CHS Inc. Annual Report 2014

FY2014 Annual Report · CHS Inc.

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Table of Contents

UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
________________________________________
Form 10-K
________________________________________

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the fiscal year ended August 31, 2014

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from to .

Commission file number: 001-36079
________________________________________

CHS Inc.

(Exact name of registrant as specified in its charter)

Minnesota
(State or other jurisdiction of
incorporation or organization)
5500 Cenex Drive
Inver Grove Heights, Minnesota 55077
(Address of principal executive office,
including zip code)

41-0251095
(I.R.S. Employer
Identification Number)

(651) 355-6000
(Registrant’s Telephone number,
including area code)

________________________________________

SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:

8% Cumulative Redeemable Preferred Stock

Class B Cumulative Redeemable Preferred Stock, Series 1

The NASDAQ Stock Market LLC

Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2

The NASDAQ Stock Market LLC

Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3

The NASDAQ Stock Market LLC

(Title of Class)

(Name of Each Exchange on Which Registered)

________________________________________

SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT: NONE

Indicate by check mark whether the Registrant is a well-known seasoned issuer (as defined in Rule 405 of the Securities Act).

YES

Indicate by check mark whether the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Exchange
Act.

YES

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.
NO

YES

Indicate by check mark whether the Registrant has submitted electronically and posted on its corporate website, if any, every Interactive
Data File required to be submitted and posted 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 and post such files).

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YES

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not
contained herein, and will not be contained, to the best of the registrant’s knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K:

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller
reporting company. See the definitions of “large accelerated filer,” “accelerated filer,” and “smaller reporting company” in Rule 12b-2 of
the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

Smaller reporting company

(Do not check if a smaller reporting company)

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

YES

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price
at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the
Registrant’s most recently completed second fiscal quarter:

The Registrant has no voting or non-voting common equity (the Registrant is a member cooperative).

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

The Registrant has no common stock outstanding.

None.

DOCUMENTS INCORPORATED BY REFERENCE

INDEX

PART I.

Business
The Company
Energy
Ag
Corporate and Other
Price Risk and Hedging
Employees
Membership in CHS and Authorized Capital
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

PART II.
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Selected Financial Data
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information

PART III.

Directors, Executive Officers and Corporate Governance
Board of Directors
Executive Officers
Section 16(a) Beneficial Ownership Reporting Compliance
Code of Ethics
Audit Committee Matters
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accounting Fees and Services

PART IV.

Item 1.

Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.

Item 10.

Item 11.
Item 12.
Item 13.
Item 14.

Exhibits and Financial Statement Schedules

Item 15.
SUPPLEMENTAL INFORMATION
SIGNATURES
EX-10.5
EX-10.6
EX-21.1
EX-23.1
EX-24.1
EX-31.1
EX-31.2
EX-32.1
EX-32.2

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ITEM 1.

BUSINESS

PART I.

THE COMPANY

CHS Inc. (referred to herein as “CHS,” “we” or “us") is one of the nation’s leading integrated agricultural companies,
providing grain, foods and energy resources to businesses and consumers on a global basis. As a cooperative, we are owned by
farmers and ranchers and their member cooperatives (referred to herein as “members”) across the United States. We also have
preferred stockholders that own shares of our 8% Cumulative Redeemable Preferred Stock, our Class B Cumulative
Redeemable Preferred Stock, Series 1 (Class B Series 1 Preferred Stock), our Class B Reset Rate Cumulative Redeemable
Preferred Stock, Series 2 (Class B Series 2 Preferred Stock) and our Class B Reset Rate Cumulative Redeemable Preferred
Stock, Series 3 (Class B Series 3 Preferred Stock) listed on the NASDAQ Stock Market LLC (NASDAQ) under the symbols
CHSCP, CHSCO, CHSCN and CHSCM, respectively. We buy commodities from and provide products and services to patrons
(including our members and other non-member customers), both domestic and international. We provide a wide variety of
products and services, from initial agricultural inputs such as fuels, farm supplies, crop nutrients and crop protection products,
to agricultural outputs that include grains and oilseeds, grain and oilseed processing and food products. A portion of our
operations are conducted through equity investments and joint ventures whose operating results are not fully consolidated with
our results; rather, a proportionate share of the income or loss from those entities is included as a component in our net income
under the equity method of accounting. For the year ended August 31, 2014, our total revenues were $42.7 billion and net
income attributable to CHS Inc. was approximately $1.1 billion.

We have aligned our segments based on an assessment of how our businesses operate and the products and services

they sell.

Our Energy segment derives its revenues through refining, wholesaling and retailing of petroleum products. Our Ag
segment derives its revenues through the origination and marketing of grain, including service activities conducted at export
terminals, through the wholesale sales of crop nutrients, from the sales of soybean meal, soybean refined oil and soyflour
products, and through the retail sales of petroleum and agronomy products, processed sunflowers, feed and farm supplies, and
records equity income from investments in our grain export joint venture and other investments. We include other business
operations in Corporate and Other because of the nature of their products and services, as well as the relative revenues of those
businesses. These businesses primarily include our financing, insurance, hedging and other service activities related to crop
production. In addition, our wheat milling and packaged food operations are included in Corporate and Other, as those
businesses are conducted through non-consolidated joint ventures.

Many of our business activities are highly seasonal and operating results vary throughout the year. Our income is

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

Membership in CHS is restricted to certain producers of agricultural products and to associations of producers of

agricultural products that are organized and operating so as to adhere to the provisions of the Agricultural Marketing Act and
the Capper-Volstead Act, as amended. Our Board of Directors may establish other qualifications for membership from time to
time as it may deem advisable.

Our earnings from cooperative business are allocated to members (and to a limited extent, to non-members with which

we have agreed to do business on a patronage basis) based on the volume of business they do with us. We allocate these
earnings to our patrons in the form of patronage refunds (which are also called patronage dividends) in cash and patrons’
equities (capital equity certificates), which may be redeemed over time solely at the discretion of our Board of Directors.
Earnings derived from non-members, which are not allocated patronage, are taxed at federal and state statutory corporate rates
and are retained by us as unallocated capital reserve. We also receive patronage refunds from the cooperatives in which we are
a member, if those cooperatives have earnings to distribute and if we qualify for patronage refunds from them.

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Our origins date back to the early 1930s with the founding of the predecessor companies of Cenex, Inc. and Harvest
States Cooperatives. CHS Inc. emerged as the result of the merger of those two entities in 1998, and is headquartered in Inver
Grove Heights, Minnesota.

Our segment and international sales information in Note 11 of the Notes to Consolidated Financial Statements, as well

as Item 6 of this Annual Report on Form 10-K, are incorporated by reference into the following segment descriptions.

The segment financial information presented below may not represent the results that would have been obtained had

the relevant segment been operated as an independent business due to efficiencies in scale, corporate cost allocations and
intersegment activity.

Overview

ENERGY

We are the nation’s largest cooperative energy company based on revenues and identifiable assets, with operations that

include petroleum refining and pipelines; the supply, marketing (including ethanol and biodiesel) and distribution of refined
fuels (gasoline, diesel fuel and other energy products); the blending, sale and distribution of lubricants; and the wholesale
supply of propane. Our Energy segment processes crude oil into refined petroleum products at refineries in Laurel, Montana
(wholly-owned) and McPherson, Kansas (an entity in which we have an approximate 88.9% ownership interest as of
September 1, 2014) and sells those products under the Cenex® brand to member cooperatives and others through a network of
approximately 1,400 independent retail sites, of which 76% are convenience stores marketing Cenex® branded fuels. For fiscal
2014, our Energy revenues, after elimination of inter-segment revenues, were $13.7 billion and were primarily from gasoline
and diesel fuel.

Operations

Laurel Refinery. Our Laurel, Montana refinery processes medium and high sulfur crude oil into refined petroleum
products that primarily include gasoline, diesel fuel, petroleum coke and asphalt. Our Laurel refinery sources approximately
85% of its crude oil supply from Canada, with the balance obtained from domestic sources, and we have access to Canadian
and northwest Montana crude through our wholly-owned Front Range Pipeline, LLC and other common carrier pipelines. Our
Laurel refinery also has access to Wyoming crude via common carrier pipelines from the south.

Our Laurel facility processes approximately 55,000 barrels of crude oil per day to produce refined products that

consist of approximately 43% gasoline, 37% diesel fuel and other distillates, 6% petroleum coke, and 12% asphalt and other
products. Refined fuels produced at Laurel are available via rail cars and the Yellowstone Pipeline to western Montana
terminals and to Spokane and Moses Lake, Washington; south via common carrier pipelines to Wyoming terminals and Denver,
Colorado; and east via our wholly-owned Cenex Pipeline, LLC to Glendive, Montana, and Minot and Fargo, North Dakota.

McPherson Refinery. The McPherson, Kansas refinery is owned and operated by National Cooperative Refinery

Association (NCRA), of which we owned approximately 84.0% as of August 31, 2014. Our ownership increased to
approximately 88.9% in September 2014, upon the third closing under our November 2011 agreement to purchase the
noncontrolling interests in NCRA. See Note 17, Acquisitions, to our audited consolidated financial statements included in this
Annual Report on Form 10-K for additional information. The McPherson refinery processes approximately 79% low and
medium sulfur crude oil and 21% heavy sulfur crude oil into gasoline, diesel fuel and other distillates, propane and other
products. NCRA sources its crude oil through its own pipelines as well as common carrier pipelines. The low and medium
sulfur crude oil is sourced from Kansas, North Dakota, Oklahoma and Texas, and the heavy sulfur crude oil is sourced from
Canada.

The McPherson refinery processes approximately 85,000 barrels of crude oil per day to produce refined products that

consist of approximately 50% gasoline, 45% diesel fuel and other distillates, and 2% propane and other products.
Approximately 25% of the refined fuels are loaded into trucks at the McPherson refinery or shipped via NCRA’s proprietary
products pipeline to its terminal in Council Bluffs, Iowa. The remaining refined fuel products are shipped to other markets via
common carrier pipelines.

Renewable Fuels Marketing. Our renewable fuels marketing business markets and distributes ethanol and biodiesel
products throughout the United States and overseas by contracting with ethanol and biodiesel production plants to market and
distribute their finished products.

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Other Energy Operations. We own and operate five propane terminals, four asphalt terminals, seven refined product

terminals and three lubricants blending and packaging facilities. We also own and lease a fleet of liquid and pressure trailers
and tractors, which are used to transport refined fuels, propane, anhydrous ammonia and other products.

Products and Services

Our Energy segment produces and sells (primarily wholesale) gasoline, diesel fuel, propane, asphalt, lubricants and

other related products and provides transportation services. We obtain the petroleum products that we sell from our Laurel and
McPherson refineries, and from third parties. For fiscal 2014, we obtained approximately 62% of the refined products we sold
from our Laurel and McPherson refineries, and approximately 38% from third parties.

Sales and Marketing; Customers

We make approximately 81% of our refined fuel sales to members, with the balance sold to non-members. Sales are

made wholesale to member cooperatives and through a network of independent retailers that operate convenience stores under
the Cenex trade name. We sold approximately 1.3 billion gallons of gasoline and approximately 1.8 billion gallons of diesel
fuel in fiscal 2014, excluding NCRA’s sales to minority owners and others totaling approximately 224 million gallons. We also
blend, package and wholesale auto and farm machinery lubricants to both members and non-members. We are one of the
nation’s largest propane wholesalers based on revenues. Most of the propane sold in rural areas is for heating and agricultural
usage. Annual sales volumes of propane vary greatly depending on weather patterns and crop conditions.

Industry; Competition

The petroleum business is highly cyclical. Demand for crude oil and energy products is driven by the condition of

local and worldwide economies, local and regional weather patterns and taxation relative to other energy sources, which can
significantly affect the price of refined fuel products. Most of our energy product market is located in rural areas, so sales
activity tends to follow the planting and harvesting cycles. More fuel-efficient equipment, reduced crop tillage, depressed
prices for crops, weather conditions and government programs which encourage idle acres, may all reduce demand for our
energy products.

Regulation. Governmental regulations and policies, particularly in the areas of taxation, energy and the environment,
have a significant impact on our Energy segment. Our Energy segment’s operations are subject to laws and related regulations
and rules designed to protect the environment that are administered by the Environmental Protection Agency (EPA), the
Department of Transportation (DOT) and similar government agencies. These laws, regulations and rules govern the discharge
of materials to the environment, air and water; reporting storage of hazardous wastes and other hazardous materials; the
transportation, handling and disposition of wastes and other materials; the labeling of pesticides and similar substances; and
investigation and remediation of releases of hazardous materials. Failure to comply with these laws, regulations and rules could
subject us (and, in the case of the McPherson refinery, NCRA) to administrative penalties, injunctive relief, civil remedies and
possible recalls of products. Our hedging transactions and activities are subject to the rules and regulations of the Chicago
Mercantile Exchange (CME) and the U.S. Commodity Futures Trading Commission (CFTC).

Competition. The petroleum refining and wholesale fuels business is very competitive. Among our competitors are

some of the world’s largest integrated petroleum companies, which have their own crude oil supplies, distribution and
marketing systems. We also compete with smaller domestic refiners and marketers in the midwestern and northwestern United
States, with foreign refiners who import products into the United States and with producers and marketers in other industries
supplying other forms of energy and fuels to consumers. Given the commodity nature of the end products, profitability in the
refining and marketing industry depends largely on margins, as well as operating efficiency, product mix and costs of product
distribution and transportation. The retail gasoline market is highly competitive, with much larger competitors that have greater
brand recognition and distribution outlets throughout the country and the world. Our owned and non-owned retail outlets are
located primarily in the northwestern, midwestern and southern United States.

We market refined fuels, motor gasoline and distillate products in five principal geographic areas. The first area
includes the Midwest and northern plains. Competition at the wholesale level in this area includes major oil companies,
including Phillips 66, Shell, Tesoro and BP as well as independent refiners and wholesale brokers/suppliers. This area has a
robust spot market and is influenced by the large refinery center along the gulf coast. The majority of the product moved in this
market is shipped on the Magellan and NuStar pipeline systems.

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To the east of the Midwest and northern plains is another unique marketing area. This area centers near Chicago,

Illinois and includes eastern Wisconsin, Illinois and Indiana. We principally compete with the major oil companies Marathon,
BP, ExxonMobil and Citgo as well as independent refineries and wholesale brokers/suppliers.

Another market area is located south of Chicago, Illinois. Most of this area includes Arkansas, Missouri and the

northern part of Texas. Competition in this area includes the major oil companies Phillips 66, Valero and ExxonMobil and
independent refiners. This area is principally supplied from the Gulf coast refinery center and is also driven by a strong spot
market that reacts quickly to changes in the international and national supply balance.

Another geographic area includes Montana, western North Dakota, Wyoming, Utah, Idaho, Colorado and western

South Dakota. Competition at the wholesale level in this area includes the major oil companies ExxonMobil, Phillips 66 and
Tesoro and independent refiners. This area is also noted for being fairly well balanced in demand and supply, but has in recent
times been impacted by the large growth of demand from the Bakken crude activity in this region.

The last area includes much of Washington and Oregon. We compete with the major oil companies Phillips 66, Tesoro,

BP and Chevron in this area. This area is also known for volatile prices and an active spot market.

Summary Operating Results

Summary operating results (including inter-segment activity) and identifiable assets for our Energy segment are shown

below for the selected fiscal years:

2014

2013

2012

Revenues ......................................................................................................... $ 14,319,979
Cost of goods sold...........................................................................................
13,364,872
Gross profit .....................................................................................................
Marketing, general and administrative............................................................
Operating earnings ..........................................................................................
(Gain) loss on investments ..............................................................................
Interest, net......................................................................................................
Equity (income) loss from investments ..........................................................
Income before income taxes ........................................................................... $
Intersegment revenues..................................................................................... $
Total identifiable assets................................................................................... $

68,434
(4,014)
735,695
$
(577,539) $
$
4,601,122

955,107

800,115

154,992

—

(Dollars in thousands)

$ 12,982,293

$ 12,816,542

11,846,458

11,514,463

1,135,835

172,136

963,699

—

148,366
(1,357)
816,690
$
(481,465) $
4,409,594

1,302,079

155,786

1,146,293

4,008

122,302
(7,537)
1,027,520
(467,583)

Our Ag segment includes our crop nutrients, country operations, grain marketing and processing and food ingredients
businesses. In fiscal 2014, revenues in our Ag segment were $28.9 billion consisting principally of grain sales of $20.7 billion
after elimination of inter-segment revenues.

Crop Nutrients

Overview

We believe our North American wholesale crop nutrients business is one of the largest wholesale fertilizer businesses
in the U.S. based on tons sold, and accounts for approximately 11% of the U.S. market. Tons sold include sales to our country
operations business. There is significant seasonality in the sale of agronomy products and services, with peak activity
coinciding with the planting seasons. There is also significant volatility in the prices for the crop nutrient products we purchase
and sell.

Operations

Products are delivered directly to the customer from the manufacturer or through our 24 inland or river warehouse

terminals and other non-owned storage facilities located throughout the country. To supplement what is purchased domestically,

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our Galveston, Texas deep water port and terminal receives fertilizer by vessel from originations such as the Middle East and
Caribbean basin where significant volumes of urea are produced. The fertilizer is then shipped by rail to destinations within
crop producing regions of the country.

Primary suppliers for our wholesale crop nutrients business include CF Industries, Potash Corporation of

Saskatchewan, Mosaic Company, Koch Industries and Petrochemical Industries Company (PIC) in Kuwait.

Products and Services

Our wholesale crop nutrients business purchases and sells nitrogen (ammonia, Urea Ammonia Nitrate solution (UAN)

and Urea), phosphate and potash based products.

Sales and Marketing; Customers

Our wholesale crop nutrients business sells to local retailers from New York to the west coast and from Canada to
Texas. Our largest customer is our own country operations business, which is also included in our Ag segment. Many of the
customers of our crop nutrients business are also customers of our Energy segment or suppliers to our grain marketing business.

Industry; Competition

Regulation. Our wholesale crop nutrients operations are subject to laws and related regulations and rules designed to
protect the environment that are administered by the EPA, the DOT and similar government agencies. These laws, regulations
and rules govern the discharge of materials to the environment, air and water; reporting storage of hazardous wastes and other
hazardous materials; the transportation, handling and disposition of wastes and other materials; the labeling of pesticides and
similar substances; and investigation and remediation of releases of hazardous materials. Failure to comply with these laws,
regulations and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible recalls of
products. In addition, environmental laws impose liability on owners and operators of contaminated property, and a party who
sends hazardous materials to such site for treatment, storage, disposal or recycling, for investigation and remediation. In some
instances, such liability exists regardless of fault.

Competition. The wholesale distribution of crop nutrients products is highly competitive and dependent upon
relationships with local cooperatives and private retailers, proximity to the customer and competitive pricing. We compete with
other large agronomy distributors, as well as other regional or local distributors, retailers and manufacturers. Major competitors
in crop nutrients distribution include Agrium, CF Industries, Gavilon, Koch Industries, and a variety of traders and brokers.

Country Operations

Overview

Our country operations business purchases a variety of grains from our producer members and other third parties, and

provides cooperative members and customers with access to a full range of products, programs and services for production
agriculture. Country operations operates 444 agri-operations locations through 73 business units, the majority of which have
local producer boards dispersed throughout Colorado, Idaho, Illinois, Iowa, Kansas, Michigan, Minnesota, Montana, Nebraska,
North Dakota, Oklahoma, Oregon, South Dakota, Texas, Washington, Wisconsin, and Canada. Most of these locations purchase
grain from farmers and sell agronomy, energy, feed and seed products to those same producers and others, although not all
locations provide every product and service.

Products and Services

Grain Purchasing. We are one of the largest country elevator operators in North America based on revenues. Through
a majority of our locations, our country operations business units purchase grain from member and non-member producers and
other elevators and grain dealers. Most of the grain purchased is sold through our grain marketing operations, used for livestock
feed production or sold to other processing companies. For the year ended August 31, 2014, country operations purchased
approximately 627 million bushels of grain, primarily wheat, corn and soybeans. Of these bushels, 603 million were purchased
from members and 343 million were sold through our grain marketing operations.

Other Products. Our country operations business units manufacture and sell other products, both directly and through
ownership interests in other entities. These include seed, crop nutrients, crop protection products, energy products, animal feed,
animal health products and processed sunflower products.

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Industry; Competition

Regulation. Our country operations business is subject to laws and related regulations and rules designed to protect

the environment that are administered by the EPA, the DOT and similar government agencies. These laws, regulations and rules
govern the discharge of materials to the environment, air and water; reporting storage of hazardous wastes and other hazardous
materials; the transportation, handling and disposition of wastes and other materials; and the labeling of pesticides and similar
substances; and investigation and remediation of releases of hazardous materials. In addition, environmental laws impose
liability on owners and operators of contaminated property, and a party who sends hazardous materials to such site for
treatment, storage, disposal or recycling, for investigation and remediation. In some instances, such liability exists regardless of
fault. Our country operations business is also subject to laws and related regulations and rules administered by the United
States Department of Agriculture (USDA), the United States Food and Drug Administration (FDA), and other federal, state,
local and foreign governmental agencies that govern the processing, packaging, storage, distribution, advertising, labeling,
quality and safety of feed and grain products. Failure to comply with these laws, regulations and rules could subject us to
administrative penalties, injunctive relief, civil remedies and possible recalls of products. Our hedging transactions and
activities are subject to the rules and regulations of the CME and the CFTC.

Competition. We compete primarily on the basis of price, services and patronage. Competitors for the purchase of

grain include Archer Daniels Midland (ADM), Cargill, Incorporated (Cargill) and similar corporations as well as local
cooperatives, private grain companies and processors at the majority of our locations in the trade territories in which we
operate.

Competitors for our farm supply and feed business include Cargill, ADM, and Land O' Lakes as well as local

cooperatives and smaller private companies at the majority of locations throughout our trade territory.

Grain Marketing

Overview

We are the nation’s largest cooperative marketer of grain and oilseed based on grain storage capacity and grain sales,

handling over 2.0 billion bushels annually. During fiscal 2014, we purchased approximately half of our total grain volumes
from individual and cooperative association members and our country operations business, with the balance purchased from
third parties. We arrange for the transportation of the grains either directly to customers or to our owned or leased grain
terminals and elevators awaiting delivery to domestic and foreign purchasers. We primarily conduct our grain marketing
operations directly, but do conduct some of our business through TEMCO, LLC (TEMCO), a 50% joint venture with Cargill.

Operations

Our grain marketing operations purchase grain directly and indirectly from agricultural producers primarily in the
midwestern and western United States. The purchased grain is typically contracted for sale for future delivery at a specified
location, and we are responsible for handling the grain and arranging for its transportation to that location. The sale of grain is
recorded after title to the commodity has transferred and final weights, grades and settlement price have been agreed upon.
Amounts billed to the customer as part of a sales transaction include the costs for shipping and handling. Our ability to arrange
efficient transportation, including loading capabilities onto unit trains, ocean-going vessels and barges, is a significant part of
the services we offer to our customers. Rail, vessel, barge and truck transportation is carried out by third parties, often under
long-term freight agreements with us. Grain intended for export is usually shipped by rail or barge to an export terminal, where
it is loaded onto ocean-going vessels. Grain intended for domestic use is usually shipped by rail or truck to various locations
throughout the country.

We own and operate export terminals, river terminals and elevators involved in the handling and transport of grain.

Our river terminals are used to load grain onto barges for shipment to both domestic and export customers via the Mississippi
River system. These river terminals are located at Savage and Winona, Minnesota; Davenport, Iowa; and Pekin, Illinois as well
as terminals in which we have put-through agreements located at St. Louis, Missouri and Beardstown and Havana, Illinois. Our
export terminal at Superior, Wisconsin provides access to the Great Lakes and St. Lawrence Seaway, and our export terminal at
Myrtle Grove, Louisiana serves the Gulf of Mexico market. In the Pacific Northwest, we conduct our grain marketing
operations through TEMCO which operates export terminals in Tacoma, Washington; Kalama, Washington; and Portland,
Oregon and primarily exports wheat, corn and soybeans. These facilities serve the Pacific market, as well as domestic grain
customers in the western United States. We also own two 110-car shuttle-receiving elevator facilities in Friona, Texas and
Collins, Mississippi that serve large-scale feeder cattle, dairy and poultry producers in those regions.

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In 2003, we opened an office in Sao Paulo, Brazil for the procurement of soybeans for our grain marketing operations'

international customers. This business has expanded its operations into the procurement and marketing of multiple
commodities, including fertilizers. During fiscal 2014, 2013 and 2012, we invested in a number of opportunities in South
America and we intend to evaluate other opportunities for investment as they come to our attention.

We have opened additional international offices between fiscal 2007 and 2014 throughout the world. These include
offices and operations in Europe, South America, the Black Sea and Mediterranean Basin regions and the Asia-Pacific region.

For sourcing and marketing grains and oilseeds through the Black Sea and Mediterranean Basin regions to customers
worldwide we have offices in Geneva, Switzerland; Barcelona, Spain; Kiev, Ukraine; Krasnodar, Russia; Budapest, Hungary;
Novi Sad, Serbia; Bosanski Samac, Bosnia; Bucharest, Romania; Sofia, Bulgaria; and a marketing office in Amman, Jordan.
We have a deep water port in Constanta, Romania, a barge loading facility on the Danube River in Giurgiu, Romania, three
inland terminals in Bosnia and an inland grain terminal at Oroshaza, Hungary. We have an investment in a port facility in
Odessa, Ukraine.

In the Pacific Rim area, we have marketing offices in Singapore; Seoul, South Korea; Hong Kong; Taipei, Taiwan; and

Shanghai, China that serve customers receiving grains and oilseeds from our origination points in North America, South
America, Australia and the Black Sea regions. In Australia we have investments in two inland grain storage facilities.

In South America we have grain merchandising offices to source grains in Sao Paulo, Brazil; Ciudad de Este,
Paraguay; Montevideo, Uruguay; and Buenos Aires, Argentina. In Brazil we have an investment in a deep water port facility in
Itaqui Port. In Argentina, we own a fertilizer warehouse in the Necochea area, have an investment in a deep water port facility
in Necochea and have an investment in a sunflower processing facility.

Finally, we sell and market crop nutrients from our Geneva, Switzerland; Singapore; Sao Paulo, Brazil; Ciudad de

Este, Paraguay; and Buenos Aires, Argentina offices.

Our grain marketing operations may have significant working capital needs, at any time, depending on commodity

prices and other factors. The amount of borrowings for this purpose, and the interest rate charged on those borrowings, directly
affects the profitability of our grain marketing operations.

Products and Services

Our grain marketing operations purchased approximately 2.0 billion bushels of grain during the year ended August 31,
2014, which primarily included corn, soybeans, wheat and distillers dried grains with solubles. Of the total grains purchased by
our grain marketing operations, 731 million bushels were from our individual and cooperative association members,
343 million bushels were from our country operations business and the remainder was from third parties.

Sales and Marketing; Customers

Purchasers of our grain and oilseed include domestic and foreign millers, maltsters, feeders, crushers and other
processors. To a much lesser extent, purchasers include intermediaries and distributors. Our grain marketing operations are not
dependent on any one customer, and its supply relationships call for delivery of grain at prevailing market prices.

Industry; Competition

Regulation. Our grain marketing operations are subject to laws and related regulations and rules designed to protect

the environment that are administered by the EPA, the DOT and similar government agencies. These laws, regulations and rules
govern the discharge of materials to the environment, air and water; reporting storage of hazardous wastes and other hazardous
materials; and the transportation, handling and disposition of wastes and other materials; the labeling of pesticides and similar
substances; and investigation and remediation of releases of hazardous materials. In addition, environmental laws impose
liability on owners and operators of contaminated property, and a party who sends hazardous materials to such site for
treatment, storage, disposal or recycling, for investigation and remediation. In some instances, such liability exists regardless of
fault. Our grain marketing operations are also subject to laws and related regulations and rules administered by the USDA, the
FDA, and other federal, state, local and foreign governmental agencies that govern the processing, packaging, storage,
distribution, advertising, labeling, quality and safety of food and grain products. Failure to comply with these laws, regulations
and rules could subject us to administrative penalties, injunctive relief, civil remedies and possible recalls of products. Our
hedging transactions and activities are subject to the rules and regulations of the CME and the CFTC.

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Competition. Our grain marketing operations compete for both the purchase and the sale of grain. Competition is
intense and margins are low. Some competitors are integrated food producers, which may also be customers. A few major
competitors have substantially greater financial resources than us.

In the purchase of grain from producers, location of a delivery facility is a prime consideration, but producers are

increasingly willing to transport grain longer distances for sale. Price is affected by the capabilities of the facility; for example,
if it is cheaper to deliver to a customer by unit train than by truck, a facility with unit train capabilities provides a price
advantage. We believe that our relationships with individual members serviced by our local country operations locations and
with our cooperative members give us a broad origination capability.

Our grain marketing operations compete for grain sales based on price, services and ability to provide the desired

quantity and quality of grains. Location of facilities is a major factor in the ability to compete. Our grain marketing operations
compete with numerous grain merchandisers, including major grain merchandising companies such as ADM, Cargill and
Bunge as well as others, each of which handles significant grain volumes.

The results of our grain marketing operations may be adversely affected by relative levels of supply and demand, both

domestic and international, commodity price levels (including grain prices reported on national markets) and transportation
costs and conditions. Supply is affected by weather conditions, disease, insect damage, acreage planted and government
regulations and policies. Demand may be affected by foreign governments and their programs, relationships of foreign
countries with the United States, the affluence of foreign countries, acts of war, currency exchange fluctuations and substitution
of commodities. Demand may also be affected by changes in eating habits, population growth, the level of per capita
consumption of some products and the level of renewable fuels production.

Processing and Food Ingredients

Overview

Our processing and food ingredients business operates globally and converts soybeans into soybean meal, soyflour,
crude soybean oil, refined soybean oil and associated by-products. We then further process soyflour for use in the food/snack
industry. In June 2014, we purchased a dry mill corn-based processing facility in Rochelle, Illinois that produces ethanol,
distiller's grains with solubles, and inedible corn oil.

Operations

Our soybean processing operations are conducted at facilities in Mankato, Minnesota; Fairmont, Minnesota; Creston,

Iowa; and Ashdod, Israel that can crush approximately 107 million bushels of soybeans on an annual basis, producing
approximately 2.5 million short tons of soybean meal/soyflour and 1.2 billion pounds of crude soybean oil. We also have
operations in Hutchinson, Kansas; Ningbo, China; and South Sioux City, Nebraska where we further process soyflour for use in
the food/snack industry.

Products and Services

Our soybean processing operations produce three primary products: refined oils, soybean meal and soyflour. Refined

oils are used in processed foods, such as margarine, shortening, salad dressings and baked goods, as well as methyl ester/
biodiesel production, and to a lesser extent, for certain industrial uses such as plastics, inks and paints. Soybean meal has high
protein content and is used for feeding livestock. Soyflour is used in the baking industry, as a milk replacement in animal feed
and in industrial applications. Soyflour is processed further to produce textured concentrates and isolates used in the food/snack
industry.

Our domestic soy processing facilities are located in areas with a strong production base of soybeans and end-user

market for the meal and soyflour. We purchase our soybeans from members, global offices and third parties with a tightly
integrated connection with our grain marketing division. Our crushing operations currently produce approximately 95% of the
crude soybean oil that we refine, and purchase the balance from outside suppliers.

Soybeans, corn and ethanol are commodities and their price can fluctuate significantly depending on production

levels, demand for the products and other supply factors.

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Sales and Marketing; Customers

Our customers for refined soybean oil are principally large food product companies including Ventura Foods, LLC

(Ventura Foods), in which we hold a 50% ownership interest and with which we have a long-term supply agreement to supply
edible soybean oils as long as we maintain a minimum 25.5% ownership interest and our price is competitive with other
suppliers of the product. We primarily sell soymeal to feed lots and feed mills and soyflour to customers in the baking industry.

The principal customer for ethanol is our renewable fuels marketing business and the principal customer for our

distiller's grains with solubles is our grain marketing business.

Industry; Competition

The refined soybean and corn product industries are highly competitive. Major industry competitors include ADM,
Cargill, and Valero as well as others in the industry. These and other competitors have acquired other processors, expanded
existing plants or constructed new plants, both domestically and internationally. Price, transportation costs, services and
product quality drive competition. We estimate that we have a market share of approximately 4% to 5% of the domestic refined
soybean oil and also the domestic soybean crushing capacity. We are a relatively small participant in the corn processing and
protein food industry.

Regulation. Our processing and food ingredients operations are subject to laws and related regulations and rules

designed to protect the environment that are administered by the EPA, the DOT and similar government agencies. These laws,
regulations and rules govern the discharge of materials to environment, air and water; reporting storage of hazardous wastes
and other hazardous materials; and the transportation, handling and disposition of wastes and other materials; the labeling of
pesticides and similar substances; and investigation and remediation of releases of hazardous materials. In addition,
environmental laws impose liability on owners and operators of contaminated property, and a party who sends hazardous
materials to such site for treatment, storage, disposal or recycling, for investigation and remediation. In some instances, such
liability exists regardless of fault. Our processing and food ingredients operations are also subject to laws and related
regulations and rules administered by the USDA, the FDA, and other federal, state, local and foreign governmental agencies
that govern the processing, packaging, storage, distribution, advertising, labeling, quality and safety of food and grain products.
Failure to comply with these laws, regulations and rules could subject us, or our foods partners, to administrative penalties,
injunctive relief, civil remedies and possible recalls of products. Our hedging transactions and activities are subject to the rules
and regulations of the CME and the CFTC.

Summary Operating Results

Summary operating results (including inter-segment activity) and identifiable assets for our Ag segment are shown

below for the selected fiscal years:

2014

2013

2012

Revenues ......................................................................................................... $ 28,894,816
Cost of goods sold...........................................................................................
28,273,515
Gross profit .....................................................................................................
Marketing, general and administrative............................................................
Operating earnings ..........................................................................................
(Gain) loss on investments ..............................................................................
Interest, net......................................................................................................
Equity (income) loss from investments ..........................................................
Income before income taxes ........................................................................... $
Intersegment revenues..................................................................................... $
Total identifiable assets................................................................................... $

241,587
(1,949)
56,544
(22,279)
209,271
$
(43,930) $
$

6,657,840

379,714

621,301

(Dollars in thousands)

$ 31,909,791

$ 28,181,445

31,341,453

27,544,040

568,338

312,616

255,722
(27)
71,597
(15,194)
199,346

637,405

273,757

363,648

1,049

57,915
(22,737)
327,421

— $

—

6,146,547

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Business Solutions

CORPORATE AND OTHER

Financial Services. We have provided open account financing to approximately 75 of our members that are
cooperatives (cooperative association members) in the past year. These arrangements involve the discretionary extension of
credit in the form of a clearing account for settlement of grain purchases and as a cash management tool.

CHS Capital, LLC. CHS Capital, LLC (CHS Capital), our wholly-owned finance company, makes seasonal and term

loans to member cooperatives and individual producers.

CHS Hedging, LLC. Our wholly-owned subsidiary, CHS Hedging LLC, is a registered Futures Commission Merchant

and a clearing member of both the Minneapolis Grain Exchange and the Chicago Board of Trade. CHS Hedging provides full-
service commodity risk management brokerage and consulting services to its customers, primarily in the areas of agriculture
and energy.

CHS Insurance. Our wholly-owned subsidiary, CHS Insurance Services, LLC (CHS Insurance), is a full-service

independent insurance agency. It sells all lines of insurance, including property and casualty, group benefits and surety bonds.
Its approximately 1,660 customers are primarily agribusinesses, including cooperatives and independent elevators, energy,
agronomy, feed and seed plants, implement dealers and food processors. Impact Risk Funding, Inc. PCC (IRF), a wholly-
owned subsidiary of CHS Insurance, was incorporated as a protected cell captive insurer in the District of Columbia in
July 2010. IRF was created as an insurance entity to provide alternative risk financing options for customers.

Wheat Milling

In January 2002, we formed a joint venture with Cargill named Horizon Milling, LLC (Horizon Milling), in which we
held an ownership interest of 24%, with Cargill owning the remaining 76%. Horizon Milling was the largest U.S. wheat miller
based on output volume. We owned five mills that we leased to Horizon Milling. We account for Horizon Milling using the
equity method of accounting and on August 31, 2013, our investment was $92.6 million. On August 31, 2013, our net book
value of assets leased to Horizon Milling was $46.9 million. As described below, in fiscal 2014, we contributed our Horizon
Milling investments and associated assets to the Ardent Mills, LLC (Ardent Mills) venture.

During fiscal 2007, we formed Horizon Milling G.P. (24% CHS ownership with Cargill owning the remaining 76%), a

joint venture that acquired a Canadian grain-based foodservice and industrial business, which includes two flour milling
operations and two dry baking mixing facilities in Canada. We account for the investment using the equity method of
accounting, and on August 31, 2013, our investment was $19.3 million. In September 2013, Horizon Milling G.P. was
dissolved and restructured as Horizon Milling, ULC - a Nova Scotia ULC (Horizon Milling, ULC). As described below, in
fiscal 2014, we contributed our Horizon Milling investments and associated assets to the Ardent Mills venture.

In our third quarter of fiscal 2014, we formed Ardent Mills, the largest flour miller in the U.S., a joint venture with

Cargill and ConAgra Foods, Inc., which combines the North American flour milling operations of the three parent companies,
including assets from our existing joint venture milling operations Horizon Milling and Horizon Milling, ULC and CHS-owned
mills, with CHS holding a 12% interest in Ardent Mills. Prior to closing, we contributed $32.8 million to Horizon Milling to
pay off existing debt as a pre-condition to close. Upon closing, Ardent Mills was financed with funds from third-party
borrowings, which did not require credit support from the owners. We received $121.2 million of cash proceeds distributed to
us in proportion to our ownership interest, adjusted for deviations in specified working capital target amounts, and recognized a
gain of $109.2 million, associated with this transaction. In connection with the closing, the parties also entered into various
ancillary and non-compete agreements including, among other things, an agreement for us to supply Ardent Mills with certain
wheat and durum products. As we hold one of the five board seats, we account for Ardent Mills as an equity method
investment, and on August 31, 2014, our investment was $198.4 million.

Foods

Our primary focus in the foods area is Ventura Foods, LLC (Ventura Foods) which produces and distributes vegetable
oil-based products such as margarine, salad dressing and other food products. Ventura Foods was created in 1996, and is owned
50% by us and 50% by Wilsey Foods, Inc., a majority owned subsidiary of Mitsui. We account for our Ventura Foods
investment under the equity method of accounting, and on August 31, 2014, our investment was $321.3 million.

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Ventura Foods manufactures, packages, distributes and markets bulk margarine, salad dressings, mayonnaise, salad

oils, syrups, soup bases and sauces, many of which utilize soybean oil as a primary ingredient. Approximately 40% of Ventura
Foods’ volume, based on sales, comes from products for which Ventura Foods owns the brand, and the remainder comes from
products that it produces for third parties. A variety of Ventura Foods’ product formulations and processes are proprietary to it
or its customers. Ventura Foods is the largest manufacturer of margarine for the foodservice sector in the U.S. and is a major
producer of many other products.

Ventura Foods currently has 12 manufacturing and distribution locations across the United States. Ventura Foods

sources its raw materials, which consist primarily of soybean oil, canola oil, palm/coconut oil, peanut oil and other ingredients
and supplies, from various national and overseas suppliers, including our oilseed processing operations. It sells the products it
manufactures to third parties as a contract manufacturer, as well as directly to retailers, food distribution companies and large
institutional food service companies. Ventura Foods sales are approximately 60% in foodservice and the remainder is split
between retail and industrial customers who use edible oil products as ingredients in foods they manufacture for resale. During
Ventura Foods’ fiscal 2014, Sysco accounted for 23% of its net sales.

Ventura Foods competes with a variety of large companies in the food manufacturing industry. Major competitors

include ADM, Cargill and Bunge and others in the food manufacturing industry.

PRICE RISK AND HEDGING

When we enter into a commodity purchase or sales commitment, we incur risks related to price change and
performance (including delivery, quality, quantity and shipment period). We are exposed to risk of loss in the market value of
positions held, consisting of inventory and purchase contracts at a fixed or partially fixed price, in the event market prices
decrease. We are also exposed to risk of loss on our fixed or partially fixed price sales contracts in the event market prices
increase.

Our hedging activities reduce the effects of price volatility, thereby protecting against adverse short-term price
movements, but also limit the benefits of short-term price movements. To reduce the price change risks associated with holding
fixed price commitments, we generally take opposite and offsetting positions by entering into commodity futures contracts or
options, to the extent practical, in order to arrive at a net commodity position within the formal position limits we have
established and deemed prudent for each commodity. These contracts are purchased and sold on regulated commodity futures
exchanges for grain, and regulated mercantile exchanges for refined products and crude oil. We also use over-the-counter
(OTC) instruments to hedge our exposure on flat price fluctuations. The price risk we encounter for crude oil and most of the
grain and oilseed volume we handle can be hedged. Price risk associated with fertilizer and certain grains cannot be hedged
because there are no futures for these commodities and, as a result, risk is managed through the use of forward sales contracts
and other pricing arrangements and, to some extent, cross-commodity futures hedging. These contracts are economic hedges of
price risk, but are not designated as hedging instruments for accounting purposes. The contracts are recorded on our
Consolidated Balance Sheets at fair values based on quotes listed on regulated commodity exchanges or are based on the
market prices of the underlying products listed on the exchanges, with the exception of fertilizer and propane contracts, which
are accounted for as normal purchase and normal sales transactions. Unrealized gains and losses on these contracts are
recognized in cost of goods sold in our Consolidated Statements of Operations using market-based prices.

When a futures contract is entered into, an initial margin deposit must be sent to the applicable exchange or broker.

The amount of the deposit is set by the exchange and varies by commodity. If the market price of a short futures contract
increases, then an additional maintenance margin deposit would be required. Similarly, if the price of a long futures contract
decreases, a maintenance margin deposit would be required and sent to the applicable exchange. Subsequent price changes
could require additional maintenance margins or could result in the return of maintenance margins.

Our policy is to primarily maintain hedged positions in grain and oilseed. Our profitability from operations is

primarily derived from margins on products sold and grain merchandised, not from hedging transactions. At any one time,
inventory and purchase contracts for delivery to us may be substantial. We have risk management policies and procedures that
include net position limits. These limits are defined for each commodity and include both trader and management limits. This
policy and computerized procedures in our grain marketing operations require a review by operations management when any
trader is outside of position limits and also a review by our senior management if operating areas are outside of position limits.
A similar process is used in our energy and wholesale crop nutrients operations. The position limits are reviewed, at least
annually, with our management and Board of Directors. We monitor current market conditions and may expand or reduce our
net position limits or procedures in response to changes in those conditions. In addition, all purchase and sales contracts are
subject to credit approvals and appropriate terms and conditions.
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Hedging arrangements do not protect against nonperformance by counterparties to contracts. We primarily use
exchange traded instruments, which minimize our counterparty exposure. We evaluate that exposure by reviewing contracts and
adjusting the values to reflect potential nonperformance. Risk of nonperformance by counterparties includes the inability to
perform because of a counterparty’s financial condition and also the risk that the counterparty will refuse to perform on a
contract during periods of price fluctuations where contract prices are significantly different than the current market prices. We
manage our risks by entering into fixed price purchase and sales contracts with preapproved producers and by establishing
appropriate limits for individual suppliers. Fixed price contracts are entered into with customers of acceptable creditworthiness,
as internally evaluated. Historically, we have not experienced significant events of nonperformance on open contracts.
Accordingly, we only adjust the estimated fair values of specifically identified contracts for nonperformance. Although we have
established policies and procedures, we make no assurances that historical nonperformance experience will carry forward to
future periods.

EMPLOYEES

On August 31, 2014, we had 11,824 full, part-time, temporary and seasonal employees, which included 710 employees

of NCRA. Of that total, 2,923 were employed in our Energy segment, 6,029 in our country operations business (including
approximately 1,371 seasonal and temporary employees), 212 in our crop nutrients operations, 1,147 in our grain marketing
operations, 908 in our processing and food ingredients operations and 605 in Corporate and Other. In addition to those
employed directly by us, many employees work for joint ventures in which we have a 50% or less ownership interest, and are
not included in these totals.

Employees in certain areas are represented by collective bargaining agreements. Refinery and pipeline workers in

Laurel, Montana are represented by agreements with two separate unions: the United Steel Worker (USW) Union Local 11- 443
represents 205 refinery employees for which agreements are in place through January 31, 2015 and the Oil Basin Pipeliners
Union (OBP) represents 20 pipeline employees for which they have an evergreen labor agreement that renews every September
1, unless 60 days' notice is given. The contracts covering the NCRA McPherson, Kansas refinery include 335 employees
represented by the United Steel Workers of America (USWA) that are in place through June 2015. There are currently 82 CHS
employees in transportation and lubricant plant operations covered by collective bargaining agreements with the Teamsters that
expire at various times, including a labor contract with Montana drivers which represents 21 employees, one with Wisconsin
drivers representing 26 employees and one with lubricant plant production workers representing 35 employees.

Certain production workers in our processing and food ingredients operations are subject to collective bargaining

agreements with the Bakery, Confectionary, Tobacco Worker and Grain Millers (BTCGM) representing 122 employees, which
expires on June 30, 2017 and the Pipefitters' Union representing 2 employees, which expires on April 30, 2015. The BTWGM
also represents 40 employees at our Superior, Wisconsin grain export terminal with a contract expiring on June 30, 2016.

Various union contracts cover employees in other grain and crop nutrient terminal operations including: the USWA
represents 90 employees at our Myrtle Grove, Louisiana grain export terminal with a contract expiring on May 31, 2016 and
Teamsters represent 7 employees at our Winona, Minnesota river terminal with a contract expiring on February 28, 2015.
Finally, certain employees in our country operations business are represented by collective bargaining agreements with the
BTWGM which represents 28 employees in two locations, Hermiston, Oregon and Great Falls, Montana, with contracts
expiring on December 31, 2014 and June 30, 2018, respectively.

MEMBERSHIP IN CHS AND AUTHORIZED CAPITAL

Introduction

We are an agricultural membership cooperative organized under Minnesota cooperative law to do business with
member and non-member patrons. Our patrons, not us, are subject to income taxes on income from patronage sources, which is
distributed to them as qualified patronage. We are subject to income taxes on undistributed patronage income, non-qualified
patronage distributions and non-patronage-sourced income. See “— Tax Treatment” below.

Distribution of Net Income; Patronage Dividends

We are required by our organizational documents to annually distribute net earnings derived from patronage business

with members to members on the basis of patronage, except that the Board of Directors may elect to retain and add to our
unallocated capital reserve an amount not to exceed 10% of the distributable net income from patronage business. We may also
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distribute net income derived from patronage business with a non-member if we have agreed to conduct business with the non-
member on a patronage basis. Net income from non-patronage business may be distributed to members or added to the
unallocated capital reserve, in whatever proportions the Board of Directors deems appropriate.

Accordingly, patronage refunds are calculated based on amounts using financial statement earnings. The cash portion
of the patronage distribution is determined annually by the Board of Directors, with the balance issued in the form of qualified
and non-qualified capital equity certificates. Consenting patrons have agreed to take both the cash and qualified capital equity
certificate portion allocated to them from our previous fiscal year’s income into their taxable income, and as a result, we are
allowed a deduction from our taxable income for both the cash distribution and the allocated qualified capital equity
certificates, as long as the cash distribution is at least 20% of the total patronage distribution. For the years ended August 31,
2013 and August 31, 2012, 10% of earnings from patronage business was added to our capital reserves and the remaining 90%
was primarily distributed during the second fiscal quarters of the years ended August 31, 2014 and August 31, 2013, totaling
$841.1 million and $976.0 million, respectively. The cash portion of the qualified distributions was deemed by the Board of
Directors to be 40% for fiscal 2013 and for fiscal 2012 it was 35% and 40% for individual and non-individual members,
respectively. Cash related to these distributions was $286.8 million and $380.9 million and was paid during the years ended
August 31, 2014 and August 31, 2013, respectively. During the year ended August 31, 2012, we distributed patronage refunds
of $676.3 million, of which the cash portion was $260.7 million.

