October 14, 2015

Management’s Discussion of Operations

The harvest of the Red River Valley and Sidney sugarbeet crops grown during 2014 and processed during fiscal 2015 produced a total of 10.4 million tons of sugarbeets, or approximately 23.5 tons of sugarbeets per acre from approximately 440,000 acres. This represents a decrease in total tons harvested of approximately 12.1 percent compared to the 2013 crop. The sugar content of the 2014 crop was 17.5 percent as compared to 17.3 percent for the 2013 crop. The Company produced a total of approximately 29.6 million hundredweight of sugar from the 2014 crop, a decrease of approximately 10.2 percent compared to the 2013 crop.

Revenue for the year ended August 31, 2015, was $1.2 billion, a decrease of $166.7 million from the year ended August 31, 2014. The table below reflects the percentage changes in product revenues, prices and volumes for the year ended August 31, 2015, as compared to the year ended August 31, 2014.

The decrease in the selling price of sugar reflects an oversupply of sugar in the domestic sugar market. The lower pulp and betaine selling price is a result of a softening of the feed market. The decreased volume of all products is due to a smaller sugarbeet crop this year as compared to the previous year.

Cost of sales for the year ended August 31, 2015, exclusive of payments to members for sugarbeets, decreased $62.6 million as compared to the year ended August 31, 2014. This decrease was primarily related to product inventories that are recorded at their net realizable value, decreased operating costs due to processing 13.3 percent fewer tons of sugarbeets this year and lower purchased sugar costs, partially offset by increased costs associated with non-member sugarbeets. The change in the net realizable value of the product inventories from the beginning of the reporting period is recorded on the balance sheet as either an increase or decrease to inventories with a corresponding dollar for dollar adjustment to cost of sales on the statement of operations. The decrease in the net realizable value of product inventories for the year ended August 31, 2015 was $49.0 million as compared to a decrease of $75.5 million for the year ended August 31, 2014 resulting in a $26.5 million favorable change in the cost of sales between the two years as shown in the table below:

¹The change is primarily due to a 22.9 percent decrease in the hundredweight of sugar inventory as of August 31, 2014, as compared to August 31, 2013, along with an 11.6 percent decrease in the per hundredweight net realizable value of sugar inventory as of August 31, 2014, as compared to August 31, 2013.

²The change is primarily due to a 34.7 percent decrease in the hundredweight of sugar inventory as of August 31, 2015, as compared to August 31, 2014 partially offset by a 5.6 percent increase in the per hundredweight net realizable value of sugar inventory as of August 31, 2015, as compared to August 31, 2014.

Selling, general and administrative expenses decreased $24.6 million for the year ended August 31, 2015, as compared to the year ended August 31, 2014. Selling expenses decreased $26.3 million primarily due to expenses related to the decreases in the volumes of sugar, pulp and molasses sold. General and administrative expenses increased $1.7 million due to general cost increases.

Interest expense increased $1.7 million for the year ended August 31, 2015, as compared to the year ended August 31, 2014. This reflects an increase in the average borrowing level of long-term debt and an increase in the average interest rate for short-term debt partially offset by a lower average borrowing level of short-term debt.

Net proceeds attributable to American Crystal Sugar Company decreased $79.8 million for the year ended August 31, 2015, as compared to the year ended August 31, 2014. This decrease was primarily due to fewer tons of sugarbeets processed resulting in the decreased production of sugar and agri-products along with a decline in selling prices.

Product Revenue Selling Price VolumeSugar -11.3% -1.6% -9.8%Pulp -22.0% -13.7% -9.6%Molasses -33.9% -1.3% -33.0%CSB -2.8% -2.8% -0.1%Betaine -15.0% -10.9% -4.5%

Change in the Net Realizable Value of Product Inventories

(In Millions)

For the Years Ended August 31

2015 2014 Change

Beginning Product Inventories at Net Realizable Value Ending Product Inventories at Net Realizable Value

$ 153.5 (104.5)

$ 229.0 (153.5)

$ (75.5)1

49.0 2

(Increase) Decrease in the Net Realizable Value of Product Inventories $ 49.0 $ 75.5 $ (26.5)

For the Years Ended August 31 (In Thousands) 2015 2014

Non-Member Business Income $ 2,603 $ 4,586

Pension & Post-Retirement Gain/(Loss) (22,188) (3,942)

Pension & Post-Retirement Prior Service Credit/(Cost) (1,544) 9,682

Equity Method Investees Other Comprehensive Income/(Loss) 812 (1,259)

Foreign Currency Forward Contract Gain/(Loss) 7 (12)

Derivative Interest Rate Contract Gain/(Loss) (632) 246

Total Comprehensive Income (Loss) $ (20,942) $ 9,301

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

Net Revenue $ 1,221,100 $ 1,387,785

Cost of Sales 498,819 561,425

Gross Proceeds 722,281 826,360

Selling, General and Administrative Expenses 285,250 309,833

Operating Proceeds 437,031 516,527

Other Income (Expense):

Interest Income 226 104

Interest Expense, Net (8,500) (6,818)

Other, Net 87 141

Total Other Expense (8,187) (6,573)

Proceeds Before Income Tax 428,844 509,954

Income Tax Expense (2,120) (2,620)

Consolidated Net Proceeds 426,724 507,334

Less: Net Proceeds Attributable to Noncontrolling Interests (5,253) (6,018)

Net Proceeds Attributable to American Crystal Sugar Company $ 421,471 $ 501,316

Distributions of Net Proceeds Attributable to American Crystal Sugar Company: Credited to American Crystal Sugar Company’s Members’ Investments: Non-Member Business Income $ 2,603 $ 4,586 Unit Retains Withheld from Members 19,021 21,948

Net Credit to American Crystal Sugar Company’s Members’ Investments 21,624 26,534

Payments to Members for Sugarbeets, Net of Unit Retains Withheld 399,847 474,782

Total $ 421,471 $ 501,316

Consolidated Statements of Operations Consolidated Statements of Comprehensive Income (Loss)

AssetsAugust 31 (In Thousands) 2015 2014

Current Assets:

Cash and Cash Equivalents $ 115 $ 120

Receivables: Trade 57,270 67,395 Members 9,240 7,993 Other 4,947 5,462

Advances to Related Parties 23,859 13,850

Inventories 220,020 221,986

Prepaid Expenses 2,674 2,699

Total Current Assets 318,125 319,505

Property and Equipment:

Land and Land Improvements 114,796 104,329

Buildings 152,604 146,320

Equipment 1,169,359 1,117,357

Construction in Progress 4,738 26,421

Less Accumulated Depreciation (958,209) (923,374)

Net Property and Equipment 483,288 471,053

Net Property and Equipment Held for Lease 56,113 65,975

Other Assets:

Investments in CoBank, ACB 3,136 3,972

Investments in Marketing Cooperatives 5,646 6,824

Other Assets 9,876 13,269

Total Other Assets 18,658 24,065

Total Assets $ 876,184 $ 880,598

Consolidated Balance Sheets

Liabilities and Members’ InvestmentsAugust 31 (In Thousands) 2015 2014

Current Liabilities:

Short-Term Debt $ 67,045 $ 60,599

Current Maturities of Long-Term Debt 335 6,065

Accounts Payable 34,487 46,971

Advances Due to Related Parties 3,760 4,477

Other Current Liabilities 43,213 33,574

Amounts Due Growers 133,348 124,321

Total Current Liabilities 282,188 276,007

Long-Term Debt, Net of Current Maturities 166,613 149,818

Accrued Employee Benefits 43,334 39,105

Other Liabilities 5,499 7,573

Total Liabilities 497,634 472,503

Commitments and Contingencies

Members’ Investments:

Preferred Stock, Shares Outstanding: 498,570 and 498,570 38,275 38,275

Common Stock, Shares Outstanding: 2,667 and 2,738 27 27

Additional Paid-In Capital 152,261 152,261

Unit Retains 206,009 210,231

Accumulated Other Comprehensive (Loss) (62,446) (38,901)

Retained Earnings 16,966 14,363

Total American Crystal Sugar Company Members’ Investments 351,092 376,256

Noncontrolling Interests 27,458 31,839

Total Members’ Investments 378,550 408,095

Total Liabilities and Members’ Investments $ 876,184 $ 880,598

Consolidated Balance Sheets

For the Years Ended August 31 (In Thousands)Preferred

StockCommon

StockAdditional

Paid-In Capital Unit Retains

Accumulated Other Comprehensive Income (Loss)

Retained Earnings

American Crystal Sugar Company Total

Noncontrolling Interests Total

Balance, August 31, 2013 $ 38,275 $ 28 $ 152,261 $ 223,902 $ (43,616) $ 9,777 $ 380,627 $ 36,581 $ 417,208

Comprehensive Income — — — — 4,715 4,586 9,301 — 9,301

Net Proceeds Noncontrolling Interests — — — — — — — 6,018 6,018

Distributions to Noncontrolling Interests — — — — — — — (10,760) (10,760)

Unit Retains Withheld from Members — — — 21,948 — — 21,948 — 21,948

Unit Retains Paid to Members — — — (35,619) — — (35,619) — (35,619)

Stock Issued/(Redeemed), Net — (1) — — — — (1) — (1)

Balance, August 31, 2014 38,275 27 152,261 210,231 (38,901) 14,363 376,256 31,839 408,095

Comprehensive (Loss) — — — — (23,545) 2,603 (20,942) — (20,942)

Net Proceeds Noncontrolling Interests — — — — — — — 5,253 5,253

Distributions to Noncontrolling Interests — — — — — — — (9,634) (9,634)

