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~~
	For the quarterly period ended ~~May 31, 2020.~~	February 28, 2021
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

41-0251095

(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 oYes ☑ No ☐

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 oYes ☑ No ☐

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 filerþ

☑

Smaller reporting companyo

☐

Emerging growth companyo

☐

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 þYes ☐ No ☑

Indicate the number of shares outstanding of each of the ~~Registrant's~~issuer's classes of common stock, as of the latest practicable date:

The ~~Registrant~~issuer has no common stock outstanding.

TABLE OF CONTENTS




		PART I. FINANCIAL INFORMATION	Page No.
Item 1.		Financial Statements (unaudited)	2
		Condensed Consolidated Balance Sheets as of ~~May 31, 2020,~~February 28 , 202 1 , and August 31, ~~2019~~2020	2
		Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020 ~~and 2019~~	3
		Condensed Consolidated Statements of Comprehensive Income for the three and ~~nine~~six months ended ~~May 31, 2020,~~ February 28, 2021, and ~~2019~~February 29, 20 20	4
		Condensed Consolidated Statements of Cash Flows for the ~~nine~~six months ended ~~May 31, 2020,~~ February 28, 2021, and ~~2019~~February 29, 20 20	5
		Notes to Condensed Consolidated Financial Statements	6
Item 2.		Management's Discussion and Analysis of Financial Condition and Results of Operations	2926
Item 3.		Quantitative and Qualitative Disclosures About Market Risk	5653
Item 4.		Controls and Procedures	5653
		PART II. OTHER INFORMATION	5854
Item 1.		Legal Proceedings	5854
Item 1A.		Risk Factors	5854
Item 6.		Exhibits	5954

~~SIGNATURE PAGE~~Signatures	6055

Unless the context otherwise requires, for purposes of this Quarterly Report on Form 10-Q, the words "CHS," "we," "us" orand "our" refer to CHS Inc., a Minnesota cooperative corporation, and its subsidiaries as of ~~May 31, 2020.~~February 28, 2021.

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, ~~2019, and Part II, Item 1A of this Quarterly Report on Form 10-Q.~~2020. 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.

Table of Contents

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Unaudited)


	February 28, 2021		August 31, 2020
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	217,675	$	140,874
Receivables	2,336,920		2,366,047
Inventories	4,246,051		2,742,138
Other current assets	2,150,250		1,017,488
Total current assets	8,950,896		6,266,547
Investments	3,639,453		3,630,033
Property, plant and equipment	4,866,751		4,957,938
Other assets	1,109,043		1,139,429
Total assets	$	18,566,143	$	15,993,947
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	2,952,392	$	1,575,491
Current portion of long-term debt	167,792		189,287
Accounts payable	2,042,475		1,724,516
Accrued expenses	451,593		501,904
Other current liabilities	1,948,781		928,843
Total current liabilities	7,563,033		4,920,041
Long-term debt	1,604,313		1,601,836
Other liabilities	679,014		652,897
Commitments and contingencies (Note 13)	0		0
Equities:
Preferred stock	2,264,038		2,264,038
Equity certificates	5,159,756		5,161,610
Accumulated other comprehensive loss	(222,458)		(233,924)
Capital reserves	1,509,902		1,618,147
Total CHS Inc. equities	8,711,238		8,809,871
Noncontrolling interests	8,545		9,302
Total equities	8,719,783		8,819,173
Total liabilities and equities	$	18,566,143	$	15,993,947

May 31,
2020 August 31,
2019
(Dollars in thousands)
ASSETS
Current assets:

Cash and cash equivalents $ 408,115
$ 211,179
Receivables 2,574,207
2,731,209
Inventories 2,818,758
2,854,288
Other current assets 1,258,553
865,919
Total current assets 7,059,633
6,662,595
Investments 3,666,959
3,683,996
Property, plant and equipment 4,999,082
5,088,708
Other assets 1,101,550
1,012,195
Total assets $ 16,827,224
$ 16,447,494
LIABILITIES AND EQUITIES
Current liabilities:

Notes payable $ 2,215,583
$ 2,156,108
Current portion of long-term debt 28,200
39,210
Accounts payable 1,751,354
1,931,415
Accrued expenses 566,258
555,323
Other current liabilities 1,061,487
901,651
Total current liabilities 5,622,882
5,583,707
Long-term debt 1,764,367
1,749,901
Other liabilities 659,689
496,356
Commitments and contingencies (Note 13)

Equities:

Preferred stock 2,264,038
2,264,038
Equity certificates 4,896,148
4,988,877
Accumulated other comprehensive loss (241,165 ) (226,933 )
Capital reserves 1,852,826
1,584,158
Total CHS Inc. equities 8,771,847
8,610,140
Noncontrolling interests 8,439
7,390
Total equities 8,780,286
8,617,530
Total liabilities and equities $ 16,827,224
$ 16,447,494

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

Table of Contents

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)


	Three Months Ended				Six Months Ended
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
	(Dollars in thousands)
Revenues	$	8,320,159	$	6,598,226	$	17,035,802	$	14,219,711
Cost of goods sold	8,218,439		6,283,171		16,755,978		13,579,113
Gross profit	101,720		315,055		279,824		640,598
Marketing, general and administrative expenses	161,510		199,570		332,171		367,901
Operating (loss) earnings	(59,790)		115,485		(52,347)		272,697

Interest expense	28,855		33,411		53,905		68,382
Other income	(17,846)		(11,352)		(30,470)		(24,850)
Equity income from investments	(64,109)		(34,398)		(114,132)		(84,060)
(Loss) income before income taxes	(6,690)		127,824		38,350		313,225
Income tax expense	31,668		2,130		7,339		8,794
Net (loss) income	(38,358)		125,694		31,011		304,431
Net (loss) income attributable to noncontrolling interests	(129)		247		(431)		1,102
Net (loss) income attributable to CHS Inc.	$	(38,229)	$	125,447	$	31,442	$	303,329

Three Months Ended May 31, Nine Months Ended May 31,
2020 2019 2020 2019
(Dollars in thousands)
Revenues $ 7,241,031
$ 8,497,941
$ 21,460,742
$ 23,465,769
Cost of goods sold 7,022,672
8,274,170
20,601,785
22,343,944
Gross profit 218,359
223,771
858,957
1,121,825
Marketing, general and administrative expenses 180,439
217,527
548,340
551,438
Operating earnings 37,920
6,244
310,617
570,387
Interest expense 26,661
42,773
95,043
122,950
Other income (8,076 ) (32,938 ) (32,926 ) (69,835 )
Equity income from investments (51,114 ) (65,170 ) (135,174 ) (173,394 )
Income before income taxes 70,449
61,579
383,674
690,666
Income tax (benefit) expense (27,052 ) 6,866
(18,258 ) 40,534
Net income 97,501
54,713
401,932
650,132
Net (loss) income attributable to noncontrolling interests (147 ) 93
955
(758 )
Net income attributable to CHS Inc. $ 97,648
$ 54,620
$ 400,977
$ 650,890

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

Table of Contents

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)


	Three Months Ended				Six Months Ended
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
	(Dollars in thousands)
Net (loss) income	$	(38,358)	$	125,694	$	31,011	$	304,431
Other comprehensive income (loss), net of tax:
Pension and other postretirement benefits	3,869		3,746		7,514		8,819

Cash flow hedges	(559)		(5,812)		1,110		(11,684)
Foreign currency translation adjustment	(761)		(8,519)		2,842		(9,358)
Other comprehensive income (loss), net of tax	2,549		(10,585)		11,466		(12,223)
Comprehensive (loss) income	(35,809)		115,109		42,477		292,208
Comprehensive (loss) income attributable to noncontrolling interests	(129)		247		(431)		1,102
Comprehensive (loss) income attributable to CHS Inc.	$	(35,680)	$	114,862	$	42,908	$	291,106

Three Months Ended May 31, Nine Months Ended May 31,
2020 2019 2020 2019
(Dollars in thousands)
Net income $ 97,501
$ 54,713
$ 401,932
$ 650,132
Other comprehensive (loss) income, net of tax:
Pension and other postretirement benefits 3,490
1,496
12,309
5,599
Cash flow hedges 6,817
(15,817 ) (4,867 ) (7,155 )
Foreign currency translation adjustment (12,316 ) (7,992 ) (21,674 ) (5,484 )
Other comprehensive loss, net of tax (2,009 ) (22,313 ) (14,232 ) (7,040 )
Comprehensive income 95,492
32,400
387,700
643,092
Comprehensive (loss) income attributable to noncontrolling interests (147 ) 93
955
(758 )
Comprehensive income attributable to CHS Inc. $ 95,639
$ 32,307
$ 386,745
$ 643,850

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

Table of Contents

CHS INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


	Six Months Ended
	February 28, 2021		February 29, 2020
	(Dollars in thousands)
Cash flows from operating activities:
Net income	$	31,011	$	304,431
Adjustments to reconcile net income to net cash (used in) provided by operating activities:
Depreciation and amortization, including amortization of deferred major maintenance	267,726		272,652
Equity income from investments, net of distributions received	(3,687)		40,109
Provision for doubtful accounts	(4,674)		1,883
Deferred taxes	35,797		(5,763)
Other, net	(18,495)		4,181
Changes in operating assets and liabilities:
Receivables	(100,398)		507,844
Inventories	(1,495,856)		(814,318)
Accounts payable and accrued expenses	273,448		(54,786)
Other, net	(119,417)		45,365
Net cash (used in) provided by operating activities	(1,134,545)		301,598
Cash flows from investing activities:
Acquisition of property, plant and equipment	(164,565)		(224,962)
Proceeds from disposition of property, plant and equipment	7,741		6,959
Expenditures for major maintenance	(10,050)		(8,809)
Proceeds from sale of business	39,567		—
Changes in CHS Capital notes receivable, net	43,283		209,608
Financing extended to customers	(1,816)		(4,475)
Payments from customer financing	5,589		8,709

Other investing activities, net	10,633		12,805
Net cash used in investing activities	(69,618)		(165)
Cash flows from financing activities:
Proceeds from notes payable and long-term debt	16,930,536		11,403,077
Payments on notes payable, long-term debt and finance lease obligations	(15,483,358)		(11,486,347)
Preferred stock dividends paid	(84,334)		(84,334)
Redemptions of equities	(12,486)		(8,834)
Cash patronage dividends paid	(21,416)		(90,030)
Other financing activities, net	(9,222)		(13,079)
Net cash provided by (used in) financing activities	1,319,720		(279,547)
Effect of exchange rate changes on cash and cash equivalents	1,026		(5,613)
Increase in cash and cash equivalents and restricted cash	116,583		16,273
Cash and cash equivalents and restricted cash at beginning of period	216,993		299,675
Cash and cash equivalents and restricted cash at end of period	$	333,576	$	315,948

Nine Months Ended May 31,
2020 2019
(Dollars in thousands)
Cash flows from operating activities:

Net income $ 401,932
$ 650,132
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

Depreciation and amortization, including amortization of deferred major maintenance 408,613
401,798
Equity income from investments, net of distributions received 1,339
(39,674 )
Provision for doubtful accounts 7,692
36,874
Deferred taxes (11,811 ) 34,786
Other, net 67,625
(46,157 )
Changes in operating assets and liabilities, net of acquisitions:

Receivables 25,290
(446,846 )
Inventories (5,602 ) (199,339 )
Accounts payable and accrued expenses (185,503 ) 174,855
Other, net (183,732 ) (436,518 )
Net cash provided by operating activities 525,843
129,911
Cash flows from investing activities:

Acquisition of property, plant and equipment (316,506 ) (278,589 )
Proceeds from disposition of property, plant and equipment 28,257
46,414
Expenditures for major maintenance (10,414 ) (210,837 )
Changes in CHS Capital notes receivable, net 219,173
(112,608 )
Financing extended to customers (5,139 ) (10,492 )
Payments from customer financing 21,341
84,189
Business acquisitions, net of cash acquired —
(119,421 )
Other investing activities, net 14,755
8,854
Net cash used in investing activities (48,533 ) (592,490 )
Cash flows from financing activities:

Proceeds from notes payable and long-term debt 19,841,762
20,715,683
Payments on notes payable, long-term debt and capital lease obligations (19,805,609 ) (20,236,780 )
Preferred stock dividends paid (126,501 ) (126,501 )
Redemptions of equities (86,272 ) (76,397 )
Cash patronage dividends paid (90,112 ) (75,669 )
Other financing activities, net (25,475 ) (25,993 )
Net cash (used in) provided by financing activities (292,207 ) 174,343
Effect of exchange rate changes on cash and cash equivalents (786 ) (382 )
Increase (decrease) in cash and cash equivalents and restricted cash 184,317
(288,618 )
Cash and cash equivalents and restricted cash at beginning of period 299,675
543,940
Cash and cash equivalents and restricted cash at end of period $ 483,992
$ 255,322

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

Table of Contents

CHS INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

Note 1 Basis of Presentation and Significant Accounting Policies

Basis of Presentation

These unaudited condensed consolidated financial statements reflect, in the opinion of management, all normal recurring adjustments necessary for a fair statement of our financial position, results of operations and cash flows for the 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 the seasonal nature of our businesses, among other things. Our unaudited condensed consolidated financial statements and notes are presented as permitted by the requirements for Quarterly Reports on Form 10-Q and should be read in conjunction with the consolidated financial statements and notes thereto for the year ended August 31, ~~2019,~~2020, included in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission ("SEC").

Certain captions within the Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and Condensed Consolidated Statements of Cash Flows have been combined within other captions as allowed by SEC financial statement reporting requirements under Regulation S-X. Prior year information has been revised to conform with the current presentation.

The recent outbreak and pandemic of the novel coronavirus known as COVID-19 and other factors resulted in substantial reductions in demand and sharp price declines in certain industries in which we operate during the third quarter of fiscal 2020, particularly with respect to the production of renewable fuels and other energy products. Based on these deteriorated macroeconomic and industry conditions, management considered the impacts on each of our businesses and determined that we needed to perform interim impairment assessments of goodwill and asset groups, as of April 30, 2020, for a reporting unit within our Ag segment that operates in the renewable fuels industry. Recent third-party price outlooks, projections of future volumes, expenses and other cash flows and a discount rate reflective of the relative risk of the cash flows were used to estimate fair value. Management believes the assumptions utilized in the assessment are appropriate and reasonable for estimating fair value. The estimated fair value of the reporting unit exceeded the carrying amount by approximately 18%, and thus no impairment was recorded. Management will continue to monitor results and projected cash flows to assess whether any impairment may be necessary in the future.

Significant Accounting Policies

The following significant accounting policy was updated or changed since our Annual Report on Form 10-K for the year ended August 31, ~~2019.~~2020.

~~Leases~~Receivables

As described in the "Recent Accounting Pronouncements" section, we adopted Accounting Standards Update ("ASU") No. ~~2016-02,~~ ~~Leases, as amended (collectively "Accounting Standards Codification~~2016-13, Financial Instruments - Credit Losses ("~~ASC")~~ASC Topic ~~842"~~326"): Measurement of Credit Losses on Financial Instruments, on September 1, ~~2019,~~2020, using the modified retrospective approach. Our accounting policies ~~and additional disclosures~~ with respect to ASC Topic ~~842~~326 are included in Note ~~14,~~ ~~Leases~~3, Receivables.

Recent Accounting Pronouncements

Except for the recent accounting ~~pronouncements~~pronouncement described below, other recent accounting pronouncements are not expected to have a material impact on our condensed consolidated financial statements.

Adopted

We adopted ASC Topic 842 as of September 1, 2019, using the modified retrospective approach. In addition, we used the additional optional transition method and package of practical expedients in the period of adoption without retrospective adjustment to previous periods presented, although we elected not to apply the hindsight practical expedient available under the standard. As a result of using the modified retrospective method, prior periods have not been restated, and a $33.7 million cumulative-effect adjustment was recorded to increase the opening balance of capital reserves as of the adoption date related to recognition of previously deferred gains associated with the sale-leaseback of our primary corporate office building located in Inver Grove Heights, Minnesota. Additionally, adoption of ASC Topic 842 resulted in the recognition of operating lease right-

~~Table of Contents~~

of-use assets and associated lease liabilities of $268.4 million and $267.0 million, respectively, as of September 1, 2019. Adoption of ASC Topic 842 did not have a material impact on our Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows. Additional information and further disclosures related to our leases and lease-related financial statement amounts are included within Note 14, ~~Leases.~~

~~Not Yet Adopted~~

In June 2016, the Financial Accounting Standards Board issued ~~ASU No. 2016-13,~~ ~~Financial Instruments - Credit Losses~~ ("ASC Topic ~~326"):~~ ~~Measurement of Credit Losses on Financial Instruments~~.326. 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~~off-balance sheet credit exposures. Entities are required to apply the provisions of this ASU as a cumulative-effect adjustment to the opening balance of capital reserves 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~~As part of our ~~fiscal year 2021~~adoption efforts, we performed various data-gathering activities, developed a credit losses model, performed data analyses and ~~for interim periods within that fiscal year.~~made accounting policy election determinations. The impact of adoption ~~will depend on the composition of our portfolio at the adoption date and we are currently finalizing our evaluation of the~~did not have a material impact ~~of adoption~~ on our condensed consolidated financial ~~statements through various data-gathering activities, development~~statements.

Not Yet Adopted

None.

Table of ~~a credit loss model and accounting policy election determinations.~~Contents

Note 2 Revenues

The following table presents revenues recognized under ~~ASC~~Accounting Standards Codification ("ASC") Topic 606, Revenue from Contracts with Customers ("ASC Topic 606"), disaggregated by reportable segment, as well as the amount of revenues recognized under ASC Topic 815, Derivatives and Hedging ("ASC Topic 815"), and other applicable accounting guidance for the three and ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019.~~February 29, 2020. Other applicable accounting guidance primarily includes revenues recognized under ASC Topic 842, Leases, and ASC Topic 470, Debt, that fall outside the scope of ASC Topic 606.


	ASC Topic 606		ASC Topic 815		Other Guidance		Total Revenues
Three Months Ended February 28, 2021	(Dollars in thousands)
Energy	$	1,243,072	$	129,086	$	0	$	1,372,158
Ag	1,169,411		5,753,333		15,468		6,938,212
Corporate and Other	4,535		0		5,254		9,789
Total revenues	$	2,417,018	$	5,882,419	$	20,722	$	8,320,159

Three Months Ended February 29, 2020
Energy	$	1,375,905	$	85,145	$	0	$	1,461,050
Ag	1,066,783		4,035,447		21,972		5,124,202
Corporate and Other	5,343		0		7,631		12,974
Total revenues	$	2,448,031	$	4,120,592	$	29,603	$	6,598,226

Six Months Ended February 28, 2021
Energy	$	2,308,036	$	321,969	$	0	$	2,630,005
Ag	2,513,910		11,840,572		29,132		14,383,614
Corporate and Other	10,995		0		11,188		22,183
Total revenues	$	4,832,941	$	12,162,541	$	40,320	$	17,035,802

Six Months Ended February 29, 2020
Energy	$	3,069,753	$	286,720	$	0	$	3,356,473
Ag	2,425,409		8,351,534		59,114		10,836,057
Corporate and Other	10,883		0		16,298		27,181
Total revenues	$	5,506,045	$	8,638,254	$	75,412	$	14,219,711

ASC Topic 606 ASC Topic 815 Other Guidance Total Revenues
Three Months Ended May 31, 2020 (Dollars in thousands)
Energy $ 762,053
$ 128,866
$ —
$ 890,919
Ag 2,026,588
4,290,627
20,686
6,337,901
Corporate and Other 6,027
—
6,184
12,211
Total revenues $ 2,794,668
$ 4,419,493
$ 26,870
$ 7,241,031

Three Months Ended May 31, 2019
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

Nine Months Ended May 31, 2020
Energy $ 3,831,806
$ 415,586
$ —
$ 4,247,392
Ag 4,446,097
12,681,108
46,753
17,173,958
Corporate and Other 16,910
—
22,482
39,392
Total revenues $ 8,294,813
$ 13,096,694
$ 69,235
$ 21,460,742

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

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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.

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~~on the passage of time. This results in 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 receivables within our Condensed Consolidated Balance Sheets and were not material as of ~~May 31, 2020, and~~February 28, 2021, or August 31, ~~2019.~~2020.

Contract liabilities relate to advance payments from customers for goods and services that we have yet to provide. Contract liabilities of ~~$204.7~~$783.2 million and ~~$207.5~~$139.1 million as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, respectively, are recorded within other current liabilities on our Condensed Consolidated Balance Sheets. For the three months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ we recognized revenues of ~~$50.5~~$19.9 million and ~~$67.9~~$39.6 million related to contract liabilities, respectively. For the ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ we recognized revenues of ~~$182.0~~$91.6 million and ~~$148.9~~$131.6 million related to contract liabilities, respectively. These amounts were included in the other current liabilities balance at the beginning of the respective periods.

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Note 3 Receivables


	May 31, 2020		August 31, 2019			February 28, 2021		August 31, 2020
	(Dollars in thousands)					(Dollars in thousands)
Trade accounts receivable	$	1,766,166	$	1,803,284	Trade accounts receivable	$	1,650,031	$	1,476,585
CHS Capital short-term notes receivable	474,425		592,909		CHS Capital short-term notes receivable	442,172		563,934
Other	524,975		511,821		Other	392,769		491,068
Gross receivables	2,765,566		2,908,014		Gross receivables	2,484,972		2,531,587
Less: allowances and reserves	191,359		176,805		Less: allowances and reserves	148,052		165,540
Total receivables	$	2,574,207	$	2,731,209	Total receivables	$	2,336,920	$	2,366,047

Receivables are composed of trade accounts receivable, short-term notes receivable in our wholly-owned subsidiary, CHS Capital, LLC ("CHS Capital"), and other receivables, less an allowance for ~~doubtful accounts.~~expected credit losses. The allowance for expected credit losses is based on our best estimate of expected credit losses in existing receivable balances and is determined using historical write-off experience, adjusted for various industry and regional data and current expectations of future credit losses.

