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þ
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Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended May 31, 2017.
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or
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o
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Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to
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Minnesota
(State or other jurisdiction of
incorporation or organization)
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41-0251095
(I.R.S. Employer
Identification Number)
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5500 Cenex Drive Inver Grove Heights, Minnesota 55077
(Address of principal executive offices,
including zip code)
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(651) 355-6000
(Registrant’s telephone number,
including area code)
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Large accelerated filer
o
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Accelerated filer
o
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Non-accelerated filer
þ
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Smaller reporting company
o
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Emerging growth company
o
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(Do not check if a smaller reporting company)
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Page
No.
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May 31,
2017 |
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August 31,
2016 |
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(Dollars in thousands)
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||||||
ASSETS
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Current assets:
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|
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Cash and cash equivalents
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$
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267,229
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$
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279,313
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Receivables
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2,722,325
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2,880,763
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Inventories
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2,684,087
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2,370,699
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Derivative assets
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388,188
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543,821
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Margin deposits
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251,695
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310,276
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Supplier advance payments
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431,433
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347,600
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Other current assets
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255,236
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202,708
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Total current assets
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7,000,193
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6,935,180
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Investments
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3,841,749
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3,795,976
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Property, plant and equipment
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5,409,151
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5,488,323
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Other assets
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970,704
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1,092,656
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Total assets
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$
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17,221,797
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$
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17,312,135
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LIABILITIES AND EQUITIES
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Current liabilities:
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Notes payable
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$
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3,321,808
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$
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2,731,479
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Current portion of long-term debt
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193,096
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214,329
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Customer margin deposits and credit balances
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132,479
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208,991
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Customer advance payments
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390,576
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412,823
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Accounts payable
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1,809,868
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1,819,049
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Derivative liabilities
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284,212
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513,599
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Accrued expenses
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422,371
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422,494
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Dividends and equities payable
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134,718
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198,031
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Total current liabilities
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6,689,128
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6,520,795
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Long-term debt
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2,046,264
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2,082,876
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Long-term deferred tax liabilities
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350,966
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487,762
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Other liabilities
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276,483
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354,452
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Commitments and contingencies
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Equities:
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Preferred stock
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2,264,063
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2,244,132
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Equity certificates
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4,214,657
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4,237,174
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Accumulated other comprehensive loss
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(209,700
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)
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(211,726
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)
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Capital reserves
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1,577,469
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1,582,380
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Total CHS Inc. equities
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7,846,489
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7,851,960
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Noncontrolling interests
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12,467
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14,290
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Total equities
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7,858,956
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7,866,250
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Total liabilities and equities
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$
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17,221,797
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$
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17,312,135
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For the Three Months Ended
May 31, |
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For the Nine Months Ended
May 31, |
||||||||||||
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2017
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2016
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2017
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2016
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(Dollars in thousands)
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Revenues
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$
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8,614,090
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$
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7,796,588
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$
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23,982,746
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$
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22,164,710
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Cost of goods sold
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8,366,988
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7,479,076
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23,142,205
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21,346,376
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Gross profit
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247,102
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317,512
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840,541
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818,334
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Marketing, general and administrative
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153,498
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143,436
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459,831
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468,394
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Reserve and impairment charges
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323,901
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26,016
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414,009
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33,869
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Operating earnings (loss)
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(230,297
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)
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148,060
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(33,299
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)
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316,071
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(Gain) loss on investments
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(393
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)
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(700
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)
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4,226
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(9,422
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)
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Interest expense
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39,201
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37,466
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|
117,411
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71,553
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Other income
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(11,554
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)
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(10,774
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)
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(70,409
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)
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(22,155
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)
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Equity (income) loss from investments
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(48,393
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)
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(72,453
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)
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(124,521
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)
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(131,819
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)
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Income (loss) before income taxes
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(209,158
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)
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194,521
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39,994
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407,914
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Income tax expense (benefit)
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(163,018
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)
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4,838
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(137,781
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)
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(17,761
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)
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Net income (loss)
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(46,140
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)
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|
189,683
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177,775
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|
|
425,675
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Net income (loss) attributable to noncontrolling interests
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(955
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)
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(592
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)
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(757
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)
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(92
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)
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Net income (loss) attributable to CHS Inc.
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$
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(45,185
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)
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$
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190,275
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$
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178,532
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$
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425,767
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For the Three Months Ended
May 31, |
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For the Nine Months Ended
May 31, |
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2017
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2016
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2017
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2016
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(Dollars in thousands)
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||||||||||||||
Net income (loss)
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$
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(46,140
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)
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$
|
189,683
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$
|
177,775
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|
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$
|
425,675
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Other comprehensive income (loss), net of tax:
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|
|
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|
|
|
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Postretirement benefit plan activity, net of tax expense (benefit) of $2,257, $2,122, $6,580 and $5,911, respectively
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3,635
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3,378
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|
10,599
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|
|
9,806
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|
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Unrealized net gain (loss) on available for sale investments, net of tax expense (benefit) of $(72), $744, $1,010 and $303, respectively
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(117
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)
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1,201
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|
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1,627
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|
|
462
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Cash flow hedges, net of tax expense (benefit) of $233, $1,595, $1,238 and $(2,456), respectively
|
375
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|
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2,574
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1,993
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(3,945
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)
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Foreign currency translation adjustment, net of tax expense (benefit) of $(334), $0, $(329) and $0, respectively
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(2,151
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)
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|
7,761
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|
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(12,193
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)
|
|
(5,910
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)
|
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Other comprehensive income (loss), net of tax
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1,742
|
|
|
14,914
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|
|
2,026
|
|
|
413
|
|
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Comprehensive income (loss)
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(44,398
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)
|
|
204,597
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|
|
179,801
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|
|
426,088
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||||
Less: comprehensive income (loss) attributable to noncontrolling interests
|
(955
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)
|
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(592
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)
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(757
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)
|
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(92
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)
|
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Comprehensive income (loss) attributable to CHS Inc.