Patrons’ Equities

Patrons’ equities are in the form of book entries and represent a right to receive cash or other property when we
redeem them. Patrons’ equities form part of our capital, do not bear interest, and are not subject to redemption upon request of a
patron. Patrons’ equities are redeemable only at the discretion of the Board of Directors and in accordance with the terms of the
redemption policy adopted by the Board of Directors, which may be modified at any time without member consent.
Redemptions of capital equity certificates approved by the Board of Directors are divided into two pools, one for non-
individuals (primarily member cooperatives) who may participate in an annual program for qualified equities held by them and
another for individuals who are eligible for qualified equity redemptions at age 70 or upon death. In accordance with
authorization from the Board of Directors, we expect total redemptions related to the year ended August 31, 2014, that will be
distributed in fiscal 2015, to be approximately $130.1 million.

Cash redemptions of qualified patrons' and other equities during the years ended August 31, 2014, 2013 and 2012

were $99.6 million, $193.4 million and $145.7 million, respectively. Additionally, in fiscal 2014, we redeemed $200.0 million
of patron's equities by issuing 6,752,188 shares of preferred stock in exchange for member's equity certificates.

Governance

We are managed by a Board of Directors of not less than 17 persons elected by the members at our annual meeting.

Terms of directors are staggered so that no more than seven directors are elected in any year. Our articles of incorporation and
bylaws may be amended only upon approval of a majority of the votes cast at an annual or special meeting of our members,
except for the higher vote described under “— Certain Antitakeover Measures” below.

Membership

Membership in CHS is restricted to certain producers of agricultural products and to associations of producers of

As a membership cooperative, we do not have common stock. We may issue equity or debt instruments, on a

patronage basis or otherwise, to our members. We have two types of members. Individual members are individuals actually
engaged in the production of agricultural products. Cooperative associations are associations of agricultural producers and may
be either cooperatives or other associations organized and operated under the provisions of the Agricultural Marketing Act and
the Capper-Volstead Act, as amended.

Voting Rights

Voting rights arise by virtue of active membership in CHS, not because of ownership of any equity or debt
instruments. Members that are cooperative associations that have met a minimum volume of business threshold with us during

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the previous fiscal year are entitled to vote based upon a formula that takes into account the equity held by the cooperative in
CHS and the average amount of business done with us over the previous three years.

Members who are individuals that have done business with us during the previous fiscal year are entitled to one vote
each. Individual members may exercise their voting power directly or through patrons’ associations affiliated with a grain
elevator, feed mill, seed plant or any other of our facilities (with certain historical exceptions) recognized by our Board of
Directors. The number of votes of patrons’ associations is determined under the same formula as cooperative association
members.

Most matters submitted to a vote of the members require the approval of a majority of the votes cast at a meeting of

the members, although certain actions require a greater vote. See “— Certain Antitakeover Measures” below.

Holders of our Class B Preferred Stock do not have voting rights, except as required by applicable law; provided, that

the affirmative vote of a majority of the outstanding shares of Class B Preferred Stock, voting as a class, will be required to
approve (i) any amendment to our articles of incorporation or the resolutions establishing the terms of the Class B Preferred
Stock if the amendment adversely affects the powers, rights or preferences of the holders of the Class B Preferred Stock; or (ii)
the creation of any class or series of capital stock, equity capital or patrons' equities having rights senior to the Class B
Preferred Stock as to the payment of dividends or distribution of assets upon our liquidation, dissolution or winding up;
provided, further, that the affirmative vote of a majority of the outstanding shares of Class B Preferred Stock will be required to
approve any amendment to our articles of incorporation that relates solely to the Class B Preferred Stock or to the resolutions
establishing the specific economic terms of the Class B Preferred Stock if such amendment adversely affects the powers, rights
or preferences of the holders of the Class B Preferred Stock.

Debt and Equity Instruments

We may issue debt and equity instruments to our current members and patrons, on a patronage basis or otherwise, and
to persons who are neither members nor patrons. All equity we issue is subject to a first lien in favor of us for all indebtedness
of the holder to us. On August 31, 2014, our outstanding capital includes patrons’ equities (consisting of qualified and non-
qualified Capital Equity Certificates and Non-patronage Equity Certificates), preferred stock and certain capital reserves.

Dividends, which may be cumulative, may be paid on equity capital of CHS that is established in accordance with our
articles of incorporation, provided that dividends on such equity capital may not exceed eight percent (8%) per annum. Unless
otherwise expressly authorized by our Board of Directors, preferred stock established and issued pursuant to our articles of
incorporation may only be sold or transferred with the approval of our Board of Directors. All of our preferred stock is listed
and traded on the NASDAQ Global Select Market as expressly authorized by our Board of Directors.

Distribution of Assets upon Dissolution; Merger and Consolidation

In the event of our dissolution, liquidation or winding up, whether voluntary or involuntary, all of our debts and
liabilities would be paid first according to their respective priorities. After such payment, the holders of each share of our
preferred stock and any other equity securities would then be entitled to receive payment, out of available assets, in accordance
with their respective liquidation preferences. After such distribution to the holders of equity capital, any excess would be paid
to patrons on the basis of their past patronage with us. Our bylaws provide for the allocation among our members and
nonmember patrons of the consideration received in any merger or consolidation to which we are a party.

Certain Antitakeover Measures

Our governing documents may be amended upon the approval of a majority of the votes cast at an annual or special

meeting. However, if our Board of Directors, in its sole discretion, declares that a proposed amendment to our governing
documents involves or is related to a “hostile takeover,” the amendment must be adopted by 80% of the total voting power of
our members.

The approval of not less than two-thirds of the votes cast at a meeting is required to approve a “change of control”

transaction which would include a merger, consolidation, liquidation, dissolution or sale of all or substantially all of our assets.
If our Board of Directors determines that a proposed change of control transaction involves a hostile takeover, the 80%
approval requirement applies. The term “hostile takeover” is not further defined in the Minnesota cooperative law or our
governing documents.

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Tax Treatment

Subchapter T of the Internal Revenue Code of 1986, as amended (the Internal Revenue Code), sets forth rules for the
tax treatment of cooperatives and applies to both cooperatives exempt from taxation under Section 521 of the Internal Revenue
Code and to nonexempt corporations operating on a cooperative basis. We are a nonexempt cooperative.

As a cooperative, we are not taxed on qualified patronage (minimum cash distribution requirement of 20%) allocated
to our patrons either in the form of equities or cash. Consequently, those amounts are taxed only at the patron level. However,
the amounts of any allocated but undistributed patronage earnings (called non-qualified written notices of allocation) are
taxable to us when allocated. Upon redemption of any non-qualified written notices of allocation, the amount is deductible to us
and taxable to our patron.

Income derived by us from non-patronage sources is not entitled to the “single tax” benefit of Subchapter T and is

taxed to us at corporate income tax rates.

Prior to September 2013, NCRA was not consolidated for tax purposes. On September 1, 2013, NCRA began to be

consolidated for tax purposes when our ownership increased to greater than 80%.

ITEM 1A.

RISK FACTORS

CAUTIONARY STATEMENT FOR PURPOSES OF THE SAFE HARBOR PROVISIONS
OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995

The information in this Annual Report on Form 10-K for the year ended August 31, 2014, includes “forward-looking
statements” within the meaning of the Private Securities Litigation Reform Act of 1995 with respect to CHS. In addition, CHS
and its representatives and agents may from time to time make other written or oral forward-looking statements, including
statements contained in its filings with the Securities and Exchange Commission and its reports to its members and
securityholders. Words and phrases such as “will likely result,” “are expected to,” “is anticipated,” “estimate,” “project” and
similar expressions identify forward-looking statements. We wish to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made.

Our forward-looking statements are subject to risks and uncertainties that could cause actual results to differ
materially from those described in the forward-looking statements. This Cautionary Statement is for the purpose of qualifying
for the “safe harbor” provisions of the Private Securities Litigation and Reform Act of 1995 and is intended to be a readily
available written document that contains factors which could cause results to differ materially from those projected in the
forward-looking statements. The following matters, among others, may have a material adverse effect on our business,
financial condition, liquidity, results of operations or prospects, financial or otherwise. Reference to this Cautionary Statement
in the context of a forward-looking statement shall be deemed to be a statement that any one or more of the following factors
may cause actual results to differ materially from those which might be projected, forecasted, estimated or budgeted by us in
the forward-looking statement or statements.

The following factors are in addition to any other cautionary statements, written or oral, which may be made or
referred to in connection with any particular forward-looking statement. The following review should not be construed as
exhaustive.

Except as required by applicable law, we undertake no obligation to revise any forward-looking statements to reflect

future events or circumstances.

Our revenues, results of operations and cash flows could be materially and adversely affected by changes in commodity
prices, as well as global and domestic economic downturns and risks.

Our revenues, results of operations and cash flows are affected by market prices for commodities such as crude oil,
natural gas, ethanol, fertilizer, grain, oilseed, flour and crude and refined vegetable oils. Commodity prices generally are
affected by a wide range of factors beyond our control, including weather, disease, insect damage, drought, the availability and
adequacy of supply, government regulation and policies, and general political and economic conditions. We are also exposed to
fluctuating commodity prices as the result of our inventories of commodities, typically grain, fertilizer and petroleum products,
and purchase and sale contracts at fixed or partially fixed prices. At any time, our inventory levels and unfulfilled fixed or
partially fixed price contract obligations may be substantial. We have processes in place to monitor exposures to these risks and
engage in strategies to manage these risks. If these controls and strategies are not successful in mitigating our exposure to these
15

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fluctuations, we could be materially and adversely affected. In addition, we are exposed to the risk of nonperformance by
counterparties to contracts. Risk of nonperformance by counterparties includes the inability to perform because of a
counterparty's financial condition and liquidity and also the risk that the counterparty will refuse to perform a contract during a
period of price fluctuations where contract prices are significantly different than the current market prices. Increases in market
prices for commodities that we purchase without a corresponding increase in the prices of our products or our sales volume or a
decrease in our other operating expenses could reduce our revenues and net income. In addition, the level of demand for our
products is affected by global and regional demographics and macroeconomic conditions, including population growth rates
and changes in standards of living. A significant downturn in global economic growth or recessionary conditions in major
geographic regions, may lead to a reduced demand for agricultural commodities, which could have a material adverse effect on
our business, financial condition, liquidity, results of operations and prospects. Additionally, weak global conditions and
adverse conditions in global financial markets may adversely impact the financial condition and liquidity of some of our
customers, suppliers and other counterparties, which could have a material adverse effect on our business, financial condition,
liquidity, results of operations and prospects.

Our revenues originated outside of the U.S. were approximately 10% of consolidated net sales in fiscal 2014 and one
of our core strategic initiatives includes global expansion. As a result, we are exposed to risks associated with having increased
global operations outside the U.S., including economic or political instability in the international markets in which we do
business, including South America, Europe, the Black Sea and Mediterranean Basin regions and the Asia Pacific region.

In our energy operations, profitability depends largely on the margin between the cost of crude oil that we refine and
the selling prices that we obtain for our refined products. The prices for both crude oil and for gasoline, diesel fuel and other
refined petroleum products fluctuate widely. Factors influencing these prices, many of which are beyond our control, include:

•

levels of worldwide and domestic supplies;

capacities of domestic and foreign refineries;

the ability of the members of the Organization of Petroleum Exporting Countries (OPEC) to agree to and maintain
oil price and production controls, and the price and level of foreign imports;

disruption in supply;

political instability or armed conflict in oil-producing regions;

the level of consumer demand;

the price and availability of alternative fuels;

the availability of pipeline capacity; and

domestic and foreign governmental regulations and taxes.

The long-term effects of these and other conditions on the prices of crude oil and refined petroleum products are
uncertain and ever-changing. Increases in crude oil prices without a corresponding increase in the prices of our refined
petroleum products would reduce our net income. Accordingly, we expect our margins on, and the profitability of our energy
business to fluctuate, possibly significantly, over time.

Our revenues, results of operations and cash flows could be materially and adversely affected if our members were to do
business with others rather than with us.

We do not have an exclusive relationship with our members and our members are not obligated to supply us with their
products or purchase products from us. Our members often have a variety of distribution outlets and product sources available
to them. If our members were to sell their products to other purchasers or purchase products from other sellers, our revenues
would decline and our results of operations and cash flows could be materially and adversely affected.

We participate in highly competitive business markets and we may not be able to continue to compete successfully,
which would have a material adverse effect on us.

We operate in several highly competitive business segments and our competitors may succeed in developing new or
enhanced products that are better than ours, and may be more successful in marketing and selling their products than we are
with ours. Competitive factors include price, service level, proximity to markets, product quality and marketing. In our business
segments, we compete with certain companies that are larger, better known and have greater marketing, financial, personnel

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and other resources. As a result, we may not be able to continue to compete successfully with our competitors, which would
have a material adverse effect on our business, financial condition, liquidity, results of operations and prospects.

Changes in federal income tax laws or in our tax status could increase our tax liability and reduce our net income
significantly.

Current federal income tax laws, regulations and interpretations regarding the taxation of cooperatives, which allow us
to exclude income generated through business with or for a member (patronage income) from our taxable income, could be
changed. If this occurred, or if in the future we were not eligible to be taxed as a cooperative, our tax liability would
significantly increase and our net income would significantly decrease.

We incur significant costs in complying with applicable laws and regulations. Any failure to make the capital
investments necessary to comply with these laws and regulations could expose us to unanticipated expenditures and
liabilities.

We are subject to numerous federal, state and local provisions regulating our business and operations and we incur and
expect to incur significant capital and operating expenses to comply with these laws and regulations. We may be unable to pass
on those expenses to customers without experiencing volume and margin losses.

We establish reserves for the future cost of known compliance obligations, such as remediation of identified
environmental issues. However, these reserves may prove inadequate to meet our actual liability. Moreover, amended, new or
more stringent requirements, stricter interpretations of existing requirements or the future discovery of currently unknown
compliance issues may require us to make material expenditures or subject us to liabilities that we currently do not anticipate.
Furthermore, our failure to comply with applicable laws and regulations could subject us to administrative penalties and
injunctive relief, civil remedies, including fines and injunctions, and recalls of our products. For example, we regularly
maintain hedges to manage the price risks associated with our commercial operations. These transactions typically take place
on the CME. Our hedging transactions and activities are subject to the rules and regulations of the CME and the CFTC. Both
the CME and the CFTC have broad powers to review required records, investigate and enforce compliance and to punish
noncompliance by entities subject to its jurisdiction. The failure to comply with such rules and regulations could lead to
restrictions on our trading activities or subject us to enforcement action by the CFTC or a disciplinary action by the CME,
which could lead to substantial sanctions.

In July 2013, CHS received a letter from the CFTC requesting CHS to preserve, and to produce to the CFTC on a
voluntary basis, documents concerning CHS's trading positions, including futures hedging transactions on the CME, for the
period from January 1, 2010 through June 30, 2013. CHS is complying with this request. CHS is cooperating with the CFTC's
inquiry. CHS also received a letter from the CME in June 2013 advising that its market surveillance department was reviewing
certain of CHS's futures positions in April and May of 2013 and requesting that CHS produce relevant documents for its
review, which CHS has produced. Any investigation or proceeding by the CME or the CFTC, whether successful or
unsuccessful, could result in substantial costs, the diversion of resources, including management time, and potential harm to our
reputation, all of which could have a material adverse effect on our business, financial condition, liquidity, results of operations
and prospects.

Changing environmental and energy laws and regulation, may result in increased operating costs and capital
expenditures and may have a material and adverse effect on us.

New environmental laws and regulations, including new regulations relating to alternative energy sources and the risk
of global climate change, new interpretations of existing laws and regulations, increased governmental enforcement or other
developments could require us to make additional unforeseen expenditures.

It is possible that some form of regulation will be forthcoming at the federal level in the United States with respect to
emissions of greenhouse gases (GHGs) (including carbon dioxide, methane and nitrous oxides). Also, new federal or state
legislation or regulatory programs that restrict emissions of GHGs in areas where we conduct business could adversely affect
our operations and the demand for our energy products, which would have a material adverse effect on our business, financial
condition, liquidity, results of operations and prospects. New legislation or regulator programs could require substantial
expenditures for the installation and operation of systems and equipment that we do not currently possess or substantial
modifications to existing equipment. The actual effects of climate change on our businesses are, however, unknown and
indeterminable at this time.

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Pursuant to the Energy Independence and Security Act of 2007, the EPA has promulgated the Renewable Fuel
Standard (RFS), which requires refiners to blend renewable fuels, such as ethanol and biodiesel, with their petroleum fuels or
purchase renewable energy credits, known as RINs, in lieu of blending. The EPA generally establishes new annual renewable
fuel percentage standards for each compliance year in the preceding year. We generate RINs in our marketing operations under
the RFS, however it is not enough to meet the needs of our refining capacity and RINs must be purchased on the open market.
In recent years the price of RINs has been extremely volatile. As a result, the purchase of RINs could have a negative impact on
our future refined fuels margins, the impact of which we are not able to estimate at this time.

Governmental policies and regulation affecting the agricultural sector and related industries could have a material
adverse effect on us.

The compliance burden and impact on our operations and profitability as a result of the enactment of the Dodd-Frank
Wall Street Reform and Consumer Protection Act and related regulations continue to evolve, federal agencies are implementing
its many provisions through regulation. These efforts to change the regulation of financial markets will subject users of
derivatives, such as CHS, to extensive oversight and regulation by the CFTC. Such initiatives will impose significant additional
costs on us, including operating and compliance costs, and could materially affect the availability, as well as the cost and terms,
of certain transactions. New federal regulations, studies and reports addressing all of the major areas of the new law, including
the regulation of swaps and derivatives, are still being finalized and we will continue to monitor these developments. Any of
these matters could have a material adverse effect on our business, financial condition, liquidity, results of operations and
prospects.

Environmental liabilities could have a material adverse effect on us.

Many of our current and former facilities have been in operation for many years and, over that time, we and other
operators of those facilities have generated, used, stored and disposed of substances or wastes that are or might be considered
hazardous under applicable environmental laws, including liquid fertilizers, chemicals and fuels stored in underground and
above-ground tanks. Any past or future actions in violation of applicable environmental laws could subject us to administrative
penalties, fines, other costs, such as capital expenditures, and injunctions. In addition, an owner or operator of contaminated
property, and a party who sends hazardous materials to such site for treatment, storage, disposal or recycling, can be liable for
the cost of investigation and remediation under environmental laws. In some instances, such liability exists regardless of fault.
Moreover, future or unknown past releases of hazardous substances could subject us to private lawsuits claiming damages,
including for bodily injury or property damage, and to adverse publicity, which could have a material adverse effect on us.
Liabilities, including legal costs, related to remediation of contaminated properties are not recognized until the related costs are
considered probable and can be reasonably estimated.

Actual or perceived quality, safety or health risks associated with our products could subject us to significant liability
and damage our business and reputation.

If any of our food or feed products became adulterated or misbranded, we would need to recall those items and could
experience product liability claims if consumers were injured as a result. A widespread product recall or a significant product
liability judgment could cause our products to be unavailable for a period of time or a loss of consumer confidence in our
products. Even if a product liability claim is unsuccessful or is not fully pursued, the negative publicity surrounding any
assertion that our products caused illness or injury could adversely affect our business and reputation with existing and
potential customers and our corporate and brand image. Moreover, claims or liabilities of this sort might not be covered by our
insurance or by any rights of indemnity or contribution that we may have against others. In addition, general public perceptions
regarding the quality, safety or health risks associated with particular food or feed products, such as concerns regarding
genetically modified crops, could reduce demand and prices for some of the products associated with our businesses. To the
extent that consumer preferences evolve away from products that our members or we produce for health or other reasons, such
as the growing demand for organic food products, and we are unable to develop products that satisfy new consumer
preferences, there will be a decreased demand for our products, which could have a material adverse effect on our business,
financial condition, liquidity, results of operations and prospects.

Our financial results are susceptible to seasonality.

Many of our business activities are highly seasonal and operating results vary throughout the year. Our income is
generally lowest during the second fiscal quarter and highest during the third fiscal quarter. For example, in our Ag segment,
our crop nutrients and country operations businesses generally experience higher volumes and income during the spring
planting season and in the fall, which corresponds to harvest. Our grain marketing operations are also subject to fluctuations in
volume and income based on producer harvests, world grain prices and demand. Our Energy segment generally experiences

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higher volumes and income in certain operating areas, such as refined products, in the summer and early fall when gasoline and
diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may
experience higher volumes and income during the winter heating and crop drying seasons.

Our operations are subject to business interruptions and casualty losses; we do not insure against all potential losses
and could be seriously harmed by unanticipated liabilities.

Our operations are subject to business interruptions due to unanticipated events such as explosions, fires, pipeline
interruptions, transportation delays, equipment failures, crude oil or refined product spills, inclement weather and labor
disputes. For example:

•

our oil refineries and other facilities are potential targets for terrorist attacks that could halt or discontinue
production;

our inability to negotiate acceptable contracts with unionized workers in our operations could result in strikes or
work stoppages;

our corporate headquarters, the facilities we own, or the significant inventories that we carry could be damaged or
destroyed by catastrophic events, extreme weather conditions or contamination;

someone may accidentally or intentionally introduce a computer virus to our information technology systems; and

an occurrence of a pandemic flu or other disease affecting a substantial part of our workforce or our customers
could cause an interruption in our business operations.

The effects of any of these events could be significant. We maintain insurance coverage against many, but not all
potential losses or liabilities arising from these operating hazards, but uninsured losses or losses above our coverage limits are
possible. Uninsured losses and liabilities arising from operating hazards could have a material adverse effect on us.

Our cooperative structure limits our ability to access equity capital.

As a cooperative, we may not sell common stock in our company. In addition, existing laws and our articles of
incorporation and bylaws contain limitations on dividends of 8% per annum on any preferred stock that we may issue. These
limitations may restrict our ability to raise equity capital and may adversely affect our ability to compete with enterprises that
do not face similar restrictions.

Consolidation among the producers of products we purchase and customers for products we sell could materially and
adversely affect our revenues, results of operations and cash flows.

Consolidation has occurred among the producers of products we purchase, including crude oil, fertilizer and grain, and
it is likely to continue in the future. Consolidation could increase the price of these products and allow suppliers to negotiate
pricing, supply availability and other contract terms that are less favorable to us. Consolidation also may increase the
competition among consumers of these products to enter into supply relationships with a smaller number of producers,
resulting in potentially higher prices for the products we purchase.

Consolidation among purchasers of our products and in wholesale and retail distribution channels has resulted in a
smaller customer base for our products and intensified the competition for these customers. For example, ongoing
consolidation among distributors and brokers of food products and food retailers has altered the buying patterns of these
businesses, as they have increasingly elected to work with product suppliers who can meet their needs nationwide rather than
just regionally or locally. If these distributors, brokers and retailers elect not to purchase our products, our revenues, results of
operations and cash flows could be materially and adversely affected.

In the fertilizer market, consolidation at both the producer and customer level increases the threat of direct sales from
the producer to the consumer.

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If our customers choose alternatives to our refined petroleum products, our revenues, results of operations and cash
flows could be materially and adversely affected.

Numerous alternative energy sources currently under development could serve as alternatives to our gasoline, diesel
fuel and other refined petroleum products. If any of these alternative products become more economically viable or preferable
to our products for environmental or other reasons, demand for our energy products would decline. Demand for our gasoline,
diesel fuel and other refined petroleum products also could be adversely affected by increased fuel efficiencies. Declining
demand for our energy products could materially and adversely affect our revenues, results of operations and cash flows.

Our agronomy business is volatile and dependent upon certain factors outside of our control.

Planted acreage, and consequently the volume of fertilizer and crop protection products applied, is partially dependent
upon government programs, grain prices and the perception held by the producer of demand for production. Weather conditions
during the spring planting season and early summer spraying season also affect agronomy product volumes and profitability. As
a result, factors outside of our control could materially and adversely affect our revenues, results of operations and cash flows.

Technological improvements in agriculture could decrease the demand for our agronomy and energy products.

Technological advances in agriculture could decrease the demand for crop nutrients, energy and other crop input
products and services that we provide. Genetically engineered seeds that resist disease and insects, or that meet certain
nutritional requirements, could affect the demand for our crop nutrients and crop protection products. Demand for fuel that we
sell could decline as technology allows for more efficient usage of equipment. Declining demand for our products could
materially and adversely affect our revenues, results of operations and cash flows.

We operate some of our business through joint ventures in which our rights to control business decisions are limited.

Several parts of our business, including in particular, portions of our grain marketing, wheat milling and foods
operations, are operated through joint ventures with third parties. By operating a business through a joint venture, we have less
control over business decisions than we have in our wholly-owned or majority-owned businesses. In particular, we generally
cannot act on major business initiatives in our joint ventures without the consent of the other party or parties in those ventures.
Investments in joint ventures may, under certain circumstances, involve risks not present when a third party is not involved,
including the possibility that co-venturers might become bankrupt or fail to fund their share of required capital contributions, in
which case we and any other remaining co-venturers would generally be liable for the joint venture's liabilities. Co-venturers
may have economic, tax or other business interests or goals which are inconsistent with our business interests or goals, and may
be in a position to take actions contrary to our policies or objectives. Our co-venturers may take actions that are not within our
control. Joint venture investments may also lead to impasses. Disputes between us and co-venturers may result in litigation or
arbitration that would increase our expenses and prevent our officers and/or directors from focusing their time and effort on our
day-to-day business. In addition, we may in certain circumstances be liable for the actions of our co-venturers. Each of these
matters could have a material adverse effect on us.

We face risk associated with our proposed new nitrogen fertilizer manufacturing plant, including cost overruns,
construction delays and operational issues.

In September 2014, our Board of Directors approved the construction of an approximately $3.0 billion nitrogen
fertilizer manufacturing plant to be located in Spiritwood, North Dakota, which would provide the region’s farmers with
enhanced supplies of crop nutrients essential to raising corn and other crops. The nitrogen fertilizer manufacturing plant will be
the single largest investment in our history. Groundbreaking will take place following completion of additional details, with the
plant intended to be fully operational in the first half of calendar 2018. There can be no assurance that actual costs for the plant
will not exceed our current estimates, that the plant will be operational based on our anticipated timing or that nitrogen fertilizer
production will be cost effective.

ITEM 1B.

UNRESOLVED STAFF COMMENTS

As of the date hereof, there were no unresolved comments from the Securities and Exchange Commission staff

regarding our periodic or current reports.

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ITEM 2.

PROPERTIES

We own or lease energy, agronomy, grain handling and processing facilities throughout the United States and

internationally. Below is a summary of these locations.

Energy

Facilities in our Energy segment include the following, all of which are owned except where indicated as leased:

Refinery

Propane terminals

Transportation terminals/repair facilities

Laurel, Montana

Glenwood, Minnesota; Black Creek, Wisconsin; Biddeford,
Maine; Hannaford, North Dakota; Ross, North Dakota;
Rockville, Minnesota

12 locations in Iowa, Kansas, Minnesota, Montana, North
Dakota, South Dakota, Washington and Wisconsin, 3 of which
are leased

Petroleum and asphalt terminals/storage facilities

11 locations in Montana, North Dakota and Wisconsin

Pump stations

Pipelines:

Cenex Pipeline, LLC

Front Range Pipeline, LLC

Convenience stores/gas stations

Lubricant plants/warehouses

12 locations in Montana and North Dakota

Laurel, Montana to Fargo, North Dakota

Canadian border to Laurel, Montana and on to Billings,
Montana

69 locations in Idaho, Minnesota, Montana, North Dakota,
South Dakota, Washington and Wyoming, 19 of which are
leased.

3 locations in Minnesota, Ohio and Texas, 1 of which is
leased

As of August 31, 2014, we owned approximately 84.0% of NCRA. Our ownership increased to 88.9% in September
2014, upon the third closing under our November 2011 agreement to purchase the noncontrolling interests in NCRA. NCRA
owns and operates the following facilities:

Refinery

Petroleum terminals/storage

Pipeline

Jayhawk Pipeline, LLC

Jayhawk stations

Osage Pipeline (50% owned by NCRA)

Kaw Pipeline (67% owned by NCRA)

McPherson, Kansas

3 locations in Iowa and Kansas

McPherson, Kansas to Council Bluffs, Iowa

Throughout Kansas, with branches in Nebraska, Oklahoma
and Texas

25 locations located in Kansas, Nebraska and Oklahoma

Oklahoma to Kansas

Throughout Kansas

Within our Ag segment, we own or lease the following facilities:

Crop Nutrients

We use ports and terminals in our North American crop nutrients operations at the following locations:

Alexandria, Louisiana (terminal, owned)
Briggs, Indiana (terminal, owned)
Fostoria, Ohio (terminal, owned)
Friona, Texas (terminal, owned)
Galveston, Texas (deep water port, land leased from port authority)
Grand Forks, North Dakota (terminal, owned)

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Green Bay, Wisconsin (terminal, owned)
Greenville, Mississippi (terminal, owned)
Indianapolis, Indiana (terminal, leased)
Little Rock, Arkansas (river terminal, land leased from port authority)
Lake Providence, Louisiana (terminal, owned)
Lettsworth, Louisiana (terminal, owned)
Melbourne, Kentucky (terminal, owned)
Memphis, Tennessee (river terminal, owned)
Mermentau, Louisiana (terminal, owned)
Muscatine, Iowa (river terminal, owned)
Post Falls, Idaho (terminal, owned)
St. Paul, Minnesota (river terminal, owned)
Tallulah, Louisiana (terminal, owned)
Texarkana, Texas (terminal, owned)
Vidalia, Louisiana (terminal, owned)
Watertown, South Dakota (terminal, owned)
Winona, Minnesota (2 river terminals, owned)

Country Operations

In our country operations business, we own agri-operations in 444 communities (of which some of the facilities are on

leased land), three sunflower plants and nine feed manufacturing facilities of which we operate eight and lease one to a joint
venture of which we are a partner. These operations are located in Colorado, Idaho, Illinois, Iowa, Kansas, Michigan,
Minnesota, Montana, Nebraska, North Dakota, Oklahoma, Oregon, South Dakota, Texas, Washington, Wisconsin, and Canada.

Grain Marketing

We use grain terminals in our grain marketing operations at the following locations:

Brazil, South America (3 owned-under construction)
Bosnia, Europe (3 owned)
Collins, Mississippi (owned)
Constanta, Romania (owned)
Davenport, Iowa (2 owned)
Friona, Texas (owned)
Giurgiu, Romania (owned)
Myrtle Grove, Louisiana (owned)
Necochea, Argentina (fertilizer terminal)
Oroshaza, Hungary (owned)
Pekin, Illinois (owned)
Savage, Minnesota (owned)
Spokane, Washington (owned)
Superior, Wisconsin (owned)
Winona, Minnesota (owned)

In addition to office space at our corporate headquarters, we have grain marketing offices at the following leased

locations, unless otherwise noted:

Amman, Jordan
Barcelona, Spain
Bucharest, Romania
Budapest, Hungary
Buenos Aires, Argentina (2 locations)
Ciudad de Este, Paraguay
Davenport, Iowa (owned)
Geneva, Switzerland
Hong Kong
Kansas City, Missouri
Kiev and Odessa, Ukraine

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Krasnodar, Russia (also 1 other Russia locations)
Lincoln, Nebraska
Novi Sad, Serbia
Sao Paulo, Brazil (also 8 other Brazil locations)
Seoul, South Korea
Singapore
Sofia, Bulgaria
Shanghai, China
Sydney, Australia
Taipei, Taiwan
Winnipeg, Canada
Winona, Minnesota (owned)

Processing and Food Ingredients

We own soybean processing facilities and/or textured soy protein production facilities at the following locations:

Ashdod, Israel
Ashkelon, Israel
Creston, Iowa
Fairmont, Minnesota
Hutchinson, Kansas
Mankato, Minnesota
Ningbo, China
South Sioux City, Nebraska

We lease the following services and engineering facilities:

Eagan, Minnesota
Burnsville, Minnesota

We own an ethanol plant located in Rochelle, Illinois.

Corporate and Other

Business Solutions

In addition to office space at our corporate headquarters, we have offices at the following leased locations:

Houston, Texas (CHS Insurance)
Indianapolis, Indiana (CHS Insurance and CHS Hedging LLC)
Kansas City, Missouri (CHS Hedging LLC)
Kewanee, Illinois (CHS Insurance)

Corporate Headquarters

We are headquartered in Inver Grove Heights, Minnesota. We own a 33-acre campus consisting of one main building
with approximately 320,000 square feet of office space and two smaller buildings with approximately 13,400 and 9,000 square
feet of space. We also have an office in Washington, D.C. which is leased.

Our internet address is www.chsinc.com.

ITEM 3.

LEGAL PROCEEDINGS

We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our

business. The resolution of any such matters may affect consolidated net income for any fiscal period; however, our
management believes any resulting liabilities, individually or in the aggregate, will not have a material effect on our
consolidated financial position, results of operations or cash flows during any fiscal year.

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Laurel

On August 30, 2012, we received from the EPA a request for information pursuant to Section 114 of the Clean Air Act.

The information requested relates to operational information and design data for flares at our Laurel, Montana refinery for the
period from January 1, 2006 to present. The information request could potentially result in an enforcement action by the EPA
with respect to flare efficiency or other issues. We provided the requested information in December 2012 and are awaiting the
EPA’s response. As it is too early to determine the potential liability or extent of potential costs associated with any such action,
we have not recorded a liability associated with this request. While the facts and circumstances of enforcement actions under
the Clean Air Act relating to flares at refineries differ on a case-by-case basis, some refineries have incurred significant
penalties and other costs in connection with such enforcement actions.

ITEM 4.

MINE SAFETY DISCLOSURES

Not applicable.

PART II.

ITEM 5.
ISSUER PURCHASES OF EQUITY SECURITIES

MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND

We have approximately 85,700 members, of which approximately 1,200 are cooperative association members and

approximately 84,500 are individual members. As a cooperative, we do not have any common stock that is traded or otherwise.

On August 31, 2014, we had 12,272,003 shares of 8% Cumulative Redeemable Preferred Stock outstanding, which are

listed on the NASDAQ under the symbol CHSCP,

On August 31, 2014 we had 18,071,363 shares of Class B Series 1 Preferred Stock, outstanding, of which 11,319,175
were issued in September 2013 and an additional 6,752,188 were issued in August 2014, to redeem qualified equity certificates
to eligible owners. These shares are listed on the NASDAQ under the symbol CHSCO.

On August 31, 2014 we had 16,800,000 shares of Class B Series 2 Preferred Stock, outstanding, which were issued in

March 2014 and are listed on the NASDAQ under the symbol CHSCN.

During September 2014, we issued 19,700,000 shares of Class B Series 3 Preferred Stock, which are listed on the

NASDAQ under the symbol CHSCM.

We have not sold any equity securities during the three years ended August 31, 2014 that were not registered under the

Securities Act of 1933, as amended.

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ITEM 6.

SELECTED FINANCIAL DATA

The selected financial information below has been derived from our consolidated financial statements for the years

ended August 31. The selected consolidated financial information for August 31, 2014, 2013 and 2012, should be read in
conjunction with our consolidated financial statements and notes thereto included elsewhere in this filing.

Summary Consolidated Financial Data

2014

2013

2012

2011

2010

(Dollars in thousands)

1,647,235

Income Statement Data:
Revenues .................................................. $ 42,664,033
Cost of goods sold....................................
41,016,798
Gross profit ..............................................
Marketing, general and administrative ....
Operating earnings ...................................
(Gain) loss on investments.......................
Interest, net...............................................
Equity (income) loss from investments ...
Income before income taxes ....................
Income taxes ............................................
Net income ...............................................
Net income attributable to

1,044,637

1,083,007

1,131,303

134,942

602,598

48,296

(107,446)

(114,162)

noncontrolling interests ......................
Net income attributable to CHS Inc. ........ $
Balance Sheet Data (August 31):
Working capital........................................ $
Net property, plant and equipment...........
Total assets...............................................
Long-term debt, including current

maturities ............................................
Total equities............................................

1,572

1,081,435

3,213,641

4,031,023

$ 44,479,857

$ 40,599,286

$ 36,915,834

$ 25,267,931

42,706,205

38,588,143

35,512,988

24,397,410

1,773,652

553,623

1,220,029
(182)
231,567
(97,350)
1,085,994

89,666

996,328

3,942

992,386

3,125,407

3,171,404

2,011,143

498,233

1,512,910

5,465

193,263
(102,389)
1,416,571

80,852

1,402,846

438,498

964,348
(126,729)
74,835
(131,414)
1,147,656

86,628

1,335,719

1,061,028

75,091

1,260,628

2,848,462

2,786,324

99,673

961,355

2,776,492

2,420,214

870,521

366,582

503,939
(29,433)
58,324
(108,787)
583,835

48,438

535,397

33,238

502,159

1,603,994

2,253,071

8,881,087

986,241

3,604,451

15,146,979

13,504,270

13,645,024

12,465,317

1,456,500

6,466,844

1,607,032

5,152,747

1,440,353

4,473,323

1,501,997

4,265,320

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The selected financial information below has been derived from our Energy and Ag segments and Corporate and

Other, for the years ended August 31, 2014, 2013 and 2012.

Summary Financial Data By Business Segment

2014

Energy

2013

2012

2014

(Dollars in thousands)

2013

2012

Revenues ...................... $ 14,319,979
Cost of goods sold ........
13,364,872
Gross profit...................
Marketing, general and
administrative ...........
Operating earnings .......
(Gain) loss on

800,115

154,992

955,107

—

68,434

$ 12,982,293

$ 12,816,542

$ 28,894,816

$ 31,909,791

$ 28,181,445

11,846,458

11,514,463

28,273,515

31,341,453

27,544,040

1,135,835

1,302,079

621,301

568,338

637,405

172,136

963,699

—

148,366

155,786

1,146,293

4,008

122,302

379,714

241,587

(1,949)
56,544

312,616

255,722

(27)
71,597

273,757

363,648

1,049

57,915

(4,014)

(1,357)

(7,537)

(22,279)

(15,194)

(22,737)

735,695

816,690

(577,539) $

(481,465) $

4,601,122

4,409,594

1,027,520
$
(467,583) $
$

209,271
$
(43,930) $
$

6,657,840

199,346

327,421

— $

—

6,146,547

investments ...............
Interest, net ...................
Equity (income) loss

from investments ......

Income before income

taxes .......................... $
Intersegment revenues.. $
Total identifiable assets $

Corporate and Other

2014

2013

2012

(Dollars in thousands)

Revenues ......................................................................................................... $
Cost of goods sold...........................................................................................
Gross profit .....................................................................................................
Marketing, general and administrative............................................................
Operating earnings ..........................................................................................
(Gain) loss on investments ..............................................................................
Interest, net......................................................................................................
Equity (income) loss from investments ..........................................................
Income before income taxes ........................................................................... $
Intersegment revenues
Total identifiable assets................................................................................... $

70,707
(120)
70,827

67,892

2,935
(112,213)
9,964
(81,153)
186,337

3,888,017

69,238
(241)
69,479

68,871

608
(155)
11,604
(80,799)
69,958

2,948,129

68,882
(2,777)
71,659

68,690

2,969

408

13,046
(72,115)
61,630

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF

ITEM 7.
OPERATIONS

Overview

The following discussion of financial condition and results of operations should be read in conjunction with the
accompanying audited financial statements and notes to such statements and the cautionary statement regarding forward-
looking statements found in Part I, Item 1A of this Form 10-K. This discussion contains forward-looking statements based on
current expectations, assumptions, estimates and projections of our management. Actual results could differ materially from
those anticipated in these forward-looking statements as a result of certain factors, as more fully described in the cautionary
statement and elsewhere in this Form 10-K.

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CHS Inc. (CHS, we or us) is a diversified company, which provides grain, foods and energy resources to businesses
and consumers on a global basis. As a cooperative, we are owned by farmers, ranchers and their member cooperatives across
the United States. We also have preferred stockholders that own shares of our 8% Cumulative Redeemable Preferred Stock (8%
Preferred Stock) our Class B Cumulative Redeemable Preferred Stock, Series 1 (Class B Series 1 Preferred Stock), our Class B
Reset Rate Cumulative Redeemable Preferred Stock, Series 2 (Class B Series 2 Preferred Stock) and our Class B Reset Rate
Cumulative Redeemable Preferred Stock, Series 3 (Class B Series 3 Preferred Stock).

We provide a full range of production agricultural inputs such as refined fuels, propane, farm supplies, animal

nutrition and agronomy products, as well as services, which include hedging, financing and insurance services. We own and
operate petroleum refineries and pipelines and market and distribute refined fuels and other energy products under the Cenex®
brand through a network of member cooperatives and independents. We purchase grains and oilseeds directly and indirectly
from agricultural producers primarily in the midwestern and western United States. These grains and oilseeds are either sold to
domestic and international customers or further processed into a variety of grain-based food products.

The consolidated financial statements include the accounts of CHS and all of our wholly-owned and majority-owned

subsidiaries and limited liability companies, including NCRA in our Energy segment. The effects of all significant
intercompany transactions have been eliminated.

We have aligned our segments based on an assessment of how our businesses operate and the products and services

they sell.

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, and also serves as a wholesaler and retailer
of crop inputs. Corporate and Other primarily represents our non-consolidated wheat milling and packaged food joint ventures,
as well as our business solutions operations, which consist of commodities hedging, insurance and financial services related to
crop production.

Corporate administrative expenses and interest are allocated to each business segment, and Corporate and Other, based

on direct usage for 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 income is

generally lowest during the second fiscal quarter and highest during the third fiscal quarter. For example, in our Ag segment,
our crop nutrients and country operations businesses generally experience higher volumes and income during the spring
planting season and in the fall, which corresponds to harvest. Our grain marketing operations are also subject to fluctuations in
volume and earnings based on producer harvests, world grain prices and demand. Our Energy segment generally experiences
higher volumes and profitability in certain operating areas, such as refined products, in the summer and early fall when gasoline
and diesel fuel usage is highest and is subject to global supply and demand forces. Other energy products, such as propane, may
experience higher volumes and profitability during the winter heating and 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 the weather, crop damage due to
disease or insects, drought, the availability and adequacy of supply, government regulations and policies, world events, and
general political and economic conditions.

While our revenues and operating results are derived from businesses and operations which are wholly-owned and

majority-owned, a portion of our business operations are conducted through companies in which we hold ownership interests of
50% or less and do not control the operations. 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 consolidating the revenues and expenses of the entity in our Consolidated Statements of Operations. In
our Ag segment, this principally includes our 50% ownership in TEMCO. In Corporate and Other, these investments
principally include our 50% ownership in Ventura Foods and our 12% ownership in Ardent Mills.

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Recent Events

In September 2014, our Board of Directors approved plans to construct a nitrogen fertilizer plant located in
Spiritwood, North Dakota. We currently estimate the construction costs to be approximately $3.0 billion, which we intend to
finance through a combination of debt and preferred stock offerings with the plant anticipated to be fully operational by the first
half of calendar year 2018. The Spiritwood facility is currently expected to produce more than 2,400 tons of ammonia daily
which will be further converted to urea, Urea Ammonia Nitrate solution and Diesel Exhaust Fuel (DEF). The majority of the
nitrogen products from the plant will be sold to farmer-owned cooperatives and independent farm supply retailers within a 200-
mile radius of the plant in the Dakotas, parts of Minnesota, Montana and Canada.

In September 2014, we issued 19,700,000 shares of Class B Series 3 Preferred Stock, which are listed on the

NASDAQ under the symbol CHSCM. The approximately $477.0 million of net proceeds, after deducting underwriting
discounts, commissions and expected offering expenses payable by CHS are intended to be used to partially fund the
construction of the Spiritwood, North Dakota nitrogen fertilizer manufacturing plant discussed above.

Results of Operations

Comparison of the years ended August 31, 2014 and 2013

General. We recorded income before income taxes of $1,131.3 million during the twelve months ended August 31,
2014, compared to $1,086.0 million recorded during the twelve months ended August 31, 2013. Operating results reflected a
change in the mix of pretax earnings which, as discussed below, resulted in increased pretax income for Corporate and Other,
partially offset by decreases in our Energy and Ag segments.

Our Energy segment generated income before income taxes of $735.7 million for the year ended August 31, 2014

compared to $816.7 million in the year ended August 31, 2013, representing a decrease of $81.0 million (10%), primarily due
to reduced refining margins. Earnings in our refined fuels businesses decreased, which was partially offset by increases in our
propane, renewable fuels marketing, lubricants, and transportation businesses during the year ended August 31, 2014, when
compared to the same twelve-month period of the previous year. We are subject to the Renewable Fuel Standard (RFS) which
requires refiners to blend renewable fuels (e.g., ethanol, biodiesel) into their finished transportation fuels or purchase renewable
energy credits, known as Renewable Identification Numbers (RINs), in lieu of blending. The EPA generally establishes new
annual renewable fuel percentage standards for each compliance year in the preceding year. We generate RINs in our marketing
operations under the RFS, however it is not enough to meet the needs of our refining capacity and RINs must be purchased on
the open market. Since January 2013, the price of RINs has been extremely volatile. The EPA suggested that it would reduce
the renewable fuels mandate for 2014 under the RFS, which has caused RINs prices to decline, however, the mandate has not
yet been issued.

Our Ag segment generated income before income taxes of $209.3 million for the year ended August 31, 2014,

compared to $199.3 million in the year ended August 31, 2013, an increase in earnings of $10.0 million (5%). The increase is
primarily related to our grain marketing earnings which increased by $51.6 million during the year ended August 31, 2014,
compared to the prior period, primarily due to strong logistical performance in North America. Our country operations earnings
increased $19.9 during the year ended August 31, 2014, compared to the prior year. Overall agronomy and grain margins as
well as service income increased for retail operations. Earnings from our wholesale crop nutrients business increased by $6.3
million for the year ended August 2014, compared to the prior year, primarily due to increased volumes and margins. These
items were mostly offset by decreased earnings in our processing and food ingredients operations of $67.7 million in fiscal
2014. The decrease consisted of a non-cash $74.5 million charge related to certain assets in Israel in fiscal 2014, partially offset
by earnings related to an acquisition in fiscal 2014. See Note 17, Acquisitions, to our audited consolidated financial statements
included in this Annual Report on Form 10-K for additional information.

Corporate and Other generated income before income taxes of $186.3 for the year ended August 31, 2014 compared to
$70.0 million during the previous year, an increase in earnings of $116.3 million. The increase was primarily related to a $109.2
million gain associated with the contribution of our Horizon Milling assets to the newly formed Ardent Mills joint venture. See
Note 4, Investments for additional information.

Net Income attributable to CHS Inc. Consolidated net income attributable to CHS Inc. for the year ended August 31,
2014 was $1,081.4 million compared to $992.4 million for the year ended August 31, 2013, which represents an $89.0 million
increase (9%).

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Revenues. Consolidated revenues were $42.7 billion for the year ended August 31, 2014 compared to $44.5 billion

for the year ended August 31, 2013, which represents a $1.8 billion decrease (4%).

Our Energy segment revenues of $13.7 billion, after elimination of intersegment revenues, increased by $1.2 billion
(10%) during the year ended August 31, 2014, compared to $12.5 billion during the year ended August 31, 2013. During the
years ended August 31, 2014 and 2013, our Energy segment recorded revenues from sales to our Ag segment of $577.5 million
and $481.5 million, respectively, which are eliminated as part of the consolidation process. Propane revenues increased $670.7
million (89%), of which $351.6 million was related to an increase in the net average selling price and $319.1 million was
attributable to volume resulting from demand caused by a shortened harvest season and related corn drying activity as well as
colder than normal temperatures, when compared to the previous year. Propane sales volume increased 42%, while the average
selling price of propane increased $0.34 per gallon (33%) in comparison to the previous year. Renewable fuels marketing
revenues increased $552.9 million (36%), from a 46% increase in volume, partially offset by a decrease in the average selling
price of $0.18 per gallon (7%), when compared with the previous year. Refined fuels revenues partially offset the increases in
revenues previously described with a decrease in refined fuels of $20.9 million (less than 1%), of which $268.8 million related
to a net average selling price decrease mostly offset by an increase in volumes, compared to the previous year. The sales price
of refined fuels products decreased $0.09 per gallon (3%), and sales volumes increased by 3%, when compared to the previous
year.

Our Ag segment revenues of $28.9 billion, after elimination of intercompany intersegment revenues, decreased $3.0

billion (9%) during the year ended August 31, 2014 compared to $31.9 billion reported for the year ended August 31, 2013.

Grain revenues in our Ag segment totaled $20.7 billion and $23.8 billion during the year ended August 31, 2014 and
2013, respectively. Of the grain revenues decrease of $3.1 billion (13%), $3.7 billion is due to decreased average grain selling
prices, partially offset by an increase of $579.3 million due to a net increase in sales volume of 2% during the year ended
August 31, 2014, compared to the prior year. The average sales price of all grain and oilseed commodities sold reflected a
decrease of $1.51 per bushel (15%) over the previous year. Wheat, soybeans, and corn had increased volumes, compared to the
twelve months ended August 31, 2013.