Notes receivable from commercial borrowers are collateralized by various combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of capital stock from certain regional cooperatives. These loans are originated in various states, primarily in the Upper Midwest region of the United States, the most significant of which include North Dakota ~~Minnesota~~ and ~~Montana.~~Minnesota. 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 primarily in the same states as the commercial notes.

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 ~~$93.6~~$93.0 million and ~~$180.0~~$101.5 million as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, respectively. Long-term notes receivable are included in other assets on our Condensed Consolidated Balance Sheets. As of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, the commercial notes represented ~~45%~~67% and ~~41%~~33%, respectively, and the producer notes represented ~~55%~~33% and ~~59%~~67%, respectively, of total CHS Capital notes receivable.

CHS Capital has commitments to extend credit to customers if there are no violations of contractually established conditions. As of ~~May 31, 2020,~~February 28, 2021, CHS Capital customers had additional available credit of ~~$762.2~~$618.0 million. No significant troubled debt restructuring activity occurred and no third-party customer or borrower accounted for more than 10% of the total receivables balance as of ~~May 31, 2020,~~February 28, 2021, or August 31, ~~2019.~~2020.

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Note 4 Inventories


	May 31, 2020		August 31, 2019			February 28, 2021		August 31, 2020
	(Dollars in thousands)					(Dollars in thousands)
Grain and oilseed	$	1,021,535	$	1,024,645	Grain and oilseed	$	1,927,931	$	1,064,079
Energy	681,364		717,378		Energy	714,798		696,858
Agronomy	967,451		954,037		Agronomy	1,403,480		822,535
Processed grain and oilseed	108,115		109,900		Processed grain and oilseed	155,492		126,022
Other	40,293		48,328		Other	44,350		32,644
Total inventories	$	2,818,758	$	2,854,288	Total inventories	$	4,246,051	$	2,742,138

As of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, we valued approximately 11% and 16%, respectively, of inventories, primarily crude oil and refined fuels within our Energy segment, using the lower of cost, determined on the LIFO method, or net realizable value. If the FIFO method of accounting had been used, inventories would have been ~~lower than the reported amount by $79.0 million and~~ higher than the reported amount by ~~$215.0~~$284.3 million and $93.5 million as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, respectively. Actual valuation of inventory under the LIFO method can be made only at the end of each year based on inventory levels and costs at that time. Interim LIFO calculations are based on management's estimates of expected year-end inventory levels and values and are subject to ~~the~~ final year-end LIFO inventory valuation. ~~During the third quarter~~

Table of fiscal 2020, we experienced price declines in our energy inventories associated with the novel corona virus COVID-19 pandemic. As a result, we recorded a noncash, lower of cost or market charge of $42.0 million in cost of goods sold to reduce the carrying value of our energy inventories to their market value at the end of the period. This charge may increase or decrease in the fourth quarter of fiscal 2020, based upon market prices observed at our fiscal year-end. ~~Any adjustments that exist as of our fiscal year-end would be incorporated into the LIFO carrying value of the inventories.~~Contents

Note 5 Investments


	February 28, 2021		August 31, 2020
	(Dollars in thousands)
Equity method investments:
CF Industries Nitrogen, LLC	$	2,651,652	$	2,662,618
Ventura Foods, LLC	374,895		381,351
Ardent Mills, LLC	215,942		208,927

Other equity method investments	265,588		253,182
Other investments	131,376		123,955
Total investments	$	3,639,453	$	3,630,033

May 31,
2020 August 31,
2019
(Dollars in thousands)
Equity method investments:
CF Industries Nitrogen, LLC $ 2,724,668
$ 2,708,942
Ventura Foods, LLC 364,726
374,516
Ardent Mills, LLC 206,476
209,027
Other equity method investments 247,778
267,247
Other investments 123,311
124,264
Total investments $ 3,666,959
$ 3,683,996

~~Equity Method Investments~~

Joint ventures and other investments, in which we have significant ownership and influence but not control, are accounted for in our condensed consolidated financial statements using the equity method of accounting. Our ~~primary~~significant equity method investments consist of CF Industries Nitrogen, LLC ("CF Nitrogen"); Ventura Foods, LLC ("Ventura Foods"); Ardent Mills, LLC ("Ardent Mills"); and TEMCO, LLC ("TEMCO"), which are ~~described~~summarized below. In addition to recognition of our share of income from equity method investments, our equity method investments are evaluated for indicators of other-than-temporary impairment on an ongoing basis in accordance with accounting principles generally accepted in the United States ("U.S. GAAP"). Other investments consist primarily of investments in cooperatives without readily determinable fair values and are generally measured at cost, unless an impairment or other observable market price change occurs, requiring an adjustment. Approximately $394.0 million of cumulative undistributed earnings from our equity method investees are included in the investments balance as of February 28, 2021.

CF Nitrogen

We have aan approximate $2.7 billion investment in CF ~~Industries~~ Nitrogen, ~~LLC ("CF Nitrogen"),~~ a 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 as equity income from investments in our Nitrogen Production segment based ~~upon~~on our contractual claims on the entity's net assets pursuant to the liquidation provisions of the CF Nitrogen 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, 2020,~~

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and 2019, equity earnings were $41.3 million and $42.0 million, respectively. For the nine months ended May 31, 2020, and 2019, equity earnings were $104.0 million and $118.4 million, respectively. These amounts are included as equity income from investments in our Nitrogen Production segment.

The following table provides summarized unaudited financial information for our equity method investment in CF Nitrogen for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019:~~February 29, 2020:


	Six Months Ended
	February 28, 2021		February 29, 2020
	(Dollars in thousands)
Net sales	$	1,285,625	$	1,297,018
Gross profit	321,565		297,630
Net earnings	297,297		280,599
Earnings attributable to CHS Inc.	53,033		62,757

Nine Months Ended May 31,
2020 2019

Net sales $ 1,954,660
$ 2,219,267
Gross profit 481,711
560,631
Net earnings 452,859
536,409
Earnings attributable to CHS Inc. 104,021
118,415

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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 with ~~Wilsey Foods, Inc., a majority-owned subsidiary of MK USA Holdings, Inc.~~Mitsui & Co., that produces and distributes primarily vegetable-oil-based products. ~~Additionally, we~~We account for Ventura Foods as an equity method investment, and our share of the results of this equity method investment are included in Corporate and Other.

The following table provides aggregate summarized unaudited financial information for our equity method investment in Ventura Foods for the six months ended February 28, 2021, and February 29, 2020:


	Six Months Ended
	February 28, 2021		February 29, 2020
	(Dollars in thousands)
Net sales	$	1,107,024	$	1,229,151
Gross profit	134,311		150,818
Net earnings	42,620		45,117
Earnings attributable to CHS Inc.	21,310		22,557

Ardent Mills and TEMCO

We have a 12% interest in Ardent Mills, ~~LLC ("Ardent Mills"),~~ which is a joint venture with Cargill Incorporated ("Cargill") and Conagra Brands, Inc., and ~~combines~~is the ~~North American~~largest flour ~~milling operations of~~miller in the ~~three parent companies.~~United States. Additionally, we have a 50% interest in TEMCO, which is a joint venture with Cargill focused on export elevation, primarily to Asia. We account for ~~Ventura Foods~~Ardent Mills and ~~Ardent Mills~~TEMCO as equity method investments, and our ~~share~~shares of the results of these equity ~~methods~~method investments are included in Corporate and ~~Other.~~Other and our Ag segment, respectively.

The following table provides aggregate summarized unaudited financial information for our equity method investments in ~~Ventura Foods and~~ Ardent Mills and TEMCO for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019:~~February 29, 2020:


	Nine Months Ended May 31,					Six Months Ended
	2020		2019			February 28, 2021		February 29, 2020
						(Dollars in thousands)
Net sales	$	4,101,502	$	4,427,127	Net sales	$	4,395,607	$	3,070,160
Gross profit	686,045		391,338		Gross profit	287,843		170,294
Net earnings	134,774		152,315		Net earnings	145,783		44,145
Earnings attributable to CHS Inc.	29,770		50,415		Earnings attributable to CHS Inc.	30,419		(3,879)

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

Note 6 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, 2020.~~February 28, 2021. The table below summarizes our notes payable as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019.~~2020.


	May 31, 2020		August 31, 2019			February 28, 2021		August 31, 2020
	(Dollars in thousands)					(Dollars in thousands)
Notes payable	$	1,573,594	$	1,330,550	Notes payable	$	2,249,275	$	763,215
CHS Capital notes payable	641,989		825,558		CHS Capital notes payable	703,117		812,276
Total notes payable	$	2,215,583	$	2,156,108	Total notes payable	$	2,952,392	$	1,575,491

As of ~~May 31, 2020,~~February 28, 2021, our primary line of credit was a ~~five-year~~five-year unsecured revolving credit facility with a syndicate of domestic and international banks. The credit facility provides a committed amount of $2.75 billion that expires on July 16, 2024. As of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, the outstanding balance on this facility was ~~$800.0~~$1.3 billion and $345.0 million, ~~and $335.0 million,~~ respectively. Additionally, on September 30, 2019, CHS Capital entered into a credit agreement with a revolving note. Under this agreement, CHS Capital has available capacity of $100.0 million, of which no amount was outstanding as of May 31, 2020.

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We have a receivables and loans securitization facility ("Securitization Facility") with certain unaffiliated financial institutions ("Purchasers"). Under the Securitization Facility, we and certain of our subsidiaries ("Originators") sell trade accounts and notes receivable ("Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the Purchasers, and this arrangement is accounted for as a secured borrowing. 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 amount available under the Securitization Facility fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business. As of February 28, 2021, total availability under the Securitization Facility was ~~amended on June 26, 2020, to extend its termination date to September 24, 2020,~~$538.0 million, all of which ~~may be further extended.~~had been utilized.

~~On June 26, 2020, we~~ We also ~~amended our~~have a repurchase facility ("Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can borrow up to $150.0 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, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, the outstanding balance under the Repurchase Facility was $150.0 million.

On September 24, 2020, the Securitization Facility and Repurchase Facility were amended, increasing the maximum availability under the Securitization Facility to $600.0 million from $500.0 million and extending their respective termination dates to July 30, 2021.

On February 19, 2021, we amended our 10-year term loan facility to convert the entire $366.0 million aggregate principle amount outstanding thereunder into a revolving loan, which can be paid down and readvanced in an amount up to the referenced $366.0 million until February 19, 2022. On February 19, 2022, the total funded loan balance outstanding reverts to a nonrevolving term loan that is payable on September 4, 2025. There was no balance outstanding under this facility as of February 28, 2021.

On August 14, 2020, we entered into a Note Purchase Agreement to borrow $375.0 million of debt in the form of notes. The notes under this Note Purchase Agreement are structured in four series with maturities ranging from 7 to 15 years and interest accruing at rates ranging from 3.24% to 3.73%, subject to certain adjustments depending on our ratio of consolidated funded debt to consolidated cash flow. The funding of these notes took place on November 2, 2020. This funding is being used to pay debt maturities and manage liquidity.

Interest expense for the three months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ was ~~$26.7~~$28.9 million and ~~$42.8~~$33.4 million, respectively, net of capitalized interest of ~~$2.7~~$2.1 million and ~~$2.5~~$3.4 million, respectively. Interest expense for the ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ was ~~$95.0~~$53.9 million and ~~$123.0~~$68.4 million, respectively, net of capitalized interest of ~~$8.9~~$4.2 million and ~~$7.1~~$6.2 million, respectively.

Note 7 Income Taxes

Our effective tax rate for the three months ended February 28, 2021, was (473.4)%, compared to 1.7% for the three months ended February 29, 2020. Our effective tax rate for the six months ended February 28, 2021, was 19.1%, compared to 2.8% for the six months ended February 29, 2020. Our income tax expense reflects the mix of full-year earnings projected across business units and equity management assumptions, which were partially offset by tax benefits related to an intercompany transfer of assets for tax planning. Income taxes and effective tax rate vary each year based on profitability and nonpatronage business activity during each of the comparable years.

Our uncertain tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing authorities. Reserves are recorded against unrecognized tax benefits when we believe certain fully supportable tax return positions are likely to be challenged and we may not prevail. If we were to prevail on all positions taken in relation to uncertain tax positions, $129.8 million and $111.3 million of the unrecognized tax benefits would ultimately benefit our effective tax rate as of February 28, 2021, and August 31, 2020, respectively. It is reasonably possible that the total amount of unrecognized tax benefits could significantly change in the next 12 months.

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Note 78 Equities

Changes in Equities

Changes in equities for the ~~nine~~three and six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ 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)
Balances, August 31, 2020	$	3,724,187	$	28,727	$	1,408,696	$	2,264,038	$	(233,924)	$	1,618,147	$	9,302	$	8,819,173
Reversal of prior year redemption estimates	7,726		0		0		—		—		0		—		7,726

Redemptions of equities	(6,539)		(31)		(1,156)		0		—		—		—		(7,726)
Preferred stock dividends	—		—		—		—		—		(84,334)		—		(84,334)
Other, net	(654)		(47)		(197)		—		—		(7,798)		35		(8,661)
Net income (loss)	—		—		—		—		—		69,671		(302)		69,369
Other comprehensive income, net of tax	—		—		—		—		8,917		—		—		8,917
Estimated 2021 cash patronage refunds	—		—		—		—		—		(9,304)		—		(9,304)
Estimated 2021 equity redemptions	(9,304)		—		—		—		—		—		—		(9,304)
Balances, November 30, 2020	$	3,715,416	$	28,649	$	1,407,343	$	2,264,038	$	(225,007)	$	1,586,382	$	9,035	$	8,785,856
Reversal of prior year patronage and redemption estimates	4,760		0		(211,970)		—		—		233,345		—		26,135
Distribution of 2020 patronage refunds	—		—		214,720		—		—		(236,136)		—		(21,416)
Redemptions of equities	(4,177)		(35)		(548)		0		—		—		—		(4,760)
Preferred stock dividends	—		—		—		—		—		(42,167)		—		(42,167)
Other, net	(26)		—		(15)		—		—		1,068		(361)		666
Net loss	—		—		—		—		—		(38,229)		(129)		(38,358)
Other comprehensive income, net of tax	—		—		—		—		2,549		—		—		2,549
Estimated 2021 cash patronage refunds	—		—		—		—		—		5,639		—		5,639
Estimated 2021 equity redemptions	5,639		—		—		—		—		—		—		5,639
Balances, February 28, 2021	$	3,721,612	$	28,614	$	1,409,530	$	2,264,038	$	(222,458)	$	1,509,902	$	8,545	$	8,719,783


	Equity Certificates											Accumulated Other Comprehensive Loss																	Equity Certificates															Accumulated Other Comprehensive Loss
	Capital Equity Certificates			Nonpatronage Equity Certificates			Nonqualified Equity Certificates			Preferred Stock					Capital Reserves				Noncontrolling Interests				Total Equities					Capital Equity Certificates				Nonpatronage Equity Certificates				Nonqualified Equity Certificates				Preferred Stock							Capital Reserves				Noncontrolling Interests				Total Equities
	(Dollars in thousands)																												(Dollars in thousands)
Balances, August 31, 2019	$	3,753,493		$	29,074		$	1,206,310		$	2,264,038		$	(226,933	)		$	1,584,158			$	7,390			$	8,617,530		Balances, August 31, 2019		$	3,753,493			$	29,074			$	1,206,310			$	2,264,038			$	(226,933)			$	1,584,158			$	7,390			$	8,617,530
Reversal of prior year redemption estimates	5,447			—			—			—		—				—				—				5,447			Reversal of prior year redemption estimates		5,447				0				0				—				—				0				—				5,447
Redemptions of equities	(4,721		)	(54		)	(672		)	—		—				—				—				(5,447		)	Redemptions of equities		(4,721)				(54)				(672)				0			—				—				—				(5,447)
Preferred stock dividends	—			—			—			—		—				(84,334		)		—				(84,334		)	Preferred stock dividends		—				—				—				—			—				(84,334)				—				(84,334)
ASC Topic 842 cumulative-effect adjustment	—			—			—			—		—				33,707				—				33,707			ASC Topic 842 cumulative-effect adjustment		0				0				0				0			0				33,707				0				33,707
Other, net	(8		)	—			(39		)	—		—				(1,312		)		410				(949		)	Other, net		(8)				—				(39)				—			—				(1,312)				410				(949)
Net income	—			—			—			—		—				177,882				855				178,737			Net income		—				—				—				—			—				177,882				855				178,737
Other comprehensive loss, net of tax	—			—			—			—		(1,638		)		—				—				(1,638		)	Other comprehensive loss, net of tax		—				—				—				—			(1,638)				—				—				(1,638)
Estimated 2020 cash patronage refunds	—			—			—			—		—				(28,504		)		—				(28,504		)	Estimated 2020 cash patronage refunds		—				—				—				—			—				(28,504)				—				(28,504)
Estimated 2020 equity redemptions	(91,633		)	—			—			—		—				—				—				(91,633		)	Estimated 2020 equity redemptions		(91,633)				—				—				—			—				—				—				(91,633)
Balances, November 30, 2019	$	3,662,578		$	29,020		$	1,205,599		$	2,264,038	$	(228,571	)		$	1,681,597			$	8,655			$	8,622,916		Balances, November 30, 2019		$	3,662,578			$	29,020			$	1,205,599			$	2,264,038		$	(228,571)			$	1,681,597			$	8,655			$	8,622,916
Reversal of prior year patronage and redemption estimates	3,387			—			(472,398		)	—		—				562,398				—				93,387			Reversal of prior year patronage and redemption estimates		3,387				0				(472,398)				—			—				562,398				—				93,387
Distribution of 2019 patronage refunds	—			—			474,066			—		—				(564,096		)		—				(90,030		)	Distribution of 2019 patronage refunds		—				—				474,066				—			—				(564,096)				—				(90,030)
Redemptions of equities	(2,998		)	(20		)	(369		)	—		—				—				—				(3,387		)	Redemptions of equities		(2,998)				(20)				(369)				0			—				—				—				(3,387)
Preferred stock dividends	—			—			—			—		—				(42,167		)		—				(42,167		)	Preferred stock dividends		—				—				—				—			—				(42,167)				—				(42,167)
Other, net	(201		)	—			3			—		—				10				(324		)		(512		)	Other, net		(201)				—				3				—			—				10				(324)				(512)
Net income	—			—			—			—		—				125,447				247				125,694			Net income		—				—				—				—			—				125,447				247				125,694
Other comprehensive loss, net of tax	—			—			—			—		(10,585		)		—				—				(10,585		)	Other comprehensive loss, net of tax		—				—				—				—			(10,585)				—				—				(10,585)
Estimated 2020 cash patronage refunds	—			—			—			—		—				(22,206		)		—				(22,206		)	Estimated 2020 cash patronage refunds		—				—				—				—			—				(22,206)				—				(22,206)
Estimated 2020 equity redemptions	(49,154		)	—			—			—		—				—				—				(49,154		)	Estimated 2020 equity redemptions		(49,154)				—				—				—			—				—				—				(49,154)
Balances, February 29, 2020	$	3,613,612		$	29,000		$	1,206,901		$	2,264,038	$	(239,156	)		$	1,740,983			$	8,578			$	8,623,956		Balances, February 29, 2020		$	3,613,612			$	29,000			$	1,206,901			$	2,264,038		$	(239,156)			$	1,740,983			$	8,578			$	8,623,956
Reversal of prior year redemption estimates	67,438			—			10,000			—		—				—				—				77,438
Distribution of 2019 patronage refunds	—			—			327			—		—				(409		)		—				(82		)
Redemptions of equities	(64,273		)	(91		)	(13,074		)	—		—				—				—				(77,438		)
Other, net	(1,544		)	(7		)	(116		)	—		—				1,053				8				(606		)
Net income (loss)	—			—			—			—		—				97,648				(147		)		97,501
Other comprehensive loss, net of tax	—			—			—			—		(2,009		)		—				—				(2,009		)
Estimated 2020 cash patronage refunds	—			—			—			—		—				13,551				—				13,551
Estimated 2020 equity redemptions	47,975			—			—			—		—				—				—				47,975
Balances, May 31, 2020	$	3,663,208		$	28,902		$	1,204,038		$	2,264,038	$	(241,165	)		$	1,852,826			$	8,439			$	8,780,286

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)
Balances, 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, net of tax —
—
—
—
389
—
—
389
Estimated 2019 cash patronage refunds —
—
—
—
—
(89,344 ) —
(89,344 )
Estimated 2019 equity redemptions (50,081 ) —
—
—
—
—
—
(50,081 )
Balances, 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, net of tax —
—
—
—
14,884
—
—
14,884
Estimated 2019 cash patronage refunds —
—
—
—
—
(69,400 ) —
(69,400 )
Estimated 2019 equity redemptions (39,850 ) —
—
—
—
—
—
(39,850 )
Balances, 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 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 )
Balances, May 31, 2019 $ 3,752,521
$ 29,207
$ 735,138
$ 2,264,038
$ (211,661 ) $ 1,834,030
$ 8,436
$ 8,411,709

Preferred Stock Dividends

The following is a summary of dividends per share by series of preferred stock for the ~~nine~~three and six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019. Note that due to the timing of dividend declarations during the fiscal year, no declarations were made during the third quarter of fiscal 2020 or fiscal 2019.~~February 29, 2020.