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$
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(43,443
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)
|
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$
|
205,189
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|
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$
|
180,558
|
|
|
$
|
426,180
|
|
|
For the Nine Months Ended May 31,
|
||||||
|
2017
|
|
2016
|
||||
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(Dollars in thousands)
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||||||
Cash flows from operating activities:
|
|
|
|
|
|
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Net income
|
$
|
177,775
|
|
|
$
|
425,675
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|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
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Depreciation and amortization
|
362,118
|
|
|
324,952
|
|
||
Amortization of deferred major repair costs
|
50,565
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|
|
55,074
|
|
||
(Income) loss from equity investments
|
(124,521
|
)
|
|
(131,819
|
)
|
||
Provision for doubtful accounts
|
198,304
|
|
|
33,869
|
|
||
Distributions from equity investments
|
105,558
|
|
|
75,435
|
|
||
Unrealized (gain) loss on crack spread contingent liability
|
(13,273
|
)
|
|
(51,321
|
)
|
||
Long-lived asset impairment
|
85,431
|
|
|
14,428
|
|
||
Reserve against supplier advance payments
|
130,705
|
|
|
—
|
|
||
Deferred taxes
|
(145,357
|
)
|
|
(16,356
|
)
|
||
Other, net
|
25,559
|
|
|
(23,414
|
)
|
||
Changes in operating assets and liabilities, net of acquisitions:
|
|
|
|
|
|
||
Receivables
|
(55,498
|
)
|
|
120,613
|
|
||
Inventories
|
(344,914
|
)
|
|
(164,652
|
)
|
||
Derivative assets
|
120,294
|
|
|
(65,651
|
)
|
||
Margin deposits
|
58,581
|
|
|
(23,988
|
)
|
||
Supplier advance payments
|
(214,538
|
)
|
|
(208,679
|
)
|
||
Other current assets and other assets
|
19,289
|
|
|
91,095
|
|
||
Customer margin deposits and credit balances
|
(76,355
|
)
|
|
2,657
|
|
||
Customer advance payments
|
(23,700
|
)
|
|
(54,136
|
)
|
||
Accounts payable and accrued expenses
|
152,094
|
|
|
(72,161
|
)
|
||
Derivative liabilities
|
(229,881
|
)
|
|
9,315
|
|
||
Other liabilities
|
(53,471
|
)
|
|
(78,511
|
)
|
||
Net cash provided by (used in) operating activities
|
204,765
|
|
|
262,425
|
|
||
Cash flows from investing activities:
|
|
|
|
|
|
||
Acquisition of property, plant and equipment
|
(298,015
|
)
|
|
(557,689
|
)
|
||
Proceeds from disposition of property, plant and equipment
|
17,702
|
|
|
7,023
|
|
||
Expenditures for major repairs
|
(1,146
|
)
|
|
(19,338
|
)
|
||
Investments in joint ventures and other
|
(13,853
|
)
|
|
(2,833,968
|
)
|
||
Investments redeemed
|
7,698
|
|
|
24,912
|
|
||
Proceeds from sale of investments
|
6,170
|
|
|
19,477
|
|
||
Changes in CHS Capital notes receivable, net
|
(104,773
|
)
|
|
(230,874
|
)
|
||
Financing extended to customers
|
(57,783
|
)
|
|
(31,681
|
)
|
||
Payments from customer financing
|
67,126
|
|
|
23,005
|
|
||
Business acquisitions, net of cash acquired
|
(2,253
|
)
|
|
(10,139
|
)
|
||
Other investing activities, net
|
4,975
|
|
|
4,911
|
|
||
Net cash provided by (used in) investing activities
|
(374,152
|
)
|
|
(3,604,361
|
)
|
||
Cash flows from financing activities:
|
|
|
|
|
|
||
Proceeds from lines of credit and long-term borrowings
|
29,890,570
|
|
|
21,377,619
|
|
||
Payments on lines of credit, long term-debt and capital lease obligations
|
(29,362,970
|
)
|
|
(18,090,681
|
)
|
||
Mandatorily redeemable noncontrolling interest payments
|
—
|
|
|
(153,022
|
)
|
||
Changes in checks and drafts outstanding
|
(118,844
|
)
|
|
1,680
|
|
||
Preferred stock dividends paid
|
(125,475
|
)
|
|
(121,499
|
)
|
||
Retirements of equities
|
(25,503
|
)
|
|
(17,117
|
)
|
||
Cash patronage dividends paid
|
(103,879
|
)
|
|
(253,150
|
)
|
||
Other financing activities, net
|
1,539
|
|
|
(3,246
|
)
|
||
Net cash provided by (used in) financing activities
|
155,438
|
|
|
2,740,584
|
|
||
Effect of exchange rate changes on cash and cash equivalents
|
1,865
|
|
|
(6,060
|
)
|
||
Net increase (decrease) in cash and cash equivalents
|
(12,084
|
)
|
|
(607,412
|
)
|
||
Cash and cash equivalents at beginning of period
|
279,313
|
|
|
953,813
|
|
||
Cash and cash equivalents at end of period
|
$
|
267,229
|
|
|
$
|
346,401
|
|
|
May 31, 2017
|
|
August 31, 2016
|
||||
|
(Dollars in thousands)
|
||||||
Trade accounts receivable
|
$
|
1,739,027
|
|
|
$
|
1,804,646
|
|
CHS Capital notes receivable
|
766,731
|
|
|
858,805
|
|
||
Other
|
464,051
|
|
|
380,956
|
|
||
|
2,969,809
|
|
|
3,044,407
|
|
||
Less allowances and reserves
|
247,484
|
|
|
163,644
|
|
||
Total receivables
|
$
|
2,722,325
|
|
|
$
|
2,880,763
|
|
|
May 31, 2017
|
|
August 31, 2016
|
||||
|
(Dollars in thousands)
|
||||||
Grain and oilseed
|
$
|
1,171,408
|
|
|
$
|
937,258
|
|
Energy
|
750,170
|
|
|
729,695
|
|
||
Crop nutrients
|
181,380
|
|
|
217,521
|
|
||
Feed and farm supplies
|
530,081
|
|
|
417,431
|
|
||
Processed grain and oilseed
|
27,991
|
|
|
48,930
|
|
||
Other
|
23,057
|
|
|
19,864
|
|
||
Total inventories
|
$
|
2,684,087
|
|
|
$
|
2,370,699
|
|
|
2017
|
|
2016
|
||||
|
(Dollars in thousands)
|
||||||
Equity method investments:
|
|
|
|
||||
CF Industries Nitrogen, LLC
|
$
|
2,808,993
|
|
|
$
|
2,796,323
|
|
Ventura Foods, LLC
|
374,006
|
|
|
369,487
|
|
||
Ardent Mills, LLC
|
195,869
|
|
|
194,986
|
|
||
TEMCO, LLC
|
41,581
|
|
|
44,578
|
|
||
Other equity method investments
|
290,391
|
|
|
263,025
|
|
||
Cost method investments
|
130,909
|
|
|
127,577
|
|
||
Total investments
|
$
|
3,841,749
|
|
|
$
|
3,795,976
|
|
|
|
For the Three Months Ended May 31,
|
|
For the Nine Months Ended May 31,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
(Dollars in thousands)
|
||||||||||||||
Net sales
|
|
$
|
2,043,628
|
|
|
$
|
1,623,696
|
|
|
$
|
5,807,777
|
|
|
$
|
4,673,341
|
|
Gross profit
|
|
234,055
|
|
|
255,191
|
|
|
651,705
|
|
|
638,093
|
|
||||
Net earnings
|
|
133,132
|
|
|
121,022
|
|
|
317,674
|
|
|
283,996
|
|
||||
Earnings attributable to CHS Inc.
