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UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
Form 10-Q
________________________________________
þ
 
Quarterly Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the quarterly period ended May 31, 2019.
or
o
 
Transition Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 for the transition period from to

Commission file number: 001-36079
________________________________________
CHS Inc.
(Exact name of registrant as specified in its charter)
Minnesota
 (State or other jurisdiction of
incorporation or organization)
 
41-0251095
 (I.R.S. Employer
Identification Number)
 
 
 
5500 Cenex Drive Inver Grove Heights, Minnesota 55077
 (Address of principal executive offices,
including zip code)
 
(651) 355-6000
 (Registrant’s telephone number,
including area code)
________________________________________

Securities registered pursuant to Section 12(b) of the Act:
Title of each class
Trading Symbol(s)
Name of each exchange on which registered
8% Cumulative Redeemable Preferred Stock
CHSCP
The Nasdaq Stock Market LLC
Class B Cumulative Redeemable Preferred Stock, Series 1
CHSCO
The Nasdaq Stock Market LLC
Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2
CHSCN
The Nasdaq Stock Market LLC
Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3
CHSCM
The Nasdaq Stock Market LLC
Class B Cumulative Redeemable Preferred Stock, Series 4
CHSCL
The Nasdaq Stock Market LLC

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.
YES þ NO o

Indicate by check mark whether the Registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the Registrant was required to submit such files).
YES þ NO o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer," "accelerated filer," "smaller reporting company," and "emerging growth company" in Rule 12b-2 of the Exchange Act.
Large accelerated filer o
Accelerated filer o
Non-accelerated filer þ
Smaller reporting company o
Emerging growth company o

If an emerging growth company, indicate by check mark if the Registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
YES o NO þ

Indicate the number of shares outstanding of each of the Registrant’s classes of common stock, as of the latest practicable date: The Registrant has no common stock outstanding.
 



INDEX
 
 
 
 
Page
No.
 
 
 
 
 
 
 
 
 
 




Unless the context otherwise requires, for purposes of this Quarterly Report on Form 10-Q, the words "we," "us," "our," the "Company" and "CHS" refer to CHS Inc., a Minnesota cooperative corporation, and its subsidiaries as of May 31, 2019.

FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q contains and our other publicly available documents may contain, and our officers, directors and other representatives may from time to time make, "forward-looking statements" within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements can be identified by words such as "anticipate," "intend," "plan," "goal," "seek," "believe," "project," "estimate," "expect," "strategy," "future," "likely," "may," "should," "will" and similar references to future periods. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations and assumptions regarding the future of our businesses, financial condition and results of operations, future plans and strategies, projections, anticipated events and trends, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict and many of which are outside of our control. Our actual results and financial condition may differ materially from those indicated in the forward-looking statements. Therefore, you should not place undue reliance on any of these forward-looking statements. Important factors that could cause our actual results and financial condition to differ materially from those indicated in the forward-looking statements are discussed or identified in our public filings made with the U.S. Securities and Exchange Commission, including in the "Risk Factors" discussion in Item 1A of our Annual Report on Form 10-K for the year ended August 31, 2018. Any forward-looking statements made by us in this Quarterly Report on Form 10-Q are based only on information currently available to us and speak only as of the date on which the statement is made. We undertake no obligation to publicly update any forward-looking statement, whether written or oral, that may be made from time to time, whether as a result of new information, future developments or otherwise, except as required by applicable law.

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PART I. FINANCIAL INFORMATION

ITEM 1.     FINANCIAL STATEMENTS

CHS INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
 
May 31,
2019
 
August 31,
2018
 
(Dollars in thousands)
ASSETS
 
 
 
Current assets:
 

 


Cash and cash equivalents
$
155,252

 
$
450,617

Receivables
2,976,452

 
2,460,401

Inventories
3,338,321

 
2,768,649

Derivative assets
265,155

 
329,757

Margin and related deposits
239,029

 
151,150

Supplier advance payments
397,509

 
288,423

Other current assets
317,885

 
244,208

Total current assets
7,689,603

 
6,693,205

Investments
3,738,140

 
3,711,925

Property, plant and equipment
5,032,324

 
5,141,719

Other assets
1,113,416

 
834,329

Total assets
$
17,573,483

 
$
16,381,178

LIABILITIES AND EQUITIES
 
 
 
Current liabilities:
 

 
 

Notes payable
$
2,763,225

 
$
2,272,196

Current portion of long-term debt
167,772

 
167,565

Customer margin deposits and credit balances
159,371

 
137,395

Customer advance payments
490,183

 
409,088

Accounts payable
2,158,431

 
1,844,489

Derivative liabilities
308,118

 
438,465

Accrued expenses
541,164

 
511,032

Dividends and equities payable
272,978

 
153,941

Total current liabilities
6,861,242

 
5,934,171

Long-term debt
1,750,155

 
1,762,690

Long-term deferred tax liabilities
218,107

 
182,770

Other liabilities
332,270

 
336,519

Commitments and contingencies (Note 15)


 


Equities:
 

 
 

Preferred stock
2,264,038

 
2,264,038

Equity certificates
4,516,866

 
4,609,456

Accumulated other comprehensive loss
(211,661
)
 
(199,915
)
Capital reserves
1,834,030

 
1,482,003

Total CHS Inc. equities
8,403,273

 
8,155,582

Noncontrolling interests
8,436

 
9,446

Total equities
8,411,709

 
8,165,028

Total liabilities and equities
$
17,573,483

 
$
16,381,178


The accompanying notes are an integral part of the consolidated financial statements (unaudited).

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CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
2019
 
(As Restated) 2018
 
2019
 
(As Restated) 2018
 
(Dollars in thousands)
Revenues
$
8,497,941

 
$
9,087,328

 
$
23,465,769

 
$
24,099,365

Cost of goods sold
8,274,170

 
8,841,696

 
22,343,944

 
23,398,272

Gross profit
223,771

 
245,632

 
1,121,825

 
701,093

Marketing, general and administrative
183,723

 
162,424

 
523,648

 
490,329

Reserve and impairment charges (recoveries), net
33,804

 
(3,811
)
 
27,790

 
(18,944
)
Operating earnings (loss)
6,244

 
87,019

 
570,387

 
229,708

(Gain) loss on disposal of business
(2,474
)
 
(124,050
)
 
(3,886
)
 
(131,755
)
Interest expense
42,773

 
49,340

 
122,950

 
130,218

Other (income) loss
(30,464
)
 
(15,802
)
 
(65,949
)
 
(54,542
)
Equity (income) loss from investments
(65,170
)
 
(59,308
)
 
(173,394
)
 
(137,111
)
Income (loss) before income taxes
61,579

 
236,839

 
690,666

 
422,898

Income tax expense (benefit)
6,866

 
55,219

 
40,534

 
(111,863
)
Net income (loss)
54,713

 
181,620

 
650,132

 
534,761

Net income (loss) attributable to noncontrolling interests
93

 
(187
)
 
(758
)
 
(699
)
Net income (loss) attributable to CHS Inc. 
$
54,620

 
$
181,807

 
$
650,890

 
$
535,460

    
The accompanying notes are an integral part of the consolidated financial statements (unaudited).


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CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
2019
 
(As Restated) 2018
 
2019
 
(As Restated) 2018
 
(Dollars in thousands)
Net income (loss)
$
54,713

 
$
181,620

 
$
650,132

 
$
534,761

Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
     Postretirement benefit plan activity
1,496

 
3,417

 
5,599

 
8,153

     Unrealized net gain (loss) on available for sale investments

 
6,286

 

 
13,480

     Cash flow hedges
(15,817
)
 
413

 
(7,155
)
 
1,472

     Foreign currency translation adjustment
(7,992
)
 
(10,188
)
 
(5,484
)
 
(10,047
)
Other comprehensive income (loss), net of tax
(22,313
)
 
(72
)
 
(7,040
)
 
13,058

Comprehensive income (loss)
32,400

 
181,548

 
643,092

 
547,819

     Less: comprehensive income (loss) attributable to noncontrolling interests
93

 
(187
)
 
(758
)
 
(699
)
Comprehensive income (loss) attributable to CHS Inc. 
$
32,307

 
$
181,735

 
$
643,850

 
$
548,518


The accompanying notes are an integral part of the consolidated financial statements (unaudited).



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CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Nine Months Ended May 31,
 
2019
 
(As Restated) 2018
 
(Dollars in thousands)
Cash flows from operating activities:
 

 
 

Net income (loss)
$
650,132

 
$
534,761

Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 

Depreciation and amortization
352,838

 
358,134

Amortization of deferred major repair costs
48,960

 
43,908

Equity (income) loss from investments
(173,394
)
 
(137,111
)
Distributions from equity investments
133,720

 
97,665

Provision for doubtful accounts
36,874

 
(4,145
)
Gain and recovery on disposal of business
(3,476
)
 
(131,755
)
Deferred taxes
34,786

 
(137,023
)
Other, net
(42,681
)
 
15,670

Changes in operating assets and liabilities, net of acquisitions:
 

 
 

Receivables
(446,846
)
 
(194,546
)
Inventories
(199,339
)
 
(314,439
)
Derivative assets
70,559

 
(22,454
)
Margin and related deposits
(87,911
)
 
(47,079
)
Supplier advance payments
(157,560
)
 
(177,373
)
Other current assets and other assets
(61,999
)
 
21,074

Customer margin deposits and credit balances
17,268

 
(19,914
)
Customer advance payments
(58,222
)
 
(51,180
)
Accounts payable and accrued expenses
174,855

 
9,617

Derivative liabilities
(137,790
)
 
11,614

Other liabilities
(20,863
)
 
(49,842
)
Net cash provided by (used in) operating activities
129,911

 
(194,418
)
Cash flows from investing activities:
 

 
 

Acquisition of property, plant and equipment
(278,589
)
 
(249,078
)
Proceeds from disposition of property, plant and equipment
46,414

 
80,045

Proceeds from sale of business
5,044

 
234,914

Expenditures for major repairs
(210,837
)
 
(39,363
)
Investments redeemed
7,203

 
6,607

Changes in CHS Capital notes receivable, net
(112,608
)
 
(83,908
)
Financing extended to customers
(10,492
)
 
(72,106
)
Payments from customer financing
84,189

 
38,725

Business acquisitions, net of cash acquired
(119,421
)
 

Other investing activities, net
(3,393
)
 
12,377

Net cash provided by (used in) investing activities
(592,490
)
 
(71,787
)
Cash flows from financing activities:
 

 
 

Proceeds from lines of credit and long-term debt borrowings
20,715,683

 
29,802,708

Payments on lines of credit, long-term debt and capital lease obligations
(20,236,780
)
 
(29,025,052
)
Preferred stock dividends paid
(126,501
)
 
(126,501
)
Retirements of equities
(76,397
)
 
(6,391
)
Cash patronage paid
(75,669
)
 

Other financing activities, net
(25,993
)
 
(70,904
)
Net cash provided by (used in) financing activities
174,343

 
573,860

Effect of exchange rate changes on cash and cash equivalents
(382
)
 
1,030

Net increase (decrease) in cash and cash equivalents and restricted cash
(288,618
)
 
308,685

Cash and cash equivalents and restricted cash at beginning of period
543,940

 
272,272

Cash and cash equivalents and restricted cash at end of period
$
255,322

 
$
580,957


The accompanying notes are an integral part of the consolidated financial statements (unaudited).

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CHS INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1        Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The unaudited Consolidated Balance Sheet as of May 31, 2019, the Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018, the Consolidated Statements of Comprehensive Income for the three and nine months ended May 31, 2019, and 2018, and the Consolidated Statements of Cash Flows for the nine months ended May 31, 2019, and 2018, reflect, in the opinion of our management, all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full fiscal year because of, among other things, the seasonal nature of our businesses. Our Consolidated Balance Sheet data as of August 31, 2018, has been derived from our audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP").

As described in Note 2, Restatement of Previously Issued Financial Information, the consolidated financial statements for the three and nine months ended May 31, 2018, have been restated to reflect the correction of misstatements. We have also restated all relevant amounts impacted within the notes to the consolidated financial statements.

The notes to our consolidated financial statements reference our Energy, Ag and Nitrogen Production reportable segments, as well as our Corporate and Other category, which represents an aggregation of individually immaterial operating segments. See Note 12, Segment Reporting, for more information related to our reportable segments.
 
Our consolidated financial statements include the accounts of CHS and all of our wholly owned and majority owned subsidiaries. The effects of all significant intercompany transactions have been eliminated.

These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, 2018, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC").

Significant Accounting Policies

The following significant accounting policies have been updated since our Annual Report on Form 10-K for the year ended August 31, 2018, as a result of the adoption of certain new accounting pronouncements effective for us during the nine months ended May 31, 2019.

Restricted Cash

Restricted cash is included in our Consolidated Balance Sheets within other current assets (current portion) and other assets (non-current portion), as appropriate, and primarily relates to customer deposits for futures and option contracts associated with regulated commodities held in separate accounts as required under federal and other regulations. Pursuant to the requirements of the Commodity Exchange Act, such funds must be carried in separate accounts that are designated as segregated customer accounts, as applicable. Restricted cash also includes funds held in escrow pursuant to applicable regulations limiting their usage.


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The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within our Consolidated Balance Sheets that aggregates to the amount presented in our Consolidated Statements of Cash Flows. During the nine months ended May 31, 2019, we updated the presentation of our Consolidated Statements of Cash Flows to include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on our Consolidated Statements of Cash Flows.

 
May 31, 2019
 
August 31, 2018
 
May 31, 2018
 
August 31, 2017
 
(Dollars in thousands)
Cash and cash equivalents
$
155,252

 
$
450,617

 
$
533,887

 
$
181,379

Restricted cash included in other current assets
99,398

 
90,193

 
43,912

 
83,561

Restricted cash included in other assets
672

 
3,130

 
3,158

 
7,332

Total cash and cash equivalents and restricted cash
$
255,322

 
$
543,940

 
$
580,957

 
$
272,272


Investments
    
As described in the "Recent Accounting Pronouncements" section below, we adopted Accounting Standards Update ("ASU") No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which was effective for us September 1, 2018. As a result, all equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. We have elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at cost less impairment plus or minus observable price changes in orderly transactions.

Investments in other cooperatives are recorded in a manner similar to equity investments without readily determinable fair values, plus patronage dividends received in the form of capital stock and other equities. Patronage dividends are recorded as a reduction to cost of goods sold at the time qualified written notices of allocation are received. Investments in debt and equity instruments are carried at amounts that approximate fair values.

Revenue Recognition

We provide a wide variety of products and services, ranging from agricultural inputs such as fuels, farm supplies and agronomy products, to agricultural outputs that include grain and oilseed, processed grains and oilseeds and food products, and ethanol production and marketing. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the goods has transferred to the customer. For the majority of our contracts with customers, control transfers to customers at a point-in-time when the goods/services have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods/services transfer to the customer. In limited arrangements, control transfers over time as the customer simultaneously receives and consumes the benefits of the service as we complete the performance obligation(s).

Revenue is recognized at the transaction price that we expect to be entitled to in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. We follow a policy of recognizing revenue at the point-in-time or over the period of time we satisfy our performance obligation by transferring control over a product or service to a customer in accordance with the underlying contract. For physically settled derivative sales contracts that are outside the scope of the revenue guidance, we recognize revenue when control of the inventory is transferred within the meaning of Accounting Standards Codification ("ASC") Topic 606.

Recent Accounting Pronouncements

Adopted

In March 2017, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Postretirement Benefit Cost. This ASU changes the presentation of net periodic pension cost and net periodic postretirement benefit cost in the Consolidated Statements of Operations. This ASU provides that the service cost component should be included in the same income statement line item as other compensation costs arising from services rendered by the employees during the period. The other components of net periodic benefit cost (such as interest, expected return on plan assets, prior service cost amortization and actuarial gain/loss amortization) are required to be presented in the Consolidated Statements of Operations separately

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outside of operating income. Additionally, only service cost may be capitalized in assets. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The guidance on the presentation of the components of net periodic benefit cost in the Consolidated Statements of Operations has been applied retrospectively, and the guidance regarding the capitalization of the service cost component in assets has been applied prospectively. The adoption of this guidance had no impact on previously reported income (loss) before income taxes or net income attributable to CHS; however, non-service cost components of net periodic benefit costs in prior periods have been reclassified from cost of goods sold and marketing, general and administrative expenses, and are now reported outside of operating income within other (income) loss. Refer to Note 2, Restatement of Previously Issued Financial Information, for the amounts of the retrospective adjustments recorded as a result of the adoption of this guidance.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments within this ASU narrow the existing definition of a business and provide a more robust framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The definition of a business impacts various areas of accounting, including acquisitions, disposals and goodwill. Under the new guidance, fewer acquisitions are expected to be considered businesses. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The guidance has been applied prospectively. The adoption of this amended guidance did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Consolidated Statements of Cash Flows, as well as disclosure about the nature of restrictions on cash, cash equivalents and amounts generally described as restricted cash. Additionally, the guidance requires disclosure of the total amount of cash, cash equivalents and restricted cash for each comparative period for which a Consolidated Balance Sheet is presented. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The amendments in this ASU were applied retrospectively to all periods presented. Refer to the additional disclosures pertaining to restricted cash within the Restricted Cash significant accounting policy above. The adoption of this amended guidance did not have a material impact on our Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU is intended to reduce existing diversity in practice in how certain cash receipts and payments are presented and classified in the Consolidated Statements of Cash Flows. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The adoption of this amended guidance did not have a material impact on our Consolidated Statements of Cash Flows.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in fair value recognized in net income. This guidance eliminates the previous cost method of accounting for certain equity securities that did not have readily determinable fair values. This guidance also simplifies the impairment assessment and allows for a fair value measurement alternative for equity investments without readily determinable fair values and includes presentation and disclosure changes. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year and was applied following a prospective basis. We have elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at cost less impairment plus or minus observable price changes in orderly transactions. As a result of the adoption of this amended guidance, we reclassified approximately $4.7 million from accumulated other comprehensive loss to the opening balance of capital reserves within our Consolidated Balance Sheet as of September 1, 2018, which did not have a material impact on our consolidated financial statements.
    
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments within this ASU, as well as within the additional clarifying ASUs issued by the FASB, provide a single comprehensive model to be used to determine the measurement of revenue and timing of recognition for revenue arising from contracts with customers. The core principle of the amended guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition guidance includes a five-step model for the recognition of revenue, including (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue when (or as) an entity satisfies a performance obligation. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year, and we elected to apply the modified

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retrospective method of adoption to all contracts as of the date of initial application. The majority of our revenues are attributable to forward commodity sales contracts, which are considered to be physically settled derivatives under ASC 815, Derivatives and Hedging (Topic 815). Revenues arising from derivative contracts accounted for under ASC 815 are specifically outside the scope of ASC Topic 606 and therefore not subject to the provisions of the new revenue recognition guidance. As such, the impact of adoption of the new revenue guidance has only been assessed for our revenue contracts that are not accounted for as derivative arrangements. The primary impact of adoption was changes to the timing of revenue recognition for certain revenue streams that had an immaterial impact. Following the modified retrospective method of adoption, we determined the cumulative effect of adoption for all contracts with customers that had not been completed as of the adoption date was less than $1.0 million. Additionally, the impact of applying ASC Topic 606 compared to previous guidance during the three and nine months ended May 31, 2019, was an overall decrease to revenues of $14.2 million and $36.9 million, respectively. Other financial statement impacts related to the adoption of ASC Topic 606 were not material. Our revenue recognition accounting policy and additional information related to our revenue streams and related performance obligations required to be satisfied in order to recognize revenue can be found within the Significant Accounting Policies section above and within Note 3, Revenues.

Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU reduces the complexity of accounting for implementation, setup and other upfront costs incurred in a cloud computing service arrangement that is hosted by a vendor. This ASU aligns the accounting for implementation costs of hosting arrangements, irrespective of whether the arrangements convey a license to the hosted software. This ASU permits either a prospective or retrospective transition approach. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year, with early adoption permitted. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715-20, Compensation - Retirement Benefits - Defined Benefit Plans - General. This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and (b) the effects of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for postretirement health care benefits. The new disclosures include the interest crediting rates for cash balance plans and an explanation of significant gains and losses related to changes in benefit obligations. This ASU is effective for us beginning September 1, 2021, for our fiscal year 2022 and for interim periods within that fiscal year, with early adoption permitted. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. Specifically, the guidance removes the requirement to disclose the amount and reasons for any transfers between Level 1 and Level 2 of the fair value hierarchy and removes the requirement to disclose a description of the valuation processes used to value Level 3 fair value measurements. The guidance also requires additional disclosures surrounding Level 3 changes in unrealized gains/losses included in other comprehensive income, as well as the range and weighted average of significant unobservable inputs calculation. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year. Early adoption is permitted. We elected to remove the disclosures permitted by ASU No. 2018-13 during the fourth quarter of fiscal 2018, but have not early adopted the new required additional disclosures, which is permitted by the guidance. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU introduce a new approach, based on expected losses, to estimate credit losses on certain types of financial instruments. This ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses associated with most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. Entities are required to apply the provisions of this ASU as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This ASU is

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effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year. We are currently evaluating the impact the adoption will have on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which replaces the existing guidance within ASC 840, Leases. The amendments within this ASU, as well as within additional clarifying ASUs issued by the FASB, introduce a lessee model requiring entities to recognize assets and liabilities for most leases, but continue recognizing the associated expenses in a manner similar to existing accounting guidance. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which amends ASU No. 2016-02, Leases. This ASU is effective for us beginning September 1, 2019, for our fiscal year 2020 and for interim periods within that fiscal year. We have initiated our assessment of the new lease standard, including the utilization of surveys to gather more information about existing leases and the implementation of a new lease software to improve the collection, maintenance, and aggregation of lease data necessary for the expanded reporting and disclosure requirements under the new lease standard. It is expected that the primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases as right of use assets and liabilities on our Consolidated Balance Sheets. This will result in a material increase in assets and liabilities recorded on our Consolidated Balance Sheets. Although we expect the new lease guidance will have a material impact on our Consolidated Balance Sheets, we are continuing to evaluate the practical expedient guidance provisions available and the extent of potential impacts on our consolidated financial statements, processes and internal controls.

Note 2        Restatement of Previously Issued Financial Information

The consolidated financial statements for the three and nine months ended May 31, 2018, have been restated to reflect the correction of misstatements. We have also restated all amounts impacted within the notes to the consolidated financial statements. A description of the adjustments and their impact on the previously issued financial information are included below.
 
Descriptions of Restatement Adjustments
 
During the preparation of our Annual Report on Form 10-K for the year ended August 31, 2018, we noted potentially excessive valuations in the net derivative asset valuations relating to certain rail freight contracts purchased in connection with our North American grain marketing operations. An investigation concluded that the rail freight misstatements included in our consolidated financial statements were due to intentional misconduct by a former employee in our rail freight trading operations, as well as due to rail freight contracts and certain non-rail contracts not meeting the technical accounting requirements to qualify as derivative financial instruments. The misconduct consisted of the former employee manipulating the mark-to-market valuation of rail cars that were the subject of rail freight purchase contracts and manipulating the quantity of rail cars included in the monthly mark-to-market valuation. In addition, the investigation revealed intentional misstatements were made by the former employee to our independent registered public accounting firm in connection with its audit of our consolidated financial statements for the fiscal year ended August 31, 2017. During the course of, and as a result of, the investigation, we terminated the former employee and have taken additional personnel actions.

As described in additional detail in the Explanatory Note in our Annual Report on Form 10-K for the year ended August 31, 2018, the Company restated its audited consolidated financial statements for the fiscal years ended August 31, 2017 and 2016, and our unaudited consolidated financial statements for the quarterly periods ended November 30, 2017 and 2016, February 28, 2018 and 2017, and May 31, 2018 and 2017. As a result of the misstatements, we restated our interim consolidated financial statements for the three and nine months ended May 31, 2018. In addition to the adjustments related to freight derivatives and related misstatements, we also made adjustments related to certain intercompany balances and other historical misstatements unrelated to the freight derivatives and related misstatements.

Consolidated Financial Statement Adjustment Tables

The following tables present the impacts of the restatement adjustments to our unaudited Consolidated Statements of Operations and unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended May 31, 2018, and to our unaudited Consolidated Statement of Cash Flows for the nine months ended May 31, 2018. The restatement references identified in the following tables directly correlate to the restatement adjustments detailed below. 
 

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The categories of restatement adjustments and their impact on previously reported consolidated financial statements are described below. 

(a) Freight derivatives and related misstatements - Corrections for freight derivatives and related misstatements were driven by the misstatement of amounts associated with both the value and quantity of rail freight contracts, as well as due to rail and certain non-rail freight contracts not meeting the technical accounting requirements to qualify as derivative financial instruments. In addition to the elimination of the underlying freight derivative assets and liabilities and related impacts on revenues and cost of goods sold, additional adjustments were recorded to account for prepaid freight capacity balances in relevant periods. Additional details related to the impact of the freight derivatives and related misstatements and their impact on each period are discussed in restatement reference (a).

(b) Intercompany misstatements - As a result of the work performed in relation to the freight misstatement, additional misstatements related to the incorrect elimination of intercompany balances were also identified and corrected within the consolidated financial statements. Certain of these intercompany misstatements resulted in a misstatement of various financial statement line items; however, the intercompany misstatements did not result in a material misstatement of income (loss) before income taxes or net income (loss). Additional details related to the impact of the intercompany misstatements and their impact on each period are discussed in restatement reference (b).

(c) Other misstatements - We made adjustments for other previously identified misstatements unrelated to the freight derivatives and related misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These other misstatements related primarily to certain misclassifications, adjustments to revenues and cost of goods sold, and adjustments to various income tax and indirect tax accrual accounts. Additional details related to the impact of the other misstatements and their impact on each period are discussed in restatement reference (c).



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CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
For the Three Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
Revenues
$
9,027,525

 
$
59,803

 
$
9,087,328

 
$

 
$
9,087,328

 
b, c
Cost of goods sold
8,728,914

 
112,447

 
8,841,361

 
335

 
8,841,696

 
a, b, c
Gross profit
298,611

 
(52,644
)
 
245,967

 
(335
)
 
245,632

 
 
Marketing, general and administrative
161,578

 
1

 
161,579

 
845

 
162,424

 
c
Reserve and impairment charges (recoveries), net
(3,811
)
 

 
(3,811
)
 

 
(3,811
)
 

Operating earnings (loss)
140,844

 
(52,645
)
 
88,199

 
(1,180
)
 
87,019

 
 
(Gain) loss on disposal of business
(124,050
)
 

 
(124,050
)
 

 
(124,050
)
 
 
Interest expense
49,340

 

 
49,340

 

 
49,340

 
 
Other (income) loss
(14,622
)
 

 
(14,622
)
 
(1,180
)
 
(15,802
)
 
 
Equity (income) loss from investments
(59,308
)
 

 
(59,308
)
 

 
(59,308
)
 
 
Income (loss) before income taxes
289,484


(52,645
)
 
236,839

 

 
236,839

 
 
Income tax expense (benefit)
60,338

 
(5,119
)
 
55,219

 

 
55,219

 
a
Net income (loss)
229,146

 
(47,526
)
 
181,620

 

 
181,620

 
 
Net income (loss) attributable to noncontrolling interests
(187
)
 

 
(187
)
 

 
(187
)
 
 
Net income (loss) attributable to CHS Inc. 
$
229,333

 
$
(47,526
)
 
$
181,807

 
$

 
$
181,807

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-07 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $29.8 million reduction of income before income taxes and a $24.7 million reduction of net income. These adjustments related to a $29.8 million increase of cost of goods sold and a $5.1 million decrease of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements
(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $38.8 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements
(c) The correction of other misstatements resulted in a $22.8 million decrease of income before income taxes and net income. The $22.8 million decrease of income before income taxes related primarily to an $18.8 million increase of cost of goods sold due to adjustments associated with the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018. The remaining decrease relates to an $11.8 million increase of revenues and a $14.5 million increase of cost of goods sold related to the timing of revenue recognition, as well as a $1.3 million increase of cost of goods sold related to the valuation of crack spread derivatives.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations, primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $9.2 million increase of revenues and cost of goods sold.




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For the Nine Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
Revenues
$
23,927,508

 
$
171,857

 
$
24,099,365

 
$

 
$
24,099,365

 
b, c
Cost of goods sold
23,173,151

 
224,116

 
23,397,267

 
1,005

 
23,398,272

 
a, b, c
Gross profit
754,357

 
(52,259
)
 
702,098

 
(1,005
)
 
701,093

 
 
Marketing, general and administrative
488,459

 
(667
)
 
487,792

 
2,537

 
490,329

 
c
Reserve and impairment charges (recoveries), net
(18,944
)
 

 
(18,944
)
 

 
(18,944
)
 
 
Operating earnings (loss)
284,842

 
(51,592
)
 
233,250

 
(3,542
)
 
229,708

 
 
(Gain) loss on disposal of business
(131,755
)
 

 
(131,755
)
 

 
(131,755
)
 
 
Interest expense
130,218

 

 
130,218

 

 
130,218

 
 
Other (income) loss
(51,000
)
 

 
(51,000
)
 
(3,542
)
 
(54,542
)
 
 
Equity (income) loss from investments
(137,111
)
 

 
(137,111
)
 

 
(137,111
)
 
 
Income (loss) before income taxes
474,490

 
(51,592
)
 
422,898

 

 
422,898

 
 
Income tax expense (benefit)
(100,901
)
 
(10,962
)
 
(111,863
)
 

 
(111,863
)
 
a, c
Net income (loss)
575,391

 
(40,630
)
 
534,761

 

 
534,761

 
 
Net income (loss) attributable to noncontrolling interests
(699
)
 

 
(699
)
 

 
(699
)
 
 
Net income (loss) attributable to CHS Inc. 
$
576,090

 
$
(40,630
)
 
$
535,460

 
$

 
$
535,460

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-07 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $52.9 million reduction of income before income taxes and a $48.5 million reduction of net income. These adjustments related to a $52.9 million increase of cost of goods sold and a $4.4 million increase of income tax benefit related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements
(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $189.0 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements
(c) The correction of other misstatements resulted in a $1.3 million increase of income before income taxes and a $7.9 million increase of net income. The $1.3 million increase of income before income taxes relates to a combination of offsetting misstatements, including a $13.7 million decrease of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018, a $6.6 million decrease of cost of goods sold related to the valuation of crack spread derivatives, and a $2.6 million decrease in expense related to postretirement benefit plan activity that resulted from a timing difference associated with recording certain benefit plan expenses (included in cost of goods sold and marketing, general and administrative expenses). The overall increase was mostly offset by an $18.8 million increase of cost of goods sold due to a timing difference associated with the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018. The increase in income before income taxes and net income was also impacted by a $7.0 million increase of revenue and a $9.9 million increase of cost of goods sold related to the timing of revenue recognition. In addition to the increase of income before income taxes, an income tax benefit of $6.6 million was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations, primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $24.1 million decrease of revenues and cost of goods sold.

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CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended
May 31, 2018
 
For the Nine Months Ended
May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Restatement References
 
(Dollars in thousands)
 
 
Net income (loss)
$
229,146

 
$
(47,526
)
 
$
181,620

 
$
575,391

 
$
(40,630
)
 
$
534,761

 
a, c
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
 
 
 
 
Postretirement benefit plan activity
3,417

 

 
3,417

 
10,755

 
(2,602
)
 
8,153

 
c
Unrealized net gain (loss) on available for sale investments
6,286

 

 
6,286

 
13,480

 

 
13,480

 
 
Cash flow hedges
413

 

 
413

 
1,472

 

 
1,472

 
 
Foreign currency translation adjustment
(11,617
)
 
1,429

 
(10,188
)
 
(11,763
)
 
1,716

 
(10,047
)
 
a
Other comprehensive income (loss), net of tax
(1,501
)
 
1,429

 
(72
)
 
13,944

 
(886
)
 
13,058

 
 
Comprehensive income
227,645

 
(46,097
)
 
181,548

 
589,335

 
(41,516
)
 
547,819

 
 
Less: comprehensive income (loss) attributable to noncontrolling interests
(187
)
 

 
(187
)
 
(699
)
 

 
(699
)
 
 
Comprehensive income attributable to CHS Inc. 
$
227,832

 
$
(46,097
)
 
$
181,735

 
$
590,034

 
$
(41,516
)
 
$
548,518

 
 

For the three months ended May 31, 2018

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $24.7 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three months ended May 31, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements
(b) None.

Other misstatements
(c) The correction of other misstatements resulted in a $22.8 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three months ended May 31, 2018, above.

For the nine months ended May 31, 2018

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $48.5 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the nine months ended May 31, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements
(b) None.

Other misstatements
(c) The correction of other misstatements resulted in a $7.9 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the nine months ended May 31, 2018, above. The adjustment related to postretirement benefit plan activity is attributable to a timing difference associated with recording certain benefit plan expenses.


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CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 
For the Nine Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
 
Cash flows from operating activities:
 

 
 
 
 
 
 

 
 
 
 
Net income (loss)
$
575,391

 
$
(40,630
)
 
$
534,761

 
$

 
$
534,761

 
a, c
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 
 
 
 
 
 


 
 
Depreciation and amortization
358,134

 

 
358,134

 

 
358,134

 
 
Amortization of deferred major repair costs
43,908

 

 
43,908

 

 
43,908

 
 
Equity (income) loss from investments
(137,111
)
 

 
(137,111
)
 

 
(137,111
)
 
 
Distributions from equity investments
97,665

 

 
97,665

 

 
97,665

 
 
Provision for doubtful accounts
(4,145
)
 

 
(4,145
)
 

 
(4,145
)
 
 
Gain and recovery on disposal of business
(131,755
)
 

 
(131,755
)
 

 
(131,755
)
 
 
Deferred taxes
(135,560
)
 
(1,463
)
 
(137,023
)
 

 
(137,023
)
 
a, c
Other, net
18,272

 
(2,602
)
 
15,670

 

 
15,670

 
c
Changes in operating assets and liabilities, net of acquisitions:
 

 
 
 
 
 
 
 


 
 
Receivables
(216,501
)
 
21,955

 
(194,546
)
 

 
(194,546
)
 
c
Inventories
(366,858
)
 
52,419

 
(314,439
)
 

 
(314,439
)
 
b, c
Derivative assets
(86,910
)
 
64,456

 
(22,454
)
 

 
(22,454
)
 
a, c
Margin and related deposits
(47,079
)
 

 
(47,079
)
 

 
(47,079
)
 
 
Supplier advance payments
(177,373
)
 

 
(177,373
)
 

 
(177,373
)
 
 
Other current assets and other assets
75,191

 
(10,294
)
 
64,897

 
(43,823
)
 
21,074

 
a, c
Customer margin deposits and credit balances
(19,914
)
 

 
(19,914
)
 

 
(19,914
)
 
 
Customer advance payments
(40,547
)
 
(10,633
)
 
(51,180
)
 

 
(51,180
)
 
c
Accounts payable and accrued expenses
73,745

 
(64,128
)
 
9,617

 

 
9,617

 
a, b, c
Derivative liabilities
23,758

 
(12,144
)
 
11,614

 

 
11,614

 
a, c
Other liabilities
(49,842
)
 

 
(49,842
)
 

 
(49,842
)
 
 
Net cash provided by (used in) operating activities
(147,531
)
 
(3,064
)
 
(150,595
)
 
(43,823
)
 
(194,418
)
 
 
Cash flows from investing activities:
 

 
 
 
 
 
 
 


 
 
Acquisition of property, plant and equipment
(249,078
)
 

 
(249,078
)
 

 
(249,078
)
 
 
Proceeds from disposition of property, plant and equipment
80,045

 

 
80,045

 

 
80,045

 
 
Proceeds from sale of business
234,914

 

 
234,914

 

 
234,914

 
 
Expenditures for major repairs
(39,363
)
 

 
(39,363
)
 

 
(39,363
)
 
 
Investments redeemed
6,607

 

 
6,607

 

 
6,607

 
 
Changes in CHS Capital notes receivable, net
(83,908
)
 

 
(83,908
)
 

 
(83,908
)
 
 
Financing extended to customers
(72,106
)
 

 
(72,106
)
 

 
(72,106
)
 
 
Payments from customer financing
38,725

 

 
38,725

 

 
38,725

 
 
Other investing activities, net
12,377

 


 
12,377

 

 
12,377

 
 
Net cash provided by (used in) investing activities
(71,787
)
 

 
(71,787
)
 

 
(71,787
)
 
 
Cash flows from financing activities:
 

 
 
 
 
 
 
 


 
 
Proceeds from lines of credit and long-term borrowings
29,802,708

 

 
29,802,708

 

 
29,802,708

 
 
Payments on lines of credit, long-term borrowings and capital lease obligations
(29,028,104
)
 
3,052

 
(29,025,052
)
 

 
(29,025,052
)
 
c
Preferred stock dividends paid
(126,501
)
 

 
(126,501
)
 

 
(126,501
)
 
 
Redemptions of equities
(6,391
)
 

 
(6,391
)
 

 
(6,391
)
 
 
Other financing activities, net
(70,916
)
 
12

 
(70,904
)
 

 
(70,904
)
 
c
Net cash provided by (used in) financing activities
570,796

 
3,064

 
573,860

 

 
573,860

 
 
Effect of exchange rate changes on cash and cash equivalents
1,030

 

 
1,030

 

 
1,030

 
 
Net increase (decrease) in cash and cash equivalents and restricted cash
352,508

 

 
352,508

 
(43,823
)
 
308,685

 
 
Cash and cash equivalents and restricted cash at beginning of period
181,379

 

 
181,379

 
90,893

 
272,272

 
 
Cash and cash equivalents and restricted cash at end of period
$
533,887

 
$

 
$
533,887

 
$
47,070

 
$
580,957

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2016-18 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

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Table of Contents



Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $48.5 million reduction of net income for the nine months ended May 31, 2018. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three and nine months ended May 31, 2018, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassifications between operating activity line items in the Consolidated Statement of Cash Flows; however, none of the freight derivatives and related misstatements impacted the classifications between operating, investing or financing activities.

Intercompany misstatements
(b) The correction of intercompany misstatements did not impact net income for the nine months ended May 31, 2018; however, the impact of adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments of less than $5.0 million between line items in the Consolidated Statement of Cash Flows. None of the intercompany misstatements impacted the classifications between operating, investing or financing activities within the Consolidated Statement of Cash Flows.
    
Other misstatements
(c) The correction of other misstatements resulted in a $7.9 million increase of net income for the nine months ended May 31, 2018. Refer to further details of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three and nine months ended May 31, 2018, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments between line items in the Consolidated Statement of Cash Flows. As a result, a misclassification adjustment was made between operating and financing activities related to a $3.1 million reduction of notes payable resulting from a duplicative entry. In addition, various misclassification adjustments were made between operating activity lines, the most significant of which related to (1) a $24.1 million decrease of inventory and increase in accounts receivable as of August 31, 2017, due to a timing difference related to the settlement of a single ocean vessel and (2) the $49.2 million net impact associated with the decrease of inventory and increase of accounts payable that resulted from the misclassification adjustment for certain items previously included within a contra-inventory account to accounts payable as of August 31, 2017, and May 31, 2018.



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Note 3        Revenues

Adoption of New Revenue Guidance

As described in Note 1, Basis of Presentation and Significant Accounting Policies, we adopted the guidance within ASU 2014-09 as of September 1, 2018, using the modified retrospective transition approach. Consistent with other companies that actively trade commodities, a majority of our revenues are attributable to forward commodity sales contracts that are considered to be physically settled derivatives under ASC 815 and therefore fall outside the scope of ASC Topic 606. As a result, these revenues are not subject to the provisions of the new revenue guidance and the impact of adoption is limited to our revenue streams that fall within the scope of the new revenue guidance.

The majority of our revenue streams that fall within the scope of the new revenue guidance are recognized at a point-in-time; however, the adoption of ASU 2014-09 resulted in a minimal number of changes to the timing of revenue recognition for certain revenue streams. Under the modified retrospective method of adoption, we determined the cumulative effect of adoption for all contracts with customers that had not been completed as of the adoption date and recognized an adjustment of less than $1.0 million to the opening capital reserves balance within the Consolidated Balance Sheet as of September 1, 2018. Additionally, the impact of applying ASC Topic 606 compared to previous guidance during the three and nine months ended May 31, 2019, was an overall decrease to revenues of $14.2 million and $36.9 million, respectively, which was primarily related to the change in revenue recognition for certain contracts from a gross basis to a net basis.

Other changes in accounting for revenue recognition under ASU 2014-09 did not have a material impact on our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, or Consolidated Balance Sheet as of May 31, 2019.

Revenue Recognition Accounting Policy and Performance Obligations

We provide a wide variety of products and services, from agricultural inputs such as fuels, farm supplies and agronomy products, to agricultural outputs that include grain and oilseed, processed grains and oilseeds and food products, and ethanol production and marketing. We primarily conduct our operations and derive revenues within our Energy and Ag businesses. Our Energy business derives its revenues through refining, wholesaling and retailing of petroleum products. Our Ag business derives its revenues through the origination and marketing of grain, including service activities conducted at export terminals; through wholesale sales of agronomy products and processed sunflowers; from sales of soybean meal, soybean refined oil and soyflour products; through the production and marketing of renewable fuels; and through retail sales of petroleum and agronomy products, and feed and farm supplies.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the goods has transferred to customers. For the majority of our contracts with customers, control transfers to customers at a point-in-time when goods/services have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods/services transfer to the customer. In limited arrangements, control transfers over time as the customer simultaneously receives and consumes the benefits of the service as we complete our performance obligation(s).

Revenue is recognized at the transaction price that we expect to be entitled to in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. We follow a policy of recognizing revenue at the point-in-time or over the period of time that we satisfy our performance obligation by transferring control over a product or service to a customer in accordance with the underlying contract. For physically settled derivative sales contracts that are outside the scope of the revenue guidance, we recognize revenue when control of the inventory is transferred within the meaning of ASC Topic 606.
 
The amount of revenue recognized during the three and nine months ended May 31, 2019, for performance obligations that were fully satisfied in previous periods was not material.

Shipping and Handling Costs

Shipping and handling amounts billed to a customer as part of a sales transaction are included in revenues, and the related costs are included in cost of goods sold. Shipping and handling is treated as a fulfillment activity rather than a promised service, and therefore is not considered a separate performance obligation.


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Taxes Collected from Customers and Remitted to Governmental Authorities
 
Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority.

Contract Costs

Commissions related to contracts with a duration of less than one year are expensed as incurred. We recognize incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets we otherwise would have recognized is one year or less.

Disaggregation of Revenues

The following table presents revenues recognized under ASC Topic 606 disaggregated by reportable segment, as well as the amount of revenues recognized under ASC Topic 815 and other applicable accounting guidance for the three and nine months ended May 31, 2019. Other applicable accounting guidance primarily includes revenues recognized under ASC Topic 840, Leases and ASC Topic 470, Debt that fall outside the scope of ASC Topic 606.
 
 
ASC 606
 
ASC 815
 
Other Guidance
 
Total Revenues
For the Three Months Ended May 31, 2019
 
(Dollars in thousands)
Energy
 
$
1,544,533

 
$
193,512

 
$

 
$
1,738,045

Ag
 
2,234,378

 
4,485,089

 
25,648

 
6,745,115

Corporate and Other
 
4,841

 

 
9,940

 
14,781

Total revenues
 
$
3,783,752

 
$
4,678,601

 
$
35,588

 
$
8,497,941

 
 
 
 
 
 
 
 
 
For the Nine Months Ended May 31, 2019
 
 
 
 
 
 
 
 
Energy
 
$
4,826,762

 
$
547,348

 
$

 
$
5,374,110

Ag
 
4,574,203

 
13,375,276

 
95,578

 
18,045,057

Corporate and Other
 
14,818

 

 
31,784

 
46,602

Total revenues
 
$
9,415,783

 
$
13,922,624

 
$
127,362

 
$
23,465,769


Less than 1% of revenues accounted for under ASC Topic 606 included within the table above are recorded over time; these revenues are primarily related to service contracts.

Our Energy segment derives its revenues through refining, wholesaling and retailing of petroleum products. Our Energy segment produces and sells (primarily wholesale) gasoline, diesel fuel, propane, asphalt, lubricants and other related products and provides transportation services. We are the nation's largest cooperative energy company, with operations that include petroleum refining and pipelines; the supply, marketing and distribution of refined fuels (gasoline, diesel fuel and other energy products); the blending, sale and distribution of lubricants; and the wholesale supply of propane and other natural gas liquids. For the majority of revenues arising from sales to Energy customers, we satisfy our performance obligation of providing energy products such as gasoline, diesel fuel, propane, asphalt, lubricants and other related products at the point-in-time that the finished petroleum product is delivered or made available to the wholesale or retail customer, at which point control is considered to have been transferred to the customer and revenue can be recognized, as there are no remaining performance obligations that we need to satisfy in order to be entitled to the agreed-upon transaction price as stated in the contract. For fixed and provisionally-priced derivative sales contracts that are accounted for under the provisions of the derivative accounting guidance and are outside the scope of the revenue recognition guidance, we recognize revenue when control of the inventory is transferred within the meaning of ASC Topic 606.

Our Ag segment derives its revenues through the origination and marketing of grain, including service activities conducted at export terminals; through wholesale sales of agronomy products and processed sunflowers; from sales of soybean meal, soybean refined oil and soyflour products; through the production and marketing of renewable fuels; and through retail sales of petroleum and agronomy products, and feed and farm supplies. For the majority of revenues arising from sales to Ag customers, we satisfy our performance obligation of delivering a commodity or other agricultural end product to a customer at the point-in-time that the commodity or other end-product (wholesale grain, agronomy products, soybean products, ethanol or country operations retail products) has been delivered or is made available to the customer, at which point control is considered to have been transferred to the customer and revenue can be recognized, as there are no remaining performance obligations that

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need to be satisfied in order to be entitled to the agreed-upon transaction price as stated in the contract. The amount of revenue recognized follows the contractually specified price, which may include freight or other contractually specified cost components. For fixed and provisionally-priced derivative sales contracts that are accounted for under the provisions of the derivative accounting guidance and are outside the scope of the revenue recognition guidance, we recognize revenue when control of the inventory is transferred within the meaning of ASC Topic 606.

Corporate and Other primarily consists of our financing and hedging businesses, which are presented together due to the similar nature of their products and services as well as the relatively lower amount of revenues for those businesses compared to our Ag and Energy businesses. Prior to its sale on May 4, 2018, our insurance business was also included in Corporate and Other. Revenues from our hedging business are primarily recognized at the point-in-time that the hedging transaction is completed after we have fully satisfied all performance obligations under the contract, and revenues arising from our financing business are recognized in accordance with ASC Topic 470, Debt, and fall outside the scope of ASC Topic 606.

Contract Assets and Contract Liabilities

Contract assets relate to unbilled amounts arising from goods that have already been transferred to the customer where the right to payment is not conditional upon the passage of time. This results in the recognition of an asset, as the amount of revenue recognized at a certain point-in-time exceeds the amount billed to the customer. Contract assets are recorded in accounts receivable within our Consolidated Balance Sheets and were immaterial as of May 31, 2019, and August 31, 2018.

Contract liabilities relate to advance payments from customers for goods and services that we have yet to provide. Contract liabilities of $182.9 million and $172.0 million as of May 31, 2019, and August 31, 2018, respectively, are recorded within customer advance payments on our Consolidated Balance Sheets. For the three and nine months ended May 31, 2019, we recognized revenues of $67.9 million and $148.9 million, respectively, which were included in the customer advance payments balance at the beginning of the period.

Practical Expedients

We applied ASC Topic 606 utilizing the following allowable exemptions or practical expedients:

Election to not disclose the unfulfilled performance obligation balance for contracts with an original duration of one year or less.
Recognition of the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that would otherwise have been recognized is one year or less.
Election to present revenues net of sales taxes and other similar taxes.
Practical expedient to treat shipping and handling as a fulfillment activity rather than a promised service, resulting in the conclusion that shipping and handling is not a separate performance obligation.

Note 4        Receivables
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Trade accounts receivable
$
2,136,872

 
$
1,578,764

CHS Capital notes receivable
577,145

 
569,379

Other
438,507

 
534,071

 
3,152,524

 
2,682,214

Less: allowances and reserves
176,072

 
221,813

Total receivables
$
2,976,452

 
$
2,460,401


Trade Accounts

Trade accounts receivable are initially recorded at a selling price, which approximates fair value upon the sale of goods or services to customers. Subsequently, trade accounts receivable are carried at net realizable value, which includes an allowance for estimated uncollectible amounts. We calculate this allowance based on our history of write-offs, level of past due accounts, and our relationships with, and the economic status of, our customers.


