Quarterly Financial Information (Unaudited)

As further described in Note 2, Restatement of Previously Issued Consolidated Financial Statements, the previously reported financial information for the quarters ended November 30, 2017 and 2016, February 28, 2018 and 2017, May 31, 2018 and 2017, and August 31, 2017, have been restated. Relevant restated financial information for the first, second and third quarters of fiscal 2018 is included in this Annual Report on Form 10-K in the tables that follow. The unaudited interim financial statements reflect all adjustments which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Although misstatements impacted individual line items within operating cash flows, the quarterly cash flow information classification between operating, investing and financing activities for these periods was not materially impacted by the misstatements and has not been presented. Restated amounts are computed independently each quarter; therefore, the sum of the quarterly amounts may not equal the total amount for the respective year due to rounding.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	(As Restated)
	As of November 30, 2017			As of February 28, 2018			As of May 31, 2018
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	249,767		$	219,273		$	533,887
Receivables	2,058,222			1,836,490			2,248,213
Inventories	3,111,963			3,676,325			2,913,507
Derivative assets	166,557			251,048			250,005
Margin and related deposits	206,955			188,167			253,141
Supplier advance payments	542,770			658,815			426,607
Other current assets	270,674			296,982			190,680
Total current assets	6,606,908			7,127,100			6,816,040
Investments	3,777,000			3,752,876			3,787,163
Property, plant and equipment	5,266,408			5,179,868			5,140,106
Other assets	997,402			943,552			960,240
Total assets	$	16,647,718		$	17,003,396		$	16,703,549
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	2,480,264		$	3,071,639		$	2,868,506
Current portion of long-term debt	71,022			46,290			53,056
Customer margin deposits and credit balances	139,868			106,323			137,999
Customer advance payments	413,519			756,642			372,590
Accounts payable	2,444,650			1,853,974			1,898,172
Derivative liabilities	207,426			361,909			316,831
Accrued expenses	425,912			465,032			538,249
Dividends and equities payable	121,209			128,700			209,718
Total current liabilities	6,303,870			6,790,509			6,395,121
Long-term debt	1,936,744			1,915,843			1,905,515
Long-term deferred tax liabilities	348,902			165,659			203,208
Other liabilities	315,254			265,028			278,869
Commitments and contingencies (Note 15)
Equities:
Preferred stock	2,264,038			2,264,038			2,264,038
Equity certificates	4,319,840			4,307,292			4,253,414
Accumulated other comprehensive loss	(177,341		)	(167,230		)	(167,302		)
Capital reserves	1,324,372			1,450,326			1,559,040
Total CHS Inc. equities	7,730,909			7,854,426			7,909,190
Noncontrolling interests	12,039			11,931			11,646
Total equities	7,742,948			7,866,357			7,920,836
Total liabilities and equities	$	16,647,718		$	17,003,396		$	16,703,549

CHS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	(As Restated)
	As of November 30, 2016			As of February 28, 2017			As of May 31, 2017
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	516,646		$	276,137		$	266,748
Receivables	3,034,083			2,767,150			2,767,967
Inventories	3,143,551			3,730,682			2,688,949
Derivative assets	277,498			233,429			206,187
Margin and related deposits	312,899			290,291			251,695
Supplier advance payments	476,907			701,705			431,433
Other current assets	187,524			196,237			265,469
Total current assets	7,949,108			8,195,631			6,878,448
Investments	3,828,899			3,802,379			3,841,749
Property, plant and equipment	5,443,079			5,404,347			5,405,651
Other assets	1,054,454			1,056,873			955,532
Total assets	$	18,275,540		$	18,459,230		$	17,081,380
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	3,227,564		$	3,867,438		$	3,321,808
Current portion of long-term debt	206,894			205,136			193,096
Customer margin deposits and credit balances	180,850			149,625			132,479
Customer advance payments	543,411			897,464			391,122
Accounts payable	2,574,006			1,919,421			1,865,803
Derivative liabilities	282,658			232,507			233,955
Accrued expenses	397,446			392,058			436,111
Dividends and equities payable	239,857			131,380			134,718
Total current liabilities	7,652,686			7,795,029			6,709,092
Long-term debt	1,958,907			2,051,567			2,046,264
Long-term deferred tax liabilities	511,821			531,522			369,170
Other liabilities	332,610			272,532			276,483
Commitments and contingencies (Note 15)
Equities:
Preferred stock	2,244,132			2,244,114			2,264,063
Equity certificates	4,194,534			4,201,803			4,214,657
Accumulated other comprehensive loss	(224,935		)	(211,091		)	(208,568		)
Capital reserves	1,592,434			1,560,498			1,397,834
Total CHS Inc. equities	7,806,165			7,795,324			7,667,986
Noncontrolling interests	13,351			13,256			12,385
Total equities	7,819,516			7,808,580			7,680,371
Total liabilities and equities	$	18,275,540		$	18,459,230		$	17,081,380

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	(As Restated)
	Three Months Ended			Three Months Ended			Six Months Ended			Three Months Ended			Nine Months Ended			Three Months Ended
	November 30, 2017			February 28, 2018			February 28, 2018			May 31, 2018			May 31, 2018			August 31, 2018
	(Dollars in thousands)
Revenues	$	8,031,884		$	6,980,153		$	15,012,037		$	9,087,328		$	24,099,365		$	8,583,982
Cost of goods sold	7,711,057			6,844,849			14,555,906			8,841,361			23,397,267			8,192,620
Gross profit	320,827			135,304			456,131			245,967			702,098			391,362
Marketing, general and administrative	139,500			186,713			326,213			161,579			487,792			186,291
Reserve and impairment charges (recoveries), net	(3,787		)	(11,346		)	(15,133		)	(3,811		)	(18,944		)	(18,765		)
Operating earnings (loss)	185,114			(40,063		)	145,051			88,199			233,250			223,836
(Gain) loss on disposal of business	—			(7,705		)	(7,705		)	(124,050		)	(131,755		)	(61		)
Interest expense	40,702			40,176			80,878			49,340			130,218			18,984
Other (income) loss	(25,014		)	(11,364		)	(36,378		)	(14,622		)	(51,000		)	(27,015		)
Equity (income) loss from investments	(38,362		)	(39,441		)	(77,803		)	(59,308		)	(137,111		)	(16,404		)
Income (loss) before income taxes	207,788			(21,729		)	186,059			236,839			422,898			248,332
Income tax expense (benefit)	20,606			(187,688		)	(167,082		)	55,219			(111,863		)	7,787
Net income (loss)	187,182			165,959			353,141			181,620			534,761			240,545
Net income (loss) attributable to noncontrolling interests	(464		)	(48		)	(512		)	(187		)	(699		)	98
Net income (loss) attributable to CHS Inc.	$	187,646		$	166,007		$	353,653		$	181,807		$	535,460		$	240,447

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	(As Restated)
	Three Months Ended			Three Months Ended			Six Months Ended			Three Months Ended			Nine Months Ended			Three Months Ended
	November 30, 2016			February 28, 2017			February 28, 2017			May 31, 2017			May 31, 2017			August 31, 2017
	(Dollars in thousands)
Revenues	$	8,001,904		$	7,400,773		$	15,402,677		$	8,638,410		$	24,041,087		$	7,996,339
Cost of goods sold	7,655,524			7,165,265			14,820,789			8,417,264			23,238,053			7,904,713
Gross profit	346,380			235,508			581,888			221,146			803,034			91,626
Marketing, general and administrative	151,258			160,166			311,424			155,347			466,771			145,236
Reserve and impairment charges (recoveries), net	18,357			72,373			90,730			326,779			417,509			39,170
Operating earnings (loss)	176,765			2,969			179,734			(260,980		)	(81,246		)	(92,780		)
(Gain) loss on disposal of business	4,105			(1,395		)	2,710			(1,224		)	1,486			704
Interest expense	38,265			39,945			78,210			39,201			117,411			53,828
Other (income) loss	(44,509		)	(18,083		)	(62,592		)	(11,952		)	(74,544		)	(25,407		)
Equity (income) loss from investments	(40,328		)	(35,800		)	(76,128		)	(48,393		)	(124,521		)	(12,817		)
Income (loss) before income taxes	219,232			18,302			237,534			(238,612		)	(1,078		)	(109,088		)
Income tax expense (benefit)	16,076			3,685			19,761			(166,124		)	(146,363		)	(34,761		)
Net income (loss)	203,156			14,617			217,773			(72,488		)	145,285			(74,327		)
Net income (loss) attributable to noncontrolling interests	(208		)	406			198			(955		)	(757		)	123
Net income (loss) attributable to CHS Inc.	$	203,364		$	14,211		$	217,575		$	(71,533	)	$	146,042		$	(74,450	)