|
|
38,662
|
|
|
64,615
|
|
|
104,568
|
|
|
118,845
|
|
|
Energy
|
|
Ag
|
|
Corporate
and Other |
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Balances, August 31, 2016
|
$
|
552
|
|
|
$
|
148,916
|
|
|
$
|
10,946
|
|
|
$
|
160,414
|
|
Effect of foreign currency translation adjustments
|
—
|
|
|
(868
|
)
|
|
—
|
|
|
(868
|
)
|
||||
Impairment
|
—
|
|
|
(5,542
|
)
|
|
—
|
|
|
(5,542
|
)
|
||||
Other
|
—
|
|
|
(298
|
)
|
|
(372
|
)
|
|
(670
|
)
|
||||
Balances, May 31, 2017
|
$
|
552
|
|
|
$
|
142,208
|
|
|
$
|
10,574
|
|
|
$
|
153,334
|
|
|
May 31,
2017 |
|
August 31,
2016 |
||||||||||||||||||||
|
Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
|
Carrying Amount
|
|
Accumulated Amortization
|
|
Net
|
||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||
Customer lists
|
$
|
48,975
|
|
|
$
|
(14,568
|
)
|
|
$
|
34,407
|
|
|
$
|
51,554
|
|
|
$
|
(15,550
|
)
|
|
$
|
36,004
|
|
Trademarks and other intangible assets
|
23,618
|
|
|
(21,713
|
)
|
|
1,905
|
|
|
35,015
|
|
|
(26,253
|
)
|
|
8,762
|
|
||||||
Total intangible assets
|
$
|
72,593
|
|
|
$
|
(36,281
|
)
|
|
$
|
36,312
|
|
|
$
|
86,569
|
|
|
$
|
(41,803
|
)
|
|
$
|
44,766
|
|
|
May 31, 2017
|
|
August 31, 2016
|
||||
|
(Dollars in thousands)
|
||||||
Notes payable
|
$
|
2,465,333
|
|
|
$
|
1,803,174
|
|
CHS Capital notes payable
|
856,475
|
|
|
928,305
|
|
||
Total notes payable
|
$
|
3,321,808
|
|
|
$
|
2,731,479
|
|
|
Equity Certificates
|
|
|
|
Accumulated
Other Comprehensive Loss |
|
|
|
|
|
|
||||||||||||||||||||
|
Capital
Equity Certificates |
|
Nonpatronage
Equity Certificates |
|
Nonqualified Equity Certificates
|
|
Preferred
Stock |
|
|
Capital
Reserves |
|
Noncontrolling
Interests |
|
Total
Equities |
|||||||||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||||||||||||||
Balance, August 31, 2016
|
$
|
3,932,513
|
|
|
$
|
22,894
|
|
|
$
|
281,767
|
|
|
$
|
2,244,132
|
|
|
$
|
(211,726
|
)
|
|
$
|
1,582,380
|
|
|
$
|
14,290
|
|
|
$
|
7,866,250
|
|
Reversal of prior year patronage and redemption estimates
|
(121,892
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
278,968
|
|
|
—
|
|
|
157,076
|
|
||||||||
Distribution of 2016 patronage refunds
|
153,589
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(257,468
|
)
|
|
—
|
|
|
(103,879
|
)
|
||||||||
Redemptions of equities
|
(43,949
|
)
|
|
(154
|
)
|
|
(1,386
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(45,489
|
)
|
||||||||
Equities issued, net
|
3,176
|
|
|
—
|
|
|
—
|
|
|
19,986
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,162
|
|
||||||||
Preferred stock dividends
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(139,760
|
)
|
|
—
|
|
|
(139,760
|
)
|
||||||||
Other, net
|
(7,560
|
)
|
|
7,300
|
|
|
(391
|
)
|
|
(55
|
)
|
|
—
|
|
|
3,046
|
|
|
(1,066
|
)
|
|
1,274
|
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
178,532
|
|
|
(757
|
)
|
|
177,775
|
|
||||||||
Other comprehensive income (loss), net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,026
|
|
|
—
|
|
|
—
|
|
|
2,026
|
|
||||||||
Estimated 2017 cash patronage refunds
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(68,229
|
)
|
|
—
|
|
|
(68,229
|
)
|
||||||||
Estimated 2017 equity redemptions
|
(11,250
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(11,250
|
)
|
||||||||
Balance, May 31, 2017
|
$
|
3,904,627
|
|
|
$
|
30,040
|
|
|
$
|
279,990
|
|
|
$
|
2,264,063
|
|
|
$
|
(209,700
|
)
|
|
$
|
1,577,469
|
|
|
$
|
12,467
|
|
|
$
|
7,858,956
|
|
|
Pension and Other Postretirement Benefits
|
|
Unrealized Net Gain on Available for Sale Investments
|
|
Cash Flow Hedges
|
|
Foreign Currency Translation Adjustment
|
|
Total
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Balance as of August 31, 2016
|
$
|
(165,146
|
)
|
|
$
|
5,656
|
|
|
$
|
(9,196
|
)
|
|
$
|
(43,040
|
)
|
|
$
|
(211,726
|
)
|
Current period other comprehensive income (loss), net of tax
|
(309
|
)
|
|
1,627
|
|
|
1,184
|
|
|
(12,208
|
)
|
|
(9,706
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
|
10,908
|
|
|
—
|
|
|
809
|
|
|
15
|
|
|
11,732
|
|
|||||
Net other comprehensive income (loss), net of tax
|
10,599
|
|
|
1,627
|
|
|
1,993
|
|
|
(12,193
|
)
|
|
2,026
|
|
|||||
Balance as of May 31, 2017
|
$
|
(154,547
|
)
|
|
$
|
7,283
|
|
|
$
|
(7,203
|
)
|
|
$
|
(55,233
|
)
|
|
$
|
(209,700
|
)
|
|
Pension and Other Postretirement Benefits
|
|
Unrealized Net Gain on Available for Sale Investments
|
|
Cash Flow Hedges
|
|
Foreign Currency Translation Adjustment
|
|
Total
|
||||||||||
|
(Dollars in thousands)
|
||||||||||||||||||
Balance as of August 31, 2015
|
$
|
(171,729
|
)
|
|
$
|
4,156
|
|
|
$
|
(5,324
|
)
|
|
$
|
(41,310
|
)
|
|
$
|
(214,207
|
)
|
Current period other comprehensive income (loss), net of tax
|
135
|
|
|
462
|
|
|
(6,805
|
)
|
|
(6,380
|
)
|
|
(12,588
|
)
|
|||||
Amounts reclassified from accumulated other comprehensive income (loss), net of tax
|
9,671
|
|
|
—
|
|
|
2,860
|
|
|
470
|
|
|
13,001
|
|
|||||
Net other comprehensive income (loss), net of tax
|
9,806
|
|
|
462
|
|
|
(3,945
|
)
|
|
(5,910
|
)
|
|
413
|
|
|||||
Balance as of May 31, 2016
|
$
|
(161,923
|
)
|
|
$
|
4,618
|
|
|
$
|
(9,269
|
)
|
|
$
|
(47,220
|
)
|
|
$
|
(213,794
|
)
|
|