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CHS Capital

Notes Receivable

CHS Capital, LLC ("CHS Capital"), our wholly-owned subsidiary, has short-term notes receivable from commercial and producer borrowers. The short-term notes receivable have maturity terms of 12 months or less and are reported at their outstanding unpaid principal balances, adjusted for the allowance of loan losses, as CHS Capital has the intent and ability to hold the applicable loans for the foreseeable future or until maturity or pay-off. The carrying value of CHS Capital short-term notes receivable approximates fair value, given the notes' short duration and the use of market pricing adjusted for risk.

The notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of certain regional cooperative's capital stock. These loans are primarily originated in the states of Minnesota, Wisconsin and North Dakota. CHS Capital also has loans receivable from producer borrowers that are collateralized by various combinations of growing crops, livestock, inventories, accounts receivable, personal property and supplemental mortgages and are originated in the same states as the commercial notes, as well as in Michigan.

In addition to the short-term balances included in the table above, CHS Capital had long-term notes receivable, with durations of generally not more than 10 years, totaling $187.2 million and $203.0 million at May 31, 2019, and August 31, 2018, respectively. The long-term notes receivable are included in other assets on our Consolidated Balance Sheets. As of May 31, 2019, and August 31, 2018, the commercial notes represented 62% and 40%, respectively, and the producer notes represented 38% and 60%, respectively, of the total CHS Capital notes receivable.

CHS Capital has commitments to extend credit to customers if there are no violations of any contractually established conditions. As of May 31, 2019, CHS Capital's customers had additional available credit of $581.5 million.

Allowance for Loan Losses and Impairments

CHS Capital maintains an allowance for loan losses, which is the estimate of potential incurred losses inherent in the loans receivable portfolio. In accordance with FASB ASC 450-20, Accounting for Loss Contingencies, and ASC 310-10, Accounting by Creditors for Impairment of a Loan, the allowance for loan losses consists of general and specific components. The general component is based on historical loss experience and qualitative factors addressing operational risks and industry trends. The specific component relates to loans receivable that are classified as impaired. Additions to the allowance for loan losses are reflected within reserve and impairment charges (recoveries), net in the Consolidated Statements of Operations. The portion of loans receivable deemed uncollectible is charged off against the allowance. Recoveries of previously charged off amounts increase the allowance for loan losses. The amount of CHS Capital notes that were past due was not significant at any reporting date presented.

Interest Income

Interest income is recognized on the accrual basis using a method that computes simple interest daily. The accrual of interest on commercial loans receivable is discontinued at the time the commercial loan receivable is 90 days past due unless the credit is well-collateralized and in process of collection. Past due status is based on contractual terms of the loan. Producer loans receivable are placed in nonaccrual status based on estimates and analysis due to the annual debt service terms inherent to CHS Capital’s producer loans. In all cases, loans are placed in nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful.

Other Receivables

Other receivables are comprised of certain other amounts recorded in the normal course of business, including receivables related to value-added taxes, certain financing receivables and pre-crop financing, primarily to Brazilian farmers, to finance a portion of supplier production costs. We do not bear costs or operational risks associated with the related growing crops, though our ability to be paid depends on the crops actually produced. The financing is collateralized by future crops, land and physical assets of the suppliers, carries a local market interest rate and settles when the farmer’s crop is harvested and sold.

We identified and recorded an out of period adjustment to correct an error related to multiple years that increased bad debt expense for other receivables by $29.5 million and $25.5 million during the three and nine months ended May 31, 2019, respectively. We concluded that the error is not material to the previously reported financial statements and its correction is not

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material to the financial statements for the three or nine months ended May 31, 2019, nor is it expected to be material to our full year results.

Note 5        Inventories        
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Grain and oilseed
$
1,115,510

 
$
1,298,522

Energy
899,150

 
715,161

Agronomy
635,560

 
246,326

Feed and farm supplies
567,952

 
391,906

Processed grain and oilseed
104,113

 
99,426

Other
16,036

 
17,308

Total inventories
$
3,338,321

 
$
2,768,649


As of May 31, 2019, we valued approximately 20% of inventories, primarily related to our Energy segment, using the lower of cost, determined on the LIFO method, or net realizable value (16% as of August 31, 2018). If the FIFO method of accounting had been used, inventories would have been higher than the reported amount by $283.9 million and $345.0 million as of May 31, 2019, and August 31, 2018, respectively. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management's estimates of expected year-end inventory levels and are subject to the final year-end LIFO inventory valuation.

Note 6        Investments
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Equity method investments:
 
 
 
CF Industries Nitrogen, LLC
$
2,767,053

 
$
2,735,073

Ventura Foods, LLC
368,774

 
360,150

Ardent Mills, LLC
209,624

 
205,898

Other equity method investments
269,099

 
288,016

Other investments
123,590

 
122,788

Total investments
$
3,738,140

 
$
3,711,925


Equity Method Investments

Joint ventures and other investments, in which we have significant ownership and influence, but not control, are accounted for in our consolidated financial statements using the equity method of accounting. Our primary equity method investments are described below.

CF Nitrogen

On February 1, 2016, we invested $2.8 billion in CF Industries Nitrogen, LLC ("CF Nitrogen"), commencing our strategic venture with CF Industries Holdings, Inc. ("CF Industries"). The investment consists of an approximate 10% membership interest (based on product tons) in CF Nitrogen. We account for this investment using the hypothetical liquidation at book value method, recognizing our share of the earnings and losses of CF Nitrogen based upon our contractual claims on the entity's net assets pursuant to the liquidation provisions of CF Nitrogen's limited liability company agreement, adjusted for the semi-annual cash distributions we receive as a result of our membership interest in CF Nitrogen. For the three months ended May 31, 2019, and 2018, this amount was $42.0 million and $35.6 million, respectively. For the nine months ended May 31, 2019, and 2018, this amount was $118.4 million and $80.0 million, respectively. These amounts are included as equity income from investments in our Nitrogen Production segment.



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Ventura Foods and Ardent Mills
    
We have a 50% interest in Ventura Foods, LLC ("Ventura Foods"), which is a joint venture that produces and distributes primarily vegetable oil-based products, and we have a 12% interest in Ardent Mills, LLC ("Ardent Mills"), which is a joint venture with Cargill Incorporated and ConAgra Foods, Inc. that combines the North American flour milling operations of the three parent companies. We account for Ventura Foods and Ardent Mills as equity method investments included in Corporate and Other.

The following table provides aggregate summarized unaudited financial information for our equity method investments in CF Nitrogen, Ventura Foods and Ardent Mills for the nine months ended May 31, 2019, and 2018:
 
For the Nine Months Ended May 31,
 
2019
 
2018
 
(Dollars in thousands)
Net sales
$
6,646,394

 
$
6,238,495

Gross profit
951,969

 
719,555

Net earnings
688,724

 
435,192

Earnings attributable to CHS Inc.
168,830

 
109,266


Our investments in other equity method investees are not significant in relation to our consolidated financial statements, either individually or in the aggregate.

Note 7        Goodwill and Other Intangible Assets

Goodwill of $199.8 million and $138.5 million is included in other assets on our Consolidated Balance Sheets as of May 31, 2019, and August 31, 2018, respectively. Goodwill acquired during the third quarter of fiscal 2019 was $61.4 million, related to our acquisition of the remaining 75% ownership interest in West Central Distribution, LLC ("WCD"). See Note 16, Acquisitions, for additional information. Changes in the net carrying amount of goodwill for the nine months ended May 31, 2019, by segment, are as follows:
 
 
Energy
 
Ag
 
Corporate
and Other
 
Total
 
(Dollars in thousands)
Balances, August 31, 2018
$
552

 
$
127,338

 
$
10,574

 
$
138,464

Goodwill acquired during the period

 
61,358

 

 
61,358

Balances, May 31, 2019
$
552

 
$
188,696

 
$
10,574

 
$
199,822


No goodwill has been allocated to our Nitrogen Production segment, which consists solely of our CF Nitrogen investment accounted for using the equity method of accounting.

Intangible assets subject to amortization primarily include customer lists, trademarks and non-compete agreements, and are amortized over their respective useful lives (ranging from 2 to 30 years). Intangible assets of $47.2 million were acquired during the nine months ended May 31, 2019, related to the acquisition of the remaining 75% ownership interest in WCD. See Note 16, Acquisitions, for additional information. Information regarding intangible assets that are included in other assets on our Consolidated Balance Sheets is as follows:
 
May 31, 2019
 
August 31, 2018
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
(Dollars in thousands)
Customer lists
$
84,815

 
$
(16,054
)
 
$
68,761

 
$
40,815

 
$
(13,082
)
 
$
27,733

Trademarks and other intangible assets
9,736

 
(5,393
)
 
4,343

 
6,536

 
(4,931
)
 
1,605

Total intangible assets
$
94,551

 
$
(21,447
)
 
$
73,104

 
$
47,351

 
$
(18,013
)
 
$
29,338



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Total amortization expense for intangible assets during the three and nine months ended May 31, 2019, was $1.9 million and $3.4 million, respectively. Total amortization expense for intangible assets during the three and nine months ended May 31, 2018, was $0.8 million and $2.5 million, respectively. The estimated annual amortization expense related to intangible assets subject to amortization for the next five years is as follows:
 
(Dollars in thousands)
Year 1
$
4,540

Year 2
4,487

Year 3
4,187

Year 4
3,944

Year 5
3,940



Note 8        Notes Payable and Long-Term Debt

Our notes payable and long-term debt are subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with our debt covenants as of May 31, 2019. The table below summarizes our notes payable as of May 31, 2019, and August 31, 2018.


May 31, 2019

August 31, 2018

(Dollars in thousands)
Notes payable
$
2,021,216


$
1,437,264

CHS Capital notes payable
742,009


834,932

Total notes payable
$
2,763,225


$
2,272,196


On May 31, 2019, our primary line of credit was a five-year, unsecured revolving credit facility with a committed amount of $3.0 billion that expires in September 2020. The outstanding balance on this facility was $902.0 million as of May 31, 2019. There was no outstanding balance at August 31, 2018.

We have a receivables and loans securitization facility (the "Securitization Facility") with certain unaffiliated financial institutions (the "Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries (the "Originators") sell trade accounts and notes receivable (the "Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the Purchasers, which is accounted for as a secured borrowing. During the period from July 2017 through an amendment of the Securitization Facility in June 2018, CHS accounted for Receivables sold under the Securitization Facility as a sale of financial assets pursuant to ASC 860, Transfers and Servicing, and the Receivables sold were derecognized from our Consolidated Balance Sheets. We use the proceeds from the sale of Receivables under the Securitization Facility for general corporate purposes and settlements are made on a monthly basis. The Securitization Facility was amended on June 27, 2019, to extend its termination date to June 26, 2020, which termination date may be further extended.

On September 4, 2018, we entered into a repurchase facility (the "Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can borrow up to $150 million, collateralized by a subordinated note issued by Cofina in favor of the Originators and representing a portion of the outstanding balance of the Receivables sold by the Originators to Cofina under the Securitization Facility. As of May 31, 2019, the outstanding balance under the Repurchase Facility was $150 million.

Interest expense for the three months ended May 31, 2019, and 2018, was $42.8 million and $49.3 million, respectively, net of capitalized interest of $2.5 million and $1.7 million, respectively. Interest expense for the nine months ended May 31, 2019, and 2018, was $123.0 million and $130.2 million, respectively, net of capitalized interest of $7.1 million and $4.8 million, respectively.


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Note 9        Equities

Changes in Equities

Changes in equities for the nine months ended May 31, 2019, and 2018 are as follows:
 
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, 2018
$
3,837,580

 
$
29,498

 
$
742,378

 
$
2,264,038

 
$
(199,915
)
 
$
1,482,003

 
$
9,446

 
$
8,165,028

Reversal of prior year redemption estimates
24,072

 

 

 

 

 

 

 
24,072

Redemptions of equities
(22,004
)
 
(183
)
 
(1,885
)
 

 

 

 

 
(24,072
)
Preferred stock dividends

 

 

 

 

 
(84,334
)
 

 
(84,334
)
Reclassification of unrealized (gain) loss on investments

 

 

 

 
(4,706
)
 
4,706

 

 

Other, net
(409
)
 

 
(26
)
 

 

 
3,436

 
318

 
3,319

Net income (loss)

 

 

 

 

 
347,504

 
(389
)
 
347,115

Other comprehensive income (loss), net of tax

 

 

 

 
389

 

 

 
389

Estimated 2019 cash patronage refunds

 

 

 

 

 
(89,344
)
 

 
(89,344
)
Estimated 2019 equity redemptions
(50,081
)
 

 

 

 

 

 

 
(50,081
)
Balance, November 30, 2018
$
3,789,158

 
$
29,315

 
$
740,467

 
$
2,264,038

 
$
(204,232
)
 
$
1,663,971

 
$
9,375

 
$
8,292,092

Reversal of prior year patronage and redemption estimates
6,681

 

 
(345,330
)
 

 

 
420,330

 

 
81,681

Distribution of 2018 patronage refunds

 

 
349,353

 

 

 
(424,333
)
 

 
(74,980
)
Redemptions of equities
(5,988
)
 
(74
)
 
(619
)
 

 

 

 

 
(6,681
)
Preferred stock dividends

 

 

 

 

 
(42,167
)
 

 
(42,167
)
Other, net
(774
)
 

 
2,589

 

 

 
(2,888
)
 
(581
)
 
(1,654
)
Net income (loss)

 

 

 

 

 
248,766

 
(462
)
 
248,304

Other comprehensive income (loss), net of tax

 

 

 

 
14,884

 

 

 
14,884

Estimated 2019 cash patronage refunds

 

 

 

 

 
(69,400
)
 

 
(69,400
)
Estimated 2019 equity redemptions
(39,850
)
 

 

 

 

 

 

 
(39,850
)
Balance, February 28, 2019
$
3,749,227

 
$
29,241

 
$
746,460

 
$
2,264,038

 
$
(189,348
)
 
$
1,794,279

 
$
8,332

 
$
8,402,229

Reversal of prior year redemption estimates
45,815

 

 

 

 

 

 

 
45,815

Distribution of 2018 patronage refunds

 

 
3,212

 

 

 
(3,901
)
 

 
(689
)
Redemptions of equities
(34,798
)
 
(34
)
 
(10,812
)
 

 

 

 

 
(45,644
)
Other, net
(1,285
)
 

 
(3,722
)
 

 

 
4,526

 
11

 
(470
)
Net income (loss)

 

 

 

 

 
54,620

 
93

 
54,713

Other comprehensive income (loss), net of tax

 

 

 

 
(22,313
)
 

 

 
(22,313
)
Estimated 2019 cash patronage refunds

 

 

 

 

 
(15,494
)
 

 
(15,494
)
Estimated 2019 equity redemptions
(6,438
)
 

 

 

 

 

 

 
(6,438
)
Balance, May 31, 2019
$
3,752,521

 
$
29,207

 
$
735,138

 
$
2,264,038

 
$
(211,661
)
 
$
1,834,030

 
$
8,436

 
$
8,411,709





24

Table of Contents


 
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, 2017
$
3,906,426

 
$
29,836

 
$
405,387

 
$
2,264,038

 
$
(180,360
)
 
$
1,267,808

 
$
12,505

 
$
7,705,640

Reversal of prior year redemption estimates
1,561

 

 

 

 

 

 

 
1,561

Redemptions of equities
(1,449
)
 
(53
)
 
(59
)
 

 

 

 

 
(1,561
)
Preferred stock dividends

 

 

 

 

 
(84,334
)
 

 
(84,334
)
Other, net
(1,498
)
 
(66
)
 
(344
)
 

 

 
3,954

 
(2
)
 
2,044

Net income (loss)

 

 

 

 

 
187,646

 
(464
)
 
187,182

Other comprehensive income (loss), net of tax

 

 

 

 
3,019

 

 

 
3,019

Estimated 2018 cash patronage refunds

 

 

 

 

 
(50,702
)
 

 
(50,702
)
Estimated 2018 equity redemptions
(19,901
)
 

 

 

 

 

 

 
(19,901
)
Balance, November 30, 2017 (As Restated)
$
3,885,139

 
$
29,717

 
$
404,984

 
$
2,264,038

 
$
(177,341
)
 
$
1,324,372

 
$
12,039

 
$
7,742,948

Reversal of prior year patronage and redemption estimates
1,060

 

 
(126,333
)
 

 

 
126,333

 

 
1,060

Distribution of 2017 patronage refunds

 

 
128,858

 

 

 
(128,858
)
 

 

Redemptions of equities
(953
)
 
(16
)
 
(91
)
 

 

 

 

 
(1,060
)
Preferred stock dividends

 

 

 

 

 
(42,167
)
 

 
(42,167
)
Other, net
(2,652
)
 
(45
)
 
(1
)
 

 

 
816

 
(60
)
 
(1,942
)
Net income (loss)

 

 

 

 

 
166,007

 
(48
)
 
165,959

Other comprehensive income (loss), net of tax

 

 

 

 
10,111

 

 

 
10,111

Estimated 2018 cash patronage refunds

 

 

 

 

 
3,823

 

 
3,823

Estimated 2018 equity redemptions
(12,375
)
 

 

 

 

 

 

 
(12,375
)
Balance, February 28, 2018 (As Restated)
$
3,870,219

 
$
29,656

 
$
407,417

 
$
2,264,038

 
$
(167,230
)
 
$
1,450,326

 
$
11,931

 
$
7,866,357

Reversal of prior year redemption estimates
1,649

 

 

 

 

 

 

 
1,649

Distribution of 2017 patronage refunds

 

 
(27
)
 

 

 
27

 

 

Redemptions of equities
(1,412
)
 
(18
)
 
(219
)
 

 

 

 

 
(1,649
)
Other, net
(1,849
)
 
(1
)
 
(36
)
 

 

 
(252
)
 
(98
)
 
(2,236
)
Net income (loss)

 

 

 

 

 
181,807

 
(187
)
 
181,620

Other comprehensive income (loss), net of tax

 

 

 

 
(72
)
 

 

 
(72
)
Estimated 2018 cash patronage refunds

 

 

 

 

 
(72,868
)
 

 
(72,868
)
Estimated 2018 equity redemptions
(51,965
)
 

 

 

 

 

 

 
(51,965
)
Balance, May 31, 2018 (As Restated)
$
3,816,642

 
$
29,637

 
407,135

 
$
2,264,038

 
$
(167,302
)
 
$
1,559,040

 
$
11,646

 
$
7,920,836

* Certain amounts associated with Accumulated Other Comprehensive Loss, Capital Reserves and Noncontrolling Interests in the changes in equities table above were restated to reflect the impact of the misstatements associated with the restatement of previously issued financial statements. Note that the majority of the restatement adjustments within the changes in equities table above relate to the opening restatement adjustments to the August 31, 2017, balances. Additionally, the misstatements for activity in the changes in equities table above relates primarily to net income (loss) during fiscal 2018. Refer to further details included within Note 2, Restatement of Previously Issued Financial Information.

Preferred Stock Dividends

The following is a summary of dividends per share by class of preferred stock for the nine months ended May 31, 2019, and 2018. Note that due to the timing of dividend declarations during the fiscal year, no declarations were made during the third quarter of fiscal 2019 or fiscal 2018.

 
 
 
For the Nine Months Ended May 31,
 
Nasdaq symbol
 
2019
 
2018
 
 
 
(Dollars per share)
8% Cumulative Redeemable
CHSCP
 
1.50

 
1.50

Class B Cumulative Redeemable, Series 1
CHSCO
 
1.48

 
1.48

Class B Reset Rate Cumulative Redeemable, Series 2
CHSCN
 
1.33

 
1.33

Class B Reset Rate Cumulative Redeemable, Series 3
CHSCM
 
1.27

 
1.27

Class B Cumulative Redeemable, Series 4
CHSCL
 
1.41

 
1.41





25

Table of Contents


Accumulated Other Comprehensive Income (Loss)        

Changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows for the nine months ended May 31, 2019, and 2018:
 
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, 2018, net of tax
$
(140,335
)
 
$
8,861

 
$
(5,882
)
 
$
(62,559
)
 
$
(199,915
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
175

 

 
(317
)
 
(25
)
 
(167
)
Amounts reclassified out
2,565

 

 
(1,475
)
 

 
1,090

Total other comprehensive income (loss), before tax
2,740

 

 
(1,792
)
 
(25
)
 
923

Tax effect
(639
)
 

 
485

 
(380
)
 
(534
)
Other comprehensive income (loss), net of tax
2,101

 

 
(1,307
)
 
(405
)
 
389

Reclassifications
416

 
(8,861
)
 
983

 
2,756

 
(4,706
)
Balance as of November 30, 2018, net of tax
$
(137,818
)
 
$

 
$
(6,206
)
 
$
(60,208
)
 
$
(204,232
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
102

 

 
18,954

 
3,176

 
22,232

Amounts reclassified out
2,564

 

 
(5,677
)
 

 
(3,113
)
Total other comprehensive income (loss), before tax
2,666

 

 
13,277

 
3,176

 
19,119

Tax effect
(664
)
 

 
(3,308
)
 
(263
)
 
(4,235
)
Other comprehensive income (loss), net of tax
2,002

 

 
9,969

 
2,913

 
14,884

Balance as of February 28, 2019, net of tax
$
(135,816
)
 
$

 
$
3,763

 
$
(57,295
)
 
$
(189,348
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
(164
)
 

 
(19,680
)
 
(7,725
)
 
(27,569
)
Amounts reclassified out
2,564

 

 
(1,385
)
 

 
1,179

Total other comprehensive income (loss), before tax
2,400

 

 
(21,065
)
 
(7,725
)
 
(26,390
)
Tax effect
(904
)
 

 
5,248

 
(267
)
 
4,077

Other comprehensive income (loss), net of tax
1,496

 

 
(15,817
)
 
(7,992
)
 
(22,313
)
Balance as of May 31, 2019, net of tax
$
(134,320
)
 
$

 
$
(12,054
)
 
$
(65,287
)
 
$
(211,661
)



26

Table of Contents


 
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, 2017, net of tax
$
(132,444
)
 
$
10,041

 
$
(6,954
)
 
$
(51,003
)
 
$
(180,360
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
4,044

 
(435
)
 
(612
)
 
2,997

Amounts reclassified out
4,214

 

 
429

 
(2,042
)
 
2,601

Total other comprehensive income (loss), before tax
4,214

 
4,044

 
(6
)
 
(2,654
)
 
5,598

Tax effect
(2,620
)
 
(404
)
 
2

 
443

 
(2,579
)
Other comprehensive income (loss), net of tax
1,594

 
3,640

 
(4
)
 
(2,211
)
 
3,019

Balance as of November 30, 2017, net of tax (As Restated)
$
(130,850
)
 
$
13,681

 
$
(6,958
)
 
$
(53,214
)
 
$
(177,341
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
6,562

 
1,081

 
2,774

 
10,417

Amounts reclassified out
4,451

 
(1,527
)
 
425

 

 
3,349

Total other comprehensive income (loss), before tax
4,451

 
5,035

 
1,506

 
2,774

 
13,766

Tax effect
(1,309
)
 
(1,481
)
 
(443
)
 
(422
)
 
(3,655
)
Other comprehensive income (loss), net of tax
3,142

 
3,554

 
1,063

 
2,352

 
10,111

Balance as of February 28, 2018, net of tax (As Restated)
$
(127,708
)
 
$
17,235

 
$
(5,895
)
 
$
(50,862
)
 
$
(167,230
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
8,906

 
160

 
(10,442
)
 
(1,376
)
Amounts reclassified out
4,841

 

 
425

 

 
5,266

Total other comprehensive income (loss), before tax
4,841

 
8,906

 
585

 
(10,442
)
 
3,890

Tax effect
(1,424
)
 
(2,620
)
 
(172
)
 
254

 
(3,962
)
Other comprehensive income (loss), net of tax
3,417

 
6,286

 
413

 
(10,188
)
 
(72
)
Balance as of May 31, 2018, net of tax (As Restated)
$
(124,291
)
 
$
23,521

 
$
(5,482
)
 
$
(61,050
)
 
$
(167,302
)
    
Amounts reclassified from accumulated other comprehensive income (loss) were related to pension and other postretirement benefits, cash flow hedges, available for sale investments and foreign currency translation adjustments. Pension and other postretirement reclassifications include amortization of net actuarial loss, prior service credit and transition amounts and are recorded as cost of goods sold and marketing, general and administrative expenses (see Note 11, Benefit Plans, for further information). Gains or losses on the sale of available for sale investments are recorded to other income. Foreign currency translation reclassifications related to sales of businesses are recorded to other income.

Note 10        Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted into law. The Tax Act provides for significant U.S. tax law changes and reduces the federal corporate statutory tax rate from 35% to 21% as of January 1, 2018. As a fiscal year-end taxpayer, our annual statutory federal corporate tax rate applicable to fiscal 2018 is a blended rate of 25.7%. Beginning in fiscal 2019, our annual statutory federal corporate tax rate is 21%.

The Tax Act also requires companies to pay a one-time repatriation tax on certain unrepatriated earnings of foreign subsidiaries that were previously tax deferred ("transition tax"). We do not have any unrepatriated earnings for foreign subsidiaries and have not recorded a liability for the transition tax.

The Tax Act initially repealed the Domestic Production Activities Deduction ("DPAD") and enacted the Deduction for Qualified Business Income of Pass-Thru Entities ("QBI Deduction"); however, the Consolidated Appropriations Act, 2018 (the "Appropriations Act") enacted into law on March 23, 2018, impacted these deductions. The Appropriations Act modifies the QBI Deduction under Section 199A of the Tax Act to reenact DPAD for agricultural and horticultural cooperatives as it existed

27

Table of Contents


prior to the enactment of the Tax Act, and it also modifies the QBI Deduction available to cooperative patrons as enacted by the Tax Act.

As of August 31, 2018, the effects of the Tax Act were provisional in accordance with the SEC's Staff Accounting Bulletin No.118. No adjustments were recorded for the nine months ended May 31, 2019, associated with the remeasurement of deferred tax balances or the one-time transition tax, and in accordance with Staff Accounting Bulletin No.118, the amounts are no longer provisional.

Note 11        Benefit Plans

We have various pension and other defined benefit and defined contribution plans, in which substantially all employees may participate. We also have non-qualified supplemental executive and Board retirement plans.

Components of net periodic benefit costs for the three and nine months ended May 31, 2019, and 2018, are as follows:
 
Qualified
Pension Benefits
 
Non-Qualified
Pension Benefits
 
Other Benefits
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Components of net periodic benefit costs for the three months ended May 31 are as follows:
 (Dollars in thousands)
  Service cost
$
9,648

 
$
9,920

 
$
78

 
$
137

 
$
263

 
$
236

  Interest cost
7,099

 
5,997

 
186

 
177

 
274

 
227

  Expected return on assets
(11,242
)
 
(12,044
)
 

 

 

 

  Prior service cost (credit) amortization
42

 
360

 
(19
)
 
7

 
(139
)
 
(142
)
  Actuarial (gain) loss amortization
3,087

 
4,905

 
1

 
16

 
(407
)
 
(306
)
Net periodic benefit cost
$
8,634

 
$
9,138

 
$
246

 
$
337

 
$
(9
)
 
$
15

Components of net periodic benefit costs for the nine months ended May 31 are as follows:
 
  Service cost
$
28,944

 
$
29,758

 
$
233

 
$
411

 
$
790

 
$
707

  Interest cost
21,297

 
17,988

 
560

 
533

 
821

 
681

  Expected return on assets
(33,726
)
 
(36,133
)
 

 

 

 

  Prior service cost (credit) amortization
127

 
1,078

 
(56
)
 
23

 
(417
)
 
(424
)
  Actuarial (gain) loss amortization
9,261

 
16,304

 
2

 
46

 
(1,221
)
 
(918
)
  Settlement (gain) loss
169

 

 

 

 

 

Net periodic benefit cost
$
26,072

 
$
28,995

 
$
739

 
$
1,013

 
$
(27
)
 
$
46


The service cost component of defined benefit net periodic benefit cost is recorded in cost of goods sold and marketing, general and administrative expenses. The other components of net periodic benefit cost are reflected in other (income) loss.

Employer Contributions

Total contributions to be made during fiscal 2019 will depend primarily on market returns on the pension plan assets and minimum funding level requirements. During the nine months ended May 31, 2019, we made a discretionary contribution of $40.0 million to the pension plans.

Note 12        Segment Reporting

We define our operating segments in accordance with ASC Topic 280, Segment Reporting, to reflect the manner in which our chief operating decision maker, our Chief Executive Officer, evaluates performance and allocates resources in managing our business. We have aggregated those operating segments into three reportable segments: Energy, Ag and Nitrogen Production.


28

Table of Contents


Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag segment purchases and further processes or resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties; serves as a wholesaler and retailer of crop inputs; and produces and markets ethanol. Our Nitrogen Production segment consists solely of our equity method investment in CF Nitrogen, which entitles us, pursuant to a supply agreement that we entered into with CF Nitrogen, to purchase up to a specified annual quantity of granular urea and urea ammonium nitrate annually from CF Nitrogen. Insignificant operating segments have been aggregated within Corporate and Other. 

Corporate administrative expenses and interest are allocated to each business segment, and Corporate and Other, based on direct usage for services, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and operating results vary throughout the year. For example, in our Ag segment, our agronomy and country operations businesses generally experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Our grain marketing operations are also subject to fluctuations in volume and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and fall crop drying seasons.

Our revenues, assets and cash flows can be significantly affected by global trade and associated market prices for commodities such as petroleum products, natural gas, ethanol, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, global trade disputes, and general political and economic conditions.

While our revenues and operating results are derived from businesses and operations that are wholly owned and majority owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. See Note 6, Investments, for more information on these entities.

Reconciling Amounts represent the elimination of revenues and interest between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments.
        
Segment information for the three and nine months ended May 31, 2019, and 2018, is presented in the tables below. Note that the fiscal 2019 results for our Ag segment include results associated with our acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, which are not included in our prior period results. Refer to further details related to our acquisition of the remaining 75% ownership interest in WCD within Note 16, Acquisitions.

Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Three Months Ended May 31, 2019:
(Dollars in thousands)
Revenues, including intersegment revenues
$
1,841,290


$
6,749,182


$

 
$
16,418


$
(108,949
)

$
8,497,941

Operating earnings (loss)
572


12,090


(9,040
)
 
2,622




6,244

(Gain) loss on disposal of business

 
(2,474
)
 

 

 

 
(2,474
)
Interest expense
1,171


26,675


13,140

 
3,883


(2,096
)

42,773

Other (income) loss
(1,098
)
 
(29,211
)
 
(399
)
 
(1,852
)
 
2,096

 
(30,464
)
Equity (income) loss from investments
(760
)

(4,012
)

(41,959
)
 
(18,439
)



(65,170
)
Income (loss) before income taxes
$
1,259


$
21,112


$
20,178

 
$
19,030


$


$
61,579

Intersegment revenues
$
(103,245
)

$
(4,067
)

$

 
$
(1,637
)

$
108,949


$

 
 
 
 
 
 
 
 
 
 
 
 

29

Table of Contents


 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Three Months Ended May 31, 2018: (As Restated)
(Dollars in thousands)
Revenues, including intersegment revenues
$
1,999,628

 
$
7,193,316

 
$

 
$
14,075

 
$
(119,691
)
 
$
9,087,328

Operating earnings (loss)
29,729

 
63,170

 
(4,153
)
 
(1,727
)
 


 
87,019

(Gain) loss on disposal of business
(65,903
)
 
5

 

 
(58,152
)
 

 
(124,050
)
Interest expense
3,496

 
28,854

 
13,119

 
4,324

 
(453
)
 
49,340

Other (income) loss
(967
)
 
(14,430
)
 
(441
)
 
(417
)
 
453

 
(15,802
)
Equity (income) loss from investments
(967
)
 
(11,359
)
 
(35,639
)
 
(11,343
)
 

 
(59,308
)
Income (loss) before income taxes
$
94,070

 
$
60,100

 
$
18,808

 
$
63,861

 
$

 
$
236,839

Intersegment revenues
$
(114,497
)
 
$
(3,784
)
 
$

 
$
(1,410
)
 
$
119,691

 
$

 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Nine Months Ended May 31, 2019:
(Dollars in thousands)
Revenues, including intersegment revenues
$
5,722,338

 
$
18,056,033

 
$

 
$
52,179

 
$
(364,781
)
 
$
23,465,769

Operating earnings (loss)
537,932

 
45,088

 
(24,048
)
 
11,415

 

 
570,387

(Gain) loss on disposal of business

 
(3,886
)
 

 

 

 
(3,886
)
Interest expense
3,756

 
73,073

 
42,161

 
7,945

 
(3,985
)
 
122,950

Other (income) loss
(4,301
)
 
(60,455
)
 
(2,362
)
 
(2,816
)
 
3,985

 
(65,949
)
Equity (income) loss from investments
(1,828
)
 
(2,675
)
 
(118,416
)
 
(50,475
)
 

 
(173,394
)
Income (loss) before income taxes
$
540,305

 
$
39,031

 
$
54,569

 
$
56,761

 
$

 
$
690,666

Intersegment revenues
$
(348,228
)
 
$
(10,976
)
 
$

 
$
(5,577
)
 
$
364,781

 
$

Total assets at May 31, 2019
$
4,573,463

 
$
7,377,779

 
$
2,788,010

 
$
2,834,231

 
$

 
$
17,573,483

 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Nine Months Ended May 31, 2018: (As Restated)
(Dollars in thousands)
Revenues, including intersegment revenues
$
5,845,437

 
$
18,574,846

 
$

 
$
46,018

 
$
(366,936
)
 
$
24,099,365

Operating earnings (loss)
179,077

 
70,954

 
(14,527
)
 
(5,796
)
 

 
229,708

(Gain) loss on disposal of business
(65,903
)
 
(7,700
)
 

 
(58,152
)
 

 
(131,755
)
Interest expense
11,760

 
69,242

 
39,067

 
11,569

 
(1,420
)
 
130,218

Other (income) loss
(2,977
)
 
(47,128
)
 
(2,612
)
 
(3,245
)
 
1,420

 
(54,542
)
Equity (income) loss from investments
(2,779
)
 
(25,180
)
 
(79,986
)
 
(29,166
)
 

 
(137,111
)
Income (loss) before income taxes
$
238,976

 
$
81,720

 
$
29,004

 
$
73,198

 
$

 
$
422,898

Intersegment revenues
$
(349,361
)
 
$
(11,391
)
 
$

 
$
(6,184
)
 
$
366,936

 
$


Note 13        Derivative Financial Instruments and Hedging Activities

Our derivative instruments primarily consist of commodity and forward contracts and, to a minor degree, may include foreign currency and interest rate swap contracts. These contracts are economic hedges of price risk, but we do not apply hedge accounting under ASC Topic 815, Derivatives and Hedging, except with respect to certain interest rate swap contracts that are accounted for as fair value hedges and certain future crude oil purchases that are accounted for as cash flow hedges. Derivative instruments are recorded on our Consolidated Balance Sheets at fair value as described in Note 14, Fair Value Measurements.


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Derivatives Not Designated as Hedging Instruments

The following tables present the gross fair values of derivative assets, derivative liabilities and margin deposits (cash collateral) for derivatives not accounted for as hedging instruments, recorded on our Consolidated Balance Sheets along with the related amounts permitted to be offset in accordance with U.S. GAAP. We have elected not to offset derivative assets and liabilities when we have the right of offset under ASC Topic 210-20, Balance Sheet - Offsetting; or when the instruments are subject to master netting arrangements under ASC Topic 815-10-45, Derivatives and Hedging - Overall.
 
May 31, 2019
 
 
 
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 derivatives
$
251,236

 
$

 
$
25,753

 
$
225,483

Foreign exchange derivatives
9,685

 

 
4,477

 
5,208

Embedded derivative asset
20,957

 

 

 
20,957

Total
$
281,878

 
$

 
$
30,230

 
$
251,648

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
300,763

 
$
4,363

 
$
25,753

 
$
270,647

Foreign exchange derivatives
7,324

 

 
4,477

 
2,847

Total
$
308,087

 
$
4,363

 
$
30,230

 
$
273,494


 
August 31, 2018
 
 
 
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 derivatives
$
313,033

 
$

 
$
26,781

 
$
286,252

Foreign exchange derivatives
15,401

 

 
8,703

 
6,698

Embedded derivative asset
23,595

 

 

 
23,595

Total
$
352,029

 
$

 
$
35,484

 
$
316,545

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
421,054

 
$
12,983

 
$
26,781

 
$
381,290

Foreign exchange derivatives
24,701

 

 
8,703

 
15,998

Total
$
445,755

 
$
12,983

 
$
35,484

 
$
397,288


Derivative assets and liabilities with maturities of 12 months or less are recorded in derivative assets and derivative liabilities, respectively, on our Consolidated Balance Sheets. Derivative assets and liabilities with maturities greater than 12 months are recorded in other assets and other liabilities, respectively, on our Consolidated Balance Sheets. The amount of long-term derivative assets and liabilities, excluding derivatives accounted for as fair value hedges, recorded on our Consolidated Balance Sheet at May 31, 2019, were $22.3 million and $14.7 million, respectively. The amount of long-term derivative assets and liabilities, excluding derivatives accounted for as fair value hedges, recorded on our Consolidated Balance Sheet at August 31, 2018, were $23.1 million and $7.9 million, respectively.


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The following table sets forth the pretax gains (losses) on derivatives not accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018.

 
 
 
For the Three Months Ended
May 31,
 
For the Nine Months Ended May 31,
 
Location of
Gain (Loss)
 
2019
 
(As Restated) 2018
 
2019
 
(As Restated) 2018
 
 
 
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
 
$
(23,749
)
 
$
32,289

 
$
41,814

 
$
(48,756
)
Foreign exchange derivatives
Cost of goods sold
 
(13,040
)
 
(16,549
)
 
14,941

 
(15,600
)
Foreign exchange derivatives
Marketing, general and administrative
 
(7
)
 
(1,109
)
 
(1,421
)
 
(1,260
)
Interest rate derivatives
Interest expense
 

 
(2
)
 

 
(3
)
Embedded derivative
Other income
 
399

 
441

 
2,362

 
2,612

Total
 
$
(36,397
)
 
$
15,070

 
$
57,696

 
$
(63,007
)

Commodity Contracts
    
As of May 31, 2019, and August 31, 2018, we had outstanding commodity futures and options contracts that were used as economic hedges, as well as fixed-price forward contracts related to physical purchases and sales of commodities. The table below presents the notional volumes for all outstanding commodity and freight contracts accounted for as derivative instruments.
 
May 31, 2019
 
August 31, 2018
 
Long
 
Short
 
Long
 
Short
 
(Units in thousands)
Grain and oilseed - bushels
693,978

 
865,956

 
715,866

 
929,873

Energy products - barrels
16,223

 
5,930

 
17,011

 
8,329

Processed grain and oilseed - tons
406

 
2,208

 
1,064

 
2,875

Crop nutrients - tons
19

 
72

 
11

 
76

Ocean freight - metric tons
125

 
95

 
227

 
45

Natural gas - MMBtu

 

 
610

 


Foreign Exchange Contracts

We are exposed to risk regarding foreign currency fluctuations even though a substantial amount of our international sales are denominated in U.S. dollars. In addition to specific transactional exposure, foreign currency fluctuations can impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of U.S. agricultural products compared to the same products offered by alternative sources of world supply. From time to time, we enter into foreign currency hedge contracts to minimize the impact of currency fluctuations on our transactional exposures. The notional amounts of our foreign exchange derivative contracts were $868.9 million and $988.8 million as of May 31, 2019, and August 31, 2018, respectively.

Embedded Derivative Asset

Under the terms of our strategic investment in CF Nitrogen, if CF Industries' credit rating is reduced below certain levels by two of three specified credit ratings agencies, we are entitled to receive a non-refundable annual payment of $5.0 million from CF Industries each year until the date that CF Industries' credit rating is upgraded to or above certain levels by two of the three specified credit ratings agencies or February 1, 2026, whichever is earlier. The fair value of the embedded derivative asset recorded on our Consolidated Balance Sheet as of May 31, 2019, was equal to $20.9 million. The current and long-term portions of the embedded derivative asset are included in derivative assets and other assets on our Consolidated Balance Sheets, respectively. See Note 14, Fair Value Measurements, for more information on the valuation of the embedded derivative asset.


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Derivatives Designated as Cash Flow or Fair Value Hedging Strategies

Fair Value Hedges

As of May 31, 2019, and August 31, 2018, we had outstanding interest rate swaps with an aggregate notional amount of $495.0 million designated as fair value hedges of portions of our fixed-rate debt that is due between fiscal 2019 and fiscal 2025. Our objective in entering into these transactions is to offset changes in the fair value of the debt associated with the risk of variability in the three-month U.S. dollar LIBOR interest rate ("LIBOR"), in essence converting the fixed-rate debt to variable-rate debt. Under these interest rate swaps, we receive fixed-rate interest payments and make interest payments based on the three-month LIBOR. Offsetting changes in the fair values of both the swap instruments and the hedged debt are recorded contemporaneously each period and only create an impact to earnings to the extent that the hedge is ineffective.

The following table presents the fair value of our derivative interest rate swap instruments designated as fair value hedges and the line items on our Consolidated Balance Sheets in which they are recorded.
 
 
Derivative Assets
 
 
 
Derivative Liabilities
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
 
(Dollars in thousands)
 
 
 
(Dollars in thousands)
Derivative assets
 
$

 
$

 
Derivative liabilities
 
$
45

 
$
771

Other assets
 
4,479

 

 
Other liabilities
 
668

 
8,681

Total
 
$
4,479

 
$

 
Total
 
$
713

 
$
9,452


The following table sets forth the pretax gains (losses) on derivatives accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018.
 
 
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
Gain (Loss) on Fair Value Hedging Relationships:
 
Location of
Gain (Loss)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
(Dollars in thousands)
Interest rate swaps
 
Interest expense
 
$
(8,122
)
 
$
(231
)
 
$
(15,129
)
 
$
(18,118
)
Hedged item
 
Interest expense
 
8,122

 
231

 
15,129

 
18,118

Total
 
$

 
$

 
$

 
$


The following table provides the location and carrying amount of hedged liabilities in our Consolidated Balance Sheets as of May 31, 2019, and August 31, 2018.
 
 
May 31, 2019
 
August 31, 2018
Balance Sheet Location
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Liabilities
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Liabilities
 
 
(Dollars in thousands)
Long-term debt
 
$
470,419

 
$
24,581

 
$
485,548

 
$
9,452


Cash Flow Hedges

In the fourth quarter of fiscal 2018, our Energy segment began designating certain of its pay-fixed, receive-variable, cash-settled swaps as cash flow hedges of future crude oil purchases. We also began designating certain pay-variable, receive-fixed, cash-settled swaps as cash flow hedges of future refined product sales. These hedging instruments and the related hedged items are exposed to significant market price risk and potential volatility. As part of our risk management strategy, we look to hedge a portion of our expected future crude oil needs and the resulting refined product output based on prevailing futures prices, management's expectations about future commodity price changes and our risk appetite. As of May 31, 2019, and August 31, 2018, the aggregate notional amount of cash flow hedges was 8.2 million and 1.1 million barrels, respectively.


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The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the line items on our Consolidated Balance Sheets in which they are recorded.
 
 
Derivative Assets
 
 
 
Derivative Liabilities
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
 
(Dollars in thousands)
 
 
 
(Dollars in thousands)
Derivative assets
 
$
5,547

 
$
812

 
Derivative liabilities
 
$
14,692

 
$
634


The following table presents the pretax gains (losses) recorded in other comprehensive income relating to cash flow hedges for the three and nine months ended May 31, 2019, and 2018:
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
 
2019
 
2018
 
2019
 
2018
 
 
(Dollars in thousands)
Commodity derivatives
 
$
(21,029
)
 
$

 
$
(9,323
)
 
$


The following table presents the pretax gains (losses) relating to cash flow hedges that were reclassified from accumulated other comprehensive loss into our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018:
 
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
Location of
Gain (Loss)
 
2019
 
2018
 
2019
 
2018
 
 
 
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
 
$
1,810

 
$

 
$
9,812

 
$


Note 14        Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs or market data that a market participant would obtain from independent sources to value the asset or liability. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The fair value hierarchy consists of three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.


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Recurring fair value measurements at May 31, 2019, and August 31, 2018, are as follows:
 
May 31, 2019
 
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 derivatives
$
27,024

 
$
229,760

 
$

 
$
256,784

Foreign exchange derivatives

 
9,704

 

 
9,704

Interest rate swap derivatives

 
4,479

 

 
4,479

Deferred compensation assets
39,327

 

 

 
39,327

Embedded derivative asset

 
20,957

 

 
20,957

Other assets
5,763

 

 

 
5,763

Total
$
72,114

 
$
264,900

 
$

 
$
337,014

Liabilities:
 

 
 

 
 
 
 

Commodity derivatives
$
76,388

 
$
239,066

 
$

 
$
315,454

Foreign exchange derivatives

 
7,480

 

 
7,480

Interest rate swap derivatives

 
713

 

 
713

Total
$
76,388

 
$
247,259

 
$

 
$
323,647


 
August 31, 2018
 
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 derivatives
$
54,487

 
$
259,359

 
$

 
$
313,846

Foreign exchange derivatives

 
15,401

 

 
15,401

Deferred compensation assets
39,073

 

 

 
39,073

Embedded derivative asset

 
23,595

 

 
23,595

Other assets
5,334

 

 

 
5,334

Total
$
98,894

 
$
298,355

 
$

 
$
397,249

Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
31,778

 
$
389,911

 
$

 
$
421,689

Foreign exchange derivatives

 
24,701

 

 
24,701

Interest rate swap derivatives

 
9,452

 

 
9,452

Total
$
31,778

 
$
424,064

 
$

 
$
455,842


Commodity and foreign exchange derivatives — Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward commodity purchase and sales contracts with fixed-price components, select ocean freight contracts and other over-the-counter ("OTC") derivatives are determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, adjusted for location-specific inputs, and are classified within Level 2. The location-specific inputs are driven by local market supply and demand, and are generally based on broker or dealer quotations, or market transactions in either the listed or OTC markets. Changes in the fair values of these contracts that are not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Interest rate swap derivatives — Fair values of our interest rate swap derivatives are determined utilizing valuation models that are widely accepted in the market to value these OTC derivative contracts. The specific terms of the contracts, as

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well as market observable inputs, such as interest rates and credit risk assumptions, are factored into the models. As all significant inputs are market observable, all interest rate swaps are classified within Level 2. Changes in the fair values of contracts not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of Operations as a component of interest expense. See Note 13, Derivative Financial Instruments and Hedging Activities, for additional information about interest rate swaps designated as fair value and cash flow hedges.
        
Deferred compensation and other assets — Our deferred compensation investments, Rabbi Trust assets and investments in common stock of other companies are valued based on unadjusted quoted prices on active exchanges and are classified within Level 1. Changes in the fair values of these other assets are primarily recognized in our Consolidated Statements of Operations as a component of marketing, general and administrative expenses.

Embedded derivative asset — The embedded derivative asset relates to contingent payments inherent in our investment in CF Nitrogen. The inputs into the fair value measurement include the probability of future upgrades and downgrades of CF Industries' credit rating based on historical credit rating movements of other public companies and the discount rates to be applied to potential annual payments based on applicable historical and current yield coupon rates. Any actual upgrades or downgrades to CF Industries' credit rating could also impact the fair value of the embedded derivative asset. Based on these observable inputs, our fair value measurement is classified within Level 2. See Note 13, Derivative Financial Instruments and Hedging Activities, for additional information.

There were no material transfers between Level 1, Level 2 and Level 3 assets and liabilities during the three or nine months ended May 31, 2019.

Note 15        Commitments and Contingencies

Environmental

We are required to comply with various environmental laws and regulations incidental to our normal business operations. In order to meet our compliance requirements, we establish reserves for the probable future costs of remediation of identified issues, which are included in cost of goods sold and marketing, general and administrative in our Consolidated Statements of Operations. The resolution of any such matters may affect consolidated net income for any fiscal period; however, we believe any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year.
    
Other Litigation and Claims

We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our business. The resolution of any such matters may affect consolidated net income for any fiscal period; however, we believe any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year.

Guarantees

We are a guarantor for lines of credit and performance obligations of related, non-consolidated companies. As of May 31, 2019, our bank covenants allowed maximum guarantees of $1.0 billion, of which $244.0 million were outstanding. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties for which we provide these guarantees were current as of May 31, 2019.