		Three Months Ended				Six Months Ended
	Nasdaq symbol	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Series of preferred stock:		(Dollars per share)
8% Cumulative Redeemable	CHSCP	$	0.50	$	0.50	$	1.50	$	1.50
Class B Cumulative Redeemable, Series 1	CHSCO	$	0.49	$	0.49	$	1.48	$	1.48
Class B Reset Rate Cumulative Redeemable, Series 2	CHSCN	$	0.44	$	0.44	$	1.33	$	1.33
Class B Reset Rate Cumulative Redeemable, Series 3	CHSCM	$	0.42	$	0.42	$	1.27	$	1.27
Class B Cumulative Redeemable, Series 4	CHSCL	$	0.47	$	0.47	$	1.41	$	1.41

Nine Months Ended May 31,
Nasdaq symbol 2020 2019
Series of preferred stock: (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

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Accumulated Other Comprehensive Income (Loss)

Changes in accumulated other comprehensive income (loss) by component, net of tax, are as follows for the ~~nine~~three and six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019:~~February 29, 2020:


	Pension and Other Postretirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustment		Total
	(Dollars in thousands)
Balance as of August 31, 2020, net of tax	$	(159,680)	$	10,886	$	(85,130)	$	(233,924)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	(125)		14,506		3,629		18,010
Amounts reclassified	4,977		(12,284)		0		(7,307)
Total other comprehensive income, before tax	4,852		2,222		3,629		10,703
Tax effect	(1,207)		(553)		(26)		(1,786)
Other comprehensive income, net of tax	3,645		1,669		3,603		8,917

Balance as of November 30, 2020, net of tax	$	(156,035)	$	12,555	$	(81,527)	$	(225,007)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	0		2,929		(587)		2,342
Amounts reclassified	5,151		(3,673)		0		1,478
Total other comprehensive income (loss), before tax	5,151		(744)		(587)		3,820
Tax effect	(1,282)		185		(174)		(1,271)
Other comprehensive income (loss), net of tax	3,869		(559)		(761)		2,549
Balance as of February 28, 2021, net of tax	$	(152,166)	$	11,996	$	(82,288)	$	(222,458)

Pension and Other Postretirement Benefits Cash Flow Hedges Foreign Currency Translation Adjustment Total
(Dollars in thousands)
Balance as of August 31, 2019, net of tax $ (172,478 ) $ 15,297
$ (69,752 ) $ (226,933 )
Other comprehensive income (loss), before tax:
Amounts before reclassifications (85 ) (3,331 ) (2,411 ) (5,827 )
Amounts reclassified 4,977
(4,473 ) —
504
Total other comprehensive income (loss), before tax 4,892
(7,804 ) (2,411 ) (5,323 )
Tax effect 181
1,932
1,572
3,685
Other comprehensive income (loss), net of tax 5,073
(5,872 ) (839 ) (1,638 )
Balance as of November 30, 2019, net of tax $ (167,405 ) $ 9,425
$ (70,591 ) $ (228,571 )
Other comprehensive income (loss), before tax:
Amounts before reclassifications —
(5,975 ) (8,540 ) (14,515 )
Amounts reclassified 4,977
(1,747 ) —
3,230
Total other comprehensive income (loss), before tax 4,977
(7,722 ) (8,540 ) (11,285 )
Tax effect (1,231 ) 1,910
21
700
Other comprehensive income (loss), net of tax 3,746
(5,812 ) (8,519 ) (10,585 )
Balance as of February 29, 2020, net of tax $ (163,659 ) $ 3,613
$ (79,110 ) $ (239,156 )
Other comprehensive income (loss), before tax:
Amounts before reclassifications (340 ) 7,795
(12,515 ) (5,060 )
Amounts reclassified 4,977
1,263
—
6,240
Total other comprehensive income (loss), before tax 4,637
9,058
(12,515 ) 1,180
Tax effect (1,147 ) (2,241 ) 199
(3,189 )
Other comprehensive income (loss), net of tax 3,490
6,817
(12,316 ) (2,009 )
Balance as of May 31, 2020, net of tax $ (160,169 ) $ 10,430
$ (91,426 ) $ (241,165 )

Table of Contents


	Pension and Other Postretirement Benefits		Cash Flow Hedges		Foreign Currency Translation Adjustment		Total
	(Dollars in thousands)
Balance as of August 31, 2019, net of tax	$	(172,478)	$	15,297	$	(69,752)	$	(226,933)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	(85)		(3,331)		(2,411)		(5,827)
Amounts reclassified	4,977		(4,473)		0		504
Total other comprehensive income (loss), before tax	4,892		(7,804)		(2,411)		(5,323)
Tax effect	181		1,932		1,572		3,685
Other comprehensive income (loss), net of tax	5,073		(5,872)		(839)		(1,638)
Balance as of November 30, 2019, net of tax	$	(167,405)	$	9,425	$	(70,591)	$	(228,571)
Other comprehensive income (loss), before tax:
Amounts before reclassifications	0		(5,975)		(8,540)		(14,515)
Amounts reclassified	4,977		(1,747)		0		3,230
Total other comprehensive income (loss), before tax	4,977		(7,722)		(8,540)		(11,285)
Tax effect	(1,231)		1,910		21		700
Other comprehensive income (loss), net of tax	3,746		(5,812)		(8,519)		(10,585)
Balance as of February 29, 2020, net of tax	$	(163,659)	$	3,613	$	(79,110)	$	(239,156)

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 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 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, 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 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 )

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, marketing, general and administrative expenses, and other income (see Note 8, 9, Benefit Plans, for further information). Gains or losses associated with cash flow hedges are recorded as cost of goods sold (see Note 11, Derivative Financial Instruments and Hedging Activities, for further information). Gains or losses on ~~the sale of available-for-sale investments and~~ foreign currency translation reclassifications related to sales of businesses are recorded as other income.

Note 89 Benefit Plans

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

Table of Contents

Components of net periodic benefit costs for the three and ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ are as follows:


	Three Months Ended
	Qualified Pension Benefits				Nonqualified Pension Benefits				Other Benefits
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Components of net periodic benefit costs:	(Dollars in thousands)
Service cost	$	11,307	$	10,538	$	108	$	101	$	297	$	262
Interest cost	4,141		5,431		68		107		123		187
Expected return on assets	(10,910)		(11,671)		0		0		0		0
Prior service cost (credit) amortization	45		45		(28)		(28)		(111)		(111)
Actuarial loss (gain) amortization	5,447		5,396		53		25		(341)		(348)

Net periodic benefit cost (benefit)	$	10,030	$	9,739	$	201	$	205	$	(32)	$	(10)

	Six Months Ended
	Qualified Pension Benefits				Nonqualified Pension Benefits				Other Benefits
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Components of net periodic benefit costs:	(Dollars in thousands)
Service cost	$	22,614	$	21,076	$	217	$	203	$	593	$	525
Interest cost	8,281		10,861		136		214		246		374
Expected return on assets	(21,821)		(23,342)		0		0		0		0
Prior service cost (credit) amortization	89		89		(57)		(57)		(223)		(223)
Actuarial loss (gain) amortization	10,895		10,791		106		49		(682)		(696)

Net periodic benefit cost (benefit)	$	20,058	$	19,475	$	402	$	409	$	(66)	$	(20)

Three Months Ended May 31,

Qualified
Pension Benefits

Nonqualified
Pension Benefits
Other Benefits
2020 2019 2020 2019 2020 2019
Components of net periodic benefit costs: (Dollars in thousands)
Service cost $ 10,538
$ 9,648
$ 101
$ 78
$ 262
$ 263
Interest cost 5,431
7,099
107
186
187
274
Expected return on assets (11,671 ) (11,242 ) —
—
—
—
Prior service cost (credit) amortization 45
42
(28 ) (19 ) (111 ) (139 )
Actuarial loss (gain) amortization 5,396
3,087
25
1
(348 ) (407 )
Net periodic benefit cost $ 9,739
$ 8,634
$ 205
$ 246
$ (10 ) $ (9 )

Nine Months Ended May 31,

Qualified
Pension Benefits

Nonqualified
Pension Benefits
Other Benefits
2020 2019 2020 2019 2020 2019
Components of net periodic benefit costs: (Dollars in thousands)
Service cost $ 31,613
$ 28,944
$ 304
$ 233
$ 787
$ 790
Interest cost 16,292
21,297
322
560
560
821
Expected return on assets (35,013 ) (33,726 ) —
—
—
—
Prior service cost (credit) amortization 134
127
(85 ) (56 ) (334 ) (417 )
Actuarial loss (gain) amortization 16,187
9,261
74
2
(1,044 ) (1,221 )
Settlement loss —
169
—
—
—
—
Net periodic benefit cost $ 29,213
$ 26,072
$ 615
$ 739
$ (31 ) $ (27 )

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 recorded in other income.

Employer Contributions

Any contributions made during fiscal ~~2020~~2021 will depend primarily on market returns on the pension plan assets and minimum funding level requirements. No contributions were made to the pension plans during the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and we do not currently anticipate being required to make contributions for our pension plans in fiscal ~~2020.~~2021.

~~Note 9 Income Taxes~~

Our effective tax rate for the three months ended May 31, 2020, was (38.4)%, compared to 11.1% for the three months ended May 31, 2019. Our effective tax rate for the nine months ended May 31, 2020, was (4.8)%, compared to 5.9% for the nine months ended May 31, 2019. The decreased effective tax rate reflects a tax benefit for the settlement of a U.S. federal audit resulting in additional tax credit carryovers, as well as the equity management assumptions used in fiscal 2020 and the associated impact on income taxes.

It is reasonably possible that the amount of unrecognized tax benefits could significantly change within the next 12 months. We have ongoing federal, state and international income tax audits in various jurisdictions and are evaluating uncertain tax positions that may be challenged by local tax authorities and not fully sustained. These uncertain tax positions are reviewed on an ongoing basis and adjusted in light of facts and circumstances, including progression of tax audits, developments in case law and closing of statutes of limitation. The total amounts of unrecognized tax benefits that, if recognized, would affect the effective tax rate as of May 31, 2020, and August 31, 2019, are $111.1 million and $93.3 million, respectively.

~~Table of Contents~~

Note 10 Segment Reporting

We are an integrated agricultural enterprise, providing grain, foods and energy resources to businesses and consumers on a global basis. We provide a wide variety of products and services, from initial agricultural inputs such as fuels, farm supplies, crop ~~nutrient~~nutrients and crop protection products, to agricultural outputs that include grains and oilseeds, grain and oilseed processing and food products, and the production and marketing of ethanol. 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 businesses. 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 quantity of granular urea and urea ammonium nitrate ~~("UAN")~~ annually from CF Nitrogen. Corporate and Other represents our financing and hedging businesses, which consist primarily ~~consist~~ of ~~commodities hedging and~~ financial services related to crop ~~production.~~production and a U.S.

Table of Contents

Commodity Futures Trading Commission-regulated futures commission merchant for commodities hedging. Our nonconsolidated investments in Ventura Foods and Ardent Mills are also included in our Corporate and ~~Other.~~Other category.

Corporate administrative expenses and interest are allocated to each ~~business~~reportable segment and Corporate and Other, based on direct ~~usage for~~use of services, ~~that can be tracked,~~ 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. Our revenues generally trend lower during the second and fourth fiscal quarters and higher during the first and third fiscal quarters; however, our income (loss) before income taxes does not necessarily follow the same trend due to weather and other events that can impact profitability. For example, in our Ag segment, our country operations business generally experiences higher volumes and ~~income~~revenues during ~~the spring planting season and~~ the fall harvest ~~season,~~ and spring planting seasons, which generally correspond to our first and third fiscal quarters, respectively. Additionally, our agronomy business generally experiences higher volumes ~~and income~~ during the spring planting season. Our global grain marketing operations are subject to fluctuations in volume and ~~earnings~~income based on producer harvests, world grain prices, demand and ~~demand.~~global trade volumes. Our Energy segment generally experiences higher volumes ~~and profitability~~ in certain operating areas, such as refined products, in the spring, summer and early fall when gasoline and diesel fuel ~~usage~~use by agricultural producers is highest and is subject to global supply and demand forces. Other energy products, such as propane, ~~may~~generally 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 market prices for commodities such as petroleum products, natural gas, 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 weather, crop damage due to plant disease or insects, drought, availability and adequacy of supply, availability of a reliable rail and river transportation network, outbreaks of disease, government regulations and policies, ~~world events,~~global trade disputes, and general political and economic conditions.

While our revenues and operating results are derived primarily from businesses and operations that are wholly-owned or subsidiaries and limited liability companies in which we have a controlling interest, a portion of our business operations are conducted through companies in which we hold ownership interests of 50% or less or do not control the operations. We account for these investments primarily using the equity method of accounting, wherein we record our proportionate share of income or loss reported by the entity as equity income from investments, without consolidation of the revenues and expenses of the entity in our Condensed Consolidated Statements of Operations. In our Nitrogen Production segment, this consists of our approximate 10% membership interest (based on product tons) in CF Nitrogen. In Corporate and Other, this principally includes our 50% ownership in Ventura Foods and our 12% ownership in Ardent Mills. See Note 5, Investments, for more information on these entities.

Reconciling amounts primarily represent the elimination of revenues between segments. Such transactions are executed at market prices to more accurately evaluate the profitability of individual business segments.

~~Table of Contents~~

Segment information for the three and ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ is presented in the tables below. Our Ag segment information includes results associated with our acquisition of the remaining 75% ownership interest in West Central Distribution, LLC ("WCD") that we did not previously own prior to March 1, 2019. Results are comparable for the three months ended May 31, 2020, and 2019; however, results for the nine months ended May 31, 2020, and 2019, are not comparable as the results of WCD were not included during the first six months of fiscal 2019. Refer to further details related to our acquisition of the remaining 75% ownership interest in WCD that we did not previously own in Note 15, ~~Acquisitions~~.


	Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total
Three Months Ended February 28, 2021	(Dollars in thousands)
Revenues, including intersegment revenues	$	1,470,465	$	6,942,185	$	0	$	12,046	$	(104,537)	$	8,320,159
Intersegment revenues	(98,307)		(3,973)		0		(2,257)		104,537		—
Revenues, net of intersegment revenues	$	1,372,158	$	6,938,212	$	0	$	9,789	$	0	$	8,320,159
Operating (loss) earnings	(55,449)		2,093		(8,240)		1,806		0		(59,790)
Interest expense	1,063		16,630		12,241		7		(1,086)		28,855
Other income	(990)		(11,636)		(302)		(6,004)		1,086		(17,846)
Equity income from investments	(832)		(16,945)		(31,344)		(14,988)		0		(64,109)
(Loss) income before income taxes	$	(54,690)	$	14,044	$	11,165	$	22,791	$	0	$	(6,690)

Energy Ag Nitrogen Production Corporate
and Other Reconciling
Amounts Total
Three Months Ended May 31, 2020 (Dollars in thousands)
Revenues, including intersegment revenues $ 960,352

$ 6,340,386

$ —
$ 13,515

$ (73,222 )
$ 7,241,031
Intersegment revenues (69,433 ) (2,485 ) —
(1,304 ) 73,222
—
Revenues, net of intersegment revenues $ 890,919
$ 6,337,901
$ —
$ 12,211
$ —
$ 7,241,031
Operating earnings (loss) (56,792 )
95,328

(7,936 ) 7,320

—

37,920
Interest expense (145 )
16,261

10,176
1,810

(1,441 )
26,661
Other income (614 ) (8,294 ) (355 ) (254 ) 1,441
(8,076 )
Equity income from investments (1,269 )
(7,999 )
(41,264 ) (582 )
—

(51,114 )
Income (loss) before income taxes $ (54,764 )
$ 95,360

$ 23,507
$ 6,346

$ —

$ 70,449

Energy Ag Nitrogen Production Corporate
and Other Reconciling
Amounts Total
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
Intersegment revenues (103,245 ) (4,067 ) —
(1,637 ) 108,949
—
Revenues, net of intersegment revenues $ 1,738,045
$ 6,745,115
$ —
$ 14,781
$ —
$ 8,497,941
Operating earnings (loss) 572
12,090
(9,040 ) 2,622
—
6,244
Interest expense 1,171
26,675
13,140
3,883
(2,096 ) 42,773
Other income (1,098 ) (31,685 ) (399 ) (1,852 ) 2,096
(32,938 )
Equity income from investments (760 ) (4,012 ) (41,959 ) (18,439 ) —
(65,170 )
Income before income taxes $ 1,259
$ 21,112
$ 20,178
$ 19,030
$ —
$ 61,579

Energy Ag Nitrogen Production Corporate
and Other Reconciling
Amounts Total
Nine Months Ended May 31, 2020 (Dollars in thousands)
Revenues, including intersegment revenues $ 4,550,155
$ 17,183,820
$ —
$ 43,514
$ (316,747 ) $ 21,460,742
Intersegment revenues (302,763 ) (9,862 ) —
(4,122 ) 316,747
—
Revenues, net of intersegment revenues $ 4,247,392
$ 17,173,958
$ —
$ 39,392
$ —
$ 21,460,742
Operating earnings (loss) 241,594
88,102
(26,318 ) 7,239
—
310,617
Interest expense 43
57,761
34,277
8,680
(5,718 ) 95,043
Other income (2,516 ) (31,142 ) (2,272 ) (2,714 ) 5,718
(32,926 )
Equity (income) loss from investments (2,242 ) 830
(104,021 ) (29,741 ) —
(135,174 )
Income before income taxes $ 246,309
$ 60,653
$ 45,698
$ 31,014
$ —
$ 383,674
Total assets as of May 31, 2020 $ 4,545,401
$ 6,742,438
$ 2,743,305
$ 2,796,080
$ —
$ 16,827,224

Energy Ag Nitrogen Production Corporate
and Other Reconciling
Amounts Total
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
Intersegment revenues (348,228 ) (10,976 ) —
(5,577 ) 364,781
—
Revenues, net of intersegment revenues $ 5,374,110
$ 18,045,057
$ —
$ 46,602
$ —
$ 23,465,769
Operating earnings (loss) 537,932
45,088
(24,048 ) 11,415
—
570,387
Interest expense 3,756
73,073
42,161
7,945
(3,985 ) 122,950
Other income (4,301 ) (64,341 ) (2,362 ) (2,816 ) 3,985
(69,835 )
Equity (income) loss from investments (1,828 ) (2,675 ) (118,416 ) (50,475 ) —
(173,394 )
Income before income taxes $ 540,305
$ 39,031
$ 54,569
$ 56,761
$ —
$ 690,666

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	Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total
Three Months Ended February 29, 2020	(Dollars in thousands)
Revenues, including intersegment revenues	$	1,561,908	$	5,127,441	$	0	$	14,049	$	(105,172)	$	6,598,226
Intersegment revenues	(100,858)		(3,239)		0		(1,075)		105,172		—
Revenues, net of intersegment revenues	$	1,461,050	$	5,124,202	$	0	$	12,974	$	0	$	6,598,226
Operating earnings (loss)	137,187		(6,809)		(10,559)		(4,334)		0		115,485
Interest expense	(187)		20,759		11,971		3,032		(2,164)		33,411
Other income	(938)		(11,395)		(348)		(835)		2,164		(11,352)
Equity (income) loss from investments	(609)		4,672		(27,923)		(10,538)		0		(34,398)
Income (loss) before income taxes	$	138,921	$	(20,845)	$	5,741	$	4,007	$	0	$	127,824


	Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total
Six Months Ended February 28, 2021	(Dollars in thousands)
Revenues, including intersegment revenues	$	2,828,310	$	14,392,490	$	0	$	27,528	$	(212,526)	$	17,035,802
Intersegment revenues	(198,305)		(8,876)		0		(5,345)		212,526		—
Revenues, net of intersegment revenues	$	2,630,005	$	14,383,614	$	—	$	22,183	$	—	$	17,035,802
Operating (loss) earnings	(123,834)		77,617		(15,862)		9,732		0		(52,347)
Interest expense	826		31,135		23,403		1,145		(2,604)		53,905
Other income	(1,472)		(23,453)		(1,867)		(6,282)		2,604		(30,470)
Equity income from investments	(1,321)		(27,118)		(53,033)		(32,660)		0		(114,132)
(Loss) income before income taxes	$	(121,867)	$	97,053	$	15,635	$	47,529	$	0	$	38,350
Total assets as of February 28, 2021	$	4,415,250	$	8,687,820	$	2,667,517	$	2,795,556	$	—	$	18,566,143

	Energy		Ag		Nitrogen Production		Corporate and Other		Reconciling Amounts		Total
Six Months Ended February 29, 2020	(Dollars in thousands)
Revenues, including intersegment revenues	$	3,589,803	$	10,843,434	$	0	$	29,999	$	(243,525)	$	14,219,711
Intersegment revenues	(233,330)		(7,377)		0		(2,818)		243,525		—
Revenues, net of intersegment revenues	$	3,356,473	$	10,836,057	$	—	$	27,181	$	—	$	14,219,711
Operating earnings (loss)	298,386		(7,226)		(18,381)		(82)		0		272,697
Interest expense	187		41,500		24,101		6,870		(4,276)		68,382
Other income	(1,902)		(22,848)		(1,916)		(2,460)		4,276		(24,850)
Equity (income) loss from investments	(973)		8,829		(62,757)		(29,159)		0		(84,060)
Income (loss) before income taxes	$	301,074	$	(34,707)	$	22,191	$	24,667	$	0	$	313,225

Note 11 Derivative Financial Instruments and Hedging Activities

~~Our~~ We enter into various derivative instruments to manage our exposure to movements primarily ~~consist of~~associated with agricultural and energy commodity ~~and forward contracts~~prices and, to a ~~minor~~lesser degree, ~~may include~~ foreign currency exchange rates and interest ~~rate swap contracts. These contracts are economic hedges of price risk, but we do not apply hedge accounting under ASC Topic 815, except with respect to~~rates. Except for certain interest rate ~~swap contracts~~swaps and certain pay-fixed, receive-variable, cash-settled swaps related to future crude oil purchases, which are accounted for as fair value hedges and ~~certain future crude oil purchases that are accounted for as~~ cash flow ~~hedges. Derivative~~hedges, respectively, our derivative instruments represent economic hedges of price risk for which hedge accounting under ASC Topic 815 is not applied. Rather, the derivative instruments are ~~primarily~~ recorded ~~within other current assets and other current liabilities~~ on our Condensed Consolidated Balance Sheets at fair value ~~as described~~with changes in fair value being recorded directly to earnings, primarily within cost of goods sold in our Condensed Consolidated Statements of Operations. See Note 12, Fair Value Measurements,.for additional information. The majority of our exchange traded agricultural commodity futures are settled daily through CHS Hedging, our wholly-owned futures commission merchant.

~~Derivatives Not Designated as Hedging Instruments~~

The following tables present the gross fair values of derivative assets, derivative liabilities and margin deposits (cash collateral) recorded on our Condensed Consolidated Balance Sheets, along with related amounts permitted to be offset in accordance with U.S. GAAP. WeAlthough we have certain netting arrangements for our exchange-traded futures and options contracts and certain over-the-counter ("OTC") contracts, we have elected ~~not~~ to ~~offset~~report our derivative ~~assets and liabilities when we have the right of offset~~instruments on a gross basis on our Condensed Consolidated Balance Sheets 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~~.