Unit Retains Withheld from Members — — — 19,021 — — 19,021 — 19,021

Unit Retains Paid to Members — — — (23,243) — — (23,243) — (23,243)

Stock Issued/(Redeemed), Net — — — — — — — — —

Balance, August 31, 2015 $ 38,275 $ 27 $ 152,261 $ 206,009 $ (62,446) $ 16,966 $ 351,092 $ 27,458 $ 378,550

Consolidated Statements of Changes in Members’ Investments

Cash Provided By (Used In) Operating Activities:

Net Proceeds Attributable to American Crystal Sugar Company $ 421,471 $ 501,316

Payments To/Due Members for Sugarbeets, Net of Unit Retains Declared (399,847) (474,782)

Add (Deduct) Non-Cash Items: Depreciation and Amortization 61,085 57,099 Accretion Expense 122 124 Loss from Equity Method Investees 1,760 729 Loss on the Disposition of Property and Equipment 1,505 2,713 Loss on the Disposition of Property and Equipment Held for Lease 796 216 Non-Cash Portion of Patronage Dividend from CoBank, ACB (18) — Deferred Gain Recognition (63) (63) Noncontrolling Interests 5,253 6,018

Changes in Assets and Liabilities: Receivables 9,393 9,312 Inventories 1,966 73,077 Prepaid Expenses 27 2,071 Other Assets — (4,314) Advances To/Due to Related Parties (10,726) 3,332 Accounts Payable (9,645) (3,937) Other Liabilities (6,993) (2,328) Amounts Due Growers 9,027 (13,339)

Net Cash Provided By Operating Activities 85,113 157,244

Cash Provided By (Used In) Investing Activities:

Purchases of Property and Equipment (64,714) (81,204)

Purchases of Property and Equipment Held for Lease (3,480) (2,281)

Proceeds from the Sale of Property and Equipment 9 53

Equity Distribution from CoBank, ACB 854 1,002

Investments in Marketing Cooperatives (360) (140)

Equity Distribution from Marketing Cooperatives 591 163

Changes in Other Assets (2,175) (268)

Net Cash (Used In) Investing Activities (69,275) (82,675)

Cash Provided By (Used In) Financing Activities:

Net Proceeds from (Payments on) Short-Term Debt 6,446 (57,898)

Proceeds from Issuance of Long-Term Debt 47,000 30,000

Long-Term Debt Repayment (36,065) (300)

Debt Issuance Cost (347) —

Distributions to Noncontrolling Interests (9,634) (10,760)

Common Stock Issued/(Redeemed), Net — (1)

Payment of Unit Retains (23,243) (35,619)

Net Cash (Used In) Financing Activities (15,843) (74,578)

(Decrease) In Cash and Cash Equivalents (5) (9)

Cash and Cash Equivalents, Beginning of Year 120 129

Cash and Cash Equivalents, End of Year $ 115 $ 120

Consolidated Statements of Cash Flows

(1) PRINCIPAL ACTIVITY AND SIGNIFICANT ACCOUNTING POLICIES:OrganizationAmerican Crystal Sugar Company (Company) is a Minnesota agricultural cooperative corporation which processes sugarbeets and markets sugar as well as sugarbeet pulp, molasses, concentrated separated by-product (CSB), betaine (collectively, agri-products) and sugarbeet seed. Business done with its shareholders (members) constitutes “patronage business” as defined by the Internal Revenue Code, and the net proceeds therefrom are credited to members’ investments in the form of unit retains or distributed to members in the form of payments for sugarbeets. Members are paid the net amounts realized from the current year’s production less member operating costs determined in conformity with accounting principles generally accepted in the United States of America.

Basis of PresentationThe Company’s consolidated financial statements are comprised of American Crystal Sugar Company, its wholly-owned subsidiaries Sidney Sugars Incorporated (Sidney Sugars) and Crab Creek Sugar Company (Crab Creek), and ProGold Limited Liability Company (ProGold), a limited liability company in which the Company holds a 51 percent ownership interest.

All material inter-company transactions have been eliminated.

Certain reclassifications have been made to the August 31, 2014 consolidated financial statements to conform with the August 31, 2015 presentation. These reclassifications had no effect on previously reported results of operations, cash flows or Members’ Investments.

Revenue RecognitionRevenue from the sale of sugar, agri-products and seed is recorded when the product is delivered to the customer. Operating lease revenue is recognized as earned ratably over the term of the lease.

Operating Lease ProGold owns a corn wet milling facility which it leases to Cargill, Incorporated (Cargill) under an operating lease. Payments are to be received monthly under the lease, which runs through December 31, 2017. The operating lease revenue is recognized as earned ratably over the term of the lease and to the extent that amounts received exceed amounts earned, deferred revenue is recorded. Expenses (including depreciation and interest) are charged against such revenue as incurred. The lease does not contain a provision for the automatic renewal or extension of the lease terms. However, it does provide an option for Cargill to request exclusive negotiations with ProGold during a certain period of time prior to the expiration of the current lease. The lease also contains provisions for increased payments to be received during the lease period related to the plant’s capital additions.

Cash and Cash EquivalentsThe Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Company places its temporary cash investments with high credit quality financial institutions. At times, such investments may be in excess of the applicable insurance limit.

Accounts Receivable and Credit PoliciesThe Company grants credit, individually and through its marketing cooperatives, to its customers, which are primarily companies in the food processing industry located throughout the United States.

Trade receivables are uncollateralized customer obligations due under normal trade terms requiring payment within 15 to 90 days from the invoice date. The receivables are non-interest bearing. Trade receivables are stated at the amount billed to the customer. Payments of trade receivables are allocated to the specific invoices identified on the customer’s remittance advice or, if unspecified, are applied to the earliest unpaid invoices.

Ongoing credit evaluations of customers’ financial condition are performed and the Company maintains a reserve for potential credit losses. The carrying amount of trade receivables is reduced by a valuation allowance that reflects the Company’s best estimate of the amounts that will not be collected. The Company determines a receivable to be uncollectible and is written off against the reserve based on several criteria including such items as the credit evaluation of a customer’s financial condition, the aging of the receivable and previous unsuccessful collection efforts.

Notes to the Consolidated Financial Statements

Non-Cash Investing Activities: Purchases of Property and Equipment include the changes in Accounts Payable related to these purchases of ($1,849,000) and ($4,790,000) for the years ended August 31, 2015 and 2014, respectively and changes in Other Liabilities of ($163,000) and $2,633,000 for the years ended August 31, 2015 and 2014, respectively. Purchases of Equipment Held for Lease include the changes in Accounts Payable related to these purchases of ($990,000) and $990,000 for the years ended August 31, 2015 and 2014, respectively.

InventoriesSugar, pulp, molasses and other agri-products inventories are valued at estimated net realizable value. Operating supplies, maintenance parts, and sugarbeet seed inventories are valued at the lower of average cost or market. Sugarbeets are valued at the projected gross per-ton beet payment related to that year’s crop.

Net Property and Equipment Property and equipment are recorded at cost less impairment. Indirect costs and construction period interest are capitalized as a component of the cost of qualified assets. Property and equipment are depreciated for financial reporting purposes principally using straight-line methods with estimated useful lives ranging from 3 to 33 years.

Net Property and Equipment Held for LeaseNet property and equipment held for lease are stated at cost, net of accumulated depreciation. Depreciation on assets placed in service is provided using the straight-line method with estimated useful lives ranging from 5 to 40 years.

Impairment of Long Lived AssetsThe Company reviews its long lived assets for impairment whenever events indicate that the carrying amount of the asset may not be recoverable. An impairment loss is recorded when the sum of the future cash flows is less than the carrying amount of the asset. An impairment loss is measured as the amount by which the carrying amount of the asset exceeds its fair value. The fair value of assets is a significant estimate and it is at least reasonably possible that a change in the estimate could occur in the near term. No impairment was recognized in 2015 or 2014.

Related PartiesThe following organizations are considered related parties for financial reporting purposes: United Sugars Corporation (United), Midwest Agri-Commodities Company (Midwest) and West Coast Beet Seed Company.

InvestmentsInvestments in CoBank, ACB are stated at cost plus unredeemed patronage refunds received in the form of capital stock. Investments in Marketing Cooperatives include investments in United and Midwest, which are accounted for using the equity method. Investments in West Coast Beet Seed Company are stated at cost.

Members’ InvestmentsPreferred and Common Stock – The ownership of common stock is restricted to a “farm operator” as defined by the bylaws of the Company. Each shareholder may own only one share of common stock and is entitled to one vote in the affairs of the Company. Each common shareholder is required to purchase preferred stock in proportion to the acreage of sugarbeets which the common shareholder places under contract with the Company. The preferred shares are non-voting. All transfers of stock must be approved by the Company’s Board of Directors and any shareholder desiring to sell stock must first offer it to the Company for repurchase at its par value. The Company has never exercised this repurchase option for preferred stock. The Company’s articles of incorporation do not allow dividends to be paid on either the common or preferred stock.

Unit Retains – The bylaws authorize the Company’s Board of Directors to require additional direct capital investments by members in the form of a variable unit retain per ton of up to a maximum of 10 percent of the weighted average gross per ton beet payment. All refunds and retirements of unit retains must be approved by the Board of Directors.

Accumulated Other Comprehensive Income (Loss) – Accumulated Other Comprehensive Income (Loss) represents the cumulative net increase (decrease) in equity related to the recording of the over-funded or under-funded status of defined benefit postretirement plans, the Company’s portion of the other comprehensive income (loss) of equity method investees and the gain or loss related to foreign currency forward contracts and interest rate swap contracts. Consistent with the Company’s treatment of income taxes related to member-source income and expenses, accumulated other comprehensive income (loss) does not include any adjustment for income taxes.