Qualified
Pension Benefits
|
|
Non-Qualified
Pension Benefits
|
|
Other Benefits
|
||||||||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||||||
Components of net periodic benefit costs for the three months ended May 31 are as follows:
|
(Dollars in thousands)
|
||||||||||||||||||||||
Service cost
|
$
|
10,537
|
|
|
$
|
9,383
|
|
|
$
|
302
|
|
|
$
|
258
|
|
|
$
|
290
|
|
|
$
|
353
|
|
Interest cost
|
5,753
|
|
|
7,691
|
|
|
210
|
|
|
352
|
|
|
232
|
|
|
427
|
|
||||||
Expected return on assets
|
(12,058
|
)
|
|
(12,013
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Prior service cost (credit) amortization
|
385
|
|
|
402
|
|
|
4
|
|
|
57
|
|
|
(141
|
)
|
|
(30
|
)
|
||||||
Actuarial (gain) loss amortization
|
5,708
|
|
|
4,765
|
|
|
136
|
|
|
172
|
|
|
(199
|
)
|
|
(116
|
)
|
||||||
Net periodic benefit cost
|
$
|
10,325
|
|
|
$
|
10,228
|
|
|
$
|
652
|
|
|
$
|
839
|
|
|
$
|
182
|
|
|
$
|
634
|
|
Components of net periodic benefit costs for the nine months ended May 31 are as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Service cost
|
$
|
31,612
|
|
|
$
|
28,149
|
|
|
$
|
905
|
|
|
$
|
776
|
|
|
$
|
870
|
|
|
$
|
1,059
|
|
Interest cost
|
17,257
|
|
|
23,075
|
|
|
632
|
|
|
1,055
|
|
|
698
|
|
|
1,282
|
|
||||||
Expected return on assets
|
(36,173
|
)
|
|
(36,040
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Prior service cost (credit) amortization
|
1,155
|
|
|
1,205
|
|
|
14
|
|
|
171
|
|
|
(424
|
)
|
|
(90
|
)
|
||||||
Actuarial (gain) loss amortization
|
17,123
|
|
|
14,294
|
|
|
409
|
|
|
518
|
|
|
(598
|
)
|
|
(348
|
)
|
||||||
Net periodic benefit cost
|
$
|
30,974
|
|
|
$
|
30,683
|
|
|
$
|
1,960
|
|
|
$
|
2,520
|
|
|
$
|
546
|
|
|
$
|
1,903
|
|
|
Energy
|
|
Ag
|
|
Nitrogen Production
|
|
Foods
|
|
Corporate
and Other |
|
Reconciling
Amounts |
|
Total
|
||||||||||||||
For the Three Months Ended May 31, 2017:
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Revenues
|
$
|
1,638,107
|
|
|
$
|
7,053,991
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
26,820
|
|
|
$
|
(104,828
|
)
|
|
$
|
8,614,090
|
|
Operating earnings (loss)
|
(5,723
|
)
|
|
(226,668
|
)
|
|
(5,619
|
)
|
|
(3,101
|
)
|
|
10,814
|
|
|
—
|
|
|
(230,297
|
)
|
|||||||
(Gain) loss on investments
|
—
|
|
|
(393
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(393
|
)
|
|||||||
Interest expense
|
4,343
|
|
|
16,609
|
|
|
10,708
|
|
|
(231
|
)
|
|
8,358
|
|
|
(586
|
)
|
|
39,201
|
|
|||||||
Other income
|
(332
|
)
|
|
(12,493
|
)
|
|
(477
|
)
|
|
—
|
|
|
1,162
|
|
|
586
|
|
|
(11,554
|
)
|
|||||||
Equity (income) loss from investments
|
(391
|
)
|
|
(9,199
|
)
|
|
(24,534
|
)
|
|
(9,920
|
)
|
|
(4,349
|
)
|
|
—
|
|
|
(48,393
|
)
|
|||||||
Income (loss) before income taxes
|
$
|
(9,343
|
)
|
|
$
|
(221,192
|
)
|
|
$
|
8,684
|
|
|
$
|
7,050
|
|
|
$
|
5,643
|
|
|
$
|
—
|
|
|
$
|
(209,158
|
)
|
Intersegment revenues
|
$
|
(97,876
|
)
|
|
$
|
(7,545
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
593
|
|
|
$
|
104,828
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Energy
|
|
Ag
|
|
Nitrogen Production
|
|
Foods
|
|
Corporate
and Other |
|
Reconciling
Amounts |
|
Total
|
||||||||||||||
For the Three Months Ended May 31, 2016:
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Revenues
|
$
|
1,322,624
|
|
|
$
|
6,526,714
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
25,114
|
|
|
$
|
(77,864
|
)
|
|
$
|
7,796,588
|
|
Operating earnings (loss)
|
103,614
|
|
|
24,432
|
|
|
253
|
|
|
(2,243
|
)
|
|
22,004
|
|
|
—
|
|
|
148,060
|
|
|||||||
(Gain) loss on investments
|
—
|
|
|
(881
|
)
|
|
—
|
|
|
—
|
|
|
181
|
|
|
—
|
|
|
(700
|
)
|
|||||||
Interest expense
|
(4,270
|
)
|
|
24,518
|
|
|
16,549
|
|
|
645
|
|
|
7,951
|
|
|
(7,927
|
)
|
|
37,466
|
|
|||||||
Other income
|
(217
|
)
|
|
(17,473
|
)
|
|
—
|
|
|
—
|
|
|
(1,011
|
)
|
|
7,927
|
|
|
(10,774
|
)
|
|||||||
Equity (income) loss from investments
|
(1,300
|
)
|
|
(5,931
|
)
|
|
(41,257
|
)
|
|
(19,922
|
)
|
|
(4,043
|
)
|
|
—
|
|
|
(72,453
|
)
|
|||||||
Income (loss) before income taxes
|
$
|
109,401
|
|
|
$
|
24,199
|
|
|
$
|
24,961
|
|
|
$
|
17,034
|
|
|
$
|
18,926
|
|
|
$
|
—
|
|
|
$
|
194,521
|
|
Intersegment revenues
|
$
|
(76,114
|
)
|
|
$
|
(3,016
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,266
|
|
|
$
|
77,864
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Energy
|
|
Ag
|
|
Nitrogen Production
|
|
Foods
|
|
Corporate
and Other |
|
Reconciling
Amounts |
|
Total
|
||||||||||||||
For the Nine Months Ended May 31, 2017:
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Revenues
|
$
|
4,867,321
|
|
|
$
|
19,345,316
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
85,691
|
|
|
$
|
(315,582
|
)
|
|
$
|
23,982,746
|
|
Operating earnings (loss)
|
86,563
|
|
|
(131,363
|
)
|
|
(14,033
|
)
|
|
(8,370
|
)
|
|
33,904
|
|
|
—
|
|
|
(33,299
|
)
|
|||||||
(Gain) loss on investments
|
—
|
|
|
6,302
|
|
|
—
|
|
|
—
|
|
|
(2,076
|
)
|
|
—
|
|
|
4,226
|
|
|||||||
Interest expense
|
12,176
|
|
|
49,798
|
|
|
35,626
|
|
|
(231
|
)
|
|
27,743
|
|
|
(7,701
|
)
|
|
117,411
|
|
|||||||
Other income
|
(828
|
)
|
|
(48,103
|
)
|
|
(30,047
|
)
|
|
—
|
|
|
868
|
|
|
7,701
|
|
|
(70,409
|
)
|
|||||||