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	(As Restated)
	Three Months Ended			Three Months Ended			Six Months Ended			Three Months Ended			Nine Months Ended			Three Months Ended
	November 30, 2017			February 28, 2018			February 28, 2018			May 31, 2018			May 31, 2018			August 31, 2018
	(Dollars in thousands)
Net income (loss)	$	187,182		$	165,959		$	353,141		$	181,620		$	534,761		$	240,545
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity	1,594			3,142			4,736			3,417			8,153			11,913
Unrealized net gain (loss) on available for sale investments	3,640			3,554			7,194			6,286			13,480			(16,628		)
Cash flow hedges	(4		)	1,063			1,059			413			1,472			1,068
Foreign currency translation adjustment	(2,211		)	2,352			141			(10,188		)	(10,047		)	(1,974		)
Other comprehensive income (loss), net of tax	3,019			10,111			13,130			(72		)	13,058			(5,621		)
Comprehensive income	190,201			176,070			366,271			181,548			547,819			234,924
Less comprehensive income attributable to noncontrolling interests	(464		)	(48		)	(512		)	(187		)	(699		)	98
Comprehensive income attributable to CHS Inc.	$	190,665		$	176,118		$	366,783		$	181,735		$	548,518		$	234,826



	(As Restated)
	Three Months Ended			Three Months Ended		Six Months Ended			Three Months Ended			Nine Months Ended			Three Months Ended
	November 30, 2016			February 28, 2017		February 28, 2017			May 31, 2017			May 31, 2017			August 31, 2017
	(Dollars in thousands)
Net income (loss)	$	203,156		$	14,617	$	217,773		$	(72,488	)	$	145,285		$	(74,327	)
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity	3,239			3,724		6,963			3,636			10,599			22,103
Unrealized net gain (loss) on available for sale investments	777			968		1,745			(118		)	1,627			2,758
Cash flow hedges	654			964		1,618			375			1,993			249
Foreign currency translation adjustment	(18,075		)	8,187		(9,888		)	(1,369		)	(11,257		)	3,098
Other comprehensive income (loss), net of tax	(13,405		)	13,843		438			2,524			2,962			28,208
Comprehensive income	189,751			28,460		218,211			(69,964		)	148,247			(46,119		)
Less comprehensive income attributable to noncontrolling interests	(208		)	406		198			(955		)	(757		)	123
Comprehensive income attributable to CHS Inc.	$	189,959		$	28,054	$	218,013		$	(69,009	)	$	149,004		$	(46,242	)

Reclassifications

Amounts previously included within (gain) loss on investments were reclassified into other (income) loss to conform to the current period presentation. This reclassification had no impact on our previously reported net income, cash flows or shareholders' equity and represents reclassifications for the periods ended November 30, 2017 and 2016, and February 28, 2018 and 2017. The reclassifications included a $2.8 million gain reclassification during the three months ended November 30, 2017, a $4.1 million gain reclassification during the three months ended February 28, 2018, a $7.4 million loss during the three months ended November 30, 2016, and a $2.9 million gain during the three months ended February 28, 2017.

Consolidated financial statement adjustment tables

The following tables present the impacts of the restatement adjustments to the previously reported financial information for the quarterly periods ended November 30, 2017 and 2016, February 28, 2018 and 2017, May 31, 2018 and 2017, and August 31, 2017. Refer to discussion in Note 2, Restatement of Previously Issued Consolidated Financial Statements. The restatement references identified in the following tables directly correlate to the restatement adjustments detailed below.

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

(a) Freight Derivatives and Related Misstatements - Corrections for freight derivatives and related misstatements were driven by the misstatement of amounts associated with both the value and quantity of rail freight contracts, as well as due to freight contracts not meeting the technical accounting requirements to qualify as derivative financial instruments. In addition to the elimination of the underlying freight derivative assets and liabilities and related impacts on revenues and cost of goods sold, additional adjustments were recorded to account for prepaid freight capacity balances in relevant periods and the impact of a goodwill impairment charge recorded during fiscal 2015 for goodwill held within our Grain Marketing reporting unit which was triggered by the lowering of earnings due to the restatement. Additional details related to the impact of the freight derivatives and related misstatements and their impact on each period are discussed in restatement reference (a).

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

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

CHS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	As of November 30, 2017									As of November 30, 2016
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	252,129		$	(2,362	)	$	249,767		$	515,484		$	1,162		$	516,646		b, c
Receivables	2,059,623			(1,401		)	2,058,222			3,052,989			(18,906		)	3,034,083			a, b, c
Inventories	3,046,101			65,862			3,111,963			3,117,935			25,616			3,143,551			c
Derivative assets	283,256			(116,699		)	166,557			419,103			(141,605		)	277,498			a, c
Margin and related deposits	206,955			—			206,955			312,899			—			312,899
Supplier advance payments	542,139			631			542,770			480,709			(3,802		)	476,907			b
Other current assets	289,250			(18,576		)	270,674			189,896			(2,372		)	187,524			a, c
Total current assets	6,679,453			(72,545		)	6,606,908			8,089,015			(139,907		)	7,949,108
Investments	3,777,000			—			3,777,000			3,828,899			—			3,828,899
Property, plant and equipment	5,266,408			—			5,266,408			5,443,079			—			5,443,079
Other assets	1,061,562			(64,160		)	997,402			1,069,468			(15,014		)	1,054,454			a
Total assets	$	16,784,423		$	(136,705	)	$	16,647,718		$	18,430,461		$	(154,921	)	$	18,275,540
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	2,480,264		$	—		$	2,480,264		$	3,227,564		$	—		$	3,227,564
Current portion of long-term debt	71,022			—			71,022			206,894			—			206,894
Customer margin deposits and credit balances	139,868			—			139,868			180,850			—			180,850
Customer advance payments	414,441			(922		)	413,519			544,266			(855		)	543,411			b, c
Accounts payable	2,380,998			63,652			2,444,650			2,568,533			5,473			2,574,006			a, b, c
Derivative liabilities	226,279			(18,853		)	207,426			317,505			(34,847		)	282,658			a, c
Accrued expenses	409,522			16,390			425,912			389,321			8,125			397,446			a, c
Dividends and equities payable	121,209			—			121,209			275,448			(35,591		)	239,857			b, c
Total current liabilities	6,243,603			60,267			6,303,870			7,710,381			(57,695		)	7,652,686
Long-term debt	1,936,744			—			1,936,744			1,958,907			—			1,958,907
Long-term deferred tax liabilities	350,841			(1,939		)	348,902			497,283			14,538			511,821			a, c
Other liabilities	315,460			(206		)	315,254			332,610			—			332,610
Commitments and contingencies (Note 15)
Equities:
Preferred stock	2,264,038			—			2,264,038			2,244,132			—			2,244,132
Equity certificates	4,319,840			—			4,319,840			4,208,336			(13,802		)	4,194,534			b
Accumulated other comprehensive loss	(178,445		)	1,104			(177,341		)	(226,220		)	1,285			(224,935		)	a
Capital reserves	1,520,218			(195,846		)	1,324,372			1,691,603			(99,169		)	1,592,434			a, b, c
Total CHS Inc. equities	7,925,651			(194,742		)	7,730,909			7,917,851			(111,686		)	7,806,165
Noncontrolling interests	12,124			(85		)	12,039			13,429			(78		)	13,351			a
Total equities	7,937,775			(194,827		)	7,742,948			7,931,280			(111,764		)	7,819,516
Total liabilities and equities	$	16,784,423		$	(136,705	)	$	16,647,718		$	18,430,461		$	(154,921	)	$	18,275,540

As of November 30, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $171.7 million reduction of total assets, a $38.6 million reduction of current liabilities, a $30.2 million increase of long-term liabilities and a $163.2 million reduction of total equities. The reduction of total assets related primarily to the elimination of $116.8 million of current derivative assets and a $49.2 million reduction of long-term derivative assets that had been recorded as assets on the Consolidated Balance Sheet as well as an approximate $16.0 million reduction of goodwill associated with a goodwill impairment charge recorded during fiscal 2015 The decreases of total assets were partially offset by related adjustments, including an $8.5 million increase of prepaid income taxes resulting from the income tax impact of the freight misstatement and the recognition of a $1.1 million prepaid freight capacity balance. The decrease of total current liabilities related primarily to a $16.5 million reduction of current derivative liabilities and a $22.2 million reduction of income taxes payable resulting from the income tax effect of the freight misstatement. The increase of long-term liabilities resulted from a $30.2 million increase of long-term deferred tax liabilities. The decrease of total equities related primarily to the elimination of the derivative assets and liabilities described above and the related income tax impacts, as well as the reduction of goodwill associated with the goodwill impairment charge recorded during fiscal 2015.