Retained Earnings – Retained earnings represents the cumulative net income (loss) resulting from non-member business, the 2009 pension measurement date adjustment and, for years prior to 1996, the difference between member income as determined for financial reporting purposes and for federal income tax reporting purposes.

Interest Expense, NetThe Company earns patronage dividends from CoBank, ACB based on the Company’s share of the net income earned by CoBank, ACB. These patronage dividends are applied against interest expense.

Income TaxesThe Company is a non-exempt cooperative for federal income tax purposes. As such, the Company is subject to corporate income taxes on its net income from non-member sources. The provision for income taxes relates to the results of operations from non-member business, state income taxes and certain other permanent differences between financial and income tax reporting. The Company also has various temporary differences between financial and income tax reporting, most notable of which is depreciation.

Deferred tax assets, less any applicable valuation allowance, and deferred tax liabilities are included in the financial statements at currently enacted income tax rates applicable to the period in which the deferred tax assets and liabilities are expected to be realized or settled.

Accounting EstimatesThe preparation of the financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Fair Value MeasurementsFair value is defined as the price that would be received from selling an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and considers assumptions that market participants would use when pricing the asset or liability, such as inherent risk, transfer restrictions, and risk of nonperformance.

The fair value hierarchy requires the Company to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is based upon the lowest level of input that is significant to the fair value measurement. Three levels of inputs may be used to measure fair value:

Level 1: Quoted prices in active markets for identical assets or liabilities.

Level 2: Includes the following inputs:• quoted prices in active markets for similar assets or liabilities, • quoted prices for identical or similar assets or liabilities in markets that are not active, • or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets

or liabilities.

Level 3: Unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities.

Derivative Instruments and Hedging ActivitiesThe Company recognizes all derivatives in its Consolidated Balance Sheet at fair value. On the date the derivative instrument is entered into, the Company designates the derivative as either (1) a hedge of the fair value of a recognized asset or liability, or of an unrecognized firm commitment (“fair value hedge”) or (2) a hedge of a forecasted transaction or of the variability of cash flows to be received or paid related to a recognized asset or liability (“cash flow hedge”). The Company has entered into foreign currency forward contracts and interest rate swaps, which have been designated as cash flow hedges. Changes in the fair value of a derivative designated as a cash flow hedge are recorded in accumulated other comprehensive income (loss) and are reclassified into earnings as the underlying hedged item affects earnings.

Business RiskThe financial results of the Company’s operations may be directly and materially affected by many factors, including prevailing prices of sugar and agri-products, the Company’s ability to market its sugar competitively, the weather, government programs and regulations, and operating costs.

Concentration and Sources of LaborSubstantially all of the hourly employees at the Company’s factories, including full-time and seasonal employees, are represented by the Bakery, Confectionery, Tobacco Workers and Grain Millers (BCTGM) AFL-CIO. The collective bargaining agreement for the Red River Valley factory employees expires on July 31, 2017. The collective bargaining agreement for the Sidney, Montana, factory employees expires on April 30, 2018. Office, clerical and management employees are not unionized, except for certain office employees at the Moorhead and Crookston, Minnesota, and Hillsboro, North Dakota, factories who are covered by the collective bargaining agreement with the BCTGM.

Shipping and Handling CostsThe costs incurred for the shipping and handling of products sold are classified in the consolidated financial statements as a selling expense on the Consolidated Statements of Operations. Shipping and handling costs were $194.1 million and $214.0 million for the years ended August 31, 2015 and 2014, respectively.

Deferred Costs and Product ValuesAll costs incurred prior to the end of the Company’s fiscal year that relate to receiving and processing the subsequent year’s sugarbeet crop are deferred. Similarly, the net realizable values of products produced prior to the end of the Company’s fiscal year that relate to the subsequent year’s sugarbeet crop are deferred. The net result of these deferred costs and product values are recorded in the Company’s consolidated balance sheet in “Other Current Liabilities.” Deferred costs and product values were $3.7 million and $0 as of August 31, 2015 and 2014, respectively.

Recently Issued Accounting PronouncementsIn February 2013, the FASB issued an update to the authoritative guidance which requires disclosure information about the amounts reclassified out of accumulated other comprehensive income. The guidance provided by this update became effective and was adopted by the Company in fiscal 2015.

In February 2013, the FASB issued an update to the authoritative guidance which requires the Company to measure obligations resulting from joint and several liability arrangements for which the total amount of the obligation is fixed at the reporting date. The guidance also requires the Company to disclose the nature and amount of the obligation. The guidance provided by this update became effective and was adopted by the Company in fiscal 2015.

In July 2013, the FASB issued an update to the authoritative guidance in regards to the presentation in the financial statements of an unrecognized tax benefit when a net operating loss carry-forward, a similar tax loss, or a tax credit carry-forward exists. The guidance provided by this update becomes effective for the Company in fiscal 2016. The Company does not expect that the adoption of this guidance will have a material effect on the Company’s financial statements.

In May 2014 and August 2015, the FASB issued an update to the authoritative guidance which establishes principles for reporting and disclosing useful information to users of financial statements about the nature, amount, timing, and uncertainty of revenue and cash flows arising from the entity’s contracts with customers. The guidance provided by this update becomes effective for the Company in fiscal 2020. The Company does not expect that the adoption of this guidance will have a material effect on the Company’s financial statements.

In January 2015, the FASB issued an update to the authoritative guidance in regards to simplifying income statement presentation by eliminating the concept of extraordinary items. The guidance provided by this update becomes effective for the Company in fiscal 2017. The Company does not expect that the adoption of this guidance will have a material effect on the Company’s financial statements.

In April 2015 and August 2015, the FASB issued an update to the authoritative guidance in regards to simplifying the presentation of debt issuance costs by requiring that debt issuance costs related to a recognized debt liability be presented in the balance sheet as a direct deduction from the carrying amount of that debt. The guidance provided by this update was adopted by the Company in fiscal 2015 resulting in a reclassification of $2,177,000 from other assets to long-term debt as of August 31, 2014.

(2) RECEIVABLES:There was no single customer attributable to the Company that accounted for 10 percent or more of the Company’s total receivables as of August 31, 2015 or 2014 or that accounted for 10 percent or more of the revenues of the Company for the years ended August 31, 2015 or 2014.

(3) INVENTORIES:The major components of inventories as of August 31, 2015 and 2014 are as follows:

(In Thousands) 2015 2014

Sugar, Agri-Products and Sugarbeet Seed $ 139,859 $ 155,381

Unprocessed Sugarbeets 6,819 —

Operating Supplies and Maintenance Parts 73,342 66,605

Total Inventories $ 220,020 $ 221,986 The Company’s reserve for inventory obsolescence was $7.2 million and $14.3 million as of August 31, 2015 and 2014, respectively.

(4) NET PROPERTY AND EQUIPMENT:Indirect costs capitalized were $1.5 million in 2015 and 2014. Construction period interest capitalized was $ .3 million and $ .5 million in 2015 and 2014, respectively. Depreciation expense was $49.0 million and $44.8 million in 2015 and 2014, respectively. The Company had outstanding commitments totaling $6.0 million as of August 31, 2015, for equipment and construction contracts related to various capital projects.

As of August 31, 2015 and 2014, the Company had Land Improvement of $2.5 and $2.6 million, respectively, associated with certain landfills at its factories. Depreciation expense associated with this obligation was $283,000 and $322,000 for the years ended August 31, 2015 and 2014, respectively. Accretion expense associated with this obligation was $122,000 and $124,000 for the years ended August 31, 2015 and 2014, respectively.

(5) NET PROPERTY AND EQUIPMENT HELD FOR LEASE:ProGold owns a corn wet-milling facility that it leases under an operating lease which runs through December 31, 2017. Under the terms of the operating lease, the lessee manages all aspects of the operations of the ProGold corn wet-milling facility.

Net Property and Equipment Held for Lease are stated at cost, net of accumulated depreciation. Depreciation expense was $11.6 million in 2015 and 2014. The components of Net Property and Equipment Held for Lease as of August 31, 2015 and 2014 are shown below:

Land and Land Improvements $ 8,790 $ 8,492

Buildings 42,804 42,379

Equipment 208,559 210,327

Construction in Progress 778 1,885

Less Accumulated Depreciation (204,818) (197,108)

Net Property and Equipment Held for Lease $ 56,113 $ 65,975 Future minimum payments to be received under the lease are as follows:

Fiscal year ending August 31, (In Thousands)

2016 $ 21,500

2017 21,500

2018 7,167

Total $ 50,167

ProGold entered into a Capital Expenditures Agreement with Cargill, Incorporated during fiscal 2014 associated with a project to replace certain equipment at the corn wet milling facility. During 2015, ProGold reimbursed Cargill, Incorporated $2.2 million for costs incurred for the project when it was completed. The agreement also provides that ProGold will receive monthly incremental lease payments from Cargill, Incorporated upon completion of the project equal to an amount necessary for the reimbursement amount together with interest to be fully amortized over a period of 12 years. The incremental lease payments total $229,000 per year and will continue during the term of the lease shown in the schedule above, including any extension(s) of the lease term but not to exceed 12 years. This incremental lease payment is not included in the amounts shown above for the original lease.

ProGold has recorded a liability of $0 and $990,000 as of August 31, 2015 and 2014 respectively, due Cargill, Incorporated associated with costs incurred on the replacement project through that date.