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	May 31, 2020									February 28, 2021
			Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting									Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting
	Gross Amount Recognized		Cash Collateral		Derivative Instruments		Net Amount			Gross Amount Recognized		Cash Collateral		Derivative Instruments		Net Amount
	(Dollars in thousands)									(Dollars in thousands)
Derivative Assets									Derivative Assets
Commodity derivatives	$	377,198	$	—	$	48,562	$	328,636	Commodity derivatives	$	980,141	$	—	$	18,849	$	961,292
Foreign exchange derivatives	13,828		—		11,728		2,100		Foreign exchange derivatives	7,221		—		5,891		1,330
Embedded derivative asset	18,636		—		—		18,636		Embedded derivative asset	15,865		—		0		15,865
Total	$	409,662	$	—	$	60,290	$	349,372	Total	$	1,003,227	$	—	$	24,740	$	978,487
Derivative Liabilities									Derivative Liabilities
Commodity derivatives	$	282,505	$	1,487	$	95,559	$	185,459	Commodity derivatives	$	515,002	$	1,893	$	19,964	$	493,145
Foreign exchange derivatives	92,962		—		11,728		81,234		Foreign exchange derivatives	64,669		0		5,891		58,778

Total	$	375,467	$	1,487	$	107,287	$	266,693	Total	$	579,671	$	1,893	$	25,855	$	551,923


	August 31, 2020
			Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting
	Gross Amount Recognized		Cash Collateral		Derivative Instruments		Net Amount
	(Dollars in thousands)
Derivative Assets
Commodity derivatives	$	327,493	$	—	$	2,980	$	324,513
Foreign exchange derivatives	11,809		—		9,385		2,424
Embedded derivative asset	18,998		—		0		18,998
Total	$	358,300	$	—	$	12,365	$	345,935
Derivative Liabilities
Commodity derivatives	$	343,343	$	956	$	5,578	$	336,809
Foreign exchange derivatives	69,466		0		9,385		60,081
Total	$	412,809	$	956	$	14,963	$	396,890

August 31, 2019
Amounts Not Offset on Condensed Consolidated Balance Sheet but Eligible for Offsetting
Gross Amount Recognized Cash Collateral Derivative Instruments Net Amount
(Dollars in thousands)
Derivative Assets
Commodity derivatives $ 215,030
$ —
$ 58,726
$ 156,304
Foreign exchange derivatives 10,334
—
7,108
3,226
Embedded derivative asset 21,364
—
—
21,364
Total $ 246,728
$ —
$ 65,834
$ 180,894
Derivative Liabilities
Commodity derivatives $ 223,410
$ 4,191
$ 41,647
$ 177,572
Foreign exchange derivatives 20,609
—
7,108
13,501
Total $ 244,019
$ 4,191
$ 48,755
$ 191,073

Derivative assets and liabilities with maturities of 12 months or less are recorded in other current assets and other current liabilities, respectively, on our Condensed Consolidated Balance Sheets. Derivative assets and liabilities with maturities greater than 12 months are recorded in other assets and other liabilities, respectively, on our Condensed Consolidated Balance Sheets. The amount of long-term derivative assets ~~excluding derivatives designated as cash flow or fair value hedges,~~ recorded on our Condensed Consolidated Balance Sheets as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, was ~~$25.3~~$15.2 million and ~~$26.6~~$21.2 million, respectively. The amount of long-term derivative liabilities ~~excluding derivatives designated as cash flow or fair value hedges,~~

~~Table of Contents~~

recorded on our Condensed Consolidated Balance Sheets as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, was ~~$9.0~~$4.3 million and ~~$7.4~~$5.4 million, respectively.

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Derivatives Not Designated as Hedging Instruments

The majority of our derivative instruments have not been 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 Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019.~~February 29, 2020.


		Three Months Ended				Six Months Ended
	Location of Gain (Loss)	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
		(Dollars in thousands)
Commodity derivatives	Cost of goods sold	$	(191,284)	$	100,268	$	(392,646)	$	142,942
Foreign exchange derivatives	Cost of goods sold	(30,881)		(37,148)		(8,240)		(47,309)
Foreign exchange derivatives	Marketing, general and administrative expenses	(435)		195		173		1,938
Embedded derivative	Other income	302		348		1,866		1,917
Total		$	(222,298)	$	63,663	$	(398,847)	$	99,488

Three Months Ended May 31, Nine Months Ended May 31,
Location of Gain (Loss) 2020 2019 2020 2019
(Dollars in thousands)
Commodity derivatives Cost of goods sold $ 85,259
$ (23,749 ) $ 228,201
$ 41,814
Foreign exchange derivatives Cost of goods sold (129,699 ) (13,040 ) (177,008 ) 14,941
Foreign exchange derivatives Marketing, general and administrative expenses (2,553 ) (7 ) (615 ) (1,421 )
Embedded derivative Other income 355
399
2,272
2,362
Total $ (46,638 ) $ (36,397 ) $ 52,850
$ 57,696

Commodity Contracts

As of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, 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 ~~contracts accounted for as derivative instruments.~~contracts.


	February 28, 2021		August 31, 2020
	Long	Short	Long	Short
	(Units in thousands)
Grain and oilseed (bushels)	851,400	1,181,716	664,673	892,303
Energy products (barrels)	12,560	11,779	10,028	6,570
Processed grain and oilseed (tons)	609	2,320	657	3,304
Crop nutrients (tons)	2	177	74	127
Ocean freight (metric tons)	370	0	1,140	95
Natural gas (MMBtu)	0	200	0	0

May 31, 2020 August 31, 2019
Long Short Long Short
(Units in thousands)
Grain and oilseed (bushels) 673,234
788,434
547,096
717,522
Energy products (barrels) 18,970
9,168
13,895
4,663
Processed grain and oilseed (tons) 858
1,686
597
2,454
Crop nutrients (tons) 144
—
76
23
Ocean freight (metric tons) 435
250
295
85
Natural gas (MMBtu) —
—
130
—

Foreign Exchange Contracts

We conduct a substantial portion of our business in U.S. dollars, but we are exposed to risks relating to foreign currency fluctuations primarily due to global grain marketing transactions in South America, the Asia Pacific region and Europe, and purchases of products from Canada. We use foreign currency derivative instruments to mitigate the impact of exchange rate fluctuations. Although we have some risk exposure related to foreign currency transactions, a larger impact with exchange rate fluctuations is 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. The notional amounts of our foreign exchange derivative contracts were ~~$1.5~~$1.4 billion and ~~$894.7 million~~$1.2 billion as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, respectively.

Embedded Derivative Asset

Under the terms of our strategic investment in CF Nitrogen, if the CF Industries credit rating is reduced below certain levels by two of three specified credit ratings agencies, we are entitled to receive a nonrefundable annual payment of $5.0 million from CF Industries. These payments will continue on an annual basis until the date that the 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.

Since the CF Industries credit rating was reduced below the specified levels during fiscal 2017, we have received an annual payment of $5.0 million from CF Industries. Gains totaling ~~$2.3 million and $2.4~~$1.9 million were recognized in other income in our Condensed Consolidated Statements of Operations for each of the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019, respectively.~~ February 29, 2020.

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The fair value of the embedded derivative asset recorded on our Condensed Consolidated Balance Sheet as of ~~May 31, 2020,~~February 28, 2021, was equal to ~~$18.6~~$15.9 million. The current and long-term portions of the embedded derivative asset are included in

~~Table of Contents~~

other current assets and other assets on our Condensed Consolidated Balance Sheets, respectively. See Note 12, Fair Value Measurements, for additional information regarding valuation of the embedded derivative asset.

Derivatives Designated as ~~Fair Value or~~ Cash Flow Hedging Strategies

~~Fair Value Hedges~~

During the third quarter of fiscal 2020, we unwound all our interest rate swaps resulting in a $16.4 million gain, which is being amortized over the life of the fixed-rate debt for which the swaps had previously been designated as fair value hedges, through fiscal 2025. As of August 31, 2019, we had outstanding interest rate swaps with an aggregate notional amount of $365.0 million designated as fair value hedges of portions of our fixed-rate debt. Our objective in entering into these transactions was 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 received fixed-rate interest payments and made interest payments based on the three-month LIBOR. Offsetting changes in the fair values of both the swap instruments and the hedged debt were recorded contemporaneously each period and only created an impact to earnings to the extent the hedge was ineffective.

The following table presents the fair value of our derivative interest rate swap instruments designated as fair value hedges and the line item on our Condensed Consolidated Balance Sheets in which they are recorded.

Balance Sheet Location May 31,
2020 August 31, 2019
(Dollars in thousands)
Other assets $ —
$ 9,841

The following table sets forth the pretax gains (losses) on derivatives accounted for as hedging instruments that have been included in our Condensed Consolidated Statements of Operations for the three and nine months ended May 31, 2020, and 2019.

Three Months Ended May 31, Nine Months Ended May 31,
Gain (Loss) on Fair Value Hedging Relationships Location of Gain (Loss) 2020 2019 2020 2019
(Dollars in thousands)
Interest rate swaps Interest expense $ (4,705 ) $ (8,122 ) $ (1,897 ) $ (15,129 )
Hedged item Interest expense 4,705
8,122
1,897
15,129
Total $ —
$ —
$ —
$ —

~~The following table provides the location and carrying amount of hedged liabilities in our Condensed Consolidated Balance Sheets as of May 31, 2020, and August 31, 2019.~~

May 31, 2020 August 31, 2019
Balance Sheet Location Carrying Amount of Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustments Included in Carrying Amount of Hedged Liabilities Carrying Amount of Hedged Liabilities Cumulative Amount of Fair Value Hedging Adjustments Included in Carrying Amount of Hedged Liabilities
(Dollars in thousands)
Long-term debt $ —
$ —
$ 334,389
$ 30,611

~~Cash Flow Hedges~~

~~In fiscal 2018, our Energy segment began designating certain~~Certain pay-fixed, receive-variable, cash-settled swaps are designated as cash flow hedges of future crude oil ~~purchases.~~purchases in our Energy segment. We also ~~began designating~~designate 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. We may also elect to dedesignate certain derivative instruments previously designated as cash flow hedges as part of our risk management strategy. Amounts recorded in other comprehensive income for these dedesignated derivative instruments remain in other comprehensive income and are recognized in earnings in the period the underlying transaction affects earnings. As of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, the aggregate notional amount of cash flow hedges was ~~10.0~~1.5 million and ~~7.7~~9.7 million barrels, respectively.

~~Table of Contents~~

The following table presents the fair value of our commodity derivative instruments designated as cash flow hedges and the line items on our Condensed Consolidated Balance Sheets in which they are recorded.


	Derivative Assets					Derivative Liabilities					Derivative Assets					Derivative Liabilities
Balance Sheet Location	May 31, 2020		August 31, 2019		Balance Sheet Location	May 31, 2020		August 31, 2019		Balance Sheet Location	February 28, 2021		August 31, 2020		Balance Sheet Location	February 28, 2021		August 31, 2020
	(Dollars in thousands)					(Dollars in thousands)					(Dollars in thousands)					(Dollars in thousands)
Other current assets	$	39,620	$	33,179	Other current liabilities	$	15,945	$	5,351	Other current assets	$	11,008	$	34,052	Other current liabilities	$	1,154	$	8,821

The following table presents the pretax ~~gains (losses)~~losses recorded in other comprehensive income relating to cash flow hedges for the three and ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019:~~February 29, 2020:


	Three Months Ended				Six Months Ended
	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
	(Dollars in thousands)
Commodity derivatives	$	(2,084)	$	(8,130)	$	(110)	$	(15,233)

Three Months Ended May 31, Nine Months Ended May 31,
2020 2019 2020 2019
(Dollars in thousands)
Commodity derivatives $ 11,081
$ (21,029 ) $ (4,153 ) $ (9,323 )

The following table presents the pretax gains relating to cash flow hedges that were reclassified from accumulated other comprehensive loss into our Condensed Consolidated Statements of Operations for the three and ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019:~~February 29, 2020:


		Three Months Ended				Six Months Ended
	Location of Gain	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
		(Dollars in thousands)
Commodity derivatives	Cost of goods sold	$	4,082	$	2,126	$	16,755	$	6,978

Three Months Ended May 31, Nine Months Ended May 31,
Location of Gain 2020 2019 2020 2019
(Dollars in thousands)
Commodity derivatives Cost of goods sold $ 884
$ 1,810
$ 7,862
$ 9,812

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Note 12 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~~

We determine fair values of derivative instruments and other assets, based on the fair value hierarchy ~~for inputs used~~established in ~~measuring fair value,~~ASC Topic 820, 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~~the assumptions ~~about the factors~~ market participants would use in ~~valuing~~pricing the asset or liability ~~developed~~ based on the best information available inunder the circumstances. ~~The~~ASC Topic 820 describes three levels within its hierarchy that may be used to measure fair value, ~~hierarchy consists~~and our assessment of ~~three levels:~~relevant instruments within those levels is as follows: 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 as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, are as follows:


	February 28, 2021
	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	$	1,856	$	989,293	$	0	$	991,149
Foreign exchange derivatives	0		7,302		0		7,302

Deferred compensation assets	49,314		0		0		49,314

Embedded derivative asset	0		15,865		0		15,865
Segregated investments and marketable securities	185,224		0		0		185,224
Other assets	5,991		0		0		5,991
Total	$	242,385	$	1,012,460	$	0	$	1,254,845
Liabilities
Commodity derivatives	$	4,409	$	511,748	$	0	$	516,157
Foreign exchange derivatives	0		64,669		0		64,669

Total	$	4,409	$	576,417	$	0	$	580,826

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	May 31, 2020									August 31, 2020
	Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total			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)									(Dollars in thousands)
Assets									Assets
Commodity derivatives	$	43,785	$	373,033	$	—	$	416,818	Commodity derivatives	$	5,762	$	355,783	$	0	$	361,545
Foreign exchange derivatives	—		13,733		—		13,733		Foreign exchange derivatives	0		11,523		0		11,523

Deferred compensation assets	44,668		—		—		44,668		Deferred compensation assets	47,669		0		0		47,669

Embedded derivative asset	—		18,636		—		18,636		Embedded derivative asset	0		18,998		0		18,998
Segregated investments	94,233		—		—		94,233
Segregated investments and marketable securities									Segregated investments and marketable securities	85,950		0		0		85,950
Other assets	5,478		—		—		5,478		Other assets	5,276		0		0		5,276
Total	$	188,164	$	405,402	$	—	$	593,566	Total	$	144,657	$	386,304	$	0	$	530,961
Liabilities									Liabilities
Commodity derivatives	$	89,891	$	208,559	$	—	$	298,450	Commodity derivatives	$	6,037	$	346,126	$	0	$	352,163
Foreign exchange derivatives	—		92,962		—		92,962		Foreign exchange derivatives	0		69,467		0		69,467

Total	$	89,891	$	301,521	$	—	$	391,412	Total	$	6,037	$	415,593	$	0	$	421,630

August 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 $ 67,817
$ 180,392
$ —
$ 248,209
Foreign exchange derivatives —
10,339
—
10,339
Interest rate swap derivatives —
9,841
—
9,841
Deferred compensation assets 40,368
—
—
40,368
Embedded derivative asset —
21,364
—
21,364
Segregated investments 77,777
—
—
77,777
Other assets 6,519
—
—
6,519
Total $ 192,481
$ 221,936
$ —
$ 414,417
Liabilities
Commodity derivatives $ 40,305
$ 188,455
$ —
$ 228,760
Foreign exchange derivatives —
20,701
—
20,701
Total $ 40,305
$ 209,156
$ —
$ 249,461

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")~~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. 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 are recognized in our Condensed 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 using 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

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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 Condensed Consolidated Statements of Operations as a component of interest expense. See Note 11, ~~Derivative Financial Instruments and Hedging Activities,~~ ~~for additional information about interest rate swaps designated as fair value and cash flow hedges.~~

Deferred compensation andother assets. Our deferred compensation investments consist primarily of rabbi trust assets that 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 Condensed 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 to our investment in CF Nitrogen. The inputs used in the fair value measurement include the probability of future upgrades and downgrades of the CF Industries credit rating based on historical credit rating movements of other public companies and the discount rates applied to potential annual payments based on applicable historical and current yield coupon rates. Based on these observable inputs, our fair value measurement is classified within Level 2. See Note 11, Derivative Financial Instruments and Hedging Activities, for additional information.

Segregated ~~investments.~~investments and marketable securities. Our segregated investments and marketable securities are ~~composed primarily~~comprised of investments in various government agencies and U.S. Treasury securities, which are valued using quoted market prices and classified within Level 1.

~~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, 2020.~~

Note 13 Commitments and Contingencies

Environmental

We are required to comply with various environmental laws and regulations incidental to our normal business operations. To meet compliance requirements, we establish reserves for the ~~probable~~ future costs of remediation of identified issues that are both probable and can be reasonably estimated, which are included in cost of goods sold and marketing, general and administrative expenses in our Condensed 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 aggregate, will not have a material effect on our condensed consolidated financial statements during any fiscal year.

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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 net income for any fiscal period; however, we believe any resulting liabilities, individually or in aggregate, will not have a material effect on our condensed consolidated financial statements during any fiscal year.

Guarantees

We are a guarantor for lines of credit and performance obligations of related, nonconsolidated companies. Our bank covenants allow maximum guarantees of $1.0 billion, of which ~~$163.8~~$181.3 million were outstanding on ~~May 31, 2020.~~February 28, 2021. 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, 2020.~~February 28, 2021.

Note 14 Leases

We adopted ASC Topic 842 on September 1, 2019, using the modified retrospective approach. In addition, we used the additional optional transition method and package of practical expedients in the period of adoption without retrospective adjustment to previous periods presented, although we elected not to apply the hindsight practical expedient. As a result of using the additional optional transition method and following a modified retrospective approach, prior periods have not been restated, and a $33.7 million cumulative-effect adjustment was recorded to increase the opening balance of capital reserves as of the adoption date related to recognition of previously deferred gains associated with the sale-leaseback of our primary corporate office building located in Inver Grove Heights, Minnesota. Our accounting for finance leases (previously referred to as capital leases) remains substantially unchanged; however, adoption of ASC Topic 842 resulted in recognition of operating

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lease right of use assets and associated lease liabilities of $268.4 million and $267.0 million, respectively, as of September 1, 2019. Adoption of ASC Topic 842 did not have a material impact on our Condensed Consolidated Statements of Operations or Condensed Consolidated Statements of Cash Flows.

We assess arrangements at inception to determine whether they contain a lease. An arrangement is considered to contain a lease if it conveys the right to control the use of an asset for a period of time in exchange for consideration. The right to control the use of an asset must include both (a) the right to obtain substantially all economic benefits associated with an identified asset and (b) the right to direct how and for what purpose the identified asset is used. Certain arrangements provide us with the right to use an identified asset; however, most of these arrangements are not considered to represent a lease as we do not control how and for what purpose the identified asset is used. For example, our supply agreements, warehousing and distribution services agreements, and transportation services agreements generally do not contain leases.

We lease property, plant and equipment used in our operations primarily under operating lease agreements and, to a lesser extent, under finance lease agreements. Our operating leases are primarily for railcars, equipment, vehicles and office space, many of which contain renewal options and escalation clauses. Renewal options are included as part of the right of use asset and liability when it is reasonably certain that we will exercise the renewal option; however, renewal options are generally not included as we are not reasonably certain to exercise such options.

Operating lease right of use assets and liabilities for operating leases are recognized at the lease commencement date for leases in excess of 12 months based on the present value of lease payments over the lease term. For measurement and classification of lease agreements, lease and nonlease components are grouped into a single lease component for all asset classes. Variable lease payments are excluded from measurement of right of use assets and liabilities and generally include payments for nonlease components such as maintenance costs, payments for leased assets beyond their noncancelable lease term and payments for other nonlease components such as sales tax. The discount rate used to calculate present value is our collateralized incremental borrowing rate or, if available, the rate implicit in the lease. The incremental borrowing rate is determined for each lease based primarily on its lease term. Certain lease arrangements include rental payments adjusted annually based on changes in an inflation index. Our lease arrangements generally do not contain residual value guarantees or material restrictive covenants.

Lease expense is recognized on a straight-line basis over the lease term. The components of lease expense recognized in our Condensed Consolidated Statements of Operations are as follows:


						Three Months Ended				Six Months Ended
	Three Months Ended May 31, 2020		Nine Months Ended May 31, 2020			February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
	(Dollars in thousands)					(Dollars in thousands)
Operating lease expense	$	17,057	$	53,155	Operating lease expense	$	18,060	$	20,538	$	35,974	$	36,098
Finance lease expense:					Finance lease expense:
Amortization of assets	1,908		5,170		Amortization of assets	1,890		1,073		3,945		3,262
Interest on lease liabilities	257		742		Interest on lease liabilities	230		261		476		485
Short-term lease expense	3,108		12,768		Short-term lease expense	4,068		6,317		8,424		9,660
Variable lease expense	1,176		2,089		Variable lease expense	863		710		1,541		913
Total net lease expense*	$	23,506	$	73,924	Total net lease expense*	$	25,111	$	28,899	$	50,360	$	50,418

*Income related to sub-lease activity is not material and has been excluded from the table above.