Note 16        Acquisitions

In December 2018, we exercised our option to acquire the remaining 75% ownership interest in WCD. On March 1, 2019, we completed the acquisition of that 75% ownership interest in WCD. The purchase price was equal to $113.4 million, including $6.7 million that was previously paid and $106.7 million paid on March 1, 2019, net of cash acquired of $8.0 million. WCD is a full-service wholesale distributor of agronomy products headquartered in Willmar, Minnesota, that operates primarily in the United States. Prior to completing this acquisition and through February 28, 2019, we had a 25% ownership interest in WCD, which was accounted for under the equity method of accounting whereby we shared in the economics of WCD's earnings on a pro-rata basis. By acquiring the remaining ownership interest in WCD, we were able to expand our agronomy platform, position ourselves as a leading supply partner to cooperatives and retailers serving growers throughout the United States and add value for our owners. The WCD enterprise value was determined using a discounted cash flow model in which

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the fair value of the business was estimated based on the earning capacity of WCD. We estimated the fair value of the previously held equity interest to be equal to 25% of the total fair value of WCD, which was implied based on the purchase price we paid for the remaining 75% interest. The acquisition-date fair value of the previous equity interest was $37.8 million and is included in the measurement of the consideration transferred. We recognized a gain of approximately $19.1 million as a result of remeasuring our prior equity interest in WCD held before the acquisition of the remaining 75% interest. The gain is included in other (income) loss in our Consolidated Statements of Operations.

Preliminary allocation of the purchase price for this transaction resulted in goodwill of $61.4 million, which is nondeductible for tax purposes, and definite-lived intangible assets of $47.2 million. As this acquisition is not considered to have a material impact on our financial statements, proforma results of operations are not presented. The acquisition resulted in fair value measurements that are not on a recurring basis and did not have a material impact on our consolidated results of operations. Purchase accounting has not been finalized and preliminary fair values assigned to the net assets acquired are as follows:
 
(Dollars in thousands)
Cash
$
8,033

Current assets
708,764

Property, plant and equipment
44,064

Goodwill
61,358

Intangible assets
47,200

Other non-current assets
55

Liabilities
(718,262
)
Total net assets acquired
$
151,212


Operating results for WCD are included in our Consolidated Statements of Operations from the day of the acquisition on March 1, 2019, including revenues and income (loss) before income taxes of $255.6 million and $10.5 million, respectively, for the three months ended May 31, 2019.


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ITEM 2.    MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This Management's Discussion and Analysis of Financial Condition and Results of Operations ("MD&A") is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition and results of operations, liquidity and certain other factors that may affect our future results. Our MD&A is presented in the following sections:

Restatement
Overview
Business Strategy
Fiscal 2019 Third Quarter Highlights
Fiscal 2019 Trends Update
Results of Operations
Liquidity and Capital Resources
Off-Balance Sheet Financing Arrangements
Contractual Obligations
Critical Accounting Policies
Effect of Inflation and Foreign Currency Transactions
Recent Accounting Pronouncements

Our MD&A should be read in conjunction with our Annual Report on Form 10-K for the year ended August 31, 2018 (including the information presented therein under Risk Factors), as well as the consolidated financial statements and the related notes included in Item 1 of Part I of this Quarterly Report on Form 10-Q.

Restatement

The accompanying MD&A gives effect to certain adjustments made to our previously reported financial information for the three and nine months ended May 31, 2018. Due to the restatements of these periods, the data set forth in the accompanying MD&A may not be comparable to discussions and data included in our previously filed Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2018.

Refer to Note 2, Restatement of Previously Issued Financial Information, of the accompanying unaudited financial statements for further details related to the restatement and its impact on our consolidated financial statements.

Overview

CHS Inc. is a diversified company that provides grain, foods and energy resources to businesses and consumers on a global scale. As a cooperative, we are owned by farmers, ranchers and member cooperatives across the United States. We also have preferred shareholders that own our five series of preferred stock, all of which are listed and traded on the Nasdaq Global Select Market. We operate in the following three reportable segments:

Energy - produces and provides primarily for the wholesale distribution and transportation of petroleum products.
Ag - purchases and further processes or resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties and also serves as a wholesaler and retailer of agronomy products.
Nitrogen Production - consists solely of our equity method investment in CF Nitrogen and produces and distributes nitrogen fertilizer, a commodity chemical.

In addition, our financing and hedging businesses, along with our non-consolidated wheat milling and food production and distribution joint ventures, have been aggregated within Corporate and Other. Prior to its sale on May 4, 2018, our insurance operations were also included within Corporate and Other.
    
The consolidated financial statements include the accounts of CHS and all of our wholly-owned and majority-owned subsidiaries and limited liability companies. The effects of all significant intercompany transactions have been eliminated.

Corporate administrative expenses and interest are allocated to each reporting segment, along with Corporate and Other, based on direct usage for services, such as information technology and legal, and other factors or considerations relevant to the costs incurred.


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Management's Focus. When evaluating our operating performance, management focuses on gross profit and income (loss) before income taxes ("IBIT"). As a company that operates heavily in global commodities, there is significant unpredictability and volatility in pricing, costs and global trade volumes. As such, we focus on managing the margin we can earn and the resulting income before income taxes. Management also focuses on ensuring the strength of the balance sheet through the appropriate management of financial liquidity, leverage, capital allocation and cash flow optimization.

Seasonality. Many of our business activities are highly seasonal and our operating results vary throughout the year. Our revenues and income generally trend lower during the second and fourth fiscal quarters and higher during the first and third fiscal quarters; however, weather or other events may impact this trend. For example, in our Ag segment, our crop nutrients and country operations businesses generally experience higher volumes and income during the fall harvest and spring planting season, which correspond to our first and third fiscal quarters, respectively. Our grain marketing operations are also subject to fluctuations in volume and earnings based on producer harvests, world grain prices, demand and global trade volumes. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage by our agricultural producers is highest and is subject to global supply and demand forces. Other energy products, such as propane, also generally experience higher volumes and profitability during the winter heating and fall crop drying seasons. The graphs below depict the seasonality inherent in our business.

* Income (loss) before income taxes deviated from historical trends during the third quarters of fiscal 2017 and fiscal 2019 as a result of material charges incurred and a combination of factors described in the Fiscal 2019 Third Quarter Highlights below, respectively.


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Pricing. Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as petroleum products, natural gas, grains, oilseed products and crop nutrients. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, availability/adequacy of supply of the related commodity, government regulations/policies, world events, global trade disputes and general political/economic conditions.

Business Strategy

Our business strategy is to help our owners grow by maximizing returns and optimizing our various operations to ensure that our core businesses are strategically positioned today and for the future. We are focusing on improving efficiency and, when necessary, disposing of assets that are not strategic and/or do not meet our internal measurement expectations. We are also focusing on making selective growth capital investments that will help to drive future growth opportunities. In addition, we are focused on maintaining financial flexibility by optimizing debt levels and ensuring adequate financial liquidity so we can effectively operate throughout the agriculture and energy economic cycles.

Fiscal 2019 Third Quarter Highlights

We completed the acquisition of the remaining 75% ownership interest in West Central Distribution, LLC ("WCD"), a full-service wholesale distributor of agronomy products headquartered in Willmar, Minnesota, that we did not previously own on March 1, 2019.
We completed planned major maintenance (to overhaul, repair, inspect and replace process materials and equipment - referred to in the industry as "turnaround") at our McPherson, Kansas refinery during April and May 2019.
Crude run rates at our McPherson, Kansas refinery were less than planned due to an extended start-up period following the turnaround.
We continued to experience significant pressure on grain volume and margins due to slow movement of grain related to uncertainty in the grain markets due to unresolved trade issues between the United States and its trading partners.
Poor weather conditions, including heavy snow and rainfall, during the spring of 2019 negatively impacted our Ag segment's operations. Severe flooding resulting from the heavy snow and rainfall contributed to railroad delays and a very late planting season, which resulted in increased costs and reduced volumes during the third quarter of fiscal 2019. Further, navigable waterways experienced high, swift water conditions impeding barge traffic, severely affecting our ability to economically supply fertilizer and grains to their associated buyers.
Earnings from our equity method investments in CF Nitrogen and Ventura Foods remained strong compared to the prior year.
As more fully described in Item 4, we continued dedicating significant internal and external resources as well as executive and board focus to improving our control environment.

Fiscal 2019 Trends Update

Our Ag and Energy businesses operate in cyclical environments. The favorable market conditions experienced by the Energy business during the first half of fiscal 2019, most notably heavy Canadian crude oil prices, returned to more normalized levels during the third quarter of fiscal 2019 and are expected to remain at these levels for the remainder of fiscal 2019. The agricultural industry continues to operate in a challenging environment characterized by lower margins, reduced liquidity and increased leverage that have resulted from reduced commodity prices. In particular, the ethanol industry continues to suffer from excess capacity which has resulted in an overall over supply of product in the market. In addition, trade disputes between the United States and foreign trading partners, particularly those that purchase large quantities of agricultural commodities, are resulting in unpredictable impacts to commodity prices within the agricultural industry now and in the future. We are unable to predict how long the current environment will last or how severe it will ultimately be at this time. In addition to global supply and demand impacts, regional factors, including unfavorable spring weather conditions in much of the agricultural region of the United States, resulted in the closure of certain fertilizer plants and port facilities as a result of flooding that could continue to impact our operations. As a result, we expect our revenues, margins and cash flows from our core operations in our Ag segment to continue to be under pressure, which also will put pressure on the associated asset valuations.


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Results of Operations

Consolidated Statements of Operations
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
2019
 
(As Restated) 2018
 
2019
 
(As Restated) 2018
 
(Dollars in thousands)
Revenues
$
8,497,941

 
$
9,087,328

 
$
23,465,769

 
$
24,099,365

Cost of goods sold
8,274,170

 
8,841,696

 
22,343,944

 
23,398,272

Gross profit
223,771

 
245,632

 
1,121,825

 
701,093

Marketing, general and administrative
183,723

 
162,424

 
523,648

 
490,329

Reserve and impairment charges (recoveries), net
33,804

 
(3,811
)
 
27,790

 
(18,944
)
Operating earnings (loss)
6,244

 
87,019

 
570,387

 
229,708

(Gain) loss on disposal of business
(2,474
)
 
(124,050
)
 
(3,886
)
 
(131,755
)
Interest expense
42,773

 
49,340

 
122,950

 
130,218

Other (income) loss
(30,464
)
 
(15,802
)
 
(65,949
)
 
(54,542
)
Equity (income) loss from investments
(65,170
)
 
(59,308
)
 
(173,394
)
 
(137,111
)
Income (loss) before income taxes
61,579

 
236,839

 
690,666

 
422,898

Income tax expense (benefit)
6,866

 
55,219

 
40,534

 
(111,863
)
Net income (loss)
54,713

 
181,620

 
650,132

 
534,761

Net income (loss) attributable to noncontrolling interests
93

 
(187
)
 
(758
)
 
(699
)
Net income (loss) attributable to CHS Inc. 
$
54,620

 
$
181,807

 
$
650,890

 
$
535,460


    

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The charts below detail revenues, net of intersegment revenues, and IBIT by reportable segment for the three and nine months ended May 31, 2019. Our Nitrogen Production reportable segment represents an equity method investment, and as such records earnings and allocated expenses but not revenue.

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Energy Segment Operating Metrics

Our Energy segment operations primarily include our Laurel, Montana and McPherson, Kansas refineries, which process crude oil to produce refined products, including gasoline, distillates and other products. The following table provides information about our consolidated refinery operations.
 
For the Three Months Ended May 31,
 
For the Nine Months Ended
May 31,
 
2019*
 
2018
 
2019
 
2018
Refinery throughput volumes
(Barrels per day)
Heavy, high-sulfur crude oil
73,344

 
69,410

 
90,261

 
84,378

All other crude oil
31,043

 
61,712

 
53,733

 
63,341

Other feedstocks and blendstocks
1,402

 
16,123

 
9,859

 
18,145

   Total refinery throughput volumes
105,789

 
147,245

 
153,853

 
165,864

Refined fuel yields
 
 
 
 
 
 
 
Gasolines
46,457

 
75,137

 
71,269

 
84,475

Distillates
45,508

 
56,170

 
64,930

 
64,015

* Refinery throughput volumes and refined fuel yields for the three months ended May 31, 2019, were lower as a result of the turnaround at our McPherson, Kansas refinery during April and May 2019.

We are subject to the Renewable Fuels Standard ("RFS"), which requires refiners to blend renewable fuels (e.g., ethanol, biodiesel) into their finished transportation fuels or purchase renewable energy credits, known as Renewable Identification Numbers ("RINs"), in lieu of blending. The Environmental Protection Agency generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year. We generate RINS under the RFS in our renewable fuels operations and through our blending activities at our terminals; but we cannot generate enough RINs to meet the needs of our refining capacity and RINs must be purchased on the open market. The price of RINs can be volatile and can impact profitability.

In addition to our internal operational reliability, the profitability of our Energy segment is largely driven by crack spreads (e.g., the price differential between refined products and inputs such as crude oil) and Western Canadian Select ("WCS") crude oil differentials (e.g., the price differential between West Texas Intermediate ("WTI") crude oil and WCS crude oil), which are driven by the supply and demand of global refined product markets. Supply and demand in the global and North American refined product markets resulted in increased crack spreads during the third quarter of fiscal 2019 compared to the same period of the prior year; however, these same factors also drove a significant decrease to the WCS differential. The table below provides information about the average market reference prices and differentials that impact our Energy segment.    
 
For the Three Months Ended May 31,
 
For the Nine Months Ended
May 31,
 
2019
 
2018
 
2019
 
2018
Market indicators
 
 
 
 
 
 
 
West Texas Intermediate (WTI) crude oil (dollars per barrel)
$61.00
 
$67.04
 
$59.55
 
$61.16
WTI - Western Canadian Select (WCS) crude oil differential (dollars per barrel)
$9.67
 
$23.27
 
$22.80
 
$18.12
Group 3 2:1:1 crack spread (dollars per barrel)*
$21.65
 
$18.08
 
$18.88
 
$19.04
Group 3 5:3:2 crack spread (dollars per barrel)*
$21.18
 
$17.53
 
$17.61
 
$18.41
D6 ethanol RIN (dollars per RIN)
$0.1586
 
$0.3768
 
$0.1653
 
$0.6378
D4 ethanol RIN (dollars per RIN)
$0.3748
 
$0.6219
 
$0.4237
 
$0.8243
* Group 3 refers to the oil refining and distribution system serving the Midwest markets from the Gulf Coast through the Plains States.









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Income (Loss) Before Income Taxes by Segment

Energy
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Income (loss) before income taxes
$
1,259

 
$
94,070

 
$
(92,811
)
 
(98.7
)%
 
$
540,305

 
$
238,976

 
$
301,329

 
126.1
%

The following table and commentary present the primary reasons for the changes in IBIT for the Energy segment for the three and nine months ended May 31, 2019, compared to the prior year:
 
 
Year-Over-Year Change
 
 
Three Months Ended May 31
 
Nine Months Ended May 31
 
 
(Dollars in thousands)
Volume
 
$
(5,149
)
 
$
(3,283
)
Price
 
(22,592
)
 
382,441

Transportation, retail and other
 
1,619

 
(497
)
Non-gross profit related activity+
 
(66,689
)
 
(77,332
)
Total change in Energy IBIT
 
$
(92,811
)
 
$
301,329

+ See commentary related to these changes in the marketing, general and administrative expenses, reserve and impairment charges (recoveries), interest expense, other income (loss) and equity income (loss) from investments sections of this Results of Operations.

Comparison of Energy segment IBIT for the three months ended May 31, 2019, and 2018

The $92.8 million decrease in Energy segment IBIT reflects the following:
The impact associated with the turnaround at our McPherson, Kansas refinery during April and May 2019. Because a turnaround necessitates an extended shutdown of the refinery, we must purchase refined products from third parties (at market prices) to offset the decrease in production and meet customer demand, which results in lower margins in our refined fuels business. The decreased IBIT related to the McPherson, Kansas refinery turnaround was partially offset by increased IBIT at our Laurel, Montana refinery following a turnaround during May 2018 that did not reoccur during the current fiscal year.
Less advantageous market conditions in our refined fuels business compared to the same period during the prior year, primarily driven by increased pricing experienced on heavy Canadian crude oil which is processed by our refineries. The increased crude oil pricing was partially offset by improved crack spreads, as well as a hedging loss incurred during the third quarter of fiscal 2018 that did not reoccur during the third quarter of fiscal 2019 and decreased renewable energy credit costs.
Gains totaling $65.9 million recorded in other income in connection with the sale of certain assets during the third quarter of fiscal 2018, including the sale of 34 Zip Trip stores located in the Pacific Northwest, United States ("Pacific Northwest") and the sale of the Council Bluffs pipeline and refined fuels terminal in Council Bluffs, Iowa, that did not reoccur during the current year.

Comparison of Energy segment IBIT for the nine months ended May 31, 2019, and 2018

The $301.3 million increase in Energy segment IBIT reflects the following:
Improved market conditions in our refined fuels business, primarily driven by favorable pricing on heavy Canadian crude oil which is processed by our refineries. The favorable crude oil pricing, as well as decreased hedging losses and decreased renewable energy credit costs, contributed to a $314.4 million IBIT increase.
Manufacturing changes within our Energy business have allowed us to benefit from certain federal excise tax credits. Following the resolution of the underlying gain contingencies associated with the tax credits during the second quarter of fiscal 2019, a gain of $80.8 million was recognized primarily as a reduction of cost of goods sold ("COGS") in our Consolidated Statements of Operations.
The increased IBIT resulting from improved market conditions in our refined fuels business was partially offset by the turnaround at our McPherson, Kansas refinery during April and May 2019. The decreased IBIT related to the

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McPherson, Kansas refinery turnaround was partially offset by increased IBIT at our Laurel, Montana refinery following a turnaround during May 2018 that did not reoccur during the current fiscal year.
The increases to IBIT were also partially offset by decreased margins for other energy products, as well as gains totaling $65.9 million recorded in other income in connection with the sale of certain assets during fiscal 2018, including the sale of 34 Zip Trip stores located in the Pacific Northwest and the sale of the Council Bluffs pipeline and refined fuels terminal in Council Bluffs, Iowa, that did not reoccur during the current year.

Ag
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Income (loss) before income taxes
$
21,112

 
$
60,100

 
$
(38,988
)
 
(64.9
)%
 
$
39,031

 
$
81,720

 
$
(42,689
)
 
(52.2
)%

The following table and commentary present the primary reasons for the changes in IBIT for the Ag segment for the three and nine months ended May 31, 2019, compared to the prior year:
 
 
Year-Over-Year Change
 
 
Three Months Ended May 31
 
Nine Months Ended May 31
 
 
(Dollars in thousands)
Volume
 
$
5,063

 
$
28,701

Price
 
(2,948
)
 
5,490

Non-gross profit related activity+
 
(41,103
)
 
(76,880
)
Total change in Ag IBIT
 
$
(38,988
)
 
$
(42,689
)
+ See commentary related to these changes in the marketing, general and administrative expenses, reserve and impairment charges (recoveries), gain (loss) on disposal of business, interest expense, other income (loss) and equity income (loss) from investments sections of this Results of Operations.

Comparison of Ag segment IBIT for the three months ended May 31, 2019, and 2018

The $39.0 million decrease in Ag segment IBIT reflects the following:
A combination of higher non-gross profit related expenses contributed to a $41.1 million IBIT decrease, primarily related to increased reserve and impairment charges in connection with certain loan loss reserves associated with the challenging agricultural environment in our country operations business, including the impact of an out of period adjustment recorded during the period increasing reserve and impairment charges (recoveries), net by $29.5 million. Increased marketing, general and administrative costs also contributed to the IBIT decrease; however, these decreases were partially offset by a $19.1 million gain recognized in connection with the acquisition of the remaining 75% ownership interest in WCD during the third quarter of fiscal 2019.
Poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural regions of the United States and continuing global trade tensions between the United States and foreign trading partners have resulted in generally decreased margins and volumes across most of our Ag segment.
The decreased IBIT across much of the Ag segment was offset by increased volumes associated with certain agronomy products, which was primarily attributable to a $10.5 million increase of IBIT that resulted from the acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, the results of which were not included in the comparable period of the prior year.

Comparison of Ag segment IBIT for the nine months ended May 31, 2019, and 2018

The $42.7 million decrease in Ag segment IBIT reflects the following:
A combination of higher non-gross profit related expenses contributed to a $76.9 million IBIT decrease, primarily related to increased reserve and impairment charges in connection with certain loan loss reserves associated with the challenging agricultural environment in our country operations business, including the impact of an out of period adjustment recorded during the period increasing reserve and impairment charges (recoveries), net by $25.5 million. Increased marketing, general and administrative costs also contributed to the IBIT decrease; however, these decreases were partially offset by a $19.1 million gain recognized in connection with the acquisition of the remaining 75% ownership interest in WCD during the third quarter of fiscal 2019.

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Poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural regions of the United States and continuing global trade tensions between the United States and foreign trading partners have resulted in generally decreased margins and volumes across most of our Ag segment.
The decreased IBIT across much of the Ag segment was partially offset by increased volumes associated with certain agronomy products, which was attributable to a $10.5 million increase of IBIT that resulted from the acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, the results of which were not included in the comparable period of the prior year.

All Other Segments
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Nitrogen Production IBIT*
$
20,178

 
$
18,808

 
$
1,370

 
7.3
 %
 
$
54,569

 
$
29,004

 
$
25,565

 
88.1
 %
Corporate and Other IBIT
$
19,030

 
$
63,861

 
$
(44,831
)
 
(70.2
)%
 
$
56,761

 
$
73,198

 
$
(16,437
)
 
(22.5
)%
* See Note 6, Investments, of the notes to the consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.

Comparison of All Other Segments IBIT for the three and nine months ended May 31, 2019, and 2018

Our Nitrogen Production segment IBIT increased as a result of significantly higher equity method income from our investment in CF Nitrogen during fiscal 2019, which is attributed to increased market pricing of urea and urea ammonium nitrate ("UAN"), which are produced and sold by CF Nitrogen. Corporate and Other IBIT decreased primarily as a result of a $58.2 million gain in Corporate and Other associated with the sale of CHS Insurance during the nine months ended May 31, 2018, that did not reoccur during the current year. The decreases to Corporate and Other IBIT were partially offset by higher earnings from our investment in Ventura Foods and increased interest revenue from our financing business.

Revenues by Segment

Energy
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Revenues
$
1,738,045

 
$
1,885,131

 
$
(147,086
)
 
(7.8
)%
 
$
5,374,110

 
$
5,496,076

 
$
(121,966
)
 
(2.2
)%

The following table and commentary present the primary reasons for the changes in revenues for the Energy segment for the three and nine months ended May 31, 2019, compared to the prior year:
 
 
Year-Over-Year Change
 
 
Three Months Ended May 31
 
Nine Months Ended May 31
 
 
(Dollars in thousands)
Volume
 
$
(68,752
)
 
$
(438
)
Price
 
(61,702
)
 
(10,102
)
Transportation, retail and other
 
(16,632
)
 
(111,426
)
Total change in Energy revenues
 
$
(147,086
)
 
$
(121,966
)


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Comparison of Energy segment revenues for the three months ended May 31, 2019, and 2018

The $147.1 million decrease in Energy segment revenues reflects the following:
Decreased selling prices and volumes for refined fuels contributed to $40.6 million and $87.2 million decreases of revenues, respectively. The decreased selling prices were driven by global market conditions and the decreased volumes were attributed primarily to poor weather conditions, including heavy snow and rainfall, during the spring of 2019 that have delayed spring planting of crops across much of the agricultural region of the United States, lowering demand for our diesel products.
Decreased selling prices for propane also contributed to a $23.0 million decrease of revenues; however, the decrease was mostly offset by a 20% volume increase of propane that contributed to a $22.3 million increase of revenues.
Other revenues decreased primarily as a result of the impact of applying new revenue recognition guidance under ASC Topic 606 during fiscal 2019 compared to previous guidance during the comparable period of the prior year, which resulted in a $14.2 million decrease of revenues due to certain contracts being recognized on a net basis rather than a gross basis.

Comparison of Energy segment revenues for the nine months ended May 31, 2019, and 2018

The $122.0 million decrease in Energy segment revenues reflects the following:
Transportation, retail and other revenues decreased primarily as a result of the sale of 34 Zip Trip stores located in the Pacific Northwest, that were sold during the third quarter of fiscal 2018. Revenues for these stores were included in the results during the nine months ended May 31, 2018, but were not present in the nine months ended May 31, 2019.
Other revenues also decreased as a result of the impact of applying new revenue recognition guidance under ASC Topic 606 during fiscal 2019 compared to previous guidance during the comparable period of the prior year, which resulted in a $36.9 million decrease of revenues due to certain contracts being recognized on a net basis rather than a gross basis.
The net impact of price and volume changes associated with other energy products, including decreased propane selling prices that contributed to an $87.7 million decrease of revenues and decreased volumes of refined fuels and lubricants, which contributed to $20.6 million and $15.2 million decreases of revenues, respectively. These decreases were partially offset by increased refined fuels selling prices that contributed to a $72.9 million increase of revenues and increased propane volumes that contributed to a $35.3 million increase of revenues.

Ag
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Revenues
$
6,745,115

 
$
7,189,532

 
$
(444,417
)
 
(6.2
)%
 
$
18,045,057

 
$
18,563,455

 
$
(518,398
)
 
(2.8
)%

The following table and commentary present the primary reasons for the changes in revenues for the Ag segment for the three and nine months ended May 31, 2019, compared to the prior year:
 
 
Year-Over-Year Change
 
 
Three Months Ended May 31
 
Nine Months Ended May 31
 
 
(Dollars in thousands)
Volume
 
$
(1,015,967
)
 
$
(244,663
)
Price
 
571,550

 
(273,735
)
Total change in Ag revenues
 
$
(444,417
)
 
$
(518,398
)

Comparison of Ag segment revenues for the three months ended May 31, 2019, and 2018

The $444.4 million decrease in Ag segment revenues reflects the following:
A 19% decrease of grain and oilseed volumes contributed to an $856.7 million decrease of revenues, which was partially offset by increased grain and oilseed prices that contributed to a $418.7 million increase of revenues. The decreased volumes and increased prices have resulted from a combination of poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural region of the United States and continuing global trade tensions between the United States and foreign trading partners.

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Table of Contents


A 27% volume decrease of feed and farm supplies contributed to decreased revenues of $305.0 million, which was partially offset by price increases that contributed to a $162.2 million increase of revenues. The decreased volumes and increased prices during the third quarter of fiscal 2019 resulted primarily from poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural region of the United States that has prevented and delayed planting of crops, impacting the mix and timing of products sold.
Decreased prices and an 8% volume decrease associated with renewable fuels contributed to decreased revenues of $23.1 million and $27.7 million, respectively. Although ethanol demand has remained relatively stable in North America, margins and underlying prices have remained under pressure for most of fiscal 2019 as ethanol production and inventory supplies have remained at high levels.
The decreased revenues across much of the Ag segment were partially offset by increased volumes and prices associated with certain agronomy products and processing and food ingredients, most of which was attributable to a $255.6 million increase of revenues that resulted from the acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, the results of which were not included the comparable period of the prior year.


Comparison of Ag segment revenues for the nine months ended May 31, 2019, and 2018

The $518.4 million decrease in Ag segment revenues reflects the following:
Decreased prices and a 4% decrease of grain and oilseed volumes contributed to $40.5 million and $520.4 million decreases of revenues, respectively. The decreased prices and volumes have resulted from a combination of poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural region of the United States and continuing global trade tensions between the United States and foreign trading partners.
Decreased prices for feed and farm supplies contributed to decreased revenues of $202.5 million, which was partially offset by a 4% volume increase that contributed to a $72.4 million increase of revenues. The decreased prices and increased year-to-date volumes have resulted primarily from the poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural region of the United States that have prevented and delayed planting of crops, impacting the mix and timing of products sold.
Decreased prices and a 2% volume decrease associated with renewable fuels contributed to decreased revenues of $96.9 million and $25.7 million, respectively. Although ethanol demand has remained relatively stable in North America, margins and underlying prices have remained under pressure for most of fiscal 2019 as ethanol production and inventory supplies have remained at high levels.
The decreased revenues across much of the Ag segment were partially offset by increased volumes and margins associated with certain agronomy products and processing and food ingredients, most of which was attributable to a $255.6 million increase of revenues that resulted from the acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, the results of which were not included the comparable period of the prior year.

All Other Segments
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Corporate and Other revenues*
$
14,781

 
$
12,665

 
$
2,116

 
16.7
%
 
$
46,602

 
$
39,834

 
$
6,768

 
17.0
%
* Our Nitrogen Production reportable segment represents an equity method investment, and as such records earnings and allocated expenses, but not revenues.

Comparison of All Other Segments revenues for the three and nine months ended May 31, 2019, and 2018

There were no significant changes in Corporate and Other revenues during the three or nine months ended May 31, 2019, or 2018; however, for those changes that did occur, higher interest income associated with our financing business was the driver.


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Table of Contents


Cost of Goods Sold by Segment

Energy
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Cost of goods sold
$
1,693,613

 
$
1,814,578

 
$
(120,965
)
 
(6.7
)%
 
$
4,692,910

 
$
5,193,537

 
$
(500,627
)
 
(9.6
)%
    
The following table and commentary present the primary reasons for the changes in COGS for the Energy segment for the three and nine months ended May 31, 2019, compared to the prior year:
 
 
Year-Over-Year Change
 
 
Three Months Ended May 31
 
Nine Months Ended May 31
 
 
(Dollars in thousands)
Volume
 
$
(63,603
)
 
$
2,845

Price
 
(39,110
)
 
(392,543
)
Transportation, retail and other
 
(18,252
)
 
(110,929
)
Total change in Energy cost of goods sold
 
$
(120,965
)
 
$
(500,627
)

Comparison of Energy segment COGS for the three months ended May 31, 2019, and 2018

The $121.0 million decrease in Energy segment COGS reflects the following:
Decreased refined fuels costs and volumes contributed to $20.0 million and $84.0 million decreases of COGS, respectively. The decreased costs were driven by global market conditions and the decreased volumes were attributed primarily to poor weather conditions that have delayed spring planting of crops across much of the agricultural region of the United States, lowering demand for our diesel products.
Decreased propane costs also contributed to a $20.8 million decrease of COGS; however, the decrease was offset by a 20% volume increase of propane that contributed to a $23.5 million increase of COGS.
Other COGS decreased primarily as a result of the impact of applying new revenue recognition guidance under ASC Topic 606 during fiscal 2019 compared to previous guidance during the comparable period of the prior year, which resulted in a $14.2 million decrease of COGS due to certain contracts being recognized on a net basis rather than a gross basis.

Comparison of Energy segment COGS for the nine months ended May 31, 2019, and 2018

The $500.6 million decrease in Energy segment COGS reflects the following:
Decreased refined fuels costs and volumes contributed to $241.5 million and $19.5 million decreases of COGS, respectively. The decreased costs for refined fuels was driven primarily by favorable pricing on heavy Canadian crude oil which is processed by our refineries, as well as hedging gains and decreased renewable energy credit costs. The decreased volumes were attributed primarily to poor weather conditions that have delayed spring planting of crops across much of the agricultural region of the United States, lowering demand for our diesel products.
Decreased refined propane costs contributed to a $76.7 million decrease of COGS; however, the decrease was partially offset by a 5% volume increase of propane that contributed to a $34.4 million increase of COGS.
A gain of $80.8 million recognized as a reduction of COGS in our Consolidated Statements of Operations during the second quarter of fiscal 2019 that resulted from manufacturing changes in our Energy business that have allowed us to benefit from certain federal excise tax credits.
Transportation, retail and other COGS decreased primarily as a result of the sale of 34 Zip Trip stores located in the Pacific Northwest that were sold during the third quarter of fiscal 2018. Costs associated with these stores were included in the results during the nine months ended May 31, 2018 but were not present in the nine months ended May 31, 2019.
Other COGS also decreased as a result of the impact of applying new revenue recognition guidance under ASC Topic 606 during fiscal 2019 compared to previous guidance during the comparable period of the prior year, which resulted in a $36.9 million decrease of COGS due to certain contracts being recognized on a net basis rather than a gross basis.

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Ag
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Cost of goods sold
$
6,580,901

 
$
7,027,433

 
$
(446,532
)
 
(6.4
)%
 
$
17,653,970

 
$
18,206,559

 
$
(552,589
)
 
(3.0
)%

The following table and commentary present the primary reasons for the changes in COGS for the Ag segment for the three and nine months ended May 31, 2019, compared to the prior year:
 
 
Year-Over-Year Change
 
 
Three Months Ended May 31
 
Nine Months Ended May 31
 
 
(Dollars in thousands)
Volume
 
$
(1,021,030
)
 
$
(273,364
)
Price
 
574,498

 
(279,225
)
Total change in Ag cost of goods sold
 
$
(446,532
)
 
$
(552,589
)

Comparison of Ag segment COGS for the three months ended May 31, 2019, and 2018

The $446.5 million decrease in Ag segment COGS reflects the following:
A 19% decrease of grain and oilseed volumes contributed to a $857.1 million decrease of COGS, which was partially offset by increased grain and oilseed costs that contributed to a $426.9 million increase of COGS. The decreased volumes and increased costs resulted from a combination of poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural region of the United States and continuing global trade tensions between the United States and foreign trading partners.
A 27% volume decrease associated with feed and farm supplies contributed to decreased COGS of $286.5 million, which was partially offset by increased feed and farm supplies costs that contributed to a $114.1 million increase of COGS. The volumes and increased costs resulted primarily from the poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural region of the United States that has prevented and delayed planting of crops, impacting the mix and timing of products sold.
Decreased costs and an 8% volume decrease associated with renewable fuels contributed to decreased COGS of $17.4 million and $27.0 million, respectively. Although ethanol demand has remained relatively stable in North America, margins have remained under pressure for most of the third quarter of fiscal 2019 as ethanol production and inventory supplies remained at high levels.
The decreased COGS across much of the Ag segment was partially offset by increased volumes and costs associated with certain agronomy products and processing and food ingredients, most of which was attributable to an increase of COGS that resulted from the acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, the results of which were not included the comparable period of the prior year.

Comparison of Ag segment COGS for the nine months ended May 31, 2019, and 2018

The $552.6 million decrease in Ag segment COGS reflects the following:
Decreased costs and a 4% decrease of grain and oilseed volumes contributed to $46.4 million and $517.7 million decreases of COGS, respectively. The decreased costs and volumes for grain and oilseed resulted from a combination of poor weather conditions, including heavy snow and rainfall, during the spring of 2019 across the agricultural region of the United States and continuing global trade tensions between the United States and foreign trading partners.
Decreased costs of feed and farm supplies contributed to decreased COGS of $199.5 million, which was partially offset by a 4% volume increase that contributed to a $66.2 million increase of COGS. The decreased costs and increased year-to-date volumes resulted primarily from the poor weather conditions, including heavy snow and rainfall, during the spring of 2019 in the agricultural region of the United States that has prevented and delayed planting of crops, impacting the mix and timing of products sold.
Decreased costs and a 2% volume decrease associated with renewable fuels contributed to decreased COGS of $74.6 million and $25.1 million, respectively. Although ethanol demand has remained relatively stable in North America, margins have remained under pressure for most of fiscal 2019 as ethanol production and inventory supplies remained at high levels.

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The decreased COGS across much of the Ag segment was partially offset by increased volumes and costs associated with certain agronomy products and processing and food ingredients, most of which was attributable to an increase of COGS that resulted from the acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, the results of which were not included the comparable period of the prior year.

All Other Segments
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Nitrogen Production COGS
$
1,076

 
$
(251
)
 
$
1,327

 
NM*
 
$
1,537

 
$
1,101

 
$
436

 
NM*
Corporate and Other COGS
$
(1,420
)
 
$
(64
)
 
$
(1,356
)
 
NM*
 
$
(4,473
)
 
$
(2,925
)
 
$
(1,548
)
 
NM*
* NM - Not Meaningful

Comparison of All Other Segments COGS for the three and nine months ended May 31, 2019, and 2018

There were no significant changes to COGS for our Nitrogen Production segment or Corporate and Other during the three or nine months ended May 31, 2019, and 2018.

Marketing, General and Administrative Expenses
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Marketing, general and administrative expenses
$
183,723

 
$
162,424

 
$
21,299

 
13.1
%
 
$
523,648

 
$
490,329

 
$
33,319

 
6.8
%

Comparison of marketing, general and administrative expenses for the three and nine months ended May 31, 2019, and 2018

The increases in marketing, general and administrative expenses during the three and nine months ended May 31, 2019, compared to the comparable period of the prior year, were primarily due to increased annual incentive compensation resulting from improved earnings for the nine months ended May 31, 2019, and increased consulting and outside service fees associated with ongoing internal controls strengthening efforts in response to prior material weakness determinations.

Reserve and Impairment Charges (Recoveries), net
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Reserve and impairment charges (recoveries), net
$
33,804

 
$
(3,811
)
 
$
37,615

 
987.0
%
 
$
27,790

 
$
(18,944
)
 
$
46,734

 
246.7
%

Comparison of reserve and impairment charges (recoveries), net for the three and nine months ended May 31, 2019, and 2018

The increased reserve and impairment charges during the three and nine months ended May 31, 2019, related to increased loan loss reserves associated with the challenging agricultural environment in our country operations business, including the impact of an out of period adjustment recorded during the period increasing reserve and impairment charges (recoveries), net by $29.5 million and $25.5 million during the three and nine month periods ended May 31, 2019, respectively. Additionally, the increase was also the result of recoveries of previously written-off assets during the prior year, including assets that were sold and loan loss reserves, that did not reoccur during the current year.


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Gain (Loss) on Disposal of Business
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Gain (loss) on disposal of business
$
2,474

 
$
124,050

 
$
(121,576
)
 
(98.0
)%
 
$
3,886

 
$
131,755

 
$
(127,869
)
 
(97.1
)%

Comparison of gain (loss) on disposal of business for the three and nine months ended May 31, 2019, and 2018

The decrease in gain (loss) on disposal of business is primarily attributable to gains recognized on the sale of certain assets during the third quarter of fiscal 2018, including a $65.9 million gain recorded in our Energy segment associated with the sale of 34 Zip Trip stores located in the Pacific Northwest and the sale of the Council Bluffs pipeline and refined fuels terminal in Council Bluffs, Iowa, and a $58.2 million gain in Corporate and Other associated with the sale of CHS Insurance, that did not reoccur during the current year.

Interest Expense
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Interest expense
$
42,773

 
$
49,340

 
$
(6,567
)
 
(13.3
)%
 
$
122,950

 
$
130,218

 
$
(7,268
)
 
(5.6
)%

Comparison of interest expense for the three and nine months ended May 31, 2019, and 2018

Interest expense did not change significantly during the three or nine months ended May 31, 2019; however, the decreased interest expense resulted from changes to the average outstanding debt balances and interest rates during the first nine months of fiscal 2019.

Other Income (Loss)
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Other income (loss)
$
30,464

 
$
15,802

 
$
14,662

 
92.8
%
 
$
65,949

 
$
54,542

 
$
11,407

 
20.9
%

Comparison of other income (loss) for the three and nine months ended May 31, 2019, and 2018

Other income (loss) increased primarily as a result of a gain of $19.1 million recognized in connection with the acquisition of the remaining 75% ownership interest in WCD during the third quarter of fiscal 2019. The gain resulted from the remeasurement of our prior equity interest in WCD held before the acquisition of the remaining 75% interest and was partially offset by decreased interest income.

Equity Income (Loss) from Investments
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Equity income (loss) from investments*
$
65,170

 
$
59,308

 
$
5,862

 
9.9
%
 
$
173,394

 
$
137,111

 
$
36,283

 
26.5
%
* See Note 6, Investments, of the notes to the consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.


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Comparison of equity income (loss) from investments for the three months ended May 31, 2019, and 2018

We record equity income or loss for investments in which we have an ownership interest of 50% or less and have significant influence, but not control, for our proportionate share of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. Equity income (loss) from investments increased during the three months ended May 31, 2019, primarily due to higher equity income associated with our equity method investments in CF Nitrogen and Ventura Foods, which increased by approximately $6.3 million and $7.8 million, respectively. These increases were driven by improved urea and UAN pricing for CF Nitrogen and improved product margins and volumes for Ventura Foods. The increased equity income from CF Nitrogen and Ventura Foods was partially offset by lower equity income from various other equity method investments, including a $6.5 million decrease following the acquisition of the remaining 75% ownership interest in WCD during the third quarter of fiscal 2019, which was previously accounted for as an equity method investment.

Comparison of equity income (loss) from investments for the nine months ended May 31, 2019, and 2018

Equity income (loss) from investments increased during the nine months ended May 31, 2019, primarily due to higher equity income associated with our equity method investments in CF Nitrogen and Ventura Foods, which increased by approximately $38.4 million and $22.2 million, respectively. These increases were driven by improved urea and UAN pricing for CF Nitrogen and improved product margins and volumes for Ventura Foods. The increased equity income from CF Nitrogen and Ventura Foods was partially offset by lower equity income from various other equity method investments, including a $7.0 million decrease following the acquisition of the remaining 75% ownership interest in WCD during the third quarter of fiscal 2019, which was previously accounted for as an equity method investment.

Income Tax Expense (Benefit)
 
For the Three Months Ended May 31,
 
Change
 
For the Nine Months Ended May 31,
 
Change
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
2019
 
(As Restated) 2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Income tax expense (benefit)
$
6,866

 
$
55,219

 
$
(48,353
)
 
(87.6)%
 
$
40,534

 
$
(111,863
)
 
$
152,397

 
136.2%

Comparison of income tax expense (benefit) for the three months ended May 31, 2019, and 2018

During the three months ended May 31, 2019, we had a significant decrease of income tax expense when compared to the same period of the prior fiscal year as a result of decreased taxable income during the third quarter of fiscal 2019. The effective tax rates for the three months ended May 31, 2019, and May 31, 2018, were equal to 11.1% and 23.3%, respectively. The federal and state statutory rates applied to nonpatronage business activity were 24.6% and 29.4% for the three months ended May 31, 2019, and 2018, respectively. The income taxes and effective tax rate vary each year based upon profitability and nonpatronage business activity during each of the comparable years.

Comparison of income tax expense (benefit) for the nine months ended May 31, 2019, and 2018

During the nine months ended May 31, 2019, we had a significant increase of income tax expense when compared to the same period of the prior fiscal year as a result of the decrease in annual statutory federal corporate tax rate that occurred during the second quarter of fiscal 2018 which did not reoccur during the second quarter of fiscal 2019. The effective tax rate for the nine months ended May 31, 2019, was equal to 5.9%, compared to significant income tax benefits recognized during the nine months ended May 31, 2018. The federal and state statutory rates applied to nonpatronage business activity were 24.6% and 29.4% for the nine months ended May 31, 2019, and 2018, respectively. The income taxes and effective tax rate vary each year based upon profitability and nonpatronage business activity during each of the comparable years.



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Liquidity and Capital Resources

Summary

In assessing our financial condition, we consider factors such as working capital and internal benchmarking related to our applicable covenants and other financial criteria. We fund our operations primarily through a combination of cash flows from operations supplemented with borrowings under our revolving credit facilities. We fund our capital expenditures and growth primarily through cash, operating cash flow and long-term debt financing.

On May 31, 2019, we had working capital, defined as current assets less current liabilities, of $828.4 million and a current ratio, defined as current assets divided by current liabilities, of 1.1 compared to working capital of $759.0 million and a current ratio of 1.1 on August 31, 2018. On May 31, 2018, we had working capital of $420.9 million and a current ratio of 1.1 compared to working capital of $148.6 million and a current ratio of 1.0 on August 31, 2017.

As of May 31, 2019, we had cash and cash equivalents of $155.3 million, total equities of $8.4 billion, long-term debt (including current maturities) of $1.9 billion and notes payable of $2.8 billion. Our capital allocation priorities include paying our dividends, maintaining the safety and compliance of our operations, returning cash to our member-owners in the form of cash patronage and equity redemptions, paying down debt and taking advantage of strategic investment opportunities that benefit our owners. We will continue to consider opportunities to further diversify and enhance our sources and amounts of liquidity. These opportunities include reducing operating expenses, deploying and/or financing working capital more efficiently and identifying and disposing of nonstrategic or underperforming assets. We believe that cash generated by operating and investing activities, along with available borrowing capacity under our credit facilities, will be sufficient to support our operations for the foreseeable future and we expect to remain in compliance with our loan covenants.

Fiscal 2019 and 2018 Activity

We have a receivables and loans securitization facility (the "Securitization Facility") with certain unaffiliated financial institutions (the "Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries (the "Originators") sell trade accounts and notes receivable (the "Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the Purchasers, which is accounted for as a secured borrowing. During the period from July 2017 through an amendment of the Securitization Facility in June 2018, CHS accounted for Receivables sold under the Securitization Facility as a sale of financial assets pursuant to ASC 860, Transfers and Servicing, and the Receivables sold were derecognized from our Consolidated Balance Sheets. We use the proceeds from the sale of Receivables under the Securitization Facility for general corporate purposes and settlements are made on a monthly basis. The Securitization Facility was amended on June 27, 2019, to extend its termination date to June 26, 2020, which termination date may be further extended.

On September 4, 2018, we entered into a repurchase facility (the "Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, the Company is able to borrow up to $150 million, collateralized by a subordinated note issued by Cofina in favor of the Originators and representing a portion of the outstanding balance of the Receivables sold by the Originators to Cofina under the Securitization Facility. As of May 31, 2019, the outstanding balance under the Repurchase Facility was $150 million.

Cash Flows

The following table presents summarized cash flow data for the nine months ended May 31, 2019, and 2018:
 
 
 
Change
 
2019
 
2018
 
Dollars
 
Percent
 
(Dollars in thousands)
Net cash provided by (used in) operating activities
$
129,911

 
$
(194,418
)
 
$
324,329

 
166.8
 %
Net cash provided by (used in) investing activities
(592,490
)
 
(71,787
)
 
(520,703
)
 
(725.3
)%
Net cash provided by (used in) financing activities
174,343

 
573,860

 
(399,517
)
 
(69.6
)%
Effect of exchange rate changes on cash and cash equivalents
(382
)
 
1,030

 
(1,412
)
 
(137.1
)%
Net increase (decrease) in cash and cash equivalents and restricted cash
$
(288,618
)
 
$
308,685

 
$
(597,303
)
 
(193.5
)%


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Table of Contents


Comparison of cash flows for the nine months ended May 31, 2019, and 2018

The $324.3 million decrease in cash used in operating activities reflects increased net income and a reduction of inventories related to corn and soybeans as a result of trade disputes between the United States and foreign trade partners.

The $520.7 million increase in cash used in investing activities reflects the following:
The acquisition of the remaining 75% ownership interest in WCD during the third quarter of fiscal 2019.
Planned major maintenance at our McPherson, Kansas refinery during the third quarter of fiscal 2019.
Higher cash receipts in the prior year from the sale of certain assets, including the sale of our primary corporate office building in Inver Grove Heights, Minnesota, in the first quarter of fiscal 2018, which was subsequently leased back to us.
Increased acquisitions of property, plant and equipment.

The $399.5 million decrease in cash from financing activities reflects lower cash needs that resulted in reduced net borrowings from our lines of credit and long term-debt facilities, $75.7 million of cash patronage paid and higher equity redemptions paid during fiscal 2019.

Future Uses of Cash

We expect to utilize cash and cash equivalents, along with cash generated by operating activities to fund capital expenditures, major repairs, debt and interest payments, preferred stock dividends, patronage and equity redemptions. The following is a summary of our primary cash requirements for fiscal 2019:

Capital expenditures. We expect total capital expenditures for fiscal 2019 to be approximately $628.3 million, compared to capital expenditures of $355.4 million in fiscal 2018. Included in the capital expenditures for fiscal 2019 is approximately $137.1 million for the acquisition of property, plant and equipment at our Laurel, Montana and McPherson, Kansas, refineries and approximately $118.0 million for selective growth capital investments. During the nine months ended May 31, 2019, we acquired property, plant and equipment of $278.6 million. In March 2019, we acquired the remaining 75% ownership interest in WCD for $106.7 million, net of cash acquired, which is included in our Ag segment. This acquisition deepens our presence in the agronomy products market and is headquartered in Willmar, Minnesota. See Note 16, Acquisitions, of the notes to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.
Major repairs. Refineries have planned major maintenance to overhaul, repair, inspect and replace process materials and equipment (referred to as "turnaround") that typically occurs for a five-to-six-week period every 2-5 years. Our McPherson, Kansas, refinery finished their planned maintenance of approximately $220.0 million during the third quarter of fiscal 2019, all of which has been capitalized as of May 31, 2019.
Debt and interest. During the nine months ended May 31, 2019, we repaid $20 million of scheduled long-term debt maturities. We have scheduled long-term debt maturities of approximately $142 million during the remainder of fiscal 2019.
Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding at May 31, 2019. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal 2019.
Patronage and equity redemptions. We expect total equity redemptions of approximately $85.0 million be distributed in fiscal 2019 and to be in the form of qualified and non-qualified equity owned by individual producer members and associations. During the nine months ended May 31, 2019, we distributed cash patronage of $75.7 million and redeemed $76.4 million of member equity.