The short-term debt outstanding as of August 31, 2015 and 2014 is summarized below:

Commercial Paper, at fixed interest rate of .43% and .46%, due 9/9/15. $ 67,045 $ 60,599

(6) INVESTMENTS IN MARKETING COOPERATIVES:The Company has a 60 percent ownership interest and a 33 1/3 percent voting interest in United. The investment is accounted for using the equity method. As of August 31, 2015, the Company’s investment in United was approximately $5.6 million. Substantially all sugar products produced are sold by United as an agent for the Company. The amount of sales and related costs to be recognized by each owner of United is allocated based on its pro rata share of sugar production for the year. The owners provide United with cash advances on an ongoing basis for operating and marketing expenses incurred by United. The Company had outstanding advances to United of $22.5 million and $13.3 million as of August 31, 2015 and 2014, respectively. The Company provides administrative services for United and is reimbursed for costs incurred. The Company was reimbursed approximately $1.1 million and $1.0 million for services provided during fiscal years 2015 and 2014, respectively.

The Company has a 41 percent ownership interest and a 25 percent voting interest in Midwest. The investment is accounted for using the equity method. As of August 31, 2015, the Company’s investment in Midwest was approximately $61,000. Substantially all sugarbeet pulp, molasses and other agri-products produced are sold by Midwest as an agent for the Company. The amount of sales and related costs to be recognized by each owner of Midwest is allocated based on its pro rata share of production for each product for the year. The owners provide Midwest with cash advances on an ongoing basis for operating and marketing expenses incurred by Midwest. The Company had outstanding advances due to Midwest of $3.8 million and $4.5 million as of August 31, 2015 and 2014, respectively. The Company provides administrative services for Midwest and is reimbursed for costs incurred. The Company was reimbursed $93,000 and $108,000 for services provided during 2015 and 2014, respectively. The owners of Midwest are guarantors of an $11.0 million short-term line of credit Midwest has with CoBank, ACB. As of August 31, 2015, Midwest had outstanding short-term debt with CoBank, ACB of $4.5 million, of which $2.6 million was the proportional amount guaranteed by the Company.

The Company has performed a complete analysis and has determined that its investments in United and Midwest do not meet the criteria of Variable Interest Entities and therefore such entities are not consolidated in the Company’s Consolidated Financial Statements.

(7) INVESTMENTS IN WEST COAST BEET SEED COMPANY:The Company has a 15 percent ownership interest in West Coast Beet Seed Company (WCBS). The investment is accounted for on a cost basis. As of August 31, 2015, the Company’s investment in WCBS was approximately $1,000 and is included in Other Assets on the Consolidated Balance Sheets. WCBS contracts with growers for the production of sugarbeet seed per the requirements of the owners of WCBS. The owners provide WCBS with cash advances on an ongoing basis for operating expenses incurred by WCBS. The Company had outstanding advances to WCBS of $ 1.4 million and $ .5 million as of August 31, 2015 and 2014, respectively.

(8) LONG-TERM AND SHORT-TERM DEBT:The long-term debt outstanding as of August 31, 2015 and 2014 is summarized below:

Term Loan from CoBank, ACB, due in varying amounts through fiscal 2027, with interest at a fixed rate of 1.95%, with senior lien on substantially all non-current assets. $ 20,000 $ —

Term Loan from CoBank, ACB, due August 2018, with interest at a fixed rate of 1.42%, through October 2015. 17,000 30,000

Term Loans from Insurance Companies, due in varying amounts through fiscal 2034, interest at fixed rates of 4.93% to 7.42%, with senior lien on substantially all non-current assets. 60,000 50,000

Pollution Control and Industrial Development Revenue Bonds, due in varying amounts through fiscal 2027, interest at fixed rates of 5.35% to 6.00% and varying rates of .03% and .07% as of August 31, 2015, substantially secured by letters of credit. 71,995 78,060

Unamortized Bond Costs (2,047) (2,177)

Total Long-Term Debt 166,948 155,883

Less Current Maturities (335) (6,065)

Long-Term Debt, Net of Current Maturities $ 166,613 $ 149,818

Minimum annual principal payments for the next five years are as follows:

(In Thousands)

2016 $ 335

2017 $ 18,355

2018 $ 35 ,625

2019 $ —

2020 $ 3,580 The Company has a long-term debt line of credit through August 13, 2018 with CoBank, ACB of $60.8 million along with an additional $60.0 million which can be utilized for either short-term or long-term borrowing purposes. As of August 31, 2015, the Company had an outstanding loan with CoBank, ACB of $17.0 million and outstanding long-term letters of credit of $59.0 million. The unused long-term line of credit as of August 31, 2015 was $44.8 million which can also be utilized for short-term borrowing purposes.

At August 31, 2014, the Company had a long-term debt line of credit through August 13, 2018 with CoBank, ACB of $60.8 million along with an additional $60.0 million which could be utilized for either short-term or long-term borrowing purposes. As of August 31, 2014, the Company had an outstanding loan with CoBank, ACB of $30.0 million and outstanding long-term letters of credit of $64.1 million. The unused long-term line of credit as of August 31, 2014 was $26.7 million which could also be utilized for short-term borrowing purposes.

During the year ended August 31, 2015, the Company issued commercial paper to meet its short-term borrowing requirements. As of August 31, 2015, the Company had a seasonal line of credit through August 13, 2018, with a consortium of lenders led by CoBank, ACB of $350.0 million along with an additional $60.0 million which can be utilized for either short-term or long-term borrowing purposes. As of August 31, 2015, $15.2 million of the $60.0 million was utilized for long-term borrowing purposes. There was no outstanding balance with CoBank, ACB as of August 31, 2015. The Company also has a line of credit with Wells Fargo Bank for $1.0 million, against which there was no outstanding balance as of August 31, 2015. The Company’s commercial paper program provides short-term borrowings up to the amount of the CoBank, ACB seasonal line of credit of which approximately $67.0 million was outstanding as of August 31, 2015. The Company had $3.8 million in short-term letters of credit outstanding as of August 31, 2015. Any borrowings under the commercial paper program along with outstanding short-term letters of credit will act to reduce the available credit under the CoBank, ACB seasonal line of credit by a commensurate amount. The unused line of credit as of August 31, 2015 was $325.0 million which includes $44.8 million that can also be utilized for long-term borrowing purposes.

The Company can borrow funds on a non-recourse basis from the CCC, with repayment of such funds secured by sugar. The limitations on such borrowings are based on the amount of the Company’s sugar inventory and certain loan covenant restrictions by CoBank, ACB. On October 1, 2013, the Company forfeited approximately 2.0 million hundredweight of 2012 crop sugar to the CCC in satisfaction of the $46.7 million in outstanding non-recourse loans. As of August 31, 2015, the Company had no outstanding loans with the CCC and had the capacity to obtain non-recourse loans from the CCC of approximately $65.8 million.

During the year ended August 31, 2014, the Company borrowed from the CCC and issued commercial paper to meet its short-term borrowing requirements. As of August 31, 2014, the Company had a seasonal line of credit through August 13, 2018, with a consortium of lenders led by CoBank, ACB of $350.0 million along with an additional $60.0 million which could be utilized for either short-term or long-term borrowing purposes. As of August 31, 2014, $33.2 million of the $60.0 million was utilized for long-term borrowing purposes. There was no outstanding balance with CoBank, ACB as of August 31, 2014. The Company also had a line of credit with Wells Fargo Bank for $1.0 million, against which there was no outstanding balance as of August 31, 2014. The Company’s commercial paper program provided short-term borrowings up to the amount of the CoBank, ACB seasonal line of credit of which approximately $60.6 million was outstanding as of August 31, 2014. The Company had $3.5 million in short-term letters of credit outstanding as of August 31, 2014. Any borrowings under the commercial paper program along with outstanding short-term letters of credit act to reduce the available credit under the CoBank, ACB seasonal line of credit by a commensurate amount. The unused line of credit as of August 31, 2014 was $313.7 million which included $26.7 million that could also be utilized for long-term borrowing purposes. As of August 31, 2014, the Company had no outstanding loans with the CCC and had the capacity to obtain non-recourse loans from the CCC of approximately $112.7 million.

Maximum borrowings, average borrowing levels and average interest rates for short-term debt for the years ended August 31, 2015 and 2014, follow:

(In Thousands, Except Interest Rates) 2015 2014

Maximum Borrowings $ 244,425 $ 291,150

Average Borrowing Levels $ 141,302 $ 192,587

Average Interest Rates 0.83% 0.61% The terms of the loan agreements contain prepayment penalties along with certain covenants related to, among other matters, the: level of working capital; ratio of term liabilities to members’ investments; current ratio; interest coverage ratio; and investment in CoBank, ACB stock in amounts prescribed by the bank. Substantially all non-current assets are pledged to the senior lenders to provide security to support the Company’s seasonal and long-term financing. As of August 31, 2015 and 2014, the Company was in compliance with the terms of the loan agreements.

Interest paid, net of amounts capitalized, was $8.3 million and $6.9 million for the years ended August 31, 2015 and 2014, respectively.

(9) DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES:The Company, as a result of its operating and financing activities, is exposed to changes in foreign currency exchange rates and interest rates which may adversely affect its results of operations and financial position. In seeking to minimize the risks and/or costs associated with such activities, the Company may enter into derivative contracts.

The Company manages its foreign currency related risks primarily through the use of foreign currency forward contracts. The contracts held by the Company are denominated in Euros. The Company has entered into foreign currency forward contracts that are designated as cash flow hedges of exchange rate risk related to foreign currency-denominated purchases of equipment. Inputs used to measure the fair value of the foreign currency forward contracts are contained within level 1 of the fair value hierarchy. The fair value of the open contracts is recorded in accumulated other comprehensive income (loss) in members’ investments. Amounts deferred to accumulated other comprehensive income (loss) are reclassified into the cost of the equipment when the actual purchase takes place.