Our processing and food ingredients revenues in our Ag segment of $1.9 billion for the year ended August 31, 2014, is
almost flat when compared to the year ended August 31, 2013. We experienced decreases in revenue of $94.0 million related to
decreased average selling prices and a decrease of $18.4 million in the volume associated with our oilseed products as
compared to the year ended August 31, 2013. Typically, changes in average selling prices of oilseed products are primarily
driven by the average market prices of soybeans. These decreases were almost entirely offset by revenues from our ethanol
facility of approximately $82.4 million, which was acquired in fiscal 2014.

Wholesale crop nutrient revenues in our Ag segment totaled $2.6 billion and $2.7 billion during the twelve months

ended August 31, 2014 and 2013, respectively. Of the wholesale crop nutrient revenues decrease of $108.0 million (4%),
$592.7 million was related to decreased average fertilizer selling prices, partially offset by $484.7 million related to an increase
in volumes, during the year ended August 31, 2014, compared to the last fiscal year. Our wholesale crop nutrient volumes
increased 18% during the year ended August 31, 2014 compared with the previous year. The average sales price of all fertilizers
sold reflected a decrease of $81.29 per ton (19%) compared with the previous year.

Our Ag segment other product revenues, primarily feed and farm supplies, of $3.4 billion increased by $125.3 million

during the year ended August 31, 2014 compared to the year ended August 31, 2013, primarily due to an increase in our
country operations retail merchandise revenues. Other revenues within our Ag segment of $191.4 million during the year ended
August 31, 2014, increased $41.2 million (27%) compared to the year ended August 31, 2013.

Total revenues include other revenues generated primarily within our Ag segment and Corporate and Other. Our Ag

segment's country operations elevators and agri-service centers derive other revenues from activities related to production
agriculture, which include grain storage, grain cleaning, fertilizer spreading, crop protection spraying and other associated
services. In addition, our grain marketing operations receive other revenues at our export terminals from activities related to
loading vessels. Corporate and Other derives revenues primarily from our financing, hedging and insurance operations.

Cost of Goods Sold. Consolidated cost of goods sold was $41.0 billion for the year ended August 31, 2014, compared

to $42.7 billion for the year ended August 31, 2013, which represents a $1.7 billion (4%) decrease.

Our Energy segment cost of goods sold, after elimination of intersegment costs, increased by approximately $1.4

billion (13%) to $12.8 billion during the year ended August 31, 2014, compared to the prior year. The increase in cost of goods
sold is primarily due to increased costs associated with refined fuels, propane and renewable fuels marketing products.

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Specifically, refined fuels cost of goods sold increased $187.4 million (2%), which reflects a 3% increase in the volume from
the prior year. On average, we process approximately 55,000 barrels of crude oil per day at our Laurel, Montana refinery and
85,000 barrels of crude oil per day at NCRA's McPherson, Kansas refinery. The cost of goods sold of propane increased $640.1
million (86%) primarily from an average cost increase of $0.32 per gallon (30%) and a 42% increase in volumes resulting from
demand caused by a condensed harvest and associated corn drying activity as well as colder than normal temperatures, when
compared to the previous year. Renewable fuels marketing costs increased $542.9 million (35%), primarily from a 46%
increase in volumes, partially offset by a decrease in the average cost of $0.18 per gallon (7%), when compared to the prior
year.

Our Ag segment cost of goods sold, after elimination of intersegment costs, decreased by $3.1 billion (10%) to $28.2

billion, during the year ended August 31, 2014, compared to the prior year. The majority of the decrease was driven by the
lower grains and oilseed costs, which decreased by $3.5 billion (15%) in the year ended August 31, 2014 compared to the prior
year. This is primarily the result of a $1.67 (17%) decrease in the average cost per bushel. This decrease was partially offset by
a 3% net increase in bushels sold, as compared to the prior year. The average month-end market price per bushel of soybeans,
corn and spring wheat decreased compared to the previous year.

Our processing and food ingredients cost of goods sold in our Ag segment of $1.9 billion was flat for the year ended

August 31, 2014, compared to the year ended August 31, 2013. We experienced a decrease in volumes sold which was offset by
a combination of the costs of goods sold associated with our ethanol facility which was acquired in fiscal 2014, and a non-cash
$74.5 million impairment charge related to certain assets in Israel recorded in fiscal 2014. See Note 17, Acquisitions, to our
audited consolidated financial statements included in this Annual Report on Form 10-K for additional information.

Wholesale crop nutrients cost of goods sold in our Ag segment totaled $2.4 billion and $2.6 billion during the years

ended August 31, 2014 and 2013, respectively. The net decrease of $171.5 million (7%) is comprised of a decrease in the
average cost per fertilizer ton of $88 (21%), partially offset by an 18% increase in tons sold, when compared to the prior year.

Our Ag segment other product cost of goods sold, primarily feed and farm supplies, as of August 31, 2014 was $2.9

billion, an increase of $84.9 million (3%) compared to the prior year and was primarily the result of an increase in our country
operations retail volumes.

Marketing, General and Administrative. Marketing, general and administrative expenses of $602.6 million for the
year ended August 31, 2014, increased by $49.0 million (9%) compared to the prior year. The net increase in fiscal 2014 was
driven by our grain marketing and international operations, and to a lesser extent, our processing and food ingredients
operations, including our ethanol facility acquired in fiscal 2014, partially offset by a decrease in our energy operations.

Gain/Loss on Investments. Gain on investments for the year ended August 31, 2014 increased by $114.1 million

compared to the twelve months ended August 31, 2013, related primarily to a $109.2 million gain associated with the
contribution of our Horizon Milling assets to the newly formed Ardent Mills joint venture. See Note 4, Investments, to our
audited consolidated financial statements included in this Annual Report on Form 10-K for additional information.

Interest, net. Net interest of $134.9 million for the year ended August 31, 2014 decreased $96.6 million compared to

the previous year. Interest expense for the years ended August 31, 2014 and 2013 was $150.5 million and $248.4 million,
respectively. The decrease in interest expense of $97.9 million is primarily due to a $78.2 million decrease in patronage earned
by the noncontrolling interests of NCRA and, to a lesser extent, a gain on interest rate swaps of $13.5 million, when compared
with the previous year.

Equity Income from Investments. Equity income from investments of $107.4 million for the year ended August 31,
2014, increased $10.1 million (10%) compared to the year ended August 31, 2013. We record equity income or loss from the
investments in which we have an ownership interest of 50% or less and have significant influence, but not control, for our
proportionate share of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in
our Consolidated Statements of Operations.

Income Taxes. Income tax expense was $48.3 million for the year ended August 31, 2014 compared with $89.7

million for the year ended August 31, 2013, resulting in effective tax rates of 4.3% and 8.3%, respectively. The decrease in the
tax rate for fiscal 2014 was driven by a combination of excise tax credit claims made for the years 2007 through 2012 related to
the blending and sale of renewable fuels deducted for income taxes of $46.3 million, net of reserves, and to a lesser extent the
release of reserves related to the expiration of certain statues of limitations of $20.9 million. The federal and state statutory rate
applied to nonpatronage business activity was 38.1% and 38.1% for the years ended August 31, 2014 and 2013, respectively.

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The income taxes and effective tax rate vary each year based upon profitability and nonpatronage business activity during each
of the comparable years.

Noncontrolling Interests. Income attributable to noncontrolling interests of $1.6 million for the year ended August 31,

2014 decreased by $2.4 million compared to the year ended August 31, 2013.

Comparison of the years ended August 31, 2013 and 2012

General. We recorded income before income taxes of $1.1 billion in fiscal 2013 compared to $1.4 billion in fiscal

2012, a decrease of $330.6 million (23%). Operating results reflected decreased pretax earnings in our Energy and Ag
segments, partially offset by increased pretax earnings in Corporate and Other.

Our Energy segment generated income before income taxes of $816.7 million for the year ended August 31, 2013

compared to $1.0 billion in fiscal 2012, representing a decrease of $210.8 million (21%). The decrease in earnings was
primarily from reduced margins on refined fuels at our Laurel, Montana refinery due to the shut down of the refinery for a
major maintenance turnaround. We experienced decreased earnings in our propane business, while our renewable fuels
marketing, lubricants, and transportation businesses experienced increased earnings during the year ended August 31, 2013
when compared to the previous year.

Our Ag segment generated income before income taxes of $199.3 million for the year ended August 31, 2013

compared to $327.4 million in fiscal 2012, a decrease in earnings of $128.1 million (39%). Our grain marketing earnings
decreased by $61.8 million during the year ended August 31, 2013 compared with fiscal 2012, primarily as a result of lower
export margins. Earnings from our wholesale crop nutrients business declined $30.5 million for the year ended August 31, 2013
compared with fiscal 2012, primarily due to decreased product margins and $13.0 million of costs associated with a feasibility
study for the Spiritwood, North Dakota nitrogen fertilizer manufacturing plant described above. Our country operations
earnings decreased $15.9 million during the year ended August 31, 2013 compared to the prior year, primarily due to decreased
grain margins. The decrease in earnings of $22.2 million in our processing and food ingredients businesses for the year ended
August 31, 2013 compared to the prior year, primarily related to $25.0 million of costs associated with a voluntary recall of
certain soy protein products. In addition, we incurred costs of $20.1 million in connection with plant downtime, inventory
write-downs and other costs in connection with the recall. The decrease in earnings in our processing and food ingredients
businesses was partially offset by increased margins from our soybean crushing and refining businesses and $5.7 million in
acquisition costs related to our acquisition of Solbar Industries Ltd. during the year ended August 31, 2012. See Note 17,
Acquisitions, to our audited consolidated financial statements included in this Annual Report on Form 10-K for additional
information.

Corporate and Other generated income before income taxes of $70.0 million during fiscal 2013 compared to $61.6

million during fiscal 2012, an increase in earnings of $8.3 million (14%).

Net Income attributable to CHS Inc. Consolidated net income attributable to CHS Inc. for the year ended August 31,

2013 was $992.4 million compared to $1.3 billion for the year ended August 31, 2012, which represented a $268.2 million
(21%) decrease.

Revenues. Consolidated revenues were $44.5 billion for the year ended August 31, 2013 compared to $40.6 billion for

the year ended August 31, 2012, which represented a $3.9 billion (10%) increase.

Our Energy segment revenues, after elimination of intersegment revenues, of $12.5 billion increased by $151.9

million (1%) during the year ended August 31, 2013 compared to fiscal 2012. During the years ended August 31, 2013 and
2012, our Energy segment recorded revenues from sales to our Ag segment of $481.5 million and $467.6 million, respectively,
which were eliminated as part of the consolidation process. The net increase of $151.9 million was comprised of an increase of
$266.0 million related to higher sales volume, partially offset by $114.1 million related to lower prices. Refined fuels revenues
increased $86.7 million (1%), of which $52.7 million was related to a net average selling price increase, and $34.1 million was
related to higher volumes, compared to the previous year. The sales price of refined fuels increased $0.02 per gallon (1%),
while volumes increased less than 1%. Renewable fuels marketing revenues increased $73.8 million (5%), primarily from an
increase in the average selling price of $0.08 per gallon (3%) and a 2% increase in volumes, when compared with fiscal 2012.
Propane revenues decreased $22.5 million (3%), which included $204.5 million related to a decrease in the net average selling
price, partially offset by a $182.0 million increase in volume, when compared to the previous year. The average selling price of
propane decreased $0.28 per gallon (21%), which was largely offset by a 23% increase in sales volumes, when compared to the
prior year.

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Our Ag segment revenues of $31.9 billion increased $3.7 billion (13%) during the year ended August 31, 2013

compared to fiscal 2012.

Grain revenues in our Ag segment totaled $23.8 billion and $20.6 billion during the years ended August 31, 2013 and
2012, respectively. Of the grain revenues increase of $3.2 billion (16%), $2.1 billion was due to a 10% net increase in volumes
and $1.2 billion was due to increased average grain selling prices, during the year ended August 31, 2013 compared to the prior
fiscal year. The average sales price of all grain and oilseed commodities sold reflected an increase of $0.50 per bushel (5%)
over fiscal 2012. Wheat, soybeans, and corn all had increased volumes compared to the year ended August 31, 2012.

Our processing and food ingredients revenues in our Ag segment of $1.9 billion increased $301.0 million (19%)

during fiscal 2013 compared to fiscal 2012. The net increase in revenues was comprised of a $258.2 million increase in the
average selling price of our oilseed products and a net increase of $42.8 million related to increased volumes, including
volumes from recent acquisitions, as compared to fiscal 2012. Typically, changes in average selling prices of oilseed products
are primarily driven by the average market prices of soybeans.

Wholesale crop nutrient revenues in our Ag segment totaled $2.7 billion and $2.8 billion during the years ended
August 31, 2013 and 2012, respectively. Of the wholesale crop nutrient revenues decrease of $90.6 million (3%), $411.2
million was related to decreased average fertilizer selling prices, partially offset by $320.6 million related to increased volumes
during the year ended August 31, 2013 compared to the prior fiscal year. The average sales price of all fertilizers sold reflected
a decrease of $66 per ton (13%) over fiscal 2012. Our wholesale crop nutrient volumes increased 12% during the year ended
August 31, 2013 compared with fiscal 2012.

Our Ag segment other product revenues, primarily feed and farm supplies, of $3.3 billion increased by $196.3 million

(6%) during fiscal 2013 compared to fiscal 2012, primarily the result of increased revenues in our global sales of retail crop
nutrients and our country operations sales of feed, crop protection and sunflower products, including additional volumes from
acquisitions. Other revenues within our Ag segment of $244.1 million during fiscal 2013 increased $30.6 million (14%)
compared to fiscal 2012 primarily due to increased service activities related to the spring planting season, including additional
volumes generated from acquisitions.

Total revenues also include other revenues generated primarily within our Ag segment and Corporate and Other. Our
Ag segment’s country operations elevators and agri-service centers derive other revenues from activities related to production
agriculture, which include grain storage, grain cleaning, fertilizer spreading, crop protection spraying and other services of this
nature, and our grain marketing operations receive other revenues at our export terminals from activities related to loading
vessels. Corporate and Other derives revenues primarily from our financing, hedging and insurance operations.

Cost of Goods Sold. Consolidated cost of goods sold of $42.7 billion for the year ended August 31, 2013 compared to

$38.6 billion for the year ended August 31, 2012, which represented a $4.1 billion (11%) increase.

Our Energy segment cost of goods sold, after elimination of intersegment costs, of $11.4 billion increased by $318.1

million (3%) during fiscal 2013 compared to fiscal 2012. The increase in cost of goods sold was primarily due to an increase in
costs for refined fuels products. Specifically, refined fuels cost of goods sold increased $273.3 million (3%) which reflected an
increase in the average cost of refined fuels of $0.08 per gallon (3%) while volumes increased less than 1% when compared to
the year ended August 31, 2012. On average, we process approximately 55,000 barrels of crude oil per day at our Laurel,
Montana refinery and 85,000 barrels of crude oil per day at NCRA’s McPherson, Kansas refinery. The aggregate average per
unit cost of crude oil purchased for the two refineries increased 4% compared to the year ended August 31, 2012, which is
reflected in the $0.08 per gallon increase in average cost of refined fuels. Renewable fuels marketing costs increased $70.3
million (5%), primarily from an increase in the average cost of $0.07 per gallon (3%) and a 2% increase in volumes, when
compared with the previous year. The cost of propane decreased by $14.1 million, which included an average cost decrease of
$0.27 per gallon (21%), partially offset by a 23% increase in volumes, when compared to the year ended August 31, 2012.

Our Ag segment cost of goods sold of $31.3 billion increased $3.8 billion (14%) during fiscal 2013 compared to fiscal

2012.

Grain cost of goods sold in our Ag segment totaled $23.9 billion and $20.4 billion during the years ended August 31,

2013 and 2012, respectively. The cost of grains and oilseed procured through our Ag segment increased $3.5 billion (17%)
compared to the year ended August 31, 2012. This was primarily the result of a 10% net increase in bushels sold and a $0.60
(6%) increase in the average cost per bushel, as compared to the prior year. The average month-end per bushel market price of
soybeans and corn increased, while spring wheat decreased compared to the prior fiscal year.

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Our processing and food ingredients cost of goods sold in our Ag segment of $1.9 billion increased $359.3 million

(24%) during fiscal 2013 compared to fiscal 2012, which was primarily due to increases in the cost of soybeans purchased and
higher volumes of products sold, which includes volumes from recent acquisitions. The increase in cost of goods sold in our
processing and food ingredients businesses included $25.0 million of costs associated with the previously described voluntary
recall of certain soy protein products. In addition, we incurred costs of $20.1 million in connection with plant downtime,
inventory write-downs and other costs in connection with the recall.

Wholesale crop nutrients cost of goods sold in our Ag segment totaled $2.6 billion and $2.7 billion during the years
ended August 31, 2013 and 2012 respectively. The net decrease of $38.0 million (1%) was comprised of a net decrease in the
average cost per ton of fertilizer of $56 (12%), partially offset by a 12% increase in tons sold, when compared to the prior fiscal
year.

Our Ag segment other product cost of goods sold, primarily feed and farm supplies, increased $161.2 million (6%)

during fiscal 2013 compared to fiscal 2012, primarily the result of increased revenues in our global sales of retail crop nutrients
and our country operations sales of feed and sunflower products, including additional volumes from acquisitions.

Marketing, General and Administrative. Marketing, general and administrative expenses of $553.6 million for the

year ended August 31, 2013 increased by $55.4 million (11%) compared to fiscal 2012. This net increase was primarily due to
the expansion of foreign operations and acquisitions in our Ag segment, as well as costs associated with the nitrogen fertilizer
manufacturing plant feasibility study mentioned above.

(Gain) Loss on Investments. Gain on investments is $0.2 million for the year ended August 31, 2013.

Interest, net. Net interest of $231.6 million for the year ended August 31, 2013 increased $38.3 million compared to

fiscal 2012. Interest expense for the years ended August 31, 2013 and 2012 was $248.4 million and $207.3 million,
respectively. The increase in interest expense of $41.1 million was primarily due to a $35.3 million increase in patronage
earned by the noncontrolling interests of NCRA when compared to fiscal 2012. See Note 17, Acquisitions, to our audited
consolidated financial statements included in this Annual Report on Form 10-K for additional information. The increase in
interest expense was also due to private placements for long-term debt totaling $280.0 million during the year ended August 31,
2013. In addition, short-term borrowings increased during the year ended August 31, 2013 compared to the previous fiscal year.
The average level of short-term borrowings increased $222.2 million during the year ended August 31, 2013 compared to the
previous year, of which $224.1 million related to line of credit activity for international subsidiaries.

Equity Income from Investments. Equity income from investments of $97.4 million for the year ended August 31,

2013 decreased $5.0 million (5%) compared to fiscal 2012. We record equity income or loss primarily from the investments in
which we have an ownership interest of 50% or less and have significant influence, but not control, for our proportionate share
of income or loss reported by the entity, without consolidating the revenues and expenses of the entity in our Consolidated
Statements of Operations.

Income Taxes. Income tax expense of $89.7 million for the year ended August 31, 2013, compared with $80.9 million

for fiscal 2012, resulting in effective tax rates of 8.3% and 5.7%, respectively. The federal and state statutory rate applied to
nonpatronage business activity was 38.1% for the years ended August 31, 2013 and 2012. The income taxes and effective tax
rate vary each year based upon profitability and nonpatronage business activity during each of the comparable years.

Noncontrolling interests. Net income from noncontrolling interests of $3.9 million for the year ended August 31, 2013

decreased by $71.1 million (95%) compared to fiscal 2012. As described in Note 17, Acquisitions, to our audited consolidated
financial statements included in this Annual Report on Form 10-K, the portion of NCRA earnings attributable to the
noncontrolling interests for our first quarter of fiscal 2012, prior to the transaction date, had been included in net income
attributable to noncontrolling interests. Beginning in the second quarter of fiscal 2012, earnings were no longer attributable to
the noncontrolling interests, and patronage earned by the noncontrolling interests of NCRA after November 29, 2011 are
included as interest, net in our Consolidated Statements of Operations.

Liquidity and Capital Resources

In assessing our financial condition, we consider factors such as working capital and internal bench marking related to

our applicable financial covenants. We fund our operations through a combination of cash flows from operations and our
revolving credit facility. We fund our capital expenditures and growth primarily through long-term debt financing and issuance
of preferred stock.

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We announced in September 2014 that our Board of Directors approved plans to begin construction of a fertilizer
manufacturing plant in Spiritwood, North Dakota anticipated to cost approximately $3.0 billion. We expect to finance the
project through a combination of issuance of preferred stock and debt. In September 2014, we took an initial step financing this
project by issuing 19,700,000 shares of Class B Series 3 Preferred Stock, as described in "Cash Flows from Financing
Activities - Other Financing" below. This issuance of preferred stock yielded approximately $477.0 million in cash after
underwriting discounts and offering expenses.

Our primary sources of cash in fiscal 2014 were net cash flows from operations and equity financing through the

issuance of preferred stock. Primary uses of cash were capital expenditures, dividends (patronage and preferred stock), business
acquisitions, retirement of equity certificates, and payments on indebtedness.

On August 31, 2014 and August 31, 2013, we had working capital, defined as current assets less current liabilities, of
$3.2 billion and $3.1 billion respectively, and a current ratio, defined as current assets divided by current liabilities, of 1.5 for
both fiscal 2014 and 2013.

We have access to a five-year, unsecured revolving credit facility expiring in June 2018, with a committed amount of
$2.5 billion, which had no amounts outstanding as of August 31, 2014 and 2013, respectively. The financial covenants for the
revolving facility require us to maintain a minimum consolidated net worth, adjusted as defined in the credit agreements, of
$2.5 billion and a consolidated funded debt to consolidated cash flow ratio of no greater than 3.00 to 1.00. The term
consolidated cash flow is principally our earnings before interest, taxes, depreciation and amortization (EBITDA) with
adjustments as defined in the credit agreements. A third financial ratio does not allow our adjusted consolidated funded debt to
adjusted consolidated equity to exceed 0.80 to 1.00 at any time. As of August 31, 2014, we were in compliance with all such
covenants. Our credit facility is established with a syndication of domestic and international banks, and our inventories and
receivables financed with them are highly liquid. 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.

In addition, our wholly-owned subsidiary, CHS Capital, makes seasonal and term loans to member cooperatives,

businesses and individual producers of agricultural products included in our cash flows from investing activities, and has its
own financing explained in further detail below under “Cash Flows from Financing Activities.”

Cash Flows from Operations

Cash flows from operations are generally affected by commodity prices and the seasonality of our businesses. These
commodity prices are affected by a wide range of factors beyond our control, including weather, crop conditions, drought, the
availability and the adequacy of supply and transportation, government regulations and policies, world events, and general
political and economic conditions. These factors are described in the cautionary statement and may affect net operating assets
and liabilities, and liquidity.

Cash flows provided by operating activities were $1.4 billion, $2.5 billion and $718.6 million for the years ended

August 31, 2014, 2013 and 2012, respectively. The fluctuation in cash flows between the current year and prior year is
primarily the result of less cash inflows related to net changes in operating assets and liabilities during the year ended August
31, 2014 compared to significant cash inflows associated with changes in operating assets and liabilities during the year ended
August 31, 2013.

Our operating activities provided net cash of $1.4 billion during the year ended August 31, 2014. Net income

including noncontrolling interests of $1.1 billion, net non-cash expenses and cash distributions from equity investments of
$195.8 million and a decrease in net operating assets and liabilities of $148.6 million contributed to the net cash provided by
operating activities. The primary components of net non-cash expenses and cash distributions from equity investments included
depreciation and amortization, including amortization of major repair costs, of $312.2 million, partially offset by gains on the
sale of investments of $114.2 million, primarily due to a $109.2 million gain associated with the contribution of our Horizon
Milling assets to the newly formed Ardent Mills joint venture. See Note 4, Investments, to our audited consolidated financial
statements included in this Annual Report on Form 10-K for additional information. The decrease in net operating assets and
liabilities was caused primarily by a decrease in commodity prices on August 31, 2014, when compared to August 31, 2013. On
August 31, 2014, the per bushel market prices of our primary grain commodities, corn, spring wheat, and soybeans, decreased
by $1.23 (26%), $1.15 (16%), and $2.68 (19%), respectively, when compared to the spot prices on August 31, 2013. In general,
crude oil market prices decreased $12 per barrel (11%) on August 31, 2014 when compared to August 31, 2013. On August 31,
2014, fertilizer commodity prices affecting our wholesale crop nutrients and country operations retail businesses reflected
increases up to 29%, depending on the specific products, compared to prices on August 31, 2013. In addition, increased grain

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inventory quantities on August 31, 2014 compared to the prior year, partially offset the impact that lower grain commodity
prices had on net operating assets and liabilities on August 31, 2014.

Our operating activities provided net cash of $2.5 billion during the year ended August 31, 2013. Net income

including noncontrolling interests of $1.0 billion, net non-cash expenses and cash distributions from equity investments of
$340.5 million and a decrease in net operating assets and liabilities of $1.1 billion contributed to the net cash provided by
operating activities. The primary components of net non-cash expenses and cash distributions from equity investments included
depreciation and amortization, including amortization of major repair costs, of $276.6 million, deferred taxes of $92.7 million
and the loss on our crack spread contingent liability of $23.1 million, which were partially offset by income from equity
investments, net of distributions from those investments, of $34.6 million. The decrease in net operating assets and liabilities
was caused primarily by a decrease in commodity prices, in addition to inventory quantities, and is reflected in decreased
receivables, inventories, margin deposits and derivative assets, partially offset by an increase in derivative liabilities on
August 31, 2013 when compared to August 31, 2012. On August 31, 2013, the per bushel market prices of our primary grain
commodities, corn, spring wheat and soybeans, decreased by $3.21 (40%), $2.02 (22%) and $4.07 (23%), respectively, when
compared to the spot prices on August 31, 2012. In general, crude oil market prices increased $11 per barrel (12%) on
August 31, 2013 when compared to August 31, 2012. On August 31, 2013, fertilizer commodity prices affecting our wholesale
crop nutrients and country operations retail businesses reflected decreases between 19% and 31%, depending on the specific
products, compared to prices on August 31, 2012. A decrease in grain inventory quantities in our Ag segment of 44.1 million
bushels (30%) also contributed to the decrease in net operating assets and liabilities when comparing inventories at August 31,
2013 to August 31, 2012.

Our operating activities provided net cash of $718.6 million during the year ended August 31, 2012. Net income

including noncontrolling interests of $1.3 billion and net non-cash expenses and cash distributions from equity investments of
$297.2 million, were partially offset by an increase in net operating assets and liabilities of $914.3 million. The primary
components of net non-cash expenses and cash distributions from equity investments included depreciation and amortization,
including amortization of major repair costs, of $253.3 million, deferred taxes of $58.6 million and the loss on the crack spread
contingent liability of $22.3 million, which were partially offset by income from equity investments, net of distributions from
those investments, of $26.9 million. The increase in net operating assets and liabilities was caused primarily by an increase in
commodity prices, in addition to inventory quantities, and is reflected in increased receivables, inventories and derivative
assets, partially offset by an increase in derivative liabilities on August 31, 2012 when compared to August 31, 2011. On
August 31, 2012, the per bushel market prices of two of our primary grain commodities, corn and soybeans, increased by $0.45
(6%) and $3.16 (22%), respectively; while the per bushel market price of our third primary commodity, spring wheat, decreased
by $0.35 (4%) when compared to the spot prices on August 31, 2011. In general, crude oil market prices increased $8 per barrel
(9%) on August 31, 2012 when compared to August 31, 2011. On August 31, 2012, fertilizer commodity prices affecting our
wholesale crop nutrients and country operations retail businesses generally reflected decreases between 1% and 14%,
depending on the specific products, compared to prices on August 31, 2011. An increase in grain inventory quantities in our Ag
segment of 23.0 million bushels (19%) also contributed to the increase in net operating assets and liabilities when comparing
inventories at August 31, 2012 to August 31, 2011.

Cash Flows from Investing Activities

For the years ended August 31, 2014, 2013 and 2012, the net cash flows used in our investing activities totaled $1.3

billion, $535.0 million and $694.2 million, respectively.

The acquisition of property, plant and equipment comprised the primary use of cash totaling $943.9 million, $659.4

million and $468.6 million for the years ended August 31, 2014, 2013 and 2012, respectively. The increase from fiscal 2013 to
fiscal 2014 is primarily related to the replacement of a coker and expansion of capacity at our NCRA McPherson refinery.

Expenditures for major repairs related to our refinery turnarounds were $3.3 million, $73.7 million and $23.4 million
during the years ended August 31, 2014, 2013 and 2012, respectively. Refineries have planned major maintenance to overhaul,
repair, inspect and replace process materials and equipment which typically occur for a five-to-six week period every 2-4 years.
There was no planned major maintenance during the year ended August 31, 2014. Our Laurel, Montana refinery had planned
major maintenance during the year ended August 31, 2013. NCRA and Laurel refineries have planned maintenance scheduled
for fiscal 2015.

For fiscal 2015, we expect total expenditures for the acquisition of property, plant and equipment and major repairs at

our refineries to be approximately $690.0 million. Included in our expected capital expenditures for fiscal 2015, is $200.0
million for a project to replace a coker at NCRA's McPherson, Kansas refinery with an expected total cost of $555.0 million
and expected completion in fiscal 2015. We incurred $186.8 million, $124.0 million and $60.4 million of costs related to the

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coker project during the years ended August 31, 2014, 2013 and 2012, respectively. We also began a $330.0 million expansion
at NCRA's McPherson, Kansas refinery during the year ended August 31, 2013 which is anticipated to be completed in fiscal
2016. We incurred $128.3 million and $25.0 million of costs related to the NCRA expansion during the year ended August 31,
2014 and 2013. In fiscal 2015, we expect to spend $829.0 million of the total budgeted $3.0 billion associated with the
construction of our nitrogen fertilizer plant in Spiritwood, North Dakota.

Cash acquisitions of businesses, net of cash acquired, totaled $281.5 million, $12.7 million and $166.0 million during

the years ended August 31, 2014, 2013 and 2012, respectively. The fiscal 2014 acquisitions were related to our Illinois River
Energy and Terral River operations. See Note 17, Acquisitions, to our audited consolidated financial statements included in this
Annual Report on Form 10-K for additional information.

Investments made in joint ventures and other investments during the years ended August 31, 2014, 2013 and 2012,
totaled $80.1 million, $21.4 million and $94.8 million, respectively. Of the amount invested in joint ventures in fiscal 2014,
$48.2 million was associated with the winding down of our Horizon Mills joint venture and ownership interest that was
contributed to our Ardent Mills joint venture. During fiscal 2012, we made a $45.4 million capital contribution to fund the
pension plan associated with our inactive joint venture between CHS and Land O'Lakes, Inc. prior to the distribution of its
assets and liabilities to CHS and Land O'Lakes, Inc.

Changes in notes receivable for the year ended August 31, 2014, decreased cash flows by $184.1 million. The decrease

was primarily the result of an increase in CHS Capital notes receivable of $224.0 million, partially offset by decreases in notes
receivable of $39.9 million principally associated with our international operations. Changes in notes receivable for the year
ended August 31, 2013, resulted in a net increase in cash flows of $211.9 million. The primary cause of the net increase in cash
flows during fiscal 2013 was a decrease in CHS Capital notes receivable of $189.3 million and a decrease in NCRA notes
receivable, compared to August 31, 2012. Changes in notes receivable for the year ended August 31, 2012, resulted in a net
increase in cash flows of $19.0 million. The primary cause of the net increase in cash flows during fiscal 2012 was a decrease
in NCRA notes receivable, partially offset by an increase in CHS Capital notes receivable of $11.9 million, compared to the
prior year.

Partially offsetting our cash outlays for investing activities during the years ended August 31, 2014, 2013 and 2012,

were proceeds from the sale of investments and redemptions of investments. During fiscal 2014, we received cash from the
redemptions of investments of $138.5 million, of which $121.2 was related to cash proceeds distributed to us as part of our
Ardent Mills joint venture. Redemptions of investments totaled $13.0 million and $12.1 million during fiscal 2013 and 2012,
respectively. Also partially offsetting our cash outlays for investing activities during the years ended August 31, 2014, 2013 and
2012, were proceeds received from the disposition of property, plant and equipment of $11.7 million, $7.7 million and $27.8
million, respectively.

Cash Flows from Financing Activities

For the year ended August 31, 2014, the net cash flows provided by our financing activities totaled $240.5 million, and

for the years ended August 31, 2013 and 2012, the net cash flows used in our financing activities totaled $443.2 million and
$638.9 million, respectively.

Working Capital Financing:

We finance our working capital needs through short-term lines of credit with a syndication of domestic and
international banks. On August 31, 2014, we had a five-year, unsecured, revolving facility with a committed amount of $2.5
billion, which had no amounts outstanding. In October 2013, we entered into a three-year $250.0 million committed revolving
credit facility for CHS Agronegocio Industria e Comercio Ltda (CHS Agronegocio) to provide financing for its working capital
needs arising from its purchases and sales of grains, fertilizers and other agricultural products. As of August 31, 2014, $250.0
million was outstanding under such facility.

At August 31, 2014 our wholly-owned subsidiaries, CHS Europe S.a.r.l and CHS Agronegocio, had uncommitted lines

of credit of $327.3 million outstanding. In addition, our other international subsidiaries had lines of credit totaling $263.1
million outstanding at August 31, 2014, of which $39.0 million were collateralized. On August 31, 2014 and 2013, we had total
short-term indebtedness outstanding on these various facilities and other miscellaneous short-term notes payable totaling
$840.1 million and $512.9 million, respectively.

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We have two commercial paper programs totaling up to $125.0 million, with two banks participating in our revolving
credit facilities. Terms of our credit facilities allow a maximum usage of $200.0 million to pay principal under any commercial
paper facility. On August 31, 2014 and 2013, we had no commercial paper outstanding.

CHS Capital Financing:

Cofina Funding, LLC (Cofina Funding), a wholly-owned subsidiary of CHS Capital, had available credit totaling

$350.0 million as of August 31, 2014, under note purchase agreements with various purchasers, through the issuance of short-
term notes payable. CHS Capital sells eligible commercial loans receivable it has originated to Cofina Funding, which are then
pledged as collateral under the note purchase agreements. The notes payable issued by Cofina Funding bear interest at variable
rates based on commercial paper with a weighted average rate of 1.05% as of August 31, 2014. There were no borrowings by
Cofina Funding utilizing the issuance of commercial paper under the note purchase agreements as of August 31, 2014.

CHS Capital has available credit under master participation agreements with numerous counterparties.
Borrowings under these agreements are accounted for as secured borrowings and bear interest at variable rates ranging
from 1.81% to 2.66% as of August 31, 2014. As of August 31, 2014, the total funding commitment under these agreements
was $164.5 million, of which $17.6 million was borrowed.

CHS Capital sells loan commitments it has originated to ProPartners Financial (ProPartners) on a recourse basis.
The total capacity for commitments under the ProPartners program is $300.0 million. The total outstanding commitments
under the program totaled $102.8 million as of August 31, 2014, of which $64.6 million was borrowed under these
commitments with an interest rate of 1.58%.

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 0.10% to 0.90% as of August 31, 2014, and are
due upon demand. Borrowings under these notes totaled $236.6 million as of August 31, 2014.

As of August 31, 2013, there were no borrowings under Cofina Funding through the issuance of commercial paper

with $30.8 million of secured borrowings under CHS Capital. CHS Capital borrowings under the ProPartners program and the
surplus funds program were $45.7 million and $290.9 million, respectively, as of August 31, 2013.

Long-term Debt Financing:

We typically finance our long-term capital needs, primarily for the acquisition of property, plant and equipment, with

long-term agreements with various insurance companies and banks.

On August 31, 2014, we had total long-term debt outstanding of approximately $1.5 billion, of which $105.0 million

was bank financing, $1.3 billion was private placement debt and $50.0 million was other notes and contracts payable. On
August 31, 2013, we had total long-term debt outstanding of approximately $1.6 billion, of which $135.0 million was bank
financing, $1.4 billion was private placement debt and $50.5 million was other notes and contracts payable. Our long-term debt
is unsecured except for other notes and contracts in the amount of $14.3 million; however, restrictive covenants under various
agreements have requirements for maintenance of minimum consolidated net worth and other financial ratios. We were in
compliance with all debt covenants and restrictions as of August 31, 2014. Long-term debt outstanding as of August 31, 2014
has aggregate maturities, excluding fair value adjustments, as follows:

2015 ............................................................................................................................................... $
2016 ...............................................................................................................................................
2017 ...............................................................................................................................................
2018 ...............................................................................................................................................
2019 ...............................................................................................................................................
Thereafter ......................................................................................................................................

(Dollars in thousands)

156,836

139,326

149,852

162,119

150,622

693,545

1,452,300

During the years ended August 31, 2014 and 2013, we borrowed $1.4 million and $280.0 million, respectively, on a

long-term basis. We did not have any new long-term borrowings during the year ended August 31, 2012. During the years

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ended August 31, 2014, 2013 and 2012, we repaid long-term debt of $157.8 million, $113.6 million and $96.6 million,
respectively.

Additional detail on our long-term borrowings and repayments is as follows:

In June 1998, we completed a private placement offering with several insurance companies for long-term debt in the
amount of $225.0 million with an interest rate of 6.81%. Repayments were due in equal annual installments during the years
2008 through 2013 and the debt was fully repaid in fiscal 2013.

In October 2002, we completed a private placement with several insurance companies for long-term debt in the

amount of $175.0 million, which was layered into two series. The first series of $115.0 million had an interest rate of 4.96%
and was due in equal semi-annual installments of approximately $8.8 million during the years 2007 through 2013. The second
series of $60.0 million has an interest rate of 5.60% and is due in equal semi-annual installments of approximately $4.6 million
during the years 2012 through 2018.

In March 2004, we entered into a note purchase and private shelf agreement with Prudential Capital Group. In April
2007, we amended our Note Purchase and Private Shelf Agreement with Prudential Investment Management, Inc. and several
other participating insurance companies to expand the uncommitted facility from $70.0 million to $150.0 million. We borrowed
$50.0 million under the shelf arrangement in February 2008, for which the aggregate long-term notes have an interest rate of
5.78% and are due in equal annual installments of $10.0 million during the years 2014 through 2018. In November 2010, we
borrowed $100.0 million under the shelf arrangement, for which the aggregate long-term notes have an interest rate of 4.0%
and are due in equal annual installments of $20.0 million during the years 2017 through 2021.

In September 2004, we completed a private placement with several insurance companies for long-term debt in the

amount of $125.0 million with an interest rate of 5.25%. The debt is due in equal annual installments of $25.0 million during
the years 2011 through 2015.

In October 2007, we completed a private placement with several insurance companies and banks for long-term debt in
the amount of $400.0 million with an interest rate of 6.18%. Repayments are due in equal annual installments of $80.0 million
during the years 2013 through 2017.

In December 2007, we established a ten-year long-term credit agreement through a syndication of cooperative banks

in the amount of $150.0 million, with an interest rate of 5.59%. Repayments are due in equal semi-annual installments of
$15.0 million each, starting in June 2013 through December 2018.

In June 2011, we completed a private placement with certain accredited investors for long-term debt in the amount of
$500.0 million, which was layered into four series. The first series of $130.0 million has an interest rate of 4.08% and is due in
June 2019. The second series of $160.0 million has an interest rate of 4.52% and is due in June 2021. The third series of
$130.0 million has an interest rate of 4.67% and is due in June 2023. The fourth series of $80.0 million has an interest rate of
4.82% and is due in June 2026. Under the agreement, we may from time to time issue additional series of notes pursuant to the
agreement, provided that the aggregate principal amount of all notes outstanding at any time may not exceed $1.5 billion.

In March 2013, we issued $100 million of notes with an interest rate of 4.71%, which mature in fiscal 2033, in a

private placement to institutional investors.

In July 2013, we issued $80 million and $100 million of notes with interest rates of 3.85% and 3.80%, respectively,

which mature in fiscal 2025, in two private placements to institutional investors.

Other Financing:

During the years ended August 31, 2014 and August 31, 2013, we made a payment of $66.0 million in each year

related to our purchase of the NCRA noncontrolling of interests.

Distributions to noncontrolling interests for the years ended August 31, 2014, 2013 and 2012 were $0.6 million, $1.4

million and $78.6 million, respectively. The decrease from 2012 is the result of our acquisition of a controlling interest in
NCRA. See Note 17, Acquisitions, to our audited financial statements included in this Annual Report on Form 10-K for
additional information.

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During the years ended August 31, 2014 and August 31, 2013, changes in checks and drafts outstanding resulted in a

decrease in cash flows of $17.8 million and $20.4 million, respectively. During the year ended August 31, 2012, changes in
checks and drafts outstanding resulted in increases in cash flows of $6.4 million.

In accordance with our bylaws and by action of the Board of Directors, annual net earnings from patronage sources are

distributed to consenting patrons following the close of each fiscal year. Patronage refunds are calculated based on amounts
using financial statement earnings. The cash portion of the patronage distribution is determined annually by the Board of
Directors, with the balance issued in the form of qualified and non-qualified capital equity certificates. Consenting patrons have
agreed to take both the cash and qualified capital equity certificate portion allocated to them from our previous fiscal year’s
income into their taxable income, and as a result, we are allowed a deduction from our taxable income for both the cash
distribution and the allocated qualified capital equity certificates, as long as the cash distribution is at least 20% of the total
patronage distribution. For the years ended August 31, 2013 and August 31, 2012, 10% of earnings from patronage business
was added to our capital reserves and the remaining 90% was primarily distributed during the second fiscal quarters of the
years ended August 31, 2014 and August 31, 2013, totaling $841.1 million and $976.0 million, respectively. The cash portion of
the qualified distributions was deemed by the Board of Directors to be 40% for fiscal 2013, and for fiscal 2012 it was 35% and
40% for individual and non-individual members, respectively. Cash related to these distributions was $286.8 million and
$380.9 million and was paid during the years ended August 31, 2014 and August 31, 2013, respectively. During the year ended
August 31, 2012, we distributed patronage refunds of $676.3 million, of which the cash portion was $260.7 million.

In accordance with our bylaws and by action of the Board of Directors, 10% of the earnings from patronage business
for the year ended August 31, 2014 was added to our capital reserves and the remaining 90%, or an estimated $810.6 million,
will be distributed as patronage in fiscal 2015, in the form of qualified and non-qualified equity certificates and cash. The cash
portion of the qualified distribution, determined by the Board of Directors to be 40% for both individual members and non-
individual members, is expected to be approximately $264.8 million and is classified as a current liability on our August 31,
2014 Consolidated Balance Sheet in dividends and equities payable.

Redemptions of capital equity certificates approved by the Board of Directors are divided into two pools, one for non-

individuals (primarily member cooperatives) who may participate in an annual retirement program for qualified equities held
by them and another for individuals who are eligible for qualified equity redemptions at age 70 or upon death. In accordance
with authorization from the Board of Directors, we expect total redemptions related to the year ended August 31, 2014, that will
be distributed in fiscal 2015, to be an estimated $130.1 million. These expected distributions are classified as a current liability
on the August 31, 2014 Consolidated Balance Sheet.

For the years ended August 31, 2014, 2013 and 2012, we redeemed in cash, qualified equities in accordance with

authorization from the Board of Directors, in the amounts of $99.6 million, $193.4 million and $145.7 million, respectively.

Our 8% Preferred Stock is listed on the NASDAQ under the symbol CHSCP. On August 31, 2014, we had

12,272,003 shares of 8% Preferred Stock outstanding with a total redemption value of approximately $306.8 million, excluding
accumulated dividends. The 8% Preferred Stock accumulates dividends at a rate of 8% per year, which are payable quarterly.
During the year ended August 31, 2013, we amended the terms of the 8% Preferred Stock to provide that it may not be
redeemed at our option until July 18, 2023.

On August 31, 2014, we had 18,071,363 shares of our Class B Series 1 Preferred Stock outstanding with a total
redemption value of $451.8 million, excluding accumulated dividends. We issued 11,319,175 shares of Class B Series 1
Preferred Stock in September 2013, which yielded net proceeds of approximately $273.3 million after deducting the
underwriting discount and offering expenses payable by us. We issued an additional 6,752,188 shares of Class B Series 1
Preferred Stock in August 2014, to redeem approximately $200.0 million of qualified equity certificates to eligible owners at a
market price of $29.62 per share. Our Class B Series 1 Preferred Stock is listed on the NASDAQ under the symbol CHSCO
and accumulates dividends at a rate of 7.875% per year, which are payable quarterly. The Class B Series 1 Preferred Stock may
be redeemed at our option beginning September 26, 2023.

In March 2014, we issued 16,800,000 shares of Class B Series 2 Preferred Stock with a total redemption value of
$420.0 million excluding accumulated dividends. Net proceeds from the sale of our Class B Series 2 Preferred Stock, after
deducting the underwriting discount and offering expenses payable by us, were $406.3 million. The Class B Series 2 Preferred
Stock is listed on the NASDAQ under the symbol CHSCN and accumulates dividends at a rate of 7.10% per year until March
31, 2024, and at a rate equal to the three-month LIBOR plus 4.298%, not to exceed 8.00% per annum, subsequent to March 31,
2024, which are payable quarterly. Our Class B Series 2 Preferred Stock may not be redeemed at our option until March 31,
2024.

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In September 2014, we issued 19,700,000 shares of Class B Series 3 Preferred Stock with a total redemption value of

$492.5 million, excluding accumulated dividends. Net proceeds from the sale of our Class B Series 3 Preferred Stock, after
deducting the underwriting discount and offering expenses payable by us, were approximately $477.0 million. The Class B
Series 3 Preferred Stock is listed on the NASDAQ under the symbol CHSCM and accumulates dividends at a rate of 6.75% per
year until September 30, 2024, and at a rate equal to the three-month LIBOR plus 4.155%, not to exceed 8.00% per annum,
subsequent to September 30, 2024, which are payable quarterly. Our Class B Series 3 Preferred Stock may not be redeemed at
our option until September 30, 2024.

We made dividend payments on our preferred stock of $50.8 million, $24.5 million, and $24.5 million, during the

years ended August 31, 2014, 2013 and 2012, respectively.

Off Balance Sheet Financing Arrangements

Guarantees:

We are a guarantor for lines of credit and performance obligations of related companies. Our bank covenants allow
maximum guarantees of $1.0 billion, of which $105.2 million were outstanding on August 31, 2014. 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 are current as of August 31, 2014.

Operating leases:

Minimum future lease payments required under noncancelable operating leases as of August 31, 2014 were $429.8

million.

Debt:

There is no material off balance sheet debt.

Contractual Obligations

We had certain contractual obligations at August 31, 2014, which require the following payments to be made:

Long-term debt obligations (1).................. $
Interest payments (2) .................................
Operating leases .......................................
Purchase obligations (3)
Mandatorily redeemable
noncontrolling interests (4) ......................
Accrued liability for contingent
crack spread payments related
to purchase of noncontrolling
interests (5) ..............................................
Other liabilities (6) ....................................
Total obligations....................................... $

_______________________________________

Total

Less than
1 Year

1 - 3
Years

3 - 5
Years

More than
5 Years

Payments Due by Period

(Dollars in thousands)

1,452,300

156,836

289,178

312,741

419,436
429,754

70,757
101,326

5,917,871

5,325,357

114,947
140,462

220,856

81,409
84,875

100,131

693,545

152,323
103,091

271,527

218,588

65,981

152,607

—

114,917

109,308

—

12,217

64,758

31,090

50,159

22,170

—

43,831

8,662,174

5,732,474

1,013,898

651,485

1,264,317

(1) Excludes fair value adjustments to the long-term debt reported on our Consolidated Balance Sheet at August 31, 2014

resulting from fair value interest rate swaps and the related hedge accounting.

(2) Based on interest rates and long-term debt balances at August 31, 2014.

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(3) Purchase obligations are legally binding and enforceable agreements to purchase goods or services that specify all

significant terms, including fixed or minimum quantities; fixed, minimum or variable price provisions; and time of the
transactions.

(4)

Includes commitments to purchase the remaining shares of NCRA and is recorded on our Consolidated Balance Sheet
as of August 31, 2014, where the long-term portion is reported at its present value of $148.8 million.

(5) Based on estimated fair value at August 31, 2014 and is recorded on our Consolidated Balance Sheet.