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Supplemental balance sheet information related to operating and finance leases is as follows:


	Balance Sheet Location	February 28, 2021			August 31, 2020
		(Dollars in thousands)
Operating leases
Assets
Operating lease right of use assets	Other assets	$	265,684		$	257,834
Liabilities
Current operating lease liabilities	Accrued expenses	58,766			57,200
Long-term operating lease liabilities	Other liabilities	210,440			203,691
Total operating lease liabilities		$	269,206		$	260,891

Finance leases
Assets
Finance lease assets	Property, plant and equipment	$	40,502		$	44,860
Liabilities
Current finance lease liabilities	Current portion of long-term debt	6,827			7,993
Long-term finance lease liabilities	Long-term debt	20,379			23,467
Total finance lease liabilities		$	27,206		$	31,460

Weighted average remaining lease term (in years)
Operating leases		8.1			8.3
Finance leases		6.2			6.0

Weighted average discount rate
Operating leases		3.05		%	3.11		%
Finance leases		3.37		%	3.33		%

Balance Sheet Location May 31, 2020
(Dollars in thousands)
Operating leases
Assets
Operating lease right of use assets Other assets $ 261,125
Liabilities
Current operating lease liabilities Accrued expenses 57,470
Long-term operating lease liabilities Other liabilities 206,299
Total operating lease liabilities $ 263,769

Finance leases
Assets
Finance lease assets Property, plant and equipment $ 42,854
Liabilities
Current finance lease liabilities Current portion of long-term debt 6,710
Long-term finance lease liabilities Long-term debt 22,443
Total finance lease liabilities $ 29,153

Weighted average remaining lease term (in years)
Operating leases 8.5
Finance leases 6.2

Weighted average discount rate
Operating leases 3.13 %
Finance leases 3.31 %

Supplemental cash flow and other information related to operating and finance leases are as follows:


				Six Months Ended
	Nine Months Ended May 31, 2020			February 28, 2021		February 29, 2020
	(Dollars in thousands)			(Dollars in thousands)
Cash paid for amounts included in measurement of lease liabilities:			Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	45,718	Operating cash flows from operating leases	$	37,460	$	28,368
Operating cash flows from finance leases	742		Operating cash flows from finance leases	476		485
Financing cash flows from finance leases	5,239		Financing cash flows from finance leases	4,602		3,285
Supplemental noncash information:			Supplemental noncash information:
Right of use assets obtained in exchange for lease liabilities	32,567		Right of use assets obtained in exchange for lease liabilities	27,919		18,162
Right of use asset modifications	6,507		Right of use asset modifications	18,038		3,967

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Maturities of lease liabilities as of ~~May 31, 2020,~~February 28, 2021, were as follows:


	February 28, 2021
	Finance Leases		Operating Leases
	(Dollars in thousands)
Remainder of fiscal 2021	$	3,775	$	35,958
Fiscal 2022	7,051		62,491
Fiscal 2023	6,121		48,834
Fiscal 2024	3,494		38,956
Fiscal 2025	2,086		28,928
After fiscal 2025	8,113		105,485
Total maturities of lease liabilities	30,640		320,652
Less amounts representing interest	3,434		51,446
Present value of future minimum lease payments	27,206		269,206
Less current lease liabilities	6,827		58,766
Long-term lease liabilities	$	20,379	$	210,440

May 31, 2020
Finance Leases Operating Leases
(Dollars in thousands)
Remainder of fiscal 2020 $ 1,689
$ 17,401
Fiscal 2021 7,297
61,134
Fiscal 2022 6,141
47,348
Fiscal 2023 5,472
37,260
Fiscal 2024 3,067
29,368
After fiscal 2024 9,339
174,940
Total maturities of lease liabilities 33,005
367,451
Less amounts representing interest 3,852
103,682
Present value of future minimum lease payments 29,153
263,769
Less current obligations 6,710
57,470
Long-term obligations $ 22,443
$ 206,299

~~Disclosures Related to Periods Prior to Adoption of New Lease Standard~~

~~The following pertains to previously disclosed information from Note 6,~~ ~~Property, Plant and Equipment, and Note 15,~~ ~~Commitments and Contingencies~~, contained in our Annual Report on Form 10-K for the fiscal year ended August 31, 2019, which incorporates information about leases now in the scope of ASC Topic 842 discussed above. Total rental expense for operating leases was $113.3 million, $88.5 million and $81.3 million for the years ended August 31, 2019, 2018 and 2017, respectively. Various leases under capital lease totaled $62.7 million and $50.0 million as of August 31, 2019 and 2018, respectively. Accumulated amortization on assets under capital leases was $20.6 million and $18.9 million as of August 31, 2019 and 2018, respectively. Minimum future lease payments required under noncancelable capital and operating leases as of August 31, 2019, were as follows:

August 31, 2019
Capital Leases Operating Leases
(Dollars in thousands)
Fiscal 2020 $ 6,761
$ 87,168
Fiscal 2021 6,199
57,381
Fiscal 2022 5,021
43,665
Fiscal 2023 4,548
34,328
Fiscal 2024 2,638
26,793
Thereafter 6,517
92,653
Total minimum future lease payments 31,684
$ 341,988
Less amount representing interest 3,445

Present value of net minimum lease payments $ 28,239

Note 15 ~~Acquisitions~~Other Current Assets and Liabilities

~~On March 1, 2019, we completed our acquisition~~ Other current assets and liabilities as of the remaining 75% ownership interest in WCD, a full-service wholesale distributor of agronomy products that operates primarily in the United States. 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, of which the net cash flows were reduced by $8.0 million of cash acquired. 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 earnings on a pro rata basis. By acquiring the remaining ownership interest in WCD, we were able to expand our agronomy platform, position ourselves2021, and August 31, 2020, are 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 price we paid for the remaining 75% interest. The acquisition-date fair value of the previous equity interest was $37.8 millionfollows:


	February 28, 2021		August 31, 2020
Other current assets	(Dollars in thousands)
Derivative assets (Note 11)	$	999,072	$	371,195
Margin and related deposits	328,849		194,097
Supplier advance payments	515,663		198,699
Other	306,666		253,497
Total other current assets	$	2,150,250	$	1,017,488
Other current liabilities
Customer margin deposits and credit balances	$	218,217	$	149,539
Customer advance payments	1,084,039		300,100
Derivative liabilities (Note 11)	576,543		416,204
Dividends and equity payable	69,982		63,000
Total other current liabilities	$	1,948,781	$	928,843

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and is included in 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 acquisition of the remaining 75% interest. The gain was included in other income in our Condensed Consolidated Statements of Operations for the third quarter of fiscal 2019.

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, pro forma 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 Condensed Consolidated Statements of Operations. Purchase accounting has been finalized and the 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 assets 55
Liabilities (718,262 )
Total net assets acquired $ 151,212

Operating results for WCD are included in our Condensed Consolidated Statements of Operations from the day of the acquisition on March 1, 2019. WCD revenues and income before income taxes were $410.0 million and $14.2 million, respectively, for the nine months ended May 31, 2020, and $255.6 million and $10.5 million, respectively, for the nine months ended May 31, 2019. Due to the timing of the acquisition during the third quarter of fiscal 2019, WCD's results prior to acquisition were not included in the comparable year-to-date period of the prior year.

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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:

•Overview

•Business Strategy

•Fiscal ~~2020 Third~~2021 Second Quarter Highlights

•Fiscal ~~2020~~2021 Trends Update

•Operating Metrics

•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, ~~2019~~2020 (including the information presented therein under Risk Factors), as well as the condensed consolidated financial statements and the related notes included in Item 1 of Part I ~~and the risk factor included in Item 1A of Part II~~ of this Quarterly Report on Form 10-Q.

Overview

CHS Inc. is a diversified company that provides grain, food, agronomy 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 who own our five series of preferred stock, all of which are listed and traded on the ~~Nasdaq~~ Global Select ~~Market.~~Market of The Nasdaq Stock Market LLC. 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; also serves as a wholesaler and retailer of agronomy products.

•Nitrogen Production. Consists solely of our equity method investment in CF Industries Nitrogen, LLC ("CF Nitrogen"), and produces and distributes nitrogen fertilizer.

In addition, our financing and hedging businesses, along with our nonconsolidated wheat milling and food production and distribution joint ventures, have been aggregated within Corporate and Other.

The condensed consolidated financial statements include the accounts of CHS and all subsidiaries and limited liability companies in which we have a controlling interest. 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 use of services, such as information technology and legal, and other factors or considerations relevant to the costs incurred.

Management's Focus. When evaluating our operating performance, management focuses on gross profit and income 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. Consequently, we focus on managing the margin we can earn and the resulting IBIT. Management also focuses on ensuring balance sheet strength through 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, our IBIT does not necessarily follow the same trend due to weather orand other events ~~may~~that can impact ~~this trend, particularly for IBIT.~~profitability. For example, in our Ag

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segment, our country operations business generally experiences higher volumes and ~~income~~revenues during the fall harvest and spring planting seasons, which generally correspond to our first and third fiscal quarters,

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respectively. Additionally, our agronomy business generally experiences higher volumes ~~and income~~ during the spring planting season. Our global grain marketing operations are subject to fluctuations in volume and income 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 spring, summer and early fall when gasoline and diesel fuel use by agricultural producers is highest and is subject to global supply and demand forces. Other energy products, such as propane, generally experience higher volumes ~~and profitability~~ during the winter heating and fall crop-drying seasons. The graphs below depict the seasonality inherent in our businesses.

* Income (loss) before income taxes experienced deviations from historical trends during fiscal 2020, fiscal 2019 and fiscal 2018 as a result of gains on sales of noncore assets, recoveries of previously recorded losses and a combination of other factors, including the impact of COVID-19 that negatively impacted our Energy segment earnings and poor weather conditions that negatively impacted our Ag segment earnings.

Pricing and Volumes. Our revenues, assets and cash flows can be significantly affected by global market prices and sales volumes of commodities such as petroleum products, natural gas, grains, oilseed products and agronomy products. Changes in market prices for commodities we purchase without a corresponding change in the selling prices of those products can affect revenues and operating earnings. Similarly, increased or decreased sales volumes without a corresponding change in the purchase and selling prices of those products can affect revenues and operating earnings. Commodity prices and sales volumes are affected by a wide range of factors beyond our control, including weather, crop damage due to plant disease or insects, drought, availability/adequacy of supply of a commodity, availability of reliable rail and river transportation network, outbreaks of disease, government ~~regulations/~~regulations and policies, global trade disputes and general political/economic conditions.

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~~Foreign Corrupt Practices Act Update~~. As previously reported in our Annual Report on Form 10-K for the year ended August 31, 2019, in the fourth quarter of fiscal 2018, we contacted the U.S. Department of Justice ("DOJ") and the U.S. Securities and Exchange Commission ("SEC") to voluntarily self-disclose potential violations of the Foreign Corrupt Practices Act of 1977 ("FCPA") in connection with a small number of reimbursements made to Mexican customs agents in the 2014-2015 time period for payments customs agents made to Mexican customs officials in connection with inspections of grain crossing the U.S.-Mexican border by railcar. In connection with its review of this matter, we have cooperated with the DOJ’s and SEC’s evaluation of other areas of potential interest relating to the FCPA. On February 25, 2020, we received a letter from the DOJ stating that it had closed its inquiry into each of these matters without taking any action against us and acknowledging its appreciation of our cooperation. We are still fully cooperating with the SEC’s ongoing evaluation of these FCPA-related matters. At this time, the SEC has not taken a position on these FCPA-related matters, and we are unable to predict when the SEC’s review of these matters will be completed or what regulatory or other outcomes may result.

Business Strategy

Our business strategies focus on an ~~enterprise-wide~~enterprisewide effort to create an experience that empowers customers to make CHS their first choice, expands market access to add value for our owners, and transforms and evolves our core businesses by capitalizing on changing market dynamics. To execute on these strategies, we are focused on implementing agile, efficient and sustainable new technology platforms; building robust and efficient supply chains; hiring, developing and retaining ~~high-performing,~~high-

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performing, diverse and passionate teams; achieving operational excellence and continuous improvement; and maintaining a strong balance sheet.

Fiscal ~~2020 Third~~2021 Second Quarter Highlights

~~Improved weather conditions during~~•Strong global demand drove commodity prices higher, and improved trade relations between the ~~spring planting season~~United States and foreign trade partners led to continued volume increases for grain and oilseed, which significantly improved earnings in our Ag segment compared to the prior ~~year drove increased volumes and margin across much of our Ag segment during~~year.

•Although improved from the ~~third~~first quarter of fiscal ~~2020.~~

~~Less advantageous~~2021, unfavorable market conditions in our refined fuels business, driven primarily by the ~~recent outbreak~~COVID-19 pandemic and ~~pandemic of the novel coronavirus known as COVID-19 and other factors,~~exceptionally high costs for renewable energy credits, resulted in volume and ~~price~~margin declines ~~and~~that significantly reduced earnings compared to the prior year.

~~As more fully described in Note 1,~~ ~~Basis of Presentation and Significant Accounting Policies, of~~•Focused cost reduction initiatives launched during the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, due to the macroeconomic and industry conditions in the early months of the third quarter of fiscal 2020, a goodwill impairment test of a reporting unit and long-lived asset tests in our Ag segment were deemed necessary. As a result of these tests, the estimated fair value of the reporting unit and undiscounted cash flows of the asset groups exceeded the carrying values, and thus no impairments were recorded. We will continue to monitor financial results and projected cash flows to assess whether any impairments may be necessary in the future.

~~Similar to other energy producers, price declines and volatility associated with the novel coronavirus known as COVID-19 pandemic, impacted our refined fuels business and~~current year resulted in ~~a $42.0 million noncash charge~~reduced marketing, general and administrative expenses.

•A significant portion of our global employees continued with remote working arrangements. In addition to ~~reduce inventories to their market value at the end of the period. This charge may increase or decrease in the fourth quarter of fiscal 2020, based on market prices observed at our fiscal year-end.~~ ~~Any adjustments that exist as of year-end would be considered permanent and incorporated into the LIFO carrying value of the inventories.~~

As more fully described in Item 4 of Part I of this Quarterly Report on Form 10-Q, we continued dedicating significant internal and external resources, as well as executive and board focus, to improving our control environment.

~~We responded to the COVID-19 pandemic by implementing significant~~ remote working arrangements, ~~for approximately half our global employees,~~we also increased hygiene and ~~infection control~~infection-control processes at all of our facilities and developed risk mitigation and exposure policies applicable to our enterprise. The costs of ~~these~~those activities were not material during the second quarter of fiscal 2021 and are not expected to be ~~material.~~material for the remainder of fiscal 2021. In addition, our operations were deemed to be essential infrastructure industries by federal and state governments, which allowed us to continue operating all of our facilities and operations.

Fiscal ~~2020~~2021 Trends Update

Our Energy and Ag segments operate in cyclical environments in which unforeseen market conditions can have significant positive or negative impacts. As with virtually all other companies in the United States, we are dealing with ~~COVID-19. We continue to mobilize our resources (operational, people and financial) to be in a position to best serve our customers, owners and other stakeholders as~~effects of the ~~social, economic and financial impacts of~~ COVID-19 ~~continue to unfold.~~pandemic. Most of our operations are considered to be ~~essential and we believe our operations will continue to not be significantly impacted;~~essential; however, periods of depressed demand and pricing ~~within the U.S. ethanol production and refined fuels industries during the third quarter of fiscal 2020 resulted~~could result in decreased profitability and the need to assess for potential impairments. ~~As a result, we recorded a noncash charge~~The rollout of COVID-19 vaccines and other efforts to reduce our refined fuels inventory to its market value at the end of the period. Like all energy producers, we are impacted by fluctuations in energy commodity prices by the requirement to reduce our inventory valuesrespond to the ~~lower~~COVID-19 pandemic in the United States and globally could also impact the profitability of ~~cost or market and should energy commodity prices continue to decline, we may be subject to additional noncash lower of cost or market adjustments, which~~

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~~could be significant. To the extent that market prices recover, we may be able to recover prior net realizable value adjustments.~~our businesses. Refer to Item 1A of ~~Part II of this Quarterly~~our Annual Report on Form ~~10-Q,~~10-K for the year ended August 31, 2020, for additional considerations of risks the ~~risks that~~ COVID-19 pandemic may continue to have on our business, liquidity, capital resources and financial results.

~~Our Energy and Ag segments operate in cyclical environments. Unforeseen market conditions can positively or negatively impact~~Although improving from the lows of the prior fiscal year, the energy industry ~~including the~~continued to experience significant volume and ~~price decreases that~~margin reductions. These reductions are primarily the result of the COVID-19 pandemic, which began in our second quarter of fiscal 2020 and significantly reduced our profitability. In addition, the cost of renewable energy credits has increased significantly, which negatively impacted our profitability during the ~~energy industry during March and April 2020.~~second quarter of fiscal 2021. We are unable to predict how long the current environment will last or the severity of the financial and operational impacts; however, we expect ~~the uncertain~~uncertainty and ~~volatile~~volatility to drive unfavorable market conditions in the energy industry ~~to remain~~that will negatively impact our profitability through the ~~fourth quarter~~remainder of fiscal ~~2020.~~2021.

~~The~~ Although challenges remain, the U.S. agricultural industry ~~continues to operate~~has experienced increased demand for grain and oilseed commodities following the Phase One trade agreement with China, which has resulted in a challenging environment that has been characterized by generally lower margins, reduced liquidity and increased leverage that have resulted from a period of reduced commodity prices. More favorable weather conditions during the fiscal 2020 spring planting season compared to the prior year provided an opportunity for increased volumes and improved earnings across much of our Ag segment. However, trade relations between the United States and foreign trade partners, particularly those that purchase large quantities of agricultural commodities, while improving, are still not normalized as of the end of the third quarter ended May 31, 2020~~, resulting in unpredictable impacts to~~commodity prices. Unforeseen global market conditions can positively or negatively impact agricultural commodity prices and volumes sold. We are unable to predict ~~how long~~these conditions or the ~~current environment will last or how severe~~severity of the ~~effects will ultimately be~~impact such conditions could have on our pricing and volumes. In addition to global supply and demand impacts, regional factors such as unpredictable weather conditions could ~~continue to~~ impact our operations. As a result, while we expect revenues, margins and cash flows from core operations in our Ag segment to ~~remain under pressure~~stabilize through the remainder of fiscal ~~2020, which~~2021, unforeseen global market conditions with negative impacts remain a risk that could put pressure on asset valuations in our Ag segment.

In addition to market conditions that impact our businesses, we will continue to ~~put pressure~~take actions to protect our financial health while continuing to deliver on ~~associated asset valuations.~~our enterprise resource planning system implementation and advance our targeted operating model, with actions that include implementing plans to substantially reduce budgeted costs and improving cash flow management with the objective of generating substantial additional operating cash flows.

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Operating Metrics

Energy

Our Energy segment operations primarily include our Laurel, Montana, and McPherson, Kansas, refineries, which process crude oil to produce refined products, including gasolines, distillates and other products. The following table provides information about our consolidated refinery operations.


	Three Months Ended		Six Months Ended
	February 28, 2021	February 29, 2020	February 28, 2021	February 29, 2020
Refinery throughput volumes	(Barrels per day)
Heavy, high-sulfur crude oil	96,847	97,863	94,709	91,410
All other crude oil	56,302	75,156	58,202	76,988
Other feedstocks and blendstocks	11,744	12,671	13,791	14,978
Total refinery throughput volumes	164,893	185,690	166,702	183,376
Refined fuel yields
Gasolines	77,479	89,160	80,890	90,721
Distillates	68,916	77,714	67,376	75,321

Three Months Ended May 31, Nine Months Ended May 31,
2020 2019 2020 2019
Refinery throughput volumes (Barrels per day)
Heavy, high-sulfur crude oil 90,118
73,344
90,976
90,261
All other crude oil 61,328
31,043
71,730
53,733
Other feedstocks and blendstocks 6,657
1,402
12,184
9,859
Total refinery throughput volumes 158,103
105,789
174,890
153,853
Refined fuel yields
Gasolines 73,196
46,457
84,837
71,269
Distillates 68,920
45,508
73,172
64,930

We are subject to the Renewable Fuels Standard, 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 U.S. Environmental Protection Agency generally establishes new annual renewable fuel percentage standards for each compliance year in the preceding year. We generate RINs through our blending activities, 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, with prices for D6 ethanol RINs and ~~can impact profitability.~~D4 ethanol RINs rising by 350% and 125%, respectively, during the second quarter of fiscal 2021 compared to the same period of the prior year, which negatively impacted our profitability during the second quarter of fiscal 2021.

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In addition to our internal operational reliability, the profitability of our Energy segment is largely driven by crack spreads ~~(e.g.~~(i.e., the price differential between refined products and inputs such as crude oil) and ~~WCS~~Western Canadian Select ("WCS") crude oil differentials ~~(e.g.~~(i.e., the price differential between West Texas Intermediate ("WTI") crude oil and WCS crude oil), which are driven by the supply and demand of refined product markets. Crack spreads and the WCS crude oil differential each decreased during the three and ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same ~~periods~~period during the prior year, contributing to a significant decline in IBIT for the Energy segment. The WCS crude oil differential also declined during the nine months ended May 31, 2020, contributing to the decline in IBIT; however, the WCS crude oil differential increased during the three months ended May 31, 2020, partially offsetting the overall IBIT decrease. The table below provides information about average market reference prices and differentials that impact our Energy segment.


	Three Months Ended May 31,				Nine Months Ended May 31,					Three Months Ended				Six Months Ended
	2020		2019		2020		2019			February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Market indicators									Market indicators
WTI crude oil (dollars per barrel)	$	25.22	$	61.00	$	45.76	$	59.55	WTI crude oil (dollars per barrel)	$	52.74	$	55.96	$	46.46	$	56.03
WTI - WCS crude oil differential (dollars per barrel)	$	15.89	$	9.67	$	16.81	$	22.80	WTI - WCS crude oil differential (dollars per barrel)	$	11.91	$	21.56	$	10.85	$	17.27
Group 3 2:1:1 crack spread (dollars per barrel)*	$	9.38	$	21.65	$	13.69	$	18.88	Group 3 2:1:1 crack spread (dollars per barrel)*	$	12.55	$	13.21	$	10.10	$	15.84
Group 3 5:3:2 crack spread (dollars per barrel)*	$	8.26	$	21.18	$	12.69	$	17.61	Group 3 5:3:2 crack spread (dollars per barrel)*	$	12.08	$	12.37	$	9.73	$	14.90
D6 ethanol RIN (dollars per RIN)	$	0.3414	$	0.1586	$	0.2342	$	0.1653	D6 ethanol RIN (dollars per RIN)	$	0.8745	$	0.1945	$	0.7115	$	0.1806
D4 ethanol RIN (dollars per RIN)	$	0.5131	$	0.3748	$	0.5112	$	0.4237	D4 ethanol RIN (dollars per RIN)	$	1.0385	$	0.4616	$	0.9245	$	0.5102

*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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Our Ag segment operations work together to facilitate ~~the~~ production, purchase, sale and eventual use of grain and other agricultural commodities within the United States ~~as well as~~and internationally. Profitability in our Ag segment is largely driven by throughput and production volumes, as well as commodity price spreads; however, revenues and cost of goods sold ("COGS") are largely affected by market-driven commodity prices that are outside our control. The table below provides information about average market prices for agricultural commodities and our sales/throughput volumes that impacted our Ag segment for the three and ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019.~~February 29, 2020.