Future Sources of Cash
    
We fund our current operations primarily through a combination of cash flows from operations and committed and uncommitted revolving credit facilities, including our Securitization Facility. We believe these sources will provide adequate liquidity to meet our working capital needs. We fund certain of our long-term capital needs, primarily those related to acquisitions of property, plant and equipment from cash flows from operations and by issuing privately placed long-term debt and term loans. In addition, our wholly-owned subsidiary, CHS Capital, makes loans to member cooperatives, businesses and individual producers of agricultural products included in our cash flows from investing activities, and has financing sources as detailed below in CHS Capital Financing.


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Table of Contents


Working Capital Financing

We finance our working capital needs through committed and uncommitted lines of credit with domestic and international banks. We believe our current cash balances and our available capacity on our committed lines of credit will provide adequate liquidity to meet our working capital needs. Our primary line of credit is a five-year, unsecured revolving credit facility with a committed amount of $3.0 billion that expires in September 2020, which is expected to be renewed during the fourth quarter of fiscal 2019. The following table summarizes our primary lines of credit as of May 31, 2019:
Primary Revolving Credit Facilities
 
Maturities
 
Total Capacity
 
Borrowings Outstanding
 
Interest Rates
 
 
Fiscal Year
 
(Dollars in thousands)
 
Committed Five-Year Unsecured Facility
 
2021
 
$
3,000,000

 
$
902,000

 
LIBOR or Base Rate + 0.00% to 1.45%
Uncommitted Bilateral Facilities
 
2019
 
615,000

 
615,000

 
LIBOR or Base Rate + 0.00% to 1.05%

In addition to our primary revolving lines of credit, we have a three-year $315.0 million committed revolving pre-export credit facility for CHS Agronegocio Industria e Comercio Ltda ("CHS Agronegocio"), our wholly-owned subsidiary in Brazil. CHS Agronegocio uses the facility, which expires in April 2020, to finance its working capital needs related to its purchases and sales of grains, fertilizers and other agricultural products. As of May 31, 2019, the outstanding balance under the facility was $20.0 million.

In addition to our uncommitted bilateral facilities above, as of May 31, 2019, our wholly-owned subsidiaries, CHS Europe S.a.r.l and CHS Agronegocio, had uncommitted lines of credit with $288.4 million outstanding. In addition, our other international subsidiaries had lines of credit with a total of $130.2 million outstanding as of May 31, 2019, of which $11.6 million was collateralized.

On May 31, 2019, and August 31, 2018, we had total short-term indebtedness outstanding on these various primary and other facilities, as well as other miscellaneous short-term notes payable, totaling $2.0 billion and $1.4 billion, respectively.

Long-term Debt Financing

The following table presents summarized long-term debt data (including current maturities) as of May 31, 2019, and August 31, 2018:

 
May 31,
2019
 
August 31,
2018
 
(Dollars in thousands)
Private placement debt
$
1,503,766

 
$
1,510,547

Bank financing
366,000

 
366,000

Capital lease obligations
22,341

 
25,280

Other notes and contract payable
29,531

 
32,607

Deferred financing costs
(3,711
)
 
(4,179
)
 
$
1,917,927

 
$
1,930,255


CHS Capital Financing
    
For a description of the Securitization Facility, see above in Fiscal 2019 and 2018 Activity.    

CHS Capital has available credit under master participation agreements with several counterparties. Borrowings under these agreements are accounted for as secured borrowings and bear interest at variable rates ranging from 3.88% to 4.43% as of May 31, 2019. As of May 31, 2019, the total funding commitment under these agreements was $42.0 million, of which $20.1 million was borrowed.

CHS Capital sells loan commitments it has originated to ProPartners Financial on a recourse basis. The total outstanding commitments under the primary program totaled $120.5 million as of May 31, 2019, of which $40.2 million was borrowed under these commitments with an interest rate of 3.7%.


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CHS Capital borrows funds under short-term notes issued as part of a surplus funds program. Borrowings under this program are unsecured and bear interest at variable rates ranging from 0.35% to 1.4% as of May 31, 2019, and are due upon demand. Borrowings under these notes totaled $26.9 million as of May 31, 2019.

Covenants    

Our long-term debt is unsecured; however, restrictive covenants under various debt agreements have requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with all debt covenants and restrictions as of May 31, 2019. Based on our current 2019 projections, we expect continued covenant compliance in the near term.

In September 2015, we amended all outstanding notes to conform the financial covenants applicable thereto to those of our amended and restated five-year, unsecured, revolving credit facility. The amended notes provide that if our ratio of consolidated funded debt to consolidated cash flow is greater than a ratio of 3.0 to 1.0, the interest rate on all outstanding notes will be increased by 0.25% until the ratio becomes 3.0 or less. During the nine months ended May 31, 2019, and 2018, our ratio of funded debt to consolidated cash flow remained below 3.0 to 1.0.

Patronage and Equity Redemptions

In accordance with our bylaws and upon approval by our Board of Directors, annual net earnings from patronage sources are distributed to consenting patrons following the close of each fiscal year. Patronage earnings for the year ended August 31, 2018, were distributed during the nine months ended May 31, 2019, including the $75.7 million cash portion of this distribution. For the year ended August 31, 2017, our Board of Directors authorized only non-qualified distributions and no cash patronage was distributed during the nine months ended May 31, 2018.

In accordance with authorization from our Board of Directors, we expect total equity redemptions related to the year ended August 31, 2018, that will be distributed in fiscal 2019, to be approximately $85.0 million and to be in the form of qualified and non-qualified equity owned by individual producer members and associations. During the nine months ended May 31, 2019, $76.4 million of that amount was redeemed in cash, compared to $6.4 million redeemed in cash during the nine months ended May 31, 2018.

Preferred Stock    
    
The following is a summary of our outstanding preferred stock as of May 31, 2019, all shares of which are listed on the Global Select Market of Nasdaq:
 
 
Nasdaq symbol
 
Issuance date
 
Shares outstanding
 
Redemption value
 
Net proceeds (a)
 
Dividend rate
 (b) (c)
 
Dividend payment frequency
 
Redeemable beginning (d)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
8% Cumulative Redeemable
 
CHSCP
 
(e)
 
12,272,003

 
$
306.8

 
$
311.2

 
8.00
%
 
Quarterly
 
7/18/2023
Class B Cumulative Redeemable, Series 1
 
CHSCO
 
(f)
 
21,459,066

 
$
536.5

 
$
569.3

 
7.875
%
 
Quarterly
 
9/26/2023
Class B Reset Rate Cumulative Redeemable, Series 2
 
CHSCN
 
3/11/2014
 
16,800,000

 
$
420.0

 
$
406.2

 
7.10
%
 
Quarterly
 
3/31/2024
Class B Reset Rate Cumulative Redeemable, Series 3
 
CHSCM
 
9/15/2014
 
19,700,000

 
$
492.5

 
$
476.7

 
6.75
%
 
Quarterly
 
9/30/2024
Class B Cumulative Redeemable, Series 4
 
CHSCL
 
1/21/2015
 
20,700,000

 
$
517.5

 
$
501.0

 
7.50
%
 
Quarterly
 
1/21/2025
(a) 
Includes patrons' equities redeemed with preferred stock.
(b) 
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 LIBOR plus 4.298%, not to exceed 8.00% per annum, subsequent to March 31, 2024.
(c) 
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 LIBOR plus 4.155%, not to exceed 8.00% per annum, subsequent to September 30, 2024.

57

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(d) 
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.
(e) 
The 8% Cumulative Redeemable Preferred Stock was issued at various times from 2003 through 2010.
(f) 
Shares of Class B Cumulative Redeemable Preferred Stock, Series 1 were issued on September 26, 2013; August 25, 2014; March 31, 2016; and March 30, 2017.
Dividends paid on our preferred stock during each of the nine months ended May 31, 2019, and 2018, were $126.5 million.

Off-Balance Sheet Financing Arrangements

Operating Leases

Our minimum future lease payments required under noncancelable operating leases presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended August 31, 2018, have not materially changed during the nine months ended May 31, 2019.

Guarantees

We are a guarantor for lines of credit and performance obligations of related companies. As of May 31, 2019, our bank covenants allowed maximum guarantees of $1.0 billion, of which $244.0 million were outstanding. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties for which we provide guarantees were current as of May 31, 2019.

Debt

We have no material off-balance sheet debt.

Receivables Securitization Facility and Loan Participations

During fiscal 2018, we engaged in off-balance sheet arrangements through our Securitization Facility and certain loan participation agreements. In the fourth quarter of fiscal 2018, we amended the Securitization Facility so that the transfer of Receivables is accounted for as a secured borrowing. Refer to further details about these arrangements in Note 4, Receivables, of the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended August 31, 2018.

Contractual Obligations

Our contractual obligations presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended August 31, 2018, have not materially changed during the nine months ended May 31, 2019.

Critical Accounting Policies

Other than as described within the Significant Accounting Policies section of Note 1, Basis of Presentation and Significant Accounting Policies, to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q, our critical accounting policies as presented in Management’s Discussion and Analysis of Financial Condition and Results of Operations in our Annual Report on Form 10-K for the year ended August 31, 2018, have not materially changed during the nine months ended May 31, 2019.

Effect of Inflation and Foreign Currency Transactions

We believe that inflation and foreign currency fluctuations have not had a material effect on our operations since we conduct an insignificant portion of our business in foreign currencies.


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Table of Contents


Recent Accounting Pronouncements
    
See Note 1, Basis of Presentation and Significant Accounting Policies, to our unaudited consolidated financial statements included in this Quarterly Report on Form 10-Q for a description of the recent accounting pronouncements that are applicable to us.

ITEM 3.     QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We did not experience any material changes in market risk exposures for the period ended May 31, 2019, that affect the quantitative and qualitative disclosures presented in our Annual Report on Form 10-K for the year ended August 31, 2018.


ITEM 4.    CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures    
    
Under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, we evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the "Exchange Act")), as of May 31, 2019. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer concluded that, as of that date, our disclosure controls and procedures were not effective because of the material weaknesses in our internal control over financial reporting disclosed within Management's Annual Report on Internal Control Over Financial Reporting in Item 9A of our Annual Report on Form 10-K for the year ended August 31, 2018.

Status of Remediation of Material Weaknesses in Internal Control Over Financial Reporting
    
Remediation Actions Taken During Previous Periods
    
The following remediation efforts were taken during previous periods:
Formed a steering committee consisting of senior finance, legal, information technology ("IT"), operational and human resources leaders who are charged with overseeing the design and implementation of remediation plans and who operate under the oversight of the Audit Committee of our Board of Directors ("Audit Committee").
Engaged outside consultants who are recognized experts in the areas of internal controls, technical accounting, IT systems, process improvement, IT user access controls in identified key systems and project management to assist management in re-evaluating the design of internal controls and accounting processes.
Completed the development of detailed remediation plans in response to each of the material weaknesses previously identified and began executing those plans.
Revised and issued new policies related to the preparation and review of journal entries and account reconciliations and drafted a new segregation of duties policy.
Completed trainings by the end of January 2019, by division, on the newly revised and issued policies on proper preparation and approval of account reconciliations and journal entries.
Formed an intercompany transactions task force focused on designing and implementing controls to ensure all transactions are properly identified as intercompany/non-intercompany and eliminated as appropriate. As a result, processes have been changed and improved, including improved communication and identification of intercompany and non-intercompany transactions.
Instituted additional training programs that will continue on a regular basis related to internal control over financial reporting for our finance and accounting personnel.
Conducted training for accounting and finance personnel on proper identification and accounting for derivatives under ASC 815.
Enhanced and supplemented the Grain Marketing finance, IT and accounting team by increasing the number of roles, reassigning responsibilities, and established a plan for the hiring additional individuals with an appropriate level of knowledge and experience in internal control over financial reporting commensurate with the financial reporting complexities of the organization.


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Table of Contents


Remediation Actions Taken During the Quarter Ended May 31, 2019

The following remediation efforts were taken during the quarter ended May 31, 2019:
Held bi-weekly steering committee meetings consisting of senior finance, legal, IT, operational and human resources leaders to oversee the design and implementation of remediation plans. At each of its meetings, the Audit Committee has conducted oversight reviews of the status and progress of the remediation.
Retained and utilized expertise and resources provided by outside consultants and service providers, including consideration and implementation of recommendations provided in relation to internal controls, technical accounting, process improvements, project management and IT user access controls identified in key systems.
Continued developing, executing and monitoring of detailed remediation plans in response to each of the material weaknesses previously identified.
Monitored and evaluated employee performance in accordance the revised and new policies related to the preparation and review of journal entries and account reconciliations.
Monitored the performance of a special employee task force assigned to consider how to effectively remediate the material weaknesses relating to intercompany accounts, including the implementation and execution of new controls designed to ensure that all intercompany transactions are properly identified as intercompany/non-intercompany and eliminated as appropriate.
Hired additional employee resources in our Grain Marketing finance, IT, accounting and internal controls areas, each of whom has, for their role, an appropriate level of knowledge and experience in internal controls over financial reporting commensurate with the financial reporting complexities of the organization.
Issued and began implementation of a new segregation of duties policy, including the use of a segregation of duties task force responsible for monitoring the implementation.

Ongoing Remediation Efforts

We are continuing to enhance our overall financial control environment through the following:
Continued execution of our plans designed to remediate the previously-identified material weaknesses.
Continued hiring for our teams in accounting, finance, IT and other areas as necessary to ensure the size and skill set of those teams is adequate given the size, scale and complexity of our organization, industry and the required internal controls over financial reporting.

Changes in Internal Control Over Financial Reporting
    
The remediation activities described above represent changes in internal control over financial reporting during the quarter ended May 31, 2019, that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.


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Table of Contents


PART II. OTHER INFORMATION

ITEM 1.    LEGAL PROCEEDINGS

We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our business. The resolution of any such matters may affect consolidated net income for any fiscal period; however, our management believes any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year.
    
ITEM 1A.     RISK FACTORS

There were no material changes to our risk factors during the period covered by this report. See the discussion of risk factors in Item 1A of our Annual Report on Form 10-K for the year ended August 31, 2018.

ITEM 6.     EXHIBITS
Exhibit
Description
CHS Inc. Senior Leadership Team Retention Award Document (Incorporated by reference to our Form 10-Q for the quarterly period ended February 28, 2019, filed April 3, 2019).
Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
Certification of the Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101
The following financial information from CHS Inc.’s Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2019, formatted in Extensible Business Reporting Language (XBRL): (i) the Consolidated Balance Sheets, (ii) the Consolidated Statements of Operations, (iii) the Consolidated Statements of Comprehensive Income, (iv) the Consolidated Statements of Cash Flows, and (v) the Notes to the Consolidated Financial Statements.
______________________________________



61

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

CHS Inc.
(Registrant)

Date:
July 15, 2019
 
By:
 
/s/ Timothy Skidmore
 
 
 
 
 
Timothy Skidmore
 
 
 
 
 
Executive Vice President and Chief Financial Officer





62
Exhibit
Exhibit 31.1

CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Jay D. Debertin, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2019, 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.

Date: July 15, 2019
 
/s/ Jay D. Debertin
 
Jay D. Debertin
 
President and Chief Executive Officer

Exhibit
Exhibit 31.2

CERTIFICATION PURSUANT TO SECTION 302 OF THE
SARBANES-OXLEY ACT OF 2002

I, Timothy Skidmore, certify that:
1.
I have reviewed this Quarterly Report on Form 10-Q for the quarterly period ended May 31, 2019, 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.

Date: July 15, 2019
 
/s/ Timothy Skidmore
 
Timothy Skidmore
 
Executive Vice President and Chief Financial Officer

Exhibit
Exhibit 32.1

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report on Form 10-Q of CHS Inc. (the “Company”) for the quarterly period ended May 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Jay D. Debertin, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(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 15, 2019







Exhibit
Exhibit 32.2

CERTIFICATION PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002
(18 U.S.C. SECTION 1350)

In connection with the Quarterly Report on Form 10-Q of CHS Inc. (the “Company”) for the quarterly period ended May 31, 2019, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Timothy Skidmore, Executive Vice President and Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:
(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 15, 2019

v3.19.2
Document and Entity Information - shares
9 Months Ended
May 31, 2019
Jul. 15, 2019
DEI [Abstract]    
Entity Registrant Name CHS Inc.  
Entity Central Index Key 0000823277  
Current Fiscal Year End Date --08-31  
Entity Filer Category Non-accelerated Filer  
Entity Small Business false  
Entity Emerging Growth Company false  
Entity Current Reporting Status Yes  
Document Type 10-Q  
Document Period End Date May 31, 2019  
Document Fiscal Year Focus 2019  
Document Fiscal Period Focus Q3  
Amendment Flag false  
Entity Common Stock, Shares Outstanding   0
v3.19.2
Consolidated Balance Sheets (Unaudited) - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Current assets [Abstract]    
Cash and cash equivalents $ 155,252 $ 450,617
Receivables 2,976,452 2,460,401
Inventories 3,338,321 2,768,649
Derivative assets 265,155 329,757
Margin and related deposits 239,029 151,150
Supplier advance payments 397,509 288,423
Other current assets 317,885 244,208
Total current assets 7,689,603 6,693,205
Investments 3,738,140 3,711,925
Property, plant and equipment 5,032,324 5,141,719
Other assets 1,113,416 834,329
Total assets 17,573,483 16,381,178
Current liabilities [Abstract]    
Notes payable 2,763,225 2,272,196
Current portion of long-term debt 167,772 167,565
Customer margin deposits and credit balances 159,371 137,395
Customer advance payments 490,183 409,088
Accounts payable 2,158,431 1,844,489
Derivative liabilities 308,118 438,465
Accrued expenses 541,164 511,032
Dividends and equities payable 272,978 153,941
Total current liabilities 6,861,242 5,934,171
Long-term debt 1,750,155 1,762,690
Long-term deferred tax liabilities 218,107 182,770
Other liabilities 332,270 336,519
Commitments and contingencies (Note 15)
Equities:    
Preferred stock 2,264,038 2,264,038
Equity certificates 4,516,866 4,609,456
Accumulated other comprehensive loss (211,661) (199,915)
Capital reserves 1,834,030 1,482,003
Total CHS Inc. equities 8,403,273 8,155,582
Noncontrolling interests 8,436 9,446
Total equities 8,411,709 8,165,028
Total liabilities and equities $ 17,573,483 $ 16,381,178
v3.19.2
Consolidated Statements of Operations (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Income Statement [Abstract]        
Revenues $ 8,497,941 $ 9,087,328 $ 23,465,769 $ 24,099,365
Cost of goods sold 8,274,170 8,841,696 22,343,944 23,398,272
Gross profit 223,771 245,632 1,121,825 701,093
Marketing, general and administrative 183,723 162,424 523,648 490,329
Reserve and impairment charges (recoveries), net 33,804 (3,811) 27,790 (18,944)
Operating earnings (loss) 6,244 87,019 570,387 229,708
(Gain) loss on disposal of business (2,474) (124,050) (3,886) (131,755)
Interest Expense 42,773 49,340 122,950 130,218
Other (income) loss (30,464) (15,802) (65,949) (54,542)
Equity (income) loss from investments (65,170) (59,308) (173,394) (137,111)
Income (loss) before income taxes 61,579 236,839 690,666 422,898
Income tax expense (benefit) 6,866 55,219 40,534 (111,863)
Net income (loss) 54,713 181,620 650,132 534,761
Net income (loss) attributable to noncontrolling interests 93 (187) (758) (699)
Net income (loss) attributable to CHS Inc. $ 54,620 $ 181,807 $ 650,890 $ 535,460
v3.19.2
Consolidated Statements of Comprehensive Income (Unaudited) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Net income (loss) $ 54,713 $ 181,620 $ 650,132 $ 534,761
Comprehensive Income (Loss), Net of Tax, Including Portion Attributable to Noncontrolling Interest [Abstract]        
Postretirement benefit plan activity, net of tax expense (benefit) 1,496 3,417 5,599 8,153
Unrealized net gain (loss) on available for sale investments, net of tax expense (benefit) 0 6,286 0 13,480
Cash flow hedges, net of tax expense (benefit) (15,817) 413 (7,155) 1,472
Foreign currency translation adjustment, net of tax expense (benefit) (7,992) (10,188) (5,484) (10,047)
Other comprehensive income (loss), net of tax (22,313) (72) (7,040) 13,058
Comprehensive income (loss) 32,400 181,548 643,092 547,819
Less comprehensive income attributable to noncontrolling interests 93 (187) (758) (699)
Comprehensive Income (Loss) Attributable to CHS $ 32,307 $ 181,735 $ 643,850 $ 548,518
v3.19.2
Consolidated Statement of Cash Flows (Unaudited) - USD ($)
$ in Thousands
9 Months Ended
May 31, 2019
May 31, 2018
Cash flows from operating activities:    
Net income (loss) $ 650,132 $ 534,761
Adjustments to reconcile net income to net cash provided by (used in) operating activities:    
Depreciation and amortization 352,838 358,134
Amortization of deferred major repair costs 48,960 43,908
Equity (income) loss from investments (173,394) (137,111)
Distributions from equity investments 133,720 97,665
Provision for doubtful accounts 36,874 (4,145)
Gain and recovery on disposal of business (3,476) (131,755)
Deferred taxes 34,786 (137,023)
Other, net (42,681) 15,670
Changes in operating assets and liabilities, net of acquisitions:    
Receivables (446,846) (194,546)
Inventories (199,339) (314,439)
Derivative assets 70,559 (22,454)
Margin and related deposits (87,911) (47,079)
Supplier advance payments (157,560) (177,373)
Other current assets and other assets (61,999) 21,074
Customer margin deposits and credit balances 17,268 (19,914)
Customer advance payments (58,222) (51,180)
Accounts payable and accrued expenses 174,855 9,617
Derivative liabilities (137,790) 11,614
Other liabilities (20,863) (49,842)
Net cash provided by (used in) operating activities 129,911 (194,418)
Cash flows from investing activities:    
Acquisition of property, plant and equipment (278,589) (249,078)
Proceeds from disposition of property, plant and equipment 46,414 80,045
Proceeds from sale of business 5,044 234,914
Expenditures for major repairs (210,837) (39,363)
Investments redeemed 7,203 6,607
Changes in CHS Capital notes receivable, net (112,608) (83,908)
Financing extended to customers (10,492) (72,106)
Payments from customer financing 84,189 38,725
Business acquisitions, net of cash acquired 119,421 0
Other investing activities, net (3,393) 12,377
Net cash provided by (used in) investing activities (592,490) (71,787)
Cash flows from financing activities:    
Proceeds from lines of credit and long-term borrowings 20,715,683 29,802,708
Payments on lines of credit, long-term borrowings and capital lease obligations (20,236,780) (29,025,052)
Preferred stock dividends paid (126,501) (126,501)
Redemptions of equities (76,397) (6,391)
Cash patronage dividends paid (75,669) 0
Other financing activities, net (25,993) (70,904)
Net cash provided by (used in) financing activities 174,343 573,860
Effect of exchange rate changes on cash and cash equivalents (382) 1,030
Cash, Cash Equivalents, Restricted Cash and Restricted Cash Equivalents, Period Increase (Decrease), Including Exchange Rate Effect (288,618) 308,685
Cash and cash equivalents and restricted cash at beginning of period 543,940 272,272
Cash and cash equivalents and restricted cash at end of period $ 255,322 $ 580,957
v3.19.2
Organization, Basis of Presentation and Significant Accounting Policies
9 Months Ended
May 31, 2019
Accounting Policies [Abstract]  
Organization, Consolidation, Basis of Presentation, Business Description and Accounting Policies
        Basis of Presentation and Significant Accounting Policies

Basis of Presentation

The unaudited Consolidated Balance Sheet as of May 31, 2019, the Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018, the Consolidated Statements of Comprehensive Income for the three and nine months ended May 31, 2019, and 2018, and the Consolidated Statements of Cash Flows for the nine months ended May 31, 2019, and 2018, reflect, in the opinion of our management, all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full fiscal year because of, among other things, the seasonal nature of our businesses. Our Consolidated Balance Sheet data as of August 31, 2018, has been derived from our audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP").

As described in Note 2, Restatement of Previously Issued Financial Information, the consolidated financial statements for the three and nine months ended May 31, 2018, have been restated to reflect the correction of misstatements. We have also restated all relevant amounts impacted within the notes to the consolidated financial statements.

The notes to our consolidated financial statements reference our Energy, Ag and Nitrogen Production reportable segments, as well as our Corporate and Other category, which represents an aggregation of individually immaterial operating segments. See Note 12, Segment Reporting, for more information related to our reportable segments.
 
Our consolidated financial statements include the accounts of CHS and all of our wholly owned and majority owned subsidiaries. The effects of all significant intercompany transactions have been eliminated.

These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, 2018, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC").

Significant Accounting Policies

The following significant accounting policies have been updated since our Annual Report on Form 10-K for the year ended August 31, 2018, as a result of the adoption of certain new accounting pronouncements effective for us during the nine months ended May 31, 2019.

Restricted Cash

Restricted cash is included in our Consolidated Balance Sheets within other current assets (current portion) and other assets (non-current portion), as appropriate, and primarily relates to customer deposits for futures and option contracts associated with regulated commodities held in separate accounts as required under federal and other regulations. Pursuant to the requirements of the Commodity Exchange Act, such funds must be carried in separate accounts that are designated as segregated customer accounts, as applicable. Restricted cash also includes funds held in escrow pursuant to applicable regulations limiting their usage.

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within our Consolidated Balance Sheets that aggregates to the amount presented in our Consolidated Statements of Cash Flows. During the nine months ended May 31, 2019, we updated the presentation of our Consolidated Statements of Cash Flows to include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on our Consolidated Statements of Cash Flows.

 
May 31, 2019
 
August 31, 2018
 
May 31, 2018
 
August 31, 2017
 
(Dollars in thousands)
Cash and cash equivalents
$
155,252

 
$
450,617

 
$
533,887

 
$
181,379

Restricted cash included in other current assets
99,398

 
90,193

 
43,912

 
83,561

Restricted cash included in other assets
672

 
3,130

 
3,158

 
7,332

Total cash and cash equivalents and restricted cash
$
255,322

 
$
543,940

 
$
580,957

 
$
272,272



Investments
    
As described in the "Recent Accounting Pronouncements" section below, we adopted Accounting Standards Update ("ASU") No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which was effective for us September 1, 2018. As a result, all equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. We have elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at cost less impairment plus or minus observable price changes in orderly transactions.

Investments in other cooperatives are recorded in a manner similar to equity investments without readily determinable fair values, plus patronage dividends received in the form of capital stock and other equities. Patronage dividends are recorded as a reduction to cost of goods sold at the time qualified written notices of allocation are received. Investments in debt and equity instruments are carried at amounts that approximate fair values.

Revenue Recognition

We provide a wide variety of products and services, ranging from agricultural inputs such as fuels, farm supplies and agronomy products, to agricultural outputs that include grain and oilseed, processed grains and oilseeds and food products, and ethanol production and marketing. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the goods has transferred to the customer. For the majority of our contracts with customers, control transfers to customers at a point-in-time when the goods/services have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods/services transfer to the customer. In limited arrangements, control transfers over time as the customer simultaneously receives and consumes the benefits of the service as we complete the performance obligation(s).

Revenue is recognized at the transaction price that we expect to be entitled to in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. We follow a policy of recognizing revenue at the point-in-time or over the period of time we satisfy our performance obligation by transferring control over a product or service to a customer in accordance with the underlying contract. For physically settled derivative sales contracts that are outside the scope of the revenue guidance, we recognize revenue when control of the inventory is transferred within the meaning of Accounting Standards Codification ("ASC") Topic 606.

Recent Accounting Pronouncements

Adopted

In March 2017, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Postretirement Benefit Cost. This ASU changes the presentation of net periodic pension cost and net periodic postretirement benefit cost in the Consolidated Statements of Operations. This ASU provides that the service cost component should be included in the same income statement line item as other compensation costs arising from services rendered by the employees during the period. The other components of net periodic benefit cost (such as interest, expected return on plan assets, prior service cost amortization and actuarial gain/loss amortization) are required to be presented in the Consolidated Statements of Operations separately outside of operating income. Additionally, only service cost may be capitalized in assets. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The guidance on the presentation of the components of net periodic benefit cost in the Consolidated Statements of Operations has been applied retrospectively, and the guidance regarding the capitalization of the service cost component in assets has been applied prospectively. The adoption of this guidance had no impact on previously reported income (loss) before income taxes or net income attributable to CHS; however, non-service cost components of net periodic benefit costs in prior periods have been reclassified from cost of goods sold and marketing, general and administrative expenses, and are now reported outside of operating income within other (income) loss. Refer to Note 2, Restatement of Previously Issued Financial Information, for the amounts of the retrospective adjustments recorded as a result of the adoption of this guidance.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments within this ASU narrow the existing definition of a business and provide a more robust framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The definition of a business impacts various areas of accounting, including acquisitions, disposals and goodwill. Under the new guidance, fewer acquisitions are expected to be considered businesses. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The guidance has been applied prospectively. The adoption of this amended guidance did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Consolidated Statements of Cash Flows, as well as disclosure about the nature of restrictions on cash, cash equivalents and amounts generally described as restricted cash. Additionally, the guidance requires disclosure of the total amount of cash, cash equivalents and restricted cash for each comparative period for which a Consolidated Balance Sheet is presented. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The amendments in this ASU were applied retrospectively to all periods presented. Refer to the additional disclosures pertaining to restricted cash within the Restricted Cash significant accounting policy above. The adoption of this amended guidance did not have a material impact on our Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU is intended to reduce existing diversity in practice in how certain cash receipts and payments are presented and classified in the Consolidated Statements of Cash Flows. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The adoption of this amended guidance did not have a material impact on our Consolidated Statements of Cash Flows.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in fair value recognized in net income. This guidance eliminates the previous cost method of accounting for certain equity securities that did not have readily determinable fair values. This guidance also simplifies the impairment assessment and allows for a fair value measurement alternative for equity investments without readily determinable fair values and includes presentation and disclosure changes. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year and was applied following a prospective basis. We have elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at cost less impairment plus or minus observable price changes in orderly transactions. As a result of the adoption of this amended guidance, we reclassified approximately $4.7 million from accumulated other comprehensive loss to the opening balance of capital reserves within our Consolidated Balance Sheet as of September 1, 2018, which did not have a material impact on our consolidated financial statements.
    
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments within this ASU, as well as within the additional clarifying ASUs issued by the FASB, provide a single comprehensive model to be used to determine the measurement of revenue and timing of recognition for revenue arising from contracts with customers. The core principle of the amended guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition guidance includes a five-step model for the recognition of revenue, including (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue when (or as) an entity satisfies a performance obligation. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year, and we elected to apply the modified retrospective method of adoption to all contracts as of the date of initial application. The majority of our revenues are attributable to forward commodity sales contracts, which are considered to be physically settled derivatives under ASC 815, Derivatives and Hedging (Topic 815). Revenues arising from derivative contracts accounted for under ASC 815 are specifically outside the scope of ASC Topic 606 and therefore not subject to the provisions of the new revenue recognition guidance. As such, the impact of adoption of the new revenue guidance has only been assessed for our revenue contracts that are not accounted for as derivative arrangements. The primary impact of adoption was changes to the timing of revenue recognition for certain revenue streams that had an immaterial impact. Following the modified retrospective method of adoption, we determined the cumulative effect of adoption for all contracts with customers that had not been completed as of the adoption date was less than $1.0 million. Additionally, the impact of applying ASC Topic 606 compared to previous guidance during the three and nine months ended May 31, 2019, was an overall decrease to revenues of $14.2 million and $36.9 million, respectively. Other financial statement impacts related to the adoption of ASC Topic 606 were not material. Our revenue recognition accounting policy and additional information related to our revenue streams and related performance obligations required to be satisfied in order to recognize revenue can be found within the Significant Accounting Policies section above and within Note 3, Revenues.

Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU reduces the complexity of accounting for implementation, setup and other upfront costs incurred in a cloud computing service arrangement that is hosted by a vendor. This ASU aligns the accounting for implementation costs of hosting arrangements, irrespective of whether the arrangements convey a license to the hosted software. This ASU permits either a prospective or retrospective transition approach. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year, with early adoption permitted. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715-20, Compensation - Retirement Benefits - Defined Benefit Plans - General. This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and (b) the effects of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for postretirement health care benefits. The new disclosures include the interest crediting rates for cash balance plans and an explanation of significant gains and losses related to changes in benefit obligations. This ASU is effective for us beginning September 1, 2021, for our fiscal year 2022 and for interim periods within that fiscal year, with early adoption permitted. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. Specifically, the guidance removes the requirement to disclose the amount and reasons for any transfers between Level 1 and Level 2 of the fair value hierarchy and removes the requirement to disclose a description of the valuation processes used to value Level 3 fair value measurements. The guidance also requires additional disclosures surrounding Level 3 changes in unrealized gains/losses included in other comprehensive income, as well as the range and weighted average of significant unobservable inputs calculation. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year. Early adoption is permitted. We elected to remove the disclosures permitted by ASU No. 2018-13 during the fourth quarter of fiscal 2018, but have not early adopted the new required additional disclosures, which is permitted by the guidance. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU introduce a new approach, based on expected losses, to estimate credit losses on certain types of financial instruments. This ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses associated with most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. Entities are required to apply the provisions of this ASU as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year. We are currently evaluating the impact the adoption will have on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which replaces the existing guidance within ASC 840, Leases. The amendments within this ASU, as well as within additional clarifying ASUs issued by the FASB, introduce a lessee model requiring entities to recognize assets and liabilities for most leases, but continue recognizing the associated expenses in a manner similar to existing accounting guidance. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which amends ASU No. 2016-02, Leases. This ASU is effective for us beginning September 1, 2019, for our fiscal year 2020 and for interim periods within that fiscal year. We have initiated our assessment of the new lease standard, including the utilization of surveys to gather more information about existing leases and the implementation of a new lease software to improve the collection, maintenance, and aggregation of lease data necessary for the expanded reporting and disclosure requirements under the new lease standard. It is expected that the primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases as right of use assets and liabilities on our Consolidated Balance Sheets. This will result in a material increase in assets and liabilities recorded on our Consolidated Balance Sheets. Although we expect the new lease guidance will have a material impact on our Consolidated Balance Sheets, we are continuing to evaluate the practical expedient guidance provisions available and the extent of potential impacts on our consolidated financial statements, processes and internal controls.
v3.19.2
Restatement of Previously Issued Financial Information (Notes)
9 Months Ended
May 31, 2019
Accounting Changes and Error Corrections [Abstract]  
Restatement of Previously Issued Financial Information
Restatement of Previously Issued Financial Information

The consolidated financial statements for the three and nine months ended May 31, 2018, have been restated to reflect the correction of misstatements. We have also restated all amounts impacted within the notes to the consolidated financial statements. A description of the adjustments and their impact on the previously issued financial information are included below.
 
Descriptions of Restatement Adjustments
 
During the preparation of our Annual Report on Form 10-K for the year ended August 31, 2018, we noted potentially excessive valuations in the net derivative asset valuations relating to certain rail freight contracts purchased in connection with our North American grain marketing operations. An investigation concluded that the rail freight misstatements included in our consolidated financial statements were due to intentional misconduct by a former employee in our rail freight trading operations, as well as due to rail freight contracts and certain non-rail contracts not meeting the technical accounting requirements to qualify as derivative financial instruments. The misconduct consisted of the former employee manipulating the mark-to-market valuation of rail cars that were the subject of rail freight purchase contracts and manipulating the quantity of rail cars included in the monthly mark-to-market valuation. In addition, the investigation revealed intentional misstatements were made by the former employee to our independent registered public accounting firm in connection with its audit of our consolidated financial statements for the fiscal year ended August 31, 2017. During the course of, and as a result of, the investigation, we terminated the former employee and have taken additional personnel actions.

As described in additional detail in the Explanatory Note in our Annual Report on Form 10-K for the year ended August 31, 2018, the Company restated its audited consolidated financial statements for the fiscal years ended August 31, 2017 and 2016, and our unaudited consolidated financial statements for the quarterly periods ended November 30, 2017 and 2016, February 28, 2018 and 2017, and May 31, 2018 and 2017. As a result of the misstatements, we restated our interim consolidated financial statements for the three and nine months ended May 31, 2018. In addition to the adjustments related to freight derivatives and related misstatements, we also made adjustments related to certain intercompany balances and other historical misstatements unrelated to the freight derivatives and related misstatements.

Consolidated Financial Statement Adjustment Tables

The following tables present the impacts of the restatement adjustments to our unaudited Consolidated Statements of Operations and unaudited Consolidated Statements of Comprehensive Income for the three and nine months ended May 31, 2018, and to our unaudited Consolidated Statement of Cash Flows for the nine months ended May 31, 2018. The restatement references identified in the following tables directly correlate to the restatement adjustments detailed below. 
 
The categories of restatement adjustments and their impact on previously reported consolidated financial statements are described below. 

(a) Freight derivatives and related misstatements - Corrections for freight derivatives and related misstatements were driven by the misstatement of amounts associated with both the value and quantity of rail freight contracts, as well as due to rail and certain non-rail freight contracts not meeting the technical accounting requirements to qualify as derivative financial instruments. In addition to the elimination of the underlying freight derivative assets and liabilities and related impacts on revenues and cost of goods sold, additional adjustments were recorded to account for prepaid freight capacity balances in relevant periods. Additional details related to the impact of the freight derivatives and related misstatements and their impact on each period are discussed in restatement reference (a).

(b) Intercompany misstatements - As a result of the work performed in relation to the freight misstatement, additional misstatements related to the incorrect elimination of intercompany balances were also identified and corrected within the consolidated financial statements. Certain of these intercompany misstatements resulted in a misstatement of various financial statement line items; however, the intercompany misstatements did not result in a material misstatement of income (loss) before income taxes or net income (loss). Additional details related to the impact of the intercompany misstatements and their impact on each period are discussed in restatement reference (b).

(c) Other misstatements - We made adjustments for other previously identified misstatements unrelated to the freight derivatives and related misstatements that were not material, individually or in the aggregate, to our consolidated financial statements. These other misstatements related primarily to certain misclassifications, adjustments to revenues and cost of goods sold, and adjustments to various income tax and indirect tax accrual accounts. Additional details related to the impact of the other misstatements and their impact on each period are discussed in restatement reference (c).


CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
 
For the Three Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
Revenues
$
9,027,525

 
$
59,803

 
$
9,087,328

 
$

 
$
9,087,328

 
b, c
Cost of goods sold
8,728,914

 
112,447

 
8,841,361

 
335

 
8,841,696

 
a, b, c
Gross profit
298,611

 
(52,644
)
 
245,967

 
(335
)
 
245,632

 
 
Marketing, general and administrative
161,578

 
1

 
161,579

 
845

 
162,424

 
c
Reserve and impairment charges (recoveries), net
(3,811
)
 

 
(3,811
)
 

 
(3,811
)
 

Operating earnings (loss)
140,844

 
(52,645
)
 
88,199

 
(1,180
)
 
87,019

 
 
(Gain) loss on disposal of business
(124,050
)
 

 
(124,050
)
 

 
(124,050
)
 
 
Interest expense
49,340

 

 
49,340

 

 
49,340

 
 
Other (income) loss
(14,622
)
 

 
(14,622
)
 
(1,180
)
 
(15,802
)
 
 
Equity (income) loss from investments
(59,308
)
 

 
(59,308
)
 

 
(59,308
)
 
 
Income (loss) before income taxes
289,484


(52,645
)
 
236,839

 

 
236,839

 
 
Income tax expense (benefit)
60,338

 
(5,119
)
 
55,219

 

 
55,219

 
a
Net income (loss)
229,146

 
(47,526
)
 
181,620

 

 
181,620

 
 
Net income (loss) attributable to noncontrolling interests
(187
)
 

 
(187
)
 

 
(187
)
 
 
Net income (loss) attributable to CHS Inc. 
$
229,333

 
$
(47,526
)
 
$
181,807

 
$

 
$
181,807

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-07 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $29.8 million reduction of income before income taxes and a $24.7 million reduction of net income. These adjustments related to a $29.8 million increase of cost of goods sold and a $5.1 million decrease of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements
(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $38.8 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements
(c) The correction of other misstatements resulted in a $22.8 million decrease of income before income taxes and net income. The $22.8 million decrease of income before income taxes related primarily to an $18.8 million increase of cost of goods sold due to adjustments associated with the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018. The remaining decrease relates to an $11.8 million increase of revenues and a $14.5 million increase of cost of goods sold related to the timing of revenue recognition, as well as a $1.3 million increase of cost of goods sold related to the valuation of crack spread derivatives.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations, primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $9.2 million increase of revenues and cost of goods sold.



 
For the Nine Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
Revenues
$
23,927,508

 
$
171,857

 
$
24,099,365

 
$

 
$
24,099,365

 
b, c
Cost of goods sold
23,173,151

 
224,116

 
23,397,267

 
1,005

 
23,398,272

 
a, b, c
Gross profit
754,357

 
(52,259
)
 
702,098

 
(1,005
)
 
701,093

 
 
Marketing, general and administrative
488,459

 
(667
)
 
487,792

 
2,537

 
490,329

 
c
Reserve and impairment charges (recoveries), net
(18,944
)
 

 
(18,944
)
 

 
(18,944
)
 
 
Operating earnings (loss)
284,842

 
(51,592
)
 
233,250

 
(3,542
)
 
229,708

 
 
(Gain) loss on disposal of business
(131,755
)
 

 
(131,755
)
 

 
(131,755
)
 
 
Interest expense
130,218

 

 
130,218

 

 
130,218

 
 
Other (income) loss
(51,000
)
 

 
(51,000
)
 
(3,542
)
 
(54,542
)
 
 
Equity (income) loss from investments
(137,111
)
 

 
(137,111
)
 

 
(137,111
)
 
 
Income (loss) before income taxes
474,490

 
(51,592
)
 
422,898

 

 
422,898

 
 
Income tax expense (benefit)
(100,901
)
 
(10,962
)
 
(111,863
)
 

 
(111,863
)
 
a, c
Net income (loss)
575,391

 
(40,630
)
 
534,761

 

 
534,761

 
 
Net income (loss) attributable to noncontrolling interests
(699
)
 

 
(699
)
 

 
(699
)
 
 
Net income (loss) attributable to CHS Inc. 
$
576,090

 
$
(40,630
)
 
$
535,460

 
$

 
$
535,460

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-07 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $52.9 million reduction of income before income taxes and a $48.5 million reduction of net income. These adjustments related to a $52.9 million increase of cost of goods sold and a $4.4 million increase of income tax benefit related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements
(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $189.0 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements
(c) The correction of other misstatements resulted in a $1.3 million increase of income before income taxes and a $7.9 million increase of net income. The $1.3 million increase of income before income taxes relates to a combination of offsetting misstatements, including a $13.7 million decrease of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018, a $6.6 million decrease of cost of goods sold related to the valuation of crack spread derivatives, and a $2.6 million decrease in expense related to postretirement benefit plan activity that resulted from a timing difference associated with recording certain benefit plan expenses (included in cost of goods sold and marketing, general and administrative expenses). The overall increase was mostly offset by an $18.8 million increase of cost of goods sold due to a timing difference associated with the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018. The increase in income before income taxes and net income was also impacted by a $7.0 million increase of revenue and a $9.9 million increase of cost of goods sold related to the timing of revenue recognition. In addition to the increase of income before income taxes, an income tax benefit of $6.6 million was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations, primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $24.1 million decrease of revenues and cost of goods sold.
CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended
May 31, 2018
 
For the Nine Months Ended
May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Restatement References
 
(Dollars in thousands)
 
 
Net income (loss)
$
229,146

 
$
(47,526
)
 
$
181,620

 
$
575,391

 
$
(40,630
)
 
$
534,761

 
a, c
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
 
 
 
 
Postretirement benefit plan activity
3,417

 

 
3,417

 
10,755

 
(2,602
)
 
8,153

 
c
Unrealized net gain (loss) on available for sale investments
6,286

 

 
6,286

 
13,480

 

 
13,480

 
 
Cash flow hedges
413

 

 
413

 
1,472

 

 
1,472

 
 
Foreign currency translation adjustment
(11,617
)
 
1,429

 
(10,188
)
 
(11,763
)
 
1,716

 
(10,047
)
 
a
Other comprehensive income (loss), net of tax
(1,501
)
 
1,429

 
(72
)
 
13,944

 
(886
)
 
13,058

 
 
Comprehensive income
227,645

 
(46,097
)
 
181,548

 
589,335

 
(41,516
)
 
547,819

 
 
Less: comprehensive income (loss) attributable to noncontrolling interests
(187
)
 

 
(187
)
 
(699
)
 

 
(699
)
 
 
Comprehensive income attributable to CHS Inc. 
$
227,832

 
$
(46,097
)
 
$
181,735

 
$
590,034

 
$
(41,516
)
 
$
548,518

 
 

For the three months ended May 31, 2018

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $24.7 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three months ended May 31, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements
(b) None.

Other misstatements
(c) The correction of other misstatements resulted in a $22.8 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three months ended May 31, 2018, above.

For the nine months ended May 31, 2018

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $48.5 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the nine months ended May 31, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements
(b) None.

Other misstatements
(c) The correction of other misstatements resulted in a $7.9 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the nine months ended May 31, 2018, above. The adjustment related to postretirement benefit plan activity is attributable to a timing difference associated with recording certain benefit plan expenses.

CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 
For the Nine Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
 
Cash flows from operating activities:
 

 
 
 
 
 
 

 
 
 
 
Net income (loss)
$
575,391

 
$
(40,630
)
 
$
534,761

 
$

 
$
534,761

 
a, c
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 
 
 
 
 
 


 
 
Depreciation and amortization
358,134

 

 
358,134

 

 
358,134

 
 
Amortization of deferred major repair costs
43,908

 

 
43,908

 

 
43,908

 
 
Equity (income) loss from investments
(137,111
)
 

 
(137,111
)
 

 
(137,111
)
 
 
Distributions from equity investments
97,665

 

 
97,665

 

 
97,665

 
 
Provision for doubtful accounts
(4,145
)
 

 
(4,145
)
 

 
(4,145
)
 
 
Gain and recovery on disposal of business
(131,755
)
 

 
(131,755
)
 

 
(131,755
)
 
 
Deferred taxes
(135,560
)
 
(1,463
)
 
(137,023
)
 

 
(137,023
)
 
a, c
Other, net
18,272

 
(2,602
)
 
15,670

 

 
15,670

 
c
Changes in operating assets and liabilities, net of acquisitions:
 

 
 
 
 
 
 
 


 
 
Receivables
(216,501
)
 
21,955

 
(194,546
)
 

 
(194,546
)
 
c
Inventories
(366,858
)
 
52,419

 
(314,439
)
 

 
(314,439
)
 
b, c
Derivative assets
(86,910
)
 
64,456

 
(22,454
)
 

 
(22,454
)
 
a, c
Margin and related deposits
(47,079
)
 

 
(47,079
)
 

 
(47,079
)
 
 
Supplier advance payments
(177,373
)
 

 
(177,373
)
 

 
(177,373
)
 
 
Other current assets and other assets
75,191

 
(10,294
)
 
64,897

 
(43,823
)
 
21,074

 
a, c
Customer margin deposits and credit balances
(19,914
)
 

 
(19,914
)
 

 
(19,914
)
 
 
Customer advance payments
(40,547
)
 
(10,633
)
 
(51,180
)
 

 
(51,180
)
 
c
Accounts payable and accrued expenses
73,745

 
(64,128
)
 
9,617

 

 
9,617

 
a, b, c
Derivative liabilities
23,758

 
(12,144
)
 
11,614

 

 
11,614

 
a, c
Other liabilities
(49,842
)
 

 
(49,842
)
 

 
(49,842
)
 
 
Net cash provided by (used in) operating activities
(147,531
)
 
(3,064
)
 
(150,595
)
 
(43,823
)
 
(194,418
)
 
 
Cash flows from investing activities:
 

 
 
 
 
 
 
 


 
 
Acquisition of property, plant and equipment
(249,078
)
 

 
(249,078
)
 

 
(249,078
)
 
 
Proceeds from disposition of property, plant and equipment
80,045

 

 
80,045

 

 
80,045

 
 
Proceeds from sale of business
234,914

 

 
234,914

 

 
234,914

 
 
Expenditures for major repairs
(39,363
)
 

 
(39,363
)
 

 
(39,363
)
 
 
Investments redeemed
6,607

 

 
6,607

 

 
6,607

 
 
Changes in CHS Capital notes receivable, net
(83,908
)
 

 
(83,908
)
 

 
(83,908
)
 
 
Financing extended to customers
(72,106
)
 

 
(72,106
)
 

 
(72,106
)
 
 
Payments from customer financing
38,725

 

 
38,725

 

 
38,725

 
 
Other investing activities, net
12,377

 


 
12,377

 

 
12,377

 
 
Net cash provided by (used in) investing activities
(71,787
)
 

 
(71,787
)
 

 
(71,787
)
 
 
Cash flows from financing activities:
 

 
 
 
 
 
 
 


 
 
Proceeds from lines of credit and long-term borrowings
29,802,708

 

 
29,802,708

 

 
29,802,708

 
 
Payments on lines of credit, long-term borrowings and capital lease obligations
(29,028,104
)
 
3,052

 
(29,025,052
)
 

 
(29,025,052
)
 
c
Preferred stock dividends paid
(126,501
)
 

 
(126,501
)
 

 
(126,501
)
 
 
Redemptions of equities
(6,391
)
 

 
(6,391
)
 

 
(6,391
)
 
 
Other financing activities, net
(70,916
)
 
12

 
(70,904
)
 

 
(70,904
)
 
c
Net cash provided by (used in) financing activities
570,796

 
3,064

 
573,860

 

 
573,860

 
 
Effect of exchange rate changes on cash and cash equivalents
1,030

 

 
1,030

 

 
1,030

 
 
Net increase (decrease) in cash and cash equivalents and restricted cash
352,508

 

 
352,508

 
(43,823
)
 
308,685

 
 
Cash and cash equivalents and restricted cash at beginning of period
181,379

 

 
181,379

 
90,893

 
272,272

 
 
Cash and cash equivalents and restricted cash at end of period
$
533,887

 
$

 
$
533,887

 
$
47,070

 
$
580,957

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2016-18 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $48.5 million reduction of net income for the nine months ended May 31, 2018. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three and nine months ended May 31, 2018, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassifications between operating activity line items in the Consolidated Statement of Cash Flows; however, none of the freight derivatives and related misstatements impacted the classifications between operating, investing or financing activities.