Intercompany misstatements

(b) The correction of intercompany misstatements resulted in a $3.4 million reduction of total assets and a $3.4 million reduction of current liabilities due to different practices of eliminating intercompany balances between CHS's businesses which existed in previous periods.

Other misstatements

(c) Adjustments for other misstatements related primarily to misclassifications between line items included within the Consolidated Balance Sheets, as well as the impact of income tax adjustments on income tax accounts, including prepaid income taxes, income taxes payable and deferred income taxes. The misclassification adjustments arose primarily due to the application of differing accounting policies between businesses and collectively with the income tax adjustments resulted in a $38.4 million increase of total assets, a $102.3 million increase of current liabilities, a $32.3 million decrease of long-term liabilities and a $31.6 million decrease of total equities.

The increase of total assets related primarily to a $67.5 million increase of inventories that resulted from a misclassification adjustment related to $67.5 million previously included as a contra-inventory balance moving to accounts payable. The increase related to inventories was partially offset by a $28.1 million decrease of other current assets that resulted from the reduction of prepaid income taxes associated with the correction of other misstatements identified during fiscal 2018 and other periods.

The increase of current liabilities related primarily to a $67.5 million increase of accounts payable that resulted from a misclassification adjustment for amounts previously included as a contra-inventory balance to accounts payable and a $38.6 million increase of accrued expenses. The increase of accrued expenses related to the recognition of a $24.9 million accrued income tax balance associated with the correction of other misstatements identified during fiscal 2018 and other periods, as well as the recognition of $13.7 million of accrued expense related to the use of a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018. Long-term liabilities decreased primarily as a result of a $32.1 million decrease of long-term deferred tax liabilities related to the correction of other misstatements identified during fiscal 2018 and other periods.

The $31.6 million decrease of total equities related primarily to the impacts associated with the $20.6 million net impact on income tax accounts and the recognition of an additional $13.7 million of accrued expense related to the use of a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018.

As of November 30, 2016

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $145.5 million reduction of total assets, a $47.0 million reduction of current liabilities, a $15.5 million increase of long-term liabilities and a $114.0 million reduction of total equities. The reduction of total assets related primarily to the elimination of $141.0 million of current derivative assets that had been incorrectly recorded as assets on the Consolidated Balance Sheet and an approximate $16.0 million reduction of goodwill associated with a goodwill impairment charge recorded during fiscal 2015. The decreases of total assets were partially offset by related adjustments, including a $4.0 million increase of receivables, a $5.7 million increase of prepaid income taxes resulting from the income tax impact of the freight misstatement and the recognition of a $0.9 million prepaid freight capacity balance. The decrease of total current liabilities related primarily to a $35.0 million reduction of current derivative liabilities and a $20.7 million reduction of income taxes payable resulting from the income tax effect of the freight misstatement. These decreases of current liabilities were partially offset by an $8.7 million increase of accounts payable. The increase of long-term liabilities resulted from a $15.5 million increase of long-term deferred tax liabilities. The decrease of total equities related primarily to the elimination of the derivative assets and liabilities described above and the related income tax impacts, as well as the reduction of goodwill associated with the goodwill impairment charge recorded during fiscal 2015.

Intercompany misstatements

(b) The correction of intercompany misstatements resulted in a $73.3 million reduction of total assets, an $85.4 million reduction of current liabilities and a $12.1 million increase of total equities due to different practices of eliminating intercompany balances between CHS's businesses which existed in previous periods.

Other misstatements

(c) Adjustments for other misstatements related primarily to misclassifications between line items included within the Consolidated Balance Sheets, as well as the impact of income tax adjustments on income tax accounts, including prepaid income taxes, income taxes payable and deferred income taxes. The misclassification adjustments arose primarily due to the application of differing accounting policies between businesses and collectively with the income tax adjustments resulted in a $63.9 million increase of total assets, a $74.6 million increase of current liabilities, a $0.9 million decrease of long-term liabilities and a $9.9 million decrease of total equities.

The increase of total assets related primarily to a misclassification adjustment for $73.8 million previously included as a contra-inventory balance moving to accounts payable. The increased inventories were partially offset by a $48.2 million reduction of inventory related to a misclassification adjustment for certain collateral moving from inventory to receivables.

The increase of total liabilities relates primarily to a misclassification adjustment for $73.8 million previously included as a contra-inventory balance moving to accounts payable.

The $9.9 million decrease of total equities relates primarily to the $28.8 million net impact on income tax accounts and the recognition of $8.1 million of accrued expense related to the use of a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018. The overall decrease in total equities was partially offset by an increase that arose from a $27.9 million timing difference for the accrual of dividends and equities payable.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	As of February 28, 2018									As of February 28, 2017
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	190,426		$	28,847		$	219,273		$	249,801		$	26,336		$	276,137		b, c
Receivables	1,765,640			70,850			1,836,490			2,697,699			69,451			2,767,150			a, b, c
Inventories	3,650,158			26,167			3,676,325			3,752,218			(21,536		)	3,730,682			c
Derivative assets	429,625			(178,577		)	251,048			386,613			(153,184		)	233,429			a, c
Margin and related deposits	188,167			—			188,167			290,291			—			290,291
Supplier advance payments	658,815			—			658,815			701,705			—			701,705			b
Other current assets	310,674			(13,692		)	296,982			200,288			(4,051		)	196,237			a, c
Total current assets	7,193,505			(66,405		)	7,127,100			8,278,615			(82,984		)	8,195,631
Investments	3,752,876			—			3,752,876			3,802,379			—			3,802,379
Property, plant and equipment	5,179,868			—			5,179,868			5,404,347			—			5,404,347
Other assets	958,613			(15,061		)	943,552			1,072,824			(15,951		)	1,056,873			a
Total assets	$	17,084,862		$	(81,466	)	$	17,003,396		$	18,558,165		$	(98,935	)	$	18,459,230
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	2,993,456		$	78,183		$	3,071,639		$	3,867,438		$	—		$	3,867,438		c
Current portion of long-term debt	46,290			—			46,290			205,136			—			205,136
Customer margin deposits and credit balances	106,323			—			106,323			149,625			—			149,625
Customer advance payments	727,535			29,107			756,642			871,370			26,094			897,464			b, c
Accounts payable	1,835,289			18,685			1,853,974			1,877,040			42,381			1,919,421			a, b, c
Derivative liabilities	372,406			(10,497		)	361,909			275,484			(42,977		)	232,507			a, c
Accrued expenses	459,867			5,165			465,032			378,318			13,740			392,058			a, c
Dividends and equities payable	128,700			—			128,700			131,380			—			131,380
Total current liabilities	6,669,866			120,643			6,790,509			7,755,791			39,238			7,795,029
Long-term debt	1,915,843			—			1,915,843			2,051,567			—			2,051,567
Long-term deferred tax liabilities	171,844			(6,185		)	165,659			516,681			14,841			531,522			c
Other liabilities	265,349			(321		)	265,028			272,532			—			272,532			c
Commitments and contingencies (Note 15)
Equities:
Preferred stock	2,264,038			—			2,264,038			2,244,114			—			2,244,114			b
Equity certificates	4,307,292			—			4,307,292			4,201,803			—			4,201,803			a
Accumulated other comprehensive loss	(168,225		)	995			(167,230		)	(211,442		)	351			(211,091		)	a
Capital reserves	1,646,837			(196,511		)	1,450,326			1,713,784			(153,286		)	1,560,498			a, c
Total CHS Inc. equities	8,049,942			(195,516		)	7,854,426			7,948,259			(152,935		)	7,795,324			a
Noncontrolling interests	12,018			(87		)	11,931			13,335			(79		)	13,256
Total equities	8,061,960			(195,603		)	7,866,357			7,961,594			(153,014		)	7,808,580
Total liabilities and equities	$	17,084,862		$	(81,466	)	$	17,003,396		$	18,558,165		$	(98,935	)	$	18,459,230

As of February 28, 2018

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $183.8 million reduction of total assets, a $26.8 million reduction of current liabilities, a $28.9 million increase of long-term liabilities and a $185.9 million reduction of total equities. The reduction of total assets related primarily to the elimination of $179.3 million of current derivative assets which had been incorrectly recorded as assets on the Consolidated Balance Sheet and an approximate $16.0 million impairment of goodwill which was triggered when earnings were lowered due to the restatement. The decrease of total assets was partially offset by a related adjustment to increase prepaid income taxes by $9.7 million as a result of the income tax impact of the freight misstatement. The decrease of total current liabilities related primarily to a $7.1 million reduction of current derivative liabilities and a $19.7 million reduction of income taxes payable resulting from the income tax effect of the freight misstatement. The increase of long-term liabilities was primarily attributable to the $28.9 million increase of long-term deferred tax liabilities. The decrease of total equities was related primarily to the elimination of derivative assets and liabilities from the Consolidated Balance Sheet as described above and the related income tax impacts, as well as the reduction of goodwill associated with the goodwill impairment charge recorded during fiscal 2015.