		Three Months Ended May 31,				Nine Months Ended May 31,						Three Months Ended				Six Months Ended
	Market Source*	2020		2019		2020		2019			Market Source*	February 28, 2021		February 29, 2020		February 28, 2021		February 29, 2020
Commodity prices										Commodity prices
Corn (dollars per bushel)	Chicago Board of Trade	$	3.26	$	3.79	$	3.63	$	3.71	Corn (dollars per bushel)	Chicago Board of Trade	$	5.29	$	3.79	$	4.64	$	3.81
Soybeans (dollars per bushel)	Chicago Board of Trade	$	8.59	$	8.68	$	8.86	$	8.75	Soybeans (dollars per bushel)	Chicago Board of Trade	$	13.63	$	9.00	$	12.23	$	9.00
Wheat (dollars per bushel)	Chicago Board of Trade	$	5.22	$	5.32	$	5.26	$	5.56	Wheat (dollars per bushel)	Chicago Board of Trade	$	6.21	$	5.47	$	5.82	$	5.32
Urea (dollars per ton)	Green Markets NOLA	$	239.00	$	254.00	$	228.00	$	268.00	Urea (dollars per ton)	Green Markets NOLA	$	293.00	$	221.00	$	259.00	$	223.00
UAN (dollars per ton)	Green Markets NOLA	$	145.00	$	166.00	$	145.00	$	193.00
Urea ammonium nitrate (dollars per ton)										Urea ammonium nitrate (dollars per ton)	Green Markets NOLA	$	154.88	$	130.00	$	137.10	$	141.00
Ethanol (dollars per gallon)	Chicago Platts	$	1.03	$	1.35	$	1.29	$	1.29	Ethanol (dollars per gallon)	Chicago Platts	$	1.54	$	1.35	$	1.50	$	1.42

Volumes										Volumes
Grain and oilseed (thousands of bushels)	Grain and oilseed (thousands of bushels)	761,645		562,314		1,839,432		1,780,330		Grain and oilseed (thousands of bushels)		665,030		583,749		1,411,613		1,203,288
North American grain and oilseed port throughput (thousands of bushels)	North American grain and oilseed port throughput (thousands of bushels)	145,789		149,036		409,739		463,440		North American grain and oilseed port throughput (thousands of bushels)		218,616		127,093		438,322		263,949
Crop nutrients (thousands of tons)	Crop nutrients (thousands of tons)	2,319		2,351		5,645		5,300		Crop nutrients (thousands of tons)		1,534		1,476		3,409		3,327
Ethanol (thousands of gallons)	Ethanol (thousands of gallons)	171,034		231,656		618,834		703,739		Ethanol (thousands of gallons)		218,147		225,524		438,918		447,800

*Market source information represents the average month-end price during the period.

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Results of Operations

Three Months Ended ~~May 31,~~February 28, 2021, and February 29, 2020 ~~and 2019~~


	Three Months Ended
	February 28, 2021		% of Revenues		February 29, 2020		% of Revenues
	(Dollars in thousands)
Revenues	$	8,320,159	100.0	%	$	6,598,226	100.0	%
Cost of goods sold	8,218,439		98.8		6,283,171		95.2
Gross profit	101,720		1.2		315,055		4.8
Marketing, general and administrative expenses	161,510		1.9		199,570		3.0
Operating (loss) earnings	(59,790)		(0.7)		115,485		1.8

Interest expense	28,855		0.3		33,411		0.5
Other income	(17,846)		(0.2)		(11,352)		(0.2)
Equity income from investments	(64,109)		(0.8)		(34,398)		(0.5)
(Loss) income before income taxes	(6,690)		(0.1)		127,824		1.9
Income tax expense	31,668		0.4		2,130		—
Net (loss) income	(38,358)		(0.5)		125,694		1.9
Net (loss) income attributable to noncontrolling interests	(129)		—		247		—
Net (loss) income attributable to CHS Inc.	$	(38,229)	(0.5)	%	$	125,447	1.9	%

Three Months Ended May 31,
2020 % of Revenues 2019 % of Revenues
(Dollars in thousands)
Revenues $ 7,241,031
100.0 % $ 8,497,941
100.0 %
Cost of goods sold 7,022,672
97.0
8,274,170
97.4
Gross profit 218,359
3.0
223,771
2.6
Marketing, general and administrative expenses 180,439
2.5
217,527
2.6
Operating earnings 37,920
0.5
6,244
0.1
Interest expense 26,661
0.4
42,773
0.5
Other income (8,076 ) (0.1 ) (32,938 ) (0.4 )
Equity income from investments (51,114 ) (0.7 ) (65,170 ) (0.8 )
Income before income taxes 70,449
1.0
61,579
0.7
Income tax (benefit) expense (27,052 ) (0.4 ) 6,866
0.1
Net income 97,501
1.3
54,713
0.6
Net (loss) income attributable to noncontrolling interests (147 ) —
93
—
Net income attributable to CHS Inc. $ 97,648
1.3 % $ 54,620
0.6 %

The charts below detail revenues, net of intersegment revenues, and IBIT by reportable segment for the three months ended ~~May 31, 2020.~~February 28, 2021. Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses, but not revenues.

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Income (Loss) Before Income Taxes by Segment

Energy


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
(Loss) income before income taxes	$	(54,690)	$	138,921	$	(193,611)	(139.4)	%

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Income (loss) before income taxes $ (54,764 ) $ 1,259
$ (56,023 ) (4,449.8 )%

The following waterfall analysis and commentary presents the changes in our Energy segment IBIT for the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

+*See commentary related to these changes in the marketing, general and administrative expenses, interest expense, other income and equity income from investments sections of this Results of Operations.

The ~~$56.0 million decrease~~change in Energy segment IBIT reflects the following:

~~A $42.0 million noncash charge to reduce~~•Less advantageous market conditions in our refined fuels ~~inventories to their market value at the end of the period.~~

~~Lower refined fuels margins due to less advantageous market conditions~~business compared to the same period of the prior year asresulted in significantly lower margins and volumes. These market conditions were driven by the continued impact of the demand shocks occurring during the COVID-19 pandemic that resulted in a ~~result~~combination of decreased ~~crack spreads, which were partially offset by improved~~ WCS crude oil differentials experienced on heavy Canadian crude oil processed by our ~~refineries.~~refineries and lower crack spreads.

~~Improved~~•Significantly higher RIN prices negatively impacted margins by approximately $40.0 million.

•Lower propane margins and volumes due to ~~hedging gains.~~warmer winter weather conditions during most of the second quarter of fiscal 2021 and increased distribution costs reduced income compared to the same period during the prior year.

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	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Income (loss) before income taxes	$	14,044	$	(20,845)	$	34,889	167.4	%

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Income before income taxes $ 95,360
$ 21,112
$ 74,248
351.7 %

The following waterfall analysis and commentary presents the changes in our Ag segment IBIT for the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$74.2 million increase~~change in Ag segment IBIT reflects the following:

~~Improved margins and volumes across much of the Ag segment as a result of more favorable~~•Favorable weather conditions ~~for spring planting compared to the same period during the prior year as well as~~and improved ~~but not normalized, trade~~ relations between the United States and foreign trade ~~partners.~~partners drove increased volumes of feed and farm supplies and grain and oilseed commodities, respectively.

~~The improved volume~~•Decreased marketing, general and ~~margins~~administrative expenses associated with focused cost reduction initiatives and increased equity income from our investment in TEMCO, LLC ("TEMCO").

•Decreased margins on grain and oilseed resulted from global commodity market conditions during the ~~spring planting season~~second quarter of fiscal 2021, including mark-to-market losses which we expect to reverse over time. The decreased margins were partially offset by ~~decreased~~improved margins ~~and volumes in our renewable fuels and~~for certain other agricultural products, including processing and food ingredients, ~~businesses attributable to COVID-19 related demand shocks in food service and transportation sectors.~~which improved as a result of stronger soybean crush margins.

A combination of lower nongross profit-related expenses contributed to a $29.9 million IBIT increase, primarily related to a $29.5 million loan loss reserve recorded during the three months ended May 31, 2019, that did not reoccur during the three months ended May 31, 2020.

All Other Segments


	Three Months Ended May 31,				Change						Three Months Ended				Change
	2020		2019		Dollars			Percent			February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)										(Dollars in thousands)
Nitrogen Production IBIT*	$	23,507	$	20,178	$	3,329		16.5	%	Nitrogen Production IBIT*	$	11,165	$	5,741	$	5,424	94.5	%
Corporate and Other IBIT	$	6,346	$	19,030	$	(12,684	)	(66.7	)%	Corporate and Other IBIT	$	22,791	$	4,007	$	18,784	468.8	%

*See Note 5, Investments, of the notes to the condensed consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.

Our Nitrogen Production segment IBIT increased as a result of ~~decreased interest expense associated with our~~higher equity method income attributed to increased sale prices of urea, which is produced and sold by CF ~~Nitrogen investment during the three months ended May 31, 2020, attributable to lower interest rates.~~Nitrogen. Corporate and Other IBIT increased due to a combination of factors, including decreased ~~primarily~~marketing, general and administrative expenses as a result of focused cost-reduction initiatives, decreased ~~earnings~~interest expense due to decreased interest rates and increased equity income from our equity method investment in ~~Ventura Foods, which experienced~~Ardent Mills, LLC ("Ardent Mills") as a ~~significant reduction in~~result of increased demand ~~due to COVID-19 related demand shocks in the food service sector.~~

for flour.

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Revenues by Segment

Energy


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Revenues	$	1,372,158	$	1,461,050	$	(88,892)	(6.1)	%

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Revenues $ 890,919
$ 1,738,045
$ (847,126 ) (48.7 )%

The following waterfall analysis and commentary presents the changes in our Energy segment revenues for the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$847.1 million decrease~~change in Energy segment revenues reflects the following:

•Decreased selling prices and volumes for refined fuels ~~driven by~~as a result of global market conditions, including ~~the~~continued impact of the demand shocks occurring during the COVID-19 ~~demand shock in the transportation sector and~~pandemic, as well as product mix, contributed to ~~$713.4~~$100.3 million and ~~$80.4~~$40.1 million decreases in revenues, respectively.

~~Decreased~~•Lower volumes of propane driven by lower demand as a result of warm winter weather conditions during most of the second quarter of fiscal 2021 contributed to a $13.6 million decrease in revenues.

•Lower revenues were partially offset by increased selling prices for propane ~~driven by~~as a result of global market ~~and weather~~ conditions ~~contributed to a $33.3 million decrease in revenues.~~during the second quarter of fiscal 2021, which positively impacted revenue by $70.7 million.

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	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Revenues	$	6,938,212	$	5,124,202	$	1,814,010	35.4	%

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Revenues $ 6,337,901
$ 6,745,115
$ (407,214 ) (6.0 )%

The following waterfall analysis and commentary presents the changes in our Ag segment revenues for the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$407.2 million decrease~~change in Ag segment revenues reflects the following:

Decreased prices across most of the Ag segment were driven by global market conditions and product mix. Lower pricing for grain and oilseed contributed to a $484.6 million decrease in revenues and the remaining price decrease was attributed to lower selling prices for agronomy products, feed and farm supplies and renewable fuels.

~~Volume increases across most of the Ag segment resulted from improved, but not normalized,~~•Improved trade relations between the United States and foreign trade partners and ~~more~~ favorable weather conditions for ~~spring planting~~most of the winter compared to the same period of the prior ~~year.~~year drove increased volumes. Stronger grain and oilseed movement contributed to a ~~$298.2~~$612.5 million increase in revenues with the remaining increase being composed primarily of improved sales volumes of agronomy products and feed and farm ~~supplies used for spring planting. These increased volumes were~~supplies.

•Due to a planned business model change at our TEMCO equity method investment to increase its operational efficiency, we experienced decreased revenues and COGS on certain transactions associated with TEMCO, which partially offset strong volume growth in grain and oilseed during the three months ended February 28, 2021.

•Higher pricing for grain and oilseed was driven by ~~lower volumes~~increased global demand and contributed to a $937.9 million increase in revenues. The remaining price increase was attributed to a combination of ~~renewable fuels~~mostly offsetting price increases and decreases for processing and food ingredients, feed and farm supplies and agronomy products, which ~~experienced lower demand~~fluctuated as a result of ~~demand shock in the food service~~global market conditions and ~~transportation sectors that followed the COVID-19 pandemic.~~product mix.

All Other Segments

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Corporate and Other revenues* $ 12,211
$ 14,781
$ (2,570 ) (17.4 )%


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Corporate and Other revenues*	$	9,789	$	12,974	$	(3,185)	(24.5)	%

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

Corporate and Other revenues decreased during the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year as a result of lower revenues in our financing business due to market-driven interest rate reductions.

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Cost of Goods Sold by Segment

Energy

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 893,922
$ 1,693,613
$ (799,691 ) (47.2 )%


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Cost of goods sold	$	1,380,045	$	1,270,092	$	109,953	8.7	%

The following waterfall analysis and commentary presents the changes in our Energy segment COGS for the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$799.7 million decrease~~change in Energy segment COGS reflects the following:

~~Decreased~~•Increased costs for propane as a result of global market conditions and ~~volumes~~increased distribution costs resulted in an $85.0 million increase of COGS.

•Increased costs for refined fuels driven by global market conditions, including the demand shock in the transportation sector that followed the COVID-19 pandemic and product mix, contributed to $635.6 million and $78.5 million decreases in COGS, respectively.

~~Decreased costs for propane driven by~~as a result of global market conditions contributed to a ~~$63.8~~$75.5 million ~~decrease~~increase of ~~COGS.~~COGS, the majority of which related to the impact of significantly higher RIN prices.

~~The decreases were partially offset by a $42.0 million noncash charge to reflect the lower market value~~•Decreased volumes of ~~our~~ refined fuels ~~inventories at~~and propane contributed to $34.7 million and $12.1 million decreases of COGS, respectively. Decreased refined fuels volumes were driven by the ~~end~~continued impact of the ~~period.~~demand shocks occurring during the COVID-19 pandemic. Decreased propane volumes were due to lower demand that resulted from warm winter weather conditions during most of the second quarter of fiscal 2021.

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Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 6,129,293
$ 6,580,901
$ (451,608 ) (6.9 )%


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Cost of goods sold	$	6,841,093	$	5,012,580	$	1,828,513	36.5	%

The following waterfall analysis and commentary presents the changes in our Ag segment COGS for the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$451.6 million decrease~~change in Ag segment COGS reflects the following:

Decreased prices across most of the Ag segment were driven by global market conditions and product mix. Lower prices for grain and oilseed contributed to a $492.3 million decrease of COGS and the remaining price decrease was attributed to lower prices for agronomy products, feed and farm supplies and renewable fuels.

•Volume increases ~~across most of~~in the Ag segment resulted primarily from improved ~~but not normalized,~~ trade relations between the United States and foreign trade partners and ~~more~~ favorable weather conditions ~~for spring planting~~during the winter compared to the same period of the prior year. Stronger grain and oilseed movement contributed to a ~~$298.9~~$606.3 million increase of COGS with the remaining increase being composed primarily of improved sales volumes of agronomy products and feed and farm ~~supplies used for spring planting. These increased volumes were~~supplies.

•Higher pricing for grain and oilseed resulted from increased global demand and contributed to a $1.0 billion increase of COGS. Changes in costs for other agricultural products were mostly offsetting and driven by ~~lower volumes~~a combination of ~~renewable fuels~~global market conditions and ~~processing and food ingredients, which experienced lower demand as a result of demand shock in the food service and transportation sectors that followed the COVID-19 pandemic.~~product mix.

All Other Segments


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Nitrogen Production COGS	$	422	$	996	$	(574)	(57.6)%
Corporate and Other COGS	$	(3,121)	$	(498)	$	(2,623)	(526.7)%

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Nitrogen Production COGS $ 430
$ 1,076
$ (646 ) NM*
Corporate and Other COGS $ (973 ) $ (1,420 ) $ 447
NM*

*NM - not meaningful

There were no significant changes to COGS in our Nitrogen Production segment or Corporate and Other during the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

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Marketing, General and Administrative Expenses

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Marketing, general and administrative expenses $ 180,439
$ 217,527
$ (37,088 ) (17.0 )%


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Marketing, general and administrative expenses	$	161,510	$	199,570	$	(38,060)	(19.1)	%

~~Decreased marketing,~~ Marketing, general and administrative expenses ~~were primarily due to a $29.5 million loan loss reserve recorded~~decreased during the three months ended ~~May 31, 2019, that did not reoccur~~February 28, 2021, compared to the three months ended February 29, 2020, due to decreased employee-related expenses, lower bad debt expenses and various cost reduction initiatives launched during the current year.

Interest Expense


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Interest expense	$	28,855	$	33,411	$	(4,556)	(13.6)	%

Interest expense decreased during the three months ended ~~May 31, 2020. The remaining decrease resulted primarily from decreased consulting expenses and incentive-based compensation~~February 28, 2021, as a result of lower interest rates compared to the same period of the prior year.

~~Interest Expense~~Other Income


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Other income	$	17,846	$	11,352	$	6,494	57.2	%

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Interest expense $ 26,661
$ 42,773
$ (16,112 ) (37.7 )%

~~Interest expense decreased~~ Other income increased during the three months ended ~~May 31, 2020, as a result of lower interest rates and decreased average outstanding debt balances compared~~February 28, 2021, primarily due to an investment gain that did not occur during the same period of the prior year.

~~Other Income~~

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Other income $ 8,076
$ 32,938
$ (24,862 ) (75.5 )%

Other income decreased primarily as a result of nonoperating gains recognized during the prior year, which did not reoccur during the three months ended May 31, 2020, including a $19.1 million gain recognized in connection with the acquisition of the remaining 75% ownership in WCD during the three months ended May 31, 2019.

Equity Income from Investments

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Equity income from investments* $ 51,114
$ 65,170
$ (14,056 ) (21.6 )%


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Equity income from investments*	$	64,109	$	34,398	$	29,711	86.4	%

*See Note 5, Investments, of the notes to the condensed consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.

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 Condensed Consolidated Statements of Operations. Equity income from investments ~~decreased~~increased during the three months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year, primarily due to ~~$17.4 million of lower~~increased equity income associated with our equity method investment in ~~Ventura Foods,~~TEMCO, which experienced a significant ~~reduction~~increase in volumes and profitability with increased trade flows to China. In addition, TEMCO changed its business model during the three months ended February 28, 2021, which has improved its operating efficiency. CF Nitrogen and Ardent Mills experienced higher equity income during the second quarter of fiscal 2021 as a result of higher urea prices and increased demand ~~due to COVID-19.~~for flour, respectively.

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Income Tax Expense


	Three Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Income tax expense	$	31,668	$	2,130	$	29,538	1,386.8	%

Three Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Income tax (benefit) expense $ (27,052 ) $ 6,866
$ (33,918 ) (494.0 )%

~~Decreased~~ Increased income tax expense during the three months ended ~~May 31, 2020,~~February 28, 2021, primarily ~~reflects a tax benefit related to~~reflected changes in the ~~settlement~~mix of ~~a U.S. federal audit resulting in additional tax credit carryovers, as well as~~full-year earnings projected across business units and equity management ~~assumptions used in fiscal 2020 and the associated impact on income taxes.~~assumptions. Effective tax rates for the three months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ were ~~(38.4)~~(473.4)% and ~~11.1%~~1.7%, respectively. Federal and state statutory rates applied to nonpatronage business activity were ~~24.7%~~24.9% and ~~24.6%~~24.7% for the three months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ respectively. Income taxes and effective tax rate vary each year based on profitability and nonpatronage business activity during each of the comparable years.

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~~Nine~~Six Months Ended ~~May 31,~~February 28, 2021, and February 29, 2020 ~~and 2019~~


	Six Months Ended
	February 28, 2021		% of Revenues		February 29, 2020		% of Revenues
	(Dollars in thousands)
Revenues	$	17,035,802	100.0	%	$	14,219,711	100.0	%
Cost of goods sold	16,755,978		98.4		13,579,113		95.5
Gross profit	279,824		1.6		640,598		4.5
Marketing, general and administrative expenses	332,171		1.9		367,901		2.6
Operating (loss) earnings	(52,347)		(0.3)		272,697		1.9

Interest expense	53,905		0.3		68,382		0.5
Other income	(30,470)		(0.2)		(24,850)		(0.2)
Equity income from investments	(114,132)		(0.7)		(84,060)		(0.6)
Income before income taxes	38,350		0.2		313,225		2.2
Income tax expense	7,339		—		8,794		0.1
Net income	31,011		0.2		304,431		2.1
Net (loss) income attributable to noncontrolling interests	(431)		—		1,102		—
Net income attributable to CHS Inc.	$	31,442	0.2	%	$	303,329	2.1	%

Nine Months Ended May 31,
2020 % of Revenues 2019 % of Revenues
(Dollars in thousands)
Revenues $ 21,460,742
100.0 % $ 23,465,769
100.0 %
Cost of goods sold 20,601,785
96.0
22,343,944
95.2
Gross profit 858,957
4.0
1,121,825
4.8
Marketing, general and administrative expenses 548,340
2.6
551,438
2.3
Operating earnings 310,617
1.4
570,387
2.4
Interest expense 95,043
0.4
122,950
0.5
Other income (32,926 ) (0.2 ) (69,835 ) (0.3 )
Equity income from investments (135,174 ) (0.6 ) (173,394 ) (0.7 )
Income before income taxes 383,674
1.8
690,666
2.9
Income tax (benefit) expense (18,258 ) (0.1 ) 40,534
0.2
Net income 401,932
1.9
650,132
2.8
Net income (loss) attributable to noncontrolling interests 955
—
(758 ) —
Net income attributable to CHS Inc. $ 400,977
1.9 % $ 650,890
2.8 %

The charts below detail revenues, net of intersegment revenues, and IBIT by reportable segment for the ~~nine~~six months ended ~~May 31, 2020.~~February 28, 2021. Our Nitrogen Production reportable segment represents an equity method investment that records earnings and allocated expenses, but not revenues.