(6) Other liabilities include the long-term portion of deferred compensation and contractual redemptions. Of the total

other liabilities of $0.5 billion on our Consolidated Balance Sheet at August 31, 2014, the timing of the payments of
$835.5 million of such liabilities cannot be determined.

Critical Accounting Policies

Our consolidated financial statements are prepared in conformity with accounting principles generally accepted in the
United States of America (U.S. GAAP). The preparation of these consolidated financial statements requires the use of estimates
as well as management’s judgments and assumptions regarding matters that are subjective, uncertain or involve a high degree
of complexity, all of which affect the results of operations and financial condition for the periods presented. We believe that of
our significant accounting policies, the following may involve a higher degree of estimates, judgments and complexity.

Inventory Valuation and Reserves

Grain, processed grain, oilseed and processed oilseed are stated at net realizable values which approximate market

values. All other inventories are stated at the lower of cost or market. The costs of certain energy inventories (wholesale refined
products, crude oil and asphalt) are determined on the last-in, first-out (LIFO) method; all other inventories of non-grain
products purchased for resale are valued on the first-in, first-out (FIFO) and average cost methods. Estimates are used in
determining the net realizable values of grain and oilseed and processed grains and oilseeds inventories. These estimates
include the measurement of grain in bins and other storage facilities, which use formulas in addition to actual measurements
taken to arrive at appropriate quantity. Other determinations made by management include quality of the inventory and
estimates for freight. Grain shrink reserves and other reserves that account for spoilage also affect inventory valuations. If
estimates regarding the valuation of inventories, or the adequacy of reserves, are less favorable than management’s
assumptions, then additional reserves or write-downs of inventories may be required.

Derivative Financial Instruments

We enter into exchange-traded commodity futures and options contracts to hedge our exposure to price fluctuations on

energy, grain and oilseed transactions to the extent considered practicable for minimizing risk. Futures and options contracts
used for hedging are purchased and sold through regulated commodity exchanges. We also use over-the-counter (OTC)
instruments to hedge our exposure on flat price fluctuations. Fluctuations in inventory valuations, however, may not be
completely hedged, due in part to the absence of satisfactory hedging facilities for certain commodities and geographical areas
and, in part, to our assessment of our exposure from expected price fluctuations. We also manage our risks by entering into
fixed-price purchase contracts with preapproved producers and establishing appropriate limits for individual suppliers. Fixed-
price sales contracts are entered into with customers of acceptable creditworthiness, as internally evaluated. The fair values of
futures and options contracts are determined primarily from quotes listed on regulated commodity exchanges. Fixed-price
purchase and sales contracts are with various counterparties, and the fair values of such contracts are determined from the
market price of the underlying product. We are exposed to loss in the event of nonperformance by the counterparties to the
contracts and, therefore, contract values are reviewed and adjusted to reflect potential nonperformance. Risk of nonperformance
by counterparties includes the inability to perform because of a counterparty’s financial condition and also the risk that the
counterparty will refuse to perform on a contract during periods of price fluctuations where contract prices are significantly
different than the current market prices.

Pension and Other Postretirement Benefits

Pension and other postretirement benefits costs and obligations are dependent on assumptions used in calculating such
amounts. These assumptions include discount rates, health care cost trend rates, benefits earned, interest costs, expected return
on plan assets, mortality rates and other factors. In accordance with U.S. GAAP, actual results that differ from the assumptions
are accumulated and amortized over future periods and, therefore, generally affect recognized expenses and the recorded
obligations in future periods. While our management believes that the assumptions used are appropriate, differences in actual
experience or changes in assumptions may affect our pension and other postretirement obligations and future expenses.

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Deferred Tax Assets and Uncertain Tax Positions

We assess whether a valuation allowance is necessary to reduce our deferred tax assets to the amount that we believe

is more likely than not to be realized. While we have considered future taxable income, as well as other factors, in assessing the
need for the valuation allowance, in the event that we were to determine that we would not be able to realize all, or part of, our
net deferred tax assets in the future, an adjustment to our deferred tax assets would be charged to income in the period such
determination was made. We are also significantly impacted by the utilization of tax credits, some of which were passed to us
from NCRA, related to refinery upgrades that enable us to produce ultra-low sulfur fuels. Our tax credit carryforwards are
available to offset future federal and state tax liabilities with the tax credits becoming unavailable to us if not used by their
expiration date. Our net operating loss carryforwards for tax purposes are available to offset future taxable income. If our loss
carryforwards are not used, these loss carryforwards will expire.

Tax benefits related to uncertain tax positions are recognized in our financial statements if it is more likely than not
that the position would be sustained upon examination by a tax authority that has full knowledge of all relevant information.
The benefits are measured using a cumulative probability approach. Under this approach, we record in our financial statements
the greatest amount of tax benefits that have a more than 50% probability of being realized upon final settlement with the tax
authorities. In determining these tax benefits, we assign probabilities to a range of outcomes that we feel we could ultimately
settle on with the tax authorities using all relevant facts and information available at the reporting date. Due to the complexity
of these uncertainties, the ultimate resolution may result in a benefit that is materially different than our current estimate.

Long-Lived Assets

Property, plant and equipment is depreciated or amortized over the expected useful lives of individual or groups of

assets based on the straight-line method. Economic circumstances, or other factors, may cause management’s estimates of
expected useful lives to differ from actual.

All long-lived assets, including property, plant and equipment, goodwill, investments in unconsolidated affiliates and
other identifiable intangibles, are evaluated for impairment in accordance with U.S. GAAP, at least annually for goodwill, and
whenever events or changes in circumstances indicate that the carrying amount of a long-lived asset or asset group may not be
recoverable. For goodwill, our annual impairment testing occurs in our third quarter. An impaired asset is written down to its
estimated fair value based on the best information available. Fair value is generally measured by discounting estimated future
cash flows. Considerable management judgment is necessary to estimate discounted future cash flows and may differ from
actual.

We have asset retirement obligations with respect to certain of our refineries and other assets due to various legal

obligations to clean and/or dispose of the component parts at the time they are retired. In most cases, these assets can be used
for extended and indeterminate periods of time, as long as they are properly maintained and/or upgraded. It is our practice and
current intent to maintain refineries and related assets and to continue making improvements to those assets based on
technological advances. As a result, we believe our refineries and related assets have indeterminate lives for purposes of
estimating asset retirement obligations because dates or ranges of dates upon which we would retire a refinery and related
assets cannot reasonably be estimated at this time. When a date or range of dates can reasonably be estimated for the retirement
of any component part of a refinery or other asset, we will estimate the cost of performing the retirement activities and record a
liability for the fair value of that future cost.

We have other assets that we may be obligated to dismantle at the end of corresponding lease terms subject to lessor
discretion for which we have recorded asset retirement obligations. Based on our estimates of the timing, cost and probability
of removal, these obligations are not material.

Effect of Inflation and Foreign Currency Transactions

We believe that inflation and foreign currency fluctuations have not had a significant effect on our operations during

the three years ended August 31, 2014 since we conduct a significant portion of our business in U.S. dollars.

Recent Accounting Pronouncements

In May 2014, the Financial Accounting Standards Board issued Accounting Standards Update (ASU) No. 2014-09,

“Revenue from Contracts with Customers." ASU No. 2014-09 requires an entity to recognize revenue to depict the transfer of
promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled
42

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in exchange for those goods or services. The guidance also requires an entity to disclose sufficient qualitative and quantitative
information surrounding the nature, amount, timing and uncertainty of revenue and cash flows arising from contracts from
customers. This ASU supersedes the revenue recognition requirements in Topic 605, Revenue Recognition, and most industry-
specific guidance throughout the Industry Topics of the Codification. The amendments in this standard are effective beginning
with our fiscal year starting September 1, 2017. We are currently evaluating the impact the adoption will have on our
consolidated financial statements in fiscal 2018.

ITEM 7A.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

COMMODITY PRICE RISK

When we enter into a commodity or freight purchase or sales contract, we incur risks related to price change and

performance (including delivery, quality, quantity and counterparty credit). We are exposed to risk of loss in the market value of
positions held, consisting of inventory and purchase contracts at a fixed or partially fixed price in the event market prices
decrease. We are also exposed to risk of loss on our fixed or partially fixed price sales contracts in the event market prices
increase.

Our hedging activities reduce the effects of price volatility, thereby protecting against adverse short-term price
movements, but also limit the benefits of short-term price movements. To reduce the price change risks associated with holding
fixed price commitments, we generally take opposite and offsetting positions by entering into commodity futures contracts or
options, to the extent practical, in order to arrive at a net commodity position within the formal position limits we have
established and deemed prudent for each commodity. These contracts are purchased and sold on regulated commodity futures
exchanges for grain, and regulated mercantile exchanges for refined products and crude oil. We also use OTC instruments to
hedge our exposure to price fluctuations on commodities and fixed price arrangements. The price risk we encounter for crude
oil and most of the grain and oilseed volume we handle can be hedged. Price risk associated with fertilizer and certain grains
cannot be hedged with futures because there are no futures for these commodities and, as a result, risk is managed through the
use of forward sales contracts and other pricing arrangements and, to some extent, cross-commodity futures hedging. These
contracts are economic hedges of price risk, but are not designated as hedging instruments for accounting purposes. The
contracts are recorded on our Consolidated Balance Sheets at fair values based on quotes listed on regulated commodity
exchanges or are based on the market prices of the underlying products listed on the exchanges, with the exception of certain
fertilizer and propane contracts, which are accounted for as normal purchase and normal sales transactions. Unrealized gains
and losses on these contracts are recognized in cost of goods sold in our Consolidated Statements of Operations using market-
based prices.

When a futures contract is entered into, an initial margin deposit must be sent to the applicable exchange or broker.

Our policy is to primarily maintain hedged positions in grain and oilseed. Our profitability from operations is

Hedging arrangements do not protect against nonperformance by counterparties to contracts. We primarily use

exchange traded instruments, which minimizes our counterparty exposure. We evaluate that exposure by reviewing contracts
and adjusting the values to reflect potential nonperformance. Risk of nonperformance by counterparties includes the inability to
perform because of a counterparty’s financial condition and also the risk that the counterparty will refuse to perform on a
contract during periods of price fluctuations where contract prices are significantly different than the current market prices. We
manage our risks by entering into fixed price purchase and sales contracts with preapproved producers and by establishing
appropriate limits for individual suppliers. Fixed price contracts are entered into with customers of acceptable creditworthiness,
43

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as internally evaluated. Historically, we have not experienced significant events of nonperformance on open contracts.
Accordingly, we only adjust the estimated fair values of specifically identified contracts for nonperformance. Although we have
established policies and procedures, we make no assurances that historical nonperformance experience will carry forward to
future periods.

A 10% adverse change in market prices would not materially affect our results of operations, since we use commodity

and freight futures and forward contracts as economic hedges of price risk, and since our operations have effective economic
hedging requirements as a general business practice.

INTEREST RATE RISK

Short-term debt used to finance inventories and receivables is represented by notes payable with maturities of 30 days

or less, so that our blended interest rate for all such notes approximates current market rates. In fiscal 2014, we entered into
interest rate swaps with a notional amount of $260.0 million designated as fair value hedges of portions of our fixed-rate debt.
Our objective is to offset changes in the fair value of the debt associated with the risk of variability in the 3-month U.S. Dollar
London Interbank Offered Rate (LIBOR) interest rate, in essence converting the fixed-rate debt to variable-rate debt. Offsetting
changes in the fair values of both the swap instruments and the hedged debt are recorded contemporaneously each period and
only create an impact to earnings to the extent that the hedge is ineffective. During fiscal 2014 we recorded offsetting fair value
adjustments of $4.2 million, with no ineffectiveness recorded in earnings. CHS Capital, our wholly-owned finance subsidiary,
has interest rate swaps that lock the interest rates of the underlying loans with a combined notional amount of $5.0 million
expiring at various times through fiscal 2018, with $0.4 million of the notional amount expiring during fiscal 2015. None of
CHS Capital’s interest rate swaps qualify for hedge accounting and as a result, changes in fair value are recorded in earnings
within interest, net in our Consolidated Statements of Operations. Long-term debt used to finance non-current assets carries
various fixed interest rates and is payable at various dates to minimize the effects of market interest rate changes. The
weighted-average interest rate on fixed rate debt outstanding on August 31, 2014 was approximately 5.6%.

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The table below provides information about our outstanding debt and derivative financial instruments that are

sensitive to changes in interest rates. For debt obligations, the table presents scheduled contractual principal payments and
related weighted average interest rates for the fiscal years presented. For interest rate swaps, the table presents notional
amounts for payments to be exchanged by expected contractual maturity dates for the fiscal years presented and interest rates
noted in the table.

Expected Maturity Date

2015

2016

2017

2018

2019

Thereafter

Total

(Dollars in thousands)

Fair Value
Asset
(Liability)

Liabilities:

Variable rate
miscellaneous
short-term notes payable . $ 840,699

Average interest rate .......
Variable rate CHS Capital
short-term notes payable . $ 318,774

1.7%

— $

— $ 840,699

$ (840,699)

—

1.7%

— $

— $ 318,774

$ (318,774)

Average interest rate .......

1.1%

—

1.1%

Fixed rate long-term debt .. $ 156,836

$139,326

$149,852

$162,119

$150,622

$693,545

$1,452,300

$(1,425,658)

Average interest rate .......

Interest Rate Derivatives:

Fixed to variable long-
term debt interest rate
swaps ............................... $
Average pay rate (a) .........
Average receive rate (b) ...

Variable to fixed CHS
Capital notes payable
interest rate swaps ........... $
Average pay rate (c) .........
Average receive rate (d) ...

5.8%

5.9%

5.7%

5.1%

4.1%

4.4%

4.9%

— $

— $130,000

$130,000

$ 260,000

4,200

—

0.24%

range

0.24%

range

417

$ 1,756

— $ 2,826

— $

4,999

(130)

range

0.16%

range

0.16%

—

range

0.16%

—

_______________________________________

(a) Average three month LIBOR for fiscal 2014 plus spreads ranging from 2.009% - 2.228%

(b) Four swaps with notional amount of $260 million with rates of 4.08% and 4.67%

(d) Average one month LIBOR for fiscal 2014

FOREIGN CURRENCY RISK

We conduct a significant portion of our business in U.S. dollars. Our Ag segment continued to expand its international

operations in fiscal 2014 with planned future growth. We had minimal, non-material risk regarding foreign currency
fluctuations during fiscal 2014 and in prior years, as a substantial amount of international sales were denominated in
U.S. dollars. From time to time, we enter into foreign currency futures contracts to mitigate currency fluctuations. Foreign
currency fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the
competitiveness of U.S. agricultural products compared to the same products offered by alternative sources of world supply. As
of August 31, 2014, $2.5 million associated with foreign currency contracts was included in derivative assets and $2.2 million
included in derivative liabilities.

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ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The financial statements listed in Item 15(a)(1) are set forth beginning on page F-1. Financial statement schedules are
included in Schedule II in Item 15(a)(2). Supplementary financial information required by Item 302 of Regulation S-K for each
quarter during the years ended August 31, 2014 and 2013 is presented below.

August 31,
2014

May 31,
2014

February 28,
2014

November 30,
2013

(Unaudited)
(Dollars in thousands)

Revenues ..................................................................... $
Gross profit .................................................................
Income before income taxes .......................................
Net income ..................................................................
Net income attributable to CHS Inc. ...........................

9,990,240

11,967,398

9,680,274

11,026,121

298,261

131,713

199,485

199,725

506,624

439,590

379,873

379,455

441,434

290,332

260,621

260,069

400,916

269,668

243,028

242,186

August 31,
2013

May 31,
2013

February 28,
2013

November 30,
2012

(Unaudited)
(Dollars in thousands)

10,950,985

11,936,556

9,882,378

11,709,938

300,576

125,233

122,600

122,797

456,911

279,476

252,329

250,796

470,647

299,387

275,518

275,086

545,518

381,898

345,881

343,707

ITEM 9.
FINANCIAL DISCLOSURE

CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND

None.

ITEM 9A.

CONTROLS AND PROCEDURES

Disclosure of Controls and Procedures:

We maintain disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Securities

Exchange Act of 1934, as amended) that are designed to provide reasonable assurance that information required to be disclosed
by us in the reports we file or submit under the Securities Exchange Act of 1934, as amended, is recorded, processed,
summarized and reported, within the time periods specified by the Securities and Exchange Commission’s rules and forms and
that such information is accumulated and communicated to our management, including our principal executive officer and
principal financial officer, or persons performing similar functions, as appropriate to allow timely decisions regarding
disclosure. In designing and evaluating our disclosure procedures, we recognize that any controls and procedures, no matter
how well designed and operated can provide only reasonable assurance of achieving the desired control objectives and we
necessarily are required to apply our judgment in evaluating the cost-benefit relationship of possible controls and procedures.

Our management evaluated, with the participation of our Chief Executive Officer and Chief Financial Officer, the
effectiveness of the design and operation of our disclosure controls and procedures as of August 31, 2014. Based upon that
evaluation, the Chief Executive Officer and the Chief Financial Officer have concluded that our disclosure controls and
procedures were effective, at the reasonable assurance level, as of August 31, 2014, the end of the period covered in this Annual
Report on Form 10-K.

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Management’s Annual Report on Internal Control Over Financial Reporting:

The financial statements, financial analyses and all other information included in this Annual Report on Form 10-K

were prepared by our management, which is responsible for establishing and maintaining adequate internal control over
financial reporting. Our internal control over financial reporting is designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles. Our internal control over financial reporting includes those policies and procedures that: pertain
to the maintenance of records that, in reasonable detail, accurately and fairly reflect our transactions and our dispositions of
assets; provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in
accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in
accordance with authorizations of our management and directors; and provide reasonable assurance regarding prevention or
timely detection of unauthorized acquisition and use or disposition of our assets that could have a material effect on the
financial statements.

There are inherent limitations in the effectiveness of any internal control, including the possibility of human error and

the circumvention or overriding of controls. Accordingly, even effective internal controls can provide only reasonable
assurances with respect to financial statement preparation. Further, because of changes in conditions, the effectiveness of
internal controls may vary over time.

Management assessed the design and operating effectiveness of our internal control over financial reporting as of

August 31, 2014. In making this assessment, management used the criteria set forth by the Committee of Sponsoring
Organizations of the Treadway Commission in Internal Control — Integrated Framework (1992). Based on management’s
assessment using this framework, we believe that, as of August 31, 2014, our internal control over financial reporting was
effective.

This Annual Report on Form 10-K does not include an attestation report of our independent registered public
accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our
independent registered public accounting firm pursuant to the Financial Reform Bill passed in July 2010, that permits us to
provide only management’s report in this Annual Report on Form 10-K.

Change in Internal Control over Financial Reporting:

During our fourth fiscal quarter, there was no change in our internal control over financial reporting (as defined in

Rule 13a-15(f) under the Securities Exchange Act of 1934, as amended) that has materially affected, or is reasonably likely to
materially affect, our internal control over financial reporting.

ITEM 9B.

OTHER INFORMATION

None.

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ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

BOARD OF DIRECTORS

PART III.

The table below lists our directors, and certain information regarding each of our directors, as of August 31, 2014.

Name and Address
Donald Anthony ..............................................................................................
Robert Bass .....................................................................................................
David Bielenberg ............................................................................................
Clinton J. Blew................................................................................................
Dennis Carlson ................................................................................................
Curt Eischens ..................................................................................................
Jon Erickson ....................................................................................................
Steve Fritel ......................................................................................................
Jerry Hasnedl...................................................................................................
Alan Holm.......................................................................................................
David Johnsrud ...............................................................................................
David Kayser...................................................................................................
Randy Knecht..................................................................................................
Greg Kruger ....................................................................................................
Edward Malesich.............................................................................................
Steve Riegel ....................................................................................................
Daniel Schurr ..................................................................................................

Age

Director
Region

Director Since

2006

1994

2009

2010

2001

1990

2011

2003

1995

2013

2012

2006

2001

2008

2011

2006

The qualifications for our Board of Directors are listed below under “Director Elections and Voting”. In general, our

directors operate large commercial agricultural enterprises requiring expertise in all areas of management, including financial
oversight. They also have experience in serving on local cooperative association boards, and participate in a variety of
agricultural and community organizations. Our directors complete the National Association of Corporate Directors
comprehensive Director Professionalism course, and earn the Certificate of Director Education.

Donald Anthony (2006): Chairs Corporate Risk Committee and serves on CHS Foundation Finance and Investment

Committee. Chaired the Nebraska Beginning Farmer Board for the last 5 years and has been the 3rd District producer
representative for 10 years. Served as director and chairman for All Points Cooperative of Gothenburg, Neb., and Lexington
(Neb.) Co-op Oil. Former director of Farmland Industries. Holds a bachelor’s degree in agricultural economics from the
University of Nebraska. Raises corn, soybeans and alfalfa near Lexington, Neb. Mr. Anthony’s principal occupation has been
farming for the last five years or longer.

Robert Bass (1994): Serves on Governance and Government Relations Committees. Served as first vice chairman and
on Capital and Audit Committees. Served as director and officer for the former Co-op Country Partners Cooperative, Baraboo,
Wis., and its predecessors for 15 years, including seven years as chairman. Served as director for Cooperative Network,
including three years as vice chairman. Holds a bachelor’s degree in agricultural education from the University of Wisconsin —
Madison. Operates a crop and dairy operation near Reedsburg, Wis. Mr. Bass’ principal occupation has been farming for the
last five years or longer.

David Bielenberg, chairman (elected in 2009; chairman since 2012): Chairs Executive Committee. Served as
assistant secretary-treasurer, chaired the Audit Committee and served on Government Relations Committee. Previously served
on the CHS Board of Directors from 2002-2006. Serves on Nationwide Insurance Board Council. Chair of the East Valley
Water District and former director and board president for Wilco Farmers Cooperative, Mount Angel, Ore. Active in a broad
range of agricultural and cooperative organizations. Holds a bachelor’s of science degree in agricultural engineering from
Oregon State University and is a graduate of Texas A & M University's executive program for agricultural producers. Operates

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a diverse agricultural business near Silverton, Ore., including seed crops, vegetables, soft white wheat, greenhouse plant
production and timberland. Mr. Bielenberg’s principal occupation has been farming for the last five years or longer.

Clinton J. Blew (2010): Chairs CHS Foundation Finance and Investment Committee and serves on the Audit
Committee. Chair of the Mid Kansas Coop (MKC), Moundridge, Kan. Served on 2010 CHS Resolutions Committee and holds
a position on the Hutchinson Community College Ag Advisory Board. Past director of Reno County Cattlemen’s Board.
Attended the CHS New Leader Institute. Member of Kansas Livestock Association, Texas Cattle Feeder’s Association and Red
Angus Association of America. Holds an applied science degree in farm and ranch management from Hutchinson Community
College. Farms in a family partnership that includes irrigated corn and soybeans, dry land wheat, milo and soybeans, and a
commercial cow/calf business. Mr. Blew’s principal occupation has been farming for the last five years or longer.

Dennis Carlson, first vice chairman (2001): Chairs Capital Committee and serves as first vice chairman of the

Executive Committee. Served as second vice chairman, chairman of CHS Foundation Finance and Investment Committee, and
as a member of the Executive Committee. Former director and past chairman of Farmers Union Oil Company, Bismarck/
Mandan, N.D. Raises wheat, sunflowers and soybeans. Mr. Carlson’s principal occupation has been farming for the last five
years or longer.

Curt Eischens, assistant secretary-treasurer (1990): Serves on Capital Committee and is assistant secretary-treasurer

of the Executive Committee. Served as second vice chairman, chaired Corporate Risk Committee and was a member of the
CHS Foundation Finance and Investment Committee. Serves as a director of Farmers Co-op Association, Canby, Minn.,
previous chairman and serves as vice chairman for Cooperative Network. Holds a certificate in farm management from Canby
Vocational-Technical College. Operates a corn and soybean farm near Minneota, Minn. Mr. Eischens’ principal occupation has
been farming for the last five years or longer.

Jon Erickson (2011): Serves on Audit and Government Relations Committees. Served on Capital Committee. Past

chairman of Enerbase and is active in a wide range of agricultural community organizations. Holds a bachelor’s degree in
agricultural economics from North Dakota State University. Raises grains and oilseeds and operates a commercial Hereford/
Angus cow-calf business near Minot, N.D. Mr. Erickson’s principal occupation has been farming for the last five years or
longer.

Steve Fritel, second vice chairman (2003): Serves as chairman of Governance Committee and as second vice chair of

Executive Committee. Served as secretary-treasurer and on Executive, Capital, Governance, Corporate Risk, and Government
Relations Committees. Director for Rugby (ND) Farmers Union Oil Co., former director and chairman for Rugby Farmers
Union Elevator, and previous member of the former CHS Wheat Milling Defined Member Board. Currently a director of
Envision. Former director of North Central Experiment Station Board of Visitors and North Dakota Farm and Ranch Business
Management Advisory Board and member of numerous agricultural and cooperative organizations. Earned an associate’s
degree from North Dakota State College of Science, Wahpeton, N.D. Raises spring wheat, barley, soybeans, edible beans and
confection sunflower near Rugby, N.D. Mr. Fritel’s principal occupation has been farming for the last five years or longer.

Jerry Hasnedl (1995): Serves on Government Relations and Corporate Risk Committees. Previously served as

chairman, secretary-treasurer, and as chair of the Executive, CHS Foundation, and Capital Committees. Previous chairman of
the former CHS Wheat Milling Defined Member Board. Serves on the Cooperative Network Board. Former director and
secretary for St. Hilaire (Minn.) Cooperative Elevator and Northwest Grain. Member of American Coalition for Ethanol and
Cooperative Network and serves on Minnesota Sunflower Research and Promotion Council. Earned associate’s degree in
agricultural economics and has certification in advanced farm business management from Northland College, Thief River Falls,
Minn. Operates a diverse operation near St. Hilaire, Minn., which includes small grains, soybeans, corn, sunflowers, malting
barley, canola and alfalfa. Mr. Hasnedl’s principal occupation has been farming for the last five years or longer.

Alan Holm (2013): Serves as a member of the Capital and CHS Foundation Finance and Investment committees.

Previously served two years on the CHS Resolutions Committee, including one as chairman. He has chaired the River Region
Co-op for the past eight years and has served on the board for 20 years. Also served as chairman of the Southern Minnesota Co-
op Directors’ Association and secretary of the Minnesota State Co-op Directors’ Association. In addition, also held leadership
positions with the Brown County Farm Service Agency county committee, Ag Star Financial Services Advisory Board and
Renville Co-op Transport. Raises corn, soybeans, sweet corn, peas and hay on 1,400 acres that has been in his family since
1870. Also raises a 50-head cow-calf herd. Holds an associate’s degree in machine tool technology from Mankato Technical
College. Has participated in numerous cooperative and agriculture educational programs, along with being an active coach and
leader in area youth baseball and softball programs. Mr. Holm's principal occupation has been farming for the last five years or
longer.

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David Johnsrud (2012): Serves as a member of the Government Relations and Governance Committees. Serves as

director and chairman for AgCountry Farm Credit Services. Serves on the Minnesota Farm Credit Legislative Committee, with
three years as chairman. Served on the Farmers Union Oil and Prairie Lake Coop boards of directors, with 15 years as board
secretary. Johnsrud served on the Mid-Minnesota Association Board, with terms as secretary and chairman, as well as on the
State Directors’ Association, with terms as treasurer. Served on the CHS Annual Meeting Credentials Committee in 2000 and
2001 and on the Resolutions Committee in 2002 and 2003. In 2010 he completed the Farm Credit Services Premier
Governance Series and became a Certified Director and is a 2010 graduate of Minnesota Agricultural Rural Leadership Class V.
Farms in partnership with his brother and nephew. Mr. Johnsrud’s principal occupation has been farming for the last five years
or longer.

David Kayser (2006): Serves on Corporate Risk and CHS Foundation Finance and Investment Committees. Past

chairman of South Dakota Association of Cooperatives and previously served on CHS Resolutions Committee. Former director
and chairman for Farmer’s Alliance, Mitchell, S.D. Raises corn, soybeans and hay near Alexandria, S.D., and operates a cow-
calf and feeder calf business. Mr. Kayser’s principal occupation has been farming for the last five years or longer.

Randy Knecht (2001): Serves on Government Relations and Capital Committees. Served as assistant secretary-
treasurer, and chaired Governance and Government Relations Committees. Previously served on boards of the American
Coalition for Ethanol and Four Seasons Cooperative, Britton, S.D., and former director and chairman of Northern Electric
Cooperative and director of Dakota Value Capture Cooperative. Holds a bachelor’s degree in agriculture from South Dakota
State University. Operates a diversified crop farm and cattle ranch near Houghton, S.D. Mr. Knecht’s principal occupation has
been farming for the last five years or longer.

Greg Kruger (2008): Serves on Audit and CHS Foundation Finance and Investment Committees. Served on Capital
and Government Relations Committees. Director, and previous chairman, of Countryside Cooperative, Durand, Wis., since its
creation in 1998. Served two years each on the CHS Resolutions and CHS Rules and Credentials Committees. Serves a wide
range of agricultural and local government roles, including as president of Trempealeau County Farm Bureau and chairman of
the local Land Use Planning Committee. Operates an 80-cow dairy and crop enterprise near Eleva, Wis. Mr. Kruger’s principal
occupation has been farming for the last five years or longer.

Edward Malesich (2011): Serves on Government Relations and Corporate Risk Committees. Served 12 years on the
board of Rocky Mountain Supply Inc., Belgrade, Mont., and 18 years on one of its predecessor cooperatives. Has served for 13
years on the board of Northwest Farm Credit Services. Holds a bachelor’s degree in agricultural production from Montana
State University. Raises Angus cattle, wheat, malt barley and hay near Dillon, Mont. Mr. Malesich’s principal occupation has
been farming for the last five years or longer.

Steve Riegel (2006): Serves as chairman of Government Relations Committee and on Governance Committee. Served
on Corporate Responsibility and Capital Committees. Director and former chairman of Pride Ag Resources, Dodge City (Kan.)
and previously served as director and officer for Ford-Kingsdown Cooperative and Co-op Service, Inc. Advisory director for
Bucklin (Kan.) National Bank, and has served on local school board. Attended Fort Hays (Kan.) State University, majoring in
agriculture, business and animal science. Raises irrigated corn, soybeans, alfalfa, dryland wheat and milo near Ford, Kan.
Mr. Riegel’s principal occupation has been farming for the last five years or longer.

Daniel Schurr, secretary-treasurer (2006): Serves on Executive Committee and is chairman of Audit Committee.
Previously served as first vice chairman and on Government Relations and Corporate Responsibility Committees. Serves on
Blackhawk Bank and Trust board and audit and trust committees. Served as director and officer for River Valley Cooperative of
Mt. Joy, Iowa. Served eight years as director of Great River Bank and Trust. Former local school board member and active in
numerous agricultural and community organizations. Named Iowa Jaycees Outstanding Young Farmer in 2004. Holds
bachelor’s degree in agricultural business from Iowa State University. Raises corn, soybeans, alfalfa and feed cattle near
LeClaire, Iowa. Also owns a heavy equipment repair business in Bettendorf, Iowa. Mr. Schurr’s principal occupation has been
farming for the last five years or longer.

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Director Elections and Voting

Director elections are for three-year terms and are open to any qualified candidate. The qualifications for the office of

director are as follows:

• At the time of declaration of candidacy, the individual (except in the case of an incumbent) must have the written
endorsement of a locally elected producer board that is part of the CHS system and located within the region from
which the individual is to be a candidate.

• At the time of the election, the individual must be less than the age of 68.

The remaining qualifications set forth below must be met at all times commencing six months prior to the time of

election and while the individual holds office:

• The individual must be a member of CHS or a member of a Cooperative Association Member.

• The individual must reside in the region from which he or she is to be elected.

• The individual must be an active farmer or rancher. “Active farmer or rancher” means an individual whose
primary occupation is that of a farmer or rancher, excluding anyone who is an employee of ours or of a
Cooperative Association Member.

The following positions on the Board of Directors will be up for re-election at the 2014 Annual Meeting of Members:

Region
Region 1 (Minnesota)................................................................................................................... Open Seat
Region 1 (Minnesota)................................................................................................................... Curt Eischens
Region 2 (Montana and Wyoming).............................................................................................. Ed Malesich
Region 3 (North Dakota).............................................................................................................. Jon Erickson
Region 5 (Wisconsin, Connecticut, Delaware, Illinois, Indiana, Kentucky, Ohio, Maine,
Maryland, Massachusetts, Michigan, New Hampshire, New Jersey, New York, Pennsylvania,
Rhode Island, Vermont, Virginia, West Virginia)......................................................................... Greg Kruger
Region 7 (Alabama, Arkansas, Florida, Georgia, Iowa, Louisiana, Missouri, Mississippi,
North Carolina, South Carolina, Tennessee)................................................................................ Daniel Schurr
Region 8 (Colorado, Nebraska, Kansas, New Mexico, Oklahoma, Texas).................................. Clinton J. Blew

Current Incumbent

_______________________________________

Voting rights, including those in regard to director elections, arise by virtue of membership in CHS, not because of

ownership of any equity or debt instruments; therefore, our preferred stockholders cannot recommend nominees to our Board
of Directors unless they are members of CHS.

EXECUTIVE OFFICERS

The table below lists our executive officers as appointed by the Board of Directors.

Name
Carl Casale...........................................

Shirley Cunningham............................

Age
53 President and Chief Executive Officer
54 Executive Vice President and Chief Operating Officer, Ag Business and

Position

Enterprise Strategy

Jay Debertin.........................................

Lynden Johnson...................................

Timothy Skidmore...............................

Lisa Zell...............................................

54 Executive Vice President and Chief Operating Officer, Energy and Foods
54 Executive Vice President, Country Operations
53 Executive Vice President and Chief Financial Officer
46 Executive Vice President, Business Solutions

Carl Casale, President and Chief Executive Officer (CEO), joined CHS in 2011. Previously spent 26 years with
Monsanto Company, beginning his career as a sales representative in eastern Washington and advancing through sales, strategy,
marketing and technology-related positions before being named Chief Financial Officer in 2009. Serves on the boards of
National Cooperative Refinery Association; Ventura Foods, LLC; Ecolab Inc.; National Council of Farmer Cooperatives;
Greater Twin Cities United Way; and Minnesota Business Partnership. Previously served on the boards of Nalco Company and

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the National 4-H Council. Named Oregon State University College of Agriculture’s 2009 alumni fellow. Holds a bachelor’s
degree in agricultural economics from Oregon State University and an executive master’s of business administration from
Washington University, St. Louis, Mo. Native of Oregon’s Willamette Valley. Operates a family-owned blueberry farm near
Aurora, Oregon.

Shirley Cunningham, Executive Vice President, Chief Operating Officer — Ag Business and Enterprise Strategy,
leads our Ag business operations, including grain marketing, crop nutrients, agronomy and renewable fuels; and enterprise
strategy functions. Ms. Cunningham joined CHS in 2013 and previously served as chief information officer for Monsanto
Company and has more than 25 years experience in information technology and business management including leading global
IT operations, acquisitions, IT research and development, strategic planning and enterprise initiatives. Serves on the
Washington University School of Engineering board and the St. Louis children's museum, The Magic House board. Previously
served on the AT&T advisory board. Holds a master's of business administration degree from Washington University, St. Louis,
Missouri.

Jay Debertin, Executive Vice President and Chief Operating Officer — Energy and Foods, leads our diverse energy

operations and processing and food ingredients. Mr. Debertin joined CHS in 1984 in our petroleum division and held a variety
of positions in its energy marketing operations. Mr. Debertin was named vice president, Crude Oil Supply, in 1998 based in the
Company’s Denver, Colorado, office. In 2001, he returned to St. Paul, Minn., with responsibilities including raw material
supply, refining, pipelines and terminals, trading and risk management, and transportation and has held his current position
since 2014. Mr. Debertin also serves as chairman of the board for National Cooperative Refinery Association and as a chairman
for Ventura Foods. He earned a Bachelor’s degree in Economics from the University of North Dakota in 1982 and a Master’s of
Business Administration degree from the University of Wisconsin - Madison in 1984.

Lynden Johnson, Executive Vice President — Country Operations, is responsible for the division delivering

agricultural inputs, energy products, grain marketing, animal nutrition and sunflower processing and other farm supplies to
producers through retail businesses in 16 states and Alberta, Canada. Before assuming his current role in September 2014, Mr.
Johnson had been responsible for the Business Solutions operations including board planning and administration, Corporate
Citizenship and the CHS Foundation, and CHS Aligned Solutions, along with subsidiaries CHS Insurance Group, CHS
Hedging Inc. and CHS Capital. He served as the vice president of Business Solutions Consulting in 2008 and previously held
the position of vice president, Member Services since 2005. Prior to joining CHS, he had a career managing cooperatives in
North Dakota and Minnesota for 23 years. Serves as a board member for the CHS Pension Plan and is a fiduciary board
member for the Co-op 401K Committee. Serves on the board of directors of CHS Capital and CHS Hedging. Holds a bachelor's
degree in agricultural economics from North Dakota State University.

Timothy Skidmore, Executive Vice President and Chief Financial Officer, joined CHS in 2013 and is responsible for

finance, accounting, strategic sourcing and insurance risk management. Previously served as vice president of finance and
strategy for Campbell North America, Campbell's largest operating division. Joined Campbell as assistant treasurer in 2001 and
held numerous leadership positions in finance including leading the cash management, corporate finance and international
treasury functions. Served in various business unit chief financial officer roles including the U.S. soup, simple meals, beverages
and international businesses where he was responsible for financial strategy, planning, reporting and balance sheet
management. Prior to joining Campbell, spent 15 years at DuPont Co., holding a variety of financial leadership positions,
including leading DuPont's finance function across Asia Pacific. Holds a bachelor's degree in risk management from the
University of Georgia, and a Master of Business Administration degree in finance from Widener University, Chester,
Pennsylvania.

Lisa Zell, Executive Vice President of Business Solutions, is responsible for leading programs and products that

support cooperatives, agribusinesses and producers that are offered through CHS Aligned Solutions, CHS Capital, CHS
Hedging and CHS Insurance. Ms. Zell joined CHS in 1999 as senior attorney after several years in private practice and a
federal clerkship with the U.S. Court of Appeals Seventh Circuit. She was named senior vice president and general counsel in
January 2011 and assumed her previous position, as executive vice president and general counsel, in January 2012. Ms. Zell
serves on the boards of CHS Insurance Group and Ventura Foods, LLC, and chairs Ventura’s Corporate Responsibility
Committee. She has earned a bachelor’s degree from St. Cloud (MN) State University and a law degree, with honors, from
Drake University.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended, requires our executive officers, directors and

persons who beneficially own more than 10% of any class of our preferred stock to file initial reports of ownership and reports

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of changes in ownership with the Securities and Exchange Commission (Commission). Such executive officers, directors and
greater than 10% beneficial owners are required by the regulations of the Commission to furnish us with copies of all
Section 16(a) reports they file.

Based solely upon a review of copies of reports on Forms 3 and 4 and amendments thereto furnished to us during, and

reports on Form 5 and amendments thereto furnished to us with respect to, the fiscal year ended August 31, 2014, and based
further upon written representations received by us with respect to the need to file reports on Form 5, the following persons
filed late reports required by Section 16(a) of the Securities Exchange Act of 1934, as amended: Mr. Skidmore was late in filing
a Form 4 relating to a transaction in June 2014 and Mr. Hasnedl, Mr. Eischens, Mr. Johnsrud and Mr. Kayser were each late in
filing a Form 4 relating to a transaction in August 2014.

We have adopted a code of ethics within the meaning of Item 406(b) of Regulation S-K promulgated by the
Commission. This code of ethics applies to all of our directors, officers and employees. We will provide to any person, without
charge, upon request, a copy of such code of ethics. A person may request a copy by writing or telephoning us at the following:

Code of Ethics

CHS Inc.
Attention: Malcolm McDonald
5500 Cenex Drive
Inver Grove Heights, Minnesota 55077
(651) 355-6000

Audit Committee Matters

The Board of Directors has a separately designated standing Audit Committee for the purpose of overseeing our
accounting and financial reporting processes and audits of our financial statements. The Audit Committee is comprised of
Mr. Blew, Mr. Erickson, Mr. Kruger, and Mr. Schurr (Chairman), each of whom is an independent director. The Audit
Committee has oversight responsibility to our owners relating to our financial statements and the financial reporting process,
preparation of the financial reports and other financial information provided by us to any governmental or regulatory body, the
systems of internal accounting and financial controls, the internal audit function and the annual independent audit of our
financial statements. The Audit Committee assures that the corporate information gathering and reporting systems developed by
management represent a good faith attempt to provide senior management and the Board of Directors with information
regarding material acts, events and conditions within CHS. In addition, the Audit Committee is directly responsible for the
appointment, compensation and oversight of the independent registered public accounting firm.

We do not believe that any member of the Audit Committee of the Board of Directors is an "audit committee financial

expert” as defined in the Sarbanes-Oxley Act of 2002 and rules and regulations thereunder. As a cooperative, our 17-member
Board of Directors is nominated and elected by our members. To ensure geographic representation of our members, the Board
of Directors represents eight regions in which our members are located. The members in each region nominate and elect the
number of directors for that region as set forth in our bylaws. To be eligible for service as a director, a nominee must (i) be an
active farmer or rancher, (ii) be a member of CHS or a Cooperative Association Member and (iii) reside in the geographic
region from which he or she is nominated. Neither management nor the incumbent directors have any control over the
nominating process for directors. Because of the nomination procedure and the election process, we cannot ensure that an
elected director will be an "audit committee financial expert.”

However, many of our directors, including all of the Audit Committee members, are financially sophisticated and have
experience or background in which they have had significant financial oversight responsibilities. The current Audit Committee
includes directors who have served as presidents or chairmen of local cooperative association boards. Members of the Board of
Directors, including the Audit Committee, also operate large commercial enterprises requiring expertise in all areas of
management, including financial oversight.

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ITEM 11.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

Executive Compensation

Overview

This Compensation Discussion and Analysis describes the material elements of compensation awarded to each of the

following executive officers (our "Named Executive Officers") for fiscal 2014:

Carl Casale
Timothy Skidmore
Mark Palmquist
Jay Debertin
John McEnroe
David Kastelic

President and Chief Executive Officer
Executive Vice President and Chief Financial Officer
Former Executive Vice President and Chief Operating Officer, Ag Business
Executive Vice President and Chief Operating Officer, Energy and Foods
Executive Vice President, Country Operations
Former Executive Vice President and Chief Financial Officer

As discussed elsewhere in this Compensation Discussion and Analysis, Mr. McEnroe has announced his intention to
retire effective December 31, 2014. Mr. Kastelic retired on September 3, 2013 and Mr. Palmquist resigned on August 31, 2014.

CHS views employees as valued assets, and strives to provide total reward programs that are equitable

and competitive within the market segments in which we compete, and within the framework of the CHS vision, mission and
values. In this section, we will outline the compensation and benefit programs as well as the materials and factors used to assist
us in making compensation decisions.

Compensation Philosophy and Objectives

The Governance Committee of our Board of Directors oversees the administration of, and the fundamental changes to,

the executive compensation and benefits programs. The primary principles and objectives in compensating executive officers
include:

• Maintaining a strong external market focus in order to attract and retain top talent by:

• Aligning pay structures and target total direct compensation at the market median of similarly situated

companies

• Obtaining applicable market data of similarly positioned companies
• Maintaining reasonable internal pay equity among executives in order to allow for broad-based

development opportunities in support of our talent management objectives

• Driving strong business performance through annual and long-term incentive programs by:

• Rewarding executives for company, business unit and individual performance
• Aligning executive rewards with competitive returns to our member owners
• Ensuring compensation components are mutually supportive and not contradictory
• Aligning annual and long-term results with performance goals

• Ensuring compliance with government mandates and regulations

Changes to our compensation plans for fiscal 2014 included changing our profit sharing and incentive plan

performance measures to Return on Adjusted Equity ("ROAE"). This change was effective for fiscal 2014 for our Profit Sharing
Plan and Annual Variable Pay Plan, and effective for the fiscal 2012 - 2014 Long-Term Incentive Plan. In addition, the Long-
Term Incentive Plan was expanded to provide incentives for superior long-term performance that are more consistent with
external benchmarks and are aligned with competitive returns to our member-owners.

Components of Executive Compensation and Benefits

Our executive compensation programs are designed to attract and retain highly qualified executives and to motivate

them to optimize member-owner returns by achieving specified goals. The compensation program links executive
compensation directly to our annual and long-term financial performance. A significant portion of each executive's
compensation is dependent upon meeting financial goals and a smaller portion is linked to other individual performance
objectives.

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Each year, the Governance Committee of the Board of Directors reviews our executive compensation policies with

respect to the correlation between executive compensation and the creation of member-owner value, as well as the
competitiveness of the executive compensation programs. The Governance Committee, with input from a third party consultant
if necessary, determines what, if any, changes are appropriate to our executive compensation programs including the incentive
plan goals for the Named Executive Officers. The third party consultant is chosen and hired directly by the Governance
Committee to provide guidance regarding market competitive levels of base pay, annual variable pay and long-term incentive
pay as well as market competitive allocations between base pay, annual variable pay and long-term incentive pay for the Chief
Executive Officer (CEO). The data is shared with our Board of Directors which makes final decisions regarding the Chief
Executive Officer's base bay, annual incentive pay and long-term incentive pay, as well as the allocation of compensation
between base pay, annual incentive pay and long-term incentive pay. There are no formal policies for allocation between long-
term and cash compensation other than the intention of being competitive with the external compensation market for
comparable positions and being consistent with our compensation philosophy and objectives. The Governance Committee
recommends to the Board of Directors salary actions relative to our CEO and approves annual and long-term incentive awards
based on goal attainment. In turn, the Board of Directors communicates this pay information to the CEO. The CEO is not
involved with the selection of the third party consultant and does not participate in, or observe, Governance Committee
meetings that concern CEO compensation matters. Based on a review of compensation market data provided by our human
resources department (survey sources and pricing methodology are explained under “Components of Compensation”), with
input from a third party consultant if necessary, the CEO decides base compensation levels for the other Named Executive
Officers, recommends for Board of Directors approval the annual and long-term incentive levels for the other Named Executive
Officers and communicates base and incentive compensation levels to the other Named Executive Officers. The day-to-day
design and administration of compensation and benefit plans are managed by our human resources, finance and legal
departments.

We intend to preserve the deductibility, under the Internal Revenue Code of 1986, as amended (the Internal Revenue

Code), of compensation paid to our executive officers while maintaining compensation programs to attract and retain highly
qualified executives in a competitive environment.

In this Compensation Discussion and Analysis, the related compensation tables and the accompanying narratives, all

references to a given year refer to our fiscal year ending on August 31, of that year.

Components of Compensation

The executive compensation and benefits program consists of seven components. Each component is designed to be

competitive within the executive compensation market. In determining competitive compensation levels, we analyze
information from independent compensation surveys, which include information regarding comparable industries, markets,
revenues and companies that compete with us for executive talent. The surveys used for this analysis in fiscal 2014 included a
combination of any of the following sources: Hay Group Executive Remuneration Report, AonHewitt Total Compensation
Measurement, Mercer US Executive Compensation Survey and Towers Watson Executive Compensation Databank. The data
extracted from these surveys includes median market rates for base salary, annual incentive, total cash compensation and total
direct compensation. Companies included in the surveys vary by industry, revenue and number of employees, and represent
both public and private ownership, as well as non-profit, government and mutual organizations. The number of companies
participating in these surveys ranged from 442 to 3,035, with an average of 1,034. In addition, in fiscal 2013 we retained
Towers Watson to provide customized survey data from the Towers Watson Executive Compensation Databank, to include a
subset consisting of 26 companies in the agribusiness, energy, fertilizer and food industries. Data for these companies included
25th, 50th and 75th percentile for base pay, total cash compensation (sum of base pay and annual variable pay), and total direct
compensation (sum of base pay, annual variable pay and long-term incentive). Towers Watson also provided historical return on
equity data for the same group of agribusiness, energy, fertilizer and food companies. The emphasis of our executive
compensation package is weighted more on variable pay through annual variable pay and long-term incentive awards. This is
consistent with our compensation philosophy of emphasizing a strong link between pay, employee performance and business
goals to foster a clear line-of-sight and strong commitment to CHS' short-term and long-term success, and also aligns our
programs with general market practices. The goal is to provide our executives with an overall compensation package that is
competitive to compensation in comparable industries, companies and markets. We target the market median for base pay,
target total cash and target total direct compensation, and 75th percentile for total direct compensation for above market
performance.