The Company is exposed to interest risk primarily through its borrowing activities. On December 24, 2009, the Company entered into an interest rate swap contract associated with a $27.3 million Industrial Development Revenue Bond issue that matures on September 1, 2019. The interest rate swap contract requires payment of a fixed interest rate of 2.827 % and the receipt of a variable rate of interest based on the Securities Industry and Financial Market Association (SIFMA) index of .04% as of August 31, 2015, on $27.3 million of indebtedness. The Company has designated this interest rate swap contract as a cash flow hedge. Inputs used to measure the fair value of the interest rate swap contracts are contained within level 2 of the fair value hierarchy. The fair value of the cash flow hedge is recorded in accumulated other comprehensive income (loss) and will be reclassified to interest expense over the life of the swap contract. No material ineffectiveness was recognized in earnings during the years ended August 31, 2015 and 2014. The current year’s loss of $763,000 is classified as interest expense on the statements of operations.

On October 1, 2014, the Company entered into an interest rate swap contract with CoBank, ACB associated with $20.0 million of long-term debt with CoBank, ACB that matures from 2024 through 2027. The interest rate swap contract requires payment of a fixed interest rate of 2.71 % and the receipt of a variable rate of interest based on the USD-Libor BBA index of .203 % as of August 31, 2015 on $20.0 million of indebtedness. The Company has designated this interest rate swap contract as a cash flow hedge. Inputs used to measure the fair value of the interest rate swap contracts are contained within level 2 of the fair value hierarchy. The fair value of the cash flow hedge is recorded in accumulated other comprehensive income/(loss) and will be reclassified to interest expense over the life of the swap contract. No material ineffectiveness was recognized in earnings during the year ended August 31, 2015. The current period loss of $474,000 is classified as interest expense on the statements of operations.

The following tables present the fair value of the Company’s derivatives and their Consolidated Balance Sheet location:

(In Thousands) Fair Value of Asset Derivatives as of August 31

Balance Sheet Classification 2015 2014

Derivatives Designated as Hedging Instruments: Foreign Currency Forward Contracts Prepaid Expenses $ 2 $ —

Total Asset Derivatives $ 2 $ —

(In Thousands) Fair Value of Liability Derivatives as of August 31

Balance Sheet Classification 2015 2014

Derivatives Designated as Hedging Instruments: Foreign Currency Forward Contracts Other Current Liabilities $ — $ 5 Interest Rate Contracts Other Current Liabilities 1,163 715 Interest Rate Contracts Other Long-Term Liabilities 1,047 863

Total Liability Derivatives $ 2,210 $ 1,583

(10) OPERATING LEASES:The Company is party to operating leases for such items as rail cars, computer hardware and vehicles. Cargill, Incorporated has assumed responsibility for the payments on a rail car lease for the duration of that lease and accordingly, the lease payments are not included in the table below. Operating lease expense was $1.8 million for the years ended August 31, 2015 and 2014. Future minimum payments under these obligations are as follows:

Fiscal year ending August 31, (In Thousands)

2016 $ 1,541

2017 1,180

2018 1,143

2019 1,103

2020 1,006

Thereafter 839

Total $ 6,812

(11) EMPLOYEE BENEFIT PLANS:Company-Sponsored Defined Benefit Pension and Other Post-Retirement Benefit PlansSubstantially all employees who meet eligibility requirements of age, date of hire and length of service are covered by a Company-sponsored retirement plan. As of August 31, 2015, the pension plans were funded as required by the funding standards set forth by the Employee Retirement Income Security Act (ERISA). The Company also has non-qualified supplemental executive retirement plans for certain employees.

Employees of the Company who are not members of a collective bargaining unit and who are newly hired, or re-hired, and employees who transfer from a union position to a non-union position on or after September 1, 2007, are not eligible for participation in the defined benefit pension plan. These employees participate in a defined contribution plan as described later in this note.

The Company’s Investment Committee has the responsibility of managing the Company’s pension plans and trust. Investment allocation decisions are made by the Investment Committee, pursuant to an Investment Policy (Policy) that includes a target strategic asset allocation. The Investment Committee is committed to diversification to reduce the risk of large losses. The Policy allows some flexibility within the target asset allocation in recognition that market fluctuations may cause the allocation to a specific asset class to move up or down within a range. The Policy is reviewed periodically by the Investment Committee. The asset allocation targets within the Plan, include four areas; Domestic Equity, International Equity, Fixed Income and Cash & Other. Domestic and International Equity consists primarily of publicly traded U.S. and Non-U.S. equities, respectively. The Cash & Other allocation is allowed only as necessary for impending benefit payments, lump sum contributions made by the company, or as authorized by the Investment Committee. The Policy does not allow direct use of derivatives, however, the Plan invests entirely in commingled or mutual funds, which may allow investment in derivatives. The stated goal is for each component of the plan to earn a rate of return greater than its corresponding benchmark. Progress of the plan against its return objectives will be measured over a full market cycle.

The following schedule reflects the percentage of pension plan assets by asset class as of the latest measurement date, August 31, 2015:

Percentage of Pension Plan Assets by Asset Class as of August 31, 2015

Asset Class Target Range Actual Allocation

Domestic Equity 35.0%–55.0% 45.2%

International Equity 15.0%–25.0% 20.0%

Fixed Income 20.0%–40.0% 29.6%

Cash & Other 0.0%–10.0% 5.2%

There have been no changes in the valuation methodologies used at August 31, 2015 and 2014. The Plan’s investment in the common/collective trust consists of investments in the WF Equity Index N Fund (Fund) managed by Wells Fargo Bank NA, The Principal Diversified Real Asset Fund (Principal) managed by The Principal and the WTC-CIF Diversified Inflation Hedges (WTC-CIF) managed by Wellington Management. The net asset value of the Fund is determined daily. All earnings, gains and losses of the Fund are reflected in the computation of the daily unit value and are realized by the plan upon withdrawal from the Fund. The fund has a daily redemption frequency and redemption notice period with no unfunded commitments. WTC-CIF and Principal use the accrual method of accounting in calculating net asset value of the funds daily based on a market, cost, or income approach depending on the underlying investment. All earnings, gains and losses are reflected in the computation of the monthly unit value and are realized by the plan upon withdrawal. Registered investment companies are valued at the net asset value of shares held by the Plan at year end based on quoted market prices. The money market fund is valued at quoted market price, which is cost plus accrued interest.

The methods described above may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, while the Plan believes its valuation methods are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

To develop the expected long-term rate of return on assets assumption, the Company considered the historical returns and the future expectations for returns for each asset class, as well as, the target asset allocation of the pension portfolio. This resulted in the selection of the 7.0% long-term rate of return on assets assumption.

The following schedules reflect the fair values of the pension plan assets by major category as of August 31, 2015 and 2014:

(In Thousands) Plan Assets at Fair Value August 31, 2015

Level 1 Level 2 Level 3 Total

Common/collective trusts Equity index fund $ — $ 57,885 $ — $ 57,885 Diversified inflation hedges — 9,530 — 9,530

Registered investment company Fixed income 68,359 — — 68,359 Domestic equity 46,440 — — 46,440 International equity 46,206 — — 46,206

Money market fund 2,492 — — 2,492

Total Plan Assets at Fair Value $ 163,497 $ 67,415 $ — $ 230,912

(In Thousands) Plan Assets at Fair Value August 31, 2014

Common/collective trusts Equity index fund $ — $ 59,212 $ — $ 59,212 Diversified inflation hedges — 11,743 — 11,743

Registered investment company Fixed income 71,045 — — 71,045 Domestic equity 47,274 — — 47,274 International equity 46,650 — — 46,650

Money market fund 644 — — 644

Total Plan Assets at Fair Value $ 165,613 $ 70,955 $ — $ 236,568

The development of the discount rate was based on a bond matching model whereby a hypothetical portfolio of bonds with an “AA” or better rating by a nationally recognized debt rating agency was constructed to match the expected benefit payments under the Company’s pension plans through the year 2045. The reinvestment rate for benefit cash flow occurring after 2045 was discounted back to the year 2045 at a rate consistent with the yields on long-term zero-coupon bonds. The resulting present value was treated as additional benefit cash flow for the year 2045 and consistently applied as any other benefit cash flow during the bond matching process.

The Company has a medical plan and a Medicare supplement plan which are available to certain union and non-union retirees. The costs of these plans are shared by the Company and plan participants. The Company’s post-retirement plan for certain non-union employees currently coordinates with Medicare’s medical coverage and provides tiered prescription drug coverage. The Company also participates in the Federal Early Retiree Reinsurance Program which provides reimbursement of medical expenses for early and disability retirees between the ages of 55 and 65 who are not covered by Medicare.

Weighted Average Assumptions as of August 31 Pension Post-Retirement

2015 2014 2015 2014

Discount Rate 4.30% 4.00% 4.30% 4.00%

Expected Return on Plan Assets 7.00% 7.00% N/A N/A

Rate of Compensation Increase 3.50% 3.50% N/A N/A The following schedule reflects the expected pension and post-retirement benefit payments during each of the next five years and the aggregate for the following five years:

(In Thousands) Pension Post-Retirement

2016 $ 11,173 $ 1,254

2017 11,385 1,229

2018 11,931 1,224

2019 15,578 1,303

2020 13,077 1,338

2021-2025 73,294 6,581

Total $ 136,438 $ 12,929 The Company expects to make contributions of approximately $7.5 million to the defined benefit pension plans, approximately $99,000 related to Supplemental Executive Retirement Plans and approximately $1.3 million to the post-retirement plans during the next fiscal year.