Equity (income) loss from investments
|
(2,039
|
)
|
|
(18,071
|
)
|
|
(60,787
|
)
|
|
(28,850
|
)
|
|
(14,774
|
)
|
|
—
|
|
|
(124,521
|
)
|
|||||||
Income (loss) before income taxes
|
$
|
77,254
|
|
|
$
|
(121,289
|
)
|
|
$
|
41,175
|
|
|
$
|
20,711
|
|
|
$
|
22,143
|
|
|
$
|
—
|
|
|
$
|
39,994
|
|
Intersegment revenues
|
$
|
(297,057
|
)
|
|
$
|
(16,068
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(2,457
|
)
|
|
$
|
315,582
|
|
|
$
|
—
|
|
Total assets at May 31, 2017
|
$
|
4,292,789
|
|
|
$
|
7,028,635
|
|
|
$
|
2,834,040
|
|
|
$
|
374,007
|
|
|
$
|
2,692,326
|
|
|
$
|
—
|
|
|
$
|
17,221,797
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Energy
|
|
Ag
|
|
Nitrogen Production
|
|
Foods
|
|
Corporate
and Other |
|
Reconciling
Amounts |
|
Total
|
||||||||||||||
For the Nine Months Ended May 31, 2016:
|
(Dollars in thousands)
|
||||||||||||||||||||||||||
Revenues
|
$
|
4,162,685
|
|
|
$
|
18,221,420
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
68,210
|
|
|
$
|
(287,605
|
)
|
|
$
|
22,164,710
|
|
Operating earnings (loss)
|
214,827
|
|
|
77,605
|
|
|
(5,506
|
)
|
|
(6,319
|
)
|
|
35,464
|
|
|
—
|
|
|
316,071
|
|
|||||||
(Gain) loss on investments
|
—
|
|
|
(6,595
|
)
|
|
—
|
|
|
—
|
|
|
(2,827
|
)
|
|
—
|
|
|
(9,422
|
)
|
|||||||
Interest expense
|
(20,723
|
)
|
|
57,785
|
|
|
21,286
|
|
|
2,246
|
|
|
18,886
|
|
|
(7,927
|
)
|
|
71,553
|
|
|||||||
Other income
|
(174
|
)
|
|
(27,778
|
)
|
|
—
|
|
|
—
|
|
|
(2,130
|
)
|
|
7,927
|
|
|
(22,155
|
)
|
|||||||
Equity (income) loss from investments
|
(3,487
|
)
|
|
(8,152
|
)
|
|
(53,112
|
)
|
|
(55,449
|
)
|
|
(11,619
|
)
|
|
—
|
|
|
(131,819
|
)
|
|||||||
Income (loss) before income taxes
|
$
|
239,211
|
|
|
$
|
62,345
|
|
|
$
|
26,320
|
|
|
$
|
46,884
|
|
|
$
|
33,154
|
|
|
$
|
—
|
|
|
$
|
407,914
|
|
Intersegment revenues
|
$
|
(250,425
|
)
|
|
$
|
(36,032
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,148
|
)
|
|
$
|
287,605
|
|
|
$
|
—
|
|
|
May 31, 2017
|
||||||||||||||
|
|
|
Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting
|
|
|
||||||||||
|
Gross Amounts Recognized
|
|
Cash Collateral
|
|
Derivative Instruments
|
|
Net Amounts
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Derivative Assets:
|
|
|
|
|
|
|
|
||||||||
Commodity and freight derivatives
|
$
|
363,627
|
|
|
$
|
—
|
|
|
$
|
27,711
|
|
|
$
|
335,916
|
|
Foreign exchange derivatives
|
10,558
|
|
|
—
|
|
|
3,895
|
|
|
6,663
|
|
||||
Interest rate derivatives - hedge
|
9,496
|
|
|
—
|
|
|
—
|
|
|
9,496
|
|
||||
Embedded derivative asset - current
|
4,507
|
|
|
—
|
|
|
—
|
|
|
4,507
|
|
||||
Total current derivatives
|
$
|
388,188
|
|
|
$
|
—
|
|
|
$
|
31,606
|
|
|
$
|
356,582
|
|
Embedded derivative asset - long term
|
20,540
|
|
|
—
|
|
|
—
|
|
|
20,540
|
|
||||
Total
|
$
|
408,728
|
|
|
$
|
—
|
|
|
$
|
31,606
|
|
|
$
|
377,122
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity and freight derivatives
|
$
|
271,337
|
|
|
$
|
3,136
|
|
|
$
|
27,711
|
|
|
$
|
240,490
|
|
Foreign exchange derivatives
|
11,689
|
|
|
—
|
|
|
3,895
|
|
|
7,794
|
|
||||
Interest rate derivatives - hedge
|
1,182
|
|
|
—
|
|
|
—
|
|
|
1,182
|
|
||||
Interest rate derivatives - non-hedge
|
4
|
|
|
—
|
|
|
—
|
|
|
4
|
|
||||
Total
|
$
|
284,212
|
|
|
$
|
3,136
|
|
|
$
|
31,606
|
|
|
$
|
249,470
|
|
|
August 31, 2016
|
||||||||||||||
|
|
|
Amounts Not Offset on the Consolidated Balance Sheet but Eligible for Offsetting
|
|
|
||||||||||
|
Gross Amounts Recognized
|
|
Cash Collateral
|
|
Derivative Instruments
|
|
Net Amounts
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Derivative Assets:
|
|
|
|
|
|
|
|
||||||||
Commodity and freight derivatives
|
$
|
500,192
|
|
|
$
|
—
|
|
|
$
|
23,689
|
|
|
$
|
476,503
|
|
Foreign exchange derivatives
|
21,551
|
|
|
—
|
|
|
9,187
|
|
|
12,364
|
|
||||
Interest rate derivatives - hedge
|
22,078
|
|
|
—
|
|
|
—
|
|
|
22,078
|
|
||||
Total
|
$
|
543,821
|
|
|
$
|
—
|
|
|
$
|
32,876
|
|
|
$
|
510,945
|
|
Derivative Liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity and freight derivatives
|
$
|
491,302
|
|
|
$
|
811
|
|
|
$
|
23,689
|
|
|
$
|
466,802
|
|
Foreign exchange derivatives
|
22,289
|
|
|
—
|
|
|
9,187
|
|
|
13,102
|
|
||||
Interest rate derivatives - non-hedge
|
8
|
|
|
—
|
|
|
—
|
|
|
8
|
|
||||
Total
|
$
|
513,599
|
|
|
$
|
811
|
|
|
$
|
32,876
|
|
|
$
|
479,912
|
|
|
|
|
For the Three Months Ended May 31,
|
|
For the Nine Months Ended May 31,
|
||||||||||||
|
Location of
Gain (Loss)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
(Dollars in thousands)
|
||||||||||||||
Commodity and freight derivatives
|
Cost of goods sold
|
|
$
|
102,327
|
|
|
$
|
(193,548
|
)
|
|
$
|
177,633
|
|
|
$
|
(103,532
|
)
|
Foreign exchange derivatives
|
Cost of goods sold
|
|
(7,168
|
)
|
|
2,249
|
|
|
(4,573
|
)
|
|
(7,550
|
)
|
||||
Foreign exchange derivatives
|
Marketing, general and administrative
|
|
22
|
|
|
(12,820
|
)
|
|
(784
|
)
|
|
2,308
|
|
||||
Interest rate derivatives
|
Interest expense
|
|
—
|
|
|
(5,096
|
)
|
|
4
|
|
|
(6,299
|
)
|
||||
Embedded derivative
|
Other Income
|
|
477
|
|
|
—
|
|
|
30,051
|
|
|
—
|
|
||||
Total
|
|
$
|
95,658
|
|
|
$
|
(209,215
|
)
|
|
$
|
202,331
|
|
|
$
|
(115,073
|
)
|
|