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The following table presents a more detailed breakout of each compensation element:

Pay Element
Base Pay

Definition of Pay Element
Competitive base level of compensation provided
relative to skills, experience, knowledge and
contributions

Purpose of Pay Element

• Provides the fundamental element of
compensation based on competitive market
practice and internal equity considerations

Annual Variable Pay Broad-based employee short-term performance

based variable pay incentive for achieving
predetermined annual financial and individual
performance objectives

• Provides a direct link between pay and annual
business objectives
• Pay for performance to motivate and encourage
the achievement of critical business initiatives

Profit Sharing

Broad-based employee short-term performance
based variable pay program for achieving
predetermined return on adjusted equity
performance levels

• Provides a direct link between employee pay
and CHS’ profitability
• Encourages proper expense control and
containment

Long-Term Incentive
Plans

Long-term performance based incentive for senior
management to achieve predetermined triennial
return on adjusted equity performance goals

• Provides a direct link between senior
management pay and long-term strategic business
objectives
• Aligns management and member-owner
interests
• Encourages retention of key management

Retirement Benefits

Retirement benefits under the qualified retirement
plans are identical to the broad-based retirement
plans generally available to all full-time
employees

• These benefits are a part of our broad-based
employee total rewards program designed to
attract and retain quality employees

The supplemental plans include non-qualified
retirement benefits that restore qualified benefits
contained in our broad-based plans for employees
whose retirement benefits are limited by salary
caps under the Internal Revenue Code. In
addition, the plans allow participants to
voluntarily defer receipt of a portion of their
income

• These benefits are provided to attract and retain
senior managers with total rewards programs that
are competitive with comparable companies

Health & Welfare
Benefits

Medical, dental, vision, life insurance and short-
term disability benefits generally available to all
full-time employees. Certain Officers, including
our Named Executive Officers, also are eligible
for executive long-term disability benefits

• With the exception of executive long-term
disability, these benefits are a part of our broad-
based employee total rewards program designed
to attract and retain quality employees

Additional Benefits

Additional benefits provided to certain officers,
including our Named Executive Officers

• These benefits are provided as part of an
overall total rewards package that strives to be
competitive with comparable companies and
retain individuals who are critical to CHS

Base Pay:

Base salaries of the Named Executive Officers represent a fixed form of compensation paid on a semi-monthly basis.
The base salaries are generally set at the median level of market data collected through our benchmarking process against other
equivalent positions of comparable revenue-size companies. The individual's actual salary relative to the market median is
based on a number of factors, which include, but are not limited to: scope of responsibilities, individual experience and
individual performance.

Base salaries for the Named Executive Officers are reviewed on an annual basis or at the time of significant changes in
scope and level of responsibilities. Changes in base salaries are determined based on review of competitive market data, as well
as individual performance and contribution. Changes are not governed by pre-established weighting factors or merit metrics.

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The CEO is responsible for this process for the other Named Executive Officers. The Governance Committee is responsible for
this process for the CEO. Mr. Casale received a base pay increase of 9.8% as provided in his employment agreement effective
January 1, 2014. The CHS Board of Directors approved the increase in order to maintain a competitive pay position to market.
The other Named Executive Officers also received the following base salary increases in fiscal 2014: Timothy Skidmore 3.0%;
Mark Palmquist 3.0%; Jay Debertin 3.0% and John McEnroe 3.0%.

Annual Variable Pay:

Each Named Executive Officer (other than Mr. Kastelic, who retired on September 3, 2014) was eligible to participate
in our Annual Variable Pay Plan for our year ended August 31, 2014. Target award levels were set with reference to competitive
market compensation levels and were intended to motivate our executives by providing variable pay awards for the
achievement of predetermined goals. Our incentive program was based on financial performance and specific management
business objectives with payout dependent on CHS triggering threshold financial performance. The financial performance
components included return on adjusted equity (ROAE) goals for both CHS and the executive's business unit. The CHS
threshold, target and maximum ROAE goals for fiscal 2014 were 8%, 10% and 14%, respectively. The threshold, target and
maximum ROAE goals for each business unit vary by unit. The management business objectives include individual
performance against specific goals such as business profitability, strategic initiatives or talent development.

CHS financial performance goals and award opportunities under our fiscal 2014 Annual Variable Pay Plan were as

follows:

Performance Level

Maximum

Target

Threshold

Below Threshold

CHS Company
Performance Goal

14% Return on
Adjusted Equity

10% Return on
Adjusted Equity

8% Return on
Adjusted Equity

<8% Return on
Adjusted Equity

Business Unit
Performance Goal

Management Business
Objectives

Percent of Target
Award

Threshold, Target
and Maximum Return
on Adjusted Equity
goals vary by business
unit but are consistent
with and support
company ROAE goals

Individual
performance goals

200%

100%

20%

The types and relative importance of specific financial and other business goals varies among executives depending
upon their positions and the particular business unit for which they are responsible. Financial goals are given greater weight
than other individual performance goals in determining individual awards.

The CHS Board of Directors approves the Annual Variable Pay Plan total Company ROAE goals and determines the

CEO's individual goals. The weighting of the CEO's goals is 70% CHS total company ROAE and 30% principle
accountabilities and individual goals. The CEO approves business unit ROAE goals and determines non-financial goals for the
other Named Executive Officers. The weighting of goals for the other Named Executive Officers is also 70% ROAE and 30%
principle accountabilities and individual goals. The ROAE goals for the other Named Executive Officers are either total CHS,
or combined CHS and business unit, depending on whether the executive is responsible for an operating group or not. The
variable pay plan is designed such that if threshold non-financial and financial performance goals are achieved, the annual
variable pay award would equal 20 percent of target awards; if target non-financial and financial performance goals are
achieved, the award would equal 100% of target awards and if maximum non-financial and financial performance goals are
achieved, the award would equal 200% of target awards.

In conjunction with the annual performance appraisal process of the CEO, the Board of Directors reviews the non-

financial goals, and in turn, determines and approves this portion of the annual variable pay award based upon completion or
partial completion of the previously specified goals and principal accountabilities for the CEO. Likewise, the CEO uses the
same process for determining individual goal attainment for the other Named Executive Officers. Named Executive Officers are
covered by the same broad-based Annual Variable Pay Plan as other employees, and based on the plan provisions, when they
retire they receive awards prorated to the period of time eligible.

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For fiscal 2014, CHS achieved an ROAE of 21.7%. Annual variable pay payments for the Named Executive Officers

are as follows:

Carl Casale ............................................................................................................................................................. $
Timothy Skidmore.................................................................................................................................................. $
Mark Palmquist ...................................................................................................................................................... $
Jay Debertin............................................................................................................................................................ $
John McEnroe ........................................................................................................................................................ $

2,475,000
648,900
965,419
888,560
865,200

Mr. Kastelic was not eligible and did not receive an Annual Variable Pay award for fiscal 2014.

Profit Sharing:

Each Named Executive Officer is eligible to participate in our Profit Sharing Plan applicable to other employees. The

purpose of the Profit Sharing Plan is to provide a direct link between employee pay and CHS profitability. Annual profit sharing
contributions are calculated as a percent of base pay and annual variable pay (total earnings) and are made to the CHS 401(k)
plan account and Deferred Compensation Plan account of each Named Executive Officer. The levels of profit sharing awards
vary in relation to the level of CHS ROAE achieved and are displayed in the following table:

Return On Adjusted Equity

14.0%

12.0%

10.0%

9.0%

8.0%

In fiscal 2014 the maximum ROAE goal was reached.

Effective for fiscal 2015, the ROAE goals are:

Return On Adjusted Equity

14.0%

12.0%

10.0%

9.0%
8.0%

Long-Term Incentive Plans:

Equates to Net
Income for Fiscal 2014

$698.2 Million

$602.0 Million

$505.7 Million

$457.6 Million

$409.5 Million

Equates to Net
Income for Fiscal 2015

$826.1 Million

$720.9 Million

$615.8 Million

$563.2 Million
$510.6 Million

Profit
Sharing
Award

2%
1%

Each Named Executive Officer is eligible to participate in our Long-Term Incentive Plan (“LTIP”). The purpose of the

LTIP is to align results with long-term performance goals, encourage our Named Executive Officers to maximize long-term
shareholder value, and retain key executives.

The LTIP consists of three-year performance periods to ensure consideration is made for long-term CHS sustainability

with a new performance period beginning every year. The LTIP is based on CHS ROAE over three-year periods. The CHS
Board of Directors approves the LTIP ROAE goals.

During fiscal 2013 CHS utilized a third party consultant, Towers Watson, to conduct an assessment of total direct

compensation in relation to Named Executive Officers below the CEO level, as discussed above under “Components of
Compensation”. A separate study was conducted by Towers Watson at the request of the Corporate Responsibility Committee of
the CHS Board of Directors to review CEO compensation. The committee reviewed the market data and concluded that the
current compensation programs were not aligned with CHS’s compensation philosophy of paying target total cash and target

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total direct compensation. Therefore, the committee recommended and, the CHS Board of Directors approved to expand the
CHS Long-Term Incentive Plan to provide additional award opportunity for above market performance between 14% and 20%
ROAE. The table below defines the award potential by ROAE levels for the CHS Long-Term Incentive Plan.

Award opportunities for the fiscal 2012-2014 LTIP are expressed as a percentage of a participant's average salary for
the three-year performance period. CHS must meet a three-year period threshold level of ROAE for LTIP to trigger a payout.
The threshold, target, maximum and superior performance maximum ROAE goals for the fiscal 2012-2014 performance period
were 8%, 10%, 14% and 20% respectively. Details for 2014 awards associated with the expanded plan are provided in the 2014
Grants of Plan-Based Awards table.

Performance Level

Superior Performance Maximum

Maximum

Target

Threshold

Below Threshold

CHS Three Year
ROAE

Percent of Target
Award

20%

14%

10%

<8%

400%

200%

100%

20%

Awards from the LTIP are contributed to the CHS Deferred Compensation Plan after the end of each performance

period. These awards are earned over a three-year period and vest over an additional 28-month period following the
performance period end date. The extended earning and vesting provisions of the LTIP are designed to help CHS retain key
executives. Participants who terminate from CHS prior to retirement forfeit all unearned and unvested LTIP award balances.
Participants who meet retirement criteria, die or become disabled receive prorated awards following the LTIP plan rules. Like
the Annual Variable Pay Plan, award levels for the LTIP are set with regard to competitive considerations.

For the fiscal year 2012-2014 performance period, CHS reached the superior performance maximum level ROAE for

awards under the LTIP. Payments for the Named Executive Officers under the LTIP were as follows:

4,612,167

1,272,600

1,875,146

1,725,907

1,603,467

1,131,200

Retirement Benefits:

We provide the following retirement and deferral programs to executive officers:

• CHS Inc. Pension Plan
• CHS Inc. 401(k) Plan
• CHS Inc. Supplemental Executive Retirement Plan
• CHS Inc. Deferred Compensation Plan

CHS Inc. Pension Plan

The CHS Inc. Pension Plan (the "Pension Plan") is a tax qualified defined benefit pension plan. All Named Executive
Officers participate in the Pension Plan. A Named Executive Officer is fully vested in the plan after three years (depending on
hire date) of vesting service. The Pension Plan provides for a lump sum payment of the participant's account balance (or a
monthly annuity if elected) for the Named Executive Officer's lifetime beginning at normal retirement age. Compensation
includes total salary and annual variable pay. Compensation and benefits are limited based on limits imposed by the Internal
Revenue Code. The normal form of benefit for a single Named Executive Officer is a life annuity, and for a married Named

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Executive Officer the normal form is a 50% joint and survivor annuity. Other annuity forms are also available on an actuarial
equivalent basis.

A Named Executive Officer's benefit under the Pension Plan depends on 1) pay credits to the employee's account,

which are based on the Named Executive Officer's total salary and annual variable pay for each year of employment, date of
hire, age at date of hire and the length of service and 2) investment credits which are computed using the interest crediting rate
and the Named Executive Officer's account balance at the beginning of the plan year.

The amount of pay credits added to a Named Executive Officer's account each year is a percentage of the Named

Executive Officer's base salary and annual variable pay plus compensation reduction pursuant to the CHS Inc. 401(k) Plan, (the
“401(k) Plan”), and any pretax contribution to any of our welfare benefit plans, paid vacations, paid leaves of absence and pay
received if away from work due to a sickness or injury. The pay credits percentage received is determined on a yearly basis,
based on the years of benefit service completed as of December 31 of each year. A Named Executive Officer receives one year
of benefit service for every calendar year of employment in which the Named Executive Officer completed at least 1,000 hours
of service.

Pay credits are earned according to the following schedule:

Regular Pay Credits

Years of Benefit Service
1 - 3 years........................................................................................................
4 - 7 years........................................................................................................
8 - 11 years......................................................................................................
12 - 15 years....................................................................................................
16 years or more .............................................................................................

Pay Below Social Security
Taxable Wage Base

Pay Above Social Security
Taxable Wage Base

10%

12%

14%

Mid Career Pay Credits

Employees hired after age 40 qualify for the following minimum pay credit:

Age at Date of Hire
Age 40 - 44 .....................................................................................................
Age 45 - 49 .....................................................................................................
Age 50 or more ...............................................................................................

Minimum Pay Credit

Pay Below Social Security
Taxable Wage Base

Pay Above Social Security
Taxable Wage Base

10%

12%

Investment Credits

We credit a Named Executive Officer's account at the end of the calendar year with an investment credit based on the

balance at the beginning of the year. The investment credit is based on the average return for one-year U.S. Treasury bills for
the preceding 12-month period. The minimum interest rate under the Pension Plan is 4.65% and the maximum is 10%.

CHS Inc. 401(k) Plan

The 401(k) Plan is a tax-qualified defined contribution retirement plan. Most full-time, non-union CHS employees are
eligible to participate in the 401(k) Plan, including each Named Executive Officer. Participants may contribute between 1% and
50% of their pay on a pretax basis. We match 100% of the first 1% and 50% of the next 5% of pay contributed each year
(maximum 3.5%). The Board of Directors may elect to reduce or eliminate matching contributions for any year or any portion
thereof. Participants are 100% vested in their own contributions and are fully vested after two years of service in matching
contributions made on the participant's behalf by CHS.

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Non-participants are automatically enrolled in the plan at 3% contribution rate and effective each January 1st, the

participant's contribution will be automatically increased by 1%. This escalation will stop once the participant's contribution
reaches 6%. The participant may elect to cancel or change these automatic deductions at any time.

CHS Inc. Supplemental Executive Retirement Plan and CHS Inc. Deferred Compensation Plan

Because the Internal Revenue Code limits the benefits that may be paid from the Pension Plan and the 401(k) Plan ,

the CHS Inc. Supplemental Executive Retirement Plan (the “SERP”) and CHS Inc. Deferred Compensation Plan (the “Deferred
Compensation Plan”) were established to provide certain employees participating in the qualified plans with supplemental
benefits such that, in the aggregate, they equal the benefits they would have been entitled to receive under the qualified plan had
these limits not been in effect. The SERP also includes compensation deferred under the Deferred Compensation Plan that is
excluded under the qualified retirement plan. All Named Executive Officers participate in the SERP. Participants in the plans
are select management or highly compensated employees who have been designated as eligible by our President and CEO to
participate.

All Named Executive Officers are eligible to participate in the Deferred Compensation Plan.

Compensation includes total salary and annual variable pay without regard to limitations on compensation imposed by

the Internal Revenue Code. Compensation waived under the Deferred Compensation Plan is not eligible for pay credits or
company contributions under the Pension Plan and 401(k) Plan.

Certain Named Executive Officers may have accumulated non-qualified plan balances or benefits that have been

carried over from predecessor companies as a result of past mergers and acquisitions. Benefits from the SERP are primarily
funded in a rabbi trust, with a balance at August 31, 2014 of $27.3 million. Benefits from the plan do not qualify for special tax
treatment under the Internal Revenue Code.

The Deferred Compensation Plan allows eligible Named Executive Officers to voluntarily defer receipt of up to 30%
of their base salary and up to 100% of their annual variable pay. The election must occur prior to the beginning of the calendar
year in which the compensation will be earned. During the year ended August 31, 2014, all of the Named Executive Officers
were eligible to participate in the Deferred Compensation Plan. Mr. Casale, Mr. Skidmore, Mr. Debertin, and Mr. McEnroe
participated in the elective portion of the Deferred Compensation Plan.

Benefits from the Deferred Compensation plan are primarily funded in a rabbi trust, with a balance as of August 31,

2014 of $103.2 million. Benefits from the plan do not qualify for special tax treatment under the Internal Revenue Code.

Health & Welfare Benefits:

Like other CHS employees, each of the Named Executive Officers is entitled to receive benefits under our

comprehensive health and welfare program. Like other non-executive full-time employees, participation in the individual
benefit plans is based on each Named Executive Officer's annual benefit elections and varies by individual.

Medical Plans

Named Executive Officers and their dependents may participate in our medical plan on the same basis as other eligible

full-time employees. The plan provides each an opportunity to choose a level of coverage and coverage options with varying
deductibles and co-pays in order to pay for hospitalization, physician and prescription drugs expenses. The cost of this coverage
is shared by both CHS and the covered Named Executive Officer.

Dental, Vision, and Hearing Plan

Named Executive Officers and their dependents may participate in our Dental, Vision, and Hearing plan on the same
basis as other eligible full-time employees. The plan provides coverage for basic dental, vision and hearing expenses. The cost
of this coverage is shared by both CHS and the covered Named Executive Officer.

Life, AD&D and Dependent Life Insurance

Named Executive Officers and their dependents may participate in our basic life, optional life, accidental death and
dismemberment (AD&D) and dependent life plans on the same basis as other eligible full-time employees. The plans allow
Named Executive Officers an opportunity to purchase group life insurance on the same basis as other eligible full-time

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employees. Basic life insurance equal to one times pay will be provided at CHS expense on the same basis as other eligible full-
time employees. Named Executive Officers can choose various coverage levels of optional life insurance at their own expense
on the same basis as other eligible full-time employees.

Short- and Long-term Disability

Named Executive Officers participate in our Short-Term Disability (“STD”) Plan on the same basis as other eligible

full-time employees. The Named Executive Officers also participate in an executive Long-Term Disability (“LTD”) Plan. These
plans replace a portion of income in the event that a Named Executive Officer is disabled under the terms of the plan and is
unable to work full-time. The cost of STD and LTD coverage is paid by CHS.

Flexible Spending Accounts/Health Savings Accounts

Named Executive Officers may participate in our Flexible Spending Account (“FSA”) or Health Savings Account

(“HSA”) on the same basis as other eligible full-time employees. The plan provides Named Executive Officers an opportunity
to pay for certain eligible medical expenses on a pretax basis. Contributions to these plans are made by the Named Executive
Officer.

Travel Assistance Program

Like other non-executive full-time CHS employees, each of the Named Executive Officers is covered by the travel

assistance program. This broad-based program provides accidental death and dismemberment protection should a covered
injury or death occur while on a CHS business trip.

Additional Benefits:

Certain benefits such as executive physical and limited financial planning assistance are available to the Named

Executive Officers. These are provided as part of an overall total rewards package that strives to be competitive with
comparable companies and retain individuals who are critical to CHS.

Agreements with Named Executive Officers

On November 6, 2013 our Board of Directors approved a new employment and an amended and restated change in
control agreement that supersede the employment and change in control agreements we entered into in November 2010 with
Mr. Casale, our CEO. The new agreements, which became effective as of January 1, 2014, are described more fully in the
narrative to the tabular disclosure below. Our prior employment agreement with Mr. Casale had an initial term expiring on
December 31, 2013. Rather than extend that agreement, our Board of Directors decided to replace the agreement with a new
employment agreement. The new agreement reflects an increase in Mr. Casale’s annual base salary from $901,800 for calendar
2013 to $990,000 effective as of January 1, 2014, and an increase in his maximum long-term incentive award from 250% to
500% of his average fiscal year-end base salary during the three-year performance period applicable to the award opportunity.
The amended and restated change in control agreement was entered into in order to reflect that the new employment agreement
had been entered into.

Mr. Skidmore, our CFO, joined us in August 2013 and the terms of his employment provide for certain payments to

Mr. Skidmore in respect of compensation earned from Mr. Skidmore's former employer during past periods but forfeited in
order to accept employment with CHS due to vesting requirements and other restrictions. Specifically, Mr. Skidmore is entitled
to receive three equal payments of $180,000 for forfeited restricted stock and three equal payments of $55,163 for forfeited
incentives to be paid as follows: the first payments within 30 days of his start date; the second payments within 30 days after
the first anniversary of start date and the third payments within 30 days after the second anniversary of the start date.

Also on November 6, 2013, we entered into a succession planning letter agreement with Mr. McEnroe, our Executive

Vice President and Chief Operating Officer of Country Operations, under which he will be eligible to receive an incentive equal
to one year's base salary upon completion of an agreed upon succession plan, which includes effective training and
development of strong successors to his leadership team, an efficient and effective transition of his responsibilities at the time of
his retirement to a successor candidate, and the successful performance of his duties and responsibilities through his retirement.
We entered into this agreement with Mr. McEnroe as a succession management strategy, to ensure we would have strong
leadership in place to assume Mr. McEnroe's responsibilities when needed. As we have previously announced, Mr. McEnroe
will retire on December 31, 2014.

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Summary Compensation Table

Name and Principal Position

Carl Casale
President and Chief Executive
Officer

Timothy Skidmore
Executive Vice President and
Chief Financial Officer

Mark Palmquist
Executive Vice President and
Chief Operating Officer, Ag
Business

Jay Debertin
Executive Vice President and
Chief Operating Officer,
Energy and Foods

John McEnroe
Executive Vice President and
Chief Operating Officer,
Country Operations

David Kastelic
Retired Executive Vice
President and Chief Financial
Officer

Year
2014

2013

2012

2014

2013

2014

2013

2012

2014

2013

2012

2014

2013

2014

2013

2012

_______________________________________

Salary (1)(2)(3)
$960,600

Bonus (4)(5)
$—

833,333

833,334

415,163

893,033

867,000

459,000

17,308

682,840

663,000

643,708

628,524

610,233

590,720

612,000

566,667

55,087

550,800

531,707

Change in
Pension
Value and
Non-Qualified
Deferred
Compensation
Earnings(2)(7)
$462,823

All Other
Compensation
(8-13)
$274,987

322,777

416,179

48,012

—

532,974

177,531

589,377

514,096

222,526

569,614

332,338

212,735

39,869

223,624

318,149

261,396

288,573

96,867

—

123,856

146,819

136,099

132,524

120,186

118,673

132,379

118,769

30,450

116,750

105,054

Non-Equity
Incentive Plan
Compensation
(1)(2)(6)
7,087,167

4,443,917

4,345,625

1,921,500

—

2,840,565

1,462,582

1,772,169

2,614,467

1,708,653

1,606,033

2,468,667

1,448,000

1,131,200

1,676,780

1,442,240

Total
$8,785,577

6,754,456

6,750,711

2,940,542

17,308

4,180,235

2,449,932

3,141,353

3,889,611

2,661,598

2,885,040

3,545,384

2,346,171

1,256,606

2,567,954

2,397,150

(1) Amounts reflect the gross salary and non-equity incentive plan compensation, and include any applicable deferrals.
Mr. Casale deferred $2,254,500 in fiscal 2014; Mr. Skidmore deferred $30,900 in fiscal 2014; Mr. Debertin deferred
$84,625 in fiscal 2014, $709,983 in fiscal 2013, $79,773 in fiscal 2012; and Mr. McEnroe deferred $309,600 in fiscal
2014, $415,000 in fiscal 2013.

(2) Information on Mr. Skidmore and Mr. McEnroe includes compensation beginning in fiscal 2013, the first year in

which they became Named Executive Officers.

(3) Salary for Mr. Kastelic includes base pay and accrued paid time off that was paid upon retirement.

(4) Includes payments of $833,333 and $833,334 in fiscal 2013 and fiscal 2012, respectively, to Mr. Casale, covering

earned and forfeited compensation from previous employment.

(5) Includes payment of $415,163 in fiscal 2014 to Mr. Skidmore, covering earned and forfeited compensation from

previous employment.

(6) Amounts include CHS fiscal 2012, fiscal 2013 and fiscal 2014 annual variable pay awards and fiscal 2010-2012, fiscal

2011-2013 and fiscal 2012-2014 long-term incentive awards.

(7) This column represents both changes in pension value and above-market earnings on deferred compensation. Change
in pension value is the aggregate change in the actuarial present value of the Named Executive Officers' benefit under
their retirement program and nonqualified earnings, if applicable.

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Above-market earnings represent earnings exceeding 120% of the Federal Reserve long-term rate as determined by the
Internal Revenue Service (IRS) on applicable funds. The following Named Executive Officers had above market
earnings in fiscal 2014: Mr. Casale- $11,831; Mr. Skidmore- $27; Mr. Kastelic- $3,657; Mr. Palmquist- $6,951; Mr.
Debertin- $11,866; Mr. McEnroe- $7,592 and above market earnings in fiscal 2013: Mr. Casale- $48,472; Mr.
Kastelic- $47,454; Mr. Palmquist- $47,445; Mr. Debertin- $125,271; Mr. McEnroe- $53,702 and above market
earnings in fiscal 2012: Mr. Casale- $24,900; Mr. Kastelic- $39,912; Mr. Palmquist- $42,397; Mr. Debertin- $112,743.

(8) Amounts may include CHS paid executive LTD, travel accident insurance, executive physical, CHS contributions
during each fiscal year to qualified and non-qualified defined contribution plans, spousal travel, event tickets and
financial planning.

(9) Includes fiscal 2014 executive LTD of $3,544 for all Named Executive Officers except Mr. Kastelic - $0.

(10) Includes fiscal 2014 employee contributions to the CHS Inc. Deferred Compensation Plan: Mr. Casale- $254,261; Mr.

Palmquist- $90,685; Mr. Debertin- $111,680; and Mr. Kastelic- $22,175.

(11) Includes fiscal 2014 employee contribution to the CHS Inc. 401(k) Plan: Mr. Casale- $14,025; Mr. Skidmore- $10,819;

Mr. Palmquist- $14,084; and Mr. Debertin $111,680.

(12) Includes the following payment for Mr. Skidmore: fiscal 2014: $31,534 relocation expenses with a gross up value of

$57,055.

(13) Includes the following payment for Mr. Palmquist: fiscal 2014: executive physical $15,234

Agreements with Named Executive Officers

We have entered into a three-year employment and a one-year change in control agreement with Mr. Casale, our CEO,
each effective January 1, 2014. These agreements replace employment and change in control agreements that we had previously
entered into with Mr. Casale in November 2010. Copies of the new agreements were previously filed as Exhibits 10.1 and 10.2
to our Annual Report on Form 10-K for the year ended August 31, 2013. The employment agreement with Mr. Casale was
entered into to clearly define the obligations of the parties with respect to employment matters as well as compensation and
benefits provided to Mr. Casale upon termination of employment. Mr. Casale's change in control agreement was designed to
help retain Mr. Casale, recognizing that change in control protections are commonly provided at comparable companies with
which CHS competes for executive talent. Because of our cooperative ownership structure, CHS is in a position where a change
of control is unlikely. However, we believe that this arrangement provides financial security to Mr. Casale and enhances his
impartiality and objectivity in the case of a change in control in which he could potentially lose his position.

The severance pay and benefits to which Mr. Casale will be entitled if we terminate his employment without cause, if
he terminates his employment for “good reason” or if there is change in control, are described below under the heading “Post
Employment”.

Mr. Casale's employment agreement also provides that in the event of certain restatements of our financial results due
to material noncompliance with financial reporting requirements, if our Board determines in good faith that compensation paid
(or payable but not yet paid) to Mr. Casale was awarded or determined based on such material noncompliance, then we are
entitled to recover from him (or to reduce compensation determined but not yet paid) all compensation based on the erroneous
financial data in excess of what would have been paid or been payable to him under the restatement.

Mr. Skidmore, our CFO, joined us in August 2013. The severance payments to which Mr. Skidmore will be entitled if

we terminate his employment without cause or if he terminates his employment for “good reason” are described below under
the heading “Post Employment”. Other details of Mr. Skidmore's employment arrangement with us are described in the
Compensation Discussion and Analysis above.

We have entered into a succession planning letter agreement with Mr. McEnroe, our Executive Vice President and

Chief Operating Officer of Country Operations, under which he will be eligible to receive an incentive equal to one year's base
salary upon completion of an agreed upon succession plan, which includes the effective training and development of strong
successors to his leadership team, an efficient and effective transition of his responsibilities at the time of his retirement to a
successor candidate, and the successful performance of his duties and responsibilities through his retirement. Mr. McEnroe
intends to retire on December 31, 2014.

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Explanation of Ratio of Salary and Bonus to Total Compensation

The structure of our executive compensation package is focused on a suitable mix of base pay, annual variable pay and

long-term incentive awards in order to encourage executive officers and employees to strive to achieve goals that benefit our
shareholders' interests over the long term, and to better align our programs with general market practices.

Fiscal 2014 Executive Compensation Mix at Target

The charts below illustrate the mix of base salary, annual variable pay at target performance, and long-term incentive
compensation at target performance for fiscal 2014 for our CEO and the other Named Executive Officers as a group, excluding
Mr. Kastelic because he did not have a full year of service in fiscal 2014 due to his retirement.

2014 Grants of Plan-Based Awards

Estimated Future Payouts Under Non-Equity Incentive Plan Awards

Grant Date
9-1-14(1)
9-1-14(2)
9-1-14(1)
9-1-14(2)
9-1-14(1)
9-1-14(2)
9-1-14(1)
9-1-14(2)
9-1-14(1)
9-1-14(2)

Threshold

Target

Maximum

Superior
Performance
Maximum

247,500

$ 1,237,500

$ 2,475,000 $

—

247,500
64,890

1,237,500
324,450

2,475,000
648,900

64,890

96,542

88,856

86,520

324,450

482,710

444,280

432,600

648,900

965,419

888,560

865,200

4,950,000
—

1,297,800

—

1,930,838

—

1,777,121

—

1,730,400

Name

Carl Casale

Timothy Skidmore

Mark Palmquist

Jay Debertin

John McEnroe

_______________________________________

(1) Represents range of possible awards under our fiscal 2014 Annual Variable Pay Plan. The actual amount of the award

earned for fiscal 2014 is included in the “Non-Equity Incentive Plan Compensation” column of our Summary
Compensation Table. The Annual Variable Pay Plan is described under “Compensation Discussion and Analysis-
Annual Variable Pay.”

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(2) Represents range of possible awards under our Long-Term Incentive Plan for the fiscal 2014-2016 performance period.
Goals are based on achieving a three-year ROAE of 8%, 10% and 14% plus a potential award for superior 20% ROAE
performance. Awards are earned over a three-year period and vest over an additional 28-month period. The Long-Term
Incentive Plan is described under “Compensation Discussion and Analysis - Long-Term Incentive Plans."

The material terms of annual variable pay and long-term incentive awards that are disclosed in this table, including the

vesting schedule, are described under Compensation, Discussion and Analysis. Specifics to the calculation of Mr. Casale's
award are described under "Agreements with Named Executive Officers."

Pension Benefits Table

Plan Name

Name
Carl Casale ........................... CHS Inc. Pension Plan ..................................
SERP .............................................................
Timothy Skidmore ............... CHS Inc. Pension Plan ..................................
SERP .............................................................
Mark Palmquist(1)................. CHS Inc. Pension Plan ..................................
SERP .............................................................
Jay Debertin ......................... CHS Inc. Pension Plan ..................................
SERP .............................................................
John McEnroe(1) ................... CHS Inc. Pension Plan ..................................
SERP .............................................................
David Kastelic(1)................... CHS Inc. Pension Plan ..................................
SERP .............................................................

_______________________________________

Number of
Years of
Credited
Service

Present
Value of
Accumulated
Benefits

Payments
During Last
Fiscal Year

3.6667

67,117

3.6667

1.0000
1.0000

35.0000

30.2500

35.5833

21.1667

1,059,459

—
47,985

903,116

2,751,640

732,328

1,800,572

740,397

864,390

455,561

827,566

—

—
—

—

455,561

827,566

(1) Mr. McEnroe is eligible for early retirement in both the CHS Inc. Pension Plan and the SERP. Mr. Kastelic and Mr.
Palmquist were eligible for retirement under both plans at the time of retirement and resignation respectively.

The above table shows the present value of accumulated retirement benefits that Named Executive Officers other than
Mr. Skidmore are entitled to under the Pension Plan and SERP. Mr. Skidmore joined us in August 2013 and accordingly is not
yet entitled to CHS Inc. Pension Plan benefits under this plan for one year.

For a discussion of the material terms and conditions of the Pension Plan and the SERP, see “Compensation

Discussion and Analysis.”

The present value of accumulated benefits is determined in accordance with the same assumptions outlined in Note 10

of our consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for the year ended August 31,
2014.

• Discount rate of 3.90%
•
• Each Named Executive Officer is assumed to retire at the earliest retirement age at which unreduced benefits are

2014 Static Mortality Table for Annuitants/Non Annuitants per §1.430(h)(3)-1(e)

available (age 65). The early retirement benefit under the cash balance plan formula is equal to the participant's
account balance; and
Payments under the cash balance formula of the Pension Plan assume a lump sum payment. SERP benefits are
payable as a lump sum.

•

The normal form of benefit for a single employee is a life only annuity, and for a married employee the normal form of
benefit is a 50% joint and survivor annuity. Other annuity forms are also available on an actuarial equivalent basis. A lump sum
option is also available.

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All Named Executive Officer's retirement benefits at normal retirement age will be equal to their accumulated benefits

under the Pension Plan and SERP, as described under “Compensation Discussion and Analysis”.

2014 Nonqualified Deferred Compensation Table

Name

Executive
Contributions in
Last Fiscal Year
(1)

Registrant
Contributions in
Last Fiscal Year
(2)

Aggregate
Earnings
in Last Fiscal
Year (3)

Aggregate
Withdrawals/
Distributions

Aggregate Balance
at Last Fiscal Year
End (2),(4)

Carl Casale .............................................

2,160,234

2,437,702

343,542

Timothy Skidmore..................................

Mark Palmquist ......................................

Jay Debertin............................................

John McEnroe.........................................

David Kastelic ........................................

30,900
—
84,625

309,600
—

7,895

989,266

955,028

714,461

800,710

797

213,322

493,358

234,558

137,509

— $
—
—
2,221,544
—
2,573,081

9,965,702

39,592

5,742,353

9,140,647

6,227,302

2,341,332

____________________________________

(1)

Includes amounts deferred from salary and annual incentive pay reflected in the Summary Compensation Table.

(2) Contributions are made by CHS into the Deferred Compensation Plan on behalf of Named Executive Officers.

Amounts include LTIP, retirement contributions on amounts exceeding IRS compensation limits, Profit Sharing, and
401(k) match. The amounts reported were made in early fiscal 2014 based on fiscal 2013 results. These results are also
included in amounts reported in the fiscal 2014 Summary Compensation Table: Mr. Casale, $254,261; Mr. Palmquist,
$90,685; Mr. Debertin, $111,680; Mr. McEnroe, $108,375; Mr. Kastelic, $0.

(3) The amounts in this column include the change in value of the balance, not including contributions made by the

Named Executive Officer. Amounts include the following above market earnings in 2014 that are also reflected in the
Summary Compensation Table: Mr. Casale- $11,831; Mr. Skidmore- $27; Mr. Kastelic- $3,657; Mr. Palmquist-
$6,951; Mr. Debertin- $11,866; Mr. McEnroe- $7,592.

(4) Amounts vary in accordance with individual pension plan provisions and voluntary employee deferrals and

withdrawals. These amounts include rollovers, voluntary salary and voluntary incentive plan contributions from
predecessor plans with predecessor employers that have increased in value over the course of the executive's career.
Named Executive Officers may defer up to 30% of their base salary and up to 100% of their annual variable pay to the
Deferred Compensation Plan. Earnings on amounts deferred under the plan are determined based on the investment
election made by the Named Executive Officer from five market based notional investments with a varying level of
risk selected by CHS, and a fixed rate fund. The notional investment returns for the fiscal year were as follows:
Vanguard Prime Money Market, .007% ; Vanguard Life Strategy income, 5.79%; Vanguard Life Strategy Conservative
Growth, 6.37%; Vanguard Life Strategy Moderate Growth, 6.87%; Vanguard Life Strategy Growth, 7.44%; and the
Fixed Rate was 4.00%.

Named Executive Officers may change their investment election daily. Payments of amounts deferred are made in
accordance with elections by the Named Executive Officer and in accordance with Section 409A under the Internal
Revenue Code. Payments under the Deferred Compensation Plan may be made at a specified date elected by the
Named Executive Officer or deferred until retirement, disability, or death. Payments would be made in a lump sum. In
the event of retirement, the Named Executive Officer can elect to receive payments either in a lump sum or annual
installments up to 10 years.

Post Employment

The CEO is covered by an employment agreement that provides for severance in the event his employment is

terminated by us without cause or by him with “good reason.” Severance consists of two times base pay, two times target
annual variable pay, a prorated portion of his unpaid annual variable award for the fiscal year in which the termination
occurred, and two years of health and welfare benefits substantially similar to those he was receiving prior to termination. Mr.
Casale's agreement contains two year non-solicitation and non-compete provisions. Payments for Mr. Casale would be made in
three equal installments over a two-year period.

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Mr. Skidmore's term sheet provides for severance in the event his employment is terminated by us without cause, or by

his with “good reason”, in the amount of one year of base pay and prorated annual variable pay.

All other Named Executive Officers are covered by a broad-based employee severance program which provides two

weeks of pay per year of service with a 12 month cap.

In accordance with their years of service and current base pay levels, the Named Executive Officers' severance pay

would have been as follows had they been terminated by us without cause or terminated their employment for good reason as of
the last business day of fiscal 2014:

Carl Casale (1)(2) ...................................................................................................................................................... $
Timothy Skidmore (3).............................................................................................................................................. $
Mark Palmquist ...................................................................................................................................................... $
Jay Debertin............................................................................................................................................................ $
John McEnroe ........................................................................................................................................................ $
David Kastelic (4) .................................................................................................................................................... $
_______________________________________

5,742,180

787,950

689,585

634,686

618,000

—

(1) Mr. Casale's post employment value includes the value of health and welfare insurance based on current monthly rates.

(2) Mr. Casale's post employment value for the prorated portion of his unpaid annual variable pay award for the fiscal year
in which the termination occurred assumes an annual variable pay award at target performance for the entire fiscal
year.

(3) Mr. Skidmore's post employment value assumes an annual variable pay award at target performance for the entire

fiscal year.

(4) Mr. Kastelic retired September 3, 2013 and received no severance.

There are no other severance benefits offered to our Named Executive Officers except for up to $5,000 of
outplacement assistance, which would be included as imputed income, and government mandated benefits such as COBRA.
The method of payment would be a lump sum. Named Executive Officers not covered by employment agreements are not
offered any special postretirement health and welfare benefits that are not offered to other similarly situated (i.e. age and
service) salaried employees.

Mr. Casale is also covered by a change in control agreement under which a “qualifying termination” entitles
Mr. Casale to a severance payment equal to 2.5 times the sum of Mr. Casale's base salary and target annual incentive
compensation award, welfare benefit continuation for a period of 30 months and outplacement fees not to exceed $30,000. In
accordance with this agreement and his current base salary, Mr. Casale would have received the following payment had there
been a "qualifying termination" of his employment on the last business day of fiscal 2014.

Mr. Casale (1)........................................................................................................................................................... $
_______________________________________

5,660,850

(1) This number includes the value of health insurance based on current monthly rates.

Director Compensation

Overview

The Board of Directors met formally eight times during the year ended August 31, 2014. Through August 31, 2014,

each director was provided annual compensation of $69,000, paid in 12 monthly payments, plus actual expenses and travel
allowance, with the Chairman of the Board receiving additional annual compensation of $18,000, and the First Vice Chairman,
the Secretary-Treasurer receiving additional annual compensation of $3,600 and all board committee chairs receiving an
additional annual compensation of $6,000. Each director receives a per diem of $500 plus actual expenses and travel allowance
for each day spent at meetings other than regular board meetings and the CHS Annual Meeting. The number of days per diem
may not exceed 55 days annually, except that the Chairman of the Board is exempt from this limit.

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Further, in an effort to align the interests of the board and management, directors are eligible to participate in the
deferred compensation plan. Other than direct contributions, company contributions are made based on ROAE to align the
interest of directors, management and member-owners. The ROAE performance goals of 8% to 20% are the same as described
in the Executive Long-Term Incentive plan, resulting in deferred compensation plan credits ranging from $5,000 to $100,000 as
detailed on the following pages.

Director Retirement and Healthcare Benefits

Members of the Board of Directors are eligible for certain retirement and healthcare benefits. The director retirement

plan is a defined benefit plan and provides for a monthly benefit for the director's lifetime, beginning at age 60. Benefits are
immediately vested and the monthly benefit is determined according to the following formula: $250 times years of service on
the board (up to a maximum of 15 years). Under no event will the benefit payment be payable for less than 120 months.
Payment shall be made to the retired director's beneficiary in the event of the director's death before 120 payments are made.
Prior to 2005, directors could elect to receive their benefit as an actuarial equivalent lump sum. In order to comply with IRS
requirements, directors were required in 2005 to make a one-time irrevocable election whether to receive their accrued benefit
in a lump sum or a monthly annuity upon retirement. If the lump sum was elected, the director would commence benefits upon
expiration of board term.

Effective August 31, 2011, future accruals under the director retirement plan were frozen. Directors elected after that

date are not eligible for benefits under this plan.

Retirement benefits are funded by a rabbi trust, with a balance at August 31, 2014 of $9.4 million. The Board of

Director's intent is to fully fund benefits through the rabbi trust.

Directors of CHS serving as of September 1, 2005, and their eligible dependents, are eligible to participate in the
company's medical, life, dental, vision and hearing plans. CHS will pay 100% of the medical premium for the director and
eligible dependents until the director is eligible for Medicare. Term life insurance cost is paid by the director. Retired directors
and their dependents are eligible to continue medical and dental insurance with the premiums paid by CHS after they leave the
Board. In the event a director's coverage ends due to death or Medicare eligibility, CHS will pay 100% of the premium for the
eligible spouse and eligible dependents until the spouse reaches Medicare age or upon death, if earlier.

New directors elected on or after December 1, 2006, and their eligible dependents, are eligible to participate in our

medical, dental, vision and hearing plans. CHS will pay 100% of the premium for the director and eligible dependents until the
director is eligible for Medicare. In the event a director leaves the Board prior to Medicare eligibility, premiums will be shared
based on the following schedule:

Years of Service
Up to 3 ........................................................................................................................................
3 to 6 ...........................................................................................................................................
6+ ................................................................................................................................................

Director

100%

50%
0%

CHS

50%
100%

CHS Inc. Deferred Compensation Plan

Directors are eligible to participate in the Deferred Compensation Plan. Each participating director may elect to defer
up to 100% of his or her monthly director fees into the Deferred Compensation Plan. This must be done prior to the beginning
of the calendar year in which the fees will be earned, or in the case of newly elected directors, upon election to the Board. The
deferral election must occur prior to the beginning of the calendar year in which the compensation will be earned. During fiscal
2014, the following directors deferred board fees pursuant to the Deferred Compensation Plan: Mr. Erickson, Mr. Hasnedl, Mr.
Johnsrud, Mr. Knecht, Mr. Malesich, and Mr. Riegel.

Benefits are funded in a rabbi trust. The amount of deferred compensation plan rabbi trust reported elsewhere in this

report includes amounts deferred by the directors.

Each year we will credit an amount to each Director's retirement plan account under the Deferred Compensation Plan.

The amount that will be credited is based on CHS cumulative ROAE over a three-year period:

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Amount Credited
$100,000 (Superior Performance)

$50,000 (Maximum)

$25,000 (Target)

$5,000 (Minimum)

ROAE Performance
20% Return on Adjusted CHS Equity

14% Return on Adjusted CHS Equity

10% Return on Adjusted CHS Equity

8% Return on Adjusted CHS Equity

Below 8% Return on Adjusted CHS Equity

The fiscal 2014 credit to each director’s Retirement Plan Account was determined based on the ROAE for fiscal years

2012, 2013, and 2014 and is reflected in the Directors Compensation Table.

During fiscal 2013 the Executive Committee of the CHS Board of Directors utilized a third party consultant, Towers
Watson, to conduct an assessment of the Board of Directors’ compensation program. The committee reviewed the market data
and concluded that the current compensation programs were not aligned with the market. Based on the findings and an effort to
align the Executive and Board of Director strategic goals and outcomes, the committee recommended and the CHS Board of
Directors approved expansion of the three year cumulative ROAE performance goals which will provide additional
contributions to each Director’s retirement plan account under the Deferred Compensation Plan for above market performance
between 14% and 20% ROAE, beginning in fiscal 2014 (based on the fiscal 2012-2014 performance period). These goals and
associated contribution levels align with CHS Long-Term Incentive Plan goals and related awards for superior performance in
that the award for superior performance is four times the target award opportunity in both programs.

Amounts credited and defined performance goals for the fiscal 2012-2014 measurement period are defined below:

Amount Credited
$100,000 (Superior Performance)

$50,000 (Maximum)

$25,000 (Target)

$5,000 (Minimum)

ROAE Performance
20% Return on Adjusted CHS Equity

14% Return on Adjusted CHS Equity

10% Return on Adjusted CHS Equity

8% Return on Adjusted CHS Equity

Below 8% Return on Adjusted CHS Equity

Upon leaving the Board during the fiscal year, a director's credit for that partial fiscal year will be the target amount
($25,000) prorated through the end of the month in which the director departs. Directors who join the CHS Board during the
fiscal year will receive credit for that partial fiscal year based on the actual ROAE for that fiscal year, prorated from the first of
the month following the month in which the director joins the Board, to the end of the fiscal year.

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Director Compensation Table

Name(1)
Donald Anthony................................................................... $
Robert Bass ..........................................................................
David Bielenberg .................................................................
Clinton Blew ........................................................................
Dennis Carlson (6).................................................................
Curt Eischens .......................................................................
Jon Erickson.........................................................................
Steven Fritel .........................................................................
Jerry Hasnedl (6) ...................................................................
Alan Holm............................................................................
David Johnsrud ....................................................................
David Kayser .......................................................................
Randy Knecht.......................................................................
Greg Kruger .........................................................................
Edward Malesich .................................................................
Steve Riegel .........................................................................
Daniel Schurr .......................................................................

Change in
Pension Value
and
Nonqualified
Deferred
Compensation
Earnings (3)

All Other
Compensation
(4)(5)

Total

Fees Earned or
Paid in Cash (1)
(2)

98,500

9,977

64,864

81,000

109,000

96,500

96,350

96,500

91,000

88,750

91,750

69,250

93,000

89,500

80,000

89,500

92,000

83,000

96,100

81,936

10,984

3,831

27,102

36,104

42,669

—

27,228

20,325

15,851

11,213

27,198

65,387

64,159

75,759

67,537

65,113

68,265

66,114

66,647

13,602

47,918

74,490

65,355

71,878

64,763

64,769

74,289

173,341

228,323

184,143

176,090

190,989

197,717

159,337

197,533

158,453

82,852

140,964

191,218

165,680

177,229

156,820

158,982

197,587

_______________________________________

(1)

Mr. Holm was elected to the Board effective December 5, 2013.

(2) Of this amount, the following directors deferred the succeeding amounts to the Deferred Compensation Plan: Mr.
Erickson, $5,000; Mr. Hasnedl, $10,000; Mr. Johnsrud, $12,000; Mr. Knecht, $14,000; Mr. Malesich $30,000; Mr.
Riegel, $6,000.

(3) This column represents both changes in pension value and above-market earnings on deferred compensation. Change
in pension value is the aggregate change in the actuarial present value of the director's benefit under their retirement
program, and nonqualified earnings, if applicable. The change in pension value will vary by director based on several
factors including age, service, pension benefit elected (lump sum or annuity - see above), discount rate and mortality
factor used to calculate the benefit due. Future accruals under the plan were frozen as of August 31, 2011 as stated
above.

Above-market earnings represent earnings exceeding 120% of the Federal Reserve long-term rate as determined by the
IRS on applicable funds. The following directors had above market earnings during the year: $162 for Mr. Bass; $32
for Mr. Bielenberg; $126 for Mr. Anthony, Mr. Blew, Mr. Carlson, Mr. Eischens, Mr. Kayser, and Mr. Kruger; $72 for
Mr. Erickson; $14 for Mr. Fritel; $56 for Mr. Hasnedl; $104 for Mr. Knecht; $57 for Mr. Malesich; $84 for Mr. Riegel;
$76 for Mr. Schurr.