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Income (Loss) Before Income Taxes by Segment

Energy


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Income (loss) before income taxes	$	(121,867)	$	301,074	$	(422,941)	(140.5)	%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Income before income taxes $ 246,309
$ 540,305
$ (293,996 ) (54.4 )%

The following waterfall analysis and commentary presents the changes in our Energy segment IBIT for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$294.0 million decrease~~change in Energy segment IBIT reflects the following:

~~Recognition of an $80.8 million gain associated with certain federal excise tax credits as a reduction of COGS during the second quarter of fiscal 2019 that did not reoccur during the current year.~~

~~A $42.0 million noncash charge during the third quarter of fiscal 2020 to reduce our refined fuels inventories to their market value at the end of the period.~~

~~Significantly less~~•Less advantageous market conditions in our refined fuels business compared to the same period of the prior year ~~drove~~resulted in significantly lower ~~margins.~~margins and volumes. These market conditions were driven by continued impact of the demand shocks occurring during the COVID-19 pandemic, which resulted in a combination of decreased crack spreads and decreased WCS crude oil differentials experienced on heavy Canadian crude oil ~~which is~~ processed by our ~~refineries, and decreased crack spreads.~~refineries.

~~The decreased IBIT was partially offset~~•Significantly higher RIN prices negatively impacted margins by ~~increased volumes and improved~~approximately $63.0 million.

•Lower propane margins due to the reversal of hedging gains ~~and significant propane demand for crop drying and home heating, particularly~~recognized during the ~~first quarter~~prior year and reduced propane volumes as a result of warmer, drier fall and winter weather conditions during fiscal ~~2020.~~2021 reduced income compared to the same period during the prior year.

Table of Contents


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Income (loss) before income taxes	$	97,053	$	(34,707)	$	131,760	379.6	%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Income (loss) before income taxes $ 60,653
$ 39,031
$ 21,622
55.4 %

The following waterfall analysis and commentary presents the changes in our Ag segment IBIT for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$21.6 million increase~~change in Ag segment IBIT reflects the following:

•Improved ~~margins across much of the Ag segment as a result of more favorable weather conditions for spring planting compared to the same period during the prior year.~~

Decreased volumes across much of the Ag segment due to poor weather conditions and a smaller crop to harvest in the fall of 2019 across much of the agricultural region of the United States in which we operate and global trade tensionsrelations between the United States and foreign ~~trading~~trade partners ~~particularly~~drove increased volumes of grain and oilseed commodities.

•Favorable weather conditions during the ~~first half~~fall harvest and winter compared to the prior year contributed to increased volumes and margins across much of ~~fiscal 2020.~~our Ag segment, particularly feed and farm supplies and processing food and ingredients. These ~~volume decreases~~improved margins were partially offset by ~~increased volumes~~decreased grain and oilseed margins, including mark-to-market losses which we expect to reverse over time.

•We saw decreased marketing, general and administrative expenses associated with ~~agronomy products that were primarily attributable to~~focused cost-reduction initiatives and increased equity income from our ~~acquisition of the remaining 75% ownership interest~~investment in ~~WCD on March 1, 2019, the results of which were not included in the entire comparable period of the prior year.~~TEMCO.

All Other Segments


	Nine Months Ended May 31,				Change						Six Months Ended				Change
	2020		2019		Dollars			Percent			February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)										(Dollars in thousands)
Nitrogen Production IBIT*	$	45,698	$	54,569	$	(8,871	)	(16.3	)%	Nitrogen Production IBIT*	$	15,635	$	22,191	$	(6,556)	(29.5)	%
Corporate and Other IBIT	$	31,014	$	56,761	$	(25,747	)	(45.4	)%	Corporate and Other IBIT	$	47,529	$	24,667	$	22,862	92.7	%

*See Note 5, Investments, of the notes to the condensed consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.

~~Our~~ Although urea and UAN margins improved during the second quarter of fiscal 2021, our Nitrogen Production segment experienced decreased IBIT due to lower equity method income attributed to reduced sale prices of UAN and increased natural gas costs, which were partially offset by increased sale prices of urea. Corporate and Other IBIT increased primarily due to decreased marketing, general and administrative expenses as a result of ~~lower~~focused cost reduction efforts, decreased interest expense due to decreased interest rates and increased equity ~~method~~ income from our equity method investment in CF Nitrogen during the nine months ended May 31, 2020, attributable to decreased market pricing of urea and UAN, which are produced and sold by CF Nitrogen. Corporate and Other IBIT decreased primarilyArdent Mills as a result of ~~lower earnings from our investment in Ventura Foods, which experienced a significant reduction in~~increased demand ~~due to COVID-19, and decreased interest income from our financing businesses due to lower interest rates during the nine months ended May 31, 2020, compared to the same period during the prior year.~~

for flour.

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Revenues by Segment

Energy


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Revenues	$	2,630,005	$	3,356,473	$	(726,468)	(21.6)	%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Revenues $ 4,247,392
$ 5,374,110
$ (1,126,718 ) (21.0 )%

The following waterfall analysis and commentary presents the changes in our Energy segment revenues for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$1.1 billion decrease~~change in Energy segment revenues reflects the following:

•Decreased selling prices and volumes for refined fuels ~~and propane were driven by~~as a result of global market conditions, including the continued impact of the demand shocks occurring during the COVID-19 ~~and~~pandemic, as well as product mix, ~~which~~ contributed to ~~$873.6~~$590.0 million and ~~$162.5~~$117.0 million decreases in revenues, respectively.

~~A 3% decrease~~•Decreased volumes of ~~refined fuels volumes~~propane resulting from lower demand due to warm and drier weather conditions during the fall and winter contributed to a ~~$126.3~~$75.1 million decrease in ~~revenues, which~~revenues. This decrease was partially offset by ~~a 9% increase of~~higher selling prices for propane volumes that contributed to a $52.5 million increase in revenues. Decreased volumes of refined fuels were attributable primarily to lower demand resulting from demand shock in the transportation sector that followed the COVID-19 pandemic and during the fall harvest as a result of ~~poor weather~~global market conditions ~~and~~during fiscal 2021, which resulted in a ~~smaller crop to harvest in the fall~~$73.1 million increase of 2019 across much of the agricultural region of the United States in which we operate. Increased volumes of propane resulted from significant propane demand for crop drying and home heating, particularly during the first half of fiscal 2020.revenues.

Table of Contents


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Revenues	$	14,383,614	$	10,836,057	$	3,547,557	32.7	%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Revenues $ 17,173,958
$ 18,045,057
$ (871,099 ) (4.8 )%

The following waterfall analysis and commentary presents the changes in our Ag segment revenues for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$871.1 million decrease~~change in Ag segment revenues reflects the following:

Volume decreases were primarily driven by lower feed and farm supply and grain and oilseed volumes that contributed to $456.4 million and $366.3 million decreases in revenues, respectively. The decreased volumes resulted from a combination of challenges experienced recently in the agricultural commodity market, including poor weather conditions during fiscal 2019 in the agricultural region of the United States that contributed to lower crop yields and fewer acres planted/harvested, and the impact of global trade tensions•Trade relations improved between the United States and foreign ~~trading~~trade partners ~~particularly~~and weather conditions were more favorable during the ~~first half of fiscal 2020. These volume decreases were partially offset by increased volumes associated with agronomy products due~~fall harvest and winter compared to ~~heightened spring demand and~~ the increase in revenues that resulted from the March 1, 2019, acquisition of the remaining 75% ownership interest in WCD that we did not previously own, the results of which were not included in the entire comparablesame period of the prior year. Stronger grain and oilseed shipments contributed to a $1.7 billion increase in revenues with the remaining increase being composed primarily of improved sales volumes of agronomy products and feed and farm supplies.

~~Decreased~~•Due to a planned business model change at our TEMCO equity method investment to increase its operational efficiency, we experienced decreased revenues and COGS on certain transactions associated with TEMCO, which partially offset strong volume growth in grain and oilseed during fiscal 2021.

•Higher pricing for grain and oilseed was driven by increased global demand and contributed to a $1.6 billion increase in revenues. The price increase attributed to grain and oilseed was partially offset by feed and farm supplies price decreases, which were the result of improved global market conditions and product mix contributed to $345.8 million and $327.5 million decreases in revenues for grain and oilseed and agronomy, respectively. However, these price decreases were partially offset by market-driven price increases for other products, including feed and farm supplies that increased revenues by $413.5 million.mix.

All Other Segments

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Corporate and Other revenues* $ 39,392
$ 46,602
$ (7,210 ) (15.5 )%


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Corporate and Other revenues*	$	22,183	$	27,181	$	(4,998)	(18.4)	%

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

Corporate and Other revenues decreased during the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year ~~primarily due to~~as a result of lower revenues in our financing business due to market-driven interest rate reductions.

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Cost of Goods Sold by Segment

Energy

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 3,850,176
$ 4,692,910
$ (842,734 ) (18.0 )%


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Cost of goods sold	$	2,661,087	$	2,956,254	$	(295,167)	(10.0)	%

The following waterfall analysis and commentary presents the changes in our Energy segment COGS for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$842.7 million decrease~~change in Energy segment COGS reflects the following:

•Decreased costs and ~~a 3% volume decrease~~volumes for refined fuels ~~driven by~~as a result of global market conditions, including the continued impact of demand ~~shock in the transportation sector that followed~~shocks occurring during the COVID-19 pandemic, ~~and~~as well as product mix, contributed to ~~$527.8~~$231.9 million and ~~$109.8~~$104.3 million decreases inof COGS, respectively.

~~Decreased~~ The decreased COGS for refined fuels was partially offset by significantly higher costs for RINs of approximately $63.0 million.

•Lower volumes of propane ~~driven by global market and weather conditions and hedging gains~~ contributed to a ~~$153.5~~$62.5 million decrease of COGS, which ~~was partially offset by a $48.0 million increase~~were driven by ~~a 9% volume increase~~lower demand that resulted from ~~significant propane demand for crop drying~~warm and ~~home heating~~drier weather conditions during the ~~first half~~fall harvest and winter heating season.

•Global market conditions, reversal of ~~fiscal 2020.~~

~~The decrease was~~hedging gains recognized during the prior year and elevated costs contributed to a $120.5 million increase of COGS for propane that partially offset ~~by a $42.0 million noncash charge to reduce our~~the decreased costs for refined fuels inventories to their market value at the end of the period and recognition of an $80.8 million gain associated with certain federal excise tax credits as a reduction of COGS during the second quarter of fiscal 2019 that did not reoccur during the current year.fuels.

Table of Contents

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Cost of goods sold $ 16,752,073
$ 17,653,970
$ (901,897 ) (5.1 )%


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Cost of goods sold	$	14,101,435	$	10,622,780	$	3,478,655	32.7	%

The following waterfall analysis and commentary presents the changes in our Ag segment COGS for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

The ~~$901.9 million decrease~~change in Ag segment COGS reflects the following:

Volume decreases were primarily driven by lower feed and farm supply and grain and oilseed volumes that contributed to $413.5 million and $364.2 million decreases of COGS, respectively. The decreased volumes resulted from a combination of challenges experienced recently in the agricultural commodity market, including poor weather conditions during fiscal 2019 in the agricultural region of the United States that contributed to lower crop yields and fewer acres planted/harvested, and the impact of global•Improved trade ~~tensions~~relations between the United States and foreign ~~trading~~trade partners ~~particularly~~and favorable weather conditions during the ~~first half of fiscal 2020. These volume decreases were partially offset by increased volumes associated with agronomy products due~~fall harvest and winter compared to ~~heightened spring demand and~~ the increase of COGS that resulted from the March 1, 2019, acquisition of the remaining 75% ownership interest in WCD that we did not previously own, the results of which were not included in the entire comparablesame period of the prior ~~year.~~year drove volumes higher. Stronger grain and oilseed shipments contributed to a $1.8 billion increase of COGS with the remaining increase being composed primarily of improved volumes of agronomy products and feed and farm supplies.

~~Decreased pricing~~•Due to a planned business model change at our TEMCO equity method investment to increase its operational efficiency, we experienced decreased revenues and COGS on certain transactions associated with TEMCO, which partially offset strong volume growth in grain and oilseed during fiscal 2021.

•Higher prices for grain and oilseed resulted from increased global demand and contributed to a $1.6 billion increase of COGS. The price increase attributed to grain and oilseed was partially offset by price decreases for feed and farm supplies, which were driven by global market conditions and product mix contributed to $401.3 million and $301.8 million decreases of COGS for grain and oilseed and agronomy, respectively. However, these price decreases were partially offset by market-driven price increases for other products, including feed and farm supplies that increased COGS by $360.8 million.mix.

All Other Segments


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Nitrogen Production COGS	$	843	$	1,534	$	(691)	(45.0)%
Corporate and Other COGS	$	(7,387)	$	(1,455)	$	(5,932)	407.7%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Nitrogen Production COGS $ 1,964
$ 1,537
$ 427
NM*
Corporate and Other COGS $ (2,428 ) $ (4,473 ) $ 2,045
NM*

*NM - not meaningful

There were no significant changes to COGS in our Nitrogen Production segment or Corporate and Other during the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year.

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Marketing, General and Administrative Expenses

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Marketing, general and administrative expenses $ 548,340
$ 551,438
$ (3,098 ) (0.6 )%


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Marketing, general and administrative expenses	$	332,171	$	367,901	$	(35,730)	(9.7)	%

~~Decreased marketing,~~ Marketing, general and administrative expenses ~~were primarily~~decreased during the six months ended February 28, 2021, compared to the six months ended February 29, 2020, due to the impact of a $25.5 million loan loss reserve recorded during the nine months ended May 31, 2019, that did not reoccur during the nine months ended May 31, 2020. The decrease was mostly offset by increased maintenancelower employee-related expenses, ~~associated with our information technology platforms~~lower bad debt expenses and increased expenses related to the implementation of our new enterprise resource planning software. In addition, we had decreased compensation expenses associated with a reduced accrual for potential incentive-based compensationfocused cost reduction initiatives launched during the current year which was mostly offset by increased payroll expenses due to the employees who joined CHS following our acquisition of the remaining 75% ownership interest in WCD, which were not included in the entire comparable period of the prior year.

Interest Expense


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Interest expense	$	53,905	$	68,382	$	(14,477)	(21.2)	%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Interest expense $ 95,043
$ 122,950
$ (27,907 ) (22.7 )%

Interest expense decreased during the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, as a result of lower interest rates ~~during the nine months ended May 31, 2020, and decreased average outstanding debt balances~~ compared to the same period of the prior year.

Other Income


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Other income	$	30,470	$	24,850	$	5,620	22.6	%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Other income $ 32,926
$ 69,835
$ (36,909 ) (52.9 )%

Other income ~~decreased primarily as a result of nonoperating gains recognized~~increased during the ~~nine~~six months ended ~~May 31, 2019,~~February 28, 2021, primarily due to investment gains that did not ~~reoccur~~occur during the ~~current year, including a $19.1 million gain recognized in connection with the acquisition~~same period of the ~~remaining 75% ownership in WCD during the nine months ended May 31, 2019.~~prior year.

Equity Income from Investments

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Equity income from investments* $ 135,174
$ 173,394
$ (38,220 ) (22.0 )%


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Equity income from investments*	$	114,132	$	84,060	$	30,072	35.8	%

*See Note 5, Investments, of the notes to the condensed consolidated financial statements that are included in this Quarterly Report on Form 10-Q for additional information.

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 Condensed Consolidated Statements of Operations. Equity income from investments ~~decreased~~increased during the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, compared to the same period during the prior year, primarily due to ~~lower~~increased equity income associated with our equity method ~~investments~~investment in ~~CF Nitrogen, Ventura Foods~~TEMCO, which experienced a significant increase in volumes and ~~Ardent Mills,~~profitability with increased trade flows to China. In addition, TEMCO changed its business model during the six months ended February 28, 2021, which together decreased by a total of $35.0 million. The decreased equity method income for these investments was driven by reduced urea and UAN pricing for CF Nitrogen, negative impacts of COVID-19 for Ventura Foods and lower product margins and volumes as a result of customer consolidation for Ardent Mills.has improved its operating efficiency.

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Income Tax Expense


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars		Percent
	(Dollars in thousands)
Income tax expense	$	7,339	$	8,794	$	(1,455)	(16.5)	%

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Income tax (benefit) expense $ (18,258 ) $ 40,534
$ (58,792 ) (145.0 )%

Decreased income tax expense during the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, primarily reflects ~~a tax benefit related to~~changes in the ~~settlement~~mix of ~~a U.S. federal audit resulting in additional tax credit carryovers,~~full-year earnings projected across business units and equity management assumptions, as well as ~~equity management assumptions used in fiscal 2020 and the associated impact on income taxes.~~tax benefits related to an intercompany transfer of assets for tax planning. Effective tax rates for the ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, were 19.1% and ~~2019, were (4.8)% and 5.9%~~2.8%, respectively. Federal and state statutory rates applied to nonpatronage business activity were ~~24.7%~~24.9% and ~~24.6%~~24.7% for the ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ respectively. Income taxes and effective tax rate vary each year based on profitability and nonpatronage business activity during each of the comparable years.

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 facility. We fund our capital expenditures and growth primarily through cash, operating cash flow and long-term debt financing.

On ~~May 31, 2020,~~February 28, 2021, we had working capital, defined as current assets less current liabilities, of $1.4 billion, and a current ratio, defined as current assets divided by current liabilities, of 1.2 compared to working capital of $1.3 billion and a current ratio of 1.3 on August 31, 2020. On February 29, 2020, we had working capital of $1.1 billion and a current ratio of 1.2 compared to working capital of $1.1 billion and a current ratio of 1.2 on August 31, 2019. ~~On May 31, 2019, we had working~~Working capital ~~of $828.4 million~~ and athe current ratio may not be computed the same as similarly titled measures used by other companies. We believe this information is meaningful to investors as a measure of ~~1.1 compared to working capital of $759.0 million~~operational efficiency and ~~a current ratio of 1.1 on August 31, 2018.~~short-term financial health.

As of ~~May 31, 2020,~~February 28, 2021, we had cash and cash equivalents of ~~$408.1~~$217.7 million, total equities of ~~$8.8~~$8.7 billion, long-term debt (including current maturities) of $1.8 billion and notes payable of ~~$2.2~~$3.0 billion. Our capital allocation priorities include maintaining the safety and compliance of our operations, paying interest on debt and preferred stock dividends, returning cash to our member-owners in the form of cash patronage and equity redemptions, and taking advantage of strategic opportunities that benefit our owners. We will continue to consider opportunities to further diversify and enhance our sources and amounts of liquidity. We believe cash generated by operating and investing activities, along with available borrowing capacity under our credit ~~facility,~~facilities, will be sufficient to support our operations for the foreseeable future and we expect to remain in compliance with our loan covenants.

As we continue to navigate the impact of COVID-19 on our business and operations, we have strengthened our liquidity through a variety of means, including curtailing certain spending and reprioritizing capital ~~expenditures and increasing cash on the balance sheet by drawing on our revolving lines of credit.~~expenditures. We are actively managing our short-term and long-term ~~liquidity needs,~~liquidity.

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Fiscal 2021 and 2020 Activity

On February 19, 2021, we amended our 10-year term loan facility to convert the entire $366.0 million aggregate principle amount outstanding thereunder into a revolving loan, which ~~we expect will include entering into~~can be paid down and readvanced in an ~~agreement to raise~~amount up to ~~$300~~the referenced $366.0 million until February 19, 2022. On February 19, 2022, the total funded loan balance outstanding reverts to a nonrevolving term loan that is payable on September 4, 2025. There was no balance outstanding under this facility as of February 28, 2021.

On August 14, 2020, we entered into a Note Purchase Agreement to borrow $375.0 million of debt in the ~~fourth quarter~~form of ~~fiscal 2020.~~notes. The notes under this Note Purchase Agreement are structured in four series with maturities ranging from 7 to 15 years and interest accruing at rates ranging from 3.24% to 3.73%, subject to certain adjustments depending on our ratio of consolidated funded debt to consolidated cash flow. The funding of these notes took place on November 2, 2020. This funding is ~~anticipated to take place during the first half of fiscal 2021 and will be~~being used to ~~refinance upcoming~~pay debt maturities ~~in fiscal 2021~~ and ~~add~~manage liquidity. ~~We also continue to actively monitor counterparty risk.~~

~~Fiscal 2020 and 2019 Activity~~

During fiscal 2019, we completed our acquisition of the remaining 75% ownership interest in WCD that we did not previously own by paying $106.7 million, of which net cash flows were reduced by $8.0 million of cash acquired. WCD is now included in our Ag segment and deepens our presence in the agronomy products market. See Note 15, ~~Acquisitions,~~ ~~of the notes to our condensed consolidated financial statements included in this Quarterly Report on Form 10-Q for additional information.~~

~~We also completed planned major maintenance activities during fiscal 2019, which contributed to cash outflows of $232.1 million for the year ended August 31, 2019.~~

We have a receivables and loans securitization facility ("Securitization Facility") with certain unaffiliated financial institutions ("Purchasers")~~, which is accounted for as a secured borrowing.~~. Under the Securitization Facility, we and certain of our subsidiaries ("Originators") sell trade accounts and notes receivable ("Receivables") to Cofina Funding, LLC ("Cofina"), a wholly-owned bankruptcy-remote indirect subsidiary of CHS. Cofina in turn transfers the Receivables to the ~~Purchasers.~~Purchasers and this arrangement is accounted for as a secured borrowing. 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

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amount available under the Securitization Facility fluctuates over time based on the total amount of eligible Receivables generated during the normal course of business. As of ~~May~~February 28, 2021, and August 31, 2020, total availability under the Securitization Facility was ~~$383.0~~$538.0 million and $423.0 million, respectively, all of which had been utilized.

We also have a repurchase facility ("Repurchase Facility") related to the Securitization Facility. Under the Repurchase Facility, we can borrow up to $150.0 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, 2020,~~February 28, 2021, and August 31, ~~2019,~~2020, the outstanding balance under the Repurchase Facility was $150.0 million.