The following schedules provide the components of the Net Periodic Pension and Post-Retirement Costs for the years ended August 31, 2015 and 2014:

The following schedules set forth a reconciliation of the changes in the plans’ benefit obligation and fair value of assets for the years ending August 31, 2015 and 2014, and a statement of the funded status and amounts recognized in the Balance Sheets and Accumulated Other Comprehensive Income as of August 31, 2015 and 2014:

Components of Net Periodic Pension Cost (In Thousands) 2015 2014

Service Cost $ 4,366 $ 3,535

Interest Cost 9,488 10,202

Expected Return on Plan Assets (16,266) (14,688)

Amortization of Prior Service Costs 238 238

Amortization of Net Loss 3,766 3,694

Net Periodic Pension Cost $ 1,592 $ 2,981

Components of Net Periodic Post-Retirement Cost (In Thousands) 2015 2014

Service Cost $ 313 $ 472

Interest Cost 736 1,369

Amortization of Prior Service Costs (1,766) (364)

Amortization of Net (Gain) Loss (1,312) (1,436)

Net Periodic Post-Retirement Cost $ (2,029) $ 41

Prior service costs are amortized over the lesser of seven years or the length of the union contract that included the benefit change.

For measurement purposes, a 6.5 percent annual rate of increase in the per capita cost of covered healthcare benefits for participants under age 65 was assumed for 2015. The rate is assumed to decline to 4.5 percent over the next five years. For participants age 65 and older, a 4.5 percent annual rate of increase in the per capita cost of covered healthcare benefits was assumed for 2015. The rate is assumed to remain constant at 4.5 percent over the next five years.

Assumed healthcare trends can have a significant effect on the amounts reported for healthcare plans. A one percent change in the assumed healthcare trend rates would have the following effects:

(In Thousands) 1% Increase 1% Decrease

Effect on total service and interest cost components of net periodic post-retirement benefit costs. $ 141 $ (118)

Effect on the accumulated post-retirement benefit obligation. $ 2,178 $ (1,808)

2015 2014 2015 2014

Change in Benefit Obligation

Obligation at the Beginning of the Year $ 242,932 $ 218,787 $ 19,025 $ 29,377

Service Cost 4,366 3,535 313 472

Interest Cost 9,488 10,202 736 1,369

Plan Amendments 16 — — (9,808)

Plan Participant Contributions — — 568 639

Government Subsidies — — 4 52

Actuarial (Gain) Loss 5,325 24,602 (873) (480)

Benefits Paid (12,412) (14,194) (1,384) (2,596)

Obligation at the End of the Year $ 249,715 $ 242,932 $ 18,389 $ 19,025

Change in Plan Assets

Fair Value at the Beginning of the Year $ 236,568 $ 212,663 $ — $ —

Actual Return on Plan Assets (3,924) 32,611 — —

Plan Participant Contributions — — 568 639

Government Subsidies — — 4 52

Employer Contributions 10,680 5,488 812 1,905

Benefits Paid (12,412) (14,194) (1,384) (2,596)

Fair Value at the End of the Year $ 230,912 $ 236,568 $ — $ —

Funded Status

Funded Status as of August 31 $ (18,803) $ (6,364) $ (18,389) $ (19,025)

Net Amount Recognized $ (18,803) $ (6,364) $ (18,389) $ (19,025)

Amounts Recognized in the Balance Sheets

Noncurrent Assets $ — $ 2,968 $ — $ —

Current Liabilities (7,336) (3,896) (1,254) (1,181)

Noncurrent Liabilities (11,467) (5,436) (17,135) (17,844)

Net Amount Recognized $ (18,803) $ (6,364) $ (18,389) $ (19,025)

Prior Service Cost Recognized in Accumulated Other Comprehensive Income Prior Service Cost Beginning of the Year $ (758) $ (996) $ 10,902 $ 1,458 Recognized in Periodic Cost 238 238 (1,766) (364) Amount Arising During the Year (16) — — 9,808 Prior Service Cost End of the Year $ (536) $ (758) $ 9,136 $ 10,902

Accumulated Gain (Loss) Recognized in Accumulated Other Comprehensive Income Accumulated Gain (Loss) Beginning of the Year $ (50,949) $ (47,963) $ 9,176 $ 10,132 Recognized in Periodic Cost 3,766 3,694 (1,312) (1,436) Amount Arising During the Year (25,515) (6,680) 873 480 Accumulated Gain (Loss) End of the Year $ (72,698) $ (50,949) $ 8,737 $ 9,176

The estimated amounts that will be amortized from Accumulated Other Comprehensive Income at August 31, 2015, into net periodic benefit cost in fiscal 2016 are as follows:

Prior Service Cost (Credit) $ 235 $ (1,766)

Accumulated (Gain) Loss 6,818 (1,530)

Total $ 7,053 $ (3,296)

The accumulated pension benefit obligation was $238.5 million and $231.3 million as of August 31, 2015 and 2014, respectively.

Defined Contribution PlanThe Company has a qualified 401(k) plan for all eligible employees. Participants may contribute a percentage of their gross earnings each pay period as provided in the participation agreement. The Company matches the non-union and eligible union year-round participants’ contributions up to 4 percent and 2 percent, respectively, of their gross earnings. The plan provides for immediate vesting of these benefits. The Company’s contributions for this element of the plan totaled $1.9 million and $2.1 million for the years ended August 31, 2015 and 2014, respectively.

Employees of the Company who are not members of a collective bargaining unit and who are newly hired, or rehired, and employees who transfer from a union position to a non-union position on or after September 1, 2007, are no longer eligible for participation in the defined benefit pension plan but receive a 4% non-elective Company contribution to the 401(k) plan. These Company contributions have a six year vesting schedule. The Company made contributions of $0.3 million for the year ended August 31, 2015. Due to forfeitures, the Company did not make any contributions for this element of the plan for the year ended August 31, 2014.

Long-Term Incentive Plan The Company’s Long-Term Incentive Plan provides deferred compensation to certain key executives of the Company. The plan creates financial incentives that are based upon contract rights which are available to the executive under the terms of the plan, the value of which is determined by the Board of Directors. During 2015, 10.00 vested contract rights were exercised. In 2015, 109.84 contract rights were granted at a stated value of $2,700 per contract right. At August 31, 2015, the Board of Directors increased the value of the 1,117.43 contract rights previously granted and outstanding from $1,800 to $2,700 per contract right. As of August 31, 2015, there were 1,227.27 contract rights issued and outstanding at a stated value of $2,700 per contract right, of which 929.53 were vested.

(12) MEMBERS’ INVESTMENTS:The following schedule details the Preferred Stock and Common Stock as of August 31, 2015 and 2014:

(13) SEGMENT REPORTING:The Company has identified two reportable segments: Sugar and Leasing. The sugar segment is engaged primarily in the production and marketing of sugar from sugarbeets. It also sells agri-products and sugarbeet seed. The leasing segment is engaged in the leasing of a corn wet milling plant used in the production of high-fructose corn syrup. The segments are managed separately. There are no inter-segment sales. The leasing segment has a major customer that accounts for all of that segment’s revenue.

Summarized financial information concerning the Company’s reportable segments is shown below:

(In Thousands) For the Year Ended August 31, 2015

Sugar Leasing Consolidated

Net Revenue from External Customers $ 1,197,933 $ 23,167 $ 1,221,100

Gross Proceeds $ 711,466 $ 10,815 $ 722,281

Depreciation and Amortization $ 49,529 $ 11,556 $ 61,085

Interest Income $ 225 $ 1 $ 226

Interest Expense $ 8,498 $ 2 $ 8,500

Loss from Equity Method Investees $ (1,760) $ — $ (1,760)

Other Income/(Expense), Net $ 87 $ — $ 87

Consolidated Net Proceeds $ 416,003 $ 10,721 $ 426,724

Capital Additions $ 62,702 $ 2,490 $ 65,192

(In Thousands) For the Year Ended August 31, 2014

Net Revenue from External Customers $ 1,363,602 $ 24,183 $ 1,387,785

Gross Proceeds $ 813,981 $ 12,379 $ 826,360

Depreciation and Amortization $ 45,511 $ 11,588 $ 57,099

Interest Income $ 104 $ — $ 104

Interest Expense $ 6,816 $ 2 $ 6,818

Loss from Equity Method Investees $ (729) $ — $ (729)

Other Income/(Expense), Net $ 141 $ — $ 141

Consolidated Net Proceeds $ 495,052 $ 12,282 $ 507,334

Capital Additions $ 79,047 $ 3,272 $ 82,319

(In Thousands) As of August 31, 2015

Property and Equipment, Net $ 483,288 $ — $ 483,288

Assets Held for Lease, Net $ — $ 56,113 $ 56,113

Segment Assets $ 819,202 $ 56,982 $ 876,184

(In Thousands) As of August 31, 2014

Property and Equipment, Net $ 471,053 $ — $ 471,053

Assets Held for Lease, Net $ — $ 65,975 $ 65,975

Segment Assets $ 813,287 $ 67,311 $ 880,598

(14) FAIR VALUE OF FINANCIAL INSTRUMENTS:Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Quoted market prices are generally not available for the Company’s financial instruments. Fair values are based on judgments regarding anticipated cash flows, future expected loss experience, current economic conditions, risk characteristics of various financial instruments and other factors. These estimates involve uncertainties and matters of judgment, and therefore, cannot be determined with precision. Changes in assumptions could significantly affect the estimates.

Long-Term Debt, Inclusive of Current Maturities – Based upon discounted cash flows and current borrowing rates with similar maturities, the fair value of the long-term debt as of August 31, 2015, was approximately $176.0 million in comparison to the carrying value of $169.0 million. The fair value of the long-term debt as of August 31, 2014, was approximately $139.3 million in comparison to the carrying value of $158.1 million.