(4) All other compensation includes health insurance premiums, conference and registration fees, meals and related

spousal expenses for trips made with a director on CHS business. Total amounts vary primarily due to the variations in
health insurance premiums which are due to the number of dependents covered.

Health care premiums paid for directors include: $13,040 for Mr. Holm; $13,376 for Mr. Anthony, Mr. Bass, Mr.
Bielenberg, Mr. Eischens, Mr. Hasnedl, Mr. Johnsrud, Mr. Knecht, Mr. Malesich, and Mr. Riegel; $14,500 for Mr.
Fritel; $15,520 for Mr. Carlson; $16,644 for Mr. Erickson; $19,892 for Mr. Kruger; $23,160 for Mr. Blew, Mr. Kayser
and Mr. Schurr.

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(5) All other compensation includes fiscal 2014 Director Retirement Plan Deferred Compensation Plan contributions: $0

for Mr. Holm; $33,333 for Mr. Johnsrud; and $50,000 for all other Board Members.

(6) Made a one-time irrevocable retirement election in 2005 to receive a lump sum benefit under the director retirement
plan. All other directors will receive a monthly annuity upon retirement. The plan benefit was frozen as of August 31,
2011.

Compensation Committee Interlocks and Insider Participation

As noted above, the Board of Directors does not have a compensation committee. The Governance Committee

recommends to the entire Board of Directors salary actions relative to our CEO. The entire Board of Directors determines the
compensation and the terms of the employment agreement with our CEO. The CEO decides base compensation levels for the
other Named Executive Officers with input from a third party consultant if necessary, and recommends for Board of Directors
approval the annual and long-term incentive levels for the other Named Executive Officers

None of the directors are officers of CHS. See Item 13 for directors including Messrs. Eischens and Johnsrud who

were a party to related person transactions.

Governance Committee Report

The Governance Committee has reviewed and discussed the Compensation Discussion and Analysis required by
Item 402(b) of Regulation S-K with management and, based on such review and discussion, the Governance Committee
recommended to the Board of Directors that the Compensation Discussion and Analysis be included in this Annual Report on
Form 10-K.

Respectfully submitted,

Steve Fritel, Chairman
Bob Bass
Dave Johnsrud
Steve Riegel

Compensation Risk Analysis

Our compensation policies and practices were reviewed by the appropriate corporate personnel in light of the

requirements of Item 402(s) of Regulation S-K. A comprehensive risk assessment of our base and variable compensation
programs was also conducted in fiscal 2010, and we continue ongoing reviews for risk. This assessment included a thorough
review of all of our significant compensation components including base pay, annual variable pay, long-term incentive pay, and
profit sharing. This review confirmed that our executive compensation program establishes an appropriate set of rewards for
achieving our strategic, business and financial objectives without encouraging inappropriate risk-taking. Specifically, all of our
incentive plans, including our long-term incentive plan, our short-term incentive plan and our profit sharing plan have
established maximum levels of performance and payouts. In fiscal 2014, the LTIP design was modified with the ROAE superior
performance maximum award payout moving from two times target award to four times target award, based on achievement of
20% ROAE superior performance. Therefore, the previous risk assessment remains adequate in ensuring all risks remain
mitigated. All plans are performance based and in total are designed in such a manner as to limit unnecessary risk to CHS. As a
result of our review and analysis, we have concluded that the risks arising from our compensation policies and practices are not
reasonably likely to have a material adverse effect on CHS.

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ITEM 12.
RELATED STOCKHOLDER MATTERS

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND

Beneficial ownership of our equity securities by each member of our Board of Directors, each of our named executive
officers and all members of our Board of Directors and executive officers as a group as of September 15, 2014 is shown below.
Except as indicated in the footnotes to the following table, each person has sole voting and investment power with respect to all
shares attributable to such person.

Name of Beneficial Owner
Directors:

David Bielenberg..............................................................................
Donald Anthony ...............................................................................
Robert Bass ......................................................................................
Clinton J. Blew.................................................................................
Dennis Carlson (3) .............................................................................
Curt Eischens....................................................................................
Jon Erickson .....................................................................................
Steve Fritel .......................................................................................
Jerry Hasnedl....................................................................................
Alan Holm ........................................................................................
David Johnsrud.................................................................................
David Kayser....................................................................................
Randy Knecht (3)...............................................................................
Gregory Kruger ................................................................................
Edward Malesich..............................................................................
Steve Riegel......................................................................................
Daniel Schurr....................................................................................

Named Executive Officers:

Carl M. Casale..................................................................................
Jay Debertin (3)..................................................................................
Timothy Skidmore............................................................................
John McEnroe ..................................................................................
Mark Palmquist ................................................................................
David Kastelic ..................................................................................
All other executive officers ..............................................................
Directors and executive officers as a group ..........................................

_______________________________________

Title of Class

8% Cumulative Redeemable
Preferred Stock

Class B Cumulative
Redeemable Preferred Stock

Amount of
Beneficial
Ownership

(Shares)

% of Class
(1)

Amount of
Beneficial
Ownership

(Shares)

% of Class
(2)

9,130
1,135
120
—
60
120
300
880
975
—
—
—
863
—
—
245
—

—
1,200
—
—
400
—
700
16,128

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

*
*
*
*
*
*
*

—
2,275
—
—
—
107
—
—
1,821
—
1,650
630
—
—
—
—
—

—
—
200
—
—
—
—
6,683

*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*
*

*
*
*
*
*
*
*

(1) As of September 15, 2014, there were 12,272,003 shares of 8% Cumulative Redeemable Preferred Stock outstanding.

(2) As of September 15, 2014, there were 34,871,363 shares of Class B Cumulative Redeemable Preferred Stock

outstanding with 18,071,363 and 16,800,000 attributed to Series 1 and Series 2, respectively.

(3)

Includes shares held by spouse, children and Individual Retirement Accounts (IRA).

* Less than 1%

We have no compensation plans under which our equity securities are authorized for issuance.

To our knowledge, there is no person who beneficially owns more than 5% of any class or series of our preferred

stock.

Table of Contents

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

Because our directors must be active patrons of CHS, or of an affiliated association, transactions between us and our
directors are customary and expected. Transactions include the sales of commodities to us and the purchases of products and
services from us, as well as patronage refunds and equity redemptions received from us. During the year ended August 31,
2014, the value of those transactions between a particular director (and any immediate family member of a director, which
includes any child, stepchild, parent, stepparent, spouse, sibling, mother-in-law, father-in-law, son-in-law, daughter-in-law,
brother-in-law or sister-in-law and any person (other than a tenant or employee) sharing the household of such director) and us
in which the total amount involved exceeded $120,000 are shown below.

Name
Dennis Carlson............................................................................................................................ $
Curt Eischens ..............................................................................................................................
Jon Erickson................................................................................................................................
Jerry Hasnedl ..............................................................................................................................
David Johnsrud ...........................................................................................................................
David Kayser ..............................................................................................................................

Transactions
with CHS

Patronage
Dividends

221,133

310,416

193,587

1,443,631

2,173,316

1,304,562

7,719

2,241

11,583

54,830

47,286

20,594

Review, Approval or Ratification of Related Party Transaction

Pursuant to its amended and restated charter, our Audit Committee has responsibility for the review and approval of all

transactions between CHS and any related parties or affiliates of CHS, including its officers and directors, other than
transactions in the ordinary course of business and on market terms as described above.

Related persons can include any of our directors or executive officers and any of their immediate family members, as
defined by the Securities and Exchange Commission. In evaluating related person transactions, the committee members apply
the same standards they apply to their general responsibilities as members of the Audit Committee of the Board of Directors.
The committee will approve a related person transaction when, in its good faith judgment, the transaction is in the best interest
of CHS. To identify related person transactions, each year we require our directors and officers to complete a questionnaire
identifying any transactions with CHS in which the officer or director or their family members have an interest. In addition, we
have a written policy in regard to related persons, included in our Corporate Compliance Code of Ethics that describes our
expectation that all directors, officers and employees who may have a potential or apparent conflict of interest will notify our
legal department.

Director Independence

We are a Minnesota cooperative corporation managed by a Board of Directors made up of 17 members. Nomination

and election of the directors is done by eight separate regions. In addition to meeting other requirements for directorship,
candidates must reside in the region from which they are elected. Directors are elected for three-year terms. The terms of
directors are staggered and no more than seven director positions are elected at an annual meeting. Nominations for director
elections are made by the members at the region caucuses at our annual meeting. Neither the Board of Directors, nor
management, of CHS participates in the nomination process. Accordingly, we have no nominating committee.

The following directors satisfy the definition of director independence set forth in the rules of the NASDAQ:

Donald Anthony

Robert Bass

David Bielenberg

Clinton J. Blew

Dennis Carlson

Jon Erickson

Steve Fritel

Jerry Hasnedl

Alan Holm

David Kayser

Randy Knecht

Greg Kruger

Edward Malesich

Steve Riegel

Daniel Schurr

Further, although we do not need to rely upon an exemption for the Board of Directors as a whole, we are exempt
pursuant to the NASDAQ rules from the NASDAQ director independence requirements as they relate to the makeup of the
Board of Directors as a whole and the makeup of the committee performing the functions of a compensation committee. The

Table of Contents

NASDAQ exemption applies to cooperatives that are structured to comply with relevant state law and federal tax law and that
do not have a publicly traded class of common stock. All of the members of our Audit Committee are independent.

Independence of CEO and Board Chairman Positions

Our bylaws prohibit any employee of CHS from serving on the Board of Directors. Accordingly, our CEO may not

serve as Chairman of the Board or in any Board capacity. We believe that this leadership structure creates independence
between the Board and management and is an important check and balance in the governance of CHS.

Board of Directors Role in Risk Oversight

It is senior management’s responsibility to identify, assess and manage our exposures to risk. Our Board of Directors

plays an important and significant role in overseeing the overall risk management approach, including the approval of
guidelines and policies that govern our risk management process. Our management and Board of Directors have jointly
developed and documented a Risk Identification and Assessment analysis for CHS, which covers eight broad categories of risk
exposure. Each significant enterprise level risk is reviewed periodically by management with the Board of Directors and/or a
committee of the Board as appropriate to identify and evaluate key risks across the organization. The review includes an
analysis by management of the continued applicability of the risk, our performance in managing or mitigating the risk, and
possible additional or emerging risks to consider. From this evaluation process, the top enterprise level risks are identified and
prioritized for each risk treatment strategy development projects that may be under taken. We continue to develop a formal
Enterprise Risk Management program intended to support integration of the risk assessment discipline and controls into major
decision making and business processes. The Corporate Risk Committee will be involved in developing and approving the
Enterprise Risk Management framework, and will be responsible for evaluating its effectiveness on an ongoing basis. When
appropriate, the Corporate Risk Committee will meet jointly with the Audit Committee to discuss common financial risks
across CHS that may have potential material impact to our financial statements.

ITEM 14.

PRINCIPAL ACCOUNTING FEES AND SERVICES

The following table shows the aggregate fees billed to us by PricewaterhouseCoopers LLP for services rendered

during the years ended August 31, 2014 and 2013:

Audit Fees (1)............................................................................................................................... $
Audit-related Fees (2)...................................................................................................................
Tax Fees (3) ..................................................................................................................................
All Other Fees (4).........................................................................................................................
Total............................................................................................................................................ $

_______________________________________

2014

2013

(Dollars in thousands)

3,672

1,341

31
5,069

2,919

373

—
3,335

(1)

(2)

(3)

(4)

Includes fees for audit of annual financial statements and reviews of the related quarterly financial statements, certain
statutory audits and work related to filings of registration statements.

Includes fees for employee benefit plan audits and due diligence on acquisitions.

Includes fees related to tax compliance, tax advice and tax planning.

Includes fees related to other professional services performed for international entities.

In accordance with the CHS Inc. Audit Committee Charter, as amended, our Audit Committee adopted the following

policies and procedures for the approval of the engagement of an independent registered public accounting firm for audit,
review or attest services and for pre-approval of certain permissible non-audit services, all to ensure auditor independence.

Our independent registered public accounting firm will provide audit, review and attest services only at the direction
of, and pursuant to engagement fees and terms approved by our Audit Committee. Our Audit Committee approves, in advance,
all non-audit services to be performed by the independent auditors and the fees and compensation to be paid to the independent
auditors. Our Audit Committee approved 100% of the services listed above in advance.

Table of Contents

ITEM 15.

EXHIBITS AND FINANCIAL STATEMENT SCHEDULES

(a)(1) FINANCIAL STATEMENTS

PART IV.

The following financial statements and the Report of Independent Registered Public Accounting Firm are filed as part

of this Form 10-K.

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets as of August 31, 2014 and 2013

Consolidated Statements of Operations for the years ended August 31, 2014, 2013 and 2012

Consolidated Statements of Comprehensive Income for the years ended August 31, 2014, 2013 and 2012

Consolidated Statements of Changes in Equities for the years ended August 31, 2014, 2013 and 2012

Consolidated Statements of Cash Flows for the years ended August 31, 2014, 2013 and 2012

Notes to Consolidated Financial Statements

Page No.
F-1

F-2

F-3

F-4
F-5

F-6

F-7

(a)(2) FINANCIAL STATEMENT SCHEDULES

SCHEDULE II — VALUATION AND QUALIFYING ACCOUNTS AND RESERVES

Balance at
Beginning
of Year

Additions:
Charged to
Costs
and Expenses *

Deductions:
Write-offs, net
of Recoveries

Balance at
End
of Year

(Dollars in thousands)

Allowances for Doubtful Accounts

2014 ................................................................................ $
2013 ................................................................................
2012 ................................................................................

94,589

111,785

119,026

9,313
(13,130)
7,380

(263) $

(4,066)
(14,621)

103,639

94,589

111,785

Valuation Allowance for Deferred Tax Assets

79,623

40,095

56,659

47,599

27,046

12,404

(8,209) $
(4,082)
(3,344)

111,509

79,623

56,659

*net of reserve adjustments

Table of Contents

Report of Independent Registered Public Accounting Firm on

Financial Statement Schedule

To the Board of Directors and Members and Patrons of CHS Inc.:

Our audits of the consolidated financial statements referred to in our report dated November 5, 2014 appearing on
page F-1 in this Annual Report on Form 10-K of CHS Inc. and subsidiaries also included an audit of the financial statement
schedule listed in Item 15(a)(2) of this Form 10-K. In our opinion, this financial statement schedule presents fairly, in all
material respects, the information set forth therein when read in conjunction with the related consolidated financial statements.

/s/ PricewaterhouseCoopers LLP

PricewaterhouseCoopers LLP

Minneapolis, Minnesota

November 5, 2014

Table of Contents

(a)(3) EXHIBITS

2.1

3.1

3.1A

3.1B

3.2

4.1

4.2

4.3

4.4

4.5

4.6

4.7

4.8

4.9

4.10

4.11

4.12

10.1A

10.1B

10.2

10.3

10.3A

Agreement and Plan of Merger among CHS Inc., Science Merger Sub Ltd. and Solbar Industries Ltd.
(Incorporated by reference to our Current Report on Form 8-K, filed November 23, 2011).
Articles of Incorporation of CHS Inc., as amended. (Incorporated by reference to our Form 10-Q for the quarterly
period ended November 30, 2006, filed January 11, 2007).
Amended Article III, Section 3(b) of Bylaws of CHS Inc. (Incorporated by reference to our Current Report on
Form 8-K, filed May 5, 2010).
Amendment to the Bylaws of CHS Inc. (Incorporated by reference to our Current Report on Form 8-K, filed
December 7, 2010).
Bylaws of CHS Inc. (Incorporated by reference to our Registration Statement on Form S-1 (File No. 333-156255),
filed December 17, 2008).
Resolution Creating a Series of Preferred Equity to be Designated 8% Cumulative Redeemable Preferred Stock.
(Incorporated by reference to Amendment No. 1 to our Registration Statement on Form S-2 (File No.
333-101916), dated January 13, 2003).
Form of Certificate Representing 8% Cumulative Redeemable Preferred Stock. (Incorporated by reference to
Amendment No. 2 to our Registration Statement on Form S-2 (File No. 333-101916), dated January 23, 2003).
Unanimous Written Consent Resolution of the Board of Directors Amending the Amended and Restated
Resolution Creating a Series of Preferred Equity to be Designated 8% Cumulative Redeemable Preferred Stock.
(Incorporated by reference to Amendment No. 2 to our Registration Statement on Form S-2 (File No.
333-101916), dated January 23, 2003).
Unanimous Written Consent Resolution of the Board of Directors Amending the Amended and Restated
Resolution Creating a Series of Preferred Equity to be Designated 8% Cumulative Redeemable Preferred Stock to
change the record date for dividends. (Incorporated by reference to our Form 10-Q for the quarterly period ended
May 31, 2003, filed July 2, 2003).
Resolution Amending the Terms of the 8% Cumulative Redeemable Preferred Stock to Provide for Call Protection.
(Incorporated by reference to our Current Report on Form 8-K, filed on July 19, 2013.)
Amended and Restated Resolution of the Board of Directors of CHS Inc. Creating a Series of Preferred Equity to
be Designated Class B Cumulative Redeemable Stock. (Incorporated by reference to our Registration Statement on
Form S-1/A (File No. 333-190019), filed September 13, 2013).

Written Action of the Board of Directors of CHS Inc. Relating to the Terms of the Class B Cumulative
Redeemable Preferred Stock, Series 1. (Incorporated by reference to our Registration Statement on Form S-1A
(File No. 333-190019), filed September 13, 2013).
Form of Certificate Representing Class B Cumulative Redeemable Preferred Stock, Series 1. (Incorporated by
reference to our Registration Statement on Form 8-A (File No. 001-36079) filed September 20, 2013).
Unanimous Written Consent Resolution of the Board of Directors Relating to the Terms of the Class B Reset Rate
Cumulative Redeemable Preferred Stock, Series 2. (Incorporated by reference to the Registrant’s Registration
Statement on Form 8-A (File No. 001-36079), filed March 5, 2014).

Form of Certificate Representing Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 2.
(Incorporated by reference to the Registrant’s Registration Statement on Form S-1/A (File No. 333-193891), filed
February 26, 2014).
Unanimous Written Consent Resolution of the Board of Directors Relating to the Terms of the Class B Reset Rate
Cumulative Redeemable Preferred Stock, Series 3. (Incorporated by reference to the Registrant’s Registration
Statement on Form 8-A (File No. 001-36079), filed September 10, 2014).
Form of Certificate Representing Class B Reset Rate Cumulative Redeemable Preferred Stock, Series 3.
(Incorporated by reference to the Registrant’s Registration Statement on Form 8-A (File No. 001-36079), filed
September 10, 2014).
Employment Agreement between CHS Inc. and Carl M. Casale, dated November 22, 2010 (Incorporated by
reference to our Current Report on Form 8-K, filed November 22, 2010). (+)
Employment Agreement between CHS Inc. and Carl M. Casale dated November 6, 2013. (Incorporated by
reference to our Annual Report on Form 10-K for the year ended August 31, 2013, filed November 7, 2013). (+)

Amended and Restated Change in Control Agreement between CHS Inc. and Carl M. Casale dated November 6,
2013 (Incorporated by reference to our Annual Report on Form 10-K for the year ended August 31, 2013, filed
November 7, 2013). (+)

Cenex Harvest States Cooperatives Supplemental Savings Plan. (Incorporated by reference to our Form 10-K for
the year ended August 31, 2000, filed November 22, 2000). (+)
Amendment No. 3 to the CHS Inc. Supplemental Savings Plan. (Incorporated by reference to our Form 10-Q for
the quarterly period ended May 31, 2006, filed July 12, 2006). (+)

Table of Contents

10.4

10.5

10.6

10.7

10.7A

10.7B

10.7C

10.7D

10.8

10.9

10.9A

10.10

10.10A

10.10B

10.11

10.12

10.12A

10.13

10.14

10.14A

10.15

10.16

10.16A

10.17

10.17A

10.17B

10.17C

CHS Inc. Supplemental Executive Retirement Plan (2013 Restatement). (Incorporated by reference to our Form
10-Q for the quarterly period ended May 31, 2013, filed July 10, 2013). (+)
CHS Inc. 2014 Annual Variable Pay Plan (*)(+)

CHS Inc. Long-Term Incentive Plan, Plan XII (*)(+)

Cenex Harvest States Cooperatives Share Option Plan. (Incorporated by reference to our Form 10-K for the year
ended August 31, 2004, filed November 18, 2004). (+)
Amendment to Cenex Harvest States Share Option Plan, dated June 28, 2001. (Incorporated by reference to our
Registration Statement on Form S-2 (File No. 333-65364), filed July 18, 2001). (+)
Amendment No. 2 to Cenex Harvest States Share Option Plan, dated May 2, 2001. (Incorporated by reference to
our Form 10-K for the year ended August 31, 2004, filed November 18, 2004). (+)
Amendment No. 3 to Cenex Harvest States Share Option Plan, dated June 4, 2002. (Incorporated by reference to
our Form 10-K for the year ended August 31, 2004, filed November 18, 2004). (+)
Amendment No. 4 to Cenex Harvest States Share Option Plan, dated April 6, 2004. (Incorporated by reference to
our Form 10-K for the year ended August 31, 2004, filed November 18, 2004). (+)
CHS Inc. Share Option Plan Option Agreement. (Incorporated by reference to our Form 10-K for the year ended
August 31, 2004, filed November 18, 2004). (+)
CHS Inc. Share Option Plan Trust Agreement. (Incorporated by reference to our Form 10-K for the year ended
August 31, 2004, filed November 18, 2004). (+)
Amendment No. 1 to the Trust Agreement. (Incorporated by reference to our Form 10-K for the year ended August
31, 2004, filed November 18, 2004). (+)
CHS Inc. Nonemployee Director Retirement Plan. (Incorporated by reference to our Form 10-Q for the quarterly
period ended May 31, 2010, filed July 8, 2010). (+)
Amendment No. 1 to the Nonemployee Director Retirement Plan (Incorporated by reference to our Form 10-K for
the year ended August 31, 2011, filed November 14, 2011). (+)
Amendment No. 2 to the Nonemployee Director Retirement Plan. (Incorporated by reference to our Form 10-K for
the year ended August 31, 2012, filed November 7, 2012). (+)
Trust Under the CHS Inc. Nonemployee Director Retirement Plan. (Incorporated by reference to our Form 10-Q
for the quarterly period ended May 31, 2010, filed July 8, 2010). (+)
CHS Inc. Special Supplemental Executive Retirement Plan. (Incorporated by reference to our Form 10-K for the
year ended August 31, 2003, filed November 21, 2003). (+)
Amendment No. 1 to the CHS Inc. Special Supplemental Executive Retirement Plan. (Incorporated by reference to
our Form 10-Q for the quarterly period ended February 29, 2008, filed April 9, 2008). (+)
Consulting Agreement between CHS Inc. and Patrick Kluempke, dated January 17, 2013. (Incorporated by
reference to our Current Report on Form 8-K, filed April 3, 2013).
$225,000,000 Note Agreement (Private Placement Agreement) dated as of June 19, 1998 among Cenex Harvest
States Cooperatives and each of the Purchasers of the Notes. (Incorporated by Reference to our Form 10-Q
Transition Report for the period June 1, 1998 to August 31, 1998, filed October 14, 1998).
First Amendment to Note Agreement ($225,000,000 Private Placement), effective September 10, 2003, among
CHS Inc. and each of the Purchasers of the Notes. (Incorporated by reference to our Form 10-K for the year ended
August 31, 2003, filed November 21, 2003).
Note Purchase Agreement and Series D & E Senior Notes dated October 18, 2002. (Incorporated by reference to
our Form 10-K for the year ended August 31, 2002, filed November 25, 2002).
Amended and Restated Credit Agreement dated as of January 31, 2011, by and among National Cooperative
Refinery Association, various lenders and CoBank, ACB. (Incorporated by reference to our Form 10-Q for the
quarterly period ended February 28, 2011, filed April 8, 2011).
Amendment No. 1 Amended and Restated Credit Agreement dated as of December 16, 2011, by and among
National Cooperative Refinery Association, various lenders and CoBank, ACB. (Incorporated by reference to our
Form 10-Q for the quarterly period ended November 30, 2011, filed January 11, 2012)
Note Purchase and Private Shelf Agreement between CHS Inc. and Prudential Capital Group dated as of April 13,
2004. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2004, filed July 12,
2004).
Amendment No. 1 to Note Purchase and Private Shelf Agreement dated April 9, 2007, among CHS Inc., Prudential
Investment Management, Inc. and the Prudential Affiliate parties (Incorporated by reference to our Form 10-Q for
the quarterly period ended February 28, 2007 filed April 9, 2007).
Amendment No. 2 to Note Purchase and Private Shelf Agreement and Senior Series J Notes totaling $50 million
issued February 8, 2008 (Incorporated by reference to our Current Report on Form 8-K filed February 11, 2008).
Amendment No. 3 to Note Purchase and Private Shelf Agreement, effective as of November 1, 2010 (Incorporated
by reference to our Form 10-Q for the quarterly period ended November 30, 2010 filed January 11, 2011).

Table of Contents

10.18

10.19

10.19A

10.19B

10.20

10.21

10.22

10.23

10.24

10.25

10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.35A

10.35B

10.36

Note Purchase Agreement for Series H Senior Notes ($125,000,000 Private Placement) dated September 21, 2004.
(Incorporated by reference to our Current Report on Form 8-K filed September 22, 2004).
CHS Inc. Deferred Compensation Plan Master Plan Document (2011 Restatement). (Incorporated by reference to
our Registration Statement on Form S-8 (File No. 333-177326), filed October 14, 2011). (+)
Amendment No. 1 to Deferred Compensation Plan (2011 Restatement). (Incorporated by reference to our Form
10-K for the year ended August 31, 2012, filed November 7, 2012). (+)
Amendment No. 2 to Deferred Compensation Plan (2011 Restatement). (Incorporated by reference to our Form
10-K for the year ended August 31, 2012, filed November 7, 2012). (+)
New Plan Participants 2008 Plan Agreement and Election Form for the CHS Inc. Deferred Compensation Plan
(Incorporated by reference to our Form 10-K for the year ended August 31, 2009, filed November 10, 2009). (+)
Beneficiary Designation Form for the CHS Inc. Deferred Compensation Plan (Incorporated by reference to our
Form 10-K for the year ended August 31, 2009, filed November 10, 2009). (+)
Share Option Plan Participants 2005 Plan Agreement and Election Form. (Incorporated by reference to our
Registration Statement on Form S-8 (File No. 333-129464), filed November 4, 2005). (+)
New Plan Participants 2011 Plan Agreement and Election Form for the CHS Inc. Deferred Compensation Plan
(Incorporated by reference to our Registration Statement on Form S-8 (File No. 333-177326), filed October 14,
2011). (+)
New Plan Participants (Board of Directors) 2009 Plan Agreement and Election Form for the CHS Inc. Deferred
Compensation Plan (Incorporated by reference to our Form 10-K for the year ended August 31, 2009, filed
November 10, 2009). (+)
Loan Agreement (Term Loan) between CHS Inc. and European Bank for Reconstruction and Development, dated
January 5, 2011 (Incorporated by reference to our Current Report on Form 8-K, filed January 18, 2011).
Revolving Loan Agreement between CHS Inc. and European Bank for Reconstruction and Development, dated
November 30, 2010 (Incorporated by reference to our Current Report on Form 8-K, filed January 18, 2011).
City of McPherson, Kansas Taxable Industrial Revenue Bond Series 2006 registered to National Cooperative
Refinery Association in the amount of $325 million (Incorporated by reference to our Current Report on Form 8-K
filed December 18, 2006).
Bond Purchase Agreement between National Cooperative Refinery Association, as purchaser, and City of
McPherson, Kansas, as issuer, dated as of December 18, 2006 (Incorporated by reference to our Current Report on
Form 8-K filed December 18, 2006).
Trust Indenture between City of McPherson, Kansas, as issuer, and Security Bank of Kansas City, Kansas City,
Kansas, as trustee, dated as of December 18, 2006 (Incorporated by reference to our Current Report on Form 8-K
filed December 18, 2006).
Lease agreement between City of McPherson, Kansas, as issuer, and National Cooperative Refinery Association,
as tenant, dated as of December 18, 2006 (Incorporated by reference to our Current Report on Form 8-K filed
December 18, 2006).
Commercial Paper Placement Agreement by and between CHS Inc. and M&I Marshall & Ilsley Bank dated
October 30, 2006 (Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2006,
filed January 11, 2007).
Commercial Paper Dealer Agreement by and between CHS Inc. and SunTrust Capital Markets, Inc. dated October
6, 2006 (Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2006, filed
January 11, 2007).
Note Purchase Agreement ($400,000,000 Private Placement) and Series I Senior Notes dated as of October 4, 2007
(Incorporated by reference to our Current Report on Form 8-K filed October 4, 2007).
Agreement Regarding Distribution of Assets, by and among CHS Inc., United Country Brands, LLC, Land
O’Lakes, Inc. and Winfield Solutions, LLC, made as of September 4, 2007. (Incorporated by reference to our
Form 10-K for the year ended August 31, 2008, filed November 20, 2007).
$150 Million Term Loan Credit Agreement by and between CHS Inc., CoBank, ACB and the Syndication Parties
dated as of December 12, 2007 (Incorporated by reference to our Registration Statement on Form S-1 (File No.
333-148091), filed December 14, 2007).
First Amendment to $150 Million Term Loan Credit Agreement by and between CHS Inc., CoBank, ACB and the
Syndication Parties dated as of May 1, 2008 (Incorporated by reference to our Form 10-Q for the quarterly period
ended May 31, 2008, filed July 10, 2008).
Second Amendment to $150 Million Term Loan Credit Agreement by and between CHS Inc., CoBank, ACB and
the Syndication Parties dated as of June 2, 2010 (Incorporated by reference to our Current Report on Form 8-K,
filed June 3, 2010).
Series 2008-A Supplement dated as of November 21, 2008 (to Base Indenture dated as of August 10, 2005)
between Cofina Funding, LLC, as Issuer, and U.S. Bank National Association, as Trustee (Incorporated by
reference to our Form 10-Q for the quarterly period ended November 30, 2008, filed January 13, 2009).

Table of Contents

10.37

10.37A

10.38

10.39

10.40

10.41

10.42

10.43

10.44

10.44A

10.45

10.45A

10.45B

10.45C

10.46

10.46A

10.46B

Amended and Restated Base Indenture, dated as of December 23, 2010, between Cofina Funding, LLC, as Issuer,
and U.S. Bank National Association, as Trustee (Incorporated by reference to our Current Report on Form 8-K,
filed December 28, 2010).
Amendment No. 1 to Amended and Restated Base Indenture, dated as of December 23, 2010, between Cofina
Funding, LLC, as Issuer, and U.S. Bank National Association, as Trustee. (Incorporated by reference to our Form
10-Q for the quarterly period ended February 29, 2012, filed April 11, 2012).
Series 2010-A Supplement, dated as of December 23, 2010, by and among Cofina Funding, LLC, as Issuer, and
U.S. National Bank Association, as Trustee, to the Base Indenture, dated as of December 23, 2010, between the
Issuer and the Trustee (Incorporated by reference to our Current Report on Form 8-K, filed December 28, 2010).
Lockbox Agreement dated August 10, 2005 between Cofina Financial, LLC and M&I Marshall & Ilsley Bank
(Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2008, filed January 13,
2009).
Purchase and Sale Agreement dated as of August 10, 2005 between Cofina Funding, LLC, as Purchaser and Cofina
Financial, LLC, as Seller (Incorporated by reference to our Form 10-Q for the quarterly period ended November
30, 2008, filed January 13, 2009).
Custodian Agreement dated August 10, 2005 between Cofina Funding, LLC, as Issuer, U.S. Bank National
Association, as Trustee, and U.S. Bank National Association, as Custodian (Incorporated by reference to our Form
10-Q for the quarterly period ended November 30, 2008, filed January 13, 2009).
Servicing Agreement dated as of August 10, 2005 among Cofina Funding, LLC, as Issuer Cofina Financial, LLC,
as Servicer, and U.S. Bank National Association, as Trustee (Incorporated by reference to our Form 10-Q for the
quarterly period ended November 30, 2008, filed January 13, 2009).
Series 2008-A Cofina Variable Funding Asset-Backed Note No. 4 (Incorporated by reference to our Current Report
on Form 8-K, filed November 17, 2010).
Amended and Restated Loan Origination and Participation Agreement dated as of September 1, 2011, by and
among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital, LLC. (Incorporated by
reference to our Form 10-K for the year ended August 31, 2011, filed November 14, 2011).
Amendment No. 1 to Amended and Restated Loan Origination and Participation Agreement dated as of
September 1, 2011, by and among AgStar Financial Services, PCA, d/b/a ProPartners Financial, and CHS Capital,
LLC. (Incorporated by reference to our Form 10-K for the year ended August 31, 2012, filed November 7, 2012).
Note Purchase Agreement (Series 2010-A), dated as of December 23, 2010, among Cofina Funding, LLC, as
Issuer, Nieuw Amsterdam Receivables Corporation, as the Conduit Purchaser, Cooperatieve Centrale Raiffeisen-
Boerenleenbank, B.A. “Rabobank Nederland”, New York Branch, as Funding Agent, and the Financial Institutions
from time to time parties thereto, as Committed Purchasers (Incorporated by reference to our Current Report on
Form 8-K, filed December 28, 2010).
Amendment No. 1 to Note Purchase Agreement (Series 2010-A) dated as of April 13, 2011 by and among Cofina
Funding, LLC, as the Issuer, Nieuw Amsterdam Receivables Corporation, as the Conduit Purchaser, and
Cooperatieve Centrale Raiffeisen-BoerenleenBank B.A., “Rabobank Nederland”, New York Branch, as the
Funding Agent and as a Committed Purchaser (Incorporated by reference to our Form 10-Q for the quarterly
period ended May 31, 2011, filed July 8, 2011).
Amendment No. 2 to Note Purchase Agreement (Series 2010-A) dated as of June 17, 2011 by and among Cofina
Funding, LLC, as the Issuer, Nieuw Amsterdam Receivables Corporation, as the Conduit Purchaser, and
Cooperatieve Centrale Raiffeisen-BoerenleenBank B.A., “Rabobank Nederland”, New York Branch, as the
Funding Agent and as a Committed Purchaser (Incorporated by reference to our Form 10-Q for the quarterly
period ended May 31, 2011, filed July 8, 2011).
Amendment No. 3 to Note Purchase Agreement (Series 2010-A) dated as of April 11, 2012, by and among Cofina
Funding, LLC, as the Issuer, Nieuw Amsterdam Receivables Corporation, as the Conduit Purchaser, and
Cooperatieve Centrale Raiffeisen-BoerenleenBank B.A., “Rabobank Nederland”, New York Branch, as the
Funding Agent and as a Committed Purchaser. (Incorporated by reference to our Form 10-K for the year ended
August 31, 2012, filed November 7, 2012).
Note Purchase Agreement (Series 2008-A) dated as of November 21, 2008 among Cofina Funding, LLC, as Issuer,
Victory Receivables Corporation, as the Conduit Purchaser, The Bank of Tokyo-Mitsubishi UFJ, Ltd., New York
Branch, as Funding Agent for the Purchasers, and the Financial Institutions from time to time parties thereto
(Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2008, filed January 13,
2009).
Amendment No. 1 to Note Purchase Agreement (Series 2008-A) dated February 25, 2009, by and among Cofina
Funding, LLC as the Issuer, Victory Receivables Corporation, as the Conduit Purchaser, and The Bank of Tokyo-
Mitsubishi UFJ, Ltd., New York Branch, as the Funding Agent and as a Committed Purchaser (Incorporated by
reference to our Current Report on Form 8-K, filed March 2, 2009).
Amendment No. 2 to Note Purchase Agreement (Series 2008-A) dated November 20, 2009, by and among Cofina
Funding, LLC as the Issuer, Victory Receivables Corporation, as the Conduit Purchaser, and The Bank of Tokyo-
Mitsubishi UFJ, Ltd., New York Branch, as the Funding Agent and as a Committed Purchaser (Incorporated by
reference to our Registration Statement on Form S-1 (File No. 333-163608), filed December 9, 2009).

Table of Contents

10.46C

10.46D

10.46E

10.46F

10.47

10.48

10.49

10.50

10.51

10.51A

10.51B

10.52

10.53

10.54

10.55

21.1
23.1
24.1
31.1
31.2
32.1

32.2

Amendment No. 3 to Note Purchase Agreement (Series 2008-A) dated as of November 12, 2010, by and among
Cofina Funding, LLC, as the Issuer, Victory Receivables Corporation, as the Conduit Purchaser, and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Funding Agent and as a Committed Purchaser (Incorporated
by reference to our Current Report on Form 8-K, filed November 17, 2010).
Amendment No. 4 to Note Purchase Agreement (Series 2008-A) dated as of December 23, 2010, by and among
Cofina Funding, LLC, as the Issuer, Victory Receivables Corporation, as the Conduit Purchaser, and The Bank of
Tokyo-Mitsubishi UFJ, Ltd., New York Branch, as the Funding Agent and as a Committed Purchaser (Incorporated
by reference to our Current Report on Form 8-K, filed December 28, 2010).

Amendment No. 5 to Note Purchase Agreement (Series 2008-A) dated as of April 13, 2011, by and among Cofina
Funding, LLC, as the Issuer, Victory Receivables Corporation, as the Conduit Purchaser, and The Bank of Tokyo-
Mitsubishi UFJ, Ltd., New York Branch, as the Funding Agent and as a Committed Purchaser (Incorporated by
reference to our Form 10-Q for the quarterly period ended May 31, 2011, filed July 8, 2011).

Amendment No. 6 to Note Purchase Agreement (Series 2008-A) dated as of April 11, 2012, by and among Cofina
Funding, LLC, as the Issuer, Victory Receivables Corporation, as the Conduit Purchaser, and The Bank of Tokyo-
Mitsubishi UFJ, Ltd., New York Branch, as the Funding Agent and as a Committed Purchaser. (Incorporated by
reference to our Form 10-K for the year ended August 31, 2012, filed November 7, 2012).
Stock Transfer Agreement, dated as of November 17, 2011, between CHS Inc. and GROWMARK, Inc.
(Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2011, filed January 11,
2012).
Stock Transfer Agreement, dated as of November 17, 2011, between CHS Inc. and MFA Oil company.
(Incorporated by reference to our Form 10-Q for the quarterly period ended November 30, 2011, filed January 11,
2012).
Amended and Restated Limited Liability Company Agreement, dated February 1, 2012, between CHS Inc. and
Cargill, Incorporated. (Incorporated by reference to our Current Report on Form 8-K, filed February 1, 2012).
Note Purchase Agreement between CHS Inc. and certain accredited investors ($500,000,000) dated as of June 9,
2011(Incorporated by reference to our Current Report on Form 8-K, filed June 13, 2011).
Joint venture agreement among CHS Inc., Cargill, Incorporated, and ConAgra Foods, Inc., dated March 4, 2013.
(Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2013, filed July 10, 2013).
Amendment No.4 to the joint venture agreement among CHS Inc., Cargill Incorporated, and ConAgra Foods, Inc.,
dated March 27, 2014. (Incorporated by reference to our Form 10-Q for the quarterly period ended February 28,
2014, filed April 3, 2014).

Amendment No.5 to the joint venture agreement among CHS Inc., Cargill Incorporated, and ConAgra Foods, Inc.,
dated May 25, 2014. (Incorporated by reference to our Form 10-Q for the quarterly period ended May 31, 2014,
filed July 9, 2014).

2013 Credit Agreement (5-year Revolving Loan) dated as of June 26, 2013 between CHS Inc. and CoBank, ACB,
as administrative agent for all syndication parties thereunder, as bid agent, as the letter of credit bank, and as a
syndication party thereunder, and the other syndication parties party thereto. (Incorporated by reference to our
Current Report on Form 8-K, filed July 2, 2013).
Resolutions Amending the Long-Term Incentive Plan. (Incorporated by reference to our Current Report on Form
8-K, filed September 3, 2013). (+)
Pre-Export Credit Agreement dated as of September 24, 2013 between CHS Agronegocio Industria e Comercio
Ltda., as borrower, CHS Inc., as guarantor, and Credit Agricole Corporate and Investment Bank (Credit Agricole),
as administrative agent, Credit Agricole and Merrill Lynch, Pierce, Fenner & Smith Incorporated, as joint lead
arrangers and joint bookrunners, and the other syndication parties thereto from time to time. (Incorporated by
reference to our Current Report on Form 8-K, filed October 2, 2013).
Succession Planning Letter Agreement between CHS Inc. and John McEnroe dated November 6, 2013.
(Incorporated by reference to our Annual Report on Form 10-K for the year ended August 31, 2013, filed
November 7, 2013) (+)

Subsidiaries of the Registrant.(*)
Consent of Independent Registered Public Accounting Firm.(*)
Power of Attorney.(*)
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(*)
Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.(*)
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.(*)
Certification Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act
of 2002.(*)

_______________________________________
(*)
(+)

Filed herewith
Indicates management contract or compensation plan or agreement

Table of Contents

(b) EXHIBITS

The exhibits shown in Item 15(a)(3) above are being filed herewith.

None.

SUPPLEMENTAL INFORMATION

As a cooperative, we do not utilize proxy statements.

Table of Contents

SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) 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, on November 5, 2014.

CHS INC.

By:

/s/ Carl M. Casale

Carl M. Casale
President and Chief Executive Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, this report has been signed below

by the following persons on behalf of the registrant and in the capacities indicated on November 5, 2014:

Signature

/s/ Carl M. Casale

Carl M. Casale

/s/ Timothy Skidmore

Timothy Skidmore

/s/ Theresa Egan

Theresa Egan

David Bielenberg

Don Anthony

Robert Bass

Clinton J. Blew

Dennis Carlson

Curt Eischens

Jon Erickson

Steve Fritel

Title

President and Chief Executive Officer
(principal executive officer)

Executive Vice President and Chief Financial Officer
(principal financial officer)

Vice President, Accounting and Corporate Controller
(principal accounting officer)

Chairman of the Board of Directors

Director

Table of Contents

Jerry Hasnedl

Alan Holm

David Kayser

Randy Knecht

Greg Kruger

*
Edward Malesich

David Johnsrud

Steve Riegel

Dan Schurr

*By

/s/ Carl M. Casale
Carl M. Casale
Attorney-in-fact

Director

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Members and Patrons of CHS Inc.:

In our opinion, the accompanying consolidated balance sheets and the related consolidated statements of operations, of
comprehensive income, of changes in equities, and of cash flows present fairly, in all material respects, the financial position of
CHS Inc. and its subsidiaries at August 31, 2014 and 2013, and the results of their operations and their cash flows for each of
the three years in the period ended August 31, 2014, in conformity with accounting principles generally accepted in the United
States of America. These financial statements are the responsibility of the Company’s management. Our responsibility is to
express an opinion on these financial statements based on our audits. We conducted our audits of these statements in
accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require
that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

PricewaterhouseCoopers LLP
Minneapolis, Minnesota
November 5, 2014

F-1

Table of Contents

Consolidated Financial Statements
CONSOLIDATED BALANCE SHEETS

August 31

2014

2013

(Dollars in thousands)

Current assets:

ASSETS

Cash and cash equivalents ..................................................................................................... $
2,133,207
Receivables ............................................................................................................................
2,988,563
Inventories..............................................................................................................................
2,760,253
Derivative assets ....................................................................................................................
603,933
Margin deposits......................................................................................................................
301,045
Supplier advance payments....................................................................................................
331,345
Other current assets................................................................................................................
279,304
Total current assets .....................................................................................................................
9,397,650
Investments .................................................................................................................................
923,227
Property, plant and equipment....................................................................................................
4,031,023
795,079
Other assets.................................................................................................................................
Total assets.................................................................................................................................. $ 15,146,979

1,808,532
2,935,478
2,664,735
499,890
340,905
398,441
262,779
8,910,760
765,946
3,171,404
656,160
$ 13,504,270

Current liabilities:

LIABILITIES AND EQUITIES

Notes payable......................................................................................................................... $
Current portion of long-term debt..........................................................................................
Current portion of mandatorily redeemable noncontrolling interest .....................................
Customer margin deposits and credit balances......................................................................
Customer advance payments..................................................................................................
Checks and drafts outstanding ...............................................................................................
Accounts payable ...................................................................................................................
Derivative liabilities...............................................................................................................
Accrued expenses...................................................................................................................
Dividends and equities payable .............................................................................................
Total current liabilities................................................................................................................
Long-term debt ...........................................................................................................................
Mandatorily redeemable noncontrolling interest........................................................................
Long-term deferred tax liability..................................................................................................
Other liabilities ...........................................................................................................................
Commitments and contingencies
Equities:

1,159,473
156,836
65,981
265,556
602,374
167,846
2,208,211
599,990
547,781
409,961
6,184,009
1,299,664
148,756
566,647
481,059

889,312
156,612
65,981
299,364
432,097
185,660
2,416,038
465,066
485,070
390,153
5,785,353
1,450,420
209,419
487,333
418,998

1,190,177
Preferred stock .......................................................................................................................
3,816,428
Equity certificates ..................................................................................................................
(156,757)
Accumulated other comprehensive loss.................................................................................
1,598,660
Capital reserves......................................................................................................................
6,448,508
Total CHS Inc. equities..........................................................................................................
18,336
Noncontrolling interests.........................................................................................................
Total equities...............................................................................................................................
6,466,844
Total liabilities and equities........................................................................................................ $ 15,146,979

319,368
3,588,346
(156,867)
1,380,361
5,131,208
21,539
5,152,747
$ 13,504,270

The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries

F-2

Table of Contents

Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF OPERATIONS

For the Years Ended August 31

2014

2013

2012

1,647,235

Revenues ......................................................................................................... $ 42,664,033
Cost of goods sold...........................................................................................
41,016,798
Gross profit .....................................................................................................
Marketing, general and administrative............................................................
Operating earnings ..........................................................................................
(Gain) loss on investments ..............................................................................
Interest, net......................................................................................................
Equity (income) loss from investments ..........................................................
Income before income taxes ...........................................................................
Income taxes ...................................................................................................
Net income ......................................................................................................
Net income attributable to noncontrolling interests ........................................
Net income attributable to CHS Inc. ............................................................... $

1,044,637
(114,162)
134,942
(107,446)
1,131,303

1,081,435

1,083,007

602,598

48,296

1,572

(Dollars in thousands)

$ 44,479,857

$ 40,599,286

42,706,205

38,588,143

1,773,652

553,623

1,220,029
(182)
231,567
(97,350)
1,085,994

89,666

996,328

3,942

2,011,143

498,233

1,512,910

5,465

193,263
(102,389)
1,416,571

80,852

1,335,719

75,091

992,386

1,260,628

The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries

F-3

Table of Contents

Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

Net income ...................................................................................................... $
Other comprehensive income (loss), net of tax:

For the Years Ended August 31

2014

2013

2012

(Dollars in thousands)

1,083,007

996,328

1,335,719

Postretirement benefit plan activity, net of tax expense (benefit) of

$8,410, $41,007 and $(21,710) in 2014, 2013 and 2012, respectively ..

13,759

63,116

(38,216)

Unrealized net gain (loss) on available for sale investments, net of tax

expense (benefit) of $1,251, $603 and $199 in 2014, 2013 and 2012,
respectively ............................................................................................

Cash flow hedges, net of tax expense (benefit) of $(8,883), $9,551 and

$449 in 2014, 2013 and 2012, respectively ...........................................

Foreign currency translation adjustment, net of tax expense (benefit) of

$(783), $(2,383) and $(3,699) in 2014, 2013 and 2012, respectively....
Other comprehensive income (loss), net of tax...............................................
Comprehensive income...................................................................................
Less: comprehensive income attributable to noncontrolling interests ........
Comprehensive income attributable to CHS Inc. ............................................ $

2,028

979

(14,407)

15,491

355

586

(1,270)
110

(3,866)
75,720

1,083,117

1,072,048

1,572

3,942

(5,855)
(43,130)
1,292,589

75,091

1,081,545

1,068,106

1,217,498

The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries

F-4

Table of Contents

Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITIES

Equity Certificates

Capital
Equity
Certificates

Nonpatronage
Equity
Certificates

Nonqualified
Equity
Certificates

Preferred
Stock

Accumulated
Other
Comprehensive
Loss

(Dollars in thousands)

Capital
Reserves

Noncontrolling
Interests

Total
Equities

Balances, August 31, 2011.................................... $ 2,669,740

24,324

1,562

319,368

(174,876)

$ 1,075,474

349,728

4,265,320

Reversal of prior year patronage and redemption
estimates ...............................................................