May 31, 2017
|
|
August 31, 2016
|
||||||||
|
Long
|
|
Short
|
|
Long
|
|
Short
|
||||
|
(Units in thousands)
|
||||||||||
Grain and oilseed - bushels
|
663,358
|
|
|
860,178
|
|
|
774,279
|
|
|
995,396
|
|
Energy products - barrels
|
13,694
|
|
|
8,151
|
|
|
14,740
|
|
|
6,470
|
|
Processed grain and oilseed - tons
|
327
|
|
|
2,188
|
|
|
541
|
|
|
2,060
|
|
Crop nutrients - tons
|
70
|
|
|
241
|
|
|
108
|
|
|
135
|
|
Ocean and barge freight - metric tons
|
4,110
|
|
|
876
|
|
|
4,406
|
|
|
877
|
|
Rail freight - rail cars
|
210
|
|
|
97
|
|
|
205
|
|
|
79
|
|
Natural gas - MMBtu
|
3,275
|
|
|
—
|
|
|
3,550
|
|
|
300
|
|
|
|
|
For the Three Months Ended May 31,
|
|
For the Nine Months Ended May 31,
|
||||||||||||
|
Location of
Gain (Loss)
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
|
|
|
(Dollars in thousands)
|
||||||||||||||
Interest rate derivatives
|
Interest expense
|
|
$
|
(435
|
)
|
|
$
|
(4,166
|
)
|
|
$
|
(1,311
|
)
|
|
$
|
(4,631
|
)
|
|
May 31, 2017
|
||||||||||||||
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
||||
Commodity and freight derivatives
|
$
|
25,493
|
|
|
$
|
338,134
|
|
|
$
|
—
|
|
|
$
|
363,627
|
|
Foreign currency derivatives
|
—
|
|
|
10,558
|
|
|
—
|
|
|
10,558
|
|
||||
Interest rate swap derivatives
|
—
|
|
|
9,496
|
|
|
—
|
|
|
9,496
|
|
||||
Deferred compensation assets
|
51,710
|
|
|
—
|
|
|
—
|
|
|
51,710
|
|
||||
Embedded derivative asset
|
—
|
|
|
25,047
|
|
|
—
|
|
|
25,047
|
|
||||
Other assets
|
13,760
|
|
|
—
|
|
|
—
|
|
|
13,760
|
|
||||
Total
|
$
|
90,963
|
|
|
$
|
383,235
|
|
|
$
|
—
|
|
|
$
|
474,198
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|||||
Commodity and freight derivatives
|
$
|
31,941
|
|
|
$
|
239,396
|
|
|
$
|
—
|
|
|
$
|
271,337
|
|
Foreign currency derivatives
|
—
|
|
|
11,689
|
|
|
—
|
|
|
11,689
|
|
||||
Interest rate swap derivatives
|
—
|
|
|
1,186
|
|
|
—
|
|
|
1,186
|
|
||||
Crack spread contingent consideration liability
|
—
|
|
|
—
|
|
|
1,778
|
|
|
1,778
|
|
||||
Total
|
$
|
31,941
|
|
|
$
|
252,271
|
|
|
$
|
1,778
|
|
|
$
|
285,990
|
|
|
August 31, 2016
|
||||||||||||||
|
Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Total
|
||||||||
|
(Dollars in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Commodity and freight derivatives
|
$
|
62,538
|
|
|
$
|
437,654
|
|
|
$
|
—
|
|
|
$
|
500,192
|
|
Foreign currency derivatives
|
—
|
|
|
21,551
|
|
|
—
|
|
|
21,551
|
|
||||
Interest rate swap derivatives
|
—
|
|
|
22,078
|
|
|
—
|
|
|
22,078
|
|
||||
Deferred compensation assets
|
50,099
|
|
|
—
|
|
|
—
|
|
|
50,099
|
|
||||
Other assets
|
12,678
|
|
|
—
|
|
|
—
|
|
|
12,678
|
|
||||
Total
|
$
|
125,315
|
|
|
$
|
481,283
|
|
|
$
|
—
|
|
|
$
|
606,598
|
|
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Commodity and freight derivatives
|
$
|
22,331
|
|
|
$
|
468,971
|
|
|
$
|
—
|
|
|
$
|
491,302
|
|
Foreign currency derivatives
|
—
|
|
|
22,289
|
|
|
—
|
|
|
22,289
|
|
||||
Interest rate swap derivatives
|
—
|
|
|
8
|
|
|
—
|
|
|
8
|
|
||||
Crack spread contingent consideration liability
|
—
|
|
|
—
|
|
|
15,051
|
|
|
15,051
|
|
||||
Total
|
$
|
22,331
|
|
|
$
|
491,268
|
|
|
$
|
15,051
|
|
|
$
|
528,650
|
|
|
|
Level 3 Liabilities
|
||||||
|
|
Crack spread contingent consideration liability
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
Balances, February 28, 2017, and February 29, 2016, respectively
|
|
$
|
2,172
|
|
|
$
|
24,155
|
|
Total (gains) losses included in cost of goods sold
|
|
(394
|
)
|
|
506
|
|
||
Balances, May 31, 2017, and 2016, respectively
|
|
$
|
1,778
|
|
|
$
|
24,661
|
|
|
|
Level 3 Liabilities
|
||||||
|
|
Crack spread contingent consideration liability
|
||||||
|
|
2017
|
|
2016
|
||||
|
|
(Dollars in thousands)
|
||||||
Balances, August 31, 2016, and 2015, respectively
|
|
$
|
15,051
|
|
|
$
|
75,982
|
|
Total (gains) losses included in cost of goods sold
|
|
(13,273
|
)
|
|
(51,321
|
)
|
||
Balances, May 31, 2017, and 2016, respectively
|
|
$
|
1,778
|
|
|
$
|
24,661
|
|
|
|
NASDAQ symbol
|
|
Issuance date
|
|
Shares outstanding
|
|
Redemption value
|
|
Dividend rate (a) (b)
|
|
Dividend payment frequency
|
|
Redeemable beginning (c)
|
||||
|
|
|
|
|
|
|
|
(Dollars in millions)
|
|
|
|
|
|
|||||
8% Cumulative Redeemable
|
|
CHSCP
|
|
(d)
|
|
12,272,003
|
|
|
$
|
306.8
|
|
|
8.000
|
%
|
|
Quarterly
|
|
7/18/2023
|
Class B Cumulative Redeemable Series 1
|
|
CHSCO
|
|
(e)
|
|
21,459,948
(f)
|
|
|
$
|
536.5
|
|
|
7.875
|
%
|
|
Quarterly
|
|
9/26/2023
|
Class B Reset Rate Cumulative Redeemable Series 2
|
|
CHSCN
|
|
3/11/2014
|
|
16,800,000
|
|
|
$
|
420.0
|
|
|
7.100
|
%
|
|
Quarterly
|
|
3/31/2024
|
Class B Reset Rate Cumulative Redeemable Series 3
|
|
CHSCM
|
|
9/15/2014
|
|
19,700,000
|
|
|
$
|
492.5
|
|
|
6.750
|
%
|
|
Quarterly
|
|
9/30/2024
|
Class B Cumulative Redeemable Series 4
|
|
CHSCL
|
|
1/21/2015
|
|
20,700,000
|
|
|
$
|
517.5
|
|
|
7.500
|
%
|
|
Quarterly
|
|
1/21/2025
|
(a)
|
The Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2 accumulates dividends at a rate of 7.10% per year until March 31, 2024, and then at a rate equal to the three-month U.S. Dollar LIBOR plus 4.298%, not to exceed 8.00% per annum, subsequent to March 31, 2024.
