

	For the Three Months Ended May 31, 2018
	As Previously Reported			Restatement Adjustments			As Restated			Accounting Changes*			As Presented			Restatement References
	(Dollars in thousands)
Revenues	$	9,027,525		$	59,803		$	9,087,328		$	—		$	9,087,328		b, c
Cost of goods sold	8,728,914			112,447			8,841,361			335			8,841,696			a, b, c
Gross profit	298,611			(52,644		)	245,967			(335		)	245,632
Marketing, general and administrative	161,578			1			161,579			845			162,424			c
Reserve and impairment charges (recoveries), net	(3,811		)	—			(3,811		)	—			(3,811		)
Operating earnings (loss)	140,844			(52,645		)	88,199			(1,180		)	87,019
(Gain) loss on disposal of business	(124,050		)	—			(124,050		)	—			(124,050		)
Interest expense	49,340			—			49,340			—			49,340
Other (income) loss	(14,622		)	—			(14,622		)	(1,180		)	(15,802		)
Equity (income) loss from investments	(59,308		)	—			(59,308		)	—			(59,308		)
Income (loss) before income taxes	289,484			(52,645		)	236,839			—			236,839
Income tax expense (benefit)	60,338			(5,119		)	55,219			—			55,219			a
Net income (loss)	229,146			(47,526		)	181,620			—			181,620
Net income (loss) attributable to noncontrolling interests	(187		)	—			(187		)	—			(187		)
Net income (loss) attributable to CHS Inc.	$	229,333		$	(47,526	)	$	181,807		$	—		$	181,807

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

Freight derivatives and related misstatements

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

Intercompany misstatements

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

Other misstatements

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

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



	For the Nine Months Ended May 31, 2018
	As Previously Reported			Restatement Adjustments			As Restated			Accounting Changes*			As Presented			Restatement References
	(Dollars in thousands)
Revenues	$	23,927,508		$	171,857		$	24,099,365		$	—		$	24,099,365		b, c
Cost of goods sold	23,173,151			224,116			23,397,267			1,005			23,398,272			a, b, c
Gross profit	754,357			(52,259		)	702,098			(1,005		)	701,093
Marketing, general and administrative	488,459			(667		)	487,792			2,537			490,329			c
Reserve and impairment charges (recoveries), net	(18,944		)	—			(18,944		)	—			(18,944		)
Operating earnings (loss)	284,842			(51,592		)	233,250			(3,542		)	229,708
(Gain) loss on disposal of business	(131,755		)	—			(131,755		)	—			(131,755		)
Interest expense	130,218			—			130,218			—			130,218
Other (income) loss	(51,000		)	—			(51,000		)	(3,542		)	(54,542		)
Equity (income) loss from investments	(137,111		)	—			(137,111		)	—			(137,111		)
Income (loss) before income taxes	474,490			(51,592		)	422,898			—			422,898
Income tax expense (benefit)	(100,901		)	(10,962		)	(111,863		)	—			(111,863		)	a, c
Net income (loss)	575,391			(40,630		)	534,761			—			534,761
Net income (loss) attributable to noncontrolling interests	(699		)	—			(699		)	—			(699		)
Net income (loss) attributable to CHS Inc.	$	576,090		$	(40,630	)	$	535,460		$	—		$	535,460

Freight derivatives and related misstatements

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

Intercompany misstatements

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

Other misstatements

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

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

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(Unaudited)



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

For the three months ended May 31, 2018

Freight derivatives and related misstatements

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

Intercompany misstatements

(b) None.

Other misstatements

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

For the nine months ended May 31, 2018

Freight derivatives and related misstatements

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

Intercompany misstatements

(b) None.

Other misstatements

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

CHS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CASH FLOWS

(Unaudited)