(278,553)

Distribution of 2011 patronage refunds ................

415,584

Redemptions of equities .......................................

(145,473)

(222)

(27)

Equities issued ......................................................

29,155

Preferred stock dividends .....................................

Distributions to noncontrolling interests ..............

Purchase of noncontrolling interests.....................

Other, net...............................................................

(1,262)

(356)

Net income............................................................

Other comprehensive income (loss), net of tax ....

Estimated 2012 patronage refunds........................

591,143

Estimated 2012 equity redemptions......................

(195,999)

674,678

(676,250)

(24,544)

396,125

(260,666)

(145,722)

29,155

(24,544)

(78,602)

(14,581)

(82,138)

(337,145)

(433,864)

958

1,260,628

8,910

75,091

(43,130)

(969,862)

8,250

1,335,719

(43,130)

(378,719)

(195,999)

Balances, August 31, 2012....................................

3,084,335

23,746

1,535

319,368

(232,587)

1,258,944

17,982

4,473,323

Reversal of prior year patronage and redemption
estimates ...............................................................

(395,144)

Distribution of 2012 patronage refunds ................

595,022

Redemptions of equities .......................................

(193,142)

(232)

Equities issued ......................................................

14,845

(39)

3,366

Preferred stock dividends .....................................

Distributions to noncontrolling interests ..............

Other, net...............................................................

(1,241)

(29)

Net income............................................................

Other comprehensive income (loss), net of tax ....

Estimated 2013 patronage refunds........................

427,155

129,462

Estimated 2013 equity redemptions......................

(101,293)

969,862

(975,969)

(24,544)

1,068

992,386

(841,386)

574,718

(380,947)

(193,413)

18,211

(24,544)

(1,442)

855

996,328

75,720

(284,769)

(101,293)

(1,442)

1,057

3,942

75,720

Balances, August 31, 2013....................................

3,430,537

23,485

134,324

319,368

(156,867)

1,380,361

21,539

5,152,747

Reversal of prior year patronage and redemption
estimates ...............................................................

Distribution of 2013 patronage refunds ................

Redemptions of equities .......................................

Equities issued ......................................................

Capital equity certificates exchanged for
preferred stock ......................................................

Preferred stock dividends .....................................

Distributions to noncontrolling interests ..............

(325,862)

422,670

(99,204)

14,278

(200,000)

(129,462)

131,661

(176)

(229)

670,809

200,000

Other, net...............................................................

(1,034)

(227)

Net income............................................................

Other comprehensive income (loss), net of tax ....

Estimated 2014 patronage refunds........................

397,237

148,579

Estimated 2014 equity redemptions......................

(130,149)

841,386

(841,120)

(61,658)

8,897

1,081,435

(810,641)

110

386,062

(286,789)

(99,609)

685,087

—

(61,658)

(575)

3,436

1,083,007

110

(264,825)

(130,149)

(575)

(4,200)

1,572

Balances, August 31, 2014.................................... $ 3,508,473

23,256

284,699

$ 1,190,177

(156,757)

$ 1,598,660

18,336

6,466,844

The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries

F-5

Table of Contents

Consolidated Financial Statements
CONSOLIDATED STATEMENTS OF CASH FLOWS

Cash flows from operating activities:

Net income including noncontrolling interests .......................................................................... $
Adjustments to reconcile net income to net cash provided by (used in) operating activities:

1,083,007

996,328

1,335,719

2014

For the Years Ended August 31
2013
(Dollars in thousands)

2012

Depreciation and amortization.............................................................................................
Amortization of deferred major repair costs........................................................................
(Income) loss from equity investments................................................................................
Distributions from equity investments.................................................................................
Noncash patronage dividends received................................................................................
(Gain) loss on sale of property, plant and equipment ..........................................................
(Gain) loss on investments...................................................................................................
Unrealized (gain) loss on crack spread contingent liability.................................................
Long-lived asset impairment................................................................................................
Deferred taxes ......................................................................................................................
Other, net..............................................................................................................................
Changes in operating assets and liabilities, net of acquisitions:

Receivables ....................................................................................................................
Inventories......................................................................................................................
Derivative assets ............................................................................................................
Margin deposits..............................................................................................................
Supplier advance payments............................................................................................
Other current assets and other assets .............................................................................
Customer margin deposits and credit balances..............................................................
Customer advance payments..........................................................................................
Accounts payable and accrued expenses .......................................................................
Derivative liabilities.......................................................................................................
Other liabilities...............................................................................................................
Net cash provided by (used in) operating activities.........................................................................
Cash flows from investing activities:

Acquisition of property, plant and equipment............................................................................
Proceeds from disposition of property, plant and equipment ....................................................
Expenditures for major repairs...................................................................................................
Investments in joint ventures and other .....................................................................................
Investments redeemed................................................................................................................
Changes in notes receivable.......................................................................................................
Business acquisitions, net of cash acquired ...............................................................................
Other investing activities, net ....................................................................................................
Net cash provided by (used in) investing activities .........................................................................
Cash flows from financing activities:

Changes in notes payable...........................................................................................................
Long-term debt borrowings .......................................................................................................
Principal payments on long-term debt .......................................................................................
Mandatorily redeemable noncontrolling interest payments.......................................................
Payments for bank fees ..............................................................................................................
Payments on crack spread contingent liability...........................................................................
Changes in checks and drafts outstanding .................................................................................
Distributions to noncontrolling interests....................................................................................
Preferred stock issued ................................................................................................................
Preferred stock issuance costs....................................................................................................
Preferred stock dividends paid...................................................................................................
Retirements of equities ..............................................................................................................
Cash patronage dividends paid ..................................................................................................
Other financing activities, net ....................................................................................................
Net cash provided by (used in) financing activities.........................................................................
Effect of exchange rate changes on cash and cash equivalents .......................................................
Net increase (decrease) in cash and cash equivalents......................................................................
Cash and cash equivalents at beginning of period ...........................................................................
Cash and cash equivalents at end of period ..................................................................................... $

267,167
45,070
(107,446)
79,685
(16,452)
3,316
(114,162)
(19,217)
74,452
(24,397)
7,777

110,133
(37,792)
(123,132)
39,861
67,688
(19,694)
(34,051)
164,021
(164,616)
134,925
11,208
1,427,351

(943,888)
11,724
(3,305)
(80,140)
138,485
(184,060)
(281,490)
1,092
(1,341,582)

247,639
1,426
(157,770)
(65,981)
—
(8,670)
(17,815)
(575)
702,979
(23,672)
(50,761)
(99,609)
(286,789)
128
240,530
(1,624)
324,675
1,808,532
2,133,207

241,791
34,847
(97,350)
62,761
(16,644)
(6,234)
(182)
23,109
—
92,717
5,714

(105,899)
557,331
610,023
812,616
286,379
(36,749)
(509,548)
(260,449)
52,897
(276,473)
10,815
2,477,800

(659,373)
7,727
(73,701)
(21,364)
13,021
211,935
(12,711)
(492)
(534,958)

85,910
280,000
(113,583)
(65,981)
(9,593)
—
(20,392)
(1,442)
—
(295)
(24,544)
(193,413)
(380,947)
1,106
(443,174)
(5,165)
1,494,503
314,029
1,808,532

The accompanying notes are an integral part of the consolidated financial statements.
CHS Inc. and Subsidiaries

F-6

219,632
33,641
(102,389)
75,468
(10,461)
(5,564)
5,465
22,328
—
58,624
481

(376,860)
(252,842)
(185,930)
(51,241)
(131,636)
(38,913)
56,177
61,978
(167,025)
111,481
60,503
718,636

(468,611)
27,839
(23,443)
(94,757)
12,112
19,040
(166,033)
(342)
(694,195)

(27,561)
—
(96,619)
—
(12,390)
—
6,353
(78,602)
—
—
(24,544)
(145,722)
(260,666)
878
(638,873)
(9,224)
(623,656)
937,685
314,029

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTES

Note 1

Summary of Significant Accounting Policies

Organization

CHS Inc. (CHS, we, us, our) is one of the nation’s leading integrated agricultural companies. As a cooperative, CHS is

owned by farmers and ranchers and their member cooperatives (members) across the United States. We also have preferred
stockholders that own shares of our 8% Cumulative Redeemable Preferred Stock (8% Preferred Stock), which is listed on the
NASDAQ Stock Market LLC (NASDAQ) under the symbol CHSCP; Class B Cumulative Redeemable Preferred Stock, Series
1 (Class B Series 1 Preferred Stock), which is listed on the NASDAQ under the symbol CHSCO; and Class B Reset Rate
Cumulative Redeemable Preferred Stock, Series 2 (Class B Series 2 Preferred Stock), which is listed on the NASDAQ under
the symbol CHSCN. During September 2014, we issued shares of Class B Reset Rate Cumulative Redeemable Preferred Stock,
Series 3 (Class B Series 3 Preferred Stock), which is listed on the NASDAQ under the symbol CHSCM.

We buy commodities from and provide products and services to patrons (including member and other non-member

customers), both domestic and international. We provide a wide variety of products and services, from initial agricultural inputs
such as fuels, farm supplies, crop nutrients and crop protection products, to agricultural outputs that include grains and oilseeds,
grain and oilseed processing and food products. A portion of our operations are conducted through equity investments and joint
ventures whose operating results are not fully consolidated with our results; rather, a proportionate share of the income or loss
from those entities is included as a component in our net income under the equity method of accounting.

Basis of Presentation

The consolidated financial statements include the accounts of CHS and all of our wholly-owned and majority-owned
subsidiaries and limited liability companies, which is primarily National Cooperative Refinery Association (NCRA), included
in our Energy segment. The effects of all significant intercompany transactions have been eliminated.

In December 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update (ASU)

No. 2011-11, “Disclosures about Offsetting Assets and Liabilities.” ASU No. 2011-11, and the subsequent amendments issued
in ASU No. 2013-01, "Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities," create new disclosure
requirements about the nature of an entity’s rights of setoff and related arrangements associated with its financial instruments
and recognized derivative instruments. The disclosure requirements in this update were effective for our annual and interim
reporting period beginning in fiscal 2014. The required disclosures have been included in Note 12, Derivative Financial
Instruments and Hedging Activities.

In February 2013, the FASB issued ASU No. 2013-02, "Comprehensive Income." ASU No. 2013-02 requires an entity

to provide information about the effects of significant reclassifications out of accumulated other comprehensive income, by
component, either on the face of the financial statements or in the notes to the financial statements and is intended to help
improve the transparency of changes in other comprehensive income. ASU No. 2013-02 does not amend any existing
requirements for reporting net income or other comprehensive income in the financial statements. ASU No. 2013-02 became
effective for our annual and interim reporting period beginning in fiscal 2014. The required disclosures have been included in
Note 9, Equities.

Cash Equivalents

Cash equivalents includes short-term, highly liquid investments with original maturities of three months or less at the

date of acquisition. The fair value of cash and cash equivalents approximates the carrying value because of the short maturity of
the instruments.

Inventories

Grain, processed grain, oilseed, processed oilseed and other minimally processed soy-based inventories are stated at

net realizable values which approximate market values. All other inventories are stated at the lower of cost or market. Costs for
inventories produced or modified by us through a manufacturing process include fixed and variable production and raw
material costs, and in-bound freight costs for raw materials. Costs for inventories purchased for resale include the cost of
products and freight incurred to place the products at our points of sale. The costs of certain energy inventories (wholesale

F-7

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

refined products, crude oil and asphalt) are determined on the last-in, first-out (LIFO) method; all other inventories of non-
grain products purchased for resale are valued on the first-in, first-out (FIFO) and average cost methods.

Derivative Financial Instruments and Hedging Activities

Our derivative instruments primarily consist of commodity and freight futures and forward contracts and, to a lesser
degree, may include foreign currency and interest rate swap contracts. These contracts are economic hedges of price risk, but
are not designated or accounted for as hedging instruments for accounting purposes, with the exception of certain interest rate
swap contracts which are accounted for as cash flow hedges or fair value hedges. Derivative instruments are recorded on our
Consolidated Balance Sheets at fair value. See Note 12, Derivative Financial Instruments and Hedging Activities and Note 13,
Fair Value Measurements for additional information.

Even though we have netting arrangements for our exchange-traded futures and options contracts and certain over-the-
counter (OTC) contracts, we report our derivatives on a gross basis on our Consolidated Balance Sheets. Our associated margin
deposits are also reported on a gross basis.

Margin Deposits

Many of our derivative contracts with futures and options brokers require us to make both initial margin deposits of
cash or other assets and subsequent deposits, depending on changes in commodity prices, in order to comply with applicable
regulations. Our margin deposit assets are held by external brokers in segregated accounts and will be used to settle the
associated derivative contracts on their specified settlement dates.

Supplier Advance Payments

Beginning in fiscal 2014, supplier advance payments are reported as a separate line item on our Consolidated Balance

Sheets. Prior period amounts have been reclassified accordingly. Supplier advance payments primarily include amounts paid
for in-transit grain purchases from suppliers and amounts paid to crop nutrient suppliers to lock in future supply and pricing.

Investments

Joint ventures and other investments, in which we have significant ownership and influence, but not control, are
accounted for in our consolidated financial statements using the equity method of accounting. Investments in other cooperatives
are stated at cost, plus patronage dividends received in the form of capital stock and other equities. Patronage dividends are
recorded as a reduction to cost of goods sold at the time qualified written notices of allocation are received. Investments in
other debt and equity securities are considered available for sale financial instruments and are stated at fair value, with
unrealized amounts included as a component of accumulated other comprehensive loss. Investments in debt and equity
instruments are carried at amounts that approximate fair values. Investments in joint ventures and cooperatives have no quoted
market prices.

Property, Plant and Equipment

Property, plant and equipment are stated at cost less accumulated depreciation and amortization. Depreciation and

amortization are provided on the straight-line method by charges to operations at rates based upon the expected useful lives of
individual or groups of assets (15 to 20 years for land and land improvements; 20 to 40 years for buildings; 5 to 20 years for
machinery and equipment; and 3 to 10 years for office and other). The cost and related accumulated depreciation and
amortization of assets sold or otherwise disposed of are removed from the related accounts and resulting gains or losses are
reflected in operations. Expenditures for maintenance and minor repairs and renewals are expensed, while costs of major
repairs and betterments are capitalized and amortized on a straight-line basis over the period of time estimated to lapse until the
next major repair occurs. We also capitalize and amortize eligible costs to acquire or develop internal-use software that are
incurred during the application development stage.

Property, plant and equipment and other long-lived assets are reviewed in order to assess recoverability based on

projected income and related cash flows on an undiscounted basis when triggering events occur. Should the sum of the
expected future net cash flows be less than the carrying value, an impairment loss would be recognized. An impairment loss
would be measured by the amount by which the carrying value of the asset exceeds the fair value of the asset.

We have asset retirement obligations with respect to certain of our refineries and other assets due to various legal

obligations to clean and/or dispose of the component parts at the time they are retired. In most cases, these assets can be used
F-8

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

for extended and indeterminate periods of time, as long as they are properly maintained and/or upgraded. It is our practice and
current intent to maintain refineries and related assets and to continue making improvements to those assets based on
technological advances. As a result, we believe our refineries and related assets have indeterminate lives for purposes of
estimating asset retirement obligations because dates or ranges of dates upon which we would retire a refinery and related
assets cannot reasonably be estimated at this time. When a date or range of dates can reasonably be estimated for the retirement
of any component part of a refinery or other asset, we will estimate the cost of performing the retirement activities and record a
liability for the fair value of that future cost.

Goodwill and Other Intangible Assets

Goodwill and other intangible assets are included in other assets on our Consolidated Balance Sheets and are reviewed
for impairment annually or more frequently if impairment conditions arise; and, if impaired, are written down to fair value. For
goodwill, annual impairment testing occurs in our third quarter. Other intangible assets consist primarily of customer lists,
trademarks and agreements not to compete. Intangible assets subject to amortization are expensed over their respective useful
lives (ranging from 2 to 30 years). We have no material intangible assets with indefinite useful lives.

We made certain immaterial acquisitions during the three years ended August 31, 2014, which were accounted for

using the acquisition method of accounting. Operating results of the acquisitions were included in our consolidated financial
statements since the respective acquisition dates. The respective purchase prices were allocated to the assets, liabilities and
identifiable intangible assets acquired based upon the estimated fair values. The excess purchase prices over the estimated fair
values of the net assets acquired have been reported as goodwill.

In our Energy segment, major maintenance activities (turnarounds) at the two refineries are accounted for under the
deferral method. Turnarounds are the scheduled and required shutdowns of refinery processing units. The costs related to the
significant overhaul and refurbishment activities include materials and direct labor costs. The costs of turnarounds are deferred
when incurred and amortized on a straight-line basis over the period of time estimated to lapse until the next turnaround occurs,
which is generally 2 to 4 years. Amortization expense related to turnaround costs is included in cost of goods sold in our
Consolidated Statements of Operations. The selection of the deferral method, as opposed to expensing the turnaround costs
when incurred, results in deferring recognition of the turnaround expenditures. The deferral method also results in the
classification of the related cash outflows as investing activities in our Consolidated Statements of Cash Flows, whereas
expensing these costs as incurred, would result in classifying the cash outflows as operating activities.

Revenue Recognition

We provide a wide variety of products and services, from production agricultural inputs such as fuels, farm supplies
and crop nutrients, to agricultural outputs that include grain and oilseed, processed grains and oilseeds and food products. We
recognize revenue when persuasive evidence of an arrangement exists, delivery has occurred, the sales price is fixed or
determinable, and collection is probable. Grain and oilseed sales are recorded after the commodity has been delivered to its
destination and final weights, grades and settlement prices have been agreed upon. All other sales are recognized upon transfer
of title, which could occur either upon shipment to or receipt by the customer, depending upon the terms of the transaction.
Amounts billed to a customer as part of a sales transaction related to shipping and handling are included in revenues.

Environmental Expenditures

Liabilities, including legal costs, related to remediation of contaminated properties are recognized when the related

costs are considered probable and can be reasonably estimated. Estimates of environmental costs are based on current available
facts, existing technology, undiscounted site-specific costs and currently enacted laws and regulations. Recoveries, if any, are
recorded in the period in which recovery is received. Liabilities are monitored and adjusted as new facts or changes in law or
technology occur. Environmental expenditures are capitalized when such costs provide future economic benefits.

Income Taxes

CHS is a nonexempt agricultural cooperative and files a consolidated federal income tax return with our 80% or more

owned subsidiaries. We are subject to tax on income from nonpatronage sources, non-qualified patronage distributions and
undistributed patronage-sourced income. Income tax expense is primarily the current tax payable for the period and the change
F-9

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

during the period in certain deferred tax assets and liabilities. Deferred income taxes reflect the impact of temporary differences
between the amounts of assets and liabilities recognized for financial reporting purposes and such amounts recognized for
federal and state income tax purposes, based on enacted tax laws and statutory tax rates applicable to the periods in which the
differences are expected to affect taxable income. Valuation allowances are established, when necessary, to reduce deferred tax
assets to the amount expected to be realized.

Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United

States of America (U.S. GAAP) requires management to make estimates and assumptions that affect the reported amounts of
assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported
amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Recent Accounting Pronouncements

In May 2014, the FASB issued ASU No. 2014-09, “Revenue from Contracts with Customers." ASU No. 2014-09
requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that
reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. The guidance also
requires an entity to disclose sufficient qualitative and quantitative information surrounding the nature, amount, timing and
uncertainty of revenue and cash flows arising from contracts from customers. This ASU supersedes the revenue recognition
requirements in Topic 605, Revenue Recognition, and most industry-specific guidance throughout the Industry Topics of the
Codification. The amendments in this standard are effective beginning with our fiscal year starting September 1, 2017. We are
currently evaluating the impact the adoption will have on our consolidated financial statements in fiscal 2018.

Note 2

Receivables

Receivables as of August 31, 2014 and 2013 are as follows:

Trade accounts receivable........................................................................................................... $
CHS Capital notes receivable .....................................................................................................
Other ...........................................................................................................................................

Less allowances and reserves .....................................................................................................
Total receivables ......................................................................................................................... $

2014

2013

(Dollars in thousands)

2,153,929

2,338,336

633,475

304,798

3,092,202

103,639

437,141

254,590

3,030,067

94,589

2,988,563

2,935,478

Trade accounts receivable are initially recorded at a selling price, which approximates fair value, upon the sale of

goods or services to customers. Subsequently, trade accounts receivable are carried at net realizable value, which includes an
allowance for estimated uncollectible amounts. We calculate this allowance based on our history of write-offs, level of past due
accounts, and our relationships with, and the economics status of, our customers. The carrying value of CHS Capital, LLC
(CHS Capital) notes receivable approximates fair value, given their short duration and the use of market pricing adjusted for
risk.

CHS Capital, our wholly-owned subsidiary, has notes receivable from commercial and producer borrowers. The short-
term notes receivable generally have maturity terms of 12-14 months and are reported at their outstanding principle balances, as
CHS Capital holds these notes to maturity. The notes receivable from commercial borrowers are collateralized by various
combinations of mortgages, personal property, accounts and notes receivable, inventories and assignments of certain regional
cooperative’s capital stock. These loans are primarily originated in the states of Minnesota, Wisconsin and North Dakota. CHS
Capital also has loans receivable from producer borrowers which are collateralized by various combinations of growing crops,
livestock, inventories, accounts receivable, personal property and supplemental mortgages. In addition to the short-term
balances included in the table above, CHS Capital had long-term notes receivable, with durations of not more than 10 years,
totaling $159.7 million and $127.7 million at August 31, 2014 and 2013, respectively. The long-term notes receivable are
included in other assets on our Consolidated Balance Sheets. As of August 31, 2014 and 2013, the commercial notes
represented 46% and 59%, respectively, and the producer notes represented 54% and 41%, respectively, of the total CHS
Capital notes receivable.

F-10

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

CHS Capital evaluates the collectability of both commercial and producer notes on a specific identification basis,

based on the amount and quality of the collateral obtained, and records specific loan loss reserves when appropriate. A general
reserve is also maintained based on historical loss experience and various qualitative factors. In total, the specific and general
loan loss reserves related to CHS Capital are not material to our consolidated financial statements, nor are the associated
historical write-offs. The accrual of interest income is discontinued at the time the loan is 90 days past due unless the credit is
well-collateralized and in process of collection. The amount of CHS Capital notes that were past due was not significant at any
reporting date presented.

CHS Capital has commitments to extend credit to customers as long as there are no violations of any contractually

established conditions. As of August 31, 2014, CHS Capital's customers have additional available credit of $1.1 billion.

Note 3

Inventories

Inventories as of August 31, 2014 and 2013 are as follows:

Grain and oilseed ........................................................................................................................ $
Energy.........................................................................................................................................
Crop nutrients .............................................................................................................................
Feed and farm supplies ...............................................................................................................
Processed grain and oilseed ........................................................................................................
Other ...........................................................................................................................................
Total inventories ......................................................................................................................... $

2014

2013

(Dollars in thousands)

961,327

1,133,555

875,719

374,023
448,454

84,498

16,232

742,194

293,370
407,023

79,706

8,887

2,760,253

2,664,735

As of August 31, 2014, we valued approximately 16% of inventories, primarily crude oil and refined fuels within our
Energy segment, using the lower of cost, determined on the LIFO method, or market (16% as of August 31, 2013). If the FIFO
method of accounting had been used, inventories would have been higher than the reported amount by $538.7 million and
$652.6 million at August 31, 2014 and 2013, respectively.

Note 4

Investments

Joint ventures and other investments, in which we have significant ownership and influence, but not control, are

accounted for in our consolidated financial statements using the equity method of accounting. Our significant equity method
investments are summarized below.

During the first three quarters of fiscal 2014, we had a 24% interest in Horizon Milling, LLC and Horizon Milling,
ULC, which were flour milling joint ventures with Cargill, Incorporated (Cargill) and were accounted for as equity method
investments included in Corporate and Other. In our third quarter of fiscal 2014, we formed Ardent Mills LLC (Ardent Mills), a
joint venture with Cargill and ConAgra Foods, Inc., which combines the North American flour milling operations of the three
parent companies, including the Horizon Milling, LLC and Horizon Milling G.P. (Horizon Milling) assets and CHS-owned
mills, with CHS holding a 12% interest in Ardent Mills. Prior to closing, we contributed $32.8 million to Horizon Milling to
pay off existing debt as a pre-condition to close. Upon closing, Ardent Mills was financed with funds from third-party
borrowings, which did not require credit support from the owners. We received $121.2 million of cash proceeds distributed to
us in proportion to our ownership interest, adjusted for deviations in specified working capital target amounts, and recognized a
gain of $109.2 million associated with this transaction. In connection with the closing, the parties also entered into various
ancillary and non-compete agreements including, among other things, an agreement for us to supply Ardent Mills with certain
wheat and durum products. As we hold one of the five board seats, we account for Ardent Mills as an equity method investment
included in Corporate and Other. As of August 31, 2014, the carrying value of our investment in Ardent Mills was $198.4
million.

We have a 50% interest in Ventura Foods, LLC (Ventura Foods), a joint venture which produces and distributes

primarily vegetable oil-based products, and is included in Corporate and Other. We account for Ventura Foods as an equity
method investment, and as of August 31, 2014, our carrying value of Ventura Foods exceeded our share of its equity by $12.9
million, which represents equity method goodwill. As of August 31, 2014, the carrying value of our investment in Ventura
Foods was $321.3 million.

F-11

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

TEMCO, LLC (TEMCO) is owned and governed by Cargill (50%) and CHS (50%). During the year ended August 31,
2012, we entered into an amended and restated agreement to expand the scope of the original agreement with Cargill. Pursuant
to the terms of the agreement, CHS and Cargill each agreed to commit to sell all of their feedgrains, wheat, oilseeds and by-
product origination that are tributary to the Pacific Northwest, United States (Pacific Northwest) to TEMCO and to use
TEMCO as their exclusive export-marketing vehicle for such grains exported through the Pacific Northwest for a term of 25
years. Cargill's Tacoma, Washington facility will continue to be subleased to TEMCO. We account for TEMCO as an equity
method investment included in our Ag segment. As of August 31, 2014, the carrying value of our investment in TEMCO was
$68.4 million.

Note 5

Property, Plant and Equipment

A summary of property, plant and equipment as of August 31, 2014 and 2013 is as follows:

Land and land improvements...................................................................................................... $
Buildings.....................................................................................................................................
Machinery and equipment ..........................................................................................................
Office and other ..........................................................................................................................
Construction in progress .............................................................................................................

Less accumulated depreciation and amortization .......................................................................
Total property, plant and equipment ........................................................................................... $

2014

2013

(Dollars in thousands)

212,609

686,371

4,558,485

133,599

1,018,011

6,609,075

2,578,052

169,022

574,834

4,195,523

118,442

480,703

5,538,524

2,367,120

4,031,023

3,171,404

Depreciation expense for the years ended August 31, 2014, 2013 and 2012, was $253.3 million, $224.5 million and

$199.8 million, respectively.

Note 6

Other Assets

Other assets as of August 31, 2014 and 2013 are as follows:

Goodwill......................................................................................................................................... $
Customer lists, less accumulated amortization of $26,114 and $20,063,
respectively.................................................................................................................................
Trademarks and other intangible assets, less accumulated amortization of
$29,587 and $25,982, respectively.............................................................................................
Notes receivable .............................................................................................................................
Long-term receivable .....................................................................................................................
Prepaid pension and other benefits.................................................................................................
Capitalized major maintenance ......................................................................................................
Other...............................................................................................................................................

2014

2013

(Dollars in thousands)

158,696

85,063

43,748

16,352

11,706

166,901
40,718

186,342

67,643

119,325

19,124

143,343
38,704

187,270

109,408

56,896

795,079

656,160

During the years ended August 31, 2014 and 2013, we had acquisitions which resulted in $72.9 million and $8.3
million of goodwill, respectively, for which we paid cash consideration of $281.5 million and $12.7 million, respectively. These
acquisitions were primarily within our Ag segment and were not material, individually or in aggregate, to our consolidated
financial statements. There were no dispositions resulting in a decrease to goodwill during fiscal 2014 and 2013.

During the years ended August 31, 2014 and 2013, intangible assets acquired totaled $38.8 million and $1.5 million,

respectively, and were primarily within our Ag segment.

F-12

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Intangible assets amortization expense for the years ended August 31, 2014, 2013 and 2012, was $9.7 million, $10.0

million and $12.7 million, respectively. The estimated annual amortization expense related to intangible assets subject to
amortization for the next five years is as follows:

Year 1....................................................................................................................................................... $
Year 2.......................................................................................................................................................
Year 3.......................................................................................................................................................
Year 4.......................................................................................................................................................
Year 5.......................................................................................................................................................
Thereafter.................................................................................................................................................
Total ......................................................................................................................................................... $

6,962

6,610

5,040

3,828

3,210

29,804

55,454

(Dollars in thousands)

The capitalized major maintenance activity is as follows:

Balance at
Beginning
of Year

Cost
Deferred

Amortization

Write-Offs

Balance at
End of Year

2014 ..................................................................... $
2013 .....................................................................
2012 .....................................................................

109,408
70,554
80,752

(Dollars in thousands)
(45,070) $
(34,847)
(33,641)

3,305
73,701
23,443

— $
—
—

67,643
109,408
70,554

Note 7

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 August 31, 2014.

Notes Payable

Notes payable as of August 31, 2014 and 2013, consisted of the following:

Weighted-average Interest Rate

2014

2013

2014

2013

Notes payable (a) ..................................................................
CHS Capital notes payable (b)..............................................
Total notes payable....................................................................................................................

2.00%

1.07%

1.69%

1.23%

(Dollars in thousands)

840,699

318,774
1,159,473

521,864

367,448
889,312

_______________________________________

(a) Our primary committed line of credit is a $2.5 billion five-year, unsecured revolving credit facility expiring in June

2018, with a syndication of domestic and international banks, with no amounts outstanding as of August 31, 2014. In
October 2013, we entered into a three-year $250.0 million committed revolving credit facility for CHS Agronegocio
Industria e Comercio Ltda (CHS Agronegocio) to provide financing for its working capital needs arising from its
purchases and sales of grains, fertilizers and other agricultural products. As of August 31, 2014 the full $250.0 million
is outstanding.

Our wholly-owned subsidiaries, CHS Europe S.a.r.l and CHS Agronegocio, have uncommitted lines of credit to
finance their normal trading activities with $327.3 million outstanding as of August 31, 2014. In addition, other
international subsidiaries had lines of credit totaling $263.1 million outstanding as of August 31, 2014, of which $39.0
million was collateralized.

We have two commercial paper programs totaling up to $125.0 million with two banks participating in the revolving
credit facilities. Terms of our credit facilities allow a maximum usage of $200.0 million to pay principal under any
commercial paper facility. On August 31, 2014 we had no commercial paper outstanding.

F-13

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Miscellaneous short-term notes payable totaled $0.3 million as of August 31, 2014.

(b) Cofina Funding, LLC (Cofina Funding), a wholly-owned subsidiary of CHS Capital, has available credit totaling

$350.0 million as of August 31, 2014, under note purchase agreements with various purchasers, through the issuance
of short-term notes payable. CHS Capital sells eligible commercial loans receivable it has originated to Cofina
Funding, which are then pledged as collateral under the note purchase agreements. The notes payable issued by Cofina
Funding bear interest at variable rates based on commercial paper with a weighted average rate of 1.05% as of
August 31, 2014. There were no borrowings by Cofina Funding utilizing the issuance of commercial paper under the
note purchase agreements as of August 31, 2014.

CHS Capital has available credit under master participation agreements with numerous counterparties. Borrowings
under these agreements are accounted for as secured borrowings and bear interest at variable rates ranging from 1.81%
to 2.66% as of August 31, 2014. As of August 31, 2014, the total funding commitment under these agreements was
$164.5 million, of which $17.6 million was borrowed.

CHS Capital sells loan commitments it has originated to ProPartners Financial (ProPartners) on a recourse basis. The
total capacity for commitments under the ProPartners program is $300.0 million. The total outstanding commitments
under the program totaled $102.8 million as of August 31, 2014, of which $64.6 million was borrowed under these
commitments with an interest rate of 1.58%.

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 0.10% to 0.90% as of August 31, 2014, and are
due upon demand. Borrowings under these notes totaled $236.6 million as of August 31, 2014.

F-14

Table of Contents

Long-Term Debt

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Long-term debt as of August 31, 2014 and 2013 consisted of the following:

5.59% unsecured revolving term loans from cooperative and other banks, due in equal
installments beginning in 2013 through 2018...........................................................................
6.18% unsecured notes $400 million face amount, due in equal installments beginning in
2014 through 2018 ....................................................................................................................
5.60% unsecured notes $60 million face amount, due in equal installments beginning in
2012 through 2018 ....................................................................................................................
5.25% unsecured notes $125 million face amount, due in equal installments beginning in
2011 through 2015 ....................................................................................................................
5.78% unsecured notes $50 million face amount, due in equal installments beginning in
2014 through 2018 ....................................................................................................................
4.00% unsecured notes $100 million face amount, due in equal installments beginning in
2017 through 2021 ....................................................................................................................
4.08% unsecured notes $130 million face amount, due in 2019 (a)...........................................
4.52% unsecured notes $160 million face amount, due in 2021...............................................
4.67% unsecured notes $130 million face amount, due in 2023 (a)...........................................
3.85% unsecured notes $80 million face amount, due in 2025.................................................
3.80% unsecured notes $100 million face amount, due in 2025...............................................
4.82% unsecured notes $80 million face amount, due in 2026.................................................
4.71% unsecured notes $100 million face amount, due in 2033...............................................
Other notes and contracts with interest rates from 1.30% to 15.25% (b) ...................................
Total long-term debt..................................................................................................................
Less current portion ..................................................................................................................
Long-term portion .....................................................................................................................

_______________________________________

2014

2013

(Dollars in thousands)

105,000

135,000

320,000

400,000

32,308

25,000

40,000

100,000

130,840

160,000

133,360

80,000

100,000

80,000

100,000

49,992

41,539

50,000

100,000

130,000

160,000

130,000

80,000

100,000

80,000

100,000

50,493

1,456,500

156,836

1,607,032

156,612

1,299,664

1,450,420

(a) We have entered into interest rate swaps designated as fair value hedging relationships with these notes. Changes in

the fair value of the swaps are recorded each period with a corresponding adjustment to the carrying value of the debt.
See Note 12, Derivative Financial Instruments and Hedging Activities for more information.

(b) Other notes and contracts payable of $14.3 million were collateralized on August 31, 2014.

As of August 31, 2014, the carrying value of our long-term debt approximated its fair value, based on quoted market

prices of similar debt (a Level 2 classification in the fair value hierarchy).

Long-term debt outstanding as of August 31, 2014 has aggregate maturities, excluding fair value adjustments, as

follows:

2015............................................................................................................................................................... $
2016...............................................................................................................................................................
2017...............................................................................................................................................................
2018...............................................................................................................................................................
2019...............................................................................................................................................................
Thereafter ......................................................................................................................................................
Total ............................................................................................................................................................... $

156,836

139,326

149,852

162,119
150,622

693,545

1,452,300

(Dollars in thousands)

F-15

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Interest, net for the years ended August 31, 2014, 2013 and 2012 was as follows:

Interest expense............................................................................................... $
Interest - purchase of NCRA noncontrolling interests....................................
Capitalized interest..........................................................................................
Interest income ................................................................................................
Interest, net...................................................................................................... $

79,614
70,843
(8,528)
(6,987)
134,942

99,271
149,087
(10,579)
(6,212)
231,567

94,090
113,184
(8,882)
(5,129)
193,263

2014

2013

2012

(Dollars in thousands)

Note 8

Income Taxes

The provision for income taxes for the years ended August 31, 2014, 2013 and 2012 is as follows:

Current
Federal......................................................................................................... $
State.............................................................................................................
Foreign ........................................................................................................

Deferred
Federal.........................................................................................................
State.............................................................................................................
Foreign ........................................................................................................

Total................................................................................................................. $

2014

2013

2012

(Dollars in thousands)

38,653

31,203

2,837

72,693

(18,018) $
11,805

3,162
(3,051)

(23,444)
(1,893)
940
(24,397)
48,296

92,102

1,685
(1,070)
92,717

89,666

9,565

7,851

4,812

22,228

66,707

1,617
(9,700)
58,624

80,852

Deferred taxes are comprised of basis differences related to investments, accrued liabilities and certain federal and
state tax credits. Effective September 1, 2013, NCRA files as part of our consolidated income tax returns and, as such, these
items are assessed in conjunction with our deferred tax assets when determining recoverability.

Domestic income before income taxes was $1.2 billion, $1.1 billion, and $1.4 billion for the years ended August 31,
2014, 2013 and 2012 respectively. Foreign activity made up the difference between the total income before income taxes and
the domestic amounts.

F-16

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Deferred tax assets and liabilities as of August 31, 2014 and 2013 were as follows:

Deferred tax assets:
Accrued expenses.................................................................................................................... $
Postretirement health care and deferred compensation ..........................................................
Tax credit carryforwards.........................................................................................................
Loss carryforwards .................................................................................................................
Other .......................................................................................................................................
Deferred tax assets valuation ..................................................................................................
Total deferred tax assets..............................................................................................................
Deferred tax liabilities:
Pension....................................................................................................................................
Investments .............................................................................................................................
Major maintenance .................................................................................................................
Property, plant and equipment................................................................................................
Total deferred tax liabilities........................................................................................................
Net deferred tax liabilities .......................................................................................................... $

2014

2013

(Dollars in thousands)

76,255

83,346

70,881

53,793

52,956
(111,509)
225,722

12,855

88,425

26,020

576,007

703,307

477,585

66,973

57,130

97,242

57,174

40,868
(79,623)
239,764

6,752

91,453

31,960

529,101

659,266

419,502

We have total gross loss carry forwards of $247.8 million, of which $152.1 million will expire over periods ranging

from fiscal 2015 to fiscal 2036. The remainder will carry forward indefinitely. NCRA’s gross state tax credit carry forwards for
income tax are approximately $63.4 million and $88.1 million as of August 31, 2014, and 2013, respectively. During the year
ended August 31, 2014, the valuation allowance for NCRA decreased by $8.0 million due to a change in the amount of state tax
credits that are estimated to be utilized. NCRA’s valuation allowance is necessary due to the limited amount of taxable income
it generates on an annual basis. Based on estimates of future taxable profits and losses in certain foreign tax jurisdictions, we
determined that a valuation allowance was required for specific foreign loss carry forwards as of August 31, 2014. If these
estimates prove inaccurate, a change in the valuation allowance, up or down, could be required in the future. During 2014,
valuation allowances related to foreign operations increased by $39.9 million due to net operating loss carryforwards and other
timing differences.

Our foreign tax credit of $5.6 million will expire on August 31, 2019 and our alternative minimum tax credit of $5.6

million will not expire. Our general business credits of $18.5 million, comprised primarily of low sulfur diesel credits, will
begin to expire on August 31, 2026.

As of August 31, 2014, deferred tax assets of $86.5 million and $2.6 million were included in other current assets and
other assets, respectively. As of August 31, 2013, net deferred tax assets of $39.3 million were included in other current assets.

F-17

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The reconciliation of the statutory federal income tax rates to the effective tax rates for the years ended August 31,

2014, 2013 and 2012 is as follows:

Statutory federal income tax rate ....................................................................
State and local income taxes, net of federal income tax benefit .....................
Patronage earnings ..........................................................................................
Domestic production activities deduction.......................................................
Export activities at rates other than the U.S. statutory rate.............................
Valuation allowance........................................................................................
Tax credits.......................................................................................................
Non-controlling interests.................................................................................
Other................................................................................................................
Effective tax rate .............................................................................................

2014

2013

2012

35.0%

1.6
(20.5)
(10.0)
1.2

1.7
(3.1)
—
(1.6)
4.3%

0.9
(22.9)
(8.5)
0.6

2.3
(0.5)
(0.1)
1.5

0.5
(24.2)
(3.5)
0.4

0.6
(1.3)
(1.9)
0.1

8.3%

5.7%

We file income tax returns in the U.S. federal jurisdiction, and various state and foreign jurisdictions. Our uncertain

tax positions are affected by the tax years that are under audit or remain subject to examination by the relevant taxing
authorities. In addition to the current year, fiscal 2006 through 2013 remain subject to examination, at least for certain issues.

We account for our income tax provisions in accordance with Accounting Standards Codification (ASC) Topic 740,
Income Taxes, which prescribes a minimum threshold that a tax provision is required to meet before being recognized in our
consolidated financial statements. This interpretation requires us to recognize in our consolidated financial statements tax
positions determined more likely than not to be sustained upon examination, based on the technical merits of the position.
Reconciliation of the gross beginning and ending amounts of unrecognized tax benefits for the periods presented follows:

Balance at beginning of period ....................................................................... $
Additions attributable to prior year tax positions............................................
Reductions attributable to prior year tax positions .........................................
Reductions attributable to statute expiration...................................................
Balance at end of period.................................................................................. $

2014

2013

2012

(Dollars in thousands)

67,271

35,718
(9,867)
(20,941)
72,181

—

67,271

During fiscal 2014, we increased our unrecognized tax benefits for excise tax credits related to the blending and sale

of renewable fuels deducted for income taxes.

If we were to prevail on all tax positions taken relating to uncertain tax positions, all of the unrecognized tax benefits

would benefit the effective tax rate. We do not believe it is reasonably possible that the total amounts of unrecognized tax
benefits will significantly increase or decrease during the next 12 months.

We recognize interest and penalties related to unrecognized tax benefits in our provision for income taxes. No amount

was recognized in our Consolidated Statements of Operations for interest related to unrecognized tax benefits for the year
ended August 31, 2014. For the years ended August 31, 2013 and 2012, we recognized $0.2 million and $0.2 million,
respectively, for interest related to unrecognized tax benefits. We recorded no interest payable related to unrecognized tax
benefits on our Consolidated Balance Sheets as of August 31, 2014 and $0.6 million as of August 31, 2013.

Note 9

Equities

In accordance with our bylaws and by action of the 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. The cash portion of the qualified patronage distribution is determined annually by the Board of Directors, with the
balance issued in the form of qualified and non-qualified capital equity certificates. Total qualified patronage refunds for fiscal
2014 are estimated to be $662.1 million, with the cash portion estimated to be $264.8 million. The portion to be issued in the

F-18

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

form of non-qualified capital equity certificates is estimated to be $148.6 million. The actual patronage refunds and cash
portion for fiscal years 2013, 2012, and 2011 were $841.1 million ($286.8 million in cash), $976.0 million ($380.9 million in
cash), and $676.3 million ($260.7 million in cash), respectively.

Annual net savings from patronage or other sources may be added to the unallocated capital reserve or, upon action by

the Board of Directors, may be allocated to members in the form of nonpatronage equity certificates. The Board of Directors
authorized, in accordance with our bylaws, that 10% of the earnings from patronage business for fiscal years 2014, 2013, and
2012 be added to our capital reserves.

Redemptions are at the discretion of the Board of Directors. Redemptions of capital equity certificates approved by the
Board of Directors are divided into two pools, one for non-individuals (primarily member cooperatives) who may participate in
an annual program for equities held by them and another for individual members who are eligible for equity redemptions at
age 70 or upon death. In accordance with authorization from the Board of Directors, we expect total redemptions related to the
year ended August 31, 2014 that will be distributed in fiscal 2015, to be approximately $130.1 million. These expected
distributions are classified as a current liability on the August 31, 2014 Consolidated Balance Sheet. For the years ended
August 31, 2014, 2013 and 2012, we redeemed in cash, equities in accordance with authorization from the Board of Directors,
in the amounts of $99.6 million, $193.4 million and $145.7 million, respectively. Additionally, in fiscal 2014, we redeemed
$200.0 million of patron's equities by issuing 6,752,188 shares of preferred stock in exchange for member's equity certificates.

Preferred Stock

Our 8% Preferred Stock is listed on the NASDAQ under the symbol CHSCP. On August 31, 2014, we had
12,272,003 shares of 8% Preferred Stock outstanding with a total redemption value of $306.8 million, excluding accumulated
dividends. The 8% Preferred Stock accumulates dividends at a rate of 8% per year, which are payable quarterly. During the
year ended August 31, 2013, we amended the terms of our 8% Preferred Stock to provide that it may not be redeemed at our
option until July 18, 2023.

On August 31, 2014, we had 18,071,363 shares of our Class B Series 1 Preferred Stock outstanding with a total
redemption value of $451.8 million, excluding accumulated dividends. We issued 11,319,175 shares in September 2013, which
yielded net proceeds of approximately $273.3 million after deducting the underwriting discount and offering expenses payable
by us. In addition, we issued an additional 6,752,188 shares in August 2014, to redeem approximately $200.0 million of
qualified equity certificates to eligible owners at a market price of $29.62 per share. Our Class B Series 1 Preferred Stock is
listed on the NASDAQ under the symbol CHSCO and accumulates dividends at a rate of 7.875% per year, which are payable
quarterly. The Class B Series 1 Preferred Stock may be redeemed at our option beginning September 26, 2023.

In June 2014, we filed a shelf registration statement on Form S-3 with the Securities and Exchange Commission

(SEC). Under the shelf registration, which has been declared effective by the SEC, we may offer and sell, from time to time, up
to $2.0 billion of our Class B Cumulative Redeemable Preferred Stock over a three-year period. In September 2014, we issued
19,700,000 shares of Class B Series 3 Preferred Stock with a total redemption value of $492.5 million, excluding accumulated
dividends. Net proceeds from the sale of our Class B Series 3 Preferred Stock, after deducting the underwriting discount and
offering expenses payable by us, were approximately $477.0 million. The Class B Series 3 Preferred Stock is listed on the
NASDAQ under the symbol CHSCM and accumulates dividends at a rate of 6.75% per year until September 30, 2024, and at a
rate equal to the three-month LIBOR plus 4.155%, not to exceed 8.00% per annum, subsequent to September 30, 2024, which
are payable quarterly. Our Class B Series 3 Preferred Stock may not be redeemed at our option until September 30, 2024.

We made dividend payments on our Preferred Stock of $50.8 million, $24.5 million, and $24.5 million, during the

years ended August 31, 2014, 2013 and 2012, respectively. As of August 31, 2014 we have no authorized but unissued shares of
preferred stock.

F-19

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Accumulated Other Comprehensive Loss

Changes in accumulated other comprehensive income (loss) by component, net of tax, for the years ended August 31,

2014 and 2013 are as follows:

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, 2012................................ $

(228,727) $

1,391

(3,806) $

(1,445) $ (232,587)

Current period other comprehensive income

(loss), net of tax .................................................

46,471

15,491

(3,866)

59,075

Amounts reclassified from accumulated other

comprehensive income (loss), net of tax ...........
Net other comprehensive income (loss), net of tax.
Balance as of August 31, 2013................................ $
Current period other comprehensive income

(loss), net of tax .................................................

Amounts reclassified from accumulated other

comprehensive income (loss), net of tax ...........
Net other comprehensive income (loss), net of tax.
Balance as of August 31, 2014................................ $

16,645

63,116
(165,611) $

—

15,491

16,645

—
(3,866)
75,720
(5,311) $ (156,867)

2,370

11,685

(90)

2,028

(6,011)

(1,957)

(6,030)

13,849

13,759
(151,852) $

—

2,028

4,398

(8,396)
(14,407)
(2,722) $

6,140

687
(1,270)
110
(6,581) $ (156,757)

979

—

979

Amounts reclassified from accumulated other comprehensive income (loss) were related to pension and other

postretirement benefits, cash flow hedges and foreign currency translation adjustments, and were recorded to net income.
Pension and other postretirement reclassifications include amortization of net actuarial loss, prior service credit and transition
amounts as disclosed in Note 10, Benefit Plans. In February 2014, interest rate swaps, which were previously accounted for as
cash flow hedges, were terminated as the issuance of the underlying debt was no longer probable. As a result, a $13.5 million
gain was reclassified from accumulated other comprehensive loss into net income. This pre-tax gain is included as a component
of interest, net in the Consolidated Statement of Operations for the year ended August 31, 2014.

Noncontrolling Interests

As described in Note 17, Acquisitions, we have a firm commitment to purchase the remaining NCRA noncontrolling

interests. The following table presents the effects of changes in our NCRA ownership interest on CHS Inc. equities for the years
ended August 31, 2014, 2013, and 2012.