Intercompany misstatements

(b) The correction of intercompany misstatements resulted in a $5.6 million reduction of total assets and a $5.6 million reduction of current liabilities due to different practices of eliminating intercompany balances between CHS's businesses which existed in previous periods.

Other misstatements

(c) Adjustments for other misstatements related primarily to misclassifications between line items included within the Consolidated Balance Sheets, as well as the impact of income tax adjustments on income tax accounts, including prepaid income taxes, income taxes payable and deferred income taxes. These misclassification adjustments arose primarily due to the application of differing accounting policies between businesses and collectively with the income tax adjustments resulted in a $108.0 million increase of total assets, a $153.1 million increase of current liabilities, a $35.4 million decrease of long-term liabilities and a $9.7 million decrease of total equities.

The increase of total assets related primarily to a $28.8 million increase of cash that resulted from a timing difference for the application of in-transit cash and a $78.2 million increase of receivables and notes payable related to a participation arrangement that did not meet certain criteria for off-balance sheet treatment. As a result, both receivables and notes payable were increased by $78.2 million.

The increase of current liabilities related primarily to the $78.2 million increase of receivables and notes payable in a participation arrangement that did not meet certain criteria for off-balance sheet treatment, a $29.1 million increase of customer advance payments that resulted from a timing difference related to the application of in-transit cash and a$27.9 million increase of accounts payable that had previously been included as a contra-inventory balance. Long-term liabilities decreased primarily due to the recognition of long-term deferred tax liabilities of $35.1 million related to the correction of other misstatements identified during fiscal 2018 and other periods.

The $9.7 million decrease of total equities relates primarily to the $14.1 million net impact on income tax accounts, which was partially offset by a $4.5 million increase related to the valuation of crack spread derivatives.

As of February 28, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $160.3 million reduction of total assets, a $61.3 million reduction of current liabilities, a $15.8 million increase of long-term liabilities and a $114.7 million reduction of total equities. The reduction of total assets related primarily to the elimination of $153.0 million of current derivative assets that were incorrectly recorded as assets on the Consolidate Balance Sheet and an approximate $16.0 million impairment of goodwill recorded in fiscal 2015 associated with lower earnings as a result of the restatement. The overall decrease of total assets was partially offset by related adjustments, including a $6.4 million increase of prepaid income taxes resulting from the income tax impact of the freight misstatement and the recognition of a $0.6 million prepaid freight capacity balance. The decrease of total current liabilities related primarily to a $43.0 million reduction of current derivative liabilities and a $20.7 million reduction of income taxes payable resulting from the income tax effect of the freight misstatement, which were partially offset by the recognition of a $2.3 million accounts payable balance. The increase of long-term liabilities resulted from the $15.8 million increase of long-term deferred tax liabilities. The decrease of total equities related primarily to the elimination of the derivative assets and liabilities described above and the related income tax impacts, as well as the reduction of goodwill associated with the goodwill impairment charge recorded during fiscal 2015.

Intercompany misstatements

(b) The correction of intercompany misstatements resulted in a $4.9 million reduction of total assets and a $4.9 million reduction of current liabilities due to different practices of eliminating intercompany balances between CHS's businesses which existed in previous periods.

Other misstatements

(c) Adjustments for other misstatements related primarily to misclassifications between line items included within the Consolidated Balance Sheets, as well as the impact of income tax adjustments on income tax accounts, including prepaid income taxes, income taxes payable and deferred income taxes. These misclassification adjustments arose primarily due to the application of differing accounting policies between businesses and collectively with the income tax adjustments resulted in a $66.3 million increase of total assets, a $105.5 million increase of current liabilities, a $0.9 million decrease of long-term liabilities and a $38.3 million decrease of total equities.

The increase of total assets related primarily to a $24.8 million increase of cash that resulted from a timing difference for the application of in-transit cash and a $47.7 million increase of inventory with a corresponding increase to accounts payable as a result of a misclassification adjustment for certain items previously included as a contra-inventory balance moving to accounts payable. The increase of inventory was offset by a $48.2 million reduction of inventory that resulted from a misclassification adjustment for certain collateral being classified as receivables rather than inventory.

The increase of current liabilities related primarily to the $47.7 million increase of accounts payable as a result of a misclassification adjustment for certain items previously included as a contra-inventory balance moving to accounts payable, a $26.1 million increase of customer advance payments that resulted from a timing difference for the application in-transit cash and $34.4 million increase of accrued expenses. The increase of accrued expenses related to the recognition of a $20.7 million accrued income tax balance associated with the correction of other misstatements identified during fiscal 2017 and other periods and the recognition of $13.7 million of accrued expense related to the use of a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018.

The $38.3 million decrease of total equities related primarily to the impacts associated with the $24.4 million net impact on income tax accounts and the recognition of $13.7 million of accrued expense related to the use of a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)



	As of May 31, 2018									As of May 31, 2017
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
ASSETS
Current assets:
Cash and cash equivalents	$	533,887		$	—		$	533,887		$	267,229		$	(481	)	$	266,748		b, c
Receivables	2,198,211			50,002			2,248,213			2,722,325			45,642			2,767,967			a, b, c
Inventories	2,940,907			(27,400		)	2,913,507			2,684,087			4,862			2,688,949			c
Derivative assets	483,794			(233,789		)	250,005			388,188			(182,001		)	206,187			a, c
Margin and related deposits	253,141			—			253,141			251,695			—			251,695
Supplier advance payments	426,607			—			426,607			431,433			—			431,433			b
Other current assets	198,078			(7,398		)	190,680			255,236			10,233			265,469			a, c
Total current assets	7,034,625			(218,585		)	6,816,040			7,000,193			(121,745		)	6,878,448
Investments	3,787,163			—			3,787,163			3,841,749			—			3,841,749
Property, plant and equipment	5,140,106			—			5,140,106			5,409,151			(3,500		)	5,405,651
Other assets	973,885			(13,645		)	960,240			970,704			(15,172		)	955,532			a
Total assets	$	16,935,779		$	(232,230	)	$	16,703,549		$	17,221,797		$	(140,417	)	$	17,081,380
LIABILITIES AND EQUITIES
Current liabilities:
Notes payable	$	2,819,086		$	49,420		$	2,868,506		$	3,321,808		$	—		$	3,321,808
Current portion of long-term debt	53,056			—			53,056			193,096			—			193,096
Customer margin deposits and credit balances	137,999			—			137,999			132,479			—			132,479
Customer advance payments	372,616			(26		)	372,590			390,576			546			391,122			b, c
Accounts payable	1,904,819			(6,647		)	1,898,172			1,809,868			55,935			1,865,803			a, b, c
Derivative liabilities	344,973			(28,142		)	316,831			284,212			(50,257		)	233,955			a, c
Accrued expenses	538,249			—			538,249			422,371			13,740			436,111			a, c
Dividends and equities payable	209,718			—			209,718			134,718			—			134,718
Total current liabilities	6,380,516			14,605			6,395,121			6,689,128			19,964			6,709,092
Long-term debt	1,905,515			—			1,905,515			2,046,264			—			2,046,264
Long-term deferred tax liabilities	207,912			(4,704		)	203,208			350,966			18,204			369,170
Other liabilities	279,303			(434		)	278,869			276,483			—			276,483
Commitments and contingencies (Note 15)
Equities:
Preferred stock	2,264,038			—			2,264,038			2,264,063			—			2,264,063			b
Equity certificates	4,253,414			—			4,253,414			4,214,657			—			4,214,657			a
Accumulated other comprehensive loss	(169,726		)	2,424			(167,302		)	(209,700		)	1,132			(208,568		)	a, b, c
Capital reserves	1,803,078			(244,038		)	1,559,040			1,577,469			(179,635		)	1,397,834
Total CHS Inc. equities	8,150,804			(241,614		)	7,909,190			7,846,489			(178,503		)	7,667,986			a
Noncontrolling interests	11,729			(83		)	11,646			12,467			(82		)	12,385
Total equities	8,162,533			(241,697		)	7,920,836			7,858,956			(178,585		)	7,680,371
Total liabilities and equities	$	16,935,779		$	(232,230	)	$	16,703,549		$	17,221,797		$	(140,417	)	$	17,081,380