Investments in CoBank, ACB and Investments in Marketing Cooperatives – The Company believes it is not practical to estimate the fair value of these investments without incurring excessive costs because there is no established market for these securities and equity interests, and it is inappropriate to estimate future cash flows which are largely dependent on future earnings of these organizations.

Par Value

Shares Authorized

Shares Issued & Outstanding

Preferred Stock: August 31, 2015 $ 76.77 600,000 498,570 August 31, 2014 $ 76.77 600,000 498,570

Common Stock: August 31, 2015 $ 10.00 4,000 2,667 August 31, 2014 $ 10.00 4,000 2,738

The components of Accumulated Other Comprehensive (Loss) (AOCL), before tax, by component consist of the following:

Year Ended August 31, 2015 (In Thousands)

Pension and Other Post-Retirement

BenefitsEquity Method

InvesteesInterest Rate

ContractsForeign Currency

Forward Contracts Total

Balance August 31, 2014 $ (31,629) $ (5,689) $ (1,578) $ (5) $ (38,901)

Other Comprehensive Income (Loss) Before Reclassifications (24,658) 407 (1,869) (150) (26,270)

Reclassifications to Consolidated Net Proceeds1 9262 405 1,237 157 2,725

Net Current-Period Other Comprehensive Income (Loss) (23,732) 812 (632) 7 (23,545)

Balance, August 31, 2015 $ (55,361) $ (4,877) $ (2,210) $ 2 $ (62,446)

Year Ended August 31, 2014 (In Thousands)

Pension and Other Post-Retirement

BenefitsEquity Method

InvesteesInterest Rate

ContractsForeign Currency

Forward Contracts Total

Balance August 31, 2013 $ (37,369) $ (4,430) $ (1,824) $ 7 $ (43,616)

Other Comprehensive Income (Loss) Before Reclassifications 3,608 (1,578) (508) 48 1,570

Reclassifications to Consolidated Net Proceeds1 2,1322 319 754 (60) 3,145

Net Current-Period Other Comprehensive Income (Loss) 5,740 (1,259) 246 (12) 4,715

Balance, August 31, 2014 $ (31,629) $ (5,689) $ (1,578) $ (5) $ (38,901)

1Amounts reclassified from AOCL for pension and other post-retirement benefits are recorded in cost of sales on the Consolidated Statements of Operations. Amounts reclassified from AOCL for the equity method investees and interest rate contracts are recorded in selling, general and administrative expenses and interest expense, net, respectively on the Consolidated Statements of Operations. See note 9 on derivative instruments and hedging activities for reclassification of the foreign currency forward contracts.2Primarily related to amortization of actuarial gains/loss for the years ended August 31, 2015 and 2014 totaling ($2,454) and ($2,258), respectively, and amortization of prior service (cost)/credit of $1,528 and $126 for the years ended August 31, 2015 and 2014, respectively.

Foreign Currency Forward Contracts – Based on a variety of pricing factors, which include the market price of the foreign currency forward contract available in the dealer-market, the fair value of the open contracts as of August 31, 2015, was an asset of approximately $2,000. The fair value of the open contracts as of August 31, 2014, was a liability of approximately $5,000. Inputs used to measure the fair value of the foreign currency forward contracts are quoted prices in active markets for identical assets or liabilities and therefore are contained within level 1 of the fair value hierarchy. See the tables below.

Interest Rate Contracts – Based on the zero coupon method in which the term, notional amount, and repricing date of the interest rate swap match the term, repricing date, and principal amount of the interest-bearing liability on which the hedging interest payments are due, the fair value of the interest rate contracts as of August 31, 2015, was a liability of approximately $2.2 million. The fair value of the interest rate contract as of August 31, 2014, was a liability of approximately $1.6 million. Inputs used to measure the fair value of the interest rate swap contracts are quoted prices in active markets for similar assets or liabilities and therefore are contained within level 2 of the fair value hierarchy. See the tables below.

The tables below reflect the assets and liabilities measured at fair value on a recurring basis as of August 31, 2015 and 2014.

(In Thousands) Fair Value of Assets as of August 31, 2015

Foreign Currency Forward Contracts $ 2 $ — $ — $ 2

Total $ 2 $ — $ — $ 2

(In Thousands) Fair Value of Liabilities as of August 31, 2015

Interest Rate Contracts $ — $ 2,210 $ — $ 2,210

Total $ — $ 2,210 $ — $ 2,210

(In Thousands) Fair Value of Liabilities as of August 31, 2014

Foreign Currency Forward Contracts $ 5 $ — $ — $ 5 Interest Rate Contracts — 1,578 — 1,578

Total $ 5 $ 1,578 $ — $ 1,583

(15) INCOME TAXES:As of August 31, 2015 and 2014, the Company had no unrecognized tax benefits. Any future accrued interest or penalties related to unrecognized tax benefits will be recognized in income tax expense if incurred. The Company is no longer subject to U.S. Federal income tax examinations by tax authorities for fiscal years 2011 and earlier. The Company is no longer subject to state income tax examinations by tax authorities for fiscal years 2011 and earlier.

Total income tax payments were $3.4 million and $1.8 million for the years ended August 31, 2015 and 2014, respectively.

The Company’s net deferred tax liability included in Other Liabilities on the Company’s Balance Sheets as of August 31, 2015 and 2014 is reflected below:

Deferred Tax Assets related to non-patronage source temporary differences $ 4,242 $ 4,572

Deferred Tax Liability related to non-patronage source temporary differences 6,240 7,965

Net Deferred Tax Liability $ 1,998 $ 3,393

Income tax expense for the years ended August 31, 2015 and 2014 is as follows:

Current Income Taxes $ 725 $ 1,603

Deferred Income Taxes 1,395 1,017

Total Income Tax Expense $ 2,120 $ 2,620

A reconciliation of the Company’s effective tax rates for the years ended August 31, 2015 and 2014 is shown below:

2015 2014

Federal Tax Expense at Statutory Rate 34.0 % 34.0 %

State Tax Expense at Statutory Rate 2.0 2.0

Payments to Members (35.4) (35.3)

Other, Net (0.1) (0.2)

Effective Tax Rate 0.5 % 0.5 %

(16) ENVIRONMENTAL MATTERS:The Company is subject to extensive federal and state environmental laws and regulations with respect to water and air quality, solid waste disposal and odor and noise control. The Company conducts an ongoing compliance program designed to meet these environmental laws and regulations. The Company believes that it is in substantial compliance with applicable environmental laws and regulations. From time to time, however, the Company may be involved in investigations or determinations regarding matters that may arise in the ordinary course of business. The Company works closely with all affected government agencies to resolve environmental issues that have arisen and believes such issues will be resolved without any material adverse effect on the Company.

The Company’s sugar manufacturing process is energy intensive and generates carbon dioxide and other “Greenhouse Gases” (GHGs). The Company believes that industries generating GHGs, including the Company, could be subject to either federal or state regulation relating to climate change policies in the relatively near future. These policies, if adopted, will increase the Company’s energy and other operating costs. Depending on how these policies address imports, the domestic sugar market may have a competitive disadvantage compared with imported sugar. These policies could have a significant negative impact on the Company’s beet payment to shareholders if the Company is not able to pass the increased costs on to its customers.

On August 12, 2011, the Company received a Finding of Violation and Notice of Violation from the United States Environmental Protection Agency (EPA) for alleged violations of the Clean Air Act concerning certain air emissions at the Company’s three Minnesota factories. Although the Company has had some preliminary discussions with the EPA concerning possible settlement of the alleged violations, there are no such discussions currently active. The Company, at this time, cannot predict the outcome of these discussions or the financial impact, if any, resulting from the resolution of this matter.

On February 23, 2015, the Company received an Alleged Violation Letter from the Minnesota Pollution Control Agency (MPCA) regarding the industrial stormwater controls at several remote beet storage sites in Minnesota. The Company is currently investigating the alleged violations and working with the MPCA. The Company, at this time, cannot predict the outcome of these discussions or the financial impact, if any, resulting from the resolution of this matter.

(17) LEGAL MATTERS: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.

(18) SUBSEQUENT EVENTS:The Company has evaluated events through the date that the financial statements were available to be issued, October 14, 2015, for potential recognition or disclosure in the August 31, 2015, financial statements.

These notes are an integral part of the accompanying Consolidated Financial Statements.