On ~~June 26,~~September 24, 2020, ~~we amended our existing~~the Securitization Facility and Repurchase ~~Facility. As a result of the amendment,~~Facility were amended, increasing the maximum availability ofunder the Securitization Facility ~~was decreased~~to $600.0 million from ~~$700.0 million to~~ $500.0 million and ~~the~~extending their respective termination ~~date of the Securitization Facility was extended~~dates to ~~September 24, 2020, which may be further extended.~~July 30, 2021.

Cash Flows

The following table presents summarized cash flow data for the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, and ~~2019:~~February 29, 2020:


	Six Months Ended				Change
	February 28, 2021		February 29, 2020		Dollars
	(Dollars in thousands)
Net cash (used in) provided by operating activities	$	(1,134,545)	$	301,598	$	(1,436,143)
Net cash used in investing activities	(69,618)		(165)		(69,453)
Net cash provided by (used in) financing activities	1,319,720		(279,547)		1,599,267
Effect of exchange rate changes on cash and cash equivalents	1,026		(5,613)		6,639
Increase in cash and cash equivalents and restricted cash	$	116,583	$	16,273	$	100,310

Nine Months Ended May 31, Change
2020 2019 Dollars Percent
(Dollars in thousands)
Net cash provided by operating activities $ 525,843
$ 129,911
$ 395,932
304.8 %
Net cash used in investing activities (48,533 ) (592,490 ) 543,957
91.8 %
Net cash (used in) provided by financing activities (292,207 ) 174,343
(466,550 ) (267.6 )%
Effect of exchange rate changes on cash and cash equivalents (786 ) (382 ) (404 ) (105.8 )%
Net increase (decrease) in cash and cash equivalents and restricted cash $ 184,317
$ (288,618 ) $ 472,935
163.9 %

Cash flows from operating activities can fluctuate significantly from period to period as a result of various factors, including seasonality and timing differences associated with purchases, sales, taxes and other business decisions. The ~~$395.9 million increase~~$1.4 billion decrease in cash provided by operating activities reflects ~~a combination~~decreased net income during fiscal 2021 compared to the same period of the prior fiscal year and working capital ~~decreases,~~increases, primarily associated with ~~decreased~~increased receivables and ~~inventories, which were partially offset by other changes, including decreased net income.~~inventories.

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The ~~$544.0~~$69.5 million ~~decrease~~increase in cash used in investing activities primarily reflects ~~increased collections of $331.8 million~~timing differences associated with borrowings and payments for CHS Capital notes receivable ~~decreased expenditures for major repairs and~~balances during fiscal 2021 compared to the ~~acquisition of the remaining 75% ownership interest in WCD~~same period during ~~the third quarter of~~ fiscal ~~2019.~~2020.

The ~~$466.6 million decrease~~$1.6 billion increase in cash provided by financing activities primarily reflects increased net cash ~~outflows~~inflows associated with our notes payable and long-term debt facilities, ~~a $14.4~~including the $375.0 million ~~increase in cash patronage paid and an increase in equity redemption payments~~Note Purchase Agreement funding during the first quarter of ~~$9.9 million.~~fiscal 2021.

Future Uses of Cash

We expect to utilize cash and cash equivalents, ~~along with~~ cash generated by operating activities and cash raised through the Note Purchase Agreement to fund capital expenditures, major ~~repairs,~~maintenance, debt and interest payments, preferred stock dividends, patronage and equity ~~redemptions and business continuity efforts amid the COVID-19 outbreak and pandemic.~~redemptions. The following is a summary of our primary cash requirements for fiscal ~~2020:~~2021:

•Capital expenditures. We expect total capital expenditures for fiscal ~~2020~~2021 to be approximately ~~$457.0~~$467.5 million, compared to capital expenditures of ~~$443.2~~$418.4 million in fiscal ~~2019.~~2020. During the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, we acquired property, plant and equipment of ~~$316.5~~$164.6 million.

•Debt and interest. We expect to repay approximately ~~$39.2~~$555.3 million of long-term debt and finance lease obligations and incur interest payments related to long-term debt of approximately ~~$76.2~~$73.7 million during fiscal ~~2020.~~2021. During the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, we repaid $20.0 million of scheduled long-term debt maturities and an additional $366.0 million of long-term debt maturities.

•Preferred stock dividends. We had approximately $2.3 billion of preferred stock outstanding ~~at May 31, 2020.~~on February 28, 2021. We expect to pay dividends on our preferred stock of approximately $168.7 million during fiscal ~~2020.~~

2021.

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•Patronage. Our Board of Directors authorized approximately ~~$90.0~~$30.0 million of our fiscal ~~2019 patronage sourced~~2020 patronage-sourced earnings to be paid to our ~~member owners~~member-owners during fiscal ~~2020.~~

2021.

•Equity redemptions. Our Board of Directors has authorized ~~and we expect total~~equity redemptions of ~~approximately $100.0~~$38.0 million to be distributed in fiscal ~~2020~~2021 in the form of redemptions of qualified and nonqualified equity owned by individual producer members and association members. During the ~~nine~~six months ended ~~May 31, 2020,~~February 28, 2021, we redeemed ~~$86.3~~$12.5 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 and Repurchase 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, with cash flows from operations and by issuing long-term debt and term loans. ~~We intend to enter into an agreement to raise up to $300.0 million of debt in the fourth quarter of fiscal 2020, the funding of which is anticipated to take place during the first half of fiscal 2021.~~ 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~~"CHS Capital ~~Financing~~.Financing."

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. The following table summarizes our primary ~~lines~~committed line of credit as of ~~May 31, 2020:~~February 28, 2021:

Primary Revolving
Credit Facilities

Maturities

Total Capacity

Borrowings Outstanding

Interest Rates

(Fiscal Year)

(Dollars in thousands)

Committed five-year unsecured facility

2024

2,750,000

1,265,000

LIBOR or base rate + 0.00% to 1.55%

Primary Revolving
Credit Facilities
Maturities Total Capacity Borrowings Outstanding Interest Rates: Based on All Tier Levels for Revolver and Capacity of Uncommitted
(Fiscal Year) (Dollars in thousands)
Committed five-year unsecured facility 2024 $ 2,750,000
$ 800,000
LIBOR or Base Rate + 0.00% to 1.55%
Uncommitted bilateral facilities 2020 330,000
200,000
LIBOR or Base Rate + 0.00% to 1.375%

Subsequent to May 31, 2020, an additional $250.0 million of capacity became available through the uncommitted bilateral facilities. We also intend to renew $80.0 million of existing capacity on the uncommitted bilateral facilities during the fourth quarter of fiscal 2020 that expired subsequent to May 31, 2020.

Our primary line of credit is a five-year unsecured revolving credit facility with a syndicate of domestic and international banks. The credit facility provides a committed amount of $2.75 billion that expires on July 16, 2024. We also maintain certain uncommitted bilateral facilities to support our working capital needs with borrowings outstanding of $475.0 million as of February 28, 2021.

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In addition to our ~~uncommitted bilateral~~ facilities above, our wholly-owned subsidiaries CHS Europe S.a.r.l. and CHS Agronegocio Industria e Comercio Ltda ~~had uncommitted~~have lines of credit with ~~$380.8~~$325.7 million outstanding as of ~~May 31, 2020. In addition,~~February 28, 2021, and our other international subsidiaries ~~had~~have lines of credit with $108.0 million outstanding ~~of $141.7 million~~ as of ~~May 31, 2020.~~February 28, 2021.

Long-term Debt Financing

The following table presents summarized long-term debt data (including current maturities) as of ~~May 31, 2020,~~February 28, 2021, and August 31, ~~2019:~~2020:


	February 28, 2021		August 31, 2020
	(Dollars in thousands)
Private placement debt	$	1,715,576	$	1,363,725
Bank financing	—		366,000
Finance lease obligations	27,206		31,460
Other notes and contract payable	33,787		34,709
Deferred financing costs	(4,464)		(4,771)
	$	1,772,105	$	1,791,123

May 31,
2020 August 31,
2019
(Dollars in thousands)
Private placement debt $ 1,365,316
$ 1,379,840
Bank financing 366,000
366,000
Finance lease obligations 29,153
28,239
Other notes and contract payable 35,241
18,601
Deferred financing costs (3,143 ) (3,569 )
$ 1,792,567
$ 1,789,111

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CHS Capital Financing

For a description of the Securitization Facility and the Repurchase Facility, see above in ~~Fiscal~~"Fiscal 2021 and 2020 ~~and 2019 Activity~~. Activity."

CHS Capital sells loan commitments it has originated to Compeer Financial, PCA, d/b/a ProPartners Financial on a recourse basis. Total outstanding commitments under the program were $150.0 million as of ~~May 31, 2020,~~February 28, 2021, of which ~~$80.2~~$6.9 million was borrowed with an interest rate of ~~1.49%~~1.37%.

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%~~0.10% to ~~1.4%~~1.40% as of ~~May 31, 2020,~~February 28, 2021, and are due upon demand. Borrowings under these notes totaled ~~$78.6~~$82.4 million as of ~~May 31, 2020.~~February 28, 2021.

On September 30, 2019, CHS Capital entered into a credit agreement with a revolving note. Under this agreement, CHS Capital has available capacity of $100.0 million of which no amount was outstanding as of May 31, 2020.Covenants

~~Covenants~~

Our long-term debt is mostly unsecured; however, restrictive covenants under various debt agreements require maintenance of minimum consolidated net worth and other financial ratios. We were in compliance with all debt covenants and restrictions as of ~~May 31, 2020.~~February 28, 2021. Based on our current ~~2020~~fiscal 2021 projections, we expect continued covenant compliance.

All outstanding private placement notes conform to financial covenants applicable to those of our amended and restated five-year unsecured revolving credit facility. The notes provide that if our ratio of consolidated funded debt to consolidated cash flows is greater than 3.0 to 1.0, the interest rate on ~~all~~ outstanding notes will be increased bybetween 0.25% and 1.00%, depending on the related note series, the actual ratio and/or whether the notes have an investment grade rating from a nationally recognized statistical rating organization, until the ratio becomes 3.0 to 1.0, or less. During the ~~nine~~three months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ our ratio of consolidated funded debt to consolidated cash flows remained below 3.0 to 1.0.

Patronage and Equity Redemptions

In accordance with our bylaws and ~~upon approval~~ by action of our Board of Directors, annual net earnings from patronage sources are distributed to consenting patrons following the close of each fiscal year and are based on ~~amounts using~~ financial ~~statement earnings. Patronage earnings for~~performance. During the six months ended February 28, 2021, we distributed $21.4 million of cash patronage related to the year ended August 31, ~~2019, were distributed during~~2020. During the ~~nine~~six months ended ~~May 31,~~February 29, 2020, ~~including the $90.1 million cash portion of this distribution. During the nine months ended May 31, 2019,~~ we distributed cash patronage of ~~$75.7~~$90.0 million.

In accordance with authorization from our Board of Directors, we expect total cash redemptions related to the year ended August 31, ~~2019, that~~2020, which will be distributed in fiscal ~~2020,~~2021, to be approximately ~~$100.0~~$38.0 million and to include redemptions of qualified and nonqualified equity owned by individual producer members and ~~associations.~~association members. During the ~~nine~~six months ended ~~May 31, 2020, $86.3~~February 28, 2021, $12.5 million of that amount was redeemed in cash, compared to ~~$76.4~~$8.8 million redeemed in cash during the ~~nine~~six months ended ~~May 31, 2019.~~

February 29, 2020.

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Preferred Stock

Dividends paid on our preferred stock during the ~~nine~~six months ended ~~May 31,~~February 28, 2021, and February 29, 2020, ~~and 2019,~~ were ~~$126.5~~$84.3 million. The following is a summary of our outstanding preferred stock as of ~~May 31, 2020,~~February 28, 2021, all shares of which are listed on the Global Select Market of ~~Nasdaq:~~

The Nasdaq Stock Market LLC:


	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 patron equities redeemed with preferred stock.

(b) 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) 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.

(d) Preferred stock is redeemable for cash at our option, in whole or in part, at a ~~per share~~per-share price equal to the ~~per share~~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~~2002 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.

Off-Balance Sheet Financing Arrangements

Guarantees

We are a guarantor for lines of credit and performance obligations of related companies. As of ~~May 31, 2020,~~February 28, 2021, our bank covenants allowed maximum guarantees of $1.0 billion, of which ~~$163.8~~$181.3 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, 2020.~~ February 28, 2021.

Debt

We have no material off-balance sheet debt.

Loan Participations

We engaged in off-balance sheet arrangements through certain loan participation agreements. Refer to further details about these arrangements in Note 3, Receivables, of the notes to the consolidated financial statements in our Annual Report on Form 10-K for the year ended August 31, ~~2019.~~2020.

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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, ~~2019,~~2020, have not materially changed during the ~~nine~~six months ended ~~May 31, 2020.~~February 28, 2021.

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 condensed 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, ~~2019,~~2020, have not materially changed during the ~~nine~~six months ended ~~May 31, 2020.~~February 28, 2021.

~~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.~~

Recent Accounting Pronouncements

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

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We did not experience material changes in market risk exposures for the period ended ~~May 31, 2020,~~February 28, 2021, that would affect the quantitative and qualitative disclosures presented in our Annual Report on Form 10-K for the year ended August 31, ~~2019.~~2020.

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"))~~1934), as of ~~May 31, 2020.~~February 28, 2021. 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, 2019.effective.

~~Status of Remediation of Material Weaknesses in Internal Control Over Financial Reporting~~

~~Remediation Actions Taken During the Quarter Ended May 31, 2020~~

~~The following remediation efforts were taken during the quarter ended May 31, 2020:~~

Held bi-weekly steering committee meetings consisting of senior finance, legal, information technology ("IT"), operational and human resources leaders to oversee the design and implementation of remediation plans.

~~Continued developing, executing and monitoring detailed remediation plans in response to each of the remaining previously identified material weaknesses.~~

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~~Ongoing Remediation Efforts~~

~~We continue to enhance our overall financial control environment through the following:~~

Continued execution of our plans designed to remediate the two remaining previously identified material weaknesses, including (1) implementing and reinforcing an adequate process for monitoring proper functioning of internal controls to verify that our accounting policies and procedures are consistently and adequately being performed as relevant by a sufficient number of resources with appropriate knowledge and training and (2) designing and maintaining effective controls over certain IT general controls for information systems that are relevant to the preparation of our financial statements and testing the effectiveness of remediated controls.

Continued hiring for our teams in functional 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 required internal controls over financial reporting.

Changes in Internal Control Over Financial Reporting

There have been no changes in internal control over financial reporting during the quarter ended ~~May 31, 2020,~~February 28, 2021, that have materially affected, or are reasonably likely to materially affect our internal control over financial reporting.

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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 aggregate, will not have a material effect on our condensed consolidated financial ~~statements~~position, results of operations or cash flows during any fiscal year.

Between January 8, 2021, and March 16, 2021, a total of 21 putative class action lawsuits were filed in the United States District Courts for the District of Idaho, the Southern District of Illinois, the District of Kansas, the District of Minnesota and the Eastern District of Pennsylvania naming us and several other crop protection manufacturers, wholesalers and retailers, including BASF Corporation; Bayer CropScience, LP; Bayer CropScience, Inc.; Cargill Incorporated; Corteva, Inc.; Federated Co–Operatives Ltd.; GROWMARK FS, LLC, GROWMARK, Inc.; Nutrien AG Solutions Inc.; Simplot AB Retail Sub, Inc.; Syngenta Corporation; Tenkoz, Inc.; Univar Solutions, Inc.; and Winfield Solutions, LLC, as defendants. The lawsuits allege that the defendants violated various federal and state laws, including antitrust, unfair competition, consumer protection and unjust enrichment laws by conspiring to maintain supracompetitive prices in seeds and crop protection chemicals, such as fungicides, herbicides and insecticides ("Crop Inputs"), and to engage in a group boycott intended to prevent companies utilizing electronic sales platforms from competing in the Crop Inputs retail sales market, thereby harming farmers. The plaintiffs in the lawsuits seek to represent all persons or entities in the United States that, since January 1, 2014, have purchased a Crop Input manufactured by a defendant from either a defendant or other retailer. The lawsuits seek treble damages and injunctive and other relief. It is currently too early in the litigation to evaluate the likelihood of any particular outcome or of any estimate of the amount or range of potential loss.

ITEM 1A. RISK FACTORS

There have been no material changes from the risk factors disclosed in Item 1A of our Annual Report on Form 10-K for the year ended August 31, ~~2019, except as set forth below. The risk factor below updates the risk factor first included in Part II, Item 1A of our Quarterly Report on Form 10-Q for the quarterly period ended February 29,~~ 2020.

~~Our business and operations have been and may continue to be adversely affected by the recent COVID-19 outbreak or other similar outbreaks.~~

Outbreaks of contagious diseases, including the recent outbreak and pandemic of the novel coronavirus that was first detected in Wuhan, China, in December 2019, known as COVID-19, and other adverse public health developments in countries and states where we operate, have had and are expected to continue to have an adverse effect on our business, financial condition and results of operations. These effects include a potential negative impact on the availability of our key personnel; temporary closures of our facilities or the facilities of our members, business partners, customers, suppliers, third-party service providers or other vendors; and the interruption of domestic and global supply chains, distribution channels, liquidity and capital or financial markets. In addition, we have taken and will continue to take temporary precautionary measures intended to help minimize the risk of COVID-19 to our employees, including requiring administrative and other groups of our employees to work remotely, suspending nonessential travel and restricting attendance at industry events and in-person work-related meetings, which could negatively affect our business. Further, COVID-19 has resulted in a widespread health crisis that has affected and is expected to continue to adversely affect the economies and financial markets of many countries and most areas of the United States, which may affect demand for our products and services, such as the declines in demand in our refined fuels, renewable fuels and processing and food ingredients businesses and Ventura Foods experienced during the three months ended May 31, 2020, and our ability to obtain financing for our business. The declines in demand experienced by our refined fuels, renewable fuels and processing and food ingredients businesses and Ventura Foods have adversely affected, and may continue to, and any of these other events could, adversely affect, our business and our financial results. The extent to which COVID-19 will impact our business and our financial results in the future will depend on future developments, which are highly uncertain and cannot be predicted. Such developments may include the ongoing geographic spread of the virus, the severity of the disease, the duration of the outbreak, the extent of any reoccurrence of the coronavirus, the development of vaccines or therapeutic treatments that can restore consumer and business economic confidence and the type and duration of actions that may be taken by various governmental authorities in response to the outbreak and the impact on the U.S. and the global economy, including whether the agricultural industry continues to be designated an essential infrastructure industry and may continue to operate if future lockdowns occur. As a result, at the time of this filing, it is not possible to predict the overall future impact of COVID-19 on our business, liquidity, capital resources and financial results.

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ITEM 6. EXHIBITS



Exhibit			Description
10.1			~~Omnibus~~ Amendment No. 4 to the CHS Inc. Deferred Compensation Plan (2015 Restatement).
10.2			Amendment No. 6 to the CHS Inc. Deferred Compensation Plan (2015 Restatement).
10.3			Amendment No. 3 to 2015 Credit Agreement (10–Year Term Loan), dated as of ~~May 1, 2020,~~February 19, 2021, by and among ~~Cofina Funding, LLC, as seller,~~ CHS Inc., CoBank, ACB, for its own benefit as ~~servicer~~a syndication party and as ~~an originator, CHS Capital, LLC, as an originator, each~~the administrative agent for the benefit of the ~~conduit purchasers, committed purchasers~~present and ~~purchaser agents set forth~~future syndication parties, and the other syndication parties party thereto. (Incorporated by reference to our Current Report on ~~the signature pages thereto and MUFG Bank Ltd. f/k/a The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as administrative agent~~Form 8-K filed February 24, 2021).
31.1			Certification of the Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2			Certification of the Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1			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.
32.2			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~~101.INS			~~The following financial information from~~XBRL Instance Document (the instance document does not appear in the ~~CHS Inc. Quarterly Report on Form 10-Q for~~Interactive Data File because its XBRL tags are embedded within the ~~quarterly period ended May 31, 2020, formatted~~Inline XBRL document).
101.SCH			XBRL Taxonomy Extension Schema Document.
101.CAL			XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF			XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB			XBRL Taxonomy Extension Labels Linkbase Document.
101.PRE			XBRL Taxonomy Extension Presentation Linkbase Document.
104			Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Extensible Business Reporting Language (XBRL): (i) the Condensed Consolidated Balance Sheets, (ii) the Condensed Consolidated Statements of Operations, (iii) the Condensed Consolidated Statements of Comprehensive Income, (iv) the Condensed Consolidated Statements of Cash Flows, and (v) the Notes to the Condensed Consolidated Financial Statements.Exhibit 101).

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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~~April 7, ~~2020~~2021

By:

/s/ Olivia Nelligan

Olivia Nelligan

Executive Vice President and Chief Financial Officer



	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	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	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, 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	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	)



		Three Months Ended May 31,						Nine Months Ended May 31,
Gain (Loss) on Fair Value Hedging Relationships	Location of Gain (Loss)	2020			2019			2020			2019
		(Dollars in thousands)
Interest rate swaps	Interest expense	$	(4,705	)	$	(8,122	)	$	(1,897	)	$	(15,129	)
Hedged item	Interest expense	4,705			8,122			1,897			15,129
Total		$	—		$	—		$	—		$	—



	August 31, 2019
	Capital Leases		Operating Leases
	(Dollars in thousands)
Fiscal 2020	$	6,761	$	87,168
Fiscal 2021	6,199		57,381
Fiscal 2022	5,021		43,665
Fiscal 2023	4,548		34,328
Fiscal 2024	2,638		26,793
Thereafter	6,517		92,653
Total minimum future lease payments	31,684		$	341,988
Less amount representing interest	3,445
Present value of net minimum lease payments	$	28,239



	(Dollars in thousands)
Cash	$	8,033
Current assets	708,764
Property, plant and equipment	44,064
Goodwill	61,358
Intangible assets	47,200
Other assets	55
Liabilities	(718,262		)
Total net assets acquired	$	151,212