As of May 31, 2018

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $229.3 million reduction of total assets, a $50.5 million reduction of current liabilities, a $30.4 million increase of long-term liabilities and a $209.2 million reduction of total equities. The reduction of total assets related primarily to the elimination of $233.9 million of current derivative assets that had been recorded as assets on the Consolidated Balance Sheet and an approximate $16.0 million reduction of goodwill associated with a goodwill impairment charge recorded during fiscal 2015. The decreases of total assets were partially offset by related adjustments, including an $11.1 million increase of prepaid income taxes resulting from the income tax impact of the freight misstatement and the recognition of a $7.5 million prepaid freight capacity balance. The decrease of total current liabilities related primarily to a $25.6 million reduction of current derivative liabilities and a $24.9 million reduction of income taxes payable resulting from the income tax effect of the freight misstatement. The increase of long-term liabilities resulted from a $30.4 million increase of long-term deferred tax liabilities. The decrease of total equities related primarily to the elimination of the derivative assets and liabilities described above and the related income tax impacts, as well as the reduction of goodwill associated with the goodwill impairment charge recorded during fiscal 2015.

Intercompany misstatements

(b) The correction of intercompany misstatements resulted in a $6.9 million reduction of total assets and a $6.9 million reduction of current liabilities due to different practices of eliminating intercompany balances between CHS's businesses which existed in previous periods.

Other misstatements

(c) Adjustments for other misstatements related primarily to misclassifications between line items included within the Consolidated Balance Sheets, as well as the impact of income tax adjustments on income tax accounts, including prepaid income taxes, income taxes payable and deferred income taxes. These misclassification adjustments arose primarily due to the application of differing accounting policies between businesses and collectively with the income tax adjustments resulted in a $3.9 million increase of total assets, a $72.0 million increase of current liabilities, a $35.5 million decrease of long-term liabilities and a $32.5 million decrease of total equities.

The increase of total assets related primarily to a $49.4 million increase of receivables and notes payable for a participation arrangement that did not meet certain criteria for off-balance sheet treatment. The increase of receivables was mostly offset by an $18.8 million decrease of inventories that resulted from the overstatement of inventories following the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018 and a $24.5 million reduction of prepaid income taxes as a result of the income tax effects associated with the correction of other misstatements identified during fiscal 2018 and other periods.

The increase of current liabilities resulted primarily from the $49.4 million increase of notes payable associated with the participation agreement described above, as well as the recognition of a $24.9 million accrued income tax balance due to the income tax effects of the other misstatements. The decrease of long-term liabilities related primarily to a $35.1 million decrease of long-term deferred tax liabilities related to the correction of other misstatements identified during fiscal 2018 and other periods.

The decrease of total equities related primarily to the $14.1 million net impact on income tax accounts and the $18.8 million timing difference adjustment associated with the implementation of a new enterprise resource planning software during the third quarter of fiscal 2018.

As of May 31, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $181.6 million reduction of total assets, a $64.0 million reduction of current liabilities, a $19.1 million increase of long-term liabilities and a $136.8 million reduction of total equities. The reduction of total assets related primarily to the elimination of $181.8 million of current derivative assets that had been recorded as assets on the Consolidated Balance Sheet and an approximate $16.0 million reduction of goodwill associated with a goodwill impairment charge recorded during fiscal 2015. The decreases of total assets were partially offset by related adjustments, including a $12.9 million increase of prepaid income taxes resulting from the income tax impact of the freight misstatement, the recognition of a $2.0 million prepaid freight capacity balance and the recognition of a $0.5 million receivable. The decrease of total current liabilities related primarily to a $50.3 million reduction of current derivative liabilities and a $20.7 million reduction of income taxes payable resulting from the income tax effect of the freight misstatement, which were partially offset by the recognition of a $7.0 million accounts payable balance. The increase of long-term liabilities resulted from a $19.1 million increase of long-term deferred tax liabilities. The decrease of total equities related primarily to the elimination of the derivative assets and liabilities described above and the related income tax impacts, as well as the reduction of goodwill associated with the goodwill impairment charge recorded during fiscal 2015.

Intercompany misstatements

(b) None

Other misstatements

(c) Adjustments for other misstatements related primarily to misclassifications between line items included within the Consolidated Balance Sheets, as well as the impact of income tax adjustments on income tax accounts, including prepaid income taxes, income taxes payable and deferred income taxes. These misclassification adjustments arose primarily due to the application of differing accounting policies between businesses and collectively with the income tax adjustments resulted in a $41.2 million increase of total assets, an $83.9 million increase of current liabilities, a $0.9 million decrease of long-term liabilities and a $41.8 million decrease of total equities.

The most significant driver of the $41.2 million increase of total assets related to a $53.1 million misclassification adjustment for certain items previously included as a contra-inventory balance moving to accounts payable. The overall increase of inventories was mostly offset by a $48.2 million reduction of inventory that resulted from a misclassification adjustment for certain collateral being classified as receivables rather than inventory; however, this misstatement did not impact total assets.

The increase of current liabilities related primarily to the $53.1 million increase of accounts payable associated with a misclassification adjustment for a contra-inventory balance moving to accounts payable, as well as the impact of the income tax adjustments on accrued income taxes, which increased by $20.7 million.

The $41.8 million decrease of total equities related primarily to the $24.4 million net impact on income tax accounts, the recognition of $13.7 million of accrued expense related to the use of a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018 and a $3.5 million increase of reserve and impairment charges related to a fixed asset impairment charge that should have been recorded during the third quarter of fiscal 2017 rather than the fourth quarter of fiscal 2017.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended November 30, 2017
	As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Revenues	$	8,048,889		$	(17,005	)	$	8,031,884		a, b, c
Cost of goods sold	7,735,627			(24,570		)	7,711,057			a, b, c
Gross profit	313,262			7,565			320,827
Marketing, general and administrative	140,168			(668		)	139,500			c
Reserve and impairment charges (recoveries), net	(3,787		)	—			(3,787		)
Operating earnings (loss)	176,881			8,233			185,114
Interest expense	40,702			—			40,702
Other (income) loss	(25,014		)	—			(25,014		)
Equity (income) loss from investments	(38,362		)	—			(38,362		)
Income (loss) before income taxes	199,555			8,233			207,788
Income tax expense (benefit)	19,936			670			20,606			a
Net income (loss)	179,619			7,563			187,182
Net income (loss) attributable to noncontrolling interests	(464		)	—			(464		)
Net income (loss) attributable to CHS Inc.	$	180,083		$	7,563		$	187,646

For the three months ended November 30, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $0.5 million reduction of income before income taxes and a $1.2 million reduction of net income. These adjustments related to a $0.5 million increase of cost of goods sold and a $0.7 million increase of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in an $11.4 million decrease of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in an $8.8 million increase of income before income taxes and net income. The $8.8 million increase of income before income taxes relates primarily to a $6.2 million decrease of cost of goods sold related to the valuation of crack spread derivatives and a $2.6 million decrease in costs related to postretirement benefit plan activity that resulted from a timing difference associated with recording certain benefit plan expenses (included in cost of goods sold and marketing, general and administrative expenses).