	For the Nine Months Ended May 31, 2018
	As Previously Reported			Restatement Adjustments			As Restated			Accounting Changes*			As Presented			Restatement References
	(Dollars in thousands)
Cash flows from operating activities:
Net income (loss)	$	575,391		$	(40,630	)	$	534,761		$	—		$	534,761		a, c
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation and amortization	358,134			—			358,134			—			358,134
Amortization of deferred major repair costs	43,908			—			43,908			—			43,908
Equity (income) loss from investments	(137,111		)	—			(137,111		)	—			(137,111		)
Distributions from equity investments	97,665			—			97,665			—			97,665
Provision for doubtful accounts	(4,145		)	—			(4,145		)	—			(4,145		)
Gain and recovery on disposal of business	(131,755		)	—			(131,755		)	—			(131,755		)
Deferred taxes	(135,560		)	(1,463		)	(137,023		)	—			(137,023		)	a, c
Other, net	18,272			(2,602		)	15,670			—			15,670			c
Changes in operating assets and liabilities, net of acquisitions:
Receivables	(216,501		)	21,955			(194,546		)	—			(194,546		)	c
Inventories	(366,858		)	52,419			(314,439		)	—			(314,439		)	b, c
Derivative assets	(86,910		)	64,456			(22,454		)	—			(22,454		)	a, c
Margin and related deposits	(47,079		)	—			(47,079		)	—			(47,079		)
Supplier advance payments	(177,373		)	—			(177,373		)	—			(177,373		)
Other current assets and other assets	75,191			(10,294		)	64,897			(43,823		)	21,074			a, c
Customer margin deposits and credit balances	(19,914		)	—			(19,914		)	—			(19,914		)
Customer advance payments	(40,547		)	(10,633		)	(51,180		)	—			(51,180		)	c
Accounts payable and accrued expenses	73,745			(64,128		)	9,617			—			9,617			a, b, c
Derivative liabilities	23,758			(12,144		)	11,614			—			11,614			a, c
Other liabilities	(49,842		)	—			(49,842		)	—			(49,842		)
Net cash provided by (used in) operating activities	(147,531		)	(3,064		)	(150,595		)	(43,823		)	(194,418		)
Cash flows from investing activities:
Acquisition of property, plant and equipment	(249,078		)	—			(249,078		)	—			(249,078		)
Proceeds from disposition of property, plant and equipment	80,045			—			80,045			—			80,045
Proceeds from sale of business	234,914			—			234,914			—			234,914
Expenditures for major repairs	(39,363		)	—			(39,363		)	—			(39,363		)
Investments redeemed	6,607			—			6,607			—			6,607
Changes in CHS Capital notes receivable, net	(83,908		)	—			(83,908		)	—			(83,908		)
Financing extended to customers	(72,106		)	—			(72,106		)	—			(72,106		)
Payments from customer financing	38,725			—			38,725			—			38,725
Other investing activities, net	12,377						12,377			—			12,377
Net cash provided by (used in) investing activities	(71,787		)	—			(71,787		)	—			(71,787		)
Cash flows from financing activities:
Proceeds from lines of credit and long-term borrowings	29,802,708			—			29,802,708			—			29,802,708
Payments on lines of credit, long-term borrowings and capital lease obligations	(29,028,104		)	3,052			(29,025,052		)	—			(29,025,052		)	c
Preferred stock dividends paid	(126,501		)	—			(126,501		)	—			(126,501		)
Redemptions of equities	(6,391		)	—			(6,391		)	—			(6,391		)
Other financing activities, net	(70,916		)	12			(70,904		)	—			(70,904		)	c
Net cash provided by (used in) financing activities	570,796			3,064			573,860			—			573,860
Effect of exchange rate changes on cash and cash equivalents	1,030			—			1,030			—			1,030
Net increase (decrease) in cash and cash equivalents and restricted cash	352,508			—			352,508			(43,823		)	308,685
Cash and cash equivalents and restricted cash at beginning of period	181,379			—			181,379			90,893			272,272
Cash and cash equivalents and restricted cash at end of period	$	533,887		$	—		$	533,887		$	47,070		$	580,957

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

Freight derivatives and related misstatements

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

Intercompany misstatements

(b) The correction of intercompany misstatements did not impact net income for the nine months ended May 31, 2018; however, the impact of adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments of less than $5.0 million between line items in the Consolidated Statement of Cash Flows. None of the intercompany misstatements impacted the classifications between operating, investing or financing activities within the Consolidated Statement of Cash Flows.

Other misstatements

(c) The correction of other misstatements resulted in a $7.9 million increase of net income for the nine months ended May 31, 2018. Refer to further details of the adjustments and their impact on net income (loss) in the Consolidated Statements of Operations section for the three and nine months ended May 31, 2018, above. The impact of the adjustments to the Consolidated Balance Sheets as of August 31, 2017, and May 31, 2018, resulted in certain misclassification adjustments between line items in the Consolidated Statement of Cash Flows. As a result, a misclassification adjustment was made between operating and financing activities related to a $3.1 million reduction of notes payable resulting from a duplicative entry. In addition, various misclassification adjustments were made between operating activity lines, the most significant of which related to (1) a $24.1 million decrease of inventory and increase in accounts receivable as of August 31, 2017, due to a timing difference related to the settlement of a single ocean vessel and (2) the $49.2 million net impact associated with the decrease of inventory and increase of accounts payable that resulted from the misclassification adjustment for certain items previously included within a contra-inventory account to accounts payable as of August 31, 2017, and May 31, 2018.