Intercompany misstatements
(b) The correction of intercompany misstatements did not impact net income for the nine months ended May 31, 2018; however, the impact of adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments of less than $5.0 million between line items in the Consolidated Statement of Cash Flows. None of the intercompany misstatements impacted the classifications between operating, investing or financing activities within the Consolidated Statement of Cash Flows.
    
Other misstatements
(c) The correction of other misstatements resulted in a $7.9 million increase of net income for the nine months ended May 31, 2018. Refer to further details of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three and nine months ended May 31, 2018, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments between line items in the Consolidated Statement of Cash Flows. As a result, a misclassification adjustment was made between operating and financing activities related to a $3.1 million reduction of notes payable resulting from a duplicative entry. In addition, various misclassification adjustments were made between operating activity lines, the most significant of which related to (1) a $24.1 million decrease of inventory and increase in accounts receivable as of August 31, 2017, due to a timing difference related to the settlement of a single ocean vessel and (2) the $49.2 million net impact associated with the decrease of inventory and increase of accounts payable that resulted from the misclassification adjustment for certain items previously included within a contra-inventory account to accounts payable as of August 31, 2017, and May 31, 2018.
v3.19.2
Receivables
9 Months Ended
May 31, 2019
Receivables [Abstract]  
Receivables
Receivables
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Trade accounts receivable
$
2,136,872

 
$
1,578,764

CHS Capital notes receivable
577,145

 
569,379

Other
438,507

 
534,071

 
3,152,524

 
2,682,214

Less: allowances and reserves
176,072

 
221,813

Total receivables
$
2,976,452

 
$
2,460,401



Trade Accounts

Trade accounts receivable are initially recorded at a selling price, which approximates fair value upon the sale of goods or services to customers. Subsequently, trade accounts receivable are carried at net realizable value, which includes an allowance for estimated uncollectible amounts. We calculate this allowance based on our history of write-offs, level of past due accounts, and our relationships with, and the economic status of, our customers.

CHS Capital

Notes Receivable

CHS Capital, LLC ("CHS Capital"), our wholly-owned subsidiary, has short-term notes receivable from commercial and producer borrowers. The short-term notes receivable have maturity terms of 12 months or less and are reported at their outstanding unpaid principal balances, adjusted for the allowance of loan losses, as CHS Capital has the intent and ability to hold the applicable loans for the foreseeable future or until maturity or pay-off. The carrying value of CHS Capital short-term notes receivable approximates fair value, given the notes' short duration and the use of market pricing adjusted for risk.

The notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of certain regional cooperative's capital stock. These loans are primarily originated in the states of Minnesota, Wisconsin and North Dakota. CHS Capital also has loans receivable from producer borrowers that are collateralized by various combinations of growing crops, livestock, inventories, accounts receivable, personal property and supplemental mortgages and are originated in the same states as the commercial notes, as well as in Michigan.

In addition to the short-term balances included in the table above, CHS Capital had long-term notes receivable, with durations of generally not more than 10 years, totaling $187.2 million and $203.0 million at May 31, 2019, and August 31, 2018, respectively. The long-term notes receivable are included in other assets on our Consolidated Balance Sheets. As of May 31, 2019, and August 31, 2018, the commercial notes represented 62% and 40%, respectively, and the producer notes represented 38% and 60%, respectively, of the total CHS Capital notes receivable.

CHS Capital has commitments to extend credit to customers if there are no violations of any contractually established conditions. As of May 31, 2019, CHS Capital's customers had additional available credit of $581.5 million.

Allowance for Loan Losses and Impairments

CHS Capital maintains an allowance for loan losses, which is the estimate of potential incurred losses inherent in the loans receivable portfolio. In accordance with FASB ASC 450-20, Accounting for Loss Contingencies, and ASC 310-10, Accounting by Creditors for Impairment of a Loan, the allowance for loan losses consists of general and specific components. The general component is based on historical loss experience and qualitative factors addressing operational risks and industry trends. The specific component relates to loans receivable that are classified as impaired. Additions to the allowance for loan losses are reflected within reserve and impairment charges (recoveries), net in the Consolidated Statements of Operations. The portion of loans receivable deemed uncollectible is charged off against the allowance. Recoveries of previously charged off amounts increase the allowance for loan losses. The amount of CHS Capital notes that were past due was not significant at any reporting date presented.

Interest Income

Interest income is recognized on the accrual basis using a method that computes simple interest daily. The accrual of interest on commercial loans receivable is discontinued at the time the commercial loan receivable is 90 days past due unless the credit is well-collateralized and in process of collection. Past due status is based on contractual terms of the loan. Producer loans receivable are placed in nonaccrual status based on estimates and analysis due to the annual debt service terms inherent to CHS Capital’s producer loans. In all cases, loans are placed in nonaccrual status or charged off at an earlier date if collection of principal or interest is considered doubtful.

Other Receivables

Other receivables are comprised of certain other amounts recorded in the normal course of business, including receivables related to value-added taxes, certain financing receivables and pre-crop financing, primarily to Brazilian farmers, to finance a portion of supplier production costs. We do not bear costs or operational risks associated with the related growing crops, though our ability to be paid depends on the crops actually produced. The financing is collateralized by future crops, land and physical assets of the suppliers, carries a local market interest rate and settles when the farmer’s crop is harvested and sold.

We identified and recorded an out of period adjustment to correct an error related to multiple years that increased bad debt expense for other receivables by $29.5 million and $25.5 million during the three and nine months ended May 31, 2019, respectively. We concluded that the error is not material to the previously reported financial statements and its correction is not material to the financial statements for the three or nine months ended May 31, 2019, nor is it expected to be material to our full year results.
v3.19.2
Revenues (Notes)
9 Months Ended
May 31, 2019
Revenue from Contract with Customer [Abstract]  
Revenues
Revenues

Adoption of New Revenue Guidance

As described in Note 1, Basis of Presentation and Significant Accounting Policies, we adopted the guidance within ASU 2014-09 as of September 1, 2018, using the modified retrospective transition approach. Consistent with other companies that actively trade commodities, a majority of our revenues are attributable to forward commodity sales contracts that are considered to be physically settled derivatives under ASC 815 and therefore fall outside the scope of ASC Topic 606. As a result, these revenues are not subject to the provisions of the new revenue guidance and the impact of adoption is limited to our revenue streams that fall within the scope of the new revenue guidance.

The majority of our revenue streams that fall within the scope of the new revenue guidance are recognized at a point-in-time; however, the adoption of ASU 2014-09 resulted in a minimal number of changes to the timing of revenue recognition for certain revenue streams. Under the modified retrospective method of adoption, we determined the cumulative effect of adoption for all contracts with customers that had not been completed as of the adoption date and recognized an adjustment of less than $1.0 million to the opening capital reserves balance within the Consolidated Balance Sheet as of September 1, 2018. Additionally, the impact of applying ASC Topic 606 compared to previous guidance during the three and nine months ended May 31, 2019, was an overall decrease to revenues of $14.2 million and $36.9 million, respectively, which was primarily related to the change in revenue recognition for certain contracts from a gross basis to a net basis.

Other changes in accounting for revenue recognition under ASU 2014-09 did not have a material impact on our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, or Consolidated Balance Sheet as of May 31, 2019.

Revenue Recognition Accounting Policy and Performance Obligations

We provide a wide variety of products and services, from agricultural inputs such as fuels, farm supplies and agronomy products, to agricultural outputs that include grain and oilseed, processed grains and oilseeds and food products, and ethanol production and marketing. We primarily conduct our operations and derive revenues within our Energy and Ag businesses. Our Energy business derives its revenues through refining, wholesaling and retailing of petroleum products. Our Ag business derives its revenues through the origination and marketing of grain, including service activities conducted at export terminals; through wholesale sales of agronomy products and processed sunflowers; from sales of soybean meal, soybean refined oil and soyflour products; through the production and marketing of renewable fuels; and through retail sales of petroleum and agronomy products, and feed and farm supplies.

Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the goods has transferred to customers. For the majority of our contracts with customers, control transfers to customers at a point-in-time when goods/services have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods/services transfer to the customer. In limited arrangements, control transfers over time as the customer simultaneously receives and consumes the benefits of the service as we complete our performance obligation(s).

Revenue is recognized at the transaction price that we expect to be entitled to in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. We follow a policy of recognizing revenue at the point-in-time or over the period of time that we satisfy our performance obligation by transferring control over a product or service to a customer in accordance with the underlying contract. For physically settled derivative sales contracts that are outside the scope of the revenue guidance, we recognize revenue when control of the inventory is transferred within the meaning of ASC Topic 606.
 
The amount of revenue recognized during the three and nine months ended May 31, 2019, for performance obligations that were fully satisfied in previous periods was not material.

Shipping and Handling Costs

Shipping and handling amounts billed to a customer as part of a sales transaction are included in revenues, and the related costs are included in cost of goods sold. Shipping and handling is treated as a fulfillment activity rather than a promised service, and therefore is not considered a separate performance obligation.

Taxes Collected from Customers and Remitted to Governmental Authorities
 
Revenue is recorded net of taxes collected from customers that are remitted to governmental authorities, with the collected taxes recorded as current liabilities until remitted to the relevant government authority.

Contract Costs

Commissions related to contracts with a duration of less than one year are expensed as incurred. We recognize incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets we otherwise would have recognized is one year or less.

Disaggregation of Revenues

The following table presents revenues recognized under ASC Topic 606 disaggregated by reportable segment, as well as the amount of revenues recognized under ASC Topic 815 and other applicable accounting guidance for the three and nine months ended May 31, 2019. Other applicable accounting guidance primarily includes revenues recognized under ASC Topic 840, Leases and ASC Topic 470, Debt that fall outside the scope of ASC Topic 606.
 
 
ASC 606
 
ASC 815
 
Other Guidance
 
Total Revenues
For the Three Months Ended May 31, 2019
 
(Dollars in thousands)
Energy
 
$
1,544,533

 
$
193,512

 
$

 
$
1,738,045

Ag
 
2,234,378

 
4,485,089

 
25,648

 
6,745,115

Corporate and Other
 
4,841

 

 
9,940

 
14,781

Total revenues
 
$
3,783,752

 
$
4,678,601

 
$
35,588

 
$
8,497,941

 
 
 
 
 
 
 
 
 
For the Nine Months Ended May 31, 2019
 
 
 
 
 
 
 
 
Energy
 
$
4,826,762

 
$
547,348

 
$

 
$
5,374,110

Ag
 
4,574,203

 
13,375,276

 
95,578

 
18,045,057

Corporate and Other
 
14,818

 

 
31,784

 
46,602

Total revenues
 
$
9,415,783

 
$
13,922,624

 
$
127,362

 
$
23,465,769



Less than 1% of revenues accounted for under ASC Topic 606 included within the table above are recorded over time; these revenues are primarily related to service contracts.

Our Energy segment derives its revenues through refining, wholesaling and retailing of petroleum products. Our Energy segment produces and sells (primarily wholesale) gasoline, diesel fuel, propane, asphalt, lubricants and other related products and provides transportation services. We are the nation's largest cooperative energy company, with operations that include petroleum refining and pipelines; the supply, marketing and distribution of refined fuels (gasoline, diesel fuel and other energy products); the blending, sale and distribution of lubricants; and the wholesale supply of propane and other natural gas liquids. For the majority of revenues arising from sales to Energy customers, we satisfy our performance obligation of providing energy products such as gasoline, diesel fuel, propane, asphalt, lubricants and other related products at the point-in-time that the finished petroleum product is delivered or made available to the wholesale or retail customer, at which point control is considered to have been transferred to the customer and revenue can be recognized, as there are no remaining performance obligations that we need to satisfy in order to be entitled to the agreed-upon transaction price as stated in the contract. For fixed and provisionally-priced derivative sales contracts that are accounted for under the provisions of the derivative accounting guidance and are outside the scope of the revenue recognition guidance, we recognize revenue when control of the inventory is transferred within the meaning of ASC Topic 606.

Our Ag segment derives its revenues through the origination and marketing of grain, including service activities conducted at export terminals; through wholesale sales of agronomy products and processed sunflowers; from sales of soybean meal, soybean refined oil and soyflour products; through the production and marketing of renewable fuels; and through retail sales of petroleum and agronomy products, and feed and farm supplies. For the majority of revenues arising from sales to Ag customers, we satisfy our performance obligation of delivering a commodity or other agricultural end product to a customer at the point-in-time that the commodity or other end-product (wholesale grain, agronomy products, soybean products, ethanol or country operations retail products) has been delivered or is made available to the customer, at which point control is considered to have been transferred to the customer and revenue can be recognized, as there are no remaining performance obligations that need to be satisfied in order to be entitled to the agreed-upon transaction price as stated in the contract. The amount of revenue recognized follows the contractually specified price, which may include freight or other contractually specified cost components. For fixed and provisionally-priced derivative sales contracts that are accounted for under the provisions of the derivative accounting guidance and are outside the scope of the revenue recognition guidance, we recognize revenue when control of the inventory is transferred within the meaning of ASC Topic 606.

Corporate and Other primarily consists of our financing and hedging businesses, which are presented together due to the similar nature of their products and services as well as the relatively lower amount of revenues for those businesses compared to our Ag and Energy businesses. Prior to its sale on May 4, 2018, our insurance business was also included in Corporate and Other. Revenues from our hedging business are primarily recognized at the point-in-time that the hedging transaction is completed after we have fully satisfied all performance obligations under the contract, and revenues arising from our financing business are recognized in accordance with ASC Topic 470, Debt, and fall outside the scope of ASC Topic 606.

Contract Assets and Contract Liabilities

Contract assets relate to unbilled amounts arising from goods that have already been transferred to the customer where the right to payment is not conditional upon the passage of time. This results in the recognition of an asset, as the amount of revenue recognized at a certain point-in-time exceeds the amount billed to the customer. Contract assets are recorded in accounts receivable within our Consolidated Balance Sheets and were immaterial as of May 31, 2019, and August 31, 2018.

Contract liabilities relate to advance payments from customers for goods and services that we have yet to provide. Contract liabilities of $182.9 million and $172.0 million as of May 31, 2019, and August 31, 2018, respectively, are recorded within customer advance payments on our Consolidated Balance Sheets. For the three and nine months ended May 31, 2019, we recognized revenues of $67.9 million and $148.9 million, respectively, which were included in the customer advance payments balance at the beginning of the period.

Practical Expedients

We applied ASC Topic 606 utilizing the following allowable exemptions or practical expedients:

Election to not disclose the unfulfilled performance obligation balance for contracts with an original duration of one year or less.
Recognition of the incremental costs of obtaining a contract as an expense when incurred if the amortization period of the asset that would otherwise have been recognized is one year or less.
Election to present revenues net of sales taxes and other similar taxes.
Practical expedient to treat shipping and handling as a fulfillment activity rather than a promised service, resulting in the conclusion that shipping and handling is not a separate performance obligation.
v3.19.2
Inventories
9 Months Ended
May 31, 2019
Inventory Disclosure [Abstract]  
Inventories
Inventories        
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Grain and oilseed
$
1,115,510

 
$
1,298,522

Energy
899,150

 
715,161

Agronomy
635,560

 
246,326

Feed and farm supplies
567,952

 
391,906

Processed grain and oilseed
104,113

 
99,426

Other
16,036

 
17,308

Total inventories
$
3,338,321

 
$
2,768,649


As of May 31, 2019, we valued approximately 20% of inventories, primarily related to our Energy segment, using the lower of cost, determined on the LIFO method, or net realizable value (16% as of August 31, 2018). If the FIFO method of accounting had been used, inventories would have been higher than the reported amount by $283.9 million and $345.0 million as of May 31, 2019, and August 31, 2018, respectively. An actual valuation of inventory under the LIFO method can be made only at the end of each year based on the inventory levels and costs at that time. Interim LIFO calculations are based on management's estimates of expected year-end inventory levels and are subject to the final year-end LIFO inventory valuation.
v3.19.2
Investments
9 Months Ended
May 31, 2019
Investments [Abstract]  
Investments
Investments
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Equity method investments:
 
 
 
CF Industries Nitrogen, LLC
$
2,767,053

 
$
2,735,073

Ventura Foods, LLC
368,774

 
360,150

Ardent Mills, LLC
209,624

 
205,898

Other equity method investments
269,099

 
288,016

Other investments
123,590

 
122,788

Total investments
$
3,738,140

 
$
3,711,925



Equity Method Investments

Joint ventures and other investments, in which we have significant ownership and influence, but not control, are accounted for in our consolidated financial statements using the equity method of accounting. Our primary equity method investments are described below.

CF Nitrogen

On February 1, 2016, we invested $2.8 billion in CF Industries Nitrogen, LLC ("CF Nitrogen"), commencing our strategic venture with CF Industries Holdings, Inc. ("CF Industries"). The investment consists of an approximate 10% membership interest (based on product tons) in CF Nitrogen. We account for this investment using the hypothetical liquidation at book value method, recognizing our share of the earnings and losses of CF Nitrogen based upon our contractual claims on the entity's net assets pursuant to the liquidation provisions of CF Nitrogen's limited liability company agreement, adjusted for the semi-annual cash distributions we receive as a result of our membership interest in CF Nitrogen. For the three months ended May 31, 2019, and 2018, this amount was $42.0 million and $35.6 million, respectively. For the nine months ended May 31, 2019, and 2018, this amount was $118.4 million and $80.0 million, respectively. These amounts are included as equity income from investments in our Nitrogen Production segment.


Ventura Foods and Ardent Mills
    
We have a 50% interest in Ventura Foods, LLC ("Ventura Foods"), which is a joint venture that produces and distributes primarily vegetable oil-based products, and we have a 12% interest in Ardent Mills, LLC ("Ardent Mills"), which is a joint venture with Cargill Incorporated and ConAgra Foods, Inc. that combines the North American flour milling operations of the three parent companies. We account for Ventura Foods and Ardent Mills as equity method investments included in Corporate and Other.

The following table provides aggregate summarized unaudited financial information for our equity method investments in CF Nitrogen, Ventura Foods and Ardent Mills for the nine months ended May 31, 2019, and 2018:
 
For the Nine Months Ended May 31,
 
2019
 
2018
 
(Dollars in thousands)
Net sales
$
6,646,394

 
$
6,238,495

Gross profit
951,969

 
719,555

Net earnings
688,724

 
435,192

Earnings attributable to CHS Inc.
168,830

 
109,266



Our investments in other equity method investees are not significant in relation to our consolidated financial statements, either individually or in the aggregate.
v3.19.2
Goodwill and Other Intangible Assets (Notes)
9 Months Ended
May 31, 2019
Goodwill and Intangible Assets Disclosure [Abstract]  
Goodwill and Other Intangible Assets Disclosure [Text Block]
Goodwill and Other Intangible Assets

Goodwill of $199.8 million and $138.5 million is included in other assets on our Consolidated Balance Sheets as of May 31, 2019, and August 31, 2018, respectively. Goodwill acquired during the third quarter of fiscal 2019 was $61.4 million, related to our acquisition of the remaining 75% ownership interest in West Central Distribution, LLC ("WCD"). See Note 16, Acquisitions, for additional information. Changes in the net carrying amount of goodwill for the nine months ended May 31, 2019, by segment, are as follows:
 
 
Energy
 
Ag
 
Corporate
and Other
 
Total
 
(Dollars in thousands)
Balances, August 31, 2018
$
552

 
$
127,338

 
$
10,574

 
$
138,464

Goodwill acquired during the period

 
61,358

 

 
61,358

Balances, May 31, 2019
$
552

 
$
188,696

 
$
10,574

 
$
199,822



No goodwill has been allocated to our Nitrogen Production segment, which consists solely of our CF Nitrogen investment accounted for using the equity method of accounting.

Intangible assets subject to amortization primarily include customer lists, trademarks and non-compete agreements, and are amortized over their respective useful lives (ranging from 2 to 30 years). Intangible assets of $47.2 million were acquired during the nine months ended May 31, 2019, related to the acquisition of the remaining 75% ownership interest in WCD. See Note 16, Acquisitions, for additional information. Information regarding intangible assets that are included in other assets on our Consolidated Balance Sheets is as follows:
 
May 31, 2019
 
August 31, 2018
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
(Dollars in thousands)
Customer lists
$
84,815

 
$
(16,054
)
 
$
68,761

 
$
40,815

 
$
(13,082
)
 
$
27,733

Trademarks and other intangible assets
9,736

 
(5,393
)
 
4,343

 
6,536

 
(4,931
)
 
1,605

Total intangible assets
$
94,551

 
$
(21,447
)
 
$
73,104

 
$
47,351

 
$
(18,013
)
 
$
29,338



Total amortization expense for intangible assets during the three and nine months ended May 31, 2019, was $1.9 million and $3.4 million, respectively. Total amortization expense for intangible assets during the three and nine months ended May 31, 2018, was $0.8 million and $2.5 million, respectively. The estimated annual amortization expense related to intangible assets subject to amortization for the next five years is as follows:
 
(Dollars in thousands)
Year 1
$
4,540

Year 2
4,487

Year 3
4,187

Year 4
3,944

Year 5
3,940

v3.19.2
Notes Payable and Long-Term Debt
9 Months Ended
May 31, 2019
Debt Disclosure [Abstract]  
Notes Payable and Long-Term Debt
Notes Payable and Long-Term Debt

Our notes payable and long-term debt are subject to various restrictive requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with our debt covenants as of May 31, 2019. The table below summarizes our notes payable as of May 31, 2019, and August 31, 2018.


May 31, 2019

August 31, 2018

(Dollars in thousands)
Notes payable
$
2,021,216


$
1,437,264

CHS Capital notes payable
742,009


834,932

Total notes payable
$
2,763,225


$
2,272,196


On May 31, 2019, our primary line of credit was a five-year, unsecured revolving credit facility with a committed amount of $3.0 billion that expires in September 2020. The outstanding balance on this facility was $902.0 million as of May 31, 2019. There was no outstanding balance at August 31, 2018.

We have a receivables and loans securitization facility (the "Securitization Facility") with certain unaffiliated financial institutions (the "Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries (the "Originators") sell trade accounts and notes receivable (the "Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the Purchasers, which is accounted for as a secured borrowing. During the period from July 2017 through an amendment of the Securitization Facility in June 2018, CHS accounted for Receivables sold under the Securitization Facility as a sale of financial assets pursuant to ASC 860, Transfers and Servicing, and the Receivables sold were derecognized from our Consolidated Balance Sheets. We use the proceeds from the sale of Receivables under the Securitization Facility for general corporate purposes and settlements are made on a monthly basis. The Securitization Facility was amended on June 27, 2019, to extend its termination date to June 26, 2020, which termination date may be further extended.

On September 4, 2018, we entered into a repurchase facility (the "Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can borrow up to $150 million, collateralized by a subordinated note issued by Cofina in favor of the Originators and representing a portion of the outstanding balance of the Receivables sold by the Originators to Cofina under the Securitization Facility. As of May 31, 2019, the outstanding balance under the Repurchase Facility was $150 million.

Interest expense for the three months ended May 31, 2019, and 2018, was $42.8 million and $49.3 million, respectively, net of capitalized interest of $2.5 million and $1.7 million, respectively. Interest expense for the nine months ended May 31, 2019, and 2018, was $123.0 million and $130.2 million, respectively, net of capitalized interest of $7.1 million and $4.8 million, respectively.
v3.19.2
Equities
9 Months Ended
May 31, 2019
Equity [Abstract]  
Equities
Equities

Changes in Equities

Changes in equities for the nine months ended May 31, 2019, and 2018 are as follows:
 
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, 2018
$
3,837,580

 
$
29,498

 
$
742,378

 
$
2,264,038

 
$
(199,915
)
 
$
1,482,003

 
$
9,446

 
$
8,165,028

Reversal of prior year redemption estimates
24,072

 

 

 

 

 

 

 
24,072

Redemptions of equities
(22,004
)
 
(183
)
 
(1,885
)
 

 

 

 

 
(24,072
)
Preferred stock dividends

 

 

 

 

 
(84,334
)
 

 
(84,334
)
Reclassification of unrealized (gain) loss on investments

 

 

 

 
(4,706
)
 
4,706

 

 

Other, net
(409
)
 

 
(26
)
 

 

 
3,436

 
318

 
3,319

Net income (loss)

 

 

 

 

 
347,504

 
(389
)
 
347,115

Other comprehensive income (loss), net of tax

 

 

 

 
389

 

 

 
389

Estimated 2019 cash patronage refunds

 

 

 

 

 
(89,344
)
 

 
(89,344
)
Estimated 2019 equity redemptions
(50,081
)
 

 

 

 

 

 

 
(50,081
)
Balance, November 30, 2018
$
3,789,158

 
$
29,315

 
$
740,467

 
$
2,264,038

 
$
(204,232
)
 
$
1,663,971

 
$
9,375

 
$
8,292,092

Reversal of prior year patronage and redemption estimates
6,681

 

 
(345,330
)
 

 

 
420,330

 

 
81,681

Distribution of 2018 patronage refunds

 

 
349,353

 

 

 
(424,333
)
 

 
(74,980
)
Redemptions of equities
(5,988
)
 
(74
)
 
(619
)
 

 

 

 

 
(6,681
)
Preferred stock dividends

 

 

 

 

 
(42,167
)
 

 
(42,167
)
Other, net
(774
)
 

 
2,589

 

 

 
(2,888
)
 
(581
)
 
(1,654
)
Net income (loss)

 

 

 

 

 
248,766

 
(462
)
 
248,304

Other comprehensive income (loss), net of tax

 

 

 

 
14,884

 

 

 
14,884

Estimated 2019 cash patronage refunds

 

 

 

 

 
(69,400
)
 

 
(69,400
)
Estimated 2019 equity redemptions
(39,850
)
 

 

 

 

 

 

 
(39,850
)
Balance, February 28, 2019
$
3,749,227

 
$
29,241

 
$
746,460

 
$
2,264,038

 
$
(189,348
)
 
$
1,794,279

 
$
8,332

 
$
8,402,229

Reversal of prior year redemption estimates
45,815

 

 

 

 

 

 

 
45,815

Distribution of 2018 patronage refunds

 

 
3,212

 

 

 
(3,901
)
 

 
(689
)
Redemptions of equities
(34,798
)
 
(34
)
 
(10,812
)
 

 

 

 

 
(45,644
)
Other, net
(1,285
)
 

 
(3,722
)
 

 

 
4,526

 
11

 
(470
)
Net income (loss)

 

 

 

 

 
54,620

 
93

 
54,713

Other comprehensive income (loss), net of tax

 

 

 

 
(22,313
)
 

 

 
(22,313
)
Estimated 2019 cash patronage refunds

 

 

 

 

 
(15,494
)
 

 
(15,494
)
Estimated 2019 equity redemptions
(6,438
)
 

 

 

 

 

 

 
(6,438
)
Balance, May 31, 2019
$
3,752,521

 
$
29,207

 
$
735,138

 
$
2,264,038

 
$
(211,661
)
 
$
1,834,030

 
$
8,436

 
$
8,411,709





 
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, 2017
$
3,906,426

 
$
29,836

 
$
405,387

 
$
2,264,038

 
$
(180,360
)
 
$
1,267,808

 
$
12,505

 
$
7,705,640

Reversal of prior year redemption estimates
1,561

 

 

 

 

 

 

 
1,561

Redemptions of equities
(1,449
)
 
(53
)
 
(59
)
 

 

 

 

 
(1,561
)
Preferred stock dividends

 

 

 

 

 
(84,334
)
 

 
(84,334
)
Other, net
(1,498
)
 
(66
)
 
(344
)
 

 

 
3,954

 
(2
)
 
2,044

Net income (loss)

 

 

 

 

 
187,646

 
(464
)
 
187,182

Other comprehensive income (loss), net of tax

 

 

 

 
3,019

 

 

 
3,019

Estimated 2018 cash patronage refunds

 

 

 

 

 
(50,702
)
 

 
(50,702
)
Estimated 2018 equity redemptions
(19,901
)
 

 

 

 

 

 

 
(19,901
)
Balance, November 30, 2017 (As Restated)
$
3,885,139

 
$
29,717

 
$
404,984

 
$
2,264,038

 
$
(177,341
)
 
$
1,324,372

 
$
12,039

 
$
7,742,948

Reversal of prior year patronage and redemption estimates
1,060

 

 
(126,333
)
 

 

 
126,333

 

 
1,060

Distribution of 2017 patronage refunds

 

 
128,858

 

 

 
(128,858
)
 

 

Redemptions of equities
(953
)
 
(16
)
 
(91
)
 

 

 

 

 
(1,060
)
Preferred stock dividends

 

 

 

 

 
(42,167
)
 

 
(42,167
)
Other, net
(2,652
)
 
(45
)
 
(1
)
 

 

 
816

 
(60
)
 
(1,942
)
Net income (loss)

 

 

 

 

 
166,007

 
(48
)
 
165,959

Other comprehensive income (loss), net of tax

 

 

 

 
10,111

 

 

 
10,111

Estimated 2018 cash patronage refunds

 

 

 

 

 
3,823

 

 
3,823

Estimated 2018 equity redemptions
(12,375
)
 

 

 

 

 

 

 
(12,375
)
Balance, February 28, 2018 (As Restated)
$
3,870,219

 
$
29,656

 
$
407,417

 
$
2,264,038

 
$
(167,230
)
 
$
1,450,326

 
$
11,931

 
$
7,866,357

Reversal of prior year redemption estimates
1,649

 

 

 

 

 

 

 
1,649

Distribution of 2017 patronage refunds

 

 
(27
)
 

 

 
27

 

 

Redemptions of equities
(1,412
)
 
(18
)
 
(219
)
 

 

 

 

 
(1,649
)
Other, net
(1,849
)
 
(1
)
 
(36
)
 

 

 
(252
)
 
(98
)
 
(2,236
)
Net income (loss)

 

 

 

 

 
181,807

 
(187
)
 
181,620

Other comprehensive income (loss), net of tax

 

 

 

 
(72
)
 

 

 
(72
)
Estimated 2018 cash patronage refunds

 

 

 

 

 
(72,868
)
 

 
(72,868
)
Estimated 2018 equity redemptions
(51,965
)
 

 

 

 

 

 

 
(51,965
)
Balance, May 31, 2018 (As Restated)
$
3,816,642

 
$
29,637

 
407,135

 
$
2,264,038

 
$
(167,302
)
 
$
1,559,040

 
$
11,646

 
$
7,920,836

* Certain amounts associated with Accumulated Other Comprehensive Loss, Capital Reserves and Noncontrolling Interests in the changes in equities table above were restated to reflect the impact of the misstatements associated with the restatement of previously issued financial statements. Note that the majority of the restatement adjustments within the changes in equities table above relate to the opening restatement adjustments to the August 31, 2017, balances. Additionally, the misstatements for activity in the changes in equities table above relates primarily to net income (loss) during fiscal 2018. Refer to further details included within Note 2, Restatement of Previously Issued Financial Information.

Preferred Stock Dividends

The following is a summary of dividends per share by class of preferred stock for the nine months ended May 31, 2019, and 2018. Note that due to the timing of dividend declarations during the fiscal year, no declarations were made during the third quarter of fiscal 2019 or fiscal 2018.

 
 
 
For the Nine Months Ended May 31,
 
Nasdaq symbol
 
2019
 
2018
 
 
 
(Dollars per share)
8% Cumulative Redeemable
CHSCP
 
1.50

 
1.50

Class B Cumulative Redeemable, Series 1
CHSCO
 
1.48

 
1.48

Class B Reset Rate Cumulative Redeemable, Series 2
CHSCN
 
1.33

 
1.33

Class B Reset Rate Cumulative Redeemable, Series 3
CHSCM
 
1.27

 
1.27

Class B Cumulative Redeemable, Series 4
CHSCL
 
1.41

 
1.41





Accumulated Other Comprehensive Income (Loss)        

Changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows for the nine months ended May 31, 2019, and 2018:
 
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, 2018, net of tax
$
(140,335
)
 
$
8,861

 
$
(5,882
)
 
$
(62,559
)
 
$
(199,915
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
175

 

 
(317
)
 
(25
)
 
(167
)
Amounts reclassified out
2,565

 

 
(1,475
)
 

 
1,090

Total other comprehensive income (loss), before tax
2,740

 

 
(1,792
)
 
(25
)
 
923

Tax effect
(639
)
 

 
485

 
(380
)
 
(534
)
Other comprehensive income (loss), net of tax
2,101

 

 
(1,307
)
 
(405
)
 
389

Reclassifications
416

 
(8,861
)
 
983

 
2,756

 
(4,706
)
Balance as of November 30, 2018, net of tax
$
(137,818
)
 
$

 
$
(6,206
)
 
$
(60,208
)
 
$
(204,232
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
102

 

 
18,954

 
3,176

 
22,232

Amounts reclassified out
2,564

 

 
(5,677
)
 

 
(3,113
)
Total other comprehensive income (loss), before tax
2,666

 

 
13,277

 
3,176

 
19,119

Tax effect
(664
)
 

 
(3,308
)
 
(263
)
 
(4,235
)
Other comprehensive income (loss), net of tax
2,002

 

 
9,969

 
2,913

 
14,884

Balance as of February 28, 2019, net of tax
$
(135,816
)
 
$

 
$
3,763

 
$
(57,295
)
 
$
(189,348
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
(164
)
 

 
(19,680
)
 
(7,725
)
 
(27,569
)
Amounts reclassified out
2,564

 

 
(1,385
)
 

 
1,179

Total other comprehensive income (loss), before tax
2,400

 

 
(21,065
)
 
(7,725
)
 
(26,390
)
Tax effect
(904
)
 

 
5,248

 
(267
)
 
4,077

Other comprehensive income (loss), net of tax
1,496

 

 
(15,817
)
 
(7,992
)
 
(22,313
)
Balance as of May 31, 2019, net of tax
$
(134,320
)
 
$

 
$
(12,054
)
 
$
(65,287
)
 
$
(211,661
)


 
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, 2017, net of tax
$
(132,444
)
 
$
10,041

 
$
(6,954
)
 
$
(51,003
)
 
$
(180,360
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
4,044

 
(435
)
 
(612
)
 
2,997

Amounts reclassified out
4,214

 

 
429

 
(2,042
)
 
2,601

Total other comprehensive income (loss), before tax
4,214

 
4,044

 
(6
)
 
(2,654
)
 
5,598

Tax effect
(2,620
)
 
(404
)
 
2

 
443

 
(2,579
)
Other comprehensive income (loss), net of tax
1,594

 
3,640

 
(4
)
 
(2,211
)
 
3,019

Balance as of November 30, 2017, net of tax (As Restated)
$
(130,850
)
 
$
13,681

 
$
(6,958
)
 
$
(53,214
)
 
$
(177,341
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
6,562

 
1,081

 
2,774

 
10,417

Amounts reclassified out
4,451

 
(1,527
)
 
425

 

 
3,349

Total other comprehensive income (loss), before tax
4,451

 
5,035

 
1,506

 
2,774

 
13,766

Tax effect
(1,309
)
 
(1,481
)
 
(443
)
 
(422
)
 
(3,655
)
Other comprehensive income (loss), net of tax
3,142

 
3,554

 
1,063

 
2,352

 
10,111

Balance as of February 28, 2018, net of tax (As Restated)
$
(127,708
)
 
$
17,235

 
$
(5,895
)
 
$
(50,862
)
 
$
(167,230
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
8,906

 
160

 
(10,442
)
 
(1,376
)
Amounts reclassified out
4,841

 

 
425

 

 
5,266

Total other comprehensive income (loss), before tax
4,841

 
8,906

 
585

 
(10,442
)
 
3,890

Tax effect
(1,424
)
 
(2,620
)
 
(172
)
 
254

 
(3,962
)
Other comprehensive income (loss), net of tax
3,417

 
6,286

 
413

 
(10,188
)
 
(72
)
Balance as of May 31, 2018, net of tax (As Restated)
$
(124,291
)
 
$
23,521

 
$
(5,482
)
 
$
(61,050
)
 
$
(167,302
)

    
Amounts reclassified from accumulated other comprehensive income (loss) were related to pension and other postretirement benefits, cash flow hedges, available for sale investments and foreign currency translation adjustments. Pension and other postretirement reclassifications include amortization of net actuarial loss, prior service credit and transition amounts and are recorded as cost of goods sold and marketing, general and administrative expenses (see Note 11, Benefit Plans, for further information). Gains or losses on the sale of available for sale investments are recorded to other income. Foreign currency translation reclassifications related to sales of businesses are recorded to other income.
v3.19.2
Income Taxes
9 Months Ended
May 31, 2019
Income Tax Disclosure [Abstract]  
Income Taxes
Income Taxes

On December 22, 2017, the Tax Cuts and Jobs Act of 2017 (the "Tax Act") was enacted into law. The Tax Act provides for significant U.S. tax law changes and reduces the federal corporate statutory tax rate from 35% to 21% as of January 1, 2018. As a fiscal year-end taxpayer, our annual statutory federal corporate tax rate applicable to fiscal 2018 is a blended rate of 25.7%. Beginning in fiscal 2019, our annual statutory federal corporate tax rate is 21%.

The Tax Act also requires companies to pay a one-time repatriation tax on certain unrepatriated earnings of foreign subsidiaries that were previously tax deferred ("transition tax"). We do not have any unrepatriated earnings for foreign subsidiaries and have not recorded a liability for the transition tax.

The Tax Act initially repealed the Domestic Production Activities Deduction ("DPAD") and enacted the Deduction for Qualified Business Income of Pass-Thru Entities ("QBI Deduction"); however, the Consolidated Appropriations Act, 2018 (the "Appropriations Act") enacted into law on March 23, 2018, impacted these deductions. The Appropriations Act modifies the QBI Deduction under Section 199A of the Tax Act to reenact DPAD for agricultural and horticultural cooperatives as it existed prior to the enactment of the Tax Act, and it also modifies the QBI Deduction available to cooperative patrons as enacted by the Tax Act.

As of August 31, 2018, the effects of the Tax Act were provisional in accordance with the SEC's Staff Accounting Bulletin No.118. No adjustments were recorded for the nine months ended May 31, 2019, associated with the remeasurement of deferred tax balances or the one-time transition tax, and in accordance with Staff Accounting Bulletin No.118, the amounts are no longer provisional.
v3.19.2
Benefit Plans
9 Months Ended
May 31, 2019
Retirement Benefits [Abstract]  
Benefit plans
Benefit Plans

We have various pension and other defined benefit and defined contribution plans, in which substantially all employees may participate. We also have non-qualified supplemental executive and Board retirement plans.

Components of net periodic benefit costs for the three and nine months ended May 31, 2019, and 2018, are as follows:
 
Qualified
Pension Benefits
 
Non-Qualified
Pension Benefits
 
Other Benefits
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Components of net periodic benefit costs for the three months ended May 31 are as follows:
 (Dollars in thousands)
  Service cost
$
9,648

 
$
9,920

 
$
78

 
$
137

 
$
263

 
$
236

  Interest cost
7,099

 
5,997

 
186

 
177

 
274

 
227

  Expected return on assets
(11,242
)
 
(12,044
)
 

 

 

 

  Prior service cost (credit) amortization
42

 
360

 
(19
)
 
7

 
(139
)
 
(142
)
  Actuarial (gain) loss amortization
3,087

 
4,905

 
1

 
16

 
(407
)
 
(306
)
Net periodic benefit cost
$
8,634

 
$
9,138

 
$
246

 
$
337

 
$
(9
)
 
$
15

Components of net periodic benefit costs for the nine months ended May 31 are as follows:
 
  Service cost
$
28,944

 
$
29,758

 
$
233

 
$
411

 
$
790

 
$
707

  Interest cost
21,297

 
17,988

 
560

 
533

 
821

 
681

  Expected return on assets
(33,726
)
 
(36,133
)
 

 

 

 

  Prior service cost (credit) amortization
127

 
1,078

 
(56
)
 
23

 
(417
)
 
(424
)
  Actuarial (gain) loss amortization
9,261

 
16,304

 
2

 
46

 
(1,221
)
 
(918
)
  Settlement (gain) loss
169

 

 

 

 

 

Net periodic benefit cost
$
26,072

 
$
28,995

 
$
739

 
$
1,013

 
$
(27
)
 
$
46



The service cost component of defined benefit net periodic benefit cost is recorded in cost of goods sold and marketing, general and administrative expenses. The other components of net periodic benefit cost are reflected in other (income) loss.

Employer Contributions

Total contributions to be made during fiscal 2019 will depend primarily on market returns on the pension plan assets and minimum funding level requirements. During the nine months ended May 31, 2019, we made a discretionary contribution of $40.0 million to the pension plans.
v3.19.2
Segment Reporting
9 Months Ended
May 31, 2019
Segment Reporting [Abstract]  
Segment Reporting
        Segment Reporting

We define our operating segments in accordance with ASC Topic 280, Segment Reporting, to reflect the manner in which our chief operating decision maker, our Chief Executive Officer, evaluates performance and allocates resources in managing our business. We have aggregated those operating segments into three reportable segments: Energy, Ag and Nitrogen Production.

Our Energy segment produces and provides primarily for the wholesale distribution of petroleum products and transportation of those products. Our Ag segment purchases and further processes or resells grains and oilseeds originated by our country operations business, by our member cooperatives and by third parties; serves as a wholesaler and retailer of crop inputs; and produces and markets ethanol. Our Nitrogen Production segment consists solely of our equity method investment in CF Nitrogen, which entitles us, pursuant to a supply agreement that we entered into with CF Nitrogen, to purchase up to a specified annual quantity of granular urea and urea ammonium nitrate annually from CF Nitrogen. Insignificant operating segments have been aggregated within Corporate and Other. 

Corporate administrative expenses and interest are allocated to each business segment, and Corporate and Other, based on direct usage for services, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Many of our business activities are highly seasonal and operating results vary throughout the year. For example, in our Ag segment, our agronomy and country operations businesses generally experience higher volumes and income during the spring planting season and in the fall, which corresponds to harvest. Our grain marketing operations are also subject to fluctuations in volume and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may experience higher volumes and profitability during the winter heating and fall crop drying seasons.

Our revenues, assets and cash flows can be significantly affected by global trade and associated market prices for commodities such as petroleum products, natural gas, ethanol, grains, oilseeds, crop nutrients and flour. Changes in market prices for commodities that we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Commodity prices are affected by a wide range of factors beyond our control, including the weather, crop damage due to disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, global trade disputes, and general political and economic conditions.

While our revenues and operating results are derived from businesses and operations that are wholly owned and majority owned, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less and do not control the operations. See Note 6, Investments, for more information on these entities.

Reconciling Amounts represent the elimination of revenues and interest between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of the individual business segments.
        
Segment information for the three and nine months ended May 31, 2019, and 2018, is presented in the tables below. Note that the fiscal 2019 results for our Ag segment include results associated with our acquisition of the remaining 75% ownership interest in WCD on March 1, 2019, which are not included in our prior period results. Refer to further details related to our acquisition of the remaining 75% ownership interest in WCD within Note 16, Acquisitions.

Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Three Months Ended May 31, 2019:
(Dollars in thousands)
Revenues, including intersegment revenues
$
1,841,290


$
6,749,182


$

 
$
16,418


$
(108,949
)

$
8,497,941

Operating earnings (loss)
572


12,090


(9,040
)
 
2,622




6,244

(Gain) loss on disposal of business

 
(2,474
)
 

 

 

 
(2,474
)
Interest expense
1,171


26,675


13,140

 
3,883


(2,096
)

42,773

Other (income) loss
(1,098
)
 
(29,211
)
 
(399
)
 
(1,852
)
 
2,096

 
(30,464
)
Equity (income) loss from investments
(760
)

(4,012
)

(41,959
)
 
(18,439
)



(65,170
)
Income (loss) before income taxes
$
1,259


$
21,112


$
20,178

 
$
19,030


$


$
61,579

Intersegment revenues
$
(103,245
)

$
(4,067
)

$

 
$
(1,637
)

$
108,949


$

 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Three Months Ended May 31, 2018: (As Restated)
(Dollars in thousands)
Revenues, including intersegment revenues
$
1,999,628

 
$
7,193,316

 
$

 
$
14,075

 
$
(119,691
)
 
$
9,087,328

Operating earnings (loss)
29,729

 
63,170

 
(4,153
)
 
(1,727
)
 


 
87,019

(Gain) loss on disposal of business
(65,903
)
 
5

 

 
(58,152
)
 

 
(124,050
)
Interest expense
3,496

 
28,854

 
13,119

 
4,324

 
(453
)
 
49,340

Other (income) loss
(967
)
 
(14,430
)
 
(441
)
 
(417
)
 
453

 
(15,802
)
Equity (income) loss from investments
(967
)
 
(11,359
)
 
(35,639
)
 
(11,343
)
 

 
(59,308
)
Income (loss) before income taxes
$
94,070

 
$
60,100

 
$
18,808

 
$
63,861

 
$

 
$
236,839

Intersegment revenues
$
(114,497
)
 
$
(3,784
)
 
$

 
$
(1,410
)
 
$
119,691

 
$


 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Nine Months Ended May 31, 2019:
(Dollars in thousands)
Revenues, including intersegment revenues
$
5,722,338

 
$
18,056,033

 
$

 
$
52,179

 
$
(364,781
)
 
$
23,465,769

Operating earnings (loss)
537,932

 
45,088

 
(24,048
)
 
11,415

 

 
570,387

(Gain) loss on disposal of business

 
(3,886
)
 

 

 

 
(3,886
)
Interest expense
3,756

 
73,073

 
42,161

 
7,945

 
(3,985
)
 
122,950

Other (income) loss
(4,301
)
 
(60,455
)
 
(2,362
)
 
(2,816
)
 
3,985

 
(65,949
)
Equity (income) loss from investments
(1,828
)
 
(2,675
)
 
(118,416
)
 
(50,475
)
 

 
(173,394
)
Income (loss) before income taxes
$
540,305

 
$
39,031

 
$
54,569

 
$
56,761

 
$

 
$
690,666

Intersegment revenues
$
(348,228
)
 
$
(10,976
)
 
$

 
$
(5,577
)
 
$
364,781

 
$

Total assets at May 31, 2019
$
4,573,463

 
$
7,377,779

 
$
2,788,010

 
$
2,834,231

 
$

 
$
17,573,483

 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Nine Months Ended May 31, 2018: (As Restated)
(Dollars in thousands)
Revenues, including intersegment revenues
$
5,845,437

 
$
18,574,846

 
$

 
$
46,018

 
$
(366,936
)
 
$
24,099,365

Operating earnings (loss)
179,077

 
70,954

 
(14,527
)
 
(5,796
)
 

 
229,708

(Gain) loss on disposal of business
(65,903
)
 
(7,700
)
 

 
(58,152
)
 

 
(131,755
)
Interest expense
11,760

 
69,242

 
39,067

 
11,569

 
(1,420
)
 
130,218

Other (income) loss
(2,977
)
 
(47,128
)
 
(2,612
)
 
(3,245
)
 
1,420

 
(54,542
)
Equity (income) loss from investments
(2,779
)
 
(25,180
)
 
(79,986
)
 
(29,166
)
 

 
(137,111
)
Income (loss) before income taxes
$
238,976

 
$
81,720

 
$
29,004

 
$
73,198

 
$

 
$
422,898

Intersegment revenues
$
(349,361
)
 
$
(11,391
)
 
$

 
$
(6,184
)
 
$
366,936

 
$

v3.19.2
Derivative Financial Instruments and Hedging Activities
9 Months Ended
May 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Derivative Financial Instruments and Hedging Activities Disclosure
Derivative Financial Instruments and Hedging Activities

Our derivative instruments primarily consist of commodity and forward contracts and, to a minor degree, may include foreign currency and interest rate swap contracts. These contracts are economic hedges of price risk, but we do not apply hedge accounting under ASC Topic 815, Derivatives and Hedging, except with respect to certain interest rate swap contracts that are accounted for as fair value hedges and certain future crude oil purchases that are accounted for as cash flow hedges. Derivative instruments are recorded on our Consolidated Balance Sheets at fair value as described in Note 14, Fair Value Measurements.