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended February 28, 2018									For the Six Months Ended February 28, 2018
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Revenues	$	6,851,093		$	129,060		$	6,980,153		$	14,899,982		$	112,055		$	15,012,037		a, b, c
Cost of goods sold	6,708,610			136,239			6,844,849			14,444,237			111,669			14,555,906			a, b, c
Gross profit	142,483			(7,179		)	135,304			455,745			386			456,131
Marketing, general and administrative	186,716			(3		)	186,713			326,881			(668		)	326,213			c
Reserve and impairment charges (recoveries), net	(11,349		)	3			(11,346		)	(15,133		)	—			(15,133		)	c
Operating earnings (loss)	(32,884		)	(7,179		)	(40,063		)	143,997			1,054			145,051
(Gain) loss on disposal of business	(7,705		)	—			(7,705		)	(7,705		)	—			(7,705		)
Interest expense	40,176			—			40,176			80,878			—			80,878
Other (income) loss	(11,364		)	—			(11,364		)	(36,378		)	—			(36,378		)
Equity (income) loss from investments	(39,441		)	—			(39,441		)	(77,803		)	—			(77,803		)
Income (loss) before income taxes	(14,550		)	(7,179		)	(21,729		)	185,005			1,054			186,059
Income tax expense (benefit)	(181,176		)	(6,512		)	(187,688		)	(161,240		)	(5,842		)	(167,082		)	a, c
Net income (loss)	166,626			(667		)	165,959			346,245			6,896			353,141
Net income (loss) attributable to noncontrolling interests	(48		)	—			(48		)	(512		)	—			(512		)
Net income (loss) attributable to CHS Inc.	$	166,674		$	(667	)	$	166,007		$	346,757		$	6,896		$	353,653

For the three months ended February 28, 2018

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $22.5 million reduction of income before income taxes and a $22.6 million reduction of net income. These adjustments related to a $22.5 million increase of cost of goods sold and a $0.1 million increase of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $161.5 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in a $15.3 million increase of income before income taxes and a $21.9 million increase of net income. The $15.3 million increase of income before income taxes relates primarily to a $13.7 million decrease of cost of goods sold arising from the use of a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018. The remaining increase relates to a $1.6 million decrease of cost of goods sold as a result of the valuation of crack spread derivatives. In addition to the increase of income before income taxes, an income tax benefit of $6.6 million was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

For the six months ended February 28, 2018

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $23.0 million reduction of income before income taxes and a $23.8 million reduction of net income. These adjustments related to a $23.0 million increase of cost of goods sold and a $0.8 million increase of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $150.2 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in an $24.1 million increase of income before income taxes and a $30.7 million increase of net income. The $24.1 million increase of income before income taxes relates primarily to a $13.7 million decrease of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018. The remaining increase relates to a $7.9 million decrease of cost of goods sold related to the valuation of crack spread derivatives and a $2.6 million increase to expense related to postretirement benefit plan activity that resulted from a timing difference associated with the recording of certain benefit plan expenses (included in cost of goods sold and marketing, general and administrative expenses). In addition to the increase of income before income taxes, an income tax benefit of $6.6 million was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended May 31, 2018									For the Nine Months Ended May 31, 2018
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Revenues	$	9,027,525		$	59,803		$	9,087,328		$	23,927,508		$	171,857		$	24,099,365		a, b, c
Cost of goods sold	8,728,914			112,447			8,841,361			23,173,151			224,116			23,397,267			a, b, c
Gross profit	298,611			(52,644		)	245,967			754,357			(52,259		)	702,098
Marketing, general and administrative	161,578			1			161,579			488,459			(667		)	487,792			c
Reserve and impairment charges (recoveries), net	(3,811		)	—			(3,811		)	(18,944		)	—			(18,944		)
Operating earnings (loss)	140,844			(52,645		)	88,199			284,842			(51,592		)	233,250
(Gain) loss on disposal of business	(124,050		)	—			(124,050		)	(131,755		)	—			(131,755		)
Interest expense	49,340			—			49,340			130,218			—			130,218
Other (income) loss	(14,622		)	—			(14,622		)	(51,000		)	—			(51,000		)
Equity (income) loss from investments	(59,308		)	—			(59,308		)	(137,111		)	—			(137,111		)
Income (loss) before income taxes	289,484			(52,645		)	236,839			474,490			(51,592		)	422,898
Income tax expense (benefit)	60,338			(5,119		)	55,219			(100,901		)	(10,962		)	(111,863		)	a, c
Net income (loss)	229,146			(47,526		)	181,620			575,391			(40,630		)	534,761
Net income (loss) attributable to noncontrolling interests	(187		)	—			(187		)	(699		)	—			(699		)
Net income (loss) attributable to CHS Inc.	$	229,333		$	(47,526	)	$	181,807		$	576,090		$	(40,630	)	$	535,460

For the three months ended May 31, 2018

Freight derivatives and related misstatements

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

Intercompany misstatements

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

Other misstatements

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

For the nine months ended May 31, 2018

Freight derivatives and related misstatements

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

Intercompany misstatements

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

Other misstatements

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

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended November 30, 2016
	As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Revenues	$	8,048,250		$	(46,346	)	$	8,001,904		a, b, c
Cost of goods sold	7,695,553			(40,029		)	7,655,524			a, b, c
Gross profit	352,697			(6,317		)	346,380
Marketing, general and administrative	147,849			3,409			151,258			c
Reserve and impairment charges (recoveries), net	18,357			—			18,357
Operating earnings (loss)	186,491			(9,726		)	176,765
(Gain) loss on disposal of business	—			4,105			4,105			c
Interest expense	38,265			—			38,265
Other (income) loss	(37,000		)	(7,509		)	(44,509		)	c
Equity (income) loss from investments	(40,328		)	—			(40,328		)
Income (loss) before income taxes	225,554			(6,322		)	219,232
Income tax expense (benefit)	16,612			(536		)	16,076			a
Net income (loss)	208,942			(5,786		)	203,156
Net income (loss) attributable to noncontrolling interests	(208		)	—			(208		)
Net income (loss) attributable to CHS Inc.	$	209,150		$	(5,786	)	$	203,364

For the three months ended November 30, 2016

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $0.1 million increase of income before income taxes and a $0.6 million increase of net income. These adjustments were primarily related to a $1.9 million increase of cost of goods sold, a $1.9 million increase of revenues related to the timing of revenue recognition, and a $0.6 million decrease of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $77.3 million decrease of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in a $6.4 million decrease of income before income taxes and net income. The $6.4 million decrease of income before income taxes and net income relates primarily to an increase of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $29.1 million increase of revenues, a $29.1 million increase of cost of goods sold, a $3.4 million increase of marketing, general and administrative expenses, a $4.1 million increase of loss on disposal of business and a $7.5 million increase of other income.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended February 28, 2017									For the Six Months Ended February 28, 2017
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Revenues	$	7,320,406		$	80,367		$	7,400,773		$	15,368,656		$	34,021		$	15,402,677		a, b, c
Cost of goods sold	7,079,664			85,601			7,165,265			14,775,217			45,572			14,820,789			a, b, c
Gross profit	240,742			(5,234		)	235,508			593,439			(11,551		)	581,888
Marketing, general and administrative	157,862			2,304			160,166			305,711			5,713			311,424			c
Reserve and impairment charges (recoveries), net	72,373			—			72,373			90,730			—			90,730
Operating earnings (loss)	10,507			(7,538		)	2,969			196,998			(17,264		)	179,734
(Gain) loss on disposal of business	—			(1,395		)	(1,395		)	—			2,710			2,710			c
Interest expense	39,945			—			39,945			78,210			—			78,210
Other (income) loss	(17,235		)	(848		)	(18,083		)	(54,235		)	(8,357		)	(62,592		)	c
Equity (income) loss from investments	(35,800		)	—			(35,800		)	(76,128		)	—			(76,128		)
Income (loss) before income taxes	23,597			(5,295		)	18,302			249,151			(11,617		)	237,534
Income tax expense (benefit)	8,624			(4,939		)	3,685			25,236			(5,475		)	19,761			a, c
Net income (loss)	14,973			(356		)	14,617			223,915			(6,142		)	217,773
Net income (loss) attributable to noncontrolling interests	406			—			406			198			—			198
Net income (loss) attributable to CHS Inc.	$	14,567		$	(356	)	$	14,211		$	223,717		$	(6,142	)	$	217,575

For the three months ended February 28, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $0.3 million reduction of income before income taxes and a $0.2 million increase of net income. These adjustments related to a $1.1 million reduction of revenues and a $0.9 million decrease of cost of goods sold, and a $0.5 million decrease of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $58.9 million increase of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in a $5.0 million decrease of income before income taxes and a $0.6 million decrease of net income. The $5.0 million decrease of income before income taxes relates primarily to a $5.6 million increase of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018. The overall decrease of income before income taxes was partially offset by a $0.6 million decrease of cost of goods sold related to the valuation of crack spread derivatives. The decrease of income before income taxes was mostly offset by an income tax benefit of $4.5 million that was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $22.6 million increase of revenues, a $22.5 million increase of cost of goods sold, a $2.3 million increase of marketing, general and administrative expenses, a $1.4 million increase of gain on disposal of business, and a $0.8 million increase of other income.