(In Thousands, Except Per-Ton-Purchased and Per-Acre-Harvested Amounts) (Not Covered by Independent Auditors’ Report) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Net Proceeds Attributable to American Crystal Sugar Company $ 421,471 $ 501,316 $ 789,474 $ 548,253 $ 804,831 $ 526,112 $ 536,151 $ 542,693 $ 601,392 $ 445,091 Non-Member (Income) Loss (2,603) (4,586) (8,597) (10,895) (8,741) (5,426) (2,309) 4,787 (2,286) (2,246)

Member Gross Beet Payment 418,868 496,730 780,877 537,358 796,090 520,686 533,842 547,480 599,106 442,845 Unit Retains (19,021) (21,948) (34,221) (27,453) (43,574) (29,531) (31,024) (23,260) (35,705) (26,417)

Member Net Beet Payment $ 399,847 $ 474,782 $ 746,656 $ 509,905 $ 752,516 $ 491,155 $ 502,818 $ 524,220 $ 563,401 $ 416,428

Per Ton Purchased:

Net Proceeds Attributable to American Crystal Sugar Company $ 44.29 $ 45.65 $ 69.16 $ 59.86 $ 73.82 $ 53.42 $ 51.80 $ 46.63 $ 50.49 $ 50.50

Non-Member (Income) Loss (0.28) (0.42) (0.75) (1.19) (0.80) (0.55) (0.22) 0.41 (0.19) (0.25)

Member Gross Beet Payment 44.01 45.23 68.41 58.67 73.02 52.87 51.58 47.04 50.30 50.25 Unit Retains (2.00) (2.00) (3.00) (3.00) (4.00) (3.00) (3.00) (2.00) (3.00) (3.00)

Member Net Beet Payment $ 42.01 $ 43.23 $ 65.41 $ 55.67 $ 69.02 $ 49.87 $ 48.58 $ 45.04 $ 47.30 $ 47.25

Member Tons Harvested 9,517 10,982 11,415 9,158 10,902 9,849 10,349 11,639 11,911 8,813

Member Gross Beet Payment Per Acre Harvested $ 1,019 $ 1,140 $ 1,854 $ 1,212 $ 1,923 $ 1,177 $ 1,310 $ 1,107 $ 1,278 $ 947

Member Net Beet Payment Per Acre Harvested $ 972 $ 1,090 $ 1,773 $ 1,151 $ 1,818 $ 1,110 $ 1,234 $ 1,060 $ 1,201 $ 890

Distribution of Net Proceeds Attributable to American Crystal Sugar Company

Gross Beet Payment Per Average Ton (DOLLARS per ton)

Gross Beet Payment(MILLIONS of dollars)

Net Beet Payment(MILLIONS of dollars)

Gross Beet Payment Per Average Acre (DOLLARS per acre)

Net Beet Payment Per Average Ton (DOLLARS per ton)

Net Beet Payment Per Average Acre (DOLLARS per acre)

0706 08 09 10 11 12 13 14 15$0

07 09 10 11 0806 12 13 14 15$0

0706 08 09 10 11 12 13 14 15$0

07 08 09 10 1106

12 13 14 15$0

0706 08 09 10 11 12 13 14 15$0

07 09 10 110806 12 13 14 15

(In Thousands, Except Ratios, Per-Acre-Harvested and Percentage Amounts) (Not Covered by Independent Auditors’ Report) 2015 2014 2013 2012 2011 2010 2009 2008 2007 2006

Net Revenue $ 1,221,100 $ 1,387,785 $ 1,603,404 $ 1,479,095 $ 1,542,777 $ 1,203,897 $ 1,200,229 $ 1,232,832 $ 1,222,857 $ 1,005,716

Total Assets $ 876,184 $ 880,598 $ 950,985 $ 899,480 $ 878,107 $ 788,743 $ 761,258 $ 813,299 $ 875,315 $ 839,997

Total Members’ Investments $ 378,550 $ 408,095 $ 417,208 $ 340,190 $ 361,499 $ 330,610 $ 339,528 $ 391,115 $ 395,620 $ 379,355

Long-Term Debt, Net of Current Maturities $ 166,613 $ 149,818 $ 128,060 $ 128,360 $ 128,640 $ 140,698 $ 143,073 $ 157,801 $ 157,974 $ 200,037

Ratio of Debt to Total Members’ Investments .44:1 .37:1 .31:1 .38:1 .36:1 .43:1 .42:1 .40:1 .40:1 .53:1

Interest Expense, Net $ 8,500 $ 6,818 $ 9,694 $ 8,165 $ 9,684 $ 9,012 $ 10,058 $ 14,750 $ 20,281 $ 19,096

Property and Equipment Additions, Net of Retirements $ 62,880 $ 79,336 $ 77,748 $ 52,080 $ 64,162 $ 73,512 $ 47,687 $ 45,188 $ 63,032 $ 45,453

Depreciation and Amortization $ 61,085 $ 57,099 $ 55,312 $ 54,072 $ 58,333 $ 55,580 $ 55,046 $ 58,197 $ 57,481 $ 56,753

Working Capital $ 35,937 $ 43,498 $ 55,799 $ 70,849 $ 53,110 $ 53,994 $ 50,482 $ 57,775 $ 36,929 $ 58,214

Red River Valley Statistics — Member Business

Acres Harvested 411 436 421 443 414 442 408 494 469 468

Tons Purchased 9,517 10,982 11,415 9,158 10,902 9,849 10,349 11,639 11,911 8,813

Tons Purchased per Acre Harvested 23.1 25.2 27.1 20.7 26.3 22.3 25.4 23.5 25.4 18.8

Sugar Content of Sugarbeets 17.4% 17.3% 19.1% 18.0% 18.1% 16.7% 17.6% 18.1% 18.2% 18.0%

Sugar Hundredweight Produced 27,255 30,934 34,568 26,051 33,494 27,386 29,611 34,276 34,814 27,289

Pulp Tons Produced 378 417 450 334 493 436 460 519 556 448

Molasses Tons Produced 19 60 167 98 22 27 36 107 124 26

CSB Tons Produced 199 197 168 156 187 158 166 164 164 154

Betaine Tons Produced 14 19 19 14 20 16 19 19 22 21

Selected Financial Data and Certain Statistics

Net Revenue(MILLIONS of dollars)

Members’ Investments(MILLIONS of dollars)

Long-Term Debt and Debt/Equity (MILLIONS of dollars)

Property and Equipment Additions, Net of Retirements (MILLIONS of dollars)

Tons Purchased Per Acre Harvested (TONS per acre)

Sugar Content of Sugarbeets (PERCENT)

06 07 09 10 110%

08 12 13 14 150

07 08 09 10 1106 12 13 14 15$0

06 07 09 10 1108 12 13 14 15

$006 07 09 10 1108 12 13 14 15

$006 07 09 10 1108 12 13 14 1506 07 09 10 1108 12 13 14 15

$1,600

$1,400

$1,200

$1,000

EXECUTIVE PERSONNELDavid Berg President and Chief Executive Officer

Lisa Borgen Vice President Administration

Brian Ingulsrud Vice President Agriculture

Teresa Warne Vice President Finance

Kevin Price Vice President Government Affairs

Thomas Astrup Vice President Operations

Daniel Mott Secretary and General Counsel

Samuel Wai Treasurer Assistant Secretary

Steve Rosenau Assistant Treasurer Assistant Secretary

David Malmskog Assistant Treasurer Assistant Secretary

Lisa Maloy Assistant Treasurer Assistant Secretary

Lois Wood Assistant Treasurer Assistant Secretary

ANNUAL MEETINGThe 2015 Annual Meeting of the members will be held December 3, 2015, at the Holiday Inn, Fargo, ND

AUDITORSCliftonLarsonAllen LLP Stevens Point, WI

LEGAL COUNSELFredrikson & Byron PA Minneapolis, MN

SHAREHOLDER INFORMATIONThe Treasury Department can help members with beet payments, transferring shares, changes of address, and similar matters. For assistance, contact:

Karen Brown Stockholder Accounting Supervisor (218) 236-4432

FINANCIAL INFORMATIONFor information regarding American Crystal business operations or financial reports, shareholders should contact:

Teresa Warne Vice President Finance (218) 236-4364

NEWS MEDIA INQUIRIESNews media representatives and others needing information about American Crystal corporate activities should contact:

Jeff Schweitzer Public Relations Manager (218) 236-4492

MARKETING

UNITED SUGARS CORPORATION HEADQUARTERS 7803 Glenroy Road, Suite 300 Bloomington, MN 55439 (952) 896-0131

Mathew Wineinger President

Mike Kerber Vice President Sales and Marketing Consumer

Steve Hines Vice President Supply and Operations Planning

Dirk Swart Executive Vice President Sales and Marketing Industrial

Kae Kaske Vice President Finance

MIDWEST AGRI-COMMODITIES COMPANY HEADQUARTERS 999 Fifth Avenue, Suite 500 San Rafael, CA 94901 (415) 259-2720

Andy Ford President

Bryan Edwardson Vice President North American Operations

Kevin Christensen Vice President Finance

OPERATING FACILITIES

CROOKSTON FACTORY 1201 U.S. 75 Crookston, MN 56716

Chris Patullo Director, Factory Operations (218) 281-0142

Jerry Christenson Agronomy Manager (218) 281-0107

DRAYTON FACTORY 8152 Old Highway 44 Drayton, ND 58225

Al Zola Factory Manager (701) 454-3230

Tom Newcomb Agronomy Manager (701) 454-3238

EAST GRAND FORKS FACTORY 1020 Business Hwy 2 East Grand Forks, MN 56721

Lloyd Kennedy Factory Manager (218) 773-5124

Jerry Christenson Agronomy Manager (218) 281-0107

HILLSBORO FACTORY 121 Hwy 18 NE Hillsboro, ND 58045

Brad Carlson Factory Manager (701) 436-3103

Greg Richards Agronomy Manager (218) 291-5472

MOORHEAD FACTORY 2500 North 11th Street Moorhead, MN 56560

Randy Axtman Factory Manager (218) 291-5431

Greg Richards Agronomy Manager (218) 291-5472

SIDNEY SUGARS FACTORY 35140 County Road 125 Sidney, MT 59270

David Garland General Manager (406) 433-9333

Russ Fullmer Agricultural Manager (406) 433-9310

Business Information

Giving BackHudi Kobrinsky, Assistant ChemistCamp KACE VolunteerLake Park, MN

Hudi has been involved in Kamp KACE (Kids Against Cancer Everywhere) most of his life. He also volunteers at the March of Dimes Black Bib Affair event and the Children’s Miracle Network annual telethon.

An Assistant Chemist at the East Grand Forks factory, Hudi uses his analytical skills in performing specialized waste water and sugar quality lab tests.

101 North Third Street • Moorhead, Minnesota 56560 • www.crystalsugar.com

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