Derivatives Not Designated as Hedging Instruments

The following tables present the gross fair values of derivative assets, derivative liabilities and margin deposits (cash collateral) for derivatives not accounted for as hedging instruments, recorded on our Consolidated Balance Sheets along with the related amounts permitted to be offset in accordance with U.S. GAAP. We have elected not to offset derivative assets and liabilities when we have the right of offset under ASC Topic 210-20, Balance Sheet - Offsetting; or when the instruments are subject to master netting arrangements under ASC Topic 815-10-45, Derivatives and Hedging - Overall.
 
May 31, 2019
 
 
 
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 derivatives
$
251,236

 
$

 
$
25,753

 
$
225,483

Foreign exchange derivatives
9,685

 

 
4,477

 
5,208

Embedded derivative asset
20,957

 

 

 
20,957

Total
$
281,878

 
$

 
$
30,230

 
$
251,648

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
300,763

 
$
4,363

 
$
25,753

 
$
270,647

Foreign exchange derivatives
7,324

 

 
4,477

 
2,847

Total
$
308,087

 
$
4,363

 
$
30,230

 
$
273,494



 
August 31, 2018
 
 
 
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 derivatives
$
313,033

 
$

 
$
26,781

 
$
286,252

Foreign exchange derivatives
15,401

 

 
8,703

 
6,698

Embedded derivative asset
23,595

 

 

 
23,595

Total
$
352,029

 
$

 
$
35,484

 
$
316,545

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
421,054

 
$
12,983

 
$
26,781

 
$
381,290

Foreign exchange derivatives
24,701

 

 
8,703

 
15,998

Total
$
445,755

 
$
12,983

 
$
35,484

 
$
397,288



Derivative assets and liabilities with maturities of 12 months or less are recorded in derivative assets and derivative liabilities, respectively, on our Consolidated Balance Sheets. Derivative assets and liabilities with maturities greater than 12 months are recorded in other assets and other liabilities, respectively, on our Consolidated Balance Sheets. The amount of long-term derivative assets and liabilities, excluding derivatives accounted for as fair value hedges, recorded on our Consolidated Balance Sheet at May 31, 2019, were $22.3 million and $14.7 million, respectively. The amount of long-term derivative assets and liabilities, excluding derivatives accounted for as fair value hedges, recorded on our Consolidated Balance Sheet at August 31, 2018, were $23.1 million and $7.9 million, respectively.

The following table sets forth the pretax gains (losses) on derivatives not accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018.

 
 
 
For the Three Months Ended
May 31,
 
For the Nine Months Ended May 31,
 
Location of
Gain (Loss)
 
2019
 
(As Restated) 2018
 
2019
 
(As Restated) 2018
 
 
 
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
 
$
(23,749
)
 
$
32,289

 
$
41,814

 
$
(48,756
)
Foreign exchange derivatives
Cost of goods sold
 
(13,040
)
 
(16,549
)
 
14,941

 
(15,600
)
Foreign exchange derivatives
Marketing, general and administrative
 
(7
)
 
(1,109
)
 
(1,421
)
 
(1,260
)
Interest rate derivatives
Interest expense
 

 
(2
)
 

 
(3
)
Embedded derivative
Other income
 
399

 
441

 
2,362

 
2,612

Total
 
$
(36,397
)
 
$
15,070

 
$
57,696

 
$
(63,007
)


Commodity Contracts
    
As of May 31, 2019, and August 31, 2018, we had outstanding commodity futures and options contracts that were used as economic hedges, as well as fixed-price forward contracts related to physical purchases and sales of commodities. The table below presents the notional volumes for all outstanding commodity and freight contracts accounted for as derivative instruments.
 
May 31, 2019
 
August 31, 2018
 
Long
 
Short
 
Long
 
Short
 
(Units in thousands)
Grain and oilseed - bushels
693,978

 
865,956

 
715,866

 
929,873

Energy products - barrels
16,223

 
5,930

 
17,011

 
8,329

Processed grain and oilseed - tons
406

 
2,208

 
1,064

 
2,875

Crop nutrients - tons
19

 
72

 
11

 
76

Ocean freight - metric tons
125

 
95

 
227

 
45

Natural gas - MMBtu

 

 
610

 



Foreign Exchange Contracts

We are exposed to risk regarding foreign currency fluctuations even though a substantial amount of our international sales are denominated in U.S. dollars. In addition to specific transactional exposure, foreign currency fluctuations can impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of U.S. agricultural products compared to the same products offered by alternative sources of world supply. From time to time, we enter into foreign currency hedge contracts to minimize the impact of currency fluctuations on our transactional exposures. The notional amounts of our foreign exchange derivative contracts were $868.9 million and $988.8 million as of May 31, 2019, and August 31, 2018, respectively.

Embedded Derivative Asset

Under the terms of our strategic investment in CF Nitrogen, if CF Industries' credit rating is reduced below certain levels by two of three specified credit ratings agencies, we are entitled to receive a non-refundable annual payment of $5.0 million from CF Industries each year until the date that CF Industries' credit rating is upgraded to or above certain levels by two of the three specified credit ratings agencies or February 1, 2026, whichever is earlier. The fair value of the embedded derivative asset recorded on our Consolidated Balance Sheet as of May 31, 2019, was equal to $20.9 million. The current and long-term portions of the embedded derivative asset are included in derivative assets and other assets on our Consolidated Balance Sheets, respectively. See Note 14, Fair Value Measurements, for more information on the valuation of the embedded derivative asset.

Derivatives Designated as Cash Flow or Fair Value Hedging Strategies

Fair Value Hedges

As of May 31, 2019, and August 31, 2018, we had outstanding interest rate swaps with an aggregate notional amount of $495.0 million designated as fair value hedges of portions of our fixed-rate debt that is due between fiscal 2019 and fiscal 2025. Our objective in entering into these transactions is to offset changes in the fair value of the debt associated with the risk of variability in the three-month U.S. dollar LIBOR interest rate ("LIBOR"), in essence converting the fixed-rate debt to variable-rate debt. Under these interest rate swaps, we receive fixed-rate interest payments and make interest payments based on the three-month LIBOR. Offsetting changes in the fair values of both the swap instruments and the hedged debt are recorded contemporaneously each period and only create an impact to earnings to the extent that the hedge is ineffective.

The following table presents the fair value of our derivative interest rate swap instruments designated as fair value hedges and the line items on our Consolidated Balance Sheets in which they are recorded.
 
 
Derivative Assets
 
 
 
Derivative Liabilities
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
 
(Dollars in thousands)
 
 
 
(Dollars in thousands)
Derivative assets
 
$

 
$

 
Derivative liabilities
 
$
45

 
$
771

Other assets
 
4,479

 

 
Other liabilities
 
668

 
8,681

Total
 
$
4,479

 
$

 
Total
 
$
713

 
$
9,452



The following table sets forth the pretax gains (losses) on derivatives accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018.
 
 
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
Gain (Loss) on Fair Value Hedging Relationships:
 
Location of
Gain (Loss)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
(Dollars in thousands)
Interest rate swaps
 
Interest expense
 
$
(8,122
)
 
$
(231
)
 
$
(15,129
)
 
$
(18,118
)
Hedged item
 
Interest expense
 
8,122

 
231

 
15,129

 
18,118

Total
 
$

 
$

 
$

 
$


The following table provides the location and carrying amount of hedged liabilities in our Consolidated Balance Sheets as of May 31, 2019, and August 31, 2018.
 
 
May 31, 2019
 
August 31, 2018
Balance Sheet Location
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Liabilities
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Liabilities
 
 
(Dollars in thousands)
Long-term debt
 
$
470,419

 
$
24,581

 
$
485,548

 
$
9,452



Cash Flow Hedges

In the fourth quarter of fiscal 2018, our Energy segment began designating certain of its pay-fixed, receive-variable, cash-settled swaps as cash flow hedges of future crude oil purchases. We also began designating certain pay-variable, receive-fixed, cash-settled swaps as cash flow hedges of future refined product sales. These hedging instruments and the related hedged items are exposed to significant market price risk and potential volatility. As part of our risk management strategy, we look to hedge a portion of our expected future crude oil needs and the resulting refined product output based on prevailing futures prices, management's expectations about future commodity price changes and our risk appetite. As of May 31, 2019, and August 31, 2018, the aggregate notional amount of cash flow hedges was 8.2 million and 1.1 million barrels, respectively.

The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the line items on our Consolidated Balance Sheets in which they are recorded.
 
 
Derivative Assets
 
 
 
Derivative Liabilities
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
 
(Dollars in thousands)
 
 
 
(Dollars in thousands)
Derivative assets
 
$
5,547

 
$
812

 
Derivative liabilities
 
$
14,692

 
$
634



The following table presents the pretax gains (losses) recorded in other comprehensive income relating to cash flow hedges for the three and nine months ended May 31, 2019, and 2018:
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
 
2019
 
2018
 
2019
 
2018
 
 
(Dollars in thousands)
Commodity derivatives
 
$
(21,029
)
 
$

 
$
(9,323
)
 
$



The following table presents the pretax gains (losses) relating to cash flow hedges that were reclassified from accumulated other comprehensive loss into our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018:
 
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
Location of
Gain (Loss)
 
2019
 
2018
 
2019
 
2018
 
 
 
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
 
$
1,810

 
$

 
$
9,812

 
$

v3.19.2
Fair Value Measurements
9 Months Ended
May 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements
Fair Value Measurements

ASC Topic 820, Fair Value Measurements and Disclosures defines fair value as the price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The standard also establishes a hierarchy for inputs used in measuring fair value, which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs are inputs or market data that a market participant would obtain from independent sources to value the asset or liability. Unobservable inputs are inputs that reflect our assumptions about the factors market participants would use in valuing the asset or liability developed based upon the best information available in the circumstances. The fair value hierarchy consists of three levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, and inputs (other than quoted prices) that are observable for the asset or liability, either directly or indirectly. Level 3 inputs are unobservable inputs for the asset or liability. Categorization within the valuation hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

Recurring fair value measurements at May 31, 2019, and August 31, 2018, are as follows:
 
May 31, 2019
 
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 derivatives
$
27,024

 
$
229,760

 
$

 
$
256,784

Foreign exchange derivatives

 
9,704

 

 
9,704

Interest rate swap derivatives

 
4,479

 

 
4,479

Deferred compensation assets
39,327

 

 

 
39,327

Embedded derivative asset

 
20,957

 

 
20,957

Other assets
5,763

 

 

 
5,763

Total
$
72,114

 
$
264,900

 
$

 
$
337,014

Liabilities:
 

 
 

 
 
 
 

Commodity derivatives
$
76,388

 
$
239,066

 
$

 
$
315,454

Foreign exchange derivatives

 
7,480

 

 
7,480

Interest rate swap derivatives

 
713

 

 
713

Total
$
76,388

 
$
247,259

 
$

 
$
323,647


 
August 31, 2018
 
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 derivatives
$
54,487

 
$
259,359

 
$

 
$
313,846

Foreign exchange derivatives

 
15,401

 

 
15,401

Deferred compensation assets
39,073

 

 

 
39,073

Embedded derivative asset

 
23,595

 

 
23,595

Other assets
5,334

 

 

 
5,334

Total
$
98,894

 
$
298,355

 
$

 
$
397,249

Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
31,778

 
$
389,911

 
$

 
$
421,689

Foreign exchange derivatives

 
24,701

 

 
24,701

Interest rate swap derivatives

 
9,452

 

 
9,452

Total
$
31,778

 
$
424,064

 
$

 
$
455,842


Commodity and foreign exchange derivatives — Exchange-traded futures and options contracts are valued based on unadjusted quoted prices in active markets and are classified within Level 1. Our forward commodity purchase and sales contracts with fixed-price components, select ocean freight contracts and other over-the-counter ("OTC") derivatives are determined using inputs that are generally based on exchange traded prices and/or recent market bids and offers, adjusted for location-specific inputs, and are classified within Level 2. The location-specific inputs are driven by local market supply and demand, and are generally based on broker or dealer quotations, or market transactions in either the listed or OTC markets. Changes in the fair values of these contracts that are not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of Operations as a component of cost of goods sold.

Interest rate swap derivatives — Fair values of our interest rate swap derivatives are determined utilizing valuation models that are widely accepted in the market to value these OTC derivative contracts. The specific terms of the contracts, as well as market observable inputs, such as interest rates and credit risk assumptions, are factored into the models. As all significant inputs are market observable, all interest rate swaps are classified within Level 2. Changes in the fair values of contracts not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of Operations as a component of interest expense. See Note 13, Derivative Financial Instruments and Hedging Activities, for additional information about interest rate swaps designated as fair value and cash flow hedges.
        
Deferred compensation and other assets — Our deferred compensation investments, Rabbi Trust assets and investments in common stock of other companies are valued based on unadjusted quoted prices on active exchanges and are classified within Level 1. Changes in the fair values of these other assets are primarily recognized in our Consolidated Statements of Operations as a component of marketing, general and administrative expenses.

Embedded derivative asset — The embedded derivative asset relates to contingent payments inherent in our investment in CF Nitrogen. The inputs into the fair value measurement include the probability of future upgrades and downgrades of CF Industries' credit rating based on historical credit rating movements of other public companies and the discount rates to be applied to potential annual payments based on applicable historical and current yield coupon rates. Any actual upgrades or downgrades to CF Industries' credit rating could also impact the fair value of the embedded derivative asset. Based on these observable inputs, our fair value measurement is classified within Level 2. See Note 13, Derivative Financial Instruments and Hedging Activities, for additional information.

There were no material transfers between Level 1, Level 2 and Level 3 assets and liabilities during the three or nine months ended May 31, 2019.
v3.19.2
Commitments and Contingencies
9 Months Ended
May 31, 2019
Commitments and Contingencies Disclosure [Abstract]  
Commitments and Contingencies [Text Block]
Commitments and Contingencies

Environmental

We are required to comply with various environmental laws and regulations incidental to our normal business operations. In order to meet our compliance requirements, we establish reserves for the probable future costs of remediation of identified issues, which are included in cost of goods sold and marketing, general and administrative in our Consolidated Statements of Operations. The resolution of any such matters may affect consolidated net income for any fiscal period; however, we believe any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year.
    
Other Litigation and Claims

We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our business. The resolution of any such matters may affect consolidated net income for any fiscal period; however, we believe any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial position, results of operations or cash flows during any fiscal year.

Guarantees

We are a guarantor for lines of credit and performance obligations of related, non-consolidated companies. As of May 31, 2019, our bank covenants allowed maximum guarantees of $1.0 billion, of which $244.0 million were outstanding. We have collateral for a portion of these contingent obligations. We have not recorded a liability related to the contingent obligations as we do not expect to pay out any cash related to them, and the fair values are considered immaterial. The underlying loans to the counterparties for which we provide these guarantees were current as of May 31, 2019.
v3.19.2
Acquisitions (Notes)
9 Months Ended
May 31, 2019
Business Acquisition [Line Items]  
Business Combination Disclosure [Text Block]
Note 16        Acquisitions

In December 2018, we exercised our option to acquire the remaining 75% ownership interest in WCD. On March 1, 2019, we completed the acquisition of that 75% ownership interest in WCD. The purchase price was equal to $113.4 million, including $6.7 million that was previously paid and $106.7 million paid on March 1, 2019, net of cash acquired of $8.0 million. WCD is a full-service wholesale distributor of agronomy products headquartered in Willmar, Minnesota, that operates primarily in the United States. Prior to completing this acquisition and through February 28, 2019, we had a 25% ownership interest in WCD, which was accounted for under the equity method of accounting whereby we shared in the economics of WCD's earnings on a pro-rata basis. By acquiring the remaining ownership interest in WCD, we were able to expand our agronomy platform, position ourselves as a leading supply partner to cooperatives and retailers serving growers throughout the United States and add value for our owners. The WCD enterprise value was determined using a discounted cash flow model in which the fair value of the business was estimated based on the earning capacity of WCD. We estimated the fair value of the previously held equity interest to be equal to 25% of the total fair value of WCD, which was implied based on the purchase price we paid for the remaining 75% interest. The acquisition-date fair value of the previous equity interest was $37.8 million and is included in the measurement of the consideration transferred. We recognized a gain of approximately $19.1 million as a result of remeasuring our prior equity interest in WCD held before the acquisition of the remaining 75% interest. The gain is included in other (income) loss in our Consolidated Statements of Operations.

Preliminary allocation of the purchase price for this transaction resulted in goodwill of $61.4 million, which is nondeductible for tax purposes, and definite-lived intangible assets of $47.2 million. As this acquisition is not considered to have a material impact on our financial statements, proforma results of operations are not presented. The acquisition resulted in fair value measurements that are not on a recurring basis and did not have a material impact on our consolidated results of operations. Purchase accounting has not been finalized and preliminary fair values assigned to the net assets acquired are as follows:
 
(Dollars in thousands)
Cash
$
8,033

Current assets
708,764

Property, plant and equipment
44,064

Goodwill
61,358

Intangible assets
47,200

Other non-current assets
55

Liabilities
(718,262
)
Total net assets acquired
$
151,212



Operating results for WCD are included in our Consolidated Statements of Operations from the day of the acquisition on March 1, 2019, including revenues and income (loss) before income taxes of $255.6 million and $10.5 million, respectively, for the three months ended May 31, 2019.
v3.19.2
Organization, Basis of Presentation and Significant Accounting Policies (Policies)
9 Months Ended
May 31, 2019
Accounting Policies [Abstract]  
Basis of Accounting, Policy
Basis of Presentation

The unaudited Consolidated Balance Sheet as of May 31, 2019, the Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018, the Consolidated Statements of Comprehensive Income for the three and nine months ended May 31, 2019, and 2018, and the Consolidated Statements of Cash Flows for the nine months ended May 31, 2019, and 2018, reflect, in the opinion of our management, all normal recurring adjustments necessary for a fair statement of the financial position, results of operations and cash flows for the interim periods presented. The results of operations and cash flows for interim periods are not necessarily indicative of results for a full fiscal year because of, among other things, the seasonal nature of our businesses. Our Consolidated Balance Sheet data as of August 31, 2018, has been derived from our audited consolidated financial statements, but does not include all disclosures required by accounting principles generally accepted in the United States of America ("U.S. GAAP").

As described in Note 2, Restatement of Previously Issued Financial Information, the consolidated financial statements for the three and nine months ended May 31, 2018, have been restated to reflect the correction of misstatements. We have also restated all relevant amounts impacted within the notes to the consolidated financial statements.

The notes to our consolidated financial statements reference our Energy, Ag and Nitrogen Production reportable segments, as well as our Corporate and Other category, which represents an aggregation of individually immaterial operating segments. See Note 12, Segment Reporting, for more information related to our reportable segments.
Consolidation, Policy
Our consolidated financial statements include the accounts of CHS and all of our wholly owned and majority owned subsidiaries. The effects of all significant intercompany transactions have been eliminated.

These unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, 2018, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission (the "SEC").
Restricted Cash and Cash Equivalents, Policy
Restricted Cash

Restricted cash is included in our Consolidated Balance Sheets within other current assets (current portion) and other assets (non-current portion), as appropriate, and primarily relates to customer deposits for futures and option contracts associated with regulated commodities held in separate accounts as required under federal and other regulations. Pursuant to the requirements of the Commodity Exchange Act, such funds must be carried in separate accounts that are designated as segregated customer accounts, as applicable. Restricted cash also includes funds held in escrow pursuant to applicable regulations limiting their usage.

The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within our Consolidated Balance Sheets that aggregates to the amount presented in our Consolidated Statements of Cash Flows. During the nine months ended May 31, 2019, we updated the presentation of our Consolidated Statements of Cash Flows to include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on our Consolidated Statements of Cash Flows.

 
May 31, 2019
 
August 31, 2018
 
May 31, 2018
 
August 31, 2017
 
(Dollars in thousands)
Cash and cash equivalents
$
155,252

 
$
450,617

 
$
533,887

 
$
181,379

Restricted cash included in other current assets
99,398

 
90,193

 
43,912

 
83,561

Restricted cash included in other assets
672

 
3,130

 
3,158

 
7,332

Total cash and cash equivalents and restricted cash
$
255,322

 
$
543,940

 
$
580,957

 
$
272,272

Investments, Policy
Investments
    
As described in the "Recent Accounting Pronouncements" section below, we adopted Accounting Standards Update ("ASU") No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which was effective for us September 1, 2018. As a result, all equity securities that do not result in consolidation and are not accounted for under the equity method are measured at fair value with changes therein reflected in net income. We have elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at cost less impairment plus or minus observable price changes in orderly transactions.

Investments in other cooperatives are recorded in a manner similar to equity investments without readily determinable fair values, plus patronage dividends received in the form of capital stock and other equities. Patronage dividends are recorded as a reduction to cost of goods sold at the time qualified written notices of allocation are received. Investments in debt and equity instruments are carried at amounts that approximate fair values.
Revenue Recognition, Policy
Revenue Recognition

We provide a wide variety of products and services, ranging from agricultural inputs such as fuels, farm supplies and agronomy products, to agricultural outputs that include grain and oilseed, processed grains and oilseeds and food products, and ethanol production and marketing. Revenue is recognized when performance obligations under the terms of a contract with a customer are satisfied, which generally occurs when control of the goods has transferred to the customer. For the majority of our contracts with customers, control transfers to customers at a point-in-time when the goods/services have been delivered, as that is generally when legal title, physical possession and risks and rewards of goods/services transfer to the customer. In limited arrangements, control transfers over time as the customer simultaneously receives and consumes the benefits of the service as we complete the performance obligation(s).

Revenue is recognized at the transaction price that we expect to be entitled to in exchange for transferring goods or services to a customer, excluding amounts collected on behalf of third parties. We follow a policy of recognizing revenue at the point-in-time or over the period of time we satisfy our performance obligation by transferring control over a product or service to a customer in accordance with the underlying contract. For physically settled derivative sales contracts that are outside the scope of the revenue guidance, we recognize revenue when control of the inventory is transferred within the meaning of Accounting Standards Codification ("ASC") Topic 606.
Recent Accounting Pronouncements
Recent Accounting Pronouncements

Adopted

In March 2017, the Financial Accounting Standards Board (the "FASB") issued ASU No. 2017-07, Compensation - Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Costs and Net Postretirement Benefit Cost. This ASU changes the presentation of net periodic pension cost and net periodic postretirement benefit cost in the Consolidated Statements of Operations. This ASU provides that the service cost component should be included in the same income statement line item as other compensation costs arising from services rendered by the employees during the period. The other components of net periodic benefit cost (such as interest, expected return on plan assets, prior service cost amortization and actuarial gain/loss amortization) are required to be presented in the Consolidated Statements of Operations separately outside of operating income. Additionally, only service cost may be capitalized in assets. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The guidance on the presentation of the components of net periodic benefit cost in the Consolidated Statements of Operations has been applied retrospectively, and the guidance regarding the capitalization of the service cost component in assets has been applied prospectively. The adoption of this guidance had no impact on previously reported income (loss) before income taxes or net income attributable to CHS; however, non-service cost components of net periodic benefit costs in prior periods have been reclassified from cost of goods sold and marketing, general and administrative expenses, and are now reported outside of operating income within other (income) loss. Refer to Note 2, Restatement of Previously Issued Financial Information, for the amounts of the retrospective adjustments recorded as a result of the adoption of this guidance.

In January 2017, the FASB issued ASU No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business. The amendments within this ASU narrow the existing definition of a business and provide a more robust framework for evaluating whether a transaction should be accounted for as an acquisition (or disposal) of assets or a business. The definition of a business impacts various areas of accounting, including acquisitions, disposals and goodwill. Under the new guidance, fewer acquisitions are expected to be considered businesses. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The guidance has been applied prospectively. The adoption of this amended guidance did not have a material impact on our consolidated financial statements.

In November 2016, the FASB issued ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. This ASU requires restricted cash and restricted cash equivalents to be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on the Consolidated Statements of Cash Flows, as well as disclosure about the nature of restrictions on cash, cash equivalents and amounts generally described as restricted cash. Additionally, the guidance requires disclosure of the total amount of cash, cash equivalents and restricted cash for each comparative period for which a Consolidated Balance Sheet is presented. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The amendments in this ASU were applied retrospectively to all periods presented. Refer to the additional disclosures pertaining to restricted cash within the Restricted Cash significant accounting policy above. The adoption of this amended guidance did not have a material impact on our Consolidated Statements of Cash Flows.

In August 2016, the FASB issued ASU No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments. This ASU is intended to reduce existing diversity in practice in how certain cash receipts and payments are presented and classified in the Consolidated Statements of Cash Flows. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year. The adoption of this amended guidance did not have a material impact on our Consolidated Statements of Cash Flows.

In January 2016, the FASB issued ASU No. 2016-01, Recognition and Measurement of Financial Assets and Financial Liabilities, which requires equity investments (except those accounted for under the equity method of accounting or those that result in consolidation of the investee) to be measured at fair value, with changes in fair value recognized in net income. This guidance eliminates the previous cost method of accounting for certain equity securities that did not have readily determinable fair values. This guidance also simplifies the impairment assessment and allows for a fair value measurement alternative for equity investments without readily determinable fair values and includes presentation and disclosure changes. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year and was applied following a prospective basis. We have elected to utilize the measurement alternative for equity investments that do not have readily determinable fair values and measure these investments at cost less impairment plus or minus observable price changes in orderly transactions. As a result of the adoption of this amended guidance, we reclassified approximately $4.7 million from accumulated other comprehensive loss to the opening balance of capital reserves within our Consolidated Balance Sheet as of September 1, 2018, which did not have a material impact on our consolidated financial statements.
    
In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606). The amendments within this ASU, as well as within the additional clarifying ASUs issued by the FASB, provide a single comprehensive model to be used to determine the measurement of revenue and timing of recognition for revenue arising from contracts with customers. The core principle of the amended guidance is that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The new revenue recognition guidance includes a five-step model for the recognition of revenue, including (1) identifying the contract with a customer, (2) identifying the performance obligations in the contract, (3) determining the transaction price, (4) allocating the transaction price to the performance obligations, and (5) recognizing revenue when (or as) an entity satisfies a performance obligation. This ASU was effective for us beginning September 1, 2018, for our fiscal year 2019 and for interim periods within that fiscal year, and we elected to apply the modified retrospective method of adoption to all contracts as of the date of initial application. The majority of our revenues are attributable to forward commodity sales contracts, which are considered to be physically settled derivatives under ASC 815, Derivatives and Hedging (Topic 815). Revenues arising from derivative contracts accounted for under ASC 815 are specifically outside the scope of ASC Topic 606 and therefore not subject to the provisions of the new revenue recognition guidance. As such, the impact of adoption of the new revenue guidance has only been assessed for our revenue contracts that are not accounted for as derivative arrangements. The primary impact of adoption was changes to the timing of revenue recognition for certain revenue streams that had an immaterial impact. Following the modified retrospective method of adoption, we determined the cumulative effect of adoption for all contracts with customers that had not been completed as of the adoption date was less than $1.0 million. Additionally, the impact of applying ASC Topic 606 compared to previous guidance during the three and nine months ended May 31, 2019, was an overall decrease to revenues of $14.2 million and $36.9 million, respectively. Other financial statement impacts related to the adoption of ASC Topic 606 were not material. Our revenue recognition accounting policy and additional information related to our revenue streams and related performance obligations required to be satisfied in order to recognize revenue can be found within the Significant Accounting Policies section above and within Note 3, Revenues.

Not Yet Adopted

In August 2018, the FASB issued ASU No. 2018-15, Intangibles - Goodwill and Other - Internal-Use Software: Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That Is a Service Contract. This ASU reduces the complexity of accounting for implementation, setup and other upfront costs incurred in a cloud computing service arrangement that is hosted by a vendor. This ASU aligns the accounting for implementation costs of hosting arrangements, irrespective of whether the arrangements convey a license to the hosted software. This ASU permits either a prospective or retrospective transition approach. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year, with early adoption permitted. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-14, Disclosure Framework - Changes to the Disclosure Requirements for Defined Benefit Plans, which amends ASC 715-20, Compensation - Retirement Benefits - Defined Benefit Plans - General. This ASU modifies the disclosure requirements for employers that sponsor defined benefit pension or other postretirement plans by removing and adding certain disclosures for these plans. The eliminated disclosures include (a) the amounts in accumulated other comprehensive income expected to be recognized in net periodic benefit costs over the next fiscal year and (b) the effects of a one-percentage-point change in assumed health care cost trend rates on the net periodic benefit costs and the benefit obligation for postretirement health care benefits. The new disclosures include the interest crediting rates for cash balance plans and an explanation of significant gains and losses related to changes in benefit obligations. This ASU is effective for us beginning September 1, 2021, for our fiscal year 2022 and for interim periods within that fiscal year, with early adoption permitted. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In August 2018, the FASB issued ASU No. 2018-13, Disclosure Framework - Changes to the Disclosure Requirements for Fair Value Measurement, which amends ASC 820, Fair Value Measurement. This ASU modifies the disclosure requirements for fair value measurements by removing, modifying and adding certain disclosures. Specifically, the guidance removes the requirement to disclose the amount and reasons for any transfers between Level 1 and Level 2 of the fair value hierarchy and removes the requirement to disclose a description of the valuation processes used to value Level 3 fair value measurements. The guidance also requires additional disclosures surrounding Level 3 changes in unrealized gains/losses included in other comprehensive income, as well as the range and weighted average of significant unobservable inputs calculation. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year. Early adoption is permitted. We elected to remove the disclosures permitted by ASU No. 2018-13 during the fourth quarter of fiscal 2018, but have not early adopted the new required additional disclosures, which is permitted by the guidance. The adoption of this amended guidance is not expected to have a material impact on our consolidated financial statements.

In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments - Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments. The amendments in this ASU introduce a new approach, based on expected losses, to estimate credit losses on certain types of financial instruments. This ASU is intended to provide financial statement users with more decision-useful information about the expected credit losses associated with most financial assets measured at amortized cost and certain other instruments, including trade and other receivables, loans, held-to-maturity debt securities, net investments in leases and off-balance-sheet credit exposures. Entities are required to apply the provisions of this ASU as a cumulative-effect adjustment to retained earnings as of the beginning of the first reporting period in which the guidance is adopted. This ASU is effective for us beginning September 1, 2020, for our fiscal year 2021 and for interim periods within that fiscal year. We are currently evaluating the impact the adoption will have on our consolidated financial statements.

In February 2016, the FASB issued ASU No. 2016-02, Leases (Topic 842), which replaces the existing guidance within ASC 840, Leases. The amendments within this ASU, as well as within additional clarifying ASUs issued by the FASB, introduce a lessee model requiring entities to recognize assets and liabilities for most leases, but continue recognizing the associated expenses in a manner similar to existing accounting guidance. In July 2018, the FASB issued ASU No. 2018-10, Codification Improvements to Topic 842, Leases, which amends ASU No. 2016-02, Leases. This ASU is effective for us beginning September 1, 2019, for our fiscal year 2020 and for interim periods within that fiscal year. We have initiated our assessment of the new lease standard, including the utilization of surveys to gather more information about existing leases and the implementation of a new lease software to improve the collection, maintenance, and aggregation of lease data necessary for the expanded reporting and disclosure requirements under the new lease standard. It is expected that the primary impact upon adoption will be the recognition, on a discounted basis, of our minimum commitments under noncancelable operating leases as right of use assets and liabilities on our Consolidated Balance Sheets. This will result in a material increase in assets and liabilities recorded on our Consolidated Balance Sheets. Although we expect the new lease guidance will have a material impact on our Consolidated Balance Sheets, we are continuing to evaluate the practical expedient guidance provisions available and the extent of potential impacts on our consolidated financial statements, processes and internal controls.
v3.19.2
Organization, Basis of Presentation and Significant Accounting Policies (Tables)
9 Months Ended
May 31, 2019
Accounting Policies [Abstract]  
Reconciliation of Cash and Cash Equivalents
The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within our Consolidated Balance Sheets that aggregates to the amount presented in our Consolidated Statements of Cash Flows. During the nine months ended May 31, 2019, we updated the presentation of our Consolidated Statements of Cash Flows to include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on our Consolidated Statements of Cash Flows.

 
May 31, 2019
 
August 31, 2018
 
May 31, 2018
 
August 31, 2017
 
(Dollars in thousands)
Cash and cash equivalents
$
155,252

 
$
450,617

 
$
533,887

 
$
181,379

Restricted cash included in other current assets
99,398

 
90,193

 
43,912

 
83,561

Restricted cash included in other assets
672

 
3,130

 
3,158

 
7,332

Total cash and cash equivalents and restricted cash
$
255,322

 
$
543,940

 
$
580,957

 
$
272,272

Reconciliation of Restricted Cash
The following table provides a reconciliation of cash and cash equivalents and restricted cash as reported within our Consolidated Balance Sheets that aggregates to the amount presented in our Consolidated Statements of Cash Flows. During the nine months ended May 31, 2019, we updated the presentation of our Consolidated Statements of Cash Flows to include restricted cash with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown on our Consolidated Statements of Cash Flows.

 
May 31, 2019
 
August 31, 2018
 
May 31, 2018
 
August 31, 2017
 
(Dollars in thousands)
Cash and cash equivalents
$
155,252

 
$
450,617

 
$
533,887

 
$
181,379

Restricted cash included in other current assets
99,398

 
90,193

 
43,912

 
83,561

Restricted cash included in other assets
672

 
3,130

 
3,158

 
7,332

Total cash and cash equivalents and restricted cash
$
255,322

 
$
543,940

 
$
580,957

 
$
272,272

v3.19.2
Restatement of Previously Issued Financial Information (Tables)
9 Months Ended
May 31, 2019
Accounting Changes and Error Corrections [Abstract]  
Consolidated Financial Statement Adjustments
 
For the Three Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
Revenues
$
9,027,525

 
$
59,803

 
$
9,087,328

 
$

 
$
9,087,328

 
b, c
Cost of goods sold
8,728,914

 
112,447

 
8,841,361

 
335

 
8,841,696

 
a, b, c
Gross profit
298,611

 
(52,644
)
 
245,967

 
(335
)
 
245,632

 
 
Marketing, general and administrative
161,578

 
1

 
161,579

 
845

 
162,424

 
c
Reserve and impairment charges (recoveries), net
(3,811
)
 

 
(3,811
)
 

 
(3,811
)
 

Operating earnings (loss)
140,844

 
(52,645
)
 
88,199

 
(1,180
)
 
87,019

 
 
(Gain) loss on disposal of business
(124,050
)
 

 
(124,050
)
 

 
(124,050
)
 
 
Interest expense
49,340

 

 
49,340

 

 
49,340

 
 
Other (income) loss
(14,622
)
 

 
(14,622
)
 
(1,180
)
 
(15,802
)
 
 
Equity (income) loss from investments
(59,308
)
 

 
(59,308
)
 

 
(59,308
)
 
 
Income (loss) before income taxes
289,484


(52,645
)
 
236,839

 

 
236,839

 
 
Income tax expense (benefit)
60,338

 
(5,119
)
 
55,219

 

 
55,219

 
a
Net income (loss)
229,146

 
(47,526
)
 
181,620

 

 
181,620

 
 
Net income (loss) attributable to noncontrolling interests
(187
)
 

 
(187
)
 

 
(187
)
 
 
Net income (loss) attributable to CHS Inc. 
$
229,333

 
$
(47,526
)
 
$
181,807

 
$

 
$
181,807

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-07 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $29.8 million reduction of income before income taxes and a $24.7 million reduction of net income. These adjustments related to a $29.8 million increase of cost of goods sold and a $5.1 million decrease of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements
(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $38.8 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements
(c) The correction of other misstatements resulted in a $22.8 million decrease of income before income taxes and net income. The $22.8 million decrease of income before income taxes related primarily to an $18.8 million increase of cost of goods sold due to adjustments associated with the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018. The remaining decrease relates to an $11.8 million increase of revenues and a $14.5 million increase of cost of goods sold related to the timing of revenue recognition, as well as a $1.3 million increase of cost of goods sold related to the valuation of crack spread derivatives.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations, primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $9.2 million increase of revenues and cost of goods sold.



 
For the Nine Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
Revenues
$
23,927,508

 
$
171,857

 
$
24,099,365

 
$

 
$
24,099,365

 
b, c
Cost of goods sold
23,173,151

 
224,116

 
23,397,267

 
1,005

 
23,398,272

 
a, b, c
Gross profit
754,357

 
(52,259
)
 
702,098

 
(1,005
)
 
701,093

 
 
Marketing, general and administrative
488,459

 
(667
)
 
487,792

 
2,537

 
490,329

 
c
Reserve and impairment charges (recoveries), net
(18,944
)
 

 
(18,944
)
 

 
(18,944
)
 
 
Operating earnings (loss)
284,842

 
(51,592
)
 
233,250

 
(3,542
)
 
229,708

 
 
(Gain) loss on disposal of business
(131,755
)
 

 
(131,755
)
 

 
(131,755
)
 
 
Interest expense
130,218

 

 
130,218

 

 
130,218

 
 
Other (income) loss
(51,000
)
 

 
(51,000
)
 
(3,542
)
 
(54,542
)
 
 
Equity (income) loss from investments
(137,111
)
 

 
(137,111
)
 

 
(137,111
)
 
 
Income (loss) before income taxes
474,490

 
(51,592
)
 
422,898

 

 
422,898

 
 
Income tax expense (benefit)
(100,901
)
 
(10,962
)
 
(111,863
)
 

 
(111,863
)
 
a, c
Net income (loss)
575,391

 
(40,630
)
 
534,761

 

 
534,761

 
 
Net income (loss) attributable to noncontrolling interests
(699
)
 

 
(699
)
 

 
(699
)
 
 
Net income (loss) attributable to CHS Inc. 
$
576,090

 
$
(40,630
)
 
$
535,460

 
$

 
$
535,460

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-07 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $52.9 million reduction of income before income taxes and a $48.5 million reduction of net income. These adjustments related to a $52.9 million increase of cost of goods sold and a $4.4 million increase of income tax benefit related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements
(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $189.0 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements
(c) The correction of other misstatements resulted in a $1.3 million increase of income before income taxes and a $7.9 million increase of net income. The $1.3 million increase of income before income taxes relates to a combination of offsetting misstatements, including a $13.7 million decrease of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018, a $6.6 million decrease of cost of goods sold related to the valuation of crack spread derivatives, and a $2.6 million decrease in expense related to postretirement benefit plan activity that resulted from a timing difference associated with recording certain benefit plan expenses (included in cost of goods sold and marketing, general and administrative expenses). The overall increase was mostly offset by an $18.8 million increase of cost of goods sold due to a timing difference associated with the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018. The increase in income before income taxes and net income was also impacted by a $7.0 million increase of revenue and a $9.9 million increase of cost of goods sold related to the timing of revenue recognition. In addition to the increase of income before income taxes, an income tax benefit of $6.6 million was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations, primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $24.1 million decrease of revenues and cost of goods sold.
CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
 
For the Three Months Ended
May 31, 2018
 
For the Nine Months Ended
May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Restatement References
 
(Dollars in thousands)
 
 
Net income (loss)
$
229,146

 
$
(47,526
)
 
$
181,620

 
$
575,391

 
$
(40,630
)
 
$
534,761

 
a, c
Other comprehensive income (loss), net of tax:
 
 
 
 
 
 
 
 
 
 
 
 
 
Postretirement benefit plan activity
3,417

 

 
3,417

 
10,755

 
(2,602
)
 
8,153

 
c
Unrealized net gain (loss) on available for sale investments
6,286

 

 
6,286

 
13,480

 

 
13,480

 
 
Cash flow hedges
413

 

 
413

 
1,472

 

 
1,472

 
 
Foreign currency translation adjustment
(11,617
)
 
1,429

 
(10,188
)
 
(11,763
)
 
1,716

 
(10,047
)
 
a
Other comprehensive income (loss), net of tax
(1,501
)
 
1,429

 
(72
)
 
13,944

 
(886
)
 
13,058

 
 
Comprehensive income
227,645

 
(46,097
)
 
181,548

 
589,335

 
(41,516
)
 
547,819

 
 
Less: comprehensive income (loss) attributable to noncontrolling interests
(187
)
 

 
(187
)
 
(699
)
 

 
(699
)
 
 
Comprehensive income attributable to CHS Inc. 
$
227,832

 
$
(46,097
)
 
$
181,735

 
$
590,034

 
$
(41,516
)
 
$
548,518

 
 

For the three months ended May 31, 2018

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $24.7 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three months ended May 31, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements
(b) None.

Other misstatements
(c) The correction of other misstatements resulted in a $22.8 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three months ended May 31, 2018, above.

For the nine months ended May 31, 2018

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $48.5 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the nine months ended May 31, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements
(b) None.

Other misstatements
(c) The correction of other misstatements resulted in a $7.9 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the nine months ended May 31, 2018, above. The adjustment related to postretirement benefit plan activity is attributable to a timing difference associated with recording certain benefit plan expenses.

CHS INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
 
For the Nine Months Ended May 31, 2018
 
 
 
As Previously Reported
 
Restatement Adjustments
 
As Restated
 
Accounting
Changes*
 
As Presented
 
Restatement References
 
(Dollars in thousands)
 
 
 
Cash flows from operating activities:
 

 
 
 
 
 
 

 
 
 
 
Net income (loss)
$
575,391

 
$
(40,630
)
 
$
534,761

 
$

 
$
534,761

 
a, c
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
 

 
 
 
 
 
 
 


 
 
Depreciation and amortization
358,134

 

 
358,134

 

 
358,134

 
 
Amortization of deferred major repair costs
43,908

 

 
43,908

 

 
43,908

 
 
Equity (income) loss from investments
(137,111
)
 

 
(137,111
)
 

 
(137,111
)
 
 
Distributions from equity investments
97,665

 

 
97,665

 

 
97,665

 
 
Provision for doubtful accounts
(4,145
)
 

 
(4,145
)
 

 
(4,145
)
 
 
Gain and recovery on disposal of business
(131,755
)
 

 
(131,755
)
 

 
(131,755
)
 
 
Deferred taxes
(135,560
)
 
(1,463
)
 
(137,023
)
 

 
(137,023
)
 
a, c
Other, net
18,272

 
(2,602
)
 
15,670

 

 
15,670

 
c
Changes in operating assets and liabilities, net of acquisitions:
 

 
 
 
 
 
 
 


 
 
Receivables
(216,501
)
 
21,955

 
(194,546
)
 

 
(194,546
)
 
c
Inventories
(366,858
)
 
52,419

 
(314,439
)
 

 
(314,439
)
 
b, c
Derivative assets
(86,910
)
 
64,456

 
(22,454
)
 

 
(22,454
)
 
a, c
Margin and related deposits
(47,079
)
 

 
(47,079
)
 

 
(47,079
)
 
 
Supplier advance payments
(177,373
)
 

 
(177,373
)
 

 
(177,373
)
 
 
Other current assets and other assets
75,191

 
(10,294
)
 
64,897

 
(43,823
)
 
21,074

 
a, c
Customer margin deposits and credit balances
(19,914
)
 

 
(19,914
)
 

 
(19,914
)
 
 
Customer advance payments
(40,547
)
 
(10,633
)
 
(51,180
)
 

 
(51,180
)
 
c
Accounts payable and accrued expenses
73,745

 
(64,128
)
 
9,617

 

 
9,617

 
a, b, c
Derivative liabilities
23,758

 
(12,144
)
 
11,614

 

 
11,614

 
a, c
Other liabilities
(49,842
)
 

 
(49,842
)
 

 
(49,842
)
 
 
Net cash provided by (used in) operating activities
(147,531
)
 
(3,064
)
 
(150,595
)
 
(43,823
)
 
(194,418
)
 
 
Cash flows from investing activities:
 

 
 
 
 
 
 
 


 
 
Acquisition of property, plant and equipment
(249,078
)
 

 
(249,078
)
 

 
(249,078
)
 
 
Proceeds from disposition of property, plant and equipment
80,045

 

 
80,045

 

 
80,045

 
 
Proceeds from sale of business
234,914

 

 
234,914

 

 
234,914

 
 
Expenditures for major repairs
(39,363
)
 

 
(39,363
)
 

 
(39,363
)
 
 
Investments redeemed
6,607

 

 
6,607

 

 
6,607

 
 
Changes in CHS Capital notes receivable, net
(83,908
)
 

 
(83,908
)
 

 
(83,908
)
 
 
Financing extended to customers
(72,106
)
 

 
(72,106
)
 

 
(72,106
)
 
 
Payments from customer financing
38,725

 

 
38,725

 

 
38,725

 
 
Other investing activities, net
12,377

 


 
12,377

 

 
12,377

 
 
Net cash provided by (used in) investing activities
(71,787
)
 

 
(71,787
)
 

 
(71,787
)
 
 
Cash flows from financing activities:
 

 
 
 
 
 
 
 


 
 
Proceeds from lines of credit and long-term borrowings
29,802,708

 

 
29,802,708

 

 
29,802,708

 
 
Payments on lines of credit, long-term borrowings and capital lease obligations
(29,028,104
)
 
3,052

 
(29,025,052
)
 

 
(29,025,052
)
 
c
Preferred stock dividends paid
(126,501
)
 

 
(126,501
)
 

 
(126,501
)
 
 
Redemptions of equities
(6,391
)
 

 
(6,391
)
 

 
(6,391
)
 
 
Other financing activities, net
(70,916
)
 
12

 
(70,904
)
 

 
(70,904
)
 
c
Net cash provided by (used in) financing activities
570,796

 
3,064

 
573,860

 

 
573,860

 
 
Effect of exchange rate changes on cash and cash equivalents
1,030

 

 
1,030

 

 
1,030

 
 
Net increase (decrease) in cash and cash equivalents and restricted cash
352,508

 

 
352,508

 
(43,823
)
 
308,685

 
 
Cash and cash equivalents and restricted cash at beginning of period
181,379

 

 
181,379

 
90,893

 
272,272

 
 
Cash and cash equivalents and restricted cash at end of period
$
533,887

 
$

 
$
533,887

 
$
47,070

 
$
580,957

 
 
* Previously reported amounts have been revised to reflect the impact of adopting ASU 2016-18 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements
(a) The correction of freight derivatives and related misstatements resulted in a $48.5 million reduction of net income for the nine months ended May 31, 2018. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three and nine months ended May 31, 2018, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassifications between operating activity line items in the Consolidated Statement of Cash Flows; however, none of the freight derivatives and related misstatements impacted the classifications between operating, investing or financing activities.

Intercompany misstatements
(b) The correction of intercompany misstatements did not impact net income for the nine months ended May 31, 2018; however, the impact of adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments of less than $5.0 million between line items in the Consolidated Statement of Cash Flows. None of the intercompany misstatements impacted the classifications between operating, investing or financing activities within the Consolidated Statement of Cash Flows.
    
Other misstatements
(c) The correction of other misstatements resulted in a $7.9 million increase of net income for the nine months ended May 31, 2018. Refer to further details of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three and nine months ended May 31, 2018, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments between line items in the Consolidated Statement of Cash Flows. As a result, a misclassification adjustment was made between operating and financing activities related to a $3.1 million reduction of notes payable resulting from a duplicative entry. In addition, various misclassification adjustments were made between operating activity lines, the most significant of which related to (1) a $24.1 million decrease of inventory and increase in accounts receivable as of August 31, 2017, due to a timing difference related to the settlement of a single ocean vessel and (2) the $49.2 million net impact associated with the decrease of inventory and increase of accounts payable that resulted from the misclassification adjustment for certain items previously included within a contra-inventory account to accounts payable as of August 31, 2017, and May 31, 2018.
v3.19.2
Receivables (Tables)
9 Months Ended
May 31, 2019
Receivables [Abstract]  
Schedule of Accounts, Notes, Loans and Financing Receivable
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Trade accounts receivable
$
2,136,872

 
$
1,578,764

CHS Capital notes receivable
577,145

 
569,379

Other
438,507

 
534,071

 
3,152,524

 
2,682,214

Less: allowances and reserves
176,072

 
221,813

Total receivables
$
2,976,452

 
$
2,460,401

v3.19.2
Revenues (Tables)
9 Months Ended
May 31, 2019
Revenue from Contract with Customer [Abstract]  
Disaggregation of Revenues
The following table presents revenues recognized under ASC Topic 606 disaggregated by reportable segment, as well as the amount of revenues recognized under ASC Topic 815 and other applicable accounting guidance for the three and nine months ended May 31, 2019. Other applicable accounting guidance primarily includes revenues recognized under ASC Topic 840, Leases and ASC Topic 470, Debt that fall outside the scope of ASC Topic 606.
 