Net income attributable to CHS Inc. .......................................................................... $ 1,081,435
Transfers to noncontrolling interests:.........................................................................
Decrease in CHS Inc. capital reserves for purchase of noncontrolling interests .
Changes from net income attributable to CHS Inc. and transfers to noncontrolling

—

$ 992,386

$ 1,260,628

—

(82,138)

interests ............................................................................................................... $ 1,081,435

$ 992,386

$ 1,178,490

2014

2013

2012

(Dollars in thousands)

Note 10

Benefit Plans

We have various pension and other defined benefit and defined contribution plans, in which substantially all

employees may participate. We also have non-qualified supplemental executive and Board retirement plans.

F-20

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Financial information on changes in benefit obligation, plan assets funded and balance sheets status as of August 31,

2014 and 2013 is as follows:

Qualified
Pension Benefits

Non-Qualified
Pension Benefits

Other Benefits

2014

2013

2014

2013

2014

2013

(Dollars in thousands)

Change in benefit obligation:

Benefit obligation at beginning of

671,066

36,225

34,470

45,542

64,189

period........................................... $ 641,284
30,417

Service cost.......................................
Interest cost.......................................
Actuarial loss (gain)..........................
Assumption change...........................
Plan amendments ..............................
Medicare D .......................................
Benefits paid .....................................

29,900

1,973

57,406

647

—

31,387

25,445

12,819
(64,483)
—

—
(34,950)
641,284

860

1,660

393

2,421

—

—
(3,576)
37,983

721

1,316

3,455
(1,952)
—

—
(1,785)
36,225

1,729

1,918
(4,135)
1,425

—

—
(2,161)
44,318

(40,734)
Benefit obligation at end of period.......... $ 720,893
Change in plan assets:

Fair value of plan assets at

beginning of period...................... $ 730,628
106,531

Actual gain (loss) on plan assets.......
Company contributions.....................
Benefits paid .....................................
Fair value of plan assets at end of

25,700

(40,734)

period .......................................... $ 822,125

Funded status at end of period................. $ 101,232
Amounts recognized on balance sheet:

Non-current assets ......................... $ 103,125
Accrued benefit cost: .....................
Current liabilities .................
Non-current liabilities ..........

(1,893)
Ending balance ........................................ $ 101,232
Amounts recognized in accumulated

—

other comprehensive loss (pretax):
Prior service cost (credit)................ $
Net (gain) loss.................................

6,848
235,564
Ending balance ........................................ $ 242,412

688,196

53,582

23,800
(34,950)

730,628

89,344

89,930

—
(586)
89,344

7,794
253,288

261,082

— $

—

— $

—

— $

—

3,576
(3,576)

1,785
(1,785)

2,161
(2,161)

— $

—

(37,983) $

(36,225) $

(44,318) $

(45,542)

— $

—

(3,222)
(34,761)
(37,983) $

(3,051)
(33,174)
(36,225) $

(2,787)
(41,531)
(44,318) $

(2,919)
(42,623)
(45,542)

859
12,542

13,401

1,088
10,685

11,773

(592) $

(7,573)
(8,165) $

(712)
(5,415)
(6,127)

2,936

2,275
(5,243)
(16,693)
—

92
(2,014)
45,542

—

2,014
(2,014)

The accumulated benefit obligation of the qualified pension plans was $682.1 million and $605.6 million at

August 31, 2014 and 2013, respectively. The accumulated benefit obligation of the non-qualified pension plans was $22.7
million and $20.1 million at August 31, 2014 and 2013, respectively.

The assumption changes for the years ended August 31, 2014 and 2013 were related to increases in and reductions to
the discount rates for both CHS and NCRA qualified pension plans, respectively. The changes in the discount rates were due to
changes in the yield curves for investment grade corporate bonds that CHS and NCRA have historically used.

F-21

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Components of net periodic benefit costs for the years ended August 31, 2014, 2013 and 2012 are as follows:

Qualified
Pension Benefits

Non-Qualified
Pension Benefits

Other Benefits

2014

2013

2012

2014

2013

2012

2014

2013

2012

(Dollars in thousands)

Components of net periodic benefit costs: .......

Service cost..................................................... $30,417

$31,387

$26,010

860

721

279

$ 1,729

$ 2,936

$ 2,556

Interest cost.....................................................

29,900

25,445

24,119

1,660

1,316

1,343

1,918

2,275

2,638

Expected return on assets ...............................

(47,655)

(49,728)

(40,904)

Settlement of retiree obligations.....................

—

Prior service cost (credit) amortization ..........

1,593

Actuarial loss amortization.............................

18,228

Transition amount amortization......................

—

1,597

22,615

—

1,831

15,131

—

229

957

—

228

921

—

228

428

—

(493)

(180)

—

(120)

(104)

1,104

562

891

936

Net periodic benefit cost................................... $32,483

$31,316

$26,187

$ 3,706

$ 3,186

$ 2,278

$ 2,974

$ 6,757

$ 6,917

Weighted-average assumptions to determine

the net periodic benefit cost:

Discount rate...................................................

Expected return on plan assets .......................

Rate of compensation increase .......................

4.80%

6.75%

4.85%

3.80%

7.25%

4.50%

5.00%

7.25%

4.50%

4.25%

5.00%

3.75%

4.75%

N/A

4.75%

4.50%

Weighted-average assumptions to determine

the benefit obligations:

Discount rate...................................................

Rate of compensation increase .......................

4.00%

4.90%

4.80%

4.85%

3.80%

4.50%

4.80%

4.50%

4.75%

4.00%

4.75%

4.60%

4.50%

3.75%

4.50%

3.75%

4.50%

The estimated amortization in fiscal 2015 from accumulated other comprehensive loss into net periodic benefit cost is

as follows:

Qualified
Pension Benefits

Non-Qualified
Pension Benefits

Other
Benefits

(Dollars in thousands)

Amortization of prior service cost (benefit).................................................... $
Amortization of net actuarial (gain) loss.........................................................

1,648

229

19,604

1,044

(120)
(421)

For measurement purposes, a 6.9% annual rate of increase in the per capita cost of covered health care benefits was
assumed for the year ended August 31, 2014. The rate was assumed to decrease gradually to 4.8% by 2026 and remain at that
level thereafter.

Assumed health care cost trend rates have a significant effect on the amounts reported for the health care plans. A one-

percentage point change in the assumed health care cost trend rates would have the following effects:

1% Increase

1% Decrease

(Dollars in thousands)

Effect on total of service and interest cost components.............................................................. $
Effect on postretirement benefit obligation ................................................................................

390

5,000

(370)
(4,800)

We provide defined life insurance and health care benefits for certain retired employees and Board of Directors

participants. The plan is contributory based on years of service and family status, with retiree contributions adjusted annually.

We have other contributory defined contribution plans covering substantially all employees. Total contributions by us

to these plans were $24.6 million, $22.9 million and $20.6 million, for the years ended August 31, 2014, 2013 and 2012,
respectively.

We voluntarily contributed $25.7 million to qualified pension plans in fiscal 2014. Based on the funded status of the

qualified pension plans as of August 31, 2014, we do not believe we will be required to contribute to these plans in fiscal 2015,
although we may voluntarily elect to do so. We expect to pay $6.0 million to participants of the non-qualified pension and
postretirement benefit plans during fiscal 2015.

F-22

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Our retiree benefit payments which reflect expected future service are anticipated to be paid as follows:

Qualified
Pension Benefits

Non-Qualified
Pension Benefits

Other Benefits

Gross

Medicare D

2015 ..................................................................................... $
2016 .....................................................................................
2017 .....................................................................................
2018 .....................................................................................
2019 .....................................................................................
2020-2024............................................................................

(Dollars in thousands)

35,797

3,222

2,787

44,287

49,495

49,844

52,956

295,700

721

3,474

1,461

5,575

23,145

2,911

3,085

3,222

3,280

18,101

100

500

We have trusts that hold the assets for the defined benefit plans. CHS and NCRA have qualified plan committees that
set investment guidelines with the assistance of external consultants. Investment objectives for the plans' assets are as follows:

•

optimization of the long-term returns on plan assets at an acceptable level of risk

• maintenance of a broad diversification across asset classes and among investment managers

•

focus on long-term return objectives

Asset allocation targets promote optimal expected return and volatility characteristics given the long-term time
horizon for fulfilling the obligations of the pension plans. During fiscal 2013, the CHS pension plans' investment policy
strategy was adjusted so that liabilities match assets, which was accomplished through changes to the asset portfolio mix to
reduce volatility and de-risk the plan. Thus, the plans’ target allocation percentages were changed to 50% in fiscal 2013 for
fixed income securities, and 50% in fiscal 2013 for equity securities. An annual analysis of the risk versus the return of the
investment portfolio is conducted to justify the expected long-term rate of return assumption. We generally use long-term
historical return information for the targeted asset mix identified in asset and liability studies. Adjustments are made to the
expected long-term rate of return assumption, when deemed necessary, based upon revised expectations of future investment
performance of the overall investment markets.

The discount rate reflects the rate at which the associated benefits could be effectively settled as of the measurement
date. In estimating this rate, we look at rates of return on fixed-income investments of similar duration to the liabilities in the
plans that receive high, investment-grade ratings by recognized ratings agencies.

The investment portfolio contains a diversified portfolio of investment categories, including domestic and

international equities, fixed-income securities and real estate. Securities are also diversified in terms of domestic and
international securities, short and long-term securities, growth and value equities, large and small cap stocks, as well as active
and passive management styles.

The committees believe that with prudent risk tolerance and asset diversification, the plans should be able to meet

pension obligations in the future.

F-23

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Our pension plans’ fair value measurements at August 31, 2014 and 2013 are as follows:

Cash and cash equivalents ................................................... $
Equities:
Mutual funds.....................................................................
Fixed income securities:
Mutual funds.....................................................................
Partnership and joint venture interests ................................
Other ....................................................................................
Total..................................................................................... $

Cash and cash equivalents ................................................... $
Equities:

2014

Level 1

Level 2

Level 3

Total

(Dollars in thousands)

4,218

— $

4,218

84,830

66,485

—

151,315

138,458

—

488,526

28,157

—

1,749

9,492

210

628,733

37,649

210

227,506

583,168

11,451

822,125

2013

Level 1

Level 2

Level 3

Total

(Dollars in thousands)

667

— $

667

Mutual funds.....................................................................

113,982

80,619

—

194,601

Fixed income securities:

Mutual funds.....................................................................
Partnership and joint venture interests ................................
Other ....................................................................................
Total..................................................................................... $

75,729

—

409,996

26,014

—

1,940

3,403

18,278

487,665

29,417

18,278

190,378

516,629

23,621

730,628

Definitions for valuation levels are found in Note 13, Fair Value Measurements. We use the following valuation

methodologies for assets measured at fair value.

Mutual funds: Valued at quoted market prices, which are based on the net asset value of shares held by the plan at

year end. Mutual funds traded in active markets are classified within Level 1 of the fair value hierarchy. Certain of the mutual
fund investments held by the plan have observable inputs other than Level 1 and are classified within Level 2 of the fair value
hierarchy.

Partnership and joint venture interests: Valued at the net asset value of shares held by the plan at year end as a

practical expedient for fair value. The net asset value is based on the fair value of the underlying assets owned by the trust,
minus its liabilities then divided by the number of units outstanding. Certain of these investments have observable inputs other
than Level 1 and are classified accordingly within Level 2 of the fair value hierarchy. Other investments in this category are
valued using significant unobservable inputs and are classified within Level 3 of the fair value hierarchy.

F-24

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The preceding methods described may produce a fair value calculation that may not be indicative of the net realizable
value or reflective of future fair values. Furthermore, although we believe our valuation methods are appropriate and consistent
with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial
instruments could result in a different fair value measurement at the reporting date. The following tables set forth a summary of
changes in the fair value of the plan’s Level 3 assets for the years ended August 31, 2014 and 2013:

Partnership
and Joint
Venture
Interests

Mutual
Funds

2014

Real
Estate
Funds

Hedge
Funds

Balances at beginning of period........................................... $
Unrealized gains (losses) .....................................................
Realized gains (losses).........................................................
Sales .....................................................................................
Purchases..............................................................................
Transfers out of level 3 ........................................................
Total ..................................................................................... $

1,940
(3)
79
(12)
—
(255)
1,749

3,403
118
187
—
5,784
—
9,492

(Dollars in thousands)
$

18,156
543
—
(18,604)
2
—
97

Total

23,621
663
266
(18,630)
5,786
(255)
11,451

122
5
—
(14)
—
—
113

Partnership
and Joint
Venture
Interests

Mutual
Funds

2013

Real
Estate
Funds

Balances at beginning of period........................................... $
Unrealized gains (losses) .....................................................
Realized gains (losses).........................................................
Sales .....................................................................................
Purchases..............................................................................
Transfers into level 3............................................................
Total ..................................................................................... $

1,868
(4)
82
(12)
—
6
1,940

(Dollars in thousands)
$

— $
—
—
—
3,403
—
3,403

16,257
1,894
(10)
—
15
—
18,156

Hedge
Funds

Total

127
7
—
(12)
—
—
122

18,252
1,897
72
(24)
3,418
6
23,621

We are one of approximately 400 employers that contribute to the Co-op Retirement Plan (Co-op Plan), which is a

defined benefit plan constituting a “multiple employer plan” under the Internal Revenue Code of 1986, as amended, and a
“multiemployer plan” under the accounting standards. The risks of participating in these multiemployer plans are different from
single-employer plans in the following aspects:

• Assets contributed to the multiemployer plan by one employer may be used to provide benefits to employees of

other participating employers;

•

If a participating employer stops contributing to the plan, the unfunded obligations of the plan may be borne by
the remaining participating employers; and

If we choose to stop participating in the multiemployer plan, we may be required to pay the plan an amount based
on the underfunded status of the plan, referred to as a withdrawal liability.

Our participation in the Co-op Plan for the years ended August 31, 2014, 2013, and 2012 is outlined in the table

below:

Plan Name
Co-op Retirement Plan.............................

EIN/Plan Number

2014

2013

2012

Surcharge
Imposed

Expiration Date
of Collective
Bargaining
Agreement

01-0689331 / 001

$2,079

$ 2,095

$1,885

N/A

Contributions of CHS

(Dollars in thousands)

F-25

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Our contributions for the years stated above did not represent more than 5% of total contributions to the Co-op Plan as

indicated in the Co-op Plan's most recently available annual report (Form 5500).

The Pension Protection Act of 2006 (PPA) does not apply to the Co-op Plan because it is covered and defined as a

single-employer plan. There is a special exemption for cooperative plans defining them under the single-employer plan as long
as the plan is maintained by more than one employer and at least 85% of the employers are rural cooperatives or cooperative
organizations owned by agricultural producers. In the Co-op Plan, a “zone status” determination is not required, and therefore
not determined. In addition, the accumulated benefit obligations and plan assets are not determined or allocated separately by
individual employer. The most recent financial statements available in 2014 and 2013 are for the Co-op Plan's year-end at
March 31, 2013 and 2012, respectively. In total, the Co-op Plan was at least 80% funded on those dates based on the total plan
assets and accumulated benefit obligations.

Because the provisions of the PPA do not apply to the Co-op Plan, funding improvement plans and surcharges are not

applicable. Future contribution requirements are determined each year as part of the actuarial valuation of the plan and may
change as a result of plan experience.

In addition to the contributions to the Co-op Plan listed above, total contributions to individually insignificant multi-

employer pension plans were immaterial in fiscal years 2014, 2013 and 2012.

Note 11

Segment Reporting

We have aligned our segments based on an assessment of how our businesses are operated and the products and

services they sell.

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, and also serves as a wholesaler and retailer
of crop inputs. Corporate and Other primarily represents our non-consolidated wheat milling and packaged food joint ventures,
as well as our business solutions operations, which consists of commodities hedging, insurance and financial services related to
crop production.

Corporate administrative expenses and interest are allocated to each business segment, and Corporate and Other, based

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

Our revenues, assets and cash flows can be significantly affected by global market prices for commodities such as

While our revenues and operating results are derived from businesses and operations which are wholly-owned and

F-26

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

our Ag segment, this principally includes our 50% ownership in TEMCO. In Corporate and Other, these investments
principally include our 50% ownership in Ventura Foods and our 12% ownership in Ardent Mills.

Reconciling Amounts represent the elimination of revenues between segments. Such transactions are executed at

market prices to more accurately evaluate the profitability of the individual business segments.

F-27

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Segment information for the years ended August 31, 2014, 2013 and 2012 is as follows:

For the year ended August 31, 2014:

Revenues ......................................................... $
Cost of goods sold ...........................................

Gross profit......................................................

Marketing, general and administrative............

Operating earnings ..........................................

(Gain) loss on investments ..............................

Interest, net ......................................................

Equity (income) loss from investments...........

Income before income taxes............................ $
Intersegment revenues..................................... $
Goodwill.......................................................... $
Capital expenditures........................................ $
Depreciation and amortization ........................ $
Total identifiable assets................................... $
For the year ended August 31, 2013:

Revenues ......................................................... $
Cost of goods sold ...........................................

Gross profit......................................................

Marketing, general and administrative............

Operating earnings ..........................................

(Gain) loss on investments ..............................

Interest, net ......................................................
Equity (income) loss from investments...........

Revenues ......................................................... $
Cost of goods sold ...........................................

Gross profit......................................................

Marketing, general and administrative............

Operating earnings ..........................................

(Gain) loss on investments ..............................

Interest, net ......................................................

Equity (income) loss from investments...........

Energy

Corporate
and Other

Reconciling
Amounts

Total

(Dollars in thousands)

14,319,979

28,894,816

70,707

(621,469) $

42,664,033

13,364,872

28,273,515

(120)

(621,469)

41,016,798

955,107

154,992

800,115

—

68,434

(4,014)

621,301

379,714

241,587

(1,949)

56,544

(22,279)

70,827

67,892

2,935

(112,213)

9,964

(81,153)

—

1,647,235

602,598

1,044,637

(114,162)

134,942

(107,446)

735,695

209,271

186,337

— $

1,131,303

(577,539) $

(43,930) $

— $

621,469

1,165

564,104

133,757

4,601,122

12,982,293

11,846,458

1,135,835

172,136

963,699

—

148,366

(1,357)

150,633

329,664

122,132

6,657,840

31,909,791

31,341,453

568,338

312,616

255,722

(27)

71,597

(15,194)

6,898

50,120

11,278

3,888,017

69,238

(241)

69,479

68,871

608

(155)

11,604

(80,799)

1,165

452,859

120,447

4,409,594

12,816,542

11,514,463

1,302,079

155,786

1,146,293

4,008

122,302

(7,537)

77,000

198,892

105,654

6,146,547

28,181,445

27,544,040

637,405

273,757

363,648

1,049

57,915

(22,737)

6,898

7,622

15,690

2,948,129

68,882

(2,777)

71,659

68,690

2,969

408

13,046

(72,115)

— $

—

158,696

943,888

267,167

— $

15,146,979

(481,465) $

44,479,857

(481,465)

42,706,205

—

1,773,652

553,623

1,220,029

(182)

231,567

(97,350)

—

85,063

659,373

241,791

13,504,270

— $

(467,583) $

40,599,286

(467,583)

38,588,143

—

2,011,143

498,233

1,512,910

5,465

193,263

(102,389)

816,690

199,346

69,958

— $

1,085,994

(481,465) $

— $

481,465

Income before income taxes............................ $
Intersegment revenues..................................... $
Capital expenditures........................................ $
Depreciation and amortization ........................ $

1,027,520

327,421

61,630

— $

1,416,571

(467,583) $

294,560

109,496

— $

168,825

92,538

— $

467,583

5,226

17,598

— $

—

468,611

219,632

F-28

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

We have international sales, which are predominantly in our Ag segment. The following table represents our product

sales, based on the geographic locations in which the sales originated, for the years ended August 31, 2014, 2013 and 2012:

North America................................................................................................. $
South America.................................................................................................
Europe, the Middle East and Africa (EMEA).................................................
Asia Pacific (APAC) .......................................................................................

2014

2013

2012

(Dollars in millions)

37,947

39,918

37,503

2,119

1,594

642

2,511

1,040

680

1,444

1,064

290

42,302

44,149

40,301

Note 12

Derivative Financial Instruments and Hedging Activities

Our derivative instruments primarily consist of commodity and freight futures and forward contracts and, to a minor
degree, may include foreign currency and interest rate swap contracts. These contracts are economic hedges of price risk, but
are not designated or accounted for as hedging instruments for accounting purposes, with the exception of certain interest rate
swap contracts which are accounted for as cash flow or fair value hedges as described below. Derivative instruments are
recorded on our Consolidated Balance Sheets at their fair values as described in Note 13, Fair Value Measurements.

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

August 31, 2014

Amounts Not Offset on the
Consolidated Balance Sheet but
Eligible for Offsetting

Gross Amounts
Recognized

Cash Collateral

Derivative
Instruments

Net Amounts

(Dollars in thousands)

Derivative Assets:
Commodity and freight derivatives ....................................... $
Foreign exchange derivatives ................................................
Interest rate derivatives - hedge .............................................

Total................................................................................... $

Derivative Liabilities: ..........................................................
Commodity and freight derivatives ....................................... $
Foreign exchange derivatives ................................................
Interest rate derivatives - non-hedge......................................

Total................................................................................... $

597,210

— $

42,229

554,981

2,523

4,200
603,933

597,612

2,248

130
599,990

—

—
— $

2,504

—

—
2,504

1,174

—
43,403

42,229

1,174

—
43,403

1,349

4,200
560,530

552,879

1,074

130
554,083

F-29

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

August 31, 2013

Amounts Not Offset on the
Consolidated Balance Sheet but
Eligible for Offsetting

Gross Amounts
Recognized

Cash Collateral

Derivative
Instruments

Net Amounts

(Dollars in thousands)

Total................................................................................... $

Derivatives Not Designated as Hedging Instruments

468,673

— $

53,107

415,566

7,079

24,135

3
499,890

458,893

5,925

248
465,066

—

—
— $

957

—

3
54,067

1,591

53,107

—

—
1,591

957

3
54,067

6,122

24,135

—
445,823

404,195

4,968

245
409,408

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 designated as hedging instruments that have been included in our Consolidated
Statements of Operations for the years ended August 31, 2014, 2013, and 2012.

Location of
Gain (Loss)

2014

2013

2012

Commodity and freight derivatives .................................... Cost of goods sold
Foreign exchange derivatives ............................................. Cost of goods sold
Interest rate derivatives....................................................... Interest, net
Total....................................................................................

Commodity and Freight Contracts:

(Dollars in thousands)
$ (482,352) $

$ 210,164
(5,595)
114

311,167
(5,219)
206

(452)
300

$ 204,683

$ (482,504) $

306,154

When we enter into a commodity or freight purchase or sales contract, we incur risks related to price changes and

performance (including delivery, quality, quantity, and counterparty credit). We are exposed to risk of loss in the market value
of positions held, consisting of inventory and purchase contracts at a fixed or partially fixed price in the event market prices
decrease. We are also exposed to risk of loss on fixed or partially fixed price sales contracts in the event market prices increase.

Our commodity contracts primarily relate to grain, oilseed, energy (crude, refined products and propane) and fertilizer

commodities. Our freight contracts primarily relate to rail, barge and ocean freight transactions. Our use of commodity and
freight contracts reduces the effects of price volatility, thereby protecting us against adverse short-term price movements, while
limiting the benefits of short-term price movements. To reduce the price change risks associated with holding fixed price
commitments, we generally take opposite and offsetting positions by entering into commodity futures contracts or options in
order to arrive at a net commodity position within the formal position limits we have established and deemed prudent for each
commodity. These contracts are purchased and sold through regulated commodity futures exchanges for grain, and regulated
mercantile exchanges for refined products and crude oil. We also use OTC instruments to hedge our exposure to price
fluctuations on commodities and fixed price arrangements. The price risk we encounter for crude oil and most of the grain and
oilseed volumes we handle can be hedged. Price risk associated with fertilizer and certain grains cannot be hedged with futures
because there are no futures for these commodities and, as a result, risk is managed through the use of forward sales contracts
and other pricing arrangements and, to some extent, cross-commodity futures hedging. Certain fertilizer and propane contracts
are accounted for as normal purchase and normal sales transactions. We expect all normal purchase and normal sales
transactions to result in physical settlement.

F-30

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

When a futures contract is entered into, an initial margin deposit must be sent to the applicable exchange or broker.

Our policy is to primarily maintain hedged positions in grain and oilseed. Our profitability from operations is

primarily derived from margins on products sold and grain merchandised, not from hedging transactions. At any one time,
inventory and purchase contracts for delivery to us may be substantial. Our risk management policies and procedures include
net position limits. These limits are defined for each commodity and include both trader and management limits. The policy
and procedures in our grain marketing operations require a review by operations management when any trader is outside of
position limits and also a review by senior management if operating areas are outside of position limits. A similar process is
used in energy and wholesale crop nutrients operations. Position limits are reviewed, at least annually, with management and
the Board of Directors. We monitor current market conditions and may expand or reduce our net position limits or procedures
in response to changes in conditions. In addition, all purchase and sales contracts are subject to credit approvals and appropriate
terms and conditions.

Hedging arrangements do not protect against nonperformance by counterparties to contracts. We primarily use
exchange traded instruments which minimize exposure to counterparties' nonperformance. We evaluate exposure by reviewing
contracts and adjusting the values to reflect potential nonperformance. Risk of nonperformance by counterparties includes the
inability to perform because of the counterparty’s financial condition and also the risk that the counterparty will refuse to
perform on a contract during periods of price fluctuations where contract prices are significantly different than current market
prices. We manage risks by entering into fixed price purchase and sales contracts with preapproved producers and by
establishing appropriate limits for individual suppliers. Fixed price contracts are entered into with customers of acceptable
creditworthiness, as internally evaluated. Historically, we have not experienced significant events of nonperformance on open
contracts. Accordingly, we only adjust the estimated fair values of specifically identified contracts for nonperformance.
Although we have established policies and procedures, we make no assurances that historical nonperformance experience will
carry forward to future periods.

As of August 31, 2014 and 2013, we had the following outstanding purchase and sale contracts:

2014

2013

Purchase
Contracts

Sale
Contracts

Purchase
Contracts

Sale
Contracts

(Units in thousands)

Grain and oilseed - bushels.................................................
Energy products - barrels....................................................
Soy products - tons .............................................................
Crop nutrients - tons ...........................................................
Ocean and barge freight - metric tons.................................
Rail freight - rail cars..........................................................
Livestock - pounds..............................................................

665,690

27,754

1,613

5,423
321

—

938,140

50,450

1,212

1,607

4,005
186

46,280

521,979

12,626

968

1,225
220

—

806,295

21,312

847

1,050

151
43

17,280

Foreign Exchange Contracts:

We conduct essentially all of our business in U.S. dollars, except for some grain marketing transactions primarily in

South America and Europe, and purchases of products from Canada. We had minimal risk regarding foreign currency
fluctuations during fiscal 2014 and in prior years, as substantially all international sales were denominated in U.S. dollars.
From time to time, we enter into foreign currency futures contracts to mitigate currency fluctuations. Foreign currency
fluctuations do, however, impact the ability of foreign buyers to purchase U.S. agricultural products and the competitiveness of
U.S. agricultural products compared to the same products offered by alternative sources of world supply. As of August 31,
2014, we had $2.5 million included in derivative assets and $2.2 million included in derivative liabilities associated with
foreign currency contracts.

F-31

Table of Contents

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Interest Rate Contracts:

CHS Capital, our wholly-owned finance subsidiary, has interest rate swaps that lock the interest rates of the underlying

loans with a combined notional amount of $5.0 million expiring at various times through fiscal 2018, with $0.4 million of the
notional amount expiring during fiscal 2015. None of CHS Capital’s interest rate swaps qualify for hedge accounting and as a
result, changes in fair value are recorded in earnings within interest, net in our Consolidated Statements of Operations. Long-
term debt used to finance non-current assets carries various fixed interest rates and is payable at various dates to minimize the
effects of market interest rate changes. The weighted-average interest rate on fixed rate debt outstanding on August 31, 2014
was approximately 5.6%.

Derivatives Designated as Cash Flow or Fair Value Hedging Strategies

As of August 31, 2014 and 2013, we have certain derivatives designated as cash flow hedges. As of August 31, 2014

we have certain derivatives designated as fair value hedges.

Interest Rate Contracts:

In fiscal 2013, we entered into derivative contracts designated as cash flow hedging instruments that were terminated

in February 2014 as the issuance of the underlying debt was no longer probable. As a result, a $13.5 million gain was
reclassified from accumulated other comprehensive loss into net income. This pre-tax gain is included as a component of
interest, net in the Consolidated Statement of Operations for the year ended August 31, 2014.

In fiscal 2014, we entered into interest rate swaps with a notional amount of $260.0 million designated as fair value

hedges of portions of our fixed-rate debt. Our objective is to offset changes in the fair value of the debt associated with the risk
of variability in the 3-month U.S. Dollar LIBOR interest rate, in essence converting the fixed-rate debt to variable-rate debt.
Offsetting changes in the fair values of both the swap instruments and the hedged debt are recorded contemporaneously each
period and only create an impact to earnings to the extent that the hedge is ineffective. During fiscal 2014 we recorded
offsetting fair value adjustments of $4.2 million, with no ineffectiveness recorded in earnings.

Note 13

Fair Value Measurements

ASC Topic 820, Fair Value Measurement 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.

We determine fair values of readily marketable inventories, derivative contracts and certain other assets, based on the

fair value hierarchy established in 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 that reflect the assumptions
market participants would use in pricing the asset or liability based on the best information available in the circumstances.
ASC Topic 820 describes three levels within its hierarchy that may be used to measure fair value, and our assessment of
relevant instruments within those levels is as follows:

Level 1: Values are based on unadjusted quoted prices in active markets for identical assets or liabilities. These assets

and liabilities include exchange traded derivative contracts, Rabbi Trust investments, deferred compensation investments and
available-for-sale investments.

Level 2: Values are based on 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, or other inputs that are observable or can be corroborated by
observable market data for substantially the full term of the assets or liabilities. These assets and liabilities include marketable
inventories, interest rate swaps, forward commodity and freight purchase and sales contracts, flat price or basis fixed derivative
contracts and other OTC derivatives whose value is determined with inputs that are based on exchange traded prices, adjusted
for location specific inputs that are primarily observable in the market or can be derived principally from, or corroborated by,
observable market data.

Level 3: Values are generated from unobservable inputs that are supported by little or no market activity and that are a
significant component of the fair value of the assets or liabilities. These unobservable inputs would reflect our own estimates of
assumptions that market participants would use in pricing related assets or liabilities. Valuation techniques might include the
use of pricing models, discounted cash flow models or similar techniques.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

The following table presents assets and liabilities, included on our Consolidated Balance Sheets, that are recognized at
fair value on a recurring basis, and indicates the fair value hierarchy utilized to determine such fair value. Assets and liabilities
are classified, in their entirety, based on the lowest level of input that is a significant component of the fair value measurement.
The lowest level of input is considered Level 3. Our assessment of the significance of a particular input to the fair value
measurement requires judgment, and may affect the classification of fair value assets and liabilities within the fair value
hierarchy levels.

Recurring fair value measurements at August 31, 2014 and 2013 are as follows:

2014

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(Dollars in thousands)

— $

921,554

— $

Assets:
Readily marketable inventories ....................................... $
Commodity and freight derivatives .................................
Interest rate swap derivatives ..........................................
Foreign currency derivatives ...........................................
Deferred compensation assets .........................................
Other assets......................................................................

78,590

—
2,523

83,217

8,778

173,108

Liabilities:
Commodity and freight derivatives ................................. $
Interest rate swap derivatives ..........................................
Foreign currency derivatives ...........................................
Accrued liability for contingent crack spread payments
related to purchase of noncontrolling interests..............

117,690

—

2,248

—

518,620

4,200
—

—

1,444,374

479,922

130

—

—
—

—

114,917

— $

1,617,482

— $

597,612

Total

921,554

597,210

4,200
2,523

83,217

8,778

130

2,248

114,917

714,907

119,938

480,052

114,917

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

2013

Quoted Prices in
Active Markets
for Identical
Assets
(Level 1)

Significant
Other
Observable
Inputs
(Level 2)

Significant
Unobservable
Inputs
(Level 3)

(Dollars in thousands)

Total

58,441

—

6,894

105,936

8,148

179,419

59,184

—

5,925

—

— $

1,203,383

— $

1,203,383

410,233

24,139

185

—

1,637,940

399,710

248

—

468,674

24,139

7,079

105,936

8,148

— $

1,817,359

— $

458,894

—

134,134

248

5,925

134,134

599,201

65,109

399,958

134,134

Readily marketable inventories — Our readily marketable inventories primarily include grain, processed grain,

oilseed, processed oilseed and other minimally processed soy-based inventories that are stated at fair values. These
commodities are readily marketable, have quoted market prices and may be sold without significant additional processing. We
estimate the fair market values of these inventories included in Level 2 primarily based on exchange quoted prices, adjusted for
differences in local markets. Changes in the fair market values of these inventories are recognized in our Consolidated
Statements of Operations as a component of cost of goods sold.

Commodity, freight and foreign currency 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, flat price or basis fixed derivative contracts, ocean freight contracts and other OTC derivatives are determined
using inputs that are generally based on exchange traded prices and/or recent market bids and offers, adjusted for location
specific inputs, and are classified within Level 2. The location specific inputs are generally 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
Consolidated Statements of Operations as a component of cost of goods sold.

Other assets — Our available-for-sale investments in common stock of other companies, deferred compensation

investments and Rabbi Trust assets are valued based on unadjusted quoted prices on active exchanges and are classified within
Level 1. Changes in the fair values of these other assets are primarily recognized in our Consolidated Statements of Operations
as a component of marketing, general and administrative expenses.

Interest rate swap derivatives — Fair values of our interest rate swap derivatives are determined utilizing valuation
models that are widely accepted in the market to value such OTC derivative contracts. The specific terms of the contracts, as
well as market observable inputs, such as interest rates and credit risk assumptions, are factored into the models. As all
significant inputs are market observable, all interest rate swaps are classified within Level 2. Changes in the fair values of
contracts not designated as hedging instruments for accounting purposes are recognized in our Consolidated Statements of
Operations as a component of interest, net. Changes in the fair values of contracts designated as hedging instruments are
deferred to accumulated other comprehensive loss in the equity section of our Consolidated Balance Sheets and are amortized
into earnings within interest, net over the term of the agreements.

Accrued liability for contingent crack spread payments related to purchase of noncontrolling interests — The fair

value of the contingent consideration liability was calculated utilizing an average price option model, an adjusted Black-
Scholes pricing model commonly used in the energy industry to value options. The model uses market observable inputs and
unobservable inputs. Due to significant unobservable inputs used in the pricing model, the liability is classified within Level 3.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Quantitative Information about Level 3 Fair Value Measurements

Fair Value

Item

August 31, 2014

(Dollars in thousands)

Valuation
Technique

Unobservable Input

Forward crack spread margin on August 31, 2014 (a)

Accrued liability for
contingent crack spread
payments related to
purchase of
noncontrolling interests

$114,917

Adjusted
Black-Scholes
option pricing
model

Contractual target crack spread margin (b) .................
Expected volatility (c) .................................................

Risk-free interest rate (d).............................................

Expected life - years (e)...............................................

Range

(Weighted
Average)

$13.58-$17.07
($15.64)

$17.50

132.37%

0.09-0.94%
(0.53%)

1.00-3.00
(2.07)

(a) Represents forward crack spread margin quotes and management estimates based on future settlement dates
(b) Represents the minimum contractual threshold that would require settlement with the counterparties
(c) Represents quarterly adjusted volatility estimates derived from daily historical market data
(d) Represents yield curves for U.S. Treasury securities
(e) Represents the range in the number of years remaining related to each contingent payment

Valuation processes for Level 3 measurements — Management is responsible for determining the fair value of our

Level 3 financial instruments. Option pricing methods are utilized, as indicated above. Inputs used in the option pricing models
are based on quotes obtained from third party vendors as well as management estimates for periods in which quotes cannot be
obtained. Each reporting period, management reviews the unobservable inputs provided by third-party vendors for
reasonableness utilizing relevant information available to us. Management also takes into consideration current and expected
market trends and compares the liability’s fair value to hypothetical payments using known historical market data to assess
reasonableness of the resulting fair value.

Sensitivity analysis of Level 3 measurements — The significant unobservable inputs that are susceptible to periodic

fluctuations used in the fair value measurement of the accrued liability for contingent crack spread payments related to the
purchase of noncontrolling interests are the adjusted forward crack spread margin and the expected volatility. Significant
increases (decreases) in either of these inputs in isolation would result in a significantly higher (lower) fair value measurement.
Although changes in the expected volatility are driven by fluctuations in the underlying crack spread margin, changes in
expected volatility are not necessarily accompanied by a directionally similar change in the forward crack spread margin.
Directional changes in the expected volatility can be affected by a multitude of factors including the magnitude of daily
fluctuations in the underlying market data, market trends, timing of fluctuations, and other factors.

The following table represents a reconciliation of liabilities measured at fair value using significant unobservable

inputs (Level 3) for the years ended August 31, 2014 and 2013:

Level 3 Liabilities

Accrued Liability for Contingent Crack
Spread Payments Related to Purchase of
Noncontrolling Interests

2014

2013

(Dollars in thousands)

Balance - beginning of year .............................................................................................
Amounts currently payable ..............................................................................................
Total (gains) losses included in cost of goods sold ..........................................................
Balance - end of year........................................................................................................

134,134

—
(19,217)
114,917

127,516
(16,491)
23,109

134,134

Note 14

Commitments and Contingencies

Environmental

We are required to comply with various environmental laws and regulations incidental to our normal business
operations. In order to meet our compliance requirements, we establish reserves for the probable future costs of remediation of
identified issues, which are included in cost of goods sold and marketing, general and administrative in our Consolidated

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Statements of Operations. The resolution of any such matters may affect consolidated net income for any fiscal period;
however, management believes any resulting liabilities, individually or in the aggregate, will not have a material effect on our
consolidated financial position, results of operations or cash flows during any fiscal year.

Contingencies

In May 2013, we initiated a voluntary recall of certain soy protein products produced at our Ashdod, Israel facility

following one customer's report to us of a positive test result for salmonella in product purchased from us. We notified
applicable food safety regulators, including the Israel Ministry of Health and the U.S. Food and Drug Administration, of both
the positive test result and our determination to conduct a voluntary recall. We have received no reports of salmonella-related
illness in relation to the recalled products. We estimate our claims loss associated with this recall to be $18.0 million. As of
August 31, 2014, $11.5 million of claims had been settled. We maintain product liability and general liability insurance (which
includes product liability coverage), which we believe will offset some related product liability expenses. However, as of
August 31, 2014, no insurance recoveries have been recorded related to this incident.

Other Litigation and Claims

We are involved as a defendant in various lawsuits, claims and disputes, which are in the normal course of our

business. The resolution of any such matters may affect consolidated net income for any fiscal period; however, management
believes any resulting liabilities, individually or in the aggregate, will not have a material effect on our consolidated financial
position, results of operations or cash flows during any fiscal year.

Guarantees

We are a guarantor for lines of credit and performance obligations of related companies. Our bank covenants allow
maximum guarantees of $1.0 billion, of which $105.2 million was outstanding on August 31, 2014. 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 are current as of August 31, 2014.

Credit Commitments

CHS Capital has commitments to extend credit to customers as long as there is no violation of any condition

established in the contracts. As of August 31, 2014, CHS Capital’s customers have additional available credit of $1.1 billion.

Lease Commitments

We are committed under operating lease agreements for approximately 3,000 rail cars with remaining terms of one to

12 years. In addition, we have commitments under other operating leases for various refinery, manufacturing and transportation
equipment, vehicles and office space. Some leases include purchase options at not less than fair market value at the end of the
lease terms.

Total rental expense for all operating leases was $91.8 million, $81.5 million and $74.6 million for the years ended

August 31, 2014, 2013 and 2012, respectively.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Minimum future lease payments required under noncancelable operating leases as of August 31, 2014 were as follows:

2015 ..................................................................................... $
2016 .....................................................................................

2017 .....................................................................................

2018 .....................................................................................

2019 .....................................................................................

Thereafter ............................................................................
Total minimum future lease payments................................. $

Unconditional Purchase Obligations

Rail Cars

Vehicles

Equipment
and Other

Total

(Dollars in thousands)

24,329

15,344

61,653

101,326

23,286

21,926

17,027

11,682

11,261

10,568

7,761

5,309

2,406

1,791

40,635

36,286

28,349

20,102

90,039

109,511

43,179

277,064

74,489

65,973

50,685

34,190

103,091

429,754

Unconditional purchase obligations are commitments to transfer funds in the future for fixed or minimum amounts or
quantities of goods or services at fixed or minimum prices. Our long-term unconditional purchase obligations primarily relate
to pipeline and grain handling take-or-pay and through-put agreements. Minimum future payments required under these
agreements as of August 31, 2014 are as follows:

Payments Due by Period

Total

Less than
1 Year

1 - 3
Years

3 - 5
Years

More than
5 Years

(Dollars in thousands)

Long-term unconditional purchase obligations .................. $ 485,739

68,008

$ 124,367

87,809

$ 205,555

The discounted, aggregate amount of the minimum required payments under long-term unconditional purchase
obligations, based on current exchange rates at August 31, 2014, was $415.0 million. Total payments under these arrangements
were $65.5 million, $62.4 million and $47.8 million for the years ended August 31, 2014, 2013 and 2012, respectively.

Note 15

Supplemental Cash Flow and Other Information

Additional information concerning supplemental disclosures of cash flow activities for the years ended August 31,

2014, 2013 and 2012 is as follows:

2014

2013

2012

(Dollars in thousands)

Net cash paid during the period for:

Interest ...................................................................................................... $
Income taxes.............................................................................................

161,213

256,538

155,888

23,363

23,228

27,671

Other significant noncash investing and financing transactions:
Capital equity certificates redeemed with preferred stock............................
Capital equity certificates issued in exchange for Ag acquisitions...............
Accrual of dividends and equities payable....................................................
Assets contributed to Ardent Mills joint venture ..........................................

200,000

14,278

409,961

205,040

—

18,211

390,153

—

29,155

578,809

—

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

Note 16

Related Party Transactions

Related party transactions with equity investees for the years ended August 31, 2014, 2013 and 2012, respectively, and

balances as of August 31, 2014 and 2013, respectively, are as follows:

Sales ................................................................................................................ $
Purchases.........................................................................................................

3,247,197

2,963,468

2,185,348

1,648,030

1,535,176

1,143,285

2014

2013

2012

(Dollars in thousands)

Receivables ................................................................................................................................. $
Payables ......................................................................................................................................

16,737

43,361

25,159

31,485

The related party transactions were primarily with TEMCO, Horizon Milling, Ardent Mills and Ventura Foods.

2014

2013

(Dollars in thousands)

Note 17

Acquisitions

During the year ended August 31, 2014, we paid $281.5 million in consideration to acquire various businesses that
related primarily to our Ag segment. These acquisitions were not material, individually or in aggregate, to our consolidated
financial statements. Included among these transactions was the acquisition of Illinois River Energy LLC, which operates an
ethanol plant that will expand our grain origination opportunities and increase renewable fuels capacity. Additionally, we
acquired the fertilizer business and assets of Terral RiverService, a transportation service company specializing in the bulk
storage and handling of dry and liquid materials along the Mississippi River system, the Gulf Intracoastal Waterway and inland
waterways of Louisiana and southern Arkansas. See Note 6, Other Assets for information about the amounts of goodwill and
intangible assets recorded as a result of these transactions.

NCRA

On November 29, 2011, our Board of Directors approved a stock transfer agreement, dated as of November 29, 2011,
between us and GROWMARK, Inc. (Growmark), and a stock transfer agreement, dated as of November 29, 2011, between us
and MFA Oil Company (MFA). Pursuant to these agreements, we began to acquire from Growmark and MFA shares of Class A
common stock and Class B common stock of NCRA representing approximately 25.571% of NCRA’s outstanding capital
stock. Prior to the first closing, we owned the remaining approximately 74.429% of NCRA’s outstanding capital stock as of
August 31, 2012 and accordingly, upon completion of the acquisitions contemplated by these agreements, NCRA will be a
wholly-owned subsidiary. As of August 31, 2014, our ownership was 84.0% and with the closing in September 2014, our
ownership increased to 88.9%.

Pursuant to the agreement with Growmark, we will acquire stock representing approximately 18.616% of NCRA’s

outstanding capital stock in four separate closings held or to be held on September 1, 2012, September 1, 2013, September 1,
2014 and September 1, 2015, for an aggregate base purchase price of $255.5 million (approximately $48.0 million of which has
been paid at each of the first three closings, and $111.4 million of which will be paid at the final closing). In addition,
Growmark is entitled to receive up to two contingent purchase price payments following each individual closing, calculated as
set forth in the agreement with Growmark, if the average crack spread margin referred to therein over the year ending on
August 31 of the calendar year in which the contingent payment date falls exceeds a specified target.

Pursuant to the agreement with MFA, we will acquire stock representing approximately 6.955% of NCRA’s
outstanding capital stock in four separate closings held or to be held on September 1, 2012, September 1, 2013, September 1,
2014 and September 1, 2015, for an aggregate base purchase price of $95.5 million (approximately $18.0 million of which has
been paid at each of the first three closings, and $41.6 million of which will be paid at the final closing). In addition, MFA is
entitled to receive up to two contingent purchase price payments following each individual closing, calculated as set forth in the
agreement with MFA, if the average crack spread margin referred to therein over the year ending on August 31 of the calendar
year in which the contingent payment date falls exceeds a specified target.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS - (Continued)

As all conditions associated with the purchase have been met, we have accounted for this transaction as a forward

purchase contract which required recognition in the first quarter of fiscal 2012 in accordance with ASC Topic 480,
Distinguishing Liabilities from Equity. As a result, we are no longer including the noncontrolling interests related to NCRA as a
component of equity. Instead, we recorded the present value of the future payments to be made to Growmark and MFA as a
liability on our Consolidated Balance Sheets as of November 30, 2011. The liability as of August 31, 2014 and 2013 was
$214.7 million and $275.4 million, including interest accretion of $5.3 million and $6.7 million, respectively. Noncontrolling
interests in the amount of $337.1 million was reclassified and an additional adjustment to equity in the amount of $96.7 million
was recorded as a result of the transaction in fiscal 2012. The equity adjustment included the initial fair value of the crack
spread contingent payments of $105.2 million. The fair value of the liability associated with the crack spread contingent
payments was calculated utilizing an average price option model, an adjusted Black-Scholes pricing model commonly used in
the energy industry to value options. As of August 31, 2014 and 2013, the amounts recognized as liabilities for these crack
spread payments are $114.9 million and $150.6 million, respectively, and are included on our Consolidated Balance Sheets in
other liabilities with a gain of $19.2 million and a loss of $23.1 million included in cost of goods sold in our Consolidated
Statements of Operations during the years ended August 31, 2014 and 2013, respectively. The first crack spread contingent
payment in the amount of $16.5 million was made in October 2013. Based on the average crack spread margin during fiscal
2014, no payment was made in October 2014. The portion of NCRA earnings attributable to Growmark and MFA for the first
quarter of fiscal 2012, prior to the transaction date, were included in net income attributable to noncontrolling interests.
Beginning in the second quarter of fiscal 2012, in accordance with ASC Topic 480, earnings are no longer attributable to the
noncontrolling interests, and patronage earned by Growmark and MFA is included as interest, net in our Consolidated
Statements of Operations. During the years ended August 31, 2014 and 2013, $65.5 million and $142.4 million, respectively,
was included in interest for the patronage earned by Growmark and MFA.

Solbar

On February 9, 2012, we completed the acquisition of Solbar Industries Ltd., an Israeli company (Solbar), included in
our Ag segment, for total cash consideration of $128.7 million, net of cash acquired of $6.6 million. Solbar provides soy protein
ingredients to manufacturers in the meat, vegetarian, beverage, bars and crisps, confectionary, bakery, and pharmaceutical
manufacturing markets. Solbar and its subsidiaries operate primarily in the countries of Israel, China and the U.S.

During fiscal 2014, due to the prolonged decrease in demand for certain products produced in Solbar's facilities in

Israel, partially as a result of the impacts of the recall described in Note 14, Contingencies, we evaluated our long-lived assets
in Israel for impairment under ASC Topic 360-10. Based on our cash flow projections, as well as our best estimate of the
residual value of the assets, we recorded a non-cash impairment charge of $74.5 million, which amounts to substantially all of
the book value of the long-lived assets in this asset group. This impairment charge is recorded in cost of goods sold in our Ag
segment.

F-39