|
(b)
|
The Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3 accumulates dividends at a rate of 6.75% per year until September 30, 2024, and then at a rate equal to the three-month U.S. Dollar LIBOR plus 4.155%, not to exceed 8.00% per annum, subsequent to September 30, 2024.
|
(c)
|
Preferred stock is redeemable for cash at our option, in whole or in part, at a per share price equal to the per share liquidation preference of $25.00 per share, plus all dividends accumulated and unpaid on that share to and including the date of redemption, beginning on the dates set forth in this column.
|
(d)
|
The 8% Cumulative Redeemable Preferred Stock was issued at various times from 2003-2010.
|
(e)
|
11,319,175 shares of Class B Cumulative Redeemable Preferred Stock, Series 1 (the "Class B Series 1 Preferred Stock") were issued on September 26, 2013; 6,752,188 shares were issued on August 25, 2014; 2,693,195 shares were issued on March 31, 2016; and 695,390 shares were issued on March 30, 2017.
|
(f)
|
882 shares that were issued on March 30, 2017, have been canceled. See Part II, Item 2 of this Current Report on Form 10-Q for more information.
|
(1)
|
On March 30, 2017, pursuant to a registration statement on Form S-1 that was declared effective by the Securities and Exchange Commission, we issued
695,390 shares of our Class B Series 1 Preferred Stock to redeem approximately $20,000,000 of our patrons’ equities that were held in the form of qualified capital equity certificates. Of these 695,390 shares, 882 shares were issued to Farmers Union Oil Company. We had previously acquired Farmers Union Oil Company in January 2017. The shares of Class B Series 1 Preferred Stock issued to Farmers Union Oil Company have been canceled.
|
(2)
|
Each share of Class B Series 1 Preferred Stock issued to Farmers Union Oil Company was issued to redeem $28.74 of patrons’ equities.
|
Exhibit
|
Description
|
10.1
|
|
10.2
|
|
10.3
|
|
31.1
|
|
31.2
|
|
32.1
|
|
32.2
|
|
101
|
The following financial information from CHS Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2017, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Statements of Operations, (ii) the Consolidated Statements of Comprehensive Income, (iii) the Consolidated Balance Sheets, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
|
Date:
|
July 14, 2017
|
|
By:
|
|
/s/ Timothy Skidmore
|
|
|
|
|
|
Timothy Skidmore
|
|
|
|
|
|
Executive Vice President and Chief Financial Officer
|
a.
|
Section 2.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
2.01
|
CHS shall originate and make the Loans to Borrowers in accordance with the Loan Underwriting Criteria, the proceeds of which will be used to finance the Borrowers’ agricultural production or processing activities. ProPartners shall then purchase up to a 100% participation interest, or in the case of Cooperative/Commercial Loans, such portion of such Cooperative/Commercial Loan offered to ProPartners, from CHS (a “
Participation Interest
”) in each Loan (each, a “
Participated Loan
” and collectively, the “
Participated Loans
”), in an aggregate principal amount totaling up to $200,000,000 in accordance with the terms of this Agreement. Subject to the limitations set forth in this Agreement, during any period when the outstanding aggregate principal balance of the existing Participated Loans that are classified as “Tier Rating C” or “Tier Rating D” pursuant to CHS’ 2014 “Producer Credit & Collection Policies” is less than 15% of the outstanding aggregate commitment balance of all existing Participated Loans, ProPartners hereby grants CHS delegated authority to approve all Loans with a Commitment amount that is less than or equal to $1,000,000 and to administer ProPartners’ purchase of a Participation Interest in such Loans (“
Delegated Authority Loans
”). Each offer to purchase a Participation Interest (for purchase on the next Purchase Date) of Loans that are not Delegated Authority Loans shall be extended to ProPartners by delivery to ProPartners of a true and correct Loan Package with respect to such Loan and ProPartners may, in its sole discretion, purchase a Participation Interest in such Loans under the terms of this Agreement. With respect to all Loans that ProPartners is purchasing a Participation Interest and all Loans where ProPartners is being offered a Participation Interest, CHS shall deliver to ProPartners a true and correct list with respect to each such Loan setting forth the Commitment to the Borrower thereunder and the amount of any advances
|
b.
|
Section 6.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
6.01
|
ProPartners shall be entitled to receive interest on the outstanding principal amount of all Participated Loans at a variable interest rate equal to ProPartners’ cost of funds (as communicated by ProPartners to CHS on a monthly basis) plus 1%, payable by CHS to ProPartners on each Interest Payment Date as provided in Section 2.07. In addition, CHS shall pay to ProPartners a commitment fee equal to 20 basis points of the difference between $200,000,000 minus the average daily aggregate loan balance outstanding of the Participated Loans for the then ending calendar quarter, which fee shall be payable on a quarterly basis on each Interest Payment Date. Any Participated Loan that is a fixed-rate loan shall bear interest at such fixed rate of interest as agreed by the parties on a case by case basis. CHS may, in its sole discretion, charge interest rates under the Participated Loans that are greater or lesser than the interest rate payable to ProPartners. If CHS charges interest rates that are higher than the interest rate payable to ProPartners, CHS may retain the excess over the interest rate payable to ProPartners from payments made to ProPartners. If CHS charges a lesser rate of interest, CHS will be responsible for paying to ProPartners the difference between the interest rate charged in the Loan Documents and the interest rate described in the first sentence of this Section.
|
c.
|
Exhibit B to the Agreement is hereby deleted in its entirety.
|
a.
|
All references in the Agreement to the term “this Agreement” shall hereafter be deemed to refer to the Agreement as amended by this Second Amendment and as may be further amended, modified, restated or replaced pursuant to a written agreement signed by the parties hereto.
|
b.
|
This Second Amendment may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.
|
|
AGSTAR FINANCIAL SERVICES, PCA,
|
|
D/B/A PROPARTNERS FINANCIAL
|
By:
|
/s/ Shaun P. Miller
|
Its:
|
SVP Credit / Chief Credit Officer
|
|
CHS CAPITAL, LLC
|
By:
|
/s/ Eric Born
|
Its:
|
Chief Credit Officer
|
a.
|
Section 2.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
2.01
|
CHS shall originate and make the Loans to Borrowers in accordance with the Loan Underwriting Criteria, the proceeds of which will be used to finance the Borrowers’ agricultural production or processing activities. ProPartners shall then purchase up to a 100% participation interest, or in the case of Cooperative/Commercial Loans, such portion of such Cooperative/Commercial Loan offered to ProPartners, from CHS (a “
Participation Interest
”) in each Loan (each, a “
Participated Loan
” and collectively, the “
Participated Loans
”), in an aggregate principal amount totaling up to $300,000,000 in accordance with the terms of this Agreement. Subject to the limitations set forth in this Agreement, during any period when the outstanding aggregate principal balance of the existing Participated Loans that are classified as “Tier Rating C” or “Tier Rating D” pursuant to CHS’ 2014 “Producer Credit & Collection Policies” is less than 15% of the outstanding aggregate commitment balance of all existing Participated Loans, ProPartners hereby grants CHS delegated authority to approve all Loans with a Commitment amount that is less than or equal to $1,000,000 and to administer ProPartners’ purchase of a Participation Interest in such Loans (“
Delegated Authority Loans
”). Each offer to purchase a Participation Interest (for purchase on the next Purchase Date) of Loans that are not Delegated Authority Loans shall be extended to ProPartners by delivery to ProPartners of a true and correct Loan Package with respect to such Loan and ProPartners may, in its sole discretion,
|
b.