 
ASC 606
 
ASC 815
 
Other Guidance
 
Total Revenues
For the Three Months Ended May 31, 2019
 
(Dollars in thousands)
Energy
 
$
1,544,533

 
$
193,512

 
$

 
$
1,738,045

Ag
 
2,234,378

 
4,485,089

 
25,648

 
6,745,115

Corporate and Other
 
4,841

 

 
9,940

 
14,781

Total revenues
 
$
3,783,752

 
$
4,678,601

 
$
35,588

 
$
8,497,941

 
 
 
 
 
 
 
 
 
For the Nine Months Ended May 31, 2019
 
 
 
 
 
 
 
 
Energy
 
$
4,826,762

 
$
547,348

 
$

 
$
5,374,110

Ag
 
4,574,203

 
13,375,276

 
95,578

 
18,045,057

Corporate and Other
 
14,818

 

 
31,784

 
46,602

Total revenues
 
$
9,415,783

 
$
13,922,624

 
$
127,362

 
$
23,465,769

v3.19.2
Inventories (Tables)
9 Months Ended
May 31, 2019
Inventory Disclosure [Abstract]  
Schedule of Inventory, Current
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Grain and oilseed
$
1,115,510

 
$
1,298,522

Energy
899,150

 
715,161

Agronomy
635,560

 
246,326

Feed and farm supplies
567,952

 
391,906

Processed grain and oilseed
104,113

 
99,426

Other
16,036

 
17,308

Total inventories
$
3,338,321

 
$
2,768,649


v3.19.2
Investments (Tables)
9 Months Ended
May 31, 2019
Investments [Abstract]  
Investment Holdings, Schedule of Investments [Table Text Block]
 
May 31, 2019
 
August 31, 2018
 
(Dollars in thousands)
Equity method investments:
 
 
 
CF Industries Nitrogen, LLC
$
2,767,053

 
$
2,735,073

Ventura Foods, LLC
368,774

 
360,150

Ardent Mills, LLC
209,624

 
205,898

Other equity method investments
269,099

 
288,016

Other investments
123,590

 
122,788

Total investments
$
3,738,140

 
$
3,711,925

Equity Method Investments [Table Text Block]
The following table provides aggregate summarized unaudited financial information for our equity method investments in CF Nitrogen, Ventura Foods and Ardent Mills for the nine months ended May 31, 2019, and 2018:
 
For the Nine Months Ended May 31,
 
2019
 
2018
 
(Dollars in thousands)
Net sales
$
6,646,394

 
$
6,238,495

Gross profit
951,969

 
719,555

Net earnings
688,724

 
435,192

Earnings attributable to CHS Inc.
168,830

 
109,266

v3.19.2
Goodwill and Other Intangible Assets (Tables)
9 Months Ended
May 31, 2019
Finite-Lived Intangible Assets [Line Items]  
Schedule of Goodwill [Table Text Block]
 
Energy
 
Ag
 
Corporate
and Other
 
Total
 
(Dollars in thousands)
Balances, August 31, 2018
$
552

 
$
127,338

 
$
10,574

 
$
138,464

Goodwill acquired during the period

 
61,358

 

 
61,358

Balances, May 31, 2019
$
552

 
$
188,696

 
$
10,574

 
$
199,822

Schedule of Intangible Assets and Goodwill [Table Text Block]
 
May 31, 2019
 
August 31, 2018
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
Gross Carrying Amount
 
Accumulated Amortization
 
Net
 
(Dollars in thousands)
Customer lists
$
84,815

 
$
(16,054
)
 
$
68,761

 
$
40,815

 
$
(13,082
)
 
$
27,733

Trademarks and other intangible assets
9,736

 
(5,393
)
 
4,343

 
6,536

 
(4,931
)
 
1,605

Total intangible assets
$
94,551

 
$
(21,447
)
 
$
73,104

 
$
47,351

 
$
(18,013
)
 
$
29,338

Schedule of Finite-Lived Intangible Assets, Future Amortization Expense
 
(Dollars in thousands)
Year 1
$
4,540

Year 2
4,487

Year 3
4,187

Year 4
3,944

Year 5
3,940

v3.19.2
Goodwill and Other Intangible Assets Goodwill by segment (Tables)
9 Months Ended
May 31, 2019
Goodwill [Line Items]  
Schedule of Goodwill [Table Text Block]
 
Energy
 
Ag
 
Corporate
and Other
 
Total
 
(Dollars in thousands)
Balances, August 31, 2018
$
552

 
$
127,338

 
$
10,574

 
$
138,464

Goodwill acquired during the period

 
61,358

 

 
61,358

Balances, May 31, 2019
$
552

 
$
188,696

 
$
10,574

 
$
199,822

v3.19.2
Notes Payable and Long-Term Debt (Tables)
9 Months Ended
May 31, 2019
Debt Disclosure [Abstract]  
Schedule of Long-term Debt Instruments

May 31, 2019

August 31, 2018

(Dollars in thousands)
Notes payable
$
2,021,216


$
1,437,264

CHS Capital notes payable
742,009


834,932

Total notes payable
$
2,763,225


$
2,272,196


Schedule of Interest,Net
Interest expense for the three months ended May 31, 2019, and 2018, was $42.8 million and $49.3 million, respectively, net of capitalized interest of $2.5 million and $1.7 million, respectively. Interest expense for the nine months ended May 31, 2019, and 2018, was $123.0 million and $130.2 million, respectively, net of capitalized interest of $7.1 million and $4.8 million, respectively.
v3.19.2
Equities (Tables)
9 Months Ended
May 31, 2019
Class of Stock [Line Items]  
Schedule of Accumulated Other Comprehensive Income (Loss)
 
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, 2018, net of tax
$
(140,335
)
 
$
8,861

 
$
(5,882
)
 
$
(62,559
)
 
$
(199,915
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
175

 

 
(317
)
 
(25
)
 
(167
)
Amounts reclassified out
2,565

 

 
(1,475
)
 

 
1,090

Total other comprehensive income (loss), before tax
2,740

 

 
(1,792
)
 
(25
)
 
923

Tax effect
(639
)
 

 
485

 
(380
)
 
(534
)
Other comprehensive income (loss), net of tax
2,101

 

 
(1,307
)
 
(405
)
 
389

Reclassifications
416

 
(8,861
)
 
983

 
2,756

 
(4,706
)
Balance as of November 30, 2018, net of tax
$
(137,818
)
 
$

 
$
(6,206
)
 
$
(60,208
)
 
$
(204,232
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
102

 

 
18,954

 
3,176

 
22,232

Amounts reclassified out
2,564

 

 
(5,677
)
 

 
(3,113
)
Total other comprehensive income (loss), before tax
2,666

 

 
13,277

 
3,176

 
19,119

Tax effect
(664
)
 

 
(3,308
)
 
(263
)
 
(4,235
)
Other comprehensive income (loss), net of tax
2,002

 

 
9,969

 
2,913

 
14,884

Balance as of February 28, 2019, net of tax
$
(135,816
)
 
$

 
$
3,763

 
$
(57,295
)
 
$
(189,348
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications
(164
)
 

 
(19,680
)
 
(7,725
)
 
(27,569
)
Amounts reclassified out
2,564

 

 
(1,385
)
 

 
1,179

Total other comprehensive income (loss), before tax
2,400

 

 
(21,065
)
 
(7,725
)
 
(26,390
)
Tax effect
(904
)
 

 
5,248

 
(267
)
 
4,077

Other comprehensive income (loss), net of tax
1,496

 

 
(15,817
)
 
(7,992
)
 
(22,313
)
Balance as of May 31, 2019, net of tax
$
(134,320
)
 
$

 
$
(12,054
)
 
$
(65,287
)
 
$
(211,661
)


 
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, 2017, net of tax
$
(132,444
)
 
$
10,041

 
$
(6,954
)
 
$
(51,003
)
 
$
(180,360
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
4,044

 
(435
)
 
(612
)
 
2,997

Amounts reclassified out
4,214

 

 
429

 
(2,042
)
 
2,601

Total other comprehensive income (loss), before tax
4,214

 
4,044

 
(6
)
 
(2,654
)
 
5,598

Tax effect
(2,620
)
 
(404
)
 
2

 
443

 
(2,579
)
Other comprehensive income (loss), net of tax
1,594

 
3,640

 
(4
)
 
(2,211
)
 
3,019

Balance as of November 30, 2017, net of tax (As Restated)
$
(130,850
)
 
$
13,681

 
$
(6,958
)
 
$
(53,214
)
 
$
(177,341
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
6,562

 
1,081

 
2,774

 
10,417

Amounts reclassified out
4,451

 
(1,527
)
 
425

 

 
3,349

Total other comprehensive income (loss), before tax
4,451

 
5,035

 
1,506

 
2,774

 
13,766

Tax effect
(1,309
)
 
(1,481
)
 
(443
)
 
(422
)
 
(3,655
)
Other comprehensive income (loss), net of tax
3,142

 
3,554

 
1,063

 
2,352

 
10,111

Balance as of February 28, 2018, net of tax (As Restated)
$
(127,708
)
 
$
17,235

 
$
(5,895
)
 
$
(50,862
)
 
$
(167,230
)
Other comprehensive income (loss), before tax:
 
 
 
 
 
 
 
 
 
Amounts before reclassifications

 
8,906

 
160

 
(10,442
)
 
(1,376
)
Amounts reclassified out
4,841

 

 
425

 

 
5,266

Total other comprehensive income (loss), before tax
4,841

 
8,906

 
585

 
(10,442
)
 
3,890

Tax effect
(1,424
)
 
(2,620
)
 
(172
)
 
254

 
(3,962
)
Other comprehensive income (loss), net of tax
3,417

 
6,286

 
413

 
(10,188
)
 
(72
)
Balance as of May 31, 2018, net of tax (As Restated)
$
(124,291
)
 
$
23,521

 
$
(5,482
)
 
$
(61,050
)
 
$
(167,302
)
Schedule of Stockholders Equity
Changes in equities for the nine months ended May 31, 2019, and 2018 are as follows:
 
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, 2018
$
3,837,580

 
$
29,498

 
$
742,378

 
$
2,264,038

 
$
(199,915
)
 
$
1,482,003

 
$
9,446

 
$
8,165,028

Reversal of prior year redemption estimates
24,072

 

 

 

 

 

 

 
24,072

Redemptions of equities
(22,004
)
 
(183
)
 
(1,885
)
 

 

 

 

 
(24,072
)
Preferred stock dividends

 

 

 

 

 
(84,334
)
 

 
(84,334
)
Reclassification of unrealized (gain) loss on investments

 

 

 

 
(4,706
)
 
4,706

 

 

Other, net
(409
)
 

 
(26
)
 

 

 
3,436

 
318

 
3,319

Net income (loss)

 

 

 

 

 
347,504

 
(389
)
 
347,115

Other comprehensive income (loss), net of tax

 

 

 

 
389

 

 

 
389

Estimated 2019 cash patronage refunds

 

 

 

 

 
(89,344
)
 

 
(89,344
)
Estimated 2019 equity redemptions
(50,081
)
 

 

 

 

 

 

 
(50,081
)
Balance, November 30, 2018
$
3,789,158

 
$
29,315

 
$
740,467

 
$
2,264,038

 
$
(204,232
)
 
$
1,663,971

 
$
9,375

 
$
8,292,092

Reversal of prior year patronage and redemption estimates
6,681

 

 
(345,330
)
 

 

 
420,330

 

 
81,681

Distribution of 2018 patronage refunds

 

 
349,353

 

 

 
(424,333
)
 

 
(74,980
)
Redemptions of equities
(5,988
)
 
(74
)
 
(619
)
 

 

 

 

 
(6,681
)
Preferred stock dividends

 

 

 

 

 
(42,167
)
 

 
(42,167
)
Other, net
(774
)
 

 
2,589

 

 

 
(2,888
)
 
(581
)
 
(1,654
)
Net income (loss)

 

 

 

 

 
248,766

 
(462
)
 
248,304

Other comprehensive income (loss), net of tax

 

 

 

 
14,884

 

 

 
14,884

Estimated 2019 cash patronage refunds

 

 

 

 

 
(69,400
)
 

 
(69,400
)
Estimated 2019 equity redemptions
(39,850
)
 

 

 

 

 

 

 
(39,850
)
Balance, February 28, 2019
$
3,749,227

 
$
29,241

 
$
746,460

 
$
2,264,038

 
$
(189,348
)
 
$
1,794,279

 
$
8,332

 
$
8,402,229

Reversal of prior year redemption estimates
45,815

 

 

 

 

 

 

 
45,815

Distribution of 2018 patronage refunds

 

 
3,212

 

 

 
(3,901
)
 

 
(689
)
Redemptions of equities
(34,798
)
 
(34
)
 
(10,812
)
 

 

 

 

 
(45,644
)
Other, net
(1,285
)
 

 
(3,722
)
 

 

 
4,526

 
11

 
(470
)
Net income (loss)

 

 

 

 

 
54,620

 
93

 
54,713

Other comprehensive income (loss), net of tax

 

 

 

 
(22,313
)
 

 

 
(22,313
)
Estimated 2019 cash patronage refunds

 

 

 

 

 
(15,494
)
 

 
(15,494
)
Estimated 2019 equity redemptions
(6,438
)
 

 

 

 

 

 

 
(6,438
)
Balance, May 31, 2019
$
3,752,521

 
$
29,207

 
$
735,138

 
$
2,264,038

 
$
(211,661
)
 
$
1,834,030

 
$
8,436

 
$
8,411,709





 
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, 2017
$
3,906,426

 
$
29,836

 
$
405,387

 
$
2,264,038

 
$
(180,360
)
 
$
1,267,808

 
$
12,505

 
$
7,705,640

Reversal of prior year redemption estimates
1,561

 

 

 

 

 

 

 
1,561

Redemptions of equities
(1,449
)
 
(53
)
 
(59
)
 

 

 

 

 
(1,561
)
Preferred stock dividends

 

 

 

 

 
(84,334
)
 

 
(84,334
)
Other, net
(1,498
)
 
(66
)
 
(344
)
 

 

 
3,954

 
(2
)
 
2,044

Net income (loss)

 

 

 

 

 
187,646

 
(464
)
 
187,182

Other comprehensive income (loss), net of tax

 

 

 

 
3,019

 

 

 
3,019

Estimated 2018 cash patronage refunds

 

 

 

 

 
(50,702
)
 

 
(50,702
)
Estimated 2018 equity redemptions
(19,901
)
 

 

 

 

 

 

 
(19,901
)
Balance, November 30, 2017 (As Restated)
$
3,885,139

 
$
29,717

 
$
404,984

 
$
2,264,038

 
$
(177,341
)
 
$
1,324,372

 
$
12,039

 
$
7,742,948

Reversal of prior year patronage and redemption estimates
1,060

 

 
(126,333
)
 

 

 
126,333

 

 
1,060

Distribution of 2017 patronage refunds

 

 
128,858

 

 

 
(128,858
)
 

 

Redemptions of equities
(953
)
 
(16
)
 
(91
)
 

 

 

 

 
(1,060
)
Preferred stock dividends

 

 

 

 

 
(42,167
)
 

 
(42,167
)
Other, net
(2,652
)
 
(45
)
 
(1
)
 

 

 
816

 
(60
)
 
(1,942
)
Net income (loss)

 

 

 

 

 
166,007

 
(48
)
 
165,959

Other comprehensive income (loss), net of tax

 

 

 

 
10,111

 

 

 
10,111

Estimated 2018 cash patronage refunds

 

 

 

 

 
3,823

 

 
3,823

Estimated 2018 equity redemptions
(12,375
)
 

 

 

 

 

 

 
(12,375
)
Balance, February 28, 2018 (As Restated)
$
3,870,219

 
$
29,656

 
$
407,417

 
$
2,264,038

 
$
(167,230
)
 
$
1,450,326

 
$
11,931

 
$
7,866,357

Reversal of prior year redemption estimates
1,649

 

 

 

 

 

 

 
1,649

Distribution of 2017 patronage refunds

 

 
(27
)
 

 

 
27

 

 

Redemptions of equities
(1,412
)
 
(18
)
 
(219
)
 

 

 

 

 
(1,649
)
Other, net
(1,849
)
 
(1
)
 
(36
)
 

 

 
(252
)
 
(98
)
 
(2,236
)
Net income (loss)

 

 

 

 

 
181,807

 
(187
)
 
181,620

Other comprehensive income (loss), net of tax

 

 

 

 
(72
)
 

 

 
(72
)
Estimated 2018 cash patronage refunds

 

 

 

 

 
(72,868
)
 

 
(72,868
)
Estimated 2018 equity redemptions
(51,965
)
 

 

 

 

 

 

 
(51,965
)
Balance, May 31, 2018 (As Restated)
$
3,816,642

 
$
29,637

 
407,135

 
$
2,264,038

 
$
(167,302
)
 
$
1,559,040

 
$
11,646

 
$
7,920,836

* Certain amounts associated with Accumulated Other Comprehensive Loss, Capital Reserves and Noncontrolling Interests in the changes in equities table above were restated to reflect the impact of the misstatements associated with the restatement of previously issued financial statements. Note that the majority of the restatement adjustments within the changes in equities table above relate to the opening restatement adjustments to the August 31, 2017, balances. Additionally, the misstatements for activity in the changes in equities table above relates primarily to net income (loss) during fiscal 2018. Refer to further details included within Note 2, Restatement of Previously Issued Financial Information.
Preferred Stock [Text Block]
Preferred Stock Dividends

The following is a summary of dividends per share by class of preferred stock for the nine months ended May 31, 2019, and 2018. Note that due to the timing of dividend declarations during the fiscal year, no declarations were made during the third quarter of fiscal 2019 or fiscal 2018.

 
 
 
For the Nine Months Ended May 31,
 
Nasdaq symbol
 
2019
 
2018
 
 
 
(Dollars per share)
8% Cumulative Redeemable
CHSCP
 
1.50

 
1.50

Class B Cumulative Redeemable, Series 1
CHSCO
 
1.48

 
1.48

Class B Reset Rate Cumulative Redeemable, Series 2
CHSCN
 
1.33

 
1.33

Class B Reset Rate Cumulative Redeemable, Series 3
CHSCM
 
1.27

 
1.27

Class B Cumulative Redeemable, Series 4
CHSCL
 
1.41

 
1.41

v3.19.2
Benefit Plans Schedule of Net Benefit Costs (Tables)
9 Months Ended
May 31, 2019
Retirement Benefits [Abstract]  
Schedule of Net Benefit Costs of Assumptions Used
 
Qualified
Pension Benefits
 
Non-Qualified
Pension Benefits
 
Other Benefits
 
2019
 
2018
 
2019
 
2018
 
2019
 
2018
Components of net periodic benefit costs for the three months ended May 31 are as follows:
 (Dollars in thousands)
  Service cost
$
9,648

 
$
9,920

 
$
78

 
$
137

 
$
263

 
$
236

  Interest cost
7,099

 
5,997

 
186

 
177

 
274

 
227

  Expected return on assets
(11,242
)
 
(12,044
)
 

 

 

 

  Prior service cost (credit) amortization
42

 
360

 
(19
)
 
7

 
(139
)
 
(142
)
  Actuarial (gain) loss amortization
3,087

 
4,905

 
1

 
16

 
(407
)
 
(306
)
Net periodic benefit cost
$
8,634

 
$
9,138

 
$
246

 
$
337

 
$
(9
)
 
$
15

Components of net periodic benefit costs for the nine months ended May 31 are as follows:
 
  Service cost
$
28,944

 
$
29,758

 
$
233

 
$
411

 
$
790

 
$
707

  Interest cost
21,297

 
17,988

 
560

 
533

 
821

 
681

  Expected return on assets
(33,726
)
 
(36,133
)
 

 

 

 

  Prior service cost (credit) amortization
127

 
1,078

 
(56
)
 
23

 
(417
)
 
(424
)
  Actuarial (gain) loss amortization
9,261

 
16,304

 
2

 
46

 
(1,221
)
 
(918
)
  Settlement (gain) loss
169

 

 

 

 

 

Net periodic benefit cost
$
26,072

 
$
28,995

 
$
739

 
$
1,013

 
$
(27
)
 
$
46

v3.19.2
Segment Reporting (Tables)
9 Months Ended
May 31, 2019
Segment Reporting [Abstract]  
Schedule of Segment Reporting Information, by Segment

Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Three Months Ended May 31, 2019:
(Dollars in thousands)
Revenues, including intersegment revenues
$
1,841,290


$
6,749,182


$

 
$
16,418


$
(108,949
)

$
8,497,941

Operating earnings (loss)
572


12,090


(9,040
)
 
2,622




6,244

(Gain) loss on disposal of business

 
(2,474
)
 

 

 

 
(2,474
)
Interest expense
1,171


26,675


13,140

 
3,883


(2,096
)

42,773

Other (income) loss
(1,098
)
 
(29,211
)
 
(399
)
 
(1,852
)
 
2,096

 
(30,464
)
Equity (income) loss from investments
(760
)

(4,012
)

(41,959
)
 
(18,439
)



(65,170
)
Income (loss) before income taxes
$
1,259


$
21,112


$
20,178

 
$
19,030


$


$
61,579

Intersegment revenues
$
(103,245
)

$
(4,067
)

$

 
$
(1,637
)

$
108,949


$

 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Three Months Ended May 31, 2018: (As Restated)
(Dollars in thousands)
Revenues, including intersegment revenues
$
1,999,628

 
$
7,193,316

 
$

 
$
14,075

 
$
(119,691
)
 
$
9,087,328

Operating earnings (loss)
29,729

 
63,170

 
(4,153
)
 
(1,727
)
 


 
87,019

(Gain) loss on disposal of business
(65,903
)
 
5

 

 
(58,152
)
 

 
(124,050
)
Interest expense
3,496

 
28,854

 
13,119

 
4,324

 
(453
)
 
49,340

Other (income) loss
(967
)
 
(14,430
)
 
(441
)
 
(417
)
 
453

 
(15,802
)
Equity (income) loss from investments
(967
)
 
(11,359
)
 
(35,639
)
 
(11,343
)
 

 
(59,308
)
Income (loss) before income taxes
$
94,070

 
$
60,100

 
$
18,808

 
$
63,861

 
$

 
$
236,839

Intersegment revenues
$
(114,497
)
 
$
(3,784
)
 
$

 
$
(1,410
)
 
$
119,691

 
$


 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Nine Months Ended May 31, 2019:
(Dollars in thousands)
Revenues, including intersegment revenues
$
5,722,338

 
$
18,056,033

 
$

 
$
52,179

 
$
(364,781
)
 
$
23,465,769

Operating earnings (loss)
537,932

 
45,088

 
(24,048
)
 
11,415

 

 
570,387

(Gain) loss on disposal of business

 
(3,886
)
 

 

 

 
(3,886
)
Interest expense
3,756

 
73,073

 
42,161

 
7,945

 
(3,985
)
 
122,950

Other (income) loss
(4,301
)
 
(60,455
)
 
(2,362
)
 
(2,816
)
 
3,985

 
(65,949
)
Equity (income) loss from investments
(1,828
)
 
(2,675
)
 
(118,416
)
 
(50,475
)
 

 
(173,394
)
Income (loss) before income taxes
$
540,305

 
$
39,031

 
$
54,569

 
$
56,761

 
$

 
$
690,666

Intersegment revenues
$
(348,228
)
 
$
(10,976
)
 
$

 
$
(5,577
)
 
$
364,781

 
$

Total assets at May 31, 2019
$
4,573,463

 
$
7,377,779

 
$
2,788,010

 
$
2,834,231

 
$

 
$
17,573,483

 
 
 
 
 
 
 
 
 
 
 
 
 
Energy
 
Ag
 
Nitrogen Production
 
Corporate
and Other
 
Reconciling
Amounts
 
Total
For the Nine Months Ended May 31, 2018: (As Restated)
(Dollars in thousands)
Revenues, including intersegment revenues
$
5,845,437

 
$
18,574,846

 
$

 
$
46,018

 
$
(366,936
)
 
$
24,099,365

Operating earnings (loss)
179,077

 
70,954

 
(14,527
)
 
(5,796
)
 

 
229,708

(Gain) loss on disposal of business
(65,903
)
 
(7,700
)
 

 
(58,152
)
 

 
(131,755
)
Interest expense
11,760

 
69,242

 
39,067

 
11,569

 
(1,420
)
 
130,218

Other (income) loss
(2,977
)
 
(47,128
)
 
(2,612
)
 
(3,245
)
 
1,420

 
(54,542
)
Equity (income) loss from investments
(2,779
)
 
(25,180
)
 
(79,986
)
 
(29,166
)
 

 
(137,111
)
Income (loss) before income taxes
$
238,976

 
$
81,720

 
$
29,004

 
$
73,198

 
$

 
$
422,898

Intersegment revenues
$
(349,361
)
 
$
(11,391
)
 
$

 
$
(6,184
)
 
$
366,936

 
$

v3.19.2
Derivative Financial Instruments and Hedging Activities (Tables)
9 Months Ended
May 31, 2019
Derivative Instruments and Hedging Activities Disclosure [Abstract]  
Reconciliation of gross and net fair values of assets and liabilities subject to offsetting arrangements
 
May 31, 2019
 
 
 
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 derivatives
$
251,236

 
$

 
$
25,753

 
$
225,483

Foreign exchange derivatives
9,685

 

 
4,477

 
5,208

Embedded derivative asset
20,957

 

 

 
20,957

Total
$
281,878

 
$

 
$
30,230

 
$
251,648

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
300,763

 
$
4,363

 
$
25,753

 
$
270,647

Foreign exchange derivatives
7,324

 

 
4,477

 
2,847

Total
$
308,087

 
$
4,363

 
$
30,230

 
$
273,494



 
August 31, 2018
 
 
 
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 derivatives
$
313,033

 
$

 
$
26,781

 
$
286,252

Foreign exchange derivatives
15,401

 

 
8,703

 
6,698

Embedded derivative asset
23,595

 

 

 
23,595

Total
$
352,029

 
$

 
$
35,484

 
$
316,545

Derivative Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
421,054

 
$
12,983

 
$
26,781

 
$
381,290

Foreign exchange derivatives
24,701

 

 
8,703

 
15,998

Total
$
445,755

 
$
12,983

 
$
35,484

 
$
397,288

Derivatives Not Designated as Hedging Instruments

The following table sets forth the pretax gains (losses) on derivatives not accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018.

 
 
 
For the Three Months Ended
May 31,
 
For the Nine Months Ended May 31,
 
Location of
Gain (Loss)
 
2019
 
(As Restated) 2018
 
2019
 
(As Restated) 2018
 
 
 
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
 
$
(23,749
)
 
$
32,289

 
$
41,814

 
$
(48,756
)
Foreign exchange derivatives
Cost of goods sold
 
(13,040
)
 
(16,549
)
 
14,941

 
(15,600
)
Foreign exchange derivatives
Marketing, general and administrative
 
(7
)
 
(1,109
)
 
(1,421
)
 
(1,260
)
Interest rate derivatives
Interest expense
 

 
(2
)
 

 
(3
)
Embedded derivative
Other income
 
399

 
441

 
2,362

 
2,612

Total
 
$
(36,397
)
 
$
15,070

 
$
57,696

 
$
(63,007
)
Schedule of Derivative Instruments, Purchase and Sales Contracts
all outstanding commodity and freight contracts accounted for as derivative instruments.
 
May 31, 2019
 
August 31, 2018
 
Long
 
Short
 
Long
 
Short
 
(Units in thousands)
Grain and oilseed - bushels
693,978

 
865,956

 
715,866

 
929,873

Energy products - barrels
16,223

 
5,930

 
17,011

 
8,329

Processed grain and oilseed - tons
406

 
2,208

 
1,064

 
2,875

Crop nutrients - tons
19

 
72

 
11

 
76

Ocean freight - metric tons
125

 
95

 
227

 
45

Natural gas - MMBtu

 

 
610

 

Schedule of Derivative Instruments in Statement of Financial Position, Fair Value
The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the line items on our Consolidated Balance Sheets in which they are recorded.
 
 
Derivative Assets
 
 
 
Derivative Liabilities
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
 
(Dollars in thousands)
 
 
 
(Dollars in thousands)
Derivative assets
 
$
5,547

 
$
812

 
Derivative liabilities
 
$
14,692

 
$
634

The following table presents the fair value of our derivative interest rate swap instruments designated as fair value hedges and the line items on our Consolidated Balance Sheets in which they are recorded.
 
 
Derivative Assets
 
 
 
Derivative Liabilities
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
Balance Sheet Location
 
May 31, 2019
 
August 31, 2018
 
 
(Dollars in thousands)
 
 
 
(Dollars in thousands)
Derivative assets
 
$

 
$

 
Derivative liabilities
 
$
45

 
$
771

Other assets
 
4,479

 

 
Other liabilities
 
668

 
8,681

Total
 
$
4,479

 
$

 
Total
 
$
713

 
$
9,452

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)
The following table sets forth the pretax gains (losses) on derivatives accounted for as hedging instruments that have been included in our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018.
 
 
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
Gain (Loss) on Fair Value Hedging Relationships:
 
Location of
Gain (Loss)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
(Dollars in thousands)
Interest rate swaps
 
Interest expense
 
$
(8,122
)
 
$
(231
)
 
$
(15,129
)
 
$
(18,118
)
Hedged item
 
Interest expense
 
8,122

 
231

 
15,129

 
18,118

Total
 
$

 
$

 
$

 
$

Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location
The following table provides the location and carrying amount of hedged liabilities in our Consolidated Balance Sheets as of May 31, 2019, and August 31, 2018.
 
 
May 31, 2019
 
August 31, 2018
Balance Sheet Location
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Liabilities
 
Carrying Amount of Hedged Liabilities
 
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Liabilities
 
 
(Dollars in thousands)
Long-term debt
 
$
470,419

 
$
24,581

 
$
485,548

 
$
9,452

Schedule of Derivative Instruments, Effect on Other Comprehensive Income (Loss)
The following table presents the pretax gains (losses) recorded in other comprehensive income relating to cash flow hedges for the three and nine months ended May 31, 2019, and 2018:
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
 
2019
 
2018
 
2019
 
2018
 
 
(Dollars in thousands)
Commodity derivatives
 
$
(21,029
)
 
$

 
$
(9,323
)
 
$

Schedule of Cash Flow Hedges Included in Accumulated Other Comprehensive Income (Loss)
The following table presents the pretax gains (losses) relating to cash flow hedges that were reclassified from accumulated other comprehensive loss into our Consolidated Statements of Operations for the three and nine months ended May 31, 2019, and 2018:
 
 
 
For the Three Months Ended May 31,
 
For the Nine Months Ended May 31,
 
Location of
Gain (Loss)
 
2019
 
2018
 
2019
 
2018
 
 
 
(Dollars in thousands)
Commodity derivatives
Cost of goods sold
 
$
1,810

 
$

 
$
9,812

 
$

v3.19.2
Fair Value Measurements (Tables)
9 Months Ended
May 31, 2019
Fair Value Disclosures [Abstract]  
Fair Value Measurements, Recurring and Nonrecurring
 
May 31, 2019
 
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 derivatives
$
27,024

 
$
229,760

 
$

 
$
256,784

Foreign exchange derivatives

 
9,704

 

 
9,704

Interest rate swap derivatives

 
4,479

 

 
4,479

Deferred compensation assets
39,327

 

 

 
39,327

Embedded derivative asset

 
20,957

 

 
20,957

Other assets
5,763

 

 

 
5,763

Total
$
72,114

 
$
264,900

 
$

 
$
337,014

Liabilities:
 

 
 

 
 
 
 

Commodity derivatives
$
76,388

 
$
239,066

 
$

 
$
315,454

Foreign exchange derivatives

 
7,480

 

 
7,480

Interest rate swap derivatives

 
713

 

 
713

Total
$
76,388

 
$
247,259

 
$

 
$
323,647


 
August 31, 2018
 
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 derivatives
$
54,487

 
$
259,359

 
$

 
$
313,846

Foreign exchange derivatives

 
15,401

 

 
15,401

Deferred compensation assets
39,073

 

 

 
39,073

Embedded derivative asset

 
23,595

 

 
23,595

Other assets
5,334

 

 

 
5,334

Total
$
98,894

 
$
298,355

 
$

 
$
397,249

Liabilities:
 
 
 
 
 
 
 
Commodity derivatives
$
31,778

 
$
389,911

 
$

 
$
421,689

Foreign exchange derivatives

 
24,701

 

 
24,701

Interest rate swap derivatives

 
9,452

 

 
9,452

Total
$
31,778

 
$
424,064

 
$

 
$
455,842


v3.19.2
Acquisitions (Tables)
9 Months Ended
May 31, 2019
Business Combinations [Abstract]  
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed [Table Text Block]
 