For the six months ended February 28, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $0.2 million reduction of income before income taxes and a $0.8 million increase of net income. These adjustments related to a $0.7 million increase of revenues and a $1.0 million increase of cost of goods and a $1.0 million decrease of income tax expense related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $18.4 million decrease of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in an $11.4 million decrease of income before income taxes and a $6.9 million decrease of net income. The $11.4 million decrease of income before income taxes relates primarily to a $12.1 million increase of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018. The overall decrease of income before income taxes was partially offset by a $0.7 million decrease of cost of goods sold related to the valuation of crack spread derivatives. The decrease of income before income taxes was partially offset by an income tax benefit of $4.5 million that was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $51.7 million increase of revenues, a $51.6 million increase of cost of goods sold, a $5.7 million increase of marketing, general and administrative expenses, a $2.7 million increase of loss on disposal of business, and an $8.4 million increase of other income.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended May 31, 2017									For the Nine Months Ended May 31, 2017
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Revenues	$	8,614,090		$	24,320		$	8,638,410		$	23,982,746		$	58,341		$	24,041,087		a, b, c
Cost of goods sold	8,366,988			50,276			8,417,264			23,142,205			95,848			23,238,053			a, b, c
Gross profit	247,102			(25,956		)	221,146			840,541			(37,507		)	803,034
Marketing, general and administrative	153,498			1,849			155,347			459,831			6,940			466,771			c
Reserve and impairment charges (recoveries), net	323,901			2,878			326,779			414,009			3,500			417,509			c
Operating earnings (loss)	(230,297		)	(30,683		)	(260,980		)	(33,299		)	(47,947		)	(81,246		)
(Gain) loss on disposal of business	—			(1,224		)	(1,224		)	—			1,486			1,486			c
Interest expense	39,201			—			39,201			117,411			—			117,411
Other (income) loss	(11,947		)	(5		)	(11,952		)	(66,183		)	(8,361		)	(74,544		)	c
Equity (income) loss from investments	(48,393		)	—			(48,393		)	(124,521		)	—			(124,521		)
Income (loss) before income taxes	(209,158		)	(29,454		)	(238,612		)	39,994			(41,072		)	(1,078		)
Income tax expense (benefit)	(163,018		)	(3,106		)	(166,124		)	(137,781		)	(8,582		)	(146,363		)	a, c
Net income (loss)	(46,140		)	(26,348		)	(72,488		)	177,775			(32,490		)	145,285
Net income (loss) attributable to noncontrolling interests	(955		)	—			(955		)	(757		)	—			(757		)
Net income (loss) attributable to CHS Inc.	$	(45,185	)	$	(26,348	)	$	(71,533	)	$	178,532		$	(32,490	)	$	146,042

For the three months ended May 31, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $25.9 million reduction of income before income taxes and a $22.8 million reduction of net income. These adjustments related to a $3.7 million decrease of revenues and a $22.2 million increase of cost of goods sold and a $3.1 million increase of income tax benefit related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $9.6 million decrease of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in a $3.6 million decrease of income before income taxes and net income. The $3.6 million decrease of income before income taxes and net income relates primarily to a $3.5 million increase of reserve and impairment charges related to a timing difference for a fixed asset impairment charge that should have been recorded during the third quarter of fiscal 2017 rather than the fourth quarter of fiscal 2017.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $37.6 million increase of revenues, a $37.6 million increase of cost of goods sold, a $1.8 million increase of marketing, general and administrative expenses, a $0.6 million decrease of reserve and impairment charges and a $1.2 million increase of gain on disposal of business.

For the nine months ended May 31, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $26.2 million reduction of income before income taxes and a $22.1 million reduction of net income. These adjustments related to a $2.9 million reduction of revenues and a $23.2 million increase of cost of goods sold, as well as a $4.1 million increase of income tax benefit related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $28.0 million decrease of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in a $14.9 million decrease of income before income taxes and a $10.4 million decrease of net income. The $14.9 million decrease of income before income taxes relates primarily to a $12.1 million increase of cost of goods sold that arose from a unit of measure assumption in the calculation of an excise tax credit that was changed during fiscal 2018 and a $3.5 million increase of reserve and impairment charges related to a fixed asset impairment charge that should have been recorded during the third quarter of fiscal 2017 rather than the fourth quarter of fiscal 2017. The overall decrease of income before income taxes was partially offset by a $0.7 million decrease of cost of goods sold related to the valuation of crack spread derivatives. The decrease of income before income taxes was partially offset by an income tax benefit of $4.5 million that was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in an $89.2 million increase of revenues, a $89.2 million increase of cost of goods sold, a $6.9 million increase of marketing, general and administrative expenses, a $1.5 million increase of loss on sale of business and an $8.4 million increase of other income.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)



	For the Three Months Ended August 31, 2017
	As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Revenues	$	7,952,005		$	44,334		$	7,996,339		a, b, c
Cost of goods sold	7,843,305			61,408			7,904,713			a, b, c
Gross profit	108,700			(17,074		)	91,626
Marketing, general and administrative	144,528			708			145,236			c
Reserve and impairment charges (recoveries), net	42,670			(3,500		)	39,170			c
Operating earnings (loss)	(78,498		)	(14,282		)	(92,780		)
(Gain) loss on disposal of business	—			704			704			c
Interest expense	53,828			—			53,828
Other (income) loss	(24,664		)	(743		)	(25,407		)	c
Equity (income) loss from investments	(12,817		)	—			(12,817		)
Income (loss) before income taxes	(94,845		)	(14,243		)	(109,088		)
Income tax expense (benefit)	(44,293		)	9,532			(34,761		)	a, c
Net income (loss)	(50,552		)	(23,775		)	(74,327		)
Net income (loss) attributable to noncontrolling interests	123			—			123
Net income (loss) attributable to CHS Inc.	$	(50,675	)	$	(23,775	)	$	(74,450	)

For the three months ended August 31, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $12.0 million reduction of income before income taxes and a $25.2 million reduction of net income. These adjustments related to a $2.9 million increase of revenues, and a $14.9 million increase of cost of goods sold and a $13.3 million decrease of income tax benefit related to the tax effect of the freight derivatives and related misstatements.

Intercompany misstatements

(b) The correction of intercompany misstatements had no impact on income (loss) before income taxes or net income (loss); however, the correction resulted in a $7.7 million decrease of both revenues and cost of goods sold due to different practices of eliminating intercompany sales between CHS's businesses which existed in previous periods.

Other misstatements

(c) The correction of other misstatements resulted in a $2.3 million decrease of income before income taxes and a $1.4 million increase of net income. The $2.3 million decrease of income before income taxes related primarily to a $3.2 million increase of cost of goods sold related to the valuation of crack spread derivatives and a $2.6 million increase of cost of goods sold and marketing, general and administrative expenses related to a timing difference associated with the recording of certain benefit plan expenses. These decreases of income before income taxes were partially offset by a $3.5 million decrease of reserve and impairment charges related to a timing difference for recording a fixed asset impairment charge. The decrease of net income was partially offset by an income tax benefit of $3.7 million that was recorded to adjust for the impact of other identified misstatements, as well as income tax items that had previously been identified and recorded as out of period adjustments in subsequent periods.

Additionally, certain misclassification and offsetting adjustments were made between line items included in the Consolidated Statements of Operations primarily due to the application of differing accounting policies between businesses. These misclassification adjustments resulted in a $49.1 million increase of revenues, a $49.1 million increase of cost of goods sold, a $0.7 million increase of loss on disposal of business and a $0.7 million increase of other income.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended November 30, 2017
	As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Net income (loss)	$	179,619		$	7,563		$	187,182		a, c
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity, net of tax expense (benefit) of $2,620	4,196			(2,602		)	1,594			c
Unrealized net gain (loss) on available for sale investments net of tax expense (benefit) of $404	3,640			—			3,640
Cash flow hedges net of tax expense (benefit) of $(2)	(4		)	—			(4		)
Foreign currency translation adjustment net of tax expense (benefit) of $(443)	(2,607		)	396			(2,211		)	a
Other comprehensive income (loss), net of tax	5,225			(2,206		)	3,019
Comprehensive income	184,844			5,357			190,201
Less comprehensive income attributable to noncontrolling interests	(464		)	—			(464		)
Comprehensive income attributable to CHS Inc.	$	185,308		$	5,357		$	190,665

For the three months ended November 30, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $1.2 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2017, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in an $8.8 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2017, above. The adjustment related to postretirement benefit plan activity is attributable to a timing difference associated with recording certain benefit plan expenses.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended February 28, 2018									For the Six Months Ended February 28, 2018
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Net income (loss)	$	166,626		$	(667	)	$	165,959		$	346,245		$	6,896		$	353,141		a, c
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity net of tax expense (benefit) of $1,309 and $3,929	3,141			1			3,142			7,338			(2,602		)	4,736			c
Unrealized net gain (loss) on available for sale investments net of tax expense (benefit) of $1,481 and $1,885	3,554			—			3,554			7,194			—			7,194
Cash flow hedges net of tax expense (benefit) of $443 and $441	1,063			—			1,063			1,059			—			1,059
Foreign currency translation adjustment net of tax expense (benefit) of $422 and $(21)	2,461			(109		)	2,352			(146		)	287			141			a
Other comprehensive income (loss), net of tax	10,219			(108		)	10,111			15,445			(2,315		)	13,130
Comprehensive income	176,845			(775		)	176,070			361,690			4,581			366,271
Less comprehensive income attributable to noncontrolling interests	(48		)	—			(48		)	(512		)	—			(512		)
Comprehensive income attributable to CHS Inc.	$	176,893		$	(775	)	$	176,118		$	362,202		$	4,581		$	366,783

For the three months ended February 28, 2018

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $22.6 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended February 28, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $21.9 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended February 28, 2018, above.

