

	For the Three Months Ended November 30, 2017
	As Previously Reported			Restatement Adjustments			As Restated			Accounting Changes*			As Presented			Restatement References
	(Dollars in thousands)
Revenues	$	8,048,889		$	(17,005	)	$	8,031,884		$	—		$	8,031,884		a, b, c
Cost of goods sold	7,735,627			(24,570		)	7,711,057			335			7,711,392			a, b, c
Gross profit	313,262			7,565			320,827			(335		)	320,492
Marketing, general and administrative	140,168			(668		)	139,500			846			140,346			c
Reserve and impairment charges (recoveries), net	(3,787		)	—			(3,787		)	—			(3,787		)
Operating earnings (loss)	176,881			8,233			185,114			(1,181		)	183,933
Interest expense	40,702			—			40,702			—			40,702
Other (income) loss	(25,014		)	—			(25,014		)	(1,181		)	(26,195		)
Equity (income) loss from investments	(38,362		)	—			(38,362		)	—			(38,362		)
Income (loss) before income taxes	199,555			8,233			207,788			—			207,788
Income tax expense (benefit)	19,936			670			20,606			—			20,606			a
Net income (loss)	179,619			7,563			187,182			—			187,182
Net income (loss) attributable to noncontrolling interests	(464		)	—			(464		)	—			(464		)
Net income (loss) attributable to CHS Inc.	$	180,083		$	7,563		$	187,646		$	—		$	187,646

* Previously reported amounts have been revised to reflect the impact of adopting ASU 2017-17 retrospectively during the first quarter of fiscal 2019. Refer to details related to the adoption of new ASUs within Note 1, Basis of Presentation and Significant Accounting Policies.

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $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 that 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).

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 $5.7 million decrease of revenues and cost of goods sold.

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT 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	4,196			(2,602		)	1,594			c
Unrealized net gain (loss) on available for sale investments	3,640			—			3,640
Cash flow hedges	(4		)	—			(4		)
Foreign currency translation adjustment	(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

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 CASH FLOWS

(Unaudited)