|
Section 6.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
6.01
|
ProPartners shall be entitled to receive interest on the outstanding principal amount of all Participated Loans at a variable interest rate equal to ProPartners’ cost of funds (as communicated by ProPartners to CHS on a monthly basis) plus 1%, payable by CHS to ProPartners on each Interest Payment Date as provided in Section 2.07. In addition, CHS shall pay to ProPartners a commitment fee equal to 20 basis points of the difference between $300,000,000 minus the average daily aggregate loan balance outstanding of the Participated Loans for the then ending calendar quarter, which fee shall be payable on a quarterly basis on each Interest Payment Date. Any Participated Loan that is a fixed-rate loan shall bear interest at such fixed rate of interest as agreed by the parties on a case by case basis. CHS may, in its sole discretion, charge interest rates under the Participated Loans that are greater or lesser than the interest rate payable to ProPartners. If CHS charges interest rates that are higher than the interest rate payable to ProPartners, CHS may retain the excess over the interest rate payable to ProPartners from payments made to ProPartners. If CHS charges a lesser rate of interest, CHS will be responsible for paying to ProPartners the difference between the interest rate charged in the Loan Documents and the interest rate described in the first sentence of this Section.
|
c.
|
Section 7.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
7.01
|
CHS hereby absolutely and unconditionally guarantees full payment of all Participated Loans; provided, however, that for each calendar year, CHS’ guarantee under this Section 7.01 shall be limited to $60,000,000 (the “
Guarantee
”); provided, however, that if the aggregate amount of Guarantee payments made by CHS during any calendar year exceeds $58,000,000, then ProPartners and CHS shall mutually agree in writing which Participated Loans are repaid pursuant to any remaining Guarantee payments made by CHS for such calendar year.
|
a.
|
All references in the Agreement to the term “this Agreement” shall hereafter be deemed to refer to the Agreement as amended by this Third Amendment and as may be further amended, modified, restated or replaced pursuant to a written agreement signed by the parties hereto.
|
b.
|
This Third Amendment may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.
|
|
AGSTAR FINANCIAL SERVICES, PCA,
|
|
D/B/A PROPARTNERS FINANCIAL
|
By:
|
/s/ Shaun P. Miller
|
Its:
|
SVP Credit / Chief Credit Officer
|
|
CHS CAPITAL, LLC
|
By:
|
/s/ Eric Born
|
Its:
|
Chief Credit Officer
|
a.
|
Section 1.22 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
1.22
|
“
Single Borrower Limit
” shall mean Commitments to any Borrower under an offered Loan, when combined with other Commitments to such Borrower and to affiliated Borrowers under other Participated Loans, do not exceed $7,500,000.
|
b.
|
Section 2.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
2.01
|
CHS shall originate and make the Loans to Borrowers in accordance with the Loan Underwriting Criteria, the proceeds of which will be used to finance the Borrowers’ agricultural production or processing activities. ProPartners shall then purchase up to a 100% participation interest, or in the case of Cooperative/Commercial Loans, such portion of such Cooperative/Commercial Loan offered to ProPartners, from CHS (a “
Participation Interest
”) in each Loan (each, a “
Participated Loan
” and collectively, the “
Participated Loans
”), in an aggregate principal amount totaling up to $265,000,000 in accordance with the terms of this Agreement. Subject to the limitations set forth in this Agreement, during any period when the outstanding aggregate principal balance of the existing Participated Loans that are classified as “Tier Rating C” or “Tier Rating D” pursuant to CHS’ 2014 “Producer Credit &
|
c.
|
Section 6.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
6.01
|
ProPartners shall be entitled to receive interest on the outstanding principal amount of all Participated Loans at a variable interest rate equal to ProPartners’ cost of funds (as communicated by ProPartners to CHS on a monthly basis) plus 1%, payable by CHS to ProPartners on each Interest Payment Date as provided in Section 2.07. In addition, CHS shall pay to ProPartners a commitment fee equal to 30 basis points of the difference between $265,000,000 minus the average daily aggregate loan balance outstanding of the Participated Loans for the then ending calendar quarter, which fee shall be payable on a quarterly basis on each Interest Payment Date. Any Participated Loan that is a fixed-rate loan shall bear interest at such fixed rate of interest as agreed by the parties on a case by case basis. CHS may, in its sole discretion, charge interest rates under the Participated Loans that are greater or lesser than the interest rate payable to ProPartners. If CHS charges interest rates that are higher than the interest rate payable to ProPartners, CHS may retain the excess over the interest rate payable to ProPartners from payments made to ProPartners. If CHS charges a lesser rate of interest, CHS will be responsible for paying to ProPartners the difference between the interest rate charged in the Loan Documents and the interest rate described in the first sentence of this Section.
|
d.
|
Section 7.01 of the Agreement is hereby deleted in its entirety and replaced with the following:
|
7.01
|
CHS hereby absolutely and unconditionally guarantees full payment of all Participated Loans; provided, however, that for each calendar year, CHS’ guarantee under this Section 7.01 shall be limited to $90,000,000 (the “
Guarantee
”); provided, however, that if the aggregate amount of Guarantee payments made by CHS during any calendar year exceeds $88,000,000, then ProPartners and CHS shall mutually agree in writing which Participated Loans are repaid pursuant to any remaining Guarantee payments made by CHS for such calendar year.
|
a.
|
All references in the Agreement to the term “this Agreement” shall hereafter be deemed to refer to the Agreement as amended by this Fourth Amendment and as may be further amended, modified, restated or replaced pursuant to a written agreement signed by the parties hereto.
|
b.
|
This Fourth Amendment may be executed in any number of counterparts with the same effect as if all parties hereto had signed the same document. All such counterparts shall be construed together and shall constitute one instrument, but in making proof hereof it shall only be necessary to produce one such counterpart.
|
|
AGSTAR FINANCIAL SERVICES, PCA,
|
|
D/B/A PROPARTNERS FINANCIAL
|
By:
|
/s/ Shaun P. Miller
|
Its:
|
SVP Credit / CCO
|
|
CHS CAPITAL, LLC
|
By:
|
/s/ Eric Born
|
Its:
|
Chief Credit Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended
May 31, 2017
, of CHS Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Jay D. Debertin
|
|
Jay D. Debertin
|
|
President and Chief Executive Officer
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended
May 31, 2017
, of CHS Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
a.
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b.
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c.
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d.
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
a.
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
b.
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
|
/s/ Timothy Skidmore
|
|
Timothy Skidmore
|
|
Executive Vice President and Chief Financial Officer
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Jay D. Debertin
|
|
Jay D. Debertin
|
|
President and Chief Executive Officer
|
|
July 14, 2017
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
|
/s/ Timothy Skidmore
|
|
Timothy Skidmore
|
|
Executive Vice President and Chief Financial Officer
|
|
July 14, 2017
|