For the six months ended February 28, 2018

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $23.8 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the six months ended February 28, 2018, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $30.7 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the six months ended February 28, 2018, above. The adjustment related to postretirement benefit plan activity is attributable to a timing difference associated with recording certain benefit plan expenses.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended May 31, 2018									For the Nine Months Ended May 31, 2018
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Net income (loss)	$	229,146		$	(47,526	)	$	181,620		$	575,391		$	(40,630	)	$	534,761		a, c
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity net of tax expense (benefit) of $1,424 and $5,353	3,417			—			3,417			10,755			(2,602		)	8,153			c
Unrealized net gain (loss) on available for sale investments net of tax expense (benefit) of $2,620 and $4,505	6,286			—			6,286			13,480			—			13,480
Cash flow hedges net of tax expense (benefit) of $172 and $613	413			—			413			1,472			—			1,472
Foreign currency translation adjustment net of tax expense (benefit) of $(254) and $(275)	(11,617		)	1,429			(10,188		)	(11,763		)	1,716			(10,047		)	a
Other comprehensive income (loss), net of tax	(1,501		)	1,429			(72		)	13,944			(886		)	13,058
Comprehensive income	227,645			(46,097		)	181,548			589,335			(41,516		)	547,819
Less comprehensive income attributable to noncontrolling interests	(187		)	—			(187		)	(699		)	—			(699		)
Comprehensive income attributable to CHS Inc.	$	227,832		$	(46,097	)	$	181,735		$	590,034		$	(41,516	)	$	548,518

For the three months ended May 31, 2018

Freight derivatives and related misstatements

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

Intercompany misstatements

(b) None.

Other misstatements

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

For the nine months ended May 31, 2018

Freight derivatives and related misstatements

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

Intercompany misstatements

(b) None.

Other misstatements

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

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended November 30, 2016
	As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Net income (loss)	$	208,942		$	(5,786	)	$	203,156		a, c
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity net of tax expense (benefit) of $2,011	3,239			—			3,239
Unrealized net gain (loss) on available for sale investments net of tax expense (benefit) of $482	777			—			777
Cash flow hedges net of tax expense (benefit) of $406	654			—			654
Foreign currency translation adjustment net of tax expense (benefit) of $(209)	(19,164		)	1,089			(18,075		)	a
Other comprehensive income (loss), net of tax	(14,494		)	1,089			(13,405		)
Comprehensive income	194,448			(4,697		)	189,751
Less comprehensive income attributable to noncontrolling interests	(208		)	—			(208		)
Comprehensive income attributable to CHS Inc.	$	194,656		$	(4,697	)	$	189,959

For the three months ended November 30, 2016

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $0.6 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2016, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $6.4 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended November 30, 2016, above.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended February 28, 2017							For the Six Months Ended February 28, 2017
	As Previously Reported		Restatement Adjustments			As Restated		As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Net income (loss)	$	14,973	$	(356	)	$	14,617	$	223,915		$	(6,142	)	$	217,773		a, c
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity net of tax expense (benefit) of $2,312 and $4,323	3,724		—			3,724		6,963			—			6,963
Unrealized net gain (loss) on available for sale investments net of tax expense (benefit) of $600 and $1,083	968		—			968		1,744			1			1,745			c
Cash flow hedges net of tax expense (benefit) of $598 and $1,005	963		1			964		1,618			—			1,618			c
Foreign currency translation adjustment net of tax expense (benefit) of $(204) and $5	9,123		(936		)	8,187		(10,041		)	153			(9,888		)	a
Other comprehensive income (loss), net of tax	14,778		(935		)	13,843		284			154			438
Comprehensive income	29,751		(1,291		)	28,460		224,199			(5,988		)	218,211
Less comprehensive income attributable to noncontrolling interests	406		—			406		198			—			198
Comprehensive income attributable to CHS Inc.	$	29,345	$	(1,291	)	$	28,054	$	224,001		$	(5,988	)	$	218,013

For the three months ended February 28, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $0.2 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended February 28, 2017, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $0.6 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended February 28, 2017, above.

For the six months ended February 28, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $0.8 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the six months ended February 28, 2017, above. The adjustment related to foreign currency translation relates to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $6.9 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the six months ended February 28, 2017, above.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended May 31, 2017									For the Nine Months Ended May 31, 2017
	As Previously Reported			Restatement Adjustments			As Restated			As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Net income (loss)	$	(46,140	)	$	(26,348	)	$	(72,488	)	$	177,775		$	(32,490	)	$	145,285		a, c
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity net of tax expense (benefit) of $2,257 and $6,580	3,635			1			3,636			10,599			—			10,599			c
Unrealized net gain (loss) on available for sale investments net of tax expense (benefit) of $(72) and $1,010	(117		)	(1		)	(118		)	1,627			—			1,627			c
Cash flow hedges net of tax expense (benefit) of $233 and $1,238	375			—			375			1,993			—			1,993
Foreign currency translation adjustment net of tax expense (benefit) of $(334) and $(329)	(2,151		)	782			(1,369		)	(12,193		)	936			(11,257		)	a
Other comprehensive income (loss), net of tax	1,742			782			2,524			2,026			936			2,962
Comprehensive income	(44,398		)	(25,566		)	(69,964		)	179,801			(31,554		)	148,247
Less comprehensive income attributable to noncontrolling interests	(955		)	—			(955		)	(757		)	—			(757		)
Comprehensive income attributable to CHS Inc.	$	(43,443	)	$	(25,566	)	$	(69,009	)	$	180,558		$	(31,554	)	$	149,004

For the three months ended May 31, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $22.8 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended May 31, 2017, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $3.6 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended May 31, 2017, above.

For the nine months ended May 31, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $22.1 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the nine months ended May 31, 2017, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $10.4 million decrease of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the nine months ended May 31, 2017, above.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



	For the Three Months Ended August 31, 2017
	As Previously Reported			Restatement Adjustments			As Restated			Restatement References
	(Dollars in thousands)
Net income (loss)	$	(50,552	)	$	(23,775	)	$	(74,327	)	a, c
Other comprehensive income (loss), net of tax:
Postretirement benefit plan activity net of tax expense (benefit) of $12,108	19,501			2,602			22,103			c
Unrealized net gain (loss) on available for sale investments net of tax expense (benefit) of $1,722	2,758			—			2,758
Cash flow hedges net of tax expense (benefit) of $155	249			—			249
Foreign currency translation adjustment net of tax expense (benefit) of $542	3,522			(424		)	3,098			a
Other comprehensive income (loss), net of tax	26,030			2,178			28,208
Comprehensive income	(24,522		)	(21,597		)	(46,119		)
Less comprehensive income attributable to noncontrolling interests	123			—			123
Comprehensive income attributable to CHS Inc.	$	(24,645	)	$	(21,597	)	$	(46,242	)

For the three months ended August 31, 2017

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $25.2 million reduction of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended August 31, 2017, above. The adjustment related to foreign currency translation is attributable to the foreign currency impact associated with goodwill that was impaired during fiscal 2015.

Intercompany misstatements

(b) None.

Other misstatements

(c) The correction of other misstatements resulted in a $1.4 million increase of net income. Refer to descriptions of the adjustments and their impact on net income (loss) in the Consolidated Statement of Operations section for the three months ended August 31, 2017, above. The adjustment related to postretirement benefit plan activity relates to a timing difference associated with recording certain benefit plan expenses.