	For the Three Months Ended November 30, 2017
	As Previously Reported			Restatement Adjustments			As Restated			Accounting Changes*		As Presented			Restatement References
	(Dollars in thousands)
Cash flows from operating activities:
Net income (loss)	$	179,619		$	7,563		$	187,182		$	—	$	187,182		a, c
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	120,148			—			120,148			—		120,148
Amortization of deferred major repair costs	16,418			—			16,418			—		16,418
Equity (income) loss from investments	(38,362		)	—			(38,362		)	—		(38,362		)
Distributions from equity investments	12,514			—			12,514			—		12,514
Provision for doubtful accounts	(3,601		)	—			(3,601		)	—		(3,601		)
Deferred taxes	15,044			1,302			16,346			—		16,346			a
Other, net	2,976			(2,601		)	375			—		375			c
Changes in operating assets and liabilities, net of acquisitions:
Receivables	(80,637		)	23,937			(56,700		)	—		(56,700		)	c
Inventories	(472,180		)	(40,843		)	(513,023		)	—		(513,023		)	c
Derivative assets	67,365			(3,439		)	63,926			—		63,926			a, c
Margin and related deposits	(893		)	—			(893		)	—		(893		)
Supplier advance payments	(292,905		)	(631		)	(293,536		)	—		(293,536		)	b
Other current assets and other assets	2,689			883			3,572			2,751		6,323			a
Customer margin deposits and credit balances	(18,045		)	—			(18,045		)	—		(18,045		)
Customer advance payments	1,278			(11,529		)	(10,251		)	—		(10,251		)	b, c
Accounts payable and accrued expenses	441,071			12,148			453,219			—		453,219			a, c
Derivative liabilities	(97,329		)	(2,627		)	(99,956		)	—		(99,956		)	a, c
Other liabilities	4,376			—			4,376			—		4,376
Net cash provided by (used in) operating activities	(140,454		)	(15,837		)	(156,291		)	2,751		(153,540		)
Cash flows from investing activities:
Acquisition of property, plant and equipment	(85,824		)	—			(85,824		)	—		(85,824		)
Proceeds from disposition of property, plant and equipment	56,079			—			56,079			—		56,079
Proceeds from sale of business	29,457			—			29,457			—		29,457
Expenditures for major repairs	(1,039		)	—			(1,039		)	—		(1,039		)
Investments redeemed	5,195			—			5,195			—		5,195
Changes in CHS Capital notes receivable, net	(69,227		)	—			(69,227		)	—		(69,227		)
Financing extended to customers	(15,778		)	—			(15,778		)	—		(15,778		)
Payments from customer financing	16,520			—			16,520			—		16,520
Other investing activities, net	1,847			—			1,847			—		1,847
Net cash provided by (used in) investing activities	(62,770		)	—			(62,770		)	—		(62,770		)
Cash flows from financing activities:
Proceeds from lines of credit and long-term borrowings	8,006,980			—			8,006,980			—		8,006,980
Payments on lines of credit, long-term borrowings and capital lease obligations	(7,657,713		)	3,052			(7,654,661		)	—		(7,654,661		)	c
Preferred stock dividends paid	(42,167		)	—			(42,167		)	—		(42,167		)
Redemptions of equities	(3,682		)	—			(3,682		)	—		(3,682		)
Other financing activities, net	(31,680		)	10,423			(21,257		)	—		(21,257		)	c
Net cash provided by (used in) financing activities	271,738			13,475			285,213			—		285,213
Effect of exchange rate changes on cash and cash equivalents	2,236			—			2,236			—		2,236
Net increase (decrease) in cash and cash equivalents and restricted cash	70,750			(2,362		)	68,388			2,751		71,139			b
Cash and cash equivalents and restricted cash at beginning of period	181,379			—			$	181,379		90,893		272,272
Cash and cash equivalents and restricted cash at end of period	$	252,129		$	(2,362	)	$	249,767		$	93,644	$	343,411

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

Freight derivatives and related misstatements

(a) The correction of freight derivatives and related misstatements resulted in a $1.2 million reduction of net income for the three months ended November 30, 2017. 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 impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and November 30, 2017, resulted in certain misclassifications of less than $3.0 million between operating activity line items in the Consolidated Statements of Cash Flows; however, none of the freight derivatives and related misstatements impacted the classifications between operating, investing or financing activities.

Intercompany misstatements

(b) The correction of intercompany misstatements did not impact net income for the three months ended November 30, 2017; however, the impact of adjustments to the Consolidated Balance Sheets as of August 31, 2017, and November 30, 2017, resulted in certain misclassification adjustments of less than $3.0 million between line items in the Consolidated Statements of Cash Flows. None of the intercompany misstatements impacted the classifications between operating, investing or financing activities within the Consolidated Statements of Cash Flows; however, a timing difference related to the application of supplier advance payments resulted in a $2.4 million decrease of cash as of November 30, 2017.

Other misstatements

(c) The correction of other misstatements resulted in an $8.8 million increase of net income for the three months ended November 30, 2017. Refer to further details 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 impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and November 30, 2017, resulted in certain misclassification adjustments between line items in the Consolidated Statements of Cash Flows. As a result, two misclassification adjustments were made between operating and financing activities, including a $3.1 million reduction of notes payable resulting from a duplicative entry and the misclassification of a $10.4 million negative cash balance associated with a timing difference for the application of in-transit cash. In addition, various misclassification adjustments were made between operating activity lines, the most significant of which related to (1) a $24.1 million decrease of inventory and increase in accounts receivable as of August 31, 2017, due to a timing difference related to the settlement of a single ocean vessel and (2) the $18.3 million net impact associated with the decrease of inventory and increase of accounts payable that resulted from the misclassification adjustment for certain items previously included within a contra-inventory account to accounts payable as of August 31, 2017, and November 30, 2017.