(Dollars in thousands)
Cash
$
8,033

Current assets
708,764

Property, plant and equipment
44,064

Goodwill
61,358

Intangible assets
47,200

Other non-current assets
55

Liabilities
(718,262
)
Total net assets acquired
$
151,212

v3.19.2
Organization, Basis of Presentation and Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents, and Restricted Cash (Details) - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
May 31, 2018
Aug. 31, 2017
Cash and Cash Equivalents [Line Items]        
Cash and cash equivalents $ 155,252 $ 450,617 $ 533,887 $ 181,379
Total cash and cash equivalents and restricted cash 255,322 543,940 580,957 272,272
Restricted cash included in other current assets        
Cash and Cash Equivalents [Line Items]        
Restricted cash 99,398 90,193 43,912 83,561
Restricted cash included in other assets        
Cash and Cash Equivalents [Line Items]        
Restricted cash $ 672 $ 3,130 $ 3,158 $ 7,332
v3.19.2
Organization, Basis of Presentation and Significant Accounting Policies - Recent Accounting Pronouncements (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 01, 2018
May 31, 2019
Nov. 30, 2018
May 31, 2018
May 31, 2019
May 31, 2018
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Overall decrease to revenues   $ (8,497,941)   $ (9,087,328) $ (23,465,769) $ (24,099,365)
Accounting Standards Update 2016-01            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Reclassification from AOCI $ 4,700   $ 0      
Accounting Standards Update 2014-09            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Cumulative effect of adoption for all contracts and customers that had not been completed as of the adoption date $ 1,000          
Overall decrease to revenues   (3,783,752)     (9,415,783)  
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09            
New Accounting Pronouncements or Change in Accounting Principle [Line Items]            
Overall decrease to revenues   $ 14,200     $ 36,900  
v3.19.2
Restatement of Previously Issued Financial Information - Summary of Impacts of the Restatement Adjustments on Previously Reported Consolidated Statements of Operations (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
Feb. 28, 2019
Nov. 30, 2018
May 31, 2018
Feb. 28, 2018
Nov. 30, 2017
May 31, 2019
May 31, 2018
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Revenues $ 8,497,941     $ 9,087,328     $ 23,465,769 $ 24,099,365
Cost of goods sold 8,274,170     8,841,696     22,343,944 23,398,272
Gross profit 223,771     245,632     1,121,825 701,093
Marketing, general and administrative 183,723     162,424     523,648 490,329
Reserve and impairment charges (recoveries), net       (3,811)       (18,944)
Operating earnings (loss) 6,244     87,019     570,387 229,708
Gain (Loss) on Disposition of Business (2,474)     (124,050)     (3,886) (131,755)
Interest Expense 42,773     49,340     122,950 130,218
Other (income) loss (30,464)     (15,802)     (65,949) (54,542)
Equity (income) loss from investments (65,170)     (59,308)     (173,394) (137,111)
Income (loss) before income taxes 61,579     236,839     690,666 422,898
Income tax expense (benefit) 6,866     55,219     40,534 (111,863)
Net income (loss) 54,713 $ 248,304 $ 347,115 181,620 $ 165,959 $ 187,182 650,132 534,761
Net income (loss) attributable to noncontrolling interests 93     (187)     (758) (699)
Net income (loss) attributable to CHS Inc. $ 54,620     181,807     $ 650,890 535,460
As Previously Reported                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Revenues       9,027,525       23,927,508
Cost of goods sold       8,728,914       23,173,151
Gross profit       298,611       754,357
Marketing, general and administrative       161,578       488,459
Reserve and impairment charges (recoveries), net       (3,811)       (18,944)
Operating earnings (loss)       140,844       284,842
Gain (Loss) on Disposition of Business       124,050       (131,755)
Interest Expense       49,340       130,218
Other (income) loss       (14,622)       (51,000)
Equity (income) loss from investments       (59,308)       (137,111)
Income (loss) before income taxes       289,484       474,490
Income tax expense (benefit)       60,338       (100,901)
Net income (loss)       229,146       575,391
Net income (loss) attributable to noncontrolling interests       (187)       (699)
Net income (loss) attributable to CHS Inc.       229,333       576,090
Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Revenues       59,803       171,857
Cost of goods sold       112,447       224,116
Gross profit       (52,644)       (52,259)
Marketing, general and administrative       1       (667)
Reserve and impairment charges (recoveries), net       0       0
Operating earnings (loss)       (52,645)       (51,592)
Gain (Loss) on Disposition of Business       0       0
Interest Expense       0       0
Other (income) loss       0       0
Equity (income) loss from investments       0       0
Income (loss) before income taxes       (52,645)       (51,592)
Income tax expense (benefit)       (5,119)       (10,962)
Net income (loss)       (47,526)       (40,630)
Net income (loss) attributable to noncontrolling interests       0       0
Net income (loss) attributable to CHS Inc.       (47,526)       (40,630)
As Restated                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Revenues       9,087,328       24,099,365
Cost of goods sold       8,841,361       23,397,267
Gross profit       245,967       702,098
Marketing, general and administrative       161,579       487,792
Reserve and impairment charges (recoveries), net       (3,811)       (18,944)
Operating earnings (loss)       88,199       233,250
Gain (Loss) on Disposition of Business       124,050       (131,755)
Interest Expense       49,340       130,218
Other (income) loss       (14,622)       (51,000)
Equity (income) loss from investments       (59,308)       (137,111)
Income (loss) before income taxes       236,839       422,898
Income tax expense (benefit)       55,219       (111,863)
Net income (loss)       181,620       534,761
Net income (loss) attributable to noncontrolling interests       (187)       (699)
Net income (loss) attributable to CHS Inc.       181,807       535,460
Other Misstatements | Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Cost of goods sold       18,800        
Income (loss) before income taxes       (22,800)       1,300
Income tax expense (benefit)               (6,600)
Net income (loss)       (22,800)       7,900
Freight Derivatives And Related Misstatements [Member] | Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Cost of goods sold       29,800       52,900
Income (loss) before income taxes       (29,800)       (52,900)
Income tax expense (benefit)       (5,100)       (4,400)
Net income (loss)       (24,700)       (48,500)
Intercompany Misstatements | Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Revenues       38,800       189,000
Other Misstatements, Timing Of Revenue Recognition [Member] | Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Cost of goods sold       14,500       9,900
Revenues       11,800       7,000
Other Misstatements, Valuation of Derivatives [Member] | Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Cost of goods sold       1,300       (6,600)
Other Misstatements, Misclassification Adjustment [Member] | Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Revenues       9,200       (24,100)
Revisions related to ASU 2017-07                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Cost of goods sold       335       1,005
Gross profit       (335)       (1,005)
Marketing, general and administrative       845       2,537
Operating earnings (loss)       (1,180)       (3,542)
Other (income) loss       $ (1,180)       $ (3,542)
v3.19.2
Restatement of Previously Issued Financial Information - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended 12 Months Ended
May 31, 2019
Feb. 28, 2019
Nov. 30, 2018
May 31, 2018
Feb. 28, 2018
Nov. 30, 2017
May 31, 2019
May 31, 2018
Aug. 31, 2017
Aug. 31, 2018
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to income before income taxes $ 61,579     $ 236,839     $ 690,666 $ 422,898    
Increase (decrease) to net income (54,713) $ (248,304) $ (347,115) (181,620) $ (165,959) $ (187,182) (650,132) (534,761)    
Decrease in cash (155,252)     (533,887)     (155,252) (533,887) $ (181,379) $ (450,617)
Increase (decrease) to cost of goods sold 8,274,170     8,841,696     22,343,944 23,398,272    
Increase (decrease) to income tax expense 6,866     55,219     40,534 (111,863)    
Increase (decrease) to revenues 8,497,941     9,087,328     23,465,769 24,099,365    
Decrease of inventory $ (3,338,321)           $ (3,338,321)     $ (2,768,649)
Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to income before income taxes       (52,645)       (51,592)    
Increase (decrease) to net income       47,526       40,630    
Increase (decrease) to cost of goods sold       112,447       224,116    
Increase (decrease) to income tax expense       (5,119)       (10,962)    
Increase (decrease) to revenues       59,803       171,857    
Freight Derivatives And Related Misstatements [Member]                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Misstatement between line items in the Consolidated Statements of Cash Flows               3,000    
Freight Derivatives And Related Misstatements [Member] | Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to income before income taxes       (29,800)       (52,900)    
Increase (decrease) to net income       24,700       48,500    
Increase (decrease) to cost of goods sold       29,800       52,900    
Increase (decrease) to income tax expense       (5,100)       (4,400)    
Intercompany Misstatements                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Misstatement between line items in the Consolidated Statements of Cash Flows               3,000    
Intercompany Misstatements | Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Misstatement between line items in the Consolidated Statements of Cash Flows                 5,000  
Other Misstatements | Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to income before income taxes       (22,800)       1,300    
Increase (decrease) to net income       22,800       (7,900)    
Increase (decrease) to cost of goods sold       18,800            
Increase (decrease) to income tax expense               (6,600)    
Misstatement between line items in the Consolidated Statements of Cash Flows               18,300 49,200  
Reduction of notes payable   $ 3,100                
Other Misstatements, Excise Tax Credit [Member] | Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to income before income taxes               1,300    
Increase (decrease) to cost of goods sold               (13,700)    
Other Misstatements, Valuation of Derivatives [Member] | Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to cost of goods sold       $ 1,300       (6,600)    
Other Misstatements, Postretirement Benefit Plan Activity | Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to cost of goods sold               (2,600)    
Other Misstatements, Timing Difference | Restatement Adjustments                    
Error Corrections and Prior Period Adjustments Restatement [Line Items]                    
Increase (decrease) to cost of goods sold               $ 18,800    
Decrease of inventory                 24,100  
Increase in accounts receivable                 $ 24,100  
v3.19.2
Restatement of Previously Issued Financial Information - Summary of Impacts of the Restatement Adjustments on Previously Reported Consolidated Statements of Comprehensive Income (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
Feb. 28, 2019
Nov. 30, 2018
May 31, 2018
Feb. 28, 2018
Nov. 30, 2017
May 31, 2019
May 31, 2018
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Net income (loss) $ 54,713 $ 248,304 $ 347,115 $ 181,620 $ 165,959 $ 187,182 $ 650,132 $ 534,761
Other comprehensive income (loss), net of tax:                
Postretirement benefit plan activity 1,496     3,417     5,599 8,153
Unrealized net gain (loss) on available for sale investments 0     6,286     0 13,480
Cash flow hedges (15,817)     413     (7,155) 1,472
Foreign currency translation adjustment       (10,188)       (10,047)
Other comprehensive income (loss), net of tax (22,313) $ 14,884 $ 389 (72) $ 10,111 $ 3,019 (7,040) 13,058
Comprehensive income 32,400     181,548     643,092 547,819
Less comprehensive income attributable to noncontrolling interests 93     (187)     (758) (699)
Comprehensive income attributable to CHS Inc. $ 32,307     181,735     $ 643,850 548,518
As Previously Reported                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Net income (loss)       229,146       575,391
Other comprehensive income (loss), net of tax:                
Postretirement benefit plan activity       3,417       10,755
Unrealized net gain (loss) on available for sale investments       6,286       13,480
Cash flow hedges       413       1,472
Foreign currency translation adjustment       (11,617)       (11,763)
Other comprehensive income (loss), net of tax       (1,501)       13,944
Comprehensive income       227,645       589,335
Less comprehensive income attributable to noncontrolling interests       (187)       (699)
Comprehensive income attributable to CHS Inc.       227,832       590,034
Restatement Adjustments                
Error Corrections and Prior Period Adjustments Restatement [Line Items]                
Net income (loss)       (47,526)       (40,630)
Other comprehensive income (loss), net of tax:                
Postretirement benefit plan activity       0       (2,602)
Unrealized net gain (loss) on available for sale investments       0       0
Cash flow hedges       0       0
Foreign currency translation adjustment       1,429       1,716
Other comprehensive income (loss), net of tax       1,429       (886)
Comprehensive income       (46,097)       (41,516)
Less comprehensive income attributable to noncontrolling interests       0       0
Comprehensive income attributable to CHS Inc.       $ (46,097)       $ (41,516)
v3.19.2
Restatement of Previously Issued Financial Information - Summary of Impacts of the Restatement Adjustments on Previously Reported Consolidated Statements of Cash Flows (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
Feb. 28, 2019
Nov. 30, 2018
May 31, 2018
Feb. 28, 2018
Nov. 30, 2017
May 31, 2019
May 31, 2018
Cash flows from operating activities:                
Net income (loss) $ 54,713 $ 248,304 $ 347,115 $ 181,620 $ 165,959 $ 187,182 $ 650,132 $ 534,761
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Depreciation and amortization             352,838 358,134
Amortization of deferred major repair costs             48,960 43,908
Equity (income) loss from investments (65,170)     (59,308)     (173,394) (137,111)
Distributions from equity investments             133,720 97,665
Provision for doubtful accounts             36,874 (4,145)
Gain and recovery on disposal of business             (3,476) (131,755)
Deferred taxes               (137,023)
Other, net             (42,681) 15,670
Changes in operating assets and liabilities, net of acquisitions:                
Receivables             (446,846) (194,546)
Inventories             (199,339) (314,439)
Derivative assets             (70,559) 22,454
Margin and related deposits             (87,911) (47,079)
Supplier advance payments             (157,560) (177,373)
Other current assets and other assets             (61,999) 21,074
Customer margin deposits and credit balances             17,268 (19,914)
Customer advance payments             (58,222) (51,180)
Accounts payable and accrued expenses             174,855 9,617
Derivative liabilities             (137,790) 11,614
Other liabilities             (20,863) (49,842)
Net cash provided by (used in) operating activities             129,911 (194,418)
Cash flows from investing activities:                
Acquisition of property, plant and equipment             (278,589) (249,078)
Proceeds from disposition of property, plant and equipment             46,414 80,045
Proceeds from sale of business             5,044 234,914
Expenditures for major repairs             (210,837) (39,363)
Investments redeemed               6,607
Changes in CHS Capital notes receivable, net             (112,608) (83,908)
Financing extended to customers             (10,492) (72,106)
Financing extended to customers               38,725
Other investing activities, net             (3,393) 12,377
Net cash provided by (used in) investing activities             (592,490) (71,787)
Cash flows from financing activities:                
Proceeds from lines of credit and long-term borrowings               29,802,708
Payments on lines of credit, long-term borrowings and capital lease obligations             (20,236,780) (29,025,052)
Preferred stock dividends paid             (126,501) (126,501)
Redemptions of equities             (76,397) (6,391)
Other financing activities, net             (25,993) (70,904)
Net cash provided by (used in) financing activities             174,343 573,860
Effect of exchange rate changes on cash and cash equivalents             (382) 1,030
Net increase (decrease) in cash and cash equivalents and restricted cash             (288,618) 308,685
Cash and cash equivalents and restricted cash at beginning of period     $ 543,940     272,272 543,940 272,272
Cash and cash equivalents and restricted cash at end of period 255,322     580,957     $ 255,322 580,957
As Previously Reported                
Cash flows from operating activities:                
Net income (loss)       229,146       575,391
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Depreciation and amortization               358,134
Amortization of deferred major repair costs               43,908
Equity (income) loss from investments       (59,308)       (137,111)
Distributions from equity investments               97,665
Provision for doubtful accounts               (4,145)
Gain and recovery on disposal of business               (131,755)
Deferred taxes               (135,560)
Other, net               18,272
Changes in operating assets and liabilities, net of acquisitions:                
Receivables               (216,501)
Inventories               (366,858)
Derivative assets               (86,910)
Margin and related deposits               (47,079)
Supplier advance payments               (177,373)
Other current assets and other assets               75,191
Customer margin deposits and credit balances               (19,914)
Customer advance payments               (40,547)
Accounts payable and accrued expenses               73,745
Derivative liabilities               23,758
Other liabilities               (49,842)
Net cash provided by (used in) operating activities               (147,531)
Cash flows from investing activities:                
Acquisition of property, plant and equipment               (249,078)
Proceeds from disposition of property, plant and equipment               80,045
Proceeds from sale of business               234,914
Expenditures for major repairs               (39,363)
Investments redeemed               6,607
Changes in CHS Capital notes receivable, net               (83,908)
Financing extended to customers               (72,106)
Financing extended to customers               38,725
Other investing activities, net               12,377
Net cash provided by (used in) investing activities               (71,787)
Cash flows from financing activities:                
Proceeds from lines of credit and long-term borrowings               29,802,708
Payments on lines of credit, long-term borrowings and capital lease obligations               (29,028,104)
Preferred stock dividends paid               (126,501)
Redemptions of equities               (6,391)
Other financing activities, net               (70,916)
Net cash provided by (used in) financing activities               570,796
Effect of exchange rate changes on cash and cash equivalents               1,030
Net increase (decrease) in cash and cash equivalents and restricted cash               352,508
Cash and cash equivalents and restricted cash at beginning of period           181,379   181,379
Cash and cash equivalents and restricted cash at end of period       533,887       533,887
Restatement Adjustments                
Cash flows from operating activities:                
Net income (loss)       (47,526)       (40,630)
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Depreciation and amortization               0
Amortization of deferred major repair costs               0
Equity (income) loss from investments       0       0
Distributions from equity investments               0
Provision for doubtful accounts               0
Deferred taxes               (1,463)
Other, net               (2,602)
Changes in operating assets and liabilities, net of acquisitions:                
Receivables               21,955
Inventories               52,419
Derivative assets               64,456
Margin and related deposits               0
Supplier advance payments               0
Other current assets and other assets               (10,294)
Customer margin deposits and credit balances               0
Customer advance payments               (10,633)
Accounts payable and accrued expenses               (64,128)
Derivative liabilities               (12,144)
Other liabilities               0
Net cash provided by (used in) operating activities               (3,064)
Cash flows from investing activities:                
Acquisition of property, plant and equipment               0
Proceeds from disposition of property, plant and equipment               0
Proceeds from sale of business               0
Expenditures for major repairs               0
Investments redeemed               0
Changes in CHS Capital notes receivable, net               0
Financing extended to customers               0
Financing extended to customers               0
Other investing activities, net              
Net cash provided by (used in) investing activities               0
Cash flows from financing activities:                
Proceeds from lines of credit and long-term borrowings               0
Payments on lines of credit, long-term borrowings and capital lease obligations               3,052
Preferred stock dividends paid               0
Redemptions of equities               0
Other financing activities, net               12
Net cash provided by (used in) financing activities               3,064
Effect of exchange rate changes on cash and cash equivalents               0
Net increase (decrease) in cash and cash equivalents and restricted cash               0
Cash and cash equivalents and restricted cash at beginning of period $ 0         0   0
Cash and cash equivalents and restricted cash at end of period   $ 0            
As Restated                
Cash flows from operating activities:                
Net income (loss)       181,620       534,761
Adjustments to reconcile net income to net cash provided by (used in) operating activities:                
Depreciation and amortization               358,134
Amortization of deferred major repair costs               43,908
Equity (income) loss from investments       (59,308)       (137,111)
Distributions from equity investments               97,665
Provision for doubtful accounts               (4,145)
Gain and recovery on disposal of business               (131,755)
Deferred taxes               (137,023)
Other, net               15,670
Changes in operating assets and liabilities, net of acquisitions:                
Receivables               (194,546)
Inventories               (314,439)
Derivative assets               (22,454)
Margin and related deposits               (47,079)
Supplier advance payments               (177,373)
Other current assets and other assets               64,897
Customer margin deposits and credit balances               (19,914)
Customer advance payments               (51,180)
Accounts payable and accrued expenses               9,617
Derivative liabilities               11,614
Other liabilities               (49,842)
Net cash provided by (used in) operating activities               (150,595)
Cash flows from investing activities:                
Acquisition of property, plant and equipment               (249,078)
Proceeds from disposition of property, plant and equipment               80,045
Proceeds from sale of business               234,914
Expenditures for major repairs               (39,363)
Investments redeemed               6,607
Changes in CHS Capital notes receivable, net               (83,908)
Financing extended to customers               (72,106)
Financing extended to customers               38,725
Other investing activities, net               12,377
Net cash provided by (used in) investing activities               (71,787)
Cash flows from financing activities:                
Proceeds from lines of credit and long-term borrowings               29,802,708
Payments on lines of credit, long-term borrowings and capital lease obligations               (29,025,052)
Preferred stock dividends paid               (126,501)
Redemptions of equities               (6,391)
Other financing activities, net               (70,904)
Net cash provided by (used in) financing activities               573,860
Effect of exchange rate changes on cash and cash equivalents               1,030
Net increase (decrease) in cash and cash equivalents and restricted cash               352,508
Cash and cash equivalents and restricted cash at beginning of period           181,379   181,379
Cash and cash equivalents and restricted cash at end of period       533,887       533,887
Accounting Standards Update 2016-18                
Changes in operating assets and liabilities, net of acquisitions:                
Other current assets and other assets               (43,823)
Net cash provided by (used in) operating activities               (43,823)
Cash flows from financing activities:                
Net increase (decrease) in cash and cash equivalents and restricted cash               (43,823)
Cash and cash equivalents and restricted cash at beginning of period           $ 90,893   90,893
Cash and cash equivalents and restricted cash at end of period       47,070       47,070
Other Misstatements | Restatement Adjustments                
Cash flows from operating activities:                
Net income (loss)       $ (22,800)       $ 7,900
v3.19.2
Receivables - Schedule of Receivables (Details) - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Receivables [Abstract]    
Trade accounts receivable $ 2,136,872 $ 1,578,764
CHS Capital notes receivable 577,145 569,379
Other 438,507 534,071
Receivables, gross 3,152,524 2,682,214
Less: allowances and reserves 176,072 221,813
Total receivables $ 2,976,452 $ 2,460,401
v3.19.2
Receivables - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2019
Aug. 31, 2018
Notes Receivable, Long-Term      
Interest Income Accrual Term, Discontinued   90 days  
CHS Capital long-term notes receivable additional available credit of counterparty $ 581.5 $ 581.5  
out of period adjustment 29.5 $ 25.5  
Maximum [Member]      
Notes Receivable, Short-Term      
CHS Capital notes receivable, current, term   12 months  
CHS Capital Notes Receivable [Member]      
Notes Receivable, Long-Term      
CHS Capital long-term notes receivable, non-current, term   10 years  
CHS Capital long-term notes receivable $ 187.2 $ 187.2 $ 203.0
Commercial Notes to Notes and Loans Receivable, Net, Percentage 62.00% 62.00% 40.00%
Producer Notes to Notes and Loans Receivable, Net, Percentage 38.00% 38.00% 60.00%
v3.19.2
Revenues - Narrative (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Sep. 01, 2018
Aug. 31, 2018
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]            
Overall decrease to revenues $ (8,497,941) $ (9,087,328) $ (23,465,769) $ (24,099,365)    
Contract liabilities 182,900   182,900     $ 172,000
Revenue recognized 67,900   148,900      
Accounting Standards Update 2014-09            
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]            
Cumulative effect of adoption for all contracts and customers that had not been completed as of the adoption date         $ 1,000  
Overall decrease to revenues (3,783,752)   (9,415,783)      
Difference between Revenue Guidance in Effect before and after Topic 606 | Accounting Standards Update 2014-09            
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]            
Overall decrease to revenues $ 14,200   $ 36,900      
v3.19.2
Revenues - Disaggregation of Revenues (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Disaggregation of Revenue [Line Items]        
Revenues $ 8,497,941 $ 9,087,328 $ 23,465,769 $ 24,099,365
Energy        
Disaggregation of Revenue [Line Items]        
Revenues 1,738,045   5,374,110  
Ag        
Disaggregation of Revenue [Line Items]        
Revenues 6,745,115   18,045,057  
Corporate and Other        
Disaggregation of Revenue [Line Items]        
Revenues 14,781   46,602  
ASC 606        
Disaggregation of Revenue [Line Items]        
Revenues 3,783,752   9,415,783  
ASC 606 | Energy        
Disaggregation of Revenue [Line Items]        
Revenues 1,544,533   4,826,762  
ASC 606 | Ag        
Disaggregation of Revenue [Line Items]        
Revenues 2,234,378   4,574,203  
ASC 606 | Corporate and Other        
Disaggregation of Revenue [Line Items]        
Revenues 4,841   14,818  
ASC 815        
Disaggregation of Revenue [Line Items]        
Revenues 4,678,601   13,922,624  
ASC 815 | Energy        
Disaggregation of Revenue [Line Items]        
Revenues 193,512   547,348  
ASC 815 | Ag        
Disaggregation of Revenue [Line Items]        
Revenues 4,485,089   13,375,276  
ASC 815 | Corporate and Other        
Disaggregation of Revenue [Line Items]        
Revenues 0   0  
Other Guidance        
Disaggregation of Revenue [Line Items]        
Revenues 35,588   127,362  
Other Guidance | Energy        
Disaggregation of Revenue [Line Items]        
Revenues 0   0  
Other Guidance | Ag        
Disaggregation of Revenue [Line Items]        
Revenues 25,648   95,578  
Other Guidance | Corporate and Other        
Disaggregation of Revenue [Line Items]        
Revenues $ 9,940   $ 31,784  
v3.19.2
Inventories - Schedule of Inventories (Details) - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Inventory Disclosure [Abstract]    
Grain and oilseed $ 1,115,510 $ 1,298,522
Energy 899,150 715,161
Agronomy 635,560 246,326
Feed and farm supplies 567,952 391,906
Processed grain and oilseed 104,113 99,426
Other 16,036 17,308
Total inventories $ 3,338,321 $ 2,768,649
v3.19.2
Inventories - Narrative (Details) - USD ($)
$ in Millions
May 31, 2019
Aug. 31, 2018
Inventory Disclosure [Abstract]    
LIFO inventory, difference amount had FIFO inventory valuation method been used $ 283.9 $ 345.0
Percentage of LIFO inventory 20.00% 16.00%
v3.19.2
Investments - Narrative (Details)
$ in Thousands
3 Months Ended 9 Months Ended
Feb. 01, 2016
USD ($)
May 31, 2019
USD ($)
May 31, 2018
USD ($)
May 31, 2019
USD ($)
May 31, 2018
USD ($)
Aug. 31, 2018
USD ($)
Schedule of Equity Method Investments [Line Items]            
Equity (income) loss from investments   $ (65,170) $ (59,308) $ (173,394) $ (137,111)  
Cost Method Investments   123,590   123,590   $ 122,788
Investments   $ 3,738,140   $ 3,738,140   3,711,925
CF Nitrogen LLC [Member]            
Schedule of Equity Method Investments [Line Items]            
Payments to Acquire Equity Method Investments $ 2,800,000          
Ownership percentage   10.00%   10.00%    
Equity Method Investments   $ 2,767,053   $ 2,767,053   2,735,073
Ventura Foods, LLC            
Schedule of Equity Method Investments [Line Items]            
Equity Method Investments   368,774   368,774   360,150
Ardent Mills LLC [Member]            
Schedule of Equity Method Investments [Line Items]            
Equity Method Investments   209,624   209,624   205,898
Nitrogen Production [Member]            
Schedule of Equity Method Investments [Line Items]            
Equity (income) loss from investments   $ (41,959) (35,639) $ (118,416) (79,986)  
Foods [Member] | Ventura Foods, LLC            
Schedule of Equity Method Investments [Line Items]            
Ownership percentage   50.00%   50.00%    
Corporate and Other            
Schedule of Equity Method Investments [Line Items]            
Equity (income) loss from investments   $ (18,439) (11,343) $ (50,475) (29,166)  
Corporate and Other | Ardent Mills LLC [Member]            
Schedule of Equity Method Investments [Line Items]            
Ownership percentage   12.00%   12.00%    
Number of parent companies   3   3    
Ag            
Schedule of Equity Method Investments [Line Items]            
Equity (income) loss from investments   $ (4,012) $ (11,359) $ (2,675) $ (25,180)  
Miscellaneous Investments [Member]            
Schedule of Equity Method Investments [Line Items]            
Equity Method Investments   $ 269,099   $ 269,099   $ 288,016
v3.19.2
Investments Equity Method investments (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Schedule of Equity Method Investments [Line Items]        
Net income (loss) attributable to CHS Inc. $ 54,620 $ 181,807 $ 650,890 $ 535,460
Ardent Mills, Ventura, CF Nitrogen [Member] [Member]        
Schedule of Equity Method Investments [Line Items]        
Net Sales     6,646,394 6,238,495
Gross Profit     951,969 719,555
Net earnings     688,724 435,192
Net income (loss) attributable to CHS Inc.     $ 168,830 $ 109,266
v3.19.2
Goodwill and Other Intangible Assets Goodwill by Segment (Details) - USD ($)
$ in Thousands
9 Months Ended
May 31, 2019
Mar. 01, 2019
Aug. 31, 2018
Goodwill [Roll Forward]      
Goodwill $ 199,822   $ 138,464
Goodwill, Acquired During Period 61,358    
remainingownershipacquired   75.00%  
Energy      
Goodwill [Roll Forward]      
Goodwill 552   552
Ag      
Goodwill [Roll Forward]      
Goodwill 188,696   127,338
Goodwill, Acquired During Period 61,358    
Corporate and Other      
Goodwill [Roll Forward]      
Goodwill $ 10,574   $ 10,574
v3.19.2
Goodwill and Other Intangible Assets Intangibles (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Aug. 31, 2018
Finite-Lived Intangible Assets [Line Items]          
Amortization of Intangible Assets $ 1,900 $ 800 $ 3,400 $ 2,500  
Other Intangible Assets [Member] | Minimum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Finite-Lived Intangible Asset, Useful Life     2 years    
Other Intangible Assets [Member] | Maximum [Member]          
Finite-Lived Intangible Assets [Line Items]          
Finite-Lived Intangible Asset, Useful Life     30 years    
Customer Lists [Member]          
Finite-Lived Intangible Assets [Line Items]          
Finite-Lived Intangible Assets, Carrying Amount 84,815   $ 84,815   $ 40,815
Finite-Lived Intangible Assets, Accumulated Amortization (16,054)   (16,054)   (13,082)
Finite-Lived Intangible Assets, Net 68,761   68,761   27,733
Trademarks and other intangible assets [Member]          
Finite-Lived Intangible Assets [Line Items]          
Finite-Lived Intangible Assets, Carrying Amount 9,736   9,736   6,536
Finite-Lived Intangible Assets, Accumulated Amortization (5,393)   (5,393)   (4,931)
Finite-Lived Intangible Assets, Net 4,343   4,343   1,605
Total intangible assets [Domain]          
Finite-Lived Intangible Assets [Line Items]          
Finite-Lived Intangible Assets, Carrying Amount 94,551   94,551   47,351
Finite-Lived Intangible Assets, Accumulated Amortization (21,447)   (21,447)   (18,013)
Finite-Lived Intangible Assets, Net $ 73,104   $ 73,104   $ 29,338
v3.19.2
Goodwill and Other Intangible Assets (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Goodwill and Intangible Assets Disclosure [Abstract]        
Amortization of Intangible Assets $ 1,900 $ 800 $ 3,400 $ 2,500
Finite-Lived Intangible Assets, Amortization Expense, Next Twelve Months 4,540   4,540  
Finite-Lived Intangible Assets, Amortization Expense, Year Two 4,487   4,487  
Finite-Lived Intangible Assets, Amortization Expense, Year Three 4,187   4,187  
Finite-Lived Intangible Assets, Amortization Expense, Year Four 3,944   3,944  
Finite-Lived Intangible Assets, Amortization Expense, Year Five $ 3,940   $ 3,940  
v3.19.2
Notes Payable and Long-Term Debt - Schedule of Notes Payable and Long-Term Debt (Details) - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Debt Instrument [Line Items]    
Notes payable $ 2,763,225 $ 2,272,196
Notes payable [Member]    
Debt Instrument [Line Items]    
Notes payable 2,021,216 1,437,264
CHS Capital notes payable    
Debt Instrument [Line Items]    
Notes payable $ 742,009 $ 834,932
v3.19.2
Notes Payable and Long-Term Debt - Narrative (Details) - USD ($)
$ in Millions
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Sep. 04, 2018
Debt Instrument [Line Items]          
Interest expense $ 42.8 $ 49.3 $ 123.0 $ 130.2  
Capitalized interest 2.5 $ 1.7 $ 7.1 $ 4.8  
Five-Year Revolving Facilities | Line of Credit | Revolving credit facility          
Debt Instrument [Line Items]          
Debt instrument, term     5 years    
Current borrowing capacity 3,000.0   $ 3,000.0    
Outstanding balance 902.0   902.0    
Repurchase Facility | Subordinated Debt          
Debt Instrument [Line Items]          
Outstanding balance $ 150.0   $ 150.0    
Maximum borrowing capacity         $ 150.0
v3.19.2
Equities Changes in Equity (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Sep. 01, 2018
May 31, 2019
Feb. 28, 2019
Nov. 30, 2018
May 31, 2018
Feb. 28, 2018
Nov. 30, 2017
May 31, 2019
May 31, 2018
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance $ 8,165,028 $ 8,402,229 $ 8,292,092 $ 8,165,028 $ 7,866,357 $ 7,742,948 $ 7,705,640 $ 8,165,028 $ 7,705,640
Reversal of prior year patronage and redemption estimates   45,815 81,681 24,072 1,649 1,060 1,561    
Patronage Refunds   (689) (74,980)   0 0      
Redemptions of equities   (45,644) (6,681) (24,072) (1,649) (1,060) (1,561)    
Preferred stock dividends     (42,167) (84,334)   (42,167) (84,334)    
Other, net   (470) (1,654) 3,319 (2,236) (1,942) 2,044    
Net income (loss)   54,713 248,304 347,115 181,620 165,959 187,182 650,132 534,761
Net income (loss) attributable to CHS Inc.   54,620     181,807     650,890 535,460
Net income (loss) attributable to noncontrolling interests   93     (187)     (758) (699)
Other comprehensive income (loss), net of tax   (22,313) 14,884 389 (72) 10,111 3,019 (7,040) 13,058
Estimated 2019 cash patronage refunds   (15,494) (69,400) (89,344) (72,868) 3,823 (50,702)    
Estimated 2019 equity redemptions   (6,438) (39,850) (50,081) (51,965) (12,375) (19,901)    
Ending Balance   8,411,709 8,402,229 8,292,092 7,920,836 7,866,357 7,742,948 8,411,709 7,920,836
Capital equity certificates [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance 3,837,580 3,749,227 3,789,158 3,837,580 3,870,219 3,885,139 3,906,426 3,837,580 3,906,426
Reversal of prior year patronage and redemption estimates   45,815 6,681 24,072 1,649 1,060 1,561    
Patronage Refunds   0 0   0 0      
Redemptions of equities   (34,798) (5,988) (22,004) (1,412) (953) (1,449)    
Other, net   (1,285) (774) (409) (1,849) (2,652) (1,498)    
Estimated 2019 equity redemptions   (6,438) (39,850) (50,081) (51,965) (12,375) (19,901)    
Ending Balance   3,752,521 3,749,227 3,789,158 3,816,642 3,870,219 3,885,139 3,752,521 3,816,642
Nonpatronage Equity Certificates [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance 29,498 29,241 29,315 29,498 29,656 29,717 29,836 29,498 29,836
Reversal of prior year patronage and redemption estimates   0 0 0 0 0 0    
Patronage Refunds   0 0   0 0      
Redemptions of equities   (34) (74) (183) (18) (16) (53)    
Other, net         (1) (45) (66)    
Ending Balance   29,207 29,241 29,315 29,637 29,656 29,717 29,207 29,637
Non-qualified Equity Certificates [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance 742,378 746,460 740,467 742,378 407,417 404,984 405,387 742,378 405,387
Reversal of prior year patronage and redemption estimates   0 (345,330) 0 0 (126,333) 0    
Patronage Refunds   3,212 349,353   (27) 128,858      
Redemptions of equities   (10,812) (619) (1,885) (219) (91) (59)    
Other, net   (3,722) 2,589 (26) (36) (1) (344)    
Ending Balance   735,138 746,460 740,467 407,135 407,417 404,984 735,138 407,135
Preferred Stock [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038
Patronage Refunds   0 0   0 0      
Redemptions of equities   0 0 0 0 0 0    
Ending Balance   2,264,038 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038 2,264,038
Accumulated Other Comprehensive Income (Loss) [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance (199,915) (189,348) (204,232) (199,915) (167,230) (177,341) (180,360) (199,915) (180,360)
Patronage Refunds   0 0   0 0      
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax       (4,706)          
Other comprehensive income (loss), net of tax   (22,313) 14,884 389 (72) 10,111 3,019    
Ending Balance   (211,661) (189,348) (204,232) (167,302) (167,230) (177,341) (211,661) (167,302)
Capital Reserves [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance 1,482,003 1,794,279 1,663,971 1,482,003 1,450,326 1,324,372 1,267,808 1,482,003 1,267,808
Reversal of prior year patronage and redemption estimates   0 420,330 0 0 126,333 0    
Patronage Refunds   (3,901) (424,333)   27 (128,858)      
Preferred stock dividends     (42,167) (84,334)   (42,167) (84,334)    
Other, net   4,526 (2,888) 3,436 (252) 816 3,954    
Net income (loss) attributable to CHS Inc.   54,620 248,766 347,504 181,807 166,007 187,646    
Estimated 2019 cash patronage refunds   (15,494) (69,400) (89,344) (72,868) 3,823 (50,702)    
Ending Balance   1,834,030 1,794,279 1,663,971 1,559,040 1,450,326 1,324,372 1,834,030 1,559,040
Noncontrolling Interest [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Beginning Balance 9,446 8,332 9,375 9,446 11,931 12,039 12,505 9,446 12,505
Patronage Refunds   0 0   0 0      
Other, net   11 (581) 318 (98) (60) (2)    
Net income (loss) attributable to noncontrolling interests   93 (462) (389) (187) (48) (464)    
Ending Balance   $ 8,436 $ 8,332 9,375 $ 11,646 $ 11,931 $ 12,039 $ 8,436 $ 11,646
Accounting Standards Update 2016-01                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax $ (4,700)     0          
Accounting Standards Update 2016-01 | Accumulated Other Comprehensive Income (Loss) [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax       4,706          
Accounting Standards Update 2016-01 | Capital Reserves [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax       (4,706)          
Accounting Standards Update 2016-01 | Noncontrolling Interest [Member]                  
Increase (Decrease) in Stockholders' Equity [Roll Forward]                  
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax       $ 0          
v3.19.2
Equities Accumulated Other Comprehensive Income (Loss) (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
Feb. 28, 2019
Nov. 30, 2018
May 31, 2018
Feb. 28, 2018
Nov. 30, 2017
May 31, 2019
May 31, 2018
Accumulated Other Comprehensive Income (Loss) [Line Items]                
Beginning Balance $ 8,402,229 $ 8,292,092 $ 8,165,028 $ 7,866,357 $ 7,742,948 $ 7,705,640 $ 8,165,028 $ 7,705,640
Other comprehensive income (loss), net of tax (22,313) 14,884 389 (72) 10,111 3,019 (7,040) 13,058
Ending Balance 8,411,709 8,402,229 8,292,092 7,920,836 7,866,357 7,742,948 8,411,709 7,920,836
Accumulated Defined Benefit Plans Adjustment Attributable to Parent [Member]                
Accumulated Other Comprehensive Income (Loss) [Line Items]                
Beginning Balance (135,816) (137,818) (140,335) (127,708) (130,850) (132,444) (140,335) (132,444)
Other Comprehensive Income (Loss), before Reclassifications, before Tax (164) 102 175 0 0 0    
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax 2,564 2,564 2,565 4,841 4,451 4,214    
Other Comprehensive Income (Loss), before Tax 2,400 2,666 2,740 4,841 4,451 4,214    
Other Comprehensive Income (Loss), Tax (904) (664) (639) (1,424) (1,309) (2,620)    
Other comprehensive income (loss), net of tax 1,496 2,002 2,101 3,417 3,142 1,594    
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax     416          
Ending Balance (134,320) (135,816) (137,818) (124,291) (127,708) (130,850) (134,320) (124,291)
Accumulated Net Investment Gain (Loss) Attributable to Parent [Member]                
Accumulated Other Comprehensive Income (Loss) [Line Items]                
Beginning Balance 0 0 8,861 17,235 13,681 10,041 8,861 10,041
Other Comprehensive Income (Loss), before Reclassifications, before Tax 0 0 0 8,906 6,562 4,044    
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax 0 0 0 0 (1,527) 0    
Other Comprehensive Income (Loss), before Tax 0 0 0 8,906 5,035 4,044    
Other Comprehensive Income (Loss), Tax 0 0 0 (2,620) (1,481) (404)    
Other comprehensive income (loss), net of tax 0 0 0 6,286 3,554 3,640    
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax     (8,861)          
Ending Balance 0 0 0 23,521 17,235 13,681 0 23,521
Accumulated Net Gain (Loss) from Cash Flow Hedges Attributable to Parent [Member]                
Accumulated Other Comprehensive Income (Loss) [Line Items]                
Beginning Balance 3,763 (6,206) (5,882) (5,895) (6,958) (6,954) (5,882) (6,954)
Other Comprehensive Income (Loss), before Reclassifications, before Tax (19,680) 18,954 (317) 160 1,081 (435)    
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax (1,385) (5,677) (1,475) 425 425 429    
Other Comprehensive Income (Loss), before Tax (21,065) 13,277 (1,792) 585 1,506 (6)    
Other Comprehensive Income (Loss), Tax 5,248 (3,308) 485 (172) (443) 2    
Other comprehensive income (loss), net of tax (15,817) 9,969 (1,307) 413 1,063 (4)    
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax     983          
Ending Balance (12,054) 3,763 (6,206) (5,482) (5,895) (6,958) (12,054) (5,482)
Accumulated Foreign Currency Adjustment Attributable to Parent [Member]                
Accumulated Other Comprehensive Income (Loss) [Line Items]                
Beginning Balance (57,295) (60,208) (62,559) (50,862) (53,214) (51,003) (62,559) (51,003)
Other Comprehensive Income (Loss), before Reclassifications, before Tax   3,176 (25) (10,442) 2,774 (612)    
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax (7,725) 0 0 0 0 (2,042)    
Other Comprehensive Income (Loss), before Tax (7,725) 3,176 (25) (10,442) 2,774 (2,654)    
Other Comprehensive Income (Loss), Tax (267) (263) (380) 254 (422) 443    
Other comprehensive income (loss), net of tax (7,992) 2,913 (405) (10,188) 2,352 (2,211)    
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax     2,756          
Ending Balance (65,287) (57,295) (60,208) (61,050) (50,862) (53,214) (65,287) (61,050)
Accumulated Other Comprehensive Income (Loss) [Member]                
Accumulated Other Comprehensive Income (Loss) [Line Items]                
Beginning Balance (189,348) (204,232) (199,915) (167,230) (177,341) (180,360) (199,915) (180,360)
Other Comprehensive Income (Loss), before Reclassifications, before Tax (27,569) 22,232 (167) (1,376) 10,417 2,997    
Reclassification from Accumulated Other Comprehensive Income, Current Period, before Tax 1,179 (3,113) 1,090 5,266 3,349 2,601    
Other Comprehensive Income (Loss), before Tax (26,390) 19,119 923 3,890 13,766 5,598    
Other Comprehensive Income (Loss), Tax 4,077 (4,235) (534) (3,962) (3,655) (2,579)    
Other comprehensive income (loss), net of tax (22,313) 14,884 389 (72) 10,111 3,019    
Reclassification from Accumulated Other Comprehensive Income, Current Period, Net of Tax     (4,706)          
Ending Balance $ (211,661) $ (189,348) $ (204,232) $ (167,302) $ (167,230) $ (177,341) $ (211,661) $ (167,302)
v3.19.2
Equities Dividends Per Share (Details) - $ / shares
9 Months Ended
May 31, 2019
May 31, 2018
8% Cumulative Redeemable [Member]    
8% Cumulative Redeemable [Line Items]    
Preferred Stock, Per Share Amounts of Preferred Dividends in Arrears $ 1.50 $ 1.50
Class B, Series 1 Preferred Stock [Member]    
8% Cumulative Redeemable [Line Items]    
Preferred Stock, Per Share Amounts of Preferred Dividends in Arrears 1.48 1.48
Class B, Series 2 Preferred Stock [Member]    
8% Cumulative Redeemable [Line Items]    
Preferred Stock, Per Share Amounts of Preferred Dividends in Arrears 1.33 1.33
Class B, Series 3 Preferred Stock [Member]    
8% Cumulative Redeemable [Line Items]    
Preferred Stock, Per Share Amounts of Preferred Dividends in Arrears 1.27 1.27
Class B, Series 4 Preferred Stock [Member]    
8% Cumulative Redeemable [Line Items]    
Preferred Stock, Per Share Amounts of Preferred Dividends in Arrears $ 1.41 $ 1.41
v3.19.2
Income Taxes (Details)
9 Months Ended 12 Months Ended
May 31, 2019
Aug. 31, 2018
Income Tax Contingency [Line Items]    
Corporate Tax Rate 21.00% 25.70%
v3.19.2
Benefit Plans - Net Periodic Benefit Cost (Details) - USD ($)
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Qualified Pension Benefits        
Component of net periodic benefit costs: [Abstract]        
Service cost $ 9,648,000 $ 9,920,000 $ 28,944,000 $ 29,758,000
Interest cost 7,099,000 5,997,000 21,297,000 17,988,000
Expected return on assets (11,242,000) (12,044,000) (33,726,000) (36,133,000)
Prior service cost (credit) amortization 42,000 360,000 127,000 1,078,000
Actuarial (gain) loss amortization 3,087,000 4,905,000 9,261,000 16,304,000
Defined Benefit Plan, Net Periodic Benefit Cost (Credit), Gain (Loss) Due to Settlement and Curtailment     169,000  
Net periodic benefit cost 8,634,000 9,138,000 26,072,000 28,995,000
Defined Benefit Plan, Plan Assets, Contributions by Employer     40,000,000  
Non-Qualified Pension Benefits        
Component of net periodic benefit costs: [Abstract]        
Service cost 78,000 137,000 233,000 411,000
Interest cost 186,000 177,000 560,000 533,000
Expected return on assets 0 0 0 0
Prior service cost (credit) amortization (19,000) 7,000 (56,000) 23,000
Actuarial (gain) loss amortization 1,000 16,000 2,000 46,000
Net periodic benefit cost 246,000 337,000 739,000 1,013,000
Other Benefits        
Component of net periodic benefit costs: [Abstract]        
Service cost 263,000 236,000 790,000 707,000
Interest cost 274,000 227,000 821,000 681,000
Expected return on assets 0 0 0 0
Prior service cost (credit) amortization (139,000) (142,000) (417,000) (424,000)
Actuarial (gain) loss amortization (407,000) (306,000) (1,221,000) (918,000)
Net periodic benefit cost $ (9,000) $ 15,000 $ (27,000) $ 46,000
v3.19.2
Segment Reporting - Segment Information (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Mar. 01, 2019
Aug. 31, 2018
Segment Reporting Information [Line Items]            
remainingownershipacquired         75.00%  
Revenues $ 8,497,941 $ 9,087,328 $ 23,465,769 $ 24,099,365    
Operating earnings (loss) 6,244 87,019 570,387 229,708    
(Gain) loss on disposal of business (2,474) (124,050) (3,886) (131,755)    
Interest Expense 42,773 49,340 122,950 130,218    
Other (income) loss (30,464) (15,802) (65,949) (54,542)    
Equity (income) loss from investments (65,170) (59,308) (173,394) (137,111)    
Income (loss) before income taxes 61,579 236,839 690,666 422,898    
Total assets 17,573,483   17,573,483     $ 16,381,178
Energy            
Segment Reporting Information [Line Items]            
Revenues, including intersegment revenues 1,841,290 1,999,628 5,722,338 5,845,437    
Revenues 1,738,045   5,374,110      
Operating earnings (loss) 572 29,729 537,932 179,077    
(Gain) loss on disposal of business 0 (65,903) 0 (65,903)    
Interest Expense 1,171 3,496 3,756 11,760    
Other (income) loss (1,098) (967) (4,301) (2,977)    
Equity (income) loss from investments (760) (967) (1,828) (2,779)    
Income (loss) before income taxes 1,259 94,070 540,305 238,976    
Total assets 4,573,463   4,573,463      
Ag            
Segment Reporting Information [Line Items]            
Revenues, including intersegment revenues 6,749,182 7,193,316 18,056,033 18,574,846    
Revenues 6,745,115   18,045,057      
Operating earnings (loss) 12,090 63,170 45,088 70,954    
(Gain) loss on disposal of business (2,474) 5 (3,886) (7,700)    
Interest Expense 26,675 28,854 73,073 69,242    
Other (income) loss (29,211) (14,430) (60,455) (47,128)    
Equity (income) loss from investments (4,012) (11,359) (2,675) (25,180)    
Income (loss) before income taxes 21,112 60,100 39,031 81,720    
Total assets 7,377,779   7,377,779      
Nitrogen Production [Member]            
Segment Reporting Information [Line Items]            
Revenues, including intersegment revenues 0 0 0 0    
Operating earnings (loss) (9,040) (4,153) (24,048) (14,527)    
(Gain) loss on disposal of business 0 0 0 0    
Interest Expense 13,140 13,119 42,161 39,067    
Other (income) loss (399) (441) (2,362) (2,612)    
Equity (income) loss from investments (41,959) (35,639) (118,416) (79,986)    
Income (loss) before income taxes 20,178 18,808 54,569 29,004    
Total assets 2,788,010   2,788,010      
Corporate and Other            
Segment Reporting Information [Line Items]            
Revenues, including intersegment revenues 16,418 14,075 52,179 46,018    
Revenues 14,781   46,602      
Operating earnings (loss) 2,622 (1,727) 11,415 (5,796)    
(Gain) loss on disposal of business 0 (58,152) 0 (58,152)    
Interest Expense 3,883 4,324 7,945 11,569    
Other (income) loss (1,852) (417) (2,816) (3,245)    
Equity (income) loss from investments (18,439) (11,343) (50,475) (29,166)    
Income (loss) before income taxes 19,030 63,861 56,761 73,198    
Total assets 2,834,231   2,834,231      
Reconciling Amounts            
Segment Reporting Information [Line Items]            
Revenues (108,949) (119,691) (364,781) (366,936)    
Operating earnings (loss) 0 0 0    
(Gain) loss on disposal of business 0   0      
Interest Expense (2,096) (453) (3,985) (1,420)    
Other (income) loss 2,096 453 3,985 1,420    
Equity (income) loss from investments 0 0 0 0    
Income (loss) before income taxes 0 0 0 0    
Total assets 0   0      
Intersegment Eliminations [Member]            
Segment Reporting Information [Line Items]            
Revenues 0 0 0 0    
Intersegment Eliminations [Member] | Energy            
Segment Reporting Information [Line Items]            
Revenues (103,245) (114,497) (348,228) (349,361)    
Intersegment Eliminations [Member] | Ag            
Segment Reporting Information [Line Items]            
Revenues (4,067) (3,784) (10,976) (11,391)    
Intersegment Eliminations [Member] | Nitrogen Production [Member]            
Segment Reporting Information [Line Items]            
Revenues 0 0 0 0    
Intersegment Eliminations [Member] | Corporate and Other            
Segment Reporting Information [Line Items]            
Revenues (1,637) (1,410) (5,577) (6,184)    
Intersegment Eliminations [Member] | Reconciling Amounts            
Segment Reporting Information [Line Items]            
Revenues $ 108,949 119,691 $ 364,781 366,936    
Reconciling Amounts            
Segment Reporting Information [Line Items]            
(Gain) loss on disposal of business   $ 0   $ 0    
v3.19.2
Derivative Financial Instruments and Hedging Activities - Purchase and Sale Contracts (Details) - Not Designated as Hedging Instrument
t in Thousands, T in Thousands, MMBtu in Thousands, Bushels in Thousands, Barrels in Thousands
May 31, 2019
T
t
Bushels
MMBtu
Barrels
Aug. 31, 2018
T
t
Bushels
MMBtu
Barrels
Grain and oilseed - bushels | Long [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | Bushels 693,978 715,866
Grain and oilseed - bushels | Short [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | Bushels 865,956 929,873
Energy products - barrels | Long [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | Barrels 16,223 17,011
Energy products - barrels | Short [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | Barrels 5,930 8,329
Processed grain and oilseed - tons | Long [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount 406 1,064
Processed grain and oilseed - tons | Short [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount 2,208 2,875
Crop nutrients - tons | Long [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount 19 11
Crop nutrients - tons | Short [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount 72 76
Ocean freight - metric tons | Long [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | t 125 227
Ocean freight - metric tons | Short [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | t 95 45
Natural gas - MMBtu | Long [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | MMBtu 0 610
Natural gas - MMBtu | Short [Member]    
Derivative [Line Items]    
Derivative, Nonmonetary Notional Amount | MMBtu 0 0
v3.19.2
Derivative Financial Instruments and Hedging Activities - Derivatives (Details)
$ in Thousands, bbl in Millions
9 Months Ended 12 Months Ended
May 31, 2019
USD ($)
bbl
Aug. 31, 2018
USD ($)
bbl
Derivative [Line Items]    
Derivative Asset, Noncurrent $ 22,300 $ 23,100
Derivative Liability, Noncurrent 14,700 7,900
Derivative Asset, Fair Value, Amount Not Offset Against Collateral 251,648 316,545
Derivative Assets 281,878 352,029
Derivative Asset, Fair Value, Gross Amount Not Offset on Balance Sheet 30,230 35,484
Derivative Liability, Fair Value, Amount Not Offset Against Collateral 273,494 397,288
Derivative Liabilities 308,087 445,755
Derivative Liability, Collateral, Right to Reclaim Cash, Offset 4,363 12,983
Derivative Liability, Fair Value, Gross Amount Not Offset on Balance Sheet $ 30,230 35,484
Credit Rating Agencies Threshold, Minimum 66.67%  
CF Nitrogen LLC [Member]    
Derivative [Line Items]    
Annual Payment Receivable Contingent On Investment Credit Rating $ 5,000  
Embedded derivative asset 20,900  
Foreign exchange derivatives | Not Designated as Hedging Instrument    
Derivative [Line Items]    
Derivative Asset, Fair Value, Amount Not Offset Against Collateral 5,208 6,698
Derivative Assets 9,685 15,401
Derivative Asset, Fair Value, Gross Amount Not Offset on Balance Sheet 4,477 8,703
Derivative Liability, Fair Value, Amount Not Offset Against Collateral 2,847 15,998
Derivative Liabilities 7,324 24,701
Derivative Liability, Collateral, Right to Reclaim Cash, Offset 0 0
Derivative Liability, Fair Value, Gross Amount Not Offset on Balance Sheet 4,477 8,703
Derivative Asset, Notional Amount 868,900 988,800
Interest rate swap derivatives | Designated as Hedging Instrument    
Derivative [Line Items]    
Derivative Assets 4,479  
Derivative Liabilities 713 9,452
Embedded Derivative Financial Instruments [Member] | Not Designated as Hedging Instrument    
Derivative [Line Items]    
Derivative Asset, Fair Value, Amount Not Offset Against Collateral 20,957 23,595
Derivative Assets 20,957 23,595
Derivative Asset, Fair Value, Gross Amount Not Offset on Balance Sheet 0 0
Commodity derivatives | Not Designated as Hedging Instrument    
Derivative [Line Items]    
Derivative Asset, Fair Value, Amount Not Offset Against Collateral 225,483 286,252
Derivative Assets 251,236 313,033
Derivative Asset, Fair Value, Gross Amount Not Offset on Balance Sheet 25,753 26,781
Derivative Liability, Fair Value, Amount Not Offset Against Collateral 270,647 381,290
Derivative Liabilities 300,763 421,054
Derivative Liability, Collateral, Right to Reclaim Cash, Offset 4,363 12,983
Derivative Liability, Fair Value, Gross Amount Not Offset on Balance Sheet 25,753 $ 26,781
Fair Value Hedging | Interest rate swap derivatives | Designated as Hedging Instrument    
Derivative [Line Items]    
Derivative Asset, Notional Amount $ 495,000  
Cash Flow Hedging    
Derivative [Line Items]    
Aggregate notional amount of cash flow hedges (in barrels) | bbl 8.2 1.1
Cash Flow Hedging | Designated as Hedging Instrument    
Derivative [Line Items]    
Derivative Assets $ 5,547 $ 812
Derivative Liabilities $ 14,692 $ 634
v3.19.2
Derivative Financial Instruments and Hedging Activities - Pretax Gains (Losses) On Derivatives Not Accounted For As Hedging Instruments (Details) - Not Designated as Hedging Instrument - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Derivative Instruments and Hedging Activities Disclosures [Line Items]        
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net $ (36,397) $ 15,070 $ 57,696 $ (63,007)
Commodity derivatives | Cost of goods sold        
Derivative Instruments and Hedging Activities Disclosures [Line Items]        
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net (23,749) 32,289 41,814 (48,756)
Foreign exchange derivatives | Cost of goods sold        
Derivative Instruments and Hedging Activities Disclosures [Line Items]        
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net (13,040) (16,549) 14,941 (15,600)
Foreign exchange derivatives | Selling, General and Administrative Expenses [Member]        
Derivative Instruments and Hedging Activities Disclosures [Line Items]        
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net (7) (1,109) (1,421) (1,260)
Interest rate derivatives | Interest Expense        
Derivative Instruments and Hedging Activities Disclosures [Line Items]        
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net 0 (2) 0 (3)
Embedded Derivative Financial Instruments [Member] | Other Income [Member]        
Derivative Instruments and Hedging Activities Disclosures [Line Items]        
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net $ 399 $ 441 $ 2,362 $ 2,612
v3.19.2
Derivative Financial Instruments and Hedging Activities - Schedule of Derivative Instruments in Statement of Financial Position, Fair Value (Details) - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Derivative [Line Items]    
Derivative Assets $ 281,878 $ 352,029
Derivative Liabilities 308,087 445,755
Designated as Hedging Instrument | Interest rate swap derivatives    
Derivative [Line Items]    
Derivative Assets 4,479  
Derivative Liabilities 713 9,452
Designated as Hedging Instrument | Derivative Liabilities Current [Member] | Interest rate swap derivatives    
Derivative [Line Items]    
Derivative Liabilities 45 771
Designated as Hedging Instrument | Other Assets [Member] | Interest rate swap derivatives    
Derivative [Line Items]    
Derivative Assets 4,479 0
Designated as Hedging Instrument | Other Liabilities | Interest rate swap derivatives    
Derivative [Line Items]    
Derivative Liabilities $ 668 $ 8,681
v3.19.2
Derivative Financial Instruments and Hedging Activities - Schedule of Derivative Instruments, Effect on Earnings (Details) - Designated as Hedging Instrument - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Derivative [Line Items]        
Gain (loss) on fair value hedging relationship $ 0 $ 0 $ 0 $ 0
Interest Expense | Interest rate swap derivatives        
Derivative [Line Items]        
Gain (loss) on fair value hedging relationship (8,122) (231) (15,129) (18,118)
Interest Expense | Hedged Item        
Derivative [Line Items]        
Gain (loss) on fair value hedging relationship $ 8,122 $ 231 $ 15,129 $ 18,118
v3.19.2
Derivative Financial Instruments and Hedging Activities - Schedule of Derivatives Instruments Statements of Financial Performance and Financial Position, Location (Details) - Designated as Hedging Instrument - Long-term debt - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Derivative [Line Items]    
Carrying Amount of Hedged Liabilities $ 470,419 $ 485,548
Cumulative Amount of Fair Value Hedging Adjustments Included in the Carrying Amount of Hedged Liabilities $ 24,581 $ 9,452
v3.19.2
Derivative Financial Instruments and Hedging Activities - Fair Value of Commodity Derivative Instruments (Details) - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Derivatives, Fair Value [Line Items]    
Derivative Assets $ 281,878 $ 352,029
Derivative Liabilities $ 308,087 $ 445,755
v3.19.2
Derivative Financial Instruments and Hedging Activities - Commodity Derivatives (Details) - Commodity derivatives - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2019
May 31, 2018
May 31, 2019
May 31, 2018
Cost of goods sold        
Derivative [Line Items]        
Pretax gains (losses) reclassified from AOCI related to cash flow hedges $ 1,810 $ 0 $ 9,812 $ 0
Cash Flow Hedging        
Derivative [Line Items]        
Pretax gains (losses) recorded in OCI related to cash flow hedges $ (21,029) $ 0 $ (9,323) $ 0
v3.19.2
Fair Value Measurements - Fair Value Measurements (Details) - Fair Value, Measurements, Recurring [Member] - USD ($)
$ in Thousands
May 31, 2019
Aug. 31, 2018
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred compensation assets $ 39,327 $ 39,073
Embedded derivative asset 20,957 23,595
Other assets 5,763 5,334
Total assets 337,014 397,249
Foreign exchange derivatives   24,701
Total liabilities 323,647 455,842
Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred compensation assets 39,327 39,073
Embedded derivative asset 0 0
Other assets 5,763 5,334
Total assets 72,114 98,894
Foreign exchange derivatives   0
Total liabilities 76,388 31,778
Significant Other Observable Inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred compensation assets 0 0
Embedded derivative asset 20,957 23,595
Other assets 0 0
Total assets 264,900 298,355
Foreign exchange derivatives   24,701
Total liabilities 247,259 424,064
Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Deferred compensation assets 0 0
Embedded derivative asset 0 0
Other assets 0 0
Total assets 0 0
Foreign exchange derivatives   0
Total liabilities 0 0
Commodity derivatives    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 256,784 313,846
Derivative Liability 315,454 421,689
Commodity derivatives | Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 27,024 54,487
Derivative Liability 76,388 31,778
Commodity derivatives | Significant Other Observable Inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 229,760 259,359
Derivative Liability 239,066 389,911
Commodity derivatives | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 0 0
Derivative Liability 0 0
Foreign exchange derivatives    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Foreign exchange derivatives 9,704 15,401
Foreign exchange derivatives 7,480  
Foreign exchange derivatives | Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Foreign exchange derivatives 0 0
Foreign exchange derivatives 0  
Foreign exchange derivatives | Significant Other Observable Inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Foreign exchange derivatives 9,704 15,401
Foreign exchange derivatives 7,480  
Foreign exchange derivatives | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Foreign exchange derivatives 0 0
Foreign exchange derivatives 0  
Interest rate swap derivatives    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 4,479  
Derivative Liability 713 9,452
Interest rate swap derivatives | Quoted Prices in Active Markets for Identical Assets (Level 1)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 0  
Derivative Liability 0 0
Interest rate swap derivatives | Significant Other Observable Inputs (Level 2)    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 4,479  
Derivative Liability 713 9,452
Interest rate swap derivatives | Fair Value, Inputs, Level 3 [Member]    
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items]    
Derivative Asset 0  
Derivative Liability $ 0 $ 0
v3.19.2
Commitments and Contingencies Guarantees (Details)
$ in Millions
May 31, 2019
USD ($)
Commitments and Contingencies Disclosure [Abstract]  
Guarantor obligations, maximum exposure, undiscounted $ 244.0
Maximum guarantees allowed by bank covenants $ 1,000.0
v3.19.2
Subsequent Events (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
May 31, 2018
May 31, 2018
Subsequent Event [Line Items]    
Reserve and impairment charges (recoveries), net $ (3,811) $ (18,944)
v3.19.2
Acquisitions (Details) - USD ($)
$ in Thousands
3 Months Ended 9 Months Ended
Mar. 01, 2019
May 31, 2019
May 31, 2019
May 31, 2018
Feb. 28, 2019
Business Acquisition [Line Items]          
acquisition purchase price $ 113,400        
amount previously paid 6,700        
Business Combination, Pro Forma Information, Revenue of Acquiree since Acquisition Date, Actual   $ 255,600      
Business Combination, Step Acquisition, Equity Interest in Acquiree, Fair Value 37,800        
Business acquisitions, net of cash acquired 106,700   $ 119,421 $ 0  
Cash Acquired from Acquisition 8,000        
Business Combination, Step Acquisition, Equity Interest in Acquiree, Remeasurement Gain $ 19,100        
Business Combination, Pro Forma Information, Earnings or Loss of Acquiree since Acquisition Date, Actual   $ 10,500      
remainingownershipacquired 75.00%        
Goodwill, Acquired During Period     $ 61,358    
West Central [Member]          
Business Acquisition [Line Items]          
Ownership percentage         25.00%
v3.19.2
Acquisitions Fair Value of Net Assets Acquired (Details) - USD ($)
$ in Thousands
9 Months Ended
Mar. 01, 2019
May 31, 2019
Fair value of net assets acquired [Line Items]    
Cash Acquired from Acquisition $ 8,000  
Goodwill, Acquired During Period   $ 61,358
West Central [Member]    
Fair value of net assets acquired [Line Items]    
Cash Acquired from Acquisition 8,033  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Assets 708,764  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Property, Plant, and Equipment 44,064  
Goodwill, Acquired During Period 61,358  
Finite-lived Intangible Assets Acquired 47,200  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Noncurrent Assets 55  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Current Liabilities (718,262)  
Business Combination, Recognized Identifiable Assets Acquired and Liabilities Assumed, Net $ 151,212